Host also joining us for the conversation, ted gotsch of telecommunications report, serves as senior editor. Senator smith, could you start by talking to us about how people watch television in the current day as say even opposed to fife years ago five years ago . Guest well, clearly, a lot is happening in telecommunications generally, and broadcasting is affected by that. Were sort of the original wireless, but we remain highly relevant because what we do tends, it is local, and as to those who want to get it the oldfashioned way, it is free. And yet you have satellite, you have cable, and now you have the internet through hulu and netflix and others that are other ways for people to access television. So television remains highly relevant to the future because when you look at the top hundred programs that are watched, 90 of them are broadcast content. And so i think the future of broadcast television is very bright, indeed. Host what are the challenges then looking forward and the future of . Guest well, i think the challenge for us is we want to be on every device for every person at every hour of the day. And were a mobile society. And so the challenge is to make sure that were on pads, computers, phones as well as the traditional viewing which is in the living room now on a wonderful hidefinition television screen. The other challenge we have, obviously, is that spectrum is a finite resource, and others want that resource, and yet there is not enough spectrum in the universe to do all video by broadband. And so our architecture of one to everyone in a location versus theirs there is one to one which is one to one, theirs will always fail because of of simply the transmission of video one to one. You cant do that. And i think the didder thing is were in a highly regulated industry. When you compare the burden that broadcasters have versus cable or satellite or, obviously, the internet or the Telephone Companies, we are, were the regulated one. We earn our licenses every day by all that we offer and the public obligations as to decency, as to childrens content, as to Public Affairs and emergency warnings. These are all things that the public is able to take for granted but which, upon which they are very reliant. And i think appreciative when they recognize, okay, this is broadcast. This is not, this is live, this is local, this is free, this is important. So with the challenges as you listed them, whats the most important first step or steps you have to take Going Forward . Guest well, obviously, were in uncharted territory with the fcc on the spectrum auction. The spectrum auction, the way they have designed it has really never been done before where you have a forward auction and a reverse auction, and i cant i think i can say with real confidence that none of the big networks are going to be volunteering to go out of business. I dont have a clue as to how many broadcasters who are on the edge financially who will say well take the money and volunteer to go out of business. Our focus is that those who stay we want them to be held harmless, and we believe the legislation that the Congress Passed does have those kinds of protection. Host so is spectrum still the lifeblood of broadcast Television Even if it goes to other platforms and on demand and things like that . Guest of course. Spectrum is one of the highways of the sky, and the way you have a channel without interference. For broadcasting that spectrum, we need it because we need elbow room. Notwithstanding all of the Regulatory Environment we operate in. I wish you two could go with me to nhk labs in tokyo and see the incredible Technological Developments occurring in broadcast television. Im not just talking about 4k, im talking about 8k, and im talking about television experiences of the future that people are going to want with and theyre going to love. And so i think on the Technology Front if were allowed our space, our elbow room, our future looks very bright indeed. Host ted gotsch of the telecommunications report, go ahead. Thank you. Senator smith, pretend you were to wake up 20 years from today. What kind of Business Model would be, would we be looking at for broadcast . I mean, with more people viewing things over the internet, some people are even questioning whether its going to exist. Whats your view on that . Guest well, it has to exist because, again, theres not enough spectrum to do video or television on a broadband basis. You can do, you can send a youtube and things like that, but if you start downloading, you know, a whole, tremendous amount all your Television Viewing it just simply will fail you. So our architecture in the end plus that thest free and its that its free and its local, thats something that cable which is taped or time delayed or a satellite content similar thats not a local focus, its not free. Its something you pay for, and its something that in the end, you know, Something Like sports, i think its really important to the American People that broadcasters continue to be the primary focus of Sports Communications because, um, you cant do it by broadband. Itll, the architecture will fail. And so i see that, the fact that its local, the fact that its live are the enduring strengths of broadcasting. And even though theres a lot of talk within Telecom Circles of looking to other areas for spectrum not only broadcast which, obviously, youre very familiar with, but maybe looking to the federal government to turn over more of the spectrum that they have have, youre still saying you dont think theres enough bandwidth to accomplish what mobile guest well, you know, the government through the military and others, they still have, they have over they have half of the spectrum thats out there, and the problem is when you want to go get it from the government, particularly the United States military, theyve got guns. [laughter] and they dont want to give it up. And ultimately, though, there are opportunities there that are not in the private sector that have been licensed since radio was first ip evented and then television invented and then television. We have half of what the Telephone Companies have. But the spectrum that we have, were anxious to keep because that is your lifeblood. Thats your seed