Transcripts For CSPAN2 The Communicators 20140602 : vimarsan

You were with a group of your peersm various parts of telecommunications. You were asked about what you uajtk priority for this city in telecommunications. Your response was spectrum, spectrum, spectrum. And talked about the three really institutions that have responsibility for that, the ntia, the fcc and congress. Im going to ask you for our audience very briefly to give a report card on how you think those three institutions are doing and why its so important. Guest so thanks for the question. Let me answer those in the reverse way. The reason its so important is that spectrum is just a fundamental input for all of this investment and innovation thats going on in the industry. As we all know from our personal lives, were all carrying at this point probably multiple wireless devices. Its what we use for our work, for our play. And those devices require spectrum. They require spectrum, more and more of the airwaves to connect up and to communicate. So its necessary that we find ways to make more and more spectrum available to continue this investment and innovation. As far as how were doing in the different institutions, i think that all three of these Government Entities that you mentioned are doing a good job within the constraints within which they operate. We do have some structural issues in the way that spectrum is managed in this country. There is no single Government Agency that has responsibility for managing the spectrum resources of the country, and so that makes it a little bit difficult. , this tia does a great ntia does a great job to try and clear up spectrum, but they dont have the authority to really take an overall, holistic view, and that does make their job more difficult. I think the, the cc, likewise, is doing a good job within the constraints that they operate. We are now for the first time looking at over the next year and a half or so two out of three recent auctions of spectrum after about a fiveyear hiatus with no spectrum, so thats encouraging. But we need to continue to look out five to ten years and say where is the spectrum going to continue to come from for the continued growth of the industry. Host so on the house side chairman walden has listed modernizing spectrum policy along with modernizing the Telecommunications Act as priorities. But you said again at this Panel Session that we as a country have no strategy for our spectrum management. I guess how do we get there, how does the Strategic Vision evolve, and my second question for this is does any country do it better than we do . Guest i think on your first question i commend congressman walden more all that he is doing right now to push this forward as well as many others on the hill k ask it really does need to start there. It these to start with congress. I think in many areas of our Communications Policy today what we are seeing in many, many debates, issues, sometimes fights within the industry are really symptoms of a larger issue which is that we are operating under an Outdated Communications statutory framework that may have been successful for the things it was trying to achieve 18 years ago or, some cases, going back 80 years ago. But its really not well suited for the challenges we face today, and spectrum is one of those. I think as far as a strategy, if you really were going to stand back and look at this as a policy matter, right . And i differentiate that a little bit from politics. The two have to cocoexist, obviously. Policy is how the world should be and politics is how the world is, and you have to take both in into the. But from a policy perspective the way this should work is congress should appoint an agency that has the authority to manage the spectrum resources of the country and look at the highest and best uses of those resources so that we can continue to serve all the important functions; National Security functions, but also driving the spectrum needs of the industry for the continuing innovation and investment. Host how about the second question . Is there a country that does a better job of having a strategy for their spectrum . Guest so far, no. I have to commend u. S. Policymakers on that. You look particularly at europe right now where the market is very fragmented, theyre having trouble getting 4g rolled out partly because you dont have a europewide approach to spectrum allocation. So so far i think the nationwide approach, the fairly farsighted approach that policymakers have had in the u. S. Has been amongst the best in the world. But were not all the way home. We still have continued needs, and so we still have room to improve. Host before i turn it over to paul, let me go to that other big bucket which is revisiting or rewriting the telecom law which, as you said, has guided the country for 75 years plus. With the speed of change in this business, how would you counsel if you ever had the opportunity the lawmakers and policymakers to even start thinking about a rewrite of this . How can it be anyway platform specific with platforms changing as rapidly as they can, and what should guide it . Guest thats a great question. It should not be platform specific. I think we, first, we absolutely need to modernize the communications laws. As i noted, many of the debates were having whether its the open Internet Order, some of the things going on in spectrum, a lot thats going on in video really are symptoms of the fact that policymakers are trying to apply these outdated regulations that werent written for todays technologies and markets in mind to modern issues. And so its time to update those. The way you avoid the law being outdated the minute the ink is dry is insure that you dont start with technology platforms, but rather, you start with the