Transcripts For CSPAN2 The Communicators 20160711

Because you dont, youre not paying for data bits based on usage. And we just acquired three Additional Properties in florida and california and texas where we bought some of the fios assets from verizon, and weve got lightning fast speeds with lot of content, lots of choice for consumers. Host how big is frontier . Guest we are the fourth largest telco, so think at and t, verizon, and im not saying these in order, i dont know whats first, at t or verizon, then century link, then us. Host well, we invited you this week on the communicators to talk about the rollout of 5g. The fcc is meeting next week, of course, about that. I want to show some video of fcc chairman tom wheeler talking about 5g. If the Commission Approves my proposal next month, the United States will be first country in the world to open up high band spectrum for 5g networks and applications. And thats damn important. Because it means that u. S. Companies will be the first out of the gate. We will be repeating the formula that made the United States the world leader in 4g. Unlike some countries, we do not believe that we should spend the next couple of years studying what 5g should be or how it should operate and how it allocates spectrum based on those assumptions. Like the examples i gave earlier, the future has a way of inventing itself. Turning innovators loose is far preferable to expecting committees and regulators to define the future. Host Kathleen Abernathy, do you agree with chairman wheeler . Guest absolutely. Host why . Guest its been an amazing history for the u. S. To be the leader in telecommunications and wireless telecommunications. In 1993 i joined one of the first wireless companies. And i remember when i was offered that job and i left my stable government job at the fcc. Folks said to me, are you kidding . Why are you going boo this flybynight little Wireless World . Theyll be out of business in a couple years. And what the markets flourished and the benefits to consumers not just in what the technology does as far as mobility and access to information, but job creation, technological advancements, driving the framework for the wireless products and services. Weve been the leader in that historically, and we should continue to stay the leader. Host one more question before we bring Howard Buskirk of Communications Daily into this. What exactly is 5g or fifth generation . Guest you know, more, faster, better. We talk about 2g, 3g, 4g, 5g. It just shows that theres an evolution in technology that allows you to do more with less. Because you have to remember spectrum is a finite resource. There are airwaves out there, but theyre being used in many different ways by both the government and the private sector. So when you talk about the next evolution, you have to find structure, you have to insure that youre not interfering with any existing users, and then you have to develop the technology that allows you to tap into that spectrum and deliver the products and Services Consumers want and value. Host Howard Buskirk. Theres been a lot of discussion about the u. S. Maintaining its competitiveness in the space. What are the steps that the fcc needs to take now to sort of spur the move toward 5g . Guest i think theyre taking the steps. Theyre identifying spectrum, and then theyre moving ahead with figuring out whats the framework, what will the rules be and how do we create a landscape, a regulatory landscape that incents the innovation and the investment. Theres still a lot of standard setting that has to happen because you dont want to go off in one direction when everyone else is developing standards around another, and you dont want to cause interference, certainly not crossborder interference. So therell be a lot of standard setting, but i think the step forward identifying and freeing up the spectrum is hugely important. And then it incents the wireless carriers who are, by the way, our direct competitors it incents them to do what they need to do to drive new products and services and create jobs. What do you see as the timetable . When do you expect to see 5g really out there where consumers are using it every day . Guest you know, it ranges anywhere from i know verizon says well probably have some product in the market around 2017, 2018. Right. Guest ores are saying i think itll be more like 200. In a Perfect World 2020. In the Perfect World, the consumer doesnt really care how you label it. They just care about can i do more, do i have more choices, can i make it happen faster, will it deliver this internet of things . Will it help me with medical and Health Care Applications . Will it help me with education . So somewhere between 2017 and 2020. What are consumers going to notice, what they may not know that theyre now on 5g as opposed to 4g, but what will consumers notice be as 5g rolls out. Guest i think what they might notice is that theyll be able to have different kinds of applications, that more devices in the home may be wirelessfriendly, that you may be able to manage and better able to use your energy so that youre using, for example, out west. Fewer water