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FREE STATE FOUNDATION 
SEVENTH ANNUAL TELECOM POLICY CONFERENCE




On March 19, the Free State Foundation held its Seventh Annual Telecom Policy Conference at the National Press Club. The conference theme was "The Future of the Internet: Free Market Innovation or Government Control?"

 

In addition to an Opening Keynote Address by Rep. Greg Walden, Chairman of the House Subcommittee on Communications and Technology, there were three panels. The Free State Foundation is now releasing the transcript of the conference's third panel session. This final panel engaged in a wide-ranging discussion of the FCC's net neutrality order, video services regulation, wireless developments, spectrum policies, Communications Act rewrite prospects, and other topics.

 

The panel was moderated by SETH COOPER, Free State Foundation Senior Fellow. The panel consisted of the following experts:  

  • JAMES ASSEY, Executive Vice President, National Cable & Telecommunications Association
  • JEFFREY CAMPBELL, Vice President, The Americas, Global Government Affairs, Cisco
  • JOT CARPENTER, Vice President, Government Affairs, CTIA
  • PETER DAVIDSON, Senior Vice President - Federal Government Relations, Verizon
  • GENE KIMMELMAN, President and CEO, Public Knowledge

The transcript should be read in its entirety for an appreciation of all of the views of each panelist. Nevertheless, in the meantime, immediately below are selected excerpts in the order of the panelists' presentations. These excerpts provide an indication of the various perspectives presented at the session. But, again, the transcript should be read in its entirety in order to obtain a full appreciation of each panelist's views.

 

And if you would like to watch the video of the proceedings, it is here.

 

JOT CARPENTER

 

At CTIA we've traditionally viewed the common carrier exemption as a useful bar against duplicative regulation. Yes, as Commissioner Ohlhausen points out, the market is dramatically different today than when that initiative or that piece of law was enacted.   We have competition where we used to have monopoly, but because we have competition, our view is we don't need a lot of regulation. If we're going to have a regulator at the federal level, we ought to have a regulator, not multiple regulators. And so when the FTC and others have proposed in the past removing that restriction and allowing the FTC authority over common carriers, it's been our view that if you're going to do that, you need to couple that with some consequent reduction in the scope of the authority of the FCC.

 

And I don't think anybody in the space objects to having some baseline level of sensible regulation. But I don't know how you get a sensible baseline with two or three regulators. I think that just simply raises the likelihood that you'll have duplication and overlapping conflict, and I don't think that serves anybody's interests."

 

I would add, certainly in the wireless space -- which is vibrantly competitive, and I think that's apparent to everybody who works outside the Portals, at least -- if you look at the last six months of last year, the number of plan and service and feature offering changes that came to market as competitors responded to each other in order to try to win share was tremendous.

 

And it was all aimed at - how do I capture consumers' attention? How do I convince someone to spend money on my network with my plan, with my device, with my features? And the idea now that somehow you're supposed to go and seek, in essence, prior approval from the Commission before you think about making those kinds of changes is exactly at odds with the way a competitive market is supposed to work.

 

It just baffles me to think that in the face of very clear evidence that the market is vibrant and innovative and delivering really good results to consumers, we now want to set up a process that says, go ask, "Mother, may I?" before you bring new plans to market. I just don't think that's a good idea. I don't think it's something that most members at CTIA are going to want to avail themselves of. And I think it will inevitably slow the process down.

 

I'm hopeful that the Commission can get back to a laser focus on the incentive auction. There's a ton of work to do if we're going to hit Tom Wheeler's stated goal of first quarter 2016. And so they really need to get busy.

 

And it doesn't matter whether they got two comments or four million comments. This wasn't supposed to be about volume of comments. It's supposed to be about what are the bounds of their statutory limits. And I think it's certainly arguable that some people forgot that central mooring post.

