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, and the lunchtime Conversation with House Majority Whip Steve Scalise, there were three panels. The Free State Foundation is now releasing the transcript of the conference's second panel session. This  panel engaged in an informative and lively discussion which focused heavily on the FCC's net neutrality order, including the impact of President Obama's involvement in the proceeding on the FCC's institutional independence.

 

The panel was moderated by Free State Foundation President RANDOLPH MAY. The panel consisted of the following prominent experts:   

• RICK BOUCHER, Honorary Chair, Internet Innovation Alliance, and former Chairman of the House Subcommittee on Communications and the Internet

•  MAUREEN OHLHAUSEN, FTC Commissioner

• DEBORAH TAYLOR TATE, Distinguished Adjunct Senior Fellow, Free State Foundation, and former FCC Commissioner

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.

 

RICK BOUCHER

 

I'm really not going to try to take apart the reclassification decision and talk about the inappropriateness of Title II as a remedy for whatever is perceived as a problem here. I think I'm just going to endorse the statement that Commissioner Pai made when he said, effectively this is using a sledgehammer to hit a nail. It's a poor fit for the highly competitive broadband market. It's a set of regulations harking back to the time of rotary telephones, when there was one provider of the service and it was a regulated monopoly. So in today's modern broadband world, multimedia, and many competitors in the space, this is truly a poor fit.

 

But the real question is, given all of that, where do we go from here? And I want to spend just a minute talking about that because I do see what I think is a rare legislative opportunity where the leverage between Democrats and Republicans is just about equally balanced. Each party has the capability now to give to the other the thing that it wants the most. The issues are crystallized. There are really only two moving parts. And in a circumstance like that, legislation truly does become possible. In fact, it is the optimal situation for legislation to pass.

 

So what is possible, I think, is a very simple bill that does two things. First, it would establish the Net Neutrality principles that emanate from the 2010 Open Internet order. Bear in mind that Democrats have been seeking those assurances for Net Neutrality for a decade; that's how long this debate has been waging, and that has always been the goal -- to provide certainty that Network Neutrality principles will be observed and protected. And in return for giving that, which the Republicans have now offered after a decade of having opposed legislating those principles, Democrats could give to Republicans the continued treatment of broadband as a lightly regulated Title I information service.

 

Now, the Republicans have put forward a draft bill that accomplishes those two goals, but it does some other things. And those other things, I would suggest, are really superfluous, and if Democrats object, as they have to a couple of the provisions -- for example, the provision in the Republican draft that says that Section 706 is not to be deemed an affirmative grant of authority to the FCC -- and if Democrats object to that and other provisions, Republicans, in the interest of establishing the principle of light regulation codified in law, should be willing to accept the Democratic suggestion to remove those extraneous provisions.

 

The big question, of course, is why would Democrats want to do this? Why would Democrats want to participate in a process, having now already achieved Title II reclassification at the FCC, which carries with it a stated set of protections for Network Neutrality? Why surrender that in order to have legislation passed that just provides Network Neutrality protection? Well, the answer is the following. The Title II guarantees for Network Neutrality are highly impermanent. They really rest on a bed of sand. They literally can be swept away in the next presidential election, which in time would create a 3-to-2 Republican majority on the FCC. And one can be relatively certain that an early order of business for an FCC with a 3-to-2 Republican majority would be to reclassify broadband as a Title I lightly regulated information service. I think we could predict that would happen within the first year of a Republican FCC majority.

 

So the Democrats are, at the moment, celebrating what is a temporary victory. At some point, there will be another Republican President. There will be another Republican FCC. And when that time comes, we could expect to see the reclassification once again occur. Litigation could also upset these guarantees. And litigation, I think we all know, is certain. It's only a matter of who's going to sue and how many are going to sue and what circuit winds up getting the case. But one thing I think the Verizon decision teaches us is that it takes a while for these decisions to be made. The Verizon decision didn't come down until three years after the case was filed. Roll that forward from now, and you're into the next administration. And if you look at the current polling, there's about a 50/50 chance that's going to be a Republican administration. So the Democrats really have a lot at risk in terms of the permanence of their Network Neutrality guarantees.

