to our consumers. today into the future nerd to optimize the video experience. to meet the demands for mobility, our industry is today launching broadcast mobile television. new mobile dtv devices and adapters will enable reception of full motion digital broadcast without the need for additional spectrum and because broadcast mobile tv relies on our existing over the air transmission, we can offer high quality video without running up expensive consumer cost or exhausting data caps, internet providers impose on their customers. other innovations on the horizon such as 3 d, 4 k are down the road and around the corner. these innovations will highlight how creatively broadcasters are using their digital spectrum now and in the future. as incentive auctions and broadcast repacking is initiated, it's imperative that 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 pruszers will need assurance that programming will only be transmitted with prior consent and agreed upon compensation. the current television context free transmission consent allows broadcasters and cable and satellite companies to negotiate in the free market for the value of the broadcast signal. these negotiations are successful because both sides of the deal have skin in the game. we have a mutuality of interest. broadcasters benefit from the exposure that cable and satellite provides and likewise these video operators benefit from reselling our incredibly popular content. it has been suggested by some in the cable industry that cable bills are rising because of the cost of broadcast programming. there's a chart on the screen

that would indicate that the data does not support that assertion. as you can see cable price increases kr consistently outpaced inflation for 11 of the last 12 years. in actually it is the cable networks that have been collecting the vast majority of carriage fees. this next chart shows the differential and the disparity in fees paid to the cable networks compared in fees to broadcasters. in 2012 it's estimated that cable will pay broad casters approximately $2 billion in retransfees while paying basic networks almost $29 billion. this does not give effect to the value of the inventory exchange that goes on from cable networks to the cable mso ease, but that amount of money in no way equalizes a $27 million disparity. this is even more confounding

when you consider broadcast ratings are many times higher than cable in so many cases. in fact, approximately 95 of the top 100 shows in the recently concluded television season aired on broadcast television both in the demographic of 18 to 49 and in the demographic of 25 to 54 as measured by nielsen. in truth, payments are not the driver of increasing cable bills and the money is not following the audience in terms of what is actually viewed in television in this country. how do we ensure our broadcast content is acceptable between those pat plorms to the new technologies at neck speed? i will observe that i think congress got it right in 1992 when it noted that broadcasters must be allowed to control the use of their signals by anyone engaged in retransmission by whatever means. new companies like sky angel are now part of the video marketplace, but it appears to

be unclear as to how the law will aplay to them and other new entrants. the fcc is currently considering the question of what is a multichannel video program distributor. these seemingly simple questions have far-reaching implications. who has program access, who pays retransmission consent fees. we believe it only makes good sense for the existing consent and exclusivity rules to be applied to all new entrants. as an industry that acquires the right to content, it's imperative that we have the right to negotiate over how our content is distributed. content should reject any erosion of the bedrock principals of consent or exclusivity because they are essential to our uniquely local system of broadcasting. broadcast television is an indecember penceablely important part of today's and tomorrow's video ecosystem. as evidenced by our recent mull billion dollar investment throughout the digital

transition, american broadcasters are prepared to play a role in the advancement of video services as we look down the road. i look forward to answering your questions when the remarks have been concluded. >> thank you. we appreciate your testimony. our next witness is the chairman of dish network. we look forward to your testimony. we serve approximately 24 million sub skrubers. i believe and understand the future of video goes hand in hand with two simple rules. first, always try to understand what the customer wants. and second, change is inevitable, embrace it. what do customers want? they want to be able to watch their program on their tv sets on their phones on the their tablets no matter where they

are. they want to be able to surf the web or make a phone call no matter where they are. dish plans to offer consumers a chance to get all these services from one company. today we do a good job of officially providing fixed video to the home. but dust hers increasingly want more than just home video. they want mobile video. they want mobile voice and mobile data. so when you look at the future of video we need to be able to provide all those communication services to every one of our customers anywhere, anymore. our company is moving in that direction with innovations like sling, our customers can use a wireless smart phone or tablet to enjoy the video content they've paid for. we recently purchased blockbuster and are integrating the video holdings. we're a leading distributor of dvr technology and continue to innovate to our customers can watch the programming they've paid for wherever and however they want. our new primetime anytime takes the kvr to a new level.

