>> thank you. great to be here -- wait a minute. it is great to be here at ints the internet and television expo. you know cable isn't in the title of the show michael powell now said cable is a dirty word. i remember when the show was very creatively named something like catz 77 or things like this. then some young whipper snapper, and barbara you are, because nothing happens without barbara york, changed the name to the cable show. and now you've moved on from that. congratulations on once again reimagining this industry and

gathering. reflecting back on the days of catv and forward to broadband era is to trace an amazing path from community antenna television to the expansion of television and now beyond. to broadband. you deserve congratulations for what you achieved as cable companies, as video companies and as network builders. you also deserve and alfred may comment about this you also deserve straight talk about what it means now that you are first and foremost broadband

companies. you have pledged as an industry to assure that the internet remains open and free. and in that goal we are in violent agreement. we do differ however, on what that means. we part company according to your recently filed motion papers over the so-called internet conduct standard, the requirement that internet service providers not engage in conduct that impairs an open and free internet and goes beyond the obvious bright line rules of blocking tlot egg and prioritization. the internet conduct standard if

you will is the going forward rule. now often people say to me you know, tom, i know that you won't do anything crazy in this internet conduct standard but what about those people that follow you? and my response is i take you at your word that you will protect an open internet. so what about those people that follow you. the purpose of the open internet order is not to create an obstacle course to test the ingenuity of isps and how they structure certain activities, it is rather to address broad outcomes not just the bright

line rules. the purpose of the general conduct standard is to address effects that are and the thet cal to the open concept. mainly not to interfere with or disadvantage access to the public internet. so to internet connection arrangements. on june 12th when this order goes into effect, there will be in effect strong protections to shield against harm to an open internet. and from that point on we cannot go backwards.

now, beyond the open internet however, i want to celebrate today the two great accomplishments of this industry. accomplishments that run from your roots to today and one great new challenge created by your evolution beyond cable television to become the nation's dominant broadband provider. part one of the story begins with primary business of cable systems when it was video. cable was an investor in infrastructure, a fierce competitor, and an innovator. the first accomplishment of that era, of course, was the coaxing coaxingal wiring of america. it began as a remarkably

entrepreneurial but also fragmented industry. it required tremendous amount of civil engineering and ingenuity, the extraordinary diverse circumstances of our far flung nation. and it was accomplished against the determined opposition of a telephone industry that recognized from the very beginning the threat inherent in a second wire into the home and office. and it was accomplished despite legal constraints from the industry's offerings that were downright hostile. now, as everybody in this audience knows the investment that sets the foundation for

today's industry was undertaken for purposes that have almost nothing to do with what the industry has become. what began as a coaxing yal cable network, designed to transmit distant broadband signals has become literally an essential part of our country's infrastructure.distant broadband signals has become literally an essential part of our country's infrastructure. in the intervening 25 or so years, the resulting hybrid fiber coax network has become an enviable combination of cost effective efficiency and scaleability. and it has become the enabler of

one of the most transformative developments in human history. in the process it has provided an illustration of the challenge, of the challenge and response, that's what i want to say, the challenge and response nature of competition. this is a theme that i tried to focus on during my time at the fcc. that for every challenge there's always a response. two decades ago as the cable industry began to expand its broadband capabilities the telephone industry responded by unleashing dsl a technology that had long existed but had not been deployed in american

homes. both cable and telco customers benefitted and both businesses flourished. the resulting telephone and cable competition helped bring us to where we are today. vastly better transmission speed and unimaginably larger more vibrant internet echo system. the second great accomplishment of your industry was the expansion of programming that you and to be fair bbs industry, that your distribution network facilitated. the great increase in programming is reflection of an effect that your industry's entrepreneurial energy and

investment have had on the broader echo system. good distribution systems do that sort of thing. they invigorate new users. you know, today's viewers may not be fully conscious of it, but the increase in the quantity and quality of programming is according to professor david waterman, the fcc chief economist, the most astounding chapter in the history of television. that story can be told in a quantitative fashion as well. the number of cable tv networks has grown from a handful in the mid 1970s to over 900 today. and the fcc itself stopped counting at 565 in our annual video competition report for

2006. in investment terms cable networks spend only -- spent only about 250 million on programming in 1983. 30 years later that figure exploded over 26 billion, twice the program spending of all national broadcast networks combined. and the result is an enormous inventory of programming. that expansion of programming is seen and heard in shows that push the boundaries of creativity, the so pran owes home land "mad men," all of which appear on cable channels. it also greatly expanded sports programming. we all remember when it was the game of the week and that was all you could see.

now you can watch the ohio state buckeyes every week all the way to the national championship. you know i would get an ohio state line in here somewhere. but if as some say this is truly the golden age of television, that it is you that made this possible. like your entry into internet access in the '90s, the creation of so many programming possibilities in this century spurred others to respond, including new and potential competitors who use your broadband pathways to deliver video to their customers, which brings us to part two.

last year at this gathering i said that you had become more than about video that you had become broadband, and that your news business had become and would be going forth broadband. and that's true. last year, the cable industry hit a critical tipping point. in the second quarter of 2014 and the first time, number of broadband subscribers exceeded cable tv subscribers, and the trend has continued. you have wisely changed the name of the cable show to the internet. but there's a more profound change, you're no longer the

cable industry as michael powell said yesterday. you are the leading association of leading broadband providers. it's something to celebrate. now the recent decision of comcast and time warner to abandon their proposed merger has relevance to this point. brian roberts' leadership and his simple and poignant statement that it is time to move on was not only a thoughtful response but it was also directionally correct.

it is time to look forward, not backward. this is not the time to dwell on the reasons why the federal communications commission and department of justice reached the conclusion that this proposed transaction would not be in the public's interest. but it is important to understand the tipping point from cable to broadband came while this transaction was under review. we recognized that the skri had changed and we saw concrete evidence of the new competition and business models made possible by high speed internet access. try

in other words, we recognized broadband had to be at the center of our analysis. and the video was in essence an application that flows over networks and that could be supplied both by the owners of facilities and by competitors that use broadband pathways to compete against the owners of those broadband pathways. this shift has implications far beyond this transaction for the industry at large. when i appeared before you in the second quarter of last year at the moment when this tipping point was actually happening, i made two points that remain important today. first, i said that we have to assure the openness of broadband americas and the internet for

all lawful uses. i'm living up to my commitment at that time that quote. you can be assured that i will raise this issue every time i am invited to address an ncta gathering. second, the cable industry has important technological advantages, a leading market position, and very limited regulation. it is to engage an understatement an unusual situation. the only way to maintain that situation is uphold your responsibilities. so now your principal business is broadband. the service you offer is critically important to all

americans, from getting and keeping a job to staying in touch with family and friends accessing entertainment, engaging in government, not to mention doing school work if you're a student and countless other applications. and the broader ecosystem you help support is extremely important to the creation of american innovation and growth of the american economy. now, as you have changed, so have the issues and the obligations and the opportunities. this is the key challenge for your industry.

first, to continue to invest and innovate so that the united states has first class broadband transmission facilities. second, to live up to the commitments that you have made in the open internet debate to avoid discriminatory acts that will impair the value of broadband and effect the internet for those mo make use of its manifold of possibilities. wh some factors mitigate this. you don't have a lot of competition, especially at high speeds that are increasingly important to the consumer of

online video. a fully competitive marketplace would bring with it intense and constant pressure pressure to improve, just as it did in the days of cable dsl competition. more competition would be better. that's why i granted the preemption that want to expand into surrounding areas where people had no broadband at all. now, i recognize the challenges of overbuilding. and to encourage it is not to assume its immediate appearance, and while i know that it is an anathema to your geographically defined way of looking at the industry, i believe as some in

the industry have already demonstrated that it can also be an opportunity. let me tell you a story. many years agate ncta when we were trying to grow out of the catv business, ncta when we were trying to grow out of the catv businessg ncta when we were trying to grow out of the catv businesso ncta when we were trying to grow out of the catv businessa ncta when we were trying to grow out of the catv business,t ncta when we were trying to grow out of the catv business, small dried flowers. imprinted on the paper weights in gold capital letters was plant a flower in the vast wasteland. by bringing competitive alternatives to television viewers, the industry did just that and the video business was

changed forever. then the industry went on to upgrade, to compete with tel cos, and develop broadband. now the question is whether consumers have competitive alternatives for broadcasting. to harken back to what you did before, will you now plant a flower in the competitive broadband desert? now i know the only rationale for such investment is to generate economic return. that's why in the open internet order, we constructed it as to put broadband providers in a situation they could prophet from the value of their investment, free from any limiting rate regulation. history proves that absent

