reauthorization, we will be considering it is part of a complex and regulatory framework governing cable and satellite retransmissions of broadcast signals, making it virtually impossible to consider whether to reauthorize the provision in a back to him. for that reason, the committee on energy and commerce which has jurisdiction that govern the broadcast market has held multiple hearings in this congress on whether to repeal, revise, or reauthorize. four years ago, the judiciary committee also grappled with a number of issues that had emerged in the marketplace in an effort to simplify and modernize as anas largely perceived

anachronistic regime for the provision of broadcast programs. , we addressedly impending transition from analog to digital television. other issues the committee considered at that time remain unresolved, while new technologies have further disrupted the market with innovations that we could not less than a decade ago. i believe we have a unique opportunity to tackle some of the big issues that will define the future of video. licenses, i think everyone will admit represent a departure from free-market negotiations and are usually the last resort in the event of market failure. when the compulsory licenses were first enacted, the cable

and satellite industries were in their embryonic stages. over it is estimated that 90% of american households subscribe to a paid tv service. of issuesa myriad that may be relevant for consideration. example, these licenses are necessary to foster competition, or should they be phased out as the copyright office and others have recommended? how many consumers truly benefit from these licenses? on the other hand, is the current overlapping web of communications and copyright policy functioning in a way that meets the goals of national media policy? it cannot be denied or disregarded that marketplace

incumbents, including broadcasters, cable and satellite providers and content creators, have entrenched interest and investments in a complex framework created by law. dismantling of this structure be unfair to those industries and harmful to consumers? 10 current law keep pace with currentnologies -- can law keep pace with technologies that seek to export ambiguities in the legal framework? what constitutes a public performance or retransmission -- for retransmission and consent purposes? cables time warner dispute resulted in a temporary blackout for some consumers. evidence of a broken system, or does it reflect a robust free-market?

also, how should we address or should we address a nascent online video distribution model that in the future may very well displace the traditional distribution methods altogether? are these internet-based video distribution models the new kids on the block, entitled to comparable statutory imposed obligations and prohibitions, or is the time for government intervention over? broadare a few of the policy questions that i think are relevant in this space. i believe we must determine whether the current regime is working to ensure that content providers and distributors, old and new, are appropriately tivized ind and incen a way that provides a

competitive environment for consumers. we have an impressive and diverse group of expert witnesses today, with very different views on how the marketplace works, and how it has developed, and most probably what the rules of the road should be moving forward. i look forward to the testimony today, and to continuing this dialogue in the future. i yield back, mr. chairman. >> thank you. the distinguished gentleman from virginia, mr. bob goodlatte. >> thank you, mr. chairman. i look forward to the testimony of the witnesses. for decades, the vast majority of americans have relied upon satellite and cable services for access to a wide variety of video content ranging from nighttime entertainment for their families, educational shows for their children, local and national news with information that informs them,

and public access channels that empower americans to see their local state and federal representatives in action. as a numbers of content continues to increase, consumers subscribe to additional sources. americans are embracing these additional services to such a degree that society has coined two new terms. cord shavers, and cord cutters. for those who are reducing or eliminating traditional video subscriptions. to the fcc's latest report, in addition to free broadcast content, 100% of americans have access t 98% have access to these , local alternative. 35% have access to two satellite services and two local alternatives. marketplace competition has grown significantly since the

last activity in this area in 2010, when congress enacted the satellite television extension and localism act. compulsoryhree licenses in title 17 impacting this industry, one of which expires at the end of 2014. this committee will concern whether a reauthorization of this compulsory license is warranted. as the written testimony demonstrates, some interested parties are advocating for congress to undertake more than a simple reauthorization, and look at other matters surrounding the video marketplace and competition policies that appear to have become more prominent recently. one core factor this committee will weigh as we consider these important issues is ensuring that copyright owners maintain the right to distribute their intellectual property as they choose, and this committee has traditionally disfavored compulsory licenses.

another core factor we will weigh is ensuring competition in the marketplace. consumers and intermediaries benefit where there is robust competition. efforts that involve competition issues deserve this committee's oversight and ongoing attention. the written testimony of the witnesses this morning highlights the importance of both issues to the video marketplace. this committee continues its oversight and legislative activities, i look forward to hearing from all interested parties about their perspectives and concerns. i thank the chairman and yield back. >> the chair recognizes the distinguished gentleman from michigan. the satellite television isension and localism act that we havens

witnesses to. fornt to thank the chairman keeping the witness list down to seven. i understand we ran out of tables and were not able to put on any more people than are here. i want to consider these options. i look forward to the witness testimony. two considerations. owners, andpyright the other about consumers. owners protect copyright because it is there a property that forms the basis of the entire scheme. compulsory licenses are generally not favored because

they distort the marketplace and result in below market rates being paid to content owners. policiese must enact that protect consumers and safeguard competition. consumers benefit from increased competition because more competition usually produces lower prices. not benefitners do financially from retransmission consent agreements, which is at the heart of these disputes, despite the fact that the signal only has worth because of the programming contained on the signal. i think we must focus on

principles of localism, people who subscribe to cable or satellite television have so many options, there is never a shortage of something to watch. even with all these choices, value their highly local news, their local sports. local channels to deliver emergency information. localism and the affiliate relationship also benefits copyright owners by allowing their programming to be publicly performed in every market across the country. i conclude by observing that there will be circumstances in which these principles will conflict. forward to working to ensure that the public interest through be served

satellite carriage of broadcast television signals. i think the chairman for allowing me to make these brief remarks. we have a very distinguished panel before us today. i will begin by swearing and the witnesses. if you would please rise? you swear the testimony you're about to give is the truth, the whole truth, and nothing but the truth, so help you god? let the record show that all witnesses concur with that. i will now introduce our panel. we appreciate everyone's attendance at this hearing. our first witness, executive vice president, chief research. he's responsible for overseeing , whilement and research serving as deals liaison to his industry associations. he received his ba in psychology and sociology from the state

university of new york at stony brook. our second witness is executive vice president, general counsel and secretary of the dish network. he is responsible for legal and government affairs for dish and its subsidiaries. he received his bs from the university of vermont. testifiedwitness today on behalf of the national association of broadcasters. he has more than 25 experience -- years of experience. fromceived his ba degree the university of virginia. chairman goodlatte has asked permission to introduce our next witness. >> it's my pleasure to welcome our fourth witness and my constituent, mr. earl mckenzie, chief operating officer, testifying on behalf of the american cable association with 35 years telecom experience.

he is responsible for daily operations of many subsidiaries. he received his ba in accounting from the college of william and mary. our next witness is our fifth witness today, vice president of public policy. he's responsible for the company's regulatory and legislative affairs, and received his bachelor's degree from santa clara university. our six witness -- sixth witness has testified today on behalf of major league baseball. he joined in 1977 and has served as outside counsel to major league baseball on copyright and telecom issues for more than 35 years. he attended northwestern university. our seventh and final witness has testified -- is testifying on his own behalf today. he served as former president of abc television network, and

former executive vice president of the walt disney company. he received his ba from the university of maryland. we will start with you. you will be the leadoff hitter today. as is obvious to all, we have seven witnesses. this can take a long time. we try to apply the five minute rule. turns to green light amber, that is your signal that the time is running out and you have a minute to go. at that point, we would appreciate it if you would wrap it up. applyl a tried -- try to the five minute rule to ourselves as well. why don't you start us off? >> thank you. paul do not owe, and i'm executive vice president chief research offer -- officer for nielson.

nielsen is a global media and marketing research company that measures what people watch in 100 countries. in the u.s., we are widely known for our television audience measurement service. over the years, nielsen has developed innovative technologies allowing us to expand our measurement services. ,hrough these technologies nielsen has the capability to measure consumer internet purchase habits, listening trends on terrestrial internet and satellite radio, and help consumers utilize social media. our instrument reports are relied on by a range of public and private sector stakeholders to facilitate business transactions and engage consumer trends. it is also used by the federal government to define markets.

and discussions of stella its predecessors begin with a conversation about nielsen's dna. market area is a collection of counties which share a predominance of viewing to broadcast stations licensed to operate within a given standard metropolitan statistical area, as defined by the omb. predominance or dominance of viewing is defined to indicate that for a particular county, homes may view broadcast stations licensed to operate from different but generally nearby metro areas. the dma with the predominant viewing is that metro area whose broadcast stations have the highest share of audience for that county. we start with new york and los angeles and continue on through the 201 dna markets. existing dna regions are testified -- tested to verify

that the dominant share of viewing from each county continues to be from broadcast stations licensed to operate from within that same home metro. all assignments are based on share of household tuning between 6:00 a.m. and 2:00 a.m. sunday through saturday -- tuesday through saturday. there are rules that nielsen exercises when it appears that the predominance of viewing may be shifting. these rules try to balance the need for stability in television markets. at the same time, the need to assure that town these are assigned to dna -- counties are assigned to dna. to broadcast shift stations from another dna, that shift must be statistically significant. instituted the dna system in the mid-1960's to measure the number of viewers in a particular area, and to connect sellers and buyers of advertising.

