hearing on the future of video. thank you. >> thank you. the chair recognizes chairman ameritus, mr. barton. >> thank you, mr. terry. i first want to take a little victory lap this morning. the college president announced yesterday that we'll have a non-bcs football playoff in college football, and i can take a little bit of credit because back when i was chairman of this committee i was chairman of that and we got the ball rolling and they announced the 14 playoffs. so i want to commend them, but also take credit for this committee highlighting that issue and i think it's a start in the right direction and i think they'll have it. my first question is to the audience. i want somebody in the audience

to tell me the original analog televisions and how many channels were -- anybody that's my age ought to know. i see one hand out there. how many? somebody. no. no, not how many you got, but how many were on the dial. there were 2 to 13, but there was no number one. i never under stood why there was no number one, but there were 13, and you could go up to 13. as mr. powell just pointed out, his testimony there were 900 programs available now. we've gone from my first tv, we've got one channel on a good day. one channel and now we've got thousands, literally. i think it is time to review the

telecommunication and miss eshoo should be commended for this hearing and i think there are principles to remember. as we look at this and this is just my scratches, so i don't claim this as the universe, but obviously in order to have a program you've got to have a creator. in this country, we've never regulated the creator of the programming and then you have to have a producer and to my knowledge we've never created the producers and there have been censorship and in creati creativity and production, we basically let that be a free market operation.

once you have a program you have to have someone to package it and market it and you have to have somebody to transmit it and you have to have somebody to view it and someone to consume it and when you get into the packaging and the transmission is where we've had a role for government. i think it's a truism that form follows function in our original regulatory format was based on the fact that whether it was radio or television there was a potential for a natural monopoly and government either tries to prevent monopoly or regulate monopoly, and a lot of the rules that we're talking about here originated when -- when the radio market and the early tv market was getting started. as mr. powell pointed out, the advent of the cable industry

brought video to more people, but it also brought additional regulation. i was the only member of the committee back in the '80s that voted against the re-regulation of cable. the only one on either side of the aisle when the first president bush was president and i was at the white house when we deregulated cable. when we passed the telecommunications act in 1996 there are at least four, maybe four or six witnesses at this table that their industry or their company did not exist -- did not exist. i could tell you today what roku is and i listened to the president and they tried to explain what it is. so i think, mr. chairman, i know it's too late to do a major bill

in this congress, but i hope in the next congress we take this up and use original principles to review the market, and we're better off having less regulation and more and more enterprise and more market competition and the role of government has had a level playing field if we can't prevent a monopoly to provide undue market share and i look forward in this committee and the next congress. the last thing i'll say is if we're going to do big things it has to be done on a bipartisan basis. this is not a partisan issue. it will go nowhere if it becomes r versus d and it has to be done in a bipartisan basis and the good news is with the leadership of both sides of this committee,

that is a very doable deal. with that, i yield back, mr. chairman. i would agree. the gentle lady from california, you are now recognized for your five minutes. >> thank you very much, mr. chairman. first of all, i would like to welcome all of the witnesses before us today, and i would just like to acknowledge that the kcra is doing for my constituents in sacramento. local news and weather as well as other local programming is good for all americans not just for my constituents and i would like to get a better understanding about the witnesses and the role and retransmission consent to localism, and mr. irvin, i understand that retransmission consent payments are used by broadcasters to support local news and local weather. how would you respond to concerns that changes and the retransmission consent regime could undermine quality, local programming. >> thank you for the question.

first of all, retransmission consent, and there was more information on this and my understanding generally goes on some to the network that is changed where the network themselves and the major network may take some of that in the large part of the consent does not flow the local broadcasters anymore and that's the way it started, but now the national network would take a large portion of that, and second, of course, it is the broadcast model is a two-pronged model that the retransmission consent fees and also advertising fees and so they get it from two sources. the troubling thing is despite the fact that the retransmission fees have good-bye gone up to 200, 300, 400% since i started in this business and the localism and the local level has gone down from a local news perspective to cut costs and operate efficiently with the

