department of justice adopted the robust release it shouldn't be approved. to begin with it's important to realize comcast is more than the largest pay-tv provider. it's also a very large programmers through its ownership of the television network and the owned and operated stations with 13 regional sports networks and many popular cable networks. time warner cable is a very large operator in a large programmer for its ownership and/or its control of 16 regional sports networks including those in new york and los angeles. ..

is noon significant concerns not present in comcast's previous deal. regarding the first component by merging its programming with time warner cable's regional sports networks and selling them in a bundle comcast will gain greater bargaining power against all pay-tv providers in all regions where time warner cable's regional sports networks are carried. it will be severe in new york and los angeles where there is an nbc television station and must have time warner regional sports network. all pay-tv providers and consumers in the market will be affected by this harm. including many aca members.

comcast will have an incentive to this it vantage pay-tv providers that compete directly with the cable systems acquires. it will do this by either withholding comcast programming during negotiation and passes or demanding higher prices for its programming. however the competitive harm will not be limited to comcast's pay-tv rivals. many of these pay-tv providers obtain programming through the national cable television cooperative nctc, comcast time warner cable will charge them higher prices for its programming and this will harm the 900 paid tv providers paying comcast, time warner cable programming through the buying routes. regarding the third component comcast denies harm a rise from its distribution assets with the time warner cable and charter cable systems it is acquiring because it doesn't compete

locally against them. however this ignores the massive combination will dramatically increase the merged entity's bargaining power over video programmers. the merged entity will have 30% of all pay-tv subscribers nationally. this level of market share has traditionally raised concerns with federal antitrust authorities and have greater me regional market share because of the comcast charter deal. as a result it will be, must have distribution outlet for national and many regional programmers. in the short run it will demand even larger volume discounts than its rivals thereby weakening their competitive position or worse and in the long run comcast time warner cable may leverage its pay-tv industry dominance to increase market share in the video programming industry ultimately reducing the industry's competitiveness too. the final result, higher prices and fewer choices for consumers.

the ftc adopt arbitration conditions designed to ameliorate the first two harms' described in the comcast nbc universal order. requiring comcast time warner cable to abide by the same conditions is insufficient because they are flawed. in particular arbitration remains too expensive for smaller pay tv providers. moreover the conditions completely describe how bargaining agents for smaller pay tv providers could avail themselves of the arbitration conditions. lastly the department of justice and fcc need new remedies for the are rising for combining comcast distribution assets with distribution assets of time warner cable and charter which did not rise in the comcast nbc transaction. in conclusion the doj and fcc have some big decisions ahead. aca look forward to working with congress and the agencies as the

review proceeds to address the transactions and competitive arms. >> thank you, matthew polka. professor hemphill is recognized for your opening statement. >> members of the subcommittee, thank you for the opportunity to testify today about the antitrust implications of this proposed merger. as several members already noted antitrust protection of the dynamic and competitive markets, a number of antitrust concerns have been raised about this merger. these concerns are generally based on mistaken analogies that don't really apply. critics have charged that this merger is just like at&t/t mobile and can't be expected to raise prices to consumers. in fact this merger is nothing like that. you heard this already but it bears emphasis. suppose high want to buy a wireless service where i live in

new york city. i can choose at&t, t mobile and other providers. take one of these away and the remaining firms may be able to raise prices which has the bad effect of squeezing some consumers out of the market. compare that to video service. where i live in west village i can choose among time warner and other options but comcast is not what choice unless i'm willing to move to philadelphia which i currently am not. in fact time warner and cable don't compete anywhere for cable customers. nothing is lost by their combination. critics offer second analogy that the comcast is sort of like the grain buyer, powerful grain buyer acting in a predatory way against farmers. in an agricultural market farmers might find themselves at the whim of the only two grain buyers in town at the two marriage they have an opportunity to reduce purchases in order to press the price.

this merger is nothing like that. in fact programmers, companies like espn are nothing like farmers. when espn sells programming to comcast nothing is use the. espn is free to sell the same programming to other video providers too ended does so to direct tv and on and on. when there is no rivalry in the use of the product this hole buyer strategy, strategy of cutting back on purchases to force the price drop collapses. there's another argument here which is comcast might strike a better bargain thanks to its increased size. that is far from clear. to be sure the stakes are higher for espn because espn loses more revenue with contract negotiations with an enlarged comcast to breakdown but stakes are higher for comcast as well. more customers complain or cancel service.

more as comcast, must have with programmers that it gained special power that way. the third analogy is comcast is just like microsoft. the idea here is netflix and other online video providers will be undermined for their ability to compete with traditional video. this deserves careful attention because we can all agree that preserving innovation and competition from online video is very important but this third analogy seems wrong to me as well. for one thing the cost of foreclosure strategies is quite high. existing protections under the earlier nbc merger conditions for online video extended to time warner which could be thought of as a benefit of the deal. what i do think we see here is not so much foreclosure but an

ongoing fight among powerful firms, to figure out who should pay for the infrastructure that makes possible the dramatic growth in online video and out of those payments should be achieved. thank you again for the opportunity to address these issues and i look forward to your questions. >> thank you, professor. at this time, mr. grunes, i invite you to testify. >> thank you, chairman and vice-chairman and chairman, ranking member, the full committee and ranking member of subcommittee and committee members. i am very happy to be here. i practiced antitrust law for 25 years and about half of that time i was with the antitrust division. comcast and time warner cable say they don't compete for

subscribers, and you have heard that this morning. the fact is comcast and time warner cable to compete. that is what brian roberts, the comcast ceo, told the senate judiciary committee in comcast's last megamerger with nbc universal and mr. roberts was right. the two companies compete in a number of ways. they compete to carry local and regional sports teams and they compete for advertising dollars. mr. chairman, to help illustrate how sports programming in particular would be abused post merger i would ask unanimous consent to submit for the record an article by former bush administration official brad blakeman. the article explains in detail the impact of the merger on sports and sports fans and is

highly relevant here. >> without objection, all the witnesses can introduce the extraneous material and records and end of the record. >> as for cable advertisers, if this merger goes through there are less choices including smaller, local advertisers in your district omega shutout entirely. they have a multitude of choices for how they get broadband. you have heard that today. at an investment conference in 2011, mr. roberts said that comcast had only one broadband competitor. he was talking about fis which was and still is and only about 15% of comcast territories. this merger is very likely

illegal. the parties know it. that is why they are here talking about how they plan to fix it. i am here to tell you what they won't, why is it is illegal and why the fixed doesn't cut it. this time it is different. let's talk about video first, since i think that is the easiest. they want to put together comcast content with time warner cable wires. the antitrust theory here is after the merger, the company will have the ability and incentive to withhold nbc and sports programming from rivals such as satellite companies and other cable that will drive of their competitors and make them less competitive. that is called in put foreclosure in antitrust jargon. is it a radical theory? no. it is right out of the comcast nbc complaint that the antitrust division filed in 2011 but this

time it is worse. now let's talk about even more serious issue of broadband. comcast and time warner cable shares of the broadband market is much higher, we haven't heard the witnesses talk about what those shares are, but by some estimates they are 50% or even more. so what is the problem? symbol. online video distributors like netflix according to the antitrust division are likely to be the best hope for additional video programming competition in comcast and time warner cable territories. if comcast can get ahold of 50% of broadband subscribers through this merger it puts itself into a position to influence how this new form of competition will play out. the antitrust theory here is called customer foreclosure. input for closure, this is

customer foreclosure. keep innovative competitors from being able to connect with their audience or charge them so their costs go up. this is not a radical theory. it was mentioned as a concern in the 2011 comcast nbc complaint. it is very similar to a theory that the division, the antitrust division litigated and won in the d.c. circuit in the microsoft case. same analysis has been applied in other cases where the internet is threatening an old business model. the key point is a legitimate role of antitrust is to keep the pathways for innovation open. there's also a firepower theory which is discussed in written testimony. finally word about remedies. if as i believe the merger is anticompetitive, simply to say no. behavioral remedies don't work

well. professor john polka said they are disastrous. they don't prevent prices from going to. partial divestiture is like shutting subscribers also often failed. in this case where comcast would pick of new york and l.a. and other markets, to keep the most profitable subscribers and the most profitable markets and divest the others that would not restore lost competition, but happy to answer any questions. >> mr. gottsch. >> members of the subcommittee, my name is patrick gottsch. myself and my daughters are sitting right behind me, represent founders and majority shareholders of real media group, owners of our fet, rolled tv, family net and roll radio and sirius sex and family. thank you for the opportunity to

testify about the importance of independent programming and the impact of consolidation from a rural perspective. are ftd is as independent as one can get. after eight years of rejection in december of 2000, finally launched as public interest channel. and in 2002 thanks to congress and the fcc establishing section 3 of the 1992 cable communication pact. the 146st independent program producers associated with it along with viewers and agricultural news. and featured on our channels. the fcc and charlie earthen for having the foresight to get opportunities to give independent channels a chance to exist and prosper.

