it took some nudging and it took some creative lawmaking with the commercial spectrum enhancement act in order to pay for the changes that the dod is going to be incurring. ..

it's the only pace of spectrum where everybody on this planet has been able to agree on it. so that otherwise we have 55 or more different bands for lte. but this is the only one that works globally that will allow america to travel overseas, enjoy lte service there. because otherwise that are like thousands of permutations were you may or may not be lucky when you go overseas so that you can actually access the lte network that people have in that country. >> let me add one thing. way you should think of this as an improvement in global consumer welfare. because what's happening is this unused spectrum for underused, is being transferred to use by consumers both in u.s. and around because of roaming around the world. you can actually value this probably billions of dollars.

>> when i asked how are going to get agencies to give it up, a very famous becomes in hell said that we should patent the it's funny all the congress think the same. this is why we don't get invited back to cocktail parties. [inaudible] >> talk about giving government agencies to get the spectrum but they never talk about paying them to do so. there's nothing in it for them, i learned this in graduate school you're actually i have a question if i may. >> yes. >> this is about unlicensed spectrum. everyone who's talk about unlicensed spectrum as a wonderful resource but economists think of that as a common property resource. great increasing demands over time. ic chart showing larger and larger demands overtime. should i worry about potential inefficient use of unlicensed spectrum because of the fact that it's a common property resource and, therefore, no one knows of?

>> you all already word about it, right? >> you anticipate the very next topic on my list, so let's get into it. i know there's questions that are on that site. let us not to unlicensed spectrum. i promise we'll come back and take your these because this is my second topic. i was reading a piece, this is for mary. whatever, read about this in the "washington post," one of my favorite writers, february 2013 was touting this new super public wi-fi network as being quote so powerful and brought in reach that consumers could use them to make calls or surf the internet without paying a cell phone bill every month. when i read this i got very excited because i don't like to pay for cell phones. >> it was a breathtaking statement. >> i don't want you or says could be standing in the way of my free cell phone service. why is it is the greatest thing since sliced bread?

>> as best i can tell what the article was referencing was the initiative led by proponents in the tech sector to champion unlicensed use of the television white spaces and/or the television guard bands that would be left once the voluntary incentive option is done. this grew out of them fcc chairman genachowski's labeling of that unlicensed use down in the tv bands as super wi-fi. the irony being it was neither super nor wi-fi at the time he said it. so for those of you who are not steeped in the technology, wi-fi is a technology that began in the 2.4 ticket bert's hands -- gigahertz band years ago. it is also now migrated into the five you hurts been. in fact the latest iteration of

wi-fi technology is exclusively designed for the five gigahertz band. why is that? because the technology it uses requires very wide channels to deliver very high throughput. throughput that's in excess of a gigabit per second. so how wide are those channels? they are 80 megahertz wide, our 160 megahertz wide. that is super wi-fi, right? that's the super part of it. the tv ban, they are not then useful bands. and one conservative as a technologist designed to reduce system for them but the problem is you don't have very much unlicensed spectrum available in the big, what we call the big in apple cities but you may have just six megahertz, or no megahertz. so what do you do with

six megahertz of spectrum in a technologist lates latest iteras 81 and 60? there's a little bit of a mismatch. while i read the article with great interest, i was reminded that back in 2006 when the fcc issued its very first report on key white spaces, my good friend, then commissioner robert mcdowell complained we would all seek consumer devices in the key white spaces bands under christmas trees in 2009. i look every year and i'm still waiting. >> i'd like to add to that. in my view as an engineer, i've you unlicensed and wide area as mutually exclusive. they are incompatible with each other. the reason wi-fi works is that you have very localized coverage areas. he put up an access point in this room and in any capacity or

coverage you put up another within the next turn. if they interfere with each other you figure out some plan or in fact wi-fi access points will automatically find channels to use. it works great even if you have a neighbor underneath using, or some other business in a floor below, as ways of coordinating and making it work. but now go to a wide area situation. the premise of unlicensed at 600 megahertz is that while you can build community networks that have a mile, five miles of coverage. guess what? over the coverage area if you have multiple operate computer and use that spectrum it will be completely uncoordinated. their art in any of the standards, and our standards being developed for unlicensed use. the standards actually don't recognize the problem of multiple service operators operating at the same time. so deploying investing large

amounts in a situation where you have no idea whether your network will function or not doesn't make sense. and my view is that that spectrum might be used by wireless isps in rural areas, but in general is not going to see really sufficient use. >> i was compared to an event where you have, when you have small groups of people having chitchat, that's unlicensed usage because they're talking in low volume among themselves in the narrow area. no, which you have a designated speaker of the evening, there needs to be somebody who will bring order to it so that people quiet down. and if they don't quiet down that's called interference. so that everybody is quiet and you have a designated speaker

speak. and then, ma you know, somebody has a question. they will get the microphone. so that is licensed usage where you have somebody bring order to. you can do that in wide areas. so licensed spectrum is most beneficial for wide areas, and unlicensed for small areas. >> so to put a bow on the unlicensed spectrum segment, i looked at them a 2014 incented or broadcast auction will that came out, and it appears that day, depending upon how much spectrum they get from the broadcasters, who make a total of 14-28 megahertz available for unlicensed use. so that sounds like a minimum of 14. it's doesn't make an additional six megahertz available violent unlicensed use of channel 37, blah, blah, blah.

my question for you is this the right allocation? i don't think anyone is saying that there shouldn't be unlicensed -- the question is how much and where should it be but isn't that really the debate? >> absolutely. i think consumers will be very disappointed with 14 or 20 megahertz of spectrum when they are used to wi-fi with 40, 60, 80, 160. they will say, you know, this is a slow train. i'm not going to use it, there's something wrong with my equipment. and on top of it they will be, because it's 600 megahertz, you will have ranges of several miles. so somebody on the other part of town can very easily interfere with you making it even slower. so if we wanted to do unlicensed spectrum we should move it up in the spectrum dial and go to, you know, we moved it to five.

i think if we go higher up there's more spectrum available and it's much more suitable for unlicensed usage. >> so i would like to separate the question of the band planned from the use of the band planned. the fcc has some very difficult problems in trying to figure out how to design a contingent and land based on how we broadcasters were going to show up and who's going to take an offer which is why we are not seeing a static banned planned that we're used to in this auction. and i think they've done a heroic job so far in trying to figure out how this is all going to work and fit together. the question then of how one uses either the duplex gap or the guard bands is a very difficult question. i know from the vendor commuted everybody has got that under a

microscope because the most important thing that can happen out of this voluntary incentive option is that it's a success, that the carriers show up with their checkbooks and purchased that spectrum. that enables the fcc today the broadcasters, fund first met, funded the u.s. treasury and gives that to a huge boost for future transition of other bands. that is the most important thing. so it's got some people got to walk into that auction, particularly the forward auction with the confidence that what they are buying is going to be usable by them. >> peter, any other questions, any other comments on the unlicensed before -- >> maybe it's about time to go to the audience. did we not do unlicensed to your satisfaction? >> i guess i will just add -- >> the kind of rant on my --

>> back to neither super your wi-fi. i think i use the same words in an article i wrote. i just want to mention not wi-fi. the current wi-fi standards don't work in that band. what ieee is looking at our entirely new standards. so no existing device is going to work in those bands. and i think it's instructive to look at where tv white spaces are getting the most usage today. it's not in the u.s. it's in places like africa providing coverage to places where there is no broadband at all, and then using those low frequencies as a fantastic way of providing, say back fall, to towns that don't have broadband, and then using as a backhaul connection for providing the local wi-fi at higher frequencies. so there are use cases for the spectrum. i'm just not sure we will ever be a viable alternative to the mobile broadband system that we all enjoy today.

