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 compared to satisfaction and confidence that they have in the number of eyeballs that are watching a tv program because of you? how are they being satisfied that they're being accurately charged a fee for their advertising on the internet or any way that's distributed through an internet-type program? >> so the really simple measures advertisers are looking for, how many people or what exposure did

my ad have? they have estimates for television. there are a number of different ways they can get those estimates for online display ads, search advertising. they get feedback and we provide it, other companies do. the number one question we're getting now from major advertisers is to understand across the screens how an ad campaign can be effective, how to balance the money they put in. that's again done. recruiting panels, using technology to measure. same kind of way we do in television. the exposure to an ad, then there's the effectiveness. but there are many ways because you have website information, you have other technology that people can do that. so we have similar methods to television, similar answers for advertisers. big question that's happening is trying to understand how they complement each other, an ad on tv, an ad on the internet. >> if i use myself as an

example, a tv program goes dark and an ad comes up. now, maybe my mind is watching it or not. but that's what's filling the space. not so with an internet screen. i may be looking at content on the screen on an ipad and there's an adjacent ad but i'm not paying any attention to that. how do you go about measuring the effectiveness of that compared to a tv program? >> so we actually use a method that involves both understanding that a panel we've recruited has that ad up and on the screen, and then recall after the fact. and certain measures we create for recall and impact for that advertising, for major advertisers. so it's a combination of things along with demographic information we have. so we can say this ad was viewed

by an estimate of men 18 to 49. and then we additionally would look at the impact of the ad and the recall. and we do that for a number of major advertisers. many of them, in fact. >> do you find that the recall for internet ads is much lower than the recall for tv ads? >> it depends on the creative, it depends on the placement. in other words, the actual ad. the placement, what we do find is that ads that are shown on both television and the internet have much higher recall and much higher effectiveness when they're combined. that's something many advertisers are studying with interest. they complement each other. >> senator, i would add also to the point i made in my remarks about innovative business models and new offerings that various content companies which obviously use advertising as

part of a way to fund the programming. are experimenting with ways of lighter ad load, for example. shorter ads. so, again, to my comment, out with the old in some respects. the new way online video is being delivered is not just the means by which the content's being delivered but the way in which it's offered up as far as the price point for the access to the content, how the ads are delivered out, prerolls it's called where you watch an ad before. there are a number of things being done. putting aside the actual measurement which is a separate discussion, not my expertise, that's being utilized. some are finding it from what we hear extremely effective. >> thank you, mr. chairman. >> thank you, senator nelson. i'm going to ask the final question, there being nobody left. so i'll have to roll several into it. ms. whiting, you were very interesting the way you answered senator pryor's question because you really hesitated when you

talked about the effect of technology leading to rural coverage. you didn't -- you had an answer, but it was awhile in coming. i thought that was honest and i happen to agree with that. the business of when rural state senators talk about rural people or poor people in far-off places and people say, well, they're just pandering to their constituency is really not at all the case. this is a basic american precept. mr. diller has said that a number of times, everything has to go to everybody. that's such a fundamentally american concept. it's also a concept which is so probable, can be probable, with this proliferation of platforms. and delivery areas. however, i think this committee

has done a very good job in three areas of all this. and that is we started the e-rate. every classroom was done on the third day. others didn't do that. and so it was a much longer process. but now the e-rate has worked. that's a starting point for -- connectivity is always a starting point. i think we've pushed really hard on, as senator nelson said, broadband. and through the stimulus package, which some people say i never want to see the likes of that again, and therein lies the problem because what we have done in broadband as a matter of public policy may have not -- may have reached its point of no return. then i think we've done a very good job in wireless. put a lot of money into wireless.

on the other hand, we haven't done that by ourselves. obviously, others have done it. but with all of these things going on, all i can think of when i hear about rural america -- and i'm going to think about the rural part of florida, not the rural part of west virginia, just for the moment so that i appear to be more honest in my questioning. and that is that for the most part it's been the business of the telecommunications companies, up until now. and there's always this wonderful thing because there's lots of mergers. and so there are lots of conditions. and so the conditions always include that you've got to go everywhere, cover everybody. and all of the telephone companies that have ruled over west virginia over the years, they've all promised it and none of them have done anything about it. yes, they've incrementally moved things further. but if you talk about mine disasters, if you talk about driving down any interstate in

west virginia and you have to kind of memorize the places where the interstate rises high enough so you have cell service, which is absolutely humiliating and embarrassing in the modern world, that's our world. that's our world. that's rural america's world. and so i am on fire on the business of if we're going to have this explosion of technologies, which i welcome, i totally welcome, and i welcome for several reasons. one is that i think this explosion of technology and capacity to see, learn, listen, watch, may be the salvation of the older generation because you read so much about people alone and they don't have friends and they can't communicate. well, all of a sudden they have all the friends in the entire world. they can make 25 friends every single hour if they want to.

and they -- but the problem is they sort of have to have children in their household. but most of them don't. so that whole problem of how is it that they come to the marvels of this new way of watching, learning, going back to 12th century british history and finding out the marvels of how people actually built cathedrals back then, you know, the stonemason process, how could they do it, it's all interesting stuff. it's exactly the kind of thing to keep them company, keep them motivated. and then the whole news factor. when they get to the news factor, i also have a big problem and question. because news outlets are diminishing. i think there's one a.p. person left in charleston, west virginia. which is our largest city and capital. and newspapers are getting smaller.

"the post" is getting easier and faster to read, as is the "times." that is slightly less. the "times" a little bit less quickly. and television increases. and news is now got you. and local news is a little bit less than cnn and msnbc and fox, et cetera, but it's still -- it's still that nature. and then local broadcasts has some of the same. so i worry about those things greatly, but what i worry most about is access to this. that we're talking here an exciting, marvelous, technologically proficient, slick but profoundly important and right development. i'm a true believer in net neutrality. i want everything to go out to everybody. i don't want anybody stopping anything. we haven't really dealt with caps here because at some point you can't create spectrum and you can buy it back or give it back and then the fcc can sell

you some and make you -- but you know, the streaming as bill nelson pointed out eats up a lot of megabits really, really fast. so my question to you is, having neatly wrapped all my complaints into that, how -- what's going to happen in this new revolution which is going to force not just the telecommunications companies but others who are in the game now to get it out to people who are not asking for it? they're not asking for it. i don't believe they are. i think when they knew they could have it and then overcame their fear of doing it and had access to getting it, you might start with connectivity, they can't go down to their local public library to do all this stuff, there's connection down there, connectivity, but i think it's going to be a really tough slog. but it is the classic american requirement of this new

explosion of possibilities. and i have absolutely no idea who i asked that question to. so i'll just ask it to barry diller. >> thank you so much. i think just like long ago phone companies were forced that in return for their monopoly that they had to connect to every place that existed -- >> but they didn't do it. >> well -- >> none of them. >> i -- didn't phone coverage mostly -- >> no. the interstates and went to the cities and where the business was and the prosperity was. they got all of that. so fairmont, morgantown are happy but other places, in the rural parts where i live, where our farm is, you can't get anything. >> well, i had thought phone coverage was pretty much everywhere. however, if itas