[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
  THE NATIONAL BROADBAND PLAN: COMPETITIVE AVAILABILITY OF NAVIGATION 
                                DEVICES

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

                                HEARING

                               BEFORE THE

      SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 29, 2010

                               __________

                           Serial No. 111-117


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov


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                    COMMITTEE ON ENERGY AND COMMERCE

                      HENRY A. WAXMAN, California
                                 Chairman
JOHN D. DINGELL, Michigan            JOE BARTON, Texas
  Chairman Emeritus                    Ranking Member
EDWARD J. MARKEY, Massachusetts      RALPH M. HALL, Texas
RICK BOUCHER, Virginia               FRED UPTON, Michigan
FRANK PALLONE, Jr., New Jersey       CLIFF STEARNS, Florida
BART GORDON, Tennessee               NATHAN DEAL, Georgia
BOBBY L. RUSH, Illinois              ED WHITFIELD, Kentucky
ANNA G. ESHOO, California            JOHN SHIMKUS, Illinois
BART STUPAK, Michigan                JOHN B. SHADEGG, Arizona
ELIOT L. ENGEL, New York             ROY BLUNT, Missouri
GENE GREEN, Texas                    STEVE BUYER, Indiana
DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
  Vice Chairman                      JOSEPH R. PITTS, Pennsylvania
LOIS CAPPS, California               MARY BONO MACK, California
MICHAEL F. DOYLE, Pennsylvania       GREG WALDEN, Oregon
JANE HARMAN, California              LEE TERRY, Nebraska
TOM ALLEN, Maine                     MIKE ROGERS, Michigan
JANICE D. SCHAKOWSKY, Illinois       SUE WILKINS MYRICK, North Carolina
HILDA L. SOLIS, California           JOHN SULLIVAN, Oklahoma
CHARLES A. GONZALEZ, Texas           TIM MURPHY, Pennsylvania
JAY INSLEE, Washington               MICHAEL C. BURGESS, Texas
TAMMY BALDWIN, Wisconsin             MARSHA BLACKBURN, Tennessee
MIKE ROSS, Arkansas                  PHIL GINGREY, Georgia
ANTHONY D. WEINER, New York          STEVE SCALISE, Louisiana
JIM MATHESON, Utah
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin 
    Islands
KATHY CASTOR, Florida
JOHN P. SARBANES, Maryland
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
BETTY SUTTON, Ohio
BRUCE L. BRALEY, Iowa
PETER WELCH, Vermont
      Subcommittee on Communications, Technology, and the Internet

                         RICK BOUCHER, Virginia
                                 Chairman
EDWARD J. MARKEY, Massachusetts      FRED UPTON, Michigan
BART GORDON, Tennessee                 Ranking Member
BOBBY L. RUSH, Illinois              CLIFF STEARNS, Florida
ANNA G. ESHOO, California            NATHAN DEAL, Georgia
BART STUPAK, Michigan                JOHN SHIMKUS, Illinois
DIANA DeGETTE, Colorado              GEORGE RADANOVICH, California
MICHAEL F. DOYLE, Pennsylvania       MARY BONO MACK, California
JAY INSLEE, Washington               GREG WALDEN, Oregon
ANTHONY D. WEINER, New York          LEE TERRY, Nebraska
G.K. BUTTERFIELD, North Carolina     MIKE FERGUSON, New Jersey
CHARLIE MELANCON, Louisiana
BARON P. HILL, Indiana
DORIS O. MATSUI, California
DONNA M. CHRISTENSEN, Virgin 
    Islands
KATHY CASTOR, Florida
CHRISTOPHER S. MURPHY, Connecticut
ZACHARY T. SPACE, Ohio
JERRY McNERNEY, California
PETER WELCH, Vermont
JOHN D. DINGELL, Michigan (ex 
    officio)
  


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Rick Boucher, a Representative in Congress from the 
  Commonwealth of Virginia, opening statement....................     1
    Prepared statement...........................................     3
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     5
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     6
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................     7
Hon. Michael F. Doyle, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     7
Hon. Mary Bono Mack, a Representative in Congress from the State 
  of California, opening statement...............................     8
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     9
Hon. Robert E. Latta, a Representative in Congress from the State 
  of Ohio, prepared statement....................................    95

                               Witnesses

Michael T. Williams, Executive Vice President and General 
  Counsel, Sony Electronics, Inc.................................    11
    Prepared statement...........................................    13
    Answers to submitted questions...............................    98
Kyle McSlarrow, President and Chief Executive Officer, National 
  Cable and Telecommunications Association.......................    15
    Prepared statement...........................................    17
    Answers to submitted questions...............................    99
Matthew Zinn, Senior Vice President, General Counsel and Chief 
  Privacy Officer, TiVo..........................................    29
    Prepared statement...........................................    31
    Answers to submitted questions...............................   106
Eric Shanks, Executive Vice President, Entertainment, DirecTV....    41
    Prepared statement...........................................    43
    Answers to submitted questions...............................   108
Harold Feld, Legal Director, Public Knowledge....................    52
    Prepared statement...........................................    54
David E. Young, Vice President, Federal Regulatory Affairs, 
  Verizon........................................................    68
    Prepared statement...........................................    70
    Answers to submitted questions...............................   114

                   Submitted materials for the record

Letter of April 28, 2010, from the Motion Picture Association of 
  America to the Subcommittee, submitted by Mrs. Bono Mack.......    97


  THE NATIONAL BROADBAND PLAN: COMPETITIVE AVAILABILITY OF NAVIGATION 
                                DEVICES

                              ----------                              


                        THURSDAY, APRIL 29, 2010

              House of Representatives,    
Subcommittee on Communications, Technology,
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:02 a.m., in 
Room 2123, Rayburn House Office Building, Hon. Rick Boucher 
[chairman of the subcommittee] presiding.
    Present: Representatives Boucher, Markey, Eshoo, Doyle, 
McNerney, Welch, Stearns, Shimkus, Buyer, and Bono Mack.
    Also Present: Representative Latta.
    Staff Present: Roger Sherman, Chief Counsel; Tim Powderly, 
Counsel; Greg Guice, Counsel; Shawn Chang, Counsel; Amy Levine, 
Counsel; Michiel Perry, Intern; Sarah Fisher, Special 
Assistant; Neil Fried, Minority Counsel; Will Carty, Minority 
Professional Staff; and Garrett Golding, Minority Legislative 
Analyst.

  OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN 
           CONGRESS FROM THE COMMONWEALTH OF VIRGINIA

    Mr. Boucher. The subcommittee will come to order. Good 
morning to everyone. Today the subcommittee considers the steps 
that will be necessary in order to enable television viewers to 
go to electronic stores and shop for set-top boxes, much the 
way that people shop for television sets today. The set-top 
boxes would be made by a variety of manufacturers who would 
compete with each other and operate various features such as 
digital video recording or Internet-based functionality. 
Competition would also be based on the price of the box. Some 
of the more capable devices could become the hubs for a home 
entertainment center, switching information of all kinds 
throughout the household. The boxes, whether simple or 
sophisticated, would all have the key capability that is not 
present today, and that is the ability to receive the input of 
television channels from any cable or satellite company and 
then display those channels on television sets.
    If that capability is assured, set-top boxes will become 
competitively available and a tremendous amount of innovation 
would then occur in the design, the manufacture, and the 
marketing of set-top boxes. TV viewers will be able to make a 
one-time purchase of a set-top box and then keep it in service, 
even if they switch their cable provider.
    We have long tried to achieve the goal of making what we 
call navigation devices competitively available. In fact, our 
effort dates from the Telecommunications Act of 1996 in which 
we directed the FCC to adopt rules to assure plug-and-play 
capability between competitively available set-top boxes and 
all cable systems. Now, almost 15 years later, that plug-and-
play capability remains an elusive goal.
    This morning we consider the next steps that should be 
taken to help us achieve it. In the National Broadband Plan 
recently released by the FCC, the Commission appropriately 
highlighted the need for a direct to consumer market for 
navigation devices and the benefits that devices with both TV 
inputs and Internet access can bring to our overall effort to 
enhance broadband adoption.
    I was pleased that the FCC published a notice of inquiry as 
a first step in assuring that by the end of 2012, all cable and 
satellite TV providers include with their services a simple 
gateway device that converts the cable or satellite company's 
TV signal into a common output that then could be processed by 
whatever set-top box the viewer may own. In the shorter term, 
the Commission is proceeding with a notice of proposed 
rulemaking with the goal of addressing the shortcomings in the 
existing CableCARD program as an interim measure until gateway 
devices are widely deployed.
    The CableCARD is used by TiVo which is the major provider 
of digital video recorders that today are available at retail 
for conditional access to cable programs. A workable CableCARD 
system could bring other providers into this market as well. To 
date, the CableCARD regime has been riddled with complications. 
First, the installation of CableCARDs typically involves 
several multiple-hour visits by sometimes untrained 
technicians. Secondly, pricing of the CableCARD has been 
inconsistent and is often very expensive. Third, some cable 
operators have been moving programming to switched video 
platforms to make more efficient use of their bandwidth.
    But a CableCARD-enabled device cannot access switched 
digital video without substantial and somewhat awkward 
motivations that are difficult to achieve. Revised CableCARD 
rules are therefore needed for the near term as the Commission 
moves to implement the gateway device proposal by the end of 
2012.
    Our witnesses today will speak to the barriers that we must 
overcome for TV viewers to realize the benefits of true set-top 
box plug-and-play capability. I want to thank each of them for 
joining us here this morning. We will turn to your testimony 
shortly. That concludes my opening statement. And I am pleased 
to recognize now the ranking Republican member of our 
subcommittee, the gentleman from Florida, Mr. Stearns.
    [The prepared statement of Mr. Boucher follows:]

