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CNBC Exclusive: FCC Chairman Kevin Martin Spoke with CNBC's "Squawk on the Street" (Transcript Included)

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When: Thursday, June 5 at 10 AM ET
Where: CNBC's "Squawk on the Street"

Following is the unofficial transcript of a CNBC EXCLUSIVE interview with FCC Chairman Kevin Martin. During the interview, Martin discusses the Verizon Wireless and Alltell Corp. talks, and the XM-Sirius proposed merger, among other topics.

All reference must be sourced to CNBC.

ERIN BURNETT: JOINING US FOR AN EXCLUSIVE INTERVIEW, FCC CHAIRMAN KEVIN MARTIN. GREAT TO HAVE YOU WITH US.WE APPRECIATE IT.

KEVIN MARTIN: THANKS FOR HAVING ME.

BURNETT: GOOD TIMING FOR US.DAVID (FABER) HAS BEEN REPORTING ON IT FOR THE PAST DAY. YOU HAVE VERIZON BUYING ALLTEL. WHAT'S YOUR REACTION?

MARTIN: NOTHING HAS BEEN FILED WITH US YET. I WOULD SAY THERE'S BEEN A LOT OF ACTIVITY IN THE MARKET ON THE WIRELESS SIDE. WE JUST COMPLETED OUR AUCTION. THERE'S A LOT GOING ON AND A LOT OF ACTIVITY ON THE WIRELESS SIDE.

BURNETT: NO DOUBT THAT A LOT OF THESE BUSINESS PLANS THAT ARE BEING PUT FORTH ARE BEING PUT FORTHWITH CERTAIN ASSUMPTIONS ABOUT HOW THESE COMPANIES CAN MAKE MONEY ON PEOPLE BUYING THE INTERNET AND GETTING THE INTERNET OVER THEIR PHONE LINE OR WHATEVER IT MIGHT BE AND ALL OF THE THINGS UNDER YOUR JURISDICTION WHICH FEEDS TO THE BIG QUESTION WHICH IS DO YOU THINK AMERICANS HAVE A RIGHT TO GET THE INTERNET FOR FREE?

MARTIN: I DON'T KNOW IF THEY HAVE A RIGHT TO GET IT FOR FREE. WE'VE HAD PEOPLE TELL US THAT THEY WOULD BE WILLING TO PURCHASE SPECTRUM AND OFFER A LIFE-LINE BASIC LOWER SPEED SERVICE FOR FREE. AND I THINK THAT'S VERY IMPORTANT. WE GOT A LOT OF BROAD BAND SUBSCRIBERS IN THE UNITED STATES. LARGEST MARKET IN THE COUNTRY -- IN THE WORLD WITH OVER 70 MILLION BROAD BAND SUBSCRIBERS BUT THERE ARE PEOPLE THAT ARE UNABLE TO SUBSCRIBE TODAY OR IT'S TOO EXPENSIVE AND OFFERING A LIFE LINE BROADBAND SERVICE WOULD BE A GOOD THING.

DAVID FABER: CHAIRMAN MARTIN, IT'S DAVID FABER. RETRANSMISSION ALWAYS AN INTERESTING ISSUE. LINN TV RECENTLY A PULL FROM CHARTER. CBS AND ECOSTAR MAY GO AT YET IT. WHERE DO YOU COME DOWN? WILL THE FCC INTERVENE IF WE SEE THESE WARS BETWEEN THE CABLE COMPANIES, THE DISTRIBUTORS OF CABLE TELEVISION AND NETWORKS IN TERMS OF RETRANSMISSION?

MARTIN: BROADCASTERS HAVE ONE OF TWO OPTIONS. THEY'RE EITHER ABLE TO ASK FOR A MUST CARRY RIGHT TO BE CARRIED ON CABLE OR SATELLITE OR OFFER TO NEGOTIATE FOR COMPENSATION. IF THEY CHOOSE TO GO INTO A MARKETPLACE NEGOTIATION, THE COMMISSION STEPS BACK AS LONG AS BOTH PARTIES ARE ENGAGING IN GOOD FAITH NEGOTIATIONS, WE DON'T GET INVOLVED.

FABER: YOU DON'T SEE YOURSELF GETTING INVOLVED SHOULD PEOPLE NOT BE ABLE TO GET THEIR CBS FOR EXAMPLE ON THEIR CABLE NETWORK?

MARTIN: WELL, AS I SAID THAT'S PART OF THE NEGOTIATION AND PART OF THE LEVERAGE BACK AND FORTH BETWEEN THE TWO PARTIES. ONCE THE TWO PARTIES DECIDE THAT THEY'RE GOING TO ENGAGE IN A NEGOTIATION LIKE THAT THEN THE GOVERNMENT REALLY STAYS OUT OF IT.

HAINES: AM I STILL GOING HAVE TO THROW OUT MY ANALOG TV SET ON FEBRUARY OF NEXT YEAR?

MARTIN: YOU CAN GET A CONVERTER BOX. WE'LL CHANGE FROM ANALOG TO DIGITAL BROADCASTING NEXT FEBRUARY.

HAINES: YOU'RE STICKING TO THAT TIMETABLE?

MARTIN: I THINK THAT IT'S IMPORTANT FOR THE CONSUMERS TO UNDERSTAND IT WILL HAVE CHALLENGES BUT IT IS IMPORTANT AND A GOOD IDEA AND FOR A COUPLE OF REASONS. WE'VE ALREADY TAKEN SOME OF THAT SPECTRUM AND SOLD IT OFF IN THE RECENT AUCTION WE HAD AS I MENTIONED A FEW MINUTES AGO. WE RAISED $20 BILLION FOR THE NEXT GENERATION OF WIRELESS BROAD BAND SERVICES AND WE PROVIDED IT BACK TO PUBLIC SAFETY SO THEY CAN HAVE THE NEXT GENERATION OF BROAD BAND SERVICES TO PROTECT EVERYONE. WE'LL STICK TO THAT DATE, YEAH.

