[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]



 
         INNOVATION VERSUS REGULATION IN THE VIDEO MARKETPLACE
=======================================================================

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 11, 2013

                               __________

                           Serial No. 113-81


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                    COMMITTEE ON ENERGY AND COMMERCE

                          FRED UPTON, Michigan
                                 Chairman

RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
JOE BARTON, Texas                      Ranking Member
  Chairman Emeritus                  JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky               FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois               BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania        ANNA G. ESHOO, California
GREG WALDEN, Oregon                  ELIOT L. ENGEL, New York
LEE TERRY, Nebraska                  GENE GREEN, Texas
MIKE ROGERS, Michigan                DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania             LOIS CAPPS, California
MICHAEL C. BURGESS, Texas            MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee          JANICE D. SCHAKOWSKY, Illinois
  Vice Chairman                      JIM MATHESON, Utah
PHIL GINGREY, Georgia                G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana             JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington   DONNA M. CHRISTENSEN, Virgin 
GREGG HARPER, Mississippi            Islands
LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
BILL CASSIDY, Louisiana              JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky              JERRY McNERNEY, California
PETE OLSON, Texas                    BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
CORY GARDNER, Colorado               BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas                  PAUL TONKO, New York
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina

                                 7_____

             Subcommittee on Communications and Technology

                          GREG WALDEN, Oregon
                                 Chairman
ROBERT E. LATTA, Ohio                ANNA G. ESHOO, California
  Vice Chairman                        Ranking Member
JOHN SHIMKUS, Illinois               MICHAEL F. DOYLE, Pennsylvania
LEE TERRY, Nebraska                  DORIS O. MATSUI, California
MIKE ROGERS, Michigan                BRUCE L. BRALEY, Iowa
MARSHA BLACKBURN, Tennessee          PETER WELCH, Vermont
STEVE SCALISE, Louisiana             BEN RAY LUJAN, New Mexico
LEONARD LANCE, New Jersey            JOHN D. DINGELL, Michigan
BRETT GUTHRIE, Kentucky              FRANK PALLONE, Jr., New Jersey
CORY GARDNER, Colorado               BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas                  DIANA DeGETTE, Colorado
ADAM KINZINGER, Illinois             JIM MATHESON, Utah
BILLY LONG, Missouri                 HENRY A. WAXMAN, California (ex 
RENEE L. ELLMERS, North Carolina         officio)
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)

                                  (ii)
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     1
    Prepared statement...........................................     3
Hon. Robert E. Latta, a Representative in Congress from the State 
  of Ohio, opening statement.....................................     4
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     4
Hon. John Dingell, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    10
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................    15
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................    15
Hon. Steve Scalise, a Representative in Congress from the State 
  of Louisiana, opening statement................................    16
Hon. Peter Welch, a Representative in Congress from the State of 
  Vermont, opening statement.....................................    16
Hon. Ben Ray Lujan, a Representative in Congress from the State 
  of New Mexico, opening statement...............................    17
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   119
Hon. Leonard Lance, a Representative in Congress from the State 
  of New Jersey, prepared statement..............................   121

                               Witnesses

Sandra M. Aistars, Executive Director, Copyright Alliance........    18
    Prepared statement...........................................    21
    Answers to submitted questions...............................   122
R. Stanton Dodge, Executive Vice President and General Counsel, 
  Dish Network, LLC..............................................    31
    Prepared statement...........................................    33
    Answers to submitted questions...............................   129
Edward L. Munson, Jr., Vice President and General Manager, KPHO-
  TV, on Behalf of the National Association of Broadcasters......    42
    Prepared statement...........................................    44
    Answers to submitted questions...............................   132
Dave Rozzelle, Executive Vice President, Suddenlink 
  Communications.................................................    53
    Prepared statement...........................................    55
    Answers to submitted questions...............................   172
James Campbell, Vice President of Regulatory and Legislative 
  Affairs, Midwest Region, CenturyLink, Inc......................    66
    Prepared statement...........................................    68
    Answers to submitted questions...............................   179
John Bergmayer, Senior Staff Attorney, Public Knowledge..........    77
    Prepared statement...........................................    79
    Answers to submitted questions...............................   182

                           Submitted Material

Letter of September 10, 2013, from Matthew Zinn, Senior Vice 
  President, General Counsel and Chief Privacy Officer, TiVo, 
  Inc., to Mr. Walden and Ms. Eshoo, submitted by Ms. Eshoo......     8
Report, undated, of the Motion Picture Association of America, 
  submitted by Mr. Walden........................................    12
Advertisement, undated, of the American Television Alliance, 
  submitted by Mrs. Blackburn....................................   102


         INNOVATION VERSUS REGULATION IN THE VIDEO MARKETPLACE

                              ----------                              


                     WEDNESDAY, SEPTEMBER 11, 2013

                  House of Representatives,
     Subcommittee on Communications and Technology,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:04 p.m., in 
room 2123 of the Rayburn House Office Building, Hon. Greg 
Walden (chairman of the subcommittee) presiding.
    Members present: Representatives Walden, Latta, Shimkus, 
Terry, Blackburn, Scalise, Lance, Guthrie, Gardner, Kinzinger, 
Long, Ellmers, Barton, Eshoo, Doyle, Welch, Lujan, Dingell, 
Pallone, and Matheson.
    Staff present: Gary Andres, Staff Director; Ray Baum, 
Senior Policy Advisor/Director of Coalitions; Sean Bonyun, 
Communications Director; Matt Bravo, Professional Staff Member; 
Andy Duberstein, Deputy Press Secretary; Kelsey Guyselman, 
Counsel, Communications and Technology; Grace Koh, Counsel, 
Communications and Technology; Andrew Powaleny, Deputy Press 
Secretary; David Redl, Counsel, Communications and Technology; 
Charlotte Savercool, Legislative Coordinator; Tom Wilbur, 
Digital Media Advisor; Roger Sherman, Democratic Chief Counsel; 
Shawn Chang, Democratic Senior Counsel; Margaret McCarthy, 
Democratic Professional Staff Member; Kara van Stralen, 
Democratic Policy Analyst; and Patrick Donovan, Democratic FCC 
Detail.
    Mr. Walden. We will call the subcommittee to order in just 
a moment if we could take our seats and close the doors. They 
are expecting votes on the House Floor in about 10 or 15 
minutes, so we are going to call the subcommittee to order and 
at least begin our opening statements so that hopefully we can 
get through as much of that as possible so that as soon as we 
get back from the votes, which will probably take, I don't 
know, 45 minutes, an hour, then we can get to you all, who we 
invited here and appreciate your attendance. It is always most 
helpful.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    So I want to thank our witnesses for joining us and sharing 
their experience on innovative in the video marketplace.
    You know, the Telecommunications Act in 1996 is old enough 
to get a driver's license, the Cable Act is old enough to drink 
alcohol legally, and the Communications Act of 1934 has been 
eligible for Social Security for a long time. While age is an 
asset to a fine Willamette Valley pinot noir, in a technology 
statute, age can portend irrelevancy. In the on-demand world of 
the internet and mobility, the statutes that govern the video 
marketplace are blissfully ignorant of the changes that have 
taken place around them.
    Today, we will examine the legal regimes governing how 
video content is regulated from creation through distribution 
and finally to consumption, asking one simple question: in a 
world where video technology is rapidly changing, are the laws 
keeping pace and are they fostering a free market?
    The video marketplace has changed significantly in the last 
40 years. From the network news era of the 1970s to the 
dominance of cable in the '80s and the rise of the direct 
broadcast satellite industry in the '90s, each decade has seen 
a new video distribution competitor and a new attempt by 
Congress to manage the market.
    Today, as a result of competition, at least 35 percent of 
American households have a choice of subscribing to either of 
the two satellite DBS providers, their local cable company, or 
the local telephone company for video services. Broadband is 
nearly ubiquitous, allowing consumers to access Netflix, 
Amazon, and Hulu. Tablet and smartphone apps produced by 
content creators allow baseball enthusiasts to watch live games 
or movie fanatics to stream the newest releases. And there is 
more innovation coming. New entrants like Intel and Google and 
Sony expect not only to enter the video distribution 
marketplace but to transform the way people watch television.
    In this diverse and evolving marketplace, one thing remains 
true: you should be compensated for your content, network 
investments, or intellectual property. If you lay fiber, you 
should receive fair compensation in the marketplace for your 
investment. If you create content--movies, TV shows, or apps--
you should receive fair compensation in the marketplace. And if 
you create smartphones, tablets, dongles, screens, or the 
software that runs on them, you should receive fair 
compensation in the marketplace.
    Given these technological changes and the multitude of 
options available to American consumers, our laws should 
reflect the operation of the free market in a competitive 
environment. Instead, we have a satellite law that finds its 
origins in ensuring access to content for a fledgling industry, 
a cable law that was passed when cable controlled over 90 
percent of the video market, and broadcast rules that ignore 
the rise of alternatives to over-the-air reception.
    We can and should be engaged in a lively discussion--and I 
think we will be based on the testimony you all have--of how to 
unshackle the free market, how to remove the government from 
the business of manipulating the marketplace.
    These are complex issues, and they are of great importance 
to consumers and to the industries, and everything should be on 
the table for discussion. We will hear from representatives of 
the content community, the major distribution networks, and 
from a representative from the public interest perspective to 
get a clearer picture of how our laws impact the video 
distribution business, affect consumers and how they could be 
changed to better reflect marketplace realities.
    I want to thank our witnesses for being here. We are 
looking forward to hearing ideas on how we can improve the 
video marketplace by getting government more out of the way. 
This early stage of the process is a good time for us to take a 
larger look at the video marketplace; it takes time and process 
to develop good policy and even more to build consensus. Yet 
the deadline for reauthorizing STELA looms large, and we must 
continue to make progress there.
    With that in mind, I expect to circulate a discussion draft 
on these issues no later than the first quarter of next year. I 
am looking forward to continuing to engage with my colleagues 
and the many industries represented here today on these 
important issues.
    [The prepared statement of Mr. Walden follows:]

                 Prepared Statement of Hon. Greg Walden

    I thank our witnesses for joining us and sharing their 
expertise on the innovative video marketplace. The 
Telecommunications Act of 1996 is old enough to get its 
driver's license, the Cable Act is old enough to drink alcohol 
legally, and the Communications Act of 1934 has long been 
eligible for Social Security. While age is an asset to a fine 
Willamette Valley Pinot Noir, in a technology statute age can 
portend irrelevancy. In the ondemand world of the Internet and 
mobility, the statutes that govern the video marketplace are 
blissfully ignorant of the changes that have taken place around 
them. Today, we'll examine the legal regimes governing how 
video content is regulated from creation through distribution 
and finally to consumption asking one simple question: in a 
world where video technology is rapidly changing, are the laws 
keeping pace and fostering a free market?
    The video marketplace has changed significantly in the last 
40 years. From the network news era in the 1970s, to the 
dominance of cable in the 1980s and the rise of the direct 
broadcast satellite industry in the 1990s, each decade has seen 
a new video distribution competitor and a new attempt by 
Congress to manage the market.
    Today, as a result of competition at least 35 percent of 
American households have a choice of subscribing to either of 
the two satellite DBS providers, their local cable company, or 
the local telephone company for video services. Broadband is 
nearly ubiquitous, allowing consumers to access Netflix, 
Amazon, and Hulu. Tablet and smartphone apps produced by 
content creators allow baseball enthusiasts to watch live games 
or movie fanatics to stream the newest releases. And there is 
more innovation coming. New entrants like Intel, Google, and 
Sony expect not only to enter the video distribution market but 
to transform the way people watch TV.
    In this diverse and evolving marketplace, one thing remains 
true: you should be compensated for your content, network 
investments or intellectual property. If you lay fiber, you 
should receive fair compensation in the marketplace for your 
investment. If you create content--movies, TV shows, or apps--
you should receive fair compensation in the marketplace. If you 
create smartphones, tablets, dongles, screens, or the software 
that runs on them, you should receive fair compensation in the 
marketplace.
    Given these technological changes and the multitude of 
options available to American consumers, our laws should 
reflect the operation of the free market in a competitive 
environment. Instead, we have a satellite law that finds its 
origins in ensuring access to content for a fledgling industry, 
a cable law that was passed when cable controlled over 90 
percent of the video market, and broadcast rules that ignore 
the rise of alternatives to over-the-air reception. We can and 
should be engaged in a lively discussion of how to unshackle 
the free market and remove the government from the business of 
manipulating the video marketplace.
    These are complex issues of great importance to consumers 
and industry and everything should be on the table for 
discussion. We'll hear from representatives of the content 
community, the major distribution networks, and from a 
representative from the public interest perspective to get a 
clearer picture of how our laws impact the video distribution 
business, affect consumers and how they could be changed to 
better reflect marketplace realities. I want to thank our 
witnesses for being here; we are looking forward to hearing 
ideas on how we can improve the video marketplace by getting 
the government out of the way.
    This early stage of the process is a good time for us to 
take a larger look at the video marketplace; it takes time and 
process to develop good policy and even more to build 
consensus. Yet, the deadline for reauthorizing STELA looms 
large, and we must continue to make progress. With that in 
mind, I expect to circulate a discussion draft on these issues 
no later than the first quarter of next year. I am looking 
forward to continuing to engage with my colleagues and the many 
industries represented here today on these important issues.

