Speaker 1: Federal Communication Communications Chairman A Pie yesterday announced plans to
Speaker 1: loosen the regulations that apply to Internet service providers. The
Speaker 1: two year old rules have become known as net neutrality,
Speaker 1: and among other things, they bar broadband companies from giving
Speaker 1: preferential access to favored content providers. With us today to
Speaker 1: talk about this announcement yesterday is Robert McDowell. He's a
Speaker 1: former FEC commissioner now a partner at the law firm Cooley.
Speaker 1: Thanks for joining us, Rob, thanks so much for having me. Um. So,
Speaker 1: I'm guessing you, when you're on the SEC, you you
Speaker 1: oppose at least an earlier version of the net neutrality rules.
Speaker 1: I'm guessing you think that what the Chairman did yesterday
Speaker 1: is a good thing. Tell tell us why. Well. First,
Speaker 1: net neutrality has no legal term of our no legal definition.
Speaker 1: So UM, it's important to understand what we're talking about.
Speaker 1: I think we're talking about a free and open Internet
Speaker 1: where consumers can free roam and use UH and download
Speaker 1: the content and apps of their choice, provided their lawful
Speaker 1: and things of that nature. And that's what we've had
Speaker 1: since the Internet was privatized in the mid nineteen nineties.
Speaker 1: UH with other laws under other law, and for the
Speaker 1: first six years of the Obama administration it was other law.
Speaker 1: What the FEC did over two years ago, though, was
Speaker 1: to use the nineteen thirty four law to classify Internet
Speaker 1: access services broadband services as a telecommunications service, something called
Speaker 1: in the shorthands Title two's Title two of the Communications
Speaker 1: Acts of four to get technical and that brings with
Speaker 1: it about a thousand different legal requirements and a lot
Speaker 1: of questions as a result. So what a jeep Pie,
Speaker 1: my friend and former colleague we served together on the
Speaker 1: FECs is doing is proposing we think we haven't seen
Speaker 1: the proposal just yet, but what he outlined yesterday um
Speaker 1: is to try to figure out a different legal path
Speaker 1: to do that so that all parts of the Internet
Speaker 1: ecosystem can thrive without these uncertainties. Rob, how high are
Speaker 1: the stakes here? You know the stakes are high. But
Speaker 1: the good news is is that you know, prior to
Speaker 1: or ten, when the FEC tried another time to impose
Speaker 1: new rule, uh, the Internet marketplace was thriving both. You know,
Speaker 1: if you look at the the edge providers content and
Speaker 1: apps and services of one form or another. Uh, we're
Speaker 1: all thriving as we're network operators. It was the wireless companies,
Speaker 1: the cable companies, the phone companies that actually connect consumers
Speaker 1: to the Internet. And so the trick here is to
Speaker 1: try to find that sweet spot, that balance, which I'm
Speaker 1: optimistic can be found. Maybe it has to be found
Speaker 1: through Congress as well. That's a whole another topic we
Speaker 1: can talk about. But the stakes are high because it
Speaker 1: is the future of the Internet. But the good news
Speaker 1: is is that everything has been thriving thus far even
Speaker 1: without these Title two rules that went into effect two
Speaker 1: years ago. So one thing you touched on. One thing
Speaker 1: Chairman Pie talked about yesterday was was the notion that
Speaker 1: that companies are doing have done very well, uh with
Speaker 1: with what he called light touch regulation. And he talked
Speaker 1: about the great success stories companies like Google and and Facebook, UM.
Speaker 1: And there's a trade group called the Internet Association that
Speaker 1: that that supports the existing rules in a posed what
Speaker 1: what the Chairman did yesterday, and that group includes some
Speaker 1: of these very h companies that are success stories, the Google's,
Speaker 1: the Ebays, Microsoft, Netflix, um, which we make of their
Speaker 1: their opposition, Well, they've also opened the door. Michael Beckerman,
Speaker 1: their CEO, who I know very well, uh, they've left
Speaker 1: the door open to having a dialogue, whether it's with
Speaker 1: the SEC or with Congress. UM. Some of those edge
Speaker 1: providers historically were very worried about Title two and coordinating
Speaker 1: it off to just apply to network operators again, broadband
Speaker 1: companies UM rather than other parts of the Internet ecosystems
Speaker 1: such as themselves, UM and the FCC in put in
Speaker 1: place this general conduct standard to kind of say we're
Speaker 1: gonna do X, y and Z, but also we're going
Speaker 1: to have authority over the general conduct of anything in
Speaker 1: the Internet ecosphere. And I think that concerned a lot
Speaker 1: of tech companies of all stripes UM. And if you
Speaker 1: think about some of these companies, they have their own networks, right,
Speaker 1: thousands of miles of fiber connecting routers and servers all
Speaker 1: over the country, all over the world to pervade content
Speaker 1: and apps and all the rest. So they themselves have
Speaker 1: content and networks just the way a Comcast or a
Speaker 1: T and T does at this point. So you know,
Speaker 1: the markets, the consumers are demanding convergence, and the markets
Speaker 1: are responding. Companies are responding, so they're all starting to
Speaker 1: blur together to kind of look like the same animal.
