seal of approval from the parent's television council. american families can have sky angel that their home as a source of wholesome family interment. our business model is not complicated. we enter into written agreements with programmers for distribution of programming to sky angel subscribers via our iptv system. we pay the programmers monthly fee per subscriber who receives a programmer's channel. sky angel enters into subscription relationships for multiple channels. we download our channels at our headquarters outside of chattanooga. we provide our subscribers with set top boxes which are necessary to receive the programming and we directly and remotely control the programming to the set top box at all times.

unfortunately, we have been faced with significant problems in obtaining act sesz to family friendly program channels. one shocking example is c-span which is supposed to be a public service but c-span refuses to deal with us. about three years ago c-span entered into an agreement with us for distribution of c-span channels on a sky angel system. c-span cut the service off three days after we started carrying it. c-span officials told us they had quote made a mistake in permitting sky angel carry its channels without any other explanation. c-span is offered on the internet as a free public service to all. but as perhaps fewer people know, c-span is controlled by the cable tv's 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 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 stifling competition. my written statement. basically discovery cut us off from receiving 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 start up company using iptv technology. trying to write a wroeng we filed a program access complaint with the fcc against discovery in march of 2010. to date the fcc has never made a

substantiative 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 skr scrutinizing the delay. 19 months have passed would access by the fcc. sky angel remains injured by the decision of discovery and its affiliated program interests. we believe that our experience with starting and operating an innovative new family video distribution service show that there's anti-competitive conduct in the industry and significant problems with the manner in which is fcc is failing tone force program access laws and regulations so that a valuable new competitive internet 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 the public interest 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'll look forward to following up with some questions. we'll turn to the president and ceo of public knowledge. we're delighted to have you here today. we look forward to your comments as well. >> chairman walden, 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. despite all the great programming and ground breaking 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 has made possible largely by an outdated regulatory structure created by incumbents to gain competitive advantage. it is time for policymakers to revamp this structure so 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 con soumers. as a result much high valued programming is not available to online video providers. they also have to contend with artificially and low data caps and other practices that keep them from reaching their full potential. while it's inevitable to i pirks

technology will play a larger part of video delivery, it's not inevitable that the market will reach its full competitive potential. that's why policymakers should extend policies to make sure that new competitors 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 and sports blackout rules do little more than preserve old business models. if these rules ever made any sense in the preinternet era, they certainly don't today. representatives are on the right track with their field to clear away much of 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 the compulsory copyright license and must carry are outdated. they're part of arn interwoven fabric of outdated business expectations. and copyright law is also regulation that is often misused to hold back innovation. witness the lawsuits against dish's auto hop service. by taking these simple steps policymakers will be able to facility 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. we'll welcome the general counsel for netflix. thank you for being here. we look forward to your testimony. i know we did audio the last hearing. if you could, just touch the butt top and make sure it's on. >> good morning. netflix helped pioneer streaming videos 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. in colluding game consoles, mobile phones and tablets. in fact, netflix delivers close to a billion hours of streaming movies and tv shows to its members every month. 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 broad band. it's spurring a wave of innovation in the consumer electronics industry with virtually all new devices internet connected. netflix are developing new methods to deliver data traversing the internet. a few weeks ago we announced the rollout of our open connect network. a single purpose content deliver lynettework focused on the efficient distribution of large media files. our goal is to help make a faster and less expensive internet for all. to this end we are connecting to isp's free of charge and making our hardware design and open source public components publicly available. userer intfaces through which consumers discover and ingauge with video are evolving.