    Mr. Walden. And with that, I would yield to the vice chair 
of the committee, Mr. Latta.

OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Latta. Well, thank you, Mr. Chairman. And I also want 
to thank our distinguished panel of witnesses for being with us 
to testify today. And today offers us the opportunity to 
continue a thoughtful and productive policy process by 
examining an important issue that affects all of our 
constituents.
    The video marketplace continues to evolve faster than most 
consumers, let alone government, can keep up with. However, 
many of the existing provisions in the Communications Act 
either no longer apply to the existing marketplace or are in 
need of serious updating. I look forward to a thorough 
discussion among our subcommittee members and the stakeholders 
as we grapple with the issues in the ever-evolving video 
marketplace, as well as the most appropriate legislative 
vehicles to move any proposed changes.
    I look forward to hearing from you all today, and with 
that, Mr. Chairman, I yield back.
    Mr. Walden. I thank the gentleman. I now turn to my friend 
and colleague from California, Ms. Eshoo, for an opening 
statement.

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

    Ms. Eshoo. Thank you, Mr. Chairman. And good afternoon to 
you, all the members of our subcommittee, and most especially 
welcome to all of our witnesses. Thank you for being here today 
to help enlighten us along this path.
    You know, despite the title of today's hearing, innovation 
and regulation, I don't believe, have to be in conflict. I 
don't think it is an either/or. I think we have to have a very 
adult discussion about where we are today, where we need to go, 
understanding that what was written in the past served us well 
for a long time. But obviously, we need an update.
    A vibrant video marketplace is one with competition, 
consumer choice, and basic protections to ensure the consumers 
have access to a competitive set-top box marketplace and aren't 
caught in the middle of a retransmission consent dispute they 
have no control over.
    Time Warner Cable and CBS reached a resolution--we all know 
this, thank God--earlier this month that returned programming 
to more than 3 million consumers after 32 days of blackout. I 
applaud both companies for reaching an agreement, but 
unfortunately, this is not the first time such a dispute has 
occurred and it certainly, I don't think, will be the last. 
Since 2005, there have been 70--that is 7-0--disputes involving 
392 stations in 297 markets for a total of 3,853 days of 
retransmission blackouts. Now, if someone out there wants to 
start defending this, I think it would be really interesting 
because I just don't think that it is defensible.
    Some will say that legislating in this area is akin to 
picking sides or interferes with a retransmission consent 
mechanism that is working just fine. I don't think it is 
working just fine; I think it is broken myself. The reality is 
is that the data paints a very different picture. The 
discussion draft I released earlier this week is not a full 
rewrite of the law but instead represents a series of ideas 
intended to spur constructive and actionable debate on ways to 
improve the video marketplace for video content creators, pay-
TV providers, and most importantly, consumers. They are picking 
up the tab. They are the customers. It is in everybody's 
interest I think.
    Specifically, my discussion draft would give the FCC 
explicit statutory authority to prevent broadcast television 
blackouts; ensure greater choice in cable programming by 
allowing consumers to decide whether or not to subscribe to the 
broadcast stations electing retransmission consent; prohibit a 
television broadcast station engaging in a retransmission 
consent negotiation from making their own or affiliated cable 
programming a condition for receiving broadcast programming; 
instruct the FCC to determine whether the blocking of a 
television broadcast station owned or affiliated online content 
during a retransmission consent negotiation constitutes a 
failure to negotiate in good faith; and five, require the FCC 
to study the programming costs for regional and national sports 
networks in the top 20 regional sports market.
    Now, this discussion draft doesn't purport to have all the 
answers, but as we embark on our third STELA-related hearing 
this year, I think we need to have a substantive dialogue about 
potential solutions to a constantly evolving video marketplace.
    I want to thank the witnesses in advance for the testimony 
that you are going to give and for the feedback I hope that you 
will give this discussion draft that I just raised.
    And I would also like unanimous consent, Mr. Chairman, to 
place into the record a letter to you and to myself from TiVo 
related to this hearing and their views on some of the issues 
that they feel strongly about. And I don't see----
    Mr. Walden. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
     Ms. Eshoo. I would like to place Mr. Dingell's statement in 
     the record. I ask unanimous consent.
    Mr. Walden. Without objection.
    [The prepared statement of Mr. Dingell follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Ms. Eshoo. And I have 17 seconds left if any of my 
colleagues would like to use it. All right. With that, I will 
yield back the balance my time.
    Mr. Walden. The gentlelady yields back. And I ask unanimous 
consent to enter into the record a graphic and statement from 
the Motion Picture Association of America detailing the 
economic impact of video content and the rise in online options 
for consumers. Without objection.
    [The information follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Walden. I now turn to Mrs. Blackburn, the vice chair of 
the full committee, for 5 minutes. And we have a couple other 
Members who would like time on that as well, if possible.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. That is correct. And I thank you, Mr. 
Chairman. I thank all of you for being here to visit with us 
today, and I kind of like the titling of this hearing, 
``Innovation Versus Regulation.''
    And I have to tell you what I hear from so many of your 
product consumers in Tennessee, my constituent, is they feel 
like that innovation sometimes is harder to get to because of 
cost and because of regulation, especially when you are looking 
at some of the archaic video regulations that are stifling them 
from getting the content that they would like to have access to 
at fair market prices.
    Innovation isn't happening as rapidly as we would like 
because we don't always have a free marketplace if you will in 
all of those areas. That is because the video marketplace is 
saddled with a 20-year-old law that unfairly treats competing 
video distributors with different rules. At the last video 
hearing, one member called the video marketplace a ``vast web 
of regulations.'' That is correct. Another colleagues said, 
``the video market is rapidly changing. Today, the government 
intervenes in various ways.'' That is also correct. Our ranking 
member correctly said ``much has changed since the '92 Cable 
Act.'' Very true. And that ``we have a lot of work to do beyond 
STELA,'' which is also very true. I think you are going to see 
quite a bit of an agreement on these issues and I think the 
chairman is very wise to start these hearings and to continue 
through this process. As we look at the authorization of STELA, 
we are not waiting until we get to the end of 5 years to begin 
the work.
    So thank you and we appreciate that you are here with us. 
And at this time I yield to Mr. Barton 1 minute.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. I thank the gentlelady. I thought the 
chairman's opening statement was excellent. I think Ms. Eshoo 
and Mrs. Blackburn have enhanced it. I do think it is time to 
do a complete review of our various telecommunications laws and 
regulations. By definition, regulation stifles innovation and I 
think by definition we can all assume that the more innovation 
we have in the telecommunication marketplace, the better off 
the country will be. So I hope these hearings, Mr. Chairman, 
lead to concrete legislative action in this Congress. I 
especially want to take a look today on some questions about 
the way retransmission consent has been used most recently.
    And with that, I yield to whomever I am supposed to yield 
to.
    Mrs. Blackburn. You yield back to me.
    Mr. Barton. I yield back to you.
    Mrs. Blackburn. And I yield at this time a minute to Mr. 
Scalise.

 OPENING STATEMENT OF HON. STEVE SCALISE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF LOUISIANA

    Mr. Scalise. I thank the gentlelady from Tennessee for 
yielding.
    Mr. Chairman, I want to thank you for the process-driven 
approach to reviewing the decades-old video marketplace 
regulations, and I am particularly pleased to hear that you 
will soon circulate draft legislation that addresses these 
issues. I applaud you for successfully moving this subcommittee 
beyond an initial information-gathering and educational phase 
on these very technical and complex issues onto a strong 
position upon which the subcommittee can act in the coming 
months.
    I also want to commend Ranking Member Eshoo for recently 
putting her own reform ideas on the table with the release of 
the Video Choice Act. While I am not in agreement with every 
provision of her bill and have taken a different approach, I 
view it as thoughtful and am encouraged by her strong interest 
in tackling these issues.
    I think we should all keep in mind that when these current 
video laws were written, this was the modern-day version of the 
smartphone, so clearly the laws are tremendously outdated that 
deal with this important issue that we are addressing today, 
and it is time to have this modernization.
    The only way we can act in the best interest of consumers 
is in a way that prevents the government from picking winners 
and losers and it is when we start getting serious about a 
free-market solution. I am pleased that is where these hearings 
and conversations are headed, and I will look forward to 
continuing the close dialogue with industry stakeholders and my 
colleagues on this subcommittee.
    So again, Mr. Chairman, I thank you for the hearing and I 
am looking forward to hearing our panel. And I yield back to 
the gentlelady from Tennessee.
    Mrs. Blackburn. I thank the gentleman for yielding back and 
I thank him for the appropriate prop that he brought to the 
committee. And, Mr. Chairman, I yield back the balance of our 
time.
    Mr. Walden. I am just amazed that he uses that. Actually, 
with Scalise I am not amazed. Oh, just kidding.
    We are going to go to Mr. Welch now for 5 minutes. He is 
going to control Mr. Waxman's time. And we have 7 minutes left 
before the vote, but 404 Members have not voted.

  OPENING STATEMENT OF HON. PETER WELCH, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF VERMONT

    Mr. Welch. Well, thank you very much. A couple things: one, 
the comments are about the fact that the technology has so 
outpaced the regulation or the law. We all know that we have to 
make some significant changes and ask some basic questions.
    Mr. Chairman, thank you for introducing or you are going to 
introduce the draft discussion. And, Madam Ranking Member, 
thank you for putting something on the table that is going to 
get the discussion going.
    The concern I have is one that has been identified by 
everyone here, namely, we have got to get the law right; we 
have got to get the regulations right. And right means there 
has got to be a lot of space for innovation. It means that 
there have to be rules of the road that are discernible and 
fair. But it also means we have to have a business model where 
the various players--the content providers, the broadcasters, 
distributors--can pay their bills and make a reasonable return.
    But my concern, too, is that we have got to look out for 
the consumers. It is really getting out of hand. In the past 17 
years the cost of cable and satellite TV has increased three 
times the rate of inflation. And, you know, this is a big deal 
for all of the people we represent, especially in rural areas. 
And, you know, the consumers need their access to the content 
in whatever manner they get it in their homes. And it is a big 
deal for them. And you know that. But they have no power 
whatsoever to affect what the situation is or what they are 
going to be charged.
    So if there is some business model out there where 
executives can literally pay a couple hundred million dollars 
to somebody who can't get to first base because they can pass 
it on to the consumers that all of us represent, that is not 
working. So having the basic questions here that have been put 
on the table, I think that really makes a lot of sense.
    The thing I hear from Vermonters, they are really getting 
squeezed on the cost of cable and satellite. You know, we are 
not going to have a proposal that is a panacea, but what we do 
have to do is have some approach where, as I mentioned, it is 
balanced because we have to have business models that work. We 
have to have rules and regulations that don't stifle 
innovation. But at the end of the day, we have got to do 
something to give some reasonable, fair treatment to consumers 
who have absolutely no ability to affect what some of these big 
deals and big negotiations are.
    So I commend the leadership on our committee for putting 
these issues on the table and hope to have our committee be 
successful in doing things that restore balance with laws that 
are way out of date.
    I have some time and I would be glad to yield it to either 
of my colleagues.
    Mr. Walden. Mr. Lujan.

 OPENING STATEMENT OF HON. BEN RAY LUJAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW MEXICO

    Mr. Lujan. Mr. Chairman, thank you so much. And I also 
appreciate the fact that everyone has gotten together to 
encourage a broader conversation in this space.
    And I think the one thing that I have been talking about in 
my office with some of my team members, and this was a result 
of watching Monday night football, the first channel that I put 
it on was on standard definition, and there were a lot of 
pixels and blocks moving around the television. And I quickly 
realized that there was a high-definition channel that we could 
change to, and so once I moved there, everything was clear. And 
when I thought my eyes were going, I realized that they 
weren't.
    But the question that I have as we talk about 
retransmission fees associated with standard definition or low 
definition, weak definition, whatever we want to call it, 
versus high-definition is the complexities associated with what 
is required to get that feed to the home to be able to use a 
technology, but also the rates associated with those packages. 
And quite honestly, if we are signing up for one package or 
another, well, why are we getting the two channels as opposed 
to the one?
    And so I think that this is a question that I have just 
from a cost perspective, from a spectrum utilization 
perspective, from a space perspective with where we are 
transforming and where we are going from an innovative 
perspective. And I would just like to pursue a little bit more 
and learn a little bit more. So I appreciate the time very much 
and I yield back.
    Mr. Welch. I yield back. Thank you.
    Mr. Walden. Everyone has yielded back. We are going to go 
into recess now. We will return after the votes as soon as 
possible, and then we really look forward to hearing your 
comments, your testimony and taking our questions.
    So with that, the committee will stand in recess.
    [Recess.]
    Mr. Walden. I call this subcommittee hearing back to order. 
I thank you all for your patience as we had the vote on the 
floor.
    And I think at this point we have been through opening 
statements on both sides, and it is time to go to our 
distinguished panel of witnesses.
    And we will start with Sandra Aistars, the Executive 
Director of the Copyright Alliance. And I would just counsel 
you, pull that microphone pretty close, make sure the button is 
lit on green, and you should be good to go.