resources. Or youre managing your electricity flows. Or if youre Getting Health Care records or actually getting monitoring of medical devices. So when you drive down spectrum costs, then as a finite resource, then you can be more creative about the kinds of products and services you can offer to consumers. Host now, Kathleen Abernathy, you said frontier, your company, is a pure play company, so why would it matter to you if you had 5g or not . Guest well, well never have 5g in the sense that as a company we cant enter the wireless market right now. Its too late to go in and compete with the five incumbents. Theyre very strong. Theyre all incredibly well positioned to leverage products and services in these markets. But frontier views it and i personally view it as complementary. No one entity has enough spectrum or enough resources or enough fiber to meet all the needs of consumers. If you look at the trajectory of how consumers are using data and video content, everythings over broadband. That means that more entities out there investing even if its in wireless versus wireline drives better technology, Better Options for us as we use our wireline infrastructure. And its a very competitive environment. For me thats good because i want less regulation, not more regulation. And if we have the opportunity to continue to compete against wireless which, mind you, there are tough competitors as is cable, but we have our own unique resources in the wireline space with the broadband data that we deliver to homes and the video products that we deliver and the voice products and we deliver and security and education. All those kinds of products. So the markets big, and its just going to grow over time. You were characterizing it as a strength that youre a pure play company, but are there problems associated with not having a wireless component to what youre able to offer consumers . Guest well, you know, in a Perfect World wed have it all, but we dont. One of the reasons youve seen us building up over the last two or three years is that size matters as far as having the resources and the eyeballs to enter the video content market, to make the investments that weve had to make to turn ourselves there a traditional phone company from a traditional phone company where that pipe to the home, you talked, and that was it. You couldnt do anything elsewhere anything else with it. Now all of a sudden that pipe to the home delivers so many other things. So weve had to invest, redefine, build. And thats what weve been doing with our acquisitions. And its a very robust and reliable product and service. The fire assets we have are incredibly fiber assetted we have are incredibly valuable in the marketplace, and weve been able to really redesign and rebuild our company to move from being what many would say is a very sleepy, rural telco into the fourth largest Wireline Broadband Company in the u. S. And to get back, to tie that back to 5g, one of the big things that the wireless carriers need to build out 5g is what they like, what we like to call backhaul. Thats the connection between the cell tower and the, and, you know, tying back into the network. Thats really important. How big a role will Companies Like yours play in that part of, in that part of 5g . Guest you know, thats a fascinating discussion because there are some people who have argued that that role, that backhaul role is critically important, and it is, and that somehow price regulation for that piece of the equation is impacting 5g. It has absolutely nothing to do with 5g. Because 5g will happen regardless of what the infrastructure costs are for building the transmission. Thats happened historically all the time a. The real issue is investing in the spectrum and holding an auction for the spectrum. The large carrier a and larger carrier b negotiation about back awlhaul just part of building the spectrum. These are just buildout infrastructure costs that many people compete for. And we compete for them, cable competes for them, other carriers compete for these backhaul resources. So i think its been a bit of a red herring. I think its an example of where every country every company tries to get what i call their fair regulatory advantage. If i can leverage regulations to give me a pricing advantage, yippee. Thats great for me. I dont see it as having any impact on 5g whatsoever because that train has left the station. Were going to see 5g built out. The fcc, though, is looking at quiteses in that special access. Prices in that special access. They like to call it Data Services as if thats a better term. [laughter] i think theyre sort of similarly clunky terms. What do you see coming out of this fcc investigation . What are your concerns . Guest you know, i think the fccs been a bit misled because be they look at that market and say, you know, two providers, Big Companies with lot of lawyers negotiating contracts, thats not enough, we need to price regulate that, then i would say, well, wait a minute. Youre starting down this path of where two providers isnt enough. And certainly in the Wireless World, there are plenty of markets where theres one or two wireless