>> on issues impacting the industr. after that, vice president biden at a conference on creativity and innovation and the role they play in the economy. then live coverage of remarks by attorney general eric holder who's speaking at a symposium on reducing crime hosted by the national association of attorneys general. and later, the senate returns at 2 p.m. eastern with general speeches followed by roll call votes on nominations for the u.s. circuit court and the office of chief of protocol. >> c-span, created by america's

cable companies 35 years ago and brought to you as a public service by your local cable or satellite provider. >> host: and from time to time on "the communicators" we like to talk to some of the telecommunications associations based here in washington, discover what their public policy concerns are. joining us this week is jot carpenter who is the vice president of governmental affairs for ctia, the wireless association. mr. carpenter, what is ctia? >> guest: ctia is, actually, at this point an orphan acronym. ctia is the trade association that represents the wireless industry. once upon a time, it was the cellular telecommunications industry association, then it became the cellular telecommunications and internet association. and then as the industry changed, we said instead of trying to change the name, we'd just become the wireless association. we're proud to represent the wireless ecosystem in its

entirety from the carriers, manufacturers, hand seth vendors, the integrators and the app developers. >> host: so what are some of the companies you represent directly? >> guest: everybody from at&t, verizon, t-mobile on the large carrier end down to bluegrass cellular and independent companies like that. network equipment companies like erickson, alcatel-lucent, handset vendors like apple and samsung and companies that stand behind them and provide things like insurance services, network integration services and so on. >> host: well, given that wide swath of the telecommunications world that you represent, sometimes their interests aren't the same, are they? >> guest: they're not. sometimes my best lobbying is getting permission to leave the office. [laughter] we spend a lot of time trying to work with our members to identify where there are issues of common interest, and that's where we go to work. it's primarily around spectrum policy, tax policy, regulatory

policy, where they tend to have common interests among members and where the members diverge, we sit on the sidelines and watch. >> host: well, joining our conversation to talk about some of those issues is a managing editor at bloomberg bna, paul barbagallo. >> hi, jot. >> guest: morning. >> guest: so one of the issues ctia has been involved with for many years is, as you noted, spectrum policy. right now the fcc is preparing for two major spectrum auctions, is the aws3 auction later this year and the broadcast incentive auction in 2015. given the recent data consumption curves, americans' insatiable appetite for mobile broadband, will these two auctions taken together satisfy demand by carriers for more spectrum? >> guest: they will help. if you go back to when the fcc released the national broadband plan in 2010, they called for 300 megahertz of mobile spectrum

over five years and 500 megahertz of spectrum over ten years. these two auctions taken together should represent a very significant step toward those goals, a very nice down payment, if you will, but probably don't get us all the way to where we need to be. the auction that'll happen this fall, the aws3 auction, will bring 65 megahertz of spectrum to market, and the incentive auction -- a first of its kind reverse auction -- will bring additional spectrum next year, but we don't know yet how much. if we think sort of optimistically, something in the 84 megahertz range. you take those two auctions together plus the recently-concluded h block auction, and you're halfway to that 300 megahertz goal for licensed mobile service. so it's a very significant step, but it's probably not the end of the work that needs to be dope. >> and in 2010 ctia estimated that the mobile carriers would need about 800 megahertz of

spectrum before 2020 just to keep up. >> guest: right. >> is that number still accurate? because as i read the recent studies from cisco and others, the, you know, demand curves are just ever increasing. so is 800 still a number that is accurate? >> guest: we think it's still a good goal. working, again, from the broadband plan, if you take that 150-ish number from aws3, the h block, you need to figure out what comes next, that 2018, 2020 tranche, and the work to identify that spectrum needs to start right now. you referenced the sis owe pro-- cisco projections. they are staggering. cisco projects that between now and 2018 the demand for mobile wireless bandwidth will increase eightfold. if you thought traffic in washington was going to increase eightfold between now and five years from now, you'd say we