in 2007, it evolves into a for-profit entity and rural media group was formed. recognized now as one of america's leading independent networks, is ranked recently the most reasonably priced, the recent 2013 independent cable news survey. nielsen rating and distributed in to over 40 million homes on cable and tbs it is the number one channel now for county viewership. number one for time spent dealing for adults 50 plus as the percentage of our overall audience competition. in 2008 it signed a eight year master affiliation agreement with congress following success in nashville, in 2010 comcast lost are s t v on all systems in colorado, new mexico, and worked closely with comcast denver office and invested heavily in its lunch by purchasing billboards, radio ads,

organizing radio remotes and straining comcast telemarketers. the launch was a resounding success with rftv generating a 2.6% live with connect with 15% on all these comcast markets. independents try harder and have to deliver. as you know in january of 2011 the comcast nbc universal merger was approved. comcast has not launched rftv in a single new major market and declined to carry our ph.d. in any markets despite the provisions added to the merger designed to protect them. on august 13th of this year, low costs and over the vehement objections from thousands of comcast customers, they were given only a 30 day notice. comcast dropped rftv on all its cable systems in colorado and new mexico and one day rftv lost

470,000 homes. 43% of its very limited comcast distribution. today rftv has worked diligently to understand the decision and find a solution. the city of pueblo, the state of colorado and even the colorado governor's office mobilized significant efforts to get comcast to reverse its decision and return rfd-tv calfs whirl and western themes programming to the states with strong ties to the western lifestyle. meetings have also been held with the regional denver office -- why was it dropped the queue that is the question everybody has but it seems to be simple. we are not truly independent. rfd-tv enjoys relationships with most other cable operators. china launched rfd-tv on their

system and time warner added rfd-tv to franchises in kentucky? concerns with comcast now taking over this major western city and another rural state should be obvious. in addition to 30 million homes, the choice to access this proven channel and a wall between rural and urban america. comcast does not reverse its recent behavior towards rmg and rfd-tv. to ensure that rural america has a balance of services between rural and urban populations. the information superhighway must go down each and every country road and provide two way communication in order that city and country remain connected. just as it was when the 1893 communications act led to the establishment of our namesake rural free delivery, or rfd-tv. thank you for allowing me not to wear a tie and i look forward to

answering all your questions. >> thank you very much. and you are recognized for the opening statement. >> thank you. ranking member johnson, for the opportunity. and it was about the internet. 15 years ago i had the good fortune and maybe good luck to fund the company on a simple principle that the internet was going to be the only network that mattered, and what was the commodity. technology would allow us to drive down prices forever. those turned out to be correct. was difficult and went through a tough market segment and we have been a good net citizen hoping lead the technology fight and driving down the costs of bandwidth.

comcast, however, has not been quite as good a citizen and is looking to be a worse net citizen going forward if they are allowed to align their network with that of time warner so the internet is based on the idea of free exchange of traffic. one of the mechanisms is appearing. while comcast assigns the consent decree as part of its last merger with nbc universal land said it is not going to interfere with traffic inside of its network. it has been very clever. interferes with traffic before it ends its network. so the internet today has allowed 2.7 million people wirelessly and another billion people wireline to connect to half of the population of the world, exchanges information. the internet is 44,000 networks.

those networks interconnect one of two ways, connectivity from companies such as ours or they connect through the peering connections. comcast does not operating global network. in fact should be buying connectivity to the global internet but used its market scale and scope to extract an unusual concession. it wanted free connectivity hearing to the internet even though it didn't operate a global network. it didn't carry its fair load. because it represented so many customers, backbone operators like cogent and others agreed to pier with them. that wasn't good enough for comcast. comcast continued to increase baskin's series had less choice, they actually started to demand payments 4 connectivity. a larger comcast will demand even greater payments. let me use an example of

netflix. netflix is our largest customer. we are their primary carrier of internet traffic. that buys the connectivity from cogent because we deliver the highest quality at a list price. we have dozens of competitors. we we in business every day by competing, offering below list price and highest quality. netflix wanted to do business with us. but we could not deliver all the traffic. we deliver no traffic, a paying comcast customer doesn't request. when we deliver that traffic, the ports for connections between our network and comcast became full. we went back to comcast and said could you please upgrade these connections? normal pattern of practice we have been doing for years. even though comcast is not

qualified to be a global pier, we will give you free connectivity, allow us to deliver the content at our expense to the customers that you are charging those 20.7 million customers that you collect $30 million a day from. comcast refused. they not only refused cogent but every other major backbone and in doing so, forced netflix, an innovative company, into a corner, they forced netflix to have to go and directly enter into a contract with comcast, pay and higher price for a less robust product. that is not a free market. that is abuse of market power. larger and more combined company would have even more market power. so there are two parties the don't sit in front of this committee today. tens of millions of consumers, i think this committee cares about them and will protect those

consumers, as will the ftc, the justice department and the fcc but there are entrepreneurs and innovators. we today sells service to thousands of providers. i can't predict where the next youtube or netflix will come from. i can tell you their business models are highly dependent on getting inexpensive connectivity and what they're not dependent on is entering into a bilateral agreement, paying a toll to many inefficient operator such as comcast who has not honored the commitments they made to date. why should they in this committee expect them to honor those commitments going forward. thank you very much. >> thank you, dave schaeffer. at this time, dr. labovitz. >> thank you, mr. chairman, ranking members conyers, bachus,

ranking member johnson and members of the subcommittee. i am pleased to be here to discuss the technical issues for your consideration of the proposed comcast/time warner cable merger. at the outset i want you to know the comcast and time warner cable are two of the many companies with whom i company has commercial relationships. the views expressed in my testimony are my own. i am both an academic researcher and commercial vendor. my current company provides network management and analytic solutions for large content companies and consumer internet providers. my career has included roles as a chairman of the principal internet industry engineering association in north america as well as project director of several national science foundation research projects studying internet architecture. i received a ph.d. in the study

of internet architecture from the university of michigan in 1999. in 2010 i collaborated on a large research study of internet traffic to date. earlier this year my company, deepfield along with academic and industry research partners began work on a large-scale follow-up study toward 2010 research. my testimony this morning is largely based on these research efforts. ten years ago the internet was much smaller and looked very different than it does today. early on almost all traffic travels across an internet core consisting of 10 to 12 large national and international internet providers including companies like at&t and level iii. united core connected content providers with many thousands of consumer access networks from a world such as earthlink and a o

l. vis interconnections the tween providers are known as peering. the exchange of internet traffic has largely developed without regulation. today and in the eerily days of the internet service providers such as at&t's sometimes negotiate exchange of internet traffic with other large providers without paying for access or traffic. the industry calls these arrangements settlement free peering. in early internet periods, they paid networks like a o l and in turn those access networks pay larger providers like at&t for connection, transit peering. market forces have transformed core internet connections. these market forces include

consolidation such as google's acquisition of youtube and the internet content advertising revenue, research has documented the accelerating impact of these market forces. internet traffic was once broadly distributed across thousands of companies but by 2009, half of all internet traffic originated in less than 150 large content distribution companies. today, just 30 companies including netflix and google contribute on average less than 1/2 of all internet traffic during prime-time hours. there have also been significant changes to interconnection on a core of the internet in recent years, specifically today there is much more direct interconnection between access networks like verizon and content providers like hulu and google than there were previously. removal of transit provider

