if you mean do i think the tablet disparity? >> no, i was just curious why that's the one where the men are -- >> he has an example -- >> i know there's a man up there with a tablet. >> i think that is manly because it's a newer device. >> and the women, they wait more to make sure they work and are prudent? >> i was going to start my testimony with my ipad and blackberry and iphone and pc but i didn't do that. but i do think that -- i do think that's just a timing issue of the distribution of the devices. >> it's interesting. all right, thank you very much. >> thank you. senator heller. >> thank you, mr. chairman. thanks for holding this hearing today. i want to thank the panel for being here. it's enlightening to hear your comments. i know we ask a lot of questions. we just do it in a different way. it's usually the same question, just asked a little bit different. i assure you that my question probably runs right down that line. but i would hope that we have more hearings like this, mr.

chairman, and that, in fact, i would hope that we talk about the communications act a little bit more, the cable act, and some of these issues. in fact, i would respectfully ask in the near future we hold an oversight hearing on the fcc and discuss some reforms that i've introduced. so that would be my request. i would also like to submit a statement for the record, if that's okay, mr. chairman. >> it's included. >> thank you. like all of you, i marvel at the technological advancements and innovations that have taken place over the last 15 years. an unregulated internet market has been a dynamic force that's created many substantial and well-paying jobs, abroad and of course in the state of nevada. these advancements beg the question of whether the laws passed in the 20th century are outdated in relation to today's changing landscape. that's why congress should look at the laws regulating content

distributors that are on the books and determine what makes sense and what does not for a world with a participant who is unregulated. they should do this while remembering that content should be protected and compensated accordingly. by focusing on the laws on the books is also a discussion for another day. today i'm hopeful that our panelists can provide an outlook with where we may be headed with content distribution and perhaps what consumers may expect around the corner. i'll tell you one of the great benefits of being a senator from nevada is to tout the conventions that come to my state. such as the consumer electronics show. a recent convention held by the national association of broadcasters. these gatherings are always informative because they showcase what's coming down the pipe from innovators for consumers. knowing where we're going, it's helpful to me because the last

thing that i want to do as a lawmaker is to stifle that innovation. so with that in mind i'd like to ask the panel kind of an open question to all of you in regards to viewing content. where do you think we're going? and do the laws in existence help or hurt us from getting there? mr. diller, i'll start with you. >> well, i said it earlier. >> i said we're going to ask questions -- >> no, i respect that, senator. but i think that where we're going is obvious. we have a new, radical revolution in communications called the internet. and so more is going to transfer -- not completely, but more is going to utilize the capacity of the internet to provide more information, more services, more programming, and the laws we have -- that '96

communication act -- no longer -- do not address the reality of this new force that has only been really going on since 1995. >> senator, i would just probably add a couple things. we see a trend of people using multiple media and multiple devices simultaneously. so more and more people watch television while they're using their tablet or their pc or their phone. which only leads to the need for more, as we're talking about, broadband, because many of those applications are like that. so we see more multitasking. we see people wanting access to their favorite programs, their favorite content, their news and information, wherever they are. and again, on the best device possible, wherever that is. but as phones in particular, smartphones also have wider and

wider penetration. that device really is a video device for any of the different kinds of content we're talking about. so i think that increases as well. so they complement each other. people are using multiple media at the same time and that will grow. so those are the big trends we see in the next couple of years. all the innovation everyone else is talking about i leave to the experts about that. >> sounds like you're an expert. >> she is. senator, the distinctions drawn among different communications services in the '96 act and the '34 act before, the '92 cable act, those distinctions have blurred significantly over the past decade or so. and i'd be happy to work closely with the committee to address that blurring and to see if perhaps there are ways we ought to update the law to reflect the business models and technology

that exist today. >> thank you. my time has run out, mr. chairman. i apologize, mr. westlake. >> you do not have to apologize ever for 29 seconds in this committee. senator kerry, then senator pryor. >> thank you, mr. chairman. indeed, the lines are blurred. in fact, it's pretty unclear right now where a lot of jurisdictions began and where they end. and i think we're way behind the curve. ironically, and i've said this before with the chairman here, as chairman of the subcommittee, i've said that we were really behind the curve within six months of the 1996 bill being signed. because we didn't really think very hard about data transmission. so a hearing like this is pretty important as we think about what's the role of government in the market going forward? and hopefully it will help us