many broadcasters are sharing local news networks and many cities today you will see that a network news show will be on multiple networks and they'll be sharing the resources. >> mr. garrett, would you like to comment on that? >> i disagree. >> the 21st century media company today needs a dual revenue stream and for years the television industry has an advertising-only model and the cable industry was launched and helped us get our signal into rural areas and built a significant business on the back of the most popular programming available to americans in every community in this country and that was local television. i would say to you that we are using as an industry the retransmission consent fees to invest in the local businesses and it helps support the investment made in digital technology which is multibillions of dollars over the last decade. i think you've seen most local

stayings and many local stations go from producing 20 hours a week of programming to 40 hours a week of programming exclusively in the local news genre. we have added multi-cast channels on our signals now which are trying to give clearance on satellite and cable, so i would disagree with mr. ergen that that money is not being used in a constructive way to advance the business interest. >> mr. barrett, how could you -- how would you respond to concerns some parties raised about the impact of broadcast stations, coordination and consolidation of retransmission consent negotiations? >> i think speaking for our company we negotiate only on behalf of the owned stations of the hearst corporation. other companies have pooled some of the retransmission consent negotiations and have created bundles, but i believe in most cases in all cases people have been smart enough to acknowledge

that they had to break up a bundle and mr. ergen wants to buy a station where we have a duopoly separately from kcra, i'll sell them kqca separately. >> mr. ergen, your thoughts, quickly? >> i think the problem is in the retransmission consent that the local broadcasters are a government-sponsored monopoly in other words, nobody else can bring that signal into the marketplace today and it's a bit of an unfair fight and what's happened is that i'll give you one example in wye onlying where one individual got the rights to negotiate for all three broadcast networks in cheyenne, wyoming and there was either no local networks in cheyenne or you had to pay whatever rate. so the signal had to come down and it's what consumers lost because of unfair bargaining. >> it's one thing to be an

unregulated monopoly and another thing to band together and negotiate on behalf of the multiple stations in the market? >> this is not the same throughout the country. >> it appears that what mr. barrett says in certain areas where sacramento might be may not be the same way as what you were talking about in wyoming and other areas? >> i would agree that each broadcaster handles it differently, so mr. barrett's company handles it on a very professional manner with just their networks. other people utilize their market power and that mischief can happen and now legally sanctioned. >> i have run out of my time and i would submit written questions. >> absolutely. >> now i recognize myself for five minutes and i'll spend most of my time with you, mr. powell, but first i just want to give an anecdotal story when i walked

into my 17-year-old's room and by the way, we got him a tv for his room for christmas thinking that when he graduates it would be a good thing for him to take to college, hopefully, he's going to college, but i walk into his room and he's on his iphone and i said hey, what's going on? >> just watching netflix. on his iphone and there's a tv sitting tliet. and that's the world we're living in. that's the people that are going to dominate the consumer products and video markets for the years to come. i think of turning on the tv, i don't. >> was the tv and internet connected? >> good point. he has the xbox 360. yea, so he can do it that way, as well, but he just chose to do it on his phone. so, mr. powell, it's interesting

you mentioned the 57%. in 1992 congress was concerned about the cable monopoly and that does not exist today if you're at 57% and the folks that are sitting in this panel and -- what does that mean to the cable industry? how is it evolving to be competitive in reference to the '92 act, and not be redundant on mats matsui's question of retransmission, but what other underbrush is there that from '92 that was just so focused on the cable industry. what do we need to do to clear out the brush? what specific things should congress look at if we want to review the '92 act? >> the first thing i would say is the beauty of competitive

dynamics is you have to increase value for consumers and you can do that through innovation and evolution of your service and i think the competition we faced first and most formidably from the satellite companies increased both the quality of content that we're providing and the amount of content we were providing. it forced us to look at new businesses for revenue development to continue to be competitive which is part of the dynamic which i think helped drive investment in broadband and umeltimately brought that io the bundle of services we offer. if you look at the wonderful things that the over the top folks are doing, you see cable companies knowing they, too, have to be able to bring that value to your son to be able to allow him to watch what they're selling over ipads and xboxes as well. so i think that dynamic has driven a lot of innovation. i would give you a more global answer about what to change.

