>> this week on "the communicators," a discussion about updating u.s. communications policy with tom tauke, executive vice president at verizon. >> host: tom tauke, in a recent speech to the new democrat network, you compared telecommunications law and telecommunications regulation to the winchester mystery house, a house that grew up over years and has hallways that go nowhere, doorways that don't open. how do you update telecommunications law in such a dynamic and ever-changing field? >> guest: it is true that our telecommunications law needs updating, and in part it is because it's grown up over time. lots of amendments here and additions there that have built this structure that is now the framework that governs our industry, but it hasn't really changed to reflect the new world of communications. so this law was essentially

constructed at a time when you had monopolies in the cable industry and the telephone industry and essentially broadcast monopolies in the local community, and it was constructed as a siloed set of industries. of course, all of that has changed. the internet and technology have changed this so that now you have everybody in everybody else's business so to speak. you canddssdustries on silos and the whole nature of the development of content with users actually developing the content rather than just being receivers of content, all of that has changed the dynamic of the industry so significantly that it's time to take a new look at the statute. >> host: do you think that the 1996 telecom law is out of date and that needs to be updated as well? >> guest: when you think about it, the driving force behind the 1996 act was allowing local

telephone companies to get into the long distance business. we don't even think about distance anymore, you know? is it's anytime, anywhere, my any place, and the notion of differentiating between a local call and in-state call, long distance call, that's been blown away. if you talk about that to a 15-year-old or an 18-year-old, they look at you strangely. [laughter] you've got to be my age to remember what it was like when you had all these different calling structures. >> host: who takes the lead? the fcc? is congress ready to develop a frame rock? >> guest: i think that congress needs to take the lead, and that's in part why i did talk about this issue. because the federal communications commission really is facing a tough task. the chairman of the fcc, chairman genachowski, has been, you know, charged by his boss, the president and the administration, with trying to implement new policies. they just came out with a national broadband plan trying to look at all of the challenges

that we face as a nation and how broadband can address some of those challenges. they see this as a vital infrastructure which is right, they're trying to encourage investment. they want innovation in the space, all of this is good. but they're trying to work with a statute that isn't structured for this area. and some, you know, i think that when we look at this world of the internet, we know that we don't want it to be a wild, wild west. we want it to be governed by a rule of law, and congress really has to determine what are the principles for that rule of law and who has the power to enforce and oversee? >> host: we're talking with tom tauke who's the ective vice president -- executive vice president at verizon. joining us is kim hart, she writes the hilicon valley column. >> host: you talked about how everybody's playing in each

other's sand boxes these days. computer companies are selling cell phones, and you stressed a lot about the need for the government to insure that no player in the ecosystem has an advantage over another and that you wanted a really technology-agnostic kind of policy going forward. what do you think is the best way to approach that since you've just said that you do think some updates are needed to the law? are there specific updates that you see needed to make sure that we're keeping up with all these changes? >> guest: well, first of all, we haven't, we haven't come up with all the answers ourselves, and certainly there are going to be many people who have different ideas, and part of the effort here was to get a conversation going to really encourage people to come forward with their ideas and discuss how legislation might be put together. and i want to say i'm a former member of congress, not current, so it's not my job to do this. but i do think that there are many capable people on the hill who are going to have good ideas about how to address some of

these issues. so with that said, let me just say i think that in essence what we need to do is to approach this from the perspective of the consumer. so one of the examples i used was behavioral advertising, for example, and behavioral advertising for those who may not know, i think, was very well described by senator byron dorgan when he said, if i go into a store and the clerk is keeping track what i buy in that store, you know, i feel fine with that. but if i go to a mall and somebody started following me around from store to store to see what i was buying in order to keep track of that and then send advertising to me, i'd feel very uneasy about it. and that's what happens on the internet is you have various players who can keep track of you as you go on the internet and compile that information and then direct advertising to you. now, our perspective is that generally consumers should not be tracked on the internet unless they give their