    [GRAPHIC] [TIFF OMITTED] T6572A.001
    
    [GRAPHIC] [TIFF OMITTED] T6572A.002
    
 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. Good morning and thank you, Mr. Chairman. And 
I welcome all of our witnesses this morning. The FCC issued 
their broadband plan, which is almost 400 pages. The font was 
about 8 points. Say you go to page 49, there is a little 
paragraph called 4.2 devices. So you read through that, get a 
little further along, you get to the recommendation, 4.12, 12. 
Now, you don't think too much about it, but you read through it 
and you realize it has huge implications. And that is why our 
witnesses are here and this is why this morning we are having 
this hearing.
    The video marketplace is completely different today than it 
was when we passed the original set-top box provisions in 1992 
and 1996. Back then, my colleagues, cable providers served 
between 90 and 100 percent of subscription TV households. Today 
there is a robust video competition as evidenced by the fact 
that satellite and phone companies now serve one-third of 
subscription TV households. And the video market is only 
getting more and more competitive.
    Congress and the FCC need to be careful as it looks to 
impose the new regulations, and perhaps some of the 
recommendations are outlined in this recommendation 4.12. Being 
able to access the Internet from a television is certainly an 
appealing idea to many consumers. As such, the market already 
seems to be delivering this service without any government 
assistance. According to the Consumer Electronics Association, 
in the next couple of years, every TV will be able to connect 
to the Internet wirelessly. In addition, industry analysts 
predict that more than 70 million Internet-connected TVs will 
ship in 2012, up from 15 million in 2009. And the number of 
such TVs in the U.S. will reach 80 million by the year 2013.
    Furthermore, we have seen that the reverse, people using 
their computers to watch TV shows and movies, is already a 
booming industry. Hula.com, for example, had almost a million 
videos viewed just in February. Congress and the FCC need to 
tread very carefully, in my opinion, when attempting to impose 
technology mandates. Let the past be our guide.
    The FCC has been unsuccessful trying to artificially create 
set-top box competition through technology mandates for almost 
20 years. Despite all of their regulatory efforts, the FCC 
concedes that attempts to manufacture a third-party device 
market have failed. Cable operators have been required to foist 
approximately 20 million CableCARDs at a cost of more than $1 
million on subscribers that elect to use operator-provided 
devices. Subscribers, on the other hand, have chosen to use 
only 500,000 CableCARDs with third-party devices.
    In response, most manufacturers have decided not to develop 
CableCARD devices. Part of the problem is that the subscription 
TV and device markets continue to develop rapidly. This has had 
two interrelated consequences.
    First, technology has outpaced the rules, making the 
inflexible CableCARD regime less than useful. Second, rather 
than buy set-top boxes and risk obsolescence, most customers 
rent from the cable operator and simply upgrade when cable 
operators roll out their new features, such as high definition, 
video on demand, and interactive services.
    Trying to artificially create set-top box competition by 
forcing subscription TV providers to support one-size-fits-all 
gateway devices is unlikely to fare any better than similar 
attempts by the FCC through their technology mandates for the 
past 20 years.
    What the FCC could not accomplish when subscription TV was 
an analog cable-centered linear video platform will only be 
harder for a digital, interactive, Internet-enabled video 
platform that is populated by diverse cable satellite and phone 
company architectures.
    While the gateway device proposal stems from a national 
broadband plan recommendation, the question is how this mandate 
promotes broadband is not quite clear. Since most subscription 
TV households likely already have broadband.
    Making the government a gateway between providers and the 
customer is unlikely, in my opinion, to be productive; at best, 
micromanaging the devices' providers will increase costs for 
consumers, hinder investment, and slow innovation. At worst, it 
is a veiled attempt to advance network neutrality and other 
regulations of that sort.
    The lack of set-top box competition in the past was not 
caused by a market failure, but because there was no market. 
With the rise of alternative subscription TV providers in the 
Internet, consumer needs are evolving; the market for third-
party video devices is following suit. The FCC would do better 
to avoid mandates and allow current innovation to simply 
continue and to flourish.
    Thank you, Mr. Chairman, for this hearing. I look forward 
our witnesses.
    Mr. Boucher. Thank you very much, Mr. Stearns.
    The gentlelady from California, Ms. Eshoo, is recognized 
for 2 minutes.

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

    Ms. Eshoo. Thank you, Mr. Chairman, for holding this 
hearing on another important recommendation contained in the 
FCC's National Broadband Plan. As you know, I represent the 
heart of Silicon Valley, and it is a place where many companies 
and industries live by the mantra ``innovate or die.''
    The issues of innovation and competition in the plan 
reflect the legislative initiatives that I pursued on behalf of 
my district for many years. In 1996, when Congress passed the 
Telecommunications Act, I partnered with my great pal, Ed 
Markey, on including a provision, section 629, to encourage 
innovation through competition in the set-top box market. In 
the 14 years since, we have only seen minor steps forward in 
creating new technologies.
    It is true that the cable industry did take it upon 
themselves to create CableCARD as a follow-up to the FCC's 
order to implement section 629. But as the FCC recognizes in 
its National Broadband Plan, quote, despite congressional and 
FCC intentions, CableCARDs have failed to stimulate a 
competitive retail market for set-top boxes.
    The FCC's recommendation to address this assessment is to 
have all multichannel video programming distributors install a 
gateway device in subscribers' homes by December 31, 2012. In 
the interim, they also recommend that cable operators fix the 
problems associated with CableCARD no later than October of 
this year. And that is not that far away.
    So I am encouraged by consumer principles recently released 
by the cable industry and their announced commitment to work 
with the FCC and the set-top boxes industry to create consumer 
choice and drive innovation.
    I am interested to hear how the rest of the panel that is 
here today think these principles will be applied. We haven't 
discussed CableCARDs, set-top boxes in this committee for a 
number of years. I remember the issue well. I had just come on 
to the committee. So it is important to revisit it so that we 
can leapfrog into the future.
    So I look forward to hearing from all of the witnesses. 
And, Mr. Chairman, again, thank you for these hearings on the 
FCC's National Broadband Plan. Thank you.
    Mr. Boucher. Thank you very much, Ms. Eshoo.
    The gentleman from Illinois, Mr. Shimkus, is recognized for 
2 minutes.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman. I am still trying to 
figure out the problem. We have a National Broadband Plan. We 
need to map those areas that are unserved or that are 
underserved, and we need to use the market and our capabilities 
to make sure that everybody has at least a level of high-speed 
Internet access. And I don't get what the frustration or the 
misunderstanding of the capitalist market is all about.
    It is the consumers who drive demand; business then fills 
to meet the demand. It is a system that works. Every time we 
intervene and try to push a service on the public through 
government, we fail. Listen, we have got video on watches, we 
have got videos in automobiles, we have got video on phones. We 
get video over copper, we get video over cable, we get video 
terrestrially, we get video over the satellite. We ought to be 
focusing on getting high-speed Internet access to unserved 
areas and underserved areas. That is where our focus should be, 
and let the competitive marketplace meet the demand that the 
public wants to be met and not use government to force a demand 
in an area where the public is not going.
    Thank you, Mr. Chairman. I yield back.
    Mr. Boucher. Thank you very much, Mr. Shimkus.
    The gentleman from Pennsylvania, Mr. Doyle, is recognized 
for 2 minutes.

OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Doyle. Thank you, Mr. Chairman. Well, I will give you a 
little known fact about myself. I like bands like Earth, Wind 
and Fire. And I am going to tell you another secret. Kenneth 
likes to watch Soul Train reruns, complete with vintage Johnson 
Hair Care Products advertisements on demand. And much to our 
delight, our respective cable companies offer those services.
    But the only way I can fill my house back in Pittsburgh 
with the hippest trip in America is with a cable box provided 
by the cable company, not from a box or a TV I can purchase at 
retail, even if I think that box gives me a better user 
experience and has features that I find useful, like maybe 
Internet connectivity.
    Now, according to the Census Bureau, 30 percent of 
Americans have never used the Internet, but 99 percent of 
Americans have a television and over 85 percent of Americans 
have some form of pay TV service. Those numbers overlap. I 
agree with Chairman Boucher on this issue, and appreciate and 
respect his leadership, which is why I am glad that the FCC's 
National Broadband Plan identified this as an issue that could 
help drive demand for Internet access.
    I look forward to a final rule fixing some issues with 
CableCARD technology, and I look forward to all of the 
witnesses today talking about the FCC's notice of inquiry about 
how all devices can work with all video providers in the 
future.
    And with that, Mr. Chairman, I will yield back.
    Mr. Boucher. Thank you very much, Mr. Doyle.
    I haven't had to worry about hair care products in quite 
some time now, but I am glad that you are still concerned.
    The gentleman from Michigan, Mr. Upton, is recognized for 2 
minutes. Oh, he is no longer with us.
    The gentleman from Indiana, Mr. Buyer, passes and will have 
2 minutes added to his questioning time.
    And the gentlelady from California, Mrs. Bono Mack, is 
recognized for 2 minutes.

 OPENING STATEMENT OF HON. MARY BONO MACK, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Bono Mack. Good morning, Chairman Boucher, Ranking 
Member Stearns and distinguished panel. The subject matter 
before us today is highly complex. We are confronting issues 
surrounding how video entertainment is delivered to the 
American consumer and an increased use of our television as a 
means of accessing the Internet. Both involve capital-intensive 
areas of our economy, and I think the FCC and Congress should 
proceed with extreme caution.
    At the outset, I would like the record to express my 
support for policies that provide individuals and companies 
with the freedom to innovate. Such freedom allows bright minds 
to develop products like video on demand and DVR. Therefore, 
beyond the equal application of existing laws and regulations, 
I am wary of the government mandating technical standards 
beyond section 629 or the regulations surrounding the 
Commission's implementation of that law.
    In addition to my concerns surrounding technical mandates, 
I also would like to remind the committee about the importance 
of content protections. Few people are investing in set-top 
boxes to watch hearings like this one on C-SPAN, no matter how 
exhilarating we might think this discussion ultimately is, 
especially with Mr. Doyle's admission of Earth, Wind and Fire. 
But consumers want a complete viewing experience that maximizes 
the capabilities of the technology they have purchased.
    The viewing experiences of the consumer are the work of a 
large number of people who have to get paid. The only way they 
get paid is when their content is protected and sold, not 
stolen. As such, the manufacturers of set-top boxes play a 
vital role in the delivery and protection of content.
    I believe that no matter how we ultimately move forward, 
the protection of content should remain a high priority. To 
further make this point, I would like to submit a letter from 
the Motion Picture Association of America.
    Thank you, Mr. Chairman. I look forward to today's 
discussion and I yield back the balance of my time.
    Mr. Boucher. Thank you very much, Mrs. Bono Mack. And 
without objection, the letter you have mentioned will be made a 
part of our record.
    [The information appears at the conclusion of the hearing.]
    Mr. Boucher. The gentleman from Massachusetts, Mr. Markey, 
is recognized for 2 minutes.

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

    Mr. Markey. Thank you, Mr. Chairman, very much. And thank 
you for your leadership on this issue. Back in 1993 when I was 
chairman of the subcommittee, I worked with Jack Fields on the 
National Communications Competition and Information 
Infrastructure Act, H.R. 3636. And like the National Broadband 
Plan's recommendation on set-top boxes, our bill was designed 
to unleash competition and innovation in the retail 
marketplace, enabling consumers to buy the set-top box of their 
choice independent of their network provider.
    The bill passed the House overwhelmingly in June of 1994, 
423-to-4. But it wasn't until the next Congress that the set-
top box language was included as a Bliley-Markey amendment 
incorporated into the 1996 Telecommunications Act, becoming 
section 629 of the statute.
    In the age of the smart phone, we can think of these 
devices now as smart video boxes, the converter boxes, set-top 
boxes, modems consumers use daily, the devices that ideally 
would help them navigate to the video and information sources 
of their choice.
    Fourteen years is an eternity in telecommunications policy. 
We might as well be talking about the Peloponnesian laws or the 
last time the Bruins won the Stanley Cup. But it is clear, 
however, that over the last 14 years, the promise of the smart-
phone box provision has not been fulfilled.
    While there have been tremendous innovations in two of the 
three main devices for connecting to broadband service, smart 
phones and personal computers, the set-top box has been the box 
that time forgot. It is simply not as smart or as available as 
it should be for consumers. And that is about to change with 
the April 21st issuance of the notice of inquiry and a further 
notice of proposed rulemaking, as recommended by the National 
Broadband Plan.
    The FCC is now beginning to seek ways to effectively 
implement section 629 from 14 years ago, to give greater choice 
to consumers and increase broadband adoption. So this is going 
to be a huge change; it will make the consumer king, which 
should be our goal. Just get out of the way, let them have a 
technology that lets them go anywhere they want to go, do 
anything they want to do.
    Thank you, Mr. Chairman, for having this hearing. We are on 
the dawn of a brand new and I think best era we have ever had 
in telecommunications.
    Mr. Boucher. Thank you very much, Mr. Markey.
    The gentleman from Vermont, Mr. Welch, is recognized for 2 
minutes.
    Mr. Welch. Thank you, Mr. Chairman. I will pass.
    Mr. Boucher. Thank you very much, Mr. Welch. And we will 
add 2 minutes to your time for questioning our panel of 
witnesses today.
    All members have been recognized for their statements. And 
we are now pleased to turn to our panel of witnesses and we 
thank each of you for your attendance here this morning.
    Mr. Michael Williams is the Executive Vice President and 
General Counsel of Sony Electronics.
    Mr. Kyle McSlarrow is the President and Chief Executive 
Officer of the National Cable and Telecommunications 
Association.
    Mr. Matthew Zinn is the Senior Vice President, General 
Counsel and Chief Privacy Officer for TiVo.
    Mr. Eric Shanks is the Executive Vice President of 
Entertainment at DirecTV.
    Mr. Harold Feld is the Legal Director for Public Knowledge.
    And Mr. David Young is the Vice President of Federal 
Regulatory Affairs at Verizon.
    Each of these gentlemen is deeply knowledgeable about the 
matter we are discussing here this morning. And we want to 
thank all of you for coming and joining us and sharing your 
views with us.
    Without objection, your full prepared written statements 
will be made a part of our record. We would welcome your oral 
presentations and ask that you try to keep those to 
approximately 5 minutes, and that will give us ample time to 
exchange ideas and ask questions of you.

