>> public affairs, history and biography saturday morning at 8 through monday at 8 a.m. eastern. >> coming up next on c-span2, "the communicators" talks with the ceo of qualcomm, a leading manufacturer of microchips for smartphones and other devices. are. >> this week on "the communicators," a discussion with paul jacobs, chief executive officer of qualcomm. >> host: paul jacobs, what does qualcomm do? >> guest: we make the chips and technology for cell phones, so many of the phones that you have of the third generation, if you've heard that terminology,

that has qualcomm's technology inside it, and many, many of those also have a chip much like you might think of intel being inside a pc. >> host: so for blackberries, iphone, ipad users, what exactly does your chip do inside those phones? this. >> guest: it does a lot these days. it started out it was just the radio communications between the device you were carrying with you and the network. but now that the phone's got so much capability in it, we've added graphics and the microprocessor that does the comp pewations that are in there and cameras and video and audio and games and all these kinds of things have been put into those chips as well. >> host: and where are they manufactured? >> guest: predominantly in taiwan, so we're what's called a fabulous semiconductor manufacturer. the designs are from san diego, but they're sent to asia and

manufactured there, and then we work with the device manufacturers around the world. what's interesting, though, is our direct revenues are 95% outside the united states because most of the handset manufacturers are now outside the united states. >> host: well, how many employees does qualcomm have, how many are located in the u.s.? this. >> guest: we have 16,000 employees worldwide and about 13,000 of them are in the united states. >> host: but most of the manufacturing, all of the manufacturing outside the u.s.? >> guest: yeah. there really isn't much manufacturing of chips anymore in the united states. >> host: because of the cost? this. >> guest: it's a lot of things. there are policies that don't promote the building of those factories in the united states, and then the problem is that the whole supply chain really is built up this asia now. there are, there are some factories in the united states and there are some coming, so we expect one of our suppliers will be building a fab in new york.

>> host: how long have you been ceosome. >> guest: i was ceo fife years -- five years ago. >> host: and your father founded the company? >> guest: yeah. we're 25 years old now. >> host: is he still active on the board? >> guest: he's another directer, an influential directer and a good guy to talk to, but i run the company now. >> host: also joining us on "the communicators" this week is guest reporter paul kirby who is a senior editor with "telecommunications reports." >> host: thank you. talking about some policy issues. the fcc and the obama administration say they want to identify 500 megahertz of spectrum over the next ten years for wireless broadband. how difficult do you think that will be, and why is that spectrum needed? >> guest: 500 megahertz is a lot to go get. you know, some of the things they're talking about to try and get large chunks of spectrum are things like incentive auctions to get the broadcasters to move off, and, you know, we have some

experience with that ourselves because we bought spectrum in one of the spectrum auctions, and before the digital tv transition happened, we were able to incent some broadcasters to turn their systems off and let us start broadcasting our system. so i have high hopes for that. some of the other spectrum will be more difficult getting it away from certain governmental users will be difficult although we have ideas for how you might do sharing of spectrum, and so anything we can determine that'll open up the use of spectrum whether it's what's called unpared meaning it's only one directional because most systems have to be two directional or used with some other licensee that has primary access to that, we're trying to build technologies that satisfy all those things. the reason why it's important is, as everybody knows, smartphones are so popular now, people are using a lot of data on them. there was a stat that said in a few years we're going to see more data used in one month than

was used in one year of 2008, i think it's 2014 compared to 2008. so a tremendous demand. at&t's seen their demand triple or more, it's growing exponentially, so people want access to all these things on their phone, videos and games and all sorts of access to the internet. so we need to be able to provide that, and more spectrum's needed. >> host: is 500 even enough? before the broadband plan came out, ctia said we need 800 over six years, and the broadband plan says 500 over ten. is it going to be enough? by the time we get to that point, they'll just need more? >> guest: my guess is there's always going to be demand for more and more. it is a scarce resource, and as, you know, it's more and more popular for people to use their phones in these ways, i think there's going to be more demand, and as we look out into the future, we're going the see wireless technology embedded in other thing, used for health care or talking about use in

