Rules that give americans more online choice, and feeds and innovation in short digital opportunity. We are going to deliver. Earlier today, i shared with my fellow commissioners a proposal to reverse the mistake of title two and return to the framework that served the nation during the clinton administration, bush administration, and the first six years of the obama administration. And that was fcc chair ajit pai and our discussion on the the communicators is about his Net Neutrality proposal. Jeffery eisenach of the American Enterprise institute and advisor for the Trump Campaign and chris lewis Vice President of Public Knowledge the consumer group. Mr. Lewis, what is your take on what the chairman proposed . We are concerned. We think the Net Neutrality rules are working. They are wildly poplar. Overwhelming majority of americans want clear rules of the road by a protected and open internet. We are concerned he is going down a path to review and repeal some or all of the rules. Host why did you think the rules were necessary . I will read from tom wheeler, the former chair. For as long as the internet a has existed it has been ground n on the thhistory of Net Neutrality. I think that is true. In the 90s with dial up and through the 2000s there has been broad support for the idea we need to protect an open internet or the concept of Net Neutrality. The real debate in washington, a way from the folks who overwhelmingly support is how do we accomplish that and i believe chairman wheelers rules are rooted in the strongest legal grounding in order to have those sorts of protections and validated by the Court Decision last year upholding those rules. Host Jeffery Eisenach . I think your question is the right question; why did we need to rules and it is something chairman pai talked about in the speech. From the internets inception and to the date the rule passed the internet was free and open and no problem. As chairman pai said there was no dystopian controllednet controlled internet. What you had was this very hypothetical threat which was made into a boogie man which motivated a lot of people you didnt have credible evidence that there was a problem and the marketplace was working. When you have regulation you have a balance. Benefit and cost of regulation. The cost of regulations we are seeing in reduced levels of investment. You also see the cost of regulation in the form that once you give the Government Agency the power to transfer wealth from one group to another group then you have people engaged in lobbying over those issues and this is maybe the most heavily lobbied issue every in telecommunications. You know, that is not healthy either. That empowers washington, that empowers lobbyist and doesnt empower. Host can we trust the isp to be our gatekeepers . I think i come back to the fact of the matter. There is so evidence that isps have interviewed with peoples ability to access content of choice before. There is one example you pull out of a little Telephone Company that was settled in six weeks in a painless process that did not require declaring the internet a public utility and subject it to price regulations. Just to help out with the example. We have more than one example of isp is Broadband Companies wanting their own content. Throughout the history of the internet, from the concept of when Net Neutrality was introduced around 2000 to 2005 when the republican fcc set principles around Net Neutrality. The powell doctrine. The powell doctrine. That was attempted to be enforced by the republican fcc. For the 2015 and 2010 rules there has been an effort to enforce these rules. The question is what is the strongest legal frame to do so and the course have upheld the 2015 rules as strong legally but there have been multiple instances whether it is face time being held back from some customers by at t or whether it is the republican fcc enforcement of comcast, with bit torrent, or the recent concerns that have been raised around comcast, at t and others referring to the content they own over other content. This falls under the umbrella of potential Net Neutrality violations. Lets walk through one of those at a time. Lets talk about the face time event. We had at t making a business decision that if people were using face time on their 3g cell phones. This was 810 years ago, that that would cause congestion for other users on the at t system. At t wasnt competing with face time. They didnt have a video app on the at t phone at that point. They were doing what might be called or we dont know under the current rules because they create so much regulatory uncertainty but what most see as management. What were the other examples . Comcastbit torent. What comcast was doing was throddling bit torent. You are in a neighborhood and trying to download and visit web sites ask you cant because your neighbor is up loading thousands of songs and music on the internet. The notion that comcast was thr throdling bit torrent because they were concerned about business is ridiculous. They have incentives now because it is a competitive market. I dont think any of those examples hold up. When you look at the fccs order from 2015 they didnt assert that isps have market power. They stayed away and were called out saying you cannot have it both ways. The declaration of something as a public utility and price regulation always comes with a demonstration of monopoly power. You havent tried to make that case because i dont think it can be credible. I think the emphasis on monopolies is important. We have seen increasing cons consolidation in the market. We see the combination of isp Companies Buying content companies and buying each other, cable Companies Buying each other and they are some of the biggest broadband providers outed there. Son consumers see a marketplace where they have few choices for access to the internet. To talk about monopolies in what your average consumer sees is fairly accurate on the local level. They are acting like local monopolies. So, chairman pai certainly has a legal case to make about what has changed in the two years we have had internet rules and he is fwoeg to to have make that case going to role back the rules but has a consumer problem. Consumers and average americans are upset about the few choices and those rules have been rolled back by congress and now the choices may be taken back further. Sorry to interrupt, but how does Net Neutrality rules promote choice . Net rules promote choice by allowing the market to work in a way where small and big competitors can bring web sites and services online. When you allow an isp to prefer their own content over a competitors content, you will reduce consumers choice. First of all, there