it allowed for the creation of a market where buyers and sellers of local television advertising could do business with each other based on impartial information by third-party. advertisers need to know that they are directing towards audiences they want to serve. with an estimate of $72 billion for the entire year, that is a market that fuels the great entertainment and news programs this country produces. with the emergence of satellite thecable, the landscape of industry changed. the new technology allowed companies that carried television programming to expand their boundaries, specifically television stations who were previously limited to being viewed in the local dna. while new technologies open new horizons, they also create new problems for the television

industry. the industry needed rules to determine which local stations could be carried in which local markets. congress and the fcc established rules governing which local television stations could be carried in which local markets. nielsen's designated market areas were adopted as a guideline for determining which local stations could be carried. nielsen did not recommend the use of the dna's purpose, nor were we ask for technical assistance on the use of the dnas. it was a decision made entirely by congress. as he were to learn more about future trends and video use, we will be happy to assist you however we can. i look forward to your questions. >> thank you, and congratulations. you beat the illumination of the red light. your entire statements will be made part of the record. >> chairman goodlatte, ranking

members of the subcommittee, i appreciate the opportunity to testify today. i am general counsel of dish network. dish is the nation's third largest paid tv provider. we are the only provider of local television service in all 210 local dma's. consumers can use features to have greater choice and control over their viewing experience. pays billions of dollars for the right to distribute content. we believe that outdated laws graded. be up public policy should support preservation and expansion of consumer video choices.

as distributors like dish offer ad in technology, some programmers are crying wolf, saying this time the threat is real and they will not be able to survive the onslaught of innovation. the challenges to the dvr are a perfect example. we believe in consumer choice. shouldeve congress protect consumers against the growing problem of blackouts caused by retransmission consent dispute. in 2010, there were 12 blackouts. in 2011, 51. in 2012, almost 100. have had 84 blackouts which puts us on track for a record-setting year of 120. the length of the blackouts a number of consumers impacted are increasing. the consumers are the real victims of these one-sided negotiations. some broadcasters are coordinating their negotiations

with each other. american television alliance, a coalition whose membership encompasses cable, ,atellite and telco providers and in which dish is a member, has unified and called for changes to the outdated retransmission consent rules. that when a local network station is pulled from a consumer due to a retransmission consent dispute, the video distributor should be able to provide another market's network signal. the broadcaster whose signal is supported would be compensated under the distance signal royalty rate. this will at least allow consumers to keep their network programming while negotiations continue. if the broadcaster's local content is as valuable as they assort -- assert, importing signal is a poor substitute, and there will be incentive to reach agreement.

living in remote and underserved areas have benefited from stella. stella allows americans residing in predominately rural areas to receive distant network signals. licenseance signal sunsets at the end of 2014 and without reauthorization, 1.5 million american households will be disenfranchised. third, in the three years since the last authorization, the video industry has not been sitting still. americans increasingly want to watch on the go. over the years, dishes has done much to responding -- respond to change. in summary, we believe the government should work to ensure competitive realities. thank you, and i look forward to

answering any questions you may have. >> thank you, mr. dodge. i commend you for beating the light. >> good morning. jerry waldron. i'm testifying on behalf of more than 1000 free local over the of theevision members national association of broadcasters. urgebroadcast constituents you to keep in mind two principles. free, locally focused broadcast television should remain available to american households. should not of stella be used to create new exceptions to copyright law that undermine those contractual relationships between broadcasters and satellite or cable companies that enable broadcast.

broadcasters, localism is coverage of local news, severe weather and emergency alerts, school closings, high school ports -- sports, local elections and affairs. our broadcast stations are also a way the local businesses inform the public about its and services -- goods and services, and create jobs and support your economies. there is no doubt that your constituents rely on our service. broadcast television remains unique because it is free, it is local, and it is always on even when other forms of communication may fail. should askittee whether the expiring section 119 signal license continues to promote localism, and whether it is in the public interest.

that thebe argued distance signal license served its purpose in 1988, when the satellite industry was getting started. it served its purpose when dish and directv first launched their small receiver services in the mid-1990's. in 2013, when dish and directv are two of the largest three paid tv providers in the country , the distance signal license is a vestige of a bygone area -- era. over 98% of all u.s. television households can view their local network affiliates by satellite. the number is growing all the time. no public policy justifies treating satellite subscribers in the local markets as unserved , which would deprive viewers of the benefits of locally focused service. there are no technical reasons for failing to serve all markets.

the subcommittee should continue to encourage localism and consider whether the section 119 license should expire. in re-examining stella, you are likely to hear from those seeking enactment of new exceptions to the copyright laws that would undermine broadcast retransmission consent rights. arguments that broadcasters have too much leverage, or that retransmission fees are directly responsible for rising cable bills are wrong. local broadcasters and pay tv providers both have an incentive to complete retransmission consent negotiations. they always do, before any disruption occurs. there are exceptions, but they are rare. disruptions from retransmission h of 1% represent 1/100t of all annual u.s. television viewing hours.

consumers are 20 times more likely to use television programming service because of a power outage than because of a retransmission consent dispute. of instancesnumber where these negotiations have resulted in disruptions, there is one distinct pattern. the involvement of time warner, directv, and dish. since 2012, these three 89%anies have been party to of all the disruptions nationwide. in contrast to what some suggest , retransmission consent payments are not responsible for high and rising paid tv prices. two cents of every cable bill dollar goes to consent fees. that is true despite the fact that during the 2011 season, 96 of the top 100 most-watched primetime programs were on broadcast television.

the committee should understand the retransmission consent negotiations are about more than just fees. negotiations increasingly include hard discussions about how we can distribute our content across a variety of new platforms, such as hulu. your local broadcast constituents urge you to rebuff calls from the paid tv industry to expand the narrowest examination of stella solely to give them an unfair leverage to market-based negotiations. they give for your time -- thank you for your time. >> good morning. on. mic is not >> good morning. as a smaller rural provider, our costs per subscriber are greater. despite the higher cost, we

still provide our customers with the same service enjoyed by urban customers. made anyhallenge not easier by certain laws and rules that govern our business. one of the simplest issues i have raced to the committee today is the competitive disparity that stems from the fact that certain laws governing the tv industry are reauthorized every five years. the cable industry does not benefit from such periodic reviews. congress has not made a broad legislative change to the cable rules since the 1990's. if congress wants to conduct such a review, one set of rules that has worked and should not be changed is the cable copyright license. goalstinues to serve its and compensating copyright holders for the retransmission of their work. any stakeholders agree no significant change to the license is necessary. if congress were to repeal the license, it would be burdensome for the cable firms to

anticipate all the copyrighted works that would need to be cleared before they are aired on broadcast stations. the repeal would create uncertainty in the marketplace for us and our customers. should congress reach a different conclusion, any change to the existing license must coincide with reform to the broadcast carriage rules such as retransmission consent, because legally intertwined. there are a number of problems related to outdated rules and regulations governing the cable industry. with limited time, i will focus on two. this committee should be aware that there are dozens of instances where separately owned broadcasters in the same market are colluding against the cable operator with her negotiation retransmission consent. that twocally means broadcast stations with exclusive market rights that are protected by the government use

the same negotiator to conduct negotiations. this anti-competitive conduct by broadcasters raises fees between 22% and 102%. these costs are passed onto the consumer. the practice of coordinating ,egotiations is widespread occurred in at least 20% of markets, and is increasing. there have been a number of mergers and acquisitions. if you share my concerns, please inform the department of justice. another area to consider is skyrocketing sports programming fees. sports league has extracted more than $110 billion from the broadcasts to table -- cable tv networks. these networks can pass those

costs on to the paid tv providers and our customers. espn and the big four are aggressively hiking their fees. the consumer shoulders these costs. a dutch -- and rooted. leg retransmission consent, sports programming markets have likeed significantly -- retransmission consent, sports programming markets have changed significantly. their dominant market power no longer justifies this exemption. ofs clear there is a host issues. i hope the issues i have raised her will be taken into

consideration as part of the committee's reauthorization of the satellite tv license. thank you for the opportunity to testify. >> thank you. >> thank you, mr. chairman. i appreciate you giving centurylink the opportunity to testify before the subcommittee as a relatively new entrant into the video marketplace. not seeking to payment for content. we seek a fair set of rules i cannot be leveraged against consumers -- they cannot be leveraged against consumers. -- that cannot be leveraged against consumers. we offer cyber security solutions to the federal government and multiple state and local governments. as a result of our recent

acquisition, we are one of the largest cloud computing and hosting companies in the world. only recently over the past five years have we gotten involved in the competitive video market, launching a fully digital ip tv in multiple markets, including orlando, las vegas, phoenix, central north carolina. consumers benefit from robust competition in the form of better service quality, more innovation, more investment, and lower rates. the cost of obtaining broadcast content has threatened consumers' ability to get any of these benefits. the current regulatory regime was created in an environment where federal lawmakers were concerned about market abuse, monopoly. over the years, lawmakers have skewed the regulatory advantages towards broadcasters.

