Transcripts For CSPAN2 The Communicators 20140707

Meeting . Guest well, the fcc proposed a set of rules to adopt open internet principles. The fcc tried in 2010 to put rules into place, but most of those rules were overturned in court. So the fcc tried to in a pragmatic way put into place rules that insure theres not blocking of traffic, theres not degradation of traffic on the internet and so forth. But they also sought comment on a variety of other different approaches. So i think given the complexity of the situation, given all of the politics involved and all of the questions involved in this, i think they did a pretty good job. I think they asked the right questions, and its absolutely appropriate that so many people are writing in and commenting. This is a tremendously important issue. Host matt wood is with free press, hes their policy director. Mr. Wood, what do you think . Guest well, we think that the fcc did ask some of the right questions, but the path their proposing to do preventing blocking, degrading of traffic is just not going to do anything for the rest of us and will not work. The frc chairman has said he wants to use a particular Legal Authority to reinstate the rule section 706 of the telecom act with apologies for diving straight into the numbers and codes, and the court case that was issued in the d. C. Circuit in january basically said, okay, if you want to use section 706, you will have to allow substantial room for individualized bargaining and discrimination right there in the text of the court case saying that the fcc has some authority under this statute, but not the authority to prevent discrimination or blocking. So thats why we agree with chairman wheeler when he says we need to have these protections in place. We appreciate the fact that hes asking these questions. We just think the answers hes providing thus far with his preferred path will not actually get us to the place where the fcc can prevent this kind of discrimination and blocking by isps. Host and randolph may of the free state foundation, whats your Opening Statement . Guest well, of course, peter, thank you for having me here, and im glad to be here with my friends matt and ken as well. I have a different perspective, and the bottom line is that my preference would be that at this time the commission not move forward to adopt any new regulations. Now, at this time they just proposed rules. And what i prefer to see is for the commission to watch the marketplace, see how it continues to develop. Remember, the internet space is a dynamic space. Its changing very rapidly. And this is the key point. In its notice and even in its previous attempt to adopt rules the commission really hasnt identified a market failure. In other words, its not saying this market has completely failed and consumers are being harmed at this time. There are an awful lot of coulds and mights in the notice about things that might happen and could happen to consumers. And i agree that if they did happen, then the commission in that case should take some action. But the commission itself says quite explicitly that it doesnt, that in its view the need to adopt these regulations is not dependent upon whether theres really a market failure. In other words, whether theres a lack of competition or whatever. And so right from the beginning from our perspective thats the wrong approach to take. Now, im sure what were going to get into will be lets assume the commission is going to adopt rules in one form or another. Its not just going to, as i would prefer it to do, to watch and wait and defer to congress. Then theres a very big question and i think kevin alluded to this and matt as to what course of action the commission should take. There are basically two different proposals. One that i think matt prefers is for the commission to classify the internet providers as common carriers, thats referred to as the title ii approach. And another, the other approach would be to adopt a commercial reasonableness standard under which their practices would be judged to see whether or not theyre lawful or not. And ill just say at this point and then i think well get into, i think, a lively discussion about these two different approaches, the title ii approach and i think matt will agree with this thats, essentially, the same common carrier model that was first adopted actually back in 1887 when congress adopted, passed the interstate commerce act to regulate railroads which were thought to have monopolistic power. It was incorporated, is essentially, for all practical purposes word for word into the Communications Act when it was adopted in 1934 to regulate what was thought to be the monopolistic telephone system, what we called ma bell at that time. And if we put these two acts together, the interstate commerce act on one side and the Communications Act on another side, title ii, i am absolutely certain finish because ive studied them that theyre, essentially, the same. And what they do, and it was their purpose to do, was to establish really strict regulatory controls on these entities to prevent the abuse of market power. And i would submit that now at time in this digital age we have a very different situation, and we dont want to apply railroadtype regulation to telephone companies. Host well, now, matt wood, did randy may assess your position correctly . Guest well, in some ways. I think the question, the way he states it is actually true in some ways. These arent, in fact, new rules the commission is proposing. It is continuing to have the same principles weve always had in place for our communication system. And