education. we believe that wireless is going to be embedded into all the things that are around you in the environment for things like smart grid and other applications. so there's just going to be more and more wireless devices that need to communicate, so i think there's going to be a continuing demand for spectrum. >> host: now, the reallocation you talked ab, part of the plan is to get 120 megahertz voluntarily from broadcasters, but the sec needs authorization from congress or something called incentive auction. >> guest: right. >> host: how difficult do you think that will be to get in a time frame to get that cleared for the wireless industry? >> guest: you know, the other experience i can go back to is the digital tv transition where the fact that money could be generated for the treasury actually caused us to get over some objections that had been brought up at that time by the broadcasters. and i think in the end the digital tv transition went fairly smoothly. so as long as there's incentives meaning sniff not just for the

treasury -- incentive not just for the treasury, but also for the broadcasters, i think we'll be able to get through that. given what's going on in congress, you don't know. politics can intrude, so -- >> host: paul jacobs, you talknd about the incentive auctions. to get to that magical 500 megahertz, is that -- how much of the, how much of that will be through sniff -- incentive auctions? >> guest: i heard chairman genachowski say it's about 300 megahertz that the broadcasters are occupying right now. so if that's the case, that gets you a fairly long way there. >> guest: but the plan would have, part of that spectrum they're occupying they will continue to occupy. under the broadband plan, 120 megahertz would come from the broadcasters, but they might use incentive auctions for satellite people as well. so the plan would be to use not only broadcasters, but also some satellite spectrum to get through incentive auctions. >> guest: i think the interesting thing will be the dynamic that gets created once there's a market system and you

see who really wants to participate, do the broadcasters still want to be over the air? as we know, most people are getting their content through cable or satellite today, and so we'll see how that goes. you know, if guys can put their local content out on those other systems and they're guaranteed to get to do that, do they really want to waste the electricity to run the towers, and are they really reaching that much more of a subscriber base? when we were doing the clearing for our flow system, we found people were really willing to make that trade-off. >> host: now, but can the chips and smartphones be made more efficient to use spectrum more efficiently as well? >> guest: yeah. that's actually an area we've been working on very, very hard. it's really the genesis of our company was we were responding to a request by the industry to get ten times better improvement back over the old analog systems if you remember those systems. now, the problem is we've done a lot of tricks in what's called digital communications theory to get these radios more and more

efficient. we're sort of running out of some of the tricks. so what you're starting to see now in the labs is that people are going towards what's called wider bandwidth systems, so they're using more and more of the spectrum we've been talking about to get bits down to the device, and you can understand that's also a difficult thing to clear. there is one other trick that's up our sleeve which is we can get the network and the devices closer to each other, and it's the reason why in some cases your wireless land will run faster. how do you get the cellular network to be closer? make it so users can deploy it themselves and we can have good connect it to those pieces -- connectivity to those pieces that might be in your house or office. we're starting to see some of the beginnings of those, little tiny cell sites for the cellular network. this would be an evolution of that going forward that would increase speeds, and we've seen things like ten times improvements when we do this kind of a network rollout, and that's something we haven't seen

ten times in a long, long time, so this is an interesting new way to look at it. >> host: paul jacobs, are there enough new ideas and new technology coming to prevent a spectrum crisis, a brownout? >> guest: i'm not sure. i mean, i think we're in a little bit of a brownout situation right now for some users, so it's really going to be a lot of different thicks that come -- things that come together. i don't think there's one silver bullet. there's one issue that's associated with the net neutrality debate which is the question of whether application developers are using the spectrum or bandwidth efficiently. because today to them however much, you know, they use, it really doesn't cost them anything. so you might look at, for example, a cellular operator who's trying to be very efficient using 50 times less capacity to run a voice service than just an internet voice overip provider might, and under strict net neutrality you might say, oh, both of those services

have to go through unimpeded. it probably needs to have some kind of method to push back to the application developers so they try to be more efficient too. >> host: so your advice to the fcc and congress on net neutrality is? >> guest: we believe people ought to have access to whatever they want on the internet. we think there needs to be some mechanism so that the consumer can understand whether they're using up a lot of bandwidth for this application or a little. my analogy is to like a car gauge. i might know how much data i can use, like my gas gauge, so i know how much i have left, and then i might have a thing that tells me my instantaneous miles per gallon, so how much capacity i'm using up at a given time. the question is can we make that simple for people? people don't react well when that device they depend on so much is complicated. but that's the notion, can we put in some transparency to the