Speaker 1: In some cases, so you have to ask yourself, as
Speaker 1: an eighty three year old law that was designed to
Speaker 1: regulate telephones that were held in two hands, uh the
Speaker 1: right mechanism or or should we find something that's more
Speaker 1: modern and more flexible that can really protect consumers in
Speaker 1: this very dynamic, sometimes ephemeral marketplace we're talking about. The
Speaker 1: fccs plans to roll back its rules governing net neutrality.
Speaker 1: Supporters said the rules prevented the creation of Internet fast
Speaker 1: lanes available only to companies that could afford to pay
Speaker 1: the price. Here's what then Chairman Tom Wheeler said when
Speaker 1: the FCC approved its rules in Today is a red
Speaker 1: letter day for Internet freedom for consumer words who want
Speaker 1: to use the Internet on their terms, for innovators who
Speaker 1: want to reach consumers without the control of gatekeepers, for
Speaker 1: a future in which there are rules to protect the
Speaker 1: Internet and its users. But yesterday, current chairman A Pie
Speaker 1: said the rules were stifling investment and innovation. I think
Speaker 1: what the SEC doesn't need is heavy handed regulations that
Speaker 1: settled businesses with a lot of rules that simply disincentivize
Speaker 1: them from building those networks. And that's going to be
Speaker 1: the course we are charting henceforth, Our guest is former
Speaker 1: SEC Commissioner Robert McDowell. He was a Republican appointed member
Speaker 1: Republican member of the Commission, and he supports what Chairman
Speaker 1: pie uh said yesterday. Rob you know, one one argument
Speaker 1: that you've heard a little bit from Tom Wheeler and
Speaker 1: hearing from other opponents of this move is that essentially
Speaker 1: the Internet is being left to police itself and it's
Speaker 1: a bit of a going to be a bit of
Speaker 1: a wild West out there. And what you could have
Speaker 1: is companies that favor either you know, uh, you know,
Speaker 1: an entity they own or somebody who pays them money, uh,
Speaker 1: in order to get faster internet service, using that you
Speaker 1: know on the website or using that app or whatever.
Speaker 1: What what's the argument, what's the counter to that? Well,
Speaker 1: first of all, that's been said for about fifteen years, uh,
Speaker 1: and it has never happened. There's there's little to no
Speaker 1: evidence that that happened. And if there were evidence, if
Speaker 1: it were happening, there were other laws on the books
Speaker 1: that already existed that would have either prevented that or
Speaker 1: punished the bad actors if they tried to do something
Speaker 1: like that. Um. So you have a section to the
Speaker 1: of the Clayton Act. You have Section five of the
Speaker 1: Federal Trade Commission Act. And this is important because what
Speaker 1: the FEC did in when it classified internet access as
Speaker 1: a telecommunication service under the Communications Act four it took
Speaker 1: away jurisdiction from the Federal Trade Commission, which polices every
Speaker 1: other corner practically of the economy, including very complex high
Speaker 1: tech corners of the economy, to prevent or punish anti
Speaker 1: competitive conduct by market players. Um so you took a
Speaker 1: cop off the beat actually with the title to classification,
Speaker 1: and you brought in about a thousand requirements um of
Speaker 1: Title two of that Act, which created all these questions
Speaker 1: and all this uncertainty that Chairman Pie is speaking about
Speaker 1: right there. So the notion that somehow companies are going
Speaker 1: to be able to broadband companies are gonna be able
Speaker 1: to discriminate in an anti competitive way against other market
Speaker 1: players or harm consumers isn't true because there are other
Speaker 1: laws that would exist but for this title too. But
Speaker 1: isn't it the case that, I mean, any trust laws
Speaker 1: tend to look backwards at conduct that are already happened.
