Cable Television Companies and brought to you as a Public Service by your cable provider. On thehis week communicators, an update on Net Neutrality and internet regulation. We are going to look at a court case that is currently being decided and get an update on what it has been like since the fcc decided on Net Neutrality regulation. Us are Walter Mccormick and christopher lewis. Mccormack Net Neutrality does not affect us operationally day today because the open internet standards are standards we agree with. Companies operating compliance with those standards. Adoptionupported their. What we objected to was the way in which the fcc went about the open internet standards. This is a 19th century form of regulation originally applied to common carriers. It has and repealed for those common carriers and we dont think common carrier regulation is appropriate for the 21st century. That is why we brought it to court. Host and some of your clients include verizon and at t. Mr. Mccormack and 100 smaller companies. How has thelewis, Telecom Industry changed. Mr. Lewis the rules were common sense. There was broad agreement on the idea of open internet rules. I think it has brought a lot of to consumers that they will be protected. The 4 Million People weighed in on the proceedings. A lot of people were watching wanted to make sure the internet remained open and able to innovate without asking permission. We have that assurance now. Thats a good thing. Host do you think if the fcc had not done what it did last year, that it would be any different today . Mr. Lewis it could be. There are a lot of of new and innovative business methods that we are striving to come up with. , they didnt have rules couldnt be. You need highlevel rules of the road. That has been talked about for over a decade. Were structured in a way that they would be able to pass muster. We saw the court basically say that the only way to make the strong, robust rules that consumers were demanding was to reclassification of the title to common carrier service. The court pointed that direction and that is the direction the fcc ultimately decided to go in. Knowledge . Is public mr. Lewis a nonprofit internet advocacy group. Property,llectual copyright and patent. Mr. Lewis thats right. Click something that lived at the heart of what i think walter was saying is something we have heard from a lot of Service Groups throughout the last couple of years which is that push for regulations wasnt even about Net Neutrality for a lot of public institutions. What they really wanted were some of the things that come along with title ii, authority to regulate privacy or stronger universal service capability. What is your take on that . Would you guys be fine if congress wrote a law that applied to these basically agreedupon rules but didnt go by title ii . Mr. Lewis we have testified before the senate talking about that if congress were to write the rules into law, they need to be careful about unintended consequences, that there are basic values around Communication Networks that need to be protected, and some of those values include privacy or universal service, or ensuring that the Network Works seamlessly, which goes to the issue of interconnection and competition. It would be a shame if congress theted a law that precluded fcc from actually dealing with those important issues. It sounds like its fair to that in addition to Net Neutrality, there should be consumer protection. Mr. Lewis that has been affirmed at the fcc in a unanimous vote of interest. ,e think that is a great place as an Expert Agency and communications network, for them to figure out how to apply the data. Bit aboutalk a little the lawsuit and in particular the oral arguments that happened in december. The court room was packed. I was there. You guys were probably there as well. Give me a little bit of your thinking about how that went. Own i think it was very interesting to see that the judge, who has written a great deal in the , the second or third round of the debate, was leading things again this time. I guess the basic question is, based on what you saw, do you think you are going to be successful in throwing out the decision to be classified as a title ii service . First, the court understood that nobody was opposed to the internet standard. Before there were any questions about whether there should be an i thinkernet, where there is a consensus, the court the way the fcc had gone about it. The court was really delving into the central issues. First of all, does the agency have the authority to determine what the scope of this is going to be . Get thateed to delegation from the congress of the United States . The court was asking questions the statute itself has terms that you as an agency have previously used to define the internet. Speaks of the public switched network, which is different from the ip network. When you are on the public switched network, you dont have the ability to simply call the network and vice versa. How can you treat it as one network . Asked questions related to what would constitute an Internet Service. An Information Service. We felt that by virtue of the asking,s the court was the court was zeroing in on the real key legal questions in this case, and thats cause for optimism. Interesting. I think a lot of folks thought three judgesof the felt it was a broad question. Kim broadband be classified can broadband be classified as a Telecommunications Service . You alluded to the mobile issue. Tell me a little bit about your thinking about how that went. There was also an issue of whether the fcc has properly dealt with interconnection issues. I think those were areas where were more skeptical. Do you feel like you were in a stronger position . Mr. Mccormack at the end of the day, the statute was pretty clear. It defines Information Services with specificity. It defines communication. Ervices with specificity it defines what telecommunications is. Called upon to engage in statutory construction, they tend to look at the plain meaning of the statute. When you cut the couple the plain meaning of the statute with the fact