a local broadcaster can force- feed unwanted content to providers regardless of consumer demand. provider has no other alternative to obtain this content in most of these markets. interpretation of the good faith standard has rendered it really meaningless, giving de facto power to the retransmission consent negotiations. notregulatory regime did want template the explosion of video competition from a myriad thendustries -- contemplate exio video competition from a myriad of industries. well the current rules create problems for the larger companies, they impose additional burdens on new entrants. every customer we get had a

relationship with another provider before they come to us. we have to win every single customer we sign up here i. we can't simply take whatever the broadcasters get. there is little harm to the broadcasters when the signal is lost, but tremendous amount of harm to a company like .enturylink the retransmission consent fees are providing a windfall not for local stations, but two national networks. the original intent of the rule was to provide a safety net for local stations. retransmission fees will billion in $6.1 2018, up from $2.4 billion in 2012. that is all at the expense of consumers. togress has an opportunity

reform and rebalance the negotiation process regarding retransmission consent. conferreds congress significant regulatory advantage to the broadcasters no longer exist. centurylink favors a d regulatory approach where are consumers could receive national content from adjacent or alternate markets. for two reasons. it rebalance is the negotiation process for both parties, where they have more leverage at the table. it does not punish consumers for providers' failure to reach agreement. day, it's of the about protecting consumers who bear the biggest brunt of this regulatory problem, and ensuring the future of a competitive you for the thank opportunity to testify. we look forward to working with the committee and try to enact and enable consumer oriented

legislative reform. thank you. >> thank you. thanks for the opportunity to testify on behalf of major league baseball this morning. let me summarize the testimony with three brief points. ineball has a major stake the copyright laws that affect television programming, including cable and satellite. baseball and its member clubs are copyright owners of a substantial amount of entertaining, valuable television programming. toy offer their fans access 5000 copyrighted telecasts each year. i do not believe there is any single copyright owner that provides the american public with more television programming than major league baseball. vast, overwhelming majority

of baseball telecasts are provided to cable and satellite subscribers pursuant to licenses negotiated in the free marketplace, and not pursuant to compulsory licensing. there is no reason that satellite carriers or cable systems or anyone else require a compulsory license to provide major league baseball telecasts, or any other broadcast television programming. satellite carriers and cable systems negotiate every day in the free marketplace. we believe they can do the same to offer broadcasts including telecasts of baseball games. finally, if congress chooses to reauthorize the section 119 compulsory license, baseball has one request. that is, adopt a mechanism to ensure that satellite carriers and cable systems at the very least pay fair market value for

their compulsory licenses. according to the fcc, cable systems, more than $67 billion in revenues by selling access to video program. royalties amount to less than one half of 1% of those revenues. one half of 1% of what is the most valuable, most-watched programming. video revenues amount to approximately $36 billion. your compulsory -- compulsory licensing royalties amounted to about $10 million less than when congress last renewed section 119. the current satellite royalty rate is the same that a panel of arbiters determine to be fair

market value six years ago. is no justification for requiring copyright owners to subsidize with the low market royalty rates, major corporate entities that dominate the cable and satellite industries. baseball believes that congress should authorize the copyright to set rates for the carriage of all broadcast programming under the cable and satellite compulsory licenses, and that the copyright board should be authorized to adjust those rates periodically so they continue to provide fair market compensation. thank you. >> thank you. i appear today on my own behalf, and no one is paying me to be here. [laughter]

i am so old that i am one of the few living souls who has been around for the entire history of this issue. i'm here today to implore you not to just kick the can down the road again. it is long past time to repeal the satellite and cable , and they licenses statutory and regulatory system that surrounds them. as the former president of the abc television network, i know how tv program rights are negotiated. i promise you that the earth ,ill continue to spend -- spin consumers will continue to have access to tv, and all tv industry sectors will continue to thrive without the compulsory licenses, without the associated fcc rules, and without retransmission consent. when the cable tv industry was in its infancy, congress granted cable and extraordinary exception from

normal copyright principles. copyright license to distribute the programs on broadcast tv channels. rules, adopted the including network non- duplication and syndicated exclusivity to limit the market disruption caused by the new compulsory license. in 1988, compulsory license was extended to satellite. in 1992, congress enacted retransmission consent requiring a marketplace negotiation between broadcast tv stations and cable and satellite distributors. a negotiation that is the functional equivalent of the negotiation that would have been required if the compulsory licenses had never been enacted in the first place. when others argue that the compulsory licenses were essential, please consider this. every day hundreds of non- broadcast tv channels, channel such as discovery, history channel, usa network, b and hbo

-- bravo and hbo get distributed without any compulsory license and without retransmission consent. distribution because the channel owner and cable and satellite systems have an old- fashioned, simple copyright negotiation. there is no reason why the broadcast channels cannot be distributed in exactly the same way. when the satellite license was 1988, you provided the sunset and expressed the expectation that the license would be temporary and would be replaced by market negotiations. the license has been renewed four times. when you renewed in 2004, you directed the register of copyrights to study the continued need for compulsory licensing. in 2008, the register released that study, calling the cable and satellite compulsory licenses arcane, antiquated,

complicated, and dysfunctional, i quote. when you redo the satellite license again in 2010, you directed the register of copyrights to prepare a more specific report to congress. proposing mechanisms and methods for the phaseout and eventual repeal of the cable and satellite compulsory license. the register to propose marketplace alternatives. the register issued that report in 2011, concluding that compulsory licenses are, quote, an artificial construct created in an earlier era. the register recommended that congress set a date specific trigger to phaseout and ultimately repeal the license. i want to close with what i think are three simple truths. compulsory licensing is not necessary in this market. channels absolutely

deserve to be paid by the cable and satellite distributors who want to sell their programming to consumers. are noroadcast channels more a monopoly than are the nonbroadcast channels such as amc, time warner cable sports net, bravo, and discovery. thank you. >> thank you. i want to thank the witnesses for their time and testimony. we try to apply the five minute rule to ourselves as well. if you can be terse in your answer, we would appreciate that. mr. garrett, how is major league baseball working to make its content available to americans in new ways with advanced technology? i indicated in my testimony, major league baseball currently offers approximately 5000 telecasts to consumers.

that is virtually every single game that is played during the course of the season. they do it in a variety of ways. they have done it over national broadcast television networks such as fox. a myriad of local broadcast stations and regional sports networks throughout the country. they do it over several cable networks, including espn, tbs, major league baseball network. a number of these programs are available via their out of packages. and finally, they make it available via their very successful, award-winning mlb.tv app, which makes all of these to anyoneavailable with an internet connected

device. >> thank you, sir. constituents, our what issues should they be asking the congress to place focus upon? that isere is one issue top of mind for dish, it is that the retransmission consent system today is broken. it's not a free market. in every local market around the country, in the old days, when cable was in its infancy you had one broadcaster who would negotiate with one cable company. there was mutually assured destruction. today that one broadcaster plays three or four distributors against each other. by losingare hurt their signals and having their prices go up year after year. >> thank you. i think you touched on this. and your opinion, what would be 119 simplyif section expires?

i think that is december of next year. >> my recommendation is that congress provide a short transition period to allow the broadcast industry to get its rights in order, and then repeal all of these licenses. would happen is the broadcast arriving would get distributed exactly the same way that a nonbroadcast program is distributed today through a simple negotiation between the cable and satellite companies on one hand, and the local station on the other hand, with the station acting as a rights aggregator just as the nonbroadcast channels do today. >> anyone else want to weigh in on that? what he suggested is similar to a bill that has been proposed by representative scalise. it is one potential option, worthy of debate.

dish, thereled that does appear to be a recognition that there is a problem. >> the section 119 license expiring, this committee could advance the debate by actually getting a number as to comedy people would be affected. i would suggest the committee asked the satellite carriers to submit a certified number as to how many people today are getting distant signal. in the past we have heard one million, but we do not know what the number is. would get thate information, we could have a serious debate about, is this distant signal license worthwhile to extend for this small number of people? there may be special circumstances which justified. right now we are all in a blind alley. >> time for one more comment. true that there are less and less folks who are availing themselves of the

distant signal license today, but it is a group of rural and underserved americans that is important. town in montana that does not have an affiliate. the distant signal license allows us to import to those folks who would otherwise have no access. >> you have to have a conversation about short markets in areas where there is a problem, but we do not know what the nature of it is. that would be a helpful step in promoting legislation. >> how many people use it, mr. dodge? >> one to one and a half million consumers. >> i now recognize the distinguished gentleman from north carolina. policy, ibecome my have decided to defer until the end of the process. chain.go last in the >> thank you for a much.

discussion --our i thank you for the variety of , but do youed mr. dodge and mr. patton the congress -- that congress should do more than reauthorize the distant signal license? anyone can start up. >> i'm happy to go first. this is one government program that you can retire. these licenses were enacted before there were any nonbroadcast channels. they only apply to the programming on the broadcast channels. you now have hundreds of other channels distributed nationwide with no muss -- no mess, no fuss

with normal copyright negotiations. that proves you don't need these licenses anymore. >> to address that point, i believe there is a difference between cable channels and the local broadcasters, the chief difference being local broadcasters received at least initially billions of dollars of spectrum for free under the promised there would be stewards of that spectrum and use it for the public good. they are further propped up by other rules. here is a specific question. we think the satellite act should be reauthorized so the current beneficiaries are not disenfranchised. we think there are two reasonable zones of expansion that should be considered. one is fixing the broken retransmission consent system. this year, thend

folks in two southwest counties in colorado start asking questions about why they cannot broncos. do i sense that there is a little space between both of their responses? [laughter] >> yes, although we are good friends. >> we are all friends here. thehis committee asked expert agency to register copyrights to study these licenses. their report said that they are, arcane, complicated, antiquated, and dysfunctional. i can't imagine why you would want to continue such a program. i'm going to give you another chance, mr. dodge.