is no evidence of that. But in terms of choice, you were talking about choice among isp. No, i am talking about mark tearing and this is why which chairman wheeler made the you see a shortage of choice in the market for online content . Right now, no, because we have Net Neutrality protections. There is the no prosecutions and evidence of Net Neutrality infractions prior. There is no evidence that when tmobile, zero rates, Music Services in general, has any impact on the Music Services. You are spotify, google play, amazon, pandora, new entry. There is no shortage there. There is no evidence it has had any impact. But you all will take away free data. I am a Spotify Subscriber for example. But those companies, and especially ones not as large, Tech Startups and new online services, need the ability to compete. You take away the rules and we have protections and there have been concerns raised we would be looking into if they havent been cut over the rules and now potentially repealed by the fcc. But without those protections, most people predict that was harmful. Most people dont predict that. One thing that i think is an important point to make, you can make a political case for Net Neutrality because we are in all favor of a free and open internet. It is impossible to make an economic case for Net Neutrality which is why the chief economist and federal communication said rulemaking was an economic free zone because the chairman and staff were instructed to ignore the economic arguments and in fact the order ignored all of the economic evidence that was presented. Simply didnt address it and was criticized by judge williams in his decent. Two important figures disagree with that. Number one, the department of justice. In the merger we have seen they have made it clear isps and the other folks are the isps them several. They made it clear they would be entertaining business arrangements. Host arent people already paying different prices for different speeds . They are paying different prices for different speeds. But when we talk about the different content over the others it is not just about the speed. It can be speed but it can be general quality of service. When certain when you have choice for speed for consumers you also have consumers choosing what level of service they want provided to them. When you have Internet Service providers dictating by setting zero rating, or using data couch arbitrarily or other business methods that may come along in the future, then you have there the isps competing. Host and as the isps move into content providing as well doesnt this change the paradigm of the argument . It doesnt change the p paradigm but the question is will there be a potential for issues of discrimination. Going all the way back to microsoft, microsoft saw net scape as a threat and acted on the purpose of effect of raising net scapes cost and making it difficult for them to compete and the courts were successful with net scape and others and the Justice Department website after microsoft for that conduct. If that conduct happened in the isp space those remedies are available. That doesnt mean that you should prevent a second tier, non dominant, company like tmobile. Nobody thinks tmobile is a monopoly. Would you say that . No, i dont think so. If you look around the world at zeery zero ratings forms, they compare the largest. What zero rating is is giving away a promotional benefit in order to get people to subscribe to your service. It is a tool as chairman pai said when he ended the investigation of the fcc it is a tool for competition not against competition. That is where it is useful to have Economic Analysis coming into play. Economists have a way of looking at competitive effects and i am not saying you could never have. I never said you could never have a situation where anyone with market power, could be google, Net Neutrality, spotify, could be amazon, could be verizon or comcast, any of them could seek to use mare marketing power. Host chris lewis, i want to get your response after he hear more from choom pay. We are proposing to return broadband to a tittle one Information Service from a title two communication service. That lets regulations drawn from directly from the clinton administration. As i mentioned earlier, title i classification was upheld by the Supreme Court in 2005 and more consistent with the facts and with the law. Second, we are proposing to eliminate the socalled internet conduct status giving the fcc the ability to micromanage the Business Practices of internet companies. Host chris lewis . You would like me to talk about title i title ii . Host yes, respond to what chairman pai had to say. He cited the 2005 Court Decision upholding the determination by the fcc that broadband to be a title i. What important to note, the court upheld the courts ability to make that decision deferring to the expert agency. I am oversimplifying it but we will go with that for now. But they also upheld that same right for the fcc with the 2015 rules. So, the challenges of the 2015 rules in court was to prove not only did they have chevron like in 2005 but wheeler fcc had to talk about what changed in the marketplace and the marketplace for Broadband Access looked very different in 2005 than it does today. They made that case and it was upheld in court and that was the justification for moving from title i to title ii. All of that was hashed out by lawyers. I think the important thing to note is average consumers see they have very few choices for internet access, local monopolies and those lock local monopolies chose to degrade content if there was a business incentive. That is why we have rules. The shift to title ii is a way to make that protection of open internet values that we wanted in 2005 able to be upheld in court and do it in a way that has a light touch. The fcc from all of the policy should not apply to broadband providers in order to get to the root of the stature and what was needed to protect consumers. Host is title ii nonnegotiable for Public Knowledge . We believe given the current law congress has given the fcc, it is the strongest framework and that the court validated that in the decision in upholding the rules. There is all sorts of talk about should you write Net Neutrality into law. That is congress perogative but it needs to be with the understanding the protech protections we got in 2015 need to be the floor and consumers dont want them walked back. Lets talk about the general rule chairman pai talked about. The general conduct rule is a mother may i rule that says before you create any kind of new service which might differentiate you have to come ask for permission from the fcc. In practice and practical