consumer and put in some measures so that that will cause the application developers to be more efficient? and then allow the operators to price the way that they want so they can have different tiers of pricing, different qualities of service. you may use up your quality of service, you know, bucket at some point and things with a grade. that will only impact the people who are using real, real large amounts of spectrum, so that's the way i look at net neutrality. >> host: you said in a speech in washington that wireless providers should not be summit to the same net -- subject to the same net knewal ri -- neutrality rules as the wire line, but in some ways doesn't that help the industry to have something rather than maybe a lot more down the road? >> guest: yeah. the only issue, though s is is a lot of the net neutrality mindset has come from the fact that we had a lot of fiber built out for the internet. so it looks like every bit is kind of free, and it really

isn't. i mean, they're free up to a point in some sense, but then when you have to lay the next fiber and dig up the ground and all those kinds of things, they become very expensive. so that's the fixed internet. on the wireless internet, we're already at that situation. spectrum's already constrained, the networks are already constrained, so you have to treat them in some way that takes acknowledgment of the fact that it's difficult to get more spectrum, and so we avoid this issue that i was talking about earlier where the application developers might not optimize it as much as they should or could. >> how do you incentivize those application developers to use less spectrum? some carriers have said because they're the ones who, basically, agree to allow those applications on their networks, they said -- they have an incentive because they said, look, we have a spectrum crisis, so, you know, rework your applications. so how do you provide that incentive to application developers? >> guest: the problem is asking carriers to go application by application is going to be very difficult, so i think what you

need to do is give some transparency to the consumers so they can see their bucket of minutes is being used up at a more or less rate by a given application, and then they will see that as cost to them -- >> host: so there's a particular tiered price. you may see, jeez, this application's going to take too much, it's not worth my money. i'll get to my cap too quickly. >> guest: we think that's one mechanism that can do it. there are other mechanisms that aren't dynamic like that. you can use an analogy to the electric grade -- grid where you have stickers that says this one's expected to use so much over this period of time. i think it'd be better if it was dynamic, but maybe something like that could be done too. >> host: this is c-span's communicators program, our guest is the ceo and chairman of the qualcomm corporation, paul jacobs. paul kirby is our guest reporter. next question, mr. kirby. >> host: earlier this month you announced qualcomm was

suspending sales of devices for your flow tv services, and there have been internet reports you're going to shut down that department entirely. can you give us an update on what happens if flow tv will happen with media flow because it's the same -- >> guest: yeah. media flow is the technology that underlies the flow tv network, so what we've done, as you said, is stop our direct to consumer sales. we were building with a partner a small stand-alone tv device. it didn't affect the sales through wireless operators, so if you have it on your phone, that's still operating. what we're looking at going forward is a couple of different possibilities to restructure it so that it works a little bit better from an economic standpoint. one may be just a sale to another party, and there are a wide range of interested parties there. the other possibility is is to stop doing what we were doing in terms of being the content aggregator and the service provider but run it as a pipe.

so we've had discussions with media companies who are interested in being able to do things like download magazines and newspapers and have those be live all the time.f had conversations with devicef manufacturers and operating system manufacturers who want to be able to download updates to their software in a very simple and easy fashion. so there are a number of companies out there who are interested in the capabilities. it's really going to come downb to what's the right economic decision for both the consumers that have used the service and,@ obviously, we'll take care offf those if anything changes, but also the shareholders of qualcomm. >> host: a lot of people say that video's kind of a killer ap for mobile. why has this not been more successful? is it the lack of devices that you actually have for the service?f >> guest: i think it's a broadcb range of things. you know, we found through watching how people use the service that there were certainf things they really liked a lotff and they were willing to watch on their phone and some thingsf they weren't.f live sports was very good,f

breaking news was very good, buf end sodic tv wasn't very good. so what we think is that the model will change, you will still have live stream content and, in fact, it may come overdd not the flow network, but maybed even over the cellular networkf in a broadcast mode we'veb designed for the cellularbf network.f and then for those other kindsb of things that aren't timeb critical, those things may getb cashed on the content, they mayb be done over wi-fi in yourb house, side loaded over thebf wire, there's any number of things those things may happen.b i dof believe we will still have mobile tv, it just may be in a different form if we don't find the right solution. >> host: paul jacobs, being based in san diego and being a tech company, do you find that washington understands your needs? >> guest: there's, likef anything, some where they dofg understand and some where theyff don't.g lots of times there may be understanding but a difficultyf to act.

