FCC Chairman Ajit Pai sat down with CNET’s Maggie Reardon to talk about his proposal to revisit the agency’s net neutrality regulations.
Federal Communications Commission Chairman Ajit Pai says he wants to fix the agency’s net neutrality rules. The FCC is set to vote on a proposal this month1 that will revisit the rules governing net neutrality, once again opening up the issue for debate. Pai, a Republican appointed in January as chairman by President Donald Trump2, says he supports the principles of an open and free internet but doesn’t like the utility-style legal framework the rules were based on. Pai, who served on the FCC as a commissioner when the rules were adopted, opposes the so-called Title II classification under the Communications Act for broadband because he says it’s discouraged broadband companies, especially smaller ones, from investing in their networks. He says it doesn’t make sense to apply regulation meant for the Depression-era phone network to modern wireless and broadband communications networks.
But Pai’s predecessor, Democrat Tom Wheeler, has said the new designation for broadband provided a legal framework for the net neutrality rules that ensured the rules would stand up to court challenges. And so far, it’s worked. A federal appeals court last year upheld the FCC’s 2015 rules and last week it threw out a request to rehear the case. Wheeler and other supporters of the regulation, such as the consumer interest group Free Press, say the rules are important to ensure broadband providers don’t abuse their power as gatekeepers to the internet by discriminating against competitors offering similar digital content and services to consumers.
CNET sat down with Chairman Pai at the FCC’s headquarters in Washington, DC, where he explained his position and said he’ll be open to wherever the facts take him in rewriting the rules.
Q: Were you as surprised by the presidential election as everyone else in America?
Pai: I certainly wasn’t expecting it. The polls seemed to suggest that the result was going to go one way. And then as the evening rolled on, the results were going in a different direction. So, yes, I think I was as surprised as most people about it.
Were you thinking, “Hey, I might get a promotion”?
Pai: I wasn’t thinking about that so much as just the prospect of being in the majority, which is something I haven’t been used to for about four and a half years. But I was really fortunate over the subsequent couple of months that people I had worked with put in a good word for me. So it was really gratifying on January 23rd to get that call from the then-president’s office.
Was it kind of like the NFL draft, where you’re sitting around waiting for “the call”?
Pai: It sort of is, except without it being so dramatic. “Now, at six feet, out of Kansas: Ajit Pai, head of the FCC.” High-fiving people. Not so much like that. But it was a really gratifying call. And it just made me appreciate what a great country this is. Not because of my accomplishments, but my parents had come here in 1971 with just $10 and a radio and a desire to achieve the American dream. They didn’t know anybody. They didn’t have any connections.
And within one generation their son is being designated by the president of the United States, the most powerful person in the world, to lead this important agency.
Let’s talk about your proposal to rewrite the net neutrality rules. I know you’re unhappy with the Title II classification, which applies utility style regulation to broadband. But I was surprised that the proposal also asks whether the “Bright Line” rules that prohibit broadband providers from slowing or blocking traffic are needed. Do you think we need rules?
Pai: Well, I haven’t made any predetermined judgment, that’s the entire purpose of this proceeding, to start this conversation with the American public. I’ve been pretty consistent about my view that I favor a free and open Internet. I’ve said that the Clinton era approach worked really well. At the dawn of the Internet age, President Clinton and a Republican Congress had a pretty fundamental choice to make. Are we going to treat this new technology as we do the water company or the electric company or Ma Bell from the 1930s? And they made a very conscious decision not to do that, because they thought consumers would be better off if they had a market place that could evolve without these heavy-handed regulations.
Consumer groups say gutting the 2015 net neutrality regulation is a handout to big broadband companies.
True, but DSL was regulated as a Title II telecommunications service until 2005.
Pai: But cable modem, for example, had never been classified as anything other than a Title I (information) service. The Supreme Court explicitly upheld that classification in 2005 in the Brand X case.
But we had Title II for broadband in the past and the internet still grew and evolved. I think DSL did pretty well in those years, didn’t it?
Pai: If you talk to most consumers, I think they would say that the best benefits came after the Title I classification, when there was much more investment in the networks. After 2005, we saw a tremendous investment in fiber and other high-speed Internet access, precisely because we had light tech regulation.
Some of that was already happening before, though. For example, Verizon had already started its FiOS build-out in 2005, before DSL was reclassified. I’m just wondering how we can say for certain that a Title II classification on broadband investment since 2015 had a negative effect.
