tv The Communicators Michael Powell NCTA President CEO CSPAN April 9, 2021 10:36pm-11:10pm EDT
violation has occurred. ♪ >> c-span is your unfiltered view of government. created by america's cable television companies in 1979. today, we are brought to you by these television companies who provide c-span2 viewers as a public service. ♪ >> michael -- some industry anae saying that up to 55 million people, by next year, will have cut their cable cord.
are we in a post-cable tv world at this point? >> i think i've heard that question asked a million times over the last 15 years and it is still there. i think that the story of cables demise is well overstated. most content companies will tell you that they can continue to invest heavily in linear products, as much as their parallel stream platforms. consumers continue to subscribe at meaningful levels. even if there is a shift to broadband platforms, those are platforms that cable companies equally benefit from as the country's leading broadband providers. i think it's an interesting conversation. i don't think it has a significant negative bearing on the overall industry. host: when you look at the number of subscribers for internet service from the traditional cable companies as opposed to video providers, what
does that due to your business model? michael: i think that the broadband component of the business is really well structured. it has really healthy margins. it's a profitable service. i don't believe that the shift has a negative impact on the revenues. you really should talk to ceo's about that. the economics of it specifically. we have listened to this narrative for over a decade. cable companies continue to expand subscriber ship through covid. over the last couple years, their financial performance continues to be sound on wall street. i think most analysts would say that the future of the industry continues to look bullish. host: the last year during the pandemic, what has that meant to the cable and internet industries? michael: and meant a lot.
it was a year in which we were able to essentially get a glimpse of the future. we had an enormous search, probably the greatest experiment you could have designed for testing the resilience and quality of the network infrastructure. i think the results were astounding. we saw 26% increase in downstream traffic, 35% increase in upstream traffic. every sector of the u.s. economy was dependent on that infrastructure. work, school, health, entertainment, retail. the results were really commendable. it demonstrated the excellence of those services and it showed that they were well-positioned to anticipate future demand and to remain resilient no matter what their call is. we saw significant subscriber ship increases. we also brought people online
who have challenges of affordability or have not been a participant because of our low income access programs and partnerships with schools. we think it was a commendable year for the industry in serving the needs of the public. host: let's bring lynn stanton into this conversation. lynn is a longtime reporter on these types of issues. she's with walters, cors, tr daily. lynn: good morning and thank you for talking to us about this. there's been a number of proposals for infrastructure investment legislation circulating including the recent white house proposal. it calls for prioritizing broadband projects that are either owned by or involves the participation of governments or nonprofit organizations.
are your numbers about to get squeezed out of this infrastructure largess that is being contemplated? michael: we don't really think so. there's not really a national solution to reach all americans who use broadband at affordable rates. that's executed exclusively by government networks. we think they can player role -- play a role in addressing the problem. they will not be the central solution for communities across the country. i think we should all be for greater expenditures on broadband infrastructure. to do so, it takes more than money. it takes policy. we've learned a lot of lessons in the past. i hope we are not doomed to repeat. the fcc spent $40 billion in the last decade on serving the
unserved. the 2008 stimulus, the financial crisis. another infusion of capital. we are still working on the problem. why haven't we succeeded? the answer is simple. we often lose the discipline necessary to target the areas that are truly unserved. we are not effective in harnessing all the technologies that are available to attack the problem. when we make those central mistakes, we often look back with regret that we spent a lot of money but continue to have citizens wanting for services. lynn: what would you say to communities that say, we have been waiting for not just years but decades effectively at this point. they just want to do with themselves because they are tired of waiting. yet, the broadband industry as a whole has promoted state legislation over the years that prevents or restricts community
abilities to respond to the needs of their citizens. michael: it's important for us to be clear about areas that have no broadband. why do they have no broadband? the economics are disastrous. the cost of providing that infrastructure is exorbitant and the number of consumers available to pay for it is minuscule. those economics are true whether you are a climate actor or a public actor. the financial burden is why it has merited to have a public subsidy program that can balance out those economics. if you will have a large expenditure of federal funds to balance off those economics, all of those providers are in a better position to serve those unserved areas. they should all be part of the solution. i think it's a missed suggestion to say that we don't think there's any areas where municipal broadband aren't part of the solution.
we are not suggesting they aren't. i think that the government would be wise to look carefully at the history of those municipal networks and their success rate. we see the mass majority of those actually fail. you can look at bristol, virginia where you had a cyber network that failed after spending $130 million. you can look at vermont, who had their credit rating downgraded. utah completely failed and sold the unit -- entire network to google for a dollar. $40 million in debt. the country has to make a decision. is that the widest place to prioritize, given the complexities of public financing models, to run a network that has to be upgraded continuously? the industry spends 15-30,000,000,000 dollars a year upgrading the network.
