policy we go. and then a long-term hard strategy and we need to stick to it over time because this is a long time. >> thank you. madam chairman, thank you. >> mr. berman and i thank the witnesses. thank you for your excellent testimony. sorry about messing up the order and totally dizzing dr. crohnan there at the end. my apologies. thank you very much. the committee is adjourned. in a few moments, a hearing on consumer choices in online video. in two hours, an economic speech by mexican president felipe calderon. after that, the senate banking committee continues its investigation into the mf global bankruptcy. and later, a hearing on the new

leadership in north korea. one of the things that i always remember because my office overlooked the building in the plaza was the plaza -- there was a day care center in the plaza. of course, some of the children were killed. others injured. but during their recess period, they would always come play out here in the plaza, and you would hear their voices. and so that left a lasting impression, of course, when they were silenced. my son, a dear friend of his in high school, she had just graduated and was working in the social security office and her father was a good friend of mine. but i got home actually that morning, i had three different messages. first of all wanting to know what he could find out about his daughter. secondly, that it didn't look good and a third message was when he was crying. watch our local content vehicles

next stop, exploring the history and literary culture of oklahoma city. with special airings the weekend of may 5th and 6th on c-span2's book tv and on american history tv on c-span3. now a hearing on how consumers are using video online and on mobile devices. the senate commerce committee heard from executives from amazon.com, microsoft, the nielsen company and the former head of paramount and fox. this is two hours. good morning, everybody. we have a very distinguished panel this morning. not that we don't always, but this is particularly so. and we welcome you. there will be hopefully

thousands of senators coming to surround us to ask you the most penetrating questions about the impenetrable future. but, anyway, this hearing is about the emergence of online video and the power of broadband to change the way in which we watch. and who knows what that's going to be five or ten years from now. this is the start of an exciting and timely conversation. it's the first hearing that's been held on this subject, which is not sort of attacking each other but looking out into the future and trying to figure out what's coming at us. can we handle it? now why are we doing this? because television is just an overpowering force in our life. television meaning what a lot of people still watch. at its best it can do more than entertain. it can educate. but not all television programming is enlightening. nor is it all fit for children's

viewing. the -- it's a global age. and i'm concerned the video content that we produced does not represent the best face that america has to the nation. so my first question is how will this disruptive technology -- when i say that, that's not a negative conoation. that's just the fact that things are changing so fast in such mammothly important ways that it is disruptive in a hopefully positive sense but definitely disruptive. how will the disruptive technology that online viewing will provide lead better -- to better content and to more consumer choice. but more than content is at issue here because year in and year out consumers face rate increases for pay television that are rising faster than the rate of inflation. we're paying for so many channels, though we usually only watch a few.

i, for example, have 500 channels. and if i watch in the course of a month more than ten, i would be amazed. why am i paying for 490? i don't know discipline it give me a warm, fuzzy feeling? not particularly. but it's all there if i want to go get it. so who is to know about human nature. so i want to know if the emergence of online video will do more than improve content and expand choice. i want to know if it's going to bring a halt or a slowdown at least to escalating bills. one other point i want to make. i've said forcefully in the past that too much television programming is crude and a poor reflection of our society. although this hearing is not focused on that topic, and i want to make it clear, i just also want to make it clear that this is something which i really care about very deeply as all of my suffering colleagues on this committee know and i'm going to

keep at it until it gets better or until i get to be my great grandfather's age, whichever comes first. so right now the question is, how do we harness this change for power for consumers? so we can get higher quality program at lower rates. but really more important, what's going to happen? what's going to happen? the stats of people who are cutting off land line and -- for telephones can also be -- i mean, i think i read that in the last month that nielsen had said that all broadcast news was down in the last month. now i guess if it's down over the course of a year it would be down over the past month but it sort of grabbed me putting it that succinctly. to our witnesses, i look forward to your thoughts on this subject and i thank you for joining us today and i want this to be a

lively and forward looking theo theory. so senator demint is the ranking member of the subcommittee. senator kerry is not here for the moment. and senator demint, we look forward to your comments. >> thank you, mr. chairman. and i do thank all the witnesses for being here. thanks for holding the hearing. the communications sector continues to be one of the most dynamic and innovative in our economy, and i hope this is just the first of many hearings this year that allow an opportunity to learn and discuss the marketplace and update the committee's record. mr. chairman, the obstacles between consumers and the video content they seek continues to disappear. and the video market, tremendous advancements in technology and massive capital investments in distribution networks now empower consumers to craft their own viewing experiences more

