>> thank you. >> i can answer anything about the history, but that's a technical question. [laughter] [applause] >> you been watching the tv, 48 hours beginning at saturday morning through monday morning at eight eastern. ..

>> and later the senate's back with a debate and a vote on a judicial nomination. >> this week on "the communicators," tom tauke of verizon discusses some of today's key issues in telecommunications, management of traffic on the internet and spectrum sales. >> host: and this week on "the communicators," verizon's executive vice president for policy, tom taukes our guest. we're also joined by kim hart, senior technology reporter for "politico." here here to discuss several telecommunications issues confronting vise season and the wireless world, and we'll begin the questioning with kim hart. >> host: hi, mr. tauke, thanks for being here. so on thursday, the fcc had a significant vote on reforming the universal service fund. that's a mouthful and even more

complicated to follow. i wanted to get your opinion on how you thought it all turned out after so many months of lobbying and so many years of talking about needing to do this. how do you think it all turned out? >> guest: it's almost decades of talking about this, and i think, first of all, the chairman and the commissioners deserve credit for taking on this issue, tackling it and getting it done. it's a big issue, very complex. and, essentially, we had system of subsidies under the old telephony world that continued as the old telephony world has died away. and the subsidies were, in many cases, being abused, they weren't targeted in a way that was helpful to consumers, so it really became almost an embarrassment for government as well as the industry. so i think that the fcc tacking this and addressing it was really important. from what i can tell and, of course, we haven't seen the order yet, from what i can tell

they also have done a very good job of balancing the various challenges that they faced and the interests of the various parties to get a package that hangs together well, is coherent and is going to accomplish the core object is. and the core objectives, i think are, one, to have some kind of limitation on these subsidies that will gradually phase down over time; two, direct the subsidies toward the deployment of broadband rather than supporting voice services. the deployment of broadband services across the country, so i think they're going to get that done. and i think that, or third, they have done this in a way which has permitted the industry to be stable. in other words, one of the worst things that could have happened is if a rapid change in these subsidy things would have destabilized companies and resulted in a reduction of elimination of services in some areas. so i think they have done that very well. so overall it seems to me they've done a good job here in

reducing the subsidies, in targeting them and achieving the objective for which those subsidies should be, should be in place. >> host: and verizon is one of the companies that stands to gain from the reduction of the access charges as they go down over the next few years. you didn't rely a whole lot on universal service funding in the beginning unlike some of the other companies. so verizon in a large way kind of made out pretty well in this whole situation, but do you think that there are some pitfalls that we may not be looking at closely enough as we should be yet? >> guest: well, verizon, of course, the various parts of the company won and lost. so the wire line part of the business, the traditional telco lost. the wireless part of the business gains a little bit because it'll pay less to wire line companies for access. so as a result it was something of a mixed bag, but overall it's going to be good for the industry, certainly it's good

for our company, and i think we're supportive of what the fcc has done, at least as we understand it at this point. the, of course there are going to be a lot of issues that will arise because this is very complex. and so there will be a few pitfalls along the way, and the fcc still has a lot of work to do to try to work through those as it enters into the various phases of this plan. the one thing that is of greatest concern to me that came out in the order was the note of proposed rulemaking relating to ip interconnection. this is the interconnection of, in essence, internet services or internet companies and particularly voiceover ip. this is an area where the government hasn't engaged before, and it is an area that has been left to commercial agreements among companies, pairing arrangements, if you will. and i think that we had -- the thing that causes us concern about this is if we look at it

in the context of the international arena, we have in europe the carriers in europe calling for rules on ip interconnection that would allow them to charge for the delivery of traffic to their, to their countries, into their countries. the developed world has wanted to establish a system that was similar to what we had in the old voice world, a system of charges for delivery of traffic to the developed world because they want to collect this money in order to build up their infrastructure. this is something which puts, in essence, old world regulation into the new world, and it allows countries to prevent the free flow of information into those countries. and, of course, it's really targeted at our internet companies in the u.s. they say we're, our u.s. companies provide the content, we provide the search, we have the amazons, we have the netflixs, so we are the ones who