STATEMENTS OF SANDRA M. AISTARS, EXECUTIVE DIRECTOR, COPYRIGHT 
   ALLIANCE; R. STANTON DODGE, EXECUTIVE VICE PRESIDENT AND 
GENERAL COUNSEL, DISH NETWORK, LLC; EDWARD L. MUNSON, JR., VICE 
   PRESIDENT AND GENERAL MANAGER, KPHO-TV, ON BEHALF OF THE 
NATIONAL ASSOCIATION OF BROADCASTERS; DAVE ROZZELLE, EXECUTIVE 
VICE PRESIDENT, SUDDENLINK COMMUNICATIONS; JAMES CAMPBELL, VICE 
   PRESIDENT OF REGULATORY AND LEGISLATIVE AFFAIRS, MIDWEST 
  REGION, CENTURYLINK, INC.; AND JOHN BERGMAYER, SENIOR STAFF 
                   ATTORNEY, PUBLIC KNOWLEDGE

                 STATEMENT OF SANDRA M. AISTARS

    Ms. Aistars. Great. Thank you. Chairman Walden, Ranking 
Member Eshoo, and members of the subcommittee, thank you for 
the opportunity to testify today about the exciting innovation 
that is occurring in the video marketplace.
    Innovation and the creation and distribution of video 
programming is happening throughout our membership and all 
across the spectrum of creators. From major motion picture 
companies to indie filmmakers, audiences have never had as many 
options for watching movies, television shows, and original 
web-based programs as a result.
    But creating audiovisual works with high production values 
is an expensive proposition. The work is labor- and talent-
intensive and it can carry commensurately large costs. 
Independent filmmakers, for instance, routinely spend 
thousands, hundreds of thousands, or even millions of dollars 
to create their works.
    One of our members, the mother-daughter filmmaker duo of 
Gail Mooney and Erin Kelly spent 3 years making a film about 
individuals who are making a positive difference in the world. 
After 6 months of preproduction work, it took 99 days, travel 
to 6 continents and 17 countries, and then 30 flights, 14 
vaccinations, 8 visas, 2,900 gigabytes of storage, 150 hours of 
footage, and 5,000 still image captures followed by a year of 
postproduction and another year of marketing and distribution 
to produce and distribute the film. And this was done as a do-
it-yourself project.
    The bottom line is that all creators make big investments 
in their works and encouraging them to keep creating will 
require ensuring that they have flexibility in how they 
distribute their works. Happily, because creators are embracing 
new modes of distribution, audiences have more choices than 
ever before for viewing films and television programs. Services 
such as Netflix, Hulu, VUDU, HBO GO, Crackle, MUBI, Amazon, 
EpixHD; devices such as Apple TV and Roku; and technologies 
such as UltraViolet enable consumers to watch what they want 
when they want and where they want.
    Five years ago, video streaming was still fairly rough in 
terms of quality and reliability, but today, viewers are 
enjoying a growing number of high-definition streaming 
services, including scores of video-on-demand and TV-everywhere 
models delivered by cable and satellite, and more households 
than ever have access to this variety of programming through 
the internet. These developments show that the video 
marketplace is evolving daily and at an ever-increasing pace to 
the benefit of audiences.
    A couple of words about copyrights since I am a copyright 
lawyer, copyright law recognizes that ensuring appropriate 
rights to authors drives innovation and benefits society. 
Ensuring the authors right to determine when and how to license 
the distribution of his or her works is key to these benefits. 
These principles have been confirmed over and over again by 
Supreme Court decisions, and as Justice Sandra Day O'Connor 
eloquently wrote, ``the Framers intended copyright itself to be 
the engine of free expression by establishing a marketable 
right to the use of one's expression. Copyright supplies the 
economic incentive to create and to disseminate ideas.''
    Compulsory licenses are a departure from normal copyright 
principles. They are appropriate only in narrow circumstances 
to address market failure and we restrict their use to such 
cases because they abrogate the rights of property owners and 
force them to license their works to government-favored 
entities at rates sometimes set by the government.
    Economists and policy experts alike criticize compulsory 
licensing on three basic grounds: first, because the supposed 
cost savings that compulsory licenses deliver in the short-term 
are usually more than offset by the inefficiencies that they 
can cause over time; second, because they limit the diversity 
of services that would ordinarily develop via marketplace 
licensing; and third, because the rates and restrictions 
quickly become outdated and are difficult to change so they are 
subject to legislative lock-in and result in price stagnation.
    Accordingly, my message to you is that, given the creative 
and compelling works and the new and innovative distribution 
models that exist today, there is no need to impose new 
compulsory licenses in the video marketplace or to renew STELA.
    And as a closing note, I would just like to mention 
positively some of the collaborative initiatives that are 
currently happening across industry lines to ensure that 
marketplace for use services is vibrant and safe. There are 
numerous efforts that are ongoing with internet service 
providers, with advertisers, with payment processors to educate 
consumers about the diversity of programming options available 
to them and to protect them from illegal sites and activities 
online. These efforts are just the start. We need to do more. 
But I would like to commend the efforts like the copyright 
alert system as examples of how our mutual goal to provide 
compelling legal services to consumers is being advanced 
through cooperation, and I would urge the subcommittee to take 
an interest in these efforts and encourage the success of these 
initiatives.
    Thank you.
    [The prepared statement of Ms. Aistars follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Walden. We thank you for your testimony. And now we 
will go to R. Stanton Dodge, Executive Vice President and 
General Counsel of the DISH Network, LLC.
    Mr. Dodge, good to have you back before our committee. We 
look forward to your testimony.

                 STATEMENT OF R. STANTON DODGE

    Mr. Dodge. It is nice to be here. Chairman Walden, Ranking 
Member Eshoo, and members of the subcommittee, and appreciate 
the opportunity to testify today.
    My name is Stanton Dodge and I am general counsel of DISH 
Network the Nation's third-largest paid TV provider and the 
only one to offer local television service at all 210 local 
markets.
    Since this is not the first hearing on the subject, I would 
like to cut right to the chase. The retransmission consent 
process is broken and in need of targeted reform. In the past 
few years, we have seen an escalating number of blackouts, and 
these blackouts are lasting longer than in the past and 
impacting millions more subscribers. So not only are takedowns 
occurring more frequently, they are also increasing in 
magnitude. The recent headlines about the CBS/Time Warner Cable 
dispute serve as a stark reminder.
    In short, the retransmission consent problem has reached a 
crescendo. It is perhaps the most destructive and outdated 
remnant of the 1992 Cable Act and does not match up with the 
vibrant, ever-changing, competitive landscape in today's video 
marketplace.
    Also of increasing concern, some broadcasters are 
coordinating their negotiations with each other and colluding 
on the rates that they demand from video distributors like 
DISH. The American Television Alliance, known as the ATVA, 
whose membership encompasses cable, satellite, and Telco 
providers, independent programmers, and public interest groups 
and of which DISH is a member, is unified in calling for 
targeted changes to the outdated retransmission consent rules 
as part of the STELA reauthorization.
    We and many other members of ATVA have voiced support for 
proposals such as interim carriage, and this solution would 
temporarily permit a distant signal to be imported during a 
retransmission consent dispute. That measure would alleviate 
the problem of service disruptions and prevent the use of 
consumers as pawns. And the broadcaster whose signal is 
imported will be compensated under the already-established 
distant signal royalty rate. If the broadcaster's local content 
is as valuable to consumers as they assert, then the imported 
distant network is an imperfect substitute and both parties 
will continue to have sufficient incentives to reach an 
agreement. The imported distant network signal simply fills the 
void for network programming.
    Members of the ATVA have also expressed interest in a 
discussion of standalone broadcast station offerings, which 
would give consumers the choice of whether to pay separately to 
receive a particular local broadcast station. And some in ATVA 
support the deregulatory approach embodied in Congressman 
Scalise's legislation from the 112th Congress. When he released 
his bill, ATVA and DISH lauded Mr. Scalise for his leadership 
in kick-starting the much-needed retrans reform debate. We 
continue to encourage Mr. Scalise's reform efforts.
    And today, we applaud Ranking Member Eshoo for circulating 
the Video CHOICE Act this past Monday. Critically, the 
discussion draft proposes concrete legislative ideas to give 
consumers greater choice over their programming, tackles the 
growing problem of funding cable channels with network 
channels, and empowers the FCC with significant authority to 
curtail blackouts.
    And we were pleased with Chairman Walden's announcement 
last night that he expects to circulate a discussion draft on 
issues impacting the video marketplace no later than the first 
quarter of next year. We look forward to working with Chairman 
Walden, Ranking Member Eshoo, Congressman Scalise, and the 
entire subcommittee to ensure that meaningful legislation is 
passed this Congress.
    As one can see, there are many ways to address the broken 
retransmission consent system, but without immediate action 
from Congress, it is likely that the blackout problem will 
continue to escalate, millions more screens will go dark, 
prices will increase, and consumers will suffer. The time to 
act is now.
    Thank you and I look forward to answering your questions.
    [The prepared statement of Mr. Dodge follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Walden. Thank you, Mr. Dodge. We appreciate your 
comments and testimony, as always.
    We will now go to Mr. Edward L. Munson, Jr., Vice President 
and General Manager, KPHO Television.
    Mr. Munson, we are delighted to have you here. We look 
forward to your comments.

               STATEMENT OF EDWARD L. MUNSON, JR.

    Mr. Munson. Good afternoon. I am honored to be here, sir.
    My name is Edward Munson. I am the vice president and 
general manager of KPHO-TV in Phoenix, Arizona. KPHO is owned 
by the Meredith Corporation. We have 13 stations across the 
country in places like Portland, Oregon; Nashville, Tennessee; 
and Flint and Saginaw, Michigan. I am here today representing 
the National Association of Broadcasters.
    The topic of this hearing, ``Innovation Versus Regulation 
in the Video Marketplace,'' touches on two concepts that are 
part and parcel to being a local TV broadcaster. TV stations 
exist in a highly regulated environment, more so than the other 
witnesses on this panel. In fact, broadcasters must comply with 
regulations not applicable to any other distribution platform.
    For instance, TV stations must abide by decency rules and 
children's programming requirements. We must give Federal 
candidates reasonable access to air campaign advertisements, 
and we must offer those spots at the lowest charge to any of 
our commercial advertisers. We must maintain main studios 
within certain geographic limits and with specific staffing 
obligations, submit numerous quarterly, annual, and biannual 
reports to the FCC, and compile quarterly lists of station 
programming.
    We proudly embrace many of these responsibilities but some 
regulations place broadcasting at a competitive disadvantage to 
the other video providers on this panel. For example, decades-
old ownership restrictions reflect a time when broadcasting was 
the only game in town. It makes no sense to hamstring 
broadcasters with outdated limitations when our direct 
competitors are not restricted in any way.
    Another example is the online public file regulation which 
requires local TV stations to place sensitive pricing 
information online when our direct competitors can see it, but 
these direct competitors don't have that obligation. These 
types of regulations, fundamental fairness requires regulatory 
parity for the benefit of competition and consumers.
    Based on our fundamental obligation to serve the public 
interest, some in the pay TV industry are arguing that a 
programming dispute means broadcasters are somehow not serving 
their local communities. In the rare event that a broadcaster 
has a dispute with one pay-TV company in a market, consumers 
have multiple other options to get their video programming. We 
understand that many of you are concerned about the impact 
these disputes have had on your constituents, and we share that 
concern. This is why it is important to remind this committee 
that no broadcaster has ever stopped broadcasting because of a 
dispute with a pay-TV provider. We are never off the air or 
blacked out. Our signals are always being broadcast and they 
are always free.
    Over my career, I have personally been involved in many 
successful carriage negotiations with companies like 
CenturyLink, Suddenlink, and Mediacom. My experience, like the 
experience of nearly the entire broadcast community, is that 
deals get done all the time. Of course you don't hear about the 
ones that go smoothly; you hear about the handful that don't. 
And there is no doubt that the Time Warner/CBS dispute was 
unfortunate. But it was predictable. The dispute seems almost 
orchestrated out of the DC lobbying playbook: create a crisis; 
then run to Congress to fix your crisis in your favor.
    The pay TV industry will tell you carriage impasses have 
dramatically increased, that the retrans system is broken and 
needs to be fixed. Honestly, this is a bit disingenuous. In a 
few instances where agreements have not been reached in the 
last 2 years, there is the distinct and disturbing pattern: 89 
percent of the disputes have involved only three pay-TV 
companies: Time Warner Cable, DISH, and DIRECTV, nearly 9 out 
of 10 disputes. That suggests to me there is not a problem with 
the process; there is a problem with the players. And we 
shouldn't be rewarding bad behavior.
    It is not a coincidence that these are the very same 
companies pressing Congress most aggressively for government 
intervention. These pay-TV companies have ratcheted up their 
efforts for government involvement in retransmission consent 
negotiations because, despite having very healthy margins and 
soaring stock prices, they are looking to Congress to help 
control their programming costs. But pricing decisions are best 
left to the marketplace.
    Similarly, the government should have no role in deciding 
when, how, or where an owner of video content distributes that 
content. These carriage agreements are increasingly about the 
digital rights for our popular programming. We want to make 
sure the consumers using new and innovative platforms can 
access our content, which, in turn, fosters more competition in 
the video marketplace.
    In conclusion, television broadcasters provided the most-
watched media out there by a wide margin. We are not running to 
Congress to ask for preferential treatment in our negotiations 
or for any legislative changes to benefit our side. We want to 
negotiate freely in the market for the value of our content. We 
only ask that Congress not tip the scales in favor of one 
industry.
    Thank you and I look forward to your questions.
    [The prepared statement of Mr. Munson follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Walden. Mr. Munson, thank you for your testimony. And 
we will get to those very soon.
    We will now go to David Rozzelle, Executive Vice President, 
Suddenlink Communications.
    Mr. Rozzelle, thank you for being here. We look forward to 
your testimony, sir.
    Mr. Rozzelle. Thank you, Mr. Chairman.
    Mr. Walden. And again, please pull the microphone close and 
turn it on. Just push the button right there.
    Mr. Rozzelle. Thank you, Mr. Chairman. Good afternoon, 
Chairman Walden, Ranking Member Eshoo.
    Mr. Walden. Is it pushed on?
    Mr. Rozzelle. It is. I have a green light.
    Mr. Walden. There we go. You have to be pretty close to it.