providers. And the consumer cant directly negotiate prices. They have to take whats given. So if you start saying over in this market the companytocompany negotiations, that theyre not sophisticated to negotiate fair prices and price regulation makes sense, i think youre saying, well, maybe we need to start price regulating other prices and services where there are only two providers. And i fundamentally disagree with that premise. Do you expect to see the fcc wrap up this probe under the current chairman, tom wheeler . And if so, what do you expect to see the fcc do here this. Guest i think the fcc intends to try i think they want to try and wrap it up before the end of the year. Im hoping that as they look at this market and particularly the fact that these are companytocompany negotiations, theres no path through to consumers on any of these pricing negotiations about special access. And mind you, the wireless sector this year will have about 100 billion in earnings, and the wireline companies theyre negotiating with for access, century link and consolidated will have about 10 billion. Were smaller, but were still sophisticated companies. And as are the wireless companies. Engaging in and micromanaging those business negotiations, in my mind, makes no sense. And i will certainly continue to urge the finishing cc to focus on rolling out the fcc to focus on rolling out 5g, not on managing pricing practices that have been unregulated for a number of years. Host next thursday, july 14th, the fcc is meeting to discuss and potentially vote on a rollout of 5g of what are they going to do . Guest identify the spectrum and a bunch of other stuff that im not exactly sure of because theyre not allowed to share that information with any of us in advance. But the goal is to say weve got the spectrum, weve got the vision thing going about where we want to go with wireless, and we are going to push ahead to insure that the u. S. Maintains its Global Leadership in the wireless arena. And i think thats terrific for our country. In fact, i would argue its essential, because this is one of those areas where u. S. Global leadership has yielded tremendous benefits economically, from a technological perspective and from a jobs perspective. Host so when you say theyve got the spectrum, is it going to be unlicensed . Are they releasing it to the public . How is it are they selling it . Guest i think they have a number of layers to it, and some of it will be up for auction, some of it will be so youve got licensed and unlicensed sort of common use. And i believe, now remember, im the wireline person now, and i havent been in wireless for a while, so you have to correct me the if im wrong, howard. I believe theyll have a layered approach, and it will fit in multiple buckets. Well, theres still some moving pieces in the order, i think, but fundamentally an unlicensed is really like wifi. Thats a better way to think, wifi. I wanted to ask you, you used to work for a carrier. Isnt it interesting to you that at this, that the fcc now is looking at opening up these High Frequency bands . These are are bands way up on the spectrum band. Guest right. That was unimaginable back in the days can you reflect on that . Guest i can. Because what happens, its fascinating the Way Technology moves you ahead. Every time you think youve hit a wall with spectrum being available for consumers, you say, well, were done. We cant access any more spectrum. Theres no technology that allows us to access this spectrum. The engineers go back to the drawing board, the insatiable appetite we have to communicate better, faster, more often drives creativity, and all of a sudden youre finding new bands that previously were unusable. Junk bands. Could never use them. All of a sudden now theyre very valuable. Different characteristics that require different buildouts, different standards, but nevertheless, certainly incredibly valuable for driving the ongoing demand for wireless applications. And i will point out that from a wifi be perspective from my company, we do a ton of wifi. So when i say we dont own wireless, we dont own wireless spectrum. But we leverage all of the wifi capabilities whenever we build out in a market, well provide wifi in stadiums, in restaurants, in businesses and in the home. So we can give a lot of mobility to our customers without actually owning the spectrum. So for Companies Like you, you have somewhat of a business interest in seeing more spectrum. Guest absolutely. Set aside for wifi. Guest absolutely. Its a good thing. Host why have you been buying fios systems . Guest because theyre there. Because two things. One, you have to scale up if you want to stay in this business. If youre reinventing your company to be more than just a phone company, that means youre putting a lot of money into capital to build out that broadband pipe. And that means scale matters for purchases of buying equipment, for purchases of negotiating content agreement. And verizon was willing to sell. And not only were they willing to sell assets, they were willing to sell fios assets which are incredible assets. The fastest speeds, the best performance