question. if preferable i would like to have a yes or no and that question is do you think blackouts as a result of the failure of these agreements are fair to consumers no matter how rare or how often they might be. mr. baron? >> no. >> miss sohn? >> no. >> and mr. erge, in? >> no. >> now, mr. ergen, i have a question for you about this auto hop issue. as you testified in your statement, and i think everybody knows the auto hop technology lets consumers skip over commercials or other things that they don't want to watch and as you said, that would mean that

when kids are watching tv they won't have to see junk food or alcohol commercials and i would like to seay see that many viewers would skip over the shock and awe tv commercials that everyone will be treated to in the campaign this fall and so -- so. i'm sorry? >> not to mention the volume. >> yea, and the volume, too. i think the volume is the issue, but if people had auto hop it would let them decide what they wanted to see, and i know this is in the courts right now and talking not about the legal issues, the consumer choice and innovation in the free marketplace, doesn't auto hop simply improve on technology that is available from the dvr to what's possible on the dvr? >> yes. i think it was settled legally 28 years ago in the beta max case, but the auto hop does what everybody in the pay tv business does with dvrs which is allows

the customer with the push of a button with a series of channels and it allows customers with the push of a button to skip ahead through a commercial. what it does is it makes it more convenient for customers and when i woke up, my alarm went off as it does every morning and i don't have to set it every morning even if i'm in a different time zone. when you choose to watch a prime time show you can make a choice to auto hop the commercial with the push of a button. so it is -- it is just as we've regulated, i've sat through regulation of -- of, we have to have a ratings system for the tv show so the customers and parents can block them out. we now have regulations to turn the volume down for commercials and it is amazing we have to do that. it's amazing that commercials could be that loud, and i think that we certainly don't need regulation that prevents a

customer as i understand the point, that they do not have the right to skip through a commercial and do not have the right to report the show. >> i've got to say from the standpoint of the broadcasters, i understand the business plan and revenue concern, but i think we have to balance the consumer decision of what they want to see versus -- versus that business when we need to work something out. i think we can all agree on that. mr. barrett is eager to make a point. >> i think if this committee is interested in protecting localism and if you're having to cover the wildfires in fort collins, the auto hopper will be damaging to the business models and provide the kind of coverage that's important to your district. >> that's why i'm saying, i think for the -- for the local

broadcasters, i'm sympathetic to the business model, but we need to balance that plus the consumers wanting the choice. it's not dish that wants to have that choice. it's the consumer, so i think we'll have to work that out. thank you very much, mr. chairman. the gentle lady's time has expired and miss black burn is recognized for five minutes. >> thank you so much. i just have a couple of questions that i want to get to today, but i do thank all of you for your patience and for your diligence in continuing to work on this issue. miss sohn, which you're the only female on the panel and you, we need more women down there. let me go to something. you said previously. you basically endorsed having usage-based billing at one point by saying the isps should charge

a flat rate for a certain amount of bandwidth and then charge a per-bit meter grade for usage that goes beyond that limit. so what i wanted to see was if you still agreed with that and should, say if somebody is a netflix subscriber and they're using a large portion of capacity as opposed to someone who just checks e-mail and does a little bit of suffering every day, should they be paying the same amount? where are you on that one? >> we don't endorse usage-based billing or data caps. they're not inherently bad, okay, but they can be abused and they can be used competitively to discourage people from using online video to disadvantaged competitors and we are very, very concerned about that. one of the problems here is what is the rationalal for usage-based billing and data caps. former chairman powell says his testimony and you said yesterday in response to questions about

the doj investigation, well, we have to deal with congestion on our networks. well, data caps is a very blunt instrument to deal with congestion because congestion only happens at one point in time, right? so if i'm backing up my data at 3:00 in the morning i'm not causing congestion, but that goes against my data cap. so i want to re-emphasize that it is very, very important for congress and the fcc to know how data caps are set and how they're evaluated and how they're moved over time and comcast just raised the data cap for the first time in two years from 450 gigabytes to 300 and why did it take so long with the explosion of video? so we don't think usage-based billing is inherently bad and it can be abused and it's important to know how they're used. >> okay. >> mr. powell, let me come to you. you may want to respond to that and i want to ask you to talk about mfn and most favored

nation status and looking at that, plus the alternate distribution method clauses that are there in cable, carriage contracts. in nashville with a lot of the entertainers, they understand that mfn approach when they're doing shows and with a lot of the content producers and people pushing content forward, we've got questions about the mfn and the adn approach so if you want to respond to what miss sohn had to say and answer the second question, that would be great. first, i want to highlight something she did say and e quoed by the country's leading regulators and the chairman of the federal trade commission that there's nothing inherently wrong with usage-based pricing, just like there isn't if you run your air-conditioning all day long at the lowest temperature and your neighbor chooses to open the windows and have the breeze blow in you will pay more

