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and -- edwards. and later, the senate returns at 2 p.m. eastern for general speeches followed later with debate on a vote for the judicial nomination of the 10th circuit court of appeals. >> c-span, created by america's cable companies in 1979, brought to you as a public service by your television provider. >> this week "the communicators" has interviews from the cable show in washington d.c. we'll look at issues facing the cable industry with analyst craig moffett and then learn about the wireless bureau at the federal communications commission with bureau chief milkman. >> host: well, we want to introduce you to craig moffett, managing partner of a group called moffett research. what do you do for a living? >> guest: i cover the equities, the stocks of the cable companies, the satellite

companies and telephone companies. i've just started my own firm. >> host: how did you get into that line of business? >> guest: i was a consultant at the boston consulting group, and i led the telecom practice there. after a short detour in 1999 through 2002, i went back to the telecom world and started writing about the telecom industry and the cable and satellite business. >> host: so when you speak, do people listen? >> guest: i hope so. that's the goal. and, you know, it's funny, i'm probably known better on wall street as a cable and satellite analyst. i still think of myself as a telecom guy having had some 25 years in telecom now. but it's, but there are, obviously, two very closely-related industries, and i think it helps to have a view on both of them. >> host: so when you think about the future of the cable companies as they currently exist, what is the future? >> guest: well, i think the first thing to remember is the cable companies are not media companies. they're infrastructure providers.

that's all they are. they are the digital pipe in and out of the home, and i think for ten years people misunderstood, particularly on wall street, people misunderstood what these companies were. they thought of them as media companies that were subject to all of the vagaries of online distribution and hulu and netflix, and they were perceived to be old media sign -- dinosaurs. that's not what they are. they are infrastructure providers, and they have the best, most advantaged infrastructure at least terrestrially that existed in the vast majority of the country. the capital markets understand that view better, and the stocks have done very, very well. now the question is what do you do for an encore. people understand how good the broadband product is and how strong the digital infrastructure is, but there are genuine challenges facing the business with, particularly with respect to video that going forward the cable operators are going to have to solve. >> host: what are some of those challenges? >> guest: it's a price problem.

you've had in the video industry this blessing of pricing power; that is, that the cable i have and the satellite industry -- industry and the satellite industry have been able to pass along price increases to consumers which is a blessing, but eventually it becomes a curse. you have raised prices now so much that lower income consumers are being squeezed out of the ecosystem. meanwhile, the programmers are raising their prices which from a distributer's point of view is an input cost at a double-digit rate. and perversely the rate of price increases so large that people are being squeezed out of the ecosystem, and yet the content openers, the programmers -- owners, the programmers are responding by saying i'm getting less unit growth, so i have to raise prices even faster. and you're watching the ecosystem blow itself apart from the inside. now, it's in slow motion. it's not, i'm not suggesting

that the ecosystem is going to collapse in a short number of years, but you're watching the foundation of the video ecosystem start to crumble. >> host: and is the time washer situation -- time warner situation an example of that where they're having fewer customers but higher rates and making more per customer? >> guest: well, remember, all the cable companies have been losing market share for years. what's different now is this phenomenon of cord cutting that people have been talking about for ten years, at least empirically didn't show up until the second half of 2010. people started talking about it in the first half of 2003. but in 2010 you, there was a watershed moment that the rate of subscription growth in pay tv dropped below the rate of new household formation. now, new household formation already suppressed by weakness coming out of the great recession. but pay tv penetration growth

was even lower than that, or i should say pay tv subscription agreement was even lower than that, so mathematically you had negative prescription growth. that has accelerated since 2010 to the point that now the pay tv universe is actual contracting in nominal terms. that is, the whole pay tv subscriber basis now contracting at a rate of about three-tenths of a percent per year. that will probably continue to accelerate even if new household formation continues to improve. so you've got a genuine problem here that you're no honger seeing unit growth -- no longer seeing unit growth and, in fact, unit declines. the cable companies' share losses, meanwhile, are moderating, but in the context now of a shrinking pie, so their numbers can't be expected to get much better on the video subscriber side. >> host: is that all because of cord cutting, people going wireless? >> guest: well, the unit growth of the industry, it's cord cutting. and i would suggest it's not the way that people think of cord

