book tv. >> joining thus week on the communicate tors is jeff gardner who has a couple of titles. he's chairman of us telecom and c.e.o. of the wind stream corporation. tell us what us telecom is and who you represent. >> we represent the telephone companies in the united states from the biggest to the smaller. we try to get together as a group and put together ideas so we can take care of our consumers in a better way. >> when you talk about the

small telephone companies how many are there in the united states now? >> there are thousands of telephone companies in the united states still. there's been plenty of consolidation but there are still many companies. from verizon and our co-ops in the association today. so still many different business issues as a part of that. we all try to work together to solve common issues. that's what the whole purpose of the association is. >> we want to get into some of those policy issues in just a minute but what is wind stream? >> wind stream is a wonderful company. i may be buy ased in that review. we are in the triple play if you will, voice brond band, we are rural. we have stretch from new mexico all the way to up state new york serving about 3 million customers. we're in some very rural

markets. some in the state of texas the average access lines per square mile is 8. very different than being an urban telephone company and we've done a good job getting these services to those customers. and we're a story of two businesses and we're also focused on the enterprise segment where we're selling to medium and small businesses everything from cloud computer to broad band and voice. >> who are some of your competitors and who are some of your collaborate tors? >> we are complicated because many of our friend are camp tors. we compete with the cable companies and wireless companies. those would be our principle competitors. >> do you ever collaborate with these companies? >> all the time. today i'm going to meet with

at&t and other companies like them we work together and compete against each other but we also work together to provide services to consumers in many ways as well. >> here to help us explore some of the policy issues is from broomberg. >> good to see you. >> one policy initiative at the federal communications commission that has affected your company and other qups is reform. and a year ago this month the f.c.c. put forth a plan to convert a $4.5 billion subsidy naundhah focused on helping companies pay for the cost of providing rural telephone service and they've converted this fund into a broad band subsidy fund. so has the f.c.c. achieved its

goals? >> there were two parts of that. huge changes in terms of carrier composition the way in which we pay one another and there needed to be a great deal of clarification tharned issue. and then the second part of that and we've made a lot of progress. we've made a lot of progress. in terms of funding we got it right. in terms of the focus to change away from voice, consumers place much less in voice and more in the broad band so i think the f.c.c. and cable companies we have that right. we need to get more brond band into rural america. so i think we've got it right for the most part. the challenge has been as we look through those, those have pretty significant financial consequences to some of the companies involved and the idea that was these would be coins

dent. that the reform would take place at the same time as vune versele funding and i think we're blind on the universal service funding side. we've got it right on brond band n. large part trying to make money available to carriers to broad band out to consumers who can't get it today but there's much work that needs to be done. and unfortunately it's going to be behind the intercarrier compensation piece. so that's what i would say we have to get right. the f.c.c. is working hard on it and i think we have to be committed to work hard and get this done fast. because one of the fundamental concernses about our members at united states telephone association we do it in a way we maintain the stability of our companies and have you to deal with both these

complicated issues at the time. >> this reform is one of the many initiatives to get broad band into rural areas right? >> yes, tess it is. and i'm very prout of our company first of all, wind stream, even though we're in rural markets, i mentioned earlier 93% of our customers can get broad band today. that's an incredible amount given the density in our marketplace. in terms of getting to that last 7% is very difficult. it's uneconomic. it's going to involve public private partnership to make that happen and that's the real challenge. >> you talked about the 93%. have you participated t in the broad band act funds and how have they increased that percentage? >> we were a part pant in a small way. we're a price cap company as

they call very ryeson and at&t. and they knew to come one a new 340dle would take some time. so they set aside $300 million a year annually to fund investment in rural america while we worked through this model. and wind stream was able to take advantage of $60 million of that. the part we got wrong was setting a limit at 775 so unless you could add a customer for $775 you wouldn't take the money. in the case of wind stream where we had built in our networks with private money, we were unable to take -- i think we took 1% of that $60 million. we have the policy right.

we've got $300 million this year and next year but we're going to be able to use very little of that. so we've filed a waiver to the f.c.c. to think about that in a different way. >> what is their thinking on that? >> they filed in our favor which is let's look at the fact that 83% of those unserved customers today are served by mid sized companies like wind stream and the fact we've made a lot of investments. we've made those low hanging fruit kind of investments. the people that we need to get today are in sparsely populated areas and it will require much more investment today. so recently we've been in dialogue with the f.c.c. on that. they are listening to us and setting us out to rule making. i just hope it happens fast enough. if you look at this and this is how we're looking ate at it

from the consumer perspective, let's get the policy right but get broad band to these consumers as quickly as possible. i get letters every day who are dying to have a broad band alternative. you can image living in the middle of nor where w no broad band. some people can't get it today. >> aside from haste tng deployment of broad band that the f.c.c. has been focusing on, they have nound areas where broad band and internet access is available some americans are not subscribing, are you finding that to be the case? >> i think that's the real issue right. in some cases there is affidavittability. we worked very hard on that in terms of devicing price plans

so people can get low end services. but it is a reality. there are people who are served but can't afford it. so we've been working with the f.c.c. on ways to help get access to these for these people who cannot afford broad band. you can't give it away but fundamentally it's an empowering technology for these people especially the young people who are trying to find a way to build a better life and broad band can be an enabler there. so from a philosophic perspective we've been trying to direct some of our efforts that way as well. but from a pricing per specive we're trying to make it as affordable as possible. >> cost is one deterrent. is lack of a computer?