Pai: If you look at some of the studies that have been put out among the top 12 ISPs, investment is down by 5.6 percent. Among the smaller ISPs — and these are the companies we want providing a competitive alternative in the marketplace — those companies, including municipal broadband providers, have told us that Title II is the wrong way to go if you want investment in the networks.
Just last week 22 small ISPs in places like Chaparral, New Mexico, have said that Title II hangs like a cloud over their businesses. They’re having trouble obtaining financing. If you believe in closing the digital divide, if you want more competition, those voices are critical because those are the companies that are trying to take the risks to connect Americans who are currently on the wrong side of the digital divide.
You bring up an interesting point, that ISPs say they aren’t investing. But some figures suggest investment has gone up.
Pai: I completely concede that if you want to count AT&T’s capital investments in Mexico as domestic capital expenditure, yes, you can reach that result. If you want to count Sprint’s accounting change for its handsets as a capital expenditure, as opposed to operating expense, then you could argue that investment has gone up. But if you look at what consumers conceive of as being infrastructure investment, which was building out the networks in the United States, those numbers have gone down.
Capital investment goes up and down for many reasons. Isn’t it difficult to pin it all on reclassifying broadband, when it’s been less than two years since the rules went into effect?
Pai: The other way to look at it is to think of what capital investment would have been had the overhang of Title II not been in place. For example, there’s this study that’s recently come out that uses econometrics to figure out what investment would have been. That delta is something that I think represents an opportunity cost for consumers at the end of the day.
In other words, you try to prove something that didn’t happen?
Pai: That’s what economists have tried to sort out, and that’s one of the reasons why I think Marc Andreessen was right a couple of years ago. Because as he put it, “You can’t have these net neutrality rules if you want to have massive investments in networks.” There’s a trade-off. Unfortunately, I think the Title II rules have given us the worst end of that trade-off.
Do you think there should be a set of rules? Is there a possibility that we can just ask the ISPs to play nice and that would be sufficient?
Pai: I’ve consistently said that I favor a free and open Internet. I’ve talked about those core principles that go all the way back to former FCC Chairman Michael Powell’s Four Freedoms, one of which was consumers being able to access lawful content of their choice. I have yet to hear anybody say, “Nope, we don’t think that’s an important freedom.” The only question here is, What’s the best legal framework for securing those values? That’s the entire purpose of the notice of proposed rule-making, is to get the public’s input on what they think that framework should be.
Ajit Pai, chairman of the FCC, says he supports the principles behind net neutrality but thinks the 2015 rules should be revisited.
Didn’t we already do that two years ago under Chairman Wheeler? Why do we need to ask that question again?
Pai: There are a couple of different reasons. First, I don’t think we built a record, in the sense that the agency was clearly heading down one path — the non-Title II path — until the president’s Barack Obama’s announcement in November 2014, which clearly swayed the decision.
Number two, I want this decision to be more long-lasting, not to be the party line vote, like in 2015, that ultimately doesn’t serve consumers well in terms of investment and competition. Ultimately, my hope is that a return to that bipartisan, Clinton-era light-touch approach, one that served us well for 20 years, is going to be one that finds bipartisan support again.
Speaking of partisanship, it seems like so many tech issues have become partisan. Why do you think that is?
Pai: I’m not sure, to be honest. But I try to make it a priority to take some of that political sting out of these debates. For example, the very first vote when I became chairman was to deliver $170 million for broadband subsidies to upstate New York on a bipartisan basis. In the first meeting I had the chance to set the agenda for, we approved, on a bipartisan basis, a $4.5 million subsidy program to bring broadband throughout rural and unserved America. We also approved $2 billion unanimously to get fixed broadband to unserved America. Just a couple of weeks ago, at our April meeting, we teed up a number of different proposals to promote wireline infrastructure and wireless infrastructure investment, again on a bipartisan basis.
I understand that net neutrality is going to suck up a lot of the oxygen. But if you look at the nuts and bolts work of what the FCC is doing, we’re really devoted, on a bipartisan basis, to delivering digital opportunity to Americans. I wish people would focus on that in addition to this issue.
What about the rhetoric? Some people were bothered that in your speech introducing the proposal, you devoted quite a bit of time to talking about the founder of Free Press, who’s no longer directing the day-to-day activities of that group.