consumer. You start and say how do you build this around competition and Consumer Protection in a way that is flexible and can change as the Technology Changes . The Technology Cycles in the environment in which we operate today are so rapid that its not a criticism of congress to say that they couldnt foresee what the technology will be five, ten years out. No one could. So what you need to do is not try and draft a statute thats based on some sort of prescient idea of what the technology will be, but rather look at some general principles that you build around; Consumer Protection, competition law, lick safety. And public safety. And build enough flexibility and discretion into the system that allows policymakers to apply that as markets and technologies change. Host all right. Let me turn it over to kirby. Several folks said that a bifurcated approach where ntia is responsible for federal spectrum and the fcc for private and state and local, that doesnt make sense. Would verizon support getting rid of the bifurcated or at least having the fcc responsible for federal spectrum which could make it easier to repurpose spectrum thats not being used . Guest you know, i dont want to get into sort of what agencies are right for what specific purposes. I think that gets into a much larger question. I think the real key, again, in the same ways i dont think you should build the statute around specific technologies. I dont think you should also go it and say, well, lets figure out the right agency first and then back into the task. I think the right way is to say whats the right overall spectrum policy or larger Communications Policy and then figure out where the right skill sets are to manage those. So it would certainly favor some sort of agency having the power and fcc may very well be the right one to manage those assets overall. So drilling down a little, in may the fcc adopted a Spectrum Holdings order and an incentive auctions order. The spectrums holding would impart limits on carriers that have more and low arer band spectrum. And verizon and at t opposed these rules beforehand. Since the order was adopted, at t said theyll go ahead and bid for 2040 megahertz probably in the auction. Verizon praised some other parts of the order but did not specifically mention the bidding limbs. Im curious if you can give us a sense with verizon, does verizon still plan on participating in the incentive auction . Guest i would say, first of all, youre right, we did praise parts of the order. There was a lot, there was a lot this there, a lot packed into the order. We thought the plan for the aws3 auction which will take place starting in november was very good. We commended the fcc on updating the spectrum stream which we thought was long overdue. I think this had become, actually, a matter of institutional integrity for the fcc, you had an ostensibly objective rule, but they hadnt updated the spectrum that was actually in use, and having brought that up to market realities is a very positive thing. As you note and as we have said repeatedly, we have concerns about putting in these restrictions in auctions. We think the incentive auction is an incredibly complex auction as it is. To begin to micromanage it on who gets what, we think, is one bad precedent as a policy matter but also puts risk in the auction. Premature to say what we will do. Were certainly going to explore the opportunities in both of the auctions, and then well make a decision when the time comes. The incentive auction that the fcc adopted, they said theyre going to do some things to try and attract broadcasters to the auction. Theres nothing for verizon and others to bid on. Do you think the fcc has done enough so far or should they do her to try to attract broadcasters to give up spectrumsome. Guest the fcc is clearly working very hard. Theyre doing an awful lot of outreach. Whether theyre successful, i would have to defer to the broadcasters in terms of what their thinking is and what impact its having, but clearly the fcc is focused on that, and chairman wheeler himself is spend a lot of time personally focused on reaching out to the broadcasters to show them the benefits of this. Now, the order that they adopted the may meeting and that got the most publicity was the internet. Guest right. And the fccs proposing to readopt their antiblocking rule that verizon had successfully challenged in federal court but with a different interpretation, and that would allow for individualized bargaining above a minimum level of access. Would this change be acceptable to verizon . And if not, do you think it would be worth verizon or others charging it . Guest when you say this change, youre referring to the individualized guest the individualized bargaining that the fcrs laid out fccs laid out in the nprm. Were going to have to see what comes out. Were at the beginning of the process, and there is a lot of Comment Period between here and now, so well have to see what the final rule is. Obviously, i cant prejudge what that ultimate and final rule will be. I think the important thing here is to look at what this overall process is and isnt about. You know, this open Internet Order and the whole issue of open Internet Order has been so complex for so long, and partly because its always been a little bit of an empty vessel into which people pour lots of ideas and ideologies, only some of which are actually related to the open Internet Order itself. So one thing i think that should be clear is what this is not about is whether or not consumers have access to an open internet. They have and they will regardless of what the ultimate rule says. And they will for a is simple reason. Isps like verizon is in our own selfinterest to provide an open internet to our customers. Thats what we do, those are