money than your neighborhood is as a consequence of your use. it's about price fairness that you're being allocated a portion of the cost consistent with your use and that's an economic principle and we don't think just because you can condemn it in words makes it so. the other thing i would say. first of all, well the's be clear. it's not, as far as i know after comcast's recent change there is not a cable company that employs a cap that penalizes a consumer after they exceed that cap, maire able to move to other prize pricing bundles or increased capacity. so this idea that we are all uniformly applying caps as a way of creating artificial scarcity is not factually accurate, and i don't think there's an economically defensible reason for usage-based pricing and

threshold models and it's not as gigi suggested, it's about how you monetize a highly fixed cost network and you put this thing in and you have to charge your end users and i have my note because of the net neutrality and we're not allowed to charge other corporations, but we have to charge end users alone and how to do that fairly is the way that cable companies are experimenting with. i'm not that much an expert on the specifics of the contracts. they're been a long time. i would note that in the doj-supposed investigation that's under way, they have the comcast-msn merger and didn't find violations in those cases and passing on them. so to be honest, they're contra contrast-specific and i'm not privy to the contracts of them and i think they can serve a beneficial purpose and they also can be harmful and that's what

we rely on examination for. >> thanks. i appreciate that. my time has expired and i yield back. >> the gentle lady yields back and now the gentleman from pennsylvania mr. doyle recognized for five minutes. >> thank you, mr. chairman. >> i want to thank you for joining us today. i know my constituents in pittsburgh appreciate the hearst station that you have there. i just want to elaborate more on the hopper service. my understanding is that there's a fair use exemption for dvr recordings. can you explain to me if you believe that the hopper service is so different than the regular dvr service? >> believe it goes beyond the contemplated fair use parameter s. i think it's a copy right issue and it's a matter that's in the course and i would be anxious to see if it adjudicates that and it remains a threat to the local broadcasting system and one of

the best qualities of the american society is that we have a local broadcasting system in place in 210 markets and all of the determinations that you'll make there will be a prioritization and tradeoff of things and i am here on behalf of people who are committed to local communities, and i think there's got to be a high prioritization for preserving that localism that the stations provide. >> thank you. miss sohn? >> it's absolutely not a copy right issue and to me this is a perfect example of how copyright is misstated and misused to stop innovation. the soni versus universal cases is absolutely clear. the public has a right to record what they want to record off of tv whether it be a vcr or dvr, that was 1984 and that was a long time ago. people have been skipping commercials for 50 years since the guy who just died invented the remote control. this is about consumer choice.

i remember, what was it? ten years ago? when jamie kelner from fox that it was okay for people to go to the bathroom to skip commercials. what it is doing turning three steps with a remote control into one and consumers should have the right to do that. >> thank you. mr. o'leary, if your testimony you spoke about your ultraviolet service. my understanding is that it's basically a new way for consumers to be able to watch movies through the internet rather than having to purchase a dvd that they can only watch on a dvd player, and i find the service very interesting. i have some questions. on the ultraviolet website, you indicate that customers can stream content to almost any internet-connected device and that they can also download digital copies when they don't have good internet access. could ultraviolet customers download the digital copy of film on to any device or certain compatible devices? >> my understanding, congressman

is that it has to be devices registered with ultraviolet service and that downloading is a component of it. i think in the first phase the emphasis is in streaming, but they will have the ability to download it on to different devices. >> i just thought it was unclear on the website and based on the advertising, it kind of seemed like to me that i could download the content on any device of my choosing and i noticed similar confusion from some other ultraviolet users who thought they would get a digital copy of the movie to watch anywhere. >> could you explain what some of the approved devices are, and what with would be an approved device, for instance. >> you can download it on to your laptop and on to a tablet on to different things like that. i would have to be a specific list of the types of devices, and the complete list of the types of devices that -- >> i'm just curious what these

ultraviolet compatible devices are. i think it just might be easier for consumers when you look at that website to understand what actually they can use and what they can't use. >> absolutely. just to follow up on that, did your service give to customers that they can have access to the purchase they made? >> i have my old dvd and some might be scratched up, but i can still go into the closet and pull out that dvd any time i want because i know they're always there. is there a guarantee that people will always have access to a purchase they make? >> yes, congressman, it is a perpetual agreement between the consumer and the producer and that they will have access to those, yes. >> thank you. mr. chairman, with that, i yield back. the chair recognized himself for five minutes. you look at the marketplace today and it was different in