characteristics. So the opportunity for us to scale up and scale up with these my cross assets was too with these fios assets was too good to be true. It was a big step for us to take because we doubled in size with the purchase of these assets. But at the same time, its now freed us up and given us the scale that we need and the Technological Capabilities that we need to continue to move our business forward and to drive better products and services to our customer base. Host so, Kathleen Abernathy, have you faced some issues in that scaling up and buying a guy cross product . Guest oh, what a good question. [laughter] yes. Its hard. Its hard because unlike with most acquisitions where company a buys company b and its a Standalone Company and you can just start operating it right away, we were actually buying piece parts of verizon. Were separating entire networks from what i call the mother ship which means we have to duplicate all that infrastructure. And even though we were getting all the employees at the same time, they have to get trained on our networks, and we have to build the data capabilities and mirror all of that capability to remove it from the verizon system and put it on the frontier or systems. And the good news is we we were effective at this cutover which is the biggest in history really. But 99 when youre talking about telco and communications capabilities, that means there were still customers that didnt have the experience they wanted. And we had to come back from that. We had to, were in the market now proving ourselves. Were in a business as usual mode. Were out there earning the trust and respect of these new customers across the states of florida, texas and california. Host do you see frontier becoming a provider . A programming Provider Company as well at some point in. Guest you know, entering the programming market is are hard. Is very hard. But what we have done is we have thousands, hundreds of thousands of video assets in our video on demand. And we have an agreement with netflix for our customers to have access to all of those assets. So we have one of the biggest video libraries in the country for a company our size. Its bigger than many of our cable competitors. So thats ooh one way were thats one way were playing in the video space without owning video. And for all the other content, you negotiate rights to it, and your ability to negotiate is directly proportional to having the scale thats necessary to say if you, if i negotiate with you for your content, disney, heres how many households i can bring to the table. Another big thing the fccs working on is privacy rules for isps. All of a sudden theyll have a lot more choices to make, and theyll just have to deal with their privacy choices more. Where do you see that headed . Do you think that theres, that the fcc will succeed in approving rules this year still . Guest so one of the outgrowths of all of this broadband constant world where you can get online anytime anywhere is that Everybody Knows about what youre doing. And theres actually been the next generation, the kids, my daughter, they dont even really think much about privacy, but i think about it all the time. My Company Thinks about it all the time and, certainly, the fcc, the ftc, congress, they want to insure that customers privacy rights are protected. But its messy because not only do you have to know how to protect customer privacy rights, you have to know how do you convey it to people and how do you explain this complex world. And the challenge we have right now in the privacy space is that theres two layers of regulation. You have ftc rules and fcc rules. Right. Guest and nobody out will in america who out there in america who goes online when they type in a Google Search says, hmm, i wonder what privacy rules apply today. They dont. They just want to believe that their privacys being protected. So the real big issue right now is to try and come up with a privacy framework that protects consumers, and we have our privacy rules very clearly explained, and weve got them out in the marketplace. And on our web site. But there are different rule for different providers, and thats where it will get confusing for customers. So i think what will be important is over time to try to reconcile those rules to a general framework but is your company concerned if the fcc hands down rules for isps that are stricter than the ones for the edge providers or . Companies like facebook and netflix . Guest well, yes. Because, lets be honest, facebook, google, twitter versus frontier . Theyre a little bigger. [laughter] theyre very adept at using data mining and marketing to consumers. So i believe that we need a good, solid framework in place, and i believe it has to be consistent across the providers. Because, again, a consumer isnt going to say, oh, well, of course since i was using amazon or facebook my privacy wasnt protected. I knew that. They wont know that. So consistency of protections becomes very important. But one final question on that. In the real world though doesnt it seem like the fcc is heading pretty strongly toward these separate rules for isps that