i think they had two core fundamental foundational elements and one that we were an integrated, exclusive monopolist and a whole bunch of rules that are premised on supporting and subsidizing broadcasting for the protection of the social compact that america supposedly wanted to advance. i think vertical innovation rules when an industry only has 14% of its operators integrated with content, these would be rules like program access and program carriage and rules premised on the idea that you have to guard against incentives being an owner of content and we have the content and those are the kind of rules we have to talk about. you have to sort of re-evaluate the social compact. is it still the policy of the united states that the cable industry should continue to forcefully subsidize the broad cold fronting model through retransmission consent and other

elements? i'm not prepared to answer them. >> well, one last question and hopefully we can have time for the broadcasters's mr. barrett. we're getting calls in our office about cable rates going up and i think this goes to the vertical integration model that was thought of as cable then, but you're not the content provider today. can you explain very quickly in 26 seconds how that's impacting the business model and what you should be telling our clients, our constituents. >> one, in the industry in this day and age under economic stress who is not sensitive to the aford ability of the consumer is acting at its peril and it is very focused that you're seeing companies experimenting with smaller and lower-priced packages. you're seeing basic packages being offered for one. secondly, it is very difficult to compare prices over time because there's so much more in

the suite of bundled services that consumers are buying. dvr, and more channels and i would leave you with one statistic. on an hourly basis, cable is more per hour and that's more than netflix subscription and other products in the market. >> is that viewing hours or eight hours in a day. >> viewing hours. eight hours a day. >> thank you. at this time the chair recognizes, the gentle lady from the virgin islands, donna christianson. >> thank you, mr. chairman and welcome to all of the panelists this morning. >> thank you for holding this hearing. just a couple of questions and i would use up all of my time. can you hear me? >> you advocate for eliminating the broadcast must carry rule and you note on the one hand the importance of protecting the public and non-commercial stations. what policies would protect this programming without a must-carry rule?

>> i think we would be comfortable with preserving must carry for public stations, but as commercial stations are concerned, my feeling is if local stations are providing good local programming, cable will want to carry them, but i don't think they need the protection of must carry. >> i see. mr. barrett, one of the concerns are advertising revenues and how are broadcasters looking to respond to the pressures of the new technologies and services? >> one of our challenges has been to get accurate measurement from nielsen has been a challenge as the world moved it with time shifted viewing for nielsen to capture that television viewing. [ inaudible ]

>> i didn't think so. >> now it's on. i'm a tv broadcaster. i should know that. >> could he answer that again and we'll stop the time? >> okay. sure. >> our challenge as broadcasters has been to be sure that nielsen captures the viewing on time shifted -- on the television experience that has time shifted on dvrs and the like and very briefly the new revenue opportunities we have with retransmission consent and multicast and in the future mobile television, the extent that those ad revenues will help replace and support some of the

downward pressure of ad revenues against the core revenue product. >> thank you. thank you, mr. chairman. mr. powell, you and other panelists have pointed out that the competitive environment in technology has changed and is continuing to change and you recommended re-examining a lot of the rules and the regulatory rules, program access and content carriage obligations as well as must carry transmission content and the duplication rights. some would say, if we were to weaken any of those rules it would give cable an unfair, competitive advantage, given the wide choices available today, how would you respond to that? >> that's a great question. >> i don't think the cable industry's position is we're just looking for a while to abandon deregulation. we're looking for a more regulatory model that more properly reflects the market and

the rules that we're living under if you accept the way they're premised would fall under a standard of today's measurements. i'm perfectly willing to entertain that somebody can conceive of a different basis or a different reason for some sort of regulatory rule, but i think that the obligation and the burden should be to prove that from a zero base, meaning given the reality of today and not the legacy of yesterday, why do you still need this rule or why do you need a proposed rule and we're a cooperative partner as opposed to just some random, get rid of everything because it's stiped, but we do think it's justified based on what we're on the market and on balance, that would be a dramatically lighter regulatory regime. >> i yield back the balance. >> thank you. >> at this time, we recognize mr. stearns for five minutes. >> thank you, mr. chairman.