the services we provide, and thats always been the case. That was the case before any open internet rules were this place, it was true during it, and its been true since then. Id also say what its not about is some sort of fast lane. The way the internet works today, the fact is content does get delivered to consumers at different speeds. Theres an entire part of the ecosystem, the content Distribution Networks whose entire Business Model is dedicated to getting Certain Companies content to customers faster than others. If you go to google from are your computer, the content from google or youtubes going to load probably ten times faster than a Small Business somewhere in mountainview nearby to google simply payoff the content distribution because of the content Distribution Networks, the networks built out by google and others. So this concept of fast lanes i find a little bewildering. Its something that someone came out with right away, and people have constantly then just repeated this mantra. In fact, you have to ask yourself why in all the time the internet has existed has no isp come up with a Business Model to provide these fast lane over the last mile . I would suggest to you that the answer is that the market has already been filled by content Distribution Networks. Theres no real demand there thats pushing people in that direction. Not clear to me why suddenly people fear that for the first time now thisll be a new development that in some way would hurt consumers. So i think what this order and what this process really is about and the question really on the table is what type of regulation do we want to apply to the internet ecosystem. And i think it comes down to a simple question; do you like the internet as it exists today . Do you value the innovation and the investment thats driven . And if so, i think what you should be in favor of is continuing the bipartisan, light touch regulation that started back in the clinton administration. And as i read it, what chairman wheeler and the rest of the fcc are laying out in the nprm, is exactly that sort of light touch regulation. Weve all felt that new rules are needed because we think the market already takes care of it, but we think that light touch regulatory approach is the right way to go. The alternative thats being suggested is to reclassify Broadband Internet as a title ii telecom service. That would actually constitute a significant change to the way this is worked. For the first time, applying 80yearold legacy, rotaryera telephone era regulation onto this incredibly rapidlymoving ecosystem. That is an untried, risky, radical regulatory experiment. We dont know how that would turn out. Host i want to do a couple of things for our nonpolicy audience. Nprm is a notice of proposed rulemaking, the first stop that says were about to Pay Attention to this issue. Guest right. Host and then also, once this happens, when an nprm comes out, is there always a pole adopted . Well, no. In this we would expect something. You can have proceedings where the fcc will propose rules and then at some point say, you know what . Were not going to do anything. But most of the time, yes. Theres a comment proceeding that will come after an nprm. The fcc will accept comments, theyll look at the record. Folks can go in and meet with them, and then theyll come out at some point with an order. Sometimes youll have a proceeding thats particularly hard, and instead of doing an order after that, theyll do whats called a further notice, and theyll ask more questions saying heres some things brought up in the original round of comments s and we want to ask some more. So not always, but we would expect some rules from this. Host and whenever we get into internet policy and net neutrality, theres always reference to title ii. For our audience that doesnt follow this, that means the threat of applying common carrier status to the internet. Would you very briefly explain to people what the implications would be . What does common carrier status mean . Guest sure. And its a great question, and to some degree i think were all still trying to grapple with what those full implications would be. We think they would be dire. Common carrier regulation brings with it all sorts of prescriptive regulations, pricing regulations, Service Quality regulations, resale requirements and obligations on downstream resellers. And so if you were to reclassify Broadband Internet as a title ii common carrier telecommunications service, we believe that it would have implications all the way through the internet ecosystem because you would begin to look at the fcc and state regulators beginning to get involved in all sorts of very micromanaged decisions on how services are offered, how theyre priced, how theyre resold and not just by the Internet Service providers themselves, but by those who are reselling those capacities. And that takes into account all sorts of aspects of the ecosystem. Others who have built out Networks Like google and netflix and and microsoft and others, but also filtering down into other parts of the ecosystem. Again, it hasnt been done. Youve had really on a bipartisan basis fcc chairmen who have agreed that was not the right way to go. And we think the implications certainly would almost immediately depress investment in the industry. But also likely would change the way that companies all through the ecosystem interact with their customers. Host we have about 12 minutes left. Okay. So on the mobile broadband side, the nprm adopted by the fcc, it opens up a discussion on whether to modify or strengthen the rules for wireless data services. The original rules treated wireless differently because its a different technology. Guest right. So in the original rules it was less stringent. The 2010 order said