what are the targeted fixes that for as partcalling of the stellar reauthorization? >> principally, there are two, the first of which is one that we favor, which is allowing video providers to import a distance signal on an interim during pendency every transmission disputes and the broadcaster takes down the program. be some form of standstill where the programming stays up, and then the parties would be entering binding arbitration to reach a fair rate. of these instances, consumers still have access to programming. theoretically, there would be incentive to bronte to in the first instance because the distant signal is an imperfect solution. i think it is clear that

there are thousands of cable systems in america. there are thousands of broadcasters in america. thevast majority of time, system works and there is a marketplace settled. there are marketplace negotiations. there has been an increase in disruption. involve three companies, directv, dish, and time warner. they are deliberately going and playing the game, and frank lee, in order to get this committee to pay attention to these issues. vast majority of cases, the system is working. with respect to the suggestion of a standstill, there's another way of putting that. they get to take my copyright without my permission. that is what a standstill is. i do not want to give them my retransmission consent, but yet they get to take it because they were taking it before and i don't want to give it to them

anymore. that seems contrary to our copyright law tradition. that would not be something that congress should endorse. >> can i add one thing? in evaluating requests made by cable and satellite for a standstill provision, i think you should consider the fact that the cable industry just went to court and successfully defeated a standstill agreement in program access disputes. they went to court and got rid of the standstill when they did not want to continue to carry something, and now they are back here asking you to enact the standstill against the broadcasters. >> may i? thank you. companies mentioned are large. we are a new entrant into the market.

i would suggest that often these larger companies laid negotiations against smaller companies like centurylink trying to compete -- and without any leverage at all, we are the ones who are getting swallowed -- will stifle innovation, investment. while the broadcasters threaten to black out, it is unlawful for any provider to not carry the signals during sweeps week, which is the week that broadcasters yet their ratings and make their advertising money. at one week we cannot do. >> mr. chairman, can i get 30 seconds more? >> 30 seconds will be granted. >> i want to make -- address one point, which is that 90% of the blackouts are caused by three companies, mine included here it that is a bit in the eye of the beholder. we take the view that 100% of the blackouts are caused by four companies, abc, cbs, fox, nbc,

their affiliates. it is not surprising that dish tv and time were cable -- dish tv and time warner cable and directv represent such a large portion. the other portion is comcast. dish, directv, and time warner are the only folks able to negotiate effectively with the broadcasters. and thank goodness we are out there fighting for consumers to lower prices. , thank you. -- >> thank you. the distinguished german from virginia is recognized. >> -- the distinguished gentleman from virginia is recognized. >> i have a number of constituents who live in -- usually a rural area, a good distance from me markets that they are in -- from the markets that they are in an a lot closer to another market they would

prefer to receive the broadcast signal from -- they are in and a lot closer to another market that they would prefer to receive the broadcast signal from. i wonder if you would elaborate on that. these are people living in rural areas, 75 miles from the d.c. market, but 25 miles from the harrisonburg market and would rather have the harrisonburg market. >> there are generally a few markets in which that kind of situation happens. the dma is what it is. it was created to reflect the viewing of the people in that county. the particular counties that you're talking about, as i said in my town -- my testimony, the predominance is the home market that it is currently in. it was developed as a mechanism to define a geography in which television signals are viewed, and therefore local advertisers would be able to use local television, support local television. >> should those lines be adjusted? >> we have a process.

we evaluate the viewing for each county within the dma. it is perhaps a little bit conservative. you have to have a statistically significant change two years in a row before we move the county over. the reason for that is the need for stability in the marketplace overall on the advertisers' behalf. there are always better ways of doing things. we generally treat these situations on a case-by-case basis. we often meet with congressman in their district -- with congressmen in their district when there is an issue. we describe what the numbers are. it is a system on which almost $40 billion of advertising has been based excessively for the last 40 years. -- based successfully for the last 40 years. >> i want to ask mr. garrett if he wants to respond to mr. mackenzie's suggestion that the sports and he brought -- and i

trust -- the sports and i trust -- the sports antitrust broadcast exemption should be lifted. >> i don't have any response. my focus is on copyright law and good copyright policy. >> in light of that, i will cut you short and ask if you work with and represent people who might have and if they would submit that to the chairman of the committee in writing, i would be pleased if the chairman would share that answer with me when it arrives. >> absolutely. >> let me ask all the members of the panel, what is the proper role for congress in responding to marketplace disputes? in order to resolve the future, does congress set timelines for the marketplace, or should it set detailed requirement that all participants must follow, and as an adjunct to that, are there ways for business to occur and be resolved without disrupting the consumers who rely upon satellite and cable services for access to video

content? i will start with mr. dodge and work our way down. >> i will take your second question first. the ways to avoid consumers being disrupted are the two ways i said earlier, one, allow the import of distance signal during interruptions. i'm not all that familiar with the niceties of what standstill's have and have not been struck down over time. if the broadcasters are going to sit here and wrap themselves in localism as a justification for about what -- about 99% of what they are saying, why do they want to disenfranchise consumers? we are not saying we are not going to pay, but don't disenfranchise consumers. >> keep moving. >> limited time. incongress wisely decided 1990 two to essentially have the marketplace settle these issues -- in 1992 to have the

marketplace settle these issues. consumers should have more choice. it is sometimes difficult to change or provider. there were reports of people wanted to change the time warner, but nobody was answering the phone. there are cancellation penalties and the like. that would enhance the marketplace, competition. >> i think our position is -- >> hit the button. >> our position is general guidelines would be better than specific guidelines. mr. dodge has come up with two ideas, the distance signal and also explaining the blackouts. distance signal does not work for the cable industry because we do not have that contract. satellite has it and can move it. for us, it would be building fiber and trying to get it off the air, which would be impossible. preventing the blackout by leaving the signal on while we negotiate would be preferable. >> i'm not sure if i agree with what has been said. >> hit the button, too.

>> i apologize. to return the negotiations to actual free-market negotiations. we hear a lot about the thumb on the scale in favor of one party over the other. we don't seek to have the thumb put on the scale in our favor. we would just rather have it removed from the other side so that the negotiations to become once again free market negotiations. the world has changed a lot since 1992. >> thank you. mr. garrett. >>, major league baseball standpoint, they license a great deal of programming that they want their consumers and fans to standpoint -- to see. they are as frustrated as anyone hearing congress or the fans themselves when that programming -- as anyone here in congress or the fans themselves when that programming is not made available. broadcasters have property rights in those signals. we believe the best way to determine the value of those property rights is through free market place negotiations. that is the objective that we and baseball have, to have free

market place negotiations or, at the very least, fair market value compensation for the programming that is being utilized. >> thank you. mr. padden. >> the gentleman's time has expired, but you may respond. >> i would like to respond about the dma. this is an example of the dysfunction that is built into the compulsory license and the associated fcc rules. in a free-market, if you have constituents who want to see station a and station a would like constituents to see it and there is a distributor between them that would like to make money distributing it, they can figure it out. all the nonbroadcast channels get disturbed you did anywhere someone wants to see them. the problem is -- get distributed anywhere someone wants to see them. the problem is these rules enshrined nielsen's rating data from 1972 as the basis for what signals can go where. they are still sitting in the

fcc rules, 1972 ratings data. if you would just get a big broom and sweep all of this stuff away, the free market could better serve your constituents. >> thank you, mr. chairman. >> [inaudible] --recognized for five minutes. >> thank you, mr. chair. mr. dodge, you said earlier that one million to 1.5 million households in the united states currently get their access to broadcast stations through the distance signal service, but it is clear that the number of households that are dependent on the distance signal decreases every time congress looks into reauthorizing section 119. can you tell us who these remaining one million to 1.5 million households are and where they are located? are they mostly in rural areas or concentrated in certain parts of the country? >> generally located in rural and underserved areas. there are four categories of

consumers. such as montana, missing fox and abc. we are allowed to import those network affiliates into those markets. if you think of utah, for example, which is a rectangle, round, so the is law allows for us to provide the signal to those who are not covered. directv. we are in all 210 markets. we don't make use of the "unserved household exception." erect tv does -- directv does. and they have some grandfathered subscribers as well, i believe. >> do we have the technology now to close the gap to them? >> for example, the short market issue is purely the fact that there are no affiliates of a particular network in those markets. with respect to outside of the

spot being, -- spot beam, it depends on the -- on whether or not the satellite beam is large enough to cover an entire dma. it is very limited when it is not. , i'm aware that consumers have several options for how they will view video content. they can access the content through paid tv carriers or other options now through the internet. there is no doubt that the online model will continue to grow in the coming years. to what extent should we consider these newer programs as we are reauthorizing satellite tv laws? >> they can inform the debate because they show how the tv market is evolving. let me also say that we have talked earlier about the comp -- conflictlic -- the between cbs and time warner

cable. a significant part of that dispute was about the ability for cbs to offer its programming to a competitor to time warner cable i understand why, -- why time warner cable does not want its programming to a competitor. time warner cable -- i understand why they don't want to make it available to hulu or a netflix. that is increasingly a matter of the negotiations, not necessarily the sig. cut was a deal that was relatively early in the process, according to news reports, but enabling broadcasters -- giving consumers choice across platforms. >> the digital rights of content are playing a more important role in these retransmission negotiations. how do you think the issue of digital rights will impact future negotiations, and does congress have a role in protecting consumers in that regard? >> copyright holders should be able to negotiate an agreement

across all their content. the cbs example is telling. cbs wants to promote competition. that's why they went about those negotiations. and we think that actually is a way that consumers can get choices. i want to come back to a statement that mr. dodge said. we don't dispute there are some cases, such as the short market situation or the corners of spot beams. what we don't know is how many there are. mr. dodge is one of two. he said earlier he has heard 1.5 million. they have the information that is needed. -- half the information that is needed. directv has the other half. what is the number? what is the context? how many are spot beams problems. -- problems? there is no technology that there should be an unserved household.