 

JEFFREY CAMPBELL

 

[I]f you look at the rationale in the FCC order for why we must have such stringent rules to preserve an open Internet, almost to the extent that in order to preserve permissionless innovation, we must ban permissionless innovation in other spaces, the rationale is that it's too difficult to do on a case-by-case basis, that we have to have bright line rules that people know in advance and whatnot. Of course, we'll enforce them on a case-by-case basis afterward. But my point is that it's actually in direct contradiction with how the FTC goes about its ordinary operation for consumer protection and the other things that are under its jurisdiction, where it's a fact-based intensive investigation, and then you get a bunch of case-by-case decisions to put that case law together.

 

I think we have to have a basis that people understand how new services, new offerings that will be brought to market are going to be reviewed by regulators, and get to an ability to have some understanding of what the rules are going to be and what people have to do.

 

To get to a point of fully understanding how a service might be offered and operated, you have to go through developing the technology. You have to develop the equipment, the software, and all the things that are going to support that technology. You have to then figure out what your business case is for it, what consumers want and what people might be willing to pay for it because things aren't magic; they don't happen for free. And at that point in time, you could go and get an advisory opinion on it. But the bulk of the investment of what it takes to offer that new service is already going to have been spent long before you're in a position to know what question you want to ask the FCC. Can I do this? Can I do that? So I'm not really sure that the advisory opinion process is really going to help a lot for this problem.

 

But the reality is that technology has gone far beyond this, and we're looking at a much more application-centric and software-centric world in which consumers are no longer just consuming based on linear video delivery. They're not consuming based upon one TV kind of device or two TV kind of devices, but multiple devices connected through multiple ways sharing content across different platforms.

 

And so the good news is that all these technology advancements actually bring software- and app-based systems into this world where we can do downloadable security, including multiple types of security, multiple types of devices that can actually provide better security because you have more renewable systems. You'll have methods of both allowing different kinds of devices to access the content and better security for the content itself.

 

I think Internet of Things -- or as we like to think of it, Internet of Everything, because it's actually more than things; it's people interacting with things -- is going to be a huge driver in the technology space going forward. It's going to affect all aspects of it and create a lot of new markets and new features and opportunities. From a policy perspective, I actually think thinking of it as a policy space is the wrong way to look at it. You should actually recognize that it's just another way of doing things that we have done before. And so the policy issues largely don't change. So if you're working with medical devices, there are lots of concerns there about efficacy, safety that the traditional medical world has always dealt with. And those things will still apply there. Privacy, obviously, is going to be a big concern in this area.

 

JAMES ASSEY

 

"I think at the end of the day it's the market transformation which continues to put pressure and drive people towards a greater sensitivity to the need for a more modern framework that will reflect the state of competition and the variety of players who are currently participating within the overall ecosystem.

 

The advisory opinion or the business letter is really only as good as the standard that you're trying to enforce. And at least in the antitrust context we have guidelines. We have a host of precedent that tells us basically whether or not we're within the zone of wanting to go in and get confirmation.

 

I don't know what to make of the general conduct standard. It's exceedingly difficult, I think, for anyone, as Jot [Carpenter] says, to know what way the FCC is going to come out on any particular practice or service innovation that may come along. And that's leads to this concern about this "Mother, may I?" approach to innovation.

 

So whether or not folks would avail themselves of it, I don't know. But I think we're unlikely to see the benefits of advisory opinions bear fruit unless we get a standard that gives us some greater predictability about what's in and what's out of the zone of reasonableness.

 

PETER DAVIDSON

 

So Rick Boucher's point about the leverage, that Republicans and Democrats right now hold kind of an equilibrium of leverage or lack of leverage, however you look at that, so this actually is the right time for them to look at this process and create a good process.

 

I think everyone's already choosing all kinds of different delivery devices, and their over-the-top video is exploding. And so I'm not sure that it's worth a whole lot of time figuring out how to figure out the old technology. What's really happening in a lot of ways now, the gating factors are not the old black boxes sitting on top of the one way you can get video. It's access to content. It's the price of content. It's getting content to as many different places on as many different devices as we can.

