Television provider. Joining this week on cspans waltermmunicators is mccormick. Would you represent in washington . Who do you represent in washington . We represent broadband providers, large and small. These were historically telecom companies, but they are broadband providers and offer service on a wireless and online basis. Countries like at t and much rural marketserve in sparsely Populated Areas of the united states. What are some of the major issues right now being confronted by the companies that you represent . The singlesay Biggest Issue is the transition to the new ip environment. Internet Protocol Communications is the future. Consumers are driving it, Ip Technology is the technology all devices to communicate with one another. It is that transition from an analog world to an ip world that is the biggest single issue. Is there any room for a wire lined up world anymore . I think the wirelined up orld is the center wire lined world that is of our economy and connects the economy and united states. Increase 40 rates per year. I was a american i would say that americas future is a wire lined a future. You are talking about the move to broadband and one of the sec is looking at is transition. You feel that the sec is moving quickly enough . I think thereve been concerns about the process taking too long. I applaud the commission for establishing the Technology Transition task force. I think it is important that we have a managed transition to ip. The commission and department of commerce work very well together in transitioning us from an analog to Digital World when it came to broadcasting. Thats not so long ago folks were very worried about having to get rid of their Analog Television sets. That was managed in a way that was done with nary a hiccup. It takes planning and execution. The new chairman of the sec is someone who is attentive to that. Will like to see the fcc do next what would you like to see the fcc do next . I think with the chairman has done is to say that he will have reload stars load stars. Content and capabilities. All of these are implicated with the ip transition. I think it is important to allow companies to have some trials. To has them has proposed have trials at two of its wired centers. I would encourage the commission to authorize them to go forward with those. I think it is important that the sec partner with the industry to make sure it is done smoothly. Partner with the industry to make sure it is done smoothly. The new chairman has only been in the seat for less than a month. What the hesitation about allowing those trials to go forward . I dont think that there should be any hesitation. The fact of the matter is that we are putting Ip Technology into our networks. Every day we are seeing manufacturers holding more and more ip equipment and less and less analog equipment. I think it is important to let those go forward. I think it is important to measure the results of those trials. They will be informative for everyone. Are there lessons to be regulate ipt how to when you look back at traditional regulation over traditional telephones . Definitely. How to, to begin with regulate, it is the wrong question. The question is how to assure robust competition. If you think about what the new chairman has said about competition being his lode star, directly consistent with the 1996 telecommunications act, an act that is now 17 years old, said that the purpose of the act was to promote competition and reduce regulation. In thisare seeing environment with ip is we are seeing the kind of internal competition that was never really anticipated by the act. If you take voice Telephone Service, today you can get up from a cable provider, up to three wireless providers in over 90 of the markets. You can get over the top through a voip provider. Have a number of options. If you take video, it was video from broadcasters are cable. Today you can get it from the telephone company, a satellite company, and you can get over the top. Netflix has 30 million subscribers, 10 million subscribers more than the nations largest cable company. We have real intermodal competition. In the environment, the goal should be to incense further to accelerate the kind of investments that will lead to greater capacity. It should not begin with the question of how to regulate. I think the question needs to be , what should be our objectives Going Forward and how do we best andmplish those objectives what Public Policy should we adopt to do so . What could the fcc or congress do that would decrease competition . Could do the things he is to continue to over regulate. One segment of the industry at the expense of investments. If you take our industry for example at the time of the 1996 act, we were considered to be operating offering a monopoly service. Telephone service today, only 25 of American Homes have a wired telephone. 95 over 95 of americans have a wireless phone. Only. Homes are wireless we are still saddled with regulations that come from the monopoly era. They are regulations that are kind of without purpose. I will give you an example. The uniformep system of accounts separate and apart from gap accounting. We are the only provider of voice Telephone Service that has to keep the uniform system of accounts. It is a second backup, a separate form of books, from gap accounting. We were told that they didnt want to see those records anymore, they have no use for them, because those companies are no longer regulated. So we said we can no longer keep the accounts. They said they were they said, we are not ready to allow you to do that to you yet. Investments, our live like to be putting our investments in the new stuff. We are required to put a lot of investment in the old stuff. One of the angst the fcc can do one of the things the sec can do is to follow the act. Promote competition and reduce regulation. Fcc is good at promoting competition but could be