>> all right. i think there was a question from the audience back year. i think you were waiting. go ahead. >> my name is sarah and i have perhaps what is a much less sophisticated question that what you all are talking about in terms of spectrum. but i have recently been accepted to a global startup incubator program to launch a mobile application development company specifically centered on health. and based on what i've heard today and what i read in the industry, first on the positive side, i am thrilled at the market potential. it's estimated to be a buddy $6 trillion industry going forward. having said that, i have a concern based on the interdependency, what we're talking about in terms of infrastructure. and that is that if i traveled from dulles airport to this location and use my mobile

device, i have a couple of challenges. one round trip from here to dulles will drain my battery. and there is no way to charge that on the metro. the second concern is that a don't have reliable service in terms of video and app usage. and here we are a very tech center. how do we capitalizing on, michael, what you refer to is both maximizing the investment and equity of consumers, feel comfortable capitalizing on this tremendous opportunity to understand that our customer base is going to -- if we can provide the reliability and increase the power connection? >> let me answer your first question first, which is you probably don't know but on the new silver line they have little power outlets. >> no, no, not to. not true. that's not true. [laughter]

>> okay. we wished it was true but it's not. okay, i wake up in the morning and my phone trains before i get into work. so if you think about health apps, health is a high-value use, especially if you're moderate and monitoring in real-time people's condition, and it is exactly the sort of high-value use that you could imagine being prioritized. so this is where the different pieces, and. if you have high-value use that can be prioritized and paid out of habit, then you can end up being able to fund the infrastructure in a way that provides more coverage. so you ask yourself the question, what would you need to sort of make sure that your health at will have a sufficient connection in every point.

you were talking about investing a lot of money and contingent is a lot of money over time. where we run a risk at this point is that policy ends up constraining the ability to identify high-value uses and direct the money in that way. you can almost imagine, i'm not saying that this would happen, you could almost imagine that places like washington, new york and so forth, would have a way of health related apps in real-time, that is not the sort of ones we're used to fitness, but ones that are directly connected to people would have priority and do it in a way that gets funded in a different way. so when we are talking about business models here, business models is not an abstract word that says, oh, some people make some money and some people go. it has to do with what sort of

services you can deliver to consumers in a way that works. >> i'm very grateful for the question because when we apply net neutrality to mobile where we have a constrained environment, net neutrality in its purest sense says everybody should be treated the same way. your potential customer, somebody who has medical monitoring gets treated exactly the same way as somebody who is downloading a youtube video. you are not allowed to prioritized somebody with a heart monitor over somebody who plays a game. and so because all usage is supposed to be exactly the same way. this doesn't really allow for your health initiatives to be flourishing when you complete, compete with somebody who has more entertainment usage rather than life critical applications.

so this is think a very good example of where we should really let the marketplace decide. because i'm sure somebody with a heart condition will put a higher premium on bandwidth and somebody playing, you know, words with friends. >> let me add one more thing. in the interest of fairness this is one place with the sec action has to be fairly active in terms of making sure that there isn't an operation of small started by larger companies. there's two things going on. one is that, that the ability to create high reliability channels for health apps and other things of such an important, but it has to allow that small startup stad should have a fair shot as well. and when hal talks about what sorts of rules you need to have

in order to make sure that that's true, this is what exactly what he's talking about, that you should be able to get into the marketplace and not feel like you are being squeezed out by large providers. >> if there are no pending questions, i'd like -- sorry. stan. >> mentor, not the communication system as a regular red line rider, that's where the problem is. [laughter] >> with why are cell phones a? let me move to another topic that's near and dear to my heart which is wireless wireline substitution. the first question is for mary. some folks are trading in their wireline connections for wireless ones. in october 2011, cisco, your firm estimated that up to 15% of

u.s. consumers could cut their broadband wireline connection in favor of a mobile data connection by 2016. and more recently in a 2013 pew survey we found that one-third of sal internet users use mostly their phone to access the internet as opposed to other devices like a desktop, laptop or tablet computer. what is stopping more folks, mary, from making the plunge and going pure wireless? >> well, i think the 2011 study sort of identified from, let me just say that sort of a top down steady, and estimate if the will of what could happen, right? and the point of the study was really to say that they wireline providers, you need to put wi-fi at the edge of your network to try to make your offering more sticky. so in full disclosure that is what was going on in 2011. i did identify some useful

trends. there are categories of consumers are probably not going to cut their wireline connection. a family that's got multiple people in the family using broadband connectivity is probably going to want that wireline connection. there are people for whom there may be coverage issues. they don't get the coverage in the home that they would like to have, or it's spotty and whatnot. but there are a category of customers in the study that we produced and the pew numbers bear it out where mobile is the compelling choice. they might be, you know, one person household who is mobile, they are renters, they move around a lot. they don't want to mess with broadband. it might be a rural household for whom there is no real wireline comparable coverage.

that students the case today despite all of our efforts to find universal service and change it to a broadband plan. so that is a component of the consumer marketplace that's eligible for the sort of thing, and i think that we are still early days in terms of figuring out how large that's going to grow. >> i think going mobile and using mobile spectrum for internet usage makes a lot of sense in the rural parts of this country. we are always talking about we have a spectrum crunch in this country, which is true in a major metropolitan areas. at the same time what is also true is that in a lot of our plane states, we have a lot of. because the population density is very low. so and distances we need to cover is very far.

i've just been working with a small role tellico and some of their customers are miles and miles out. right now they're trying to serve them with dsl, and as we all know dsl punishes you severely for how far you are away from a central office. and the best way for them to actually serve the customer would be wirelessly. because we can put 20 megahertz, if not more, to that customer. and then only five or 10, if you are in rural kansas or south dakota where the boom hasn't hit yet. you know, you have a handful of customers sharing a cell, you know, and the cell was 20 megahertz can up to do 150 megabits per second. that's something you can't dream of providing that with, you know, dsl or even fiber because

the cost is simply prohibitive. so providing these customers in the rural parts with wireless would be the best solution for consumers and for the providers alike. >> roger brings up a great point. let me just a minute my response earlier. from a technology perspective we are early days on 4g. we are about to move to 4g, advance this conversation and industry about what does the 5-g technology look like which were started get to the point where these wireless technologies are really delivering very substantial throughput. so again as those technologies roll out in the market place and become available, it becomes law or compelling, particularly in these kinds of situations spent a special and only a few people actually share it. when less people and in this room actually share the bandwidth of a cell, then the

throughput is delightful. it's worth -- [inaudible] well, what do you spent from a fiber connection? it's just that in washington, in new york, in silicon valley we have so many people trying to use the same spectrum that we have that crunch. >> i'd like to add i think we've made unbelievable progress. i've been involved with wireless technology for 20 years now, and lte networks are 1000 times faster than cell or digital networks i worked with 20 years ago. but we still have a long way to go. mobile broadband is at a point, a comment was just made if it's not heavily used, i'm lucky enough i have our remote office in a rural area which happens to have lte. so when i do i just use my phone as a hotspot, and my family

shared plan is sufficient for me to run my business off my phone. that's my connection to the tough part today is cutting the cord to your tv and getting all your entertainment via hulu, netflix, et cetera, and cutting the cord to your broadband connection because the tooth of add up to a disastrous situation. the fact is we consume when you're watching netflix in high-definition you're running, you're consuming about a gigabyte per hour. so you're going to go through whatever broadband plan you have a fairly quickly, but that's going to change. the capacity increases that we anticipate with lte advance, with small cells, ultimately with use of 5-g, all those developments will keep augmenting capacity. so to mary's point that just right now is a subset of people who can be served by wireless

broadband only, that percentage is going to keep increasing. wireless is never going to replace fiber. but where's it's only maybe 15-20% people that can be served by wireless now, i with a budget of the decade it might be twice that come in five years after that maybe placekicking but it's hard to predict exactly. but the trend is very positive. >> i think -- >> i think business model, you know, if we have a regular environment that lets us use the right technology and the right scenario, and that is, for example, wireless in rural america as an equivalent to wireline service. that will allow operators to adapt their business model that they don't have to provide the same type of pricing and the

