[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]





PUBLIC, EDUCATIONAL, AND GOVERNMENTAL (PEG) SERVICES IN THE DIGITAL TV 
                                  AGE

=======================================================================

                                HEARING

                               BEFORE THE

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 29, 2008

                               __________

                           Serial No. 110-84


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov







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                    COMMITTEE ON ENERGY AND COMMERCE

    JOHN D. DINGELL, Michigan, 
             Chairman
HENRY A. WAXMAN, California            JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts         Ranking Member
RICK BOUCHER, Virginia                 RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York               J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey         FRED UPTON, Michigan
BART GORDON, Tennessee                 CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois                NATHAN DEAL, Georgia
ANNA G. ESHOO, California              ED WHITFIELD, Kentucky
BART STUPAK, Michigan                  BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York               JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland               HEATHER WILSON, New Mexico
GENE GREEN, Texas                      JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado                CHARLES W. ``CHIP'' PICKERING, 
    Vice Chairman                          Mississippi
LOIS CAPPS, California                 VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania               STEVE BUYER, Indiana
JANE HARMAN, California                GEORGE RADANOVICH, California
TOM ALLEN, Maine                       JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois               MARY BONO, California
HILDA L. SOLIS, California             GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas             LEE TERRY, Nebraska
JAY INSLEE, Washington                 MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin               MIKE ROGERS, Michigan
MIKE ROSS, Arkansas                    SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon                 JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York            TIM MURPHY, Pennsylvania
JIM MATHESON, Utah                     MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina       MARSHA BLACKBURN, Tennessee
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana 


                           Professional Staff

              Dennis B. Fitzgibbons, Chief of Staff
                Gregg A. Rothschild, Chief Counsel
                   Sharon E. Davis, Chief Clerk
            David L. Cavicke, Minority Staff Director

                                  (ii)



          Subcommittee on Telecommunications and the Internet

               EDWARD J. MARKEY, Massachusetts, Chairman
MIKE DOYLE, Pennsylvania             FRED UPTON, Michigan
    Vice Chairman                        Ranking Member
JANE HARMAN, California              J. DENNIS HASTERT, Illinois
CHARLES A. GONZALEZ, Texas           CLIFF STEARNS, Florida
JAY INSLEE, Washington               NATHAN DEAL, Georgia
BARON P. HILL, Indiana               BARBARA CUBIN, Wyoming
RICK BOUCHER, Virginia               JOHN SHIMKUS, Illinois
EDOLPHUS TOWNS, New York             HEATHER WILSON, New Mexico
FRANK PALLONE, Jr., New Jersey       CHARLES W. ``CHIP'' PICKERING, 
BART GORDON, Tennessee                   Mississippi
BOBBY L. RUSH, Illinois              VITO FOSELLA, New York
ANNA G. ESHOO, California            GEORGE RADANOVICH, California
BART STUPAK, Michigan                MARY BONO, California
ELIOT L. ENGEL, New York             GREG WALDEN, Oregon
GENE GREEN, Texas                    LEE TERRY, Nebraska
LOIS CAPPS, California               MIKE FERGUSON, New Jersey
HILDA L. SOLIS, California           JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex officio)
  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     1
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     2
Hon. Edward J. Markey, a Representative in Congress from the 
  State of Massachusetts, opening statement......................     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     5
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     7
    Prepared statement...........................................     8
Hon. Jane Harman, a Representative in Congress from the State of 
  California, opening statement..................................     8
Hon. Lois Capps, a Representative in Congress from the State of 
  California, opening statement..................................     9
Hon. Hilda L. Solis, a Representative in Congress from the State 
  of California, opening statement...............................    10
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, prepared statement......................................    11

                               Witnesses

John B. O'Reilly, Jr., Mayor, City of Dearborn, MI...............    11
    Prepared statement...........................................    14
David L. Cohen, Executive Vice President, Comcast Corporation, 
  Philadelphia, PA...............................................    68
    Prepared statement...........................................    70
Gail Torreano, President, AT&T Michigan, Detroit, Michigan.......    98
    Prepared statement...........................................    99
Annie Folger, Executive Director, Midpeninsula Community Center, 
  Palo Alto, CA..................................................   101
    Prepared statement...........................................   103

                           Submitted Material

Jeff Trudell, director of technology, Wyandotte Public Schools, 
  letter to Mr. Dingell..........................................   174
Elaine McClain, letter of January 28, 2008 to Messrs. Dingell and 
  Markey.........................................................   175
Linda A. Badamo, director of cable TV and communications, Clinton 
  Township, MI, letter of January 28, 2008 to Mrs. Gail Torreano.   178
City of Boston, MA, letter of January 28, 2008 to Mr. Markey.....   182
Kyle McSlarrow, president and CEO, National Cable & 
  Telecommunications Association, letter of February 15, 2008 to 
  Messrs. Markey and Stearns.....................................   185
David L. Cohen, Executive Vice President, Comcast, letter of 
  February 13, 2008 to Mr. Dingell...............................   188
``Commitment,'' AT&T graphic.....................................   190

 
PUBLIC, EDUCATIONAL, AND GOVERNMENTAL (PEG) SERVICES IN THE DIGITAL TV 
                                  AGE

                              ----------                              


                       TUESDAY, JANUARY 29, 2008

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 1:00 p.m., in 
room 2322 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman) presiding.
    Members present: Representatives Markey, Harman, Gonzalez, 
Inslee, Rush, Eshoo, Green, Capps, Solis, Dingell (ex officio), 
Stearns, Upton, and Barton (ex officio).
    Staff present: Amy Levine, Tim Powderly, Mark Seifert, 
Colin Crowell, Maureen Flood, Philip Murphy, Neil Fried, and 
Garrett Golding.
    Mr. Markey. Ladies and gentlemen, welcome to the 
Subcommittee on Telecommunications and the Internet. Today we 
are going to have a hearing which examines the issues related 
to public, educational, and governmental services on cable 
systems. I want to begin by welcoming my good friend, Cliff 
Stearns, from Florida as the new ranking member of the 
Telecommunications Committee. Cliff and I have been friends 
since the first day that he came to Congress and came 
immediately down to the House gym and began blocking my shots, 
and so that has been a--I thought I would make that honest 
disclosure up front, Cliff. And I think we are going to have a 
great relationship as the years go by.
    What I would like to do though is first, because Anna Eshoo 
just absolutely has an urgent reason to leave, to recognize her 
to make an opening statement first, and then I will recognize 
Cliff Stearns and then make my own opening statement. The chair 
recognizes the gentlelady from California.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman. I really appreciate it 
and to the ranking member, Mr. Stearns, for allowing me to just 
make a brief opening statement and kind of leap frog over 
others. The House Intelligence Committee is beginning a very 
important hearing right now, and so as a member I really need 
to get there. But let me just say a few words and thank the 
witnesses for being here. Certainly to Ms. Folger, Annie 
Folger, who is here from Palo Alto, California, which is the 
heart of my district, as the Executive Director of the 
Midpeninsula Community Media Center. They provide a wonderful 
service to our community. The mission of that organization, as 
it is for others like hers, is to use television and the 
Internet to create and distribute programs that promote and 
celebrate individual expression, local achievements, education, 
local cultural exchanges, arts appreciation, and civic 
engagement. Those are very, very important things in our 
communities across our country.
    In fact, it is a snapshot of civic life in America. Her 
organization and others also provide the most local programming 
on television. They cover all the city councils, all the 
meetings, all the things that go on in the public square that 
the public really needs to be included in in all the areas that 
I just mentioned. Now the PEG channels are a vital first class 
function for communities across the country, and I think that 
they are being threatened by second class treatment on AT&T's 
video service. Ms. Folger is going to testify today about 
AT&T's U-Verse product, which is new to my congressional 
district. And I hope that we can get the kinks out of this, 
that it doesn't carry the characteristics that seem to be part 
of it now.
    Now AT&T recently received a statewide license in 
California to provide video service, but unfortunately they are 
televising PEG channels in such a cumbersome way that it 
threatens access to those channels nationally. There is going 
to be a short demonstration that Ms. Folger is going to put on. 
I think it will be of great interest to the subcommittee and 
will underscore how U-Verse doesn't permit viewers to record 
PEG channels on their DVRs, that the picture quality is a 
quarter of the quality of a normal channel, and closed 
captioning is not provided. I think we have to do much better. 
I think that when a state license, a statewide franchisee 
license is issued, that there are public obligations to that. 
So, Mr. Chairman, I am sure that part of the regular order will 
be that we can write letters for the record to our witnesses 
and have them respond.
    And again, Ms. Folger, thank you for being here. Thank you 
to my colleagues for allowing me to move in front of you. I 
hope that we can get past these issues, and I am sure the 
witnesses will address the points that I am irritated about and 
help us to have a comfort level and that it will no longer be 
the case. So thank you, Mr. Chairman, and to all my colleagues. 
I very much appreciate it.
    Mr. Markey. The gentlelady's time has expired, and we 
welcome you, Ms. Folger. My wife grew up in Palo Alto, and she 
believes that her marriage to me is proof that there is such a 
thing as downward social mobility leaving Palo Alto, so we 
welcome you. The chair recognizes the ranking member, the 
gentleman from Florida, Mr. Stearns.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Mr. Chairman, thank you very much, and thank 
you for that generous introduction. You and I have been 
friends, and we share interest in sports across the board. And 
I have been an admirer of yours, and also you and I have 
debated many times, and you are very skillful, so I have a 
great deal of admiration for you. And I welcome the opportunity 
to be the ranking member and also to compliment my predecessor, 
Mr. Upton of Michigan, who did an excellent job, and he is 
helping me, and I look forward to this transition with his help 
and yours, Mr. Chairman, and I am so pleased to be here. And I 
would say to the witnesses we appreciate your time. I would say 
though to the gentlelady from California that perhaps my take 
on this issue is perhaps a little bit different than hers. I 
think there is a way to balance out the need for innovation and 
let the cable companies have a little bit of an opportunity to 
provide innovation and to provide more channels through the 
digital rather than the analog spectrum, with also providing 
access to the consumers to PEG channels, so I perhaps will give 
a different perspective, which I think would be healthy, Mr. 
Chairman, in a hearing of this nature.
    Mr. Markey. You just have to be careful today when you say 
the gentlelady from California, because that is all we have 
today. You have to be more specific today.
    Mr. Stearns. Okay. Well, I am speaking of Anna Eshoo, of 
course, who previously spoke and opened up the hearing. But I 
do welcome the gentleladies from California, too. Mr. Chairman, 
we now have a marketplace of convergence where labels don't 
matter anymore, where there are other--there was one separate 
to phone, cable and wireless, and so forth, and now it is all 
blurring together, and the convergence is coming. And in order 
for this innovation to continue, we have got to allow the 
companies to innovate and not put handcuffs on them. Cable 
operators may need to convert certain channels to digital 
format. This conversion allows cable operators to save capacity 
for faste, broadband service and more channels, including more 
high definition content, so going digital also enables advanced 
features such as video on demand and interactivity.
    In fact, each analog PEG channel uses the same space as 3 
high definition channels, 10 video on demand channels, 15 
standard definition channels or 42 megabits per second 
broadband service. So the purpose of this hearing is to examine 
the digitization of PEG channels, what that means to the 
consumer and the innovation I talked about earlier. Now the 
Communications Act allows municipalities to require cable 
operators to carry PEG channels. Some cities are concerned that 
digitizing PEG content will make it less accessible to 
consumers. I understand their concern. Comcast in Michigan 
announced plans this past November to offer PEG channels only 
in digital format.
    As a result of Comcast's change, a subscriber with an 
analog television would need a digital cable set top box to 
continue receiving the PEG channels. Comcast has offered to 
provide such a consumer one set top box per household at no 
cost for 1 year. Additional boxes after the first year would 
cost $4.20 per month. Cable companies like our television 
broadcasters are in the process of converting their 
transmission to digital format. Because the cable transition 
does not directly implicate the public airwaves or the 
availability of spectrum for emergency responders, no 
transition deadline has been mandated for cable operators. 
Instead, they are making individual decisions on when and how 
to transition to digital based on capacity constraints, 
consumer demand and the availability of their investment 
capital.
    Most cable systems today have some subscribers receiving 
analog channels and some receiving digital channels; thus, they 
are currently simulcasting the local broadcast channels and PEG 
channels in both analog format and standard definition digital 
format. So my colleagues, so long as cable operators meet their 
legal obligations regarding carriage of particular content, we 
should allow the free market, not the heavy handed regulation, 
to determine how and when to convert to digital. Congress had 
been pushing cable operators to carry more content as well as 
increased broadband speeds and penetration. Cable operators are 
attempting to balance these sometimes competing forces. Cable 
providers are in a better position, my colleagues, than 
regulators to determine how to maximize service for their 
consumers. If they calculate wrong obviously they are going to 
lose business. Let them do it, but I believe this hearing is 
very important to hold, and I look forward to hearing from our 
witnesses. Thank you, Mr. Chairman.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
            CONGRESS FROM THE STATE OF MASSACHUSETTS