                   STATEMENT OF DAVE ROZZELLE

    Mr. Rozzelle. OK. Thank you. My name is Dave Rozzelle and I 
am an executive vice president with Suddenlink Communications, 
the leading provider of cable video services and broadband 
internet access to approximately 1.4 million households in 
second-tier cities, small towns, and rural communities. Thank 
you for inviting me to testify today.
    Speaking first: Innovation. As a company, Suddenlink is a 
prime example of innovation in the cable industry. We have 
increased the number of HD channels we offer, we deliver video 
content to new screens like iPads, computers, and game 
consoles, and we have a partnership with TiVo to distribute 
their DVRs directly to our customers. Our broadband service 
delivers residential customer data speeds in excess of 100 
megabits per second in many of the communities that we serve, 
including some very small rural communities.
    From the consumer standpoint, the state of video has never 
been stronger. Consumers today have many sources for video 
content. In virtually all locations they can subscribe to cable 
television, DIRECTV, or DISH and get 100 or more HD channels 
and the ability to record and watch at their convenience on the 
DVR. In some markets, they can also choose service from AT&T U-
verse, Verizon FiOS, CenturyLink's Prism TV, or Google Fiber. 
They can watch online video from a myriad of sources, including 
Netflix, Amazon, iTunes, and Apple TV, to name just a few.
    Also, consumers can access video on an increasingly wider 
range of devices. Cable TV everywhere lets consumers watch 
video on their laptops, tablets, and smartphones. Sprint offers 
its cellular subscribers access to popular programs from 
networks like Comedy Central, Style, Discovery Channel, and 
more.
    The path to continued growth for cable is to enhance and 
expand its customer's use and enjoyment of our networks. Cable 
is investing billions annually to ensure that this potential 
can be realized, and as a result, other providers of content, 
services, or devices in the online video ecosystem can 
flourish. Our partnership with TiVo is an example of such 
efforts.
    In contrast to this dynamic growth change and innovative 
nature of the video marketplace I just described, our Nation's 
communication laws have remained largely the same. Video 
distributors are subject to a range of different statutory and 
regulatory regimes. While some regulatory differences are 
grounded in distinctions that warrant particular treatment, 
others echo outdated notions of market power. Twenty years ago, 
cable served 98 percent of all multichannel video households. 
Today, cable serves 56 percent. Many of the regulations adopted 
in the early years of cable video service linger and are no 
longer justified.
    Two areas ripe for reform are retransmission consent and 
the so-called navigation device integration ban. When the 
retransmission consent regime was first enacted, broadcast 
stations could only reach viewers off air or through cable 
systems. Today, the multiple MVPD environment has substantially 
increased the leverage that broadcasters can exert in 
retransmission consent negotiations by playing one video 
provider off another. Their leverage is exacerbated because 
broadcasters still control marquee events and because the 
network affiliation structure guarantees that in almost all 
circumstances only one provider will be available to local 
viewers.
    In retransmission consent disputes consumers bear the brunt 
of this imbalance. The number of RTC-related shutdowns 
increased from 12 in 2010 to 51 in 2011 to 91 in 2012. 
Policymakers need to take a fresh look at retransmission 
consent in today's marketplace.
    Similarly, whatever justification there was for the 
integration ban has long since been superseded by market 
developments. Cable operators are required by FCC rules to use 
a separate security module and set-top boxes they lease to 
customers instead of being able to integrate the security and 
channel-changing function of those boxes. This integration ban, 
which applies only to cable, has cost operators/consumers more 
than $1 billion since it went into effect in 2007 and wastes 
hundreds of millions of kilowatt hours per year. It imposes a 
material unnecessary cost on cable video services when 
programming costs increases have stressed many household video 
budgets in recent years.
    How should legislative change be affected? While the 
targeted changes I just mentioned would improve the consumer 
video experience, the basic framework of the Act can remain in 
place. Congresswoman Eshoo's draft bill is an excellent 
example.
    Thank you again for the opportunity to appear today and I 
welcome any questions that you may have.
    [The prepared statement of Mr. Rozzelle follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Walden. And we thank you for your testimony and we look 
forward to the questions and answers.
    We will go now to Mr. James Campbell, Vice President of 
Regulatory and Legislative Affairs, Midwest Region, 
CenturyLink, Inc.
    Mr. Campbell, thanks for being with us.

                  STATEMENT OF JAMES CAMPBELL

    Mr. Campbell. Thank you, Chairman Walden, Ranking Member 
Eshoo, members of the subcommittee, a special hello to 
Representative Gardner from my home State. Thank you for giving 
CenturyLink the opportunity to testify before you today as a 
relatively new entrant in the video market.
    Obviously, content is going to be a big topic today, but I 
just want to assure you that CenturyLink does not seek to avoid 
paying for its content but rather to create an environment 
where we go back to true market-based negotiations. And we 
actually have two parties that are sitting at the table with 
some risk and giving something and taking something.
    But we have a little background. CenturyLink is the third-
largest telecommunications company in the United States. We 
offer voice, video, and data to over 14 million subscribers in 
37 States. We offer the same service to businesses in all 50 
States and some select international communities. And recently, 
with our purchase of Savvis, we are one of the largest cloud 
computing and data hosting companies in the world combined with 
our cybersecurity solutions that we offer to the Federal 
Government and multiple State and local governments. So we are 
a true global player.
    With that, we just recently got involved in the competitive 
video business in the last 5 years where we have launched our 
Prism TV in multiple markets, including Colorado Springs, 
central North Carolina, and most recently in Omaha where we 
launched a gig service. It is a competitive service and it 
truly brings a choice to the market.
    Consumers benefit from this choice. They get better quality 
service; they get more innovation, more investment, and 
ultimately lower rates. Unfortunately, the cost to broadcast 
content is threatening consumers' ability to receive just any 
of those benefits.
    So the regulatory regime we are looking at was creating an 
environment when the Federal policymakers were concerned that 
broadcasters were going to be subject to market abuse by the 
incumbent cable providers when they had virtually all of the 
market. Now, today, what was the shield is now used as the 
sword. So as we face negotiations for retransmission consent, 
it becomes difficult for us to negotiate, and these rules are 
used against us in a myriad of ways, including the fact that 
national content can be forced down our throat along with the 
local content through tie-in arrangements. We have virtually no 
other option to get content in these markets. And the FCC's 
interpretation of the good faith standard has rendered it 
meaningless, essentially giving further de facto power to the 
broadcasters. So that the scales that Mr. Munson spoke about 
our already in the favor of one party over another, and we are 
simply asking that they be returned to level.
    In addition, the regulatory regime does not reflect the 
explosive competitive nature of the video market and the 
explosion of competitive providers over a myriad of networks 
and methods. The current rules not only pose problems for large 
providers but also more so for small providers like 
CenturyLink. Every customer we obtain currently has a 
relationship with someone else. We have to win them over.
    And for us to sit and face these types of terms and 
conditions from broadcasters, I know Mr. Munson said that 
thousands of these retransmission consent negotiations go 
smoothly, including with CenturyLink. I doubt there was a lot 
of horse-trading and haggling in that negotiation. We 
essentially have to take what we get.
    Ultimately, the fees that are being charged are providing 
windfalls for the corporate broadcasters and not the local 
stations. Retrans was designed to promote localism and, you 
know, ensure that there was a safety net for local stations. 
Now, we have to buy these local stations along with multiple 
other channels, and we have no choice but to take it because 
these are products and content that our subscribers need. SNL 
Kagan projects that by 2018 $6.1 billion will be gained in re-
trans fees over 2.4 billion from 2012. That is a 250 percent 
increase over just two retransmission cycles. And this is all 
at the expense of consumers that live and work in your 
districts.
    Congress has an opportunity with STELA to reform and return 
this negotiation process into a true market scenario. We agree 
with DISH that the carriage of distance signals, if there is an 
impasse, would be one way to do that. You would essentially 
return some leverage back to the providers so when we sit down 
at the table, we both want something. Right now, it is not the 
case. The reasons Congress conferred the regulatory advantage 
to the broadcasters no longer exist.
    CenturyLink favors a deregulatory approach. Again, distant 
signals can come in for two reasons: again, it returns the 
balance of the negotiations to both sides of the table equally, 
and more importantly, it doesn't punish consumers while two 
providers try and work out a deal.
    To close, at the end of the day, this is not about winners 
and losers; it is about protecting consumers from the 
regulatory problems that exist today.
    Again, we thank you for the opportunity to be here. We look 
forward to working with this committee and Congress to come up 
with a solution that is consumer-oriented. Thank you.
    [The prepared statement of Mr. Campbell follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Walden. Mr. Campbell, thank you for your testimony. We 
will now go to our final witness this afternoon from Public 
Knowledge, the Senior Staff Attorney, John Bergmayer.
    Mr. Bergmayer, thank you for being here and we look forward 
to your testimony.