same type of bundles that you have in a mobile environment that includes urban areas in a largely fixed or in a fixed environment in rural america. so i think, you know, if we had the right regulatory environment, these problems will actually go away and everybody wins. >> let me add one more thing to the. if we are thinking about where people locate in the u.s., rural versus urban, the ability to offer different types of access in the rural areas or the ex-urban areas, they have a large social benefit in terms of starting people out to lower cost areas. one of the things we think about at ppi is the large economic development policies in terms of cities versus rural areas. i think it's important that in an era where wireless is essential, that we allow the

pricing plans to adapt as well. >> let me know bring this back to some concrete policy issues. because i think that how you perceive wireless and wireline, is a compliment or is it a substitute, can influence your answer to a lot of key policy issues but i will just point out that my dear friend susan crawford wants us to see that as strict compliments, right? and that drives a lot of for view of how she comes up with policy. but it sounds to me from this panel that while it might not be a perfect substitute today, there's a lot of substitution going on in the margin and could be a better substitute in the future. so with that wind up let me ask some concrete policy questions. roger, you have a piece out that talks about how the fcc should carve up the spectrum when it goes to sell it in the broadcaster auction, right? and you say, quote, to regain

its lead of the trade should quickly allocate more licensed spectrum to wireless operators, in larger contiguous blocks, end quote. i'm going to hold you to the. now was reading that it sounds to me that if you had your way it would make life at the margin more difficult for smaller wireless carriers but after all is the blocks were in teeny tiny slices, that would allow for greater opportunities for smaller folks. whenever i have a choice between choosing like my local coffee vendor or starbucks, i always go with a small local guy. do you have something about small wireless carriers because not at all, but a much of a big fan of smaller, you know, telecom providers in general. because i call them, they're on the proverbial bicycle and they're going up against the big carrier on a steamroller. and if a small carrier gets

rolled over by a steamroller, they did something wrong. i think there is an important part for small providers, but we also have to recognize that the small rural providers have 3% marketshare. where they are operating there is a lot of spectrum. so on top of it, you know, i think it's a very lot of old gold by the fcc to protect them, -- a laudable goal, but you can't eat the cake and have it at the same time. you can't have the fastest possible internet in the world and carve it up into small pieces but it doesn't work. so there is room and there is a necessary protection for the 3% in this country. but for the 97% of consumers that are working with a larger wireless carriers, we need to

use it in larger spectrum. for example, in switzerland the swiss regulator carved it up into one and 40 megahertz spectrum. it to start with the spectrum allocation, with carrier aggregation where they're offering 300 megabits per second download speed. if you, like here in the united states, the biggest spectrum bands would have continuous spectrum is the 1900 c. block where it's 50 megahertz paired, you are not coming anywhere near, even if you add on another 10 megahertz paired piece of spectrum. so if we are actually serious about having the world's fastest internet service, wireless

internet service, we can't get anything but have large services. if not we should make a conscious decision that we valley competition over raw speed. that's a very valid decision. but you can't have your cake and eat at the same time. >> mike, i would want you to weigh in from an economic perspective. what i see happening that if wireless is becoming more and more of a substitute for wireline over time and people are going to star using wireless, leaning on wireless to do their heavy demand, heavy capacity demanding apps like video, it seems to me that that's going to push out the benefits of having a larger, all things equal and i'm just wondering should this inform or how should inform the fcc when it comes to figuring out the number of carriers in any market or how to carve up the spectrum? >> i think the word you used

before was on the margin and i think that's an important word. what happens is even if you don't cut the cord completely from the wireless still provides competition on the margin. because if what you have is the ability to sort of use the wireless some of the time so that you don't break your data cap, okay, because i know that i shift back and forth almost seamlessly between using my wired broadband and my wireless, depending on what's happening. so in terms of your original question about does it provide competition, the answer is that it does put you to think about it providing competition even if we don't cut the cord completely. >> let me get peter to weigh in from it in getting perspective. if what i am positing is true and the economies of scale and wireless are just going to be so large it's going to be difficult for a small player to compete, what role is left for the small wireless guys? is there's still something

constructive for them to do from an engineering perspective? >> well, certainly if you're trying to deploy a national network that today requires many, many billions of dollars of investment. you know, i certainly think in rural areas or less developed areas there are opportunities. i happen to live in oregon and the columbia river court, and we have a very innovative internet service provider called gorge.net, of course but and they've been using wireless for ever in whatever new wireless technology comes along they are all over because there's a lot of people that can only be served by wireless. that's one example and there are probably others. >> there is an important place for small, smaller carriers. predominately outside of major metropolitan areas where you

have unfortunately huge economies of scale. and where if you want to have, you know, it's a very laudable that we are helping with designated entities, but we also have to recognize that building a nationwide network is 5 billion, $10 billion. how a family small -- small family-owned business can raise that amount of money, a subtle but difficult to grasp. so we have very laudable social policy goals that are in direct conflict with economic reality. >> last question on wireless wireline and i hope the audience has more questions but this one is for mary. you guys have a new 2014 mobile dni report out, and cisco is projecting mobile data traffic to grow from zero-point for x. bytes per month to 2.7 exabytes per month by 2018, an eight-fold

increase over the next five days but i don't even know what an exabyte is but it sounds good to me. >> big big spent what is driving all this debate? could it be substitution from wireline connections to? >> the main drivers of demand that we are seeing are as follows. one is screen size. our devices are getting bigger. i'm going to go out to second and get one of those new apple devices that is bigger than my old apple device. we embrace tablets as well as the smart phones, and so because we are consuming so much video, as roger pointed out, that's a lot more its of data that are moving over these mobile networks because of screen size and video. so explosion of tablets, explosion of smart phones. the tablets themselves are

getting much more processing power. we are projecting on a monthly basis a tablet today is consuming on average about 1.4 gigabits of data a month, and the 20 team that's going to jump to 5.6 gigabits a month. so these are becoming as powerful or more powerful than laptops. and then the number of connections is growing as well. it's not just people anymore. its machines, the internet, things that's happening to us, all those things are really driving demand. i mean, i think the substitution effect is in there somewhere but it's probably not the primary mover at this point of what's going on with the explosion in data demand. >> here's a little interesting tidbit. every inch your screen size goes up, your daily consumption doubles. >> why is that?

may be from an engine and standpoint. >> because it's so much more enjoyable user experience, and the number of pixels on the screen goes up, and so that really drives it. you are much more likely to watch a movie on a five-inch device than on one inch or two-inch device. >> exactly right. it's not just in addition to screen size but it's also the resolution. when apple came out with a retina display which everybody now has matched come within it was that there were more pixels than your eyes were able -- you could see the individual pixels anymore, meaning the screen have better resolution than your eyeballs did. and so the redneck display quadrupled the number of pixels and now we are seeing we are seeing with four k. displays. a four k. display has four times the resolution of a standard hd display therefore shall he they will be a company by better

compression so the bandwidth requirement will only double but it still doubling, right? >> the word requirement is a little bit funny their because there is an interplay between them demand and supply here that just because your screen demands that many pixels doesn't mean that you're going to get them from your wireless connection. so you could easily imagine a situation as the business model evolves winter, and this goes down to where we were talking about earlier, where what you contract for at a lower price is lower resolution data coming onto your screen. you may not want to, but that's why we are at the odd time where yes, the demand, the devices are demanding that much but it's not really a requirement.