called middlemen is because they see greater efficiencies of scale in the economy. a significant degree of vertical integration and blurring the traditional distinctions between companies. content providers and global backbones, cable internet service providers offer wholesale transit, transit internet providers offer content distribution and cloud hosting services. for example level iii is a large transit provider as well as the second-largest content distribution provider. ongoing work found growing diversity and complexity in the internet cybersupply chain. third party infrastructure and services supporting delivery of internet content. websites once came from computers directly owned and managed by the content owners located in tens of thousands of

enterprise machine closets and enterprise data centers around the world. today the majority of internet content leverages one or more multiple third-party content distribution services hosting providers, exchange points or cloud providers. often with many diverse interconnections to networks like comcast to verizon. examples of companies providing the services are identified in my prepared statements. i want my testimony and research findings to provide the technical context of increasingly complex economic and engineering issues associated with internet content delivery and interconnection. if your time and attention, i will be pleased to answer any questions you may have. >> at this time we will proceed under the 5 minute rule with questions in order that each member has sufficient time to ask questions of a large panel,

we expect we 2 rounds of questioning. i will say members who are not members of the subcommittee but members of the whole committee as we start and second rounds, i will yield my time to you because i am told that is the only way we can accomplish that so you have been here the entire hearing so you will commence the second round. i now recognize myself for five minute. david cohen, you stated following your response to a question, my counterpart in the senate, amy klobuchar we have independent networks because we're focus on the consumer. if you have compelling content and can make the case that our consumer wants to watch the content we will carry it.

first, i would ask you if you stand by that statement. secondly, i would caution you, what may be a consumer in philadelphia, what may be a consumer in alabama, an agricultural county in colorado, is a totally different consumer. >> thank you, mr. chairman. i do stand by that statement and i completely acknowledge the second part of what you are saying, we try to assess what customers want in individual local markets so whereas we do centralize negotiation of content deals out of our headquarters in philadelphia there is enormous input from local systems as to what channels and what programming their customers might want to see. to put flesh on the bones of this we think we are if not the

most, one of the most independent programmer friendly distributors in the industry. we kerri 160 independent programming networks, and in the last three years we have negotiated and given expanded distribution for 120 of those networks so we are a company that really does try to find the nichees. most of those networks may not have national distribution but we try to find the nichees of programming that customers in particular are interested in. >> mr. gottsch, has comcast lived up to the stakes? >> the -- >> there we go. >> the 160 programmers that david cohen mentioned for two programmers in the family net channel but that hasn't been the case in the last year and

specifically the last merger, we in fact as i mentioned, in colorado and new mexico and in those states there was not a rate dispute. we were under contract. we have the support of the city of pueblo and the state of colorado and the governor's office in colorado and when it was announced rfd-tv would be removed, we have a lot of customers that were contacting us saying they cannot get rid of comcast or customer service telling them that it was a rate dispute. we invited folks, and deliver their letters and concerns to the denver office. we have seven of these binders, over 4,000 customers asking comcast not to remove us but we were removed in august of 2013. >> it is not just the numbers of

content. i know that with mergers in the radio business birmingham which is an sec football town is getting a lot of hockey news, and we get a lot of soccer which is growing but most people my age don't know what the rules of soccer are. their football, baseball and basketball and so i would say it is a challenge but it is a challenge if you become bigger, you need to be aware. >> i am sympathetic to this argument, i was involved at the time of this decision and in a perfect world, if money was not an issue, and the rfd-tv was the substantial issue, in

albuquerque they're very band with constrained and local teams made a judgment that it was more important for us to add more high-definition channels of popular programming like the smithsonian channel and the food channel, to customers in that market. nothing punitive against rfd-tv. we continue to carry rfd-tv to 700,000 customers including kentucky and nashville. and let's stay focused on the consumer. and if bear important they can switch to dish in those markets. bose kerri rfd-tv. we are not controlling consumer

choice. and the bulk of our base in urban areas of colorado. >> the fear that the rural market gets left out, very sensitive to that. there's still a lot of people but i will let mr. gottsch responds. >> just a brief -- the curious thing here, the question we can get answered, 160 independent channels comcast carried they appear to have taken one of the most popular channels in the colorado and new mexico markets, nielsen ratings are higher than the other 159 channels in many parts. and again, it was the support of local government and the request of colorado that if there was

160 independents isn't there room for one independent channel devoted to world interests which make up 27 million homes. and 20 million comcast is taking over. one channel devoted to rural america is all we are asking for. >> mr. johnson for five minutes. >> thank you, mr. chairman. the minority leader ownership in the video and marketplace, good business, an important societal goal, and helps to expand our

economy, and if contest announced its merger with time warner. it anticipated that the fcc would require it to etna under the 30% limit. for cable-tv systems. and so there was an agreement that has been worked with charter to to sealed the 3.9 million channels or subscribers would be required to get under that 30% benchmark. did comcast, david cohen consider doing smaller transactions with

african-american and hispanic companies? that have given the whole million to charter? >> mr. johnson, and i know you are aware of our commitment as a company to minority participation and ownership as well as access to minority centric programming so this was a significant part of our discussion and remains a significant part of discussion. the problem is there was no way to accomplish the significant sufficiency is and competition and public-interest enhancing efficiencies that we have been able to generate through this three part transaction with charter by dividing systems into smaller pieces and making them available for smaller companies whether they are minority or not minority to be able to bid for them. it was a topic of discussion. we had discussions with numerous minority-owned groups who are

interested in purchasing cable systems and report to you the same the we have reported to them which is we will continue to look for opportunities to create minority ownership in the cable system space. >> what about enabling already existing minority-owned providers to get larger? >> i am running through my mind, don't think it would be appropriate to disclose the various groups we have talked to. i am not sure whether any of them are existing minority owners of cable systems but to the extent we would engage in this kind of process we would obviously not exclude those types of groups from participating. if i can, mr. chairman, i have some credibility speaking to this, four years ago when we

doing the nbc universal transaction, i talked about the company's commitment to minority ownership in the cable channel space. i referenced tv 1 which we create after the acquisition of at&t broadband in which we continue to support, one of the great success stories of a minority-owned channel and nbc universal transaction, we committed to launch eight new minority-owned independent networks over an 8-10 year period, we launched four of those already, two of the african-american know and and two owned by hispanic americans so this is a space where minority ownership of businesses, wealth creation opportunities and conversation shaping opportunities is very important to us as a company. >> thank you. as you know, african-americans view television programming at a more significant levels than the

general population. it will be a disproportionately small amount of programming towards urban and african-american audiences. does comcast carry any african-american controlled and operated networks. are those networks, the basic tier of in every market. >> i am not sure what the basic tier is anymore, but i can tell you the most popular tier is the basic digital tear. we carry 11 african-american known or targeted networks which is the sum of african-american owned or operated networks that we know about. i know only three of them are african american-owned, tv 1, aspire and revolt, we don't

necessarily know whether it these other networks are majority african-american don't, minority, and identify african-american targeted networks and we carry all 11 of them, the most popular digital tear. >> how do you respond to claims that comcast and nbc you blocked certain content providers like univision sports from being carried on your services are run play -- unfairly placed channels and other content providers like bloomberg news because they compete with nbcu channels? >> two very different questions that the answer would be the same to both which is i would deny those charges. i think they are not true. in terms of in terms of in terms of the way we treated bloomberg news the irony of the bloomberg news situation was bloomberg

news, and line up before we owned cnbc so there couldn't have been any discriminatory intent. i don't want to rely on that argument anymore. we had a dispute with bloomberg news that was resolved at the fcc. we repositioned bloomberg news to news neighborhoods as they have requested, and we have resolved that matter entirely. >> all right. would you care to respond to the claim about univision? >> i was worried about the time. >> i was going to go there in my line of questioning. >> we kerri eight networks, univision asked for three networks. we are one of the largest of not largest carrier of hispanic programming. 58 channels.