than ever. at the root of this increasing consumer power and choice is a complex and overlapping mix of content creators, distributors and electronic manufacturers racing to serve the marketplace better. a few such companies from this mix are with us today. with innovation empowered individuals comes disruption to established models and incumbent powers. unfortunately many of our current video laws and policies were sawed and achieved decades ago by established interest seeking government granted protection from market forces. they were written for a time and a market that no longer exists. and they need to be repealed. our video laws simply do not reflect the current realities of the marketplace, and i'm afraid they actually foreclose innovative service offerings and consumer benefits. our laws should not promote or

protect one technology over another or one competitor over another. last year i introduced the next generation television marketplace act to comprehensively withdraw government meddling from the video industry. there 24 primary interventions the government has made over the years in the video market which my bill repeals. the compulsory copyright license and retransmission consent. these laws impose mandates on individual consumers and businesses. they violate the property rights of content creators, and they treat similar services differently. while i know these legacy issues are not the focus of today's hearing, mr. chairman, i look forward to discussing them at a future hearing here in this committee. in his prepared remarks, mr. diller states that consumer demand is a powerful force, and those who give consumers what they want will be rewarded in

the marketplace. i couldn't agree more, which is why i believe we should be creating a deregulatory parody in the video market so investment and innovation, not lawyers and lobbyists, is rewarded in a free economy to the ultimate benefit of all consumers. finally, mr. chairman, i want to express my sincere interest in working together with you to seek ways to improve our laws and regulations to better serve competition, innovation, the national economy and most importantly, the american consumer. thank you, mr. chairman. >> thank you very much. thank you for those comments which, obviously, i share about working together. we have not sat together before, but we will sit together in the future. our witnesses are sublime. barry diller who i've known for many years. my wife says hi. chairman of iac, former chairman of paramount pictures, fox

broadcasting, usa broadcasting and you are an investor. you are very knowledgeable about the history of video and you have spoken previously about how the disruptive change presented by online vool may change the nature of pay television. so we welcome your testimony, sir. >> thank you. >> -- long -- say too long career in entertainment and media. i've been chairman of three major studios, broadcast stations, broadcast network, cable channels and now internet companies with more than 50 brands. so i've been both a practitioner and a student in the evolution of media over the last 45 years. with ubiquitous broadband internet access, an unlimited pipe of options will be increasingly available for all

audiences. and together with the advances in consumer devices like the ipad, it allowed consumers to access the data they want directly from producers without middlemen, without toll takers, wherever and however they want. this is the great future of consumer choice and competition. and i think the realization of generations of public policy aspirations. that is, if we protect and encourage the miracle of the internet which allows anyone to press a send button and publish to the world without having to go through the closed systems that have so dominated media since its very beginning. contrast that future with the past world of less than a handful of broadcast television stations. and this evolved in the '70s and the '80s with the advent of cable television and satellite video distribution.

it had rules and regulations designed primary to preserve the incumbent broadcasters. hardly surprising that given any technological development that threatens the hegemony of the existing players is going to be opposed by them. then along came video recorders. when sony introduced the beta max video cassette recorder. this was opposed in a suit by universal and disney. at the time, two of the largest producers of programming. they contended that no one should have the right to make a copy of their material. courts disagreed and the vcr industry boomed. it made way for private, on-demand consumer consumption through the sale or rental of prerecorded video cassette tapes. cable and satellite offered all manners of service enabled by the technology of the video recorder. then along comes the great revolution of the internet

affecting every pocket of commerce, except, oddly, the way most people receive the most popular video programming. but even with the restrictive tv everywhere concept that demand a cable or satellite subscription, broadband internet has enabled a few online video on demand services to begin a transition to the online environment. this great internet revolution is ready now to provide a new platform for competition that will, in turn, lead to video packages and a la cart offerings driven by consumer choice and device innovation rather than dictate it by the financial interests of a handful of programmers and distribution companies. how can that not be in the public interest. there are no barriers to entry on the internet. creators have the opportunity to

make and distribute whatever is their fancy. if intermediaries have less control over the tv ecosystem, creators would be able to reach viewers more directly and will not have to sign over so many rights to distributors. viewers would benefit from being able to watch vastly more programming in the way they want to watch it and from having an alternative to subsidizing the current unwieldy marketplace. new technology can allow a more modern approach to receiving local broadcast programming. right now roughly 15% of americans rely solely on over the air television because it's difficult to install home antennas or because of problems with reception. this ought to be of concern to congress which appropriated $650 million to ensure that households could actually receive the signals when digital