competition, predominant position in the market such as yours creates economic incentive to use that market power to protect your traditional business in a way that's ultimately harmful to consumers. this was chairman powell's message in his well celebrated silicon flat iron speech in which he identified four internet freedoms that were essential for the industry to preserve. this is a recognition repeated often since, and most recently in the open internet order that it is not just useful but necessary to ascribe rights to the users of the internet distribution system, vis-a-vis the owners and operators of the system. your challenge will be to overcome the temptation to use

your predominant position in broadband to protect your traditional cable business. the internet will disrupt your existing business model. i know i am not telling you anything you don't know, and you know you can take that to the bank, because it has done that to everyone. my thought today is that you disrupted your business twice before on the path from catv to cable programmers to broadband. those who stay on top are ones that embrace change, in ways large and small the fcc has done and continues to do what it can to encourage your industry to meet its broadband related

challenges and responsibilities. large measures of course, include the open internet orders, freedom to secure a return on your investment while also prohibiting actions that would harm the open internet. the open internet requirements are intended to safeguard the internet dynamism by ensuring that the internet remains open and free. the commission has its work to do to clear obstacles to competition. we will proceed to consider whether to adopt a technologically neutral definition of a multi channel program distributor and to be candid i favor a technological neutral definition that included internet based companies that choose business models that fit

in this status. new obligations from congress are also focused on competition. an advisory committee is working hard to deliver a report by september on the critical question of security that promotes commercial availability of supplied devices. and we must begin rule making to review how to apply the totality of the circumstances test to assess whether retransmission consent negotiations are being conducted in good faith. on these issues we will seek your comment. we are committed to empowering competition. and one more important thing that has come into focus following our open internet order, i intend to ensure that you do not confront excessive

rates for pole attachments. today, the wire line bureau is asking for comment for reconsideration to clarify the intent from the 2011 reforms to levels that cable and telecommunications rates for pole attachments. once the record is refreshed, my expectation is that a recommendation will be made to the full commission to take any action that it can to further align cable and telecommunications rates. now, i know that this industry and this association do not support the recent open internet order. and as i have made plane

hopefully throughout this presentation today, i believe rules crafted provide what's needed to enable an economic return that will justify new investments and secure an open internet. but i also believe that we can note where we agree and not only where we disagree. this year michael powell told congress that, quote, cable broadband providers are unequivocally committed to building and maintaining an open internet experience. maintaining, improving and protecting the broadband transmission system is the right thing to do. america depends on it.

thank you very much. [ applause ] >> ladies and gentlemen, welcome the moderator. julia boorstin. and now, welcome our panelists. first, chief executive officer of cable vision systems corporation, james dolan. next, the president of cox

communications, pat esser. the president and ceo of liberty global michael fries. the chairman and ceo of time warner cable rob marcus. and president and ceo of charter communications tom rutledge. >> i want to thank you all for joining us here this morning and on the heels of chairman wheeler's comments, i love how you react to them. first, we have to address the elephant in the room. we have five cable companies here. i think you guys maybe can work out some deals in the next half an hour.

tom, rob you are sitting next to each other. anything you want to discuss? >> let's move on to chairman wheeler's comments. >> where's brian? >> other than brian, everyone else is here. seriously, what's the next big thing for m and a? >> we are focused on time warner cable, had a great quarter, feeling good on the position we are in. not commenting further on m and a. >> tom? >> the world is full of possibilities, i can't tell you any of them. >> do you have something to say? >> as chairman wheeler said and brian said it is time to move on. i would like to see us move on to consolidation of markets rather than paying attention to the entire country or just

individuals, and the one market i know best, new york, which we share, i think consolidation of that marketplace would provide one, a great deal of ingenuity, much more access to resources for the customer and lower prices, and i think it would be a great business. >> you're proposing a deal -- >> i am not sure if i was asked on a date or to get married. >> i think i am proposing a commune. >> what are you proposing? >> what i think is that in new york, if new york was one market, if new york was operated like one market that you would see things like wi-fi distributed throughout the entire marketplace, starting with access to wi-fi and that

important technology being ubiquitous in the marketplace. you see how the customers react with broadband companies, company in that marketplace would provide a lot of efficiency and there would be a lot of opportunity for innovation. >> but what does that look like. you compete a lot with verizon vios. do you want to make a deal with them? >> no. >> do you want to make a deal with time warner cable? >> yes. >> we are making progress. >> and the other operators there, but look new york is one marketplace. if you look at marketplaces, los angeles, chicago, et cetera, if they operated as one won't say one company, but one operation, there's a lot more we could do. >> what do you think, tom? >> i agree. the deal that we had didn't work, had a lot of trades and swaps and the logical putting

together of assets so that you could get the scale even at the local level that you need to be a quality service provider and roll out products that are efficient and innovative. the industry is in a state because of the way it grew up having lots of tv marketplaces where the efficiency isn't recognized. and that's true throughout the country. there are scale opportunities throughout the business that aren't being realized. >> where does cox fit into this? >> first of all, i feel like i'm on match.com. >> like the dating game. >> all trying to update our relationship status now. in front of 10,000 people. little awkward up here. i don't think anyone is going to speculate what we want to talk about, we are not going to on stage in front of a bunch of

people. i will tell you that cox enterprises, if we believe in a space, we have consistently made acquisitions, did the right things for the business long term, we are very committed to it, and i agree with the concept there is scale and benefit for consumers if we fix some of the markets which we serve partial pieces of as industry. but it will take time. >> what's your perspective as someone not involved in the domestic marketplace? >> i am baffled by it all to be honest with you. and i am baffled by the chairman's remarks. i'll say it because he doesn't regulate my business. i found them very curious. on one hand he says that the cable industry through consolidation and scale, fostered innovation and programming, that's a closed network. yet there's presumption of guilt and punishment of success that this industry achieved that i have never witnessed before in

my life. for years, for years i asked european regulators to look at the u.s. market for guidance. that's not happening today. and i'll tell you, european regulators are also baffled by what's happening here, and on the issue of scale i will tell you that we are able to achieve that in a country like holland, only 7 million homes. we could own those end to end 100%, and regulators see that's good for innovation and good for infrastructure investment and for everybody and we don't need to abide by rules that presume some action that may be harmful but we don't know for sure but just in case we're going to do these things. it is really a terrible regulation. i will just say what these guys probably are thinking terrible. [ applause ] >> do you think there are lessons to be learned in the u.s. from the way european regulation has been handled?

>> yes, sure. what european regulators focused on is a level playing field they focused on a light touch focused on infrastructure competition, they have not arbitrarily defined broadband as 25 mg for example. what is there to invest, why would they do it now. there's a number of things the u.s. market could have learned. is it too late i don't know that's not my game here. you guys will find out. but we're happy to be abroad, let's put it that way. >> i see you nodding. >> well, we suffer from the stockholm syndrome in the u.s., and we have to be careful of our captors. ha-ha-ha. it is interesting how the business is evolved. people want to call us a broadband company and we are but

our cost of programming -- we are a business where entertainment and communication service provider, when we started building our networks with fiber optics, we weren't building it to build broadband, we were building it for interactive television and telephones. broadband came out of that. i think what people call the broadband market today 15 years from now will be a different product set and what we call ourselves will be different and the way we describe our products will be different but our networks and capability of the digital infrastructure that we have and our ability to provide quality service is where the opportunity is, so i find artificial distinctions interesting academically but they're not what i think about from a marketplace perspective. >> rob, sounds like you worked hard to grow video subscriber numbers, everybody talks bouts video is less important and

broadband is more important. >> i unlike mike have a business regulated by the chairman. i feel like we operate in a different environment than he seems to live in. in my world broadband is incredibly competitive and i think the competition has in fact fueled tremendous investment on our part and it is investment that we continue to make day-in and day-out to make our broadband product better, so again i wonder what the problem really is. we are making broadband more and more capable and you know i think that's reflective of the success of the environment in which we work. >> i think to say that the cable industry here or anywhere in the world hasn't embraced the internet as a distribution platform for video is crazy. how many people out there are using a tv everywhere product today. raise your hands generally. 25, 30%. if i asked the question last year, would have been 10%. tv everywhere is at a tipping

point. the fact i can watch my xfinity go app or verizon go in europe, linear channels, thousands of hours of content. if that's not embracing the internet as distribution platform for video, i don't know what is. so it doesn't to me -- i think i agree with you, i don't think that's necessarily an accurate reflection of what's happening here. >> let me get to your question. by the way, we embrace over the top video, think it is a fantastic application of broadband capability we deliver and we welcome it and we try to facilitate great experiences for our customers on that front. your question on video growth we long ago abandoned focusing on individual product as opposed to customer relationships and we are intent on growing customer relationships, whether those are video customers whether they're high speed data only customers or ideally triple play customers. we like to sell as many customers as we can as many products as we can so i kind of

resist this notion of focusing on product centric definitions of customers. we want to expand the breadth of customer base, sell them as many things as we can, and it may not happen at the same time. a broadband customer today may be a triple play customer tomorrow, and video customer today may be a triple play customer tomorrow. every individual one is important. we are very proud of the fact we grew video customers this quarter. >> before we talk about over the top and new offerings, you have some disruptive -- i want to get a couple more reactions to chairman wheeler's comments. pat, i am curious, how problematic do you think title two is for your business? we have to see the lawsuit on behalf of cable association -- >> let me do this. two words are thrown together, net neutrality and title two. i think the industry demonstrated since 1997 we are committed to the principals of net neutrality.