>> i think that's absolutely an issue, access to computers for young people in the home is a real issue. in some homes in urban poor areas, they don't have the digital literacy that you talk about and that's a broader issue. we've been working on more on a state by state basis within wind stream. the u.s.t.a. has been involved in that on how we might help there but i think we've got a lot of work to do there. >> what about whit comes to mobile broad band is that included in the access america plan? >> it is. i think that one of the mobile brondsband going to play a big role as some of the large companies has rolled out

services. the latest 4 g is improving the broad band capabilities. but i think fundamentally everybody i think miss a couple of points here often and that is without a land line connection there is no wireless because it's all going back to the public switch telephone network. so we have to pay attention to both types of infrastructure and around fissics i think of mobility is going to be a complementary service. it's not going to be a replace of employment for broad band. more and more people are off loading from their wired access and it's because of things like spectrum limitations. so for that to work in concert i think of mobility and wired

access as complementary. >> so much of the policy discussion is focused on wireless and that mobility so what you said is a little off from what we're hearing here in washington. >> i think there is definitely been a big focus on wireless and what the capability is. we're out there in the world today and understand that the spectrum limitations are real. engineers will tell you about that, that it just can't deliver the kind of band width that we need to really accomplish the goals that businesses and consumers want in their homes. and so what we're trying to do at the u.s.t.a. is constantly remind people without the wired network you're not going to have the wireless network. so the policy makers i think understand it better than ever that you need fiber facilities into these cell towers in order

to enable them to carry broad band at faster and faster speeds which and you need better access to broad band capables in the home. >> jeff gardner is president and c.e.o. of the wind stream corporation and he is chairman of us telecom. >> we talked about universal service fund reform and one issue facing the f.c.c. right now is how to pay for this fund going forward. they took a historic step to broad band service rather than telephone service. and for years while the fund supported telephone service it was paid for by telephone customers. how should the f.c.c. approach this issue and who should pay into this fund? >> it's a real difficult issue. it's ironic it's being funded by the part of the industry that is declining which doesn't

seem like it's going to be able to keep up with the need there. and so a broader technology agnostic approach is probably called for. as you know very well, there are a lot of political implications. there is a lot of sensitivity around tacksing the internet. so i understand those issues but i do also just economically and with the trend we see in our country, you've got to broaden the base somehow. i don't have the answers to that today but i think that's something that we're going to have to really work together over the next several years to figure out because the reality is the world has changed. the wired telephone network is no longer going to be able to support the u.s.f. fund. it's going to take a broader base and that's going to be

required. because at the end of the day, there is no simple solutions here. these consumers live in areas for whatever reason, some by choice, some by that's where they grew up and that's where they live today. but it is uneconomic to serve them. so the broad band fund is absolutely necessary. there is no other way to get service. we're public companies, we have to earn a decent return for our shareholders. we're going to do everything possible and i believe we've done that at wind stream. i'm proud of what our members have done. we've spent $66 billion a year for five years to get to our rural customers. we employ 500,000 people across the country in great jobs that employ people above the national average. but there is much more that

needs to be done so that's a tough question that needs to be worked out. and that's why it's so important what is going to happen in the next year in washington. it's on our agenda. >> you've talked about the next year in washington. obviously this will air before the election. how will you assess the current administration, the current congress and would you favor any changes november 6? >> without talking about whether i'd prefer one president over the other, i do favor changes. it's been a very frustrating year. it's been a frustrating time, not just the year, several years here where our policies seem to be more short-term oriented while we're making long-term decisions. i had a meeting with my team where we had to make investment decisions and these are ten to twenty year investments yet

we're living in a country that has tax policy that has six months, we can look forward six months. we know big things are going to happen 2031. and this fiscal cliff is something we're going to talk about. we're very very worried about it. so i'm hopeful regardless of who wins that we find a way in this country to have better discourse in this country so we can make progress. in the board room we don't have the luxury to walk out without a conclusion. we've got to make decisions about how to invest our shareholders money and for the good of our consumers and our businesses to get jobs growing again. i just hope whatever happens in this election that these debates, that this discussion fosters a more bipartisan

approach. it's been very frusstrathe. i've told that to both our democratic senators and our republican senators and congressman that we've got to get some things done. we've got to give clarity to these issues in american business. and i'm especially concerned about the tax policy. and many of the companies in our industry pay a dividend as you know. and if left alone and the bush tax cuts expoir on january 1, that tax rate goes up to over 40% which has real implications and at the same time it becomes disconnected with the capital gains rate which i think is very, very important to keep both of those low and leent. it encourages investment with respect to dividends. it matters a lot to our