this is in 100% of all the markets. >> can you address the issue of localism, the principle that is embedded in our nation's communication loss? -- laws? can you tell us how the law develops to focus on localism and some of the benefits of holding onto that principle -- how the law developed to focus on localism and some of the benefits of holding onto that principle? >> it is the notion that broadcasters should meet the needs of their local community. that makes american broadcasting unique around the world. there are broadcast systems in europe and asia. we are locally focused. the reason we are concerned with distance signal, it undermines localism. the local broadcaster bringing the local car dealership, talking about the local high school sports were tornado, if you are getting a signal from new york or l.a., you are not going to be aware in oklahoma about the prenatal -- the tornado that is coming.

localism is the heart of the broadcast. it is also the heart of the satellite laws. we think that is a strong argument why the committee should be skeptical that distance signal license is still needed. >> thank you. i yield back. >> the gentleman from texas. >> thank you very much. having grown up as a broadcaster, working in radio since i was 15 years old, i kind of grew up in the public interest convenience and necessity standard. i certainly have a great deal of sympathy for the local broadcasters.

>> the distance signal is an imperfect solution. all it will do will ensure folks are able to watch "american idol," but they won't be able to watch their local news. >> maybe you can tell me some of the benefits that we are getting. i cannot believe i'm going to get better hurricane information than a weathercaster we call dead-wrong dale affectionately in corpus christi. [laughter] >> that's exactly right. we understand the market. people are tuning in for a daily basis -- on a daily basis for their hit shows. when the tornado comes, there will be an outcry. i don't think you want to say where is that local station the day after the tornado hits. that is the point. localism is about being there and serving the community all the time. much of the viewing is tuning in for -- >> i have limited time.

mr. mackenzie, can you tell me -- go ahead. did you want answer this? -- want to answer this? >> i would.\ we are often at the edge of a dma. i will use my system as an example. we are in shenandoah county in the washington, d.c., dma. you cannot get off the air in our area. we have to have it brought in by fiber. there are no local sports. but i can get that from a distance station. >> let's talk about section 119. if we do away with the requirements -- the incentives for local stations to get on, do we end up with network affiliate super stations? it is the station in new york or chicago or l.a. that everyone gets. then how does the local car

dealer advertise? or whatever business they are in the local community? >> that's absolutely what would happen. the easiest thing for the carrier to do would be to make an arrangement with new york and chicago and outlay -- and l.a. then we would have a national broadcast system. that's not the american system. that is not the case that would give a platform for the car dealers or movie theaters. >> i have limited time. >> why shouldn't consumers be able to choose? it sounds like mr. waldron is poor -- proving the point that consumers -- >> is in a cheaper to use less grant -- bandwidth and less resources to have won national and do away with all the spot beams and all of that -- to have one national and do away with all the spot beams and all of that?

>> we broadcast locals in all 210 markets. we made the decision that we want to be in there. all we are saying is to protect consumers from takedown, allow us to import a distance signal. that's not the endgame. >> you go under whatever agreement is eventually reached. >> of course. >> mr. donato, we talk about these million or so people who aren't served by anybody. is there a way we set it up where they just -- even with the dma's. we set it up to the one that is most rationally close to them? isn't there a way to start over and do away with the 1972 stuff? if i have my choice of local affiliates on washington, d.c., i would pick the corpus christi local affiliate. >> the 1972 stuff is what was

written at the time. no one has updated it. we would be delighted to supply the committee with updated information on it. so you understand what the invitations are, pay penetration in 1972 was less than5%. -- than 5%. now the amount of viewing that goes to cable stations is about 60%, 65%, so there has been a shift. typically, the counties in which it feels like it is irrational that it cannot get the broncos game are large among world counties. -- large, rural counties. we do have split counties. we have split counties in the past. >> my time is up. i have to research whether watching my corpus christi stations on my slingbox is illeg al. >> the gentleman from florida is recognized for five minutes. >> you have made an argument --

very compelling argument that the current retransmission system that is in place is incredibly complex, comically complex. but your solution is to walk away, fo rus -- for us to walk away from that process altogether, which would bring all the broadcast stations into the free market, if i understand your proposal. i appreciate your desire to take congress out of this. and i think the full committee's chairman touched on this before. if you take congress out of these business-to-business dealings, congress is still going to be tipping the scales in favor of one party or the other, either by keeping compulsory licenses or by striking them. why is walking away altogether a fair solution? >> i think the best way to explain it is like this. first, you get cable -- i will

say cable like -- cable and satellite a compulsory license for broadcast stations. then the fcc adopted rules that restrict cable and satellite's use of that compulsory license. enacted congress retransmission consent, which requires a marketplace negotiation between the station and the cable and satellite people. you ended up at the same place you would be, namely a marketplace negotiation, if you had done nothing, except you've got a bunch of regulatory warts that you developed along the way, like the fact that the 72 rules are still in the fcc's rules. all i'm saying is it is a rube goldberg system. it's a complex way to do something simple. it really is a chance to say here is a government program

that each little step made sense only did it, but the end result is nonsensical, so we are going to back out of it. >> let's talk about regulatory warts for a second. i assume that you would have some -- been some disagreement somethat -- be in disagreement with that proposal. i'm homing -- hoping you could walk us through the process but it takes to negotiate with local broadcasters. what makes them more difficult from your company's perspective then negotiating with the non- broadcast stations? those negotiations i'll take place without any congressional interference at all. why is there a difference? is it more difficult, and if so, why? >> it is more difficult because you have these 210 small monopoly territories, if you will, where this local broadcaster, as mr. waldron

asserts, has this valuable local content that is irreplaceable that no one else can re-create, and that one broad click -adcasr three four broadcasters against -- just her beaters against one another. -- play one or three or four distributors against one anhe the broadcaster might lose an eyeball for 30 days. lsh has eternity after the customer go through the headache of switching. >> can you go through that in a little more detail? playing several off of one another? how does that work? what is it you would see happen? >> in some cases, the broadcasters will call -- start running advertisement in rawling,r, saying, c putting into their signal, you are about to lose your signal from dish. please call your provider.

they run advertisements in the local papers. maybe it is a smaller amount of these things that actually go to a takedown. there are a number of these where you do get to 11th hour negotiation. consumers have been bartered for weeks if not months with all these advertisements and messages across the bottom of the screen saying the sky is falling, you better switch now. there is a huge disenfranchisement of consumers even when it doesn't go to a takedown. >> let's take the statement, read it back, and swap out the word hbo for broadcasters. hbo is going to pull back its programming. hbo is going to run an advertisement to say, you want to watch hbo, your favorite show, go to directv, because dish doesn't have hbo. these are marketplace negotiations. what is different about this, as

mr. padden said, with every other sort of broadcaster? and dishdepends on hbo and directv to have serious negotiations and that's the same thing that's going on here. >> 15 seconds to state the difference. >> with respect to hbo, are there other movie channels? yes. localism is not that important. we should be able to import in new york because it's not that important what is going on in denver. he can talk out of both sides of his mouth. >> the gentleman's time has expired. the distinguished gentleman from florida. >> i think the big difference andeen directv and dish members of the american cable association, we are very small providers.

normally with less than 5000 subscribers. when we start our retransmission discussions with the broadcasters, it is after they have already negotiated with the big companies in the dma. when we try to make a negotiation -- and on numerous occasions, i have asked, could we have a most favored nations clause in our contract to make sure we are being treated fairly compared to the others in our marketplace, i have never been able to get that in. i think there's a huge difference between a negotiation between directv and dish and the broadcasters and the small cable operators and broadcasters. >> great. this is my first time going around with this tiered i'm a freshman. it is really interesting to see -- my first time going around with this. i'm a freshman. it is really interesting to see. there were one hundred games where we had tbs in florida, for the braves, wgn for the cubs, a little bit of white sox, those

were the people i followed. when they first came out -- when espn started covering cable, you started to get more. and with the internet, ira member went and the btv came out -- i remember when mlb tv came out. you can now watch it on your devices. i wonder about the lost productivity in the american workforce. but that's a discussion for another time. as someone who is new to this -- a lot of people say, congress has to solve the problems of the american public, all that, and that's nice to say, but it of skiers the fact that we created a lot of problems -- but it obscures the fact that we created a lot of problems over the years. what would you say that congress has created a problem with this that we should look to rectify? >> sure. one perfect example is the compulsory license that you enacted gives cable systems the

right to carry stations that are deemed significantly viewed in their carry - - county based on a list of rating sfrom 0-- arengs from 1972 that enshrined in the fcc rules. if the station wants to get carried somewhere else and the constituents want to see it, the station has to petition the fcc to amend the list of significantly viewed asians so they can be carried -- viewed stations so they can be carried there. it is crazy. if you rely on the market, they will figure it out. there are several answers i could give. the one i would focus on for major league baseball is the like majorentities league baseball and other content owners are forced to subsidize essentially a $100 billion industry by providing