that the fcc, for decade, has indicated that these services were Information Services and not Telecommunications Services, we think it leads to a pretty strong case that the fcc can not simply call something that was one thing and Information Service and then suddenly decide we are going to call that another thing. Not a lawyer, but dont Appellate Courts tend to defer to agencies a fair bit . I felt like watching those arguments, the court was giving them a little bit of leeway there. Mr. Mccormack courts do offer advice to agencies within their area of expertise. It has to be exercised within what is called reasoned decisionmaking, and thats because agencies are exercising. Uthority that is not their own mr. Lewis we are pretty confident about the over arching classification. Up until now, the fcc had approached broadband as title i, but we had the internet before that, and during the first as a public internet, it was classified as a title ii service. So we were fairly confident about whether this had been classified correctly. Stepping away from the legalese for a second, it seems like over the past few months, and really this month, i think, one of the key Net Neutrality issues in practice has been the issue of zero rating, exempting certain traffic from data finds or being charged for them. Ofis a question with a lot fierce debate on both sides whether this is a Net Neutrality violation or an awesome can them or benefit, and whether it is something that would be good for the internet and Internet Users going forward. What is your take on that . Neutrality, inet guess, is this going to be a good thing . It lewis we are watching closely. We have written on zero rating and Data Management practices. It, we felt that the fcc needed to take a strong look at it and learn more about how companies are applying these practices. Why . Because we feared that it could be applied in a neutral way or in a way thats anticompetitive and harms innovation and. Ompetition from materializing we have seen some of the plans over the last few months. Some of them really give us pause. The ones from comcast and at t especially. Comcast has not necessarily. Dmitted they are doing it they are just choosing to favor their own content and zero raid it while others may not be. Host should a telecom company, in your view, be allowed to give unlimited online ability to a customer . Mr. Lewis as far as unlimited wea, we want to make sure are talking about free data, and that it does it in a way that doesnt preclude other, new, Innovative Services from coming along. If you are going to apply it, lets say, to one video service, why not apply it to all the Video Services . As one of the issues is highbandwidth uses online. Mr. Mccormack we believe this should be looked at from the standpoint of the consumer. The big question before the fcc is this. Who should bear the costs of the internet . We believe that all of the costs should not necessarily simply be and thathe end user, the enduser has to pay a rate that maybe doesnt reflect the use they are making or the value they are receiving. For example, why should the a wealthy social elite who has multiple hd televisions and is simultaneously streaming three channels of hd tv to their , why shouldnt there you subsidize a low income user who wants to have access for their children to be able to do homework and to be able to use email . We need to make sure the market is allowed to develop in a way that allows the greatest benefits to the consumer. What walter think is talking about is true, and i think thats why you have an look at theseto specific Business Practices and apply them. What drives us as consumers while we want consumers to be able to get the best deal, we also want to make sure that everyone has access to the great opportunities that the internet offers. When you start to see a twotiered internet created wayuse of any competitive ,hat zero rating is applied talking about access to education, for example, and the homework cap. A lot of the new, innovative education tools coming online videobased tools. This allows specialeducation whoents and other students need extra support to prelearn and relearn content. If students are worried about a data cap because one video is excepted and other videos they their Education Services are not , that is a concern. This is the sort of example we. Re looking at the broad goal everyone has is the most affordable broadband, but how these practices are applied can impact people based on limiting what services they can use. And again, jumping back to, not the rules or the legal theory behind the rules, what would be happening in the world we generally agree on these principles of no blocking and no prioritization. At the same time, if i remember correctly, when the last round of appellate cases was happening , verizon and the fcc, the lead attorney said that with more regulations, my clients would be looking at these types of arrangements. Doesnt that sort of take a bite out of the contention from broadband providers at this point that they have no interest in paid prioritization . Mr. Mccormack because the fcc is the perfect of regulation, the most pervasive form of regulation, is the purveyor of regulation, the most regulation,rm of that means the fcc has authority over every aspect of our business. This is exactly the kind of mother may i approach to convention that we wanted to seek to avoid with regards to the internet. We think its fine for the federal Communications Commission to come in when there are identifiable harms leading injury, butconsumer its another thing for the federal Communications Commission to be involved in the Central Planning of the economy and have to spin out hypotheticals or whatifs over every new business application being offered only when it is offered by an Internet Service provider. That is really the concern. If the rules had been adopted or if the alternative is enacted congress, we would not be having the debate today. The bright line rules are good even though there was an indication previously the providers would be looking at things that could potentially run