as perhaps fewer people know, c-span is controlled by the cable television industry. in addition to the shocking decision of c-span to cut us off, a number of large programmers have refused to deal with sky angel for the distribution of must-have family oriented programming, saying or implying that they want to avoid conflicts with the big players in the video distribution industry and unlike c-span which is supposed to be a public service, commercial programmers that refuse to deal with us are passing up the higher subscriber rates that sky angel typically pays because we are too small to have any real bargaining power. discovery communications is the most obvious example of a large programmer that refuses a lucrative distribution agreement with sky angel in order to stifle competition. my written statement describes our problems with discovery in some detail, but basically, discovery cut us off from receiving their channels two years into a seven-year distribution agreement. discovery has never offered a

coherent explanation for its actions which did not make economic sense. we are positive that it was anti-competitive in nature, trying to deter a new startup company using ip tv technology, trying to right a wrong we filed a program access complaint with the fcc against discovery in march of 2010. to date, the fcc has never made a substantive ruling on that case. even though the fcc's own decisions say that they will decide program access complaints within five months and the d.c. circuit court of appeals is scrutinizing the fcc's delay in acting on our program access complaint. nonetheless, 20 some months have passed without substantive action by the fcc so tiny sky angel remains injured by the unfair programming decisions of multi-billion dollar discovery communication and its affiliated program distribution interests. we believe that our experience with starting, operating an innovate nif new family oriented

distribution service shows there is anti-competitive conduct in the industry and significant problems with the manner in which the fcc is failing to enforce program access laws and regulations so that a valuable new competitive entrant is facing unfair discrimination. the program access requirements under the 1992 cable act require fair treatment of competitors such as sky angel but those requirements are not being enforced. the will of congress is being ignored and competition by sky angel and likely others is being stifled. we believe that the public interest in supporting competition in video distribution, expanded use of the internet, diversity in programming sources and affordable choices for american families requires the attention of the congress to ensure that the existing legal framework is fairly and properly enforced. thank you again for the opportunity to testify and i would be pleased to answer any questions that you may have or provide you with any additional

information. >> mr. johnson, thank you for your testimony. we look forward to following up with some questions. we'll now turn to gigi saun, president of public knowledge. we look forward to your comments. >> chairman walden, ranking member eshoo, members of the subcommittee, thank you for inviting me to talk about the future of video. there is widespread agreement that we are currently living in the golden age of television. but despite all the great programming and groundbreaking devices, americans are still locked into a tv business model that limits competition and choice, keeps prices high for video, and limits technology and online video from achieving their full potential. this business model was made possible largely by an outdated regulatory structure created by incumbents to gain competitive advantage. it is time for policy makers to revamp this regulatory structure so that new video competition can thrive, giving consumers greater options and the ability to watch video whenever they want and on the device of their

choosing. this will result in lower prices, better services and more flexibility and control for consumers. the internet is changing the video marketplace just as it changed the market for music, books and other forms of media. consumers are attempting to drive this change by demanding that more content be provided to them through the internet. one grassroots campaign by consumers called take my money hbo advocates for hbo content which is only available if you subscribe to cable or satellite tv service, to be available for purchase on the internet. more than 60,000 people visited the petition website within 12 hours of its launch, leading many of them to express over twitter their willingness to pay money directly to hbo only if it were available on the internet. despite this level of excitement for internet video distribution, it is not a foregone conclusion that the internet will disrupt the video marketplace. dominant players in the market today control both the content their online competitors need

for their service and the pipes they must use to reach consumers. as a result, much high value programming is not available to online video providers. they also have to contend with artificially and arbitrarily low data caps and other discriminatory practices that keep them from reaching their full potential. so while it's inevitable that i.p. technologies and the internet will play an ever larger part of video delivery, it's not inevitable that the market will reach its full competitive potential. that's why policy makers should extend policies that ensure that new competitors like sky angel can access high value content at reasonable prices. if they do this while at the same time protecting internet openness, they can ensure that the video marketplace normalizes and becomes truly competitive. there are other regulations that permeate the video marketplace should be repealed today. the network nonduplication,

