many people who haven't made that change yet and what we're talking about here today is finally transitioning those old networks into essentially being part of the internet. so we have here today hank and david from respectively at&t and verizon who are going to explain what their companies are doing and what it means for americans, why they're doing it. and how it might offer better services. and then two experts who have been studying the transition jody griffin from public knowledge, out in front and articulating five basic values that they think should guide the ip transition. the f.c.c. seems to agree with them. the question is how to implept those values. and professor christopher yu from the university of pennsylvania law school will offer his perspectives on what tools the f.c.c. has today. so i will remind everybody watching that we're discussing this on the i.p. transition hash tag and we will take questions from the audience first after the initial presentations about what the ip transition is and then after our panel discussion among our experts today.

>> it's a pleasure to be here today to talk about the i.p. transition. but before we do what i want to talk about is another transition that's been occurring and that's directly related, and that's the transition of our networks from copper to fiber. of course it's generally understood today everybody knows that fiber to the home is the best broadband network possible and one that many are striving to obtain. when verizon started to roll this out ten years ago it wasn't so obvious and we got a lot of questions about why we were doing this. who needs 30 megabits per second?

but everybody knows today that we need much more than that which is why we're now up to 500 per second over the fiber and much more to come. so fiber is an important part of the i.p. transition and a basis for the i.p. transition. but the transition of voice from copper to fiber doesn't depend on i.p. and that's what i wanted to talk about for a few minutes. so fiber started in the telephone network many years ago. there aren't many in the room old enough to remember candice bergen's commercial and the pin drop. but what differentiated sprint's network at the time was that it was all fiber and as a result the sound quality was noticeably superior to the existing long distance network. it was initially deployed in the long distance networks and then in the interoffice facility networks but fiber in the loop has also been around for a while.

what i have for a slide is the picture of a central office and i'm showing the copier connection from the central office to the house. this is the basic building block of the telephone network. in the central office there is backup power provided with diesel generators and batteries what power that copper loop to the home. and that's how basic voice was provided. fiber was introduced into that loop many years ago, 30 years or more, with digital loop carrier systems. fiber went out to a remote terminal that was out in the network somewhere and then from there copper connections were driven to the home. again, the power was provided at the remote terminal. there was commercial power there and then backup was provided through battedries primarily because you can't have big diesel generators out in the neighborhoods.

that fiber is pushed ever closer to the home with new networks now. we have fiber to the node or curb. these are even smaller boxes in the neighborhoods that have fiber coming to them and then use copper to provide that last connection to the home. again, with battery backup engineered for a certain period of time typically eight hours. and then finally fiber to the home. and here that optical network terminal is right at the customer's house and again battery backup is provided there for use storing power outages and what not. so how did fiber to the home, how did we start rolling out fiber to the home. we had our existing copper network that literally went to every home and business almost 100%. and we started by the easy thing to do is in the new build to just deploy fiber there rather than deploying copper. and we did that in some cateses.

but the real significant thing that we did differently was to do a fiber overlay. and so where we had existing copper we ran a brand new network that was fiber that went past every home or business. and then as customers ordered the internet or television service, we would connect them with a fiber drop wire to the house install the electronics on the side of the house and provide the service. so that -- we began that about ten years agent we've now built our fiber network to pass about 18 to 19 million homes and businesses. and the results in the marketplace have been very interesting. because what it shows is that the transition is actually well under way. i have a chart here that shows for those areas where we've deployed fiber where we have fyyose available more than half have left our network completely. they've gone either wireless only or getting service from a competitor such as cable. about 40% of the homes in those markets are getting our fiber service and less than 6% are on the copper network. so that copper network that was built out to serve 100% of the customers that over the past 10 years has shrunk by more than 94% so it's less than 6% are on there. so as we look at why these

remaining few have not moved over, in many cases it's because of concerns that the fiber is more expensive and they're going to have to pay more. and it's true that the way that we were deploying this was if you ordered the television service or the broadband service that was when we would install fiber. but that's not the case anymore. and people who just want their basic telephone service over the fiber can now get that for no additional costs and for no installation fees, the same monthly price, the exact same service in fact. and so i have a chart here that just shows for basic telephone service -- now, we have a fios digital voice, an i.p.-based voice service. that's not what i'm talking about here. i'm talking about a person's plain old telephone service. they can have that moved from copper to fiber and get the same voice quality actually better because it's less vulnerable to interference static on the line and those sorts of things. 911 works exactly the same. health monitors, security systems, fax machines, all of these things work exactly the same because it's the exact same service. and there's no change in price and greater reliability. and again, i talked about the power and backup battery backup

capabilities. that's part of it as well. so we're now reaching the tipping point where we have so few customers left on the copper that it really makes sense looking at how we can complete that transition and move those remaining customers and in a way that's acceptable to them but it has to be done from the copper over to the fiber. and with that, i will turn it over to hank to talk about the i.p. transition.

>> thanks, david. and thanks for inviting me to be here. that was really i think a great intro because when people ask me what is the i.p. transition that sort of the shortest sound byte version of an answer i have is that it is a transition from narrow band to brondband. and i think your discussion really brought out the broadband part. i'm going to talk a little bit about the pact switching part and what that means. at at&t we've been talking about the i.p. transition for what seems like a long time now. we filed our petition with the f.c.c. asking them to authorize trials of the ip transition back in november of 2011. but actually the f.c.c. started talking about it before we did. in the course of developing the national broadband plan in 2009, the f.c.c. sought comments on -- although it wasn't called the i.p. transition they called it the sunset of the

legacy phone network. and in the plan that they ultimately adopted, they basically noted that the i.p. transition was inevitable because it would not in the long run be sustainable to maintain two networks. what are those two networks? what are the differences between them? that is what i would like to talk about for a few minutes here. really, at the highest level the transition from circuit switching to packet switching is a very fundamental change in networking. a circuit switch network, that's the traditional network, works

by reserving capacity across the network. so between whatever users are using the network for the duration of the call. a very smart engineer once observed that the value -- that really circuit switching is useful to do when the relative

cost of transport is low as compared to processing. and so what moore's law has done is of course relentlessly lowered the cost of processing. and so this particular guy larry roberts back in i forget the 60s or 70s kind of predicted that the transition was inevitable because the cost was going to drop over time where the cost of transport would not change as fast due to the cost of civil engineering. so we're in that world today. in the circuits switch network you reserve capacity ton an end-to-end basis. what packet switching does is instead of reserving capacity it breaks communications up into into small pieces and sends them independently across the network where at the other end of the network they emerge miraculously magically and are reassembled into a coherent stream. in a sense that's the transition that we're undergoing in the i.p. transition. what technology perspective, the traditional phone network technology is quite old. so circuit switches, circuit switch transport, ss 7 signaling, these are the technologies that ultimately will be sunset. the interesting thing is what they're being replaced by is actually developments are happening so fast there that it's changing. in effect we are now at the same time as we are making this i.p. transition we're also changing the core of the network. we're moving from a network where we had specialized -- this is a fancy engineering term for you -- boxes. we had specialized boxes used to provide services to a network

-- and now i will use a fancy term. i hope it's not too bad. where what we have is something called network function virtualization where the functions, instead of being dictated by the pieces of equipment, will be software base, and off-the- shelf routers will be able to provide any of the services that were previously provided by these specialized boxes. so this is a tremendous change in networking at the very core that's going on at the same time as we're making the transition to i.p. ultimately, the i.p. network from a consumer perspective is a much better network because it's not designed for a single use. i mean, the phone network was really designed to do one thing which is provide telephoney. the ip network can provide an infinite number of uses and people take advantages of them every day. think of the ways you communicate, whether text messaging, video chat, social networking platforms like facebook. there's an infinite number of ways in which people are able to communicate using ip net working. so the transition is a great boom for consumers from a technology perspective they have moved from dumb receivers or terminals of telephones to

basically computers. customer equipment of the i.p. network. whether a small computer like a phone or a big one. david really laid out how the traditional network is descaling in terms of it was a network built for close to 100% of the population that's now being used by a spall fraction of that. we see similar trends on our network and do not expect that to stop any time soon. so our view is the i.p. transition is inevitable. it's well under way. what we want to figure out in concert with policymakers, public interest groups, other companies, is that how do we complete the transition in a way that works for everybody as best as we can? this is not something that's going to happen tomorrow. this is going to take several years to do. at&t has targeted 2020 as our own internal target for hoping to sunset our t.d.m., circuit switch networks and we look