often, these products are the ongoing operational costs with those challenging economics that make it a poor choice. it isn't about whether they should be in the game. we'd like everybody to be in the game. we should do it smartly and learn from history as to what really works well and what doesn't. to suggest that they are the premier or prioritized collection of companies to solve the problem i think fails to diagnose the problem accurately. michael: you mentioned a couple of the -- host: you mentioned a couple of the cities that have had trouble with broadband. what about chattanooga? could that be a model for the future? michael: i think everybody goes to chattanooga. it tells you a lot. you would be hard-pressed to scratch out a list of companies that go beyond that. the number of failures far outweighs a number of successes. this is not the disparaging of
those efforts. generally, it was a fine project. it has done good things in its community. i don't resent them for that. the idea is, is that replicable? i would submit that it is not. the federal government is attempting to solve the problems for the nation. they should incorporate those experiences where they make sense. they should not see them as the exclusive or prioritized solution because the vast majority of networks in the country are built with private capital bye-bye -- by private providers. if it was true that the economic models were better when government run, we would see a lot more of those projects being successful. this is about using all of the assets we have a billable to us -- available to us in the most targeted way. it's not about us versus them or them versus us.
it's about putting dollars where they will have the greatest impact. lynn: there's been much discussion about future proofing these government-funded networks , including discussions of acquiring them to be able to provide symmetrical speeds. what is your view of that? would your members be able to meet those requirements? we could be focusing more speed to places that maybe are still on dial up or don't have a cable provider. what do you think of this symmetrical? michael: it's a brilliant question. i think the government rightly has an instinct that makes some sense. if we are going to spend a ton of money on new broadband number -- networks, we don't want them to become obsolete. that's a respectable instinct. what does it mean to be future
proof? whether the government's crystal ball on being able to make that assessment is questionable. more importantly, we need to draw a distinction that gets lost in most of the stuff i read. one question is how you define unserved area. this should be the areas that have been waiting the longest. who have the greatest need. who have no broadband or very little broadband, really inadequate broadband. you can find those service areas in lots of ways. they should be defined in ways that produce a solution set of communities that are most in need. not communities that have adequate broadband and the money goes to upgrade them. once you define the areas, you can have a discussion about the quality of the network you are going to build in those undefined areas. those are not the same set of questions.
one is to define who needs the money. the second is what kind of networks we will build. then we can talk about what kind of networks we will build. you should be investing in areas that have no broadband in advanced infrastructure. i would argue that fiber is not the only advanced infrastructure that you should look to. you should use many more tools that are in the toolkit. they have been more future proofed than any other technology in the country. that cable network has grown consistently with demand and need. it offers the five fastest speeds nationwide. offering a gig to the vast majority. it has announced plans to take that all the way to 10 kids over the next several years. when you decide what type of network we will build, for the
truly unserved, we are right to look at the most advanced networks that are reasonably affordable. that includes other choices than just putting all of your chips in one single technological bucket. if that bucket fails you, you've lost and wasted an anonymous amount of money. if we look back over time, at google fiber, at fios, a lot of other brand fiber projects, there are complexities associated with building fiber in rural areas. they often end up being abandoned or left stranded. i would hate that to be the result in the united states. like the ftc, invite all comers to compete. if they can serve those communities at the speeds we want, we should do it. finally, i'm worried about part of the challenge, using a standard that is symmetrical.