syndications exclusivity and blackout rules protect old business models. if these protectionist rules ever made sense, they certainly don't today. representative scalise and demint are on the right track with the bill that would clear away the regulatory underbrush that holds back the evolution of the video marketplace. although the bill does go too far by eliminating media ownership restrictions. other rules like retransmission consent, the compulsory copyright license and must carry are also outdated. but they are part of an interwoven fabric of regulatory and business expectations. they should be reformed but cautiously and eventually, eliminated. copyright law is also regulation that is often misused to hold back innovation. witness the lawsuits against ario and dish's autohop service. by taking these simple steps, policy makers will be able to facilitate the development of competitive online video and subsequently disengage from

regulations that were designed to counter the effects of bottleneck control. if they fail to do this, it is likely that incumbents will continue to shape the development of the video market and extend their current dominance indefinitely. while the internet provides grounds for hope that the future of video will be much better for consumers, a lot of work remains for this hope to become reality. thank you. i look forward to your questions. >> thank you for being here. we appreciate your testimony on this very important set of issues. now we will welcome david hyman, general counsel for netflix. thank you for being here. we look forward to your testimony. you know, i know we did audio the last hearing. but if you could -- just touch that button and make sure it's on. okay. >> now it's even green. there we go. good morning. netflix helped pioneer streaming movies and tv shows over the internet. in 2008, we began to deliver instant streaming video to televisions through the use of a

handful of internet connected devices. today, over 23 million consumers in the united states use the netflix streaming service on more than 900 different types of devices, including game consuls, phones and tablets. the internet delivery of video provides consumers with unprecedented freedom and control over what video programming they can watch as well as when and where they can watch it. this is the future of video. increased demand for internet video is driving consumer adoption of broadband. it's spurring a wave of innovation in the consumer electronics industry with virtually all new devices being internet connected. innovation leaders like netflix are developing new methods for delivering the video data traversing the internet. just a few weeks ago, we announced the rollout of our open connect network, a single purpose content delivery network focused on the efficient distribution of large media files.

our goal here is to help make a faster and less expensive internet for all, and to this end, we are connecting to isps free of charge and making our hardware design and open source software components publicly available. user interfaces or uis which consumers discover and engage with video are likely evolving. the typical linear channel selection grid uses the up/down, left/right remote to access content will likely be replaced with intuitive and visually stimulating uis that use motion, touch and voice as means of control. over the next few years, uis will evolve in amazing ways. a decade from now, using a linear feed from a broadcast grid of 200 channels will feel as odd as using a television dial to change channels does today. the internet is helping to reconceptualize how content is made and consumed. last year for example, netflix announced it would be offering several original television series to its members. this is really the first time such high quality productions will be debuted through the

internet. our first show will be house of cards, a political thriller set right here in washington, d.c. the series stars kevin spacey and robin wright and is directed by david pincher. we will be experimenting with how our programs are released, likely offering multiple episodes, perhaps even whole seasons at one time. in doing so, netflix is giving artists like mr. fincher greater latitude to great compelling stories while giving our members the freedom to watch world class content in a way that suits their individual preferences. video services like netflix are leveraging the power of the internet to help consumers discover content they will love. using recommendation and merchandising technology, netflix is helping to expand the reach and popularity of video content. for example, the availability on netflix of all four prior seasons of the series "mad men" help drive a 20% increase in those watching this season's opening episode. by combining technology with

consumer choice, we were able to find an untapped audience of more than a million viewers for a show in its fifth season. this is just one example of how traditional and emerging video distribution platforms can complement one another. all this change however has led to speculation about the demise of traditional video distribution platforms and networks but it is our belief these platforms and networks will also adapt to today's shifting video landscape. we see the beginnings of this with various internet offerings commonly referred to as tv everywhere. these offerings provide cable subscribers on demand access to a variety of content through internet connected devices like the ipod, the ipad and the xbox. in this way, cable subscribers are afforded many of the benefits of internet video within the bundled offering of their cable service. to get a good feel for this implementation i would recommend that you take a look at comcast stream picks, hbo go, or showtime's tv everywhere