giving consumers the choice to easily view their preferred prooming when they want while skipping what they do not want to see. this means that allowing your kids to watch tv doesn't mean they have no choice but to see commercials for junk food or alcohol. the auto hop did nothing more than improve upon technologies to give consumers the ability to record their television shows for play back at home at a more convenient time when they're able to fast forward through or skip over commercials. these are some of the ways we responded to our customers changing needs. but we have to go further mchl the past we haven't shrunk from betting the company to stay competitive. we went from selling big dishes to launching our own small dish business to give consumers what they want including mobile video, voice and data we have to take a significant risk once again. last year we invested billions of tlars to acquire two bankrupt satellite companies with the aim of transforming those assets to a next generation mobile broad

band service. we want to provide consume wers the choice and providers that they seek. if we're successful, we'll fuel billions in investment and create jobs. this brings me to my second point. foster change, don'tic nor it or be afraid of it. we're prepared to leverage our experience and financial strength to drive our communications and entertainment forward and make them more mobile than ever before. we can't get started until the fcc releases updated rules governing how our satellite licenses can be used for broad band. given the overwhelming support we hope the fcc will act in finalizing our new rules by the end of the summer. we want to build the most advanced wireless network in the united states to compete against the incumbents but we need to compete to have a chance. the rules governing how broadcasters and pay tv providers reached retransmission agreements are outdated and in need of change.

adopted the process in the 1992 cable act, there was one operator negotiating with one broadcaster. today there are multiple pay tv providers in each market including satellite, and large regional cable providers. then there are new and over the top video providers. the broadcasters still maintains the government sanctioned mo knolly in his market while paying tv providers a stiff competition. the result is almost bad for consumers and for the free market. broad casters play the pay tv providers against one another. they cut off the most popular sports and entertainmenting programming if their demands are not met. consumers lose because they cannot see the programming they paid for. they pay higher rates or both. the problem is only getting worse. with more blackouts and more broadcaster abuses. from where we sit the broadcasters cling to the status quo instead of meeting consumer demand and embracing new

technologies and business models. it's a prime example of an outdated government policy and in need of overhaul by congress and/or the fcc. it's incredible to see how much we've changed since 1992. likely there are a few of us who used the internet back then or had a cell phone. the idea of streaming movies to a cell phone was science fiction. just as businesses must foster change in a rapidly evolving video marketplace to keep pace with what the consumer wants, government should work to ensure the regulations mirror today's realities, consumer expectations and advances in technologies. thank you and i look forward to your questions. >> thank you for your testimony. and now our final witness, michael o'leary who is the senior executive vice president for global policy and external affairs for the motion picture association of america. thank you for being here today. i look forward to your comments. >> thank you, chairman. i want to thank you all for the opportunity to testify.

i also want to acknowledge and thank my colleagues on the panel. whether you are at a theater at home on the road or choose to download and view when you want, content creators, consumer electronics companies and content distributors are working together to provide new innovative options for audiences to easily access high quality content. we welcome this opportunity to testify and work with this subcommittee as you consider appropriate policy for the the future of video. this is an important discussion and we are pleased to be a part of it. like all successful businesses we are driven by the desire to create and meet consumer demand for the products that they produce. we are listening to our audiences. we are attune to their desires and every day we are developing innovative new ways to give viewers the experiences that they want. audiences today want to enjoy movies on multiple platforms from the big screen to televisions of all sizes to computers and tabllets and on their phones. we are partnering with youtube,

facebook, netflix, roku. soon with others that are no doubt some other new platform which exists only in the mind of some inventive young person out there, all of these exciting innovations benefit both the consumers who receive the high quality viewing experiences and the creators who take the risk and invest in these productions. for many people all around the world there is no substitute for the theater going experience. the big screen is a foundation of the american movie industry. creating wonderful movies that people can watch in movie theaters is an important part of america's rich history but a part of the future and present of video. in addition to utilizing cutting edge and sophisticated visual effects, our companies embrace 3 d, imax and brilliant sound. the theater will continue to play a significant role in the future of how people around the globe are entertained. our member companies are not just making movies rabl for the

big screen. for decades people have watched movies on television. but that experience is kpanging too with each passing day. today our programs are being delivered to television screens by over the air digital broadcasts and through an astonishing change of channel choices enabled by our distribution choices through netflix, voodoo, hulu or other services. audience now find entertainment on their mobile devices as well. all of the major motion picture studios distribute full length films and television show directly to consumer mobile