>> mr. barrett, you've been getting all of the questions and i have another question which is more or less confined to the district and i represent gainesville and it appears there's a dispute between directv and the abc affiliate wcjb over transmission consent fees and you're probably not familiar with that. >> i'm not familiar. >> we own the nbc affiliate in nearby orlando. >> i don't necessarily want to get involved with this business dispute, but some have suggested that because now gainesville and the directv they can't even get abc now and it's a sort of a blackout, and i guess in your opinion are the blackouts becoming more frequent? cox happens to own the abc station in orlando. >> we own the nbc affiliate wesh in orlando and over the past several years or so, there has

been a new nbc affiliate licensed to gainesville to that marketplace and you may infer that we stood aside and did not challenge that nbc affiliate that went into that marketplace. >> mr. aragon, are they becoming more frequent and becoming a problem for directv? >> they are becoming more frequent. >> we have a clear difference of opinion here. >> think perhaps we can get the committee to -- >> your position is they're becoming more frequent. >> i can speak for dish network we had six blackouts last year and we've had nine already this year. >> so if you've had nine already this year and let's take gainesville and they can't get abc and they call you up and say why can't we get abc? what do you say? >> you basically say you're working with the broadcaster and it's a bit of an unfair food fight because the broadcaster -- the consumer has a choice to

switch to the video provider, a, and b, they only get their sweeps, ratings and their sweeps ratings only happen four times a year by nielsen which affect their advertising rates except by law, cable companies can't take down and can't take down a network during the sweeps rating. so it's just not a fair fight out there today and it is becoming more prevalent. >> what do you think a solution should be? because is there a solution? it seems like -- >> i think there are some fairly easy solutions. as an example, the if we'll make a market determinant, i'm all for that, but then you'd have to go to a standstill, and the customer doesn't, and while

disbuttes going on. and it's a fair fight. >> i don't think they want to get involved with this dispute. >> you opened pandora's box! >> i've given him a chance to speak, and i understand the broadcasters' deploy mobile dtv services to allow viewers to watch live, local news, emergency alerts and other programming on the go, what are the differences between broadband mobile, dtv and currently available on cell phones and can mobile dtv help alleviate the pressure on the wireless bands? >> the architecture of the broadcast signal that is the single point and multipoint distribution is the superior distribution system that doesn't run into broadband congestion. if i invite youed to a yankee game in new york city and we wanted to go online you'd have trouble in yankee stadium on any

given weekend connecting with the broadband supplier that didn't buffer and didn't have real signal limitations over the air broadcast signal could touch every one in that stadium simultaneously and there would be no signal degradation and is a vastly superior sig fall. >> my last question, i think we all understand the need for more spectrum. i think the fcc is move forward regarding the sban spectrum dish recently required to build out a wireless network. what is the status of this item and when will the fcc issue the final order in your opinion? >> we first went through a waiver process last year and ultimately were denied that waiver by the fcc and went by the rule making process which is now complete in the sense that the comments are in from all of the parties that might be affected here, positively or negatively by our entry into the

wireless business and now it's just the rule making is now just has to be decided by the full commission, the five commissioners to make a decision and we're hopeful they can do that by the end of the summer other than time and realize the fcc has a lot of other things on their plate as michael powell can speak to when he was there, absent other than time they have the facts and we're hopeful they'll do it by the end of the summer and that unleashes 40 megahertz of spectrum and of course, obviously, a huge investment in this industry and jobs at a time when, you know, a lot of companies are hoarding their cash because other than uncertainty out there, they can alleviate their problem. so it's a case where business and government can work together to do the right thing for consumers and also unleash productivity and investment in the united states.

>> thank you, mr. chairman. >> the chair now recognizes the gentle lady from colorado. >> thank you very much, mr. chairman. sitting here listening to this testimony reenforces my view that this transmission issue is a very messy issue and there's not a one-size solution. most people would like to see agreements reached that are fair to consumers and think one thing, almost everybody could agree with is congress shouldn't put too heavy of a finger on that scale. we should try to allow the market to come to a solution. i believe that we need access to free and diverse and local news and local programming and information and i was just looking at the wildfires in colorado and there's a good example of how consumers in boweleder and colorado springs and fort collins need to be able

to get access to local news, and so that's a balancing i have to have and also several members of the panel talked about mobile tv and how much promise that that has, but the strong argument supporting the value of broadcasting to consumers don't necessarily equate to a justification for pulling a signal from cable or from satellite viewers if retransmission consent negotiations fail, and i'm thinking about this from the standpoint of my constituents who work all day, and who barely have time to sit down in front of the television and who want to turn on the first game of the world series and they hope the rockies might be in it although maybe not this year, but -- but they can't get the programming they want because we had failed retransmission consent talks