them with -- you mentioned a variety of well for programming you can see now. the vast wealth of that programming is made available through negotiated licenses through a marketplace of negotiation. we think the same could be true of the program now available through compulsory licensing. continue,ory licenses at the very least, we should have fair market value paid for that programming. >> what is the dollar lost to major league baseball? >> i don't know the answer to that. it's not a question of harm. it's a question of talking about what is fair and reasonable in that marketplace compensations, marketplace value is what we all live within this industry. >> thank you. conceptually, i think the biggest problem is that the rules that are currently in place don't recognize what the

marketplace looks like today in its -- and it is ever changing and ever evolving. the biggest thing congress could do would be to make sure that there are rules in place that encourage innovation and investment in competition -- and competition. consumers benefit the most by having companies like centurylink though into a major market, -- centurylink go into a major market, invest, and compete. i think that's what congress should look at. >> good. mr. mackenzie. >> small, rurla kerry -- small, rural carriers are the ones bringing broadband to america. oftentimes, regulations are one- size-fits-all. we should look at how will changes impact small providers. >> i'm out of time. if the rest of you gentlemen would like to cement something, i would certainly like to hear

your views -- to submit something, i would certainly like to hear your views as well. >> the distinguished gentlelady from california. >> i appreciate your time. it has been helpful to me, coming from los angeles, having just experienced a blackout, which i thought was specific to our area and did not really realize how widespread this was or why this happens -- i just had a couple questions for you. one of which is do you worry that pulling consumers into these escalating negotiations between cable or satellite and broadcasters means that more people are going to opt out of pay tv? and whether or not you think this would have a harmful effect on content creators who shows are distributed on cable and satellite? >> can i make one point? broadcaster is a free, over the air service. during the so-called blackout, the service was available 100% of the time.

i realize that some people might not have antennas or might have reception problems. >> so, i could have seen cbs if i had rabbit ears? >> absolutely. it was available over the air during the entire time. there were reports in the new york market that there was a run on antennas at radioshack. i do want to emphasize the signal is always on and always up. it may not be available in the cable system, and we realize that, but it was available this whole time. >> i take a bit of an issue with that. i don't think the broadcasters build out terrestrial signal to every dma. >> i don't think people knew that. i doubt whether there was a run on rabbit ears in l.a. >> shame on broadcasters were not building out their entire dma's. >> from a paper writer perspective, -- pay provider

perspective, it's not pretty. >> many broadcast stations from -- play an important role in providing local and emergency information to the communities they serve. i know we all agree consumers should not be deprived of emergency information, especially in emergencies. what steps can congress take to ensure that our constituents don't get caught in the middle of these commercial disputes? particularly when weather or other emergency information is at stake? >> if there is a dispute, the consumer should be able to change providers. there should not be a cancellation fee. there should be a rebate if there is not service. >> that is not that easy to do. if you just want to cancel right in the middle of the dispute. go ahead. >> it's not easy to do, but that is a choice that consumers can have in addition to getting the signal over the air.

and by the way, it is free to anyone who has an antenna. >> representing antenna companies. >> can i address the point about refunds and cancellation fees? our view of the world is it is an unfair fight as it stands. you have one broadcaster who plays the distributors off of each other. mr. waldron is trying to make it worse by saying let's give another hammer to the broadcaster, by saying you have to do refunds and wave termination fees -- waive termination fees. the fact that there are blackouts are the exact reason the disclosures are crystal clear. programming is subject to change. we cannot ever guarantee we are going to provide any local broadcaster signal because there is a constant threat of takedowns. >> would anybody else like to respond? >> the proposals we have put forward during these disputes, the signal remains up while negotiations are going on,

therefore the consumer is not going to be harmed. once the negotiations are completed, then the fees are paid retroactive. no one is really disturbed or harmed by that. it allows the consumer to continue to have service during that period of time. >> ok. anyone else? thank you. i'm sorry. >> i would just repeat that mr. tokenzie's industry went court to defeat a standstill agreement in the context of the program access rules. for them to now say they like it in this instance, i think is unusually duplicitous, even by washington standards. >> would you like to respond, mr. mackenzie? >> my companies and the companies of the aca were not involved in that dispute. the large cable operators may be, but not the small cable operators. >> thank you.

>> the distinguished gentleman from louisiana. >> thank you, mr. chairman. thank you for having the committee meeting today. let me jsut -- just start with -- i guess i will show a favoritism and start with mr. campbell, from centurylink. i guess my question to you would be, looking at most of your new subscribers and the fact that they are -- they are probably new to the internet, looking at the area where you all are located. if you go down the street towards that area, it's one of the poorest places in the country that has consistently been that way. the fact that your new customers are coming in and taking video along with internet access -- what kind of effect is that having the area? >> congressman, thank you for

the question. it has had a great effect, not only for our subscribers that take the video product, but for those who choose not to, as we upgrade the networks in these markets that we enter, we are offering broadband speeds that megabyts. 25 to 40 even those people we cannot sign up -- 25 to 40 megabits. even those people we cannot sign up. from the video perspective, the benefit is great. it allows us to compete with the incumbent cable operator and offer video product. from a broadband perspective, the effect is even greater. >> from a price point, how are you all with the traditional video providers, cable providers? >> traditionally, in the markets we have entered, we enter lower than they do. what we have seen is some slowdown in price increases from the incumbent cable operator,

although that has not -- they slow down the increases. they still increase their prices and content acquisition is still a problem. generally, our price point is lower. >> well, in -- local just say that many broadcast stations play an important role in providing local news, weather, and emergency information to the communities. ofever, nearly 90% households today watch their local broadcaster through a pay- tv subscription and therefore depend on cable, satellite, or other video subscriber to offer these video programs. as we mark the anniversary of 9/11, i believe that we all agree that viewers should not be described -- deprived of local information when there are emergencies, regardless of how retransmission, consent, and nego -- retransmission consent negotiations are proceeding.

in area, we have to worry about hurricanes and tornadoes and other things. d interested whether the panelists will comment on tactic tos as to whether it i threaten blackouts given viewers are thent of missing emergency information? whatanke to make sure our constituents don't get caught in the middle of that fight,th and other disasters may play a part? anyone can start. >> we don't think it's fair for consumers to be put in that position, especially given that the broadcasters received, at least initially, billions of dollars of spectrum for free under the premise that they would be stewards of that spectrum for the public good. with all due respect to mr. waldron, i don't think saying to folks, and go use an off air antenna, is a satisfactory solution. they don't carry the entire dma's.

>> the vast majority of thousands of broadcasters and cable companies reach deals. for your constituents and the vast majority of constituents, as i said in my opening statement, 1/100 of 1% of all viewing hours were lost to disruptions. you're more likely to use -- lose your service because of power outage. the vast majority of times, the deals are reached and constituents continue to get their service. >> congressman, as you know, our company is steeped in a reach -- rich history of being a rural communications provider. we absolutely embrace localism. the issue from a video perspective -- i think mr. dodge mentioned this. negotiations are not quite as local as they used to be. if we are dealing with a local station in the colorado springs

market, it might be a better negotiation process. we are dealing with syndicates that own 30, 40, 50 markets to play them against each other, who push these negotiations up to the national level and tie in all of this nonlocal content into the agreement and say take it or else. that's kind of the issue, from the video perspective. in utopia, if they were local and it worked the way the mr. waldron said, i don't disagree, but it does not work that way. >> i see the my time has expired. mr. chairman, i yield back. >> the distinguished general from georgia. -- distinguished gentleman from georgia. >> thank you, mr. chairman. this is one of the issues that my staff and others have said this is a terribly competent at issue. i began reading agin -- about it last week and i felt like i was back in law school. reading a paragraph or five times. what is being said -- reading a paragraph four or five times and

saying what's being said here. i've been listening today. what i come back to is, serving the ninth district of georgia, the start of the appalachian peoplewhat i hear is the who are not paid to be here -- my constituents could care less about the complexity of it. they want to be able to get their news, watch new ideas and tv, watch new programming. sometimes, the complacency of what i have seen here today is more fighting for our battles and market share than the person we actually serve. donato, i'm going to assume that this was sort of off-the- cuff. you said the dma is what it is, almost implying, like nielsen, we are --

you don't always have to be there. we can change that. there can be other ways to look at dma's. i would like for you to explain the process in which nielsen decides the current dma boundaries and tell me whether or not northeast georgia is under current consideration. >> currently, the process is annually. we evaluate the share of tuning to stations in the home market. for a particular county, which has a majority of the viewing or the largest share -- it is to that home market that account he is assigned -- that a county is assigned. in some cases, the counties on the outskirts of the dna, we will split counties and put one part in one county and the other part in another. >> does safety of her become an issue? -- does safety ever become an issue? does it ever enter into what you're thinking about? by splitting accounting, -- a county, one of mine is split.

