Training. Verizon is one of the largest wireless companies. Thank you for being our guest. Joining me with the questioning is paul kirby. And we are delighted to have you. Earlier this spring we covered you at a panel and you were asked about what the number one privacy priority was in telecommunication and your response was spectrum, spectrum, spectrum and talked about the three institutions that have responsibility for that. I am going to ask you were the audience to briefly give a report card on how the institutions are doing and why it is so important. Guest the reason it is important is spectrum is a fundamental input going on in the investments. We are all carrying multiple wireless devices and they require spectrum and more and more of the airwaves to connect up and communicate so it is necessary to find ways to make more spectrum available to continue the invasinovatioinnov. As far as how we are doing, i think all three of the Government Entities are doing a good job within the constraints in which they operate in. We are constructual issues. There is no one responsible for managing the spectrum. Nitia does a great job but they dont have the authority to take an overall holistic view and that makes their job more difficult. I think the fcc is doing a good job within the constraints they operate. We are now, for the first time, look at over the next year and a half or so that 23 auctions after a five year hiatous of no spectrum. So that is exciting but we need to look at and see where it is going to continue to come from. Host host on the house side they have two huge efforts and priorities and you said at the Panel Session we as a country have no strategy for our spectrum management. I guess how do we get there . How does a stregic plan come about . Guest i commend those trying to push this forward on the hill. It needs to start on there. It needs to start with congress. I think in many areas of the communication policy today what we are seeing in many, many debates and issues and sometimes fights within the industry, are symptoms of a larger issues and that is we are operating under an outdated communication statutory framework that may have been successful were the things it was trying to achieve 18 years ago or in some cases 80 years ago. But it isnt wellsuited for the challenges today and spectrum is one of those. If you look at this as a policy matter, and that is different from politics, they to coexist. Policy is how the world should be and politics is the way the world is. You have to take both into account. From a policy Perspective Congress should appoint an agency that has the authority to manage the spectrum resources of the country and look at the highest and best use of those resources so we can continue to serve the National Security function and driving the spectrum needs. Host is there a country that has a better job for their spectrum . Guest so far no. In europe the market is fragmented and they are having trouble getting the 4g rolled out partly because they have dont a nationwide approach to allocation. So far i think the nationwide progress has been amongst the best in the world. But we are not all the way home. We have continued needs and room to improve. Host host lets go to rewriting or revisiting the telecom law that has guided the country 75 years plus. With the speed of change in the business, how would you counsel the lawmakers and policymakers to start thinking about a rewrite of this . How can it be platform specific with them changing as rapidly as they do and what should guide it . Guest it should not be platform specific. We absolutely need to modernize the communication laws. Many of the debates like the open Internet Order, spectrum, video are showing that policy makes are trying to apply these outdated methods to modern issues. It is time to update those. The way you avoid the law being outdated the minute the ink is dry is ensure you dont start with platforms, you start with it consumer. How do you build it in a way that is flexible and can change as the way the technology changes. The Technology Cycles in the environment today are no rapid that it isnt a criticism for congress to say cannot see ten years out. So dont draft something based on what it might be but rather look at general principles like consumer protection, publix Public Safety and apply that. Host turning it to paul kirby. Several folks said nti is responsible for federal and the fcc for private and state and local. That doesnt make sense. Would verizon support getting rid of the biforcated that could make it easier to repurpose spectrum that is not being used. Guest i dont want to get into what agencies are right for specific purposes. I dont think you should build the statute around significant technologies and i dont think you should figure out the right agency first. I think the right way is to say what the overall spectrum policy or larger communication policy and figure out where the right skill sets are to manage those. It is certainly favoring an agencies having the power and the fcc maybe the right one to manage those assets overall. Drilling down a little in may, the fcc adopted a spectrum and incentive auction order. The spectrum order would put limits depending on how much spectrum is returned on carriers are lower broadband and verizon and at t proposed them. Verizon praised other parts of the order but didnt mention the bidding limits. I am curious if you can give us a sense if verizon still plans to participate in the incentive auction . Guest i would say you are right. We did praise parts of the order. There was a lot in there. We thought the plan for the aws3 auction starting in november was very good. We commended the fcc on updating the spectrum screen which we thought was long overdo and was matter of institutional integ i integrity for the fcc. It was a very positive thing. As you note and we