 

Now, the one thing Randy did not mention in his introduction is the fact that I am in fact a Democrat, and I've served in Congress as a Democrat for 28 years. I did, as he suggested, represent a pretty contentious district, and today it's pretty much a Republican place. But my Democratic principles are firmly intact. And I have always been a Network Neutrality supporter. Back in the early part of the debate, I worked with Ed Markey and others to try to provide statutory permanence for Network Neutrality. The Republicans opposed us every step of the way. And so far, that debate has not led to the guarantees being provided in any kind of permanent way. But now the Republicans, ten years after the start, have come to the point where they're saying to Democrats, we will provide the Network Neutrality assurances from the 2010 Open Internet order. They have offered that. And Democrats should seize that victory and say that the goal all along was not reclassification. The goal all along was to obtain permanent protection for Network Neutrality, and here is a way to do it: statutory permanence that is essentially immune from judicial challenge, that can stand the test of time, and put to rest at long last what has been the most contentious telecom policy debate of the 21st century. We now have that in our reach.

 

Congress created the FCC to be an independent agency and to exercise its independence apart from policy positions announced by the administration even when the majority on the Commission happens to align with the Administration's general views and be of the Administration's party. I'll have to say that in the 25 years that I was a member of the House Energy and Commerce Committee, and served for virtually all of that time on what we used to call the Telecommunications and Finance Subcommittee -- the name of the subcommittee changed a bit over the years but it was always the same jurisdiction -- we always oversaw the FCC. I can't remember a single time in that quarter of a century period when any president, Democratic or Republican, was as explicitly directive of the FCC as President Obama chose to be. I think it really is extraordinary. And frankly, I was quite surprised because I had been following the progress that was being made at the FCC at the time under Chairman Wheeler's leadership to try to address the deficiencies in the 2010 Internet order that had been found by the D.C. Circuit and find a way forward utilizing the Section 706 authority that the D.C. Circuit was quite explicit in noting that the Commission had.

 

My guess is that had it not been for the video that went out from the White House shortly after the election, we would now be looking at an FCC order that did not reclassify but was based on Section 706. That's my guess, now; that's just one person talking. But events lead me to speculate that that would, in fact, have been the outcome. So I think the White House involvement made a difference. I think it's unfortunate. It is extraordinary. And to come back to the precise question you asked, yes, I think it does put in question the extent to which the Commission is truly going to be able to function as an independent body in those instances where the White House announces such clear determination with regard to any particular issue the Commission is considering.

 

MAUREEN OHLHAUSEN

 

I should say I speak only for myself, not for the whole FTC. But I think there's a general sense of concern going back to the organic part of our statute. So the FTC Act has a common carrier exemption. And it's really a bit of a relic. It was put into place at the time when you had a pervasively regulated monopoly that was pervasively regulated by another regulator. And so it didn't make sense necessarily to have a Competition and a Consumer Protection regulator layered on top of that. But things have changed so much in this area. We've seen such fantastic growth of competition, of convergence, of previously heavily regulated services really moving into being much, much more competitive. And that common carrier exemption doesn't really make sense today, but it's still in place.

 

And one of the concerns that I have is, looking now at the Open Internet order, I've tried to delve into it -- I'm sure everyone has tried to delve into it -- to try to figure out what now is a Title II service? How big is this bucket that the FCC has created, and is everything now Title II? I'm concerned that moving ahead, it might create some challenges for the FTC to be able to continue to protect consumers online in the way it's so actively and effectively done till now."

 

[G]iven the troublingly very broad language in the FCC's order, [it] will, at the very least, take up a lot of the FTC's resources and perhaps shut us out of some of the very active consumer protection that we've been able to do. So that's why I'm here today, to raise those concerns and to say I'm concerned about this not as the FTC versus the FCC, but really for consumers. We've been, I think, doing a very, very good job for consumers, and I'm worried about the impact on consumers if we lose some of those tools or it makes those tools a lot harder for us to deploy.

