susan hennessey will be with us. we'll talk talk about apples fight of the fbi over encryption. robert daly will talk about surface-to-air missiles and the state of china's economy. be sure to watch c-span "washington journal" beginning live at 7:00 a.m. eastern tomorrow. join the discussion. >> on the sonic communicators, conversation with the head of the national socialization of broadcasters. former senator gordon smith. the united kingdom votes on june 23 to decide whether they should remain a member of the european member union. remarks from the homeland security jay johnson will be later. >> c-span, created by marcus cable companies, 35 years ago and brought he is a public service by your local cable or satellite provider.

>> senator gordon smith, president and ceo of the national association of broadcasters, welcome back to the communicators. we appreciate being here. >> guest: thank you it's a pleasure. >> host: the current fcc, five commissioners have been a place for a couple of years now, you've, you've got to work with them, how would you describe your relationship and how would you describe the current fcc. >> guest: i think it is fair to say this is proving to be one of the more partisan fcc's i have ever observed. i say that having observed many of them on the congress committee. i think it is stylistic and i think chairman wheeler has an agenda in mind and he wants to push it and he needs to votes. it makes it challenging for us but because on one hand our issue, telecommunication issue should not be republican and

democrat. it seems to be more divided that way than i have ever seen. that is their business and my business is to work with both sides constructively and as effectively as possible. >> is the fcc structured in your view in a way that is the 21st century? >> i think so but i think the house commerce committee and others have come up with reform ideas that are probably long overdue. but again, i'm not anxious to tell them how to do their job because my job is to get along with them and work with them and try to make broadcasting case as well as i can on the basis of good public policy. >> joining us today to talk about the issues is my tea table. >> hello senator.

do you think this fcc is more or less responsible to pressure and does the election time make a difference? >> the election year, all of the time consumed a lot of oxygen on the hill. the focus of the hill tends to be more focused on the ballot box then not necessarily government agencies. at least least that was my experience. i would say that some of the chairman's and raking it member nelson in the senate and house, as well as the judiciary committees, bipartisan we have written things to the fcc that

in my date would have gotten a different response. at least that was a my experience. i think congress congress has been doing its job and oversight, how responsive the fcc has been to that pressure, sometimes yes, sometimes no. >> we sort of glimpsed of the end of wheeler's term. how do you think he is going to be remembered as a chairman? what you? what you think his lasting legacy will be? >> i think he is very able and a very smart man. i think he has very clearly in my what he wants his legacy to be. he is no respecter of industry, he is going after that. sometimes in the face of real congressional criticism. that is not necessarily a bad thing, it it is just what his agenda is that he is pursuing. my own sense is that his legacy

will largely be defined by the neutrality vote and especially by the broadcast spectrum auction. he he has put a lot of his chips on that part of the table. we are anxious for it to be successful, we are anxious for it to be over. we are anxious to do our part, i am really riding to horses on the circus on this because i have many broadcasters who are very anxious for good business reasons wanted to participate. i have a lot of broadcasters who just want to be in business and left alone, and support localism, and grow their businesses and look for new ways and new platforms to get broadcasting content out there. so on the one hand i have to support the auction which we do, and i do, on the on the other have to protect the remainder of

the men in the process. we are doing our best to ride those two horses at the same time. >> the fcc has not really statistics on how many broadcasters are signed up for the auction. do you have any sense of the level of participation? is it enough of the broadcast i? >> no one knows in the chairman has said that he is likely to release that. i have have reason to believe that many broadcasters will look at it, again for good reason. how many remain in it is the open question. of course that depends on the buyer side. how many companies will come to the table, when you look at what we hear on the street, spread is already out, verizon and at&t seem to be vague about their intentions and t-mobile is going to be a big player but how big their wallet is is another question. what new interest will come in,

we do not know. all of those cards are being held by chairman wheeler. >> when you think it a secret a secret? >> i do not know. i suppose he should answer that question. >> could you talk about the vacant channel proposal? i know nab has fought hard against that, why do you think the fcc is pursuing it so hard in the face of that opposition i do you think it will end up in court? >> remember part of the motive of the auction is to raise money for the federal government. a vacant channel, let's let's be honest to get the vacant channel? google is a company with a market capitalization of $547 billion. it is the biggest company in the world. it is bigger than many countries. if you're going to set aside a google channel for nothing you have to ask yourself, is that in the interest of the legislation?