so the notion that somehow we can do without them now because theres no market failure, i think, ignores the fact that we still need an open and nondiscriminatory Communications Platform even as the technology changes. Yes, common carrier regulations can apply to monopolies and utilities. They can apply in other situations as well where you do have more than one choice. Nobody would really think its okay for Verizon Wireless not to pick on verizon, but they were the plaintiff in this case for Verizon Wireless to block my phone calls to a certain number or Certain Group of numbers just because i could always switch to at t or sprint or tmobile or some other regional carrier. These principles are just as valid today as theyve ever been. We want the same basic, Core Principles in place which say the person who provides my connection doesnt get to decide how i use it or who i call. They set the charges and the rates, but it should be fair and reasonable for me, and i should be able to use it however i wish once ive paid my bill. Host if you had your curt es, would druthers, would the internet be in title ii . Guest theres Internet Access which is the wires and spectrum that we use to get online. The internet content, i think we would all agree, should remain free from regulation. But as Susan Crawford has said, its like confusing the conversation for the sidewalk, you know in of course we want the conversation to be free and unregulated, and the fcc has no place regulating content online. They have always made sure that the Communications Pathways stay open. So today we have a regulated phone system, or at least we have the vest vestiges of a regulated phone system. The fcc makes sure that Communications Pathway is open, nondiscriminatory and there for everybody to use, not just those few the phone Company Might favor. Host kevin werbach, youve been listening to this conversation . Guest yeah. I wanted to jump in and say, first of all, lets make sure we understand what this debate is all about. Were getting into the details which are really important, but whats at issue here is the openness of the internet. And the internet is the most extraordinary engine of opportunity, innovation, economic growth, freedom that we have ever seen. And, basically, the broadband platforms and systems that were talking about are the information infrastructure of the 21st century. They are the ways that we are going to communicate with each other and also the ways that were going to do business. So its crucial to think about whether those platforms remain open the way they have historically. The internet has grown up as a network where anyone can communicate, anyone can get online. A teeny Little Company can get access to the network and become in some cases like google or facebook, a huge business. And its vital that that not change as the internet evolves. Were moving more into a broadband world, and randys right saying the internet is evolving, and we shouldnt fix it in place. But i think everyone at this point in this debate agrees that these values are important. And thats, its important to say, a Significant Development in this debate. Weve been fighting about Net Neutrality or open internet rules for more than a decade now in the u. S. And in that time theres been a real shift. So when we started out, you had seem like ed whitacre who was then the ceo of at t saying things like no one can touch my pipes. We paid to build our network, and we should decide what happens on it even if that means discrimination, essentially. Now you have Companies Like comcast, david cohn of comcast has said we think were more committed to Net Neutrality than anyone. At t just put out a blog post saying we completely agree we shouldnt discriminate en bloc, and were putting some of that into our terms of service. So i think theres an emerging consensus that these values are important. And then we get down into the weeds about how to do it, and theres legitimate disagreements about whats going to happen, but that has to be the starting point. And i think while i share some of randys views on this, i think the starting point of saying, well, we dont think anything bad has happened so, therefore, we shouldnt adopt anything is problematic. Because once we lose the openness of the internet, if we move into an environment where its closed, where it doesnt have that competition, where investors, venture capitalists dont fund startups because they say, well, im not sure youre going to be able to get be access to the network, that has a, essentially, a vicious cycle it creates that prevents that kind of innovation. So we have to avoid that happening. And in order to avoid that happening, we have to have a cop on the beat. And thats the role that the fcc has historically played in these communications markets, as matt says, and its the role it should continue to play here. So we have this debate about the best way to do it. And, quite frankly, i dont think in practice it would matter all that much between title ii and the 706 process that chairman wheelers proposing. Again, were talking here about hypotheticals. And there are some forms of differentiation of traffic that are perfectly legitimate. For example, every isp blocks spam and can be of denial of service attacks, and no one is saying they shouldnt be able to do that. Everyone allows companies and individuals to pay more for higher catty. So i may have a capacity. So i may have a better broadband connection that be my neighbor because i may more. As these new Business Models develop, as these new services get tried, whats the scope that the fcc should take off