this opportunities to introduce david shapira. mr. chairman, you read -- or you highlight the some of his business background. and that's i think one of the most significant parts of his record and resume. i won't dwell on the details of his background. but i do want to say something about his character. i think that's what i'll start with. we all know the challenges of being in elected public service. appointed public service comes with challenges as well. the process itself is substantial challenge and i'm always amazed and gratified that we have people willing to put themselves forward for public service even though the process to get there to be confirmed or even to be considered is challenging. i think that's -- the fact that david is willing to do this is an indication of his character

and also his commitment to our country. he is the ceo and chairman or has been from 1980 until 2012 of giant eagle. since 2012, he served as executive chairman of giant eagle, one of the most successful businesses that i know he went to stanford. we don't have a lot of that around here. we could use more of that with degrees in economics. he's on the board of directors of the allegheny conference and community development, extra mileage education foundation, the academy at pittsburgh, pittsburgh symphony, united jewish federation, the united way of allegheny county and i can go on and on but i won't. he's also a member of the carnegie melon university board of trustees. i believe his experience and his

success will be of great benefit to the postal service serving as a member of the board of governors. again, i come back to his character. this is a person of integrity and someone who truly believes that what he's doing if he were to be confirmed would be public service. we have an inscription on the finance building in our state capitol. it reads as follows, all public service is a trust given in faith and accepted in honor. i think david understands that. if he takes this opportunity, he accepts it with honor and the best way to demonstrate you accepted it in that fashion is to do quality public service with integrity. he will do that. i have no doubt about that. so david, we're grateful you're willing to serve and i'm honored to be part of this nomination process for you. >> thank you, senator casey. appreciate those words of support. i know senator toomey wanted to

come here. i'm not sure if he'll make. if he does we'll offer that opportunity. i would ask unanimous consent that his statement of support be entered into the record. >> i will not object. if mr. casey will repeat one time those words inscribed in the capitol? all public service -- >> all public service is a trust given in faith and accepted in honor. >> i do not object. thank you. >> i wish they were my words. but they're inscribed in a building in harrisburg. >> those are great words. >> thank you, senator casey. it is tradition to swear witnesses in. so if you'll please rise and raise your right hand. you swear the testimony you give before this committee will be the truth, the whole truth and nothing but the truth so help you god? >> i do. >> thank you very much. >> i could read your introduction but we read it before. we'll just listen to your testimony. >> thank you very much, chairman johnson.

if i can just say i'm blown away by senator casey coming and saying what he did and i really thank you for that. chairman johnson, ranking member carver, members of the committee, thank you for the honor of appearing today and for the privilege to be considered for nomination to the united states postal services board of governors. i want to thank president obama for this honor and for the vote of confidence that it represents. it is truly humbling and if confirmed, i will work diligently to show that this confidence and your consent is well deserved. i also want to thank my wife cindy and my family for supporting this undertaking. the responsibility and opportunity for national public service will require sacrifice and if i'm confirmed they will be my partners. my family is truly my greatest gift and nothing i've accomplish wod have been possible or even

desirable without them. >> is she the young woman sitting over your left shoulder? >> she's this very young beautiful woman, yes. >> we thank you for your willingness to share your husband with our country. >> though my written testimony provides details for more than 30 years i was the chairman, ceo and president of giant eagle markets. senator. >> sorry. >> this is what we call a walk on. this is a walk on. >> i'm really now completely blown away. >> during that time, our chain of stores grew from 50 stores to over 400 stores. i was doing a little bit under $10 billion in volume 36,000 americans. i don't want to take credit for. this i was always surrounded by smart, capable people and the achievement is theirs, not mine.

large organizations like giant eagle only succeed when they tap and inspire the talents of a diverse workforce and i'm immensely proud to -- of the team that i helped to lead. when i stepped away from day-to-day operations in 2013, i left the company in very capable hands. actually, at the hands of my daughter, laura, who is now the ceo and her executive and extended team. i always had an interesting in giving back to my community and have served on boards and lay leadership positions and number of civic organizations over the years. however since my retirement i have been able to more fully pursue what i hope will be a second career in community service and philanthropy. such service is foundation of our country and major component of our democratic society.

oo friend of my father used to hand out business cards that said the more i get the more i give. every citizen to the extent that he or she is able should look for opportunities to serve. now president obama has offered me a new opportunity, one with a truly national and international scope. the united states postal service epitomizes a key tenant that underlines -- underlies our unique government of the people. the right of everyone, rich or poor, rural or urban, of every creed, faith, and race to efficient, affordable and reliable communications. so critically important to the founding fathers was this concept that they established the u.s. post office at the second continental congress of 1775. a year before signing the declaration of independence. this is a political thought and messaging.

perhaps most important it is a bedrock to people everywhere to remain connected to family, friends, community, and the greater world around them. other communications have come, disrupting the paradigm and creating new challenges and opportunity the mail still remains and has the significant place as an essential government service. today the institution is struggling. for years its expenses have exceeded revenue. looking deeper, the most profitable product first class mail is in decline but it is achieving growth in the delivery of packages. the post office is undertaking an ambitious effort to cut costs but it faces the real risk of degrading service which could lead it worse off in the long run. >> it's reason losses have forced it to delay needed capital investments. it needs to address its long

term benefits particularly retire retiry accounts. the answer is multifaceted. it must preserve and enhance the current products while seeking out new opportunities to expand. must look for ways to be more efficient but also must preserve those assets which will enable it to have long term growth. it needs a solid lanplan but i must make near term capital investments. if confirmed, i look forward to exploring these issues and much greater depth and i believe that my business background experience and commitment to public service can help push this work forward. thank you, members of the committee, for your attention and i look forward to answering your questions. >> thank you, mr. shapira. we welcome pat toomey. he has a few words of support as well. >> i do.

thank you very much, chairman johnson and ranking member carper. i appreciate you giving me this chance. apologize that i was not here at the beginning but, you know, there is a rule in the senate that requires conflicting simultaneous scheduled meetings. but it's a pleasure for me to be here and to just say a few words on behalf of mr. shapira with respect to his nominee to be a governor of the u.s. postal service. i'll be brief. let me just say the postal service and the united states are very, very fortunate that a man of his accomplishments and capabilities is willing to serve in this capacity. i am delighted that he's willing to do this. we will benefit enormously from his wisdom, his experience and the very hard work that i know he'll do here. i think mr. shapira was way too modest in describing his

accomplishments in guiding giant eagle from what started as a very small chain with several other families and has become a very, very large business. employing tens of thousands of people and really doing great work. in addition he served on numerous corporate and university boards from which he's developed a terrific range of experiences and acquired great knowledge about so many different business activities and models. his philanthropic work with his wife cindy has been absolutely terrific and very, very important, especially in western pennsylvania and beyond. so i just think that david shapira represents the best that pennsylvania and pittsburgh has to offer this country. he's an extremely talented and accomplished business and philanthropic leader and we're just very fortunate to have his services. i fully support his confirmation.