>> right. >> so when the data forecast have built into them certain assumptions about what's going to happen in the marketplace, which is constrained by capacity, by revelation and by price. >> just to echo that, it doesn't really make sense for me to consume hd video on my five-inch phone because i can't really see the difference between that and video at one quarter the resolution. and so if i had -- >> if we could watch a wicked looking at a one inch screen. >> that goes back to my previous point, why not have a flexibility service plan where i could have discounted plan which automatically transports a video to a coarser resolution which am i not even be able to tell the difference. difference. >> i think this is a deeply important to policy point here,

is what the policy and the technology and economics intercept and every time somebody on the panel says we are at an early stage, that's what they mean is that we don't actually know where in the intersection we want to be in the end, and we have to allow more flexibility to sort of find out where the sweet spot for the sweet spots are. >> we have reached the point where we are at the flat piece, and at one point in time with the right policies in place, with the right incentives in place, right models, it will go up dramatically. >> let me go back to the audience and see if we have any questions before my next set of topics which is going to be international comparison as a preview. is anybody waiting with questions? all right, then let's march forward. i want to go back, mary, to your latest cisco mobile study, and

it shows that 4g connections are projected to overtake 3g connections in the u.s. around 2016, but 3g won't surpass 4g in europe even by 2018 or i was really confused about this but i thought the u.s. should be looking to europe for how to design its wireless ecosystem. what's going on here? do they have a problem? >> and it's not just europe, it's the rest of the world. the rest of the world lives for now in 2g or 3g land. and one of the things we have done uniquely here, and and again industry, policy makers take credit for this, is we've made spectrum available that has enabled our carriers to move to 4g. and to get those networks built out. in a way that other countries are lagging. i mean, we did the 700 megahertz digital transition. other countries are putting

ketchup. these kinds of advances, the flexible licensing approach that roger sherman talked about earlier today, these all enable the carriers to move to 4g in a rapid way, and we have benefited from the. we've got the first broad scale deployment to we will be the first country that moves to 4g advanced technology. we have, from the vendor community's perspective, we have developed jobs in this country to every major vendor regardless of the nationality of the headquarters does therefore g. develop in here in the u.s. so it's been a tremendous benefit to the u.s. to use spectrum policy to drive ahead and be the world leader right now. and it would be nice if we can continue to do that. >> and it would be nice if we recognize that this is job

creating, that is being a leader in 4g produces jobs in the u.s. >> we also have to give the american carriers actually credit. because in this country what we take for granted is with the exception not the rule. when you are buying wireless service, you are paying the same amount if you are on 2g, 3g, 4g connection. because the wireless carriers want you to have the best possible user experience. and that is usually the most advanced. in other countries in europe, in the uk, for example, three out of the four carriers charge a premium for 4g. you have to pay somewhere between five and 10 pounds, $15 extra a month to have 4g service. when the smallest carrier called

paris in the uk -- called three, in the uk offered 4g service at the same price as 3g, the other carriers accused them of devaluing the product rather than realizing the great advantage consumers have come and the carrier actually has because the price does go well. if you go to continental europe, here you get, doesn't matter how big your bucket is. you get the fastest speed. for example, in germany the bigger the bucket you have, the faster the download speed they give you. so usage like that, you know, as also by the way an explanation why sometimes the average data speeds are faster. because they are artificially

limiting the access to the 4g networks. so the average speed goes up whereas, which is if we take all the speeds divided by the number of people, is the average speed. were asked in the united states, the meeting speed which is actually what gets 50 out of 100 people is actually higher. because we give them we are actually, we approach wireless in a much more democrat line then, and a much more -- than the people in europe and the carriers in europe. >> you have a new study on these international comparisons and i've got some amazing stats in there, many of which make the u.s. look pretty awesome. but let me talk about two in particular. one, you said the u.s. used to

lead the world and wireless download speeds but that's a good news but we been overtaken recently by candidate, japan and france. i can understand losing out to canada and japan but i just don't understand the france thing. [laughter] that's just embarrassing. what's the sure how do we get it back? >> the root of it is spectrum allocation and spectrum sizes. they have made larger pieces of spectrum available for 4g. we have to kabul it together, you know, through pure happenstance the wireless carrier can get 20 megahertz of continuous spectrum together. the speeds are comparable. but it's not working there were. because in europe you by the spectrum nationwide and you have one block. here, gene, wireless spectrum is

divided in 437, no joke, 437 little slivers of spectrum and then they're put together in different ways with the cellular spectrum. so having contiguous spectrum on a nationwide basis is extremely difficult for a u.s. carrier, and it's a trivial task for carriers everywhere else in the world. and so that's part of the answ answer. >> one other stat, unless you guys want to weigh in, that struck me from the report is about how much more the u.s. wireless operators are investing relative to their peers. this was impressive. according to your calculation, you're looking at wireless cap ex and you say that we are at about $100 million per inhabitant in the u.s. versus $55 per inhabitant in the

european union. i was like, the america. that was really exciting. now, can you attribute this difference in cap ex to any particular policy differences across or is there just too many things changing that would confound that analysis speak with the most significant policy difference is that in the united states, wireless carrier can use whatever technology they want on whatever spectrum they have. and that allows significant flexibility for the carrier. this changed a few country but previously to this round you bought spectrum for a specific technology. and if the markets said i don't want to cheap -- 2g service in

more i want 3g and 4g, the carrier has to say, i'm sorry, the government tells i can only give you 2g service on spectrum. this is really inhibiting the market, market development, investment, and you know, the lfnow, the welfarof country. >> go ahead. >> this question is for actually for roger to actually for roger the image and the differences between the united states and the uk in the 4g, 3g space and that's when it if you could talk about the 3g auctions that the uk actually had. i know there was a huge issue with these auctions, came in like 22 or 23 billion pounds and after projections like three or 4 billion pounds. i'm just wondering the auction rules that set up if it had any effect on the how services are deployed and kind of, many many

people act to criticize the 3g auctions in uk for being kind of botched and i wonder if you have opinions on this, if you take one way or the other and how that has affected the auction within the uk. >> i think, you know, what we see and saw with the 4g auctions was a really bad hangover from the 3g auctions. where, you know, the european carriers went really crazy and spent tremendous amount of money. and then to a certain extent botched themselves by adopting a very neat approach, and rather than stimulated usage like the u.s. carriers. i remember having worked for a european company at that time in our system. and that was, you know, 2000,

yes, late '90s, almost 2000 when we were like chastised for using a wireless connection to download at silly things like powerpoint presentations. because the cost was so prohibitive, and i think this hangover and a very slow adoption is what actually diminished the value of the options. >> are there any other questions out there? we are getting close to the top of the hour. wheel, do you have a question -- will? spent thank you. roger is gone but i would like to ask panelists to comment on how we will maintain the leadership of 4g that mary talked about, the global leadership, and what are the two most urgent things you would ask

or employ the fcc to do or not to do in order to speed this along the road to 5g and beyond? >> well, i think, you know, i will start with the. i think we can all agree that when did more spectrum, spectrum issue of the fuel that drives this engine. and the other thing is, you know, maintaining a light touch regulatory environment that has benefited us so greatly over the last 30 years. and now that things are working so well we are trying to change the formula. and i would greatly caution from doing that. >> to which i would add, resist the temptation to take a snapshot of today's market and consider it a static. this is the hardest thing for

policymakers to get their arms around is that markets are dynamic, technology is dynamic. everything is moving and changing, and the northstar should really be, are consumers going to benefit or are they going to be harmed, right? so resist the temptation to take a snapshot. and the other thing i would add is make a voluntary incentive auction a big success. >> program i think that what you said about not focusing on the static market, but this is the early days. as you know one of the projects we have going on at ppi is a 15 year look at the wireless market. take us beyond 5g india six g. and this is, this is comparable to what the semiconductor industry does, which is think about laying out a roadmap 15 years out. and once you start thinking about in 15 year terms, you stop

thinking of the market being static. you start thinking about all the different business models from all the different possible uses, and you realize it puts more weight on the investment. it puts more weight on to flexibility, and it puts less weight on what's happening in the market right now. so having a longer timeframe which emphasizes the dynamism is extremely important. >> you're going to get the last word if you could tell chairman wheeler, roger sherman, one thing, what would it be? >> one thing? well, i would say, you know, encourage innovation. did not put up barriers that will make application developers try to do creative applications, operators trying to deploy the network. don't put up barriers that will make them think twice about investing in this marketplace.