the table . And there is a debate going on about whether the fcc should totally preclude whats called paid prioritization or not. That actually doesnt go to the title ii issue. So whichever set of rules the fcc picks there can be with some limits. As matt said, the fcc is more constrained under 706 on totally prohibiting these kind of prioritization deals, but it can allow for some degree of prioritization even under the common carrier rules as long as theyre offered on the same terms to start with everyone. So were going to get very quickly into the weeds no matter what happens here, but i think we need to start with a regular in addition that we need to move recognition that we need to move forward, we need to get something adopted thats in place that gets through the courts, and then were going to have to fight inevitably about lots of these details. Guest i agree with, again, quite a bit of what kevin said particularly about the values that he articulateed, and openness is important. So is innovation, by the way. And not only innovation at the edge, the content providers and application providers, but also in the network because innovation can take place there. But i want to to move this forward, im going to, i want to assume that the commission be is going to adopt some new rules because i differ with kevin, i think, in this sense, that he minimizes the difference between the two different approaches, the title ii approach and the lets call it the section 706 commercial reasonableness approach. And he said that it may not make much difference. I think there is a significant difference, and im not, you know, entirely sympathetic to the section 706 approach, although i did say the day that it leaked that chairman wheeler might propose that, that it did have certain merits. So i wanted to try and hopefully move this debate in that direction. Heres what the difference is and why its important. I was actually at the commission from 1978 to 81. That was during the hey today of title ii heydey of title ii regulation of at t. I was in the general counsels office, associate general counsel, and i understand whats in title ii and where it comes from. And there are a lot of, theres a lot of regulatory baggage that comes with it. Now, i know under one theory theres and, truly, im not going to get too deep into the weeds, but theres a theory that the commission could adopt this title ii regime and then forbear from applying all of these different requirements that come with it. But those requirements have to do with things like allocating cost among different services, valuing property, getting the fccs permission before you extend that works or discontinue networks, getting the fccs permission for when you have a director that is in common with a director of another company and things like that. By the way, also interconnection with networks in a traditional public utilitystyle proceeding. So theres a lot of baggage, and it would, in my view, it would not necessarily legally be easy for the commission to get rid of those, all of these various requirements, nor could it be done in a short time. So, you know, aside from the rigidity of title ii, theres the practical problems. But let me just focus on the commercial reasonableness standard because, to me, if theres going to be some action, thats far preferable. Because if its implemented properly, and it would have to be implemented in this way if its going to pass be judicial muster because i think as matt said, the court said that the commission cannot, in effect assuming it doesnt reclassify it cant impose a regulation as a practical matter is just like common carrier regulation. So the key would be to interpret commercial reasonableness so that theres sufficient flexibility for the internet providers to be able to experiment with some new models. And i guess from my perspective to just presume that absent some showing of consumer harm or, again, market failure and possibly there could be that, but at least go in with the presumption that the practices are going to be reasonable unless theres evidence presented to show that theyre not reasonable. And to place the burden on the complaining party to show the unreasonableness. And then you would have a regime, i think, that, you know, that perhaps in order the get past this issue that to get past this issue thats been with us for over a decade that we could with live with and just see whether that works that way. Guest well, randy says that innovation can occur in the middle of the network, and thats true to a point, its just im always skeptical of claims that my innovation is blocking your innovation, which is often the way these innovations by the phone companies, the Cable Companies are phrased. So when at t or comcast says allow us to phrase traffic this a way we find suitable, we just take those claims with a grain of salt, especially when we look for consumer harm. Its not always easy to prove what were missing out on. Guest its not your innovation that may be blocking my innovation, the regulators review and potential misjudgments in having to make priority judgments in advance about whats permissible. Guest right. Guest so, and im not attributing any ill intent to the regulators at all or even incompetence, but thats just the nature of regulation, that there can be those types of misjudgments. So i would rather wait and see whether theres an actual guest right. Guest can marketplace rob and consumer harm before problem and consumer harm before trying to stop something in advance. Guest right. And im not necessarily attributing ill will to at t and comcast. I think