                  STATEMENT OF JOHN BERGMAYER

    Mr. Bergmayer. Good morning, Chairman Walden, Ranking 
Member Eshoo, and members of the subcommittee. Thank you for 
the opportunity to participate in today's hearing.
    Today, I am going to talk about two things: First, I have a 
few remarks on current video issues; then, I will present a few 
ideas that will make the video marketplace more competitive and 
affordable.
    For years, Public Knowledge has met with both sides of the 
aisle on video reform issues and we frequently find that we 
agree with several proposals coming from Members of Congress 
who come from very different political backgrounds. While there 
are some real differences of opinion on how to proceed, there 
is a widespread recognition that current rules and the market 
structure they enable are not serving the viewer as well as 
they should. We are in a window where reform is possible only 
if members of this committee come together to find common 
ground.
    The month-long blackout the kept CBS programming, both 
broadcast and cable, from appearing on the lineups of Time 
Warner Cable subscribers has focused the attention of some 
policymakers. Ranking Member Eshoo's draft Video CHOICE bill 
puts forward a number of creative ideas that could move the 
video marketplace in a good direction. Under the provisions of 
this discussion draft, not only would viewers be protected from 
the effects of corporate contract disputes that blackout 
channels, they would get more choice on what channels they 
subscribe to and could see their monthly fees go down.
    Another approach, the Television Consumer Freedom Act is 
being promoted by Senators McCain and Blumenthal. This bill 
proceeds from the observation that programmers, broadcasters, 
and cable companies all receive a number of special protections 
from the government. It asks that they provide viewers with 
more choice in exchange.
    We have also been encouraged by efforts by Representative 
Scalise in previous Congresses to look for outdated video 
regulations that merit elimination in order to remove 
unnecessary protections for video incumbents.
    We should not overlook an important part of viewer choice. 
That is choice in the devices that people can use to access 
their cable programming. Cable set-top boxes often have high 
rental fees and lack the innovation found in other areas of 
consumer electronics. This is why Congress passed Section 629 
of the Communications Act. Congress and the FCC should continue 
to enforce the current cable card implementation of that 
statute while moving to a more modern implementation that fixes 
some of the shortcomings.
    Congress must reauthorize STELA. Satellite has been a 
success story where action by Congress and the FCC insured that 
a new distribution technology could access content and reach 
viewers. It should be a lesson for policymakers about the 
importance of fostering new modes of video competition. The 
success of STELA points to the best long-term approach for 
improving the video marketplace. That is to promote competition 
from new providers.
    The internet is changing the video marketplace just as it 
changed the market for other media. However, dominant players 
in video have control over the content online competitors need 
for their service and the pipes they need to reach viewers. New 
technology will play a large part of video delivery but the 
market may not reach its full competitive potential. Consumers 
will still suffer from a lack of choice and independent content 
producers will struggle to reach viewers.
    But there is a solution at hand. Congress should make sure 
that its pro-competition video policies are technology-neutral. 
If it does this while protecting internet openness, it can 
ensure that videos have more choices.
    Like satellite, online video is a success story but it can 
be much more than it is now. It is not driving down cable 
prices. For most users, it is a supplement to cable, not a 
replacement. Congress and the FCC can help online video develop 
into a full competitor in three easy ways: First, they can 
clear away some of outdated rules that slow down the evolution 
of the video marketplace; second, they can extend the 
successful policies that protect providers from anticompetitive 
conduct to certain online providers; and third, they can 
protect internet openness and prevent discriminatory billing 
practices that hold back online video. This will increase 
competition, meaning lower prices, better services, and more 
flexibility and control for consumers.
    To be sure, many of the regulations that permeate the video 
marketplace can be repealed today. These rules include the 
Sports Blackout Rule and prohibitions on distant signal 
importation. Some other rules like the Compulsory Copyright 
License are outdated but must be reformed cautiously. Measures 
that are designed to mitigate the market power of certain large 
video providers should not be repealed until effective 
competition develops. Examples of these kinds of roles included 
the Program Access and Program Carriage Rules.
    In some respects, they should be extended. For example, 
online video providers that wish to voluntarily operate as 
multichannel video programming distributors should be able to 
do so. This would ensure that consumers had more choices for 
high-value content than they do today. It would eliminate the 
incentives that keep certain content from being licensed 
widely.
    Finally, Congress can help ensure the internet remains open 
to creators of all sizes by working to prevent the anti-
competitive use of data caps and other open internet 
violations.
    My brief oral testimony can only touch on a few issues. My 
written testimony contains more detailed analysis and 
recommendations.
    Thank you for inviting me to speak and I look forward to 
your questions.
    [The statement of Mr. Bergmayer follows:]
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    Mr. Walden. Mr. Bergmayer, thank you for your testimony.
    I want to thank all the witnesses for your testimony. We 
will now move into the questions.
    And I want to pick up on some things you said, Mr. 
Bergmayer. And I have had some people say in the course of this 
dispute between CBS and Time Warner Cable when you talk in 
terms of the customers, do the customers deserve a refund in 
any portion from your perspective if they didn't get the 
programming that originally was there and all that?
    Mr. Bergmayer. Yes, sure.
    Mr. Walden. What's your view on that?
    Mr. Bergmayer. I think it goes without saying that 
consumers should receive compensation if they don't receive the 
services that they pay for. And the details of what caused the 
dispute, that is not any of their concern or business.
    Mr. Walden. Right.
    Mr. Bergmayer. However, I don't think that will actually 
solve any of the underlying issues that lead to the blackouts 
to begin with.
    Mr. Walden. I understand that. Yes, but it is just 
something people have talked about, you know, because this one 
went so long.
    Mr. Bergmayer. Yes, there is dispute.
    Mr. Walden. And let me ask about because we are all having 
this discussion about these rules and you heard my opening 
statement. I am qualified for Social Security so I mean, you 
know, old enough to get a drink legally. And so I want to talk 
about the ownership caps a bit because it strikes me and I 
would be curious to get your comments or any of you because 
broadcasters clearly have an ownership cap limitation of, what, 
39 percent or something or TV does, overall audience. 
Satellite, you don't have any limitation on markets you serve 
if I understand it, the two satellite providers. Are ownership 
caps something that have outlived their usefulness? Cable 
doesn't really have that, right, so what are your views on 
that?
    Mr. Bergmayer. Public Knowledge definitely thinks that the 
media ownership rules serve an important purpose in ensuring 
that people have a diversity--
    Mr. Walden. So broadcasters should have an ownership cap 
but the others shouldn't?
    Mr. Bergmayer. I think, you know, the rules might need to 
be revisited to be more technology-neutral absolutely. When you 
are singling out a particular industry, that might be 
problematic. But in general, media ownership serves a purpose.
    And I have to point out that the issue that affects 
retransmission consent in particular are ownership problems 
that don't really trigger the rules because they are about 
stations that are in different markets that still jointly 
negotiate retransmission consent with large MVPDs. And I am 
sure some of the cable companies can address that issue better 
than I can.
    Mr. Walden. They are not necessarily negotiating at all 
times with mom-and-pop cable operators anymore either, are 
they?
    Mr. Bergmayer. There are many small cable operators 
throughout the country----
    Mr. Walden. Yes----
    Mr. Bergmayer [continuing]. And rural areas that have 
retransmission consent--
    Mr. Walden. We have sort of gotten to the point where we 
have got big organizations on both sides in many cases, right?
    Mr. Bergmayer. Well, there are big organizations on both 
sides, and unfortunately, sometimes there are still little guys 
on both sides----
    Mr. Walden. I don't dispute that.
    Mr. Bergmayer [continuing]. That get forgotten in this.
    Mr. Walden. Yes. So, Mr. Campbell, Mr. Dodge, and Mr. 
Rozzelle, from what I understand, the MVPDs generally object to 
the bundling of broadcast channels with cable networks during 
retransmission consent negotiations. And at the same time, each 
MVPD before us no doubt offers bundled packages of channels to 
their customers. They also likely offer bundled video and voice 
and data service or want to offer data. Everybody is kind of 
getting into that. What is the difference from your perspective 
between the bundles offered by the programmers and the bundles 
that the MVPDs themselves offer?
    Mr. Dodge, you look like you want to leadoff. Have at it.
    Mr. Dodge. Sure. Well, you know, DISH, I think, it has been 
very, very innovative in the bundles it offers----
    Mr. Walden. Um-hum.
    Mr. Dodge [continuing]. In the market creating family-
friendly-only packages that are smaller and more affordable for 
families, and actually, the bundles offered by the programmers 
and the bundles offered by the distributors largely are the 
same thing. We wish we had more flexibility in how we could 
actually package, but as the bundles are offered to us, they 
also include restrictions on how we can actually create 
packages.
    Mr. Walden. All right. Mr. Campbell?
    Mr. Campbell. One of the differences in the bundles we 
offer to our subscribers if they don't like them or want to go 
somewhere else, they can call a competitor. In these 
retransmission negotiations, the bundles are forced on us and 
if we agree to the terms and conditions, we carry the 
programming. If not, then we have nowhere else to get it.
    So, yes, to echo Mr. Dodge, we are very creative with our 
bundling package as well in trying to make it as competitive as 
possible. I think the real issue on the retrans side is the 
one-sided negotiations of it.
    Mr. Walden. All right. Mr. Rozzelle?
    Mr. Rozzelle. The packages that we offer our customers are 
structured as flexibly as we can given the program contracts 
that we have with the distributors, including the broadcasters 
under RTC. And that restricts us from doing a lot of things 
that we would do were we left on our own in terms of offering 
flexible packages. We are very mindful of the impact of video 
cost on the affordability of video services. In many of our 
small markets it is a big issue, and we wish we had more 
flexibility, Mr. Chairman.
    Mr. Walden. All right. Mr. Munson, did you want to comment 
on that?
    Mr. Munson. I do not work for a company that owns 
multiple----
    Mr. Walden. Um-hum.
    Mr. Munson [continuing]. Cable networks, but if you look at 
it holistically, there are over 1,200 television stations in 
America. The networks themselves, let's say ABC, Disney I think 
actually owns only 8 of those 1,200. So the effective bundling 
of cable channels with broadcast stations is really a small 
part of the regular negotiation.
    Mr. Walden. All right. My time is expired.
    I turn now to the gentlelady from California, Ms. Eshoo, 
for 5 minutes.
    Ms. Eshoo. Thank you, Mr. Chairman. And thank you to each 
one of the witnesses. I think you all gave really very fine 
testimony obviously, with, you know, your own best wishes of 
what you think is excellent for everyone. But that is the way 
it is.
    Let me start with Mr. Dodge. Although DISH wasn't part of 
last month's dispute between Time Warner Cable and CBS, I 
understand many of your customers were still impacted. Why were 
they impacted?
    Mr. Dodge. That is true because CBS ultimately blocked 
anyone who had Time Warner broadband service from receiving 
their online content regardless of whether they actually 
received a video from----
    Ms. Eshoo. So internet service was blocked as well?
    Mr. Dodge. Correct. Regardless of whether you were----
    Ms. Eshoo. Well, I think that is something for all of my 
colleagues to keep under their hat as we consider this. I mean, 
you know, it is metastasizing. I mean this isn't just one area 
where people are affected. There is a multiplicity of impacts. 
Thank you for that.
    I would like to go to Mr. Munson. In Mr. Campbell's 
testimony he points out that the FCC rules prohibit cable 
providers from taking down broadcast signals during a Nielsen 
ratings sweeps week. My discussion draft includes a similar 
provision during a retransmission consent negotiation impasse. 
Why is it unlawful for a pay-TV provider to pull your signal 
during sweeps weeks but it is OK for a broadcaster to pull 
their signal during a retrans dispute often time to occur 
actually on the eve of a big sporting event?
    Mr. Munson. First of all, I'll maybe answer the last 
question first. And again, I wasn't involved in the CBS/Time 
Warner dispute but----
    Ms. Eshoo. No, but you are here representing the 
broadcasters, so that is why I am asking the broad question, 
excuse the expression.
    Mr. Munson. As I understand, that retransmission consent 
contract ended sometime in June or July. There were extensions 
to it and the dispute ended up with CBS coming off the cable 
system in August. And really the month of August we are kind of 
in the doldrums of summer and we are in reruns.
    Ms. Eshoo. So you don't find any disparity even on the face 
of this? You don't see anything that is wrong with it?
    Mr. Munson. Well, there is always----
    Ms. Eshoo. Are you defending it?
    Mr. Munson [continuing]. Marquee events that are going on--
--
    Ms. Eshoo. But I mean are you defending it?
    Mr. Munson. I am not sure I understand the question.
    Ms. Eshoo. Well, you know, the whole issue. I already gave 
you my question and, you know, maybe it is difficult for you to 
answer it and I understand why. Maybe that is the real answer. 
So thank you.
    I would like to go to Mr. Bergmayer. Thank you for what you 
said about the discussion draft. We appreciate it and we want 
to work with everyone. We have to have a very good, sensible, 
bipartisan approach on this thing. So we appreciate what you 
said in your testimony.
    Now, you stated that policymakers should reject attempts 
whether at the SEC or in Congress to weaken the cable card 
system or to make it more difficult for the FCC to implement 
its successor. Can you explain why ending the integration ban 
before adopting a successor technology would disrupt innovation 
and harm consumer choice in the set-top box marketplace? Now, 
this is an issue that I go way back on, way back on, and I 
can't believe that that many years have gone by since we did 
the legislation on it, but I obviously have a keen interest in 
what that policy produced. So can you address it?
    Mr. Bergmayer. Yes, absolutely. I mean people are relying 
on cable card today and new devices from companies like Samsung 
and TiVo.
    Ms. Eshoo. Maybe just use one sentence to describe to set 
it up for the Members. What does today's set-top box do and 
then go to answering the question?
    Mr. Bergmayer. Yes, I mean the set-top box is what allows 
people to access their cable content. It might be the DVR. It 
might have some other functions. And most people still are 
renting their boxes from their cable company. You know, you 
don't go into the store and buy a device like you do in a lot 