    Mr. Markey. I thank the gentleman. The chair will now 
recognize himself for his opening statement. And I will begin 
just by saying that we do have a busy agenda ahead for this 
year that will address many telecommunications policies topics 
on both the legislative and oversight fronts, with our next 
significant oversight hearing scheduled for February 13 on the 
status of the digital television transition. Just 4 weeks into 
the consumer converter box program, the Commerce Department has 
almost 4 million requests for coupons worth about $160 million, 
so it is off to a brisk start. We are also following very 
closely the ongoing auctions at the Federal Communications 
Commission of the licenses to the frequencies the broadcasters 
will be relinquishing as part of the digital television 
transition.
    I am eager to see the extent to which the auction actually 
results in the introduction of new competitors into the 
marketplace in different regions around the country, as well as 
the advent of new wireless services, devices, and applications. 
Initial reports of lagging interest thus far in the so-called D 
block license, a commercial wireless opportunity with a unique 
public safety mission, is discouraging. The auction is 
obviously not over yet, and it is still possible for a 
successful auction of the D block license. However, if the 
auction ends and the D block has not met its reserve price, the 
subcommittee will actively review the parameters of that 
auction, including an assessment of its various conditions, the 
reserve price, and the structure of the public safety trust, 
and it would be my intention should events at the auction 
require it to work closely with FCC Chairman Martin and his 
colleagues to develop a plan for reauctioning these frequencies 
in a way that will foster new wireless competition and enhance 
interoperable public safety communications across the country.
    It is an issue that I know that Ms. Harman and other 
members of the committee have an intense interest in. Today's 
hearing focuses upon public, educational, and governmental 
services. Historically the Congress has supported this, 
ensuring that a portion of capacity on cable systems be 
reserved for such services, and thousands of communities around 
the country have used such rights to access cable system 
capability to develop and offer television channels for their 
local communities. With the backdrop of our recent debate last 
night on media ownership, it is important to keep in mind that 
these PEG channels represent vital and vibrant voices for 
localism and diversity in our national media mix.
    PEG channels today offer citizens the chance to view local 
government proceedings, local high school plays and sporting 
events, educational courses, foreign language programming, 
local civil news and information, programming distributed by 
Armed Forces, charities and local community groups, and other 
fare. The vast majority of this programming would otherwise not 
exist on the dial because neither traditional broadcasters nor 
cable programmers typically develop programming on such a local 
level or open access to community groups to program time and 
capacity. As the nation continues to transition to digital 
television and the march of technology moves ever forward, it 
is important that cable operators, programmers and communities 
work together to ensure that consumer welfare is protected.
    As we have seen in recent weeks, many cable operators are 
moving channels, including PEG channels and CSPAN in a manner 
that is drawing consumer complaints. The Congress has a 
longstanding policy interest in safeguarding and fostering 
diversity and localism, even as we seek to promote more 
broadband deployment, greater affordability, and the advent of 
other new services and equipment in the marketplace. Today we 
have an opportunity to hear from witnesses about what is 
happening in the marketplace and obtain suggestions as to how 
these important policy objectives can be met with the least 
amount of disruption to consumers. So I look forward to hearing 
from our witnesses and working with them in the months ahead to 
ensure that we do in fact have a good policy on these issues.
    And so now the chair will turn, and almost in a Dickensian 
way, and only in Congress can this work, because here as well, 
here as in Dickens, there is life after death. And so I have 
the privilege now of introducing the ranking member of telecom 
subcommittee past, Christmas past, Fred Upton, to make his 
opening statement. And we welcome you back and hope that we see 
you here frequently, Fred.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. I promise you I will be here a lot, and I 
appreciate the opportunity to serve now as a mere member of 
this powerful and important subcommittee as the former chairman 
and ranking member. And, Cliff, you have big shoes to fill. It 
is nice to be back. There was a time that in Michigan we had 
only cable, and now we have other video competitors such as 
AT&T, as well as satellite. And AT&T's service is new and 
innovative, and it will take a commitment on both the part of 
AT&T and the cities to work together to develop the best PEG 
programming that they can. And I certainly count myself as a 
supporter of PEG. I am sure AT&T would like to attract 
customers to its new service. Consumers want a choice of 
providers, and this pushes cable to provide a better product as 
well or it will lose its customers to the competition.
    And as we have seen, the more competition the better it is 
for consumers. That is the competitive environment that many of 
us have always imagined for this technology. Certainly there 
are going to be growing pains along the way. That isn't 
surprising. When you get a new cell phone, for example, or any 
other technology product, you are going to have to learn it and 
all of its features. I believe the same to be true for the 
latest iteration of video service being offered by AT&T, that 
there may be a bit of a learning curve, but the potential 
benefits are great to the consumers that will use it. In 1996 
we amended Title VI of the Communications Act to ensure that 
cable technology and the deployment of set top boxes would not 
be unduly hampered by local franchise authorities.
    The provision plainly states, and I quote, ``No state or 
franchising authority may prohibit, condition or restrict the 
cable system's use of any type of subscriber equipment or any 
transmission technology.'' We adopted that provision for a 
reason. We believed that private companies rather than public 
officials could best chart technological advancement. Given the 
challenges that cable operators face in the current competitive 
landscape against other multi-channel video programming 
distributors who are already widely offering all digital 
services, it hardly seems the time for us to backtrack on our 
commitment to provide cable operators with discretion over 
their technical development. Local officials, even when well 
intentioned, should not be dictating necessarily how much of a 
cable system is analog or how much of it is digital.
    I understand that there might be some disruption among the 
transition period that may be a cause of concern to the PEG 
viewers as well as their providers, but I would encourage local 
governments and PEG programmers to embrace the digital age and 
work cooperatively to minimize any transitional disruption. If 
the FCC imposes dual carriage requirements and we want a 
broadband provider to provide as much as 100 megabytes per 
second speeds to compete, then cable has to carry all of the 
PEG channels and something is going to have to give. I have 
always believed in regulatory parity. Cable and other 
terrestrial carriers are mandated to carry PEG channels while 
satellite providers that serve over 30 million households have 
no such mandate.
    The bottom line is this. Consumers want HD, more HD. 
Otherwise, they are going to leave that provider. Our goal is 
to try to make sure that competition works as best that it can 
so in fact they will have those services if they want them. I 
yield back my time to the gentlelady from California.
    Ms. Harman [presiding]. I thank the gentleman for yielding 
and would note for the record that the gentlewomen from 
California have now taken over the committee, which I declare 
to be a good start. It is now my pleasure and privilege to 
yield to the chairman of the full committee for an opening 
statement.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Madam Chairman, thank you for the recognition. 
I commend you and Chairman Markey for holding this very 
important hearing. I want to begin by welcoming a number of 
friends here today, including my very dear friend, Mayor 
O'Reilly of Dearborn, Michigan, and also Ms. Gail Torreano. I 
want to thank them and our other witnesses for their time and 
efforts in participating in this day's hearings. The committee 
today will hear testimony concerning the current treatment of 
public, educational and government, or PEG, programming by 
video programming providers. Local communities would use PEG 
programming to cover town meetings and to air educational 
programs and even to cover local high school sports events. 
These are very important programming and very important matters 
of concerns to the communities. It constitutes a crucial aspect 
of political discourse in communities across the United States 
and promotes important goals of localism and diversity, and in 
many instances, if not in all, in some way or other it is 
enshrined in the agreements originally adopted between the 
communities and the providers of cable service.
    The committee recently learned that some providers are 
changing how consumers receive PEG programming. In other cases, 
these changes could impose additional costs on consumers or 
make it difficult for them to locate PEG programming. In other 
instances, changes may prevent consumers from digitally 
recording PEG programming. These are matters of grave concern 
to the communities, to the listeners, and also to the 
committee. I wish to be clear. I am not opposed to any effort 
that could address the problem of the underlying cable 
operators' obligation to make PEG programming available to 
consumers. It matters little to me if such efforts are driven 
by technological change, the need for more network capacity or 
the desire to compete with new entrants or enter as a new 
entrant.
    PEG programming deserves first-class treatment, not second-
class billing. That is why the Congress requires cable 
operators to provide PEG programming on the most basic tier of 
service and why this committee has stated that it should be 
available to subscribers at the lowest reasonable rate. I am 
pleased that Comcast, which had announced changes detrimental 
to the way it delivers PEG services in Michigan, has agreed to 
make a good faith effort to work out a settlement with affected 
communities. I want to commend them for that. I am optimistic 
that these discussions will lead to a result that leaves all 
parties better off. And one of the functions of this committee 
in hearings of this kind is to find out what are the problems 
and how those problems could best be worked out to the 
satisfaction of all concerned.
    I recognize that all types of communications networks are 
being upgraded with the latest technologies. This committee and 
I support that. These upgrades often require Congress to 
consider how existing policy priorities will be accommodated by 
the new networks of the future. This committee has examined 
such efforts and such issues closely in the past, and I look 
forward to doing so now for PEG services. I want to thank you, 
Madam Chairman, and I want to thank the committee for this time 
and for their effort and leadership in this matter. I look 
forward to the testimony of today's distinguished witnesses. I 
have the unanimous consent request that certain matters be 
inserted into the record.
    First of all, a letter from Mr. Jeff Trudell, Director of 
Technology, Wyandotte Public Schools, a letter from Elaine 
McClain of Birmingham, Michigan to the committee, a letter from 
Linda Badamo, Director of Cable TV and Telecommunications for 
Clinton Township, Michigan to Gail Torreano of AT&T.
    [The information appears at the conclusion of the hearing.]
    Ms. Harman. Without objection.
    Mr. Dingell. Thank you, Madam Chairman, for your courtesy 
to me.
    [The prepared statement of Mr. Dingell follows:]

                   Statement of Hon. John D. Dingell

    Mr. Chairman, thank you for holding this very important 
hearing. Let me begin by welcoming several friends here today, 
including my dear friend Mayor O'Reilly of Dearborn, Michigan. 
Thank you for your time and efforts to participate in today's 
hearing.
    The Committee will hear testimony today concerning the 
current treatment of Public, Educational, and Governmental or 
"PEG" programming by video programming providers. Local 
communities use PEG programming to cover town meetings and air 
educational programs and even to cover local high school sports 
events. This programming constitutes a crucial aspect of 
political discourse in communities across America and promotes 
the important goals of localism and diversity.
    The Committee recently learned that some providers are 
changing how consumers receive PEG programming. In some cases, 
these changes could impose additional costs on consumers or 
make it more difficult for them to locate PEG programming. In 
other instances, the changes may prevent consumers from 
digitally recording PEG programming. These are matters of grave 
concern.
    Let me be clear--I am opposed to any effort that would 
thwart the goals underlying a cable operator's obligation to 
make PEG programming available to consumers. It matters little 
to me if such efforts are driven by technological change, the 
need for more network capacity, or the desire to compete with 
new entrants. PEG programming deserves first-class treatment, 
not second-class billing. That is why Congress requires cable 
operators to provide PEG programming on the most basic tier of 
service and why this Committee has stated that it should be 
available to subscribers at the "lowest reasonable rate."
    I am pleased that Comcast, which had announced changes 
detrimental to the way it delivers PEG services in Michigan, 
has agreed to make a good faith effort to work out a settlement 
with affected communities. I am optimistic that these 
discussions will lead to a result that leaves all parties 
better off.
    I recognize that all types of communications networks are 
being upgraded with the latest technologies. These upgrades 
often require Congress to consider how existing policy 
priorities will be accommodated by the new networks of the 
future. This Committee has examined such issues closely in the 
past, and I look forward to doing so now for PEG services.
    I thank you for this time and look forward to the testimony 
of today's distinguished witnesses.
                              ----------                              


  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman. Thank you, Mr. Chairman, for your leadership on 
this issue and so many other issues on this committee. I love 
being back. I also enjoy so much serving on this subcommittee 
and would like to welcome Mr. Stearns to the ranking member 
position and to say to his predecessor who just left the room 
that we all know he has become a world renowned expert on 
efficient light bulbs, and for that reason he needs to be 
ranking member on the energy subcommittee. But both of you try, 
and I appreciate this, to join with the majority on this 
committee to fashion responsible, bipartisan legislation. It 
makes a difference. This committee is a critically important 
committee in Congress, and this issue is a very important issue 
too. I yield myself a few minutes to make my opening remarks 
and would like to comment about the issue raised by Chairman 
Markey, and that is the ongoing auction for the 700 megahertz 
space at the FCC.
    I want to thank him, he is back, for agreeing to hold 
hearings immediately following the conclusion of the auction 
and for making certain that this committee is a partner with 
the FCC in what happens next. Hopefully this auction will be 
successful. I am watching closely the D block portion of it, 
because I think the most important reason to do this auction is 
to make certain that we finally solve our problem with 
interoperable communications in the event of a terrorist attack 
or a natural disaster. But nonetheless it is important that 
this committee be a player here and that we prevent any change 
of rules in mid-course should the bids not come in in regular 
fashion and that we help structure with the FCC something else 
if the D block of the auction is not successful.
    I have written to Chairman Martin about this. I also wrote 
a letter to Chairman Markey and Ranking Member Stearns about 
this, and just want to close with this point, that this DTV 
transition may be the last chance for decades to leverage 
private sector interest in spectrum with first responders' need 
for a network. It is unfathomable to me that 6 years after 9/
11, in fact almost 7 years after 9/11, we haven't solved this 
problem. A big piece of the solution is spectrum, spectrum 
built out by the private sector to accommodate a range of needs 
that our first responders have and some of which they don't 
even know they have. But this is the place to do it, this is 
the time to do it. The deadline cannot slip, and as we think 
about this DTV transition, which is very important, we must 
think first about making our communities safer. So I yield back 
the balance of my time, and I yield back the chair to Chairman 
Markey. And thank you all for coming.
    Mr. Markey. The chair recognizes the gentlelady from 
California, Ms. Capps, for her opening statement.

   OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Capps. Thank you, Mr. Chairman. I want to thank you and 
also Chairman Dingell. It is because of the two of you, your 
leadership, that we are having this hearing today and this 
issue comes before this committee. I am going to be brief in my 
opening remarks. I have been preceded by two important women 
members from California, and there is yet another one to speak, 
so I can be one in the line of speakers here. But this hearing 
does provide us all an excellent opportunity to examine some 
important issues and choices we will have to make in the 
transition from analog to digital television. It highlights 
also our responsibility to stay true to the principle and 
spirit of localism that is currently captured in our 
telecommunications laws.
    I understand that advances in technology allow us to do 
more with less space, but I also caution that this should not 
come at the expense or cost of our public, educational, and 
government channels and local voices. It shouldn't have to come 
also at the cost of equality and accessibility of PEG channels 
to all of our constituents. Growing the consolidation already 
threatens to crowd out local content. This is, I believe, a 
perennial threat, and that is why we should be involved, so 
that we can speak for some of our local groups who have very 
few voices besides ours to represent them. We have to continue 
to do what we need to do to ensure that this consolidation 
doesn't happen again. And I want to also echo and am thankful 
for our colleague Jane Harman, who everytime she has a chance 
speaks to the issue of what we need to provide for first 
responders. And everytime there is an opportunity to discuss 
the spectrum that we should keep that in mind. They also don't 
have a lot of powerful voices on their side except for those of 
us here who remember 9/11 so clearly the interoperability that 
we want to provide for our first responders. So thank you 
again, Mr. Markey. I yield back. I am looking forward to the 
expert testimony that we are about to hear.
    Mr. Markey. The gentlelady's time has expired. The chair 
recognizes the gentleman from Texas, Mr. Gonzalez.
    Mr. Gonzalez. I waive opening.
    Mr. Markey. The chair recognizes the gentlelady from 
California, Ms. Solis.

  OPENING STATEMENT OF HON. HILDA SOLIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Solis. Thank you, Mr. Chairman. I just want to applaud 
you and the ranking member for having this important hearing. 
So much has already been said about the need to continue to 
provide this very vital service. PEG channels play a really 
important role in communities like mine. We just met with some 
of our local cable folks and heard a great deal about the 
educational benefits that we see in areas like East Los 
Angeles, where not everyone has the luxury of having the 
Internet at home and vice versa, so it is a very important part 
of what I think our committee can do to help oversee this that 
we see that this support is there and that we continue this 
very vital service. Thank you, and I yield back.
    Mr. Markey. The gentlelady's time has expired. The 
gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. I would like to have my 
full statement placed in the record. And following my 
colleagues from California, in our district in Houston there is 
a lot of programming on our public, educational, and 
governmental services that just wouldn't be available to our 
communities without it, and that is why I look forward to the 
hearing, and hopefully we will see that continuation if not an 
expansion particularly as we head into the all digital effort 
that we are doing. And with that, Mr. Chairman, I ask that my 
full statement be in the record.
    [The prepared statement of Mr. Green follows:]

                      Statement of Hon. Gene Green

    Mr. Chairman, thank you for holding this hearing on the 
effects on PEG services as we transition to the age of digital 
television.
    PEG stations provide an important service to the public - 
they provide diversity and keep the public informed of local 
news and events with locally produced programming.
    That is why Congress in 1984, and again in 1992, defined 
and limited what PEG services local franchising authorities 
could require and required that PEG channels be carried on the 
basic tier along with all local broadcast signals the system 
carries.
    PEG channels provide local programming that would not 
otherwise exist.
    At the same time the move to digital television, in 
broadcast and by video service providers, has enormous benefits 
for the public.
    The digital transition in broadcast has freed up spectrum 
that will be used to improve public safety communications and 
expand broadband offerings for the public.
    Similarly, moving to digital platforms on cable and other 
video services is a move toward more efficient delivery of 
content and provides benefits by increasing capacity for 
providers to offer additional programming and improved 
broadband speeds for consumers.
    In my hometown of Houston, I know at least one of Comcast's 
headend facilities is all-digital, and it is by far the most 
state of the art facility they have in the area and provides 
the most advanced services customers want.
    I think the benefits of digital video are undeniable, and I 
strongly believe the cable industry needs to move to a digital 
platform to stay competitive and to improve services, 
especially broadband speeds.
    But, like many of my colleagues here today, I also want to 
know when the industry moves to digital that cable customers in 
Houston aren't going to have to pay more to see the Houston 
Community College or the City of Houston's PEG channels.
    I would like to hear from Mr. Cohen how Comcast plans to 
make that transition while minimizing the impact on customers' 
ability to view PEG channels and minimizing the impact on their 
pocketbooks.
    From our other panel member today representing a video 
service provider, I hope to hear more about how the IP based U-
verse service is offering PEG programming, as I know it is 
significantly different than cable.
    I understand customers can often access PEG programming 
from their hometown and from surrounding towns and that it is 
offered more like on-demand programming and not included in the 
regular program guide.
    I would be interested to learn if customers have expressed 
opinions one way or the other on this, and I also would like to 
hear from Mr. O'Reilly and Ms. Folger about their experience 
with this service.
    Thank you again Mr. Chairman for holding this hearing, and 
I thank the witnesses for being here and look forward to their 
testimony.
                              ----------                              

    Mr. Markey. Without objection, it will be included, and 
that concludes all statements from members of the subcommittee. 
We will turn to our witnesses, and we will begin by hearing 
from John B. O'Reilly, Jr., the Mayor of the City of Dearborn 
in Michigan. We welcome you, sir. Whenever you are ready, 
please begin.

  OPENING STATEMENT OF JOHN B. O'REILLY, JR., MAYOR, CITY OF 
                       DEARBORN, MICHIGAN

    Mr. O'Reilly. Thank you, Chairman Markey. My message today 
is simple, and that is when it comes to PEG, Congress got it 
right in 1984, and that is not just because I was working here 
at the committee at that time, and they got it right again in 
1992, and that is that the local interest of cable, the way it 
serves local constituents, is something that brought it to a 
level where it was warranted to grant them as a private 
enterprise the right to use the easements and rights of ways in 
public areas in order to put this forward. So they were given 
the status of utilities like gas and electric because it was 
important that this brought that local voice, that local 
opportunity, and PEG is the example of that local opportunity. 
That is what made the compelling argument for extending some of 
the privileges that have been offered at cable.
    And so when we contrast with other mediums, we have to 
remember that that was a unique element of that. And another 
thing I want to talk about is that Dearborn and all local 
governments welcome broadband competition. We are lucky we have 
two wire-to-wire competitors, WOW and Comcast, in our 
community, and they are going at it head to head. We have a 
wide diversity of satellite dish providers. We have now AT&T 
entering the marketplace. We have given over seven licenses to 
broadband and bundled carriers along our major rights of way. 
We have approved point-to-point communication that has to be 
strung up. So we have been out there promoting and accepting a 
wide range of different models within the area of competition. 
We are not afraid of digital. We shoot in digital, edit in 
digital. We show our stuff in digital. Digital is a format we 
use and we are happy with and that is on our local cable. We 
have a robust local cable operation. We have every voice in the 
community represented. We have a lot of special programs, and 
that goes back to something unique.
    Dearborn has an interesting place in cable legislation 
history because in 1984 when Senator Goldwater was promoting S. 
66, his version of the cable legislation at that time, he 
singled out Dearborn in his remarks on the floor as an example 
of the onerous imposition that powerful cities were exercising 
over the four cable companies. He didn't have the facts right, 
so I am going to take this liberty to represent us well. What 
happened is in those days in 1980 and 1981, cable providers 
were going out and doing rent a citizen. Prominent citizens 
were put as a frontage piece to get the cable contracts. There 
were a lot of aggressive promotions offered to get the cable 
contracts. It was a wild time.
    Dearborn chose a different path. Dearborn established a 
blue ribbon commission that appointed technicians, engineers, 
educators, lawyers, who went out and researched everything that 
was going on in the marketplace at that time, and it brought it 
all back to the table and put together an RFP for cable that 
was extraordinary, in fact, so extraordinary that no provider 
should have been on it. And I agreed with Senator Goldwater at 
the time that what it is is a good example of what should not 
have been done, but this was a private marketplace, arm's 
length. The cable providers had no gun to their head. They 
wanted it. They went after it with some concessions. And again 
that is what I am pointing out is no one should, save in a 
marketplace environment, no one should save someone from their 
own bad decision, and I think that is the case, and I make that 
case very well for Dearborn.
    We asked for everything. In fact, one of the things that 
they negotiated out was 24-hour monitoring of school buildings 
with infrared cameras. That was in our cable franchise in 1981. 
We had an extraordinary array of things that were local 
interest that would have served greatly our community, and many 
of those things still remain in some message. But the point is 
that was arm's length. Now as we move forward, we look at what 
has happened. In our contract it is very clear. We have that no 
channel location changes can occur unless by mutual agreement. 
That is in the contract. That has not been abrogated by either 
the 1984 or the 1992 legislation or subsequent 1996 
legislation, so that still stands, and that is one of the 
things we stand on.
    Last year in Michigan, and I think it is happening around, 
and this is something that we are asking you to look into, 
Michigan legislation moved into the cable regulations with 
strong support of some of the parties here, and it seems that 
maybe the result didn't make people happy. So beginning in 
January of 2007, Michigan had what they believed was a new 
regulatory environment. The first contact we had from Comcast 
was that we were going to lose the free cable that had been 
included in our contract to the three fire stations and other 
city buildings in our community. We said okay. We understand it 
is a marketplace decision. They were the only ones doing it. We 
made no objection because we understood to be competitive they 
had to shed some things that needed to be shed.
    The next communication we got in 2007 was close all the 
local cable TV production studios. There were nine in the State 
of Michigan. That is down from one in every community, by the 
way. When cable first came in every community was asking for 
one. It had gone down to nine statewide. This is not where 
cities produce their cable. This is where the local things, our 
Rotary Good Company program was there. Our Kiwanis Talk Program 
was there, a lot of programming that is locally based by local 
public groups was produced there. Those were gone. The city is 
now forwarding our equipment on to help produce those programs 
to continue it.
    Mr. Markey. Mr. O'Reilly, if you could summarize, please.
    Mr. O'Reilly. Okay. I am sorry. We made no objection. 
Anyway, the last one was that PEG was moved from basic service 
into tier of digital. What we are saying--and we went to court, 
and you have this, the Eastern District judge, Judge Roberts, 
agreed that a federal exemption would apply and decided on our 
behalf in terms of a stay, temporary restraining order. But we 
just want to say that we think that PEG needs to be in the 
basic service tier, that they need to be bundled together. I 
don't object to moving to digital, but they should not be 
separated. They are part of that commitment. Local must carry 
and PEG should be bundled together. Thank you.
    [The prepared statement of Mr. O'Reilly follows:]


    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Markey. Thank you, Mr. Mayor, very much. We appreciate 
it. Our next witness is David Cohen, who is the Executive Vice 
President of the Comcast Corporation, a frequent visitor before 
our committee. We welcome you back. Whenever you are ready, 
please begin.

