Technology. Consumers have come to expect things to double and improvement and triple in improvement in sixmonth increments, just like they expect their ios to update every few weeks and a brandnew devices come in every year. The same kind of expectations are being driven into the home. People are looking for that kind of exponential increase in speed. On the other hand if you look at the ditty he would look at the fastest point of technology in the history of the world. Internet speeds have essentially doubled every year. In the last 10 years, it was 1500 . These are exceptional paths. You go 80 Miles Per Hour one minute, and the you think youre going 20, you want to go even faster. That is the rally of the market we are in. We should never be satisfied or happy. Even though there is some explanations, it is an industry that continues to invest 20 billion 50 billion to solve problems for consumers. How worried are you about cord cutters . Im not worried as much as intrigued. I am the father of two Adult Children who grow up as Digital Natives who have known no other world. The internet, and the interactivity, im curious whether they are as different. I do think the market is rightfully generating a set of complementary opportunities that are both opportunities and risks. For our industry, they are not all positive and all negative. A lot of cord cutting, more viewing, happening over complementary infrastructure drives bargaining consumption. These things arent zerosum for our industry. Some of those same things have been benefits. There is studies that pour cold water on this overenthusiastic, once he year that the media writes a story where they have to admit begrudgingly people seem to be watching the same favorite shows largely on the same platforms, and that cord cutting from much more of an idea, then a cold reality at least at scale. The reality that most consumers dont appreciate is they would be nothing to watch on netflix, nothing to watch on hulu if that content didnt get monetize on cable in the first place. These things over the top content, and cable content, are more mutually dependent people recognize. Youre not going to binge watch breaking bad if the 4. 1 million at the sewed it took to make it and episode it did to make it hadnt been made on the cable platform in the first place. The two things oddly enough need each other more than each would mutually acknowledged. It is the reality of content creation. Unless you are going to create organic content or user published content like youtube, if you are talking about mad men and true detective they have to go through monetization. If it doesnt run to the cable platform there is no second have to the idea. That is an important reason why i dont think we should worry about it. They need to be complements to each other. Consumer seemed to be consuming them that way. There is more tv to watch more ways. Joining our conversation to talk about the issues the cable industry faces is Gautham Nagesh of the wall street journal. Thank you. You mentioned that cord cutting is still more of an idea than a phenomenon. Only five percent of households do not subscribe to paid tv but subscribe to broadband. We do see increased competition for cable and the paytv sphere from telecom dump an ease like at t and verizon. Then the competition from satellite. It was suggest paytv penetration may be almost completely returned. Whered you see the growth for the cable industry . It is a great question. You look at the data, there is been 100 million multichannel video subscribers for a very long time. You have seen changes in market share. In cable, in the 1990s, over 90 of the market. Today the cable industry only has 50 . Satellite has picked up a huge chunk of that. The second and Third Largest in the United States are the satellite companies. The Cable Companies dont really dominate the top. The businesses have matured. You have to do two things. Its a lowercost to keep margins good or find new sources of revenue. They are attacking both of those things. To focus on the revenue side, looking for new ways delight and hold consumers. If you look at comcast and its investment in the x 1 platform. You can make videoondemand more attractive. Easier to use. The interface more weblike. Dont lose what you have. Innovate to keep what you have. You also see them taking advantage of broadband. That is a blessed source of new Business Opportunity for our industry. It is growing faster. It has a huge market. It has good economics. It is a good business. That is a big part of what it has become. I keep joking that i wish i could figure out a new word to call it because cable misrepresents it. This big communication platform is a big part of it. And then i will think you will see home security, all kinds of other services as the home becomes the internet of things. You can expect these companies to attempt to offer services along those lines as well. Just like apple has a new platform. Everyone understands you are chasing those internet of things opportunities within the home. These companies are looking for opportunities like that as well. And trying to lower their costs. When you have a digital platform and you have a relationship with consumers in the