forward to working with the policy makers, other companies, public interest groups to figure out how to make this transition as smooth as we can. >> ok. so i want to pause here and take questions from the audience about the i.p. transition, basic

issues at play before we get into our panel discussion. but let me just ask you. maybe if each of you could just to clarify if you could just explain what the differences are as you see them between the two paths that your companies are taking, that will perhaps help set the stage for our discussion. >> so i wouldn't say that they're so much different paths. they're just different areas of focus at the moment. our network is undergoing the same transition from circuit switching to i.p. that hank talked about. and so the things that he talks about in the transitions that he talks about are happening. they are inevitable. and they are ultimately to the benefit of consumers and to the internet eco system as a whole. i think the difference is that we are so far along now in the copper to fiber transition that i think it's important to accentuate the differences there and the fact that, yes, most of our customers over the fiber prefer to get the i.p.-based communication service. but for those customers who don't want those, who want to

keep getting the same old telephone service that they had in the past, that option remains, too. and i think that helps to remove some of the concerns that people may have that people will be left behind or that there are capabilities that won't be available. and so that's the main reason inl i think for changing the point of focus right now. >> so just to clarify, because at this point i can it's lost for a lot of people. so even as you're transitioning, you're still planning to offer a circuit-switched telephoney service so there's two different dimensions here of the physical infrastructure and the way that the service is delivered. is that fair? >> that's absolutely right. and as i said, the vast majority of our customers prefer the new i.p.-based rich communication services. but we didn't want to require people who weren't quite ready to move in that direction on their own.

we didn't want to force them to do that at this point. so we wanted to continue to make the plain old telephone service at the price with all the features and what not that they're familiar with available to them. >> i agree totally with david. at the same time as we are working on planning for the sunset of the circuit-switched net work and the platform of system that is support it, we're seeing the same forces driving fiber deeper and deeper into networks generally. so whether we're looking at the business customer segment, the consumer segment, or wireless, in every one of those areas the market is going to continue to push fiber out closer and closer to customers for the simple reason that fiber provides greater performance and band width than any other physical medium. >> so in our panel discussion jody is going to start off by laying out some of the concerns that she and other consumer advocates have had. so we'll get into those. but for the moment does anybody have any questions on what the i.p. transition is, how it's going to work, the differences here to the extent that they're relevant? i'm happy to take those now. anyone? if not, why don't we just get

started then. so jody, you have done a lot of work in this area. why don't you give us a little historical perspective here and take us back to the kingsbury commitment in 1913 if you would like. and if i may put in a plug for our previous program, which i think you'll also find on the c-span archives, was on this very topic. so last fall was the 100th anniversary where there was a

settlement where the department of justice dropped a lawsuit against at&t. we had a debate at that point i think that harold was on that panel from public knowledge about in the long term was that really the best way to protect consumers and, or how do we apply those values in a world where you no longer have one system, you have competing systems, cable companies and wireless companies and at&t and verizon. so you can start wherever you want there. kingsbury public knowledge, up to you. >> ok. well, i will start by thanking you for having this panel and having public knowledge on it. i think since you've already described the commitment, i'm going to start with values, which was mentioned earlier, because that's really been a big focus of public knowledge as this debate really got under way at the f.c.c. and with at&t's petition to start trial. so from public knowledge's standpoint, we've -- we have have identified basically five fundamental values that underlie what the u.s.'s policies have been for basic communication service, which up until now has really been basic voice service over

the traditional phone network, and we think that it's important to identify what those values are and understand what it means to achieve the goals set out in those values ahead of time. because i think otherwise you'll just as we move into this transition it will just become a battle of the wish list between the various stakeholders and there won't really be any guiding principles to figure out where do we want to go and how do we know when we've gotten there. so for us the five fundamentals were universal service, which includes basic buildout, in the past we've handled this with implicit and explicit subsidies. it also includes things like disabilities access, making sure we're getting to everybody not just based on geography but also

what are their needs in terms of a basic communications service. second, we had interconnection and competition, interconnection policy actually in the past has played a role as universal service as well. so you'll notice there's some overlap between the policies in terms of which of these five fundamental values that serve. but interconnection is also an important competition policy nowadays. and local number portabilities. so making it easier for people to switch from one provider to the other is important in order to keep their phone number. it's a big disadvantage to switching if you can't take your phone number with you. so that's important. third, we had consumer protection which is we see as privacy rules and then just basic protection against fraud and being able to have a place to redress

your complaints in a meaningful way. for us it's been the f.c.c. and depending on what state you live in there may be redress available at the state level as well. and fourth, we've had network reliability. so for us we see this as two components. one is what happens during emergencies. you know, during a hurricane, after an earth quake, how do we make sure that the network is as robust as possible before the disaster strikes and then how do we get it back up as quickly as possible afterwards. and then a second part of reliability is just kind of the basic day-to-day how do we make sure that the network keeps functioning? i think up until this point the u.s. has done a really good job of making sure that we have a phone network that everybody can rely on in a way that we kind of take for granted now because it's just always been there and we know that you pick up a phone you're going to hear a dial tone you're going to be able to call someone. that call is going to go through.

they'll be able to pick up, you'll be able to hear each other. it's very basic stuff that i think is just part of the network. >> i have to interrupt here. have you used a cell phone recently? >> i have. and i've also had dropped calls. when we were planning this panel, my cell phone dropped. >> with dial tone sometimes you don't know the network is changing. >> the traditional phone network has been very reliable. it hasn't been perfect but i think it's reached the point where people can just assume that it's going to work because it so

often does. and then there's also just basic mechanisms, like how does the numbering work. who takes care of that? you know just kind of these things that we don't tend to think about and i think that it's good that you don't have to think about it because it should be seamless from the consumer perspective. and finally we have public safety which is 911. in this area we have more recent legislation so i think we're a little bit ahead so to speak than certain other areas of the transition. but there's certainly the question there of how do we make sure that 911 service will continue to be reliable?

how do we coordinate the work between the federal government and the state and local governments to make sure that we're seizing new opportunities to make it easier for people to access 911 and at the same time not losing any of the reliability that we had before. so those are the five fundamentals that pk articulated. we've seen other players also articulate very similar fundamentals. at&t put out some that were very similar, the f.c.c. put out some very similar. which i don't say to mean that anybody is copying anybody else but i think that we're all arriving at the same conclusion. because it's just that's what the basic values are. so i think that's why you're seeing multiple stakeholders with different incentives as we go into the transition coming to the same conclusion about what are the basic principles that are guiding our network. so i can -- i could talk for hours but maybe i guess i'll pass it back tor you. >> i think that helps set the stage. we haven't mentioned one important part which is that there is right now a set of trials going on at the f.c.c. has authorized. christopher, do you want to just give us a brief update of that? and then we'll turn to the larger policy debate.

>> sure. i was going to try to step back and try to see if i can clarify the issues on a little bit of a broader level. so when we began our communications network, we had first came across actually with telegraph but we had voice communications first via wires and then we had radio, audio communication over the air waves and it became video. and they didn't meet. so we had one transmission mechanism dedicated to wires and voice spectrum and video. so all these things started chipping away. so we saw first cable television. we had a way to do video over wire. now, it used a different mechanism for what we call encoding. a special way to communicate that was not compatible with phone or over the air. then we sought saw wireless telephony with voice over the air. the internet is putting together not just media but the means by which we communicate. any of those can be voice, video, e-mail, gps -- mapping services. whatever you need it to be, that will be run across a uniform protocol called the internet protocol or what we are calling ip. we used to have separate networks dedicated to different applications. one network just for voice, one just for video and one just for e-mail. if you are on the phone and you are not watching video or e-mailing, if you are not doing one then it is more effective and cost-efficient. we are talking about the old voice network.

how do we move from the cost benefits of the service benefits by thinking about how things have to change? another thing going on that we have not talked about. we talked about the supply side and how people provide it. there are changes in the way users aren't using the network. not the services but what people want. this debate is taking place in europe. they have a set of universal service obligations that still includes phonebooks. a lot of us today say we cannot remember the last time we looked at a phone book. that information is obsolete. online is more efficient. another thing that is part of their universal service obligation as payphones. in the world of ubiquitous cell phones you cannot find a pay phone on most streetcorners anymore. they are not useful because of the way people are using the network. one of the pivotal questions is we used to think about voice as the key application that connects everybody. if you look at the way my children use communication, the only thing that use the voice phone to call his me. they are taxing people. i am not saying that that moment has arrived but we should have a mechanism for thinking about the service side and the user side to figure out how they are doing it and to change with the times. the hard part of the transition, we have done this before, we have retired the telegraph network even though it was once the basic form of connectivity. we retired the analog television network. i am not saying it is easy or

that there are problems. the trials going on are in an isolated number of cities. we are saying what are all the details we have to work out? there are a lot more than we thought. in phone calls, there is a central database where we verify the connection. i'm trying to call hank or david or jodi, is this number actually the line that connects to them. that transition has not fully happened to internet-based communications. how you do air handling, how you do international settlements. these are things we have not worked out. what happens if we turn off the old network and what do we have to work out? i would add one dimension to what jodie said in terms of values. it falls into public safety. it is not just 911, it is law enforcement and home security. there are issues in terms of communications assistant, law enforcement, wiretaps and things that remain very important and are difficult to transport from a traditional voice switch world to internet-based world.

