On October 18, 2012, the Free State Foundation held a lunch seminar titled "Ideas for Communications Law and Policy Reform in 2013." The program began with a Conversation between FSF President Randolph May and FCC Commissioner Robert McDowell discussing ideas for reforming communications policy by the FCC as well as ideas for revising the Communications Act to reflect today's competitive marketplace and digital realities.

FSF is now releasing a transcript of "A Conversation with FCC Commissioner Robert McDowell." Commissioner McDowell discussed topics ranging from his own regulatory philosophy to the FCC's ongoing regulatory creep and tendency to over-regulate, to the vagueness of the public interest standard, to potential revisions to the Communications Act, and many more. While the transcript should be read in its entirety for an appreciation of all of Commissioner McDowell's views, selected excerpts are highlighted immediately below. And if you would like to watch the C-SPAN video of the Conversation, it is here.

Commissioner Robert McDowell:

"We should look at the Code of Federal Regulations. I've talked a lot about reviewing rules to get needless rules off the books. Again, Chairman Genachowski has embarked upon that to a certain degree. By his count, he has more than 200 rules that he says he's taken off the books. We've looked at that in my office. Probably about 150 of those rules are what we would classify as bookkeeping, either cross-references that have been erased or the court struck down something and it just was left in the rulebook, et cetera. So I think we can be more aggressive on that front. Congress has actually given us a number of tools in this regard. There's Section 10, forbearance, of course... But also, the forgotten sibling of Section 10, right next door, Section 11 requiring us every two years to look at telecommunications rules and determine whether or not they should stay on the books. There's also Section 202(h) in the 1996 Act. That requires us to look at our media rules and deregulate as more competition comes online. It's very explicit, actually. It has a deregulatory bent to it. And there's Section 706 which doesn't provide us with a lot of authority to do anything, but talks about removing barriers to investment. That has a deregulatory bent as well, as did the thrust of everything coming out of the 1996 Act. So these are all tools that we have currently."

"No, in most cases, we don't get options memos. It would be nice if we did. There are five FCC commissioners by statute. We're all independent votes. We each get our own staff. And I certainly don't want to interfere with each office's independent collaboration and brainstorming. The Chairman, of course, is the CEO of the agency and gets access to all 1600 employees. Chairman Genachowski has done a very good job of opening up access to the career substantive experts throughout the agency. If he's brainstorming with his staff, I don't need to know everything...But it would be good if at a certain point, we could get options memos outlining different options. Now, different chairmen are always concerned about leaks to the press. So if there is an idea in an options memo, they may not want that discussed outside the building because it might be put there as a straw man or who knows. There could be some other motivation. But I think it would really help with collaboration if we could get those. It really helps stimulate thought to hear what the career experts at the agency are suggesting from across the spectrum of ideas."

"For several years now I've called for cost-benefit analyses and bona fide economic analyses to be incorporated before we embark upon rulemaking. That includes market analyses of the rules we might be proposing or the industries we might be regulating. It's absolutely necessary. Every rule has a cost. Sometimes we are mandated by Congress or maybe a court to have a rule. And sometimes the Commission comes up with rules on its own, for better or for worse. But every rule has a cost. There's no such thing as a cost-free rule. It's almost a regulatory law of physics that there's going to be an unintended consequence."

"When you're looking at concentrations of market power and abuse of that power, you have to look at whether that's resulting in consumer harm. That's got to be a question that's asked in every proceeding."

"Sometimes Congress tells us we have to do something, so we try to be faithful to it. But if we're embarking on new ground, the case has to be made that there's an actual need, a demonstrated need for a rule. Then it has to be narrowly tailored and preferably sunsetted."

"Congress contemplated that regulation impedes investment with the last major comprehensive rewrite of the Act in 1996 with Section 706. It talks about removing barriers to investment. It actually uses the word 'investment.' So Congress has contemplated this a bit. You can also read that into Section 202(h) and other places, too. In the absence of market failure, if you've got regulation, then in a way you're politicizing that part of the marketplace that you're trying to regulate."

"So in the instance of net neutrality, what is reasonable network management? Reasonable network management is whatever three unelected bureaucrats say it is. None of us has an engineering degree. And a lot of these types of decisions are business and engineering decisions. Bureaucrats start to politicize these types of decisions. That means from every two-year election cycle or every four-year election cycle, investors and market players aren't quite sure what the rules are going to be. That creates uncertainty, so they have to start adjusting or tailoring business plans to these two- or four-year cycles. And that creates confusion, actually inhibiting investment and risk taking."

