Airlines, what have you. Theres two things that happen. Once a commission interests itself in a particular area, puts a sign out that says open for business, which is basically what we did when we did the open Internet Order, right . What happens . Firms realize, oh, i dont get to make money looking at customers and making investments, i make money by going to the regulators and getting them to favor me and disfavor others. The phrase economists use for this is rent seeking. And thats what it does, it opens up rent seeking. For 30 years we never had any complaints about interconnection. Since 2010 weve had a number of complaints. Why . Open for business. The second thing that happens, and this is, i think, the most dangerous part of it, is even though the commissioners may say, well, we want to limit how much we regulate, okay . That wont happen. They will be under constant pressure to expand the regulatory writ. And weve seen this happen now. Level iii, for example, in 2010 said lets try to Leverage Network neutrality into regulating interconnection. Now, genachowski said at the time quite wisely no, no, no, no, thats not Network Neutrality. Were not going to touch that, okay . Well, even that appears to be changing. So it looks like were now leveraging the interest of the fcc and Network Neutrality into in interconnection. Into interest in interconnection. How much more do we expect . It will encompass the whole internet eventually. Camels nose under the tent, okay . Theres a backstop, light touch regulation. Doesnt happen that way, guys. Just look at what regulation has done in the past. Its a disaster. If you love the bell system and title ii regulation, youll love this with the internet. Was that clear enough . [laughter] well, well let the audience audience anne marie, a lot of your work, as you said, is how investors think about the broadband infrastructure. What could you tell us about how investors might respond to a more active role for the fcc this regulating interaction . One of the things investors do is look at data, and whether youre looking at data from cisco or telegeography or any number of other sources, what youre going to see is tremendous growth not only in the amount of traffic that runs over the internet, but as john pointed earlier, a tremendous amount of flexibility in the way the internet has evolved to respond to that. And what we have evolved out of the network of networks that john talked about is really a network of innovators, millions of them around the globe. And what has made all of that possible is the tremendous flexibility of the commercial, very highly informal as someone said earlier, handshake agreements in many cases to change rapidly. And one thing, you know, some regulation has some advantages, but one thing that regulation does not offer is flexibility. Once you encode something in law, youre kind of stuck with it for a very long time, for an awful lot of litigation. And so i think a major concern for investors and why i think investors would be very concerned to see government regulation of the internet is that that flexibility which enables the whole ecosystem not just the network layer, but all of the application layers, service and layers above that would suddenly become rigidified. Anywhere sitting in that ecosystem anyone sitting in that ecosystem is going to have to start thinking about how do i make sure that my application sitting up here is not suddenly going to be subject to regulation. What keeps me from being a Telecom Service when so many of the things out there not being regulated could qualify . So i think what you would find is a tremendous concern about that lack of flexibility, and you would find investment drying up. Okay. John, let me ask you a technical question. So part of this discussion, and i alluded to this earlier when we were talking to kevin, part of this discussion is about voice traffic. So as were completing the ip transition and moving off of the tdm network and on to all ip networks, one of the questions is whether or not interconnection requirements on the voice network, how and if those translate to the, to an ip network and whether or not its kind of just expanding that to all traffic and treating them all under different kinds of interconnection rules. If we were just talking about voice traffic, from a technical stand point is it possible for isps to distinguish voice packets from other packets and subject, you know, just those to interconnection rules . And if so, is there a way of doing it without introducing other kinds of technologies that maybe have some downsides that we have seen in other contexts . So complicated question. Let me divide that into two cases. There is a voiceover ip service that would broke look to you like a normal telephone. Theyre never mixed together with other internet traffic. In the world today, they may actually be converted back to old circuits and then back to ip again and sort of a leftover of the legacy circuit switch days. I can imagine the world where, hopefully, where that sort of art official Technology Change artificial Technology Change will go away and theyll all be ip packets, but theyll all be voice. And it wont be any different from what it is today. Contrast that with Something Like sciech where the skype where the voice packets are all mixed together with all the internet traffic, and now i cant tell it apart unless i use deep packet inspection. Interesting question. The first kind of Voiceover Service is probably going to live on for the foreseeable future even as we go to ip. We will have Internet Connection that technically is ip but in terms of business arrangements looks a lot like telephone. But the more we mix these together im technically, i dont know how were going to separate them. And from a policy perspective, im actually getting a little worried as we start to treat these different types of traffic differently as to why and how were treating it differently, and if its because of exerting market power or just normal business. Yeah, well, go ahead, anna maria and then jerry. Well, to me, looking at it again from the investment perspective, think about someone whos designing a game, right . I