>> great. i want to thank everybody for coming but i'm going to wrap it up at this is been a lot of fun to my first time ever moderating. we will see if i get invited back. and thanks to ppi for hosting us. thank you, guys for coming to a let's give the panelists a nice round of applause applause but -- [applause] [inaudible conversations] [inaudible conversations]

>> republican ed gillespie has conceded the virginia senate race to democratic incumbent mark warner. the latest numbers from the state board of elections has senator warner leading by more than 16,000 votes, or one percentage point out of more than 2 million ballots. here's a part of what he had to say to supporters during his concession speech earlier today. >> kathy and i are happy to be with you today. we just wanted to give a little update on where things stand and the stance this way. as you know, the canvassing is just about completed, and the official tally is now a gap of more than 16,700 votes, larger than it was on election night. obviously, it did not move in the direction that we hoped it

would come and so i've called mark warner this morning to congratulate him on his reelection, to thank him for his public service to our commonwealth, and to wish him and his family well. it was a nice conversation, and i hope that he does well obviously in his continued service for the commonwealth of virginia and for the country. this is a hard fought race, and i'm proud of the campaigns we have run, and i loved every minute of it. [applause] >> well, maybe not this one so much. but we ran and issues driven policy focused campaign with specific proposals to create

jobs, raised a co-pay, lift people out of poverty, hold down health care costs and reduce energy prices. .. in my head and in my heart, i know that a change in the outcome is not possible. >> the result leaves to open senate seats. alaska is too close to call in

louisiana will be decided in a runoff election next month. we will continue to follow all the latest developments on the c-span networks and at c-span.org.

>> up next treasury undersecretary david cohen discusses u.s. strategy to disrupt the financing of the islamic state. part of a forum hosted by the carnegie endowment for international peace. >> good morning ladies and gentlemen. i am marwan muasher vice president for studies at the carnegie endowment for peace and director of entity -- i want to welcome you to carnegie and thank you carnegie and thank you for joining us for this timely discussion on u.s. efforts to disrupt the financial networks that support the islamic state of iraq under levant, what is called vices. i see there is enough interest in the room for this issue.

it's an overflow. while considerable public attention is focused on military efforts to degrade isis americans. there's another effort being led by the treasury department which is focused on shutting down the flow of money to isis from outside sources and through smuggling metrics running through neighboring countries. it has been estimated that isis currently produces over 55 million gallons of oil per day which once sold on the black market can provide between one and $2 million per day in revenue. this money in addition to the funds the group collects from activities such as extortion, kidnapping and illegal surcharges. it should be no surprise that isil is now considered the world's wealthiest and most financially sophisticated terrorist organization.

to discuss the strategy to try to cut off these funds we are honored to have david cohen with us today. mr. cohen is the undersecretary for terrorism and financial terrorism at the financial department where he leads the department in enforcing, enforcement regulatory and intelligence functions in identifying and disrupting financial support for international terrorist organizations and other illicit actors that are a threat to national security. he will discuss the terror financing challenge by isis, the group sources of revenue and the measures the treasury department and other u.s. agencies are taking to address this threat. following his remarks we will open the floor for questions from the audience. for those of you who want to join the conversation on line, we will be live tweeting this event using the hashtag

disrupting isis, one word. please join me in welcoming treasury undersecretary david cohen. [applause] >> good morning and thank you dr. marwan for that kind introduction to the carnegie endowment for hosting me today. it's truly an on or to have the opportunity to lend my voice to the ongoing dialogue fostered by carnegie and its studies program. before i begin my remarks i would like to take a moment to note our sympathy and prayers are with the people of canada during this difficult time. we are still working on gathering all the information about the attacks yesterday and are working very intensely with their canadian counterparts.

this is a tragic reminder of the need for vigilance in the face of terror. as president obama has made clear to prime minister harper our friends and the ottawa will have whatever support they need from our security teams here in the united states. to come this morning to discuss an especially pernicious expression of the endemic problem of violent extremism, the terrorist group known as the islamic state in iraq and levant. in particular i will describe the u.s. and international effort by a team of treasuries to undermine isil's financial strength as part of a comprehensive strategy to disrupt, degrade and ultimately defeat isil. let me begin by briefly reviewing quietly are so focused on isil. the isil terrace have slaughtered thousands of innocent people who did not subscribe to their ideology.

they have persecuted religious minorities and threaten genocide. they enslave and rape women and girls. they have brutally murdered aid workers and journalists who have traveled to syria just to bring a small measure of relief to the syrian people or to tell their story. the vast majority of their victims are muslims, sunni and shia alike. as the sows chaos in communities across syria isil threatens core u.s. interests. it threatens american personnel and facilities in iraq. it threatens our regional allies including turkey, jordan and lebanon to our already strained by the ripple effects of the crisis in syria. and because it is attracting so many foreign fighters destabilizing an entire region and securing a safe haven iso if left unchecked could ultimately pose a direct threat to citizens of the united states and their allies outside the middle east. put simply a terrorist

organization with territorial ambitions and the stated desire to kill innocent people abroad must be confronted. that is why under the leadership of president obama the international community has come together to stop this threat. the president has tapped general john allen as special envoy to spearhead the establishment of a broad coalition, now some 60 partner strong ranging from the middle east to europe and beyond. behind the strategy to degrade isil capabilities rollback its recent gains and ultimately defeat it. i sila scrap the world's attention for its outlandish ambitions and astounding brutality but also for another reason, it's essential well. isil's primary funding tactic enables it to fund tens of millions of dollars per month. these tactics include the sale of foreign oil, the ransom of kidnap victims, theft and

extortion from the people who it currently dominates into lesser extent the supporters outside of syria and iraq. so as part of united states broader strategy to degrade and defeat isil we have the treasury department are intensifying our focus on undermining isil's finances. this is the whole of government ever to probably take a lead on the financial component of the strategy we are working closely with their counterparts in the state department, the department of defense, law enforcement in the intelligence community. we are also linked up with international counterparts. indeed just last friday we hosted a meeting with the state department that brought together over 20 countries and organizations to identify financial measures to financially isolate and undermine isil as well as the illegitimate assad regime. as with the rest of the campaign against isil or efforts to combat its financing will take time. we have no silver bullet, no

secret weapon to empty empty isil scoffers overnight. this will be a sustained fight and we are in the early stages. but one thing is certain. so long as isil terrorizes the people of iraq and syria empowers the broader middle east and threatens u.s. interests overseas and at home, we will remain committed to degrading its financial strength. in 2004, the office of the treasury department was created and charged with developing and deploying financial tools to combat terrorist financing, reflecting the recognition that one way to forestall terrorist attacks is to deprive terrace urbanization is a money paid to the application a powerful national and international sanctions close cooperation with partners in the private sector and enhancements to international financial transparency, we have made it harder than ever for terrorist groups to raise, move, store and use funds.

in many respects our campaign against isil's financial foundation will build on our work over the past 10 years and closely resemble our previous campaign. but to some extent i suppose it's a different terrorist financing challenge. it has a vast wealth at an unprecedented pace and its revenue sources have a different composition of those from other terrorist organizations. unlike for instance core al qaeda isil derives a relatively small share of its funds from deep pocket donors and dust does not depend on moving money across international borders. instead isil isil obtains the vast majority of its revenues to local criminal and terrorist activities. just as isil relies in part on new models to fund itself we too are adapting our tools and techniques to combat isil's financial activities. before turning to the specific steps we are taking let me take a moment to detail these sources of revenue.

first, isil has raised a significant amount of money, and many millions of dollars by selling oil extracted from the fields of syria and iraq. our best understanding is that isil has tapped its long-standing and deeply routing black market connecting traders in and around the area. after extracting the oil isil sells it to smugglers to intern transport the oil outside of isil strongholds. they move oil in a variety of ways by relatively sizable tankers to smaller containers. rails understand iso- controls oil refineries with various sizes and capacities and earns some revenue from the sale of refined petroleum products. so who ultimately designs those this click the printer information as of last month so was selling oil is substantially discounted prices to a variety of middlemen including some from syria who have transported the oil to be resold.