we will resolve our issues with univision. >> i want to follow up on that. i want to point out i don't want to sound hostile to the merger because i really think the government needs to stay as much out of the business world as possible but i have had some concerns raised by constituents and some interest groups that i have agreed to talk to you guys about. that is the purpose of this hearing to get the stuff on the table. i learned last week that a combined comcast time warner cable will serve 91% of the hispanic households in the u.s. and will be the fought -- top distributor in 19 out of 20 top hispanic marketers. we know you guys don't telemundo , one of the leading providers of spanish-language programming.

along with what mr. johnson was asking what assurances can you give us that you won't discriminate against non comcast nbc universal own programming produced by other countries and you have other procedures in place to prevent that discrimination? >> i should have waited for your follow-up. i could have given a more complete answer. we have not been able to verify those numbers just for the record, but i have observed before in this transaction that sometimes big is bad and i understand that but sometimes big is good and sometimes big is very good. when you have a company like comcast which has this extraordinary commitment to diverse programming but in particular to hispanic and hispanic seemed programming, covering a greater percentage of the hispanic population in the united states is a really good thing. brings that commitment to those communities in the same way we brought it to the current

comcast footprint. so we have a significant commitment to carrying hispanic programming. we carry 58 hispanic or hispanic seemed cable channels currently. we have read transmission consent, long-term reach transmission consent agreement with univision and we carry eight univision networks. >> this kind of follows up on my overall concern about the difficulty for new programmers to break into the market. univision's sportsnet work is perfect example. they are not on your stations the end of the number one spanish-language sports salute argues against being good business to have it on there. you hear mr. gottsch testified that his ratings in markets where he was removed from your cable system were higher than some of the other channels that

you owned. i guess the level of vertical integration, the fact that nbc owns so many would potentially compete. >> let me respond to that. fortunately for us this was one of the most litigated issues that existed in antitrust law and the percentage of the market, a single company can have before there is a risk that can foreclose content to consumers twice. the fcc had extended proceedings to determine what was that percentage in the market? twice they concluded if the cable company had one cable company had more than 30% of the market, there would be an undue risk of that company serving as a bottleneck or exporting improper pricing. twice the d.c. circuit struck that down finding 30%, there was no evidence, a 30% share, a

cable company would control the market. we are coming in below 30% and the answer to the question is any cable channel has more than 70% of the rest of the company to be -- the rest of the country to be able to go after. >> i am running out of time. >> the perception that exists is the program character roles. there are the rules that prevent us from discriminating against a new channel or existing channel in favor of content that we own. that is something that already exists under the law. >> one of the mitigating factors that will gain you support in this is as new technologies are developing and you are getting more competing cable companies, you have fire us competing, google fiber coming in, they are going to be more options in the short term. i am also concerned about the programming. i will use an example from corpus christi where i live.

we have two cable companies, time warner and grande. comcast owns the rights to the astros baseball games. and won't be a lot of incentive for you to sell the rights to carry the astros baseball game for a few cents or a buck a subscriber to grande when you can bring in $100 internet cable phone into -- how are we going to address the issue of fair access to your program? taken to the extreme, nbc and bravo, we are going to jack them up to competing cable companies in the same market? >> i smile only because i wish we had that problem with the regional sportsnet. >> is the astros fault. >> i really wanted to watch the astros. that would be good news for that network. but this is a perfect example of why the fear about our control

of this is overstated. that network is controlled by the two teams, the astros and rockets. we have a minority ownership interest, we manage it. but they control the pricing and net worth and distribution of it but even if that were not true and we were controlling that, that is on the program access so you have the program access rules and i note that under the nbc universal order a small cable company that doesn't like the terms that are being offered actually has a right of arbitration just on that regional sportsnet without any other programs or cable channels bundles with it. >> i see i have run the red light. i have a couple more questions in the second round of questioning for some of the other members of the panel. i will now go to the ranking member of the full committee,

distinguished gentleman from michigan, mr. conyers. >> i thank all the witnesses for their important contributions. i have a strong feeling that we may have to have another hearing on this because of the complexity of the material. i would like to start off just observing mr. hemphill left out the consumer welfare as the key objective of antitrust law. he said the goal of antitrust is to ensure dynamic competition and open markets. but i didn't hear a lot about keeping prices low and choices for the consumer. i would like to turn to mr.

grunes, who said that 30% of the cable market share is not enough to be anti-competitive. but really no court has ruled that 30% is as a rule not enough to be anti-competitive. and vote supreme court has also ruled that 30% of america was a traveling to and toward concentration. and also, what about the 40% control of the broadband internet? how do you see this as some things that we may not overcome if this merger were to go through? >> thank you, ranking member

conyers. two points. first of all, i did not advocate the 30% as not being a problem. the merging parties -- >> mr. cohen did. >> and that point out a couple of things. first of all, judge diane wood of the seventh circuit who is also antitrust division former antitrust division lawyer and chicago professor found that 20% was large enough in the toys r us case depending on the markets. the issue is not simply -- not a subscriber, not a subscriber. when you have the top ten or top 20 markets that gives you power in each of those markets and that is the power we should be concerned about.

in terms of the broadband shares, i am not sure whether it is 40%, 50%, could be as high as 60% but the one thing that i can say is the we have not heard comcast or time-warner cable come in today and say we are going to get those shares down to 30%. talking about the video shares. they haven't said a word about the broadband shares. >> thank you so much. >> if i might just ask, if you don't mind. >> i do mind right now because i am under a very tight -- may be on the second round. >> may be on the second round. >> let me turn to matthew polka. comcast is a cable company and a programmer and that raises a double concern with me because

higher prices and fewer choices, which is what we are concerned about and i think the department of justice is going to take some little while sorting this out. i don't know if it is resolveable to be honest with you. what are your cautionary comments to the committee about this? >> very cautionary. as i mentioned in my opening comments these are three separate mergers they were talking about, not just one horizontal merger because you have the combination of programming assets of comcast and time warner cable. the combination of comcast distribution and other programming assets that could be combined anti-competitive lee and i should know grande communications is a member of hours and is concerned about the nature of this big deal at

prices they will be charged ultimately that there consumers will have to absorb and then the ability of the large company even though it may not be 30% of the market to be able to control land have influence over other programmers. other large media companies that they deal with in terms of what prices are charged to comcast time warner company which ultimately affects the prices of other member companies. ..

has gone 99% over that same period. so we've seen a decline of eight times as much as comcast. secondly, you know, a lot of the conversation here has been around video -- >> could you explain that? i didn't understand his response about the percentages of -- >> wait a minute. [inaudible] >> i know. let him finish and we will get back. >> go ahead spent all trying to into that when we get there. but the ultimate way in which video content can be distributed to consumers is over the internet. so today american consumers use about 300 minutes a day per capita of video, only 15 minutes of that is delivered over the internet.

overtime the cost of publishing the content continues to decline, and if allowed to operate freely, probably somewhere between 220-250 minutes a day will eventually be delivered over the internet. comcast, through its interconnection strategy, is deciding to limit the ability of over the top video because it directly competes with its liberal the program video and gives it an additional control flood over the production of that video. so it's another way to increase price. >> thank you very much. and thank you, mr. chairman. >> we will not go to the gentleman from north carolina for his round of questioning. >> thank you, mr. chairman. i'm sure that my constituents back at home who are time warner customers want to cut right to the chase. so mr. cohen, on my constituents

are time warner customers going to face higher prices for services post merger? >> mr. holding, there's nothing about this transaction that is going to lead to increased prices for consumers. i think there's significant consumer benefits that your constituents will see as result of this transaction, faster internet speeds, more video on demand choices, more free deal -- more free video on demand choices, the ability to watch more content on a streaming basis. inside and outside the home, access to our excellent video platform which is truly a groundbreaking new way of watching television, but there's nothing in this transaction will result in an increase in prices for any time warner cable consumer. >> you said in the past that we

are certainly not promising that customer bills are going to go down or even increase less rapidly. you would still stand by those comments? >> i said that i can't do what i said was, and i've a nasty little habit which i hope no one wants to persuade me to stop of telling the truth. so i was asked a question and i said i can't guarantee that prices are going to go down, and i can't guarantee that they're even going to increase at a lower rate. i think this transaction has the potential to slow the increase in prices because with our additional scale, our additional investment and our ability to gain some purchasing advantages in the set-top box market, maybe be able to move the needle slightly on the programming side. what other benefits we can get as a result of the combined scale of the company, consumers