need some new roads. well, we face that same problem, we need more spectrum. the auctions will help. additional infrastructure investment will help. new technology will help. but we probably also ought to be working at figuring out what that next tranche is after the d-tv or the incentive auction. >> host: what do you think could be that next step? >> guest: well, i think it's going to be a challenge in the sense that there's no prairie out there, right? there's no virgin swath that the fcc or the ntia can say, hey, go park in this band over there. so we'll have to look at a combination of repurposing commercial spectrum and potentially repurposing federal spectrum as well. there are a huge number of federal users that are on old systems that are not perhaps as efficient as they could be. moving those federal users to new, more efficient technology may render a spectrum dividend that could be then repurposed for commercial use, sold at auction so it not only generates an opportunity for the

commercial sector to gain access to spectrum that it badly needs, but it generates an opportunity for the government to recognize revenue. similarly in the commercial sector, looking at potentially smoothing the secondary market approval process so that you can take spectrum that's in the hands of somebody who's perhaps not using it or using it as fully as it could be used and move it more easily, more quickly into the hands of those that would value it and want to put it to a higher, better use. >> host: such as whom? >> guest: well, potentially our members. i think our guys are very interested in having an effective secondary market, so if they can identify another license holder that has spectrum that would fit with their portfolio, they have an easy path to get that into their hands. we don't mind that there's a regulatory approval process, but it ought to be speedy, predictable and as short as possible. >> in an event last week, deputy federal chief technology officer tom powers said that the p-cast

report from july 2012 -- and that's president's council of advisers in science and technology -- their report has led to a, quote, fundamental rethinking of government's approach to spectrum. do you agree, and what are your views on how the fcc and the ntia have responded to this report? one of the big recommendations was to open up the airwaves to more sharing. >> guest: i i think there's going to be continued conversation around sharing, but what i don't want to see happen is conversation about sharing crowd out a conversation about clearing. i think, ultimately, the answer is to have both, to clear spectrum whenever that's possible. we think clearing is the optimal outcome, the gold standard for ctia's members is cleared, internationally-harmonized spectrum. and where that can be achieved, we think that ought to be the goal.

we have an auction mechanism that over 20 years has proven to work very, very well. we ought to continue to go down that path wherever and whenever possible. but to the extent that it's not possible to clear spectrum, we can look at sharing opportunities. there are a multitude of kinds of sharing. some are much easier to accomplish than others. geographic sharing is something that we do today, and we can look at it in the future as a way to work with federal users who may have a band that they occupy, but they only use in a limited part of the u.s. geography, let the commercial sector use it where the government's not. temporal sharing where maybe the military uses a band, but they train in it a month or two a year, and they don't use it the rest of the time. well, could we use it when they're not using it? i think those are sharing examples that can work for the industry. i think what's more challenging and where mr. power and others in the administration have spent a little more time, perhaps, than we wish they had is on

cognitive sharing, the idea that you would frequency hop on a realtime basis. it sounds neat, it will open up potentially lots of opportunities. the problem is there's no commercially-scaleable available technology today that does that. and so as our guys go out and think about how to provide world class service to their consumers, the idea that they won't be in control fully of their network or their spectrum holdings is troubling. we don't think that's something around which you can build a business today. could you in five years? ten years? fifteen years? perhaps. but until we get there, let's focus on the things that we know work like clearing and the other sharing examples that i shared earlier. >> do you have any hope for the fcc's efforts to open up the 3.5 gigahertz band for more innovative uses? >> guest: we do. while our focus has been on clearing and particularly clearing below three gigahertz which is the sweet spot for

mobility, 3.5 offers an interesting opportunity for small cell technology, and there'll be sort of tiered access in that space. a number of our members have been very active in the proceeding, and so we're very interested to see the commission sort of drive that home. there's been good participation among our members from both the carriers and the vendor community, and we think that there's real promise there. that may be a good sharing example, if you will. >> host: at the national, so of broadcasters meeting in april, mr. carpenter, gordon smith, the head of the nab, said that ours is the only industry the a spectrum auction can actually harm, and it's an open question whether the fcc has balanced the aims of freeing up more spectrum and protecting the broadcasters. >> guest: well, it is an open question in the sense that the commission hasn't completed its rulemaking, and so we're all waiting just like mr. smith's members are waiting, our members are waiting to see what kind of