want to invest in someone whos designing a game. I want that kid this his garage to think about the that kid in his garage to think about the best possible game, not to think about how to design it in a way that will keep the voice part of the game out of regulation, you know . Look at skype. You figure out how to divide voice from the video packets, whats skype going to look like . How are they going to sort of arbitrage the rules to stay out from under the regulation . Thats what i meant when i said earlier that for investors, the huge concern is going to be eliminating a lot of innovation and a lot of flexibility because the energy that now goes into those is going to go into regulatory arbitrage. How do i design my product, my service to avoid regulation . Jerry . Go ahead. This was a very interesting point which was the transition from the old Public Switch Telephone Network, the copper wires, to eventually to ip. And i want to commend two folks. One is kevin, he has a great paper on this. T i disagree with all his conclusions, but its a great paper. [laughter] the other thing i want to mention that chairman wheeler has teed this issue up, and its an ugly issue. Im glad he did it. Somebodys got to look at it because, you know, telephony, wire telephony is in freefall. And weve got a lot of companies that have all kinds of obligations to maintain copper wire in a situation where thats a dying, dying market. I mean, okay . And we have to figure out how to do that. Now, the only thing i dont want to have happen is that the death of the pstm become the tail that wags the interconnection dog. And i think we have to keep our view on what do we want interconnection to look like . Do we want it to be title ii regulated, or do we want to continue as a free market thing . And i dont want the death of pstn to really determine that outcome. I think that would be a mistake. I dont want to mischaracterize your position on this, kevin, so let he just clarify this. Is your view that however the fcc gets involved or more involved or stays involved with interconnection, do you see a distinction between voice traffic and all other traffic in terms of what that regime would look like, or do you see a similar set of rules, similar set of regulations applying to all of them, and if so, is it 251 and 252 of the existing act . Theres a set of legacies. The paper that jerrys talking about is called no dial tone, and the issue there is we have a set of industries that is subject to certain regulation, and the problem is the way things have evolved, that regulation is all or nothing, and once traffic goes to ip as a technical matter, the argument is suddenly all those rules go away. While the industry stays the same. While you still have the existing structure of the Communications Industry where we have no longer legally mandated monopolies but still some very powerful, very dominant players, and players that understand how to play that regulatory arbitrage game. You cant just say, guess what, ip is magic pixie dust, now youre in the internet, and now its a get out of jail free card. Thats the flip be side about the concern that youre hearing about regulatory arbitrage is an arbitrage that goes the other way. So as that transition happens and i agree with jerry, a difficult set of issues, but one that appropriately the fcc is taking on, and the industry is taking on as well we need to work through what the transition looks like. At the end of the day, no, it doesnt make sense to say theres some magic about voice packets thats somehow different than any other kind of packets. At the end of the day, i think we need one interconnection regime which is, again, why ive been trying to argue these distinctions weve historically made between what happens on the pstn and what happens to voice traffic that somehow is not on the pstn, what happens to net flew central Net Neutrality on the Network Versus off the network, all these distinctions ultimately dont make sense n. The middle theres a lot we have to do to maintain relationships and to manage a transition. I think thats appropriate. But the ender of the day, the question is what we want to have. And what im worried about is what jerry said at the beginning. I would hate to see the internet turned into a supermarket thats just selling us peas. Thats not what the internet is today. Thats not the kind of open platform thats generated so much extraordinary innovation. Thats a Traditional Market where youve got a distributer that controls whats on the shelf space, and they have the power of life and death over every purveyorover products by of products by allocating that shelf space, and its a linear market. Nothing comes back from consumer back the other way. Thats not the internet that weve had over the past few decades, and thats not the internet we should have in the future. So, i mean, obviously, the fcc can only work with the tools the fcc has available to it by law. Weve mentioned, i mentioned section 251, section 252, that deals with interconnection now on the switch Telephone Network. Interesting enough, if that was sort of within the tool set that the fcc was going to use to get more involved here, that would also kind of ask an interesting question about the role of state regulators in that process. So i want to ask all of you or any who have an opinion about this, is there a role leave the legal aside for a moment should there be an appropriate role for state regulators in managing or regulating interconnection, and if so, what should that role be as distinct from the federal role . Who wants to take that on . Jerry probably has a very short answer. [laughter] good god. [laughter] let he mention one thing, however, because we havent talked about this at all. But generally, if we have problems with terminating access to monopolies as kevin mentioned, if we have some problem in what is otherwise looks like a Competitive Industry where we might get into some market power, the answer to that is not regulation, its antitrust. And i think the same answer applies at the state level. Getting the state regulators involved if i dont even want the feds involved, i certainly dont want the states guys, but can they