have said we have concerns about putting the restrictions in auctions. We think the incentive auction is complex as it is and micromanaging it on who gets what is not what we think we should do. We will explore the both the decisions, though, and make the decision when the time comes. They said they are going to try to attract broadcasters to the option and if enough dont give up spectrum there is nothing for verizon to bid on. Do you think the fcc has done enough . Or should they do more . Guest they are doing an awful lot of research and whether they successful i would have to reach out to the broadcasters. But you see chairman wheeler focused personally reaching out to the broadcasters. The open internet got the most attention and blocking the Net Neutrality law but with a different reading of it that would allow for individualized bargaining above a minimum level of access. Would this change be accept to verizon . If not, would it be worth verizon or others challenging it . Guest when you say this thing you are referring to the individualized bargaining laid out by the fcc . We will have to see what comes out. We are at the beginning of the process so we will have to see what the final rule is. I cannot prejudge what the ultimate final rule will be. I think the important thing here is to look at what this overall process is and isnt about. This open Internet Order and the whole issue of open internet has been complex foresee long because it has been an empty vessel people poor ideas and only some are related to the open Internet Order itself. This isnt about whether or not consum consumers have access to open internet. They will continue to do so. Isp like verizon is in its own interest to provide open internet. That has always been the case. It was true before rules, during it and since then. I would also say it isnt about a fast lane. The way the internetworks today. There is an entire part of the eco systems whose entire Business Model is dedicating to getting information to content. Google and you tube content will load ten times faster because of the Distribution Networks and they have been built out by google and others. So this concept of the fast lane i find a little bewildering. It is something someone came out with right away and people have repeated this mantra. In fact, you have to ask yourself why in all of the time the internet existed has no isp coming up with the fast market and i would suggest it is because the market is filled by contribution networks. There is no demands pushing people in that direction. Not clear why people fear for the first time this is going to be a new development and hurt consumers. What this order and process is really about, and the question on the table really is, what type of regulations do we want to apply to the internet eco system. It comes down to a simple question do you like the internet as it exist today . Do you value the innovation and investment it has driven . If so, you should be in favor of the bipartisan light tough regulation that started during the clinton administration. What we are laying out is that regulation. We long felt no rules are needed because the market takes care of it but the light touch regulatory approach is the right way to go. The alternative is reclassify broadbrand internet as a telecom 2 service. And we will apply 80yearold rotary regulations on to this rapidly moving eco system. That is untried, risky, radical, reglortory suggestion. Host this is the first stop we pay tension to and once an npr comes out is there always a policy . Guest you can have proceedings where the fcc will propose rules and say we will not do anything but most of time yes. The fcc accepts comments, look at the record, folks meet with them and they will come out with an order. Sometimes you have a proceeding that is hard and they will ask more questions saying here things brought up. We would expect rules it from this. Host there is always reference to title two. And that is applying the common carrier status to the internet. Would you explain the implications would be . Guest in some cases we are all grappling with what they would be. We think they would be dire. Common carrier brings pricing regulations, Service Quality and downstream, if you were to reclassify broadbroadband as this, we believe it would have implications through the eco system of the internet because you would look at the fcc and the state regilators getting involved in micromanaged decisions on how services are provided and priced and not just by the providers but by those reselling the devices. And that takes into account others who have built out Networks Like google and microsoft and others. It hasnt been done. You have fcc chairman agreeing that wasnt the right way to go. We think the implications would certainly immediately depress investment in the industry but also would likely change the way that companies through the eco system interact. Host we have about 12 minutes left. Guest the original rules treated wireless differently because it is a different technology. So in the original rules it was less stringent. The 2010 order said that mobile providers cant block websites that compete with the providers services. And mobile providers cant block websites and app that compete with their services. In practical terms, there is a big difference in wireles management and what they are proposing . Guest i would say wireless is different. We dont think rules are necessary for wireline and if they were to be adopted we think it is important to top with the light touch Regulatory Regime that has been part of this and driven investment. We believe you need to look at wireless different ways. It has unique characteristics. We talked about spectrum and you have different scarcity on the Wireless Network and you need the flexibility to continue to manage the capacity to serve the customers well. Without