home, you can look for new opportunities revenue. The nest thermostat is going to sit on your wall. Other kinds of devices are going to be part of our lives. Putting the infrastructure together is an opportunity. Should a consumer have to pay extra for a Security System to their cable company, or should that be facilitated by the existing broadband if they subscribed one . This is a good question. It is simpler then made out in the public space. If the something has a cause it is going to be paid somewhere. The real answer to the question is, are there Incremental Services to offer somewhere that new business is going to be compensated for. Either as a new service, or buried within basic broadband subscription. I see this with the dispute with netflix pretty argument that, it is already paid for. That is an argument for saying any additional costs be brought on by all broadband subscribers. It means, you could bury it in one fee and call it your broadband fee. The reality is, you pay for it as a separate term. Youre going to pay for it either way. While one may feel like i am getting this from my one offering, youre still ultimately paying for pieces. If you offer security services, devices, inputs, subscriptions, all that is definitely incremental expense to offer product services. That is something you are selling. It is interesting made the comparison. The cable Business Model is such that one the incremental expenses of whatever additional programming are born as a cable package. Its unlike you are saying broadband should function differently, that there should be some flexibility to explore those arrangements. This is the subject of the rulemaking of the sec right now and controversy. How do you think controversy, how do you feel about the idea of managed services or auxiliary availability for what we call edge providers . A couple of things. If you look at your cable product, we bundle that. We dont get a bill that says you paid for one thing. And we hide what the thing is. You buy a phone service, you get a broadband service, you buy a video service. You can combine them together. It is telegraphed that you are buying a set of services that youre getting a price efficiency for bundling. That is different than saying lawyers used to do, we are not quite a tell you what but for Services Rendered here is a bill. This is what you paid for this. Managed services should be able to offer over 80 of what is dedicated right now to delivering you a managed service. That is called cable. If i took our pipe and divided it like a pie structure, absolutely that is what were doing now. What is cable . We spent decades building a private proprietary infrastructure over 80 of which is dedicated right now to delivering you a managed service that is called cable. The hype is of delivering you specialize Service Called cable. That is what this show called over. We should be will to do this is the confiscation of our business. You should demand as a matter of law we take away our price of service and put in the public domain. That to us is really beyond the pale as form of confiscation of private property. We use a portion of the pipe for the public internet. The majority is for the services we build and develop. The reason your cable doesnt , or can beixelate High Definition is because it is highly prioritized and highly managed. Unless youre willing to say Cable Service itself shouldnt exist, you have to at least concede forms of managed services. Government owned. Withild our Infrastructure Private capital to sell service to the american public. The government has to be careful to success suggest the semiyou can remove those services and repurpose them. Michael powell, one of the issues the fcc is seeking comment on is the issue of a new Net Neutrality standard. Chairman wheeler has proposed allowing companies to make contracts with cable providers, with broadband. Some are calling this a fast lane. What do you think of that . Lane . Consider it a fast but merely defend chairman wheeler. It is a complete distortion to characterize what he is doing as he is proposing to have fast lanes. He is not proposing we should have fast lanes. He is dealing with boundaries of the law as interpreted by the court. He is trying to create the strongest manager alan the role he can within the perimeter of what the law provides. If the law does not provide for it it is the obligation of congress to give him that authority or not. It is not his responsibility to make up the authority or pretend he has something that he doesnt. The fcc is not allpowerful. I think he has he is proposing tough Net Neutrality rules that have to accommodate the boundaries of the court. That is a fair description of what he is up to. Honest. E, ill be you talk to every ceo in my industry. I dont think they know what a fast lane is. I dont think anyone is contemplating doing one. I think this issue is blown be on the proportion of our incentives and interests. For 16 years there has not been a Net Neutrality rule. Our broadband business have run substantially and not one isp has endeavored to do even a quarter of the things that are hypothesized to me at every legal right and opportunity to do them. That is because i dont think it makes