>> we come back to the question about the ip transition trials later. we lay out some of the issues. before we get into the mess the fcc is facing in trying to deal with this, let's take a step back and ask you all. if you were starting from scratch and you are trying to

craft a new communications act to regulate a world where telephone networks are just part of the internet, how would you do it? how would it look different from the world we live in today? hank, do you want to start us off? >> sure. i will start by saying i think that that is a daunting question for someone who has been, as i

have, doing basically telephony regulation for 18 years or so. the biggest change in the policy environment. the way you should think about the question is what is the policy environment that you want to create? the 1996 act made a sea change. a lot of this debate is dealing with the repercussions of this. that is the move from we will rely on monopoly as the basic way of delivering basic communication services to we will rely primarily on the market as the basic way of delivering communication services. that really changed the communications world from a world where the carriers, the monopolists and the regulators worked out the details of service. they figure out here is how long you going to have to repair something. here is your reliability requirement.

here is 911. all the details were never done by -- they were not driven by consumer demand. they were driven by this regulatory process. the 1996 act changed that fundamentally and said going forward we are going to rely on the market process. put consumers in a totally different position. it has led to something that christopher was talking about. the world of today is a world where different people have different sets of priorities for communication. it is a much more complicated world for regulators. let's say 20% of users are primarily text users. 20% are social networking users for communication. others rely on video. some still rely on voice.

if you are a regulator, how do you respond? it is very difficult when you look at it from the old lens we had prior to 1996. going back to your question. if i were to start a new -- leaving aside things like spectrum and things like that. focusing on what kind of basic policy framework what i put in place for regulation. i would do a public knowledge did. let's look at the goals that the market might not adequately handle. there are a lot of goals we think the market will. what are the ones we think the market will not deal with? universal service is one. the reason for universal service is we realize that the market will not bring service -- let's

focus on rural. it will not bring service to these places because it costs too much and you cannot make an adequate return. universal service. there is probably a public safety component. we had this big issue back in the early 2000's with voice over ip and 911. consumers were buying a service that regulators decided they were not happy with 911 capabilities of that service will stop the market was driving to something that policymakers were not happy with. so they created obligations for the service providers. i think that is what you would do. identify the areas we want to address. specifically, what are the problems we want to solve? how do we do it in an environment where we do not have a monopoly provider who can kind of just whisk the costs under the rug and recover them through implicit subsidies on different sets of customers. >> let me call on david. that point you made is incredibly important. i do not think most people understand what you just said. when you say implicit subsidies, you are talking about some users who are paying more to subsidize other users. nobody sees that as a tax on their bill.

that is not part of the universal service charges, that if you look carefully you will see. it was essentially a tax that was paid by some users in the old network. >> a lot of taxes. the right design that was created is kind of crazy anyway. we had a rates that were lower in numeral areas than urban areas based on something called value of service pricing. the idea was since the world -- rural community, there were only 100 or so people who live there but in urban communities there were tens of thousands or hundreds of thousands, the value to the rural customer is lower. they cannot call as many people. we will make their rate seven dollars a month. the us is in the same state. someone in the urban community will have a rate of $15 a month. even though the cost equations are flipped the other way. all kinds of distortions in pricing. we are still working goes out today, frankly, in the

marketplace. >> what happens when you make a transition from a monopoly era from a world of competition ? >> all of those problems. anywhere you have put in place costs that do not reflect the service costs, the market will expose that. you will find out that the cost -- let's say you had business subsidizing residential users. new entrants come in underpriced to business, that subsidy is no longer sustainable. that happens in market after market. whatever they goals are, if they are not goals the market will adequately served within the understanding of policymakers. this is not for carriers to decide. if they are not goals the market

can adequately serve, you have to figure out how we want to do it and how we want to pay for it. you cannot rely on the system of implicit subsidies when you moved to competition. >> if i could add something to that. looking at the monopoly provider and the difference between that and the competitive environment that we have today is an important piece. another important consideration that has to be kept in mind is that in the old world the service provider controls everything from end to end and basically made things happen. when the regulator wanted something, the service provider built it into the network. all the intelligence was in the network itself in the switches. that gave the service provider complete control. today, that is no longer the case. increasingly, the computers that we are walking around with smartphones -- they have operating systems and applications, all of which the customer is using to meet communications needs. in many keys is, the service provider has no visibility or control into those things.

when a verizon wireless customer calls an at&t customer at using skype on their smartphone, we just route packets and we do not know anything about that call. whatever the new framework is has to take into account that is is is a much more dynamic and complicated environment where there are a number of new players from the application developers to the operating system guys to handset makers. all of which are part of delivering the services to customers. >> i am going to make this point very clearly. i agree with hank that we should start with values. it is always exciting when pk gets to say we agree with at&t. even if later in this panel we will disagree again. i think that starting with values is the right way to go. once you start trying to operationalize that, they can start to get tricky.

one thing i will add -- i think it was hank that mentioned this earlier. when you are talking about this network now with different types of services that can run over the network you will have a lot of different people with different priorities. i think that one goal, which is not missing early easy want to achieve but it is a worthy one, is to make sure the transition is a step forward for everyone. that includes seizing the opportunities and efficiencies, new services available on ip networks. seizing the opportunities of mobile networks and the advantages does bring. at the same time, making sure that no one is getting left behind. and that the attributes of the current network in terms of reliability, pricing, the features that run over the

copper network like medical alerts, life alerts, security systems, faxes -- those kind of things. making sure that the people who are relying on those now are made whole. and ideally even left better off after the transition. >> jodie, can you be more concrete? what exactly are you afraid of in terms of people left behind? you mention certain technologies that might not work over the network. do you want to elaborate on that or on your concerns about reliability question mark >> first, in terms of the technologies, depending on what kind of transition we are looking at whether our technologies and features that operate on the traditional copper network that might not operate on the new services. faxes, security systems, medical alert systems. these were designed to operate over the copper network. as david mentioned, for some networks they might be able to offer the same services. for, say, wireless networks -- some of them cannot currently operate the services. there are two parts to it. one is making sure that people with medical alerts should still be able to use medical alerts. that is a really valuable thing. for everyone. second, even if a new network can support that type of feature there is the question of whether the equipment the customer currently has will still work with the new network or if they have to go out and buy a new fax machine. i can sound like a small thing but when you added up that can be million dollars of customer equipment. whose job is it to pay for that

change? whose responsibility is it to make sure that the customers are told ahead of time. either way, your fax machine is going to stop working. or your credit card machine at a small business is going to stop working when you moved to a new service. >> the fax machine you keep talking about --

