captioning performed by vitac >> absolutely. i mean, broadband -- by the way. right now, the profit margins on data transmission are in the 90s, so it's not exactly as if these systems are not going to be built out. they are being. and they're being added to every hour. so i don't think you have any worries about that. >> senator, i would just add the greatest innovation we've seen the last couple years has been from those that are utilizing

broadband online video delivery, bar none. access to the broadband and the reach of broadband is the essential part. i don't find that we have an issue of getting access to the content. in fact, the most profoundly different content is coming from those who are utilizing that means. wide access to it, essential. that is essential. but that is the -- the creation of the content is growing exponentially, both the volume of it as well as the innovation behind it. >> fold by senator hiller and senator kerry. thank you for holding this hearing. i wanted to -- i think you all know the fcc national broadband plan talks about getting

broadband to everyone, yet often the speeds aren't as fast in the rural areas. yould you talk -- maybe one of the three of you that provide these services about how you're working to make your delivery systems more available to rural america? >> we are a platform company. we don't actually deliver broadband to the end point. we are certainly -- as i said in my opening remarks, encouraging wider access to that at the fcc for megadown minimum threshold, because at that point, we feel what we can deliver in terms of high quality video, high def quality video, that suits the needs that we have as far as giving those consumer what is they need.

>> we're hoping to provide the value for the broadband. the very fact that the movies and tv episodes already are available from service like amazon instant video makes it more valuable for consumers. certainly that's an area of important oversight from this kmismgs i'm a big believer in that. but rural areas especially will benefit from internet video. >> and there's article today in "the washington post" pointing out a 1934 telecomact was ensuring programming for rich and poor alike. how about the disparity issue in terms of equal access to low-income households. how do you think that facts into this?

as more and more people will be getting their news in different ways. >> i would say that access is going to be increasingly available as the broadband infrastructure, not only becomes completely ubiquitous, but also has enough price competition to allow it to be available. i think that what the fcc is doing is -- in terms of using the old telecom funds to finance buildouts in rural areas, etc., for broadband is great. i think we do need a national policy for broadband. because everyone is going to be affected by it and we're going to need to have as good a system as there is in the world. and right now, we don't. >> and what do you see the role for local news? our state, the local news is

provided through getting people through tornados to the flooding in fargo, literally daily reports of where people should go. what's the role of local news as you see the video marketplace maturing? >> i've always thought, as people said that local broadcasting, local television stations were going to be outmoded, and we're probably -- in all of these new development areas, are going to be antiquity. i've always felt otherwise. because the strongest local television stations are the ones that provide the most news and information and community programming. and so i think that is -- continues to be very vibrant. and clearly if you look at the success of any television station in any market, they are more dependent upon their

ability to deliver news than they are having the hit television program of the moment. >> senator, i find that based on just viewing in the greater seattle area where the two of us live -- or actually, you work for one, i live in seattle. the local stations are utilizing online now for a depth of local news that isn't practical on air. so there is barely ten minutes that goes by in a broadcast of a local independent or affiliate station that does not refer to their website for more in-depth video footage, etc. so actually, i think the local -- i agree, local content remains for most consumers first and foremost where they go as opposed to just a broader national feed. and the local stations on the whole, i think we're seeing just the beginning of it. i think you will see those local stations actually adapt to these video apps that others are doing

and it will only proliferate. >> we have the tv viewers. 59 to 40 women watch more tv. online women beat out men 53-47 for videos. 50/50 for smart phones. and the tablet owners are the only categories where the men are ahead, 53-47. do you see that changing as well? where do you see that going? >> no, i don't see that changing. >> why is that? >> actually, we see very broad distribution of video and the usage on every device. if you mean do i think the tablet disparity? >> yeah, i was just curious why that's the one -- >> i think that's just been -- he's got an example -- >> yeah, i know, there's a man

thereupon with the tablet. >> that is mainly because it's a newer device. >> and the women wait more to wait for them to work? >> i was going to start my testimony with my iphone and my ipad and my pc, but i do think that's just a timing issue of the distribution of the devices. >> all right, thank you very much. >> thank you. senator hiller? >> 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