>> many broadcasters broadcasting interested companies have said that repacking plant was taken into account the level of the tower cruise, the level of infrastructure there is to support the auction and the repacking. is that still the case? >> several things, first of all if i were to come and, if you were an auto mechanic and i came in and i said how long is it going to take to fix my car and you have not looked at it, could you tell me how long it would fix? >> of course not. >> itself answering and that's essentially what is happening here. we do not know how long it will take to do. you can tell me how many megahertz they will get and how many stations are going to be effective. if it is 1000, i can promise you just on the physical labor required that 39

month is not enough. if it is 200, maybe too much time. unfortunately the fcc has put 39 months in their regulation. in their defense, every fcc commissioners and house hearing was asked a question, we force the broadcasters off? if you get 120 megahertz and it is not done what you force those who have not completed in the repacking to go dark? everyone about them, even chairman wheeler said no. i do not think they could sustain a politically of the you said to a state you are off the air, i cannot imagine. i can imagine could as i used to sit in one of those chairs what my reaction would be if they set all my broadcasters in oregon were off the tv set. that was out lawmakers megaphone to the people. that that is how you communicate with your constituency. so they are not going to do

that. nor do they know how long it will take until they know how many stations need to be repacked. >> just to go back a step, are broadcasters excited about this auction? i know you gave a mixed view of this, some are, are, some arts. i they excited about the chance to benefit financially? >> i think it just depends on their rock caster and the balance sheet. what type of modernization they look to. how can they monetize their spectrum. do they have any excess? do you have a couple of channels maybe they can get rid of one, maybe they can channel share. so i think every one of them has to speak for themselves. i see my membership is rather divided on it and who is going to be participating and who will

not. many will. many are public companies that they have got to answer to board of directors, investors, they have to look at this and look at it seriously. i believe they are, but see they have in the auction the ability to withdraw at any time. they do do not have to accept an offer that is made. so how many will be at the end? i cannot say say anymore then tom wheeler can say. >> if it goes the way wheeler wants it to with so many megahertz being cleared, are you concerned that any position will be leak weekend because they'll be less broadcasters? >> that's a fascinating fascinating question. things are in shorter supply. we will be smaller and demand. does that mean you are less important or more important? if something is in short supply in the public still truly values localism, one of the most popular telecommunication brand

are your local tv stations. will they be less important or more important? i think the answer is we will have a smaller band but will be actually more important. many of the people who are going to bid on the auction, they want what we have. they want our airway. they do not want the responsibility a broadcaster has like localism, like weather, news, sports. they don't want to do that. they want the spectrum so they can bill you more on your phone bill or any other bill they may be able to direct you through the airways. my only view is this is a grand experiment, never been tried before. i'm happy for my broadcasters who want to utilize it but i have a duty to protect those who want to stay in the business. product caster seem to be devoted to their industry of their cause of public service and great network content.

>> is there an impact to the viewer of the smaller spectrum? >> if you are not crowded out. some channels and told me just go away. but what that will do is make the programming scheduling more interesting on what remains. i think it is possible there may be some communities that will have none but that will be very few. i think the public policy that underlies an over arches the bride cast license, their values that are still valuable to the american people. what broadcasters do, what newspapers do, the two of them together they get people the civic information they need to live in formed lives and know

what's going on in their community. that brings up the ownership rule, the newspaper broadcast crossover rule if anything he needs to changed because were both in the journalism business and were both important to the people who live in every community in this country. >> it should be changed in your view, but will it? >> i never really understood the review, i never focused on it on the senate congress committee. i have been at nab for six years and they have missed it twice. there is a real crying need for that to be accomplished and changed so that for the sake of the first amendment and investigative journalism, it ought to be changed. >> speaking of the ownership rule, congress took a swipe at

the fcc rules and joint sales agreement enforced a grandfathering provision in there. do you think the fcc has a responsibility to skilled at rollback now that they know congress and doesn't approve of it to some degree? >> i would think they would, but i do not know that they will. it is the everlasting credit, barbara mikulski and senator blunt, senator schumer, congressman walden and others, these gentlemen on a bipartisan basis understood at their core that once the rules are set in broadcasters that eventually rely on those rules that you cannot change them post factor. that is what the fcc did and the congress said no, you don't. so i would think they would take note of that. we are are one of the few writers to get through on the last resolution through congress.