are sending traffic, and they want to charge us. and in part it's to, in a sense, collect money from u.s. companies. so i think that when you look at it in than context, we have to be very careful about what we do domestically in setting up a regime for a government regime for interconnection rather than allow the pairing and commercial agreements that have governed us in the past in the internet world. >> host: tom tauke, what about phasing out the usf completely? do you think that could have been achieved? >> guest: i think that's what the order will accomplish over the long haul. now what the order is focused on or usf is focused on is not ongoing subsidies, but it's focused on trying to provide the capital investment, if you will, for the networks to bring broadband to hard-to-serve areas. so while we are, you know, doing a great job, i think, as an industry and as a country in getting broadband deployed

relatively rapidly, both wire line and wireless, there are areas of the country where economically it just doesn't make sense to provide these networks, build the networks and provide the service. i think the fcc is of the view once the infrastructure is built and you can provide multiple services, you probably will not need subsidies or at least very limited subsidies in very few areas to sustain those networks. because these networks provide more services that just voice. so you'll have multiple revenue streams over these networks. and as a result i think that the key is to use the subsidy to build until infrastructure, but then you ought to be able to phase out the subsidies once that infrastructure is built and the services are flowing over those networks. >> host: there were some complaints that nontraditional carriers were being shut out with this usf rulemaking, that they weren't allowed to enter,

and it favored the large verizons and at and ts. >> guest: actually, i'd argue the opposite. under the old system, essentially, the money was target today the old voice carriers, the traditional wire-line telcos, and it was designed to subsidize voice. so in rural areas the rural carriers got the money -- no, the incumbent carriers got the money. so this, i think, through the auction system on the wireless side and through the system that is underway on the wire line side which will at some point move to an auction system after five to seven years, i think we're going to see it opening up for other carriers to be able to receive the subsidies. now, i should observe and this isn't exactly what you asked, but one of the abuses we have had of the system has been among wireless carriers. so the -- we've had areas of the country where we've had a dozen,

15, in one instance i'm told 16 carriers that receive sub citi to provide -- subsidy to provide service to that community. and the subsidy was based on the cost of delivering a wire line service to the community. so, obviously, if you strung a wire to a home or it takes a mile of wire to reach it, that can be fairly expensive. the wireless carrier could come in, get that same subsidy and instead of getting it once for the house could get it three, four, five times depending how many mobile phones were in that family. and so it became a boondoggle. why would the government want to subsidize 14, 15, 16 carriers in a hard-to-serve area? and, of course, as a result of this it became an abuse of the system. so i think that what in one sense some of that abuse has gone away, it will go away on the wireless side because we will focus on the areas that don't have service.

and secondly, i think what we will see, however, is that all carriers eventually once the thing is fully phased in will have the opportunity to bid to serve areas that don't have service today. >> host: you once a few months ago talked about just the sheer number of rural small carriers that are in some states like iowa, for example. >> guest: yeah. >> host: do you think this will lead to some consolidation of some rural carriers or put some of them out of business? >> guest: this has been happening. i mean, the consolidation has been happening for quite a while, and this is good. when i represented the great state of iowa in congress, there were 161 telephone companies in the state of iowa. we're down from that number. i can't tell you exactly what it is today, but that consolidation is gradually taking place, and i think this is a positive thing for consumers because when it comes to building infrastructure, there is, there are benefits to having some scale.