regard to what happens on the wireline it is essential we continue to recognize the wireless market and the technology and the wireless spectrum constraint issue. What is going proposed for wireless . Is that problematic . Guest i dont want to get into that because we are filing papers and commenting on that. The mpr 3 has posed the question if wireless should be treated in a different way and we believe it is the question. Do you think it will be likely you will be back in court . Guest if the fcc reclassify broadbrand as class two, i think that will end up in the court. I think this issues generates more heat and light over the years it has been debated. A number of people in the industry are ready to move on and feel like there are more important policy issue in washington we should be talking about. The question is can the fcc chart a path that encourages the investment in the eco system that everyone can say this works well enough we can move on to other things. With a carefully crafted rules that is a possibility. The transition to all it networks is another requirement. Companies will be doing trials to try to see in an all ip world what do we have to look for and the chairman talks about network com pact and things that are protect the public dont go away. Give us an example of how you would like the proceeding to go. Guest you hear people talking about general Technology Transitions and there are a lot going on. 40 of the population today for example use only wireless for their home phone. And you see a transition from copper to fiber that is going on and is well underway. These things get conflated. One of the things we want to make sure happens during the trials is the fcc doesnt impede or slowdown even the Technology Transitions that are going on and driven by consumers. They are voting with their feet in their transition to wireless. We are doing copper line to fiber lines and that is not a transition from tdm to ip. These customers kept the same service but went over a network that is far more reliable. We just had one of the toughest winters on the eastern seaboard and our system showed how well they do under the weather. We think the fcc is asking important questions in terms of the types of values we have as we moved forward but we want to make sure we are not in a situation where Technology Transitions that are well under way, such as customers choosing wireless or transitioning from copper to fiber which is an improvement for customers, dont get slowed down by rules or questions that need to be answered when ultimately this is improvement for the customers. That is one issue, though, customers choosing. Some customers dont chose to go to wireless. And after Hurricane Sandy some people were forced to go to wireless and it isnt the same. You have relability issues you dont have with wireline. Guest i think you are referring to the situation in fireland, new york, which is unique. It is an island that has a summer population predominantly. This was an example of the advanta advantages of a robust system. We could not rebuild the wireline structure between sandy and memorial day when the populati populati populati population surged. We put in wireless and got feedback and at the end of the summer we made the decision we would rebuild with fiber instead. This was an example where wireless provided a great shortterm solution but we determined fiber was the right solution longer term. The trials are looking at issues with areas that go to wireless. We are looking at copper to fiber migration in my situation which doesnt produce the situations. Customers are getting the same services at the same price just over a different fiber platform. Another issue is the theft of smartphones. Officials say a large number of crimes occur when people steal cell phones. In april it was announced they would have devices that will allow people to secure their cell phones. And you have been praised legislatures and regilators but some folks are not happy. There is a kill switch that is allowing you to turn your cellphone off if stolen and the proponents say there should be more and this should be a defau default. Guest ctia has come together and shown great leadership. It is an issue all of us take seriously. We want to do what we can to help prevent that. Cti came together and showed leadership coming up with a volunitary code. We need the manufactures and all parts of the eco system involved in this. You always need to look at the overall experience because we want to look at technology that works that might discourage cellphone theft. You dont want a situation where custom customers dropped the phone behind the couch and think it is stolen and realize cannot have it turned back on or that it is accidently done. Or it is hacked into. One can see teenage pranks of people turning off eachs phone. So you want to think through all of the Technology Aspects of how this work and ctia is taking a hol holistic way to address this. But you oppose kill switch . Yes, because we dont want patchwork all across the city. We think ctia will address the issue and give time for it to work. It is premature and counter productive to have all kinds of legislation on this. Host we have a minute left and so many issues left. The Congress Passed the u. S. Freedom act on the whole bulk collection of data. Has verizon taken a position on this specific law and where do you think the policy should be going . Guest we did. We came out in support of the act. We applauded it because it brings an end to bulk collection and focuses on privacy of customers and strikes the right balance. We have been supportive of it and continue to support it moving on to the senate. Thank you. I hope you will come back. All of these topics affect each one of us and each is complex. Paul kirby, thank you for your time. 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