>> thank you senator toomey and senator casey for taking time to offer the words of support to the nominee. mr. shapira, it is tradition to ask you a series questions prior to my questions. we'll allow the senators to retreat. let me start with is there anything you're aware of from your background that might present a conflict of interest with the duties of the office with which you've been nominated. >> no. and if anything should arise, i would recuse myself from any possible decisions about that. >> okay. thank you. >> do you know if anything personal or otherwise that would in any way -- that would in any way prevent you from honorably discharging the office to which you've been nominated? >> no. >> do you agree with our reservation to comply with any request for summons to appear

and testify before any duelly constituted committee of congress if confirmed? >> yes. >> okay. thank you. >> i'm obviously intrigued by your business background. i started my business in 1979. you started a year later. you just did a whole lot better than i did. obviously, you have some real talents. you talk about opportunities for the post office. can you tell me that your concern or whether you're concerned or not concerned about the postal system competing with the private sector and, you know, how you try and set up guidelines if you have concerns? >> let me answer that question with a little bit of background. as i was getting prepared for this hearing, i realized that during my career at giant eagle we faced a situation which is very -- we faced then and continue to face actually a situation which is very similar

to what the post office does. and that is the rise of new competitors and new technologies. which threaten various parts of our business. in the giant eagle case something that most people wouldn't think about, but there's been an enormous lifestyle shift from eating at home to eating out. and in the supermarket business, we serve food to eat at home. so every meal that that switches from the home to a restaurant takes business away from us. and so the way we adopted -- or adapted to that was to continue to do what we did but also to be in to diversify what we sold. and as i was saying at the staff hearing yesterday or monday, we

started going in the new business. but within our stores. so that not only did the new business bring in revenue but the fact that we had the new business reinforce the old business. and some examples of that are getting into the business like pharmacy. when i started in the supermarket business, there really was no such thing as pharmacies in supermarkets. and today -- well, giant eagle in particular but really all good supermarkets have very successful pharmacies. the second example of that is gasoline. where, you know, whoever would imagine that you get your gas at the same place you get your groceries? i think the post office has the same kind of problem. it's got a severe technological threat and competitive threat to its best product which is first class mail. i think the way to defend that

is to continuously try to improve first class mail but also to develop other products which is bring in revenue. and hopefully reinforce the use of first class mail at the same time. and actually as i look at what the post office has been doing, it has been doing those things. so i don't think it needs a radical change. it needs an emphasis on continuing to change its format over time. you know, in terms of competing with private -- with private businesses, or at least governmental businesses is the right word which i think is the essence of your question, it's a very interesting question. the post office has a mission. needs to carry out the mission. its competitors have a different

mission. that gives them certain advantages and certain disadvantages. but -- and clearly the post office competes against them as they compete against the post office and, frankly, i think competition is a good thing. so i am in favor of seeing new products and being aggressive about building the business model. >> having been in the business, i imagine you did a lot of strategic planning. i have and have found great value in business called swat analysis. people are not really familiar with that in washington. i'm sure you are. strengths, weaknesses, opportunities and threats. can you go through a quick analysis of the postal system? let's start with strengths. what are the primary strengths

of the postal service? >> well, the primary strengths are the system and the employees. and the history. the post office has a system which calls on every single address every day. that's an enormous strength. the second strength is brand equity. everyone understands the post office. everyone understands how to mail a letter, how you go about getting a stamp, putting it on. so there's -- in this case, a brand equity is sort of an institutional memory, not only of the post office but the whole population of the country. the opportunities -- well the

weaknesses are several things. i think the weakness is it is constrained as efficiently it might by law. an example of that is the necessity to prefund the retiree health benefit which is something that i'm not aware of any other company or institution does. and a second weakness is it's in some ways constrained from introducing new products. i mean any understanding is the law says the post office can't introduce a new product that doesn't use the post box, the mail box. in a day like today where technology is changing so

quickly, the inability to adapt to changing technology is a big weakness. it's a huge threat. the threat of the internet in terms of the first class mail. even actually second class, bulk mail is enormous. and i know as a company like giant eagle, we're trying to move as fast as we can. to sending out our communications with the public over the internet. because it's so much cheaper. it's not so easy to do. which is the big strength of the post office. it's nice to dream about it, you can't just carry it off. i'm sure i'm leaving some out. but those are the strengths and weaknesses. the threat is i think a number of things.

clearly technology is an enormous threat. it's a threat to any kind of business at any time. that's sort of one reason i'm happy i'm retired these days is technology is changing so fast and very hard to keep up with. i think the other threat is the constraints that are put on by law and by the political system. the opportunities are enormous. the need to get information from one place to another is only going to grow. we're increasingly interconnected world. and the question is how can the post office adapt to the changes and the needs to accomplish that task? my experience says that whenever there is disruption like there

is today that it's an enormous threat and it's also an enormous opportunity. and the question is can the post office figure out how to take advantage of that. >> okay. thank you, senator carper. >> thank you, mr. chairman. again, very nice to have a chance to meet you and to meet cindy as well. i understand i used a basketball term talking with mr. shapira about the role his wife played in encouraging him to be named to be put forward by the president. i described her role as getting an assist on the play. so we thank you for your encouragement. i was born in beckly, west virginia, a coal mining town in southern west virginia. south of chairlstant.

and back there a couple months ago for a funeral of my 98-year-old aunt hazel. and she was married to my mother's oldest brother. and back in the -- about 1950 he started a little supermarket in beckly, west virginia, on harper road right off the turnpike. it is called panda's market. he they sold groceries and gasoline. it sounds familiar, huh? >> everything that goes around comes around. >> there you go. as i grew up, i would go back -- i grew up in virginia in roanoke. i would go back in the summers with my sister just to be with my grandparents, our cousins. and i would work a little bit, not a lot, but summers and at the mom and pop supermarket. my uncle died early. but his brother michael jim and his wife took it over. and they had it down the road from them harper road.

a kroger opened up. they said our market was doomed. they weren't. and then an a & p opened up and they said that pat's market is doomed. but they weren't. and they continued to do reasonably well right up into my aunt and uncle reached retirement age. worked hard. it wasn't easy. they didn't have a chain of mom and pops but they had theirs. over time they changed the way they did business. and to adjust to the competition that they had just down the road. they offered people a chance to buy food on credit. folks that wanted to have groceries delivered, they delivered. if my grandfather was a butcher. he had parkinson's disease. his hands would shake like this. he drove the mountain roads until he was 81. and he would go to that butcher shop and cut meat. when he was in those shop, his hands would be like a rock. it was amazing what he would go through. people wanted a special cut of meat, they got it. they wanted produce, they got

it. folks walked in the store, the staff knew the name of the people that were coming in, even their children. and they continued to be a supermarket. a little supermarket. but over time they became a catering service as well. you mentioned people change the way they eat and they decide well, you want to have somebody prepare your food. we'll help with that. i learned so much from my aunt and uncle and from their business in terms of customer service and being a servant. our job is to serve. talk about the lessons that you -- life lessons that you learned from starting and growing your business that might be appropriate or applicable to the post that you've been nominated for. >> thank you for the question. that's a great question. at giant eagle we feel we serve

four constituencies. and the four constituencies are our customers, our team members or employees, the communities we live in and our shareholders. and when i talk about this, i like to say that those four are not in any particular order except for the last one. that doesn't mean that we don't think our shareholders are important. obviously, they're important and we know we have to make money and we have to grow the business and we have to pay dividends, otherwise the shareholders will say we don't need you. so why do i say the other three are more important? the reason is we take a long run view of our business. and we think if we serve those other three constituencies well