the, generally, the small rural carriers have built already the infrastructure for broadband because they were able to receive substantial subsidies coming through for voice services, but with networks. so they are going to receive less subsidy, many of them, over the next several years, less subsidy than they did before. i don't think this is going to put them out of business because the fact is they have built broadband networks, and they can deliver more services over those networks. and now they'd have not just only voice revenue, but they're going to have video revenue, and they have other services that are going to continue to come into the arena, i think, because of the new technology and the new infrastructure that's in place. so i think, i think the fcc did a very good job in a sense of balancing here again so that they are making sure companies don't have financial shock. you know, they have a phase-in, so they're avoiding the financial shock, and they're leading us to a world of the new

technology and the new services. >> host: well, chairman genachowski in his press conference following yesterday's meeting of the fcc commissioners talked about the cost. and we just want to play a little of this and then get your reaction. >> guest: okay. >> i don't expect that overall consumer rates will go up as a result of this order as compared to not doing reform. so the reform, what we're doing to do eliminates hidden subsidies that ends up on consumer phone bills, it constrains the growth of the fund, and that growth would have translated directly into increases on consumer phone bills. >> host: mr. tauke. >> guest: i think the chairman is right. i don't think we're going to see increases in phone bills as a result of this order. the trend in the industry is down. your getting more service -- you're getting more service for

the dollar that is spent, and that trend is going to continue. there may be a company here or there whether it's a bump up in one part of the bill and a decrease in another part of the bill, but overall this is going to result in less money being paid by the consumers to the industry for the services that are being provided. >> host: kim hart, any more questions on the issue of usf before we move on? >> host: i think we've covered it. [laughter] >> host: tom tauke is the executive vice president for policy for verizon, and we want to move on to net neutrality. what is the status of verizon's suit against the fcc? >> guest: the status is this, that the process has occurred among the various circuit courts to determine which circuit court will hear it, and it's the d.c. circuit court that will hear the case. to the best of my knowledge, the court has not yet set a calendar for that, so we're going to wait to see what the calendar is that

is set fort by the court. -- forth by the court. >> host: there was an article that it was serendipitously beneficial to verizon that the d.c. court got chosen. >> guest: well, in this case the choice was made by lottery, and the d.c. circuit was pulled when they did the lottery among the courts. we believed that if another court had been selected, that that court would have deferred to the d.c. circuit because the d.c. circuit generally has handled these issues in the past and handled the most recent case which was the comcast case from which the current order developed. i think in addition to that that we believed because of the impact on wireless licenses that there was another angle for bringing it to the d.c. circuit since the d.c. circuit has responsibility by statute for all those cases. >> host: now, representative walden, greg walden, a republican of oregon who's the chair of the telecommunications

subcommittee recently wrote a letter to chairman genachowski saying, do not move forward on your net neutrality proposal. if for any reason that it does go through, could congress step in? >> guest: well, interestingly, there is a congressional review act process for overturning regulations that are adopted by agencies, including the fcc. the house has already acted and passed the motions to disapprove of the regulations. it's now pending action in the senate. this is something that doesn't happen very often. it happens occasionally. but it appears as if there's sufficient senators to force a vote in the senate, and so we expect that that will happen sometime over the next few weeks or months. >> host: kim hart. >> host: um, and in that lawsuit verizon said the fcc has overstepped it jurisdiction and does not have authority over broadband, therefore, should not be meddling with how it manages

it networks, or you manage your networks. but the fcc has said the rules create certainty for business, and that is most important going forward. do you disagree? >> guest: yes, i disagree it creates certainty, but i think it's also the main issue we have is jurisdiction. s what the jurisdiction or authority of the federal communications commission over the internet space or the broadband space. the fcc is relying on a statute that was built for the telecom world, the old telecom world of voice services over wire line networks, and they're trying to find authority there to extend to coverage of the internet and the delivery of services over the internet. we don't believe that the statute gives them that authority. we don't believe they have the jurisdiction, therefore, to impose these rules. and in the order that they adopted not only did they claim jurisdiction to impose these