Pai: He’s still on the board of directors.
You used decade-old quotes from him that weren’t related to net neutrality, and some people said you were “red baiting.” Were you trying to inflame or stir up conservatives to be as impassioned about your flavor of net neutrality as some of the folks on the other side of the debate?
Pai: Absolutely not. I mean, if quoting somebody is an attack, then I think this goes back to Charles Barkley’s comment about his autobiography, that “I was misquoted.” He said these words. And so, look, you’ve got to be accountable for what you say in the same way this particular special interest is delighted in making personal attacks on me.
I think the question is better turned on them: Why are you focusing on impugning somebody’s integrity instead of focusing on what people have actually said and done? That’s all I did in that passage, was simply quoting people running this organization.
Do you think part of the problem is that the conversation has gotten away from facts and has become more personal?
Pai: I think if you look at my record, if you look at the things I’ve said in public, I’ve consistently tried to focus on the facts, to be as bipartisan as I can. At the same time, I’m not going to sit here and not defend my own integrity when it’s questioned. So, I will call people out. I have a first amendment right, as anybody else, to speak his mind, and I’m going to exercise it, so long as I have the privilege of enjoying my own constitutional freedoms.
What would you say to folks who think you’ve been too cozy with broadband companies? They say your efforts to roll back the previous FCC’s privacy rules, and killing the cable set-top box rules, have been gifts to the broadband companies.
Pai: On set-up boxes, I would suggest that people ask former FCC Commissioner Jessica Rosenworcel. There was a bipartisan resistance to the then-chairman’s proposal to essentially double down on 1990s technology. She and I, and Commissioner Michael O’Rielly agree that this was the wrong approach.
Broadband deployment is a bipartisan issue. I’ve consistently worked with Democrats and Republicans. On issues like broadband, at the end of the day what delivers value for the consumer is better, faster, cheaper internet. I’m committed to using the tools in the FCC’s toolbox to deliver on that promise.
I think if you look at my record, if you look at the things I’ve said in public, I’ve consistently tried to focus on the facts, to be as bipartisan as I can. At the same time, I’m not going to sit here and not defend my own integrity when it’s questioned.
Another big question hovering over the net neutrality debate is how much authority the FCC should have. What do you see as the role of the FCC? Should the agency be regulating internet access or should another agency like the Federal Trade Commission be handling that?
Pai: It’s a great question. There are things that the FCC should do in order to make internet access a more likely prospect, especially in unserved parts of rural America.
We oversee federal subsidy programs. And I’ve been focused on updating those programs to make sure that we get the biggest bang for the buck and to make sure that people who are offline get online. And to make sure people who are online get better options. So that’s one of the tools. The other tool is to relax or revise or modernize some of our regulations that stand in the way of investment.
A classic example is the FCC’s rules requiring some smaller rural telecom carriers to maintain their copper plant. Dollars spent maintaining that plant by definition can’t be spent on deploying fiber to agricultural heavy areas and the like. We want to make sure we modernize those rules. At the same time, there is authority that Congress could give us. One of the things I proposed last September when I outlined my digital empowerment agenda was this idea of gigabit opportunity zones.
If Congress could create a framework that would allow smaller businesses to build out into some of these rural and low-income urban areas where the business case currently isn’t strong enough to warrant deployment, that could be a powerful force multiplier. I’ve seen it throughout my travels in small towns and some big cities alike. In those areas where Internet access simply isn’t feasible right now, those kinds of incentives could be really powerful in creating a sense of hope and empowerment.
The FCC was flooded with more than 4 million comments the last time it proposed rewriting net neutrality rules. If you get a similar response this time, and it’s overwhelmingly in support of keeping the Title II classification for broadband, will that change your mind on Title II? Would anything change your mind on that specific point?
Pai: As I’ve said, we have an open mind. That’s the reason that we call it a notice of proposed rule-making. It’s not a decree.
The entire purpose of this process is to get public input. Then, after the record is closed, we apply what the DC Circuit calls a “substantial evidence test.” We look through the record, figure out what the right course is based on facts in the record. Then we make the appropriate judgment. I don’t have any predetermined views as to where we’re going to go. That’s the reason why we have an Administrative Procedure Act and an independent agency like the FCC that’s committed to following that Act.
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- ^ vote on a proposal this month (www.cnet.com)
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