affirmative permission to be tracked. and that should apply to anybody who would track. it should apply to the internet service provider, it would apply to the search engine, it would apply to anybody who would be attracting your behavior on the internet. and i think it's a little bit like if the you walk into a grocery store today. you can give permission for them to keep track of what you buy and you join the club and you get a discount, or you can deny that permission. and that's the same thing that we should have on the internet, that same kind of rule, but it should apply to everybody. so if the consumer says, no, i don't want to be tracked, that applies to all the players, not to one, and you shouldn't have a situation where you have to do this method to get this player not to track and another method to have another player not to track. so i think looking at it from a consumer perspective you want to make sure that it's easy for the consumer, that the consumer feels secure and safe, and that the same rules apply for all the people who might be doing or

participating in some way in the consumer experience on the internet. >> host: do you see, you know, a lot of players in the industry especially in the advertising world have really kind of advocated for self-regulatory -- >> guest: i would advocate in some ways for a self-regulatory process because this is such a fast-moving world and generally government doesn't move that fast, to be blunt. government isn't designed to move quickly. to the extent you could have industry self-governance, that could work well. the advertising industry is a good example of that, it's a self-governing industry in large part, but it has the federal trade commission stepping in where the industry isn't able to handle an issue themselves. so i think that is not a bad model at least for a lot of things that might go on on the internet, at least at this time in our history when things are moving quickly and we have a lot

of new experiences and technology being put out there. >> host: mr. tauke, the broadband plan released by the fcc recently, there seemed to be general across-the-board support. is verizon a full supporter of the broadband plan? >> guest: there's so much in the plan that to say a full supporter probably would get me in some trouble with somebody, but i think generally there are a lot of very good things on the broadband plan, and i want to single out the very good work that the team that put that plan together did. they had a limited amount of time, and they came up with a very credible document based on a lot of research. we think there are things in there like the call to begin work on freeing up spectrum in order to meet future mobile communications needs right on target. some of the efforts to try to restructure the high-cost fund and universal service to insure that it's going to bring broadband to rural areas, generally very much on target, i

think. the efforts to focus on adoption, the efforts to get the federal government to play a role as they purchase services in driving broadband adoption and using broadband in order to deliver services to constituents. i mean, i think all of these things are very good. there are some aspects of it that cause us a little bit of pause, but that happens when you have a 360-page document. >> host: such as? >> guest: well, i would say some of this is in some of the questions raised about regulation. we generally are of the view that the policy that the federal government adopted during the clinton administration and has essentially followed since then which is that the government gives the really light regulatory touch to the internet and has espoused that policy around the world, that that is the right policy. and while this plan doesn't recommend a change from it, it raises the question about whether or not there should be a change from that policy.

and then there are other specific issues, well, i'll just pick one, copper retirement, which is close to us. we've been deploying fiber. when you replace the copper with fiber, you want to pull the copper out at some point because you don't want to run two networks, you want to run one. that's part of the business case for putting in the fiber. if you would be required to maintain the copper, then your ability to deploy fiber is diminished because you can't afford to maintain two networks. so i think that when that kind of issue is raised which had not been on the table from our perspective before, then that causes us some concern about whether this might be headed. so in any comprehensive review of issues you, there are some you like, and there are some that you have concerns about, and that would be the case here. but overall, i think that the fcc deserves commendation for its work. >> host: verizon's ceo and google's ceo co-wrote an op-ed

in "the wall street journal" talking about some points of agreement that those companies see within the broadband plan. >> guest: right. >> host: can you talk a little bit about the points that you guys are eye to eye on and then maybe we can get into some of the things that you aren't so eye to eye on. >> guest: there's a little bit of history that i might just recount. we have been trying for about two years to try to bridge some of the gaps between some of the players in the internet space. we've had some, you know, policy disputes here in washington. my own experience is that if you can find a way to bridge some gaps, you can help the policy process a little bit. and to the extent we can, we'd like to help the policy process develop appropriately for this internet ecosystem. i think it's fair to say that one of the areas of policy dispute has been net neutrality, and verizon has been on one side saying we really don't see net neutrality as it's defined by