rules, but they claimed jurisdiction to essentially regulate the entire internet space including price regulation, interconnection which we talked about a few minutes earlier and, essentially, a claim that we can introduce the world of telephony regulation into the internet and broadband space. we think that is wrong. they don't have that authority. we also think from a policy perspective that is very dangerous. and so as a result we are fighting this in part because of the implications of the claim of jurisdiction more than the actual rules. you know, just to be clear as we have said, we don't have to change any of our business practices to comply with these rules. we're in full compliance with these rules, and we were before they were adopted. so it suspect a matter of -- it isn't a matter of really a dispute about open networks. we favor open networks. this is really a dispute about whether the fcc has authority to

regulate the internet space. >> host: now, mr. tauke, ctia which represents, the association which represents a lot of the wireless industry has taken a backseat on the net neutrality. and while verizon has filed the suit. what are your thoughts about that? >> guest: well, there are two sets of suits against the fcc. one set of suits was filed by players who said that the rules that were applied to the wire line side of the business should also have been applied to the wireless industry. and so ctia is weighing in to fight that piece. they aren't weighing in on the verizon side to overturn the fcc rules. so the ctia is taking a slightly different position. and in part this is because, you know, these rules were a result of a lengthy negotiation with various players in the industry. i was part of a lot of those discussions. and some of the companies, in essence, agreed to support the rules if they were shaped the

way they were. of we never agreed to that, and so we, obviously, are challenging it as i said on jurisdictional ground, but other companies reached an agreement with the fcc and, therefore, aren't challenging. and some of those members are part of ctia, and i think that's why they're walking the line they are. >> host: this is c-span's "communicators" program. our guest, tom tauke who served in congress, 1979-1991. our guest reporter, senior technology reporter for "politico," kim hart. >> host: wanted to shift the discussion to spectrum issues since that is so near and dear to verizon's heart as well. >> guest: sure. >> host: um, as we all know, the supercommittee is right now trying to figure out its recommendations for deficit reduction and spectrum auctions could be a part of that, those recommendations. how do you think the supercommittee will handle whether to include a spectrum

auction or to allow this to go through with a regular congressional process, or where do you think it's going? >> guest: i think that the odds are that the supercommittee if it comes up with recommendations, which i think it will, but if it comes up with recommendations for the congress on deficit reduction, it will include a proposal relating to auctions of spectrum. they really are scrambling to find money, let's face it, and there aren't many places you can find money for the federal treasury without raising taxes, and so i think they're going to glom on to this. and include it in the deficit reduction package that is, comes forth from that committee. this is a good thing from our perspective because it is really important that more spectrum be made available. the yankee group just did a study not too long ago which said by 2015 the capacity of wireless networks would have to increase 60 fold from what they are today, 60 times more than

today in order to accommodate the demands for additional video services and other kinds of traffic over wireless network. consumers are eating -- [laughter] a lot of things, eating up the wireless capacity, if you will, which is a good thing from our perspective by downloading videos and so on. so i think that there is going to be a real need for spectrum. you know, and this is a long process to clear spectrum. so if congress gives its authorization now, you go through a lengthy process to clear the spectrum, then you have to have auctions, then you begin to build the infrastructure using that spectrum. so from the time you start to the time you actually bring benefit to consumers, it's an 8-12 year process. so really important we start now, and i think the congress will do that. i will say, you know, the committees of jurisdiction, commerce committee in the senate, passed legislation in this hair, house commerce committee has been working on

it, so the supercommittee has something to work on here. >> host: now, a harvard law professor argues in the huffington post that it's not the right approach for, to make the network sell some of their spectrum because it will stifle innovation. and he goes on to talk about the use of unlicensed spectrum and how wi-fi has been very successful in short distance. >> guest: i think congress is looking at how to, again, achieve a good balance here. and i think, i suspect that there will be some support in the supercommittee for providing some unlicensed spectrum. part of the question is what spectrum is used for licensed services, what is unlicensed and so on. and i think that the 84 probably megahertz that will come there the broadcast side is probably better suited for the kinds of mobile services that we have today than it may be for