cutting in -- i think the stereotype of the cord cutter is some 30-something master of the universe with a terrific computer and access to all the digital content in the world at their fingertips. the reality of the cord cutter is quite different. the reality is a lower income american that may not even have a broadband subscription and is looking at the pay tv subscription as a necessary cost reduction, and they're switching not to the consumption of netflix and hulu and a bunch of online content as much as they are switching back to over-the-air broadcast tv because it's all they can afford. so you're seeing an affordability crisis, not so much a technology revolution. >> host: so, craig moffett, at the end of the day are you bullish, bearish, neutral on cable companies? >> guest: well, the cable companies are really good businesses. for the first time in my experience covering them on wall

street in 11 years, they're actually fully recognized to be good businesses, and the nature of stock picking is that it's not good enough to be good, you have to be better than people expect. and for the first time, i think expectations are more or less in line with these businesses' prospects and at least in the aggregate i think these stocks are probably fairly priced. >> host: when you look at a comcast model whether a broadcaster, distributer, operator, is that a model for the future for other cable companies as well? >> guest: it's not clear. the idea of vertical integration has been a pendulum that swings back and forth. remember, this time warner cable was part of time warner corporation, and they just unwound their digital, their vertical integration just about five years ago. cablevision did the same thing and spun off its content assets in the form of amc, and they've

become a pure play. comcast went in the other direction and vertically integrated. i still think the balance of the industry has moved more away from vertical integration than toward it. now, there are some regulatory complexities that go along with being vertically integrated. comcast operates under consent decree obligations that last for five years post the 2009 or 2010 closing of the deal. and so it's not entirely clear that right now what that vertical integration can get them. a few years from now when their, when those obligations sunset, it may be that we start to see some more innovative ways to put that vertical integration to work, but right now i think most people are in the wait and see mode. >> host: mr. moffett, are the charters, the coxes, the bright houses, the etc. s ready for a wireless world?

are we ready for a wireless world? >> guest: i think it depends what you mean by a wireless world, and there is, there's a lot of fuzziness about the term wireless. when you're using your ipad, something like 80% of the time you're probably using it via wi-fi. that may feel like wireless to you and me, but from an economics perspective, that's actually a wired connection. when you think about wireless in the traditional definition which is macrocellular, macrocellular from an economics point of view has a very hard time competing with terrestrial broadband. and so the -- and, remember, this is not just an issue of speeds, it's an issue of throughput which is in tech know speak -- techno speak, it is a function of not just the connection, but how long the session lasts, session frequency. wireless networks aren't really

designed for people to go on all the time and stay on all the time to do things like streaming video. and so, in fact, the world isn't moving wireless as quickly as people think. wireless devices are capturing more and more of the usage, but a surprising amount of the time those wireless devices are actually connected or tethered to wired, not wireless networks. >> host: how closely do you follow what congress is doing, what the fcc is doing as an analyst? >> guest: very closely. and i think, look, the telecom industry writ large -- and by that i include cable and satellite -- comes from a long history of regulation. personally, i started working with the fcc back when i was a consultant in the late 1980s. and so i think if you come from a background where the divestiture of at&t was a genuinely recent event or the breakup of at&t in the big bang

in 1984 was a genuinely recent event, i think you have a profound appreciation for how important the rules are. and having done this for 20-something years with a lot of that time spent in washington, i think, yes, i have a pretty profound appreciation for the rules. >> host: the net neutrality case currently in the courts, could that adversely affect this world, this cable world? >> guest: absolutely. and in a perhaps counterintuitive way. i think if, in fact, the d.c. circuit overturns the fcc and vacates the open internet order, on first reading, a first reading might be that that would actually be a victory for the network operators. i'm not so sure. i think vacating the open internet order would create a void that i suspect that google and a lot of other internet service providers would step in