replaced analog broadcasting. areo, a company in which i've invested, has invented technologies that allow consumers to get a clear, perfect picture over the internet and watch live, local broadcast television on any connected device -- an ipad, iphone or an internet ready television set. it provides its members with their own antenna capable of receiving high definition local broadcasts. properly understood, areo allows a consumer to outsource or locate remotely an antenna and dvr and to use that equipment to access the over the air content to which they are all entitled. >> it's dvr and the cloud technology ad a breakthrough as the consumer need nose extra wires or set-top boxes or remote controls that no one understands. by making over the air digital

broadcast signals actually useful to consumers, areo is bringing forth the very reality that congress sought, that congress invested close to a billion dollars in and at no additional cost to taxpayers. areo is but one example of how the internet can inject competition into the video market place. online video is just beginning. it will take all kinds of new products, new failures that will move these systems from a closed to an open environment. it will take vigilance to make certain that net neutrality continues to be safeguarded. that no road blocks or toll bridges can be inserted between the producer and the consumer. my hope is that congress keeps the most watchful eye as these marketplaces develop. i know at some point soon the communications act of '96 will

have to be rewritten to take into account the internet which didn't exist when the ablct bece law. incumbents have natural tendencies to limit. the rules of the game favor entry, innovation and competition. in the end, there's no stopping technical innovation, but i would hope that a wise and engaged congress will make certain we have the levelest playing field, most encouraging environment for new media over the next crucial years of its development. thank you for listening, and i'll be happy to answer any questions i can. >> thank you, mr. diller. our next witness is ms. susan weiting, vice president of the nielsen company. and i think you're going to talk about how american viewing patterns are changing, which is for sure. and that more households are watching online video than ever before. you've been at this -- your

company has been at this for decades and decades and you produced data about american television which is very helpful. and particularly helpful as we go into this disruptive period where nobody is quite where sure it's going to end up. >> they you chairman rockefeller and other members of the committee. i'm sues an whiting, vice chair of the nielsen company. you are, i think, familiar with nielsen's role in television ratings in the u.s., but you may not know we're also a global information and measurement company measuring what people watch on tv, on the internet, on mobile devices, but also what they buy in retail stores all over the world. so i appreciate this opportunity. based on our latest research, the average american watches nearly five hours of video each day. 91% of which is done watching traditional tv sets in realtime or live, meaning they are not recording on a dvd, using video on demand or even watching a

dvd. but what has emerged in the last four or five years is a simple message. consumers watch their favorite content on the best screen available at that moment. and they watch from more locations and on more devices than ever before. the availability of digital technology, digital access and the explosion of laptop computers, mobile devices and tablet computers in american life has really enabled this change. these devices, along with, at the same time, a record number of tvs in homes, have provided more screens. our latest state of the media u.s. digital consumer report provides a comprehensive overview of these trends. my testimony today is based on the findings in that report and the report has been provided to the committee. today more than 274 million americans have internet access

through their computers which has doubled since 2000. in october of 2011, nearly 166 million americans watched video online. and more than 117 million americans accessed the internet through a mobile device. nearly half of all the mobile devices used in the u.s. today are smartphones which makes it possible to access the video. broadly speaking, each month, the average american sends 146 hours and 45 minutes watching tv, 4 hours and 31 minutes watching internet videos on a pc and 4 hours and 20 minutes watching video on a mobile device. so the use of video on pcs continues to increase. it's up 80% in the last four years. so who is using video this way?

our research shows that women are 6% more likely to review video online than men. 18 to 34-year-olds match 35 to 49-year-olds as the largest demographic watching videos online. sites like youtube and netflix together most recently represented 56% of the streaming time which for the average american is 4 hours and about 31 minutes each month. but along with that increase in video consumption online, it's worth noting that 33.5 million mobile phone users now watch video on their phones which has increased almost 36% since last year and consumers with this access spent 4 hours and 20 minutes doing this. consumers are increasingly becoming media multitaskers meaning that they'll use more than one form of media at the same time.