and that we're good financially responsible business people that in the long run the shareholders will be better off and, of course, so will everybody else of all those constituencies. i think in an organization like the post office, which is a little different because in this case the customers actually are the shareholders, we're all the shareholders. we're all the shareholders. but i think if we concentrate on serving our customers, taking care of the workforce and making sure that workforce is well trained, well motivated, understands why they're here. it was interesting listening to the admiral who i thought spoke beautifully on the subject. if we remember that part of our

mission is to serve communities, big or small, near or far, and if we are freed from some of the constraints that we operate under, that post office can be very successful and adapt over time and change. >> i should know the answer to this question but i don't. so i'll ask it. in the postal service, there are four labor unions that are organized and represent different employees and employee groups within the postal service. and we have the opportunity to work with them, the board of governors and folks who are leaders at the postal service have the opportunity to work with them as well. i find them to be more often than not constructive and trying to be helpful to enable postal service to survive and thrive and go on to service for hundreds of more years in this

country. i don't know to what extent in your business you've had a chance to work with collective bargaining units. but if you have, you could share with us some of what you learned from that? if you haven't, any observations you might have with that in mind. >> giant is a union company. we have some small nonunion companies. we deal with -- we have dozens of different union contracts. i think dealing with -- assuming that the unions have reasonably good leadership, and in many ways it's better to be a union company. it gives you an ability to communicate with people that you don't necessarily have if you're nonunion.

my view on dealing with employees is you have to respect him. you have to listen to them. you have to get feedback from them. you have to include them in the process. you have to train them. some of the things the admiral said, you have to have a clear mission. you have to explain it to people. when there's a problem, you have to be open and honest about what the problem is. you have to make people understand what the problem is. my experience is in most cases, not all, but in most cases you can -- unions are cooperative and can help solve the problem. you have to respect their point

of view, too. it takes me back to when i talked about our constituencies. one of the most important constituencies is the employees. and union represents the employees. so you should respect it. just like you would if they weren't in the union, actually. >> thanks. >> thank you, senator carper. have you really studied the financial situation of the post office? are you pretty well versed in that? >> when you use the word really studied, i would say no. but i -- >> casually studied? >> well, more than casually. i did prepare for this. and so i would say i'm reasonably familiar with it. >> i have a business background. i find it rather confusing. did you find the preparation

you've had for this is relatively confusing or straightforward? >> both. when you look at the prefunding requirement of the retirement health benefits, that seems to me to be very straight forward. in fact, it's what essentially goes on is we put a debit against our earnings for the amount. we put it in our debit balance and then we don't pay. then it's like a joke. >> it's a debt that's owed to the federal government? it's not prefunded it's prefunded on the extent you have a liability from the post office to the federal government? it's just one of the liabilities? >> right. there is pension liabilities. there are all kinds of liabilities.

the prefunding of the retirement benefits and the connection to whether the employees have to use medicare seems to me that that should be an obvious and very easy fix. and in looking at the financial statement the prefunding is just very slightly smaller than the loss. the total loss of the system. so if the prefunding were eliminated, we wouldn't be losing -- well, we would still be losing money but not very much. >> but we still have this overhung of $100 billion of unfunded liability. i looked at the balance sheet as best i can reconstruct it and something close to gap versus other large bankruptcies and looks like a bankrupt to me. do you have a similar type of conclusion?

>> it's -- if you're just looking at a straight up and down look, it seems like we're bankrupt. but the liabilities are paid out over many, many years. this is a discounted value of the future liability. so bankruptcy, can you look at a balance sheet and say you're bankrupt or look at a cash flow statement and say you're bankrupt. cash flow statement, i don't believe we're bankrupt. and so the question is, by the way, this is not just a post office question. this is a question for private industry. this is a question for the government. it's particularly true in pension liabilities. we have enormous pension liabilities and the question is what are we going to do about it? i don't think we're bankrupt in the sense that i think we still have time to deal with it.

but we are bankrupt in the sense that if we don't deal with it, it's clear what the end is going to be. so it's a matter of definition of what your terms are. but it's clearly a serious problem and one that i won't say all -- i know giant eagle faces it. we are members of collective bargaining agreements that have employer joint pension funds where the funds are horribly underwater. they're on, i think it's called a red list. the question is what are you going to do about it? we clearly have to face up to the problem. >> the problem is, and senator carper led the way with this, trying to come to some political resolution of this which was not successful. you spoke about all the constraints on the post office. constraints because congress is trying to in some way or shape or form manage and direct what should be a, you know, what i think the goal was to make the

post office a more autonomous type of organization. but they don't have that autonomy. both operationally or financially. so american taxpayer in the end is still on the hook for this. if you read the constitution. i realize the post office is a basic power. article one, section eight, to establish post offices and post roads. do you think it's really a governmental imperative or constitutional imperative that no matter what, the post office is -- you know, we have to maintain a post office as opposed to we have to perform the constitutional duty of delivering mail? when delivery of mail is less and less vital and becomes obsolete because of technology, do we have to come up with different things for the post office to do just to have a post office even if it's way outside the mission of delivering mail?

>> that's a wonderful question which i'm not sure i know the answer to. i would say this. there's a big question within your question which is what is the definition of delivering the mail? and it doesn't say you have to deliver the mail two times a day, seven times a week. it says you have to deliver the mail. now does that mean every day? does it mean every other day? does it mean two times a day? the function is important. the question of how we define the function is also very important. so it seems to me that the answer to your question it would really have to define what it is we want to maintain. and general terms are not very helpful in doing that which is what i think causes the

controversy. >> i agree with you. we need to find what the post office should do, what is the constitutional power of it and we really need to ask ourselves a serious question with a bankrupt organization, do we need to maintain this organization at all cost and have it expand into different areas that just might compete with private sector companies with an implicit taxpayer guarantee with taxpayers on the hook for growing liabilities? i mean, i think these are very serious questions the board of governors is asking themselves and congress we have to ask ourselves the same questions. but i appreciate your answers. >> senator, can i just add that to that? i was -- this is the first time i've ever been in a hearing like this. this i've seen them on television. but i was fascinated by the questions of the admiral who was sitting here before me. and it was obvious to me you were all impressed and i was equally impressed with the answers he gave. one of the things i really liked

about the questions and answers was the willingness of the committee to have his back. and at least what appeared to be the desire on both sides, his side and the committee's side to cooperate on helping to solve the problem. my view of the post office is, the post office can't solve these problems itself. it needs you. it needs the congress. there needs to be a cooperative solution to the problem. that is obviously difficult because different people have different political views. i like to take the attitude there are no problems that are

unsolvable if you have put people with common objectives who are trying to solve. although i don't think it would be me who would be interacting with the committee. although maybe it would be. i think that cooperation of this committee and the post office is crucial. to solve these problems. >> i completely agree. coming from a manufacturer background, i solved a lot of problems. this is a process. it starts with the definition of the problem. defining what it is you're trying to accomplish. laying out the reality of the situation which is why i was asking you, you know, your understanding of the financial situation of the post office which, you know, trust me, the political environment gets all jumbled up. people don't really completely understand it. i'm having a hard time. again, i'm trained accountant. i've been in business a long time. i've looked at a lot of balance sheets and it's still confusing to me. i'm getting a little bit better handle. it starts with reality

situation then based on that, defining the problem and what exactly the achievable goal is. then you start setting strategies. we oftentimes bypass that process. i think that's what you're hearing in the earlier part of our committee hearing is we were really trying to get to what was definition of the problem? are we admitting we are having one? are we looking at this honestly? i appreciate the fact you have this business background. you're highly successful. i think you'll have the right type of mind. you're answering the questions from my stand point correctly what's the definition. but we have to ask the right questions. i appreciate the input and we absolutely want to cooperate with the board of governor and post master general. it's a big problem and has not been fixed. i have questions whether or not we can resolve this through political process because we haven't been able to do that in the past. i know senator carper is dedicated to this. he's done a lot of work on it.