that much sense. At t wrote a blog saying not doing fast lanes or priority access. No plans or interest in that. I dont think they would be remotely willing to say that in the public forum they were sure that their business doesnt involve that. Think about how silly it is that a certain level. I turned to google and say if you dont pay me, i am not going to deliver internet search to my customers. How that is going to go with your customers. Why doesnt google say i have a better idea, pay me . Search resultser to your consumers. How would you like that . Look at retransmission. Blackout scenarios work out for Cable Companies now. When you try to tell cbs or espn should those power relationships have gone in a different direction. They are more worried of that scenario than the idea they have massive Business Opportunities to charge. The other thing we forget is 90 customers, 19 are not doing anything that requires any enhanced capabilities. They are facebooking. None of that stuff requires a substantial improvement in a fast lane. There isnt much services that would benefit from such a lame. You would have to believe that i can charge so much to the few companies that do to offset the degradation of a slow lane that i condemn the rest of my consumers. I dont think it makes economic sense or logical sense. We would be crazy if we did some of the things people are suggesting. Which is why this fight is not about Net Neutrality. It is take the cable industry for example. We supported it. We didnt sue anyone. One company did. I think we are willing to live with that. They are all on our terms of service even today. The on thing we care about is for one rule we are not going to support radically transforming the entire regulatory model in title 2. Which is like reaching for a sledgehammer and chainsaw, and a bulldozer to tackle one rule. Not even one rule. One piece of one rule. Punitive benefits to doing that are almost zero and the risks of doing that are monumental. That is not the only thing we are in the mood to be fighting over. I think it would be a radically disastrous step for the country and damage our businesses. I think it would hurt consumers much worse than people understand. I think it would hurt Web Companies more than they understand. Title to very far and wide. I can conceptualize services that web innovators are involved in that find themselves tangled in that regime. Dont think we are doing a fast lane today. I dont know what it means for the future. I dont think we have any plans to do when. We would live with the respectful role in regards to the law. We dont think changing us and Public Utilities is the right approach. We wish the chairman will in crafting the role. He deserves everyones support and assistance. Rather than criticism. We will see how it comes out. Michael powell served as chairman of the fcc 20012005. You referenced one of the things that is open for comment as part of the proposal is whether or not Broadband Internet access should become a public utility and regulated under title 2 under the medications act. Communications act. Your industry and a whole is against the prospect, but convince us that the portion of the pipe that is dedicated to the Broadband Internet is not a utility in 2014. We should, let me start by except thathouldnt because something is important it becomes public utility. That is the language going around. It is not a luxury. That seems to be simplicity of the analysis. What does that mean . Making as a Public Utilities going to make the internet go faster . Is going to reach more people . Thatve the benefits of transformation . When you start to examine it, you have to examine it against the results have been achieved. Generally accepted by all, the trillioninvested 1. 2 in the private sector to grow the internet. As a regulatory model, is it going to produce more capital for investment or less . Let me go through a quick list. It raises rates for consumers. Why . Under the telecommunications law, it automatically is a matter of law that those services have to be taxed to the universal service program. As consumers to pull out their phone bill and go through the details. Tommy if you dont see a whole set of fees, taxes, required by the state and federal government attach to your bill. Sometimes 25 of your bill will be those fees. They are required by law if youre a Telecom Service provider. Consumers use youre entitled to the agency that protects against ,raud, false advertising, abuse protections, privacy, the agency that has the lead role in that would be disenfranchised. Lose. Er you gain you will the consumer doesnt come out better. The cost of Regulatory Compliance in a regime like this are massive. Every Company Needs a license. I could go on and on with the roles and responsibilities that occur. The cost would unquestionably rise. That will come out in broadband growth. If you like Internet Speed today, you might have to get used to it. The investment needed to grow it will shrink. If you think people are bluffing about that look it with the when jennation was proposed title ii. Stock is the most booming stock market in the world. They are down because of the threat of title ii. That will depress capital investment. That