corn. If you lose your spectrum, it means youve lost your channel, your license. It means you dont have a future. And, you know, i think weve just seen, for example, in sandy, the hurricane, when all of the Broadband Networks fail, the constant is broadcast radio and television. And if people have got electricity or if they can get it on a mobile device, they can see this stuff live. And sometimes that information that is transmitted can be a matter of life and death. Do you think that, um, if not enough channels broadcasters come forward to volunteer spectrum, that the broadcast industry will look to congress to maybe put something in place mandatory to maybe force some of our smaller broadcasters to get out of the game and open up more spectrum . Guest you know, we have to be prepared for that. I think that thats certainly a possibility, um, at the end of the day i think the world of tomorrow has to be a future of broadcast and broadband, and if its just one, it will fail the American People. And if its just one, all of the other Public Values like decency, like localism, like free, that goes away. And so when you want to, for example, if youre a sports team, if your university were in a bowl game that you wanted to watch but it wasnt broadcast, then youd better have the right cable channel or subscription. You better be paying your bilker or you wont be watching the game. I dont think members of Congress Want to go there either. Host there was figures from nielsen that took a look at pure broadcast television watchers, this was in the Third Quarter of 2011, it totaled 5. 8 million homes down from 6. 2 million homes, do you still have eyeballs just for pure broadcast television . Is. Guest well, yes, we think the number of broadcastonly homes is probably around 17 million homes, and when you look at second and third televisions, usually people dont want to be paying for two cable bills, and so theyll are a satellite or a Cable Television in the living room, but where they shave or in the kitchen theyve got a broadcast television. But lets say, lets just limit it to 17 million. You extrapolate that to the number of people, its probably approaching 50 million americans are dependent upon it. And those tend to be more of our minority communities, the economicically underprivileged, often the elderly and increasingly the young techies who are cutting the cable and who find enough on broadcast with multicasting and all of the new offerings of broadcasting. They say i dont have the time to watch any more than that, and such as i cant find over the airwaves, ill get on hulu or netflix. By our studies its growing, not decreasing. The cordcutting phenomenon a real one. So, you know, we think cable is important. We want them to succeed. Satellites important, we want them to succeed. They cant succeed without broadcast content. Thats why under retransmission consent theyre increasingly willing to pay for the content without which they cant sell a television subscription. Host can a network just live on cable and not have to broadcast over the air . Guest dont i mean, theyre not trying to. They want to be over the air. Host right. Guest and thats why theres so many owned and operateed stations that are owned by cbs or abc, because they understand that the gravitas of their marquee of cbs still has to have that local component, that local news, and, you know, with multicasting, they can go hyperlocal. Youre seeing in a six megahertz license you can put four broadcast channels there now. And so youre seeing a lot of the Minority Community finding niche markets in multicasting. Youre finding foreign language, youre finding religious broadcasters, fulltime sports, fulltime weather. All of these things are part of the new age we live in, and they come to you via broadcast. Host ted gotsch. The fcc released a notice proposed rulemaking on incentive auctions. How complicated do you see the process being . Guest i see it hugely complicated, and i think a lot of folks in and out of the fcc are scratching their head as to how this is going to work. But we want to be cooperative. I mean, if a broadcaster wants to go out of business and cash in, thats called freedomful we support that. And the fcc chairman has called it culling the herd. Well, we dont want any of our heard culled necessarily, but if somebody wants to go out of business, they can. But i the problem in all of this calculation is that this is an urban problem. This is not a rural problem. Generally speaking, the urban stations, the ones that they want to go out of business are not going to go out of business. Theyre not going to volunteer. And the areas where theyre out to get people to volunteer tend to be in the flyover states. And they dont need their spectrum. And so how this is going to work matching buyers and sellers is going to be a whole new exercise, and we will be cooperative as long as its transparent. As long as the congressional mandates are observed to hold harmless those who stay. We dont want interference. We want to stay on the air. Theres a lot of people that count on us. Whether they get it over the air or they count on it coming through a wire or bouncing off a satellite. The fcc has said that it wants to move rapidly towards or holding incentive auctions in 2014. Your group has expressed concern that if commission rushes the process that it might not be done right. Can you elaborate a little bit . Guest well, the way theyre structuring this is theyre going to say how many at this price will go out of business . Theyll see who raises their happened, and then theyll say to the buying community, how many will buy at that price . And no one will know whos doing what but them in the middle, and then when they find out, okay, we dont need that spectrum, okay, how many will buy for this and how many will buy for that, and theyll try to come up with a patchwork model that clears a band for them. The other side of this which is concerning to us is, of course, a lot of powers will have to be moved as part of the repackaging of television stations, and that is, if this is not done correctly, you know, the dtv transition went from analog to digital, thatll look like sunday school class compared to the complexity of this. And millions will be