some of the proposals at the fcc to be a good thing. google has been a strong advocate of this policy. and so we have been working with google to try to see if we can bridge that gap. so we did a filing, we did a blog several months ago, we did a filing at the fcc in the net neutrality proceeding which in both of those we outlined some areas of agreement, and now this op-ed is another attempt to try to continue to bridge gaps. i think what, in essence, i'd say that what we -- i think generally we agree on the policy of the light regulatory touch, if you will, is probably the right policy going forward for the government. i think we also agree, however, that you need, you need a structure here, a policy structure that works. because we both consider our companies to be good actors in the space doing a lot of good things, we also know that bad

actors can make it, can chill consumer behavior in the space, and that wouldn't be good for anybody. so you do want government oversight in order to insure that bad actors are disciplined in the space. then the question is how do you do that? i think i would say there are two key things that we have reached, i think, a common understanding on. one is the test for government intervention. the government should step in when there is harm to consumers or users in the space, if there's some harm, or if there's anticompetitive activity. so if somebody's doing something to harm or is anticompetitive, that's reason for the government to step many. the other reason we have focused on is process. and we have been working on a process for self-governance in the industry to the extent that's feasible, but also a mechanism to when disputes go to the government like the fcc or the ftc, that there's a workable

process that gives you a quick answer. so we're looking at instead of having a system like we do today at the federal communications commission where the fcc makes rules in anticipation of what might occur, we think, well, it's very hard to anticipate this market especially several years in advance. so isn't it better off to have a system where when an issue comes forward the fcc has that issue brought to it, it makes a decision based on the facts of that case and in the course of making those decisions is flushing out the policy for the space. so i think we're looking at both the test and the process as key to coming to some common understanding of something that would work for our industry. >> host: and you mentioned the fcc kind of last week in your speech you said you wanted a more flexible, adaptive oversight of this industry that is changing so quickly every day. >> guest: right. >> host: some have said that's kind of advocating taking some

of the fcc's teeth away, kind of taking a little bit of the rulemaking power and enforcement power and taking more of an ftc-like rule, having enforcement power but not as much rulemaking power. how do you weigh the two? >> guest: i don't think it's taking the teeth away at all, and that clearly isn't the intent. i think it's doing -- using the power of government in as smart a way as possible while attempting to achieve the objective of having innovation in the space, the development of lots of new products and services and having a quick-moving market. so if you have those things, you can't have a cumbersome regulatory process. you need an agile regulatory process. so i think what we're saying is that the fcc should set out guidelines or maybe the congress should in statute, but somewhere we need principles laid out, the guidelines laid out. tests for government intervention as i alluded to, and then start moving on these things quickly.

i would say to you that if you have a process where it takes years to get an answer and you're bogged down in the courts which is what is threatening our industry right now, that's not a good answer for anybody, and it certainly doesn't make the agency effective in the marketplace. what we want is, well, whatever the agency is that has this jurisdiction, whether the fcc or the ftc, that they move promptly, that they're able to make decisions quickly and in that way shape the marketplace rather than having everything ending up in the courts. >> host: tom tauke, if you could just reconcile a couple of things. in your speech and in a lot of verizon blog filings you're always talking about the investment that's been made and the number of people who have access to the internet. 95% of americans, etc., things like this. and then you talk about a light regulatory touch and then at the same time there's discussion here in the op-ed by eric schmidt and evan seeden berg