i want to support his efforts in the future. >> thank you for what you said. what should our role be? i look back to abraham lincoln. i was once asked what is the role of government in our lives. he said the role of the government to do for the people what they cannot do for themselves. there is a constitutional stipulation we have a postal service. our forefathers said if we're going to have this experiment called the united states of america it might be helpful to communicate. it will be helpful for us to facilitate commerce. maybe we can help them find a role in this country. as you said in your business, over time the demand of your

customers have changed and your business has changed to meet those. i think the same is true with the postal service. some of the folks that we work with in order -- we're -- i think the congress is a neighborhood. we talk about one of my last trips down to honduras a place i hope to visit with him. we're trying to figure out why are these people coming up to the u.s. trying to get to our country from honduras and salvador and it's because they live difficult lives which we contribute to making more difficult. i asked a bunch of questions by the press there. one of the things i said you have in honduras, do you have home depots, they said we have them. i said we have them in america too. they're advertising in america

for years has been, you can do it. we can help. and i said to the folks in commerce, you can do it we can help. we can do this we can help with your alliance of prosperity they've adopted. and i think the same is true with the postal service. there is need for the service to be offered. fed ex ups they don't want to deliver packages to every door every day. the postal service is going to those doors and mail boxes. it's a nice piece of business for the post office. they can work out with a deal with ups. on the issue a lot of people keep coming back to, and it's the issue of unfunded liability

for retiry healthcare. and the question is is it real liability. i think it is. and my last year as governor we were on a meeting with -- not fed ex. meeting with the folks from moody's and fitch trying to get a aaa credit rating. we had never had a aaa rating. seven years we cut taxes we paid down our debt. strong employment numbers. we made the case my last year as governor for aaa credit rating. lo and behold all of them gave us all a's. we still have it. they said to us, they said you have a liability that you're not addressing, i said what is that? and they said that we used to have -- when i became state treasurer, we had no money in

our pension fund for our retirees none. we used to sell revenue anticipation notes to raise money to be able to make pension checks every month. we fixed that. fully funded and advertised in ten years. took care of it. they said you have all this big liability for healthcare and you've not set aside any money. they said you need to do something about that. they said got to address this. we began to. and they still continue to try to do that. in order to get president bush to sign into law postal legislation. we had to not only recognize that liability but they had to pay it off over like ten years. which is i don't know of any company in america that has been asked to do something that aggressive aggressively. when you look at the liability, the money that the -- the money that postal service pays into medicare trust fund is greater, i believe, than any other

employer in america. they pay more money into medicare trust fund than any other employer. they don't get full value for what they pay. and most postal retirees, 65 and over sign up for part a. majority sign up for part b. i think almost none sign up for medicare part d. the prescription drug program. so the postal service is by overpaying into medicare, they're subsidizing competitors so they can underpay. my wife retired from du pont when she turned 65. she still only looks 45. folks at med quar reached out to her and said, martha, we love you. by the way, you're going to have to sign up for medicare part a and b and d. we'll provide wraparound coverage for you. not just du pont did that. all kinds of employers in the country do that when they retire at 65. the postal service can't do that. that is the most important thing we can do. is to fix this issue.

we should still have the liability, it must be met. we ought to level the playing field. that's part of our enabling responsibility. let me ask a question that after i've given that diatribe there, let me ask a question about the -- while the postal service continues to try and reduce costs while also maintaining fast and reliable service and growing its business -- here's the question, how would you, as a member of the board of governors, try to find the right balance on this challenge? maintaining fast and reliable service and growing your business? a little bit like the question we asked tsa admiral. >> i think it's the responsibility of all businesses to keep their costs as low as possible. i also have a very strong belief that you cannot cut costs and

make yourself successful in the long run. you have to grow revenue. so the concept that we can cut our costs to become profitable, while i believe it is important to cut costs, to me it's a doomed strategy. you need to be able to look at a growing business to be successful. and if you can't do that, then cutting costs works in the short run. but you can only cetut them so far. and what inevidently happens it cuts costs and sales go down even more. so my view is absolutely pay attention to costs be as efficient as you can. but it is not a successful

business strategy in and of itself. you have to have a strategy that grows. >> one of the things we talked about yesterday on the phone was one >> one of the things mr. shapira and i talked about on the phone was one of the three round tables that we talked about, and we invited people to come in, from the post office and other walks of life from the post office and we said what are your ideas and i was delighted to hear how much creative ideas there are and this was just scratching the surface. it can't just be cut, cut, cut. i think they have reduced by half of the part-time employees and they reduced by half and -- by a third the number of full time post offices around the country and down right-sizing and now there are ways to help them in pays like the preretirement pension to make it

fair. but we have some great opportunities and we're going to have to fun fixing this and i look forward to doing that. and one of the best things i learned in life was from my failures and not so much from my successes. and we've all had failures. and when you look at the dissolution and the bankruptcy of your company's former subsidiary, was it pharmore -- could you give us onnia of what you -- idea of what you learned from that that might be applicable from here. >> i learned so much from that it would take me an hour. >> well, we don't have that long. >> well, first place, i agree with you. i've come to the conclusion, if

one is looking at success, however one might define it, that the biggest successes come from having failures and then recovering from them. and one of the things i learned from the farmor debacle, can't call it anything other than that -- was that you can recover. you have to keep your eye on the ball. you have to fight your way out of any problem you are and you have to take the lessons that you learn from that and apply them as you go forward in the future. so just as an example, farmor's failure which not only bankrupted farmor but came close to bankrupting giant eagle as well caused giant eagle to become a much more focused on the bottom line cutting assets

and cutting debt and being a much more secure and safe company. so i don't have any doubt that having gone through farmor, that that changed the way we managed giant eagle. the second thing i learned, which as an accountant, senator, you will know this, one of the things you're always looking for is fraud. and every accountant i've ever talked to, when you talk about fraud, they say if you get a conspiracy of just a few key people, it is very hard to detect. and that is actually what happened at farmor. the whole conspiracy was four people. and so one of the things that i have become more vigilant about since then is looking at the

financial statements, looking at how they pulled off the fraud at farmor, and asking, is there anything that is going on in our current company that is something like that? and i've taken that and applied it in a larger sense, whenever i am, as a director or a chief executive. whenever something goes wrong in a company that is like ours, the first thing i do is i call in the top executives and i say, first thing is thank god is wasn't us, and second place, let's find out what happened and why it happened and are we vulnerable to that. the last thing i learned -- well i learned lots of things, but i've often wondered to myself how did i survive that crisis. i was the chief executive. it was a natural question to