don't block sites, transparent of how we manage networks not choosing which bit comes to your home. i think we have been demonstrating that for almost 20 years, 18 years. title two is different. title two has taken business heavily funded $23 billion we invested in our network since 1997 and for making all this investment, taking all this risk the rules are changed. while we are totally exposed, continuing to invest in our network, then the rules are changed. the rules were written in 1930 to apply to a business that has nothing to do with 1930. it is a dynamic business. broadband brought so much economic growth to the country. we are already seeing early signs that within weeks after title ii coming out of the fcc, we are seeing new classification

of taxes legal costs are going up, legal structure i will have to put in place to deal with the filings and complaints and everything else that come through the process, and at the end of the day my customer pays for that. i think you're hearing a repeat here, i don't think it is needed it is unnecessary. it was -- herman cain, presidential candidate lives in atlanta was on the radio in atlanta, i don't care if you like him or not, said something funny on the air. he says three things you know about the government. if it doesn't move, they'll sustain it, they'll create programs to support it. if it moves, they'll tax it. if it moves too fast they'll regulate it. i kreefeel we created this american dream, i agree and somewhere we got out of synch with

regulators, and we have to find more balance. >> what do you think? >> for us essentially i agree with what pat is saying. for cable vision, we are in a highly competitive marketplace and to be honest i don't see the regulations effecting us much at all. the competition is what regulates our marketplace, and he did say the competition was what was important. i do worry one of the things i thought i heard the chairman say was something akin to government subsidized competition which i think is very dangerous. >> one thing you have been very focused on is the idea of disrupting the cable bundling. it seems like you're embracing cord cutting with offerings. >> we are embracing the customers. we did an accounting study at the company and attempted to

associate all of the direct, indirect expenses with each of our products. and when we were finished with that study, we found that broadband outperforms video 7 to 1. for every dollar of profit i make at video, i make $7 of profit in broadband. so -- and we see the customer as wanting more and more broadband wanting better and better connectivity. they want it in their homes they want it outside their homes. they don't want to wait. and if it breaks, they want it serviced immediately and fixed the first time. those are the things we are focusing on. >> you just shook your head. are you worried about cord cutting or breaking up -- >> i was shaking my head because i can't hear jim. i think something i did hear is that he said that he is not

embracing cord cutting but rather embracing the customer and i think the reality we are all dealing with is to the extent there are behavioral trends and ways of consuming content better for customers, we have to embrace that. our business depends on enabling customers to get what they want when they want it where they want it, how they want it, and i think those of us who embrace it will be the ones who succeed. >> the question is what does the future look like? you have fling tv doing a new slim package a paired down package, verizon with a custom tv bundle, being sued by espn. i am curious where you see the future going in terms of over the top packaging. you're bundling hbo now with broadband and hulu with broadband. i believe you're the only one doing that so far. i am curious to hear what the success is of slimmed down bundles and whether you consider

over the top cord cutter bundles. >> there have always been cord cutters. most that cut cords in prior periods before internet television was available would cut to go over the air. they would cut for personal reasons, they were about to move or go to college or come back from college or for economic reasons, personal reasons. that has always been going on. the cable industry tried at various times to put various packages together to satisfy people mostly income related with television service and if you sell product to people that isn't what they expect in terms of full access to services that they in their minds think of as cable, they don't stick well. markets are fluid. people come in and out of them.

more variety and package functionality you provide and individual, better off you are as a company because you are satisfying somebody. but people's needs change through time. so i think what's going on now is you have some products that are coming direct to consumers, some are coming in packages we sell. you can mix and match those together and satisfy niche customers. people that buy hbo show time, some don't. majority don't. people have always had choice in what they buy in their subscription package. how you put that together is what we do to satisfy people. so where it comes from or whether it is over the top, whether it is part from cable service, it doesn't matter. what cable is is three different regulatory regimes for bits and two copyright regimes for bits. and how do you mix and match that and satisfy customers is the art of being a good packager.

>> what do you think, mike? >> so we are not burdened by historical or existing cost base that u.s. operators are burdened by. we look at it as tom and rob said in a very simple way. we are in the business of plug and play. in the business of seamless connectivity in our case connectivity across wireless and mobile, and we want customers to feel connected to our networks wherever they are and want them to choose our networks because they're the fastest, best most reliable. on top of that want them to play on our networks, play more or less, depending what they choose to do play with content, play with internet, play with any aspect of what can be offered in that network at your choosing, and on all devices. the fact that my kids watch on tablets or smart phones, they don't care where it comes from. what did netflix teach us? they taught us principally it is about the app the user

experience, user interface. we adopted an app essentially that put that plug and play experience together and allows you to search for content, find content puts that plug and play experience together and allows you to search for content and find content in a way you're used to doing on other application. we have preempted ott a little bit in europe. we've launched our own version of netflix called my prime. it's available on every device. in end it's about plug and play. if you keep it simple and offer consumers what they want why would they get rid of one or the other? it's a package. >> it is a story that gets missed all the time. if you look at video consumption globally, there is more video consumption going on in the world or domestically. much that of is because of the companies sit thong stage have made. whether you want to talk about cloud-based dvrs or multiple tuners or we made a reference here a moment ago about 90 tv

everywhere apps. a huge view d libraries. the point is we ourselveses have given our customers more places more devices to view the don't. and one of those is our broad band network. it's enabled this release of innovation that as long as i'm in the business of connecting customers to the things they care about, i'm okay. >> but the question, though, do you need to be in the business of selling them a bundle or can they pick and choose which things they want to connect to. >> you mean video bundle? >> video bundle. >> sometimes i will, and sometimesly not. that's their choice. they're the customer. >> look we're in favor of choice. and to the extent we can have more flexibility in the way we package video product, i think that's inherently a good thing. i think there is a tendency to conflate two different concepts. one is packaging, and the other is technology delivery means. and the reason we tend to conflate them is for some reason the deals, the programmers have cut with over-the-top providers

seem to be somewhat more flexible than the ones that have been cut with traditional video companies. so i think that's a temporary state of affairs. but on the simple question of packaging, i think more flexibility is better. that said we've offered different tiers of service for many, many years. and by and large, the vast majority of customers tend to take the larger bundle. and the reason is it's a damn good value. >> it's interesting. we're just coming off a weekend where the big mayweather pacquiao fight was packaged in a brand-new way thanks to new technology. people found a new way to get around paying for sports content. >> right. >> obviously it's very new technology. and piracy has been around for a long time. the ceo of periscope said it's a piracy problem, not an internet program. it's a large part of holding the bundle together. you worried about all these new

technological threats is breaking apart the content bundle whether it's a bundle sold via the internet or over cable? >> i don't think -- i don't care whether the content bundle breaks apart. from our point of view, buying content wholesale a la carte is probably less expensive for us than buying it in packages from large content companies. but the big issue going forward, what you're referencing is security is a huge problem in the digital age. and we have very vast high speed networks. storage that you can buy is getting cheaper every day. so people can keep content and move it around the world instantly. and that's true even of live don't because of the two-way network. so the security of don't and how content companies sell their products and whether they're secure or not and worth paying for is a real issue. if they don't secure their content, it won't be worth much. and that's lesson of what we

just saw this weekend. >> well, i think it's -- there is another dimension to it, which is the thing that was exploited in the case of the retransmission of the fight this weekend was actually the analog hole. and there is no way to close that. if the eye can see it, a digital device can see it. and the real issue arose out of the mass transmission of something that was otherwise simply seen by another person. i'm not sure how to solve the problem security-wise. but certainly, i think for all of us who live in this ecosystem, protecting intellectual property is critical. >> and looking down the road as consumer demands change, and you all seem to say you want to give consumers what they want, how are you as companies going have to adapt to these changing consumer needs? i mean, there are panels going on here at ncta about new messagesmental millennials and how they want to consume content and pay for it

or not pay for it. how does that change your business? pat? >> they want access. they want flexibility. they want different sized packages. they want to use technology. they want it on multiple screens. i think the industry has demonstrated and we're trying to do that. and at the same time werke had a conversation about periscope or meerkat. these are real. that's the world we now do business in. if we don't manage it properly or watch our digital rights, but they're going to still exist there is good reasons those apps are being used. but it's our new world. but we've had these -- one thing i do agree with, with the chairman we've had a number of moments in our history where we've kind of reinvented ourselves. and i think we're going to still have those moments in my career of going forward. i mean, the future very bright. i can take cox. i look at our company and i say man, look at what is going on. we rolled out gigabits in more markets. i look at the fact that business services is on the cusp of hitting $2 billion in growth.