discuss forms 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. >> it is included. >> thank you. like all of you, i marvel at the technological advancements and innovations that have taken place the last 15 years. it has been a dynamic force and 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 adventurery are o -- century are outdated. 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 with 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 us with an outlook of where we may be headed with content distribution and perhaps what consumers may expect around the corner. 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 shelf. a recent convention held by the national association of broadcasters. these gatherings are always informative because they showcase what's coming down the pipe. knowing where we're going is 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 and existence help or hurt us from getting there? mr. diller, i'll start with you. >> well, i said it earlier. >> i said we were going to ask questions -- >> no, i respect that, senator. but i think where we're going is obvious. we have a new radical revolution in communications called the internet. 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, do not address the reality of this new force that has only

been really going on since 1995. >> senator, i would probably add a couple things. we see a trend of people using multiple media and multi-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 were talking about, broadband, because many of those applications are like that. so we see more multi-tasking. we see people wanting access to their favorite program, their favorite content, their news and information, wherever they are, and on the best device possible wherever that is. but as phones in particular, smart phones 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 that, the '92 cable act, those distinctions have blurred significantly over the past decade or so. and i would 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. >> 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 begin and where they end. i think we're way behind the curve. ironically, and i've said this before with the chairman here, as chairman of the sub committee, 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, fair prices, as well as the role that competition is going to play in those choices. i don't think we've tapped the answer to that yet, to be honest with you. you mentioned it a moment ago. ms. whiting. the four apparatus experience that you live and some people may have more. but it's pretty normal actually for people to be doing that actually. there's nobody that 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 and movies over the internet for the rest of us to produce and distribute our own video. from the innocuous and silly and

personal family-oriented kinds of things to the joseph koni video, which had profound impact, stunning, over 80 million-plus hits in a short period of time. and now smart phone and the tablet folks makt 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, xbox, microsoft xbox 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 band withwidth. on the wired side, we need to be pushing out broadband networks to underserved regions, still a problem here. you and i have talked about this. the committee has had hearings before on it. 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 sort of part of the opening comments i wanted to make earlier. but we have to protect neutrality, i believe. i think that's critical as we approach this. we've fought back against one effort here in the senate to undo that. so i remain very committed, as the chair of the sub committee working with my full chair, to make sure that we enhance this marketplace, and frankly, make a little sense 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. 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 and a number of different venues, the knowledge you have of this, what would prevent you from, say, going out and creating now your own sort of fox network or some network, any other name you could attribute to it, but exclusively -- >> 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 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 a la carte programming that i think is probably the greatest opportunity that there is. >> and in that context -- i mean, i don't want to ask -- we don't have a cable or broadcast

representation to answer this. but do they have an incentive 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 would probably look pretty carefully at that playing field, shouldn't it? >> yes, sir. >> to make sure there's fair access and comp tismgs. >> yes, sir. if i may suggest, at amazon, we start with our customers and work backwards and try to figure out what they would want. in this context, to look at the citizen consumer and then work backwards from that, what would they want? i believe they would want as much choice, as much selection,

the greatest value and greatest convenience possible. as we look at the telecommunications laws as they exist today, try to put ourselves in the shoes of the sudden consumer and 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 the ability to let the net distribute and develop in this sort of way that you've described? >> sorry, please, after you, simple. >> i would say it's a 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 the 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? >> i'm confident that 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 screen the video,

but i don't think anybody obviously wants to impede the freedom to go where you want to go so. 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. we fundamentally abhor piracy. so we're concerned, of course, about the prevalence of piracy in some areas of the world. 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 soap-o was good legislation because i think 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 can make sense of of it. thank you. >> thank you, senator kerry. senator pryor? >> thank you, mr. chairman, and thank you for having this hearing. it's been great. mr. diller, if i can start with you. i know that when senator kerry asked you about what's there to prevent you to start your own thing on the internet, there's

absolutely nothing. you're obviously excited about that. and 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 handicap, could have access to those. and one of those examples that we gave was when folks were watching a movie like "the wizard of oz" online, it doesn't have to be closed captions, but on television, it is. 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 xbox 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 -- 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 field b ining fields be? >> i think the regulation should be relatively light touched. but i think that given 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 regular si 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. and the reason it's easier is because the internet and it's 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 the xbox. i'll respond on that. we are working toward the implementation of closed captioning. it's complex. the amount of data 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, and that's intellectual property. it does seem to me that given the ubiquity of the internet, as you said, it becomes harder and harder and harder for folks who own that intellectual property to enforce that. do the same old rules apply, or should the commerce committee be considering other approaches to make sure that folks get their