STATEMENTS OF MICHAEL T. WILLIAMS, EXECUTIVE VICE PRESIDENT AND 
   GENERAL COUNSEL, SONY ELECTRONICS, INC.; KYLE McSLARROW, 
   PRESIDENT AND CHIEF EXECUTIVE OFFICER, NATIONAL CABLE AND 
   TELECOMMUNICATIONS ASSOCIATION; MATTHEW ZINN, SENIOR VICE 
  PRESIDENT, GENERAL COUNSEL AND CHIEF PRIVACY OFFICER, TIVO; 
ERIC SHANKS, EXECUTIVE VICE PRESIDENT, ENTERTAINMENT, DIRECTV; 
  HAROLD FELD, LEGAL DIRECTOR, PUBLIC KNOWLEDGE; AND DAVID E. 
   YOUNG, VICE PRESIDENT, FEDERAL REGULATORY AFFAIRS, VERIZON

    Mr. Boucher. Mr. Williams, we will be happy to begin with 
you, and I would ask that you hold your microphone as close to 
you as you can. I think even closer than that would be good. We 
can hear you much better. Be sure you have turned it on. Thank 
you.

                STATEMENT OF MICHAEL T. WILLIAMS

    Mr. Williams. Good morning, Chairman Boucher, Ranking 
Member Stearns, and distinguished members of the subcommittee. 
Thank you for allowing Sony Electronics this opportunity to 
testify on this very important issue. Sony is here today to 
lend its support to the FCC's National Broadband Plan and 
specifically to the gateway device proposal it describes. When 
implemented, it will bring consumers better value and a nearly 
infinite number of choices for news, information, and 
entertainment. The gateway device will allow true competition 
among content owners, service providers, and device 
manufacturers like Sony. And we all know where there is true 
robust competition, prices drop and services improve.
    The concept of an MVPD gateway is not something new or 
revolutionary. In fact, this service model has been discussed 
among device manufacturers in the MVPD community for many 
years. The gateway concept is a natural evolutionary step in 
the progression of television viewing.
    For the first 50 years, what we might call TV 1.0, 
consumers received video through one national standard that 
applied to all over-the-air broadcasters. It was easy to use, 
it worked well and it allowed for a host of innovation and 
competition in the television receiver market.
    Starting in the 1970s, we entered into TV 2.0, the MVPD 
age, first through cable, then satellite and, most recently, 
telephone companies. TV 2.0 expanded consumer choice from a 
handful of channels to hundreds, and the technology has evolved 
from one to many, but it came with a price--the lack of 
interoperability.
    Now we are at the dawn of TV 3.0, a confluence of the 
Internet and traditional MVPD services. TV 3.0 will leverage 
the power of the Internet to enable consumers to tailor their 
television viewing in ways we can only imagine. It will enable 
viewers to interact with the program they receive and with each 
other. More importantly, it will give consumers the tools they 
need to man their programming choices to get what they want, 
when they want it, and to decide where they will view it.
    Now, you may ask, What does this new TV 3.0 world have to 
do with set-top boxes; why do Congress and the FCC need to be 
involved? The answer, we look back when we changed from TV 1.0 
to 2.0. Over-the-air broadcasts relied on a single nationwide 
standard to transmit a television signal from the station to 
the viewer.
    In the MVPD age, there is no single nationwide transmission 
standard. Every cable operator, every satellite operator uses 
something different. Consumers simply subscribe to one MVPD 
provider, and they don't want to spend the extra money to buy a 
device that can receive every one of these many different 
signals. The genius of this universal gateway device in this 
approach is that it combines the best of both worlds. It 
dramatically facilitates the integration of Internet-delivered 
video and data along with traditional MVPD services.
    Simply put, the gateway device is a translator. It takes 
the transmission signal from the service provider and 
translates it into an output signal that all retail consumer 
devices can understand.
    Now, there are other elements that are necessary for the 
gateway approach to work. First, consumer devices such as 
televisions need to operate on a level playing field against 
each other, which requires the use of a common national 
standard.
    Second, in order to provide an innovative consumer 
experience, the device needs to be able to tell the consumer 
what content is available and to access it.
    Third, the output from the gateway device must be simple 
and open, like the existing Wi-Fi or USB standards. This output 
standard should not come with extraneous licensing or technical 
obligations that would hinder innovation, impair widespread 
implementation and offer consumers little value. It is clear 
there are details that need to be filled in, but the committee 
should understand that the technologies necessary to implement 
this gateway device are in wide use today and they existed for 
many years.
    Sony believes that the gateway device is a workable 
solution to implement the congressional mandate contained in 
section 629. All of us, this committee, the FCC, the service 
providers, content providers, manufacturers and consumers have 
a stake in bringing television into its third age. Sony is 
convinced that the Commission's gateway proposal can and will 
succeed for all stakeholders. And we look forward to joining 
these stakeholders to make TV 3.0 a reality. Thank you very 
much.
    Mr. Boucher. Thank you, Mr. Williams.
    [The prepared statement of Mr. Williams follows:]

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    Mr. Boucher. Mr. McSlarrow.

                  STATEMENT OF KYLE McSLARROW

    Mr. McSlarrow. Thank you, Mr. Chairman, Ranking Member 
Stearns and distinguished members of the subcommittee. First 
let me just state at the outset that we are very supportive of 
the direction the FCC is going both with its notice of inquiry 
and the NPRM. We think what they presented is a very thoughtful 
case for innovation that ties together really 2 strands that I 
think it is worth taking just a moment to unpack. The first 
strand, as you have identified, Mr. Chairman, and others, goes 
back to section 629, which is how do you create a competitive 
retail market for devices. It is not just set-tops. It could be 
televisions or other navigation devices. That marketplace 
hasn't taken off. It hasn't taken off principally for two 
reasons: one, CableCARDs were functionally deployed in one-way 
devices at a time when the world was turning two-way. So you 
have one-way devices with CableCARDs and there really is no 
consumer demand for one-way devices. Really at this moment in 
time, TiVo is really the only remaining successful player in 
that field.
    The second reason it didn't take off is pretty obvious. 
Right now CableCARDs, with the exception of Verizon, are only 
used by cable companies; and therefore if you buy a device that 
is a CableCARD device, you can't actually take it to another 
competitor. In today's world, in 2010, four out of ten 
consumers take a multichannel video service from somebody other 
than a cable company.
    The second strand is what was really identified in the 
broadband plan, which is totally apart from whether or not 
there is a retail market: What do we do, what are the 
opportunities and challenges of integrating television and 
video on the Internet? And I think what we tried to do is put 
those two together in a way that we are actually very intrigued 
by.
    Now, I think there are a lot of unanswered questions. And 
to be fair to the FCC, they have teed up most of those 
questions which is why they started with an NOY. But I think 
our role in terms of the cable industry is to think about not 
so much the past, but what the opportunities are for the 
future. And to that end, as Ms. Eshoo said, we actually 
submitted to the FCC and to this subcommittee a set of consumer 
principles. What are the goals here?
    Now, we have identified a couple that we think everybody 
should be able to sign up to. One, we do think consumers ought 
to be able to connect devices to their multichannel video 
service without at least a set-top box. They ought to have a 
retail market. Number two, we think that consumers ought to be 
able to take those devices they do purchase at retail and move 
them from one provider to another, which promotes competition. 
Third, we think that consumers should have the option of being 
able to access Internet; in particular, to access Internet 
video. Fourth, we think, more than that, they ought to have the 
ability to search across all of the platforms so that they can 
identify video on whatever the multichannel service is 
providing, whether it is video on demand or a linear channel or 
YouTube or Netflix or some other service that is emerging on 
the Internet platform.
    Now, the caution we have is that we are skeptics of 
government technology mandates. But that doesn't mean that we 
shouldn't be at the table doing the hard work necessary to try 
to achieve those goals. And we have committed to the FCC and we 
commit to you that we will do that.
    There is still a host of issues that are unanswered. We 
actually conceptually talked about ideas like the gateway 
device that Mike was just talking about a moment ago. I am not 
sure a gateway device is fully fleshed out right now. At a 
conceptual level there should be some interface that we ought 
to be able to work toward that allows us to accomplish those 
goals. But there are still enormous issues related to content 
protection, a lot of the promotional, transactional, and 
advertising issues surrounding each of these platforms.
    We have other providers here today. We have different 
technology platforms. How we make that seamless is still a 
challenge. But I think, as Mike said a moment ago, the 
technologies probably exist. And if there is a will for all of 
the providers, the CE manufacturers, the content providers to 
work together with the FCC, I think we can achieve them. Thank 
you, Mr. Chairman.
    Mr. Boucher. Thank you very much, Mr. McSlarrow.
    [The prepared statement of Mr. McSlarrow follows:]

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    Mr. Boucher. Mr. Zinn. And please pull that microphone very 
close.