ask. did he know? should he have known, et cetera? and i know myself, when you read about one of the frauds, the first thing everybody thinks is the chief executive must have known. i didn't know. i was the one that discovered the fraud, actually. but what i learned is the most important thing is to really be totally honest and open all of the time. and to make sure that when there is bad news, that you don't make any effort to hide it and that it comes from you. and i think taking that and applying it to the situation at the post office, there is a lot of bad news at the post office. and i think we ought to recognize the bad news and we ought to try and figure out -- i mean, you're never going to deal

with it unless you recognize it and then we ought to come up with plans to say this situation is bad, that situation is bad, how are we going to deal with it? and to me, if you identify what the problems are, no matter what people's going in assumptions are, if you can get them to understand the problems, you can generally get them to agree on solutions, assuming there are solutions. but the solutions are often very tough. and require changes that a lot of people don't want to make. so if you want to accomplish those kinds of changes, people have to have a shared understanding of the problem. >> thank you very much mr. --

mr. president and general, we've been blessed by the testimony of two nominees that i think are exceptional and i close where i start off and we're lucky that we're willing to do this and cindy is willing to give you up to seven the people of our country. and last thing to say, the legislation that dr. coburn and i worked on focused on innovation and foster and encourage innovation and the other four people nominated as presidents to serve a couple of them are good on the innovative front as well and i hope the legislation that we pass foster innovation and that we'll have a chance to work with you on that and frankly the rest of us. i went way over my time. thank you for your patience, mr. chairman. >> thank you, senator carper.

mr. shapira, i'll tell you one thing right off the bat, the solutions for the post office and the fiscal solutions for this country will not be easy. so i want to thank you for again coming here, for your testimony, your willingness to serve. thank you for being an example of a great american. someone serving your community and your state and your nation by doing what americans do. aspiring, building something, building something successfully, with some adversity. unfortunately in today's society we too often demonize and demo god people and we need to celebrate success and i celebrate it with you and i want to thank your wife for being by your side here in this service. so again, look forward to moving this nomination through as quickly as possible so we can get the board of governors operating under regular order. they have filed responses to bio graphical and answered questions and had financial statements reviewed.

without objection, this information and my written opening statement will be immediate part of the hearing record on file and available for public inspections at the community offices. this hearing will remain open until tomorrow june 11th, '12:00 p.m. for submission of statements and questions for the record. this hearing is adjourned. >> senator, thank you very much. >> you're welcome. .

tonight on c-span3, fcc chair tom wheeler talked about broadband and rig lating internet service providers. and then legal analyst discuss police body cameras and civil rights. the missing e-mails of former irs employee lois lerner and a discussion about regulating global financial markets. the federal communications commission announced they will regulate internet providers much like phone companies. at the brookings institution today the head of the fcc tom

wheeler discussed that decision and proposed network neutrality rules which would require these isps to treat all internet content the same. this is just over an hour. [ inaudible ]. welcome to the forum on the future of broadband. broadband is a major driver of economic growth and civic engagement through the connectivity that it provides it makes it possible for consumers, businesses and governments to communicate with one another and engage in a wide variety of activities. every day we're seeing new applications in education, health care, energy communications and transportation among other things. the internet of things is enabling the growth of sensors, remote devices and machine-to-machine communications. in this situation it is final that we have fast universal and open broadband.

last week the federal communications commission approved a plan to subsidize broadband internet access for underserved americans through the reform of the lifeline program. there's hope we can close to digital divide and bring the benefits of technology to all people. today we are very pleased to welcome tom wheeler to brookings. tom, as you know, is the chairman of the federal communications commission. for over three decades he's been involved with telecommunications and technology. as a entrepreneur, he started a number of different companies offering innovative cable, wireless and video communications services. prior to joining the fcc chairman wheeler was a managing director of core capital partners investing in early stage ip-based companies. he's author of a new book we highly recommend on abraham lincoln and the tell graphic one of the norg nall technologies that helped power

new areas of communication and commerce. mr. wheeler will differ a keynote speech that will be followed by a discussion moderated by blair levin. blair is a non-resident senior fell lowe in the metropolitan policy program at brookings and currently serves as the executive of director of gig-you. that's a consortium of leading universities connecting through next generation networks. blair also served as an adviser to a variety of non-profit organizations. many of you know he was one of the major architects of the u.s. national broadband plan that has helped put america on the path to a digital economy. we will be archiving this event. anyone who wishes to view it after today will have an opportunity to do so through the brookings.edu website. we also have a twitter feed set up #fcclive.

any of you that wish to post comments during the forum are welcome to do so. please join me in welcoming tom wheel tore the brookings institution. >> thank you very much darrell and to you and rob for hosting this this. it's great to be here at brookings. i was saying to darrell and rob, one of the really significant functions this institution provides is to become a place where policy makers and the public can interact on important issues. and so i'm really grateful to you for hosting this today. maybe we ought to start out today with a little broadband scripture. in the beginning, there was

blair levin and the national broadband plan. the excellent work of the national broadband plan called our attention to the opportunities and challenges of broadband, the kind of work that is presently being carried on by the president's broadband opportunity council continues that kind of forward looking effort. and as blair told us in the first line of the national broadband plan, broadband is the defining network of the 21st century. broadband networks facilitate

today's economy and today's social activity. but even more important than what they're doing now, what broadband is doing now is what it is igniting in terms of new possibilities for the future. thanks to broadband, the often -- the unimaginable of today becomes the reality of tomorrow. we only have to look at a couple of facts that we now accept as common to see that. the largest taxi cab company has

no cars. the largest overnight stay company doesn't own any hotels. what they do have is easy access to broadband which enables them to assemble resources in new ways to present them to the public in new ways. and to do define an economic future that is task based as opposed to production based prebroadband activity.

we should not overlook as well that broadband is also the igniter of more broadband. as the success of broadband services increases, the demand for broadband, it also increases the incentive for competitive broadband. and it's because of this two pronged impact that our policy is to expand broadband and to assure that our broadband resources are fully utilized. that means that we want to expand geographically into areas where it doesn't exist and it means we want broadband to be affordable for and adopted by all of our citizens, and it means we want broadband to be open and free of any artificial inhibitions on its use.

so here's the punch line. it's pedal to the medal on broadband policy for consumers and competitors. expanding broadband requires better network technology. it requires more competition. it requires that companies continue to invest to satisfy consumer demands for bigger, better, and more broadband. it requires that broadband providers not be able to limit competition in broadband-dependent markets like apps and services and it requires the limitations on

consumer demand whether on the basis of geography or economic circumstances or disability be removed. simply put, broadband should be available to everyone everywhere. but my message today is simple. the job of the fcc is to exercise it's authority with both determination and discretion. so that technology, competition, investment and consumer empowerment are able to work together to reach our nation's broadband goals. as you probably know i think history matters a lot. so let's consider some history. networks have been a defining

economic force throughout history. and the victory laurels have gone to those who embraced the new networks. the exciting part about our time is while broadband and the internet may be the most important networks in history, their effects have not yet been the most significant in history. the simultaneous emergence of the mid 19th century railroad and telegraph networks reshaped the economy and society of that time more than the internet and all that it has produced has shaped ours, thus far.