the typical linear selection grid that uses the remote to access content will likely be replaced with intuitive and visually stimulating ui's that use motion, touch and vice as means of control. over the next few years they will evolve in amazing ways. a decade from now choosing a linear feed from a broadcast grid will feel as odd as using a television dial to change channels today. last year for example, netflix announced it would be offering several original television series to its members. this is really the first time that 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 fichblger. we will be experimenting how our programs are released likely offering whole seasons at one time. in doing so netflix can giving

art lists like mr. fincher greater latitude to create compelling stories while giving our members the freedom to watch content in a way that suits their preferences. video services like netflix are leveraging the power of the internet to help consumers discover the content they will love. using religious and merchandising technology fete flix is helping to expand the reach and popularity of video content. for example, the availability of netflix of all four prior seasons of "madmen", helped 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 compliment one other. all this change has led to speculation about the demise of traditional video distribution platforms and networks.

but it is our belief that these networks and platforms will adapt. we see the begins of this with various authenticated video offerings commonly referred to as tv everywhere. these provide cable subscribers on demand access to internet connected devices like the ipad, the ipod and the x box. 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, i would recommend you take a look at comcast picks, or showtime's tv everywhere offering. these will likely grow in popularity and consumers willen creasingly view devices connected to the internet. as netflix as we focus streaming and offer original content, we are asked if we're not becoming more like a traditional network such as hbo. the fact is that these networks are becoming more like netflix.

as traditional platforms and networks move to distribute their programming over the internet, they're beginning to meet with other the top video providers. adds this trend continues issues such as discriminatory data and ip connection must be examined with a much more disearning eye. when you couple limited broad band competition with a strong desire to protect the legacy of video businesses, you have the means and the motivation to engage in anti-come pet i have behavior. add to this mix a regulatory and legislative framework crafted before the modern internet era and you have the makings for confusion and gamesmanship. competition leads to innovation and growing consumer choice. in large part because of innovation from players like netflix. traditional platforms and networks are change their ways of doing business. in adapting to the changing landscape. these platforms and networks should not be unfairly leveraged

to stifle unaffiliated video providers. i encourage this committee to examine closely the environment for internet delivered video. netflix stands ready to work with you and others in the industry to explore modifications or other changes that will help assure a competitive marketplace for years to come. thank you for the opportunity to hear from me today and i look forward to your questions. >> thank you for your testimony and participation. we will go to mr. jim funk, he's the senior vice president of management for roku. we look forward to your testimony. >> good morning. my name is jim funk and i'm the senior vice president of product management roku. it was founded ten years ago in silicon valley. we are a rapidly growing company 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. the dvr is now among the most popular interment devices roku is betting on the internet as the future of television. four years ago roku introduced a small set top box that allowed consumers to stream movies from netflix over the internet and watch them in high quality on their tvs without needing a computer. the combination of the $99 player and netflix streaming was a revolutionary offering. now four years later there are hundreds of models of tvs, blu-ray players, game consoles and set top box 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 we have offered a range of products. roku has grown beyond a 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 that are available to the millions of households which are purchased our streaming players. most users have subscription service. roku provides more intermeentert services. in addition to netflix users can enjoy tens of thousands of movies and television programming.

roku is becoming available for distributors. we announced a partnership with dish network. customers of time warner cable, vz dish and others can now enjoy on demand movies and shows from hbo on roku. local broadcasters have even begun with reaching their audiences on roku. today you can watch local news on demand from broadcast stations in madison, wisconsin, las vegas, and indianapolis. roku is a means for content producers who do not have traditional distribution to reach the tv via is internet. for example, we have over 75 faith-based channels representing everything from individual congregations to

catholic and mormon church broadcasts. we have a channel created by house oversight and video reform committee. we believe the devices like roku are part of the future of television because of what we saw. consumers like the new technology of internet streaming because it combines all the new consent choices with convenience and value. with the widespread adoption of dvrs consumers now expect ondemand viewing and the internet provides unlimited kas b by. i did not come here today to advocate for special legislation.

our point of view is devices such as roku represent an area of special area and delivery that are finding a home in the living room of millions of consumers. it's a means the broad band connections to the benefit of ifp's. our interest here and this is the consumer's interest is this continued to be an open marketplace for competition in the 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. thank you for your time today. i look forward to your questions. >> thank you for testimony. it's most helpful.