so, for example, in the high-skilled visa issue, everybody knows there's ac problem that we bring the bestf and the brightest to the united states, train them and send them home. so we're building these pockets of excellence in other places. people understand that, it'sb just hard getting the action. so, yeah. i mean, you know, if you talk about things where we have veryf positive interactions, you know, the spectrum auctions and dtv transition, digital tv transition, all those kinds ofd things were very good, and wec were able to interact well, welb we're hopeful, by the way, on these high-skilled immigration things will get solved, hopeful on stem education, funding for basic research. all these kinds of issues that are so important to us. one area that we're very concerned about right now is tax policy. qualcomm generates 95% of its revenues offshore. now, we have two businesses. our licensing business generates what's called on-shore so it's

present -- subject to present tax. u.s. companies have about $1.4 trillion of so-called offshore money, and if you could imagine that could get brought back into the u.s. economy directly, that would be a private sector stimulus. the problem is getting that scored right and getting it so that it can be brought in. it's very difficult. so we continue to talk about it, we talk about it, actually, in the context of a new factory which we are going to be building to build spray technology. so we've been what i said was established before, we now have a display technology where we are building a factory in conjunction with some partners. that factory's going into taiwan. policymakers sometimes think it's because of labor costs. labor costs are very, very low percentage of the costs of building these displays. what it is is the capital cost of building the factory and putting the equipment in it. we can't bring that money back to the united states without incurring, you know, a 40%

haircut. so if we build the factory in taiwan -- and this has happened to many, many manufacturing businesses in the united states -- you build that outside the united states, and you pay 100 cents on the dollar. you bring it back to the united states, pay 60 cents on the dollar. that seems like tax policy that needs to get changed, but it's been very, very difficult. >> host: does qualcomm maintain a washington-based office, and as ceo and chairman how much time do you spend focused on policies that are created out here? >> guest: yes. we do have a washington office, and we've had one for quite a long time. i end up spending more and more of my time in washington actually. you know, i come in the for the business round table meetings as an example, but probably maybe once or twice a quarter in addition to that. so i'm here fairly frequently. >> host: just to meet on policy issues? >> guest: exactly. >> host: how, with the new congress coming in next year, do you expect -- a lot of people say, well, spectrum issues are bipartisan, so we don't think republicans have more control it will change, but, in fact, a lot

of things haven't gotten through. this year, for instance, there's been legislation on spectrum inventory that has not gotten through, incentive auctions people are still waiting for. so if republicans have more control, what will that mean, good or bad, for wireless? >> guest: yeah. hard for me to handicap that one. but i think that, you know, we will see this move ahead no matter what happens in the elections because the incentives are really in the right place in the sense that it can provide money to the treasury, it can provide money to the incumbents and it's something that everybody recognizes we really need. everybody's run into the fact that their phone sometimes can't get access to the content or at the speed that they want, so on a personal level people get it. the constituents get it. so if there's money that also can be generated, i think that, you know, those are pretty good reasons for legislation to move forward. >> host: paul jacobs, the clinton white house was very

well known for its focus and enthusiasm about technology. what have you found, what did you find in the bush administration, and what are you finding in the obama administration? >> guest: well, it's interesting because we end up dealing a lot with the fcc, and the fcc commissioners always are interested in technology, so we always find good reception there. i think in this administration, you know, it's been also, i think, for me a little different because now i'm the ceo and the chairman, and so i have a little bit higher level of access maybe than previously, and so i do find that people are very interested. one of the areas that they are really understanding is the fact that we have these intangible exports in terms of intellectual property whether it's new technology in patents or the designs of chips, and people are starting to understand now that that's actually a critical component of the economic well being of the united states. so we are getting more traction with those concepts, and i think that's been an evolutionary process over time and, like i

said, i've been personally involved with it really over just the last five years. >> host: you mentioned education. you're in washington for an education conference. can you give us a sense or kind of explain to the viewer how you all have been involved? you have, actually, initiative that tries to look in things like education and health care and other things and reach out and look for ways wireless can help. can you give us a sense of what you've done there? >> guest: sure. so the company was founded by my father and other people who were professors that came out of act deem that, so we have -- our hearts are very close to education. we need a lot of very educated workers because we're using many people who have engineering degrees as an example, so stem education is really critically important to us. we've done a lot of donations into education about roughly $100 million worth of donations over the last ten years at various levels and for various things. some are directly to research projects and universities, but others are for things like