rules the commission's going to put forward. i don't think there's a deliberate attempt on the part of the commission to injure the broadcast industry. the statute is structured in a way where the broadcasters' participation is voluntary. no broadcaster has to participate. for those who want to participate, there are going to probably be several ways in which they can do that. they can choose to surrender their license and have it sold at auction and exit the business or move to an internet-based delivery mechanism for their content. they can channel share. and we just finished a pilot project in los angeles where we worked with two broadcasters, one commercial and one public, to demonstrate the validity of the channel-sharing concept. we're really pleased with the results of that trial. we think it will potentially demonstrate to a large swath of the broadcast community the viability of the channel of sharing option so that -- channel-sharing option so that they can realize some benefit from the auction even if they choose not to exit the market. and i think there's real

potential there. so between the fact that the rules aren't written, and it's not clear yet which broadcasters are going to participate, i understand senator smith's concerns, but i think he ought to withhold final judgment until he sees what the rules are and he hears from his own members and others in the broadcast industry what their reaction to the order might be. >> host: paul barbagallo. >> and as you noted, jot, ctia undertook a study recently in which two broadcast stations shared the same six megahertz channel. and the results were quite positive. for broadcasters. and quite clearly, it showed that broadcasters can share and, certainly, hd. what do you see as the resistance now potentially for broadcasters sharing? is it based on the results of the study? is it financial in nature only? or is, or are there some other

issues that -- >> guest: so, paul, it's a good question, but it's ard to generalize in the sense -- hard to generalize in the sense that every market is a little different, each broadcast portfolio might look a little difference. but in general, you know, you'll have some broadcasters who just say, look, the incentive auction is not for us. we view our long-term business as being in the broadcast business. it's where we've been, it's where we are, it's where we'll be. and our expectation always has been there'll be a subset that just choose not to participate under any suckers. any circumstances. but we do think for some independent stations, potentially some public stations that are chronically challenged on the funding side the ability to channel share and realize potentially significant infusion of capital into the business and not suffer any degradation of their signal, no impact on their consumers, their viewers is presidentially very attractive. and so that channel-sharing pilot that we held in los angeles demonstrated to us you can support multiple hd signals,

up to three on one six megahertz swath, you can do two and four standard definition signals, you can do one hd and up to seven standard definition signals. so depending on what kind>p@@@@h broadcasters are participating, what kind of programming they're offering to end users, it gives them a lot of options. given that the incentive auction is by statute -- the broadcast incentive auction -- one-time deal, i think there's a lot of reason for them to think about participating depending on what kind of rule the commission structures. they may be able to put their license in it doesn't hit the right financial there are hold, they don't have to sell, they don't have to share. but it gives them options to think about moving forward. >> host: jot carpenter, with the potential of new net neutrality rules coming on line via the fcc or standards, i should say i guess, should those apply to the wireless industry as well?

>> guest: peter, i don't think so. the old rules recognized something that we thought was very important which is that wireless is different. and so the rules that were struck down by the court had always contemplated that while wireless would be subject to the same sort of transparency obligations that other broadband providers were, the unique nature of the wireless business, the fact that it's not only competitive, but it has a fundamentally different architecture, shared architecture, more limited bandwidth necessitated different treatment of wireless. so we weren't subject to sort of nondiscrimination obligations that applied on the wire line side. now that the commission is in a position after the d.c. circuit's decision to go back and take a fresh look at those things, we hope they'll continue to recognize that wireless is, in fact, different. not only is it different in terms of the bandwidth it can offer and the architecture of the network, it's different in the sense that it's robustly

competitive. and so carriers do not have a market-based incentive to do anything other than deliver an open, positive internet experience to their end users, because if you don't like what you're getting from carrier a, it's not very hard to move to carrier b or carrier c or carrier d. and that much more than a rule is what's going to drive consumers to have a positive experience. carriers have no incentive to discriminate or throttle traffic in a way that harms consumers or internet content providers. >> and, jot, as you know, the fcc has not only been busy setting up these spectrum auctions for the future, but they've also been working to open up the airwaves for unlicensed wi-fi use. and ten years ago many people thought that wi-fi would be, you know, a great competitor to the licensed wireless carriers, that it would pose this great competitive threat. but carriers have been