it is really out of sync with the reality of what we see today. even in covid when we had people two-way videoconferencing, we sought ratios of 15 downstream to one. if you define unserved at 100 and 100, you are saying two thirds of the country doesn't have broadband. that's just incongruous with reality. you are going to start spending money in long beach and aspen and a whole lot of places that are more than happy to take a second -- a second bite of the apple while the rest of the communities are at the back of the line. host: that said, is the fcc broadband map app. -- map accurate in your view? michael: no. everybody agrees on that. in fact, we have been a leader in championing the approach that the fcc has ultimately embraced
to result in greater granularity to allow us to target and focus more at -- expertly. the polygon shape file is a proposal that we made to the commission that they ultimately adopted. that's part of the cautionary tale here. if we are going to spend hundreds of billions of dollars, staggering amount of money, a lot of that is coming out without these maps being completed. we've heard a commitment by the commission to try to get the maps completed as quickly as possible. if we are honest and fair, it is not a quick process. it is pretty complex. the worst thing we could do is have tons of money sloshing around if there's no disciplined math, no guard rail to who gets the money. i think we might find ourselves looking back like we bidden -- did in 2008, concluding that
this program was a disaster because all the money went to areas that didn't really need them. my greatest objective is to not repeat that result. yes. we need better maps. they are overdrawn. we all know that. we have proposals on the table to fix it. congress only recently appropriated the money necessary to do it. i think the chairwoman was wise to get them done as quickly as she can. host: you are watching the communicators on c-span. our guest this week is michael powell, the president and ceo of an cta. former chairman of the federal communications commission. i guess reporter is lynn stanton of walters corners tr daily. that's a lot of title. what does that mean? lynn: [laughter] it just means that i cover
broadband and internet and telecom issues. that's part of walter's clue or. host: what is that? lynn: it's a multinational company that publishes in the business-to-business space in a lot of different areas. host: thank you just a follow-up on the acting chairwoman. would you support her becoming full-time chair? michael: that's addition for the private. i learned long ago to not expressing a preference to one chair or the other. i would only say this. i have worked with her most of my career. when i was chairman, he even tried to hire her to work for me. she was a wise woman and chose not to. her career has not suffered one
bit as a consequence. i have a healthy respect for her intellect. we look forward to working with her and her acting capacity. if she should be so lucky as to be appointed president, we look forward to working with her then. lynn: since we are on that subject, you were a commissioner on the fcc and then made chairman. do you have any advice? even in the acting motivation or if she makes full-time. michael: she is smart. she doesn't need my advice. it really is an advantage to ascend to the chairmanship from some experience on the commission. i'm not saying it's indispensable but it six or
nearly helpful. you are already very deeply emerged in the contemporary issues of the agency. you've had an opportunity to reflect on your vision and your priorities. you can assume the helm at a pretty clear view about where you would like to go. i think the unsung part of that is that you know the staff extremely well. you know the strengths and weaknesses of the institution. it's a difficult institution to operate. putting aside the policy space. when you have built relationships over the course of your time, it's moves that transition for you. my only advice to all chairs is to breathe. you are in for a long run. listen as much as you talk. really take some concerted time to formulate your thinking
before you are pressured, as everyone will try to do to get you to state positions that you are not yet prepared to stake. these are high-stakes, important decisions. they take forethought. i remember i made a commitment not to do anything big for a few months. a lot of people complained and pushed and pressured. at the end of the day, it was the right choice. i think it is part -- smart to make sure that you know where you are going before you start the car. lynn: ok. circling back to these broadband infrastructure proposals that are circulating. the president's proposal talks about making sure not just that broadband is available but that it's affordable. are you worried that that could mean rate regulation? do you expect that this is a forerunner of up to make lifeline support more robust?
it doesn't go far towards broadband. we've seen this $75 a month on tribal land emergency funding that was in some of the covid-19 relief legislation. do you think we need to move more in that direction? any concerns about what affordable means to president biden? michael: yeah. i think if we are honest, this assertion was a little ambiguous. what was being proposed was very ambiguous. nearly to work with congress around this topic vaguely and generally. i think it surprised us in part because it seemed so unfounded on any realistic assessment of pricing in the u.s. or the world. i learned at the antitrust pavilion what is the right price or the fair price is not a simple question.
it's a pretty complex economic question. the only thing we got was comparing rates to foreign countries, citing data that is four years old. the report being referenced was published in june of 20 -- 2017. there are countless other sources of international comparison that reach a completely different conclusion. economist magazine has an intelligence unit who evaluates international rates in the u.s. -- and the u.s. is ranked number one inaffordability. the icu, when it does a quality adjustment for purchasing power, ranks the united states second in the world on affordability. the sec's own data, which evaluated 27 countries, ranked the u.s. second inaffordability. one thing that is very slippery about prices, you have to be
careful that you are comparing apples to apples whenever you make any comparison. apples to make any comparison. -- one of the things we see frequently done that is inaccurate is to compare prices without controlling what the difference business could be. so it's not the price of a wanted and a half megabit network to a network that is 100 megabits, or 200 megabits, but there are completely different products. what you have to do is to quality adjust the prices. price per megabit, it matters. what is the consumer paying for each megabit? if you use that in the u.s. to define 98% over 15 years, that is a pretty good result. i challenge you to find many commercial markets, particularly, utility services, that have that kind of successful stability and increase. i'm not sure i can agree with