for example, recent nielsen data shows that 57% of smartphone and tablet users in the u.s. check their e-mail and 44% visited a social network site while watching tv. consumers are finding and accessing their favorite content on more and more devices. or screens. consumers are saying unequivocally that online video will continue to play an increasingly larger role in their media choices. thank you again, senator rockefeller, for the opportunity to join you today. >> thank you, ms. whiting. mr. paul misener, the vice president of amazon.com. and i believe that you will speak about amazon's entry into the online streaming video business following on the heels of its efforts to digitize books and make them more widely available through its kindle service. i'm going on a limb here but i

think you'll stress the need for an open internet which is kind of called network neutrality which is controversial around here but which i support and which my colleague to my left does not. in order for amazon to compete against incumbent video service providers. we welcome you. >> thank you very much, chairman rockefeller. >> did i get it about right? >> yes, sir. absolutely right. my mom will be proud. thank you, mr. chairman and members of the committee. exactly a quarter century ago, the fcc set out to establish rules for so-called advance television which was the very first significant update to consumer video quality since the introduction of color tv in the early 1950s. the commission established a private sector advisory to evaluate the technology and i had the honor of assisting that committee's chairman. his committee can be thanked for the beautiful theater quality video that we now take for granted when we watch a movie or football game on hdtv. but much more emerged from the

chairman's committee than pretty pictures. already in the mid'80s, digital video capture and compression had come of age. in the early '90s, the committee also oversaw the emergence of digital transmission of digital video data bits. the future voof was to be digital all the way from the camera to the display. two other crucial developments occurred at the same time. first, the worldwide web was invented, forever transforming the internet. second, congress overhauled u.s. communications law. although the 1996 act maintains some legacy distinctions, it also codified the concept of an information service. it was into this era that amazon.com was born. amazon opened on the world wide web in july 1995 as an online book store and quickly grew to offer other media products, including music, cds, vhs tapes if we remember those and dvds,

all of which require physical delivery. but today, the amazon instant video service offers customers throughout the united states, whether in populist or rural areas the ability to buy, rent or subscribe to a huge catalog of videos delivered instantly, 24 hours a day. amazon instant video is available on pcs and macs and other internet capable devices. it currently offers more than 120,000 movies and commercial-free television episodes for purchase or rental and about 25,000 of those are available in high definition. in february 2011, amazon introduced prime instant video as a subscription service through which amazon prime members can watch instantly and for no additional cost more than 17,000 video titles selected from the amazon instant video library. this gives our customers an easy opportunity to explore new video content. now although we recognize that our customers want to watch

video content from the comfort of their homes, we also recognize that they are on the move and, thus, they want access to digital video, not just any time but also anywhere. to support that demand, last september, amazon introduced the kindle fire. this device, which is a fully functioning tablet that allows customers to access the internet, read books, play games and watch high quality video. and if our customers have any questions about our online video services and the kindle fire, our customer service team including specialists in our huntington, west virginia, facility, are standing by to help. and so, mr. chairman, to answer the question poised in today's title -- hearing, online video has emerged. and ub doubtedly will be a key medium of future video delivery. with continued growth of broad band internet access, we believe the consumer demand and choice will cause continued growth of online video services for an even brighter future. this assumes, of course, that

the internet will remain a nondiscriminatory open platform. the open internet erne courages innovation and allows consumers to decide whether a particular product or service succeeds or fails. and this open sentence crucial in rural areas of the country where other choices are more limited than elsewhere. the fcc has pledged to monitor the potential for competitive or harmful effects from specialized services, but i ask your committee remain vigilant on this and other issues of internet openness. for example, consumer data caps instituted by some network operators merits such vigilance. consumer choice without imperiment must be preserved. amazon would be happy to assist the committee in any way we can be helpful, including if the committee were to undertake a review of the '96 act. as the testimony delivered in this morning's testimony -- hearing indicates, the lines between the communications services separately addressed in that legislation continue to

blur and how consumers, especially young people, now think of television does not match long-standing legal and regulatory conventions. the hearing today already has drawn important attention to that fact and so in conclusion, mr. chairman, amazon.com believes the future of online video is very bright for consumers. and we look forward to work with the committee to preserve consumer choice. thank you again for the opportunity to testify, and i look forward to your questions. >> thank you very much, mr. misener. and finally, blair westlake whose corporate vice president of microsoft. and your response to the xbox at microsoft and that started as a video game but it's gone on to become an amazing instrument. we welcome your testimony. >> chairman rockefeller, members of the committee, thank you for the opportunity to testify on the emergence of online video today. i ove