do something in the antitrust arena . Can state attorney generals take action if they think its necessary . Because i think thats the appropriate place to have action if we have whatever problems might arise with sewer connection interconnection, thats what we ought to be doing about it, not regulating it. Anna maria . I dont believe that something at the level of the states has a role in what is global traffic effec the next google that were all trying to protect in all of this discussion that momentum have that kind of that doesnt have those kinds of resources and would also find itself fighting in 50 different state arenas and a whole bunch of courts. That just doesnt make a lot of sense. I think either side of this event wants the states involved i want to make sure kevin gets, goes on the record one way or the other. That would be a complete nightmare. I wanted to just elaborate on something gerry said. He said we do have antitrust as a backstop if a Transit Provider thought it was being excluded from a deal. We have something else, too, thats important, and i mentioned this in the policy brief, and that is were about to get a new set of rules that are designed to protect edge providers, namely content and app providers and device makers, and these are going to be a no blocking rule youre talking about the open internet. Yeah. It isnt just entirely antitrust wed be leaning on, wed be leaning on antitrust plus whatever new productions are going to come out for content providers including a nondiscrimination rule, a no blocking rule. So to me, the real way to kind of tee up the policy debate is once you have antitrust and the rules that are aimed to protect content providers, you know, what extra protection are you getting by overlaying an interconnection obligation . For me, its a pretty small amount of protection that youre buying. I think that the only folks youre really helping out are going to be these standalone, Transit Providers or content delivery networks, and its just not obvious to me what additional protections are needed, what kind of social purpose is served by breathing life into intermediaries, and i mean that in a loving sense [laughter] well, i upset someone from a level iii when i called them intermediaries. I didnt mean anything pejorative about that. But, you know, what are you getting with this at the margin . Thats, to me, the key policy question that should be addressed. So, kevin, lets be clear, do you see a role for states in terms of interconnection regulation, and if not, how do you keep them out . Well, turn the question around, what could states contribute to anything in this regime or in this world . I think theres a good argument that states will continue to have a strong role in universal service because theyre closer to the ground, and they are familiar with local variations which still exist even in a Global Internet interconnected world. And states, perhaps, have a role in consumer protection, again, because theyre closer to the end users and heavy a better understanding and a better capacity to resolve some of those issues. I think in terms of an overall interconnection regime for the internet or for ipbased services no reason to say that that has to go through 50 state commissions, and i would certainly agree that that just, you know, magnifies a regulatory problem. But, you know, there are some of these issues that come into play where, for example, if you have a rural provider thats being blocked or traffic thats not being delivered, i think a state could have some role at least as a factfinding matter in that dispute so we could talk about how to do that. But i dont think thats really core to any of these issues that were talking about here. Yeah, john, go ahead. So ive already made a comment on whether we regulate and transparency versus regulation, but assuming you were going to regulate, id just remind you that were looking at interconnection between two big networks. Each of those networks may operate in dozens of states, and they probably have interconnection points in at least half a dozen states, maybe a dozen states. If you have a dozen different sets of state regulations, what does that a do to interconnection agreements, and how can you even find where the problem is if youre only looking at whats going on in one state . I think you need federal agencies involved. Yeah. I mean, i guess to me one reason i was happy to see section 706 is sort of the preferred mode in the open Internet Order that came out even though title ii is also raised because it seems to me that that leaves the fcc a lot more flexibility in all of these areas in terms of what it would draw into the net of regulation and what it would exclude. I mean, its lovely for kevin to say states have this role but not that role, but if you actually as i know he has done extensively look at 251 and 252, states initiate steps, you know . States come back and say, wait a minute, i think voice is actually under my jurisdiction. Its kind of hard to prevent that if youve brought in that regime. And what that then mean is the a very lengthy process during which investors have no idea what the outcome is going to be, during which the attention of the companies that are involved is focused on the legal issues as opposed to focused on their business. So that, to me, is the concern. Did you want to follow up . Sure. One is this nose under the camels tent, look, i was at the fcc in the 1990s. They didnt want me to have the word internet in my title, so i got to be called council for new technology policy. We were dealing with all these issues. We have dealing with regulation of voip in 1998 when the fcc put out the stevens report which if you look closely says, essentially, phonetophone, carrier, voiceover ip is a communications service, were just not going say that right now because we want the market to grow. If you had open internet rules from 2010 to 2014, and all investment didnt dry up, and all the internet didnt just become this regulated thing that everyones afraid of. So it doesnt necessarily go all one way or the other. The one thing ill say about the states, the one thing that i worry about with is pstn transition, and this