it also appears that some of the oil emanating from territories were isil operates has been sold to kurds in iraq and then resold into turkey. and a further indication of the assad regime's depravity it seems that the syrian government has made an arrangement to purchase oil from isil. it is difficult to get precise revenue estimates on the values of these transactions in light of the murky nature of the market but we estimate the beginning in mid-june a isil has earned approximately $1 million a day from these oil sales. there are good indications however that recent quotas from military efforts have begun to impair isil's ability to generate revenue from oil. airstrikes on oil refineries are threatening isil supply networks and depriving it of fuel to sell or to use itself. moreover our partners in the region including turkey and the kurdistan regional government

are committed to preventing isil derived oil from crossing the borders. last week the international energy agency reported that isil's ability to produce refined and smuggle oil had been significantly hampered. second, isil also kidnaps innocent civilians to profit to obtain their release. isil did not pioneer kidnapping for ransom. it's been around for thousands of years and other terrorist organizations including al qaeda's affiliate in yemen and north africa also rely and ransom as a key revenue source. as i've said before kidnapping for ransom is one of the most significant terrorist financing threats today. for isil, these ransom payments are irregular but each one can be a significant boon. this spring i so released capture journalists and other hostages from several european countries. in return according to press reports i so received several

billion dollars in payments. all in all isil has taken in at least $20 million in ransom this year. third, like its predecessor al qaeda in iraq, isil raises money up to several million dollars a month or a sophisticated extortion racket. in iraq and syria isil extracts payments from those who pass through, conduct business in and seek to live in territory where it operates. in the iraqi city of mosul for instant isil tears are going home to home business to business demanding cash at gunpoint at a grocery store money to refuse to pay was one with a bomb outside a shop. others who have not paid of seeing their relatives kidnapp kidnapped. religious minorities have been forced to pay special tribute. we have seen reports that when customers make cash withdrawals from local banks were isil operates isil has demanded as much as 10% of the value.

make no mistake this is not taxation in return for services or even real protection. it is vast, pure and simple simple. amani isil pilfers is being exchanged not for a guarantee of safety but for the temporary absence of harm. fourth, isil also profits from a range of other criminal activities. they rob banks. they lay waste to thousands of years of civilization in iraq and syria by looting and selling. they steal livestock and crops from farmers and despicably they sell abductive girls and women as slaves. finally as i mentioned earlier i sold derives some funding from wealthy donors. even though i so currently does not rely heavily on external donor networks it maintains import links to financiers in the gulf as a state of treasury designations last month made clear. so isil's revenue streams are to

be sure diverse indeed. with the important exception of some state-sponsored terrorist organizations isil is probably the best funded terrorist organization we have confronted. nonetheless, understanding this effort will take time, dedication and broad collaboration we are well-positioned to degrade isil's financial strategies. our strategy involves three mutually supported elements. first, we are working to disrupt isil's revenue streams in order to deny it money in the first place. second, we aim to limit what isil can do at the funds it collects by restricting its access to the international financial system. and finally we will continue to impose sanctions on isil's leadership and financial facilities to disrupt their ability to operate. let me elaborate. the first elements of our strategy is working to cut off isil's main sources of funding.

in particular its revenue from oil sales, ransom payments, extortion and crime and support through foreign donors. to disrupt the market and oil derived from isil controlled field we will target financial sanctions anyone who trades in isil stolen oil. it is true of course that isil's oil networks that are largely outside the formal economy where individuals are less vulnerable to financial pressures. but at some point the oil is acquired by someone who operates the illegitimate economy and who makes use of the financial system. he has a bank account. his business may be financed and his trucks may be insured. his facilities may be licensed. all that makes isil oil facilitators vulnerable. the middlemen traders refiners and transport companies and

anyone else that handles isil's oil should know that we are hard at work identifying them and we have the tools at hand to stop them. and combating isil's fund-raising through oil sales we will leverage the well-established reluctance of banks around the world to facilitate the financing of terrorism. and beyond financial sanctions were working closely with others in the u.s. government to enhance the ability of our partners in the region to choke off cross-border oil smuggling groups and identify those involved in smuggling networks. the turkish and iraqi kurdish authorities have both made commitments to combat whatever oil smuggling occurs in this territory. and of course as i mentioned earlier are military colleagues are playing a significant role in degrading the source of funding through air airstrikes on oil related targets. next, to prevent isil from raising funds for ransom we are

redoubling our efforts to translate the emerging international consensus against the payment of ransom to terrorists groups to employ a more widely adopted practice. it has been u.s. policy for many years to refuse the payment of ransoms or make other concessions to hostages. this policy rests on the sound premise confirmed by experience that an explicit and consistently applied no concessions policy reduces the frequency of kidnapping by eliminating the underlying incentive to take hostages in the first place. in the context of hostagetaking by terrorists this policy has even greater force. we know that terrorist organizations, isil included come he is ransom money to fund the whole range of their violent activities. refusing to pay ransom to terrorists therefore not only makes them less likely than americans will be taken hostage but also deprive terrorists of funding critical to their deadly

aspirations and operations. we maintain this policy not because we are coldhearted. to the contrary, at the president's direction will we use all of our military intelligence law enforcement and diplomatic capabilities to secure the release of american hostages. the attempts made this summer by u.s. forces to rescue hostages being held by isil reflects this commitment. but very simply if we are to protect our citizens and avoid bankrolling our adversaries every country must adopt and implement a no ransom policy. this is beginning to take shape. last year the g8 unequivocally rejected the payment of ransom to terrorists and this ear members of the u.n. security council have adopted resolutions reaffirming their shared commitment to seek the safe release of hostages without making monetary or political concessions. going forward as we seek to

prevent kidnappings from occurring and remain dedicated to freeing those taken we will continue to urge subscribing to a new ransoms policy. at the same time we will look to user counterterrorism sanction authorities against those who demand or receive ransom on behalf of terrorist organizations. we are also concerned about external donor networks. to prevent isil from raising funds from donors abroad we will continue to identify financial supporters and target them for sanctions. we have long believed disrupting the funding networks in and attacked with applied sanctions against two dozen individuals associated with hq i were isil over the past 10 or so years and we will continue to target those who would exploit the suffering of innocent people in syria and iraq to raise money for their extremist agendas whether in

support of isil or any other terrorist group. in the month ahead we plan to accelerate our efforts to identify targets with sanctions and take action against them through our counterterrorism authorities. in september president obama led the u.n. security council and unanimously passing of resolution to stem the flow of foreign terrorist fighters into and out of iraq and syria. security council resolution 2178 aim specifically to prevent and suppress both fighters and money to isil and -- and we are working with others to implement it safely. we are working especially closely with our friends in the gulf to our stalwart partners in the anti-isil coalition to ensure that they all have these rules in place to combat terrorist financing and that they all use these tools effectively. we especially appreciate the close collaboration and the strong steps taken by the emirates and saudis combat isil

financing. even though i suppose not -- for terrorist financing that's no reason to relax our focus is very. and disrupting isil's current source of income in this isil gains prominence in the global terrorist movement we must be prepared for the possibility that while the extremists will increasingly seek to fund it. as for disrupting the revenue that isil generates from extortion and other local criminal activities we recognized that treasury tools are not specifically well-suited to the task. we can and we will identify and designate individuals who oversee isil's extortion networks calling attention to those who are brutalizing the people in iraq and syria but our experience and combating hq i extortion networks with isil mimics drives on the point of shutting down the revenue flow of isil's extortion network ultimately will require breaking

its hold on territories. lines of everett and anti-coalition are focused on this crucial objective. nonetheless even where treasury's financial tools cannot cut off certain revenue streams we still have a crucial role to play. that brings me to the second key element of our strategy. as we work to disrupt isil sources of income we are focused on restricting isil's access to the international financial system in order to impair its ability to collect funds from abroad and to move, store and use the funds it acquires locally. isil's ability to make the use of the money it raises depends on access to the banking system and syria, iraq and internationally. operating entirely in cash is both cumbersome and risky. cash is bulky, vulnerable to theft and requires complicated logistics to transport.