increasingly using wi-fi to offload their traffic. given that this is a very clear position of the fcc that unlicensed and licensed should be a two-pronged approach to spectrum policy, how do carriers view wi-fi? >> guest: i think they view it as a critical component in the spectrum portfolio that they use to provide service. i think, paul, you hit it on the head. ten years ago it was a different view. ten years ago it was very much the view that there was a licensed crowd, and there was an unlicensed crowd, and never should the two meet or mix. there's been a real evolution in thinking over the last decade. carriers see wi-fi as an integral part of their strategy to manage their licensed services. they want to get spectrum back into service as quickly as possible, so the faster you can offload traffic -- including by using wi-fi -- the better off you're going to be. and so we look at that recent order from the fcc, and we absolutely applaud what the

commission did. it's a great example of unlicensed in the right place. the five gigahertz band is not a place that's hospitable to licensed mobile service, provocation characteristics of the band are really not ideal for the kinds of things we do on the licensed side. but they're ideal for unlicensed. so as a complement to licensed service ors it's really very helpful to have additional unlicensed spectrum available, sort of a classic washington thing, right? you want to get two people fighting, and you sit back and watch. so there are a lot of people who want to stir the pot by saying it's licensed or unlicensed. well, no, it's actually both. and our concern is it's simply each in its proper place where we can clear and provide opportunities below three gigahertz for licensed service. we think that makes the most sense. above three we probably think you ought to be looking at unlicensed. and over time as technology evolves that demarcation point may slide a little, but in general what we want is to have access to both. and we go back to the broadband

plan, we talked about 300 for mobile service, presumably licensed with, i think, the delta between the 300 and the 500 really being in the unlicensed space. we're very happy to have both. >> and with the new wi-fi standard coming online and this tranche of airwaves holding enormous potential for wi-fi applications, 5.1 gigahertz band, is there a fear that wi-fi can pose a competitive threat to licensed spectrum given the propagation characteristics, given the massive amounts of spectrum now coming online and made available to the cable operators, for example? comcast is reported to be launching a wi-fi wireless service that would compete against the at&ts and verizons. is this viable from a competitive standpoint? >> guest: we'll see. you know, this is an open, vibrantly competitive market,

and if there's somebody out there who's got a new idea they want to try to bring to market, come on in. the water's fine. the more the merrier. we would welcome them, and we'll see how it dose. >> host: jot carpenter, prior to becoming vice president of ctia served as vice president of governmental affairs for at&t. he also served as a legislative assistant for congressman mike oxley, republican of ohio, and he was on the energy and commerce committee, wasn't he? >> guest: he was at the time, yes. that's, in fact, how i got involved in telecom. it's not something i had ever thought about doing before i came to washington, but as you know, you go to the hill, and they give you ten things to do. and if you're really lucky, a couple of them are fascinating. i was lucky that one of the things they asked me to help on was telecom. i found out sort of once i rolled my sleeves up and got into it was this was really neat work. there was a lot going on here that was very central to the health of the economy, it was cutting edge. it was a great opportunity, and

i'm eternally grateful to him and to his chief of staff who hired me for giving me the opportunity. >> host: about 3.8 million jobs in the u.s. are directly related to the wireless industry, about 2.6% of the employment picture in the u.s. 146 billion added to the gdp via the wireless industry. mr. carpenter, when it comes to the nsa and phone records, who should be holding those records? >> guest: it's a tough question. our members' view has been that they don't want to have to hold those records for any longer than they have a need to for their own business purposes. if the government happens to need something while the company's holding it for its own business purposes and they bring the right kind of court order, our companies have a history of complying with those court orders. we don't view it necessarily as our role to get between the government and the civil liberties community on what the standard ought to be for that. if you bring us the right order

from a court, we'll comply. but we'd very much not like to be in the data retention business for any longer than is necessary for general business purposes. we think that raises a slew of cybersecurity and potential privacy concerns, and it's really not a space the industry wants to be cast. >> host: mr. barbagallo. >> another important issue to ctia, jot, is wireless taxes. >> guest: uh-huh. >> what are your views on the state of play on the hill with respect to wireless taxes right now. >> guest: well, there are a multitude of projects going on that we hope to get done this year, and whether they get done as individual bills or ultimately as one big bill is still anybody's guess, and i guess i don't really care as long as they all get done, but we're very interested in seeing, first and foremost, a permanent extension of the internet tax freedom act, mother to have yum on internet access -- mother to have yum on internet access taxation. that prevents not only end user taxes on internet access, but also on preventing multiple and