understand how free americans are to really engage in the creation and consumption of video in fair terms, at fair prices. as well as the role that competition is going to play in those choices. and i don't think we've tapped the answer to that yet, to be honest with you. you've mentioned it a moment ago, ms. whiting. the four apparatus experience that you live and some people may even have more. but it's pretty normal, actually, for people to be doing that nowadays and there's nobody here who doesn't understand the ways in which the digital technologies have shaped the video landscape from youtube, amazon instant video, facebook, netflix, many others, have now made it possible for hollywood to distribute television movies

over the internet for the rest of us to produce and distribute our own video. from the sort of innocuous and silly and personal, family-oriented, kid-oriented kinds of things, to the joseph kony video, which had profound impact and stunning, over 80 million or so hits over a short period of time. now the smartphone and tablet folks make it possible for people to capture video not just on your television or computer but any time, anywhere. so it's a brave new world. it's a whole new deal. and most of these services are riding on either the wired or the wireless investments of a group of companies -- the satellite, cable, telephone folks. and now they're using their broadband capabilities to put content out in new ways such as the comcast, x-box, microsoft

x-box setup. so a lot of us are sitting here trying to figure out, what are the principles that ought to guide us going forward? mr. chairman, i think it's critical that whatever we do, we help to grow and empower and enable this innovation. that means on the wireless side that we have to do a better job of managing and releasing the spectrum, because video takes up a heck of a lot more bandwidth. on the wired side, we need to be pushing out broadband networks to underserved regions. still a problem here. mr. chairman, you and i have talked about this. the committee has had hearings before. we've had policies put in place. president bush way back in 2003 or so said we're going to have policy that had everybody in america wired. as we all know, we're light years behind that. in fact, dropping behind other countries, which we really ought

to take note of. if you want to talk about american competition and preeminence in the marketplace, it's going to be dictated largely by some of this, and we're not doing what we need to do by any sense of the imagination. finally, i'd just say -- this is part of the opening comments i wanted to make earlier, mr. chairman -- we have to protect net neutrality, i believe. that's critical as we approach this. we fought back against one effort in the senate to undo that. so i remain very committed, as chair of the subcommittee working with my full chair, to make sure that we enhance this marketplace as we go forward. and frankly, make a little sense out of it. because i think consumers are bouncing off the walls right now in some ways. in other ways they're benefiting just enormously through the increased access and different appliances. and we have to be careful not to

nip that because of its power in the marketplace. so let me ask you a couple of questions, if i can. one, i might ask mr. diller, given your success in the marketplace in a number of different venues, the knowledge you have of this, what would prevent you from going out and creating now your own sort of fox network or some network, any other name you could attribute to it -- >> i think i would pick a new name. >> well, pick a new name. but your own network, your own individual network, outside of the broadcast or the cable world, and just distribute it purely on the internet? >> absolutely nothing. >> doable? >> yes. the wonderful thing about this miracle of the internet is you literally get to make up whatever you want, press a send

button, and publish to the world without anybody between your effort and the consumer. so it gives you an absolutely open possibility to create anything. now, we're at a very early stage. we've only had video for a few years. the ability to transmit rich pictures over the internet. and there's no question in my mind that as time goes on and systems for consumers get used to, to the same degree that they're used to the one click on amazon, so that if you have something you can offer it to someone in a payment system that they'll understand and easily be able to access. and so this will happen over time. it is the promise of ala carte programming that i think is the greatest opportunity there is.

>> and in that context, and i don't want to ask -- i mean, we don't have a cable or broadcast representation to answer this. but do they have an incentive therefore to try to limit the growth of online alternatives? mr. misener? >> thank you, senator. i can't speak for them, obviously. but we've seen indications that they may wish to restrict the availability of competing content. and that has to be monitored vigilantly, i believe, by the commission and this committee -- >> congress should probably look pretty carefully at that playing field, shouldn't it? >> yes, sir. >> to make sure it is fair access and competition? >> yes, sir. if i may suggest, at amazon we start with our customers and work backwards to try to figure out what they would want.

in this context, in congress' role, to look at the citizen consumer and work backwards from that. what would they want? i believe they would want as much choice, as much selection, the greatest value, the greatest convenience possible. as we look at the telecommunications laws as they exist today, try to put ourselves in the shoes of the citizen consumer, see what they would want, rather than what the industries do. >> i want to ask this of both mr. diller and mr. misener. how critical is net neutrality to this ability to be able to let the net -- to distribute and to develop in this sort of way that you've described? >> sorry, please. >> after you, sir. >> i would say it's at parity with the need for national broadband policy that gets us to be, if not number one, i wouldn't settle for less than number two. we are now number 18, i think. >> something like that. 16, 18.