 

So I'm not a person who says, oh, my gosh, there could never be a problem in these markets. Right?.... The question, I think, is how frequent is it such that you need a complete government regulatory structure put on top of what is essentially a free market? At this point, one of the things we've seen -- I think the whole growth of the Internet and the whole growth of telecommunications is moving away from the monopoly provider towards a more competitive market with more competitive players and more competitive forces. So I think that antitrust can be a useful tool to address the occasional problems that might arise, and that also consumer protection is an important tool to make sure that the promises that are made by consumers, by their ISPs, and by their carriers, are kept.

 

One of the things that we looked at in the 2007 report was whether competition was growing in this market or whether it had become static. And what we saw was that competition was growing. And if you look from 2007 till now, one of the greatest areas of broadband competition that's grown is wireless. Right? In 2007, we mentioned it, but it wasn't as capable and dynamic and prolific as it is today. So in an environment where competition is growing, I think that mitigates again against having a heavy regulatory approach and having more of an antitrust kind of approach. And then I think the other question you need to ask is, the new regulations, will it spur greater competition in these markets or will it freeze, basically, the services that are available today into place?

 

DEBORAH TAYLOR TATE

 

The [FCC's Open Internet order] is not about providing broadband to all citizens. That's not what this order did. It's not about trying to reach the most rural or remote or tribal lands. It really is not about trying to ensure that our schools have the broadband connections that they need for our global educational competitiveness. It's really not about cybersecurity or trusted environments. It is certainly not about encouraging investment and continued innovation and infrastructure expansion. It is not about streamlining government regulations and making them easier to understand. It is also not about reducing costs, whether it be direct costs or taxes or indirect costs to consumers....And it is not about being a beacon to the world for independent regulatory actions.

 

And finally, I guess -- I just want to make a point -- it is not about solving a crisis because there is no crisis. So if you get the gist of my remarks, which follow along directly with Congressman Walden and [Commissioners Pai and O'Rielly], these are all the things that I believe the Commission should be focused on, whether it's cybersecurity or incenting private investment, ensuring that our education [system] is globally competitive, certainly providing broadband to our entire nation, and, of course, reducing the cost to consumers. So those are the areas I think we should be concentrating on. I don't think this [Open Internet] order does any of these.

 

Well, I did want to congratulate Commissioners Pai and O'Rielly for actually standing up and bringing this [matter of editorial privileges] to everyone's attention because I think that Randy's right. In many ways this was just so ordinary, so routine, and so ubiquitous, that people hadn't really thought about it a lot.

 

I did want to speak to a few of the points that [FTC Commissioner] Maureen [Ohlhausen] brought up. And that is that most of you all knew this before I got to Washington, but I didn't realize just how unlimited and infinite the chairman's powers were. When a chairman has a personality type that embraces, whether you're in the majority or in the minority, different opinions, then that's wonderful. And oftentimes you're really able to have an impact on how a proposed rule looks or how it may be changed after it was voted on with the editorial privileges. Some of you all probably remember that while I was there, Commissioner McDowell and I actually got to read about a proposed rule in the New York Times. When somebody called and said, did you read about the rule in the New York Times, I said, no. I don't read the New York Times all the time.

 

Yes. I had actually brought the headline, "The FTC Is Suing AT&T for Throttling." And so the FTC is already involved in many of these issues. They have so much of the expertise, as Maureen so eloquently stated, to be able to protect us, consumers, and that right now, back to my "nots" at the beginning, we're not in a crisis. We don't really have a huge, entire ecosystem of issues and problems and petitions being filed, and that through their consumer division, through their marketing, antitrust, all of the various expertise that the FTC can bring to this entire issue, again, my concern is like Commissioner Pai's. Where do you start with this order? From the individual to the international, it is causing huge problems.

 

And I'll just add that the other elephant in the room is we haven't even talked about the jurisdiction of the states once you've applied Title II. So that could be another entire hour of a panel discussion.

 

A PDF of the full transcript is here.

 

And please click here to view a video (approximately 56 minutes) of the entire panel proceeding.