                   STATEMENT OF MATTHEW ZINN

    Mr. Zinn. As far as it can go. Chairman Boucher and Ranking 
Member Stearns, thank you for inviting TiVo to discuss device 
competition and the National Broadband Plan. Consumers love 
TiVo products because they combine the ability to find, record, 
and play cable programming with the ability to find, record, 
and play broadband programming, Netflix, Amazon, Blockbuster, 
YouTube all in one easy-to-use user interface.
    TiVo puts the consumer in charge of its own viewing 
schedule while respecting the rights and concerns of copyright 
holders. TiVo's ideas have been copied, though never equaled, 
by video service providers in their own lease boxes, yet TiVo 
boxes have never been placed on an equal footing with leased 
boxes in terms of access to programming, pricing, installation 
and support.
    The CableCARD was designed by the cable industry itself so 
that the consumer need only turn on the product, read two sets 
of numbers on the screen, and call them into his local cable 
operator. These are being supported this way in a few systems 
around the country. But by and large, installation and support 
have been woefully inadequate. And even when CableCARD-reliant 
devices have been supported, cable operators have been making 
channels unavailable to consumers who rely on these devices.
    Let me show you what I am talking about in terms of access 
to cable programming. Here is a Web site showing a channel 
lineup for a cable operator system in Utica, New York.
    [next slide]
    You can clear the Web site and then you can search by 
programming package.
    So the next slide shows that we have searched by the 
programming package entitled ``Not Available on CableCARD.'' 
Funny title for a programming package that contains over 200 
channels that are not available on CableCARD according to this 
Web site.
    [Slide shown.]
    The next slide shows what is in that package. Well, there 
are a lot of movie channels that consumers are being told are 
not available on CableCARD.
    [Slide shown.]
    No hablo espanol on CableCARD.
    [Slide shown.]
    HD movies. If you buy an HD box or you have an HDTV, you 
kind of want HD movies. Not available on CableCARD.
    [Slide shown.]
    Anybody like sports? Not available on CableCARD.
    [Slide shown.]
    Twenty-one of the top 25 top-rated channels in HD are not 
available on CableCARD according to the Web site.
    My point is not to pick on a particular cable operator 
cable system only to graphically show the unequal competitive 
situation for retail set-top boxes. The fact is most of these 
channels may be accessed by TiVo boxes using a tuning adapter. 
Yet there is no mention of that here, no mention of digital, no 
mention of tuning adapter. All the consumer sees is ``not 
available on CableCARD,'' and most consumers would look at that 
and say, I am not going to buy a retail box.
    Is it any wonder why more people lease boxes than buy 
retail boxes when confronted with this situation?
    And even if you get past the programming issue, then you 
have pricing issues: How much is a CableCARD, do I have to pay 
for a lease box and a CableCARD? And then there are 
installation issues which are now legendary. Faulty cards; 
untrained installers; installers who fail to bring CableCARDs 
who are not familiar with them; multiple truckloads to do a 
signal install, and so on.
    Fortunately, Congress anticipated the video service 
providers might foreclose device competition and innovation. 
The Consumer Electronics Availability Act of 1995 directed the 
FCC to assure in its regulations the commercial availability of 
competitive devices for multichannel video programming 
providers. This subcommittee's bill became section 629; in 
1996, the Telecommunications Act.
    After many years of intermittent and inconsistent efforts 
to foster video device competition, Chairman Genachowski 
proposes to really advance the ball here in two proceedings. 
First is a rulemaking to allow products such as TiVos, which 
rely on CableCARDs, to work on cable systems free of technical 
handicap. And the second is notice of inquiry to consider a 
gateway for competitive and innovative products to operate on 
cable, satellite, telephone video systems as much as personal 
computers and portable products, operable Wi-Fi connections 
today.
    My earlier slides show that cable operators have recently 
made ordinary subscription channels unavailable to competitive 
products, even though our customers must continue to pay for 
them. Cable operators do this with a switch digital technique 
in which certain of these channels must now be electronically 
requested from the head end. TiVo devices have the capability 
to send the necessary requests to the head end using broadband.
    But TiVo's license from cable labs does not allow our 
products to be configured to make these simple requests, and 
cable systems currently are not set up to receive them. A 
regime in which a cable subscriber is required to use an 
operator-provided set-top box to receive a significant amount 
of programming is the very antithesis of what a competitive 
set-top box policy is designed to achieve.
    We are encouraged that the NCTA has recognized this in its 
statement of principles to Chairman Genachowski, and we look 
forward to working with cable to address this critical issue. 
We applaud Chairman Genachowski for proposing these solutions.
    In summary, Mr. Chairman, CableCARD is not hard to fix and 
we are not asking for much. We are asking for installation 
support, which is in the law. We are asking for pricing 
transparency and nondiscrimination, and we are asking for 
upstream signaling so that retail boxes have regular cable 
programming without an operator-provided set-top box. All of 
these are what was supposed to be provided by the plug-and-play 
agreement that was signed into law in 2003. Thank you.
    Mr. Boucher. Thank you, Mr. Zinn.
    [The prepared statement of Mr. Zinn follows:]

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    Mr. Boucher. Mr. Shanks.

                    STATEMENT OF ERIC SHANKS

    Mr. Shanks. Good morning. I am Eric Shanks, Executive Vice 
President of Entertainment at DirecTV. And thank you for 
allowing me to testify today.
    To foster innovation and increase broadband adoption, the 
FCC is considering a plan to stimulate a retail market for 
smart video devices. While DirecTV supports the goal of 
innovation and broadband adoption, we have concerns with this 
proposal. Specifically the FCC may require cable, satellite, 
and other video providers to develop an all-video adapter whose 
sole function is to connect its service with third-party 
devices. The manufacturers of these devices could strip out our 
service and replace it with their own.
    This government intervention is both unnecessary and 
harmful. Innovation and the convergence of broadband in TV are 
prevalent in the market today and growing. DirecTV is driving 
this effort by including Ethernet ports on all of our HD boxes 
and access to some of the most popular Internet sites like 
Flicker, Facebook and Twitter. By ignoring what is occurring in 
the market today, the proposal will have the opposite effect of 
what it intends. It could give cable a clear competitive 
advantage. It would place our innovative services at risk and 
result in increased costs and inferior customer service.
    We built our business nearly 20 years ago through 
innovation. And it is imperative that we do even more today to 
remain competitive. In the last 15 months alone, we have 
downloaded 76 new features to our set-top box. We do more than 
simply transmit plain vanilla programming. The features and 
services you are about to see create the video experience that 
is unique to DirecTV.
    Please roll the video. Should I go on and come back to the 
video later? There we go. I assure you we do give our customers 
audio.
    Ms. Eshoo. Just not Congress, huh?
    [Video played.]
    Mr. Shanks. So everything you just saw resides in our set-
top box. Under the proposal, however, we cannot ensure that 
these features or any future innovations would work with third-
party boxes. Thus consumers are left with three choices: one, 
pay for a new box from DirecTV; two, settle for an incomplete 
service that they expect to get; or three, switch to a provider 
whose technology is more suited to an all-video device. 
Although we don't advocate an all-video adapter mandate for any 
service provider, cable's two-way architecture allows it to 
place its intelligence in the head end rather than the home. 
This means its services will still work with third-party 
devices. This, however, is not an option for satellite. Thus 
the proposal would skew the competitive landscape towards 
cable, undermining the government's longstanding efforts to 
stimulate competition.
    In addition, allowing third parties to strip out our 
services that you just saw and develop their own user interface 
will diminish the industry-leading customer service they expect 
from DirecTV.
    When DirecTV first launched, there were hundreds of models 
of set-top boxes, each with their own controls and features. 
And frankly, we struggled to help subscribers handle even the 
most basic functions when they called us, such as setting 
parental controls or turning on closed captioning.
    This proposal would turn back the clock, leaving no clear 
lines of responsibility for customer service. We receive 140 
million customer phone calls a year, including a great number 
regarding the set-top box. Who will take these calls and, more 
importantly, who will solve the customers' problems?
    We believe there are better ways for the FCC to achieve its 
goals without the potential harm to innovation, competition and 
customer service.
    And, fortunately, the FCC is willing to consider 
alternatives. DirecTV is already implementing one such 
solution. The RVU Alliance is a consortium of over two dozen 
distributors and manufacturers that have developed an open 
standard for in-home networking capabilities that allow 
subscribers to watch content anywhere in the home on any 
device, whether from any paid TV provider or the Internet. With 
RVU, everyone is free to innovate and provide unique services 
which accomplishes our shared goals. It fosters innovations, 
integrates broadband and video, eliminates the need for 
multiple set-top boxes, and creates devices that can work with 
different video providers.
    DirecTV is eager to work with the FCC and with Congress to 
achieve the shared goals of innovation and broadband adoption. 
Thank you, and I look forward to your questions.
    Mr. Boucher. Thank you very much, Mr. Shanks.
    [The prepared statement of Mr. Shanks follows:]

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    Mr. Boucher. Mr. Feld.

                    STATEMENT OF HAROLD FELD

    Mr. Feld. Thank you, Mr. Chairman, Ranking Member Stearns, 
and members of the subcommittee. My name is Harold Feld and I 
am Legal Director for Public Knowledge. My organization, joined 
by other consumer and public interest groups as the FCC is part 
of the National Broadband Plan to adopt a universal gateway for 
set-top boxes and video devices. Two of those organizations, 
Consumers Union and Media Access Project, joined us in the 
written testimony submitted today, describing how a universal 
video gateway referred to in the FCC proceeding initiated last 
week is a set-back box, or AllVid device, will benefit 
consumers and further our National Broadband Plan. We believe 
that such a device applied across all MVPD platforms would 
promote innovation in the device and service market, enhance 
competition among MVPDs and help spur adoption of broadband by 
increasing the value proposition of broadband to consumers.
    We also believe that the circumstances in today's market, 
as MVPDs are increasingly offering triple-play packages of 
video and voice and data, cable is undergoing a digital 
convergence and the ferment of VC interest in making online 
video available on every screen creates a perfect opportunity 
for the FCC to reboot its implementation of section 629.
    As the FCC recognized in the recent notice of inquiry, the 
proposed AllVid approach could do for this generation of 
devices what the FCC's historic Carterfone decision and 
subsequent rulemaking did for the phone network, saving 
consumers monthly rental fees, opening up a new universe of 
equipment choices and, finally, creating the opportunity for 
unforeseen innovations such as the modem and the dial-up 
Internet.
    I want to make three points. Choice and competition in 
video devices is good policy. As everyone knows, you can attach 
any device and run any application on your broadband connection 
at home. Whether it is an Apple, a Dell, an HP or an energy-
saving device that lets me adjust my home thermostat remotely, 
I can attach it to my home broadband connection. My mother and 
my mother-in-law can have video calls with what I believe is 
their favorite grandson, and it doesn't matter that I have 
FiOS; my folks have RCN and my in-laws use Comcast. The 
equipment all functions the same.
    This didn't happen by accident or because providers wisely 
arrived at this result through self-regulation. It happened 
because more than 40 years ago, the FCC announced a decision 
called Carterfone, that customers had a right to attach devices 
to the phone network. By setting a few simple ground rules, the 
FCC created the world of today in which consumers enjoy devices 
and services impossible to have imagined when it decided 
Carterfone.
    With this experience in mind, Congress first in 1992 and 
then in 1996 required the FCC to create such ground rules for 
video devices. Nearly 15 years later, consumers are still 
waiting.
    My second point. The FCC's attempt to implement the law 
through CableCARD has not worked. CableCARD has not lived up to 
its promise. Others here can speak more directly to why 
CableCARD failed in that promise. In general, we believe, as 
the name CableCARD implies, the FCC simply delegated too much 
to the cable industry. CableCARD works for cable. It does not 
plug-and-play for consumers. It does not work with U-Verse or 
other IPTV. It is not required on DBS. And it does not play 
well with FiOS.
    The FCC further undercut CableCARD adoption by granting 
countless waivers, including waivers for so-called low-cost, 
low-functionality boxes that undercut adoption.
    As a first step, the FCC needs to fix CableCARD. Many 
consumers and competitive devices rely on it, but we need a 
fresh approach that is easy to use for consumers and promotes 
competition and innovation.
    My third point. The video gateway is the best solution to 
implement the law, promote consumer choice, and promote 
broadband. All MVPD should provide consumers with a simple 
device that communicates with the MVPD network and makes MVPD 
services available to third-party devices. This will bridge the 
gap between closed MVPD networks and open home media 
ecosystems. It will open up all subscription TV networks to 
device competition. It is a win for consumers, for consumer 
electronics and retail industries, and ultimately for the MVPD 
industry as well.
    As we saw with Carterfone, opening up the phone network for 
new devices created new opportunities for the telephone network 
providers to sell new services that they would never have 
developed without device entrepreneurs stimulating demand.
    Only the video gateway model will help fulfill the goals of 
the National Broadband Plan in promoting adoption as well as 
just deployment. As Mr. Doyle observed earlier, between 85 
percent and 90 percent of Americans rely on some form of MVPD, 
and almost all Americans have a television set, but only 60 
percent of Americans have broadband in their homes.
    By approaching broadband adoption through the media device 
most familiar to all Americans, their television set, we can 
help bridge the digital divide and make broadband for all 
Americans a reality. Thank you.
    Mr. Boucher. Thank you very much, Mr. Feld.
    [The prepared statement of Mr. Feld follows:]

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    Mr. Boucher. Mr. Young.