will see in terms of impact on their bills. and for us, consumers are always front and center. i think consumers are going to be the big winners in this transaction. and in moderation that we can bring to increases in their bills will certainly be one of the benefits that we would love to be able to see. >> mr. schaeffer has made some very direct allegations. and even though the technical aspects of what mr. schaeffer is talking about are a little bit above me, i do get his point very clearly that the combined share of broadband and also the amount of share you haven't -- you have in top markets and so

forth is powerful. so easy to take a minute and respond directly to the allegations that mr. schaeffer has made. >> so thank you for that opportunity. i'm going to try to bring this down to a level that i can understand, which really requires coming up a little too more of a 30,000-foot level. i think there are two different markets here that we need to consider. one is the broadband isp market, what's called the last mile market, our delivery of broadband services to our customers. the second is the market in which mr. schaeffer and cogent functions which is the interconnection market which is the first mile market, if you will. how internet providers, how google and netflix get their content onto the internet so that, onto the internet and into our isp so that our customers can gain access to it. i don't believe, and i'll be interested if professor hemphill agrees with this, that the

market share that we are achieving in the broadband isp market, the last mile market is close to the level that has any impact whatsoever on the first mile market. that market is an intensely competitive market. it's a market with the dozens of network operators, content delivery networks, peering organizations, transit providers. as mr. schaeffer has described, it's a market which he has competed vigorously for 15 years trying to offer the lowest price and the highest quality. it is a market where pricing has dropped 99% over the last 15 years. and as a result of that, and netflix of the world, the googles of the world, the internet content companies, the young man working in his crotch in your district wants to be the next netflix has dozens and dozens of choices at how to get his or its content onto the

internet to enable them to deliver it to our customers. we think that market is functioning extremely well. we don't think that market and the structure of the park is affected at all as a result of this transaction. and that the questions that have come up recently about that market are better look at on an industrywide basis which is exactly what tom wheeler and the fcc has said, that they are prepared to do. if you gave me the invitation, one thing i also want to reply to his description of our netflix transaction. which as far as i know is wholly inaccurate. we did not force netflix to enter into an interconnection deal with us. that was netflix's idea. they came to us. it was their desire given the size of their traffic to cut out the middleman, their words, the

middleman happened to be cogent by the way, and to deal directly with us. and although our agreement with the netflix is subject to a nondisclosure agreement, and i cannot disclose the terms of the agreement which i would you willingly by the way with permission from netflix. i can tell you it has been publicly reported, contrary to what mr. schaeffer said, that netflix is paying not more to us under this agreement but less. and i think netflix made a commercially reasonable decision given the size of the traffic, they did not need to do with the wholesaler. they could deal with us directly and they came to us and asked us for that deal. and i would note they turned around two weeks ago and announced that they had done exactly the same type of deal with verizon. >> thank you, mr. chairman. >> thank you. we will now go to the gentlelady who has a child at the university of texas, though i've sure is looking on the longhorn

network, much like i am. ms. zelman a. >> thank you, mr. chair. and thanks to all of you for being here today. we appreciate you taking the time. this merger obviously has the attention of many folks across the country and my constituents are no different. they rely on cable access for tv as well as for broadband and pricing is very, very important to my constituents. i hear about it from the on a regular basis and their concerns about any high-priced future. many times beyond the rate of inflation for the same service they had. they're very concerned about the impact this might have. follett uploaded on mr. holding's questions, mr. cohen, you said that you don't expect u this to have an impact on prices per se, but if this is going have an impact on

and -- and economies us to art achieved, then what can be done to help lower prices for consumers? >> i think that's a very good question and i'm not sure i have an answer to that. i think that when you look at the number one driver of cable pricing, by the way this may come as a surprise, mr. polka has bobby spoken more on this subject than anyone on the panel, but when you come and you might want to ask them the question as well, the number one driver of the cable pricing is the cost of programming. and the cost of programming is rooted ultimately, i think mr. polka would agree, in the cost of producing that programming and the rights of a programming, and in particular sports rights. so that if you look over the last decade there's been 120% increase industrywide in the cost of cable programming. and yet the average, and yet the

increase in the most common package of cable programming has risen at less than half that rate over that period of time. so cable operators, large and small, have been valiantly fighting to try and ameliorate the impact to the consumers of the overall cost of programming. i'm not sure what the answer is to being able to control the spiraling, continued spiraling increases in programming and programming rights, and in particular sports rights. but i think somewhere in that algorithm is the ultimate solution to at least moderating price adjustments. if i can be one of the point though, i want to say that when you look at what happened in the pricing of programming, the fcc statistics do with a particular package. if you look at programming, if

you look at the cost of cable programming on a per channel basis, the increase has only been about .2% over the last decade where inflation it has increased 2.4% over that period of time. so that's about 12 times, that's about one 12th of the rate of inflation. and if you look at promotional bundles which is the way the majority of our customers consume their content, the pricing of those bundles has been flat over the last seven years. >> i actually do want -- thank you but i want to ask mr. bogle the same question and also century for doom, so mr. polka, what is your feedback? >> thank you very much. david, you are correct that there are enormous sports rights costs as well as cost of production for programming. that are paid by large companies that own content such as comcast, nbc universal. large content companies like

comcast nbc universal pay those rights and then in turn pass those on to their customers who are cable operators. among which are the 850 members of the american cable association whose median size is 1500. the fact of the matter is that without control of content, with the right that these content companies have come and particularly in the context of this merger, there is the ability to be anticompetitive in the use of that programming. out give you an example. our members purchase the program through the national cable television cooperative. it would be likely in this merger to see, this is why we are asking for fcc and department of justice review, that comcast-nbc universal as part of a larger transaction will seek to recover its programming in sports rights costs. one way that they can do that is how it charges itself as nbc

universal charges comcast for programming. well, it sort of one and the other but if nbc universal charges comcast a higher price, and that price is then transferred down to the smaller providers of the national cable television cooperative, our members, who by programming, our prices as member companies and as competitors to both comcast and time warner will rise which will ultimately lead to rising prices for the consumers. so we are not convinced that this merger will lead to lower prices for consumers. in fact, to your point about choice, there really is no choice today because of how programming from companies like comcast universal and others, how programming is sold in bundles. where once a programming must be purchased or no programming can be purchased at all. ultimately, unless those bundles are broken up, all they will see is higher prices. >> thank you.

and thank you, mr. chair. i yield. >> thank you very much. i see the next one up is the gentleman from virginia, the chairman of the full committee, mr. goodlatte. >> thank you, mr. chairman. let me direct my first question to you, mr. cohen. to the extent that comcast is able to obtain discounts from programmers, is it likely that these programmers with the higher payments from other their distributors to compensate for lost revenue? >> so i will give a short answer to that but i yield my time to professor hemphill who may comment more knowledgeably but i think the answer to your question is no. the reason for that is in my lay terms, you can assume if we got a bigger discount that that would cause a programmer to go to a smaller cable company and try and make up the discount by getting a higher rate from the programmer. that would assume the initial us negotiation with a smaller to grammar, it left money on the table. it charged in less than what

they could otherwise get and now that they got less from us they would have to go back and get more from the other programmer. and i don't think that's the way markets work and they think that economics and antitrust law is pretty well settled on that fact. >> before we go to professor hemphill, by the -- i have other questions. next am going to go to mr. schaeffer on the issue of in your testimony you argue that comcast will be able to prevent content from reaching customers over the last mile. do the requirements contained in the nbc ordered, particularly the open internet requirement adequately addressed your concerns of? >> so while comcast has alleged that it is abiding by the net neutrality rules and not discriminating against content flowing over its network, it has

refused to upgrade its connectivity to all of the major backbones globally. comcast alleges in its written testimony that the vast majority of traffic reaching its customers goes through settlement free or nonpayment connections. but then it also says that netflix accounts for over 30% of the traffic going to its customers. so there's clearly an introduction assistance he -- a clearly consistency. what in that comcast has done is by refusing to upgrade those connections, two things. one, they denied their customers that they are charging the highest quality service that they could possibly deliver because they know that the requests is those customers sent will not be answered. the bids cannot fool back to the network. but secondly they have created an inferior quality --