the key phrase in that sentence of course is thus far. my conviction is we are on the cusp of when our broadband networks will prove even more transformative than the networks of the 19th century. and that belief is based upon this new fact. broadband networks are new in a new way. and that new way is the evolution from hardware based networks to ones that are software based. with a result that changes the nature of networks.

the effectiveness is the circle where new applications are enabled by broadband which drives the next generation of applications which drives the next generation of broadband in an ever continuing cycle. there are multiple benefits of the network's evolution from hardware to software. first, we're moving from networks with limited functions in a world in which software expands network capabilities and makes them available to non-traditional applications. as one person recently put it when describing this to me, networks are moving from a sip world to an api world. the result will unleash innovation in both networks and

their applications. another impact of software replacing hardware is that the cost of expanding network capabilities decreases. in the old days it was necessary to add a physical circuit if you wanted to increase capacity. today it's often just a matter of adding computing power. finally, the evolution to software-defined networks with virtualized components, means that network operating expenses decrease. verizon reports the replacement of central office physical switching systems with software reduces their real estate costs

by up to 80%. what used to require floors and floors of switches can now be done with a few racks of computers for a fraction of the space and the price. the same holds true of energy costs. powering a few computers can save up to 60% of costs as compared with powering endless switches. with all of these advantages of software defined networks, the expansion of network capabilities. the economies available in expanding capacity. and the reduction in operating costs. it's no wonder that at&t has said that by 2015, 75% of their

network will be controlled by software. but this is not just about reducing costs and increasing functionality for incumbents. the effects of software-based networks are also good for consumers and competitors because they enable the local exchange carriers to become more fulsome competitors to cable operator's dominant position in high speed broadband. thank you gordon moore. 50 years ago there was moore's law. that the power of microchips would double and thus computing costs decline about every two

years. the compound doubling every couple of years has meant that the 60 transistors that were on the microchip when moore propounded that law are now over a billion ha the cost has remained relatively stable. we tend to think of moore's law in terms of,000 smart phone in our pocket or purse now has as much computing power as a multimillion dollar mainframe, or super computer of a few decades ago. but moore's law is also what is driving the revolution in network economics. the computing power magnifies the capacity of network connections. for optical fibers, of course the result is optimal, but even

for band width constrained copper networks low cost computing power allows transmissions to be broken into parts and sent over different strands to be reassembled at the other end, increasing through put. the same concept called carrier aggregation is increasing the throughput of wireless networks through increased processing power. that the nature of the network is changing right under our noses is a significant data point for those of us in the oversight business. as the cost of delivering broadband goes down the opportunity for broadband expansion including competitive competitive broadband expansion and broadband innovations goes up.

this means that we're not going to let imaginary concerns about investment incentives and the omnipresent bogeyman of so-called utility regulation cause us to let up on policies that encourage fast fair and open broadband. since we come together today on the heels of the d.c. circuit's decision rejecting request to stay the open internet order let's begin by addressing the relationship between broadband network openness and investment.

fortunately there is a disconnect between what is said in washington advocacy and what happens in real life. while a few big dogs are threatening to starve investment, others are stepping up. many have publicly said that title ii regulation does not discourage investment. in recent transactions both announced and rumored point to the same conclusion. of course, the post open internet announcements by at&t, bright house, centurylink, cincinnati bell comcast cox

cable, time warner cable about their plans to expand to expand broadband service certainly speak for themselves. there are a group who feel that the move from analog to digital transmission should be their ticket to escape what i've called the network compact. those responsibilities that have always governed the relationship between those who build and operate networks and those who use them access connection, consumer protection, public safety, national security. here is a simple statement of fact. broadband is the most powerful and pervasive network on the planet, and giving credit where credit is due that's a line i first heard from blair levine.

it's the most pervasive and powerful platform on the planet. suggestions that that kind of flat form and pervasiveness and that kind of network, it exists without oversight, are unthinkable. but the kinds of oversight designed by the open internet order are a new regulatory model designed for these new network times. i keep describing this oversight as a referee on the field who can throw the flag.

in our implementation, i plan to adhere to the wisdom that the best referees do not make themselves part of the game unnecessarily. as a proud disciple of woody hayes and urban meyer, i believe the players should be allowed to play. referees make sure the game is played fairly and they don't call the plays. it will be up to the competitors, for instance, to advocate for themselves in negotiations with other competitors, and our job is not to substitute the fcc for what should be hard fought negotiation and tough competition. it's up to the players to compete hard against their opponents, but make no mistake

about it, if they violate the rules, we'll blow the whistle. we're arbiters of the last resort and not the first resort, and we will not micromanage like in the pre-broadband days, and this means no network unbundling and no tariffs, in short, none of this bogeyman of utility regulation. in that environment at a time when consumers are demanding better broadband, why would a rational broadband provider not make the investment to give it to them? the answer, of course, is only if competition is lacking, only if consumer demand is

artificially limited. companies invest to win the race of competition if there is a race. as we push onward into the broadband future, our challenge continues to be assuring but the preconditions for broadband ignition are as widespread as possible, and the best tools for accomplishing that are competition and consumer demand. so let's be clear. we're not going to let up on protecting and promoting broadband competition. as i made plain on innumerable occasions, opportunities for improvements in quality and reductions in costs will be

pursued and that the benefits will be shared with consumers. suffice it to say, continuing to encourage and protect a competitive marketplace is a foundational requirement of our responsibilities at the fcc. our skepticism about the competitive impact of the proposed sprint/t-mobile merger a year ago, and the recently abandoned comcast and time warner cable merger are evidence that we take seriously our responsibility to protect competition, but protecting competition is only half of the equation. our job is to promote competition as well. we know broadband competition works.

just look at cities like kansas city and austin and lafayette and atlanta and chattanooga. the arrival of even one well-equipped broadband competitor causes significant competitive response from incumbent operators with qualitative improvements benefiting consumers of incumbent and insurgent companies alike. the commission will continue to look for ways to promote broadband competition. one way is to lower some of the costs of extending broadband facilities. we dealt with the inability to get access to conduits in the internet order, and we are taking a effort to better align the cost of using poles and conduits. perhaps the fcc's most tangible role in growing broadband is to

allocate and make available both licensed and unlicensed spectrum necessary for competitive wireless broadband. our use of auctions, a competitive device in their own right, for assigning license spectrum is well known and in most quarters well celebrated. making available spectrum for unlicensed use draws less public attention, but as the remarkable success of wi-fi demonstrates, it is literally an indispensable element in the provision of broadband today. and if more indispensable is a permissible concept, it will be more indispensable to the broadband of tomorrow. i recently spoke to chairman

walden under whose leadership the incentive law was created. we are of one mind. there will be an incentive auction in the first quarter of 2016. when i came onboard at the agency, the question of whether the broadcasters would show up at the incentive auction was a matter of debate. i am quite encouraged from what we have been hearing from broadcasters. while we are talking about spectrum, we should not overlook the role it will play in determining who is the international leader in 5g broadband networks. this nation is the international

leader in 4g lte, as a result of the availability of spectrum to become a home for lte. we do not intend for the united states to lose the pole position in the international wireless broadband race. we will maintain that leadership in the same way we obtained the leadership in 4g. first through being out front in allocating appropriate spectrum and second, by allowing carriers to deploy 5g service in any frequency band they find suitable including the 600 megahertz in the upcoming auction. another way to stimulate broadband is to increase opportunities for additional competition in up stream markets. that's why we proposed a rule to give over-the-top video i don't

vieders the ability to choose the same business model as cable and satellite provide wers the same program access rights. we expect to move that to a report in order this fall. there is a new line of ott providers queuing up to expand video choice and increase consumer demand for broadband. demand for broadband is also affected by consumer's perceptions about the potential non-monetary costs of using it. we committed in the open internet order to address issues of privacy implicated by consumer's use of the internet. we will begin that process with a notice of proposed rule making in the autumn. finally, let me be clear, we should not and will not let up on our policies to make broadband more available.