>> net neutrality is mandatory. because there is no question that without it, you will see the absolute crushing of any competitive force. it's just not going to be possible if you say that distributors can put tin cans and anchors around anyone that wants to deliver programming that they don't own, those distributors. since we have a universe today where there are very few distributors, that's not a good thing. >> mr. misener, do you agree with that? you do not have to give a long answ answer. >> i'm confident i could not have said it better. >> okay. final question, if i may. as we all know, hundreds of thousands of movies are illegally downloaded every day.

one could block that by preventing people from getting to sites that stream the video. but i don't think anybody obviously wants to impede the freedom to go where you want to go. then the question is asked or begged, is there in the current copyright and proposed copyright law, both civil and criminal, too little protection for traditional video creation and too much constraint on innovation, or is the balance right, and should we simply enforce the protection in this new era? where do we come out on that? >> we're in the business of selling legitimate product. and thus we fundamentally abhor piracy. and so we're concerned, of course, about the prevalence of piracy in some places around the world.

and so if there are ways to get at those kinds of copyright protection issues more effectively, we certainly would support that, senator. >> i think copyright protection works pretty well right now. i do think some strengthening, particularly outside the united states, would be very helpful. i did not think that sopa was good legislation because i thought it was a ridiculous overreach. but current law is fine, hopefully enhanced somewhat. >> well, this is something we obviously need to follow up on. there are a whole lot of side bar issues to each of the questions i asked and we look forward to working with you all closely as we work through this. and hopefully we can make sense out of it. mr. chairman, thank you. >> thank you, senator kerry. senator pryor. >> thank you, mr. chairman. thank you for having this hearing. it's been great. mr. diller, if i can start with you.

i know that when senator kerry a few moments ago asked you about what's there to prevent you to start your own thing on the internet, absolutely nothing, you're obviously excited about that. it is exciting. but i also have a question about regulation and what regulatory environment you think there should be out there. for example, we recently passed -- i guess it was last year -- the 21st century communication video accessibility act which makes sure that certain devices that aren't covered by previous law, the handicapped could have access to those. and one of those examples that we gave was when folks were watching a movie, say "the wizard of oz" online, it doesn't have to be closed captioned. but obviously on television it is. so those are not real -- those are regulations that don't necessarily infringe much, but

they do make this access available to everybody. so if you look at something like today like x-box 360, i don't think it is covered under our new act, as far as i know it's not. maybe it should be. but i think that technology has changed so rapidly, we've not been able to keep up. so what's the balance there in this sort of -- i would call it legacy regulation. you're very comfortable with all kinds of regulations given your background. what's the balance there as we move forward and as we're doing more and more online? how much regulation should there be and how equal should those playing fields be? >> well, i think that regulation should be relatively light touch. but i think that given these very -- this very powerful mass communications, the engines of such, there's got to be, first

of all, the levelest playing field that can be legislated. at the same time, there are all sorts of legacy obligations that broadcasters took on. that cable companies took on. that satellite companies took on that should now be covered and included with the internet and the issues of the internet. i don't think it's that hard to do. the last time around the '96 act took a lot of plot and preparation and endless noise was heard from. not that that's not going to happen again but i actually think this time around it's easier. the reason it's easier is because the internet and its ubiquity and its adoption has changed so many things naturally that amending the act for the future i don't think is going to be -- that includes the

internet, the reality of the internet, i don't think is going to be that problematic. >> did the other panelists have any comments on that, any response? >> senator, you mentioned x-box. i'll respond on that. we are working toward the implementation of closed captioning. it's a complex undertaking. the volume of content that is flowing and the amount of data that's associated with the closed captioning is no small task but that is certainly our goal and one that we treat very seriously. >> anybody else? let me ask this question about something that senator kerry alluded to a minute ago, that's intellectual property. and it does seem to me that given the ubiquity of the internet, as you said, it just becomes harder and harder and harder for folks who own that intellectual property to enforce that. and do the same old rules apply?