that mobile broadband providers could not block web sites and applications that compete with the providers own voice and video services, suggesting the possibility that mobile broadband providers should not be allowed to block web sites and apps that compete with the providers own services, not just telephoneny. Telephony. Is there a big difference with what theyre proposing . Guest first, i would say to the kind of premise of your question, first, wireless is different. As i said, we think that rules are not necessary for even wireline broadband, and if rules were to be adopted, we think its important to continue with this light touch Regulatory Regime thats been bipartisan for many years now and has driven all this investment. Even if there were to be rules for the wireline side, we absolutely believe you need to look at wireless differently. As you note, wireless does have unique characterrist iings characteristics. You have different scarcity in terms of the spectrum capabilities there on the wireless networks. You have unique Network Management issues, and you need the flexibility to continue to actively manage those network capacities in order to serve your customer as well. And so without regard to what happens on the wirelines, its absolutely essential that we continue to recognize the unique aspects of the wireless market, Wireless Technologies and the wireless spectrum constraint issues. So whats being proposed in the nprm for wireless, is that problematic . Guest i dont want to get too far into that because were going to be filing our comments soon on that in a detailed level, and so were going to be commenting on that specifically. I think one of the things that the nprm has posed the question is whether wireless should continue to be treated in a different way, and we think absolutely that is the case. Do you think its likely that whatever the fcc adopts, it will be back in court because of someone . Guest i think it depends. It depends on what the fc. C does. If the fcc were to reclassify broadband as a Title Ii Telecommunications service, i think it is inevitable that that will end up in court. But i dont know that it will necessarily regardless of what the fcr does here fcc does here. I think this is an issue that has generated a lot more heat and light over the number of years its been debated. I think there are a number of people in the industry who are ready to move on on this issue, feel like there are far more important policy issues in washington that we should we should be talking about, and the question is can the fcc chart a path here that continues to encourage this investment and innovation in the ecosystem that everyone can say this works well enough, we can move on to other things. I think with a care trycrafted care anycrafted final rule, thats a possibility. Now, another big proceed anything the fcc involves the transitions to allip networks. And the fcc is going to be looking at doing companies will be doing trials to try to see, okay, in an allip world what do we have to look for, and the chairman has talked about his Network Compact and making sure that things that protect the public dont go away just because things might be all ip. What would the fcc, excuse me be, what would verizon like to see this these trials and give us a sense of how youd like this reeding to yo. Guest sure. And i think, paul, you stated this very reicely which was great because what you often hear people talking about are general Technology Transitions, and there are a lot going on. There is the tdm to ip transition thats taking place. We see all around us people cutting the the cord and going from wireline to wireless. About 40 of the population uses only wireless for their home phone. And then you see a transition from copper to fiber that is going on and, in fact, is well underway. And these things often get conflated. So i think one of the things we want to make sure happens as part of these trials is that the fcc does not actually impede or slow down even the Technology Transitions that are going on that are driven by consumers. As i noted, consumers are voting with their feet in their transition to wireless. We see transition going on to fiber. Were doing quite a lot of transition of copper line to fiber lines. Thats not a transition from tdm to ip, these are customers who are actually keeping the same Services Just over a different physical infrastructure thats far more reliable. Weve just come through one of the toughest winters in a long time here up and down the eastern seaboard, and and our Fiber Networks really showed how resilient they are, how much less repair they take when subjected to that kind of stress of weather. And so thats a great thing. Its a very positive thing for consumers. So we think the fccs asking some important questions in terms of the types of values that we have as we move forward with our customers. But we also want to make sure that we dont get into a situation where Technology Transfer transitions that are well underway such as customers choosing wireless or transitions from copper to fiber which are an improvement for customers dont get slowed down or impeded by a series of prescriptive rules or even questions that need to be answered when, ultimately, this is an improvement for the customers. But that im sorry. But thats an issue customers choosing. There are concerns where the customers dont choose to go to wireless, and after Hurricane Sandy there were concerns that some customers were being forced to wireless when the wireline infrastructure was destroyed, and wireless is not the same. So you have propagation, other issues, liability issues that you do not have necessarily with wireline. Guest right. And i think youre referring specifically to the situation of fire island, new