means growth in the internet. Ill of the objectives the president talked about, making broadband more accessible to more people, more affordable, all of that would be threatened. States would suddenly have a regulatory hub on the internet a do not have today. States could impose taxes and fees on service. What are the benefits . It is a fixed the problem they are asking for. 80 years of president for that. You can discriminate. You get no benefit because you would have all of this harm and these unintended consequences. I have to say about the unintended consequences. A telecome offering service, so is kindle. It bundles all communication with content. It offers you a candle the vice,t has a three g connection that could easily be in snared. Skype, xbox, they are innovations that would be convoluted by this switch. All of a sudden that stuff would become uncertain and confused. The amount of time and energy it would take to resolve, easily a decadelong. The court cases, jurisdictional reordering of things. Backuld take this country in the Information Age when it is trying to accelerate and compete effectively to be a. Reat empire consumers will regret it. The advocates of the idea of changing will regret it. I want to ask you about a Supreme Court decision. If the Supreme Court decides , doesbly towards aereo that affect the cable industry . I dont think that is significant quite honestly. We have an obligation to carry those channels anyway. People tend to forget that just because you may be able to offer canrvice which people capture them over the air, we would still have a legal carry duty. Most of these companies are big who insist on the terms of that kind of carriage. I dont know it would be easy to escape them. Its face it. Technology is disruptive. Will bent aereo it something else. These are powerful signals across the air. Technology will be constantly trying to hack and figure out how to capture the content delivered to consumers. That is the shape of more to come as innovators attempt to fund the services. Could affect retransmission fees . It is hard to say. The only way it would is if you have a goodonsumers costeffective effective way of getting valuable channels in a way that me disconnected from their cable bill so that if you didnt want to pay the increases in retransmission you would move to this other service provider. Maybe that would bring costs down. And probably i think all these companies are pretty good at protecting their interests through negotiating. Michael powell of the National Cable and telecommunications association. Thank you for being on the communicators. Thank you. Cspan, crated by americas Cable Companies are to five years ago and brought to you in the Public Service by your local supply provider. Satellite provider. When i started covering congress, you had people like mills, russell, Wilbur Howard baker. People who were giants in their own way. A couple of those guys got themselves into trouble. Overall, these were people who knew they were all intelligent. They knew had to craft legislation. They knew how to do a deal. They worked with whoever the president was. Whether it was that party or the other party. They usually found a way to come together and make decisions for the good of the country. Today, you dont see that anymore. The quality of members of congress in terms of their intelligence and their work ethic has diminished. They are great people. The members. Align they are a minority. I think the hardest work they do is raising money. It is not learning the issues are crafting deals. It is making speeches and position themselves to get reelected. Myers is leaving washington, d. C. Behind. Find out why sunday night at 8 00 on q a. The new head of the customs and Border Protection has pledged a more transparent and open Border Patrol agent c. Speaking at the center for International Studies he called the influx of unaccompanied children attending to enter the u. S. Southern border a humanitarian crisis. This discussion is one hour. Good morning, everyone, welcome to csis. My great pleasure to be introducing our speaker today and our discussant along with them. First is the honorable Gil Kerlikowske who is here as the commissioner of u. S. Customs and Border Protection, sworn in in march. Customs and commissioner of protection. Border he has an extensive history within the Law Enforcement and now runs the largest federal Law Enforcement agency in the country. Hiswe are looking ford to remarks this morning. Customs and Border Protection of late,in the news and he is going to have some good questions put forth to him our discussant adam iles who managing director at the chair top group and has had plenty of his own experience years on homeland security. To me turn it over kerlikowski and let him give his remarks. It is a great pleasure to be back at csis. Especially o be in the beautiful facility. I think well over a year ago i had the opportunity to deliver remarks on another noncontroversial topic, drug csis. At so to be back and have another ascontroversial topic such immigration, border security, et delight. Just a te tee thank you again and let me bed things. T with a few i had let me go ahead and start with a few things. Days about 1