 

I think there's going to be a tremendous need for more spectrum going forward for quite some time, so another aspect of whatever the modernization legislation in Congress should be is some kind of spectrum modernization provision that deals with identifying more government-owned spectrum and finding ways to get that out, licensed, unlicensed, WiFi, whatever. We should have a ten-year pipeline or a fifteen-year pipeline of spectrum that we can identify. And with advances in technology, that shouldn't be that hard to do. And I'm all in favor of trying to identify some kind of government incentive program because I think people work best with incentives, and I think there are some ways to do that.

 

So I actually agree with Gene [Kimmelman], that although there's kind of a demonstrable lack of evidence of existing problems, as I think the congressional hearings over the last couple days have demonstrated, there really isn't a lot of evidence of harm today. But clearly there is concern about harm in the future, and I think there's some free-floating anxiety about what might happen. But it is there. And so I think Congress can undertake a thoughtful legislative process that pulls in comments from everybody, that has a transparent, serious legislative effort to craft legislation that answers those concerns with specificity, but that also is going to have to be flexible enough going forward to account for unknown problems if there are bad actors doing things that we don't know about today.

 

The rules have to be flexible enough to deal with that. And that's the issue. So the Republicans have put down four specific areas that they're willing to go forward on, and the Democrats have said that's not enough because we need to have some kind of flexibility going forward to deal with unknown issues today. And so that's where the discussion is going to be in Congress. And I hope that over the next year they can undertake that exercise and that at the end of it, that four million people or 300 million people are satisfied that we have an Internet governance regime in place that will not stifle innovation and investment but that will also deal with bad actors in the Internet space.

 

GENE KIMMELMAN

 

But my guess, just purely conjectural, [regarding the general conduct standard] is that there is no absolute answer on whether it's zero-rating or any one of the relationships you've described. I think it's going to play out probably more similarly than differently than what it has during much of the last ten years. The words are somewhat different, but a lot of what we've been operating under has been either a precise set of parameters of what discrimination is or a set of concerns about regulators likely to step in if someone goes too far this way or that way. So I seriously doubt it's going to be very different.

 

[On redefining the MVPD definition] It's incremental change. It doesn't get at the deeper issues. Because I again agree with Peter [Davidson]. One of the first statements was, we shouldn't be doing technology mandates. We shouldn't be doing things technology-specific. One of our problems is that Title VI of the Communications Act is loaded with that because that's what we did in 1992. We thought about satellite delivery. We thought about cable delivery. And we were way too specific in drafting law. So I think this is a very small step. It's trying to make the programming more available for a form of distribution that we wouldn't have known of in the early '90s but that is very similar. But it doesn't get at the fundamental problem of what this marketplace should be looking like in 2015.

 

Regarding spectrum auctions] Can I just say that's a big "if" there at the end, Peter [Davidson], because what we always come back to whenever this comes up is, it's not just money for the Treasury. It is: are you also doing competition policy through auctions? And this has always been the debate that has led to a lot of complexity around this issue. So it's fundamentally, what are you trying to accomplish in the auction? And if you're trying to drive more competition, then we get into -- or you're trying to drive more diversity of ownership -- you get into all these complexities in one way or another. So I think the key there is, what is the overarching goal that Congress is trying to achieve?

 

If you look at people who participated somehow in this proceeding and yelled out "Title II" or yelled out anything, I would just like to point out there are an awful lot of people who believe they are thoroughly schooled in Title II who I'm not sure know what Title II means. So it goes both ways there in terms of the "very expert" versus the people who have never maybe read the Communications Act. But I think on a more serious note, the important thing there is not what words they said. It's what were they trying to express. And I think that whether it's a lot of individual commenters or a lot of the experts in the proceeding, there is a fundamental consensus in this society that there are certain kinds of discrimination we should not have in networks, and then there's ambiguity about what the dividing line is.

 

And I think that's fundamental to not forget here, that there's probably a lot more agreement than disagreement besides the way it was expressed in this proceeding that really does serve as a baseline for how the markets have worked and I think how they will work in the coming years.

 

A PDF of the full transcript is here.

 

Please click here to view a video (just over seven minutes) with excerpts featuring all of the panelists.

 

And please click here to view a video (just over an hour) of the entire panel proceeding. 

 

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