unlicensed services. therefore, i think that the committee when we would hope the committee would use that spectrum for mobile services and perhaps potentially some spectrum coming from the government for mobile services. but there will be other spectrum over time, more spectrum that will be made available for unlicensed. >> host: and speaking of spectrum, i wanted to touch on the at&t and t-mobile dealment last month verizon's ceo was speaking at an investors' conference and said that the at&t/t-mobile transaction had to occur because of the lack of spectrum on the market and that it was almost gravity that was pushing the two company together. so is that, is verizon kind of supporting the deal, or i know that he has said you're not taking a position. but that certainly seems like you're at least not opposing it. >> guest: i think what we are not opposing it, we are not supporting it, we are staying out of it, so to speak.

we're trying to stay neutral. i think what lowell -- i know what lowell mcadam was, the point he was making was this. what drove is need for the u.s. government to address the spectrum issue just as we talked about earlier, congress needs to do something in order to make more spectrum available. and companies recognize there will be a great need for spectrum, and so it was just another sign that more spectrum is needed. and that was a factor that drove the at&t/t-mobile transaction. >> host: and given that the department of justice has sued to block that deal, what kind -- if they are successful in that, what kind of implications does that have for the overall industry going forward which does need more spectrum, as you said, and needs flexibility in order to acquire that spectrum that it needs?

>> guest: well, it's unclear exactly what the implications would be of the doj or the fcc turning down the transaction. i think that it's safe to say companies will, you know, adapt to the circumstances that are in place. and t mobile, some have observed, is already taking steps in the marketplace to go after the prepaid, lower-cost services and to try to carve out a niche there in anticipation of a potential turndown of the transaction. so companies will adapt to the circumstances. but the overall industry, i think it will highlight the need, however, for congress to act on the spectrum issue and for the fcc to move promptly once congress acts to implement the plan. bottom line, huge consumer demand coming. if you don't increase the spectrum available, the costs of services will inevitably go up, and that's not in anybody's interests. frankly not in the companies' interests, not in the consumers'

interests. >> host: and, kim hart, time for one more question. >> host: i did want to touch on the other lawsuit that verizon is involved with the fcc over data roaming. can you give us an update on the status of that lawsuit? >> guest: this, again, is in large part a jurisdictional issue. the status is before the courts, but we don't, again, have a clear time frame for action by the court. the bottom line is, is that we don't want the fcc to have unlimited authority to regulate in the wireless space, and we are again attempting to con find the -- confine the fcc's authority to the statutory jurisdiction that it has. >> host: and finally, mr. tauke, 15 years ago verizon was, basically, a local telephone company. today it's fios, wireless and some wire line. where are you going to be in ten years? what's the -- what, what's the

path? >> guest: i -- here's the way i would describe it. first, i think we have been a regional and national company, and we are becoming a global company. we already have the most connected global backbone, internet backbone, the premier internet backbone. we also have recently engaged in cloud services, cloud computing services. so those are two of our efforts to move into the global market. secondly, we have had siloed networks, if you will a wireless network, a wire line network, an ip network. we want to have unified platforms to bring to consumers and to businesses so that they can converge their services, if you will. video we say anytime, anywhere, any place. similar for other data services. so i think those are two of the things that you can expect from verizon; growing global and trying to bring to the consumers and to businesses a converged set of communications services. >> host: tom tauke is the

executive vice president for verizon for policy. kim hart is a senior technology reporter at "politico." >> if you missed any of this program with wisen communications executive thomas tauke, you can watch it again tonight. "the communicators" airs each monday evening at 8 p.m. eastern, 5 pacific right here on c-span2. >> just ahead, libya's ambassador to the united states talks about security and educational needs for his people. in a half an hour, we're live as republican presidential candidate herman cain talks about his 9-9-9 tax plan. and later the senate returns at 3 p.m. eastern for a period of general speeches followed by debate and a vote on a judicial nomination.