"Unnecessary regulation is just an added burden, if nothing else. Posner is correct in that regulations are like taxes. They do impose costs. Those costs ultimately are borne by consumers, either through higher prices or through not getting an innovation that they otherwise would have received through endeavors in the marketplace. And that's what you can't measure. You can't measure what didn't happen really as the result of a regulation. For instance, go back to net neutrality. If you look at USTA's Capex figure for telecom in 2010, it was $66 billion. In 2011, it was $66 billion. Now, I see a lot of economists, a lot of PhDs after their names here. I would love for someone in the room to do some sort of study as to why was that Capex is frozen. Was it due to the December 21, 2010, net neutrality order or not?"

"One of the things we can do is more sua sponte forbearance, to take the initiative on our own to try to erase some of the rules or turn back some of the rules in the rulebooks...We should be looking at regulation from a different perspective, which is: It should be justified. You have to justify the regulation. That's why I like the idea of sunsetting. It would force the Commission to reexamine rules every few years and see if they're really needed."

"More and more I look at the communications marketplace through the eyes of my kids. I have three kids, ages 5, 11, and 13. They are voracious consumers of communications products. To my kids, it doesn't matter whether that content is coming over a twisted copper pair or coax or over the air in one way or over the air in another way or licensed or unlicensed. As we see this dynamism in all this competition and positive, constructive chaos, I really do think it is time to reexamine the statutory construct. We have these silos where it's one set of rules if it's Title II, twisted copper pair, or telecom servers, or whatever. There is one set of rules if it's under Title III one way, and another set of rules if it's Title III another way. There is yet another set of rules if it's over coaxial cable, et cetera, et cetera. That really is early 20th Century thinking or maybe even late 19th Century thinking. And we've got to distance ourselves from that. We need more regulatory flexibility."

"I hope any discussion regarding a new statute would start with looking at concentrations of market power, abuse of that power, and if there is resulting harm to consumers. That should be all wrapped into definitions of the public interest. The marketplace is moving so very quickly that regulators really can't keep up with the marketplace and shouldn't try unless there's marketplace failure that results in harm to consumers."

"So what does the public interest mean? It's in the context of each section and subsection of the statute. Again, what does it mean? It means whatever a majority of the elected bureaucrats we call FCC commissioners says it means... More direction from Congress would be very helpful."

"I can't explain the motivations or philosophies of my colleagues. But I do think we, in a lot of ways, need to start from scratch. We need to understand that there are producers of content and they want to push their content out over multiple platforms. When it comes to things like the newspaper broadcast cross-ownership ban that was adopted in 1975, as I've said before, it's as outdated as the polyester leisure suits and disco music of its birth year. If you're a broadcaster, you can push your content out over radio, TV. You can push it out over the Internet, certainly. But somehow if you print it on a piece of paper daily, it all of a sudden becomes a threat to democracy. In the meantime, there are a number of markets where we have waivers or grandfathered exceptions to the cross-ownership rule. And my question is, is there less democracy in those markets as a result of that? I don't think so....Over the past few years, we've seen hundreds of daily newspapers go out of business. I don't want to say it's because of the rule. There's a market change going on, of course. But with the market being so fragmented, not only on the consumption side but on the supply side of the market as well, that's only a good thing. There's less danger concentration because of competition."

"Back in 1960, when there were three TV networks and essentially one phone company, all of the FCC's regulations neatly fit into 463 pages of the CFR. As of about a year ago, it's about 3700 pages, even though we have markets that are more competitive. What that shows is from 1960 until last year, the number of pages in the CFR grew by about 800 percent, and the economy grew by a little over 350 percent. So it's an example of how regulation in this area, just by page count, has outpaced economic growth."

"Especially in the wake of Citizens United v. FEC, you have to ask: When a speaker is barred from speaking on one of many platforms, is that constitutional? We should have presumptions. We should be assuming and always working in good faith that our rules are not only supported and called for by the statute but the Constitution as well. I'm frequently applying a First Amendment screen to what I vote on."

"Section 706, in my view is deregulatory in its bent. What it requires us to do is produce a report. Beyond that, it's not clear what it requires us to do other than to remove barriers with the implication being the removal of regulatory barriers that might be deterring investment. I think it's that simple. So I don't think it gives us the authority to impose net neutrality regulations, for instance, or data roaming. Both of those issues are before the appellate courts."

"We have a [USF] contribution factor that has been spiking out of control. This is a tax on consumers. The pool of revenue from which we draw those funds has been shrinking and will continue to shrink as market trends continue. Something has to be done. I've been a proponent for many years now of at least examining a hybrid or something involving phone numbers and telecom revenues. I am not in favor of any Internet tax, or broadband tax, or something that is essentially a broadband tax that might be named something else. And I never have been. So when we talk about broadening the base, it's not into that space. It never has been."