Speaker 1: Isn't it better to have rules that look forward, especially
Speaker 1: given how quickly the tech industry works. You know, by
Speaker 1: the time you know the antitrust case is brought against Microsoft,
Speaker 1: the industry has has changed dramatically before you get to
Speaker 1: a final judgment. In a case like that, it wouldn't
Speaker 1: be better to have rules that we know, know what's
Speaker 1: what is? Uh, you know that they sort of govern
Speaker 1: what companies do before they do it. Well, Actually, when
Speaker 1: you have a fast paced, quickly changing marketplace, UM, it
Speaker 1: is that enforcement that seems to work better rather than
Speaker 1: regulators trying to guess where the market is headed. And
Speaker 1: in part that's what was happening here. Uh. Chairman Pie
Speaker 1: would argue, UM and others. So, uh, you have the
Speaker 1: Department Justice, any trust division and the Federal Trade Commission
Speaker 1: able to police those high tech areas in a lot
Speaker 1: of complex areas, whether it's privacy or any trust or
Speaker 1: consumer protection, etcetera. UM. And if you look actually the
Speaker 1: speeches and the writings of Acting Federal Trade Commission Chairman
Speaker 1: Marine Olhausen, she talks extensively about the issue you just
Speaker 1: raised to say, Look, what you need are flexible rules
Speaker 1: that punish market actors and create dist incentives. And really
Speaker 1: this can be proven out by looking at market behavior
Speaker 1: leading up to the vote on that neutrality that was
Speaker 1: largely struck down by a court uh and order. Um,
Speaker 1: you know, let's look at the marketplace. Until then, it
Speaker 1: was doing wonderfully, beautifully well, and it still is by
Speaker 1: the way overall. But what Pie is trying to do
Speaker 1: is to remove the uncertainty and try to find something
Speaker 1: that's more modern and more flexible so that every aspect
Speaker 1: of the inner ecosphere can thrive, and not just certain
Speaker 1: parts of it. Rob Is it true that only Congress
Speaker 1: can ensure that net neutrality doesn't swing like a pendulum
Speaker 1: with each administration? Yeah, you know what, And that's speaking personally.
Speaker 1: I think that's ultimately what should happen. Of course, it's
Speaker 1: very hard to get anything through Congress right now, but
Speaker 1: you're right, every four to eight years we could have
Speaker 1: a new regulatory regime depending on who's elected president, who
Speaker 1: the new chair is uh. And that creates more uncertainty
Speaker 1: and more harm. And that's why I'm optimistic and hopeful.
Speaker 1: Maybe I'm more hopeful that I am optimistic that all
Speaker 1: the parties could come together once they see where Chairman
Speaker 1: Pie is going, and come to the table in Congress
Speaker 1: to try to get something done. This was actually close
Speaker 1: to happening in you had Chairman John Thune of the
Speaker 1: Centem Commerce Committee and the ranking member Bill Nelson very
Speaker 1: close to agreeing on some principles for legislation until it
Speaker 1: looked like the FEC was just going to go ahead.
Speaker 1: And there are a lot of pressure groups who are
Speaker 1: pressured Center Nelson and some others to back off of legislation.
Speaker 1: But you're absolutely right. I mean, I think all aspects
Speaker 1: of the Internet eco sphere could could benefit from sitting
Speaker 1: down with members of Congress and just saying, hey, this
Speaker 1: is something that historically has been bipartisan. Keep in mind here,
Speaker 1: I was the senior Republican sometimes the only Republican on
Speaker 1: the FCC ardently defending Clinton Gored administration policy regarding the Internet.
Speaker 1: The Clinton gord administration was very much opposed to Title two,
Speaker 1: and that was the case through the first six years
Speaker 1: of the Oban administration as well. Uh, and something change.
Speaker 1: So so here we are, what if you give me
Speaker 1: the fifteen second version of what you would like to
Speaker 1: see replace the rules that are being scrapped. Well, you
Speaker 1: want to make sure that there's not an opportunity for
Speaker 1: blocking or the throttling of of internet access. Uh, the
Speaker 1: anti competitive conduct that would favor some content over others. Um,
Speaker 1: you want to make sure that it's free and open
Speaker 1: and that consumer demand is not frustrated, that consumers continue
Speaker 1: to gain happy. Okay, thank you so much to Rob McDowell,
Speaker 1: former FEC commissioner or guests talking about the FCCS changes
Speaker 1: on Internet broadband regulation. Coming up on Bloomberg Law, We're
Speaker 1: going to talk about that two year prison sentence for
Speaker 1: Jesse Litvack. He was convicted of lying to a customer
Speaker 1: about bond prices. That's the case that has certainly gained
Speaker 1: notice on Wall Street. That's coming up