disenfranchised from television if this isnt done properly. So, again, were in uncharted territory. We know the will of congress, we know the goal of the fcc, we will be cooperative. Host a discussion about the future of television on this weeks communicators. Our guest, gordon smith of the National Association of broadcasters. He serves as their president and ceo. Also joining us, ted develop of telecommunications reports. Talk about content. I can watch extreme home shows on abc, i can go to cable or elsewhere and watch a multitude of show on home ownership, home changes, whatever. Youre faced with competition on that front. Make the case that broadcasters still is the ability to compete and should . Guest well, notwithstanding the proliferation of all these channels, again i go back to what are people watching, and it is the high quality of broadcast content that keeps them coming back to broadcast channels. They may not even know theyre on a broadcast channel, but thats what theyre watching. 90 of the top 100 shows are broadcast. And as long as the economics of broadcasting are preserved, the content will be high, and that will attract ears and eyeballs, and thats, of course, the challenge with the proliferation of competition thats out there which so far were doing fine with it. Gls and you spoke of regulation. Broadcast tv is regulated differently as far as cop tent when it comes to cable in. Guest oh, absolutely. I mean, you know, when we were kid, if you wanted to bring smut home, you had to sneak it past your mother. Hope you didnt do that. Today all youve got to do is hit the wrong channel, and youll get all the garbage in the world coming into your house, so people need to be very careful about channel surfing. But if tear on a broadcast if theyre on a broadcast content, there are Community Standards of decency that we have to observe which parents ought to be mindful of when it comes to the viewing of a family. I think thats good public policy. I know many of my members think their First Amendment rights are somehow impinged by that. That said, its also a very good advocacy point we make on capitol hill that there ought to be some place for the family to turn that observes localism, provides it for free to the viewer and that does have respect for Community Standards. Were not perfect. Theres a fleeting expletive here or there, wardrobe malfunction, but we have technology that allows us time delay, there are ways that people can can be protected, and broadcasters are not in the indecency business. Thats not our model. And i think ultimately that serves the American People. The, um, theres been a lot of talk from nab in the wake of the 2009 Digital Television transition about moving towards mobile dtv and multicasting, you mentioned this briefly before. How successful have those offerings been thus far, and in mobile tv in particular it seems it has taken a while for the mobile ecosystem and devices to be developed and why is that . Guest yeah. Well, it simply takes time, but i can tell you on the market now its called the dog l, you put it in your ipad, and you have an app for a broadcast station, you get that, and you get live airwaves, and you can watch it on your ipad. The future is mobile, and we will want to be on all these devices, and im absolutely confident we will be with this and other things that are coming along with mobile. And, you know, at the end of the day i think the broadcast and broadband with technology in the future will be interactive with one another, and it has taken a while for mobile, but we want to be in the backseats of cars, we want to be on your phone, we want to be on your ipad, and the technology is there to provide that. Host so is there still hurdles to cross especially as more tablets are sold . Guest its just more education and making people available. And the ideal thing about watching video broadcast on your ipad, youre not billed streaming rates. Youre not billed by the bit. Its free x. Thats good, and its live. So if you want to, youve got to leave the redskin game early last night and you wanted to plug in, you know, you could watch it in backseat of your car, or maybe your carr has a broadcast receiver in it. Thats the future, and we recognize that, and were going to be participant in it. Host we live with a digital video recorder, what does it mean for the future in. Guest i think its here, its going to be there. People want, you know, im often asked the question do people want their video live, or do they want it when they want it . And the answer is they want both depending on their schedule. And so weve got to fill that niche and make sure were on every platform, every device at all times so that people have a choice if theyre going to record it, theyre going to watch it on their schedule. But some things you want to watch live, and were there to provide that. Host and since the broadcasting industry depends on advertisers and advertisers dont want their commercials fast forwards through, whats the next steps . How do you capitalize on that particularly . Guest yeah. The hopper, thats a real challenge. Cbs has told dish network were not going to do business with you if youre going to continue to provide that because youre were going to charge you a whole lot more in retransmission to make up for the loss of advertising, or youre not going to be able to do that because youre going right at the economic model of a broadcaster. And, you know, as long as we have Revenue Streams from advertising and retransmission consent, those get reinvested in the best content on television. Host tom. It seems apparent from discussions weve really come to a situation where it seems to many observers that we have broadcasts going up against the Wireless Industries. Some washington observers have suggested that nab and broadcasters have begun to lose some of their clout, and do you feel that considering these continuing battles, discussions regarding spectrum and it usage, um, is how is nab positioned to sort of do battle with Wireless Industries over these issues . Guest well, what we do is for free to the consumer. What they do comes with a fee, and free is better than a fee. And if you want to talk to lawmakers and having been one myself, i can tell