saying you need private investment and partnership between governments and private companies, and then in your recent speech you talked about perhaps subsidies for broadband a la food stamps. could you reconcile those? >> guest: sure. [laughter] >> host: there's a lot of questions. sorry about that. [laughter] >> guest: let's start by saying that the investment in this space is huge. i mean, our company alone has been investing at the rate of $17 billion a year for the last several years, and when you look at that in contrast to all other american companies, it's much greater than any other american company but at&t. a few years we've been ahead, a few years they've been ahead, but our companies and the rest of the industry are investing huge amounts of money in infrastructure. the fcc estimated investment of up to $50 billion -- $350 billion needed to get our

infrastructure to improve to match the services and the demands that will come from the marketplace. so you have to have a climate which encourages and permits that investment, okay? part of creating that climate is having a government policy that makes sense, so you want, you want a policy that insures the consumers feel comfortable in the space because that's part of encouraging investment, you also want a policy, however, that moves with the marketplace and the technology which is what i was trying to describe earlier. i think there's, there are other things government can do. there are little things like when the state of virginia put its driver's license process online, you know, this was a great thing. you didn't have to go to the dmv to stand in line anymore. the city of alexandria where i happen to live though i spend most of my time working in new w jersey and new york, but you can

go online and see your property tax things for your car and your home, and it's terrific. it just makes doing business with the government so much easier. government, in a sense, can encourage adoption by doing those things, by using the tools that are available. the broadband plan focuses on that. using broadband in education, using broadband to conserve energy, using broadband to make our transportation system smarter, using broadband in order to improve the delivery of health care services. so government's role in encouraging the use of this technology and, frankly, updating government is a terrific thing. the other place where i think government has a role to play is the private sector with all of its investment is not reaching some citizens. there is a role for government to play to try to make sure those citizens are reached. i don't think anybody suggests it's wise to keep them out of the system or offline, so to speak. we don't want a digital divide as some have suggested, and

traditionally we've done that. we've had the universal service fund to support universal telephony, and i think this is the same kind of thing. so i believe government's role is to create the climate for investment, to insure that everybody is engaged, to promote the use of the technology as much as possible so that people adopt the technology and their lives are enhanced by it. >> host: along the model of using kind of a different model for maybe subsidies like along the lines of a fuel or a food stamp-type model, can you elaborate how you might see that happening? that was an idea that hasn't been talked about a lot. >> guest: sure. yeah, i think one of the things that i suppose is an example of what government should not do, okay? government, in creating the right climate, should not be picking winners and losers. so if the you look at the fuel industry or the -- for home

heating -- or food stamps, you don't have the government in the home heating industry saying to companies, well, you collect money, and then we will distribute money to the companies, and they will provide the services to the consumers. instead, the government collects money from the general tax base, gives money to those consumers who need it to purchase fuel, and then the consumer decides if be they're going to buy natural gas, home heating oil, you know, electricity or whatever, but the government doesn't get into the business of directing money to companies and then telling the companies how they're going to deliver the service. and if it did, it would mess up, i suspect, the delivery of heating to the people who need it. similarly, with food stamps you don't have government coming in and sending money to the grocery store or the food manufacturer to then provide food to consumers. instead, you have the government sending money to the consumer so they can go to the grocery store and buy food like everybody else. my belief is that if the government tried to send the

money to the grocery store or the food manufacturer, we'd mess up the food distribution system. so when it comes to broadband, my only point is this: we have had a world where there was one telephone company in an area, so you'd send the money to the telephone company, and the company would then provide the service to the consumer. that's not the model for the industry we have today. instead, we have many companies that are providing broadband services to consumers, and the consumers who need the assistance should receive the funds and purchase it from the company they choose. a satellite company, a cable company, a telephone company, whatever. but don't, you know, have the government picking the winners and losers in the marketplace or controlling the marketplace through the distribution of subsidies. so subsidies to consumers, not to companies. >> host: tom tauke is the executive vice president of verizon, kim hart is a technology reporter with "the hill." next question.