i think that ought to say something. the president signed it. but again that is their business as to how they will respond. >> what is your current relationship to broadcasters with the cable companies, particularly particularly when it comes to retransmission? >> there is always an economic tension there as you can imagine. they want to pay less and we believe our content is worth more. we are paid 10% of the monies coming, that are dispersed through pay television yet we represent 35 or 40%. there is a disparity between the viewership and the compensation. obviously they would would like to blame retransmission consent for the inflation and cable bills, but the truth is it has more to do with the set-top box anything that happens between them in broadcasters and

free-market. >> you raise the set-top box issue, that's a huge issue in their supposed come up with it at the next meeting, nap hasn't weighed in on that to my knowledge. broadcast content is a huge part of what they are selling. >> i respect the fact that the chairman is looking at something, chairman wheeler is if nothing else he is to his credit fostering competition. he is looking at one of the real cost centers in the paid television industry. so i understand why he is doing that. i suppose as a consumer myself putting on my broadcaster hat who is the new gatekeeper? is at, google, i don't know. if it is one of those the question i have is, right now we have tough negotiations with

directv, satellite, or dish, or with comcast and cable, time warner, you name it. those retransmission consent negotiations are happening all of the time. 99.9% handle without any difficulty at all. but they are paying for the content. so if it goes to a new set-top box with a different gatekeeper i guess mike question putting my broadcaster back on is, what about my copyright material? of they can sell ads on that? if so, did i have no responsibility for what they will then take from broadcasters? i think there's some serious legal issues there we are paying attention, but this is something they'll vote on, i think it is likely to go to rulemaking at some point and we are going to be participant because we want

to protect our content, it has a a value. and we are determined to protect that. >> speaking of negotiations, how worried are broadcasters that there's going to be a lot of changes to the negotiation rule. >> again, this is a solution looking for a problem. i understand as good business people and pay-tv colleagues are, they are looking to reduce any cost that they can. but again, we are paid far less for our content than they pay themselves for their own content. our content has has a lot more viewership than theirs. we think there is a disparity between compensation and viewership but it is also true that her friends on the other side of that negotiation, some of them i think dish in particular really relish that whenever they can get an impasse with some small broadcaster and

blow that up into some big deal and they always time it around the super bowl, the oscars, as night follows day that is going to happen. then they go to fcc in the hill and say there is a huge problem. opening up this proceeding will probably result in more standoff, more blackouts. the best thing that could happen should they close the proceeding quickly and that sends the message that you should spend less time looking for special favors and government and more time negotiating in business. that is how it is supposed to work. that's how it has worked. >> what is the impact of the super bowl of an election season on broadcasters? is it like christmas money? >> it is. let's be honest, football, the nfl has become a secular relation in our country and half

of the country was tuned in. at least i suppose, it was just off the charts. sports have a great value and they are very important to broadcasters. i am pleased to tell you that the broadcast picture has never been better. members are streaming in all of that and the architecture of mystery meat will never support that kind of viewership that we can do with a good clear view broadcast. but the big unit is the tv with the broadcast signal. when it comes to commercials and dvr's and other devices to skip over the commercials, what, what is the impact of that? >> it is a concern, most of the revenue is still advertisement. it is still small.