                  STATEMENT OF DAVID E. YOUNG

    Mr. Young. Chairman Boucher, Ranking Member Stearns and 
members of the subcommittee, thank you very much for the 
opportunity to speak with you on what is obviously a very 
important issue to the chairman and this subcommittee, and has 
been for a long time. And the reason I believe it has been 
important is because this is an issue that you believe will 
drive competition, innovation, and consumer choice, which was 
certainly desperately required when first visited in 1992 and 
even again in 1996.
    But a lot has changed since then. It has been less than 5 
years that Verizon first began offering FiOS TV service to the 
residents of Keller, Texas. And our 3 million subscriber base 
is small compared to our cable and satellite competitors, but 
we are playing big. And our innovations in the marketplace are 
forcing our larger competitors to respond to us.
    We have spent $23 billion building an all-fiber-to-the-home 
network that is capable of delivering the fastest broadband 
speed, and we have integrated the best of digital cable 
technology with Internet protocol to provide the best video 
experience possible.
    We have also introduced a number of service innovations. We 
were the first multiroom DVR. We were the first to provide a 
media manager service that allowed content from your PC, 
pictures, and music to be played through your television set. 
And we brought something to the market called widgets. And 
these widgets are applications that run on our set-top boxes.
    The first ones that we brought were traffic and weather. 
These are still very popular ones. But we were the first to 
bring Twitter and Facebook to the TV. And these turn television 
watching into a true social media experience.
    We have brought other ones like the NFL Red Zone that 
allows you to have an interactive multimedia sports experience 
rather than just watching programming on the TV. And just this 
week, we announced our YouTube and iheartradio apps, so that 
you can access all of the YouTube content or tune into hundreds 
of radio stations from across the country. And all of this is 
through the leased set-top boxes that our customers have today.
    But we are not the only ones doing this. You walk into any 
Best Buy or other big box store, you will find lots of 
innovative, smart video devices available. These are devices 
like the XBox or the Wii or the PlayStation. There are smart 
TVs. There are Blue Ray players. There are specialized boxes. 
Some call them Internet media adapters or net-top boxes like 
Apple PD or Roku and, of course, PCs, laptops, netbooks and 
tablet computers. All of these are able to access video content 
over the Internet and bring that experience to a customer's 
television set. And so from these devices you can access 
Netflix, you can access YouTube, Amazon, Major League Baseball 
and more.
    So there is actually a robust retail navigation device 
market. The problem is that these same devices can't be used to 
access your subscription TV program, and that is what we are 
all trying to figure out. That, of course, was the vision 
behind section 629. It is the vision behind the FCC's notice of 
inquiry, and it is the reason that we have been reaching out to 
our CE partners and trying to demonstrate proof-of-concept 
prototypes that demonstrate that their CE devices could work 
with our service without the need for a leased set-top box. It 
is also why Verizon has taken a leadership position in a number 
of standard setting bodies to help develop the standards to 
make all of this possible.
    We believe that this is achievable, but we have concerns 
about the specific proposal. We think that a gateway model 
imposed on all technologies is not necessarily the best way to 
go. It is certainly not the only way to go. And we think that 
it risks repeating some of the mistakes that were made in the 
past in the implementation of CableCARD.
    Mr. Young. So what is the right way to achieve success? Any 
policy framework needs to recognize consumer choice. Some 
consumers prefer to lease a box and let somebody else buy it 
and maintain it and take care of it. Others would prefer to buy 
the box and own it themselves. And so, any solution should 
ensure both of those things.
    Any solution should encourage collaboration. Collaboration 
between the device makers and the service providers is 
important because it can improve the experience for the 
customer. It can help avoid problems by making sure that every 
detail is taken care of in advance. And if things do break, as 
they often do, it ensures that there is a way of getting that 
problem resolved without leaving the customer stuck in the 
middle with two parties pointing fingers at each other.
    We have to ensure that the MVPD experience is delivered to 
the customer the way the customer expects it to be delivered 
and that they are getting everything that they pay for.
    And then, finally, I think all of this goes to creating the 
right framework that will promote continued innovation, 
competition, and consumer choice without repeating the mistakes 
of the past.
    Thank you.
    [The prepared statement of Mr. Young follows:]