devices through major operators. the ability to access high quality content is thriving online. where competitors for consumers' attention are providing new offerings every week. in a few short years the quality of video delivery has improved tremendously. with it hundreds of licensed services have sprung up among the world. among them is hbo go which adds value by providing online access to hbo programming. that's not simply the programming that's available on tv today. that's basically all of their catalog in the past as well. netflix is not only delivering a staggering number of movies online, but is also moving into the production of online content, original content. youtube and facebook are entering into the agreements to distribute movies as well. online services today cater to every manner of consumer viewing model including rental, download to own, subscriptions and ad

supported viewing. they are provided by every conceivable type of commercial entity including technology companies like apple's ie tunes, broadcast television networks, cable networks and pay television channels like hbo and epix, telecommunications, cable and satellite providers retailers like amazon, best, blockbuster netflix and walmart and gaming systems as i mentioned like playstation and x box. and new adventures delivered entirely to delivering great content seamlessly. a word about portably. consumers want the access to purchase the content without having to buy the same thing twice. this began a few years ago as our company started to include with mini dvd and blu-ray disc titles a transferable digital

copy for consumers to use on their portable devices. now there are a variety of ways to buy once and play everywhere. one exciting innovation comes from the digital entertainment system which is a con sosh yum of more than 60 studios, retail stores and firms that has created ultraviolet. which is a cloud based diddal locker for consumer content. when a consumer purse chass ult tra violate media such as a blu-ray or dvd, the consumers receives the enduring right to access that content on any ultraviolet device registered to their household. to enjoy that content via streaming through the devices at home or on the go. presently over 5,000 titles are available through ultraviolet. and over three million consumers have set up accounts in one year. this spring walmart will begin offering consumers the ability to convert their collections to

digital ultraviolet companies. walmart estimates the average user brings about seven discs to the store and each conversion takes about a minute. other initiatives are being developed such as disney studio all access which will provide consumers with access to disney content across all devices. in closing, mr. chairman, we are relentlessly innovating to keep pace with our audience and give them more choices on how we view our content. as this committee considers the appropriate policies for the future of video, we hope that you will continue to recognize as promising as they are, we need to move forward. without the content that consumers want, they simply don't reach their full potential. make no mistake, we will always have an incentive to seek out now ways for our content to be distributed. we must be compensated for it

and part of the zugss on how it is distributed. we are pleased to be part of the dialogue and we look forward to working with you in the weeks and months ahead. >> thank you for your testimony and thanks for all i don't have your witnesses on enlightning us on your views on these important issues related to the world of video. i'm going to start my question with mr. johnson. appreciate your comments and situation you face. i want to just get above your company per se, but raise the issues that come up in this new world we're in. i understand why you'd want the protections of the communications act that have forged multichannel video distributors. are you prepared for the responsibilities. this probably goes to others as well. for example, are you willing to live under the rules requiring the competitive availability of set top boxes, the network

nonduplication and syndicated exivity rules and the closed captioning emergency information requirements. all the other cards attach odd the communications act. tell me what that means to your world. >> chairman, we're currently already offered closed caption. we currently offer the eas service. as far as must carry retransmission consent we're not going to be carrying any type of local broadcasting. with ef done a marketing breemt with a company called antennas direct, which sells over the air digital antennas so that our subscribers that want to receive over the air programming can do that through them. so we will not be entering into any retransmissioning consent issues. >> what if you were required to? >> we'd have to look at that when it happens. >> let me ask the same of the others. given the world you're operating

in now, do you want everything that's in the communications act good and some might argue burdensome. >> i think our position is the current situation where there's a innovate is probably the right approach. there are some parts of the requirement that will naturally come to the market which is closed captioning and a lot of other things that will be of benefit to the consumers and they were written for a different environment than exists today. >> mr. hymen? >> i agree with mr. funk in the sense that it highlights some of the antiquated notions with the definition of mbbd, and i also think that it's something in determining mbbd should be done in a broader scale in a single regulatory filing. >> all right. mr. johnson, mr. hyman, and mr. arogat, isn't it that a child could be watching kaio in the

same living room, but the way that programming got there may be subject to different rules depending on whether it was provided by sky angel, netflix, the cable company or dish, shouldn't regulatory or non-regulatory treatment be the same? mr. johnson, i'll start with you. >> what we're asking for is a level playing field that we'll be having access to the same programming our competitors do and because of there's the definition of mvpd is up in question, we've not been able to have the access to that programming. >> mr. arogat? >> in general, i would say yes, the rules should be the same whether to your earlier point, the chairman's earlier point, if you'll be the v.p. you would have to limit the rules to the current incumbents. having said that, there are