training teachers in stem education or incentivizing ex-employees that were in science and engineering fields to go back into the schools to train people m -- people. the area that we're excited about right now is using wireless as an enabling technology to improve education, to give children the ability -- or students, i should say, the ability to be connected to the curriculum, to each other and do that 24/7 outside the boundaries of the classroom walls. we have a very good example of a program like this that we funded called project connect where we had students in an algebra class who when they were given smartphones, they scored 30% higher on standardized tests. and the reason was they could interact with each other, they could use the technology outside of the school. the story was told at the conference today by one of the people involved that the kids were actually explaining on

blogs to each other how they would solve different problems, so the kids could actually learn from each other. then you think about the fact they can also get feedback from the students, from the apartments, from the teachers in a pretty low-stress way because they're just communicating over their phone much the same way we all, you know, text message. then you can also imagine that you can keep track of how learning can going. so a teacher may be able to see students that are doing better, responding better to a particular program or students who are responding less well. so in the end i think what's going to happen, we all talk about these tablet devices and so forth, i think we're going to see the textbook sort of transform. it'll be a living thing, it'll be adapted to the person using it, it'll have more multimedia instead of, you know, 50 pounds of paper printed on a book that a kid carries on their back. so this whole notion that things are going to become much more live, and it's going to be much more like what the kids do outside of school because it is kind of strange.

there was a survey done that showed that kids feel like they step pack in time -- back in time when they go to school because they don't have access to a lot of the things they have outside of school. if you can get more engagement with the children by using these technologies and improve their outcomes, i think that's going to be a big win particularly as we're more and more focused on a knowledge economy in the united states and the world in general. >> host: now, there's a policy angle to that as well, right? in september the fcc adopted a pilot program that would allow e-rate funds to be used off school grounds, and that, i assume, will kind of help propel that. >> guest: right. yes, so we're very focused on that pilot, hoping to see that program grow. you know, we are concerned that we'll have the same equivalent thing as the digital divide, a mobile divide? now, it's nice because mobile phones are less expensive things and, therefore, it seems likely that the cost aspect can be managed a little bit better. but having programs like e-rate to help out is definitely a key

component to getting, you know, to closing any potential mobile device. >> host: paul jacobs, just back to the spectrum for a minute. what's your level of support or nonsupport for the d block public safety spectrum, setting aside? >> guest: we like the idea that public safety should have access to spectrum. we actually were the ones who were the lead bidder in the last u.k. auction on the d -- the last auction on the d block, but we decided because of the constraints we didn't want to take it and go above the minimum bid, so it didn't end up getting sold. it's a very delicate process. you need to make sure theincentives are there so that the systems get built out. i personally believe having it done by commercial operators is better. you can amortize the costs across a much wider rage, a much larger business, i should say. they have the personnel, they've made the investments in the various kinds of technologies, and then if you can give the

public safety the ability to use the systems when they're needed and when they're not needed, they can be used for commercial use, that seems to me to be a good compromise. >> host: so access not necessarily devotion. >> guest: exactly. no, i think that will work well. the other thing it'll do is it'll give public safety providers or users access to more commercial equipment. you know, as long as it's in the right range -- which it is -- right band, the equipment that's built to use a tablet, they can use the same tablet. it'll lower the cost for them as well, so i think that's going to be a critical thing. >> host: paul kirby? >> host: the issue over the last few months has been intense over the d block. qualcomm's not been extremely active in it, the idea you have -- although you said your personal viewpoint that regardless of how it turns out, your chips will probably be in whatever equipment's being used, particularly if public safety folks even if they get their spectrum that they want will rye

to use commercial devices. is that a fair statement that you all will probably be in the chips of anything, so it's not necessarily an issue you've got to stick your neck out on one side or the other on this? >> guest: yeah. i think it's going in a reasonable fashion, so we don't really need to inject ourselves so deeply into that debate. the other piece about the chips is we make them multimode, so they can run on various different technologies as well because there's been that debate, does the government need to mandate a specific technology for this band or not, and i would argue that the chips will take care of that pretty well. it's really the number of bands that causes added cost rather than the number of different technologies the way the chips work. they've gotten so small, we can just cram lots of radios onto those chips. so, yeah, i think that what we really want to see is just the kind of road block to get broken, busted through and get that spectrum out on to the market, and we know there's demand. there's demand both on the public safety side