that the reason weve seen at t and comcast and verizon as well although somewhat quieter than those other two Companies Embrace the chairmans proposal and say theyre fine with section 706 is because, randy, you and i probably agree more than i do with ken on this point, i do think there is a meaningful difference between 706 and title ii and under title ii the fcc, could, in fact, keep the network open, prevent the monetizing of their network that i think these Big Companies want to do. Of course, they should be be be allowed to monetize in certain ways, by selling different amounts of capacity to different people, but not by two things. Not by saying were going to charge you more based on how you use that capacity meaning if you want to go to netflix, it costs one thing, but if you want to go to amazon, it costs another. And the problem of putting the burden of proof on the Internet User is that these companies are quite literally saying everybody on the internet is now a customer of the isp. So if i come to cspan. Org and i visit cspan using my broadband connection, suddenly cspan is not just a comcast of its own internet provider, it is now a customer of my Internet Service provider and can be charged for the privilege of reaching me. And thats really the kind of discrimination and differentiation and prioritization that we see as out of bounds here, as harming innovation, as something that will be difficult to measure the consumer harms because we wont know what were losing out on once the Internet Service provider is in that drivers seat and say only certain sites will reach you at a certain speed or only certain sites will reach you at all depending on the Customer Relationship theyre able to craft out of this decision where, again, my isp dictates whether or not other web sites can reach me. Host kevin werbach, you sounded like you wanted to say something. Guest yeah. Now were starting to get into something new here because a lot of this debate weve been having is the same debate we can have on pretty much any telecom issue. Theres always a reasonable argument why we shouldnt regulate ahead of time, and theres always a reasonable argument why we should regulate ahead of time. The question is whats really going on here, and how are things likely to evolve. So part of whats new is realizing how little we actually know. So all of these relationships are inside the internet, and most of its dark. Most of it because the fcc has not chosen to address the internet core market, theres no transparency about a lot of these interconnection agreements. Even in cases like the recent deal between netflix and comcast where its been reported publicly that netflix is paying comcast, but the terms of the deal are not public. So one of the pieces of the fccs open internet rules that actually survived the court review was a transparency mandate. And thats something that is actually more important than people give credit to, and i hope the fcc takes it and runs with it. We need to understand better whats actually going on and what might be going on in terms of Network Management and in terms of other practices. Then the other piece here is we started federally to talk about something that technically isnt necessarily even part of Net Neutrality, but it should be in the same debate which is interconnection. So formally, the open internet rules only apply to practices on the access providers network. They dont apply to deals on the edge of the network. So the deal between comcast and netflix is not at all subject to these open internet rules regardless of what theory were talking about. Now, i think it should with in the same basket. I think we need to think about these issues in the same way. Basically because of what matt described. If if an access provider can use its leverage, whats called its terminating access monopoly, even if theres multiple competing transit providers on the internet, once an access provider has enough market power, then it can potentially use that to extract tolls from other Companies Across the internet. Thats something we should be worried about. Now, i would agree with what randy would probably jump in and say which is, well, we dont know if thats going to happen, theres Competitive Pressures and so forth. We shouldnt absolutely preclude all of those deals, but there needs to be an enforcement mechanism and a review mechanism that provides some transparency to the public and to the fcc about whats going on, and then we can work through how we deal with these kinds of issues. I think what is new is there are a variety of other mechanisms that regulators can use, things like arbitration, adjudication proceedings which the fcc really hasnt used too much historically, and i think we have an opportunity here to build some of these new approaches x. Theres a variety of interesting and good proposals that are there in the record already in the proceedings. But, again, once we get beyond this initial point that we need to do something, then i think we can look. And, ultimately, the only way were going to answer these kinds of questions that were arguing about here is seeing what actually gets tried. Theres lots of theoretical prioritization and quality of Service Arrangements that in practice have not actually been used and may not be used, but lets see what actually happens and then insure that theres a backstop in place so that if something gets tried that would cut off innovation, theres an opportunity to stop it. Guest well, again, i want to agree with quite a bit of what kevin said, particularly the transparency point that he began with is important. Ive