>> let me interrupt you because i don't want to get you the opportunity repeat all of your testimony. my question was does nbc order, particularly the open internet requirement adequate address your concerns, yes or no? >> no. >> let me turn to mr. polka and ask you, does the comcast merger impact the cable hardware and software industry? in other words, does this transaction make the comcast standard the industry standard and doesn't have an impact on your cable provider members of? >> i would say, and thank you for the question, i think that is a legitimate question that necessarily needs to be part of the review by the fcc and the department of justice. i've mentioned a number of video concerns today. there were many other aspects to this merger that do need to be reviewed, whether it's the cable advertising market, broadband internet competitive market, access to technology, development of technology, how that is used by the combined comcast-time warner cable, how

that is made out of other competitors. i think that is definitely a line of inquiry that the fcc has to pursue. >> let me hop back to mr. schaeffer and ask you, and because when you discuss how traffic delivery was congested as result of delivering netflix content. you have stated you asked, had to add additional ports to increase -- decrease congestion. what our ports and other expensive to add on to the network? please be brief because i want to come back to mr. able to give him an opportunity to respond to some of these matters. >> yes, mr. goodlatte. port is the physical location where the traffic flows between the two networks. the capital cost is trivial and we've actually offered to pay not only our capital cost for our ports be added also to be comcast. but to date they have refused to accept that offer. >> thank you. professor hemphill, mr. cohen deferred to you to supplement his answer. if there's anything

mr. schaeffer or mr. polka have said you want to respond to, have at it spent i think on the first point mr. cohen said it well, that from an economic perspective we would not expect something of shortfall in one market to be made up into another or vice versa. that a savvy company is going to negotiate as best begin with all its counterparts and there's not some code it's trying to reach. thing about each of those negotiations separately. i think with respect to the conversation we've been having about ports, whether any of this raises a for closure concern, i think it's important to understand that payment for conductivity, payment for interconnection is not new. is not a new fight. it's always been the case that a payment is it going to be made through cash or through reciprocal carriage. and so to think about this as a

for closure concern i think is wrong. i think what this is really going on is a fight about who should pay for what in this highly competitive in a lot of ways, highly competitive business. >> thank you. my time has expired. thank you, mr. chairman. >> thank you, mr. chairman. i will now go to the gentleman from new york. >> thank you, mr. chairman, and let me thank the witnesses for your presence here today. let me begin by just associating myself with the remarks of come and observations and concerns of mr. johnson connected to the implications of this merger on women and minority-owned businesses within the cable and internet video space. let me also acknowledge that amongst the constituents that i represent, a substantial number of cable subscribers, as you

know, obviously, our time warner customers and time warner have certainly been there responsible corporate citizen in terms of its community engagement in brooklyn and in queens. i have every reason to believe that that will occur given comcast's track record to this merger be approved, particularly as relates to expansion of internet essentials. but there are also issues that they're concerned about that i want to explore slavery began with mr. cohen. you testified that the merger will result in substantial benefits to consumers, correct? >> correct. >> and you indicated that comcast can promise faster speed, to? >> correct. >> you indicated i believe that greater customer choice is a likely benefit of the merger, correct? >> better customer choice in terms of on demand tv everywhere, correct. >> and then i think you also indicated that innovation will result from the merger and then

that could translate into enhanced video, voice, and/or internet opportunities for the consumer, correct? >> scale leads to investment, investment in r&d and innovation and infrastructure, better networks, more secure networks, more reliable networks and ultimately innovation of the future just like our larger global and national competitors are investing, our need to be able to look around the corner and to develop products for three years from now and five years from now that were not even imagining today. >> i have no reason to disagree with that and i think that's a sound premise to operate under. however, as many of my colleagues have observed there's been no commitment given today i either you or mr. marcus as relates to the impact of this proposed merger on consumer price. and that, in fact, is the issue

that the people i represent in brooklyn and queens who are currently time warner subscribers are most concerned about. so let's see if we can get a little bit of clarity on that. comcast is a publicly traded company, correct? >> correct. >> as a result of comcast being a little bit accompanied you got busier obligation to your shareholders? >> that is correct. >> part of that busier obligation and isom connected to it is concluded that this merger will likely result in greater profitability for comcast if it were to be approved? >> i think the answer is basically yes, but really, i really want to say this. i mean, a couple years ago we woke up and we realized that we are now competing in a different class. a couple of members have referenced this, this world is changing with explosive speed. and so the real, the business

rationale underneath the merger really relates to our ability to innovate, invest, and to stay competitive. >> i understand the. i don't want to cut you off but my time is limited. you did acknowledged though basically yes, you expect -- >> more profitable -- >> let me finish. >> if we did not come if we were not able to innovate, invest and continue to grow. >> i understand and that's a very sound point, and consistent with your fiduciary obligations to your shareholders and i would expect nothing less. i guess the question that my constituents would expect me to ask, isn't it reasonable for them to assume that pursuant to a merger likely to result in greater profitability and a bigger, better comcast post merger, that there will be some positive benefits for them in terms of impact on price? >> so, i don't know whether it's

appropriate for them to assume that but it is certainly our expectation that out of this transaction will come a significantly improved customer experience with customers more satisfied with their service. there is more to making customers happy and just the price we charge them to kids the value that we are delivering to them, and we think, we believe very strongly that consistent with our fiduciary duty to shareholders we have to focus on price, focus on customer satisfaction, focus on customer service as a way to preserve and grow our customer base in an intensely competitive market and that all of those interests are aligned. >> thank you. >> thank you, gentlemen. let me say this to the panel. after mr. smith of missouri does his questions, we will take a 10 minute break. because you all have been in the chair quite some time.

mr. smith of missouri is recognized for five minutes. >> thank you, mr. chairman. my first question is for mr. cohen. you testified that comcast and twc currently serve different geographic areas and do not offer services to the same constituents consumers. yes or no come wit with a consus and either companies geographic areas experienced any decrease in competition for video, broadband or voice service if this transaction is approved? >> unequivocally no, they will not. >> thank you. mr. polka, as you know many of your member companies are in rural areas, like the area of missouri i represent. though they do not in my area compete directly with comcast or time warner, does this merger affect cable operators who do not directly compete with comcast?

>> yes, they do, congressman. and affect our incoming vice chairman is one of your constituents. it does impact those companies that do not compete directly with comcast and time warner. in the acquisition of programming and in the acquisition of programming pricing, as i mentioned before with the combination of comcast this division assets, with time warner cable assets, because of their size and their ability to demand lower prices from other programming content providers, it also does have an impact on the prices charged by all of the multi-video programming distributors, which means if to david's point it may not necessarily, we may not see this yet and to that is more that comes out from the merger review. our prices are members are also programming prices might increase, but certainly because of the ability of comcast time warner combined to drive also programming pricing down it will

create a bigger disparity in pricing between comcast, time warner and all of the multi-video programming distributors who by programming primarily to the national cable television cooperative. so the end result is comcast to pay a lower rate, and the disparity in programming prices between comcast and her members will increase. >> so virtually attend or so small companies in the district probably would see an increase while comcast may see a decrease of? >> that's what we expect to occur, yes. >> okay. mr. schaeffer, as someone who's been involved in internet backbone for some time, i would like to ask you a question about interconnection. what effect would the merger have in the market place negotiations with the company and other providers because it would have a significant impact in that comcast would now control access to a greater number of consumers, and extract

additional market power. for those consumers when they enter into a contract to buy broadband, they don't really i think mortgage their and to think comcast views that they do. >> thank you. transform, -- mr. gottsch, i was interested in your testimony. what was the reason that they cited of why they dropped you've? >> mr. cohen's explanation today, that it was a bandwidth issue ended to drop one channel and they picked our channel. the thing that concerns me is that is another policy of comcast in going forward when we need bandwidth, are they going to just be dropping independent channels from those markets without any regard to support from the audience, without regard to price, without regard