or should the congress, specifically the commerce committee, be considering other approaches to make sure that folks get their intellectual property protected, both domestically and abroad? >> senator fine, thank you. at amazon we've been working with rightsholders since our inception to ensure their legitimate product is made available to the widest range of consumers. and likewise for our customers that we provide them the legitimate product. so the 120,000 videos that i've referred to available in amazon instant video and on kindle fire, those were all obtained by working with the rightsholders. we're very comfortable continuing to work with them, to respect their intellectual property rights. >> good. one last question if i may for miss whiting from nielsen. i know you look at all this data all the time, you see what

people are doing and how people are behaving out there. what about, do you think that -- one of the things that this committee's been working on is trying to get high-quality broadband to every american that wants it. it's particularly challenging in rural areas. do you think that as more and more content is available online, that that will actually incentivize people to get broadband? especially in the rural areas? >> i think it just seems like a logical conclusion because so much of what you could talk about and experience every day at -- the applications that are useful, the way you can communicate, the way you can learn and get your entertainment, being available particularly on a phone as i said before, i think will lead to more people asking for broadband and requiring that access. so that usually leads to a commercial discussion about making it available. >> and that's going to lead to the issue of affordability for broadband and trying to get it deployed.

one of the concerns i think this committee has expressed over and over is, we don't want two americas. we don't want urban to have all the latest and greatest and high-tech stuff and rural to just be left behind. thank you very much. >> senator, i would add that the offering of all this additional video, which is really -- requires that broadband capability which i mentioned before as far as the 4 meg threshold that the fcc has stipulated, my impression in dealing with these various isp -- internet service providers, is they are looking for new ways to be able to offer broadband to more households and be able to sell it. it is frankly a good margin business and as people see more and more of this content, demand goes up. as typically occurs with most businesses, when demand rises, businesses typically see that void and try to fill it. i actually think that this

increase in video content may well be a catalyst for many to build more. we hope so. >> thank you. thank you, mr. chairman. >> thank you. >> thank you, mr. chairman. of course, senator pryor, you've been such a champion for rural america. and as you know, the fruits of your labors in getting broadband, the fruits of the chairman's labors in getting broadband out into the rural areas, have helped my state enormously as well as a lot of people don't think of florida as being rural, but there are vast portions of florida that are rural. and i might say, having done a number of town hall meetings in the rural parts of the state, now that as a result of the stimulus bill, having put money into expanding broadband into the rural areas, which is now

just occurring, that is being greeted with exceptional excitement and approval among the rural areas, so that basically as you say, that we don't have two americas, that the children in rural america have the same access to the information that the children in urban america do. i wanted to ask a question of ms. whiting. because i'm just absolutely -- i was fascinated the other day when a senior member of our staff said to me that she does not watch television any more, that she gets all of her information basically from either her computer or from her ipad. so how in the world is nielsen, which has now refined the

technique so well in determining how many eyeballs are watching a tv set, with your boxes, your electronic boxes, now that measure it exactly, how in the world is nielsen adapting to determine how many eyeballs are watching content on the internet? >> thank you for the question, senator nelson. we've obviously had to adapt because as we just talked about, if we want to follow the audience of a program across any screen -- the tv, the pc, the phone, the ipad soon, any websites -- we have to measure that. we do that for both the programmers and advertisers. so we use technology to do that. we recruit samples of consumers who let us measure that. there are a growing number of people who do not own -- there are contradictions going on. there's a small, younger, generally, group of people who do not own a tv set.

they tend to have a smartphone. not only online. they're getting their content and their information that way. you balance that with households that now have four tv sets and their pcs and every other device and our task, because programmers and advertisers really require it, is to measure the programming across that. so technology's our friend here. without giving a long explanation, we use technology to help us measure, with permission, the behavior on all those screens in samples of people. so it's possible and we're doing it. and i expect we'll have to continue to innovate. because there will just be more screens. >> well, technology refined your technique with regard to television screens. because you could put a box on a representative sample and then determine who was watching what program.

how do you do that with a hand-held computer device? >> so very specifically it's usually a software application that we basically recruit someone to participate. we download either a software application or we're measuring a commercial or a program and there's a code in the commercial and program and we pick it up if you're part -- basically it's code recognition. so it's technology that's residing on whatever the quipt is equipment is, whether it's a phone or a pc or soon your ipad. we use software. so it's not a separate box that's connected, it's a way of understanding behavior with your permission. >> how do advertisers understand that they are being charged appropriately on the internet as