[laughter] what is that? >> it is great. i know that -- do we have a question? ok. [indiscernible] so, the fax machine point. it is kind of the typical oh, that is so old down in my basement with my vinyls. a lot of people still rely on it. in terms of getting the same functionality from the new network, that is a big point. in the small-business community there are people still relying on older technology. that is a reality we have to face. >> christopher, do you want to

jump in? >> the question about the fax machine points out a very important change is going on. we used to think of data as an application on a voice network. it is now upside down. it is now voice as an application on a data network. what we think of as the network has changed. we still have this lingering idea from the voice network that that is the baseline. any new technology has to replicate all that functionality perfectly. there is a problem with that. it is expensive. there is new capabilities that we can do with the new network which were not possible in bold. there are capabilities in the old network that do not come as easily with the new. one example that is given is 911. because it was physically wired in and the phone did not move. you could program information

into the database that said this phone is at this address on this floor in this room. the cell phones moved, we do not know where you're located. we build a gps so we can figure out where on the grid you are. it does not tell you what floor altitude you are on. you used to get that information for free because of a technical flaw to the old network. the cell phone is the most brilliant emergency response device invented in a long time. we might need to look at the values and adapt them to a new world. i would say fax is another example. the reason it does not work well on ip, fax is sensitive to delay. the internet is not completely as consistent as the phone network. we have a lot of new ways to send pages of information that do not involve a fax machine. going back to values would be thinking creatively about that. maybe we provide bridge technologies like we did in the digital television transition.

instead of insisting that the new network doesn't fax the way the old network did, we risk losing benefits of that technology as we move forward. we need to think more creatively about this and maybe there is a way we can reverse engineer the internet network to try to make that not such a stark transition. at the end, whenever you retire an old technology, there will be some people who do not want to get off. you see this in cell phone networks. in the end, the phone companies say here is a new phone, i will give it to you for free, get off my old network. and they will finally say but i do not want a new phone. at some point you say i am sorry. that first generation phone will stop working on this date.

just as software stops. there will be a turnoff date for every new technology, that is inevitable. >> in the digital tv transition, the government went out and bought -- subsidized the converter boxes for americans. that work nearly as well as the obamacare website. [laughter] what are you suggesting exactly? obama-fax machines. >> is the art of the possible. it is fun to think about a clean slate network as if we never had the voice network commitments. and designing it from scratch. most people who work in washington, d.c. understand we are not on a clean slate, we are coming from someplace. there is political support for different positions and different issues. a big part of what d.c. policymakers attempt to do is to find ways to get a consensus for a big change. sometimes it is smoothing over problems by creating subsidies. sometimes it is by creating new value and bringing support people. losing something by putting something on the table. gaining more capabilities from the network. there is no magic formula. if it there was, politics would be easy. it will be a nip and tuck game

on disability access and emergency response. all the issues jodie talked about. we will have to take them on one at a time. >> christopher talks about we should be able to figure out a deal. the numbers i have seen in terms of what it is costing to maintain the second network that is used by 6% of the population and a dwindling number at that. what? $14 billion a year. there is a lot of money being spent here that could be spent better. let's play "let's make a deal." do you see a way to make everybody better off? >> any money spent maintaining the old network is money that is not being spent in the new network, which we recognize the value of. there is a path forward.

as christopher says, there is a way to address their legitimate concerns that are out there in a way that works for everyone. i think that is all of our jobs. to find those solutions will stop what i wanted to add, i think there is an uber value that was part of the old network that radically changes in the new network. that is change. the old network was designed to not change. it was designed to be stable. not over years but over decades. the service did not change. the way that it was provided did not change. switches were changed out over decades, not the cycles that we have now. today, the networks are dynamic and constantly changing because

the demands of the consumers are constantly changing. equipment is replaced more quickly. i talked about our first generation fios had a top speed of 30 megabits per second. over a 10 year period we're up to 500 megabits per second. we are on our third generation of optical electronic equipment we're using in the network to provide the higher services. we need to move away from the old value of preventing change at all costs or delaying changes as long as possible to the new era we are in where change has to be an important part of the equation. that means constant investment and innovation. >> i would add that everybody knows what what the cost is of maintaining the old network. from a real perspective a lot of the costs are not even recognize. we're talking about a network where the systems that support

it are 40 years old sometimes. you often hear of people who are frustrated with repair times and provisioning, scheduling, these kinds of things. part of the cause of that is the old systems. until we can sunset those systems, some of those frustrations will continue. the costs of those things are very hard to estimate. getting too can we make a deal? i think in a way, that is the point of the trials that we have undertaken in florida and alabama. instead of talking about this abstractly, our hope is that by making it concrete in a few places we can bring out the issues that matter, find solutions that work in these places, and then say if we do it this well this can become a template for this transition on a broader basis. that is kind of the main reason that we sought the trials.

>> i'm glad you brought up the trials. can you elaborate on what exactly you are doing? what we should expect to see happen in the next however long that is going to take? then i will ask david the same question. >> when we looked out across a planning period for us, we realized we could not sustain forever the traditional network and the ip network. then we thought about how are we going to sunset this? we have 4700-odd what we call wire centers spread across 22 states in which we are the local phone company. trying to imagine how you would sunset this, all 4700, was daunting. we did what we do when we have a

large-scale project we are trying to figure out. what if we did a trial in a small number of wire centers? we would take things we learned from that and apply them broadly. we looked across our network and we determined that while there were no places that would perfectly tee up every issue we were likely to see as part of the transition, we identified a wire center in florida and a wire center in alabama as places where we thought if we undertook a test of the transition we would learn a lot and that would be helpful to us as we try to complete the transition throughout the rest of our network. with those trials -- those trials are underway today in the sense that we have engaged very strongly with the local community.

talking to them about what we are doing and when we will be doing it. we have also been listening to a lot of the public policy debate. we are currently working on figuring out how do we handle things like, let's say, medical monitoring devices or faxes across a wireless only service. basically, the time table for the trial is until the enhancement to the service are ready, the trial will be voluntary. going to consumers and trying to convince them. here are the merits of our new services, you should make this transition. we're not going to force anyone to do this until we feel like every legitimate question we have gotten an answer to. that this is how we will handle this issue. something like medical monitoring, 911.

christopher raises a discussion about 911. wireless has gone from not having location information to having location information. now there is a discussion about should we make that location information more accurate? we at at&t are engaged on are there ways we can make it a lot more accurate? we are thinking about that, too. ultimately i think we will solve all these problems. it would be absurd to think that we would get to the end of this process and say we have got to keep the pots network for the next 25 years. these are solvable. >> this is not a medical marijuana issue. plain old telephony service. [laughter] david, do you want to explain what verizon is doing? >> we are not currently participating in ip transition trials. we had a trial forced on us a couple years ago when hurricane sandy came through. we had two offices in central

-- central offices in lower manhattan that were inundated with seawater, as were our customers. the copper cables were completely saturated with salt water. salt, copper, and electricity are not a good accommodation. our cable was ruined. we were forced by necessity to do something different. what we did was replace all that copper with fiber to all customers there. we have worked closely with the customers that were affected and came up with solutions to most of the problems that could be found. we're now at the point where we have got central offices with tens of customers systems that were meant to support thousands of customers. it is our responsibility to help them make the transition in a way that is accessible to them. making sure they do not pay more and other needs are met. they get all the services they want and have adequate backup

power capabilities. >> hank has described how at&t is running the trials that have been sanctioned by the fcc. there is a process, not clear what is going to happen next. the fcc is involved. you are taking a different path and doing this on your own. what has the fcc said to you? >> we are doing is following the well tested process that has been in place for these sorts of things. if you are discontinuing a service, you file what is called a 214 to get permission to discontinue the service. in lower manhattan we had to file 214's for telegraph service. we were no longer able to provide telegraph over the fiber or metallic services.

plain old telephone service is still provided over the fiber without any change. if we want to retire the copper, in lower manhattan that was done for us by nature. going forward, there is a process in place that basically requires us to notify anybody who might be affected that we plan to retire the copper. and then there is a process for making that happen. >> did you misspeak or did you have to tell the fcc you are not going to provide telegraph service anymore? >> that is not a joke. [laughter] >> my telegraphs are no longer going to go through? >> you can no longer get telegraph service in lower manhattan. >> what does that say, verizon had to tell the fcc was not going to keep running a telegraph network? i thought that was dead long ago. >> it was. the regulation lives on pass the business.