always supported the fccs transparency provision as part of the open internet regulations. I moon, ive i mean, ive done that, and theres always a question of how much, and, you know, what the burdens are. But thats important. And its important, and kevin alluded to this. We havent talked much about it, but i began the discussion with it. It makes a difference as to whether youre talking about a market that is monopolistic, in my view, in which theres not competition or one in which there is some competition. Now, we could debate and maybe well do it another day how much competition there is and whether its enough, but this is not the marketplace that we had back in the last century with ma bell, you know . We do have wireless. In fact, most people dont realize this. Over twothirds of the Internet Connections now in the u. S. Are through wireless devices. Be ask can theyre not even largely and theyre not even largely covered by the Net Neutrality rules. Now, you may wish that they should be guest they should be. Guest i think the wireless carriers recognize that. Guest and most of the investment in the last several years, you know, has gone to the wireless side which may tell you something about whether regulation matters. But heres really the point that i want to make. If we didnt have any competition, then consumers wouldnt have a choice, and if if a provider did something, quote, thats harmful, consumers didnt like it, they wouldnt have a place to go. But when you have competitive alternatives, theyre not perfect, its not, its not like the wheat market, but when you have choices, then consumers can move to another provider. And thats important in this debate. Guest i agree its important, i just think as i said at the outset, theres some things we dont want our Communications Providers to compete on, and one of those is who blocks the least or who discriminates the least. So the transparency provision is important, i agree, but its not enough. And even all the other methods that kevin listed, we just feel like looking at the court case that the fcc lost back in january, that no matter what they tried to do, whether its some kind of alternative dispute resolution or some kind of stakeholder gatherings or any kind of enforcement that the cop on the beat in this case if they use that 706 authority already no power to prevent bad things from happening. Chairman wheeler says he will prevent bad things from happening, and we think that he cant do that if you look at the court case and look at the restrictions that it places on the fccs ability to prevent blocking, to prevent discrimination. Weve talked about not seeing market failure today, but we do have several instances of, at t, comcast, verizon in different areas whether were talking about the netflix interconnection agreements or not, but things like not allowing certain video or voice chat applications to work on your mobile device. At t has a long track record of blocking first and then allowing only later after some pressure. So we have seen instances where the carriers have tried to retain that control over who gets to use their services and how they can use them. And thats why we feel like we need to maintain this Core Communications Network Principle for broadband and just as we had it for other types of communications networks. Host when should we look for action by the fcc on this proposal . Guest well, the comment deadlines are set. They could act right after the end of those, they could take a little while. Everybody thinks they want to do something this year, but the comment deadlines are july and september, and whether they act in october or november, that would be kind of a sprint speed for the fcc to really get something done only a couple months after the comments were done coming in, but that is everybodys notion of what their target is and what their time frame is right now. Host and if you want to add your comments to what the fcc is proposing or you can go to openinternet fcc. Gov and make your comments. Gentlemen, i hope all three of you will come back once the Comment Period has elapsed and once we can talk her. Unfortunately, were out of time. Kevin werbach with the university of pennsylvania joining us there philadelphia, matt wood with free press and randolph may with the free state foundation. This is the communicators. Live on wednesday morning, british Prime Minister David Cameron answers questions from members of the house of commons. Watch Prime Ministers questions live on cspan2 at seven a. M. Eastern. This afternoon a look at mexicos efforts to boost oil and gas production. Mexicos ambassador to the u. S. And a panel of Energy Executives will talk about the recent decision to allow private sector access to statecontrolled energy market. Watch this live on cspan at 1 30 p. M. Eastern. Recently, a Senate Commerce Committee Held a hearing reviewing ecigarette advertising targeting young people and its effects on their health. Well hear from Cigarette Company executives and industry experts. This is about two hours and 15 minutes. Okay. Today the committees examining the marketing of ecigarettes, and i should warn you that emotionally im on edge. On this whole subject. Im on edge. A product whose popularity has recently been soaring including and especially among young people. We will hear today, i assume, from the Tobacco Companies or whatever they call themselves that they will be, theyre Just Marketing to adults which im going to find an amazing answer, and we will quote that. Ecigarettes are batteryoperated products that vaporize a liquid containing something called nicotine, and we allem