to try to fill. and once you create that void and you acknowledge that you don't know how it's going to be filled, it introduces a significant amount of uncertainty. i suspect the cable operators and the network operators in general would probably be better off with the status quo, the dell you know, if you will. than throwing the entire question back up in the air and waiting for it to be reresolved, if you will. >> host: craig moffett, are the googles, apple, netflix, amazon, are they positioned to take a chunk, a good chunk of business away from the cable companies? >> guest: well, i think the short answer is probably not. but remember where we started this discussion. the cable companies are not media companies. they're infrastructure providers. if you understand that they are

the physical layer that is the network layer of -- or in the network parlance the fiscal layer of distribution, none of those other players actually participate at the physical layer. many people, i think, used to use the term there are all these internship pathways e -- alternative pathways emerging into the home, and by that they would mean hulu and netflix and what have you. in fact, those are not alternative pathways into the home, those are alternative aggregations of content. and i think you have to be precise in thinking separately about the aggregation layer and the physical layer. the physical layer where the cable operators compete is not a layer where they see google that is outside of the google fiber project which is still relatively small. it's not a layer where they see google or apple or amazon. >> host: what is the aerial

technology bring to this marketplace? >> guest: it remains to be seen. technologically, i think,aerio is simply another way to do over the air broadcast tv. ironically, it's not free. they're still charging customers for an experience that at least in theory they could get with an over-the-air antenna. now, they add to that dvr and a lot of interesting functionality to it. it remains to be seen how the courts decide between where the second circuit has come out so far and where the ninth circuit has come out on its peer, aerio killer and how that potential, those two potentially different readings will end up getting resolved whether et has to go to the -- it has to go to the supreme court will determine the legality of aerio. but from a user experience and technology perspective, it's an

interesting design not so much because of what gets all the press about the an 9/11 thats and the way that -- antennas and the way that they have worked around the rules to comply with the cablevision ruling, but i think more importantly it's a very interesting test of consumer appetite for paying $7 or $8 a month for an online streaming version of broadcast channels that they can get free over the air for $8. sorry, for the cost of an antenna, i mean. >>st so finally, craig moffett, when you think about the future of tv, what comes to mind? >> guest: well, use the phrase the future of tv, and i don't know whether the is -- whether tv is the right phrase anymore. it's the future of video consumption. and i suspect that the old adage in technology is everything changes less in five years and more in ten than you would ever

expect. five years from now i think we're still going to be looking at a world that is dominated by the traditional pay tv packages. you know, people have waited for years to see the pay tv package blow apart, and i think in some ways that was almost, that required a willful ignorance of the economics of the ecosystem to believe that that was going to happen anytime soon. it's start starting to happen though. you're starting to see rogues around the edges not through some seismic change in the business model or technology, but through the leakage of people out of the system at a very slow but accumulating rate. over ten years that will be a very large audience that the programmers and the entertainment industry will have to address and have to serve, and i think you're somewhere in that 5-10 year range where things really start to accelerate, and the traditional bundle starts to come apart. >> host: and we've been talking with craig moffett, managing partner of moffett research.

this is "the communicators" on c-span. >> host: and now joining us here at the cable show in washington, d.c. is ruth milkman who is the wireless telecommunications bureau chief at the fcc. ms. milkman, what do you do? what's the wireless bureau? >> guest: well, i run the wireless bureau which is about 200 people. we do all the licensing of the various wireless services. so everything from your cell phone service to amateur radio to aviation and private land mobile services like those that are used by taxis. we oversee about two million licenses. so that's one of our main functions. >> host: are you also responsible for, like, cell phone tower placement and licensing of that? >> guest: we're responsible for antenna registration and for making sure that the notifications that are necessary to comply with the environmental laws and the historic preservation laws are complied