the common carriage requirement means you need permission before you start a service. you need permission before you end a service. what you will discover is there is always a constituency for people who did not want a service to end. with the last three or four years there was a new york times article talking about how con edison was going to stop sending d.c. power to a small portion of manhattan. back in the days in the wars between edison, in the 1920's, people adopted d.c. power devices. that got smaller and smaller until one day the company said it does not make any sense to maintain this idiosyncratic network for a small number of customers. yes, they imposed costs on people who are used to having their homes provisioned in a certain way. this is the hard problem of policy making. for the greater good to make a move for the whole network to move forward. at some point you are going to strain someone on the old

network who won't want to change off. think about creative ways to do that. i know you made fun of the digital television transition. whatever you say, it did work. dtv is off, that spectrum is being redeployed. we can get into a discussion about whether that was the right way to do it. at the end of the day there is no more analog television in the u.s. rule number one is it has got to work. i am willing to open up this conversation completely to try to find solutions. i think the kind of values discussion that jodie is talking about is a good way to do that as long as we remember that each new technology will do certain things better answer things worse. we need to take you vantage of technological change and not always revert back to the old. look to new solutions that do not present themselves before. >> my point about the digital television transition, for all its messiness and waste, the gain was so large that it was worth any amount of incompetence

and poor execution because it was done. my point was that similarly here there is a huge deadweight loss. that is a term economists like to use. what it means is we are throwing away lots of money on running an old network, or in the case of the dtv transition, we were thrown away spectrum. we had to put a stake through its heart and move on. i am teasing when i asked questions about the fax machine and the telegraph. jodie, what do you think about these trials? >> what i think when i see the trials, specifically about the trials at&t has proposed. i think this is the opportunity for the fcc to figure out what the checklist is when a carrier

files a 214 a and says we want to switch from tdm-based copper service to ip over copper or wireless. the trials by at&t and other carriers as well is the opportunity to collect as much data as possible about what this transition does from a carrier perspective. and what the reaction is from consumers. and to try to use that data, informed by the values, to come up with a list of what a carrier

would have to show in order to show under 214 a that service is not impaired or is otherwise serving the public convenience and necessity to switch to a new network. right now, it is not very well established. what that means and what a carrier has to show to the fcc. my hope is that if these trials are done well and consumers are protected throughout the trials but we also get information about new services. we can come out with an understanding on all sides of what the standard is on various aspects of the new network in order to allow a carrier to switch over to a new technology. you mentioned the telegraph and the 214 a, i kind of see that -- >> vinyl records. >> yes, we will see how many old technologies we can name. i kind of see that as an enlightening comparison to when verizon was switching to fixed wireless for a temporary amount of time after superstorm sandy in fire island. so, verizon filed a 214 a four telegraph service, not a big deal. it eventually probably gets approved by default under fcc procedure. in contrast, we look at what

happened when verizon filed a 214 a to switch to a fixed wireless service voice link instead of copper in fire island after superstorm sandy. it was exactly the opposite. a lot of people were upset. a lot of people were relying on copper for dsl access because they would not have gotten internet through voice link. a lot of people were worried about the features we talked about like reliability and medical alerts and security systems and faxes. i think that that kind of shows the usefulness of 214 a as a check.

as a way for the carrier, policy maker, and customers to say are we ok with this or is somebody going to get left behind? in some instances, everybody is going to be fine and no one is upset they are losing the telegraph capability. in other instances people are going to say my grandmother needs to have the connection to the hospital on the copper network. how are we going to make sure she has some sort of service that provides the same feature? >> i want to switch gears to talking about law before we lose everybody's attention. we talked about old technology and new technologies. we have not really talked about one issue that really is first and foremost in many people's mind -- power. christopher mentioned the ac-dc battle. not the band, but competing electrical systems.

there is of course another electrical grid, the copper network that kept phones running. not only was their power along the copper network, the hardware along the network would keep working by that power. if you are one of those people with a really simple phone that only plugs into the network and does not require a plug to run fancier features, that phone would keep working, even if the electrical grid went out. david, hank, do you want to elaborate on what your companies are doing to address concerns about your networks going out during emergencies? >> sure. i showed this in my slides. the power situation you described with power distributed from the central office has not been the general standard for quite a while as we have deployed fiber deeper and deeper into the network. intermediary points where the copper networks terminate and power has to be supplied have become quite commonplace. the reason that is necessary is

in order to deliver the broadband speeds that people want as their primary objective, we need to keep pushing that fiber closer and closer to the home. those nodes, whether a remote terminal or a node or an optical network terminal at the customer's home, rely on commercial power in the first instance and then sort of battery back up in the second. that has been the case for quite some time. we have, from the beginning, provided fios with a 12 fold battery back up that provided approximately eight hours of backup time. a rechargeable backup battery that looks like a motorcycle battery or a car battery. recently we have developed a power alternative that uses commercial d cell batteries. these are the batteries you can buy for flashlights or lanterns or whatever. the powerpack with the d cell batteries will last for 24 hours

to 30 hours in an emergency and can be replaced by the consumer as often as necessary to keep phone service working almost indefinitely. the reality is that for many if not most of our customers, they do not care. they have cordless phones in the house that go out when the power goes out. they just default to using their cell phones. for customers who do care and want a wired phone to work, we are addressing their needs. >> the only thing i would add is that this is a great example of how the market has moved past policymakers. something like 70% or more of customers have already moved the on the service that had the capability of copper-based power. they are either wireless only or on some voice over ip platform. whether it is a cable company or over-the-top provider or a phone company.

none of these customers have this capability. they have made this migration and are continuing to make this migration. in some states, fewer than 15% of homes are connected via copper at any point into the traditional phone network. >> even some that are may not have a phone that works only with -- >> they may have a cordless phone. customers are waiting for an of policymakers want to make some decisions about power issues related to power loss, they should approach that from a federal industry perspective. at this point it would be absurd to say we have got all these other services out there and we are not going to put any obligation on them. you, you are basically losing your customers and we will have obligation on you. we'll have a conversation about

general backup power requirements, but it has got to apply to everyone. >> the storms have pointed out how we need to rethink emergency response. i was in neighborhoods where the entire neighborhood lost commercial power and the phone system was down. people were able to work on their cell phones. powering a small number of cell phones was more feasible than putting up utility poles. people needed recharge stations. we open up schools and fire departments and let people recharge devices. it was not great but even a world -- i do not care how well we engineer the copper network. when the phone lines are down, we were down. we were able to keep activity -- connectivity but we needed a

different approach to infrastructure. that was recharging stations on a charitable basis. that is a great example of how technology gives you opportunities. another reality -- my guess is during the worst of this you are not going to use all the apps on your wireless network you could when everything was working great. unless you want to over engineer the wireless network and support everybody jumping on all at once at the highest level, for a 100 year storm that is not a smart idea. it is a very expensive idea. you can do it but it costs a lot. we may have to think about this on an industrywide basis. do we need to harden every single cell tower which we have a great density for the huge amount of service people use. maybe in emergencies we need people to pare back what they are doing. figure out a process going for that we can meet people's minimal needs through a disaster. and then get onto the future. that is a different

conversation. >> i would just add. i think what christopher was saying was very true. in some instances, you will have examples where the power is out and or the phone lines are down but cell towers are working. you will have the opposite, cell towers might be down and the payphone on the corner is the only thing that is working. we did see that after sandy in new york, they had lines around the block for a payphone because it was the only way people could make a call. how do we move everything forward? how do we use the opportunities for recharging stations, portable phone sells. how do we use opportunities to make technology as robust as possible while not leaving behind the people who are relying on their phone to work? i which i mean their landline phone. i am not saying that we cannot move forward until we have power over fiber. david laughs at the mention of that.

we do need to think over how do we meet the same consumer expectations that will be out there for reliability absent that. do we have reliable carrier -- rechargable carrier provided batteries, commercial batteries, both? there are advantages and disadvantages to each. one other thing is that, hank mentioned a lot of people have moved on to networks that do not have the power of of the copper like voice networks over cable service providers. one thing is that we have seen instances where ip networks failed due to a software glitch or a natural disaster. you see reports in the news where reporters would be talking to people who would say i had no idea my phone was not going to work when the power was out. i did not think to ask that when

i switched over. that is concerning to me. we are not just talking about people having different or less capability on a new network. we are talking about them having less reliability and they do not even know that so they are not preparing for it. >> there's an old saying about foreign policy that politics stops at the water's edge. you might say something similar about the disaster preparedness and emergency resilience.