better at reducing regulation. Things thata few the new chairman could do right away that you would welcome that would be helpful, from your perspective, in promoting competition and reducing regulation . What are couple things he could do right away . When you look across the board at those who provide voice Telephone Service to eliminate those regulations that obtain to us and not to our competitors. For example, the system of accounts. Equal Access Requirements that really have no eating in todays environment. The idea that we had only 25 of households that are subscribing to a landline telephone how do we deal with the requirement that we have to make a Network Available for the 75 that are not using our service . These are issues that really go to the competitive balance and they go to where investment laws. Finally, the requirement that no matter what, even when we deploy fiber, that we have to make a voicecapable circuit available is one that is not impose on others who are deploying fiber. In many cases, it has led our companys to having to maintain it to networks a Fiber Network and a Copper Network. The Copper Network is quickly becoming one that people do not use. Of theonly one percent comprisecommunications of the old voice traffic. I dont know anyone nowadays democrats, rob lukens, everyone is procompetition. What you need to get them off the books . I like to be as concrete as possible on that. What we need to get him off the books is either to have been repealed or have the fcc announced it will forbear from regulation. The 1996 act provided that mechanism. We have files forbearance petitions. Filed forbearance petitions. I think we need to have the sec acknowledged that consumers have choice for a service, like voice thoseone service, that choices can be intermodal in nature. The commission needs to expand thinking in of not terms of wire Line Voice Service but the competition for voice service. Consumers have multiple choices for voice service. The commission should no longer engage in economic regulation of that service. Someuld you like to see kind of special committee etfs cc or some signed up some kind of task force review all these . I think this is something the can diggy task force a look at that. Is going to be the new counsel at the sec. I have Great Respect for phil revere. He was the architect of the 1970s with some of the original computer one and computer to a requirements that were aimed at introducing competition into the industry. I think that tom wheeler himself is one that has led industries that have been seeking to expand, it employed, and invest. He has a very keen appreciation for those things that limit investment. There is nothing that limits investment more than lack of certainty and predictability. Where there is a regulatory uncertainty creates and predictability. That limits investment. Optimistic that we are going to see commission that will focus on objectives and ,oals, investment, deployment and did not focus so much and not focus so much on the traditional regulatory that has been the hallmark of the fcc. Youre watching the communicators. Our guest this week is walter is the president of the bond broadband association. Mccormick, looking at the fcc, the new fcc with five do you see Net Neutrality and net management coming back as a front forefront issue . I cant imagine it would be a front burner issues. I think it has been resolve for a long time. I think it was long before i think he was solved long before the adoption of current regulation because it was over 10 years ago that the commission propagated its internet principles. For over a decade now companies have been operating in complete conformance with those principles. Things like do not flock degrade anyr, application. 10 years ago, that was sort of established and today, you have so much competition in the field that no company is going to change the terms of service for the consumers. There is a court case right now the Net Neutrality appeal is before the d c circuit. Of partsr anticipation of the order will be overturned . You have to be a general consul at the department of transportation. I know you are a good court watcher. What is your expectation based on what you have seen so far . The court began to ask questions as courts usually do , about theuity extent of the commissions authority and the impact of certain words if they are not completely clear. I think that the reason arise in because the is weight of the regulars was crafted was in a way that it would appear to potentially from offerings to consumers in the future services that consumers might want to have. It was that ambiguity and that toertainty that i think led let verizon to say that this could be problematic, not just for us but for Public Policy. That being said, i do not know how the court will rule. As i said before, no matter how the court rules i believe there has been established at this point sort of a commonly accepted set of standards for the way that people do business with regard to internet access. I do not expect that the consumers will see any changes net regard. You think the rules have had any effect one way or another on competition . I have not seen have any effect whatsoever on competition or members or on the language in which we do business. Mr. Mccormick, you came into tech and telecom through a backdoor. You have a transportation background. Had to get into tech . How did you get into tech . I moved into transportation. I moved back into communications. You could say that my background is in networks. My background is in railroad networks and trucking networks and Highway Networks and communications networks. What we have seen is that the a look amici kate Telecommunication Networks historically were structured along the lines of transportation networks. The fcc was modeled on the interstate commerce commission. Natural,en kind of a professional discipline to be able to move and post in move in both environments. What percentage of the American Public has in her next access to broadband today . 