HAINES: ARE YOU GOING TO DO ANYTHING ABOUT THESE -- WHAT SOME PEOPLE CONSIDER TO BE EXORBITANT PER LINE FEES WHEN YOU CANCEL BEFORE THE END OF YOUR CONTRACT?

MARTIN: WE'LL HAVE A PUBLIC HEARING ON IT NEXT WEEK WHERE WE ASK WHETHER OR NOT CONSUMERS SHOULD CONTINUE TO BE CHARGED AN EARLY TERMINATION FEE THE WAY THEY ARE AND WHETHER THOSE BUSINESS PRACTICES WE SHOULD TAKE A CLOSER LOOK AT. CONSUMERS DO DESERVE TO BE ABLE TO PURCHASE THEIR CELLULAR SERVICE AND MAKE SURE IT WORKS THE WAY THEY WERE PROMISED IN THE STORE AND IF THEY BRING IT BACK, NOT BE CHARGED THAT FEE. WE NEED TO LOOK AT THAT AND CONSIDER ADOPTING A NATIONAL FRAME WORK FOR IT. I'M CONCERNED THAT WE COULD HAVE A SERIES OF DIFFERENT STATE RULES AND REQUIREMENTS THAT WOULD DEVELOP THAT WOULD MAKE IT MORE DIFFICULT FOR CONSUMERS AND MORE DIFFICULT FOR THE WIRELESS SERVICES.

ERIN BURNETT: I GOT TO SAY AS SOMEONE WHO HAS HAD SAID TO SWITCH SERVICES BECAUSE IT WAS SUBPAR AND YOU DON'T FIND OUT UNTIL LATER, THOSE FEES ARE PAINFUL.ONE QUESTION FOR YOU ON SOMETHING YOU MENTIONED. YOU SAID THAT WE GOT BETTER BROADBAND THAN ANYONE ELSE. WE HEAR ABOUT HOW EUROPE HAS FASTER INTERNET ACCESS AND SOUTH KOREA IS FASTER AND PARTS OF CHINA AS WELL. WHY IS THAT? IT WOULD SEEM WE WOULD WANT TO BE THE BEST AT THAT.

MARTIN: I THINK WE HAVE MADE A LOT OF PRACTICE IN THE BROADBAND DEVELOPMENT IN THE LAST FEW YEARS. THERE IS CERTAIN CHALLENGES HERE IN THE UNITED STATES AS FAR AS ALL OF THE RURAL AREAS THAT WE HAVE TO TRY TO CONNECT. ONE OF THE DIFFERENCES WHEN YOU COMPARE US INTERNATIONALLY IS MANY OF THE OTHER COUNTRIES HAVE DENSER POPULATION SO IT'S EASIER FOR THEM TO CONNECT EVERYONE TO BROADBAND AND THEY CAN PROVIDE FASTER SPEEDS EASIER. IF YOU LOOK AT IT ON A STATE BY STATE BASIS COMPARED TO SOME OF THE COUNTRY, MASSACHUSETTS IS COMPARABLE TO JAPAN AND NEW JERSEY TO KOREA. WE HAVE SIMILAR BROADBAND SPEEDS WHEN YOU LOOK AT THE DEMOGRAPHICS IN THIS COUNTRY.

MARK HAINES: WHERE DO WE STAND ON XM-SIRIUS?

KEVIN MARTIN: THAT MERGER HAS BEEN IN FRONT OF US FOR AWHILE. IT'S A DIFFICULT ISSUE FOR THE COMMISSION. WE HAD A RULE IN PLACE THAT WOULD SAY THE TWO COMPANIES COULDN'T MERGE WHEN WE AUCTIONED OFF THAT SPECTRUM. THEY HAVE COME IN AND ASKED FOR US TO CHANGE THAT RULE AND PUT FORTH DIFFERENT SEVERAL PUBLIC INTEREST COMMITMENTS THAT THEY WOULD BE WILLING TO MAKE CAPPING THEIR PRICES FOR A CERTAIN PERIOD OF TIME AND OFFERING CONSUMERS TO PICK AND CHOOSE CHANNELS THEY WOULD WANT TO HELP LOWER THEIR PRICES. WE'RE LOOKING AT THAT. I THINK THE COMMISSION WILL DO SOMETHING ON IT SOON.

DAVID FABER: AREN'T YOU UNDER SOME OBLIGATION HERE TO FINALLY GIVE -- IT'S BEEN A YEAR AND A HALF. HOW IS IT POSSIBLE IT CAN BE SO LONG TO REVIEW A POTENTIAL DEAL AND AREN'T YOU UNDER AN OBLIGATION TO ANSWER THESE GUYS IF NOT TODAY, TOMORROW, OR VERY SOON?

MARTIN: I THINK WE ARE UNDER AN OBLIGATION BUT THIS IS AN UNUSUAL CIRCUMSTANCE. WE HAVE A RULE THAT ACTUALLY PROHIBITS THIS MERGER. THIS WAS UNLIKE ANY OTHER MERGER THAT'S COME IN FRONT OF US. WE HAVE A RULE THAT WOULD PROHIBIT IT FROM GOING FORWARD. I THINK THAT THEY'RE ASKING FOR SOMETHING EXTRAORDINARY AND THE COMMISSION IS TAKING A LOOK AT IT. WE'LL GET BACK TO THEM SOON.

BURNETT: CHAIRMAN MARTIN, THANK YOU FROM ALL OF US.




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