will be a lot tougher guest it does. It does seem like that. I think its because the fccs looking at it and saying but these are the right rules. These are the rules that should be in place. And my answer would be you need to reconcile with the realities of the marketplace. One of the hardest things when youre regulating is you know what you want the world to be, you just dont always know how to create the Regulatory Framework to get you to that space. And if in designing your regulations theres till a lot of loopholes, then you didnt really accomplish what you wanted to accomplish in the first place. And thats always the frustrating part, because jurisdictional boundaries, the scope of your Legal Authority condition standpointly puts pressure on constantly puts pressure on what you can do. And that is why i think to the extent possible where the market works, let it work. I think in the privacy arena you do need to have some rules and regs in place, but you have to appreciate that if you put your thumb on the scale over here, somebody over here has a different set of rules and requirements, and are you really accomplishing what you want to accomplish. Host Kathleen Abernathy, when you go up to the hill, what are the issues you talk about most frequently . Guest believe it or not whats been most frequently discussed is broadband to Rural Communities. Because theres still a lot of very rural markets out there that dont have Broadband Access and capability. The fcc came up with a program called the connect america fund. Its basically a revamping of the old universal service fund to say lets use it to help subsidize broadband to Rural Communities as opposed to subsidizing voice to Rural Communities. You say, well, why do you need to subsidize . These are very rural markets where the costs of the infrastructure build are so significant that while it would get there, it wouldnt get there anytime soon. And we all know how critical broadband is in our daily lives. And particularly in a rural market be, if you think about access to medical care or advanced math teachers or advanced Training Classes or even submitting your resume for jobs online, broadband to Rural America is critical. And we have taken all the connect america funds money we can because were committed to building out those rural markets x. Thats been a theme thats resonated both with congress as well as with the fcc. Host whenever we have somebody from a corporation here, we often ask how does the telecom act of 96 affect your life and your company, and would you like to see a comprehensive rewrite . Guest the telecom act is incredibly outdated, and it forces sometimes bizarre behavior by regulators and sometimes bizarre behavior by companies. Why . Because instead of providing your products and Services Consistent with the technology of today, youre trying to shoe horn it into a regulatory structure thats outdated. On the other hand, be careful what you ask for, because you never really know what comes out of a rewrite. And im not particularly optimistic there will be a rewrite anytime soon anyway. So what most companies do, like my company, is we really look at the framework of the statute and say this is what we have to deal with. We have to be, we have to act consistent with the law, we have to work with regulators in a way that pursues the public policy, public interest, and we have to figure out a way to deliver value to our customers and new products and services. And for the most part, all companies have been figuring out a way to do that. But sometimes it results in what you call unfairness because the statute isnt identical for all companies that are providing somewhat identical products. But you just have to get over that. Because it will never be totally fair. Its like telling your children, life is not fair. You have to get over that and say how do i live within the confines of the statute, and how do i provide products and Services Consistent with that, and how do i work with regulators to explain why i think some regulation makes sense and some doesnt. Host Kathleen Abernathy is executive Vice President for Frontier Communications, former member of the federal communications commission. Howard buskirk is executive Senior Editor at Communications Daily. Coming up on cspan2, portions from saturdays Democratic National Committee Platform hearings. After that, donald trump is in Virginia Beach to talk about veterans issues. Live coverage starts at 1 p. M. Eastern here on cspan2. Today president obamas top economic adviser, jason furman, and congressman sandra levin talk about Unemployment Insurance and its role in the economy. Live coverage beginning at 10 a. M. Eastern on cspan. Could 5g mobile connectivity be right around the corner . Fcc chair tom wheeler is pushing for it and says the u. S. Must lead the world to develop it. Tonight on the communicators, Frontier Communications executive Kathleen Abernathy talks about 5g and what it means for the u. S. Shell also discuss why 5g is needed for the internet of things, selfdriving cars and the expansion of virtual reality. Shes joined by Communications Daily Senior Editor Howard Buskirk