we talked about customer relationships. i saw most of the results from my public friends. we're growing customer relationships as an industry there is a lot of great indications in this industry that the future is very, very bright and we should be excited. but we have technological change to deal with. we're going to grapple with that as we go along. and we're going to take a couple of steps forward and a step back as we good through this process. >> we have amazing networks. we all know that. powerful networks that have over time become even more powerful and we have reinvented those networks. we have great content relationships. together we spend billions every year with great don't providers. what we have missed is to use an overused term is the app. the app that allows that don't to be accessed easily, seamlessly on multiple devices by kids, by consumers who want it simple. and as we invest all of us and we are for sure in that app in that experience i think we saw the big series of issues that

were -- a good conversation. millennials. what will they do? kids don't like cable. the truth of the matter is put the bill aside the experience can and should be incredible, and will be. we're finding our customers when we launch horizon with horizon go, they don't go anywhere. i watch my kids -- i hate to keep using infinity, but i watch them on the x-1 app. they don't go anywhere. it works well it's simple, like the great companies we know exist in this industry we got it. >> we're out of time, jim. you're nodding. i know you have been work outside the traditional cable system with all your new introductions. do you care about selling traditional cable tv or is your future all about broad band? >> we look at traditional tv, we look at it sort of like the convenience store. it's the milk and the eggs. and you got to have it. but for the future of cablevision, we'll continue to innovate in that space and we'll continue to offer those products in multiple way, including to millennials who

only watch an hour of tv a day. but what we know is most important to them is connectivity. and that's where we're going to focus. and we're, as i said, a highly competitive market. and we want to be the dominant provider. so we're going to focus on what people want the most. >> great. unfortunately, we're out of time. certainly a fascinating tipping point for the industry. not just in terms of mma, but in terms of all the new products you're offering consumers. thank you, five of you so much for joining us today. [ applause ] >> and now, ladies and gentlemen, please welcome our next panel, which will also be

moderated by julia forstin. first, the chairman and ceo of showtime networks, matt blank. [ applause ] next the chief executive officer of fx networks and fx productions, john landgraf. [ applause ] and the president and ceo of am c/net works incorporated, josh sapan. [ applause ] >> thank you, guys. i'm sure you were listening backstage, and there is a lot of talk about over the top and how the cable carriers aren't so worried about cord cutting because they also sell broad

band. but for you, you have to think about cable carriage of your channels both for retransmission fees, but also for two of you for advertising. how worry ready you about cord cutting? >> look, we need to grow our business. and the traditional distribution business is very mature right now. i think, you know, one of the key sound bites of this past week was in the comcast earnings where they announced that they now had more broad band subscribers than they had video subscribers. there is a very clear message there. for us new distribution has always been critical. and we intend to grow households. and we need new ways to do that. so i wouldn't say we're that worried about cord cutting. i think there is a lot of opportunity in a lot of different corners of the marketplace to grow showtime and we want the take advantage of that. >> what do you think? >> i think we need to get to the consumer. and i think that cord cutting is

a terrific catchy term, and i think it's not as ubiquitous as people think it is. but i think what is true and i think that was reflected on the previous panel is that the interface by which people find and consume great stories and great content is shifting over time. and essentially what we're all working towards is having an interface that is comparable to the best interfaces that anybody can field. >> you must be watching the launch of hbo now. what do you think? >> i think the previous panel was encouraging to me because i think the changes that are being made are intended to sort of free up consumers from feeling obligation. and i think when they do that it's a more pleasurable experience. it's more fun. i think a lot of that stuff which sounds disruptive and different can recapture the

imagination of the consumer, and he can feel -- he or she can feel better what they buy and have more flexibility. and i think focus on mike fries called it app. i think interfaces are not really face-lifts. they are fundamental. when you get a great one, you just love it to death. and if you combine that with the feeling that you can get what you want and i think cablevision is doing that when you want it, i think your motivation increases. and i think you actually consume potentially even more. so i find it very encouraging. >> but i guess the question for showtime, fx and amc is whether or not you want to go directly to consumer. and les moonves says they're already working on an app. you can give us updates? >> most importantly, i've spent a good part of the past two years talking to the heads of every cable company about, you know, the math of bringing showtime to the current distribution universe.

via broad band. so that's a good place to start. we think there is a lot of opportunity out there. and we're going take advantage of it. the question is when the is right time whom. are the right players, and, you know, that's something that i think we'll be talking about shortly. >> hbo now has been in the market now for about a month. we don't know exact numbers but it sounds like it's off to a good start. do you think there are any lessons to how that's been launched and how it's going to far? >> just to finish on that, i think the one tremendous advantage we've seen and we've begun to site with showtime any time, consumers are getting used to buying all sorts of products whether it's an uber ride a movie ticket their dinner delivered with really excellent consumer interface. and that's something that as an industry we haven't really experienced until in our case we've been able to bring an application like showtime anytime out there. and you see what the difference is. when you can present your product with an interface that

is consistent with the types of products that are being consumed due to all the changes in technology. and that's a big deal. >> i think what we're all facing is that the number of broad band only cust m: u deminimus, that each of us who has a national consumer brand, and these are three great consumer bands has to pay attention to that second of the market that is now only broad band. we have to figure out a methodology. i don't want to discount the pathway through our existing relationships with cable operators who again, are also in the broad band business. the truth is the symbiotic relationship between both has served us well for a really long time. we have a problem. we have a group of 10 million homes, and it's going to grow to 20 million probably by 2020. and we have to figure out how to get there. and certainly direct to them is one path.

but there is also a path that goes through broad band and just as an evolution of our existing relationships. >> now, i can also watch -- i watch all of your shows. and i can watch them on your networks, or sometimes on netflix or amazon. there are all these new ways that one can consume this content. do you see that eating into your core subscriber number? >> i think what you can see right now, i think you can see that there is a lot of nonlinear consumption of the very best don't. and i think our three brands have a significant percentage of the very best don't. now fortunately for us we also own a lot of that content. so we benefit from the consumption that is happening after our market. we've been focused i think very aggressively preserving the first window for our cable partners and providing really good -- like we have the stacking rights the sort of in-season full episode rights of all of our shows.

it's about 20 original series. we're focused on providing them through our apps through our mvp partner apps as well as our own apps. on the other hand, there is tremendous value in that back-end marketplace. and it's largely replacing syndication. >> it sound like for you, ownership of that content is really integral to your strategy. >> it is. we started, fx productions more than a decade ago. frankly, if we were in the business of renting programs ie licensing as opposed to owning it i don't think we could make the numbers work. but the ownership of content turns out or the a terrific business. we have businesses that are very good at marketing and launching the shows and owning the shows is a boon. i would have no objection to seeing the back-end rights of our shows captured by our own programing service our brand in the way hbo go captures the back end rights of its programing i would have no objection to recapturing those rights inside

the mvp pd system if there was an economic pathway to doing it. but ultimately we're in partnership with content creators. and they're going to go to where they get the most creative freedom, the best marketing and they're going get paid the best. the bottom line is those syndication revenues, which are increasing domestically svo measures are absolutely critical to being able to compensate artists. >> now, amc is unique in that you have this "walking dead" behemoth. this has been a real driver of live programing. and i know all three you have time shifted programing. it doesn't matter in terms of ratings. you don't have to worry about advertisers. but "walking dead" has really been very unique in that live programing sense. how do you encourage that or drive it or keep that show alive? and what is that value of that live event? >> well, in the current advertising regime has undergone some modifications, it may undergo further modification, it's very