STATEMENT OF DAVID L. COHEN, EXECUTIVE VICE PRESIDENT, COMCAST 
                 CORPORATION, PHILADELPHIA, PA

    Mr. Cohen. Mr. Chairman and members of the committee, thank 
you for inviting me to testify today, and it is truly always a 
pleasure to appear before this committee, and I welcome the 
opportunity today to discuss Comcast's plans for carrying PEG 
programming in the digital TV age. Let me start by saying that 
Comcast and the cable industry have a long history of 
supporting PEG programming, and we recognize its value to our 
customers and our local government partners similar to the way 
that many members talked about it in their opening statements. 
It is also important to note that the issues raised by this 
hearing are temporary transitional issues. In the relatively 
near future it is likely that all cable video services will be 
delivered in a digital format, and all of our customers will 
need some form of digital equipment. That is already the case 
with our major competitors.
    During this transitional period, we are working hard to 
accommodate consumer demand for more bandwidth intensive 
services such as high definition television, video on demand, 
and faster broadband speeds. We have wonderful technologies 
including signal compression and switched digital video, but we 
also need to use our bandwidth more efficiently, and that means 
delivering in a digital format channels that previously were 
delivered in analog. Given the genesis of this hearing, I want 
to say that our recent experience in Michigan is atypical in 
two important respects. First, in the vast majority of our 
cable systems PEG channels remain in analog, and we have no 
plans to change that. In fact, we have voluntarily increased 
our PEG carriage in many systems by adding a digital simulcast 
to accompany the traditional analog version.
    In light of the relatively large number of PEG channels in 
certain Michigan communities, however, we need to work out 
different arrangements for PEG to help us accommodate consumer 
demand for those other services, and that leads me to the 
second way in which our Michigan digital initiative differs 
from our standard practice. In retrospect, we failed to 
communicate adequately our goals and to work cooperatively with 
our local partners to produce a win for everyone, for the 
consumer, the local government, the PEG community, and for 
Comcast. That is not the way we want to do business in Michigan 
or in the rest of the country, and I want to apologize for 
that. I am pleased to say that we are now engaged in friendly, 
and what I am sure ultimately will be fruitful, discussions 
with the local governments in Michigan, including Mayor 
O'Reilly of Dearborn, who is testifying here with me today.
    With this background, let me quickly highlight three key 
points about the digital delivery of PEG. One, the delivery of 
PEG channels in a digital format is a small part of a much 
larger transition from analog to digital television. The 
spectrum efficiency of digital technology enables video 
providers like Comcast to vastly expand our service offerings. 
Second, today's intensely competitive video environment compels 
cable operators to offer PEG channels in a digital format. Our 
major competitors are already all digital, and they widely tap 
that fact in their consumer marketing. The two national DBS 
providers offer no local PEG programming whatsoever, and our 
telephone competitors generally seek to offer less than we do. 
If established cable operators are unduly restrained in our 
digital transition it will weaken our competitive posture, and 
ironically it will ultimately harm PEG programmers whose 
primary distribution is on cable.
    Third, I want to clearly state that we are not 
discriminating against PEG channels. In most of our cable 
systems the vast majority of commercial programming services 
are already transmitting exclusively in digital format. 
Importantly, even when we digitize PEG channels, those channels 
remain part of the basic service tier, which means that no 
additional service fee is required to view digitally delivered 
PEG channels. And while some customers may need digital 
equipment to view these channels, a rapidly growing majority of 
our customers already have this digital capability. The bottom 
line is that we believe that digital delivery of PEG channels 
is fair, it is appropriate, it is pro-consumer, it is key to 
our ability to respond to competition, and that it is lawful, 
but as I said earlier, and this is the most important 
statement, given the strong commitment that we have to PEG 
programming and given the strong relationships we enjoy with 
our local government partners, Comcast is committed to working 
cooperatively with those local partners to ensure efficient PEG 
delivery through the digital transition.
    Thank you again for the opportunity to testify, and I look 
forward to taking your questions.
    [The prepared statement of Mr. Cohen follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Markey. Thank you, Mr. Cohen, very much. Our next 
witness is Gail Torreano, who is the President of AT&T 
Michigan. Welcome.

STATEMENT OF GAIL TORREANO, PRESIDENT, AT&T MICHIGAN, DETROIT, 
                               MI

    Ms. Torreano. Thank you very much, Mr. Chairman, and the 
other members of the subcommittee for inviting me here today. 
AT&T's PEG product is a reflection of our commitment to 
consumers as well as our communities. AT&T is very proud of its 
PEG product. It is robust, it is innovative, and it is high 
quality. AT&T is investing over $5 billion by mid-2008 to 
upgrade its telecommunications network and bring fiber closer 
to our customers' homes. Over this advanced network, AT&T is 
offering a suite of IP-based services, including U-Verse TV. In 
fact, AT&T created 1,200 new positions in Michigan in 2007, the 
majority of which are union jobs and are supporting this U-
Verse deployment. AT&T's PEG offering, which we rolled out last 
summer, reflects the innovative nature of U-Verse TV itself.
    It is available at no additional cost with any U-Verse TV 
package, and I brought a demonstration that I would like you to 
turn to your left so that you can see what it is like.
    [Video shown.]
    Ms. Torreano. If I may continue.
    Mr. Markey. Please.
    Ms. Torreano. I am sorry about the low sound. Hopefully you 
picked up some of it.
    Mr. Markey. We apologize to you for the low sound.
    Ms. Torreano. As you can see, the U-Verse PEG product is 
different from traditional PEG products offered by incumbent 
cable providers, but these benefits clearly--or these 
differences clearly benefit our customers in the communities in 
which we all live. For instance, a Dearborn resident who owns a 
small business in Southgate, Michigan, will be able to watch a 
Zoning Commission hearing from his home as he sees what his 
neighboring community is doing. And the PEG content is 
available on Channel 99 no matter where you are in the United 
States watching our product. AT&T has conducted scores of 
demonstrations and technical discussions about the PEG product 
with various elected officials and other stakeholders. We have 
made adjustments to the product in response to the reactions 
that we have received from local communities, and we will 
continue those ongoing dialogues as we continue to enhance the 
product.
    For example, AT&T's PEG product will now remember the 
customer's last programming selection, making it easier for the 
customer to jump to that favorite PEG channel and see that 
immediately when they go on the TV. In sum, the very technology 
that will allow AT&T to alter the competitive landscape for 
video services will likewise issue a new era of community 
programming. I appreciate having the opportunity to be here to 
share a bit about our product and have the opportunity to 
answer your questions. Thank you.
    [The prepared statement of Ms. Torreano follows:]

                     Statement of Gail F. Torreano

    My name is Gail Torreano, President of AT&T Michigan. Among 
other things, I am responsible for AT&T's community and 
government affairs in Michigan. In that role, I am familiar 
with the Public, Educational and Governmental (PEG) programming 
made available in connection with AT&T's U-verse TV product, as 
well as our extensive efforts to incorporate feedback from 
communities into our evolving PEG capabilities.
    AT&T's approach to PEG programming is driven by a 
commitment to carry the programming in any community we serve 
that seeks carriage; an insistence that our PEG capabilities 
reflect what our customers have come to expect from our 
competitors; and a continuing effort to enhance the product as 
technology and customer demand evolve. With these principles in 
mind, AT&T is proud of the PEG product that it has deployed; it 
is robust, distinctive and of high quality.
    In this statement, I will outline the basic contours of 
AT&T's U-verse TV deployment; describe the particular 
characteristics of the PEG capabilities available with U-verse 
TV; summarize our beneficial efforts in Michigan and elsewhere 
to obtain critical feedback from our local communities 
regarding our PEG product; and, in the process, address some of 
the concerns that have been raised regarding the unique 
characteristics of our PEG service.

                       AT&T's IP Video Deployment

    AT&T is investing over $5 billion by mid-2008 to upgrade 
its telecommunications network and bring fiber closer to AT&T 
customers' homes. More fiber in the ground, closer to 
customers, will make it possible for AT&T to provide a 
groundbreaking suite of Internet Protocol (IP)-based services 
over its existing network. These services will include 
broadband Internet access, IP telephony (VoIP), and AT&T's IP-
based TV (IPTV) service called AT&T U-verse TV.
    AT&T's U-verse effort represents the largest rollout of 
IPTV technology to date in the world, and the features, 
functions and competitive impacts of U-verse TV will prove to 
be equally unprecedented. Using a client-server delivery model, 
and next-generation compression and modem technology developed 
specifically for U-verse, AT&T will deliver hundreds of 
television channels (dozens of them in high definition) to 
consumers over a largely copper-wire network originally 
designed to carry traditional telephony service. The 
possibilities presented by this breakthrough achievement are 
enormous, and U-verse TV at its current stage of development 
has only begun to realize its full potential.
    AT&T began its commercial offering of U-verse TV in late 
2006. As of the end of 2007, after just one year of service, 
AT&T already had signed up 231,000 customers - up from 126,000 
customers just three months earlier. As of January 24 of this 
year, AT&T had deployed the U-verse technology to 7.9 million 
living units. Our target is to be able to make the service 
available to 30 million living units in our local service 
territory by the end of 2010. In short, U-verse TV is a 
competitive game-changer; it brings fresh, innovative IP-based 
services to consumers thirsty for choice for their video 
services.

                       The U-verse PEG Experience

    AT&T's PEG offering benefits directly from the new 
communications and broadband technology that enables the U-
verse suite of services. It operates as an application that 
integrates content obtained via a secure IP-based connection, 
for example a "stream" of live community video, and delivers 
that content to the end user's television via the U-verse set 
top box (STB). Most importantly, U-verse unifies the full range 
of PEG programming in a given Designated Market Area (DMA) at a 
single, easy-to-find location. And, PEG programming is 
available - at no additional cost - in connection with any U-
verse TV package.
    AT&T has designated Channel 99 as the location on its U-
verse channel guide dedicated exclusively to PEG programming. 
The choice of Channel 99 was deliberate, as it is a prime 
location. It bridges the local station line up with the 
national channel line up, which begins at Channel 100. That is, 
customers find PEG programming before reaching the multitude of 
national broadcast stations.
    At the PEG channel, a customer sees an alphabetical listing 
of all the cities with PEG programming available in her DMA. 
Once she selects a city from that menu, she can then choose 
from a list of programming available for that city. Moreover, 
while watching, she can choose to display a navigational bar on 
screen to select different PEG programming made available 
within that city. This allows a seamless change from one PEG 
program to another. Alternatively, she can choose to "hide" the 
navigational bar and watch full-screen PEG programming.
    AT&T's method for PEG carriage has several inherent 
benefits. First, PEG programs are available to much larger 
audiences because distribution is not limited to town borders. 
Unlike most typical cable customers, U-verse subscribers will 
be able to keep track of events in surrounding communities, 
where they might work or attend school, or where family members 
and friends live. If, for instance, the City of Livonia has 
produced premier educational programs, residents in, say, Royal 
Oak will be able to enjoy them. Or, a Dearborn resident who 
owns a small business in Southgate will be able to watch a 
zoning commission hearing in that neighboring community from 
the comfort of his home. Second, the new service brings 
programming from multiple municipalities in a DMA together in 
an easy-to-remember channel location. Among other things, this 
ensures a consistent, predictable experience across the U-verse 
platform; all U-verse customers will know exactly where to go 
for the available PEG programming in their area. Third, AT&T's 
PEG product potentially enables cities, at marginal cost, to 
provide PEG content over the web because all of the city's PEG 
content will be in the digital form widely used for delivery 
over the public Internet. Thus, if a city chooses to do so, it 
can present digitized PEG content on its municipal web site so 
that anyone (anywhere) with access to the public Internet can 
view it. Use of this technology will empower cities by enabling 
more viewers more flexibly to access their PEG in a manner that 
suits their interests and schedules.

                     Coordination with Communities

    AT&T launched its first PEG market in July 2007. As of 
today, we have the product operational in 14 cities with over 
40 PEG channels. In doing so, we have remained sensitive to the 
reactions and observations of our local community partners. 
Among other things, AT&T established various demonstration 
locations where cities could experience AT&T's PEG product on 
the U-verse system and provide their suggestions, reactions and 
concerns regarding the product.
    In Michigan, in particular, AT&T has gone to great lengths 
to involve local communities in the process of enhancing our 
PEG capabilities. Our implementation team has conducted 
technical meetings with 39 of the 45 communities that have made 
requests for carriage of PEG programming and has conducted 
similar meetings with numerous other cities that have merely 
requested information about PEG. In addition, AT&T has 
conducted scores of demonstrations of U-verse TV and the PEG 
product with other stakeholders, including legislators, Public 
Service Commission and Attorney General staff, and 
representatives from various municipalities.
    This concerted effort to involve local government and other 
officials in the development of our product has born fruit and 
been translated into actual modifications to the PEG offering. 
Just by way of example, in response to municipal suggestions, 
AT&T added a PEG menu tab on the U-verse main menu. In addition 
to accessing PEG at Channel 99, an end user can access the PEG 
channel from the main Electronic Program Guide menu screen by 
selecting "Local Public Education and Government." No other 
channel on AT&T's system has this capability. Additionally, 
AT&T's PEG product will now remember the customer's last 
programming selection, making it even easier for the customer 
to jump to her favorite PEG content.

                          Different is Better

    AT&T acknowledges that not all local communities are 
comfortable with some of the more original attributes of the U-
verse PEG offering. In particular, some communities have voiced 
concerns about the placement of all PEG programming at a single 
channel, requiring in some cases an additional step of choosing 
among a menu of community programming.
    This is a difference as compared to more traditional PEG 
products offered by incumbent cable operators, but it is a 
difference that clearly benefits our customers and the 
communities in which they live. With U-verse, the customer can 
access from a single, easy-to-remember channel (or a dedicated 
tab on the U-verse main menu) all PEG programming that 
communities in the relevant DMA have asked to be carried on 
AT&T's system. This is a significant benefit for customers who 
live and work in neighboring communities and therefore have an 
equal interest in government or school activities in multiple 
locations, who wish to keep track of community events where 
their family and friends live, or who want simply to monitor 
happenings in surrounding communities. Thus, AT&T has expanded 
exponentially the PEG viewing choices of its customers and, in 
turn, offered local communities and PEG programmers a much 
larger audience for their broadcasts.
    Moreover, by placing PEG content on a common channel across 
AT&T's network, AT&T can better promote Channel 99 nationally 
so that customers will know, wherever they live, that they can 
find important community information on Channel 99. Indeed, 
AT&T has already assembled a comprehensive promotional campaign 
to notify AT&T subscribers that PEG content will be found on 
Channel 99. AT&T will promote Channel 99 on the air on Buzz 
Channel 300 and the Help Channel (Channel 411) on the U-verse 
Service; online through the U-connect web site (uverse.att.com/
uconnect) and the U-talk discussion board (utalk.att.com); and 
in print through promotional flyers and AT&T U-guide updates.
    In sum, the very technology that will allow AT&T to alter 
the competitive landscape for video services in general will 
likewise usher a new era of community programming.
                              ----------                              

    Mr. Markey. Thank you, Ms. Torreano. And our final witness 
is Annie Folger. She is Executive Director of the Midpeninsula 
Community Media Center from Palo Alto, California. We welcome 
you.

