And surcharging Medicare Coverage for smokers and the obese. You can watch this and other q a interviews all this week at 7 p. M. Eastern here on cing span 3. Cspan2. Cspan, created by americas Cable Companies in 1979, brought to you as a Public Service by your its provider by your television provider. Host and this week on the communicators, gordon smith who is president and ceo of the National Association of broadcasters, our guest reporter is paul kirby of telecommunications report. Senator smith, you started at nab nearly four years ago. How have the issues changed in those four years . Guest well, it seems like the issues just keep on coming, and they tend to be very major issues affecting both radio and television. But clearly on the radio side, the whole issue of performance rights, performance tax, whatever you want to tribe it as, is an ongoing challenge. Hopefully, the day will arrive when both the digital and the terrestrial platform can come up with a model that actually grows music and works for both. But right now one has an unsustainable business model, and the other one works for radio, but on the other hand, we need it to work for the performers too. But if you provide a rate that simply destroys local radio, that is a bad thing. We cant stand idly by for that. But a lot of contractual negotiations are going on with some of our major members like Clear Channel and intercom, doing deals with labels. So a market is starting to develop in that regard. On the investigation television side, obviously, the other big issues are spectrum which is now out of congress and into the hands of if fcc. Retransmission consent and, of course, ownership restrictions. These are all things that have of enormous consequence to Television Broadcasters both large and small. And were engaged in the all of them. So i guess my Biggest Surprise is how many big issues keep coming. Host well, speaking of the fcc, it looks like theres going to be a new chairman of the fcc, want to get your views on tom wheeler and potentially moving ahead with him without a republican nominee. Guest well, i we support the confirmation of tom wheeler. I personally do not know him, believe ive met him on one occasion, but what i know of him from people whose opinions i value, they hold him in high regard. He is both politically savvy and business experienced, and he has run two trade associations, so he will certainly have an idea of the job that that nab has to do for our members. And so we respect his resume and look forward to engaging with him. But having served on the Senate Commerce committee, i can tell you he wont be confirmed until there is a republican to pair him with. Thats just the way it works there. And i cant imagine that changing. So sometime this fall, hopefully before christmas, well have a fullystaffed fcc commission. One of the major issues at the fcc is the incentive auction, and ill ask you more details about it, but first of all, the fcc wants to hold their auction next year. Is that too ambitious b . Is there a concern theyll rush things and not look into things carefully enough . Guest well, it may sound cliche, but weve said from the beginning lets do it right and not just right now. And that really has a lot of meaning to us. And we have great sympathy for the fact that this is an enormously complicated process that theyre, that they are going through. What we have asked of the fcc commissioners is more traction parent si transparency, more engagement. It might be conventional wisdom that if broadcasters want to stop this actually, i think its in our interests to accelerate this to the degree possible while still getting it right. Because this has enormous consequence to the nation that there is a dedicated and healthy broadcast band dedicated to broadcasting if were serious about preserving video on a large scale that is free and that is local. These things are hugely important to people. In the information age, people still care about gathering around their big screens and watching sporting events or getting emergency information or staying up with the news. It comes there broadcasting in a very significant way. So we, we gave up a lott of spectrum a lot of spectrum when we went from analog to digital. Were being asked for more. But i think its important to understand the Broadband Community has twice as much spectrum as we do. They want more of ours. At the most, this auction will add 10 to their current holdings. But it will require roughly moving 60 of Television Towers in this country. That is an enormous undertaking, and you cant underestimate the potential for disruption to the American People if this is not done right. So when we ask for transparency and more engagement, we actually have at the nab some of the brightest minds in the physics of spectrum in america, and a lot of the problems we could help resolve if we were included at the ground level so the Software Works out right and doesnt, isnt put out and then has to go back and put out and go back, we can resolve a lot of these things together with the can coalition we have formed with the Broadband Community. Theres a commitment of interest here to a community of interest here to get it done as quickly as possible with the least amount of disruption. Is that why nab said at a recent hearing some have described the auction as a winwinwin, and nab does not see a win for broadcasters who remain on the air . At this point you would settle for a winwin tie, why is that . Guest because spectrum is a finite resource. Spectrum is the seed corn of anybody that has it. If you dont have it, you dont get a cob. And you want crop. And if you want to talk about corn and peas, we can do that. I know something about that. Thatll be the next show. Guest so when we talk about spectrum be, were actually talking about the importance to, very significant Public Policy. Should this nation have a dedicated broadcast band . And the answer is, clearly, yes. If were interested in a medium that