of other markets.
    Ms. Eshoo. Um-hum.
    Mr. Bergmayer. And the Section 629 of the Communications 
Act was intended to address that and make it a more competitive 
market that is much more similar to other markets. And cable 
card, years ago, was the technology that the FCC and the cable 
industry and a lot of stakeholders came up with to implement 
629. And it is still being used today. And as I was saying, you 
know, there are new devices coming onto the market that are 
using cable card not just from TiVo, which everyone knows, but 
also from Samsung entering the cable card market.
    Ms. Eshoo. Um-hum.
    Mr. Bergmayer. So it remains an important platform for 
innovation.
    And the integration ban issue, I mean the integration ban 
tries to assure that these third parties get the same level of 
support as operator-supplied devices so that the first party 
operator-supplied box can't do something that a TiVo or Samsung 
can't also do.
    Cable card isn't perfect and for years Public Knowledge has 
been calling for the FCC to implement a more technology-
neutral, a better solution that we think solves a lot of the 
problems that I think Members have identified with the cable 
card system. But if the system is weakened now without a 
successor technology in place, I think that essentially spells 
the death knell for Section 629. It will still be on the books 
but the FCC won't be able to implement it and it becomes less 
likely that it will ever move forward. And the biggest problem 
with set-top box is still the high cost of people renting them 
every month.
    Ms. Eshoo. Right. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Walden. Thank you.
    The chair now recognizes the gentlelady from Tennessee, 
Mrs. Blackburn.
    Mrs. Blackburn. And thank you, sir.
    Mr. Munson, I would like to begin with you. At our last 
hearing on video reform that was in June and I asked a question 
of Marci Burdick, who was here on behalf of the NAB. And I 
asked her whether she thought the position the broadcasters 
took on the radio side where they refused to recognize a 
performance right for sound recording undermines their position 
for retransmission. And we got kind of a convoluted response on 
that one. I imagine you may have heard about that in 
preparation for the hearing today, and it was something about 
there has been a symbiotic relationship between radio and 
artist but nothing really clear.
    And the reason I bring it up again is because I am sure 
that you saw this ad in yesterday's Politico, and it quotes a 
broadcast executive who said, ``the idea that we have to pay 
them to put up their music on our radio stations is absurd.'' 
So, Mr. Chairman, I would like to enter that into the record.
    Mr. Walden. Without objection.
    [The information follows:]
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    Mrs. Blackburn. Thank you, sir. And so I am coming to you 
now, and my question for you, sir, is can you square that up 
for us and explain why the broadcast industry supports 
compensating content owners in the TV market but not in the 
radio market?
    Mr. Munson. Thank you, Congressman. If you take a look at 
it, in essence there are two different business propositions. 
On the radio side--well, let's start with the TV side. On the 
TV side we are creating content that multichannel video 
providers want to buy and then resell to the consumer. So we 
enter into negotiation, and by the way, they mark that up so 
that they can make a profit on it. Then we enter into 
negotiation whereby they buy the programming and then resell 
it. At the same time, at all times, we are over the air free 
and we provide that service for no fee if you want to put an 
antenna up and watch it.
    On the radio side that is a direct relationship between the 
radio station who plays the music of the artist, the artist 
then increases their--
    Mrs. Blackburn. Sir, it is all still content. Your answer 
doesn't square up so you might want to go back and listen to 
that.
    Mr. Dodge, have you got any thought on that?
    Mr. Dodge. I don't see any difference.
    Mrs. Blackburn. Thank you. Anybody else want to weigh in on 
that?
    Mr. Bergmayer. Public Knowledge has supported that radio 
broadcasters should pay performance royalties, yes.
    Mrs. Blackburn. Yes. OK. Thank you.
    Mr. Campbell, I would like to come to you for just a 
second. I am always amazed and I think you are probably hearing 
this a lot, people talk about retransmission taking place in a 
free market. And I look at some of what goes on and I am 
thinking, you know, you look at the mandates, retransmission 
consent, compulsory copyright, basic tier placement, required 
tier buy-through, et cetera, et cetera. The list goes on. And 
those are not necessarily what we would call free market terms. 
So if you can, just give me kind of a thumbnail sketch when you 
look at this and we want these negotiations to take place in a 
free market. That may not be the case, and if not, what rules 
do you suggest that Congress examine so that we come to a level 
playing field? You know, in your perfect world what would we be 
looking at?
    Mr. Campbell. Representative Blackburn, thank you. You are 
correct. I think in any free market negotiation both sides come 
to the table with some risk and some benefit. And speaking as a 
new entrant, it is completely skewed in favor of the 
broadcasters, and that is largely as a result of the 
regulations in place today. That is why I think the discussion 
that Representative Scalise started last year is a great way 
and I think that is probably what I heard today. And again, I 
commend Ranking Member Eshoo for her draft this week. I think 
people are realizing there is a problem.
    Our proposal of a distant carriage, we think, brings the 
scales up to a level playing field, and here is why: We need to 
get local news to our consumers and the broadcasters want to 
tie that together with national content. They probably want to 
have all this tied together and us pay a premium price, 200, 
300 percent increases.
    I think if we are carrying another signal in an adjacent 
market even though our consumers don't get the local news, the 
broadcasters are incented to come to the table, get a deal, and 
we are incented to come to the table to get a deal because we 
both now have something that we want to offer our consumers 
that is not there at that time. But just saying take it or 
leave it or you will go black or there is nowhere for us to 
turn is not a free market negotiation.
    Mrs. Blackburn. I yield back.
    Mr. Walden. I will now go to Mr. Doyle, I believe.
    Mr. Doyle. Thank you, Mr. Chairman.
    Mr. Walden. Mr. Doyle for 5 minutes.
    Mr. Doyle. Heavy on the Mister. Thank you, Mr. Chairman.
    Well, I want to start out by reiterating something my 
friend and colleague Ms. Eshoo said. And I am very concerned 
about the blocking of online content in retransmission consent 
disputes. This is new ground that is being broken here that we 
have not seen before in any retransmission negotiations. And 
the most recent one where the broadcast blackouts affected 3 
million people, the online subscribers to CBS.com, we are 
talking about 11 million people that were affected by that 
outside the area that was being negotiated, and I hope this 
doesn't become the new normal for our retransmission disputes.
    Mr. Campbell and Mr. Rozzelle, you represent companies that 
provide video and broadband services to consumers. What do you 
think the reaction would be if your company blocked access to 
internet content as part of a retransmission dispute?
    Mr. Rozzelle. Congressman Doyle, I think it is very clear 
to us what would happen. It would be argued that we violated 
the net neutrality principles and that we were engaging in, if 
not unlawful conduct, immoral conduct.
    I will tell you that I was--perhaps I am naive here--but I 
was very surprised in a way that the FCC didn't say to CBS in 
this case you are a broadcaster operating as a public trustee 
in the public interest. The programming involved here was 
created as a result primarily of the licenses that you hold 
from us, and now, you have withheld that programming in another 
venue, but nevertheless, withheld that programming from members 
of the public and we don't find that to be in the public 
interest. And I am sorry they didn't do that. I think it would 
have been appropriate.
    Mr. Doyle. Mr. Campbell?
    Mr. Campbell. Representative Doyle, I really don't have 
anything to add. I think Mr. Rozzelle answered it quite well.
    The only other thing I would point out is that, to go back 
to Representative Blackburn's suggestion if it is truly a free 
market, then the broadcasters maybe should return some of the 
free spectrum they got to offer that and bid on it. But I would 
have nothing to add to the online blockage other than Mr. 
Rozzelle.
    Mr. Doyle. Let me ask a question to again Mr. Rozzelle, Mr. 
Campbell, and Mr. Dodge. There seems to be an increase in the 
number of agreements between local broadcasters to co-own and 
operate equipment and facilities, and I want to say I believe 
in the value of local news and local programming and I believe 
that broadcasters need to find innovative solutions to the 
advances of technology in the marketplace.
     However, both DISH and Suddenlink and Public Knowledge 
mentioned in their testimony instances where joint agreements 
have resulted in separately owned stations in a single market 
jointly negotiating for retransmission consent. How have you 
seen this trend develop and what do you think the consequences 
have been?
    Mr. Dodge. Well, the American Cable Association, or the 
ACA, did a study that showed in those scenarios where 
separately owned stations joined together in those so-called 
local marketing arrangements that the resulting cost to the 
distributors and ultimately consumers increased anywhere 
between 22 and 160 percent. And it is also my understanding 
that the Department of Justice starts to get interested in such 
things at about the 5 percent mark. So I think the numbers are 
pretty telling.
    Mr. Doyle. Mr. Rozzelle?
    Mr. Rozzelle. We have run into circumstances where in one 
market that we serve the ABC affiliate and the Fox affiliate, 
two of the big four, came to us together and it was a very, 
very difficult negotiation for us as a result.
    I would say to you, sir, that if we step back and take a 
look at the result of the increasing retransmission consent 
fees and try to correlate those increases with increases in 
local programming as a result, which was the reason that this 
whole system was put in place to begin with, as I understand 
it, I don't think that correlation exists, not positive.
    And so I think that this is a very difficult issue. I think 
Ranking Member Eshoo's bill is therefore more valuable today 
than it has ever been and we look forward to participating in 
that process.
    Mr. Doyle. Mr. Campbell?
    Mr. Campbell. Representative Doyle, as a new entrant, we 
are not in a lot of markets yet where we would probably be 
subject to these sort of arrangements, but obviously, we have 
heard about them. And, you know, as we grow, obviously if any 
of this happens, then we will be sure and provide that data.
    Mr. Doyle. Mr. Munson, I saw that you wanted to comment.
    Mr. Munson. Yes, thank you. If I could make a few comments, 
Congressman.
    Mr. Doyle. Sure.
    Mr. Munson. First of all, there is nothing illegal about 
these arrangements between television stations. If there was, 
the FCC wouldn't allow it. But the fact is that in my 
experience of doing retransmission contracts of this sort, 
there is never an option that is not given where a multichannel 
video provider could pick up just one of the stations. They 
always offer that. But there is a lot of exchange that goes 
back-and-forth between the cable company and the television 
station.
    Mr. Doyle. Mr. Chairman, I see my time is up and I thank 
you for your generosity.
    Mr. Walden. We will now go to Mr. Barton for 5 minutes.
    Mr. Barton. Thank you, Mr. Chairman. I have got just one or 
two basic questions, maybe three.
    The first thing I want each of the panelists to tell me who 
you think the primary stakeholder that you are representing is. 
And I will start with Ms. Aistars.
    Ms. Aistars. So I represent the Copyright Alliance and we 
are a coalition of 40 institutional members who are copyright 
owners, creators of all varieties. So I am speaking for the 
creative community.
    Mr. Barton. OK.
    Mr. Dodge. Consumers.
    Mr. Barton. Just consumers?
    Mr. Dodge. Yes.
    Mr. Barton. I hear chuckles at that but that is OK.
    Mr. Munson. The National Association of Broadcasters and 
KPHO television and Meredith Corporation.
    Mr. Barton. Where is KPHO?
    Mr. Dodge. We are in Phoenix.
    Mr. Barton. Phoenix, Arizona. OK.
    Mr. Rozzelle. Mr. Dodge stole my response, Congressman, but 
I am here representing Suddenlink Communications.
    Mr. Barton. Representing who?
    Mr. Rozzelle. Suddenlink Communications.
    Mr. Barton. What is Suddenlink Communications?
    Mr. Rozzelle. Suddenlink Communications is a cable 
operator. It serves about 1.4 million customers throughout the 
United States. And we are a member of the NCTA but I am here 
representing the company.
    Mr. Barton. OK.
    Mr. Campbell. Representative, Mr. Dodge once again stole my 
thunder.
    We are representing our subscribers who are trying to bring 
a competitive choice in the marketplace against the incumbent 
providers and other video providers.
    Mr. Barton. So you are a cable company?
    Mr. Campbell. We are a telecommunications company. We offer 
video services over an IP TV network. We currently negotiate 
cable franchises in some cities where we operate under 
statewide franchising. But yes, it is a wire-lined facilities-
based that currently passes over 1.5 million homes.
    Mr. Barton. OK.
    Mr. Bergmayer. And Public Knowledge is here to represent 
the interest of TV viewers.
    Mr. Barton. TV viewers.
    Mr. Bergmayer. Yes, sir.
    Mr. Barton. Do people subscribe to Public Knowledge? I mean 
is this kind of like Heritage Foundation or Common Cause?
    Mr. Bergmayer. We are not quite at that scale but we are a 
nonprofit public interest group.
    Mr. Barton. OK. Well, you know, I asked the question 
because the old days, you know, I knew who the broadcasters 
were and I knew who Comcast was and I knew who AT&T was, you 
know, and I knew who the local affiliate station was in my 
district. But you could put a gun to my head and I wouldn't be 
able to tell you without you telling me who you folks represent 
because the marketplace is totally different, totally 
different.
    Now, I have at various times been a customer, which means I 
pay money for services of Time Warner Cable, Comcast Cable, 
Charter Cable. Currently, I am a paying customer for DIRECTV. I 
just switched from Comcast to Verizon FiOS, and I am in the 
process of switching from Charter to AT&T U-verse. OK. Both 
Verizon FiOS and AT&T U-verse are bundled services, which I get 
telephone service keeping my old telephone number, internet 
high-speed so-called service, and what I would call cable or 
television service. OK. And I pay a flat monthly rate, which is 
lower than the old separate rates.
    Who can tell me what body is the dominant regulator of the 
bundled services that I now am receiving through Verizon FiOS 
and AT&T U-verse? Is it the FCC? Is it the cable? I mean who is 
it?
    Mr. Campbell. Representative, I think the answer is yes. In 
our case we offer the bundled telecommunications, video, and 
data. From a telecommunications perspective, the FCC and the 
State Public Utilities Commissions regulate that portion of the 
service.
    From the video perspective, local governments and the FCC 
has some oversight but not as much as they used to--regulate 
the provision of cable service. And then the broadband is kind 
of out there in its own little world.
    Mr. Barton. Well, my time is about to expire, but the point 
of the first question and the point of the second question is 
the laws that are on the books had no conceptual ability to 
foresee what is now happening in the marketplace. And again, 
when AT&T was a phone company, we kind of understood the law 
regulating telephone service. And when Charter was a pure cable 
company, we understood the law of regulating cable television. 
Well, Charter has bundled services. All these groups have 