york, which is a unique situation. Fire island is an area that that has predominantly a summer population. The population surges during the summer months. You know, this was an example, to me, of the advantages of a robust and Diverse Technology ecosystem. We had a situation where we simply could not rebuild a wireline infrastructure between the time that sandy hit and memorial day. When the population was set to surge. We put in lace a wireless solution in place a wireless solution that gave people very good functionality, always with the intent of improving that. We got feedback, talks to customers over the course of the summer and at the end of the summer made the determination we were actually going to rebuild with fiber instead. This is an example where wireless provided a great shortterm solution for customers. Over the longer term, we determined that fiber was the right solution. And so that was a unique situation. In general, what we are doing and what the trials are the trials are looking at issues, for example, are there areas that they go to wireless. In our situations what were looking at right now is predominantly a copper to fiber migration. Which doesnt present those same situations. Customers are getting the same services at the same price points just over a different fiber infrastructure. Another issue that consumers will care about is the theft of smartphones. And its a big issue. Law enforcement has been very concerned with it, and they say, for instance, in washington and other cities a large number of the crimes occur when people steal smartphones. So in april the Wireless Industry announced what they call voluntary commitment, and starting next year they will include in devices apps and other things that will allow to try to secure their cell phones. And theyve gotten youve been praised by some legislators, some regulators and others. However, some folks arent that happy. The attorney general of new york and the da in San Francisco have been very active on the kill switch issue that would allow you to turn your cell phone if its stolen, turn it off remotely, say that you should do more. You shouldnt have to wait until next year, and this kill switch should come as a default, and people shouldnt have to do anything to make it occur. I guess i wanted to get your reaction to that criticism. Guest as you note, ctia is a trade association has really come together and, i think, shown great leadership on this issue. Its an issue that all of the Companies Take very, very seriously. Anytime crime is involved, its something that were all concerned about and want to make sure were doing what we can to help prevent that. Ctia did come together, as you note, and this is and showed leadership in coming up with a voluntary code here. This has to have all parts of the ecosystem involved. This isnt something that carriers can do unilaterally. We need the handset manufacturers, you need all parts of the ecosystem involves in this. Involved in this. You also need to look at the overall customer experience, because we absolutely want to look at technology that works to, that might discourage cell phone theft. You at the same time dont want to have a situation where4 r customers, say, drop their phone behind the sofa, think its stolen, have it turned into a brick and call back in and realize they cant have it turned back on. Or that its accidentally done or its hacked into. One could see teenage pranks of seem turning off each others phones. So you want to make sure youve really thought through all of the Technology Aspects of how this solution will work and, again, i think ctia is to be commended in really taking a holistic and thoughtful approach in how we address this consumer need overall. But the industry has opposed legislation at the state level for kill switches. Guest yes. Simply because what we dont want is a patchwork of inconsistent laws throughout the country. We think this voluntary commitment is going to address the issue. We think we should give it time for it to work, and lets take a look at that. We think its premature and counterproductive to have individual states all across the country passing separate legislation. Host so we have about a minute and a half left, and we have so many big issues we havent gotten to including many of in the area of security. Last Week Congress passed the usa freedom act, book collection of data. Has verizon taken a position on this specific law, and where do you think the policy should be going . Guest yes, we did. We came out in support of the usa freedom act. We applauded it because it brings an end to bulk collection, really focuses on privacy of customers and, we think, strikes that right balance. Weve been very supportive of that, and well continue to be supportive as it now moves on to the senate side to see if we can get a final law passed. Host well, thank you. Hope youll come back. As you said, it affects all of us in the country, and each one of them is very complex. Paul kirby, thank you for your questions this week, and thank you for your time. Guest thanks very much. Cspans new book, sundays at eight, includes financial journalist Michael Lewis. We are living through a really dramatic period, and it is not over. Were sort of at the beginning rather than the end. And there are real structural problems. Yes, that were going to be living i mean, im not an economic forecaster, but everything i read suggests were going to be living with unusuallyhigh levels of unemployment, a lot of pain from are overindebtedness. I mean, the a quarter of the countrys on food stamps, i saw it on tv. Its not a great depression. Were not reprising exactly what happened in the 30s, but its a version of that. Read her of our conversation with Michael Lewis and other featured interviews from our