we do need to be prepared for situations like that. people underestimate risks of an entire community losing connectivity. i agree with you, jodie, but the question christopher identifies is how do you deal with those risks in the most rational way? you need a multifaceted approach. on the one hand, you need to have that capability to drop in small cells to recharging station in schools and libraries, fire stations and so on. we might also need a conversation about the resilience of the electrical grid. in part about underground and the networks. one point i often make is that every telecom lawyer looks for telecom solutions. if all you have is a hammer, all you see is nails. there is more than telecom policy. trees fall on power lines and knock out the telephone system. that is not going to change. we can have a conversation about undergrounding them. put a conduit under the road and let anybody lease access from the municipality. that could increase the resilience of the communications network and the power network. the conversation is worth having. i want to switch gears from this conversation and talk about --

we talked about values. we have not talk about what the fcc should do. let's rewind to last week when there were people at the fcc who were, who we said, i don't know if this happened, they said they were going to be banging pots and pans outside in homage to pots, plain old telephony network. they want the fcc to reclassify broadband services under title ii of the communications act. they want the internet to be regulated, at least by default, the same way we regulated the monoply telephone networks.

we are having the same debate about the ip transition. my question to the panel is what should the fcc do? i will give you a few options, give me your thoughts. your number one is the title to door. let's say the fcc reclassified broadband as a title ii public utility. and they promised they are going to forbear from some of the requirements to strike a balance. they can do the same thing for telephony. door numbere two is the d.c. circuit when they struck down the neutrality rules earlier this year accepted the fcc's interpretation of a previously obscure part of the telecommunications act. that could be a basis for the fcc to regulate net neutrality or a lot of other things. privacy and all the things we're talking about today. is that a potential basis for regulating the ip transition in the future? door three, there's a lot of other things in the communications act. broadband networks are currently under title i, information services like youtube, netflix, and hulu. the fcc has been able to use its ancillary jurisdiction in the past to regulate a lot of title

i information services. especially when it comes to public safety. also many of the things we have been talking about that are more economic in nature. title i plus ancillary jurisdiction. door four, section 251 e, access to numbers.

jodie mentioned that as something she is concerned about. the fcc regulates the north american numbering plan. it can impose conditions on accessing that bank of numbers for carriers to get numbers. can they use that as a basis for regulating some of these concerns? number five, i'm about to stop. [laughter] door number five, there's another agency here, the federal trade commission regulates companies that are not common carriers. both competition concerns and consumer protection. it can deal with, for example, billing, cramming and slamming and concerns of billing are jointly dealt with by the ftc and the fcc. the ftc has the authority to enforce multi-stakeholder agreements. if the industry sits down with

public knowledge and work something out, that can be enforced by the ftc. number six. congress, a new communications act. so, what do you think? grab a mic and tell me what you think. >> ok, i will start. i do not know if i will get to all six. >> please don't. i'm trying to get a range of options for the audience. what options does the fcc have and what do you think it should do? >> public knowledge thinks the clear answer is classifying or reclassifying, depending on what service we are talking about, to title ii. we think that one reason that section 706, title i and ancillary authority, is not

enough -- when the net neutrality rules were challenged previously. in the d.c. circuit case, pk's point of view was we are skeptical of the ability to use these other sources of authority but we will let the fcc make its case. we will see what happens. basically what we saw in the d.c. circuit case was that 706 does indeed have even more broad authority than we anticipated. what it does not include is no blocking and nondiscrimination. there was a net neutrality-shaped hole in the fcc's 706 -- when applied to the phone network, that is even more concerning. no blocking and nondiscrimination, that goes to the heart of reasonable terms and prices and the heart of interconnection. >> can you explain, we have not talked about interconnection. >> interconnection -- for the phone network or all these other ip services.

in order to get my information from me to somebody who is a customer of another service, another isp, the networks have to physically connect at some point. i can happen in a variety of different ways, but it does have to happen. one policy we had in the traditional phone network side was the idea that you have to be open to interconnecting with other carriers. that way, a larger carrier would not have an unjustified advantage because they could say well, you have to be on our network. if you go onto our competitor's network we will not let you call our customers. there were universal service aspects of that policy as well. today, a lot of it is a competition issue.

i don't, under the d.c. circuit's ruling, i do not see how you can further those policies without going to title ii. that is what we have been saying to the fcc, this is your clear choice. we waited to see if there was a way you could figure this out under title i or 706, it did not happen and you must do to title ii. under title ii there is a section called forbearance authority. regulatory flexibility or something like that. it allows the fcc to forbear from certain title ii provisions that -- if that provision is not necessary to ensure reasonable rates and does not harm competition and serves the public interest. if it meets a general competitive-public interest test, the fcc can say we are not going to enforce that provision

as applied to a particular carrier of service. the fcc -- it is a powerful tool and the fcc should use it carefully to forbear from certain provisions in title ii that would not apply to an ip-based network, ip-based voip in particular. >> she is standing strong with door number one. >> maybe we can get into the net neutrality discussion but let's focus on the ip transition and voice, initially. the fcc cannot willy-nilly decide i will go this way or

that. they are an agency of law. they have to be consistent -- >> ish, right? >> let's look at voice, the fcc, if it generally determined voice over ip was a telecom service, the ramifications would be immense. from a technology perspective there is no difference between skype and vonage. they are using different addressing systems. you cannot just eclair i am -- declare i am going to say voice over ip is a telecom service without hitting a bunch of services you did not attend to hit. i do not think the fcc is planning to classify skype as a telecom service. the services they care about our services that use telephone numbers. services like skype that do not use telephone numbers they are not interested in regulating. in that case, 251 e and the title i ancillary authority is the only way they can go. i do not see how they can go down the title ii route without dragging in facebook chat and face time. if you say it is a telecom service when it is ip, you will

have a very broad impact on the ip ecosystem. >> hank, just so we understand how you are engaging with jodie. are there specific things you think the fcc cannot do that jodie would want them to do under the approach you are proposing. 251 e plus title i. >> i have not heard anything they cannot do. i think the fcc could continue -- they have been upheld by the d.c. circuit under an ancillary theory for 911. for customer privacy. for discontinuance is. there is a host of things they have applied to voice over ip that they have been upheld on a

title i. with respect to the goals public knowledge has expressed, i do not see how they could not pursue those rationally under, for voice services, under a theory of 251 e combined with title i. >> the debate about whether we should regulate the internet under the regime for the traditional telephone network. it does not comply with law, and that is the big question. and that even if you can, should you? as a matter of law, there are people who think it is very flexible and the fcc has leeway. currently -- there are a couple decisions pushing against them. decisions by the supreme court and the fcc itself. given those, the fcc can change its mind.

the court was deferring to what the agency decided. ultimately, is the statue. the statute says you are subject to traditional telephone regulation if you are a telecommunication service, which is defined in colloquial terms. if a company provides pure transport from and point to the end-user's choosing without processing storage. the supreme court focused on the word processing and storage. a lot of these systems do not just send traffic end to end. what has flown under the radar is an point of the user's choosing. when you put a web address in, www.google.com. try that in japan or germany.

you do not specify an endpoint. basis, ifre statutory you're interested, i have articles. let's say we get over the legal point very it should we do it? the interesting question is, people look at the traditional telephone network. if you look at the literature 20 years ago, we didn't think it worked that well to begin with. there are all these criticisms. it deters innovation. it facilitates collusion by making all your prices visible and enforceable.

great means for coordinating across firms. it is very hard to do if quality varies. what is the same product? there are different cost of different technologies. this becomes very difficult to do. the big problem to me is one-size-fits-all is the approach embodied by that old regime. the oldsaw even in telephone world, business customers say you will give me a, b and c for this price. i don't need a and b. i really need this xyz. a cheaper price for a stripped-down service or anyone a higher price, more elaborate service. in the beginning, competitive days of telephone service. that flexibility was a tremendous advantage. we end up with this

categorization game. i was talking to a person managing the xbox by microsoft. you see regularly and say just because we have a chat feature doesn't make it a telephone. don't regulate it like a telephone. canjust because the xbox employ video doesn't make it a cable service. what this means is that we start laying this game. who provides a service that resembles or replaces something that it did before is going to have this fight about whether they are in or out. think thist people and its coste game will exceed the benefits of doing so. >> one of my collects used to refer to it as a metaphysical , parsing these complicated definitions. what i'm hearing you say is at the end of the day, it matters

less than the practical consequences of what classification means. see brand x as metaphysical at all. i don't see classification is metaphysical. can analyze the specific terms, whether this technology fits the definition. this isn't a great move. these definitions were written when they didn't refer to the internet instead of four. some of the definitions go back to 1934. on some level, the way they applied the current technology is almost anachronistic. i am reminded of the 1984 cable act. for 30 years, we tried to figure out where cable fit into the old statute. eventually, we just made a new statute that was designed for cable. quibble about the good and bad, but ultimately someone is going to have to go back to