cases when things are different between the technologies and you have to look at it on a case by case-basis and satellite is a national service and it remains to be seen how the i.p. networks related to what mr. johnson are doing whether it will be national or whether they'll be local. so it depends on some differences because of that. >> mr. powell? yes, mr. chairman, what you are having is the continued of lagz of the convergence in which technologies increasingly bring sameness to the way the things are provided and distributed. i wouldn't make the hallmark of suggesting that things are situated just because they can produce the same content, the same show. there are different business models and different terms, different technologies underlying it. the cable industry spends $186 billion to build an

infrastructure that's optimized for premium, high quality content. that's very different than the same content being sold on i tunes in a model designed to sell ipods. as long as we're cognizant of the different business models and they're pursuing different objectives just because they have the same content doesn't necessarily make them identical and i do think there should be more sameness than there is today. >> all right. my time has expired and getting to the heart of the issue here is everybody wants a little different deal, the other guy's deal and we're trying to figure out what's the right, regulatory regime to spur innovation, competition in the marketplace that functions. with that i'll turn to my colleague from california. the woman who is proud to represent innovation and

technology, miss eshu. >> thank you, mr. chairman. i think you've hit the nail on the head because i think we all want to see an acceleration of innovation that it not only be, you know, that we motivate things through the -- whatever it might be, a change in the law, whatever the rules at the fcc because this is really one of the more exciting areas relative to our national economy that holds so much promise and there's an insatiable appetite on the part of consumers and so i think this morning's hearing is really highly instructed, but there are right below the surface there are all these different cases. i have four questions that i want to ask, starting with mr. funk, mr. hymen and miss sohn.

we're very well aware of the data for data applications such as netflix, amazon, hulu, while at the same time the wireless carriers are moving away from the unlimited data plans. there was a piece in "the new york times" yesterday that talked about broadband moving to meters. first of all, do you think this curtails innovation and if so, how would you address it? >> do you want to start? >> first of all there,'s been speed-based fears and the idea of internet consumers is not new. the important thing is as long as there's competition among internet service providers, providers who give good value to consumers will get the business and if the tiers become

restrictive in the way that they disadvantaged and services and restrict choice in a competitive market, companies that provide those services will not succeed. so the key here is really competition in order to ensure that the -- you get the right outcome. >> thank you. >> let's go quickly. i have four questions. >> want to talk about the marketplace. >> you've got 30 seconds. thousands of video channels and it's the golden age of video. i think that's true. i think the one thing we have to be mindful of and i woulding is this committee to be mindful of is internet video and there's only one way to get internet video and there are very few carriers that provide internet video in some cases and there's only one carrier that people can access that and the ability to have competition in the marketplace is something that you guys should be mindful of as you go into the internet video and with respect to our issues, the issues that i've raised and been fairly public about is the

application of discriminatory data caps in the way in which the same mind cap on. >> when are they discriminatory and when are they not? >> with the same comcast over stream picks, and one has the data caps and the other doesn't. from our standpoint is you implement data caps and there are innovation issues with respect to data caps and they should be applied equally and when not at all. >> i agree with my colleagues to the left. so a perfect example of the discriminatory data caps is what comcast is doing with the xbox 360. so it's exempting its own xfinity app from the data cap, but netflix and others are subject to the data cap. so while we don't think that data caps are inherently bad, when they're ash trrbitrary the be abused.

they also own internet -- and if i can just say one more thing, one of the things that really galls us is that we have been asking -- public knowledge has been asking the fcc now for almost two years to look at data caps and not to regulate them and look at them to find out how they're evaluated and how they're raised or lowered so people can have an idea of what these caps are intended to do and they've just refused. >> thank you. >> and mr. funk, it's my understanding that 20% of your customers have dropped their cable or satellite service, and what factors do you think lead more customers rather than additional -- rather than a compliment of traditional cable or satellite service. >> we do see a percentage of our users who have cut the cords or dropped the satellite package and it's the minority and i

think they a variety of reasons and in some cases it's cost and there might be a living situation and there are preferences on programming. i think what's interesting is that there are now choices that allow consumers that opportunity so things like netflix and hulu plus give people a selection of video at a lower price the ability to get that. so i think increased choice of offerings is really the key to providing the right service for consumers and we provide one method for doing that and you'll see more innovation in the coming months and years to how to do that better. so we're optimistic that cord-cutting will lead to different consumption. >> i have two questions and i'll submit the other two in writing. i want to thank all of the witnesses because together you've made this a not only, but

20 years ago when congress first