we'll go to mr. michael powell president and ceo of the communications and technology. >> it's always a great honor and privilege to appear before this committee. i've 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 that 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 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 remember that cable industry when it was first pioneered was all about making tv better. we brought television to rural america and urban areas that could be reached by traditional

broadcast programming. we ultimately developed original programming that led to iconic brands that americans associate with television today. cnn and espn, c-span, discovery, the history channel. these were all creations of the artist and creators of 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 dvr. in 1996 when congress called on the community space to introduce telephone competition it was the cable industry that most significantly made impact representing almost 25% of alltel phone servicepgfnñ today. and then there's broad band. truly the cable industry stepped up and led to the mass deployment of cable broad band 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. by almost any metric used, particularly those used by the government and fcc we're experiencing the best we ever have. first and foremost there is simply more content. we've gone from a 1950s world of three channels to hundreds of channels back in '92 to over 900 programming channel sources today. and that continues to expand and explode at a rapid rate. and is it any good? i would submit that tv is producing the finest content that it has in its entire history. the critically acclaimed programs of the sopranos or modern family are capturing the imagination of the american public. i think the industry and content producers and distribute toshs have a great deal to be proud of. when i was at the fcc our goals. i heard it mentioned earlier in the opening statement is the diversity of content. we don't want all the same

stuff. and we are experiencing a period in which we hit on a model that allows true diversity of niche programming to smaller audiences by definitions by ones that are passionate about the things they believe in. put simply if you fish, love music, crave sports, gorge on politics, want your native language or reflect your community on television or if you oddly have a fetish for jersey shore it's all out there and available to you. we should be proud of what we've 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 90% of multichannel distribution in this country. today it enjoys 57%. and since the mid to late 90s, its share has remained flat or declined in the face of competitive threat. today americans can choose between cable companies, the

satellite companies that rank second and third in subscribership. you can buy dvd easy at best buy or pay $1.20 for a dvd at a red box distribution machine. it's an exciting opportunity for the american citizen. then we hadn't seen enough. then the internal fanl lie began to realize its promise. we are look at extraordinary ams of internet content and video by a whole host of companies. some represented today. there has been an 80% increase in video streaming since 2008. more and more on every conceivable device that can be dreamed up at apple's magic factory or anyone else. that's an kbieting place. this golden age is set against a regulatory environment that is

tarnished. i submit my full testimony for then and now analysis. you can quickly see cable once owned 98% of the market owned 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 watch 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 pred incompetents that one was built be resvelted.

first and foremost we've seen a breathtaking explosion of video streaming content as i said an 80% growth. netflix who sits next to me is the largest provider of subscription video in the country. not cable or not satellite. that growth has occurred many the current marketplace. our plsys caps their pricing have in no way forwarded the ability to watch video streaming content by any measure. and we are expanding to meet demand consistently having increased broad band 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 broad band. and as the testimonies of the ceo of roku and the general counsel of netflix make 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've done for our business. thank you and i like forward to your questions. >> thank you. we look forward to hearing from you. we turn to ceo and president of hurst television inc. >> i'm the president and ceo of hearst television. our company owns 29 companies. i traveled here from new york city on the national 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 plays a role in the ecosystem. what dif rentuates broadcasters is our unique commitment to serve our local communities and to operate in the public interest. 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 a variety and quality of tn thaent that is unmatched by any other media. certainly we cannot discuss the future of video without talking about spectrum, the oxygen of our delivery for over the air signals. with concerns over spectrum use intensifying, its broadcast television uniquely offers the most efficient use of spectrum to transmit video. the genius of television broadcasting is its one too many architecture. for high demand programming like the super bowl and upcoming olympics, there's no limit to how many viewers can tune in. with wireless one to one architecture there is not enough spectrum to allow every viewer to watch the events simultaneous sli on smart phones or tablet devices. there should be no doubt that we need to focus on the most efficient ways