moreover i still will have a hard time finding external operations including facilitating the movement of foreign fighters without access to the international financial system. to that end we are working to limit isil's ability to transact with the iraqi syrian and international banking system. scores of bank branches are located in territories were isil currently operates. through cooperation with the iraqi authorities, bank headquarters and the international financial community we aim to prevent isil from using those bank branches. the private sector also plays a key role in this element of our strategy. bank secrecy reports filed with the treasury for financial security provide the u.s. government with valuable insight into the financial activity areas were isil operates. we carefully review this report

were isil financing and quickly disseminate information to authorities. the third element of our strategy and chosun are time-tested approach to countering the financing of terrorism. that is we will continue to dismantle isil's financial foundation through targeting designations leadership, supporters and financial facilities. running a terrorist organizati organization, especially one that lets isil spam hundreds of miles is both costly and bureaucratically challenging. in order to keep track of all the revenues isil depends on complex networks with cfo like figures at the top. as we identify these individuals that make up those networks we will expose and detonate them. we have seen from our fight against al qaeda and other terrorist organizations that sanctioning top officials hamper their ability to raise and handle funds. doing so against isil will make it harder for isil to conduct commercial and financial

activities and also clearly identified communities to stand behind this evil organization. we have already stepped up our designations of isil officials in iraq, syria and their financial supporters outside the area. most recently on september 24, the treasury sanction to high-profile individuals associated with isil a financial facilitator he who arranged a 2 million-dollar donation from the gulf and the senior military commander. both are based in syria soliciting donations for curing military equipment and recruiting foreign fighters. these designations will not on their own stop these individuals from operating that day and designations to come will frustrate isil's ability to attract monies and fighters. before concluding i would like to make one final point about her campaign against isil financial foundation.

we should not confuse funding with financial strength. while isil today is well-funded terrorist groups overall financial strength turns not just on its income but also on its extensive and important the degree to which it dedicates its resources. in that regard i've operates within certain constraints. isil territorial are a financial burden. attempting to govern territory in iraq and syria were currently operates much less delivering some modicum of services to the millions of people it seeks to subjugate is expensive. by way of comparison only since no one expects isil to deliver the same level of services as legitimate iraqi government the official iraqi budget this year for the provinces were isil operates is well over $2 billi $2 billion. that far outstrips isil's

revenue and does not include the price tag of the territories it seeks to dominate in syria. what this means is that isil cannot possibly meet the most basic needs of its people it takes to rule. in fact we are already saying reports of water and electricity shortages in mosul as isil fails to deliver. as we make progress in diminishing isil's revenues and its freedom to use them we will further exploit this vulnerability. the consequences of isil's inability to meet the cost of governing by the way were articulated very well in a recent report by carnegie's on line journal program. with time, patience and close international cooperation the steps i've outlined today will help -- undermined isil's financial finances. the campaign will require more

than financial tools. this is primarily because given that isil is enriching itself locally it cuts off one key source of funds requires broadening of territories which operates the more broadly even as this vital military campaign progresses we recognized the only solution to the conflicts in iraq and syria are political in nature. the hateful ideology propagated by isil must be countered by tolerance, economically vibrant societies and governments that rule in an inclusive manner. these are long-term goals that the united states is deeply committed to fostering. while we work towards lasting solutions to treasure will continue to employ innovative strategies to disrupt isil financing. together with our partners in the u.s. government and across the globe we will degrade and ultimately defeat isil. thank you. [applause]

>> thank you very much undersecretary cohen. let me start the discussion with a couple of questions and then we'll open it up to the audience. you just returned from a trip from saudi arabia. both countries as individuals continue to donate money to isil. what was your message to them and how do you assess the state of fund-raising in the gulf for these organizations? >> that's right it just last week was in saudi arabia and qatar. look, the gulf is anonymously important in the anti-isil coalition for a whole host of reasons including the counter

financing aspect of this. we have made no secret over the years of our concerns with financing for a terrorist organization coming out of the gulf and i think we have made some significant progress in the gulf but there's obviously more more work to be done. i think if you go through each critical country individually, if you look at saudi arabia for instance, my meetings there were very good. the saudis are deeply committed to ensuring to the best of their ability that no money goes to isil, al qaeda or al-nusra funds. they have really over the last number of years made enormous strides in combating terrorist financing and you know i am confident are completely committed to ensuring that isil is not able to raise funds in

the united kingdom. in the uae and i did visit the uae on this trip but i'm a frequent visitor. they also are steadfastly committed to preventing funding for isil. we have a very good close relationship with the emirates in combating terrorist financing. in fact we have just initiated a bilateral terrorist financing task force and they're going to work together even more closely on combating terrorist financing. i think that's a very positive development that reflects an ongoing commitment by the emirates. with respect to qatar and kuwait, it didn't make it to kuwait on this most recent trip although general allen who is spearheading this overall effort is i think just embarking on a

tour that will include kuwait as well as qatar. you know i have in the past noted that both qatar and kuwait are permissive jurisdictions for terrorist financing and every specific concerns to him that his reference and some extend isil. and i think both countries have more work to do. and qatar where i was last week i had very good meetings with senior leadership where we discussed how best to address this problem. the qatar's and the emirate recently promulgated a new laws regarding charitable activity and qatar as a way to try and assure that the charitable sector is not used as a mechanism to fund terrorist organizations. but there are u.s. and u.n.

designated terrorist financiers and qatar that have not been acted against under qatari law. khalifa also buy and more recently al-rahman who was redesignated in august. they are both residents and qatar. with respect to kuwait they are also home to a number of u.s. and u.n. designated terrorist financiers. they also have the laws and the institutions in place to combat terrorist financing and kuwait. one of the things that we are particularly concerned about and to the recent designees sharif

outlaws me were raising funds through social media and twitter appeals in particular. they are raising funds not necessarily but also reaching out to others, including in saudi arabia to make appeals to raise funds. so one of the areas where we are quite concerned is ensuring that an particular people who have been designated by the u.s. and by the u.n. are disrupted and unable to continue their financing activities. as i say i think there is more work to do both and qatar and kuwait. we have been deeply engaged with both countries for a number of years. we have seen others make really substantial progress in combating terrorist financing and we are going to continue to work as closely as possible with our partners in the gulf.

>> how would you address critics of u.s. policy to suggest that this is not america's fight and it would be better left to countries in the region and not to the united states, and how do you see the campaign progressing progressing in the months and years ahead? what would you look for to determine what it's working on now? >> while i would say a couple of things. first of all, this is certainly america's fight to some extent and as i noted what isil is doing threatens core u.s. interests interest whether it's our personnel and facilities in iraq and in baghdad and erbil or the interest of some of our very close partners in the region jordan, lebanon, turkey is very significant u.s. interests. as well is the concern that isil is attempting to create a safe

haven for terrorism across that swathe of territory which is attracting foreign fighters. i think we have seen something on the order of 15,000 foreign fighters flowing to the area from 80 or so different countries including dozens of americans. so it is deeply in our interest to confront isil in combat isil and degrading defeat isil but it's not our fight alone. i think the size of the anti-assad coalition as 60 countries and organizations coming together to combat isil 10 of which are involved in military strikes. i think it demonstrates that this is viewed quite properly as a threat really to many countries around the world. and then as to how we will judge

the success of our particular efforts to address isil financing, like i said this is going to be a long-term effort and it's going to involve work that the treasury department does in designations, and exposing the networks. it will involve work of partners and in other countries, in turkey and elsewhere and where we are very much to engaged. my deputy was in turkey and general allen was there last week. we are continuing very close and indications with the turks on these issues. and you know it will require an enhanced understanding of the funding networks we are combating whether it's the oil networks, other smuggling networks, external donation networks. i should note that we are very