important. it's how the account goes and how the money flows. the underlying phenomenon of watching when something is scheduled, when there is all of these opportunities to watch at your own choice on various different machines is a curious one. and i think we're seeing this effect that is both an empire at the moment and in "walking dead," which has increased ratings at 10:00 p.m. every sunday, a thing seemingly of the past. and it's occurring now. and i think it is -- i think it's to some degree in response to a greater -- the growing trend of people watching alone on a machine, and binging and a taking advantage of all sorts of improvements in facility. but it does miss out on community. so there is a big lot of fun. of course when you watch the super bowl live or the academy awards. but there is an awful lot of fun when you watch "the walking

dead" and the show after it called "the talking dead" and you tweet and you're in community. and i think you're seeing that experience in empire. of course you're seeing certain broadcast networks try and take advantage of literal live with theatrical productions. we saw with "sound of music" and "peter pan" and a bunch of upcoming. i think there is an oddly bright future that will be defined with greater specificity about what wins at a time slot. but there is a totally cool time slot win thing because it's in service of people being together. you got to hit it right and it zigs against the zag of on demand. but i think it's a pretty rich television opportunity. >> sort of unexpected shift. >> well, first to go back to your question with john, you know looking at this environment with netflix and all

of these competition in the home, we see something that, you know, it's the more things change, the more they stay thez same. we've seen this heavy user dynamic in our business for the better part of 30 years in multipay. in certain households just want everything. now when we look at hulu we look at netflix, we look at amazon prime we see the index very high in our homes. so you can take a glass half empty or a glass half full view of that. the half empty would be gee, how you going to compete? the half full which i prefer to take is we're seeing these heavy users. and we are fortunate to exist in that very precious space where that audience is saying give us more. give us more of this great you know serialized dramatic content. as much of it as we can get. and the advantage we have in particular not being an advertising driven environment is that we really don't care how somebody watches something.

and the example i always use is "dexter," which has been off our air now for about a year or so. ten years ago we launched "dexter." two-thirds of the viewing was live on sunday night and a third of it was delayed through other vehicles when "dexter" went to the final season a year and a half ago it was a complete reverse. a third of the viewing was live on sunday night. and two-thirds of the viewing came on demand dvr, other places. yet in that final season we had three times the viewing that we had in season one. that says our ability to use this technology to manage through these platforms creates tremendous value for showtime subscriber. do. >> you think there needs to be a shift in measurement then for you, john, when you're trying to negotiate with advertisers? how broken is the measurement system? >> look, it's different. it's more difficult than that in the sense that the fundamental advertising model is due for massive reinvention.

i think ultimately what the consumer is telling us is that they're not willing to give us 15 minutes of their time to watch 45 minutes of our content. i think they are willing to give us quality time for a relevant ad. and ultimately i'm actually very bullish and very excited about the advertising business's ability to reinvent itself over time. what matt said is absolutely true. the viewership of our shows has gone up when you count all those various different streams. and ultimately, while we have an advertising issue that i think is going to be very dynamic, very transformative marketplace, it's going to be different five years from now than it is now, i think the business of making great stories that engage consumers and being paid for those stories is as good as it's ever been. and i don't see it going anywhere. you know ultimately i think all this comes back to

creativity and storytelling, you know. i think that the mode of interaction is vital to the consumer. but ultimately, no one is going to be able to corner the market on great story telling. it refuses to be corralled into one single bucket. and i trust that, you know, you could come back here in a decade, and these three brands will still be very healthy, and there are other brands that are very healthy that will also be healthy in ten years. >> i want to hear about the content decision-making process. but first, on the ad topic, we're heading into the up fronts. what is your outlook for ad spending this year? how it is going to handle the fact that there are now all these other competitors like netflix stealing eyeballs? >> i think there is an evolution under way. it is an evolution. there is the appeal of digital, which has notwithstanding some measurement issues associated with it, i think it has some

precision that is advantageous. some of which is actually coming into the cable television advertising organization. and it is getting much more specific. and the data opportunities for being able to sell someone who wants to sell a product are improving dramatically. and so it won't be like it was. it will actually be tremendously more efficient for people who spend their money. and that's really occurring as a consequence of all the data that is being collected and now organized and seen most specifically through set-top books of cable system. i think that's really a great tailwind. i think i'll echo what john said. i think there are certain shows that are so popular, and they have so much inherent appeal that they really do have -- it's an overused word, high engagement. if you ask -- if you sort of think about what your favorites are, and you think how much you

like your favorites i waited with phenomenal anticipation for the comedians. i watched the first episode of "the affair" and fell in love. and i value those two things enormously. so i'm watching with rapt attention when that stuff is on. that's the me of it. but that's not lost on people who spend money. and so i think when you have they think are favorite, i think you have something that is unique and premium. when you combine that with improving analytics you have a pretty good proposition for someone who spends money because they want to move a product. >> yeah. i would say this too. i think you have an odd imbalance in the marketplace right now that josh alluded to which is essentially the standard for viewability for a 30-second commercial on our channel is a full view 30 seconds of the commercial with audio. and the standard in digitally delivered internet video is 50% of the pixels for two seconds. and that's creating an

artificial perception of ubiquity in the marketplace. but that standard is insufficient. i'm talk about the video -- the video -- internet video standard. it cannot continue. ultimately, once that standard is sharpened up supply will contract, and i think the marketplace will normalize. >> when you look at the changing way people are used to consuming, and this drive towards binge watching on netflix or on itunes or amazon do you ever see a world where showtime releases all its episodes at once? >>ly never say never. we live in a very quickly changing marketplace. we still like the model of premiering a show seeing our viewership build over a 12-week period in the four seasons of the year seeing all the social activity behind the show from week to week. you know, we could switch that tomorrow if we felt it made sense. but at the moment we don't. and, you know we watch the consumer very carefully. we watch all of these things.

we're very happy with our current model. but we're also 100% flexible. and again we don't have to wonder about what impact that has on the advertising environment. so we have perhaps a lot more flexibility to move for quickly if we had to but you know, it's also unreasonable to assume that all a the different demos that we address are going to behave similarly. you know, you can wait 12 weeks and watch "homeland" all at once if you want to. we always see in a season of "homeland" we always see tremendous uptick in people watching the previous season on demand. so there is going to be lots of different types of viewing going on. and we just want the stay flexible and make sure we can take advantage of the marketplace. >> all these different types of viewing must be impacting programing decisions. when you try to figure out what new show to add to our lineup or what show to give an extra season, how are all of these content decisions impacted by

all the changes to the landscape, all the changes to the consumer? >> well, you know, i think it's a very good question. what it does is it puts a lot more pressure on us as programmers to look at all the information, look at how people are using our service. and, you know, i'll tell you, john talked about it at length. we own most of our programing now. and that's incredibly important, not just in terms of the really significant incremental revenue we have generated last year in particular, from ownership. but also the flexibility it gives you to make decisions about how this programing is going to be distributed, how we're going to use it. we don't have to worry about what a studio is going to permanent us to do. so all that figures into the mix. >> i think actually all this stuff makes good have a better chance. and it all makes great have the best chance. because in the old world when it was six, seven eight, nine, ten

and 11 and you had fragmented attention, you had young kids you either caught it or you didn't. if it was good and if it was little nuanced and you missed it, and it was a story that unfolded over time you were sort of out of luck. so i think there is a huge now bias toward good and great. >> but is what is good and great different now because of the different ways people are consuming it? >> here is what i -- >> here is what i -- >> i couldn't agree more with what josh and matt said. i think television used to be somewhat disposable. it was made on some level for the night it went on the air and the week it went on the air. now we make television, we make stories, and we're evaluating, will this story still be relevant 10 years from now or 20 years from now? it's more like film in that sense in that it's an asset that can continue to return from a financial standpoint for a long, long time. and that's great. because essentially what that does is raise the creative bar. so you might where as you might have asked yourself the question will people watch this on a sunday night now you ask

yourself the question can we imagine two people sitting in a room talking about this show ten years after it's off our air? and that's a much better question to ask in terms of the quality of the bar. >> i think that really matters when you combine that with -- and we too own increasingly the shows that we make. when you combine that with ownership, it really is just treated conversationally. you wait for your friends to either say electronically or directly you ought to go watch blank. you haven't seen it. you really ought to catch it. if it's somewhere available through some pretty good point of access in the reservoir of digital stuff, you think oh, gee, i want to watch the best stuff. i'll go find it. so it creates life expectancy a whole lot longer than it used to be. it's not the old syndication of i'm traveling. i can watch a comedy at 10:00 p.m. when i'm exhausted. it's high on intention. and i actually think in this world, it's a fairly big upside for the business that we're in.