bundled services. And I don't think even you folks, as smart as 
you are, really can delineate who the dominant regulator is or 
even how to regulate if you need to regulate.
    So, Mr. Chairman, my time is expired but that is why your 
hearings are so important and I really hope we can come up with 
a way to bring the regulatory scheme if we need one into the 
21st century.
    Mr. Walden. I thank the gentleman.
    And I am just going to exercise the chairman's prerogative 
for just a minute because I think it is important we have a 
little fun and frivolity in these hearings, but when asked who 
you represent here, unless you are co-ops, you are probably 
also representing your investors and shareholders through a 
fiduciary responsibility. I recognize you are always 
representing your customers, but fundamentally, is anybody here 
not representing your owners?
    Mr. Dodge. Yes, fair enough, Mr. Chairman. I wasn't sure 
where the question was going, but of course, I represent DISH 
Network.
    Mr. Walden. That is what I thought you meant but I thought 
everybody might want to qualify that unless you are a co-op, 
right? Anybody disagree with that?
    Mr. Bergmayer. Not at all, no.
    Mr. Walden. There you go. All right. Now, we go to, I 
believe, Mr. Latta.
    Mr. Latta. Thank you, Mr. Chairman. And thank you again to 
all of our witnesses today. I really appreciate hearing your 
testimony.
    And if I could start with Mr. Rozzelle, in your testimony 
you state that whatever justification there was for the 
integration ban has long since been superseded by marketplace 
developments, and then you go on to state that consumers and 
operators, this has cost them more than $1 billion since it 
went into effect in 2007. I was wondering, could you expand and 
elaborate on what you gave us in your testimony about the 
integration ban?
    Mr. Rozzelle. Thank you for the opportunity, Congressman 
Latta. The figure, $1 billion, comes from a rough calculation 
that the cost of adding a cable card to the boxes that we 
distribute directly to our customers costs about $50 a box. It 
also adds significantly increased electrical cost associated 
with the operating of the box.
    There are roughly 40 million cable cards out. The program 
has been successful. It was passed in 2007 and the country is 
full of cable cards. The relationship that we have with TiVo, 
which uses cable cards, is an example of the success of that 
program. And it is one of the big reasons why that experience 
that we have had and our continued operating premise, which is 
that any video customer that comes to us with a device from 
wherever it came will be supported by us if it wants to take 
our cable television services. Video services are so highly 
competitive that if we do not support them, they will go 
someplace else.
    Mr. Latta. Let me ask real quick when you say that you will 
support anything that is brought to you, does that put a 
technological strain on you or on your tech crews?
    Mr. Rozzelle. You know, I am no engineer, sir, so it is 
possible, I suppose, someone could show up on our doorsteps 
with something that simply wouldn't work, but if it is a device 
that was designed to work on our network, I can tell you that 
we would do everything that we reasonably could to make certain 
that we kept that customer happy.
    Mr. Latta. Thank you. And kind of following up if I could 
maybe ask everybody this question what Mr. Barton had brought 
up, you know, really where the laws are out there today. For 
each of you sitting out there today, you know, and we pretty 
much have heard from everyone that, you know, the laws are 
either outdated or we have problems. If each of you could just 
kind of briefly say if you had the opportunity, what law on the 
books would you want to get rid of or change today? And I will 
start ladies first.
    Ms. Aistars. I think as I said in my testimony, the 
Copyright Alliance represents largely copyright owners, and 
from a copyright perspective, statutory licenses are 
disfavored, and I think to a greater or lesser extent most of 
my members would agree that the existing licenses are an 
anachronism, but we also recognize that there are business 
practices that have grown up around them and so to unwind them 
we would have to, you know, give some further thought as to how 
to do that in a way that is not disruptive.
    Mr. Latta. OK. Mr. Dodge?
    Mr. Dodge. So if the choice was completely getting rid of 
something versus targeted reform, then we would say get rid of 
the retransmission consent scheme to the core along the lines 
of what Mr. Scalise has proposed.
    Mr. Latta. Mr. Munson?
    Mr. Munson. I guess I would say the ownership caps would be 
the first thing, but if I could mention one other thing.
    Mr. Latta. Oh, sure.
    Mr. Munson. Thank you. And that is that there has been a 
lot of talk about whether the retransmission consent is broken 
or not, but I don't know if I am the only one on this panel--I 
think I am--that actually has negotiated a retransmission 
consent contract, and I find that it works. It ends up going 
down to the wire, as many negotiations with businesses do, but 
what is not broken here even though we have brick cell phones 
and everything else, but what is not broken here is when two 
companies get together, one company wants what the other one 
has and they get together and negotiate a deal, and then only 
1/2 of 1 percent of the deals go public and end up with an 
impasse.
    Mr. Latta. I am running out of time here. Mr. Rozzelle?
    Mr. Rozzelle. Congressman Latta, I have also negotiated 
retransmission consent contracts and I would tell you that in 
the case of Suddenlink, they were almost always successfully 
negotiated because we simply didn't have any power at the table 
to do anything other than accept the deal we were given.
    If I was going to affect a set of laws, I would affect the 
broadcast carriage laws that impact retransmission consent.
    Mr. Latta. Mr. Campbell?
    Mr. Campbell. I would echo Mr. Dodge and Mr. Rozzelle said. 
And I, too, have negotiated retransmission consent. Obviously, 
over the years the leverage has been swayed in favor of one 
side, and at some point this is accelerating upward, and the 
model breaks with these types of increases.
    Mr. Latta. Mr. Bergmayer?
    Mr. Bergmayer. Well, it is hard to pick just one but for 
these purposes basic tier buy-through, and our testimony has a 
number of provisions that should be sunsetted, listed.
    Mr. Latta. Thank you. Mr. Chairman, my time is expired and 
I yield back.
    Mr. Walden. The gentleman yields back.
    I will now go to Mr. Scalise for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman.
    When we talk about the different challenges that each of 
you face, you each have different groups that you answer to, 
corporations, boards, customers. Ultimately, you are all trying 
to provide services and represent those people that create the 
great content that we all enjoy. And so when we have this 
conversation, the reason I appreciate the chairman's focus and 
the ranking member's interest in this is that I think we all 
want to make sure that the policy is smart and reflective of 
the world that we live in today.
    And I bring the phone not just to point out that it cannot 
text the chairman or give him the LSU/Oregon score on this 
phone, but this was the modern device at the time these laws 
were written. And if you look at what you can do with this 
device today and you compare it to what you can do with this 
device, and when people realize that the laws that are on the 
books today that all of you have to deal with were written for 
this, not for this and haven't been changed since this device 
was the modern device, it shows you how outdated the laws are 
but it shows you how complicated it makes your jobs and your 
daily lives.
    And government needs to go and get with the times and 
figure out that you are living in a different world. You have 
to go in negotiations every single day dealing with the 
realities of modern technology. You couldn't even text somebody 
but you surely couldn't download video, audio.
    The things you can do today have complicated the 
marketplace because now the laws are written in a way where you 
literally had one broadcaster sitting in a room with one cable 
operator. You had a monopoly negotiating against a monopoly. 
And maybe that worked back in that day but we are not in that 
day anymore.
    Every consumer benefits from the fact that they have got 
multiple options. If they want to turn on the TV, they can get 
that through a cable wire, they can get it through a fiber, 
they can get it through a satellite, they can get it from so 
many sources but they can also go on their mobile device and 
just download it onto their iPhone or iPad or Galaxy or 
whatever device you have got. And yet, the rules are so rigid 
that it forces in some cases government picking winners and 
losers. In some cases you have complications you have got to go 
to the FCC to get a ruling. And the innovation that is lost is 
really what hurts the consumer. And that is really why we are 
here today.
    I want to ask you, Mr. Campbell, because you all just 
recently rolled out Prism. It is a fairly new product, you 
know, that you are into this marketplace and video, and you 
have had to go through some of those growing pains in 
establishing these relationships and negotiations. And the 
negotiations are different depending on what kind of cable 
service or what kind of product you are trying to provide. 
Because if you are going to a broadcaster, it is a different 
negotiation than, for example, you know, you all are based in 
Monroe, Louisiana. We are proud to have you as a Fortune 500 
company in Louisiana, but you are in Monroe. And a lot of 
people now know about Monroe because of Duck Dynasty, number 
one show in the country. We are very proud of that. They are 
from West Monroe they would tell you, not just Monroe.
    But, you know, the reason 11 million people or so last week 
wanted to watch that show was because it is really good 
entertainment. But that is not a broadcast network. The number 
one show in the country is not a broadcast network or it is not 
CBS or ABC or NBC or Fox. It is A&E. So you are in negotiation 
with them to get that program that everybody wants is a lot 
different under the law than a negotiation with CBS or ABC or 
one of those broadcast stations, is that correct?
    Mr. Campbell. That is correct.
    Mr. Scalise. And so all you're asking for is a free 
marketplace where you want to pay people for their copyright. 
You know, our copyright artists, Ms. Aistars' clients, they 
provided content; they ought to get paid for it. But shouldn't 
that negotiation happen for A&E the same way as CBS because you 
are a consumer. You are just flipping through the channels. You 
want to watch a show. You know, why should one negotiation be 
ruled by the government in a different way than the other 
channel when for the consumer, it is a seamless operation?
    Mr. Campbell. Representative Scalise, I have spent a lot of 
money at the Duck Dynasty shop for my children, by the way. But 
you are exactly right. A&E was created and there is no sort of 
scales that are tipped in their favor under the law that would 
give them an advantage over us in a negotiation. They have 
cleared their copyrights. Sometimes the broadcasters that we 
deal with, they don't want to clear all of those, which is part 
of the compulsory license issue.
    But you are absolutely right. They are under no regulatory 
regimes so we sit down with them on one channel, we negotiate 
carriage, we come up with agreement, and we put them on.
    Mr. Scalise. And clearly, we want everybody to be treated 
fairly. We want you to have to go and whether it is CBS or A&E 
or any other channel, you know, go have a negotiation. If you 
come to an agreement, great; if not, you know, obviously, you 
go somewhere else. You look for other means to provide the 
service. But the broadcasters ought to be paid for their 
content, the artist who created the content ought to be paid, 
but it should be done in a free market. You shouldn't have must 
carry here and then you have got a buy-through, you have got 
free transmission consent, you have got compulsory copyright. 
There are all these things stacked on top of each other.
    Broadcasters have limitations under current law. They can't 
even own multiple media outlets, yet if you are operating on 
the internet, you don't have any of those limitations. And yet 
you are competing against each other but one guy has got one 
set of rules he is playing by and somebody else has a different 
set of rules. And so all we are trying to do here is start this 
conversation to say, look, it might have worked in 1992. Things 
are dramatically different in a great way for us in terms of 
innovation but don't have these laws hold us back on the 
innovation for today. And that is why the conversation not only 
needs to start but ultimately we need to get to the point where 
we can actually get to text, get to a position where we can 
update and modernize these laws to reflect what is happening in 
the world we are in today.
    And I appreciate all of you for what you do to provide 
great services because customers love it, but we ought to make 
sure it is being done in a free and open marketplace that 
reflects today's technology.
    Mr. Campbell. Thank you, Representative.
    Mr. Scalise. Thank you, Mr. Chairman. I yield back the 
balance of my time.
    Mr. Walden. Thank you, Mr. Scalise, for your work.
    We will turn out to Mr. Lujan for 5 minutes.
    Mr. Lujan. Mr. Chairman, thank you very much and to you and 
to the ranking member for the work you have been doing in this 
space.
    The conversation that we are having today, as complex as it 
is, but a reality that hits everyone across this country as we 
look not only for information for valuable content and 
entertainment as well. So thanks to everyone for being here.
    I want to recognize as well the important work that the 
broadcasters do in making sure that during times of emergency 
we are able to get that local news. There is actually flash 
flood warnings taking place in my district as we speak. There 
was a tornado that was spotted early this morning that warnings 
went out to the community that we are able to depend on that.
    But on the same note, as we talk about that, when these 
conversations are taking place with the breakdown that took 
place between CBS and Time Warner and content is shut off, that 
valuable asset, if consumers don't have redundancy, my rabbit 
ears are now, I guess, the digital form of those in the home, 
and our form of redundancy at least for me is my smartphone, 
which I think would be redundant. But if internet content was 
even cut off and now that I couldn't see it on my television, I 
couldn't go to my device and try to pull it up because I still 
have internet connectivity whether it is through whatever my 
phone is receiving or through the internet signal that I still 
have in the home, that concerns me.
    And I think that in the same vein that I talk about the 
importance of the critical service that is provided, it 
concerns me that this shutout can take place from a blanket 
perspective.
    And I don't know if, Mr. Munson, we can talk about that a 
little bit to see what we can do to prevent that from happening 
when, at the very least, this is occurring. And I say that 
because the broadcasters know I still have a lot of concerns 
about orphan counties. And, at least in New Mexico, we still 
haven't solved this problem. And we need to because there are 
still places in New Mexico that those that are subscribers or 
that live in rural areas--and I invite anyone to drive out with 
me to New Mexico. It takes 8-1/2 hours to cross my district 
alone, rural in nature. And there are a lot of people living in 
these rural towns that count on receiving local information, 
but now, because of the way that some of these lines are drawn 
they don't get local news; they get news from the neighboring 
State but maybe not some of the warnings that they would like 
to hear as well. So, you know, that is a whole other issue.
    But in regards to where sometimes the conversations break 
down and it is the consumer that was left out of that warning, 
can you talk about that a little bit, Mr. Munson?
    Mr. Munson. Yes, thank you, Congressman.
    First of all, I want to reiterate something I said in my 
opening statement, and that is that we never went dark. CBS 