i did not even see four of my counties on the atlanta area even listed. is there safety that ever comes into town -- account of what you're talking about? >> the dma is entirely based on viewing. >> i appreciate that. so, these gentlemen have talked about safety and localism and these kinds of things. yet when we do the dma, safety is not being taken into account. so, the argument is really interesting here. we get them talking about localism and safety. we get you saying we don't even take it into account for dma's. >> i guess i would respond in this way. the dma is basically set up as a that buyersntity so and sellers of advertising understand the geography associated with viewing audiences. it is the basis for literally

hundreds of millions -- billions of dollars of commercial activity. it really is the thing that has supported local television all along. it is subjective. it is based on viewer preferences. it is not based on any rules. we frequently talk to congressman and congresswomen -- congresswomend when similar issues arise. >> we will talk about that in just a second. >> we handle them one at a time and try to demonstrate why they are where they are. sometimes this is the reason why we began to split county -- a county. >> one of my counties in particular, i think it is a false the sanction. we are talking -- a false distinction. we are talking onto the different levels. we talk about localism and the safety aspect -- we are talking on two different levels.

we talk about localism and the safety aspect. you're not even discussing some of the arguments being made. i might submit more questions for the record at a later time. how are broadcasters willing to facilitate the availability? i have four orphan townies. -- counties. i would like to make sure that we get this question addressed. it came up in my town hall meetings. people understand that they get it because we are in a different dynamic in those four counties and split between two smaller markets. can i get a commitment out of you continuing to work with me on those orphan townies? -- counties? >> absolutely. >> i will leave this question open. it came to me as i was listening to you. i'm out of time. i was submitted for the record -- i will submit it for the record. can i have 30 seconds? thank

you, mr. chairman. andad "the new york times" the "washington post." . get information from all over why couldn't i have my local broadcasting and the los angeles affiliate if i wanted to question mark and i'm not setting myself up -- if i wanted to? and i'm not setting myself up for you to say he's on one side or the other. couldn't it be either or -- either/or? >> your time has expired. you may answer -- answer. >> exclusive territories are common in business. if you are a distributor for car dealership. that is what a local broadcaster is. they are the cbs affiliate, that outlet. if you bring in another cbs station, you have defeated the

exclusivity the broadcaster negotiated for. hashe gentleman's time expired. the gentlelady from washington. >> thank you, sister chair -- mr. chair. i want to thank all of you for being here. i want to start with mr. padden. you haven't talked about localism at all and how that would impact access to local information. >> again, i'm just suggesting to you that marketplace forces would be a better served -- servant of consumers' interests. if there is programming they are interested in, whether it is local programming or something from somewhere else and you leave it to the market and there is money to be made for biting that program to them -- money to be made providing that program to them, they will get it. the majority of the viewing is to local broadcast stations because of the overwhelming interest in the local news and weather and sports.

in a free-market system, that would continue. there would be absolutely no diminishing -- diminution in that at all. why you would want to continue a system that is based on the nielsen ratings from 1972 to decide who gets to watch what i don't understand. >> with the new technology today, the internet, people are getting a lot of local information even when they're not at home. many of us are still staying connected at home and getting local information in other ways. we have people traveling around a lot. they are not always in their local area, but they still want news that is happening from home. given the development of new technologies and the differing consumer behavior in terms of access to content, and making sure that we, given that we have legislation from 1988 and nielsen ratings from earlier, how do we make sure that we put together policy that does not

inhibit innovation or change going forward? as we look at what we should do here in the next step? that is kind of a broad question for everyone. we want to make sure that whatever we do addresses issues that consumers have today, but also does not block innovative new entrants that may also want to compete in this space. mr. donato? >> i would like to answer that, actually. we measure viewing of television online. we have made an announcement -- it's a very consultative technical problem. we have solved the technology. starting at the end of next year, viewership on tablets will also be included in the ratings. we have measurement solutions. the business relationships are very complicated. i would not comment on them. i would leave that to my fellow panelists. but we do have measurement solutions worked out. >> if i could comment on the

1972 nielsen data point, one thing that is missing from the record, although theoretically dma's can change based on viewership and viewership is what is measured, there's only one signal that's available on a dma, when you check the viewership, you will get the same local affiliate over and over again. in southwest colorado, for example, which is in albuquerque to provide both albuquerque and denver to the folks in those counties and let the consumers decide. when mr. donato's firm calls -- maybe people are right, they prefer to buy their chevrolet from albuquerque. it is the vote of the people to decide where the counties should be. >> i've said it before. i don't understand the 1970 two comments. every year, we evaluate comments. -- the 1972 every year, we evaluate your ship here that's what the dnas

are based on -- we evaluate viewership. that is what the dma's are based on. >> how do we make sure we put together legislation that does not inhibit innovation? >> if i could come back to your question about technology. technologies very exciting about -- for broadcasters. it is exciting for -- you can use the internet and technology to keep up with your local broadcaster, even when you are in washington, d.c. with the cbs issue with time warner, an important part of that was the online digital rights so that cbs could make that programming available to hulu or netflix or amazon instant video. expandinglogy is opportunities to view your local broadcasting. >> you are right. new technology is creating all kinds of wonderful opportunities. unfortunately, the compulsory license that you have given to

the cable industry and the satellite industry, you have not given to the online industry. for example, you give the rights to broadcast programming to comcast and directv, but you don't give it to netflix. i don't understand why. i'm not advocating that you give it to netflix. what i'm advocating is you undo the license you have given to cable and satellite that currently puts online distributors at a disadvantage. ar -- the united states is party to a number of international treaties that prohibit compulsory licensing of television programming through online providers. the only way you can level the playing field is by repealing license for cable and -- repealing the license for cable and satellite. >> my time has expired. i yield back. >> the gentleman from texas. >> let me apologize for being tardy, as well as for having to leave early. this is one of those days where

all the three committees on which i serve our meeting concurrently, so i am having to shift around. i may be covering some subjects that have already been covered. i apologize for that. i would like to address a couple ofue. my first question would go to mr. dodge, mr. waldron, and mr. mackenzie. the temporary compulsory license has been extended innumerable me congress. my question is how well is it working for television viewers, and do you feel that it ought to be reauthorized for another five years? >> i would say it is working wonderfully as a result of the last reauthorization -- it is working wonderfully. as a result of the last reauthorization, dish is providing 210 channels to all the dma's. >> i agree completely. we think the local compulsory licenses do work. i disagree with my friend preston padden on that one.

>> we will go three in a row. i also agree. >> the next question is for mr. garrett, mr. padden, and mr. dodge. what alternatives exist to the compulsory license, and would t hose alternatives adequately protect the rights of copyright holders? mr. garrett? >> the copyright office has addressed that very question in a report that they prepared for congress, when they talked about the different types of licensing. direct licensing, sublicensing, and collective licensing. and the report lays it out in excellent detail. the one thing i would mention is, the actual history here of what has happened with wbts, for example. i have had the privilege of being present at every one of

the hearings this subcommittee has held on this issue since the late-1970's. when i go back, i think about the years where people would debate about making wpbs available and it could only be done by compulsory licensing. in 1990, it converted to a cable network. today, it is available in virtually every -- to virtually every cable surprise -- subscriber, pursuant to free- market agreement. including the agreement that major league baseball has. a desk at the packager programming on tbs for several --rs ash it has kept a pack it has kept a package of programming on tbs for several years and will continue to. >> a could be more fair to copyright owners than the government system where government boards set the rates. >> and mr. dodge? >> we believe the compulsory licenses do still have utility.

part of the reason is what mr. padden noted in his written testimony. that is the magic of the compulsory license. >> thank you for your testimony. i yield back. >> i thank the gentleman from texas. the distinguished gentleman from new york. >> thank you, mr. chairman, and the ranking member -- and i think the ranking member as well -- and i thank the ranking member as well. it seems some of the disputes over the recent years have resulted in a temporary blackout, inability for consumers, some of whom i represent back home in brooklyn and parts of queens, to get parts of content -- to get content. they all seem to occur in and around significant sporting events. most recently, in the run-up to the start of the football season.

there was a conflict that was resolved on the eve of the football season starting, thankfully. in the past, back at home, there was a conflict that prevented some consumers from seeing part of the early yankees' run through a particular playoff -- season. wou that wound up resolving itself. there was a conflict that centered around the ability for some people to see msg, which broadcasts the knicks. the knicks were off to a terrible start, so nobody cared. then jeremy lynn came on the scene, and he became -- jeremy lin came on the scene and it became a big problem. it seems to have an interesting timing as it relates to major sporting events. i'm very interested in mr. 's observations as it

relates to sports licensing fees. i believe you testified that these transmission fees have been skyrocketing in recent t imes. is that correct? >> true. >> i think you also indicated that consumers are hurt as a result. , how you elaborate on that consumers are heard by the increase in licensing fees? espn, the cost of that channel alone is $5.50, and that is a channel that is required to at the basic tier. whether you are a sports fan or not, you are having to pay for espn. when you look at the sports

cramming -- force programming on the cable channels and broadcasting channels, the amount of the cost that can be attributed to sports -- i do not have an exact number, but the expense.is 1/3 of the >> who requires espn to be carried at the basic tier? >> that's part of the negotiation you have with disney. they will only allow you to carry espn if you put it on the lowest tier. >> ok. you also mention in your testimony that you thought that the antitrust exemptions that exist perhaps should be revisited because of the dominant marketshare that exists with major sports leagues. is that correct? >> yes. >> in 1922, i believe the antitrust exception was granted blanket to major league baseball. you referenced legislation is congress passed in 1961, but if

we were to revisit the antitrust weretion, and adjustments to be made, recognizing that this is the difference between baseball and the other major sports leagues, how do you think the landscapeact in a manner that was favorable to consumers? >> what you have rather than one entity negotiating on behalf of the entire league -- you would have individual teams negotiating in their local market. i think that would allow for more competition and probably lower costs. >> could you comment on that? >> as i indicated earlier, very few people would like to hear what i had to say about antitrust policies and antitrust laws. my focus is on the copyright side. with thell say is that sports broadcasting act, it is among other things, responsible for why you and the american public will be able to see the world series on fox this year.