you when i wanted to talk to my constituents in oregon, i knew i could put up a cable ad, but i had to run it for a month before anybody saw it with consistency. I could put up an internet ad, and maybe a thousand people might see it if im lucky. But if i want to move numbers and communicate overnight with my constituents, where do i put my money . I put it on broadcast television. Because thats where the eyeballs are. So i think were well positioned to do battle with those who would hike to put us like to put us out of business. So even though, because certainly there seems to be a growing, um, feeling, you know, people the importance of broadband, the importance of wireless that this is the future of, you know, communications, and theyre certainly pressing that, you know, we need to get ahead of the rest of the world and more spectrum and that leads to innovation and devices, um, are you facing headwinds even if maybe b the sheer numbers are adding up in your favor as youre explaining people get it over the air, they get it through satellite, cable or internet. Tell me what about the Telephone Companies is local. I mean, whats local about their content . Whats free about their content . Their content is important, and people want to have access to it. That does not mean they want it to the exclusion of localism. Were the only country in the world that has a broadcast system that isnt like the bbc which is all the news you can get in britain. Youve got cbs, you have abc, nbc and fox and telemundo and univision, and they have affiliates that go local and deep. That doesnt exist in other nations, and we, we have something pretty special. Why would we want to destroy that just so that the Telephone Companies can take over more of what broadcasting does . Would they take the regulations of a broadcaster . Would they do local news . Would they observe decency standards . Would they do it for a much lower price . Free . Theyre not going to do that. So when it comes to a lawmaker, he or she is going to say to themselves do broadcasters still serve a valuable Public Interest . And the answer is, yeah, you know, my kids like childrens programming. And i like having a station that im not worried about them watching. And i like the fact that the underprivileged in our society can have it for free, and i like the fact that broadcasting is making an effort through multicasting to include all of the diversity of america so you have bounce tv that has niche programming to the africanamerican community, obviously, univision, telemundo have done a tremendous thing in providing content for the hispanic community. I think lawmakers in their heart of hearts understand that broadcasting does things for the American People, their constituents, that these other Telecommunications Devices are not willing to do and certainly are not regulated to do. But if youre going to get rid of broadcasting, whabt all those what about all those Public Policies that are served by broadcasterrers . Arent those valuable still . I think the answer is yes. Host how much clout do broadcasters have at the fcc . Guest i hope some because if you get rid of us, you get rid of their purpose. They listen to us, we will be to them. Theres a healthy tension that exists between an industry and its regulator, but we work cooperatively with them. We simply value our industry because we think the American People do and, therefore, the fcc does as well. Host is there more emphasis to cable or over the top or any other type of programming rather than broadcasters at the fcc . Guest not that i know of. I mean, they have a they need to be fair to all, but again, i think our industry and not those other Industries Serve all of the Public Values that ive just spoken about. Host and aside from spectrum, are there any other regulatory issues that you could say to the fcc give us this or at least let us have some way that would help us be competitive in the future . Guest well, they have begun to wisely, i think, reck these that the ownership rules were designed in the days of i love lucy, and now with all of the changes with preserving legitimate journalism, i think that theyre trying to look at some loosening of the ownership rules so that a newspaper, a radio station, a television station can pool their resources, their capital to preserve Good Journalism. Thats actually a very real threat in our society right now. If we had to look to the internet for all our news, um, i think a lot of people scratch their heads and wonder about its sufficiency, its credibility. And good news reporting is certainly dope in newspapers, and its certainly, i believe, done in television stations. Not the same depth, but importantly. And the ownership restrictions if they were loosened to a degree would allow Good Journalism through broadcast medium and also be helpful to the newspaper industry. Host ted gotsch, time for one more question. Okay. What do you, again, you talked about this a little bit before, but what will the effects of time shifting and people viewing things over the internet have on Linear Program channels . Guest well, its going to have an impact, but, again, i believe that broadcasters because of their architecture, because of the publics values they serve, because its free and because its local, were a survivor. You know, when television came along, everybody said radio was dead. When the internet came along or cable or satellite, everybody said broadcast is dead. No, were still very much alive and well in both radio and television, and because we have an architecture and a niche that is hugely important and, obviously, capturing the eyeballs of the American People. Host so as where you sit as the president and ceo of the national sexer of broadcasters, whats job number one for you Going Forward . Guest oh, the preserve of channels that are not interfered with in sufficient volume that we can innovate into the future and provide these remarkable new television experiences which are not just the near horizon, theyre here. And within this decade you will see Television Sets the likes of which you cannot imagine, because ive seen em. Ive been to the nhk labs in tokyo, and its better than 3d. Got depth of field, its got a clarity of picture. Its not even