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    Mr. Boucher. Thank you very much, Mr. Young.
    And thanks to all of our witnesses for your thoughtful and 
informed comments this morning. We have benefited in our 
understanding of the issue from the information you have 
provided.
    Mr. Shanks, let me begin my question with you. You 
represent DirecTV this morning. And I hear two basic concerns 
being expressed by you. Let me see if there is a way to address 
these consistent with the FCC's proposals.
    The first thing that I have heard you say is that you are 
concerned that you are in a very different situation from 
cable; that cable can place a lot of the functionality 
interfaces in the local cable headend. You have to build those 
into your box because, given the constraints of a satellite, 
you can't place those interfaces in the satellite, so you have 
to do that in the box itself. And you are concerned that, if it 
is not exactly your box that your consumer is using, some of 
that functionality could be lost.
    Would it serve your purpose and satisfy that concern if you 
were able, under the FCC's eventual order, to be able to build 
the essential functionality that you have to have into your 
gateway device?
    You could still keep it simple. The primary goal of the 
device would be the standardized output signal that could be 
received by and processed by competitively available navigation 
devices. But you could enhance it to the extent necessary in 
order to include that vital functionality that you have to 
provide for your consumer experience.
    Is that a possible solution?
    Mr. Shanks. As we understood it today, no, in the sense 
that the third-party devices at the handoff point of a gateway 
can pick and choose what to do with the content. So----
    Mr. Boucher. Well, I think you are going to the second part 
of your concern. Let's stick with the first part. I am going to 
address the second part in just a moment.
    So the first part is simply this. If you put that 
functionality that you have to build into your boxes today into 
the gateway device itself, why doesn't that solve the problem?
    Mr. Shanks. That gateway device would be our set-top box.
    Mr. Boucher. Well, it wouldn't necessarily have to go that 
far. I mean, it wouldn't have to do all the various things that 
your set-top box does at the moment. It would just be the 
essential things that the cable company builds into its headend 
that you, by necessity today, have to put into the set-top box.
    Mr. Shanks. I believe that the service that is sold from 
DirecTV--which is a service which is comprised of all of the 
things that, you know, we displayed in the video. The only way 
that satellite can actually get that service is by a completely 
seamless and disaggregated chain of satellite, set-top box, 
remote control to the television set.
    So that gateway would have to include--I mean, we actually 
don't build unnecessary things into our set-top box because we 
don't want to increase cost. So it is as simple as we can make 
it today.
    Mr. Boucher. Well, all right. I hear what you are saying.
    Let me ask that you give serious consideration to this 
possibility. Because the Commission is on track, and I think 
properly, and many of the witnesses here have said properly, to 
develop the gateway box as the bridge, as the way to make sure 
that you really can have this competitive market for set-top 
boxes. And it seems to me that if you enhance that set-top box 
with whatever is absolutely essential for you to have in it, 
comparable to what the cable company puts in its local cable 
headend, and leave all the other functionality for the 
competitive set-top box itself, that the problem potentially is 
solved. And I would just ask that you give careful thought to 
it, going forward.
    Mr. Shanks. Yes, sir.
    Mr. Boucher. The second part of your concern was this. You 
said that you are concerned that some of the unique 
functionality that you offer that makes DirecTV special could 
be stripped out by that competitive provider of a navigation 
device and, therefore, deprive your customer of that unique 
experience.
    Would it not be a simple answer to that concern if the FCC, 
as part of its rule, basically says that all of the services 
provided by the multichannel video distributor would have to be 
passed through and processed by and made available to the 
consumer from these competitively available navigation devices?
    Mr. Shanks. There are two concerns with that.
    Number one, that innovation is clearly happening today. 
Sony Bravia television, we hand off our signal. The complete 
DirecTV service is included in the Sony Bravia television----
    Mr. Boucher. Well, let me just see if I can get a direct 
answer to the question, because my time is limited.
    Mr. Shanks. OK.
    Mr. Boucher. Would that not be a satisfactory way to handle 
it?
    The Commission would require that the very concern you are 
expressing here, in fact, not become a reality, because that 
box would have to process and make available all of your 
functionality.
    Mr. Shanks. So that would just get to my second point, 
which is----
    Mr. Boucher. Well, that is the second point.
    Mr. Shanks [continuing]. Customer service. Exactly. Which 
is, you know, the ability to be able to troubleshoot, and who 
is going to call DirecTV if the interface is completely 
hijacked from DirecTV. And that is a problem that we have had 
in the past.
    Mr. Boucher. OK. Thank you.
    Mr. McSlarrow, let me turn to you. Thank you very much for 
cable's very constructive statement of principles. Those have 
been presented very well by you this morning. And I want to 
just make reference to the first one for purposes of the 
question to you.
    That first principle says that consumers should have the 
option to purchase set-top boxes at retail that can access 
their cable company's video services without having to have a 
set-top box that is supplied by that cable provider. And that 
certainly speaks directly to the goal that we are here trying 
to achieve this morning.
    Can I read that statement as suggesting that the cable 
industry would also support taking the steps that are necessary 
to make sure that the switched video services, the digital 
switched video services that many cable companies are now 
beginning to offer--with, as Mr. Zinn suggested, hundreds of 
channels now being provided and switched digital video that 
cannot at the present time be accessed through cable cards--
would you support the steps, consistent with this first 
principle, that would enable those switched digital video 
services to be accessed through cable cards so that companies 
like TiVo would be in a position to record those programs as 
well as others?
    Mr. McSlarrow. Yes. And, in fact, in 2007, Tom Rogers, the 
CEO of TiVo, called me and asked me to help him address this 
issue. And, in fact, at the end of 2007, Tom and I made an 
announcement where the cable company made a commitment to 
supply tuning adapters to any TiVo customer so they could 
access switched channels. Now, it is not a perfect system, but 
we have already shown our willingness and our commitment to 
meet that obligation.
    Mr. Boucher. I appreciate that statement.
    Let me just suggest that the way that I think it is being 
done today is somewhat awkward. And it involves using a bulky 
tuning adapter, which is, itself, as large as a set-top box, 
and it is difficult to connect and utilize.
    What Mr. Zinn is proposing is that the cable company allow 
a request to be sent upstream by way of the broadband network. 
And it would seem to be a fairly simple matter for the cable 
company to accept that request and have it acted upon 
electronically. Would you agree that that is an appropriate 
request, and would your companies honor it?
    Mr. McSlarrow. So I would have described the tuning adapter 
as ``miniscule and elegant.'' But----
    Mr. Boucher. I have actually seen one, and it is as big as 
a set-top box. At least the one I saw was.
    Mr. McSlarrow. OK, large and elegant.
    Mr. Boucher. Yes. I think Mr. Zinn has one here, by the 
way. He can show us just how large it is.
    I am sorry. Go ahead.
    Mr. McSlarrow. All right, go ahead. Have your field day.
    See, it is actually smaller than a set-top.
    The IP back channel is a legitimate issue. The problem we 
have right now, at the moment, is that what TiVo has asked for 
is a proprietary IP back channel solution, where they are 
working with SeaChange.
    We are actually open to and have told the FCC we are open 
to exploring IP back channel so you could signal upstream to 
the headend that is an open standard, that would be available 
to any consumer electronics manufacturer who wants to avail it, 
not just one company
    Mr. Boucher. All right. My time has long expired. And the 
chair will be generous with other Members as they propound 
their questions.
    Thank you very much to all of you for those answers.
    The gentleman from Florida, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman.
    Let me just ask each of you a question. Just give me a 
``yes'' or ``no'' answer.
    Should the FCC adopt a current gateway mandate as currently 
proposed?
    Mr. Williams, yes or no?
    Mr. Williams. Yes.
    Mr. Stearns. Mr. McSlarrow?
    Mr. McSlarrow. I don't know.
    Mr. Stearns. Just ``yes'' or ``no.''
    Mr. McSlarrow. There is no gateway proposal. It is a 
concept. I don't know.
    Mr. Stearns. Well, do you support the FCC's commission? Do 
you think they are on the right track?
    Mr. McSlarrow. I think they are on the right track. But 
they are exploring it. It is just an NOI.
    Mr. Stearns. So you think they are on the right track.
    Mr. Zinn? The first question is, should the FCC adopt the 
current gateway mandate as currently proposed, yes or no?
    Mr. Zinn. I agree that they are on the right track. I also 
agree with Kyle that it is an NOI and there is no concrete 
proposal at the current time.
    Mr. Stearns. So you think, when they talk about the 
recommendation of 4.12, that is not a proposal?
    Mr. Zinn. It is a concept, and I agree with the concept. So 
my answer is yes.
    Mr. Stearns. So you don't see it as a mandate at all?
    Mr. Zinn. Actually, I don't see it as a tech mandate. I see 
it as a request for standardization. So it is a definitional 
question: Is a standard a tech mandate, or is a standard a 
standard?
    Mr. Stearns. So you don't see the FCC's recommendation as 
any mandate at all. It is just talking about apple pie and 
cherry pie, apple pie and goodness, huh? That is how you see 
it?
    Mr. Zinn. Yes.
    Mr. Stearns. OK.
    Mr. Shanks?
    Mr. Shanks. No, sir.
    Mr. Stearns. OK.
    Mr. Feld?
    Mr. Feld. Well, to the extent that they ask whether----
    Mr. Stearns. Just a ``yes'' or ``no.''
    Mr. Feld. We filed a petition asking for a rulemaking on 
this, and they put that out as part of the NOI comments. So we 
support that.
    Mr. Stearns. So you are a yes.
    Mr. Young?
    Mr. Young. No, I don't think the gateway proposal as it 
stands is----
    Mr. Stearns. OK. I think it is important, just first of 
all, to find out where you are on this basic question here. I 
noticed that two of you here wouldn't give me an answer, and it 
seems a little more political, your answer, frankly. I would 
think, if you back to your association members, I think they 
are going to give you an answer to this and not quite as 
equivocal as the two of you just gave.
    Mr. Young, the National Broadband Plan calls for a gateway 
mandate to kick in on December 31, 2012.
    Mr. Zinn and Mr. McSlarrow, it is 2012, so that is a 
mandate, in my opinion.
    But, anyway, Mr. Young, so the question to you is, when do 
you think your companies will be accessible on third-party 
devices?
    Mr. Young. We are working very aggressively to make that 
happen well in advance of the 2012 deadline. And we believe 
that it can be done without the gateway as proposed by the FCC. 
So we are encouraged that the NOI looks for alternative 
approaches because we believe we have one.
    Mr. Stearns. Do you think there could possibly be a risk 
that the 2012 mandate will slow down your existing work?
    Mr. Young. That is certainly a possibility. If the gateway 
approach must be adopted in a particular way by all providers 
regardless of whether it is necessary, that would certainly 
slow down our work.
    Mr. Stearns. OK.
    Mr. Shanks, the same question to you is, when do you think 
your company is going to be accessible on third-party devices? 
And is there a risk, possibly, that this government mandate of 
2012 will slow down your existing work?
    Mr. Shanks. First of all, the DirecTV service is available 
through open standards called DLNA today. So you can watch 
DirecTV on a PC or on a phone or any DLNA-enabled devices.
    Mr. Stearns. You can do it on a PlayStation? XBox?
    Mr. Shanks. If they are a DLNA-compliant, open standard----
    Mr. Stearns. Handheld wireless devices, too?
    Mr. Shanks. Yes, sir.
    Mr. Stearns. Digital recorders?
    Mr. Shanks. Yes, sir.
    Mr. Stearns. OK. iPad?
    Mr. Shanks. The iPad I don't think is DLNA. But our Sunday 
Ticket application will work on an iPad, yes.
    Mr. Stearns. OK.
    And then I guess, Mr. McSlarrow, just the same question to 
you, possibly.
    Mr. McSlarrow. So I could probably meet your needs here. We 
are not for a mandate. We are willing to explore these 
concepts. So----
    Mr. Stearns. But the 2012--your company will be accessible 
on third-party devices by 2012?
    Mr. McSlarrow. We are already accessible to third-party 
devices. I think the question is whether or not there is going 
to be a marketplace that it is a two-way marketplace.
    Mr. Stearns. OK.
    Mr. Shanks, can you explain why you believe the gateway 
device mandate will hurt your ability to innovate and compete?
    Mr. Shanks. You know, DirecTV as a service includes 
everything that you just saw. And we set customer expectations, 
and I think that that has been a big part of our success.
    The issue we have with this is, number one, obviously, it 
does give a clear advantage to cable because of their two-way 
pipes, and we only have a very large one-way pipe.
    Secondly, you know, would in the proposal any third-party 
device have to have, kind of, a litany of exceptions of things 
that they don't get when they are buying the DirecTV brand? 
Because, you know, that box is obsolete the day that you buy 
it, and we continue to upgrade, like I said, 76 features in the 
last 15 months.
    And, you know, as Sony and other CE manufacturers know, 3-D 
is the next big thing, apparently. We have given a free upgrade 
to all of our HD customers that will allow them to watch the 
World Cup in 3-D starting June 11th. And a third-party device, 
we have no assurance whether that customer who thinks they are 
getting DirecTV would actually be able to see 3-D. And who 
would they call? It would be just confusion on a customer 
service level.
    Mr. Stearns. Mr. Young, let's take a hypothetical. What 
happens if someone wants to introduce some sort of 