offering. these implementations will likely grow in popularity and consumers will increasingly view traditional cable networks on devices connected to the internet. at netflix especially as we focus on streaming and begin to offer original content, we are often asked if we are not becoming more like a traditional network such as hbo. the fact, however, is that these networks are becoming more like netflix. as traditional platforms and networks move to distribute their programming in nondemand fashion over the internet, they are beginning to meet more directly with pure play or over the top video internet providers like netflix. as this trend continues, issues such as discriminatory data caps and i.p. interconnection must be examined with a much more discerning eye. when you couple limited broadband competition with a strong desire to protect legacy video businesses, you have both the means and the motivation to engage in anti-competitive behavior. add to this mix a regulatory and legislative framework largely crafted before the modern internet era and you have the makings for confusion and gamesmanship.

competition certainly leads to innovation and growing consumer choice. in large part because of innovation from internet players like netflix, traditional platforms and networks are changing their long-standing ways of doing business. in adapting to this changing landscape, these platforms and networks should not be permitted to unfairly leverage their data delivery networks or content distribution relationships to stifle unaffiliated video providers. i encourage this committee to examine closely the evolving competitive environment for internet delivered video. netflix stands ready to work with you and others in the industry to explore various regulatory modifications or other changes that will help assure a competitive and innovative video marketplace for years to come. thank you for the opportunity to appear before you today. i look forward to your questions. >> mr. hyman, thank you for your testimony and participation. we will now go to mr. jim funk, senior vice president of product management for roku. thank you for being here. we look forward to your testimony. >> good morning, chairman walden, ranking member eshoo and

members of the subcommittee. thank you for inviting me here to testify today about the future of video. my name is jim funk. i'm senior vice president of product management at roku. roku was founded ten years ago in silicon valley. we are a rapidly growing company with less than 200 employees, still small by comparison with other companies represented at this hearing. the company's founder, anthony wood, is a serial entrepreneur who among many accomplishments started replay tv and is considered the inventor of the dvr. while the dvr is now among the most popular entertainment devices, roku is betting on the internet as the future of television. four years ago, roku introduced a small internet connected set top box that allowed consumers to stream movies like -- stream movies from netflix over the internet and watch them in high quality on their tvs without needing a computer. the combination of a $99 roku player and netflix streaming was a revolutionary offering. now four years later, there are hundreds of models of tvs,

blu-ray players, and set top boxes offering this streaming video capability. these products can be found today at best buy, walmart, target and amazon.com, marketed by well known brands such as apple, microsoft, sony and samsung. since the launch of the roku player we have sold more than three million boxes in the u.s. and now offer a range of very affordable products from $49 to $99. roku has grown beyond the set top box and has become an open streaming platform that allows content providers to create applications which we call channels. roku now features more than 500 channels available to millions of households that have purchased our streaming players. most roku users have a cable or satellite subscription service in addition to their roku player, and roku provides both new entertainment choices as well as ways to get more value out of a cable or satellite television service. in addition to netflix, roku

users can enjoy tens of thousands of tv episodes and movies on demand from services such as hulu plus, amazon instant video, crackle, hbo and epix. we offer sports packages from major league baseball, the nba, major league soccer, and there is new from nbc, fox news, the "wall street journal" and cnbc. beyond video, roku users can enjoy streaming music services like pandora, internet radio from around the world, photo sharing and popular games like angry birds. roku is becoming an alternative way to reach consumers for existing video distributors, too. we recently announced a partnership with dish network to stream their international programming to consumers who may not be able to install a satellite dish. customers of time warner cable, verizon, dish and other mvpds can enjoy on demand movies and shows from hbo and epix on roku. local broadcasters have even begun to experiment with reaching their audiences on roku. today, you can watch local news on demand from broadcast

stations located in madison, wisconsin, las vegas, and indianapolis. roku is also a means for content producers who do not have traditional cable or satellite distribution to reach the living room tv via the internet. for example, we have over 75 faith-based channels representing everything from individual congregations to catholic and mormon church broadcasts. we even have a channel created by the house oversight and government reform committee where video of hearings like this are available on demand. we believe that devices like roku are part of the future of television because of what we already see. the average roku user streams over ten hours of video per week, which is almost one-third the number of hours that the average american watches traditional tv. consumers like the new technology of internet streaming because it combines all the new content choices with convenience and value. with the widespread adoption of dvrs, consumers now expect on