it is that law which gives the commissioner of baseball, the nfl and other leaks the ability to pull together rights and make available to the american public the kind of programming that is now made available. i think the law has been -- has worked well, and it is one of the reasons why today i can come and say to you that every one of the practically 5000 games played in major league baseball -- i'm sorry, 5000 telecasts of games in major league baseball is available in one fashion or another to your constituents and to all consumers. >> thank you. >> i thank the gentleman. he distinguished lady from texas is recognized. >> mr. chairman, thank you. i think all of us are expressing our appreciation to our chairman member andranking indicating that our calendars caused us to be delayed. in one instance, homeland

security was discussing syria. i might add that the comment -- the content of gentleman before us, content and various providers have helped to contribute to america's education and discourse on this very important issue, so we are here for more than just a separation of powers as to who has what and who needs to be regulated, but to be able to thank you for how you contribute to the public discourse on some very vital issues. we are engaged in this regulatory discussion because saw fit in its wisdom to regulate both the content and to createers in order more robust competition, which i think is vital, and particularly the responsibilities of the judiciary committee are on the competition. i might add that there is merit in everyone's position, as i

have been able to glean, and certainly to the national association of broadcasters, i want to just be historic in my reflection on the old days of the black and white television antenna where you did provide content of joy to those communities that could get a television, and all they had to do was to plug it into the socket. to a new posture that for many was a very difficult change because they to now pay for something plugthey had been able to in and receive some form of content, but in the wisdom of the congress and the innovativeness of technology, we have all come to live together with the new access that consumers have. in the course of that, i want to raise a number of questions. many members have expressed certainly the concern of the

issue of blackouts and how it impacts not so much the entities that are having a disagreement -- i heard someone say that is only a minute percentage that occurs, but if it occurs at all, it is a difficult challenge for many of us. with all due respect and reflection, the customer will be cable company, and they will not be calling me entity that has the content. we have to find a balance of that because there are concerns that this would be a growing problem, so i'm going to be posing a generic question to start out with, and i would appreciate those who would answer it to do so, and i might have missed it. this is just a plain, simple question -- do we expect to have these content conflicts coming up over and over again, and there is a way the industry will look to solve those kinds of concerns?

"i have content. you are a provider. you want to get my content, you have to pay." are there ways to regulate rather than skew what congress tried to balance? the other question is -- should the upcoming reauthorization include a discussion of other issues related to satellite cable and the big four broadcasters, and what do you think they should be? again, to those who would want to answer, do you think it should simply be a clean reauthorization? the judiciary committee has its jurisdiction, and others have theirs. specifically, to mr. dodge on the dish network. if congress did not reauthorize

section 119 compulsory license, how expensive or burdensome would that be for you? you.is specifically to and can you answer the other question about getting a resolution on how you debate this question going forward and then the reauthorization question? is for everyone, mr. dodge. why don't you wait on the question i specifically asked you. >> yes, i think something can be done to resolve this. what we need to do is look at the rules that are currently in place that are slanted in favor of the broadcasters that were created at a time when broadcasters were facing issues with the incumbent operators, and now, the shield has turned into a sort. if some of those issues were removed, such as network non- duplication, i think you would see a much more balanced

negotiation process. we have incentive to get local news channels to our consumers, and i think broadcasters have the incentive as well, but the problem is that so much of the national content is tied to it. if we were able to carry that content, i think the negotiations would be more balanced. to answer your first question -- is this problem going away? for lack of a better term, the proof is in the numbers. in 2010, there were 10 local blackouts. in 2011, there were roughly 50 erie we are on track to set a not a at 120, which is record i think any of us will be happy to hit. we welcome competition, and we need to find a way ourselves to evolve and participate in that. >> thank you. anyone else?

>> [inaudible] support a clean reauthorization, and the vast majority of deals do get signed. still today, you can get a tv and an antenna and plug it in, and you get tv for free. >> thank you, mr. chairman, for your indulgence. i look forward to talking with you. i want to thank the chair for convening this hearing and all of the witnesses for participating. it has been a delightful, free- flowing discussion. it has been great to see mr. dodge and mr. waldron seated next to each other going toe to toe. i will always benefit, since i have started going last in the series ofhat has taken place

because there is always one inment that kind of pops up the whole discussion that hits my mind. that comment today came from mr. dodge when he looked at mr. waldron and said, "you cannot talk out of the sides of your mouth -- both sides of your mouth." my thought was that most of us in all of the industries -- it is my experience -- have talked out of vote sides of their mouths, depending on what is beneficial to their particular industry -- have talked out of their mouths, depending on what is beneficial to their particular industry. i would note that it is particularly applicable to the broadcasters because i have been for peoplevocate

being paid for their intellectual property, and for that reason, i have been a strong advocate of your ability to negotiate for payment for .our product i think that is very important. tot i have not been able reconcile, however, is how you toly a different standard the people who provide copyright material on radio, the performers, and i just do not dichotomy, sot i'm hopeful that you all will maybe come around on the radio side to the same position that when you own the

.rotected material understand that there are performers out there that own the protected material that they produce, and they deserve to be paid also. thatm not going to belabor note that itwould seems to me to be unfair for you thato take the position there is some kind of performance tax when the government gets no part of the ,erformance rights of revenue yet, there is no performance tax paid for what you

have the copyright to. i hope you all will help me reconcile that. i will not do it here in public, but it is a concern that i have, and i think these are inordinately difficult issues. closerof come down probably to where mr. patton does than most people. we would probably be better off to get the government out of the way, not only in this context, but in the performance rights will not be, so it a surprise to anybody because i announced it at a hearing right before the break, that i was introducing a bill to do away with the compulsory license of

but to make sure that if a performer -- if you play a performer's music, that you and worke them and go out a deal with them if that is what you want to do. i am kind of free-market on a lot of this stuff, and i was particularly appreciative that your testimony was the last , so i thank all of you for being here. i will not necessarily ask a question unless mr. waldron wants to respond to what i did not intend to be a personal . because i.a.b started by saying that we all are self-serving and talk out of both sides of our mouths. i think that is characteristic of all of us at one time or

another. i just use your industry as an example, as mr. dodge did. i thought his comment was appropriate. say we looknted to forward to further conversations with you, probably best in private. we do not accept all that you said, but we would like to continue the conversation. >> we have held the conversations on a local and national level, and they have always been cordial and congenial. as you have said, you and mr. dodge and mr. waldron are good friends. en are good padd friends. all of us are good friends. we do not always agree on every issue. the motion picture association of america has requested that we submit this info graphic illustrating the continued rapid growth of online viewing options

, soaudiences for the record i would ask unanimous consent that we make this part of the record. i'm not even sure what it is. [laughter] i am in complete agreement that anything that will help us make the decisions ought to be part of the record. >> without objection. >> i ask unanimous consent to submit it. >> we will accept that without objection. i want to thank those of you who have been in attendance for the entire hearing. obviously, your interest is more than just casual. i particularly want to thank the witnesses. you have contributed significantly to a very complex, very important issue, and we may meet again, but it has been a pleasure having you all with us. today's hearing is now concluded . without objection, all members

will have five legislative days to submit additional questions or additional materials for the record. this hearing is adjourned. >> thank you. [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2013] >> tomorrow, virginia congressman rob wittman discusses how automatic budget cuts known as sequestration are affecting the pentagon budget and the military overall effectiveness. he currently serves as the chair of the house armed service committee on readiness. you can see "newsmakers" sunday at 10:00 a.m. and again 6:00 p.m. also tomorrow, a discussion on u.s. intelligence and the ability to respond to terror attacks. you can see that sunday at 10:35 ..m. eastern

>> we bring public affairs events from washington directly to you, putting you in the room at congressional hearings, white house advance, briefings, and conferences, and offering complete, gavel-to-gavel coverage of the u.s. house, all as a public service of private industry. we are c-span, created by the tv industry 34 years ago and funded by your local cable or satellite provider. now, you can watch us in hd. >> both chambers of congress returned to session on monday. the senate gavel then at 2:00 p.m. eastern to consider judicial nominations before discussing and energy efficiency bill to help manufacturers to manufacturers develop energy-efficient technologies. the house returns tuesday at 2:00 p.m. eastern for bills and speeches.

next week, members will consider a forest management measure that would direct the agriculture department to establish sustainable timber farming zones. later this week, a bill that would revise food aid programs that were left out of the farm bill when it was debated earlier this year. also, possible work on a continuing resolution that would keep the federal government funded past september 30. see the house live on c-span. this past monday, a three-judge panel for the d c circuit court of appeals heard oral argument on whether internet service providers must continue to treat all traffic equally. the case -- verizon versus the sec -- it's one of the largest internet providers against the federal government and whether the fcc has the regulate -- authority to regulate internet the case, verizon ts one ofe fcc, pick