does video like no one else can. I mean, if you took all of our spectrum and you tried to do all video through broadband, candidly, theres not enough spectrum in the universe to do video one to one versus our one to everyone technology. Which, again, is live, its local, its free, its important. You cannot do the super bowl on a one to one basis. You have to have broadcast architecture. And so thats why we think its important to do it right. Not right now, but do it as soon as you can do it right. Host well, senator, from your former seat on the Commerce Committee and as the head of nab now what about the use of government spectrum and utilizing some of that unused spectrum for commercial purposes . Guest well, i mean, the government has half the spectrum out there. Its used, obviously to, by the defense department, and we used to say on the Commerce Committee when wed ask can we get some of this to put into commercial use, the answer always was jokingly, theyve got guns. [laughter] and they have to give it up. And they dont want to give it up anymore than, i suppose, any of our broadband friends. You know, at the other but it takes the administration to tell the military to surrender some of it. And there is an effort now to get them to relinquish some. Unless you think that would crowd the government, i mean, they went as we did from analog to digital which created efficiencies which enabled broadcasters already to return 108 megahertz of prime spectrum real estate. They went to digital. They got excess space. That could be dedicated to the commercial purpose as well. So we think that there is a lot that the government could do to solve this problem for our broadband friends. Well, the department of defense has a proposal, and that would involve giving up most of one band, the 17551780, but they would share with broadcasters and others the 2025 and 2110. Your reaction to that plan. Guest were open to consider whatever, but i would just simply note i think it was about a year ago the defense the Department Said it wasnt possible to share with us. If somethings changed, let us see the test. But that band is important because thats what broadcasters use particularly in emergency circumstances. That is the band that allowed president obama during the boston bombing when he was getting his news via cable but sort of second and third hand, were told he said get me a live broadcast feed. It was on that very band that he was able to watch live what was happening in boston. So again, when these ideas are floated, its really important to get into the details and find out the consequence of these suggestions that are put out there. Again, if somethings changed and they can share, let us see the tests that say that it can work now where it couldnt have a year ago. Now, looking at some of the complaints in the incentive auction proceeding, how is the fck not being transparent enough fcc not being transparent enough . They said theyve met with nab folks 15 times alone. Guest well, they recently put out a whole bunch of information and, you know, understanding it all is really what they want us to do. Well let you see what were working with. What we could do with them if they wanted to get us and our broadband colleagues together in a room, we could tell them what we think works and what doesnt, and then if were all in the same boat in getting this right, i think we could have a lot fewer starts and stops many this process. For example, one of the major things that has to happen is these new agreements with canada and mexico. And these are very complicated international relationships. You know, Spectrum Airways dont know the difference between the u. S. Or the canadian boarder, and if the auction is going to be successful in sufficient quantity, this has to be resolved with canada or else you will literally disenfranchise broadcast tv from all of our thorne and Southern States northern and Southern States. So let us be a part of that, you know . Let us know in the beginning be part of the creation instead of responding to their best guest at this point. Be. Gordon smith, we recently had chet key nose ya on this program, founder of air owe. We asked him about to respond to people saying that theyre socalled stealing broadcaster signals. Heres what he had to say f we could get your response. At some point you have to call it what it is, its name calling. Because when three federal courts express an opinion that it is a Legal Technology and its consistent with what congress spended, its difficult for me to sort of look at it any other way except for name calling. Fact of the matter is that this content is paid for by the consumers in advertising, spectrum that the broadcasters have. Guest i would respond just this way, it is true the Second Circuit denied a preliminary injunction against broadcasters, so the case proceeds. Yesterday on the merits in the ninth circuit a case called aerio killer, a ninth Circuit District Court held that it was, in fact, they held that it was a violation of copyright. So that happened yesterday. Ultimately, this will have to be decided, i suppose, by the Supreme Court. By but the principle is simply this if you want to put out our stuff, you want to grab it and charge someone for it, then theres a copyright issue. If aereo just wants to provide the service and not charge for it, then i think they have a better case. But ultimately, when you take someone elses property and you resell it, you owe them for it. You should negotiate for it. Thats the requirement of copyright law. And eventually, the courts will decide this, and certainly the market will. I mean, as Television Broadcasting becomes more and more mobile, you know, it used to be ubiquitous broadcasting with a big tv in your living room. Now its pretty much on every device that you can have. Thats going to create a Real Investment problem, a return on investment problem for aereo as a business be model. Another new technology thats creating [inaudible] for