>> and the social conversation isn't just people talking over the water cooler. it's people telling their friends. >> oh, yeah. >> and facebook and twitter and all that does that have a sort of exponential effect then in terms of -- >> tremendously. there is oodles of leverage in good. and i guess i might ask rhetorically how many times the show you checked out was referred to you by a friend who made a suggestion that you should watch it, but you weren't quite sure of it. and how many times when you finally got it to you sometimes said not for me and sometimes you said this is good. i'll get into it. so i think the system is a new system. but it's quite a functional system. >> just give you one example. if you can think about how movie marketing used to be everything in the sense you could make a pretty mediocre movie. but if you marketed it really well and turn people on it for the weekend you get multiple times the box office. and now marketing doesn't really mean very much because

essentially people figure out whether the movie is any good. and frankly we're facing the same thing. you got to make a good television series. because the best marketing for your television series as josh says is word of mouth. and you don't get that unless your show is great. >> it's even a little true for movies. we had a movie called "boyhood" which at some point will turn up on showtime i'm happy to say. and it was very quiet and very small. and it hardly had what you would call a big opening weekend. and i do think it built and built and built because of its quality. and i think so it was tremendously enhanced by social. i think what john is saying for television pointedly and new, but is actually also true for movies and for all forms of media. >> unfortunately, we're out of time. i just have to ask, when am i going to be able to buy a showtime app? can you tell us? >> right now you can use showtime any time with your subscription through your local cable operator. >> give them the last plug. looking out for news and all the different ways you guys are bringing your product directly

to consumers. thank you the three you have for joining us. we really appreciate it [ applause ] in a few minutes, more from the internet and tv expo held recently in chicago. commerce secretary penny pritzker is interviewed by former fcc chair michael powell. looking ahead to some of our live coverage here on c-span3, the senate transportation committee holds another hearing on renewing programs focusing on the the agency's efforts to modernize the air traffic control system. faa administrator michael huerta will testify, along with the heads of industry trade groups. that's at 10:00 a.m. eastern. and then in the afternoon at 2:30, a hearing on law enforcement using body cameras before a senate judiciary subkea

committee. again, on c-span3. >> with live coverage of the u.s. house on c-span and the senate on c-span 2, here on c-span3 we compliment that coverage by showing you the most relevant congressional hearing and on weekends c-span3 is the home to american history tv with programs that tell our nation's story including six unique series. the civil war's 150th anniversary. american artifacts, touring museums and historic sites to discover what artifacts reveal about america's past. history's bookshelf with the beth money history writers. the presidency, looking at the policies and leg. lecturers in history with top college professors delving into america's past. and our new series real america, featuring films from the 1930s through the '70s. c-span3, created by the cable tv industry and funded by your local cable or satellite provider. watch us in hd.

like us on facebook and follow us on twitter. here is commerce secretary penny pritzker now discussing the government's role in cybersecurity and increasing broad band access. later, the ceos of the a & e tv network and the website vimeo speak about increasing programing and content choices for consumers. and a reminder you can get more of our coverage of the internet and tv expo at c-span.org. >> good morning to everyone. i hope you're enjoying day three of intx and that you have had a great show so far. now we're going to provide you with an extraordinary opportunity. it's a chance to hear from one of the most significant business voices within the obama administration and in the country. a woman whose agenda and department play a role in the

growth of our industry and the health of the american economy. our 38th u.s. secretary of commerce penny pritzker is approaching her third anniversary on the job. actually, second. she came to it on the heels of a distinguished private sector career spanning more than a quarter century running companies in fields as diverse as real estate hospitality, senior living, and financial services. as accomplished as her private sector experience might be her achievement so far as secretary of commerce are exceptional. she has led the way in creating new global markets for u.s. businesses. she is open to american investments several nations of eastern europe the asian pacific region, and other parts of the world. she has energized efforts to boost american exports, helping create new american jobs. she has initiated her

department's first ever effort to ensure that american workers become equipped with skills for the job market of the 21st century. and like us, she is passionate about extending the benefits of broad band to americans of all ages, income levels, and stations in life. under the secretary's leadership, the commerce department has joined the department of agriculture to form a broad band opportunity council. it's a mission to seek new ways in which the federal government can help promote broad band deployment adoption, and more competition to better serve american consumers. we are thankful that the secretary has made time here on an important business trip to chicago to experience intx and to visit with us today. ladies and gentlemen, please join me in warmly welcoming united states secretary of commerce, the honorable penny pritzker. [ applause ]

>> thank you very much. >> thank you so much. please. have a seat. well, it's great to be in your hometown. thank you so much for joining us. >> thank you for having me. >> it's good to be with you. you know a lot of people are perplexed about what the scope of the department of commerce. you really have quite a portfolio. i thought we would start out by you giving us a short overview of your responsibilities and those of the employees of your department. >> sure. the department of commerce has a number of different areas that we focus on. but maybe i'll just run through really quickly. >> sure. >> because i know you want to get to the issues. so obviously, we run the national telecommunications and information agency, which deals -- you deal with quite a bit. we also run the national institute of standards and technology. both of which are very relevant to the digital world, to broad band, to communications. we also, though, run census.

so we count -- we're by the constitution we have to count everyone. but we also basically are the survey arm of the federal government. we're often subcontracted with to run surveys for different parts of the federal government. we run the international trade administration. so we help companies, american companies that want to do business abroad. we have foreign commercial service in 75 countries around the world. and we have our u.s. export assistance centers where over 100 cities in the united states to help you do business around the world. we also -- they also focus on helping foreign companies who want to invest here in the united states. we run the bureau of industry and security. so if you make a good that could be for dual purpose use both civilian and military you may need a license. you to get a license from us. we do your economic statistics as well. we run the patent and trademark office. and then we run the economic

development administration and the minority business development administration. so we have a pretty broad mandate. >> quite a mouthful. >> a broad set of things we do. but fundamentally what knits them all together -- oh, and i forgot noaa. we run the weather center. and we're responsible for our coastlines. literally, we count the fish in the sea and we tell you how many you can catch. but what all of these have in common is our number one stake holdinger and number one customer is the business community. and we're really a service provider of public goods to the business community. if you think about a good portion of what we do is provide information, whether it's weather information, it's population information, it's demographic information, it's economic information. and so it's a -- or we help you, we provide services that help businesses do what they do best, which is try and grow find new

markets. and you guys create jobs. >> it's an exceptional portfolio. and we're thrilled to be one of your constituents. you know, it seems like we're in a period of business and economic history which is really like the third great economic revolution, the information age. and of course that's components driving our business. and i know it's a focus of yours. soy thought maybe we would focus a little bit on what the internet means both in terms of great opportunity and excitement, as well as the dangers and risks that are associated with some of what we're seeing there. let's start a little bit on the positive side. you know, a lot of effort has gone into deploying the infrastructure to allow the united states to be a real leader in broad band infrastructure, to allow the kind of innovation creation that platform provides. i know you're co-chairing the broad band opportunity council. i just want to get your thoughts about both broad band, what are some of the things that can

accelerate it or might be limiting from an investment infrastructure standpoint. or what your plans are with the council. >> well, michael, let me step back for one minute. first of all, if there is one message i hope people will take away from today is that we at the department of commerce, we really want to work with is the private sector on the various issues that are facing the industries for which you're responsible and that are present here today. we want the public and private sector to work together. that's what the broad band council is really about. so secretary vilsack, who is the secretary of agriculture, but also he is really more of a rural portfolio, if you will. >> yes. >> and the goal of the broad band council is really to increase broad band investment, which i know is something near and dear to your heart and to the heart of the folks here in this room. we want to decrease barriers. and so this -- because the president has made a very high

priority access to broad band, he knows how important it is for innovation, for education for the general growth of our economy. but what we need -- what we do know is that broad band access is the private sector has taken a real lead role in providing broad band service investing i think over the last six years about $300 billion. but that's not evenly spread across the population. it tends to be we're in the more urbanized places which makes sense. that's where it makes economic sense. so that's where the federal government has to come in and say what do we do about the other folks. because you don't want the leave that portion of our population behind, right? and we know that access to broad band is absolutely critical to the future of all americans. so the broad band council is place where we would love your

input. we have in fact out of request for comment right now through ntia that will be open i think until june 10th. and there is really two issues that we're interested in hearing from you and all of your constituents about what are the barriers that you're facing, what are the issues that are impediments to broad band investment. and also, you know, what any thoughts about what we can be doing about these barriers any -- both identifying the challenges, regulatory and others as well as any ideas, positive ideas. the president has asked us by august 23rd to provide him with a set of recommendations as to what the administration should be doing. so it's an area of cooperation between us. >> we're excited to be engaged in that process. one of the great benefits of this industry is in many ways it started out as a rural service.