proud of the treasury departme department. we have a house intelligence agency. we are the only finance ministry and the world that has our own intelligence agency. what these folks do is help us understand the financial networks. they develop financial intelligence. it's enormous and with important to be offered that the intelligence community help us understand these networks. so, to answer your question, how do we judge our success? i think we will see over time that we are degrading each of these lines of financing for isil. as i said isil has a fair amount of money today. what is critically important is that we do everything we can to prevent recurring revenue. one-time revenue that we can

address is one thing. we want to make sure that as they have significant expenses they don't have a ready stream of recurring revenue. >> let's open it up. we have about 20 minutes that we will take questions in batches of three. please keep it short. please. >> hi. monolith à la korea. how can you assess what you have done so far and you talked about how people in the gulf and governments in the gulf have new tools that he wanted to make sure they know how to use. what are these tools and also just the last question you were talking about how some of you guys have been trying to come up with novel ideas to combat this novel way of raising funds but really you haven't outlined anything about what you are talking about. you have always had designations and always looks the other

financial networks so what's new about what you are doing? >> yes sir. >> national and domick for democracy. you laid out a great strategy for formal sector banking and stuff like this. i just want to raise your attention on two things didn't mention. what about informal companies that are in saudi arabia? i can make $100,000 by phone telling you with that 100,000 i will give it to -- that's one. second one thing you didn't mention this agriculture. if you seee wheat and corn are used in the isis area and i don't know about syria but that's a lot of money coming in. did you look in this area?

>> with that the question from the back. >> international for terrorism studies. a big source of combating isis has been supplying materials and weapons to the syrian rebels into the peshmerga. shouldn't a priority be put on ensuring the supplies do not fall into isil hands which would then put less pressure on their financial coffers? >> okay. let's start with these. >> great. so how would i assess our progress so far? as i said we are in the early stages of these efforts. i think-somethings that we have done what i do think have been useful are the designations in september of some of both the

military and financial facilitators which builds on work that we have been doing for a number of years to identify people who are related to aqi. there are dozens of designations. this helps in that it was useful in my recent trip to the gulf to highlight work that can be done. this is not going to be an exercise where we are going to at the end of every month be able to produce a balance sheet that shows what isil's finances look like. this is going to be a steady effort that will degrade isil's financing over time. the other area where i think we have seen as i noted, we have seen some progress already is not something that we have done at the treasury department. treasury department. it's something that our

colleagues in the department of defense and their partners have accomplished in terms of strikes against isil oil facilities and oil refineries in particular that impart a piece there ability to refine but also makes it difficult for them to fuel their vehicles both their military vehicles as well as vehicles that may be smuggling oil. so i think those are efforts and i guess the one other in this i think it comes to your question about what's new, we have also begun conversations with the iraqi government and with other financial regulatory authorities around the world about our concerns with the bank branches that are within isil controlled territory. this is a difficult problem because our interest is not in shutting down all economic

activity in the areas were isil currently operates. they are subjugating huge swaths of populations of millions of people who are still trying to live their lives and banks as everybody knows are important for the economy. at the same time we are very concerned about isil's ability to co-opt or co-workers the bank employees into sort of using the banks as a way for them to move money and particularly internationally. in so this is, i don't know if it's new or toll but it's a new manifestation of accord treasury competency which is working with financial counterparts both in the iraqi government and outside to do what can be done to try and prevent isil from making use

of these branches. so, i will leave it at that. on the question of the informal means to move funds, it's absolutely right and it's something that we confront in all of our counterterrorist financing efforts is that not everything moves through a formal financial center but we also have a history of identifying and taking action against informal financial networks. we have done it in afghanistan. we have done it in pakistan. what it requires is good intelligence on who is involved in these activities and then action against them. and it also requires the cooperation and collaboration with partners in the region. i think the examples you cited

was one end of that transaction was in saudi arabia. we are as i noted very closely engaged with the saudis on these issues. they are i think fully engaged on the efforts to combat isil financing and we will work with partners in the region on those sorts of issues. both with respect to the question on agriculture and isil selling weapons, as i said one of the challenges here is that isil controls territories and that means that they are able to engage in activities within the territory where they are currently operating whether it's stealing crops and selling them or coming into weapons that have been left behind and selling them. that's all activity that we are

aware of yet there are ways to address if it is going beyond the borders where they operate but fundamentally it's going to require pushing back isil from the territory where it operates in freeing the lands where they are as well as you know that won't work on the extortion networks but it will work on the selling of crops that they are stealing. >> hi. ratio -- rachel oswald. he said there has been success in the conversations with countries i'm guessing primarily european countries about no longer paying ransoms to isil and other terrorist groups. could you be more specific about which countries are coming around?

>> barbara slavin from atlantic council. how do you deal with the fact that there are mixed motivations on the part of the members of the coalition many of them putting a priority in getting rid of bashar al-assad and especially tricky in this light in their many folks who seem to have an ambivalence about the activities of the islamic state and if i could also throw in the iran question. how much progress have you made in setting up financial channels for people who want to do legitimate business with iran and will there be a blessed channel between an american and an iranian bank if we get a comprehensive nuclear agreement? thank you. >> in the back. >> okay, please. >> i have a quick question regarding the oil trade. you said that some of the oil that isil is controlling is sold

in iraq and resold to turkey. could you clarify what percentage of the oil is crude and what percentage is refined and also there are two ways where the iraqi kurds are are transporting this oil to turkey. one is through the pipeline and the second one through tracks. the government sees that oil traders smuggling. what is your position on this issue when you said you are working with the partners in the region to choke off cross-border oil smuggling routes. does that include the oil truck trade made between -- and turkey? >> in the back. yes, sir. >> will with "the wall street journal." to follow up on the oil trade i believe you mentioned some fairly well sized tanker

vessels. as the u.s. or others identified which vessels are being used, what routes are they applying between which ports and how would they be stopped through being arrested at the ports or in their fifth fleet on the high seas? how is that particularly going to be stopped? >> i'm going to try to do this in reverse order. just for added fun. just on your question i didn't mean to suggest vessels in terms of ships. i think what we have seen our tankers, truck tankers, not ship tankers. so just to clarify that. and then to the question on how the oil is moving and what the

smuggling networks look like and what we have learned about them. i don't have much more detail than i can provide today on the specific routes and the specific mechanisms than what i have already said. but i will note this, that the smuggling routes have existed for a long period of time, long before isil was active in the territory and what may have been a willingness to sort of look the other way to be sort of you know, not knowledgeable about the origin of the oil that the smuggling networks are using i think the smuggling networks by the way it's not just oil. there are other origins of oil

that may have been tolerable any time or what was happening was just people stealing oil from the syrian or the iraqi government and selling it through these networks. the differences that we now know and they now know that this oil begins with isil, begins with a terrorist organization and that the trade in this oil fundamentally funds this terrorist organization and so what may have been a willingness to look the other way in the past is something that i think cannot continue going forward and as i said we will try to emphasize that message both rhetorically and through action as we identify people who are involved in those networks. with respect to competing

objectives or ambivalence or what have you, i will leave the diplomacy to the diplomats. i don't sense any ambivalence whatsoever among some of the key partners and the importance of combating isil financing. i think even with respect to what i was saying on qatar and kuwait, and neither of those countries and no officials in those countries are saying to me that they are indifferent to the funding of isil coming from the territory. quite the contrary. both of those countries are aware of the problem and i didn't answer the question about the tools to let me come back to that which is that the qataris have a new love regarding

terrorists. they have long-standing legislation around them that designate individuals and designate terrorist organizations as they are obligated to do under u.n. security council resolutions. the kuwaitis also have both institutions in the legal framework to do essentially what we did which is to take administrative action against terrorist financiers. those are the tools that are available and as i said i think we are going to continue to work with both of those jurisdictions so they employ those tools as effectively as possible. and then on the question about ransom and where we have had success, i do think it's notable that in the last year or year plus you have had the g8 come out with a very strong statement about the payment of ransom and then you had to u.n. security council resolutions that one

specifically focused on ransom payments and the other in the context of foreign fighter terrace not paying ransom to terrorists. that is a very significant declaration of adherence to a no ransom policy. ..