  STATEMENT OF ANNIE FOLGER, EXECUTIVE DIRECTOR, MIDPENINSULA 
             COMMUNITY MEDIA CENTER, PALO ALTO, CA

    Ms. Folger. Thank you. Good afternoon. I actually run a 
non-profit PEG access organization serving Palo Alto and five 
surrounding jurisdictions. I represent the Alliance for 
Community Media and over 3,000 PEG access centers that operate 
5,000 local community channels. On behalf of our members, 
community television producers and viewers, we thank Chairmen 
Dingell and Markey and the members of this subcommittee for 
inviting the Alliance to speak with you today. Alliance members 
are here from California, Illinois, Indiana, Kentucky, 
Michigan, New York, Ohio, Virginia, and Washington, D.C. PEG 
access owes its existence to the visionaries in Congress who 
protected the franchise process to create a platform for local 
communication. In Palo Alto, for example, we carry 
Representative Eshoo's town meetings live on our channels, 
answering the e-mails of constituents who cannot attend.
    But in the past 2 years there has been a major push to 
undermine local cable franchising. The FCC has overruled 
Congress, assigning itself powers that Congress meant for local 
communities. Industry-backed legislation in 17 states has 
further harmed public access. Thirty years of community 
investment in PEG has been turned on its head. We welcome 
competition but not at the expense of PEG access obligations. 
Representative Markey noted the dangers of this de-regulatory 
fervor in an address a year ago in Memphis, when he said we 
will not let telecommunications companies or the FCC chill PEG 
access television. At this point, we would like to start our 
video showing how long it takes to load a PEG channel on U-
Verse at a typical home in Cupertino, California. First, the 
customer flips through the commercial channels, then he loads a 
PEG channel.
    The challenge for PEG is not digital technology. Many PEG 
centers have already moved into digital technology for 
production and transmission. The challenge is preserving PEG 
signal quality, function, channel placement and funding. Let me 
give you an example. AT&T's PEG platform consigns PEG channels 
alone to a format that is inferior to commercial channels in 
virtually every way that matters to a viewer. For example, 
AT&T's PEG product cannot closed caption the educational 
programming that our hearing impaired students rely on. Most 
DeAnza Community College programming is closed captioned, as 
California law requires. AT&T, however, will not pass through 
the closed captioning DeAnza provides. This means that our 
disabled students cannot be served as the law and common 
decency demand.
    But the lack of closed captioning is just one of the 
several shortcomings of AT&T's PEG product. PEG channels in U-
Verse cannot be recorded on DVR, take from 45 to 90 seconds to 
load, are harder to find, have no second audio program for 
Spanish language or other translations, and only 25 as much 
resolution as other channels, have a smaller picture, stutter 
when used for sports, dance or motion, and have no last channel 
or favorites capability on the remote. If AT&T's PEG product is 
so cutting edge, why aren't other basic commercial programmers 
on AT&T's system seeking the same treatment? Let us look at the 
broader picture. The threats currently faced by PEG in Palo 
Alto are being played out across the country, but the problems 
go far beyond those presented by AT&T's PEG product.
    Phone and cable companies may tell you that they are taking 
care of PEG access, but the reality can fall short of that. PEG 
funding in Ohio, Missouri, Florida, and Wisconsin will end in 
less than 5 years. Comcast closed PEG facilities in 9 
communities in northern Indiana and 12 in Michigan. Salina, 
Kansas is losing more than $130,000 this year as a result of 
operators' interpretation of new state laws. As more of our 
media is consolidated, outsourced, regionalized, and controlled 
by people far away from our home towns, the local commitment of 
our PEG channels becomes all the more important. Whether it is 
in an urban neighborhood or a small town, we need local media 
resources like PEG access. To ensure PEG's future, Congress 
must act to strengthen laws protecting PEG access.
    We look to our leaders in Congress to preserve the ability 
of local communities to express their unique interest, to know 
their neighbors, to stay informed. Let industry and the FCC 
know that efforts to imperil PEG will not be tolerated or 
allowed to stand. We ask you to reinvest in our local 
communities for which PEG access is the only and last remaining 
local television by making sure that community programming 
grows and thrives in the future. Thank you for your time. I 
look forward to your questions.
    [The prepared statement of Ms. Folger follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Mr. Markey. Thank you, Ms. Folger, very much. And I ask 
unanimous consent to enter into the record a letter from the 
City of Boston on these issues as well. Without objection, so 
ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Markey. The chair will now recognize himself for a 
round of questions. Mr. Cohen, as the digital TV transition 
unfolds and cable systems are upgraded to full digital 
capacity, many channels may be shifted to digital tiers, some 
before others. Today we are discussing PEG channels. Up in 
Massachusetts, many consumers are upset that CSPAN 2 is being 
moved. What is the criteria which Comcast uses to determine 
which channels to transition and when?
    Mr. Cohen. The chairman is correct. And as I noted in my 
testimony and my oral statement, this is really not just a PEG 
issue. Part of our digital transition, which I think is 
different than the broadcast digital transition that Congress 
has tended to focus on is our long-term program ultimately to 
transition our plants, and I am talking cable now, to a fully 
digital platform. There is no science to answer the question 
that you have raised. It is more a matter of art. As we look at 
bandwidth and as we look at the packages of channels that we 
are offering, we try and make judgments and assessments based 
on overall customer demand, and we are trying to migrate 
channels that may have lesser customer demand in order to add 
high definition channels and other services that have greater 
customer demand.
    In CSPAN's case let us remember we have CSPAN, we have 
CSPAN 2, we have CSPAN 3, which was launched exclusively as a 
digital channel. So CSPAN, prime CSPAN, we have not migrated to 
digital anywhere. CSPAN 2 has been one of the several dozen 
channels, analog channels, that we have begun the process of 
migrating to digital. When we do that, we try and put in place 
affordable plans for our customers to gain access to those 
channels. We added a new digital tier called digital starter or 
enhanced cable or basic digital in all of our markets as we 
began this migration so that there would be an affordable 
digital option for the customers who still wanted to receive 
access to those channels.
    Mr. Markey. Can I ask, Mr. Cohen, when CSPAN 2 is being 
moved, are they being moved and agreeing to it, or are they 
being moved and being resistant to it?
    Mr. Cohen. Well, our affiliation agreement with CSPAN gives 
us the right to move CSPAN, CSPAN 2, and CSPAN 3 to digital, 
and it gives us, as I said, CSPAN 3----
    Mr. Markey. And have they agreed to that? Are they happy 
with it? In other words, there are a lot of things. You know, 
you agree that certain things will happen, but then when 
someone invokes it as a contract and here CSPAN 2 is just being 
moved from its neighbor, CSPAN 1, and CSPAN 2 tends to cover 
the Senate more, so I am doing this obviously more 
dispassionate, but a lot of my constituents seem to enjoy 
watching the Senate proceedings. And so it seems to me that the 
cable industry used to tout that CSPAN 2 was going to join 
CSPAN 1, and now as it is put in a different category. I guess 
the question is from CSPAN, are they just going agreeably, or 
are they at least internally questioning the wisdom of the 
decision?
    Mr. Cohen. I think every content provider would like to 
have their channel carried on a tier of service that had the 
broadest possible distribution, so if you were to ask CSPAN 
where would they prefer to have CSPAN 2 carried, they would 
tell you as an analog channel.
    Mr. Markey. You are saying that CSPAN agreed to it as part 
of their carriage agreement with the cable operator?
    Mr. Cohen. That is correct.
    Mr. Markey. That the cable operators could put it wherever 
they wanted to put it.
    Mr. Cohen. That is correct. And let me just say there is 
always a win here, so when CSPAN launched CSPAN 3, a lot of 
cable providers, by the way, including Comcast, did not launch 
it ubiquitously across their digital plant, so as we have been 
migrating CSPAN 2, we have always simultaneously launched CSPAN 
3.
    Mr. Markey. I have to--only because my time is going to run 
out and I want to ask Ms. Torreano a quick question because I 
am concerned about the fact that closed captioning is not easy 
to selectively turn on and off by consumers. It strikes me that 
technologists ought to be able to solve this limitation 
regarding closed captioning. Would you please comment on how 
closed captioning can be addressed?
    Ms. Torreano. Yes. First of all, if the city or the PEG 
provider provides us with programming with captioning, we can 
carry that. At this point in time, we cannot close that. It is 
open captioning. It is one of the issues that we have talked to 
communities about. Clearly you have heard it from your 
constituents. I have talked to numerous cities in Michigan, and 
I have heard the same thing. What we are in the process of 
doing is we are having dialogue, and this is one of the issues 
that we have heard and in fact we think right now we are in the 
process of taking those issues back. We have taken them back. 
That is not the only issue that communities have communicated 
to us, but that is one. And you are right, we can't do it right 
now.
    Mr. Markey. Obviously, we are very concerned about that 
issue in the committee. We are proud of building it into the 
Americans with Disabilities Act in 1990 out of this committee 
and part of the 1996 Telecom Act. It is something we are all 
collectively very proud of. Ms. Folger, quickly, do you have a 
comment on that issue?
    Ms. Folger. Closed captioning is very important to our 
disability community, and we feel that if AT&T can offer it on 
all their other channels they should be able to offer it on 
ours as well. We don't want sub-quality standards.
    Mr. Markey. I thank you. We are mandating that all TV sets 
be able to carry closed captioning. The television 
manufacturers are fighting, but we mandated that it happen, and 
we work with all of the content industries as well, and we kind 
of created a whole new industry, you know. Guys could be at 
bars watching the game and trying to meet new people at the 
same time, and who knew what we were going to be doing with 
that and immigrants able to kind of turn it on so their 
children could see what it was in English even as the people 
are talking. And there are millions of Americans, new 
Americans, who do that as well. So this is very important. 
Closed captioning can't be left behind. The chair's time has 
expired. I recognize the gentleman from Florida, Mr. Stearns.
    Mr. Stearns. Mr. Chairman, I wonder if I could delay my 
turn and just ask the opportunity to have my predecessor, Mr. 
Upton, who has to leave for an important meeting, if he could 
take his 5 minutes now.
    Mr. Markey. Without objection.
    Mr. Upton. I thank my friend from Florida for being 
accommodating. I do have a couple questions. First of all, I 
want to say based on the testimony that I heard it sounds to 
me, it sounds like we might be able to see an agreement reached 
between the parties. And I am very glad to hear that, and I 
can't resist, though you weren't prepared to talk about the Big 
Ten Network as it relates to the schools, I hope that it 
follows that same pattern and that ultimately we will get an 
agreement on the Big Ten Network. But we will save that for 
another hour but in knowing that you weren't prepared to talk 
about that. The question that I do have, though, is primarily 
to Mr. O'Reilly. Mr. Mayor, welcome before the committee.
    I am interested to know exactly what are the franchise fees 
today that you are receiving from a variety of different 
providers in Dearborn? What is the franchise fee? Do you know 
off the top what it would be for--3 percent?
    Mr. O'Reilly. It is about 5 percent.
    Mr. Upton. So is it 3 plus 3 for the PEG channels, is that 
how--it is 5 percent of the channel?
    Mr. O'Reilly. It is not separate for PEG channels, but what 
we had is a bifurcated system when the law was passed. It was 
grandfathered in at 5 percent franchise fee. And so that 
generates about $700,000.
    Mr. Upton. And that is from Comcast, is that right?
    Mr. O'Reilly. Right.
    Mr. Upton. And is it the same figure for AT&T?
    Mr. O'Reilly. We don't have that kind of agreement with 
AT&T but with WOW we have, okay, and WOW is 5 plus 1.
    Mr. Upton. WOW?
    Mr. O'Reilly. Yes, WOW. Another cable provider, Wire to 
Wire.
    Mr. Upton. That is right. I heard you say that. So are you 
working with AT&T then to get a franchise?
    Mr. O'Reilly. Well, that is an issue because the way that 
the state law PA-480 was provided there does not appear to be 
mechanism for that.
    Mr. Upton. As we looked at a national franchise bill in the 
last Congress, 2006, I believe we had a 6 percent for everyone, 
is that right, 5 plus 1, so we had 6 percent for everyone. So 
if that national law was in AT&T, everyone would be at 6 
percent. What is the number of customers that you have for 
Comcast and WOW?
    Mr. O'Reilly. About 15,000 for Comcast and 7,500 for WOW 
right now.
    Mr. Upton. And do you know what the number is for AT&T?
    Mr. O'Reilly. I think they are just beginning the service, 
so I would have to defer to Ms. Torreano, because we don't have 
that number. We have no way of knowing it right now.
    Mr. Upton. Gail, do you know about what----
    Ms. Torreano. The state law calls for up to 5 and up to 2, 
5 for the franchise fee, 2 for the PEG fee. I don't know 
specifically about Dearborn, but we have applied in Dearborn as 
well as 106 other communities in southeast Michigan, and we are 
serving parts of 107. So it would----
    Mr. Upton. Do you have a back of the envelope number?
    Ms. Torreano. More than likely it would be, I would think, 
5 and 2 or 5 and 1--5 and 1.
    Mr. Upton. But in terms of the number of customers.
    Ms. Torreano. I don't have a breakdown by city. No, I do 
not. We have about 230,000 that we are serving nationally at 
this point in time.
    Mr. Upton. And obviously, Mr. O'Reilly, with satellite you 
don't get any fee, is that right?
    Mr. O'Reilly. Correct. They don't use the public right-of-
way.
    Mr. Upton. So the point that I just want to make is that 
all consumers, and I am no different than anybody else, we want 