converting universal service programs from their narrow band origins to broadband is our most important admissions. we have built on that by deploying $10 billion over six years to ten rural price cap carriers to provide broadband service to their customers and we have begun a program to test nontraditional means of delivering broadband in rural areas. i have told senator thune it's my goal to similarly reform the broadband support program for small rate of return carriers. commissioner o'reilly has played a significant role in this effort, including putting forth a set of principles. we are working with the affected carriers to explore the best

approach. we had been in search of a consensus proposal from the rate of return carriers that would help us meet the policy objectives that the commission unanimously adopted in april of 2014. unfortunately, while i appreciate the carriers' willingness to engage, if we are to keep on schedule, time is not our friend. absent a consensus from the parties involved, we will put forth our own proposal. just as we need to make sure that all parts of our country have broadband, we need to make sure all our citizens are able to use it. last year we modernized and expanded our efforts to address the need of the schools and libraries.

learning isn't confined to the classroom. as the commissioner pointed out even those students can now connect at school, too many experience a homework gap when they cannot get online at home. a recent pew research study found that 5 million students -- that's nearly 20% of all students between 6 and 17 -- do not have high speed internet service at home. it is simply unacceptable in an era where learning opportunities have never been richer or more available that these students have to go to mcdonald's or some other wi-fi equipped location to do their assignments.

our obligations and opportunities to extract more value from broadband do not end with our children. another pew study found half of americans that rely on smart phones for broadband access have had to cancel their mobile subscriptions because of financial hardship. commissioner clyburn has been championing a program, and she wants to rid the components to get rid of waste, fraud and abuse and abuse, but to refocus to broadband. we will learn from that notice and then move on to reform and revitalize. broadband service -- broadband access is also very important to another group of americans,

those who live with physical and intellectual challenges. although our efforts do not receive headlines as much as some of our other activities, the application of information technology to attack the needs of americans with disabilities will be a priority as long as i am chairman. we are, for instance, the first federal agency to harness broadband to allow those who use american sign language to communicate directly with the fcc using online video, a broadband effect. several months ago we began urging all federal agencies to have an online video asl capability. to aid in this, the fcc is building a web-based api

platform that will allow any company or agency to plug in and utilize the power of broadband to do a simple thing, help hearing impaired americans communicate. the 25th anniversary of the americans with disabilities act is coming up next month. this is a great opportunity for all federal agencies to take the simple but significant step of harnessing online video for those that speak with their hands and hear with their eyes. as i noted at the beginning of this presentation, we are closer to the beginning of the broadband network's promise than the end. the broadband-related agenda i described is key to assuring that the technology's remarkable promise will be realized.

if we succeed in accomplishing this agenda, and i am determined that we will, new generations of american innovators will be able to combine their technical abilities and entrepreneurial instincts with broadband's capabilities to produce great things, things that today we can't even begin to imagine. thank you very much. [ applause ] i will speak loudly while we are getting the microphone up.

i have to say i always thought of re-writing genisis. you have to have a better biblical sense. >> that's sort of the first half of the story. >> i want to talk about your speech, but before i do that, i want to talk about your book. >> hold it higher, will you? >> yeah, available on amazon, and you can never go bad. but i do want to point out that you have been an opponent of prioritization, but in this book where you say lincoln was our most technologically sophisticated president, the only one to get a patten, you reveal he gave the associated press a priority in getting to the telegraph in order to get their stories out because they

were generally favorable to lincoln, so my question to you, sir, is if prioritization was good enough for lincoln, why is it not good enough for chairman wheeler? >> well, there you go again. >> i should note -- i covered the reading -- >> are you only this far through? >> no, it's a reference point. >> it's a really good point, but here is what you have missed, however. the telegraph was the original open network. there was no prioritization in it. a telegram was handled in the order in which it was received and what you are referencing is what amounted to a form of censorship that the lincoln administration engaged in during the course of the war, and i

would say that the realities of a wartime experience versus the kind of situation that would exist today is a little different, number one, but number two, always remember, the telegraph, the first electronic network was an open network. >> so to be clear, you are opposed to prioritization but you are in favor of censorship? yours words not mine. >> always fun to sit down with you, blair, and we can talk more about his use of the ap but we won't. >> we won't. we'll move on. if you quote me on that, you have to put a smiley face. i want to tie together the speech you gave in 1987. one of the things we are trying

to address on the broadband plan is how do we move from having isp business models based on the models of scarce bandwidth, and an interesting by the way, paid prioritization, there is no business model for it. you talked about it a bit, but when i hear you say competition, what i hear is deployment, we need without some new deployment of abundant networks, there won't be competition. am i understanding that right? >> yes. >> and i think you said government has an obligation to lower the costs of the inputs. i want to talk about wireless

and on the wireless side, spectrum is the key. i would say this administration and you have done a great job, you know, when we arrive with the broadband plan there was no spectrum and you ran the least expensive in terms of money, but applying spectrum it was not there before the aws 3 spectrum, and larry strickland has played a role in that. are there other things you can do in your time to create new spectrum? i just might note, ctia released a study this week that pointed out that we got our demand site estimates rights, which astonishes me -- i thought we were making them up, but turns

out the guys that did the actual study were good, and still with all that you have done we are still behind. are there other things that can be done? >> first of all, it's an activity that is always underway to say where can you find new spectrum? but the reality, as mark twain said about real estate, they aren't making it anymore. so there is a new paradigm that has to develop in the marketplace and the regulatory environment about spectrum that i think is based on two realities. first is that everything in the word is economic, okay? people who say i'll never part with my spectrum, if you can help them see the economic value in parting with that or having a

different approach to their use of the spectrum it often can let the scales fall from their eyes. that's what auctions do and that's what the incentive auction is doing. the second paradigm shift is the concept of sharing. spectrum used to be allocated on the basis that this is the sign of the analog wave form. so we have to have a block of spectrum that will allow that to operate and we have to have guard bands on the side to make sure no other wave form gets -- interferes with that, and in a digital world that goes by the way side and sharing becomes much more possible. and one of the things i believe that will come out of the spectrum auction is increased channel sharing, where broadcasters will say i am going to take this 6 megahertz block,

which is the size historically there for analog purposes but which can have five or six different digital channels in it and we'll share those. i think we are moving from a concept of its mine to i've got to share it, and that's going to require some transformation in thinking. also we are moving to an environment where the economic issues can be -- or the economic forces can help decide these kinds of issues. >> with the multi-pronged approach, some sharing and some licensed and some unlicensed and all of those things, and one of the things that i will find in policy debates in washington, people see things in black and white, and you will say we need a lot more sharing and a lot more for unlicensed.