demand viewing and the internet provides virtually unlimited capacity for delivery of on demand content. in addition, the combination of inexpensive internet connected devices and the expanding selection of internet video services offer an excellent entertainment value for cost-conscious consumers. i did not come here today to advocate for a specific legislation. our point of view is that devices such as roku represent an area of exciting innovation in entertainment and information delivery. they're finding a home in the living rooms of millions of consumers. these devices are being embraced by all segments of the entertainment industry as a means to expand the business opportunities for legitimate content distribution. they are also driving the adoption of high speed broadband connections to the benefit of isps. our interest here and we believe this is also the consumer's interest, is that there continue to be an open marketplace for competition in this space that includes not only competition between device manufacturers, but also open competition

between video services, both traditional and new, as well as competition between internet service providers. the widespread availability of high speed internet open to all video sources is essential to continued growth and innovation in this market. thank you for your time today. i look forward to your questions. >> mr. funk, thank you for your testimony. it's most helpful. we'll now go to mr. michael powell, president, ceo of the national cable and telecommunications association. mr. powell, we're delight tod have you here today. please go ahead with your testimony. >> thank you, mr. chairman and ranking measure eshoo. always a great honor and privilege to appear before this committee. i have done it many times and i'm proud to be here again. i'm also proud to be here as a representative of america's great success story, the cable operators and cable programmers of the united states, to talk about the future of video. for one reason only and that this is an industry through its own investment, technological innovation, has contributed to the glimmering present that we're currently enjoying and has

every intention of contributing to a more glorious future in the area of video. it's important as a quick reminder to reminder to remember that cable industry when it was first pioneered was all about making tv better. we brought television to rural america and urban areas it couldn't reach, couldn't be reached by traditional broadcast programming. we ultimately developed original programming that led to the iconic brands that most americans associate with television today, cnn, espn, c-span, discovery, the history channel, these were all creations of the artists who created the cable industry working in cooperation with the production community. we were the first to bring about any time any place shifting through video-on-demand and through dvrs and in 1996 when congress called on the communications space to introduce telephone competition it was the cable industry that most significantly made an

impact representing almost 25% of all telephone service today. then there is broadband. truly the cable industry stepped up and led to the mass deployment of cable broadband in the united states now reaching 93% of all homes in america. so we are experiencing in my judgment a truly golden age of television, but by almost any metric used, particularly those used by the government and fcc, we experiencing the aboutest we ever have. first and foremost there is simply more content. we have gone from a 1950s world of three channels to one in which there were 100 channels back in '92 to over 900 programming channel sources today, and that continues to expand and explode at a rapid rate. is it any good? i would submit that tv is producing the finest content that it has in its entire history, the critically aclaimed programs of the sopranos or mad

men or homeland or comedies like modern family are truly capturing the imagination of the american public and i think the industry and content producers and distributors have a great deal to be proud of in terms of the quality. when i was at the fcc i remember our central goals and i heard it mentioned earlier in the opening statement is the diversity of content. we don't want all the same stuff. we are experiencing a period in which we hit on a model that allows true diversity of niche programming to smaller audiences by definitions but ones that are passionate about the things they believe in. put simply, if you fish, love music, crave sports, george on politics, want your native language or reflect your community on television or if you have a fetish for jersey shore, it is out there and available to you. we should be proud of what we achieved in diversity. we also have more competitive sources for content than ever before. i would fully admit that 20 years ago in 1992 when the cable act was passed, the cable

industry was a monopoly. it had 98% of multi channel video distribution in this country. today it enjoys 57% and since the mid-to-late '90s it's share as remained flat or declined in the face of competitive threat. today americans can choose between cable companies, the satellite company that is rank second and third in subscribership, telcos, buy dvds at best buy or walk to the corner store and pay $1.20 for a dvd at a red box distribution machine. it is an exciting opportunity for the american citizen. then we haven't seen enough. then the internet finally began to produce the realization of its promise. we now are looking at extraordinary amounts of internet content and video by a whole host of companies, some represented today. there is an 80% increase in video streaming since 2008 and by some estimates 62% of traffic