discriminatory on internet commerce. that moratorium expires on the 1st of november and needs to be extended. it's been in place since 1998. we hi it's been an enormous success and helped to drive broadband penetration across the country and certainly taxing the internet is not going to help drive penetration or adoption. we'd like to get congress to act on that. simply, there's a tax moratorium that proposes a timeout on new discriminatory taxes on wireless service. that's something we think is long overdue. the general sales tax rate is nationally about 7%. it varies by state. some states it's higher, some states it's lower. but on average, about 7 president. the average tax -- 7%. the average tax on a wireless bill is 17%. that makes no sense. in an information-driven economy, why we would tax a critical information input at twice the rate of other goods

and services makes absolutely no sense other than we're still lugging around a tax system that was designed pack in the days of ma bell. and back in the days of ma bell, taxing of thtelephone didn't really matter because you didn't have an alternative, it was a very efficient way for government to raise money, right? nickel here, nickel there. bell system had a billing relationship with everybody. that got grafted onto the wireless system, and we've been carries it around for 20 years. and the thought initially was, that's okay. only rich people have wireless phobes. we're in a place now where there's 330 million accounts in america. certainly not true it's the province of the wealthy anymore, and taxing that service at twice the rate of other goods and services really doesn't make sense. beyond that, a couple of other things we're working on in the tax space, digital goods and services tax fairness act is intended to provide a template under which states get some guidance about how they tax digital goods. so if you have a download from a

company in california and it transits a server in oklahoma on its way to me in virginia, who gets to tack that transaction? -- tax that transaction? the answer can't be all four jurisdictions. it ought to be one, and the digital goods bill aims to provide some clarity around that question. and then finally, corporate tax reform, very important to our members if you invest $25, $30 billion a year in the network, depreciation schedules are really important for our vendors, the r&d credit's very important. so getting some long-term answers about how those issues are going to be treated. and then ultimately, trying to reform the tax system to get the rate down to where we're internationally competitive is important. that probably doesn't happen this year. but we're starting that conversation, and we want to see it happen sooner rather than later. >> host: jot carpenter, a lot of the regulation action is done at the state level, isn't it, rather than the federal? is.

>> guest: some. now, we're a little different than the wire line industry in that we're, thankfully, fairly lightly regulated. there are some limits on what the states can do, but certainly my colleague, jamie hastings, spends a lot of time in the airports and state capitols and would tell you the states are doing plenty of things around our business. in general, we prefer that if we're going to have regulation, it be done once at the federal level. it's easier to implement if you're a carrier making a national service offering, you want to be able to your plan once. you want to have one advertising campaign. you don't want to have a different rate for service in each state. that complicates things and, ultimately, hurts consumers. but what's really important is we think in a vibrantly competitive industry you don't need a lot of regulation. the fact of the matter is, companies keep each other honest. they bludgeon each other pretty aggressively in the marketplace to win business, and i think the last six months have been great evidence of that as you've seen a slew of new promotions come

out, all of which have been to the benefit of the consumer. you've never had more choice among plans in the marketplace. you've never had more choice of handsets. there's really something for everybody out there. and to me, there's not a lot for the regulator to do; provide spectrum, provide stability and let the market work. >> host: 40% of homes now do not have wireline telephones. >> guest: that's right. >> host: and that's growing. at some point will the fcc, congress consider wireless to be common carrier? >> guest: well, wireless to the extent that it provides voice service is a common carrier today. we're treated differently in the broadband space, but that's consistent with the way that the wire line broadband offerings are treated. you raise an interesting question though, at what point do we become a replacement for the wire line network. i think consumers are voting every day, and there is a significant tranche of the

population that has said i don't have real need to have a wire line device. i think if you look at the population under 30, many of them never have a relationship with their local wire line company. they see the wireless device as all they need. and that may be true in the broadband space as well. you see a number of folks who use the wireless device as their onramp to the internet. they don't have a pc or wire line broadband connection in the home. and you see them on cord cutters, an increasing number of people watching video on their mobile device as well. it may not be the phone, it may be a tablet. but the mobile platform is the platform of choice for a growing number of people, and we think that's a really exciting thing for us. it says something really good about our future. >> host: jot carpenter is vice president for governmental affairs at ctia, and paul barbagallo is a managing editor at bloomberg bna. this is "the communicators."