shareholders, people think about dividends more from a corporate perspective. i just had a shareholder meeting in little rock two months ago and there were people who are living off these dividends. they're buying these stocks and paying for their groceries every week and mortgage. shareholder meetings are getting smaller and smaller, fewer people attend. one elderly couple drove in and both came up to me and said i have one question and it's are you going to keep your dividends. so it's just not big corporate america. i think we got to look at the people that are relying on these. so this tax policy is very very important. we've got to get this right and we've got to get republicans and democrats working together in this country so that we can

get things done and create jobs and get this economy moving again. >> one issue beyond the fiscal cliff that telephone companies are facing now is cyber security, how to secure our networks -- your networks. and u.s. telecom has advocated the position that congress should enable better sharing of information between companies, telephone companies themselves and the government. why would this approach be better than regulation? >> i think with regulation comes a concern that we'll be overregulated and won't be able to run our businesses the way we need to. and i think the last thing we need is another regulatory entity that's designed to over see an industry.

we can hand this will ourselves. we're the experts, we know what needs to be done. today there is unprecedented cooperation between companies. and twopet work closely with the government. their a getting more of these cyber threats or as many as business today. so the cooperative way without creting additional regulation which translates to more taxes and money we think is a better way to handle it. we think there are a number of legal considerations too that companies cannot share information. if one company spots a cyber threat then there are a number of legal issues they can't say hey, something is coming. >> that's right. that's why so much time has been spent on this cyber security regulation so we can feel more comfortable around sharing this without getting into difficulty around these

regular laces. it's a really issue in this country today. >> mr. gardner, with the new congress, how do you feel about a rewrite of some of the major telecommunications legislative pieces, 1996 telecom act? do you think it's important to treat your business as one big whole or do you think a piece mill approach to legislative policy change social security the way to go? >> i think 1996 was a long time ago and there are some great parts of the 1996 act that i think encourage competition which is very good for the consumer. so we need to make sure that we pay attention to that. but let's face it, look what happened with the internet

between 1996 and 2012, the whole sworled changing. that's what cyber security, all these issues we've been talking about, good old piece mill. i don't think of it that way. this stuff is happening real time. i don't see a way to deal with them collectively in one piece of legislation but probably better to deal with these individually. >> you call yourself still a telephone company but is there such a thing anymore? >> no. we're a communications company. i mean the voice is still important to our customers but mostly what we're offering today is communications broad band, children and texts and e-mail are much more valuable to customers, getting internet

entertainment. we're much more of a communications company today so when we refer to wind stream internally and externally it's a communications and not a telephone company. >> should very riseson and at&t be regulated in the same way? >> absolutely. we're both trying to serve the same set of customers. those businesses have changed very much in the last ten years in terms of the cable companies getting into the telephone business. we're getting into the video business and we all need access to entertainment content, to play out our business models so i think you've got to take a much broader look and not treat the telephone companies

differently. >> has congress -- as congress prepares for rewrite in the next year or sorks what should be the guiding principle? sl >> we have an act that was designed to open up competition in telecommunications markets. so as we move forward, what on a very high level what should be the guiding principle? >> if ir7 starting out today, i would use my guiding principle as the consumer and really how much progress have we made in terms of enabling them in terms of broad band. i think that should be the corner stone in how congress thinks about acceleration and our anlt to get brond band to everywhere in america which we can't today without different programs. and i think if you focus on the consumer you can't go wrong.

>> what should be the role of the f.c.c. in a future regime? >> i think the f.c.c. has tackled a big challenge in the last four years dealing with intercare compensation and universal service reform. i think what they need to be focused on in the short run is executing on that. we've got the intercarrier comp done. it should be on universal service reform and really thinking about are we doing the best job possible getting broad band out to rural america? >> jeff gardner, when you're working how much of your time is spent worrying, talking about reacting to decisions made here in washington? >> far more than i'd like. it's been very important. obviously the intercarrier compensation and universal service reform, my role at the

usta, we've all had to come together as an organization and i'm proud that we did and worked with the f.c.c. on. that but this policy is very important but it does take away time that you should be quock cussing on your customers. thank goodness i have competent people back at headquarters worrying about our consumers but it is important and i'm going to continue to spend my time here because it matters. we've invested in your washington office here. i think decisions we make over the next four years are going to have profound implications over the health of our business and our tooblet really accomplish what we want to which is to get to these rural customers. >> time for one more question.

>> if you could have a wish for the f.c.c. to tackle any issue you want, what would it be? >> i would really like -- i'm going to give you two things. first, to deal with this have you to have issue and the short run issue is the $300 million they made available which was an excellent idea. unfortunately only 1/3 of that is going to be used. so $200 million is going to go unspent that could serve america. the same issue will be in front of us in 2013. that's what wind streemsswaver all about. are there other ways to think about this other than the $775 limit. and beyond that, i think getting on to the model we need going forward for universal funding, the industry has put forth a modut