HD content. Once you have HD you don't want to go back to 
something else. And as you all negotiate with Comcast and 
others as it relates to the quality of service in Dearborn, 
what you have to worry about is if for some reason Comcast, you 
steer people away from Comcast because they don't have that--
they don't offer the HD, that consumer is going to pick 
somebody else. They are going to go to satellite. They are 
going to go to AT&T where you have no agreement, and so you 
will then lose all of that money from that consumer every 
single month.
    Mr. O'Reilly. I am a Comcast customer, and I have bundled 
service, so my modem, my telephone service, and my television 
service are all bundled with Comcast. You are right. And that 
is not what we are trying to do. We are trying to maintain the 
basic tier of service in its integrity. Where they put it, and 
that is why our contract says negotiated, where they put it is 
where we want to go because we think it is important to our 
customers, particularly the customers, the 13.5 percent who are 
where they need to get a converter in order to access, that 
group is a heavy user of local cable as we understand it. Again 
the Nielsen ratings are very difficult. We have talked about 
that in terms of getting real numbers. But we know that there 
is a sharp--and we use it as a tool. When our sirens go off, at 
the same time our sirens go off there is a message that is 
carried so that people can go and see what is that about, what 
do I have to do. We do a lot of public safety. In fact, it is 
so important all of our programming is now put on our web site 
also, so we are trying to be really current, but we do not want 
the cable companies to be harmed in any way. We just say that 
this is one of the last things negotiated in the original 
contracts that we think is important enough that we need to 
make sure it is maintained.
    Mr. Upton. Last question, just a yes, no. Gail, do you all 
offer the Big Ten Network?
    Ms. Torreano. Yes.
    Mr. Upton. Okay. Yield back my time.
    Ms. Solis [presiding]. Thank you. I would like to recognize 
the chairman of the Energy and Commerce Committee, the 
gentleman from Michigan, Mr. Dingell.
    Mr. Dingell. Madam Chairman, thank you for your courtesy to 
me. This question to Mr. O'Reilly and Ms. Folger, do PEG 
channels and PEG programming provide valuable service to the 
communities and to the consumers, yes or no?
    Ms. Folger. Yes.
    Mr. Dingell. Mr. O'Reilly.
    Mr. O'Reilly. Yes.
    Mr. Dingell. Are there any other entities in your community 
outside of PEG programmers that consistently offer this type of 
community oriented programs that are offered here, yes or no?
    Mr. O'Reilly. No, with the exception of local broadcasts.
    Mr. Dingell. Ms. Folger.
    Ms. Folger. I didn't understand.
    Mr. Dingell. Does anybody else offer the kind of service 
that you get out of PEG channels?
    Ms. Folger. No.
    Mr. Dingell. Now, Mr. Cohen, I understand that in the 
community of Grand Rapids Comcast offers with four channels, 
that it owns the basic service traditional local broadcast 
signals and PEG services. These channels are Comcast 
information, Comcast local, Comcast marketplace, and Comcast 
review. In the events that led to this hearing, I understand 
that Comcast chose to cease to provide PEG programming in an 
add-on format rather than moving your own channels to the 
digital tier. I am confused. In the latest statutory 
requirements relative to these matters why did you move PEG 
channels and not the other channels into the digital tier 
rather than terminating analog PEG programming?
    Mr. Cohen. Mr. Chairman, I am not familiar with the Grand 
Rapids situation. I will look into it and get back to you. I 
can tell you that elsewhere, and I am sure, the case in 
Michigan, that we have migrated or even terminated some of our 
own local programming, which, by the way, comes with its own 
controversy, because that local programming is like PEG 
programming and does provide local content, but the fact that 
they are our channels does not protect them from digital 
migration, digitization or even complete closing down, and I 
will get back to you on the details in Grand Rapids.
    Mr. Dingell. Now, Ms. Torreano, I note that AT&T has filed 
a request on behalf of U-Verse for a waiver of the FCC's 
emergency alert system requirements, our national and regional 
public safety alert system by which consumers are warned of 
imminent harm. Is that true?
    Ms. Torreano. Yes.
    Mr. Dingell. Now I am curious. Why did AT&T launch a 
service that did not provide the required alert, and is there a 
reason for that?
    Ms. Torreano. The alerts are viewed on all of the national 
programming, and we are in the process--the technical experts 
are in the process, making it available throughout the entire 
lineup.
    Mr. Dingell. It is my understanding that when an event like 
Katrina or 9/11 comes along, this kind of national alert or 
local alert is extremely important. Now national alerts are 
important, but if it is going to happen in your backyard and it 
is not big enough to attract the attention of national 
networks, it could be that a fellow's got a problem. There 
might be an airplane dropping in his backyard causing no small 
unhappiness, or it might be that there is a small tornado 
headed towards him, and he isn't going to get the family to the 
basement in time.
    Ms. Torreano. And I would agree with you, and we would 
agree with you that our communities are important, and that is 
why our technical experts are working on it to resolve this 
just as quickly as we can.
    Mr. Dingell. You are working on it?
    Ms. Torreano. Yes.
    Mr. Dingell. Thank you. Now, Ms. Torreano, again we have 
heard from many who are concerned about the manner in which 
AT&T provides PEG programming. I believe that there will be in 
the course of this hearing some comment on that. In my 
district, each broadcast station has its own channel, while the 
PEG channels for the entire state of Michigan are grouped 
together on channel 99. I understand that if one of my 
constituents is looking for a PEG program she must then use a 
drop-down menu to find her community, and after finding her 
community the consumer must use another drop-down menu to find 
the particular PEG channel she was looking for. I understand 
that my constituents cannot set a DVR or TIVO to record the PEG 
programming on AT&T's U-Verse service, but they can record 
broadcast channels using a DVR or a TIVO. Is that true?
    Ms. Torreano. To your last question, you cannot--our DVR 
will not record the pay channel programming. You can use a TIVO 
or a DVR of your own to record it. Again that is one of the 
issues that communities have communicated to us, and we--our 
communities are partners. They are our customers. You have on 
one hand the mass customer, and we have had an extremely good 
response from our customers. They are satisfied with the PEG 
product. We don't have any complaints. On the other hand, our 
communities are important to us. We live in our communities. We 
work in our communities. And we understand. I am a parent. I 
understand the importance of PEG. I used to every morning when 
there was snow on the ground turn on my TV to determine if my 
kids had school.
    I have to tell you that I never knew where the PEG channel 
was. I knew it was under 30, but I never knew which one. We 
believe that by offering it on the channel 99, we believe that 
is something that people remember, and we have had good 
feedback. As the DVR function, we have taken that back. There 
are a number of issues, as I talked about before, the EAS, that 
we have taken back and that we are looking at. Our communities 
are important to us. I am working with them all the time. We 
don't want them dissatisfied. We do understand the importance 
of PEG. We want them to be satisfied as well.
    Mr. Dingell. Well, I am over my time, but I would simply 
make this observation. First of all, I know you and respect 
you. You are a very, very valuable citizen and community leader 
back home and have great affection on my part. I am very 
concerned about PEG because in this changeover that is 
occurring we are going to have a lot of problems in seeing to 
it that the community service that we need for our people 
continues. And I am very much concerned about the situation 
also with regard to Comcast, and I want to thank Mr. Cohen for 
his cooperation in working towards bringing these situations to 
a conclusion. But when PEG was first instituted, it was put in 
place by the communities with the agencies that they were 
licensing, and the idea was that that would be a community 
service which would make it desirable to have that particular 
entity provide that particular service to the community, and 
that was one of the licensing considerations that went into the 
licensing of the original cable people who got into these 
communities.
    I hate to see it be dissipated because things were 
happening which were going to remove it. I also have a strong 
concern about the difficulty that we could confront if all of a 
sudden we were to find that the emergency notices, which are so 
important to our people in the event of major difficulty, all 
of a sudden vanished from the airwaves and all of a sudden 
somebody flies away like Dorothy in her house into the land of 
Oz. I don't think anybody would particularly like that because 
we had a tornado that was not mentioned on the national news 
service. So I hope that we will be able to continue working 
with you and with Comcast and with others, and we can establish 
in the mind of all that PEG is very important, emergency 
services is very important, and that we will have the 
cooperation of all concerned. Thank you for your presence 
today.
    Ms. Solis. The next member on our committee that will be 
recognized, the former chair of our committee, now in the 
minority, Mr. Barton from Texas, 5 minutes.
    Mr. Barton. Thank you for reminding me that I am now in the 
minority.
    Ms. Solis. I thought I was being polite.
    Mr. Barton. Well, no, you were. Mr. Dingell and I are 
playing hopscotch as we go before the three subcommittees today 
that are in operation. So I got to refocus from the FDA and 
SCHIP to PEG. Let me start with you, Mr. Cohen. Next year in 
March of 2009, the whole country is going to go digital in 
terms of television broadcast, isn't that correct?
    Mr. Cohen. Actually I think it is February but close 
enough. Close enough for government work, as they say.
    Mr. Barton. Mr. Dingell and I are the two people that came 
up with the date.
    Mr. Cohen. That is right.
    Mr. Barton. You would think I would remember the date. I 
know it is after the Super Bowl.
    Mr. Cohen. That is right. That is right. I remember those 
discussions.
    Mr. Barton. So in advance of that my understanding is in 
Michigan, I don't know if it was the entire state or just the 
City of Dearborn that Mr. O'Reilly is the mayor of, Comcast 
decided to take its public, education, and governmental 
channels, or its PEG channels, off of analog and put them into 
the digital format. Is that correct?
    Mr. Cohen. Let us say the answer is yes, but I want to just 
make a real fine point here, which is there are two different 
ways you can deliver a channel in digital format. One is to 
migrate it to a digital tier, which means that you would charge 
a customer more money to get that service level. The second is 
you can simply digitize the channel but leave it as part of the 
basic tier, and it is the second option that we unveiled in 
Michigan. That is we did not move it to a different tier of 
service. We proposed the change. We proposed in maybe a more 
ham-handed way than we would like to change the method of 
delivery while leaving it as a part of the same tier.
    Mr. Barton. Okay. Now when you did that how many customers 
would be affected by that proposed change?
    Mr. Cohen. That is a very good question. We have about 1.3 
million customers in the State of Michigan. Let us say all but 
about 60 percent of them are already digital customers so they 
would have zero impact from this. About 450 customers--400,000 
to 450,000 customers--are not currently digital customers. That 
is the group of customers that would have been affected by this 
change. Those customers fall into two groups. One is our really 
limited basic customers that lowest tiers spending $10 to $15 a 
month for basic broadcast channels, PEG, et cetera, and for 
that group of people the best option probably would have been 
the option that we made available, which is that we would 
provide them with a free set top box. They could continue 
paying $12 to $15 a month. We would give them a free set top 
box for a year, and after that we would have charged them 
something up to $4.20 a month. No decision was made as to 
whether that is the amount we would have charged.
    Mr. Barton. When you announced this proposed change to the 
customer base, not the governmental base, which is important, I 
understand, but at the pure retail customer level, how many 
complaints did you get about this proposed change?
    Mr. Cohen. Relatively--I mean we certainly heard some 
pushback, relatively little consternation from the pure 
customer base.
    Mr. Barton. So, Mayor, is it your city that filed the 
lawsuit?
    Mr. O'Reilly. Yes, it is.
    Mr. Barton. Now I would assume that you are in addition to 
being the Mayor you are also a customer.
    Mr. O'Reilly. Yes, I am.
    Mr. Barton. You could be if you wanted to be. It may be a 
satellite.
    Mr. O'Reilly. I have lots of choices, but I have chosen 
Comcast up to this point.
    Mr. Barton. All right. So did the City of Dearborn decide 
to go to court based on voter complaints to you and the other 
council men and women or just based on your personal--
    Mr. O'Reilly. Based on complaints that arose from the 
community in several different sectors. We have very robust 
local programming. As the entities themselves became aware, 
they and their followers, you know, supporters, contacted us 
about it.
    Mr. Barton. What was their principal beef to--
    Mr. O'Reilly. It was the idea that they had to get a 
converter box to get it when many of them were basic here, and 
as Mr. Cohen just pointed out, and I want to make this clear, 
the two major tiers that were impacted are those who were 
getting just must carry, some ESPN, I think. So it was very 
basic. It was $12 a month for that tier. The next tier that was 
really impacted that he mentioned was the tier that was 
channels 1 through 99 in our system, which meant it covered a 
lot of product but it was non-digital. It was analog, but it 
was the most programming you get on analog.
    Mr. Barton. But the big complaint is that while they got 
one set top box free they didn't get three set top boxes.
    Mr. O'Reilly. It is not really--well, no, it is also not 
for free. January 15 was a trigger date for them to switch it 
to digital, and the notice came out in January that in February 
the price of those two tiers went up by about $3 per, which 
basically covered the cost of the box. So you can call it a 