the statute with this technology in mind and decide what it is we want to accomplish. i'm sure there will be some battles won and lost in different ways. the idea we are going to use old words which will randomly fall on a new technology probably is not the right idea. number six, communications act, is that your vote? >> eventually, there will be a rewrite heard it may take 60 years the way did the first time, maybe less. but congress is ultimately in charge. even if they don't change the statute, they can influence what agencies do i appropriations, by hearings, commitments, all these different tools that have been part of this towns at those for a very long time. ethos for as yo very long time. >> i am not going to contradict

the argument here does clearly illustrate that the statute is outdated and we do need a new act. i will go with door number six as well. >> ok. i've a few other questions i want to ask here. it will take us more a field. i want to open this up to the audience and give them a chance to ask questions. for those of us who are now watching on a live stream, just tweaked your questions at me or use the ip transition #. na will come van along with a microphone. identify yourself and any question you may have. head -- i will go ahead and ask the first one. let's connect this to different debate from net neutrality. what you think the connection is here to broadband deployment? if we are to promote a larger set of values like encouraging

companies to continue deploying fios for example or at&t is 45 megabit service to much of its footprint and can do better than that, don't we want this transition to happen as soon as possible? how to reconcile the trade-off between delay and wasting billions of dollars every year and getting it right? jodi, georgia star? >> so, this goes to -- i can always find a way to bring it back to one of the five fundamentals. for me this would be universal service. one of the things we didn't talk about is one basic question. as you get to universal services, what is a basic service. what is a service return to get out jerry but he? for decades that was basic force. now i think we are getting to the point where maybe that needs to be upgraded. maybe broadband is now the basic service and our policies need to be geared to getting that out to people there it i think that

starts to lead into the same set of questions of how we get these new technologies out to people and still make sure that people who are relying on -- they just service look at the same reliability and features that they had before. -- i'm not sure i really answered your question,. >> we're doing trials. we tried to get this right. a lot of concerns. more money we wait, is being wasted on maintaining an old network. there's a lot of new services being delayed. how do we know when it is time to pull the plug on the old network and bring up again the digital transition idea. that took years to do. time when all that

spectrum could have been available to americans to provide broadband service. it would've helped certain people more than others. a lot of people rely solely on their wireless phones for service. in the interest of averting harm to a small number of people making the transition, other people suffered because they didn't get new technologies. >> is not as if there is some magic point where we say now is the point. interesting thing about the phone network and the internet is that a are networks of networks. just at&t's network, it is not verizon's network, federatedorks are all into what the user experience is a recent network, even though it goes across multiple networks. situation, what we have recommended at at&t is that you

take a realistic look at how much work is involved in making this transition and you pick a date and say as of this date in the default system here is going to be an ip system that will no longer be any obligations associated with the tdm network of the past. instead, whatever those obligations are, they will be purely in this new technology and new system. once industry has that data, industry can figure out what we and to do to get there, maybe in some places additional policy work will be needed, maybe not. we will have to find out there it i think that is the key role that regulator can play. on jodi's point, this is another area where the regulator is way behind the marketplace. , for consumers,

standalone is not the basic form of communication service. voicenot standalone service. interestingly, this is an area where the fcc actually is bound by statute. the statute says that universal service a shall be an evolving level of service, and b, must be something that is subscribed to by substantial minority of americans. i think there's an argument that the fcc continuing that they seek standalone voice requirement is not consistent with the statute, even today. that.mie ask you about we mention section 706. there is another court case pending right now in the 10th circuit where the fcc has cited section 706 b as a basis for pay as a that money we tax, even though the fcc will say is not a tax we all pay that tax on her bills. the fcc must use that money

towards promoting broadband deployment. you think they're going to win on that basis, what is at mean for the ip transition? there are certain issues in telecom that a think of as the angels dancing on the head of the candidate. the statutory definitions are very arcane. i don't know the answer. we argued in the 10th circuit that the fcc had the authority to support broadband. i think the thing about that question is, from the scf -- from the sec's perspective, if we lose, they say we cannot promote -- is hard to believe there's not a substantial majority in congress that would agree that in fact that should be were we do with universal service nowadays is support broadband. i would view that kind of lost but if ccs temporary only. i think it would be substantial bipartisan support if the fcc was supporting broadband with

universal service. i think they can actually get something. i think that is something congress could do something about. >> errs a difference a people overlook about the internet. it is a network of networks. said that badly understood. those networks do not have to be part of the internet. a powerful -- there are private networks. financial services need -- perfect records, they cannot tolerate the best efforts rule of the internet. they can't get what they need, so they go elsewhere. what fascinates me is they are level down. different offices used to buy leased line services which would be dedicated to them between different locations. now we are doing private lines.

that private learn is not being used by that person 24/7, 365. we can allow the line to be shared. if it is going to be a virtual private learn from it has to be there when the person wanted. when the person is paying for the land like a private service. otherwise, if you don't give them that ability, they will buy a private line service, which would be more expensive and when you're not using it will not be available to be shared by the people. that is how the internet works. the capacity is now available for the people. that is the sharing aspect that makes the internet work so low. if we don't have the ability to share and allow people to get things like private line services and a bunch of other things that used to be considered terrible, you talked in fact,circuits, internet two is developing high herbs uses for things like ion.

it is a search network we dedicate an entire network for high data uses. there are more different ways we're using the networks. i'm really worried that if we take to narrow a view of what the core services are and make sure that we flatten everything available so we have one big pot, we're going to lose these really differentiated services that are starting to emerge today because it is not just e-mail and web browsing anymore. we live in a much different world. >> you on a plain old enough -- telephony model, you want a variety of services. >> is the way people used it was one from electric power doesn't vary that much in terms of distribution. water, there are areas were -- natural gas, the product has a very narrow range in the technologies on changing, the networks are built out. traditional practices work very well in those.

knows what the business model is going to succeed in the future. that sort of vision of o, i know what this is supposed to look like it is harder to justify without hurting consumers. >> if there is a question in the audience just raise your hands. >> lestrade a wrap up with a few final questions. we keep dancing around this idea that maybe congress should have a tool. i think everybody here seems to agree, tell me if you don't. what would it take to actually get it done? what kind of impetus does congress need and might it help wethe fcc finally said help, need you to update the statute?

aspersions,asting when he has good government, major reform legislation is very difficult to pull off. hasnd, every major reform taken minimum 5-10 years because there is a lot of discussion. actually, you need a big decision or something that changes the environment. they were fighting and deadlocked over that for 12 years. congress wasn't at all interested. different plans in the market, it is easy to stop things from happening in this town than it is to make them happen. what happened is the supreme this decided to copyright issue. it strengthened the hand of cable companies. all of a sudden the deal changed to where legislation gets done with the bill offers everyone something that is worth more to them by having the bill go through than having the bill not go through. be in different dimensions, one part of the

industry would like x. they would rather have wise well but they're willing to give up why to get x. the other part of the industry wants why. a lot of people will say there's some technological change that would do it heard some people reo decision the ae that is coming down will help this. you need a decision that would change the relative value that the different people would face in getting a deal as opposed to not getting a deal. >> i agree with christopher. you need basically something to happen where having legislation is important enough for enough people that it can't be blocked any longer. it could be a court case, it could be technology, it could be any number of things, but that has to happen to get legislation passed. click i agree. anything that is as big would take a long time. we are really just at the

beginning of the white paper process we've seen in the house. thinking about the big issues and starting to develop policy, but we are not at the point of which rule works and how should we start. , really, one thing you said that think is right is -- i-- not just one thing think with the fcc does him a going forward, is to make a big difference. if the fcc, let's look at net neutrality. go slower than 706 and people are upset because allowing paid prioritization on the internet decimates what people are expecting in terms of an open internet. that could be a big issue. to title iiassified and people are happy with that, maybe there's a lesson to those congress.g in

although there might be other actors who are upset with title ii endless push harder. that is just one issue. you could also look at spectrum video. i think what the fcc does, either in terms of taking action on its own or perhaps saying we can't do anything, our hands are tied on a particular provision because of the way the law is written would have a big impact. >> i think all the points of the been made about taking time, what it means is we really need to be starting now and laying the groundwork. we don't know what that triggering event is going to be, but we have to make sure that people understand the world as it exists today or as it will exist next year or the year after, rather than when they last looked at this 18 years ago or something they remember from the past. really, understanding looking at the world as it is, laying the groundwork, and then coming at

it from a clean sheet of paper. don't take the old structure that we are designed for a particular market structure and really look at what is necessary to achieve the desired objectives in the world as it exists. >> well, on that note i will share something with you that my grandfather said to me when i was born in germany in 1924. this i would be young again i would make different mistakes. i think about that a lot. we're going to get it wrong the matter what we do. the current path is not necessarily the best one or sustainable one, the question here for the audience, if you can identify yourself sir -- >> ken madsen. to be a little bit more specific, how should

telecommunication be applied? should there be a distinction carriers and to get to the mean on that, to get to jody's value of universal access and going to that a little bit more with universal service. how regard to define these telecommunications or telecoms? matter, i as a basic think that the way that the regulations currently in the statute currently look at telecommunication services having to do the transport and the network that is moving things as opposed to the services that crunch the data and do some sort of processing for you, is the right distinction, although there are disagreements about what qualifies as a telecom service now. waysnk there are a couple