functionality that the FCC has failed to consider, for example, 
or doesn't work with the gateway mandate? Do you perceive that 
you will need FCC permission to change? I mean, how would that 
work?
    Mr. Young. That is actually what I think is one of the 
significant flaws with the proposal as it was written. And it 
is basically that all of the intricate functionality involved 
in providing our services would have to be standardized so that 
they could be made available through this gateway.
    That means that us and DirecTV and the cable companies 
would all have to do all of our services exactly the same way, 
and that would be locked in. And then there would be no ability 
to innovate or bring new capabilities to our products because 
there would be no way of introducing new functionality outside 
of that standard that had been mandated.
    Mr. Stearns. Mr. Shanks, do you agree? Or would you like to 
comment?
    Mr. Shanks. No, I think we actually agree on most of those 
points.
    Mr. Stearns. Mr. McSlarrow?
    Mr. McSlarrow. I agree.
    Mr. Stearns. OK.
    Mr. Chairman, thank you very much.
    Mr. Boucher. Thank you very much, Mr. Stearns.
    The gentlelady from California, Ms. Eshoo, is recognized 
for 5 minutes.
    Ms. Eshoo. Thank you again, Mr. Chairman.
    And I want to thank all the witnesses. This has been an 
instructive panel, in terms of your testimony and your answers 
to the questions that Members have already posed.
    I just want to make an observation, and that is that I have 
read what the FCC is trying to do is simply establishing a 
standard protocol and that that is not a mandate. And it seems 
to me that there is consensus on this panel, with the 
exception, I think, of Mr. Shanks. I hope I am characterizing 
it correctly. But I think that is important to be stated.
    I don't think anyone here has been directly or indirectly 
involved--members, that is, of the committee--in mandating 
technologies. But standards are very important. And I think 
that when that is clear, that serves people of the country 
well. And so I just want to start out with that.
    I apologize that in my opening statement I didn't make a 
special fuss in welcoming Matt Zinn, who is my constituent. And 
I am proud that he is here and testifying and value his 
service.
    So let me start with you, Mr. Zinn. You have worked hard to 
make your technology compatible with what the cable companies 
have developed. Can you tell us about either your positive 
views of what you have heard Kyle McSlarrow talk about today? 
Or are there still some lingering issues relative to TiVo and, 
you know, the plans for improving the cable card? Because I 
heard that that is where you have had problems.
    Mr. Zinn. Right. I think the biggest issue is, as I showed 
in the slides, access to switched digital programming directly. 
You know, I showed the tuning adapter. It is a set-top box. It 
was supposed to be a little dongle, but it turned out to be a 
set-top box. And a competitive box policy that requires a 
consumer to get a large number of channels by using a cable 
set-top box is the antithesis of a competitive set-top box 
policy.
    Ms. Eshoo. But in terms of what you have heard today in the 
discussion, does that clear away some of the weeds relative to 
what you just said?
    Mr. Zinn. If there is follow-through from the cable 
industry on creating an IP back channel solution that is not 
proprietary, that would help greatly.
    And then if there is follow-through on clearing away some 
of the installation support issues--self-installation goes a 
long way. In California, in your district, Comcast actually 
does a pretty good job of allowing consumers to self-install 
cable cards. And it is not that complicated.
    Ms. Eshoo. Right.
    Mr. Zinn. I think there are ways to address this----
    Ms. Eshoo. I have even done it myself.
    Mr. Zinn. There you go.
    And then pricing. Most cable programming is sold in 
packages, and in the packages a set-top box is included. Now, 
if you bring your own set-top box, there is no discount from 
bringing your set-top box.
    So I think that, like cable modem service, a cable company 
either lets you lease a cable modem or, if you buy a cable 
modem, they don't charge you for the cable modem.
    Ms. Eshoo. Right. I am running out of time.
    To Mr. McSlarrow, do you want to respond to that?
    I want to take this opportunity to thank you for what you 
are doing, because you recognize that there are problems with 
the cable card. You are committed to changing that.
    Do you want to respond to some of Mr. Zinn's comments?
    Mr. McSlarrow. First, thank you. But just to play off of 
that----
    Ms. Eshoo. And I think the principles that you have come up 
with, as the chairman said, is really helpful.
    Mr. McSlarrow. Well, thank you.
    I think, as Matt was just talking about, we live in a cable 
card world today. There are issues that we need to address. We 
are committed to addressing them.
    But I think what is important in the take-away of this 
hearing is, what is the future like? How do we get out of that 
world? There is going to be a natural transition. It is going 
to be a two-way interactive world. It is going to integrate 
television and the Internet.
    So we are committed to doing both, addressing the near-term 
fixes that need to be addressed while we work on the future.
    Ms. Eshoo. Good.
    Let me just make another observation, since I have 19 
seconds left. And that is that I have no doubt that the October 
2010 date and what has to take place between now and then will 
happen. It is what comes around the corner from that. And I 
think that is where most of the work lies and the cooperation 
has to take place.
    So, Mr. Chairman, thank you.
    And, again, to all the witnesses, thank you for what you 
are doing. And I couldn't agree more with Mr. Markey, that this 
is one of the most exciting times for us. And I look forward to 
people all over the country being part of that excitement and 
the services. Thank you.
    Mr. Boucher. Thank you very much, Ms. Eshoo.
    The gentleman from Illinois, Mr. Shimkus, is recognized for 
5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman.
    And I don't know any Member of Congress who has more guests 
announced in a telecommunications high-tech committee than Anna 
Eshoo.
    It seems like every time we have a high-tech hearing, Anna, 
you have a constituent here. It must speak to your district, I 
would say.
    Ms. Eshoo. It does. Thank you. Good guess.
    Mr. Shimkus. So, welcome.
    And I think what I just keyed on--and I am not going to 
spend a long time--the two-way interactive world. And the basic 
question is, who drives that the quickest? Government 
mandates--not a mandate, but government standards, which then 
moves to a mandate, versus the market. That is all.
    Now, we believe the market. I think when you look at 
handsets, the telecom bill that was passed that kind of 
released innovation, that is why we all have a multitude of 
things on our hips that can do a gazillion things that no one 
ever dreamed of. If we had stayed controlled, we would have 
stayed rotary. So that is kind of the same thing.
    Now, I have teenagers, so I am experienced in how these 
kids are way advanced. And I don't understand how any of this 
stuff works, and I have been on the committee 14 years. But I 
do know, we have an XBox 360, and we know that gaming has 
pushed new technology. And then the market placed a demand for 
interactive gaming online worldwide. So when one of my sons is 
playing Modern Warfare 2 or whatever these great games are, 
they are amazing, but when they team up, they could be playing 
with kids in Japan or South Korea.
    Now, Mr. McSlarrow, this is over our coaxial cable. Does 
the cable industry get any revenue other than the basic service 
fee for the cable connection?
    Mr. McSlarrow. In most cases----
    Mr. Shimkus. No. I don't see it.
    Mr. McSlarrow. I mean, I can't think of one.
    Mr. Shimkus. You buy the XBox 360, you hook it up, and you 
can interact worldwide in a gaming situation.
    Now, the FCC didn't intervene, didn't tell the online game 
world and the high-tech community from Anna Eshoo's district, 
``Make this happen.'' It was the consumer demand of gaming 
worldwide.
    And I would just end on that. I think it is a compelling 
argument to remember that, if we want to innovate, we let the 
market push us. And when we start dictating, we slow up the 
process, we don't speed up the process.
    And thank you, Mr. Chairman. I will yield back.
    Mr. Boucher. Thank you very much, Mr. Shimkus.
    The gentleman from Pennsylvania, Mr. Doyle, is recognized 
for 5 minutes.
    Mr. Doyle. Thank you, Mr. Chairman.
    You know, there is a difference between a tech mandate and 
tech standards. A tech mandate is seen as onerous, as you hear 
from several of my friends over there. A tech standard is a set 
of rules that lets others play on a common playground. So a 
tech standard is like the plain telephone jack that allowed my 
young daughter to want a Mickey Mouse phone.
    So, Mr. Zinn and Mr. Williams, are you looking for a 
standard similar to that? Or are you looking for a mandate?
    Mr. Zinn. If I could just chime in on that, what I would 
have liked to say to Mr. Shimkus before he took off was: The 
reason that his children can do that is because of the Internet 
Protocol standard. And that is the same standard that the FCC 
is talking about for set-top boxes.
    Mr. Williams. And, Congressman Doyle, absolutely, it is the 
standard. And you have hit the nail right on the head here. 
Because, as we know from the past, if we study the past, we 
know from the national standard--it was the National Television 
Standard Committee, when we had an over-the-air broadcasting, 
didn't mandate the technology of how the signal was processed. 
That was up to an individual station or broadcaster. What it 
allowed is everyone had the same standard to transmit. We had 
CBS, ABC, NBC compete with each other on the nightly news. And 
now we are going to have the same thing in TV 3.0, the national 
standard.
    But, again, how Sony is going to render the video content 
on the Internet or allow you to take the Internet and that data 
and interact with the services that you are buying from DirecTV 
or AT&T or Verizon, that is the brand-new world that we want to 
see developed through this standard, not a technology mandate. 
We are not here for that.
    Mr. Doyle. Very good.
    Mr. Feld, I am curious about something that Mr. Young from 
Verizon raised in his testimony, that we can achieve 
compatibility through open standards with a set of protocols 
that will allow retail devices to access video services from, 
you know, either a cable or satellite company. How do you react 
to that?
    Mr. Feld. What we have seen historically is that we have 
the greatest potential to achieve that when the FCC plays the 
role of an honest broker, able to bring the industry together, 
avoid holdouts, push people, nudge, and stand above the 
financial interests that every vendor and every provider has.
    The Internet Protocol and the success we have had with that 
goes back to the dial-up modem, which goes back to the original 
Carter phone decision and the rulemakings that set that very 
basic standard. We have seen the same thing in television, 
digital television.
    The wireless devices that Mr. Shimkus spoke of are all 
certified by the FCC. When the FCC does its job right and acts 
as an honest broker among the industry and makes it clear that 
there is no value in holding out for a proprietary or industry-
specific solution, we are able to have these sort of protocols, 
and the industry is then able to build on that so that, having 
established the cooperation, the next generation comes much 
more easily to the industry.
    But it is getting over that hump to get the parties 
together, to push them to rise above their different interests 
and create a standard that really serves the consumers and 
industry both and allows the market to develop where the FCC 
plays such an important role.
    Mr. Doyle. Thank you.
    Mr. Chairman, I don't have any other questions. I will 
yield back.
    Mr. Boucher. Thank you, Mr. Doyle.
    The gentleman from Ohio, Mr. Latta, is recognized for 5 
minutes.
    Mr. Latta. Well, thank you very much, Mr. Chairman. I 
appreciate you holding these hearings.
    You know, it is one of those things, I think, that Mr. 
Shimkus brought up. When in doubt, I have a 16-year-old and an 
18-year-old I call my kids, because they are a lot more tech-
savvy than us. And it is hard to explain to them the years of 
growing up in northwest Ohio when we had two channels and some 
days you got them and some days you didn't. And with all the 
different things that are out there today, it is absolutely 
phenomenal what is out there.
    And I guess one of the things that I would just like to 
ask: You know, right now we have a lot of the consumers out 
there that look forward to purchasing and then installing the 
different video navigation devices. But what about the 
consumers that, again, aren't as technically savvy and just 
want the cable/telephone/satellite company to provide and 
install the navigation device?
    And, as you know, when we completed the DTV transition, we 
spent millions making sure that people could install and set up 
and use their converter boxes. You know, I still go in a lot of 
houses today that the microwave light is blinking and that the 
VCR is still blinking. So there are a lot of folks out there, 
again, that aren't quite as tech-savvy as some of the kids out 
there.
    And so I guess, if I could ask Mr. Young, is the FCC's 
AllVid proposal too focused on the technical elite at the risk 
of the rest of the population, especially some of our older 
Americans who are not as proficient in adapting to the new 
technology that is provided to them?
    Mr. Young. I think that there is certainly a risk of that, 
if it goes a certain direction. I am hopeful that the FCC will 
not go in that direction in the NOI. But the mandates that come 
along with the FCC's AllVid adapter proposal--and it does go 
beyond just the standard. There are mandates there that say the 
vid adapter must do this, must not do that. And so, if that was 
adopted like that, it would have a very negative consequence 
for that group of people.
    Mr. Latta. Well, let me follow up with that, then. If 
something like this would be adopted, how do we get it out 
there for those individuals that need help? Because, again, as 
we watched what happened with the transition not too long ago, 
we were sending out all this information on TV about when 
things were being changed over with signal and letting folks 
know they would have to have a converter box just, you know, if 
you want to get your regular antennas to work.
    But how would you foresee that we could actually get out 
there and do something?
    Mr. Young. I think the best way to do that is to not 
disrupt what they are already buying and enjoying. I think that 