>> the fact is you will have to be sharing inside licensed and inside unlicensed as well. the procedures pn that we put out on the auction yesterday, the day before, laid out how in some instances it is ridiculous to say that in this big licensed area, because we have got some interference over in this corner that everything else should not be available. that's a geographic sharing concept. then we have got sharing, as i said, inside the same band. i think sharing is both a licensed and an unlicensed kind of activity and opens up opportunities in both. >> they are talking about the wired world and you talked about it and indeed in the last 12 months there have been a number

of promising announcements, and one of the things we talked about was to lower the costs of key inputs like you were talking about with poles and remove barriers at the state and federal and local level, and a lot of cities are changing the way they do business, and you at the commission have taken away one of the key state barriers which is laws preempting municipalities and that's obviously in court. i want to talk about the federal level and what the fcc might be doing and you mentioned at the council, the department of agriculture and department of commerce are cochairing for kind of an ongoing multi-agency task force to make sure there are not barriers. how do you look at that process and what are your hopes for that and what are you planning to do during your time? >> i think the broadband opportunity council is a

structure that can only be done at the highest levels of government where everybody has to look at what are the things in my policies that have an impact on broadband. there is obvious things. can we have a dig-once policy with highways? can we lay fiber when roads are opened up for epa sewer grants, and multi-al other kinds of things. so the fact that the president has convened this kind of a group to say okay, we're going to get introspective in our agencies and say what is it that not because of malice after forethoughtof /* of forethought but we never thought about it impact is really important. i went through the list. there are, you know, we're dealing with poles and we are

expanding lifeline. the privacy issue, which i think probably we just had a sentence or two in there about it, it's integral to the growth of broadband. if consumers worry that they don't have sufficient privacy online, why are they going to use online? so we need to deal with that. there is a generic issue from an analog tm-based environment to an ip environment. we want that to happen. so many of the things that we are going to be dealing with is how do you encourage that transition, but at the same point in time how do you make sure that you don't decouple it

with the societal protections that always existed in terms of our relationship with networks? so that becomes a huge component of where we are going. >> yeah. i want to switch topics from the networks to the adoption side and start by just noting an interesting announcement by the markle foundation by the way of upgrading skills of american workers as well as helping them find jobs by using linkedin, and we talked about it in chapter 13. what you said about education doesn't just remain in the classroom. part of it is to make sure we get broadband -- that everybody gets access to broadband where they live. and this, of course, brings up the lifeline proceeding that you are now looking at. one of the things that was curious to me was the press focused on the political disagreements, but as i read

beneath them, there did seem to be three core principles that i think there was actually a consensus about. number one, broadband is the core communications product service, and when they talk about universal service, it's going to be broadband. secondly, the problems of waste, fraud and abuse really come from the fact that we have carriers do the certification, and i am not blaming carriers but that process leads to that, and there are many ways -- we need to take that certification responsibility away from the carriers. the third is we need to use market forces more effectively to increase the value that the participants get. am i seeing that wrong? there was a lot of focus on the partisan disagreement, but on those three principles i thought there was actually kind of an agreement. >> i think that's correct. it's a matter of degree, but i think you have outlined the three corners, if you will, the three legs of the stool.

>> i might note ron klain, who i know you know and has many jobs in government, and i am going to ask one more question and then we will open it up for questions from the answers and we are going to run about five minutes late or over our original time. i want to start by saying, you are the first non-lawyer chairman in quite a while at the fcc so in particular i want to congratulate you on two major victories in the courts the other day on both -- >> i wrote them all personally. >> yeah, i know. i was very impressed. you were ready to argue the case -- >> exactly, uh-huh. >> also on the auctions. but i want you -- i always tell you while you are in the job, you can't play the historian but you have to be a decision-maker and it's a different thing. when i think back on my first

stint at the fcc, there were a couple decisions that got no controversy and they were largely ignored but in the fullness of time we saw them as being far more important. one was speeding up the digital television transition, and by virtue of getting that spectrum out in 12 years rather than 30 years which was the original plan, that created the foundation for 4g, and then terminating data, and that's a longer story, but those things turned out to be incredibly important. in some ways i think you have done an interesting job of creating -- eliminating and terminating barriers for over the top video that i think is now fully appreciated.

as a historian, if you go forward ten years and look back at your time what do you think willñxuó be the mostunder appreciated decisions today or ones that we're not looking at that ten years from now, again, in the fullness of time, will say they were really important? >> i don't know if under -- most under appreciated, but the ones -- attention that is not being paid to right now, as i indicated in the -- in my remarks, i feel -- we feel very strongly about the incredible opportunity that technology offers to help americans with disabilities solve the challenges that they have, and we have -- the first meeting i had at the commission with any outside group, i asked all the disabled groups to come in and sit down and said let's talk about how we apply technology, solving the challenges of

americans with disabilities, and we will keep doing that. the idea -- we've been through closed captioning and we have been through text to 911, and we have been a program that puts equipment out for people that cannot hear or see but can still use broadband. i talked about this open platform that we are going to have so that people can communicate, and we will keep pressing that agenda because i just basically think it comes down to this, if we are fortunate to exist in a time when technology can be applied to historical barriers that people have never been able to overcome before and we don't seize that and chase that as hard as possible, then shame on us.

i think that's the thing -- i hope that's the thing we are doing that nobody is really paying attention to but will have a lasting effect. >> thank you, certainly, for that. with that, let me open it up to questions from the audience. >> i wanted to ask, how do you envision the overbuilding playing out and how do you envision -- how do you see promoting that given the fact that it's not really cost effective at this point? >> i think what i was saying is that economics are changing, which i think is encouraging for those that believe in multifacility-based competitors. i think there is competition that will increase, and that's one of the reasons why spectrum

and 5g and everything is so important. i think we just cannot accept the reality that, well, there is only going to be one provider and we have to do everything possible to make sure that we are creating an environment for multiple providers. >> the woman in back. not that far back, sorry. >> not that far back. >> sharon boyce. i have been trying to understand this issue for average people because there has been such lobbying about censorship issues and all the different issues, i guess it's propaganda by certain lobbyist, but if you could explain it in one paragraph or a sentence that maybe your mother or an 8-year-old grandchild that would know more about tech than i do actually, but if you could explain it quickly to the average people what we are fighting for with the broadband issue, thank you. >> i think it's a simple

question that because broadband is the definitive network of the 21st century we want to make sure it's thoroughly available, that it's fast and growing in terms of its continual increase and that it's open, and open means not only open to those that want to pass through it, but open to those that want to get access to it so that they can have the benefit of what passes through it. >> right there. >> thank you for coming -- >> can you speak into the mic so people can hear you. >> you talked about how licensed and unlicensed are peanut butter and jelly and not oil and vinegar. >> let me remember that line.

>> i believe that is your line. >> i thought it was chocolate and peanut butter. >> the licensed spectrum holders need to understand they have to accept more tolerance on interference. you have been chairman for about 20 months and you mentioned the oil and vinegar tolerance when you were chairman of the tac. can you outline some or mention some of the success stories you have had of convincing licensed users of sharing that spectrum, and do you have new initiatives on the existing spectrum out there now? >> thank you, and good question. it goes back in part to the question that blair asked a