-- if you are talking about for services -- there are a couple of ways you can look and voice services differently, depending on what type of service they are. either definitionally or in terms of recognizing this as a separate service but we are going to treat it in a particular way because it is voice and people are depending on it. one option is interconnected voice. hankway, this gets to what is talking about earlier when he e. i ambout using 251 worried about that because if we get the point where there is no traditional telecom network left because everything is gone to ip and we are not saying that is telecom network, then i worry that that structure falls apart because you have to be ancillary to something. that is a different point. if you look at interconnected to voip thatosed

is over-the-top and riding on a thinkfforts internet. i we need to try to use those distinctions to reflect the different ways that people rely on skype versus traditional landline phone versus von age and try to -- i think the angle is always to figure out where people are relying on the services in the same way, we should treat them the same way. with a are seeing a difference between the services, we should recognize them. >> there are a lot of difficult definitional problems. there's a big fight over whether apple's face time is essentially voice. if we put that into voice, and this is one of the brewing

complaints brought under the old order, it is a wonderful problem. you have to look at the technology. a single apple face time user uses one third to one half of the uplink bandwidth on a note just because a network was not engineered for that. it is a very difficult technical problem where there is a real issue. if it is voice you have to let it through. what is interesting to me is he said something else which is important. look at the competitive environment. complaintsearliest brought under the old network neutrality rule against metro pcs. metro pcs to me as a hero. are 1.4 megahertz spectrum to use fourth-generation wireless. that is about one 30th of what the standard spec is. they're diversifying to make the market more competitive.

the problem is they do by putting up a platform for which they did not write media players. they can always support a handful of media players, including what was supporting youtube. people complain you're supporting youtube and not us. they're sitting right in media player for our platform and we will do it. the reality is, they had three percent market share. anything they did to make themselves more effective as a competitor was a boon to consumers. they're goingea to hurt consumers by some fancy , it is implausible. you should've let them do whatever they want. adding something like a market -- would be a tremendous boon to unleashing a lot of creativity. >> i think this is a really interesting question. in the context of a new statute, my immediate reaction is to say why would we want to have a definition of telecommunication

service. ae definition we have serves particular purpose any particular statutory framework. it has proven incredibly difficult to administer. be, if peopleuld are going to draft a new law, they should throw away this idea that we're going to have a definition of telecommunication service. this identify the services they think should be subject to regulation, identify the kinds of regulation that should apply, whether it is a video chat, broadband video access, whatever the services are to which they want to allow regulation, identify them rather than having an abstract definition like we have today that then has to be applied to individual services. the second part of your question shows how the current status quo is.

anytime time you get into a discussion about how do we fund universal service, you come to the conclusion that we should come to general revenues. then you say that is impossible. you walk away with no answer to this conundrum of how do we have universal service? i think that, as long as we have a system --which is a tax system, that applies to a particular fiduciary. we do not think that these are the services. we have this abstract definition. we try to figure out who falls in that abstract definition. we would be better to have a clear -- these are the things. pickngress decides that, your service --mobile should contribute. whatever it is.

have a decision and apply that decision. the current approach is not amenable to good solutions. and am going to give david jodi the last word here. for my part, i want to mention that it does take a long time to think the strings -- these things through. my think tank did exactly this. we combined a working group of democrats and academics and brought them together. how do you apply economic regulation and a world where you cannot parse these definitions? this has to apply to everything. is,the model they propose and dead of focusing on what service you apply to, let's focus on applying -- what should the government

regulate? at the heart was the idea that there was a general presumption that economic regulations should be presumed unnecessary. circumstances that demonstrates the significant threat -- that threaten to harm consumers. in other words, if there is a problem that the fcc can show will not be fixed by market forces, the fcc can do economic regulation. that model was built on antitrust laws. they apply to almost everybody. rather, what the question of consumer welfare is. from is a model there people across the spectrum, to deal with all of the economic problem's today. it would leave in place the

ability of the fcc to do regulations. osing, i would ask for your general thoughts. also, that sort of model. is that a place to go back and begin a conversation? >> i think there's a lot of merit to that. i think it is the type of framework that can ride flexibility for a constantly changing dynamic environment. written, thect was telephone network have not changed a lot in decades. it was very stable and how it worked. that was easy to do and that law did not change for another 60 years. we are in a completely different environment now. things are happening very rapidly. we just do not know what the services are going to be 10 years from now. so, i think a framework that focuses on the potential harm

and puts the consumer in the focuses on the protections they need is probably a good way to think about it. >> i think that there is a place for harms. i think our policy should also be looking at what is the best we can achieve in addition to protecting against the worst that can happen? i will add one concern i have about looking at market power. problems that you can have that could happen in an absence of market power. if there is an informational problem or if there is a practice that all of the carriers have, that can cause harms that will not necessarily be answered if there is a market power rush holt analysis. it has to be done before anyone can act. not to be a broken record, but

it ultimately has to go back to the goal. think about what is the world we want to see. design policies that bring us there, as opposed to stopping at the worst that can happen. one more point i would add is that, from congress's perspective, delegation should not be a dirty word. there is a herpes to having an expert agency that can be given principles, sometimes more specific than the public interest. they tell the agency what the goals are that it is trying to get to, but get at the flexibility to change those regulations as new technologies appear. >> do you think that the communications act does not effectively today? >> i think it could. >> if it were changed? >> no, as it exists now, i think it could.

i think there are political problems that could stop them. >> final word, david? >> i think it starts today. it has not addressed -- it is than the internet that it has been shielded from these regulations. we have seen the innovation, the investment. things came out of the blue unexpectedly. that is where the dynamism has happened. it is a result of policies intended to protect that space from the legacy regulations. it does not say they cannot take action to make things better. described, we have seen that happen with voice over i.t. services. they have been able to address 911 and other issues. i think there is a path forward. right now, it is the discretion of the agency.

i think we should look at very successful and how do we embody that? >> i am just going to clarify -- the doctor also gave them the power to deal with these practi ces. works today. ftc public knowledge has put out five values. fcc has put out a similar document. i encourage you to check out both of those and at&t's response to that. we will blog about this and remind you that we did in about last year on the kingsbury commitment. there's a lot of framework underlying that. lee's join me in thanking our panelists today. [applause]

>> next, and jeb hensarling talking about the export and imports. and then, your calls and comments on "washington journal." on "newsmakers," bernie sanders, chair of the veterans affairs committee. he talks about delays for veterans at va hospitals. 6:00 eastern. and >> thank you for your service. glad you are here. >> thankful to be here. >> you are going to have a very

nice surprise when you go in the memorial. it is beautiful. thank you. sailor right navy now. >> get my wife and here, where is she? -- 3.- 2 >> are you in the navy? >> i was in the marine corps. >> marine corps, tough. >> yeah, that was tough. >> well, thank you for being here today. >> thank you. thank you for all the service. >> former world war ii veteran and senator bob dole regularly greets visitors at the world war ii memorial. part of the holiday weekend on c-span3. >> on tuesday, the heritage

foundation hosted jeb hensarling. he talked about his opposition to the export import bank and called on congress to let it harder expire. he is a representative of the house committee. he did not rule out running for speaker. this is just over 45 minutes. >> tom delay noted that there was no fat to cut. importantly, this underlined a fundamental truth about today. for every dime in that fundamental budget, it was spoken for by someone who would lobby