the predicate. i don't know what the evidence is, or if there is evidence that rates are unaffordable. secondly, i think it is pretty ambiguous about what we think we should do with it. that is important, because i will turn to the second part of your question, yes, we support the idea of direct subsidies to consumers. i think congress was smart to start moving toward that varying course of -- during the course of the covid relief legislation. it is the fastest, most efficient way to get support to the people who need it. get checks to them to afford broadband. much more efficient, much more quick than some vague process to try and bring down overall average rates. also, what we find is when people really are in need or are for the kind of rates they need in order to afford a service, a kind of rate that nobody rate making process will ever
produce, you are talking about rates closer to the $10 range, or $15 range. not that you would ever conclude that as the reasonable average rate for the industry. i think subsidies work, and the conclusion out of covid in our nation is broadband is an essential service, like food, water, health, and safety, and we need a social safety net. we need a social safety net that helps them afford that service. the most efficient way is to do the direct subsidies, rather than the vague process of rate regulation. we have seen rate regulation in this industry many times in the last 60 years. in a bipartisan way, the country moved away from it, because it resulted in lack of innovation. networks that were not improving , quality difficulties. if you are a regulatory scholar,
you have seen many examples of how overzealous rate regulation destroyed markets or destroyed innovation. a market that moves really fast and has to innovate at a very rapid rate, i think you should be very cautious about suggesting the government should have a role in determining and a setting what the right prices would be. because it will radically slow down progress. it will probably result in decreased innovation. and it is not entirely clear what utility it will provide to the american public that justifies the cost of that exercise. host: michael powell, one of the issues you dealt with on the fcc was net neutrality. it is coming back up in policy circles now. has the powell doctrine on that been successful over the last 20 years? michael: i think the answer is yes, the powell doctrine, if
there is such a thing, when we talked about this, the goal was to create an environment and culture in the knee emerging broadband industry that the direction of this service should be to the benefit of consumers, and ultimately, that you didn't block access to any content, did not prioritize services, and consumers could attach any device to the network. those questions were in doubt at the dawn of the internet. as it has unfolded, it has become deeply ingrained in the isp business model, isp cultures, and business and profitability models. the country has an open internet today, it has had an open internet every step of the way of its evolution. whether the rules are in place, in periods when they are for a short period, or gone for a short period, nothing really
changes. so we continue to have the access they have come to expect. i can tell you with great certainty, in our industry, it will stay that way. rules are the rules, because it is just the right way to run the network. we make plenty of money doing that way. we don't see virtue in the things we're supposedly accused or expectedly wanting to do. i think it is just a mythology that is unfounded. the country has wasted an enormous amount of resources going back and forth over a rule that doesn't seem to make any meaningful impact on the lives of consumers. i'm sure we will have to go through the wasted exercise for a fourth time. at some point, we should focus on the things that matter to consumers. if you want to talk about lack of neutrality, let's examine the big tech platforms who are the ones that put a lot of money in their own effort to try and hamper the infrastructure. the net neutrality rule so that
they would be able to have unparalleled power and control over the internet. and we are looking at the consequences of that today. but who really blocks content? twitter or comcast? who really prioritizes the facebook feed or charter service? i don't think that is comparable. yet in our limited amount of capacity, focus on communication issues, to devote a disproportionate amount to what i think doesn't make a significant difference, i think is unfortunate. but we will live with whatever rules we have to live with. but i don't think the country is being well served by this never ending debate. host: final question. lynn: as a former fcc chairman, now with the agency from the outside, does it seem more politically polarized? how does it affect your members that you serve to have agency policy subject to change with
each new administration? michael: i think what is frustrating is the bias of a business and a ceo, if they want stability and finality to the greatest extent they can in a regulatory framework so they can plan, so they can invest, make reasonable predictions for 1, 3, and five-year planning, and when the government lurches violently back and forth over a rule set, mostly because it is driven by a political ideological food fight between the two parties, that is not beneficial to business, to the service, that is not beneficial to consumers. i'm afraid at times, the government has elevated the virtues that there are two own the other side and defeating the
other side that we engage in policy debates that really don't advance in great complexity. the government is more polarized, the government is more rigidly ideological than it was in the past. some of it has flashed into the fcc more than i would like to see. we should remember when the incoming agencies were created, there were created expressly, and in part, to insulate them from the whims of the political process, that they can be thoughtful, technological, and judicious reaching these outcomes. if the fcc just becomes a mini legislature responsive to the crowd, i don't know where the virtue is at all. we might as well let congress and the administration make communication policy, because if it is all politicized, what is the difference? it might be antidemocratic, you
only need three votes. so i'm a fan of a judicious fcc, technological fcc, and one that doesn't stay removed from -- to make judgments and calls. as opposed to paying attention to whether of being called this name or that on the wall street journal or new york times. i hope that will ultimately rewrite itself with time. host: michael powell, president and ceo of the internet and television association. lynn stanton is -- a senior editor. thank you for being on "the communicators." >> c-span is your unfiltered view of government. created by america's cable television companies in 1979. today, we are brought to you by these television companies who provide c-span