broadcasters is the dish hopper, and broadcasters recently lost their attempt to get a preliminary injunction there. That goes forward, it allows, basically, consumers to skip commercials. Some folks said perhaps broadcasters will have to figure into the retransmission fee requests if they lose that case. If you give us kind of your sense of where you the thats where you think i thats going . Guest i think if it does not violate copyright, then it probably and certainly does violate contract. So it then becomes an issue of, you know, the hopper is just aimed at broadcast content, not at cable content, not at their content. So its something of real concern to us. Its not for consumer, its for them, its for dish. Because they dont allow people to block out their ads, just ours. So, you know, at the end of the day, i think all of my members when it comes to doing cop tent deals content deals with dish, theyre going to have to either to pass action they probably have damages they can seek. But as to the future be, it means you better have a Different Number in mind when you want to renegotiate transmission with dish. Another incentive auction question. Nab has said they dont know broadcasters that are willing to give up broadcasters that are willing to but led by a former executive in the industry they say theyre willing to consider it. Do you know yet of any that are willing to consider it, and do you think their just outliers . Guest i think theyre outliers, but, you know, theyre free to do this. And if that Coalition Wants to play, then play. Well adjust accordingly. But, again, i think its really important to understand how consequential this repacking will be and the size of the broadcast band. Its important to america as a matter of Public Policy to have a healthy broadcast industry. Because what we have, our architecture cannot be replicated by broadband. Now, the opponents say the original report on the fcc says about 11 Million People watch broadcast exclusively over the air compared to 100 million who use a paytv service. Okay, tine, maybe broadcasters should still get spectrum, but its not as critical because your people are using over the air. Guest well, were just glad people get our content however they want to get it, but i would note there are three different once. I think gary shapiro, cea, put out that it was 7 . Well, that was their own internal workings and was certainly biased against us. Nielsen has it at 11. At independent, unrelated to anything that nab does, the gfk media, they did an independent study, and they said that number now has climbed to 19. 3 of households in america. And thats just to as exclusive use of television over the air. Most homes have either a cable or a satellite, and then they have several other tvs that are on antenna. But lets just say the number is 19. 3 . Who are those people . Well, they tend to be the economically underprivileged, the minority community, and now increasingly the young who are either cutting the cord or never hooking up the cord because they found that with a combination of broadcast and the internet theyve got all the tv they can watch all the time they have to watch tv, that staysatisfies it. So broadcast direct over the air viewership is growing, its not shrinking. And those constituencies of minorities, economically underprivileged and and rural and young and often elderly, they shouldnt be excluded from the world of Television Just because various dueling statistics are out there. Host so, senator smith, when you think about the future of television 5, 10, 20 years, what do you see . Guest its a very exciting future. I mean, i think multicasting, for example, which digital made possible be, one of the reasons why people are cutting the cord is they find out that unlike on cable or satellite, you can go to your channel 4, and you can get four channels off that now. Theres tremendous new content coming in that you can get only through over the air. Mobile is an issue that im very interested in and concerned in and pushing my membership to adopt. There are probably 150 cities in the country now where if it has stations lighting up a mobile transmission so that people can get broadcast signals that theyre not billed for, its just free to them on their ipads and other devices. Thats the future. And one of my really exciting things that ive seen recently in a visit to tokyo with nhk labs was the coming of 4k and hk, and this is such incredible its visually. Its better than 3d, and you dont need glasses. And these things all take spectrum, and they certainly take investment by broadcasters in what you would know of as a new standard. Your viewers may understand the difference between the atfc and the ofdm standards. The rest of the world is on the ofdm standard which has far greater efficiency and mobility and penetration capacity for purposes of mobile. I think eventually thats where broadcasters will end up, and that will provide video anytime, anywhere on any device for all people at all times. And thats an exciting future because especially as it relates to video, no substitute for broadcast architecture. Host are we going to continue to see some retransmission fights or disagreements . Guest i think you will. Obviously, we hate it when there are any disputes because retransmission consent is hugely important to my television members. I mean, there are two ways you pay for localism, local con at no time. You pay content. You pay for it through advertising model which is the historic model of Television Broadcasting or now a growing stream is retransmission consent. Now, itll find its level like any market. Right now cable pays itself far more for its content than it pays to broadcasters. And the truth of the matter is our content is the one that people watch the most. You look at the hundred talk about seas in talk shows in any given week, 94 of them are broadcast. Its important that we fight and win this battle on retransmission consent because, candidly, its vit