if the people who like dish and have the hopper want to say let's undercut 85% of the bread casters revenue stream, it's a problem. we want to be able to say to the advertiser look, we will deliver the eyeballs and that will produce customers for you. if they get people to skip it some well. in the super bowl, however people tune in for the ads almost ad almost as much as for the game. advertising still remains central to the revenue stream, necessary and great content from supporting localism in journalism and every local community. >> can you talk about the progress and the update of the

three-point oh stander, is it moving in a way that will get it adopted by the time of the repack, is their transition plan? >> at this juncture nab is very interested in what it can do on the promise it allow members to do with less spectrum even more than what they have. mobility, ip interoperability, multi-casting, channel sharing, it has great promise but there is no finish standard yet. so before i voice an opinion, i want to see the final product and then we'll take it toward television board and it is really our members who will make that investment. it looks promising but the proof is in the putting in the transition is difficult. >> are there issues that you and

others agree on an all work for the same goal when it comes to congressional issues or fcc issues? >> it seems like we're often on different sides but there are many things that we are on the same page. it goes issue by issue. i have high regard for both. i have particular affection for michael, i was on the senate congress committee when he was on the chair and i thought he was superior, superb. i love his dad was a privilege to work with colin powell. he is a remarkable guy just like his father and mother. >> would he be taken a position yet on? we haven't, some members are for and some are against. that is one of those issues that i know i debated back and forth. i can make you a good case casework, i can make a good case against it.

>> nab does not have a foot in that race? >> no i don't understand why the others do. >> there has been concerned this is a radical topic shift, there's been concern about the fcc closing enforcement field offices and keeping up with enforcement radio, has those concerns born out? is fcc doing enough about pirate radio right now? >> we have a proceeding on that. it undercuts legitimate license and legal radio. i beastly we don't want that. whatever they can do in the future to identify and illuminated we think that is important. i do want to salute on a.m. revitalization, tremendous efforts by commissioner clyburn, commissioner who led that through and gives the a.m. radio station a window to apply for fm

translators to keep in business and keep listeners. we are very grateful for the fcc for that ruling. >> 20th anniversary of the telecom act of 1996. time to update it? >> yes. as i recall i was not in the senate when that passed, it preceded me by a year. i think the difficulty with telecom axes they take a long time because they have a tendency to pick winners and losers and overhang any future telecom rewrites are issues like net neutrality, set-top box, things on which lots of capital flows one way or another. so it becomes very difficult things to do. the other thing with that legislation is it is the

complexity of it. the constant change in technology. it seems like as soon as they get it done technology has moved on to most of it is her irrelevance. that said, what i like about the telecom rewrites is it will look at things in a holistic way. the more holistic you look at it, the more difficult it becomes to make it the loss. my guess telecom rewrites will still be more rifle shot than holistic. yet big players, big interest who will, make their case. >> given your past of the senate and your current position as president ceo of the national association of broadcasters, what can realistic, and this bounces off the other question, what can realistically we expect to be legislated in the congress

that deals with some of the issues? >> this year? >> yes. >> not much. the reason is because it is a presidential election year. it was my experience peter, in an election year and doubly so in a presidential year, until you get to the lame duck. the lame ducks dynamics are determined by who wins and who loses. we are going to be watching for everything and be prepared to make her case all your long, but when it gets to the lame duck and the leadership are cutting their cards were going to do the best we can to protect our members against anything that might come up. i can't predict you what that would be. >> we have one minute left.

>> a few years ago at the nab show wheeler suggested a business plan for broadcasters involved concentrating on line, channel sharing and making money off the auction, he was hugely criticized by the people at the show. isn't that's what happening now? was he right about that? >> the criticism was the fact that we're some of the biggest online players already. we are already doing that. in terms of channel sharing, a lot lot of that will depend on each individual station and what kind of deal they can structure. all of that will happen anyway. so he so he was saying what you do what you are doing and that was the response, because check it out we are already there. >> senator gordon smith, presidency of the national association of broadcasters. thank you both for your time today. >> thank you.

>> c-span, created by america's cable companies 35 years ago and brought to you as a public service by your local cable or satellite provider. >> the united kingdom of votes on june 23 to decide whether they remain a member of the european union. we will hear from british prime minister david cameron's on c-span2. after that, remarks from homeland security jay johnson. >> secretary of state john kerry testifies about his departments $50.1 billion budget request for 2017. we have live coverage starting at 10:00 a.m. eastern. on c-span 33 veterans affairs secretary robert mcdonnell testifies about the president 2017 ba budget virginia budget