never went dark in those markets. Their transmitters were on. 
They were broadcasting at full power during the entire time. 
People can receive our signals. We have spent a lot of money on 
a very robust system. As you know, in the southwest, we count 
on translators in many cases to repeat that signal through 
large areas of land to reach as many people as we can possibly 
reach with the over-the-air signal.
    Mr. Lujan. Well, Mr. Munson, I don't want to interrupt, 
sir, but then it goes back to redundancy. And my question is if 
I am going to make an investment in my home to put a digital 
receiver so that I can receive the broadcast feed off of that, 
then should I be open to what is being suggested by the 
chairman and the ranking member to say that I have made the 
investment to receive that digital signal, so I get my local 
affiliates for free. So then why am I paying for them on my 
DISH feed or my cable feed?
    Mr. Munson. Primarily----
    Mr. Lujan. And I think we need to be careful when we say 
that it is constantly being said because then, as a consumer, 
where am I? If I am going to invest in what I believe is 
redundant again to my smartphone and through what I perceive to 
be able to get information over the 'net but even that was 
chopped off, then my redundancy is the investment with what I 
need to do, especially in a rural area. And so, you know, a 
feed in New York City is different than a feed in New Mexico.
    Mr. Rozzelle. Congressman, if I might, one of the redundant 
features that exists is your local cable television operator 
because he has an emergency alert system. And that is triggered 
by, as you know, various stages from the Federal Government all 
the way down to the local entity. And that includes weather 
alerts as well. I thought I would point it out.
    Mr. Lujan. Well, I think that is fair but in a day that--
and, Mr. Chairman, I see my time has run out--we are 
highlighting the importance of a broadcast feed never going 
down and always being fed. I guess that is where I am caught a 
little bit now as I am looking at this closer when trying to 
understand what that means.
    So if I am watching my local channel, CBS goes out, that is 
the channel that I watch. I know that when I turn it on, it is 
blank; it says talk to your cable subscriber or talk to 
whatever it is so we can try to get this figured out, is that 
emergency broadcast still going to run on that channel or am I 
going to have to flip the channel in hopes--because probably I 
am going to turn it off and then I am going to go to my 
smartphone if I know that something is happening.
    Mr. Munson. It does run on our television station, yes.
    Mr. Lujan. So even with that signal, even with that little 
note up there, I would still get the message?
    Mr. Munson. In the particular case you have described, if 
it were to happen to have an impasse between a cable company 
and a broadcaster, nothing is passed through because there had 
been an expiration of that particular contract.
    I want to also mention again that we are talking about 1-1/
2 percent or a half of 1 percent of the times we enter into 
these negotiations as broadcasters it ended up in an impasse. 
It is unfortunate and it is particularly outlined, as we talked 
about in the CBS/Time Warner, it was very public and 30 days 
long. But that is a rare occurrence in these negotiations. 
There are probably people negotiating as we are sitting here in 
new retransmission deals that we don't know about.
    Mr. Lujan. I appreciate it. Thank you, Chairman.
    Mr. Walden. And I think your point is it is still over-the-
air broadcast so it is not a complete blackout. If you have an 
antenna, you still get CBS? It is just not available on a cable 
or satellite provider, depending on who is having the blackout.
    Mr. Munson. That is correct, Chairman. Yes, sir.
    Mr. Lujan. Thank you. Thank you, Mr. Munson. I appreciate 
that.
    Mr. Munson. Thank you.
    Mr. Walden. We will now go to the gentleman from Colorado, 
Mr. Gardner.
    Mr. Gardner. Well, thank you, Mr. Chairman. And I had hoped 
that Mr. Scalise would still be here because for the record he 
still brings his 8-track player.
    But thank you very much, all of you, for being here. I 
particularly welcome Mr. Campbell and Mr. Dodge for your 
representation today. Both of you are responsible for creating 
thousands of jobs in my district and across the State of 
Colorado, so I thank you so much to both of you for being here.
    Now, with regards to the topic of today's hearing, there 
are two primary concerns that I have. One is a consumer's 
ability to get what they want at a reasonable price and the 
free market mechanisms that allow that to happen. But it seems 
like we are more and more facing impasses as we try to achieve 
those 2 goals of the free market and giving the consumer what 
it is that they want at a reasonable price.
    Broadcasters come before the committee and our office and 
say that everything is working the way it should, but others 
say that it is not working the way that it should. And I will 
tell you in Congress when we get accused of things working or 
not working, we end up with negotiations, concessions, those 
kinds of words that pop up, compromise. Each side has to give a 
little, a bit for the sake of the people who are affected to 
try to meet the two concerns I addressed of the consumer.
    And so I don't purport to have an answer and I don't know 
that anybody here on this committee has purported to have all 
of the answers or to say that there is one proposal that will 
fix this situation. But the fact is that there are still 
blackouts and that consumers are paying the price both 
figuratively and literally. But in my mind one blackout is one 
too many, especially when it is one that affects so many 
millions of people. And I think we can all agree on that. And 
sadly, it isn't just one and it hasn't been just one. The 
rising cost of programming and the number of retransmission 
consent disputes and impasses leads me to believe that we do 
have a problem.
    So with that, I have a few questions for our witnesses. To 
Mr. Dodge, could you please explain a little bit more about 
your plan? Would you pay broadcasters in the adjacent market if 
you were to import their signal? And what would this do to help 
the problem that we all see?
    Mr. Dodge. Yes, we would. The imported signal if you will 
would be compensated under the current distant network signal 
royalty scheme, which is negotiated with each reauthorization 
of STELA, SHVERA, whatever flavor it is with the copyright 
holders and represents a fair market rate. And the idea would 
be that when a local signal is down we could import an adjacent 
market signal, which, as I noted in my opening remarks, is 
quite an imperfect substitute. It allows people to continue to 
have access to the core network programming but there would be 
no local content, so there would still be an incentive for both 
parties to negotiate and reach a fair deal to retrans at the 
local station.
    Mr. Gardner. You spoke about it earlier in your opening 
statement in terms of this being a permanent solution. This is 
not a permanent solution because I mean if you want to watch 
the Denver Broncos, you are not going to be thrilled if you 
have to watch the Cleveland Browns. Of course----
    Mr. Dodge. Many would say that.
    Mr. Gardner [continuing]. In this case it has worked out 
very well for us.
    But will this process though help you get a solution though 
for consumers, a settlement so to speak?
    Mr. Dodge. We think it will because it will somewhat level 
the playing field which today we think is quite out of skew. 
And there is sort of two goalposts, which I think are 
represented by Representative Scalise's bill and Ranking Member 
Eshoo's bill, which in one you can do a complete deregulatory 
approach or you can try and level the playing field a little 
bit so there are fair negotiations.
    Mr. Gardner. And to Mr. Munson, during the last hearing, I 
asked each panel member if they believed the current system was 
a free market system and why. And I had one broadcaster respond 
by stating that it was in fact a free market. And that I will 
quote from the hearing: ``In terms of retransmission consent, 
we view that as a mechanism of actually entering into 
negotiation, and I think one of the tenants of our businesses 
we spent a lot of money in creating content and we want to be 
able to, you know, get an appropriate return on that content.''
    And so my question to you, with regard to the proposal that 
is outlined in the testimony today to import distant signals 
even if a cable company is willing to pay you for importing a 
distant signal, you are still opposed to that idea? And you are 
opposed even if it is over a short period of time? And why is 
that?
    Mr. Munson. My experience is, Congressman, that it would 
prolong the dispute, not shorten it. By bringing another CBS 
affiliate in in this particular case, first of all, it violates 
the long-held contract that I have with the television network 
for the exclusivity for the CBS product, in this case Phoenix. 
You can't import ESPN from another market if you have a dispute 
with ESPN. You can't say, well, I want to bring the ESPN signal 
from Tucson into the ESPN market into Phoenix. Why would it be 
any different to import the CBS signal, which violates our 
contract?
    It really goes to the core of localism. As you have already 
mentioned, it destroys the localism. Bringing a distant signal 
in with television commercials, with programs, news programs, 
traffic, weather that doesn't reflect that particular community 
destroys the whole idea behind localism, which was the 
foundation of over-the-air broadcasting.
    Mr. Gardner. So I mean do you think that what we have today 
is a free market system, a system that works in the free 
market?
    Mr. Munson. I do. I think that having the deadline--I 
mentioned this earlier--having a deadline, while gut-wrenching 
for the parties at some times, it generally brings the parties 
together. But by prolonging it, by bringing another station in, 
it artificially kicks the can down the road with the deadline, 
and therefore, the parties don't negotiate and get a deal done.
    Mr. Gardner. Mr. Chairman, I yield back.
    Mr. Walden. The gentleman yields back. Looks like we go now 
to gentleman from Missouri, Mr. Long.
    Mr. Long. Thank you, Mr. Chairman, and thank you all for 
being here today for your testimony. It looks like maybe I am 
the cleanup hitter today.
    So, Mr. Dodge, let me start with a question for you. Do you 
think that DISH and others involved in efforts to change these 
retransmission consent laws, do you think that you and others 
are working hard enough out in the marketplace as it exists 
today to reach successful deals?
    Mr. Dodge. We do.
    Mr. Long. I am sorry?
    Mr. Dodge. Yes, we do.
    Mr. Long. You do? OK. Earlier, you said in your testimony 
when it was your turn at the microphone there you said that 
blackouts are occurring with more frequency and last longer. So 
if that is the case, if they are happening with more frequency 
and they are for a longer period of time, just ballpark, but 
how many disputes has your company been involved in over, say, 
the last 5 or 6 years?
    Mr. Dodge. Actually, I don't have a number of the top of my 
head.
    Mr. Long. Can you get it for me?
    Mr. Dodge. Of course.
    Mr. Long. OK. Because I would kind of like to know what--
because if we are doing everything we can out there in the 
marketplace to, you know, prevent these and then they are 
happening more and more with more frequency and lasting longer, 
I would kind of like to--if you can get me an answer to that, I 
would appreciate it.
    Mr. Dodge. Of course.
    Mr. Long. OK. Thank you. And is it Aistars?
    Ms. Aistars. Aistars, yes.
    Mr. Long. Ms. Aistars, OK. The satellite compulsory 
licenses were created, as we saw--I don't know if it was Joe 
Barton's phone that Scalise held up there or what, but they 
were created a quarter of a century ago and for very specific 
reasons of course at that time, as you are well aware of.
    So looking at the satellite compulsory licenses 25 years or 
better, are those reasons still relevant today with what we 
have heard today and all of the new technology and everything?
    Ms. Aistars. Thank you for the question.
    As I said when I introduced myself, I am a copyright lawyer 
rather than a Communications Act lawyer, and so I think some of 
the justifications for the creation of those licenses were more 
steeped in communications law than copyright law, although they 
reside in Title 17.
    But I guess I would just say that the marketplace is 
vibrant with a variety of new services, as you have pointed 
out. You can do more today with the devices you have in your 
pocket than ever before. There is more creative content 
available to consumers through a variety of new services. And 
so I am enthusiastic about video marketplaces as we see it 
today, and I don't see that it is in need of any new 
regulation.
    Mr. Long. OK. OK.
    And with that, Mr. Chairman, I yield back.
    Mr. Walden. Does the gentleman yield?
    Mr. Long. I already yielded back, yes. Do you want me to 
yield to somebody?
    Mr. Walden. Yes, he was asking.
    Mr. Long. Oh, I am sorry.
    Mr. Walden. Mr. Lujan.
    Mr. Long. Now, you don't have a Vermont accent.
    Mr. Lujan. No, sir. I have got this one over here but----
    Mr. Long. That is not what it says on the TV monitor.
    Mr. Walden. And is that really a Missouri accent? That is 
what I want to know. No one knows.
    Mr. Lujan. I thank the gentleman for yielding. I guess just 
a few follow-ups with what was said.
    Mr. Munson, I really appreciate the response to Mr. Gardner 
associated with where these territories and markets were drawn 
and they give you your competitive advantage for the space that 
you operate in, but it also impacts a dilemma that I am trying 
to solve in my State in my district with orphaned counties. The 
consumers are not given the choices with what content they want 
delivered to them because someone drew an arbitrary line based 
on a population center, based on a market penetration of where 
the epicenter is for advertising. They get whatever content is 
going to be thrown at them.
    In this day and age I think with DISH through my Slingbox I 
can get the content recorded and then I can watch it digitally 
anywhere that I have access to the internet that there is 
enough bandwidth for the video stream capacity. So I get my 
local content from New Mexico when I am here that way. But in a 
day and age where I am able to subscribe to a suite of 
information, there should be no reason that, based on some 
lines that were drawn that leave my consumers out if they want 
information.
    But as I have described before in this committee, if they 
are savvy enough as far as a DISH Network or DIRECTV subscriber 
and they go get a Post Office Box in an area that gets local 
programming, no matter where they are, I could do it here. I 
could have a DISH Network or DIRECTV network here. I could get 
billed to my New Mexico address and set the thing up here and I 
could get all the local programming that I want from New 
Mexico.
    It seems that something is broken in a way that I today 
based on a law that is preventing consumer choice should be 
able to get whatever programming from Arizona, California, 
Colorado, or New Mexico that I so desire as well.
    And so I just wanted a little bit of time to explain that 
that is a concern that I have with where these lines were drawn 
with how it is hurting my consumers when they want local news 
and they can't even get that.
    Thank you, Chairman. And I yield back.
    Mr. Walden. The gentleman yields back. And I think that 
wraps up what I think has been a traffic hearing. We really 
appreciate all the testimony, your answers to our questions. 
And, as you know, we don't have to tell you this is a 
complicated issue that we are trying to work our way through.
    We also know STELA has a timeline and a clock on it. We 
also know there are a lot of people who want to hang every 
caboose and main car and everything else onto STELA if they 
can. So we are going to be having further discussions about the 
video marketplace as we go forward.
    And with that, the committee stands adjourned.
    [Whereupon, at 4:41 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
                                 
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