with, and we also work a lot with our state and local counterparts who, as you know, have a lot to do with the zoning regulations that dictate where cell towers can be placed. >> host: when was the wireless bureau created? >> guest: i think it was created in about 1995 around the time of the first pcs auctions, the first wireless auctions. >> host: is your, because of today's technology, is your portfolio growing? >> guest: um, certainly the size of the industry that we regulate is growing. there are now more mobile devices than there are people in the united states, and the revenues and networks and investment of the wireless industry, the commercial wireless industry keeps growing. we also have people thinking of more and more ways to use wireless services whether it's unlicensed devices like your

wi-fi device or your baby monitor or anything like that. >> host: what do you do with that unlicensed spectrum or that unlicensed wireless device? do you have regulations at all that go with that? >> guest: right. so i've got a counterpart part of the fcc organization, the office of engineering and technology, that is in charge of equipment authorization. and they're the ones that mostly deal with the unlicensed devices. and they make sure that the devices are certified so that they don't interfere with any other users of the spectrum. >> host: what's one of the issues in front of the wireless bureau right now? >> guest: well, bill might have mentioned this earlier, but one of the big ones is the broadcast incentive auction. so we are trying to set up an opportunity for broadcasters to turn in some of their spectrum rights if they choose to to decide to channel share or to move to a different part of the

spectrum. and in return get a part of the auction proceeds as we rearrange the spectrum, turn around and sell it to the wireless companies for flexible use which could be mobile broadband. >> host: so what's your bureau's part of that? >> guest: so we've got two parts of it. one is to figure out what the spectrum looks like once it's rearranged for the wireless use. so what we call this a band plan, what size, what amount of frequency, what are the geographic areas, how is it arranged. and we're also the bureau that's responsible for auctions. so auctioning everything from paging licenses to cell phone licenses and also to fm construction permits. this'll be the first time that we've ever offered money to a wireless licenseee, but it won't be the first time we've run a

reverse auction. >> host: really? >> guest: yes. there's two types right now. one is in the universal service fund context. doesn't have anything to do with wireless at all. but it's a way of applying competition to make sure that we're efficiently distributing universal service fund monies. so last fall in september of 2012 we ran an auction for something we called a mobility fund in which different companies, wireless companies in this case, were bidding for money for universal service fund support that they would need in order to build out mobile broadband services in their communities east to upgrade -- either to upgrade existing networks so they could provide broadband or to expand to new areas. that's the only reverse auction we run. the incentive auction is going to be more complicated because

we need to both run a reverse auction and allow the broadcasters to turn in spectrum rights, and then we have to run the forward auction to license out that spectrum, see how much we get. >> host: ruth milkman, do you think you're on time, on schedule to do this in 2014? >> guest: so far things are looking good -- >> host: even with three commissioners? >> guest: you know, there's a lot of work that has to be done by the staff, and we're working on that right now. and then when the time comes, we'll be making recommendations to the commissioners, and they'll vote on an order. >> host: maybe that makes your job easier just to have three commissioners instead of five. >> guest: i will not commenten commenten -- comment on that. [laughter] >> host: less meetings at least. what's another issue confronting your bureau right now. >> guest: whether we can remove barriers to deployment. you mentioned cell phone towers and, of course, as more and more people use mobile broadband, we need more capacity. that means we need more spectrum. but often carriers also need to

upgrade and expand their networks. whether that's building new towers or adding new equipment to existing towers or moving to smaller cell, something they call small cells that is antennas that are closer together and cover a shorter range of areas. so there are a number of things that we think we can do to make infrastructure deployment go more smoothly and more quickly, and so we're also work withing on a rulemaking -- working on a rulemaking to look at those issues. >> host: ruth milkman, what's your message here to the cable show, to the cable companies? why are you attending this show? >> guest: we are so excited at the announcement of the cable industry to do the 115 million hot spots, and i think that almost all networks these days are a combination of wire line and wireless networks.

