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On this special bonus episode of Recode Decode, Kara turns the mic over to Recode Senior Editor for Policy and Politics Tony Romm, who spoke with the chairman of the Federal Communications Commission Ajit Pai. The two discussed the future of net neutrality, the role of the FCC in “boring” things like the country’s infrastructure and the agency's role overseeing telecom giants as they gobble each other up.
You can read some of the highlights from the interview at that link, or listen to it in the audio player below. We’ve also provided a lightly edited complete transcript of their conversation.
If you like this, be sure to subscribe to Recode Decode on Apple Podcasts, Google Play Music, TuneIn or Stitcher.
Kara Swisher: Recode Radio presents Recode Decode, coming to you from the Vox Media podcast network. Hi, I’m Kara Swisher, executive editor of Recode. You may know me as someone who believes the internet should be free and open except when my kids are using it. In my spare time, I talk tech, and you’re listening to Recode Decode, a podcast about tech and media’s key players, big ideas and how they’re changing the world we live in. You can find more episodes of Recode Decode anywhere you listen to podcasts. We’re on Apple Podcasts, Google Play Music, TuneIn, Stitcher, Soundcloud, and more, or just visit recode.net/podcasts.
Today we have a special bonus episode for you. Recode Senior Policy and Politics Editor Tony Romm spoke with FCC Chairman Ajit Pai in Washington, D.C., earlier today. Last week, Pai formally announced his plans to roll back net neutrality rules that were passed under President Obama, and boy, is the internet pissed. Take it away, Tony.
Tony Romm: Thanks, Kara. I’m here with FCC Chairman Ajit Pai. Chairman, thanks for stopping by. Thanks for hanging out with us.
Ajit Pai: Tony, it is great to be with you.
We’re going to see if I can go an entire podcast without making fun of your Kansas City Chiefs.
There’s so many opportunities, Pat Mahomes, losing to the Steelers last year in the playoffs. I really appreciate your restraint if you ... Yeah.
Yeah. I mean, to tell a Philadelphian that they have restraint is sort of a mistake on your part, especially as we start an interview where we’re going to talk about net neutrality.
Philadelphians are very soft spoken. They don’t really have a lot of opinions.
That is fake news. That is, in fact, fake news. Thanks for coming to talk about the real news, Chairman.
Definitely.
You’ve kept us pretty busy over the course of the last couple months.
So I hear.
Yes, so you hear. Lots of things from net neutrality to media ownership, and we’re going to talk about a lot of them. I want to start by rewinding the clock a bit to January when President Trump was planning his administration. You were one of the early folks to meet with the president at Trump Tower, I believe.
Right.
It was January 16, if my memory serves me correctly ...
Good memory, yes.
... and then a few days later we had the news that you were going to be taking over the agency. What did the president tell you in that meeting about what he expected from you and from your FCC?
I was really appreciative of the meeting that we had. It was kind of surreal, I have to say. I was nervous anyway, meeting the president-elect of the United States, but I remember walking down the hallway in Trump Tower and I got this unsettling feeling. I thought, “What is this?” Then I realized I’m in the hallway where “The Apprentice” contestants walk after they’ve been fired.
Oh no.
I thought, “The last thing I want is for me to mimic what they had to go through.” We had a great conversation. He had my bio in front of him. He knew some of my work. The bottom-line message he had to me was, look, we want you to have free rein of the agency, do what you think is the right policy to get America investing again, get the sector moving again. He wasn’t really specific, but he just asked, “What are some of the priorities that you’ve got?” so I talked about my plans for infrastructure investment, outlined some of the proposals that I talked about last September in Cincinnati at a speech at the Brandery, and he goes, “Oh, this sounds great. Good luck, and look forward to working with you.” That was pretty much it.
Yeah, so it was a “you’re hired” instead of “you’re fired” for your first meeting with the president.
Thankfully. He didn’t say it in those words, but, yes, it was very gratifying at the end to know that I had come away making a favorable impression.
Were you worried, though, given the national political sentiment at the time, that a lot of the politics that surrounded the election and have since surrounded the president in the first 100 days were going to affect you and the way that you approached issues at the FCC?
Not so much, for a couple of different reasons. First and foremost, I stressed to the White House — and they have agreed repeatedly — that we are an independent agency. Secondly, the issues that I’ve chosen to champion — closing the digital divide, for instance, boosting rural broadband — these are not issues that know a party affiliation.
Just this afternoon, for instance, I met with Senator Angus King, an Independent from Maine, and outside of his office there’s a great poster of JFK with a quote that says something to the effect of “Let us not search for the Republican answer. Let us not search for the Democratic answer. Let us search for the right answer.” Notwithstanding the fact that things like net neutrality occupy a lot of the space in the public discourse, if you look behind the scenes, you’ll see a ton of the stuff that we’ve done on a bipartisan basis to deliver digital opportunity to a lot of Americans. Even if it doesn’t make the headlines, that’s the bread-and-butter work of the FCC that I’m really proud about. I think it’s, frankly, apolitical.