98 of americans have access to phones today. The latest statistics at the end of 2012 was at 95. 8 of americans had access to a rock band a broadband provider. Virtually 100 have access to broadband delivered over satellite. Ofhave about four percent america that is not covered by a fixed broadband provider. I think that one of the areas we have not talked about is what to do with the rumor remote, rural areas of america that need that accent. It has never been more important than today. We are even seeing the federal government on important initiatives, like access to health care and signing up for health care. Making that primarily primarily available over the internet. It is extraordinarily important that we get broadband out to that last four percent of were copies cannot make a reasonable Business Case and required government support. The fcc has been proceeding forward very favorably in regards to the price cap carriers and publicly traded companies. I think its reforms have been very helpful and they are leading to very sick sick and investment very significant investment. For the smaller rate of return carriers, there remain some uncertainties with the sec reforms ficc reforms and there will been there will need to be more requirements. Everything where they should be right now . Or is everything a bit of a mess terms of some of the [indiscernible] [laughter] i had to write something about this the other day and i said i was glad i am a mostly wireless reporter. The Smallest Companies in the nation serving the most rural areas. These are companies that tend to be the sole provider of service in those areas because they are so remote. It is the 4 of america that do not have access to broadband. These Companies Want to invest in broadband and note that this is what the Consumers Want to have. The program, they established a mechanism to cap support. The idea was wellintentioned. Thatdea was to make sure companies were not over recovering from the universal service fund. A mechanism that was adopted had adverse effects of creating in normas uncertainty about the predictable creating enormous the system. About loans from the Utility Services collapse. Decided that it could no longer lend money because it wasnt sure about the predictability of funding Going Forward. 80 members of congress have now written to the fcc and said that the way in which you have adopted reforms for rate of return companies are creating problems with investment and deployment. To her credit, the chairwoman took a couple of actions to that some immediate relief would provide some predictability for the next year or two. This is an area that the fcc is going to have to revisit and revise. They call you tonight and say, how do i fix this . What would you tell them . What is your vice to them . To focusice would be on broadband investment and look at the investment objective. Thatsf program is one continues to be primarily based upon calculate subsidies that are based upon the provision of which Telephone Service it needs service. Annies be a program that is based on the cost of the employment and operating. Roadband infrastructure to followup on howards line of questioning, if you recall tonight and you were asked about how you would like to see the spectrum auctions structured, what would you say . Lode starack to his promotion, the whole idea of having spectrum auctions was to have an open competition. You put your money up and bid. Nothing could be more open than that. Are publics these assets that are being sold to private interests. The goals to maximize the return to the united states. Frankly, tomou, wheeler is probably more knowledgeable about how structure spectrum auctions than the rest of the fcc staff combined. I would also tell him this as that spectrum gets auctioned off, dont underestimate the importance of the need for dramatic investment in terrestrial hebased lybased wire technology. Wiredlineg into a based network and they are going to have to have dramatic investments in the fire network. Fiber network. Transition between wired and fiber continues to be everything as important as everything we could do on the wireless side. Is said that the money is centered around verizon and at t and no one else has the money to compete with them. The other Large Companies tmobile, sprint these are large, multinational companies. Historically they are for they have had the wherewithal to the spectrum. The more rules you apply, the less money that is going to come in from the auctions. Thise publicly held is a public asset. The American People reserve deserve a fair return on that asset. One of the goals that the commission have to have is to maximize the return on that asset. Since we are talking spectrum auctions the department of seesce weighed in and concerns with at t in the rise of bit infractions. Thisu think is a member of party and administration that there will be a big break between what the doj is represent ash recommending to what is ultimately going to come . Own on these issues there is always a balancing of interests. Maximizing the people the return to the people of the united states, making sure there is a full and fair competition assets,m access and make sure that at the end of the day consumers have choices in regards to wireless providers all go into the mix. Theres going to be ample time for comment and discussion for us to have those auctions. I think it is a political act that you have to have action that you have to have consensus on the problem before you have consensus on the solution. There is a pretty clear consensus on what the objectives are here and the question is how best to resolve it. Also in usf, i wanted to ask you, do expect to see internet expansion, is a going to be a controversial thing . I think we are inte