to anything that an independent channel has going? >> okay. mr. cohen, is there any other reason why rfd was dropped other than bandwidth? >> as i -- the answer is primarily a bandwidth driven determination. it was a determination by the local market that the consumer demand for that particular channel in that market was -- put at the top of the list to be considered being dropped. it had nothing to do with the fact it was independent. certainly nothing to do with our 8% ownership interest in retirement living tv, which is a completely -- >> my concern is this, it's a world tv station and a lot of folks in my area rely on and watch it quite often. and if other people across this country in non-urban areas want to watch it, i hope they have the opportunity. my question is, can you give me any documentation showing like

the 400,000 households in the colorado area of, was there other independent or other cable television networks that lower viewership than rfd that you did not drop? >> we can certainly follow up on that and i get back to you. we could put in a qfrs and address the in the queue of our process. do want to emphasize we still carry rfd-tv to six or 700,000 of our customers. and so this is not a situation where we simply said this is a terrible joke and we don't want to have anything to do with it anymore. it's a local market decision base, and again i hear and understand the content being real content. i want to emphasize again, we are primarily an urban cluster cable company. even in western states, most of our consumers are in urban areas. so it is our goal to provide

programming to our customers that they want to see, and we are not depriving anyone of access to rfd-tv because the abroad carriage on dish and directv and all of the customer -- >> just only to your consumers, the 400,000 in colorado and -- >> right. >> thank you, mr. chairman. i think you. at this time we are going to reconvene at about eight minutes after. and i thank you for your patience and allow you to take -- [inaudible conversations] >> all listening available at c-span.org. the house was in this morning.

before wrapping up the votes to become speaker john bennett minority leader nancy pelosi and majority leader eric cantor talk briefly about the congressional response to the kidnappings of almost 300 schoolgirls. >> mr. speaker, americans have watched in horror this week the atrocious news reports coming out of nigeria. hunches of young girls have been kidnapped with the intent to be sold into slavery or marriage. simply because they had the courage to seek an education and a better life. just this past weekend i watched my daughter, not much older than these girls, graduate from college. as a parent, i cannot imagine the suffering of the moms and dads who merely wanted a good education for their daughters. the obama administration is taken initial steps to assist

efforts to return these girls to freedom, and to their families. i thank them for their efforts, and i know all of us stand ready to provide whatever assistance is necessary. members should be aware that upon our return we will consider a bipartisan resolution being considered by the foreign affairs committee regarding boko haram and these kidnappings. additionally, when we come back we will also consider five bipartisan bills to take steps towards our ultimate goal of ending human trafficking. together these bills provide resources and authority to fight domestic human trafficking, provide services to the victims, and takes steps to deal with international human trafficking.

the atrocities in nigeria have awakened the global conscious and have reminded us all of the evil of human trafficking. it is also important to note that the underlying threat posed by extremist groups in nigeria, and throughout the region, is growing. whether it is boko haram, i'll sharia, hezbollah, hamas or al-qaeda, it is critical that we in the house work with the administration to confront the growing threat these violent extremists pose to international peace, security, and the protection of innocent lives. in the coming days as we focus on finding and returning these girls to their homes, may god watch over them and those seeking the return.

and with that, speaker, i will yield to the generally from california, the democratic leader. >> thank you, mr. speaker, for giving the house this opportunity to speak this afternoon about this despicable crime. in starting i will thank the distinguished majority leader for his remarks and i would associate myself with his remarks in their entirety. that's how important all of this is. i want to commend congresswoman wilson for her resolution, h.r. 573 which says, which condemning the adoption -- abduction female students by armed militants from the group known as boko haram and northeast province of the federal republic of nigeria. mr. speaker, it is clear what happened in nigeria is outside

the circle of civilized human behavior. it is unconscionable, and these despicable acts must be condemned in the strongest possible terms. the capture and captivity of these girls challenges the conscious of the world in a very specific in a very different way. and perhaps that difference can make a difference. i wholeheartedly support the decision by president obama, secretary kerry and the administration to deploy, aid, personnel, law enforcement and military experts to nigeria to partner with local authorities to find these girls and return them home. [applause] >> i commend the within members of the house in a bipartisan way, 100% of the women had signed a letter condemning these

actions. isolate the first lady for her bring back our girls sweet, and hope that members will also be doing that. because the most horrible swarm of torture, form of torture for someone held by terrorists is when their captors tell them nobody knows you're here, or you are, and he's even worried about you. we want to remove all doubt, every minute of every day. and as we go in to mother's day, think of those mothers. think of those fathers. think of the siblings of these girls. our thoughts and prayers rest with mothers and fathers and siblings. of each go kidnapped and separated from her family, and all the victims of human

trafficking around the world. it does, as horrible as it is, as unthinkable as it is, it's happening all the time, trafficking issue. so maybe this horrible, heinous crime will get the attention that human trafficking needs in order for us to end it. and so let us all subscribe to the hashtag bring back our girls. with that, mr. speaker, i thank you again for giving us this opportunity to focus on this despicable action, but to do so carefully, hopefully, and determined to bring back our girls. with that, going to i yield back to the dissing bush leader and yield back -- yield back. thank you, mr. speaker. >> the house will observe a moment of silence for these young women. the numbers will rise.

[silence] >> the house today passing legislation to permit we extend the research and development tax credit. also bill to expand federal funding for charter schools. the senate wrapped up work yesterday. members return monday and continue consideration of an energy bill that would provide incentives for energy-efficient manufacturing and promote energy savings and buildings. a vote to limit debate on the bill scheduled for 5:30 p.m. each and. as always watch live coverage of the house on c-span, live senate coverage on c-span2. today off before the house oversight subcommittee examined a washington, d.c. law recently

approved either me or that decriminalize the possession of up to one ounce of marijuana in the nation's capital. tutelage of that amount subcommittee chairman john micah brought along a prompted an its lealed to a lighthearted exchane with a college. >> the penalties for marijuana possession starting with federal law 21 usc code section 844 which has simple possession, that can provide for a one year of a fine of not less than $1000. that's the federal law. the new d.c. laws $25 penalty, civil penalty. federal park land penalty in fact, fine or jail term up to six months. there are 26 agencies that are responsible for law enforcement. i have this joint here, and this

is -- okay, don't get too excited out there, some of you. this is not a real one. it is a mach i. but i'm told by staff that this joint, ms. norton, that the penalty is, let's see, he of up to one ounce or less, one ounce is 28 grams, is that correct? and each joint as about one gram. so over 20 joints you could be in possession of in the district of columbia. here's the list of penalties which i'm submitting to the record but i can't submit this, as i said, this is a full joint. but for the record i will submit this list -- [inaudible] >> know, i had staff do it. [laughter] they have more experience last

[laughter] all kidding aside there are very serious considerations with the district come steps the disc has taken. we won an open honest airing of what's going to happen, however this is going to be enforced, and the implications and that's why we brought in federal and district and other officials to discuss this in an open and honest manner. >> that hearing today on d.c.'s marijuana policies is available at our website, c-span.org. >> a house subcommittee last week held a hearing looking at u.s. natural gas exports and the potential impact on u.s. foreign policy. house lawmakers discussed the situation in ukraine and how u.s. gas exports could impact the situation. all of ukraine's imported natural gas currently comes from russia. this hearing is just under two hours.