free box, but you can also say most of those customers saw an 
increase of $3. A customer tier in between those two saw one 
penny. It went from $31.49 to $31.50.
    Mr. Barton. So they are complaining that they are getting 
rope-a-doped.
    Mr. O'Reilly. Right. Exactly. They are saying we are being 
told we are getting a free box but our costs are going up $3, 
and it is happening coincidental with the change.
    Mr. Barton. If we could get this problem worked out this 
year it would go away next year, wouldn't it?
    Mr. O'Reilly. Next year they would have to pay for the box, 
for all the boxes.
    Mr. Barton. Next year the whole country goes digital.
    Mr. O'Reilly. Well, they could get a box through the coupon 
program where they would have to get a box through here, but if 
they got the box through here it would be $4.20 a box, so they 
would have that incurred cost for the same product they had 
been getting now. Our thing is we have a contract. Our contract 
is enforceable. It requires mutual agreement on this, so that 
is our position.
    Mr. Barton. Well, this is fascinating.
    Ms. Solis. You are a little over.
    Mr. Barton. I haven't even got started yet, but my time is 
expired. Madam Chairwoman, let me ask, is this a solvable 
problem at the local level, or does it take the full weight and 
power of the Congress to fix this problem?
    Mr. Cohen. I think the answer is this is a solvable problem 
at the local level. Mr. Chairman, you were not here for my 
testimony, but as you know this isn't the way we like to do 
business, and I said we tried. We weren't quite a total bull in 
the china shop here. We tried. In retrospect we are not happy 
with our performance. I apologized in my testimony, and we are 
in friendly negotiations now with the cities in Michigan, 
including Mayor O'Reilly, and I am highly confident that there 
will be an agreement.
    Ms. Solis. All will soon be forgiven.
    Mr. Barton. Does it happen to be that Dearborn is 
represented by John Dingell?
    Mr. O'Reilly. It helps.
    Mr. Barton. It does help.
    Mr. O'Reilly. Let me say, Congressman, on your answer the 
fact is that without regard to Comcast, I think that this 
committee needs to look at what the states are doing. Michigan 
recently passed PA-480. The district court of the Eastern 
District did a great job of analyzing this, and they believed 
that portions of that are pre-empted federally by the Cable 
Act. I think that warrants examination on its own.
    Mr. Barton. Well, anything Chairman Dingell wants to look 
at warrants examination. Just like when I was chairman anything 
I wanted to look at. I understand the chair----
    Ms. Solis. That is correct, but now the chair will move on 
to our next member of Congress, Mr. Gonzalez from Texas, for 5 
minutes.
    Mr. Gonzalez. Thank you very much.
    Ms. Solis. I am sorry, 8 minutes.
    Mr. Gonzalez. Even better. I am sure we say we are not 
going to use it, then we go 12 minutes, but anyway. But I think 
the former chairman of the full committee brings a good point. 
Is this really solvable at a certain level? Is it going to be 
federal, state or local? But the real question comes down to is 
this a technological challenge, or is it really a business 
decision, and that is what we really need to get a handle on. I 
don't want to confuse the DTV conversion. That really does not 
have a whole lot to do with this, maybe from a business aspect, 
but technologically it doesn't. What we are talking about here 
in essence is having that cable wire going straight to your 
television like my television that may not be the latest, 
whatever, being able to go to and paying the minimum amount to 
my cable company and that PEG is going to be part of it.
    And I think, Mr. O'Reilly, that you probably have the basic 
answer, and that simply would be to bundle PEG with must carry, 
because most people would venture to guess that anyone who is 
obligated under must carry is probably not going to move one of 
those must carry channels anywhere else where it would result 
in what Mr. Dingell pointed out in regards to PEG. Don't do 
anything to make it more expensive or add cost or difficulty in 
locating. That is what we are trying to do here, and my fear is 
that we get really more complicated than necessary. So the 
question comes down to is it a technological problem or one 
that is more a business decision? And I will start with Mr. 
O'Reilly.
    Mr. O'Reilly. Very good. Thank you, Congressman. I think it 
is really just a business decision that that can be negotiated 
and be worked out. Again, that is going to depend on the 
willingness. And the matter of the analog versus digital, I 
don't understand that. That is the business decision part, but 
it is certainly doable, and there is no question it can be 
done.
    Mr. Gonzalez. Mr. Cohen.
    Mr. Cohen. I have already said that I think that private 
party negotiations are the best way to resolve this issue. I 
won't take a lot of your time in doing this. I would really 
caution the committee into imposing additional carriage 
mandates on cable operators as a part of this digital 
transition. If anything, I think Congress should be looking at 
reducing carriage mandates, not increasing them, and if you 
want to focus on consumer-related issues, we are not new 
players to this table. There are many members of this 
committee, some of them sitting in this room today, who weighed 
in on this issue when it was before the FCC, but the number one 
cost driver in our digital transition is the FCC's decision 
taking away our right to deploy low cost, low end set top 
boxes. By denying that waiver, the FCC imposed about a billion 
dollar tax on the American consumer as a result of this digital 
transition.
    If there is anything from a public policy perspective that 
warrants congressional attention, it would be ensuring that we 
can deliver digital equipment to customers' home at the lowest 
possible cost.
    Mr. Gonzalez. And I couldn't agree with you more, and I 
don't want to get dragged into that particular aspect of this 
debate, because I don't think it is necessary to address the 
issue at hand. And I want to stay focused, because obviously, 
and this is a lesson to everyone, and that is probably don't 
roll out anything new in a member's district who happens to be 
so senior in Congress and happens to be the chair of Energy and 
Commerce, but other than that we will move on. Ms. Torreano, is 
it a technological challenge that can be solved or is it really 
just more of a--for you it may be technology.
    Ms. Torreano. We have technology challenges. It is a 
different technology that we are using. We are providing IPTV, 
TV over the Internet. We are a new entrant. We are providing 
choice to customers. We think that is a good thing. It is a 
process, it is evolving. And in our situation, sir, I would 
compare us and take us back a bit to the wireless industry, and 
the wireless industry came out with a new technology. Obviously 
over the years it has improved. I think things are moving much 
quicker in today's world than they were back then, and things 
are going to evolve quicker, but it is technology. But on the 
other hand we are listening. We care about our communities. We 
care about our customers. And we are going to continue to 
listen and work with them to see what we can do to get over 
these technological hurdles.
    Mr. Gonzalez. You have to believe in the basic principle 
because this committee believes in it, and I think Congress 
does as far as the importance of PEG, and again no additional 
cost, no greater difficulty in locating, and then the last I 
neglected to point out was an inferior product, which I think 
Ms. Folger had pointed out. And I think you really need to keep 
track of that. Now the other thing is from a technological 
point of view can you do it, and I think we are willing to 
listen to reason, but at some point though is there some 
advantage that is given to you because of the technological 
restrictions or inabilities that places you at an advantage to 
someone else like cable?
    I think Mr. Cohen was pointing out that that could be 
something that we face, and we have to be very, very cognizant 
of that possibility. Ms. Folger, in your opinion, is this a 
technological challenge or is it something that is just really 
a business decision that can be worked out?
    Ms. Folger. I definitely think AT&T has made a business 
decision. They decided not to build a fatter pipe to the home. 
The last mile is copper wire. Somebody said it is like sipping 
an ocean through a straw. They substitute software to squeeze 
PEG through as a video stream. Now Verizon on the other hand 
made the business decision to build fiber straight to the home. 
They don't have that problem. There is a company in Sacramento 
called Sure West. They, like AT&T, use the IPTV technology, but 
unlike AT&T, PEG channels keep their same original numbers, 
channel numbers, and they are delivered as full video channels.
    Mr. Gonzalez. And I think it is important to try to 
understand that technology, because I surely don't, the Verizon 
approach to it and the buildout of the fiber optic as opposed 
to what maybe AT& T is doing, and that bears some closer 
scrutiny. I am just saying at this point in time, I think it is 
really a business decision that can be worked out and such. And 
I guess the last observation is something that we were touching 
on is we think in terms of going federal and franchising, in 
Texas we have a Texas franchising law, and I am not sure how 
that impacts the obligations or abilities of AT&T when they are 
not dealing directly with the municipality. Believe me, we have 
already had that bloody fight, but I am still a supporter for 
the federal franchise regime, and I hope that we are able to do 
it next go round. At this point, I have 47 seconds, and I will 
yield back the balance of my time. Thank you.
    Ms. Solis. Thank you. The ranking member, Mr. Stearns from 
Florida, is recognized for 5 minutes.
    Mr. Stearns. Thank you, Madam. Mr. Cohen, in your opinion, 
forgetting the lawsuit from the Mayor here, does the federal 
and state law allow you to do this? I understand that they 
allow--well, in your opinion does the federal and state law 
allow you to make these decisions you made?
    Mr. Cohen. I will answer your questions, but I just want to 
confirm again that we are not relying on our legal rights in 
our negotiations with the municipalities. The answer is 
obviously we do believe that both the federal and the state law 
allowed us to take the actions that we took.
    Mr. Stearns. And is it true that within the public access 
laws that you can calibrate your decisions so that they are 
cost effective?
    Mr. Cohen. I am not sure I understand that question. I 
think the answer is yes.
    Mr. Stearns. Yes, following the argument that both the 
federal and state laws allow you to do this, it also allows you 
to get re-compensated for your decision to innovate?
    Mr. Cohen. That is correct.
    Mr. Stearns. So is there any other state where Comcast is 
operating that you intend to do the same thing?
    Mr. Cohen. As I said in my testimony, our typical practice 
is to negotiate this out with the affected LFAs, and we have 
done that successfully in a number of places. I will give just 
one example, which is my hometown of Philadelphia. We 
negotiated with Philadelphia and were able to--there were four 
analog PEG channels in Philadelphia, and we were able to 
negotiate a return of three of those analog PEG channels. They 
kept one, and we gave them four digital PEG channels, so they 
went up one PEG channel, but four were digital, one was analog.
    Mr. Stearns. So you are saying in Philadelphia you are 
actually able to accomplish what you have not accomplished in 
Dearborn through negotiations?
    Mr. Cohen. But in fairness to Dearborn, that is not their 
fault.
    Mr. Stearns. No, I understand. I understand.
    Mr. Cohen. I am going to say that and--
    Mr. Stearns. You are telling me what is controversial here 
you have already worked out in Philadelphia.
    Mr. Cohen. And we have worked it out in Philadelphia and in 
other jurisdictions, and I am confident given the good faith 
that exists between Comcast and our local partners in Michigan, 
including Dearborn, that we will be able to work something out 
that is a win for our customers----
    Mr. Stearns. No, I understand. You don't have to give me 
the--I understand what you are saying. Let us just talk about 
what you are going to do once you do this. I mean when you talk 
to Dearborn or Philadelphia, the capacity that you are going to 
recover by carrying the PEG channel exclusively in digital 
format, why don't you just outline all the advantages for the 
consumer, because I think if the consumer had to decide 
notwithstanding that Ms. Folger and others have said the 
quality of the PEG channel on the analog is weak, I assume that 
the PEG channel would be better, and there would probably be 
more enhancement for the digitized PEG channel once the 
transition occurs, so that in the end the quality of the 
resolution would be better, closed captioned.
    Mr. Cohen. We believe that ultimately the win here is a 
pro-consumer win, because we think the PEG channels would be a 
higher quality viewing experience, and more importantly, we 
will be able to add other services that are extremely popular 
with consumers really as referenced in your opening statement. 
More high definition television, more video on demand, more 
high definition video on demand, faster speeds for our high 
speed data, and additional services for our Comcast digital 
voice product, all of which require additional bandwidth.
    Mr. Stearns. As I said in my statement, if you did away 
with 1 PEG channel, you will get replaced with 3 high 
definition channels, 10 video on demand channels, 15 standard 
definition channels, 42 megabits per second of broadband 
service. Incredible. So maybe the argument has to be also from 
the standpoint that, sure, it is a little inconvenient. You may 
have to pay four more dollars or free for a while, but you are 
going to get so much more. Ms. Folger, wouldn't you be happier 
with a PEG channel that is high resolution, has closed caption, 
and at the same time you get for the same price perhaps three 
high definition additional channels?
    Ms. Folger. Exactly. We are asking for comparable quality.
    Mr. Stearns. Yeah. So I think your argument would come down 
to why should the consumer have to pay more money.
    Ms. Folger. Right.
    Mr. Stearns. And actually probably, Mr. Cohen, when you 
make this transition, you might do what AT&T did is assign 1 
channel for the PEG so that me and others don't have to scroll 
through the whole bloody 99 channels to find it.
    Mr. Cohen. We probably won't go to that particular choice 
in communities where we have multiple PEG channels but what we 
will do is we will group the PEG channels, together so that 
they will be easier for people to find and to be able to gain 
access to them.
    Mr. Stearns. Thank you, Madam Chair.
    Ms. Solis. Yes. We will recognize now Mr. Rush from 
Illinois for 5 minutes.
    Mr. Rush. Thank you, Madam Chairperson. Let me just ask 