it was a way of bringing television to rural communities that couldn't pick up over broadcast antennas. so the united states has this unique advantage in that we really had an infrastructure that pulled out from rural america to the cities. and it gives us a chance to get that right in getting as many americans on board as possible. i read recently something you put out that i found intriguing. you said 65% of today's kids will likely be doing jobs that have not even been invented yet. pretty daunting statistic. tell me more what that means and how should we be thinking than as a country and an industry? >> well, think about the following fact. since 2009, fully a third of our economic growth has come from innovation. those are parts of our economy that didn't exist. so it's easy to project over the next 25 years that we've got a lot of innovation ahead of us. and many of you are on the forefront of that.

but what is critical to living up to that opportunity, and remaining a leader in the world is education, skills development. i really applaud what you guys have done in terms of connect to compete. really impressive. it underscores what we all know, which is access to high speed internet is critical. in fact, that kids are digitally literate. the fact that we can create low cost internet service not only for individuals, but for schools, really, really important. and as you said, we're in the middle of a revolution. and an evolution that i think certainly i haven't seen in any lifetime. and it's why the department of commerce created an initiative called skills for business. for the very first time, the department of commerce is

interested and focused on a skilled workforce. now that sounds crazy but the department of labor has usually owned this. and the president has really encouraged us to get involved and to partner with the department of labor because of the recognition that the labor force of the future is going to be determined by employers. it's not the federal government's. so what we're -- what kind of training guess on in america needs to be driven by business leaders. they need to -- we need to be clearer about what you need, and we need to be training for the jobs that exist and are going to exist. so one of the things that we're doing at the department of commerce is we just announced in the last week a partnership a public/private partnership with the aspen institute. because there is a lot of really innovative things going on in the country, but we're not taking advantage of best practices and learning around the country. what is going on in chicago is different than what is going on in south carolina or going on

in, you know arizona at arizona state. i mean, there is just a lot of really interesting things going on. but we need to bring those efforts and ecosystems together. meaning we need to bring the university, the community college, the private sector, and the local governments in regions together to learn from one another and to also help develop what is called best practices around skilled workforce and training. and the internet is an absolute -- we take -- it's an assumption. we've got to have internet capability. we have got to have the capacity to support these kinds of trainings and learning. >> i think that's a great insight. it seems like a lot of times in the public media we spend all our time talking about the technology, and we don't understand what the challenge is to be a citizen or a consumer or member of the labor force. i mean we really -- even to just be a consumer if you think about it is increasingly requires a level of technical skills educational attainment that really isn't there.

so i applaud that. let me segue a little bit to the things that we should be a bit afraid of. i've often said to people cybersecurity threats may be the great achilles heel of all the promise of the internet age. and if we can't somehow figure out how to protect and secure that infrastructure, it's tough to continue to invite our citizens to put more and more of their valuable life into a system that ultimately could be destroyed. i know this is a passion of yours. i wonder what you might say about how both the government and we as a continue can combat the problems that we're facing. >> well, think about cybersecurity. the reason it's so hard is first of all, it's ubiquitous, right? it's everywhere. and second, it's complicated. there are legitimate cybersecurity issues that we need to address that affect national security, that affect you protecting your intellectual property, that affect privacy for the individual. but then there is also the other

problem, which is many governments are using cybersecurity as a lever to try and either catch up by putting in place discriminatory laws that force data localization or force keeping your intellectual property within a country or turning over your intellectual property. so that's why it's so complicated. the key to this is we in the private sector and we in the public sector must work together to address cybersecurity. both the policy and to actually fight the challenge. so in -- at the department of commerce we have for example the 15 pilots which are working on i have tos to pass words. we have the nist cybersecurity framework which is a framework being used to help managers who are not technologically proposition as savvy as your

tech groups to work with their internal technology so that there is better communication. but the other thing that needs to happen is we at a very high level, and i was talking with some of the folks about this, we need to work together. the public and private sector in combatting cybersecurity. and in that we also have to therefore create liability protection for the private sector when they're being good citizens to help the government in dealing with the attacks that we're under constantly, right? every business here is under constant attack, as is the federal government. so that's why we propose the administration proposed legislation, cybersecurity legislation enabling us to work more closely together and providing that kind of liability protection. it's my understanding the bill sought of the house. with actually greater protections than originally we had proposed, which is terrific. and now the senate needs to act on this.

it's really, really important that we work together on this. and as a result, ntia which is the national telecommunications and information agency has a new cyberinitiative to try and tap private sector expertise. and we're looking for input by may 18th. so if you go to our website at i think it's ntia.doc.gov we would love your input as to what are the topics we should focus on. we're going to -- this is a huge priority for us to work more closely with the private sector. not just on cybersecurity, but you'll hear it over and over from me at the department of commerce. we've got to hear what -- because you're our customer. we need to better understand what are the issues where do you think we could play a more effective role. >> we're very supportive of legislation working with you and the administration. i think you point out that everybody has a small window into the picture, and we really need to knit together. >> exactly.

>> the collective picture with what government nose, what a business knows, what the sector nose. i think that's going to be useful. >> to that end we at ntia and at the department are creating kind of a center of excellence around the digital economy. and we love participation from those you have in the audience. >> terrific. one last critical subject and it perplexes me often is privacy. >> yes. >> because it doesn't mean the same thing to the same people. at one level, people's information has become an important part of the fuel of the information economy to be able to customize, advertise. at the same time, it's starting to feel creepily like there is nothing you can do to protect your own anonymity or privacy. i know this is a subject you have been focused on. where do we stand on that? >> well we did last year the administration put out a big data working group, which really laid out the challenge that you just articulated so well.

we need to find a balance between promoting the benefits of big data which could be things like health care more efficient transportation, or better weather information. between that and protecting individuals' privacy. and that line is not -- it's not clear. and as a result i have brought into the department of commerce a chief data officer, someone from the community. and we're developing a strategy not just about privacy about a whole bunch of things. because we're also looking at how to take the data that we have and make it more available to the private sector to be better used. but this issue of protecting privacy, civil liberties and freedom to do business is one that we're going have to work out. what i encourage you, we in government are being asked and we're being forced by other governments around the world to

really engage in this subject. as a result, we need more input as to if we develop a certain policy, what are the unintended consequences. because at the end of the day, it depends on trust right? >> right. >> we've got to not only protect information, but we've got to -- the use of it has to be in a fashion that draws the right line. >> yeah, yeah, very difficult. well listen, this has been an extraordinary conversation. i'm so proud of what you do. thank you for your service to the country. and you can certainly count on us as being your partner as you chart these difficult waters going forward. so thank you very much. >> well, michael, you have always said a good example for all of us. thank you so much for having me here. and i really look forward to working with all you have in the audience. >> thank you so much. let's give her a hand. [ applause ]

>> ladies and gentlemen, please welcome the host of this morning's rico conversation senior ed core of media re/code peter kafka. also please welcome the president and ceo of a & e networks nancy dubuque. and chief executive officer of vimeo, kerry trainor. >> you made it. >> we're closing out the show, guys. that's a very important branded piece of equipment. we'll have to replace it. these are from steel case. >> i'm so sorry. >> is there a trademark? >> you cannot buy these anymore. >> do you guy -- you guys don't are to carry these on right? >> someone does that for us.