we can add support for these new devices without having to 
disrupt the lease model that many people prefer.
    And so any solution, I think, should allow the customer to 
choose which they prefer. And some customers will have a 
mixture of both, and that is a good thing.
    Mr. Latta. Thank you.
    Mr. Chairman, I yield back.
    Mr. Boucher. Thank you very much, Mr. Latta.
    The gentleman from Massachusetts, Mr. Markey, is recognized 
for 5 minutes.
    Mr. Markey. Thank you, Mr. Chairman, very much.
    And, yes, this really does go back to the Carter phone era 
and our attempts to make sure that consumers are not denied the 
opportunity to go out and buy their own phone. I remember when 
the CEO of AT&T sat down here in 1979 and told us that if 
someone could go out and buy their own phone that wasn't a 
black rotary dial phone and plug it into that phone jack, it 
could bring down the whole phone system of Massachusetts. And I 
actually did, I turned to Al Gore and I said, ``We've got to 
break these people up. This is ridiculous.''
    ``How long will it take, Mr. Chairman, for you to be able 
to figure that out?'' ``Well, about 10 years. Maybe in 10 years 
we will be able to have other phone companies able to have 
phones that plug into our phone jacks.''
    So that was, like, a frightening thing to me, because we 
were all renting that black rotary dial phone for $3 a month. 
Our mothers had done it for, like, 40 years. Three bucks times 
12, 36 times 40 years. That is like $1,400 to rent that black 
rotary dial phone, with no new device you can plug in yourself 
that you control.
    So we come to this point now where we have this great 
opportunity that make it work. Right? That consumers can plug 
their own devices in and make it work.
    So what do you think, Mr. Shanks? What are the chances here 
that you are going to be able to work this out so that people 
can buy a device that plugs into your device and still allows 
you to provide first-class quality service for DirecTV 
customers?
    Mr. Shanks. Mr. Markey, maybe I am the only one in the room 
that sees at least one big elephant, and it is the fact that, 
no matter what television you buy today, you can plug it in to 
make sure it works, whether it is with Verizon or Comcast or 
Adelphia. There is a standard there. And the televisions now 
made by Panasonic, LG, Vizio, I looked up on Amazon today, 300 
of them, they are all touting millions of Web sites that you 
can go to while you are watching DirecTV. With Panasonic even, 
you can Skype with your grandma while you are watching DirecTV.
    Mr. Markey. You know what, though? Here is my point. I am 
kind of a technological agnostic. I have no idea. OK? 
Congressional experts are only experts compared to other 
congressmen, but not real experts, OK? That is just an 
oxymoron, ``congressional expert,'' you know, like ``jumbo 
shrimp'' or ``Chevy Chase nightlife.'' OK? There is just no 
such thing.
    So we need to make sure that, you know, we just have the 
most imaginative 17-year-old out there coming up with new 
ideas. Which might not be Mr. Panasonic, it might not be Mr. 
anybody else. That is the beauty of this incredibly short road 
that we have traveled in the last 15 years.
    And as the author of Section 629, I have been waiting for 
the day where we are all liberated totally and we can just go 
down and buy the box of our choice and just plug it in there 
and make it work.
    So are you going to work here with the FCC to make this 
possible for people to be able to have more control so it is 
just not, you know, kind of an impossible technical difficulty 
for you to be able to overcome?
    Mr. Shanks. Yes, sir. I mean, we obviously are embracing 
open standards, broadband connectivity to our boxes, to 
televisions, so that anywhere in the chain you can absolutely 
insert what television manufacturers are doing.
    I actually was in Silicon Valley the other day. I saw an 
amazing set-top box from a very large Silicon Valley company 
which was taking the DirecTV signal in via standard HDMI port. 
They put a complete browser over the top of it. And the cool 
thing with that was, when the browser crashed, right--which 
browsers we all know do, and you get that waiting for an 
hourglass----
    Mr. Markey. But you will work it out, though?
    Mr. Shanks. That is exactly----
    Mr. Markey. Yes. As I said, there are going to be a lot of 
technical difficulties.
    Let me just move on quickly here. We are coming up to the 
20th anniversary of the Americans with Disabilities Act. And 
there were some other impossible things that we just built into 
that law out of this subcommittee, including closed captioning 
for all television sets, back in 1990.
    You should have heard the consumer electronics industry on 
that one. My God, that was going to add $25 or $30 to every 
television set. ``Just very, very difficult. You have no idea, 
Congressman, how hard it will be to build that little thing 
in.'' And now, you know, in bars across America, how could 
guys, you know, talk to women and watch the game if they didn't 
have closed captioning today? I mean, it is an essential part 
of our society. And who would ever think of having a TV set 
without it in?
    So, as we are moving forward--I actually, you know, 
introduced the Video Accessibility Act, kind of, on this 20th 
anniversary to, kind of, totally modernize the access the 
disabled community would have to all this video/voice data.
    So what do you think about that? You guys are familiar with 
the bill as I have introduced it. Mr. Young, can we incorporate 
that as part of this process that we are looking at right now?
    Mr. Young. You raise a very important point. Because, as 
video service providers, we have responsibilities, and we have 
to ensure that those responsibilities are met regardless of the 
device that is used to access our service. And so, yes, that is 
something that definitely needs to be considered.
    Mr. Markey. Great.
    Do you agree with that, Mr. McSlarrow?
    Mr. McSlarrow. I do.
    Mr. Markey. And can we do that as part of this process?
    Mr. McSlarrow. I think so.
    Mr. Markey. Do you agree with that, Mr. Shanks?
    Mr. Shanks. Yes, sir.
    Mr. Markey. Mr. Williams, could you get that done?
    Mr. Williams. Yes.
    Mr. Markey. OK. That is beautiful.
    And Mr. Zinn?
    Mr. Zinn. I have no objection to that.
    Mr. Markey. No objection. Beautiful.
    And Mr. Feld?
    Mr. Feld. I would just like to add that bringing the 
inventiveness of the thousands of potential entrepreneurs and 
developers who could come up with solutions in this through a 
gateway so that we have all sorts of solutions, whatever works 
best for the disabilities community I think is an important 
part of opening up the set-top box, as well, to make things 
like this happen.
    Mr. Markey. So you are saying the more open the set-top 
box, is the more likelihood that thousands of people maybe with 
disabilities will start to think about how they can use that 
device to help millions of people across the country better 
access all of this information.
    Mr. Feld. The more people working on a problem and the 
easier it is for people to adopt the solution that other people 
develop, the more likely that problem is to be solved.
    Mr. Markey. With the exception of the United States Senate, 
oK? And I agree with that. All general rules have exceptions.
    So I do think that we are really at the dawn of a 
tremendous era here.
    And especially you, Mr. Shanks, I would appreciate it if 
you could bring flexibility here to this process. It has been a 
long, long time. And I think it would be great if consumers 
could just go down to their store and buy the device that they 
want.
    And just to make sure--and, obviously, we want to have 
service and maintenance issues dealt with by the service 
companies. But, at the same time, the consumer is king and 
queen, and the more that they are allowed to do more that, I 
think the better off the whole industry is. I just think the 
more of these devices that will get sold and the more 
programming that will get watched, and the more revenue that 
each of your companies will be able to garner.
    So thank you so much.
    Mr. Boucher. Thank you very much, Mr. Markey.
    The gentleman from California, Mr. McNerney, is recognized 
for 5 minutes.
    Mr. McNerney. Thank you, Mr. Chairman.
    And thank you, Mr. Markey, for some interesting remarks 
there.
    Mr. Markey. I will take that as a compliment, I hope.
    Mr. McNerney. Mr. Williams, I was wondering, what is the 
state of affairs with regard to a universal gateway device? I 
mean, Sony must be developing something like that. Are the 
challenges mostly technical or regulatory? Where do we stand on 
that?
    Mr. Williams. The challenges are, in the sense, the current 
operating environment from the past where not all MVPD 
providers were required to address the solution.
    The elegance and the beauty of this proposal that the 
notice of inquiry embraces is that it is an all-MVPD solution. 
Telecos, satellite, cable are all at the table with the CE 
manufacturers and other groups. And the Internet, because it is 
open standards, it is well-received, you know, everyone 
understands the concept of common standards that allows the 
innovation to take place, it is moving along.
    But we need the framework to ensure that everyone has to 
play on the same field by the same rules. And that will allow 
innovation for all those people to figure out how is the best 
or the coolest way for you to interact with the TV programming 
that you are purchasing, be it from AT&T, Verizon, DirecTV, or 
Comcast.
    Mr. McNerney. Well, this reminds me a little bit of 
football. I mean, you want a level playing field and you want 
rules that everybody understands so that people don't get hurt, 
so that the game can be played fairly. I mean, I think that is 
where we need to go. And what you are telling me is that, once 
we get those sorts of rules in place, then the technology ought 
to take off.
    Mr. Williams. Absolutely. And we just have to look to--when 
I was a child, we had three stations in Boston, Massachusetts, 
but they all broadcast on the same standard. They competed on 
content.
    On the television side, we all had to receive the same 
signal, but we went from tube TVs to transistorized TVs. One 
company decided to go with RCA color mask for color TVs. We at 
Sony went a different way; we went Trinitron. So no one 
mandated, you have to use this technology to render color 
video. We developed it, innovated, and competed. And what 
happened? The price of televisions went down over time, and 
they are still going down.
    Mr. McNerney. OK. Thank you.
    Mr. McSlarrow, you gave a list of four goals. They seem 
pretty laudable. Are those widely shared, in your opinion, the 
four goals that you mentioned? There ought to be retail 
devices; the devices should be transferable; they should have 
access to Internet videos; and there should be search 
capabilities. Are those, in your opinion, universally shared 
goals?
    Mr. McSlarrow. It depends which industry. I mean, I think 
the goals--it is are probably hard to disagree with them. I 
think the proof of the pudding is going to be in what 
requirements are placed on different actors in the system to 
accomplish those goals. You know, we have been basically 
debating that point this morning.
    But I think the one great opportunity that we have that is 
new today that wasn't present when the original 629 was enacted 
is that we live in a broadband age. And the convergence is 
taking place. And there are--as others have made this point--
you can go to Best Buy today, and you can see devices today 
that do a lot of these things.
    So, to some extent, we are accomplishing these goals today. 
It is probably also true that working together--and, again, it 
doesn't necessarily require a mandate--but working together as 
providers, manufacturers, content creators, we might be able to 
come up with some kind of interface that makes this even easier 
and deploys even more quickly.
    Mr. McNerney. Thank you.
    Mr. Zinn, what specific proposals would you offer to 
benefit customers to have an early implementation in a short 
time frame?
    Mr. Zinn. I am not sure I understood the question.
    Mr. McNerney. Well, let's see here. Well, you expressed 
concern that it would take too long to arrive at solutions that 
will be amenable to independent providers. I was wondering what 
specific proposals you might have to offer that would benefit 
customers.
    Mr. Zinn. Well, my view is--and I think it is borne out by 
this panel--is, there is not a broad consensus on the gateway 
approach. Right? Mr. Shanks is going to need a lot of 
convincing. Mr. Young is going to need some convincing. The 
cable industry is more on board than the rest. Sony is on 
board. But, you know, my experience in this industry over 20 
years is that things take a lot longer than we think they are 
going to take. And the FCC may say 2012, but I don't believe 
it.
    And, in the interim, cable card is what we rely on. The 
TiVo box does not work if a cable card does not work, end of 
story. And we are the only people who depend on it. So we need 
to make it work today, this year. And we are glad that the FCC 
is determined to make that happen.
    So, you know, we need access to programming, installation 
has to work, and we have to end this pricing discrimination. 
That is what we need today.
    Mr. McNerney. So you are saying that the best thing to do, 
then, is to go after cable cards, make them work, as soon as 
possible.
    Mr. Zinn. Yes.
    Mr. McNerney. OK.
    Mr. Chairman, if you will allow me, one more question?
    Mr. Boucher. One more question, Mr. McNerney.
    Mr. McNerney. OK, thank you.
    Mr. Shanks, you certainly seemed to voice concern about the 
bias in the current program. Do you think a universal gateway 
device can be developed that would be unbiased, that would 
allow you to offer services that can be available by the 
universal gateway device?
    Mr. Shanks. I do believe that there are major concerns on 
our part when it comes down to the economics of a gateway and 
the advantage that cable would have over satellite and, 
therefore, you know, what that would do to the marketplace of a 
gateway and third-party devices.
    Mr. McNerney. OK. Thank you.
    Mr. Boucher. Thank you very much, Mr. McNerney.
    And thanks to all of our witnesses for your outstanding 
testimony here and what has been a very interesting 
conversation back and forth with you today.
    We are going to keep the record of this hearing open for 3 
weeks. And, during that period of time, Members may well be 
propounding in writing some additional questions to you. When 
you receive those, please respond as promptly as you can and 
help illuminate our record of this hearing with your answers.
    Our thanks to each of you for taking time with us today.
    And this hearing stands adjourned.
    [Whereupon, at 11:47 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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