both Ms. Torreano and Mr. Cohen, PEG is sometimes portrayed as 
a burdensome requirement. Does PEG offer advantages to both of 
your companies, and what are those advantages, and what are 
some of the disadvantages? In other words, is there a profit 
advantage or advantage that would be defined monetarily for the 
offering of these PEG channels to your companies? Ms. Torreano, 
why don't you start.
    Ms. Torreano. I think that the consumer, our customer, your 
constituents, want PEG channels. I mentioned before that I as a 
mom, I watch PEG channels, so, yes, I think that there is a 
business reason to provide it. They are part of our 
communities. It is information that our customers want, and it 
is something that I think they have become used to for 
different reasons, and different people have different reasons. 
So, yes, I think it is an important part, and we in our 
offering, U-Verse offering, we think it is important. In fact, 
our PEG offering is a little bit different than the traditional 
cable PEG TV, because what you get is if you live in the 
southeast Michigan area near Detroit, we are serving 
approximately 107 communities or parts of 107 communities, and 
what you will be able to do is you will be able to see PEG 
programs from every one of those communities. I think that is 
an advantage to a customer, because no longer are our worlds 
confined to one city. It is much bigger than that. As a Detroit 
resident, you may have a child who goes to school in Dearborn, 
so you get a broader perspective.
    Mr. Rush. Does the average PEG viewer, do they transition 
into becoming more loyal to your--and purchase other products 
from your company, is that what you are saying?
    Ms. Torreano. What I am saying is that it is a different 
product. I don't know that--it is too early to tell. We are in 
our infancy. We are just beginning this product, but I think 
that our customers will find that it is a robust product, it is 
an innovative product, and it is a game changer. And the PEG 
product is different. It is really greater in that you get to 
get information and watch programming from other communities 
other than just the one that you live in.
    Mr. Rush. Mr. Cohen, would you answer the question? You 
have a little bit more experience in this area.
    Mr. Cohen. As I have said before today, cable in general 
and Comcast in particular believes in PEG programming. We 
believe in the value that PEG programming brings to the 
community. There have been a couple of questions asked about 
the local nature of programming that appears in PEG channels, 
and its unique or almost unique status, not necessarily vis-a-
vis AT&T or Verizon but against our satellite competitors. That 
local content is a competitive differentiator for us, and we 
think it is a valuable competitive asset.
    Mr. Rush. Ms. Torreano, in Chicago we have the Chicago 
Access Network television, or CAN TV, and there are a lot of 
elderly and other religious people who are in my district, 
church going people who like to watch church services on 
television and other programs similar to those on the cable 
stations. Would they have as easy access to CAN TV under the U-
Verse, or would it be more difficult?
    Ms. Torreano. I believe it is easier. Everything you go to 
channel 99 and channel 99 then when you press okay it takes you 
to another menu in which you can watch any of the PEG 
programming in the Chicago area. And if, in fact, CAN is the 
program that you watched previously, when you turn it back on, 
we now have the ability for the program, the CAN programming 
will come right up, so that it will be right there for you.
    Mr. Rush. What is the quality of the video for the CAN TV 
and PEG programming, has the quality of the video been 
compromised on U-Verse, or does it remain as it presently 
exists under the current system? I understand that there are 
some problems in terms of the quality of the video, that the 
quality is less vibrant, and that the quality has been 
compromised tremendously. Is that true?
    Ms. Torreano. I don't believe so. We have had others have 
said that it is, but I think our PEG programming, the quality 
of it is comparable to PEG programming that you see on the 
cable network, but that is an issue, again that our communities 
have expressed to us. Me in particular, I am talking to our 
communities on a weekly basis, and so, yes, I have heard that.
    Mr. Rush. Ms. Folger, I only have a few--thank you, Mr. 
Chairman. I yield back the balance of my time.
    Mr. Markey. I apologize to the gentleman, but you are 6 
minutes right now, and I think the roll call is going to be 
going up pretty quickly, but if we want we can come back and 
have a lightning round of 2 minutes if you would like. The 
chair recognizes the gentlelady from California, Ms. Solis.
    Ms. Solis. Thank you, Mr. Chairman. My question is directed 
to Ms. Folger. I wanted to get to some comments that you made 
regarding PEG channels and some of the, I guess, challenges 
that you see that viewers are facing. You mentioned Spanish 
language access and closed captioning services. Can you 
elaborate a little bit more for me on that?
    Ms. Folger. I can. AT&T offers to put open caption on the 
picture all the time. It will not pass through the closed 
captioning capability, so what this is going to mean for 
someone who is not needing the closed captioning feature, part 
of the picture is going to be obscured throughout the entire 
program. I don't know if you have ever seen closed captioning 
but there is a banner that goes across the screen, so for 
someone who wants to watch it without the banner there is no 
getting rid of the banner. On the other hand, the hearing 
impaired people who need to be able to read that also do not 
have the ability to flip that on and off as they normally do 
when they are taking a course, for example, on our community 
college channel. And so what they have to do is sacrifice, to 
be able to read the material. In addition to that, because of 
the vastly reduced resolution of the picture by 75 percent, a 
lot of teachers use Power Point presentations as their lectures 
and when you reduce the quality that much and you try to read 
the print on a Power Point presentation on a small TV screen, 
it is nearly impossible to read, so it has a number of problems 
that will be to the detriment of our community.
    Ms. Solis. You mentioned Spanish language as well.
    Ms. Folger. The second SAP, second channel feature is not 
activated at all with channel 99, so, for example, in Los 
Angeles. where they offer Spanish translation for the city 
council meetings that would not be available on any of the 
council meetings and there are many people in this country who 
rely on that translation for their information about local 
government.
    Ms. Solis. And then my next question would be to Ms. 
Torreano from AT&T. Why can't AT&T provide second language or 
closed captioning?
    Ms. Torreano. We can provide second language channels if in 
fact the community provides that to us.
    Ms. Solis. How do you know if they want them or not, what 
kind of effort is made to know that there is an interest?
    Ms. Torreano. Well, actually I can't speak specifically for 
California, but in Michigan we are meeting with each and every 
one of our communities. That is part of the process that we 
have. When they are interested in providing PEG programming, we 
sit down and discuss all the technical aspects that are 
required of providing us the programming, so we spend 
considerable time with every single community to make sure that 
they in fact understand the needs.
    Ms. Solis. But why would AT&T make such a decision for Los 
Angeles? That is just incredible to me where 40 and 50 percent 
of the population speaks other than English, and the primary 
dominant language is Spanish, so what are you basing that 
information on, and who is making that decision?
    Ms. Torreano. If I understand your question correctly, if 
Los Angeles provides us with a program in any language other 
than English, we will carry that.
    Ms. Solis. So the city then has to provide that support?
    Ms. Torreano. Whatever the city will provide us, we will 
carry.
    Ms. Solis. Okay. I will end my questioning there, and I 
know we will come back for another round.
    Mr. Markey. Well, you have a minute left to go if you have 
any other questions.
    Ms. Solis. Mr. Cohen, yes, I also want to thank the Mayor 
for coming. It sounds like you all can work things out at least 
in this situation. I have some reservations about how that is 
going to work out given what I have heard from my colleagues 
and the impact of federal legislation that currently provides 
this committee with that jurisdiction to oversee that things 
are being handled correctly or at least fairly. Not correctly, 
fairly. So I would just like to hear your comments. I know, Mr. 
Cohen, you said that you don't think it is wise for us to get 
involved. Maybe you could just elaborate a little bit on that.
    Mr. Cohen. Well, I had mentioned previously, I think the 
current legislative and regulatory structure creates an 
appropriate balance that enables cable providers to negotiate 
PEG programming and commitments with their LFAs, and I think 
the balance, it has been explored in this hearing very well, on 
the one hand we may need more bandwidth and our local--first of 
all, as I said, this is a transitional issue. In a few years, 
this is going to become irrelevant because everyone is going to 
have digital equipment. I think the local governments 
understand that chasing customers away from cable, which is the 
primary deliverer of PEG programming, is not in anyone's 
interest. And we have numerous occasions where we have been 
able to work out these agreements with local governments where 
we have needed to do so. As I said several times, I am highly 
confident that the negotiations we are having now will be 
productive in the State of Michigan.
    Mr. Markey. The gentlelady's time has expired. There are 
two roll calls on the House floor. We have approximately 10 
minutes left to go to make the roll call, so the way I usually 
end these hearing is I ask each one of the witnesses to give us 
the 1 minute that they want us to remember. I apologize to the 
members because the roll call has gone off. Give us the 1 
minute you want us to remember about this issue which clearly 
deals with the digital transition, and we move forward not 
losing what we have always had back in the home communities. So 
we will begin with you, Ms. Folger. One minute.
    Ms. Folger. Thank you. There are several things I would 
like to say to this commission--committee, I am sorry. First of 
all, we are asking that no harm be done to PEG access. We know 
that you understand the value of what we have to offer. The 
biggest challenges to use because we are the only outlet for 
local communities, schools, churches, non-profits, local 
governments, and ordinary people, ordinary people need to be 
able to find us, to see us, and to use us. If we are buried on 
channel 99 and it takes a minute and a half to find us, nobody 
is going to be flipping around and finding us. That is harm. If 
this happens, we are sunk. And what do we want to make this 
right? We feel that these problems are a result of bad law. The 
way to correct it is good law. Close some of these loopholes 
that are allowing these things to happen. I believe that PEG 
channels are the poster children of localism, so fix the 
problems, please.
    Mr. Markey. We agree with you, too, and I think every guy 
who is here and every woman who sees a guy with a clicker in 
his hand knows that that guy can watch the news, a sporting 
event, and a movie simultaneously clicking back and forth, and 
no guy is waiting a minute and 30 seconds for any station to 
come on. So that has to get fixed. Ms. Torreano.
    Ms. Torreano. Thank you very much. I would just say, first 
of all, again thank you for inviting me here. We are a new 
entrant. We are giving your constituents a choice, and when 
there is choice that is always a good thing, because that means 
that the consumer, your constituents, are really in the 
driver's seat. This is evolving. It is a process. It is not an 
event, and we expect the process to continue and to continue to 
improve. It is a robust product. It is an innovative product. 
It differentiates us, and we do believe and act on it. Our 
communities are important. That is where we live, too, and that 
is where our customers are. And we are going to continue the 
dialogue and continue to evolve our product, and thank you 
again.
    Mr. Markey. Thank you, Ms. Torreano. Mr. Cohen.
    Mr. Cohen. Beyond custom that will turn time back to the 
chair, three statements. One, PEG programming is valuable and 
important. Two, the digital transition is complicated and may 
require change, but in the end it will be very good for 
consumers. And, number 3, Comcast and the cable industry pledge 
to this committee to commit to work with our LFAs to protect 
the essence of PEG through the digital transition.
    Mr. Markey. Thank you, Mr. Cohen. Mr. O'Reilly.
    Mr. O'Reilly. Thank you, Mr. Chairman. The existence of 
basic service tier is not limited to rate regulated communities 
but is an obligation of every video provider utilizing public 
property for the delivery of its services. The PEG channels 
must appear on the basic service tier or the same level of 
service as that of commercial broadcast carriers or channels. 
PEG programming must be delivered with the same visual and 
audio quality and technical functionality, including closed 
captioning provided for commercial broadcast channels, and that 
a single tier of service may not be technically divided such 
that the subscriber must employ additional equipment to view 
all the programming on that tier. In addition, I am sorry that 
Congressman Upton didn't go, because if he moved to Dearborn he 
would have a choice for a Big Ten channel because with 
competition, while Comcast in our community doesn't carry the 
Big Ten channel, WOW does, so that is why we are for 
competition in market.
    Mr. Markey. Thank you, Mr. O'Reilly. So I think anyone who 
heard this hearing knows that there is widespread support for 
PEG channels on the Telecommunications Subcommittee. We want 
the consumer to be king. We understand that there is a digital 
transition that is going on in industry, but we want to ensure 
that as flexible as you have to be in doing that that 
ultimately the PEG experience that consumers are used to not 
only continues to exist but is expanded and improved upon. We 
want more channels. We want better programming. We want broader 
band. We want more local access, more diversity. That is what 
the consumer expects as part of this revolution. We are going 
to work with the industry and with the local communities in 
order to ensure that that is the result of this incredible 
revolution.
    We thank all of you for participating. This hearing is 
adjourned.
    [Whereupon, at 2:58 p.m., the Subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                 
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