at primetime on the internet is video content. as we have heard, they're producing original content and more and more on every conceivable device that can be dreamed up and apple's magic factory or anyone else. that's an exciting place. this golden age is set against a regulatory environment that is tarnished. i am a believer that law is premised on certain factual predicates about markets, economics, and technology. simply put, today's regulatory regime is built on a foundation that crumbled long ago. i submit my full testimony for then and now analysis but you can quickly see cable once owned 98% of the market and owns 57% today. cable once owned 54% of the cable channels that you see today. today they only own 14%. back in '92 a majority of americans that watched television over the air today, that's down to 14%. this is not to suggest that one industry is better than the

other but the predicates on which the law are built long ago crumbled into the sand and high time they be reevaluatereevalua >> i would like to conclude by taking on head on the conjecture and speculation and suggestion that somehow the cable industry is actively involved in an effort to destroy or eliminate over the top emerging competition. it is flatly wrong and we lied by the facts. . we have seen a breathtaking explosion of video streaming and content. as i said, an 80% growth. netflix who sits next to me is the largest of video in the country, not cable or satellite. that growth occurred in the current marketplace. our policies, caps, pricing, have in no way thwarted the consumer's ability to watch video streamed content by any measure and we're expanding to meet demand consistently having increase the broadband speeds 900% in the last decade and recently announced plans for

startling speeds by the end of the decade. finally, i would say, mr. chairman, remember, we sell broadband. as the testimonies of the ceo of roku and the general counsel of netflix made clear, their services help stimulate demand for services we sell. i assure you many members of our board are very proud and appreciative of some of those services and what they have done for our business. thank you. i look forward to your questions. >> mr. powell, thank you. we look forward to asking a few questions of you and the other panelists. now turn to the president and ceo of hearst television inc., mr. david barrett. thank you for being here and look forward to your testimony. >> good morning, chairman wahl and ranking member eskew and members of the subcommittee. i am david barrett, the ceo of hurst television. we own 29 tv stations across the country a number of which in your home markets. i traveled today from new york city on behalf of the national association of broadcasters. you can tell from the makeup of

this panel that the future of video is very bright, very diverse, and more inclusive than ever before. each of us here today plays an important role in the video ecosystem but what differentiates television broadcasters from every other entity at this table is our unique commitment to serve our local communities and to operate the public interests. localism is our mandate and we breathe it every day. we supplement our local programming with the most popular national entertainment, news, sports, programs to provide viewers with a variety and quality of content that is unmatched by any other medium. certainly we cannot discuss the future of video without talking about spectrum, the oxygen of our delivery for over the air signals. with kerps over spectrum use intensifying, it's broadcast television that uniquely offers the most efficient use of spectrum to transmit video. the genius of television broadcasting is it is one to many architecture. for high demand programming like

the super bowl and the upcoming olympics, there is no limit to how many viewers can tune into these games and events. with wireless one to one architecture there is simply not enough spectrum on the planet to allow every viewer to watch the events simultaneously on smartphones or tablet devices. there should be no doubt that we need to focus on the most efficient ways to deliver video to our consumers. today and into the future in order to optimized the video experience. to meet the demands for availability our industry is today launching broadcast mobile television. new mobile dtv devices and adapters will enable motion of full motion digital broadcast without the need for additional spectrum and because broadcast mobile tv relies on existing over the air transmission we can offer high quality video without running up expensive consumer costs or exhausting data caps internet providers impose on their customers. other innovations on the horizon

such as 3d, 4 k and ultra high definition are down the road and around the corner. these innovations will highlight how creatively broadcasters are using their digital spectrum now and will be doing so in the future. as intents active auctions and broadcast repacking is initiated, it is imperative the fcc policy determinations not jeopardize the opportunity to bring these new and exciting services to life. our industry recognizes that consumers expect to view our programming on a variety of devices large and small. in order to make that a reality and preserve our business viability content producers will need assurance that programming will only be transmitted with prior consent and agreed upon compensation. in the current television context retransmission consent allows broadcasters and cable and slight companies to negotiate in the free market for the value of the broadcast signal. these negotiations are successful because both sides of the deav