>> host: wanted to talk about title i versus title ii. this is something that is always quite explosive -- >> guest: now we're getting down into the weeds. [laughter] >> host: well, of course, we're all waiting on comcast's court ruling. >> guest: right. >> host: the fcc classifies broadband as title i a regulation service. comcast has challenged that decision, and depending on what the court comes back with, the fcc has indicated it is open to considering reclassifying broadband altogether as a communication service under title ii. you indicated in your speech last week that you don't think that is a wise idea both because the fcc doesn't necessarily have jurisdiction to do that, and also because the current broadband industry just doesn't fit into the title ii framework. can you tell us a little bit more about your thinking on what will happen if the fcc does go forward with that thought?

>> guest: probably saying that i think it's an unwise idea to classify title ii -- broadband as title ii would be an understatement. [laughter] you know, the title ii law was a great law for the industry that existed in 1934, the telephone industry that was a monopoly industry. but it includes excruciating regulation of the industry from kinds of patches that the workers wear on their uniforms to how many times the phone rings before it's answered. i mean, it just is very extensive regulation of the industry. and it is, i think, horribly ill-suited for the industry that we have today, the communications sector that we have today. and i think that if the fcc would try to in a sense shoe horn this industry into the title ii section of the law and apply that to the industry, that we would end up with years of court battles, and this is in part what wouldn't be good for

anybody. so that's partway, i think, it's time for congress to step in. i mean, the fcc -- i don't want to speak for the fcc, but as an observer of the federal communications commission i'd say they'd only be doing in out of desperation because the court would be telling them, well, you have classified broadband as title i, that doesn't work, so let's try title ii because there isn't any other title which really fits. they're doing it because they don't have any place else to turn. this is when congress is supposed to act. we don't have a segment of the communications statute that really applied or works for this -- applies or works for this segment of the industry. congress needs to update the law, so to speak. >> host: would classifying it as title ii would it cover companies like google? >> guest: well, no. it would only cover a segment of players in the industry, those essentially who have networks and certain kinds of networks.

google has an extensive nationwide network that connects all of its servers and all of its storage capability, but it doesn't have the kind of network that would be regulated under title ii. so it does, it creates i think from the consumer perspective it would not work and from the, from a legal perspective it would result in a lot of dispute. and so it wouldn't be a good thing, i think, for the growth of the industry or the achievement of the objectives of the national broadband -- >> host: cover the comcast and the verizons. >> guest: you know, it's interesting, comcast thinks they're under title vi which is for cable companies. verizon when it's acting as a telephone company is under title ii, but theoretically comcast would be put under title ii which would be interesting to watch that happen. i mean, this is all kind of inside baseball and down in the weeds so to speak, but it does have profound impact on the

consumer experience. so going back to the consumer. if the consumer should have some kind of sense of certainty in the space, not have to worry about which company at the moment is doing which thing but just what is my experience and do i have a good experience in the space, i don't think this would work very well for the consumer. >> host: with a longtime washington hand, do you see any movement in congress or do you see the fcc leaning towards considering all these companies to be equal partners in a sense? >> guest: i think the fcc is constrained, some might even say ham strung by the statute under which they operate. they have a certain amount of flexibility, but in essence what's happening potentially with the court decisions is that their flexibility is being constrained. okay? that's part why it's important for congress to act. there are a lot of members of congress who believe they ought to act. congressman boucher issued a

statement, and i don't want to speak for him, but he wants a comprehensive look at the law. several other members said similar things, and i think there is a general recognition that from time to time when you have an industry as dynamic and as changing as this industry is, i mean, in '96, remember, we didn't -- whoever thought of a search engine, you know? what was google? i mean, this is a whole different world today. wireless, downloading wireless video on your phone? most people didn't have wireless phones. to think what was written in '96 would apply to today's industry, i think most people would say, yeah, probably you need to update the law. >> host: you've also said you see, along those lines, the power is kind of shifting to the cloud. >> guest: yes. >> host: how do you see verizon playing a role in that, or what is verizon's place in this new system? >> guest: first, let me take a moment to try to explain, if i can, what is the cloud. here's what's happening in the world that we