effect what that meant is at the time chairman wheeler departed the fcc and we had the transition the fcc was engaged in an unbounded, quote unquote, investigation into these free data program. Programs pursued by companies which are by and large competitors for sprint and tmobile and the u. S. And that harms innovation and entrepreneurship and competition because those programs are programs that i said those companies are using to more effectively compete against the dominant forms. The other point i guess you have to keep coming back to is the fact that and let me try to give economic underpinning. We have this thesis that firms have the incentive and ability to discriminate against content from other people. They also have the incentive and ability not to. And in practical effect, that is the incentive and ability that has prevailed since the beginning of the internet all of which occurred in an unregulated world. If i start diskrcriminatdiscrid make it hard for you to listen to spotify. Almost everybody listens to spotify on their mobile device and you have choices. You have the four infrastructure base carriers and lots of places you can go to listen to spotify and thereat market is competitive. People in that market, because if you pick up the paper, you will see ads. If in fact, verizon were to discriminate against spotify and you were a verizon subscriber you could and you would and the fact of the matter is they are worried about that enough they havent done it. Ten years ago the concern was the mobile echo system was going to be a closed garden. All of the music didnt want to allow outside Mapping Applications on the black berry device. The vision we have now is underpinned by the economics of the fact providing those services is good businesses. Always has been. Before we impose this common carrier regulatory scheme the whole enterprise there ought to be evidence of a problem. We cannot forget and i will say it before and i will say it again the history. The network was not unregulated over the course of that history whether it was the attempt to reverse the paddle doctrine which were not rules but principles and attempted to be enforced. For the 2015 rules, there has been the threat of the fcc acting when Net Neutrality was violated and because of that you have gotten to this consensus where the Companies Agree maintaining open internet is a good thing partly because there is a threat from the agencies. You can go through the different ways it has been regulated but there has been an understanding in the marketplace this is something that need to be respected and it would be a shame to see those rules ago away. One more point since talking about my own personal use of spotify. I am pandora. Oh, you are a pandora guy. Well, we show competition in the marketplace for Music Services. But when it comes to broadband i do mostly listen to spotify over my Landline Service or when i can get wifi for free. Why . Because mobile services are data capped because of the structure of the mobile market because they have more limited bandw bandwidth. There are different choices for mobile broadband but there is a reason why most people who can afford it prefer to have a land line and this is why the fcc is defined broadband not only under chairman wheeler but as a basic service and they defined it in a way that meets the needs of people. In order to meet the great innovations coming online, mobile broadband while falling under Net Neutrality rules is still working to get up to be competitive with land line broadband and stow is reflected in the way i play spotify and according to the wheeler 2015 rules it is supposed to be reflected in the way they respect reasonable network management. Jeffery eisenach, do you have a problem with the concept of Net Neutrality . Well, it is a slippery concept. If it concept is all of us would like to be able to reach information and use applications and virtually unlimited plethora or variety of things available on the internet and dont want to interfear with it absolutely i think we are all in favor of Net Neutrality. If Net Neutrality means my mobile provider is not allowed to give me free stuff then i am not quite so sure i believe in that. If Net Neutrality means the heaviest users of the last mile infrastructure, that being Net Neutrality, that government is going to pass a rule in advance that says netflix and the isps are prevented from entering into house sharing arrangements and Net Neutrality would say we want all of our customers to get 4 hp k and verizon could say lets share the cost we would love to do that too. But we dont have the Capital Budget to do that. But you help us pay for that and absolutely and maybe you raise the price you think your customers want this and the variety is there. If you believe that and believe you are providing greater value hale they will be happy to may more. I am not in favor of the government stepping in in advance and saying that transaction can never occur. There is another possibility. The possibility is that verizon is a monopoly that says we have all these customers and they are never going to see your stuff unless you pony up. That is what microsoft did that. There is a remedy for that but it doesnt require prohibiting the first thing which is a value enhancing business arrangement that helps anybody. Do you have a problem with the netflixverizon example . I believe netnext came out as a supporter of the 2015 rules so they agree the rules toprotect them and other innovators is a good thing. When it comes to having arrangements between content and broadband providers, just pointing to the strength of the decision by the wheeler fcc and how they created these rules because while, i think some of the folks on our side of the debate were pushing for them to have clear rules against zero rating and some of the plans, chairman wheeler and the majority did not. Instead they created a more flexible rule allowing them to look at business arrangements and determine if they are problems with the marketplace and a violation of Net Neutrality. That is a much more cautious approach than maybe some of the more strident advocates wanted but it allowed chairman wheeler and others to say is this a good arrangement or not. Is this harmful to competition . Is it not . I would argue our organization, Public Knowledge, pointed out more agregious examples where they are not only the owner but own a broad range of content. We have seeing this with at t who merged with direct tv and about to merge with time warner. We see it prom multiply providers. Host unfortunately, we are out of time. I hope you come back with this argument. Chris lewis with Public Knowledge, and Jeffery Eisenach wi