and it doesn't depend, doesn't matter what the technology is, all these companies are out there to get good service to their customers, and that's what we're interested in as well. >> host: you're a lawyer by training. >> guest: i am. >> host: how did you get into the telecom field? >> guest: when i was in law school, i had worked on newspapers in high school and ran my -- sorry, law school newspaper, and i thought i would be interested in media issues, and i came to the fcc thinking that i wanted to work on broadcast issues a at the time. this was in the early 1980s. and somebody turned me on to telecom, and i thought it was so fascinating that i kept on doing it. >> host: ruth milkman, glad we had the chance to introduce you to her. she is the bureau chief of the wireless telecommunications bureau at the fcc. thanks for your time this afternoon. >> guest: thank you. >> c-span, created by america's cable companies in 1979 brought to you as a public service by

your television provider. >> coming up next, a look at new efforts to update weather forecasting technology with senate appropriations committee chairman barbara mikulski and commerce secretary penny pritzker. then live remarks on the future of civil space exploration with u.s. representative donna edwards. she's the senior democrat of the house science, space and technology subcommittee. and later the senate returns at 2 p.m. from its weeklong july 4th recess for a period of general speeches followed with debate and vote on a judicial nomination to the u.s. circuit court of appeals. >> also today on the c-span networks, health care analysts speak before a house subcommittee to discuss the current medicaid system. they'll discuss their ideas for change and how implementation of the affordable care act could expand the program. you can watch this hearing live at 4 p.m. eastern over on

c-span3. >> be now, a look at updating weather forecasting technology. speakers include senate appropriations committee chairman barbara my mikulski of maryland and commerce secretary penny pritzker. they spoke with reporters after recently touring the national center for weather and climate prediction. this is about 35 minutes. [inaudible conversations] >> okay. good morning. i'm dr. louis, i'm the director of the national weather service, and first i want to welcome you to the noaa center for weather and climate prediction. i'm thrilled that this new world class forecasting facility can host such a visit, and just to

etch size, this is the -- emphasize, this is the central core of the national weather service. essentially, this is where what you read, see and hear about weather, climate and water begins. it all starts in this building. it doesn't end here, but it all starts here for the larger enterprise. we're here to showcase how the national weather service provides the foundation for the weather enterprise and works towards attaining and building a weather-ready nation. and joining me today we have maryland senator barbara mikulski, the newly-sworn-in commerce secretary, penny pritzker, the acting noaa administrator kathryn sullivan and brian norcross. thank you all for being here. i'd like to start this panel discussion by saying just how excited i am for changes that are about to take place in the national weather service and what it means to our protecting life and property across the

entire country. we are about to begin a multiyear, multiphase series of remarkable upgrades to our supercomputers beginning with a threefold increase in computing power by mid july of this year and a tenfold increase by the end of calendar year 2014. and we'll have even greater advances beyond that. we'll be running higher resolution models across the whole spectrum producing more accurate forecasts and warnings across the country. and be with more computing power and more sophisticated models, decision makers across the country will now have more dependable information provided earlier to convey potential threats. while i could discuss the game-changing advancements all day, i will be happy to take questions later. for now, without further ado, it's my privilege to welcome secretary pritzker. >> thank you.

thank you, doctor. it's a great, it was great to tour noaa's center for weather and climate prediction and to meet our team of experts. i'm pleased, this is my first of several stops to commerce department facilities in the region. it's a particular honor to be here with chairwoman mikulski, someone who i deeply admire for her longstanding service to congress. the people of maryland, indeed, are very fortunate to have you representing them in washington. the name of this facility says it all, predicting the weather and climate is essential to protect lives and property. and to strengthen our country. every day noaa and the national weather service scientists and meteorologists analyze billions of pieces of data. finish they issue highly-accurate forecasts that are essential information for each of us and for our businesses. w