1992 when congress passed the cable act and yet the laws and regulations still apply today, as if innovation has come to a screeching halt. it's important for us to go back because we take for granted the technology and i can look on my video device and watch "swamp people" episodes on this video device and yet the laws that we have on the books today were written when we had these devices for telephones and so while i can do things today we all take for granted, just remember the law was written when this device was your communications device. so i think when we start this conversation it's very important to remember that technology has changed dramatically, yet the law hasn't changed at all and so we have a process today where if you have a disagreement with the law you have to go with the fcc and maybe they rule your way one day and maybe they rule against you one day, but shouldn't you have the discussion. they remain subject to archaic

regulations while they operate free from the heavy hand of government and are constantly threatened by the possible extension of the same obsolete rules. since congress created it decades ago, it has the responsibility to fix them today. it forces people to turn to the fcc for relief and to cherry pick regulations that benefit their platforms. i also question the wisdom of regulating new start-ups and innovative services as traditional video providers. they're not recipes for encouraging the utmost innovation, and investment and ultimately competition benefiting consumers. modernizing the decades-old regulatory framework by repealing the intertwined 76 and the '88 copyright licenses as well as the '92 cable act. sweeping away the intrusions will level the playing field for content distributors alike. negotiators for broadcast content will look like it does

for cable programming and the traditional copyright licenses. it's time we recognize the dramatic transformation that's occurred in the video marketplace by getting the government out of negotiations that should be left up to the private sector. i think i know somebody in the sub committee that got legislation to do just that, and we'll now -- i want to ask some of our panelists our questions about this. first, if we can just go across the board and ask a yes or no question. do you think it allows consumers sufficient choice over what, when, where and how they watch video programming? yes or no, we'll start with mr. johnson. >> with regarding our service i would say no because of the lack of programming -- >> thank you. just yes or no across. >> no. >> mr. hymen? >> getting there. yes. >> mr. funk? >> i agree with mr. hyman. >> mr. powell? >> make that three. yes. >> mr. barrett? >> yes. >> mr. ergen?

>> no, not yet. >> mr. o'leary. >> yes. >> so we have clearly, a split amongst the panelists here. mr. barrett and i appreciate the work that wdsu tv, the nbc affiliate in new orleans does and it's one of the first affiliates. do you currently have the legal rights to sub license always broadcast programming transmitted over your signals to companies like netflix and sky angel. who do not qualify for compulsory copyright licenses? is it something that you have the legal right? >> limited right with our networks with respect to how we may transmit their signal to other transmitters? >> limited rights? >> yes. >> is your company opposed to paying for access to content? no. we're not op -- no, we're not opposed to paying for content. >> mr. johnson?

>> you say content you mean local programming or cable chan willel? >> any content -- >> we have been paying for it, the content, yes. >> mr. hymen? >> all we do is pay for content. >> this is something that already occurs. i want to ask mr. barrett, you all own a stake in a & e, the history channel, lifetime and other cable channels, correct? >> that's correct. >> those negotiations when you're negotiating with different video distributors, is that a free market? do you all just sit at a table or there any copyright laws that have to happen? >> we negotiate on behalf of hearst it of of it for the retransmission consent rights and are not involved in any negotiations with hearst known to the cable asset. >> i want to ask you about comments you made on page 9 and 10 you made specific reference

of the 3675 in which you say cable and satellite providers, you said first, they would turn back the clock to a time when cable and satellite providers confiscated and resold broadcas obtaining broadcasters' consent. i would suggest to you that my legislation does not do that. i would hope you've read the sections that not only repeal compulsory copyright, but also retransmission consent which means rewe would revert to original copyright laws and under the legislation that i filed that you referred to, a company would have to pay for the content that you would provide before you could distribute and you referred to my bill and said that providers can confiscate the content under my bill, which is a mischaracterization, and i wonder, can you read the bill and have you relooked at this statement? >> if you say this is a

mischaracterization, i will revisit that. >> you've read the big too. does this legislation that has filed allow for people to confiscate content and give it away, would they actually have to pay for it? >> i think not. the thing that keeps getting lost in the conversation is that mr. barrett's colleagues gets their transmission spectrum for free from the public, okay? in exchange, they're supposed to make that signal available for free from the public. so this notion that they're somehow entitled to money for their signal, number one, that's only been the case for the last 20 years. so from the advent of television broadcasting the '50s until 1992, other people were quote, unquote, confiscating their signals, but again, that signal was supposed to be free. i don't know how you confiscate something. >> if under the bill, they would have to pay and get an agreement with one of mr. barrett's companies. pay to get the copyright license. >> that makes more sense. it eliminates the middleman.