>> the hearing will come to order. i'd like to begin by stating the overnight commission statement. to fundamental principles. first americans have the right to money is well spent. second and the cost of inefficient and such a government that works for them but our duty is to protect these rights. our solemn responsibility is to hold government accountable to taxpayers. we will work tirelessly in partnership with watchdogs to the facts to the american people and bring genuine reform to the federal bureaucracy. today we're here to discuss the role of look like natural gas. the exports and how we're handling that in national security policy. another hearing held by the subcommittee focus on department of energy strategy and process driven applications and support lng.

specifically to non-free trade agreement countries. african were joined by mr. chris smith who's here again with us today, think you also like to welcome deputy assistant secretary mr. hochstein from energy resources. thank you for coming. by now it's in the middle of energy production revolution. that gives us access to resources not previously recoverable. prior to 2005 is just that there was less than 200 trillion cubic feet of dry natural gas reserves in the united states. as of 2010 the number has risen to over 300 trillion cubic feet an increase of over 50% in just five years. economic studies commissioned by the d.o.e. to inform its decision-making on lng export indicate the united states will see a net economic benefit from lng exports. exports could be powerful and much-needed foreign policy tool should we choose to wield it. many of our friends and allies

are forced to buy the oil and gas from resources of the russian president vladimir putin. ukraine imports over 60% of its natural gas to all of these imports are from russia. this gives rush and immense amount of power over ukraine. this is also the case for some other eastern european countries. rush has the habit of squeezing its neighbors energy supplies when it wants to influence the action. the united states has the resources to counter this and come to the aid of her eastern european allies. what it needs is the political will. as mentioned in the present, we are someone with a duty process for the approving the license is. countries with which with a free trade agreement covering natural gas, the natural gas act of 19 to get requested the week to grant applications to export lng. such export is deemed to be consistent with the public interest and the authorization must be granted without modification or delay. countries with which we do not have a free trade agreement covering natural gas at the natural gas act still presents

do you we will grant application export lng unless the department finds the proposed exportation will not be consistent with the public interest. the united states has export natural gas via pipeline to canada and mexico since the 1930s. the lower 48 states in may 2011 at the department of energy grant the first permit to export lng cannot fta country. that facility is currently under construction in southwest louisiana will begin exporting lng very soon. when we had our last hearing on this topic this was the only facility of proof for non-fda exports. i'm pleased to see that number is now seven. there are still 24 applicants waiting for d.o.e. approval. i encourage the way to process these applications expeditiously. the process to determine exporting excess of their due process international interest has gone on for months. in december 20 to president obama said to "time" magazine the united states is going to be

a net exporter of energy because of new tech to choose and what we're doing with natural gas and oil. president also recognize these energy developments could have a huge geopolitical consequence. it would seem the president's remarks are embodied in the state upon your of energy resources. this bureau set up on a few years ago states one of its goal to manage the geopolitics of today's energy economy to a reinvigorated energy diplomacy with major producers and consumers. one object if i hope to accomplish is to get a sense of how the administrative is taking advantage of national security and diplomatic opportunity. it seems clear to me this administration has identified allen g. exports as a fallible is a crucial part of u.s. diplomacy and strategic relations. i like to make sure that different parts of our government are communicate effectively and efficiently. deed over the aware of the foreign policy objectives pushed by the state department? have these agencies working hard most of to advance the goals? arthur into governmental barriers that we can help fix to

move this along? allowing more exports will have a clear a fact on the fulfillment of our foreign policy agenda. we need to ensure we have strategy in place that safeguard her allies and we must have across agency coordination to carry it out. i thank the witnesses for agreeing and i look forward to your testimony. i recognize the distinguished ranking member for her opening statement. >> thank you, chairman lankford for holding today's hearing. i look forward to what hope will be an informative discussion. first i certainly agree that russian control of the national pashtun natural gas supplied through and in ukraine is a critical issue the european union gets 24% of its gas from russia. some countries such as lithuania, finland and latvia are dependent on russia for the entire this, that, and the other supply. considering president putin's ambitions, the united states must help our european allies.

unfortunately at least in the short-term proposals to ukraine by fast tracking approval of new lng export terminals would not meet the goal intended of quickly getting u.s. lng to europe and ukraine in particular. currently the u.s. has only one lng export terminal in alaska with another terminal in louisiana scheduled to start operation in 2015. building more terminals and find the private investment to fund them will take several years. i'm all in favor of giving the department of energy and the federal energy regulatory commission the resources they need to speed the permitting process. ferc in particular has a complex and slow process which could benefit from additional resources. however, we shouldn't pretend that faster permitting alone is a panacea. in addition the main barrier to u.s. exports to europe is not the permitting process. it is a fact that u.s. gas shipped to europe would be substantially more expensive

than cheap russian gas. most experts agree that lng exports from the u.s. would be far more likely to go to asia where prices are higher than in europe. this is not to say that the u.s. -- but taking note that productive in that for conducting foreign policy the energy exports is complex. so how can we help ukraine, given these practical constraints? a number of efforts already under way. the u.s. is working with the eu and the international monetary fund on a number of efforts to move europe towards a greater diversity of energy sources. such as reversing flows of natural gas from existing pipelines into ukraine and further developing ukraine's own natural gas resource. encouraging energy efficiency rarely makes headlines, but in ukraine it could be a game changer. ukraine produces as much gas as

it uses. but ukrainians are notoriously profligate energy users, thanks to government energy subsidies. by implementing the same efficiency measures that other european countries already use, ukraine could be nearly self-sufficient. mr. chairman, i think these efforts to use america's resources to bolster our foreign policy are admirable and we are becoming increasingly important over the next decade. however, we must not lose sight of the economic and environmental side effects of our current energy boom. a brookings energy security initiative study found that u.s. lng exports would have a modest upward impact on domestic prices. even this modest increase estimated to be around $50 per family would be damaging to low income consumers. who must often choose between heating their home and buying food. that means that an increase in allergy exports should go hand in hand with full funding of the

low income home energy assistance program. we must also must not forget the business and manufacturing built businesses, plants around plentiful low-price natural gas. creating jobs to challenge exports can be offset by the loss of jobs elsewhere in the economy. increasing lng exports would increase the environmental risks associated with drilling and gas liquidation. a strong foreign policy cannot come up the cost of polluting america's drinking water with unknown chemicals from fracking fluid or drowning victims. including my district with uncontrolled sea level rise. u.s. lng exports can provide substantial benefits but we must be realistic about what is feasible and control to the coast. thanks again mr. chairman for holding this hearing and to our witnesses for being here today. >> members will have seven days to submit opening statements. let me introduce our panel.

mr. christopher smith, and mr. amos hochstein, u.s. department of state. since committee rules all witnesses are sworn to for the testify. please stand and raise your right hand. [witnesses were sworn in] >> thank you. in abc to let the record reflect the witnesses answered in the affirmative. and/or to allow time for discussion of as the delimiter old testament to five minutes. will have plenty of time for oral questions. your written statement we made a part of the permanent record as well. mr. smith, you're recognized. >> thank you very much, chairman lankford and ranking member speier. i appreciate the opportunity to discuss department of energies program of regulating the export of natural gas including liquefied natural gas. via buttons were expensive domestic natural gas supply provides unprecedented

opportunities to the united states. over the last several years domestic natural gas production has increased significantly. outpacing consumption growth resulting in declining natural gas imports. production growth is primarily due to the development of improved drilling technologies including ability to produce natural gas trapped in shale formation there production from these sources made up less than 2% of the u.s. supply in 2000, and 40% of the total in 2012. a dramatic change. historically the department of them just played an important role in development of technology have enabled taken a states to expand development of energy resources. beginning in the late 1970s research investment by the department contribute to development of hydraulic fracturing and extend a horizontal lateral drilling technologies that were later refined and commercialize the private sector investments and continued industry innovation. launching billions of dollars in economic activity associate with

shale gas production. thanks to american ingenuity and know-how, apply to our abundant domestic natural gas resources the united states is now the world's number one natural gas producer and disposed to become a net exporter of natural gas by 2018. today domestic natural gas prices are lower than international prices deliver lng to overseas markets. as in the united states, demand for natural gas is growing rapidly in foreign markets. we primarily to the developed the department and has received a growing number of applications domestic produce natural gas to overseas markets in the form of liquefied natural gas. the department authority to break a leg the export of natural gas arise from the natural gas act which provides to statutory standards for processing applications to export lng. by law am a applications to export natural gas to nations with which the united states has a free trade agreement that provides a national treatment of trade and natural gas are deemed

consistent in the public interest and the secretarsecretar y of energy must grant authorization without modification or delay. as of march the 24th, the wii has approved applications. applications to ask for natural gas to non-fda nation's the secretary must grant the authorization and less apt opportunity for hearings the proposed export has found cannot be consistent with the public interest. ..

developed the application perceiving. applicants and interveners are for free to raise issues of public interest that may not have been addressed in the prior cases. today the department has granted seven off organizations for long-term applications to produce equivalent to 9.3 billion standards per day. as of today, 24,000 applications are pending to support the countries. they will purchase a non- fta applications on a case-by-case basis following the order established in set forth on the