afoul of them. Lewis the bright line rules created in 2010 were overturned. I think we all wanted bright , but you have to get them in a way thats legally possible. Lets turn away from Net Neutrality for a second to an issue that i think you agree on to a fair extent, and thats the issue of lifeline, which the fcc is looking at modernizing sometime in the first half of this year or 2016. Of theooking at the date other day and found that there are about 13 Million People currently enrolled in lifeline, but estimates are there might be 45 Million People eligible for the program. Why are so many people not taking advantage of what would seem to be a pretty useful and is there anything the fcc can do to make it more . Ttractive mr. Mccormack so, its difficult to be poor. When you are poor, one of the things thats particularly difficult as having to comply with all kinds of paperwork in everyto take advantage of program out there providing you with some ability. With regard to the lifeline today, even though you for other low income programs, you have to prove your qualification that you have to you have to separately qualification tor every provider. Be done that should away with. We should streamline it. Mr. Lewis we both support the program. The question is how can we make whoore sufficient for folks have to go to multiple programs, like walter said. How do we make it more efficient for the Companies Providing the services . We are trying to figure out how to do it in the simplest way, but also to look at, while you try to make it simple and take the waste and fraud at, how do you extend that to broadband question mark because that is where all of these things are converging. Broadband . Because that is where all of these things are converging. Is another thing you agree on and that is the time warnercharter merger. Make the that would company as large as probably the Biggest Company out there, and thats comcast. See ae still continue to local monopoly in the cable market. Improved prices for consumers. We continue to see them go up. The consolidation of the market has been a real concern for us. Our netflix or apple tv competing . They compete but only when they can get connected to the network. Most people still have to go to the Cable Company or have access to the internet. Most consumers only have access to one or two highspeed internet choices, and if one of walter companies isnt in that market, then its just the cable industry. Mccormack let me respond. Its a big merger. We are not opposed to the merger, for say that per se. Merger, per se. I take issue with the word monopoly. Monopoly means one. We know that people can get video programming from the Cable Company, the internet company, the telephone company. They can have roku boxes. There are a variety of video choices. We want the fcc to do. Come up withcc to some common sense conditions to make sure that the common sense that exists today continues to exist in this area. The cable industry is a highly industry. We dont want to see cable programming that is only programming for cable companies. We want cable programming to continue to be available to other multichannel video providers. , new charterd would have control over a lot of programming. John malone has control over a lot of programming. We want to make sure there are conditions that ensure that new charter cannot favor itself or be favored with regard to programming. The parties to this merger have indicated that this is something they would not do otherwise, so we think the commission should have no objection. The samet that argument chris lewis is making in favor of Net Neutrality regulation . Esther mccormick i dont think its the same argument at all. Mr. Mccormack i dont think its the same argument at all. With regard to Net Neutrality, we support the standards and we support adoption and regulation of the lot. Have a variety. F ways to access the internet they are being imposed because it is thought that those particular standards are the way in which an open internet should , and i dont know of a single Internet Service provider in the company in the country a businessto operate modeled in conflict with the open internet standard. Mr. Lewis by the way, we agree with walters point about access. We think it is consistent with the idea of letting consumers have access to all the options available. You brought up dr. Malone, i cable industry magnet who has a lot of interest and a large stake in charter. Charter has offered some concessions that they say would limit to the point of not being interests in charter visavis his interests in other programs. Does u. S. Telecom think those conditions are sufficient or would you like to see the fcc go even farther . Mr. Mccormack we would like to see his hands stay very far away from charter programming. Chris, you talked about how charter is going to be almost as big as comcast. I think new charter will have about 19 million subscribers or so to comcasts 22 million or so. Comcast obviously has a lot of the highspeed broadband connections, which is what the fcc has focused on, connections of 25 megabits or more. Charter has a minimum service of 60 megabytes per second. Megabits per second. Committed to Net Neutrality. Are you still worried even though they seem to have some characteristics for online video, are you satisfied that access . T block have talked about not having set top box fees. New data caps. Mr. Lewis which we are seeing from comcast. Those are encouraging. Knowledge following the spectrum option. We are following it very closely. We are excited for the opportunity to see the medium size companies. Making them more competitive. Will judge it at the end of the auction. We will push for stronger rules. We are hopeful that we can get a competitive result out of this. Mr. Mccormack we are looking forward to the auction. [laughter] how closely are you following them . The companies individually are following the auction. We represented them on the broadband side. Our association are not advocates for particular policy with regard to the auctions. Except it is important to get spectrum out there