but these are expensive and important. >> should i put my pillow back? >> do whatever you want. just don't leave without it. >> your lumbar is at risk. >> everyone in this room, everyone watching i think knows who nancy is. she runs some of the most high profile networks on tv, some of the most important programming on tv. some krouf might not know kerry. runs vimeo. a brief introfor you kerry. you run the second biggest video site on the internet. is that the way to describe you? >> the second largest video sharing platform. >> 150 million users? >> yep. >> significantly smaller than youtube, but still very big. >> uh-huh. >> the reason i want to have both of you guys on stage is you're both trying to do the same thing. you're both trying to deliver video programming to people who want to see it. very different business models, very different approaches. i think maybe you can talk about why that is. here is a real easy one. you make a lot of money from advertising. >> yep. >> kerry you had a background in advertising yahoo! and when you came to vimeo what, three

years ago? >> yep. >> i assume you were there to start showing ads. three years later you're still not showing any ads. why are you not showing ads? >> we get that a lot. the fundamental answer is we don't have any problem with ads in their place on earth. and as you said, i had worked in ad-supported digital products. and i think that it's a great business model. we were even talking about backstage. broadcast television has not gone away. and is still consumed massively. it's just a question of what is right for us. and we think that youtube has done a good job building up the -- what we think of as the broadcast phase of online video. it's free. it's supported by ads. but vimeo we're focused on what we think is really the beginning of a new phase, which is the premium direct paid version of the internet. and if youtube is the open global equivalent of broadcast tv, we want vimeo to be the open

global equivalent of premium cable, sort of the open hbo if you will. and we think that that user experience is proven. people like to pay for don't just as much as they like to consume it for free. so we're really focused on the opportunity of that paid model, not, you know, trying to convince the world that the ad model is evil. >> nancy, you got the best of both worlds right now, right? you have a subscription model courtesy of people like me who pay for time warner cable. and you also have the ad business. we were talking before last week, you talked about there is a sense -- you got a sense there is a disdain for advertising among your viewers. >> well, i think, look, we love advertising, and i know that advertisers love us because we offer not only scale, but an incredibly premium environment where they know where their products are going. they know where their brands are going. there are behavior problems that are happening out there whether it's fast forwarding or dvring or the ad blocking.

clearly the consumer is finding ways around that. so we're being really vigilant and focused on the creative experience as it relates to advertising. and these are going to be advertising. they are slow models to change, but, you know, you look at -- actually, youtube posts the most popular ads. how long do you think the most popular ad on youtube is? do you know the answer? two minutes. >> a movie trailer? >> no. it's good content. it's the buzz feed cat thing thing is huge. if you can make your advertisement from a brand standpoint be a compelling story, viewers will consume it, and so i think we have to shine a light and spend time with the partners saying what is the eco ecosystem look like? we have to migrate away from spots and dots and instead make

sure we target that audience and that viewer with an ad they want to receive, which there's a lot of evidence that if it's targeted, they will receive it, and, also, make the creative experience of the advertising more engaging. >> we've been talking about or hearing about targeted tigz for eded advertising for at least a decade. we're far off -- >> we're doing a test now you saw the booth out there, this show was packed and we are far off, but it's moving. i think you're going to see a lot of targeted deals up front. >> there's a race, viewers vote with their clicker or whatever mechanism they use to watch tv or not watch tv, and the ad business is further behind in terms of delivering -- >> look, there's big measurement challenges with neilson. we are vocal about that. that just needs to either be addressed and improved or other options are going to emerge, and, you know, i think we're not

capturing all of the viewing that's happening and that's really frustrating because you know we had a conversation earlier where creators need to be compensated for the work that they do, and that's -- so we have to figure out new economic models to protect for that. >> so we talk about the viewers responding to advertising, television in general, right, things are not the same. everyone knows broadband only households, and there's big mass audience, but does well doing it. how are you thinking about programming, separate from advertising, programming for an audience that has much different behaviors than five years ago? >> yeah, i mean i think it's going to be a lot of different things for a lot of different people. we're not going to see as -- we mention in the beginning broadcast tv is here, cable's going to be here. it's an ecosystem where i'm in the mood for something short and snackble, i go here. when i'm in the mood for a drama epic event experience, i go

here. people are getting sophisticated where to go for what. >> are you changing the way you program? >> well, we were laughing before that just the idea of a prime time schedule when all the viewing behavior is happening. part of what you see is just the industry is moving. i mean, there's a prime time schedule because advertisers are used to selling into that, but we're all aware that you know, a lead-in is not as important today as it was three years ago, and the competition and the race we're all in is really for people's time because that's the finite, you know undisruptble thing. if someone can put more hours in the day, that's a great business model, but i don't think we're going to get there with that. we're all fighting for a consumption pattern that the audiences have. >> a piece of wisdom is long form happens -- your programming and then online videos for

snackable stuff, on the phone wherever you watch it. is that on vimeo? are people paying for long and short form as well? >> yeah. everything nancy's saying. we're seeing the viewer diet is evolving in realtime right? of when i get it, where i get it, what i get where, and vimeo has skewed longer. you know, our stock in trade is not the fail video or the cat on a skate board or america's funniest home videos -- >> those are popular. >> they are. >> seems like you should run that on vimeo. >> yes but there's a place for that. that's youtube. it's phenomenally successful. what we see, yes, people are consuming longer form pieces of content, and, particularly, since the launch of vimeo on demand, which is essentially, an open active itunes system

where people are consuming feature length films, consuming a lot of documentaries, feature length, call it an hour, episodes into single minutes, into close to television half hour, hours, and one of the most interesting things for us is because there are not any of the sort of programming structures, generally half lowerhours or hours it's whatever. one of the most interesting things about consumer demand and the business model is we see creators breaking all of the rules of price to length if there were an absolute ratio, but, generally, everything for instance, on itunes my skew to a certain amount you pay for 30 minutes or 60. we have people charging tens of dollars for tens of minutes, and very -- >> what's your biggest hit on vimeo? >> right. so the biggest hit, actually, the first original series called

"high maintenance" which was picked up by hbo and they are a perfect example of everything i'm describing. >> describe it to the audience. >> "high maintenance" is a comedy that grew up on vimeo. the creators chose to use vimeo to post episodes on their own. it's about a bicycle message pot dealer based in brooklyn, and this is his encounter with a client, and in terms of what you find on the web, really well-written beautifully shot, you know, really smart and thoughtful, not at all a cat video, and they started -- we gave them money to produce their next set of episodes, and they range from seven minutes up to 20 minutes. it was $8 to have streaming rights for six episodes. you know, the cool thing is it's a different type of creative product, a different type of business model and in terms of return back to them, which we both agree creators

earn money. they made more selling their content in two days on vimeo than they would have made in the entirety of the two years it was up for free, even with the most aggressive ad money. >> how many episodes did you sell? >> we have not disclosed any of the numbers, so we're going to stick to that, but i would say it's hundreds of thousands of dollars, and, you know for again, someone to generate hundreds of thousands of dollars on youtube at $2 cpn you're talking about, you know 50 million streams to make $100,000. >> we used to wonder when web video would be competitive or create stuff that would be as good as today. now we don't wonder about that anymore. it's happening, right? netflix netflix, amazon and vimeo "high maintenance" was getting praise, great critical buzz and now it's going to hbo and a lot of people i follow on twitter say it's great it's great, going to hbo. this must suck for you guys.

you make a show, it puts you on equal footing with the tv guys, and a year later, you lost it. >> well, look there's a certain amount of bittersweetness to it for sure, and this is not just the new -- what did you call it? we put the announcement out and it it was sort of our farewell press release, whatever it is, but in all honesty, the sweet side of it -- the bitter side is obvious. look, we supported them. we love to continue to fund them and help them continue to succeed and fund that directly from vimeo. but at the same time, look that type of opportunity for them and it was a close relationship, and for them to really graduate directly to that and know that we can have a place distributing that programming, it really does paint the picture. >> they are graduating, right? going from one level to another level, so you're not on the same level, do you think -- and netflix likes to think of itself as on equal footing. do you aspire to that or always sort of a training ground?

>> well, i'd be interested, nancy, we talked a little bit about how you guys even view the platforms, but i will say this. look, there's no -- there's no question that the economic maturity of channels like hbo is well beyond where we are. and if we're going to put our money where our mouth is and we want creators to flourish with the tools we have, we are jerks not to support them saying, this is awesome, go do this, this is great. we'll find a way to continue to distribute this to your web audience, and we reach all nooks and crannies that they do not because we're a global platform. we're in every device, every country. so that part of it is just real. now -- but the consumption always predates the economicship. we know that. so when i look toward to the future, though absolutely. the footing is just going to be more and more equal. >> how long before equal? >> ten years into online video

sharing. you're now is captureingeing $5 to $7 billion of advertising. that's a chunk of the u.s. and international ad spin. the online paid ecosystem is about two years old, and so you know, call it a decade from now, if we're capturing, you know some 10% or 12% of that market and that's dangerous math, but that's probably what you're looking at. >> nancy, what's the web mean for you? putting both original content there, you made just for digital platforms, and you're taking stuff, obviously there? >> talking backstage, you know, one of the more interesting stats that i've seen recently as i look at the top 20 shows across the brands and 2020 shows in nonlinnier. there's little overlap. >> a lot of folks expect the web brings people to tv right? >> you know, the web is providing, you know, long form content on the web is real