>> i just ask if you could go back and look at the statement. >> i will go back and look. let me comment, i think the characterization that we get for free is a mischaracterization that the public trustee model has been in place since the 1920s and the 1930s communications act and it acknowledges that the spectrum is a limited resource that belongs to the public and most capable of serving the public interest should be entrusted with that license and the body of record would show the local broadcasters in this country have served the public interest very well in the notion of free is baloney. >> i was specifically asking about the bill that was filed and the copyright laws that would still be in effect if the bill was filed. nobody should retransmit your signal without getting an agreement and compensation to you. all right. appreciate it. the gentleman from michigan is recognized for five minutes. >> i thank you. i commend you for holding this hearing and welcome to our

witnesses. i have a lot of questions to ask and too little time. so i hope you'll help me by answering yes or no. this question to all witnesses, and i'm going to make a statement and then i'll ask if there is anyone that disagrees. we can all agree that consumers want innovative and entertaining new content, new delivery methods won't matter much to consumers. now, is there anyone that disagrees with the statement that content creators should be compensated fairly for the content which itself should be protected? is there anyone that disagrees with that statement? very well. now, speaking of content, there's some consternation, i understand this question, mr. ergen, that your latest invention affect content and distribution, so i would like to explore this issue perhaps more carefully.

mr. ergen, is dish network currently being sued for copyright infringement and breach of conduct in federal court over the new service? yes or no? >> yes. i would characterize it differently. we filed a declaratory ruling in the state of new york -- >> no. >> let me finish, please, because i want to make sure the record is clear. >> mr. chairman, may i have order, please. >> one last question from the gentleman from michigan. is it true that hopper automatically records and provides commercial skipping for programs on the local ford network affiliation statements in the market? yes or no? >> no, it does not automatically record. >> thank you. now, mr. ergen, is this so because the channels are the

most popular channels on your system? yes or no? >> it has to do with a variety of factors. >> is that yes or no? >> it's not a yes or no answer on that one because it relates to how the satellite works and how we can record. >> i have an election coming up like all of my colleagues here on the committee, like every politician everywhere, and we all use political ads on local stations to reach our constituents and those who vote in the districts. mr. hopper, it limits the ability of every member of this sub committee and every one of the challengers to reach constituents with ads to help them make up their minds on election day. do you understand and appreciate the concern that the politicians up here on the dais and other politicians would feel on this matter? yes or no. >> i understand the consumers

very well. i'm not a politician, so i can't say i understand your concerns. >> very well, thank you. >> certainly understand consumers. >> given all of this, mr. ergen, i hope you understand my skepticism when it comes to dish's latest offering and its effect on the future of video. i would like to use the rest of my time to learn more about how the cable industry is adapting to new, federal communications regulations to provide its subscribers with new types of content and ways to visit. now, mr. powell, is it true that the cable industry supported the commission's open internet order? yes or no? >> ultimately yes. >> thank you. mr. powell again, if you please, help me remember, was use-based billing considered and allowed by the open internet order? yes or no.

>> yes. >> mr. powell, were managed services also considered and allowed as part of the order? yes or no? >> yes. >> mr. powell, i want to thank you for the way you're proceeding here. so are cable companies delivering products and services as well as practicing business models that comply with the open internet order, yes or no? >> yes. >> mr. powell, in other words, cable is complying with the order? >> yes, we believe we are. mr. powell, one last question and i do want to commend you again, the fcc just set its viewability order. i think it's very important that cable subscribers be able to access local content by smaller broadcasters. this is the question. what steps will ncta's member

companies take to ensure that their subscribers can still access local broadcast signals affected by the viewability orders' sun set. >> yes, we agree that it is important that we can continue to receive their signals. 80% of the consumers have gone digital and they will not be affected. as to the remaining 20%. we committed to low-cost boxes that would make that an affordable transition, similar to the boxes broadcasters used for the hd-tv transition, and we've p we've committed to providing adequate notice and the transition period to allow that to happen smoothly. >> thank you, mr. powell. and my thanks to the panel and thank you for your assistance and your candor. i yield back the balance of my time. >> the gentleman yields back. the gentleman from illinois, mr. rush, is recognized for five minutes. >> thank you, mr. chairman, and

i want to thank the witnesses for their appearance in the subcommittee. >> i have a question regarding the legal construction on the definition they will submit for the record or ask if we have another round of questions. and if there is time remaining, mr. chairman, i would like to hear some of the panelists' views regarding the consumer privacy matters. privacy needs to be addressed as so many of your video business models depend heavily on advertising, and there are other emerging models not represented here today that are rolling out video offerings tied to social media platforms. but first, i would like to ask for the record questions that pertain to the importance of more diverse ownership of