Yeah. Although, in the first days of your tenure as chairman, you were asked questions about the president’s comments regarding reporters and whether they’re enemies of the American people. Am I the enemy? What’s the actual answer to all this?
The answer is that I love you, Tony. I will never stop loving you.
You will never stop loving me.
No, I have consistently said, look, the First Amendment is a core part of the Bill of Rights. The freedom of the press, the freedom of speech, the freedom of expression is what makes America distinctive, I think, among societies in the world today and over history. It’s unusual to have a First Amendment, frankly. I think journalists around the country do a terrific job, an important job, covering issues of local interest, making sure that communities are involved. Look, so long as I have the privilege of being at the FCC, I’m going to continue speaking out in favor of the First Amendment.
Sure. Is there a role for the FCC to play in fake news? I think a lot of people think there’s a role for the FCC to play, but what’s your thought?
We don’t engage in content regulation. I know there’s a big debate about that. What I’ve consistently said is that’s more of a political debate that lies outside of the FCC’s bailiwick. We are focused, first and foremost, on making sure that we have a competitive marketplace that allows everybody — newspapers, broadcast TV, broadcast radio and others — to continue to thrive in the digital age. We’ll let the chips fall, in terms of content, wherever they may.
In the early days, you had said that you wanted to take a weed-whacker to remove the rules that are holding back investment. What did you mean by that?
What I had in mind were some of the regulations that we’ve had on the books for a while that stand in the way of investment in networks. Just to give you a very simple example, a couple of weeks ago at our most recent FCC meeting, we voted on a bipartisan basis to get rid of a rule that artificially held back rural telecom carriers from building out their networks. Essentially, the message the FCC had given previously was you can accept federal subsidies to build out in these areas, but if you build out to some of the higher-cost areas, then you essentially lose all of that funding. We just got rid of that, because the last thing we want to do is prevent these carriers from building out. That’s the sort of antiquated rule that we wanted to get rid of.
Our Part 32 accounting rules — exceedingly boring, I recognize — but just the fact that companies have to maintain two different sets of books, literally one for their business and one for the FCC’s purposes, and the FCC hadn’t relied on any of that paperwork in years. I asked our staff, “When was the last time you looked at these reports?” They said, “Pretty much never.” We wanted to relieve some of those. Those are the kinds of regulations I had in mind because I want every dollar that a company has to be spent on building out networks, not on paperwork or regulatory requirements that aren’t relevant in 2017, whatever relevance they might’ve had back in 1934 or 1996 or 2015 or whatever.
Although, there have been times where it’s been much more controversial than that ...
Of course, yeah.
... whether we’re talking about media ownership or net neutrality. It’s felt to some folks ... Democrats have charged that you’re just going through and systematically wiping out some of the work of your predecessor, FCC Chairman Tom Wheeler, who has been quite vocal, actually, sort of a break from the past.
Has he?
Yeah, a little bit.
I didn’t realize that.
A little bit. There have been a couple things he’s said about it. Systematically taking down some of the work that he did, it sort of feels like, with the current normal, with Democrats fighting Republicans so often, that a Republican FCC is just looking to undo all of the work that Democrats did.
I mean, that’s an unfortunate view of things. I’ve consistently tried to reach common ground; even in the previous administration, some of these orders were adopted on party-line votes. Before those votes, I consistently reached out and said let’s try to reach a common ground here because ultimately the agency’s decisions stand the test of time, both in terms of longevity and in terms of public support, if they are bipartisan. Unfortunately, a lot of those entreaties were rebuffed. All we’re simply trying to do in a lot of cases is go back to the status quo, trying to figure out the rules of the road that are forward-looking, market-based and, hopefully, bipartisan.
That being said, the New York Times in a series of editorials has been pretty critical of you. I think in one they called you “anti-consumer.” What’s your reaction to that?
Oh, it’s absurd. Look, I understand that people are going to want to take a hatchet to me, to my integrity, to my decisions, and that’s obviously what the First Amendment is all about, but I wish people would focus on some of the things that we’ve done on a bipartisan basis. The very first vote under my chairmanship was delivering $170 million of federal funding to upstate New York to build out broadband. The first meeting that I had the privilege of setting the agenda for, we got unanimously over the finish line a $4.5 billion plan to build out 4G LTE and a $2 billion plan to build out fixed broadband to parts of the country that don’t have it. To me, if I were truly anti-consumer, I would simply say, “You know what, the digital divide is fine with me. Why expend any agency resources trying to close it?” I think the proof is in the pudding, even if it doesn’t get the recognition that it deserves.
Yeah, I think the other New York Times editorial said that you were too close and too kind to the telecom industry.
I mean, that’s another one of the cases. Look, people are free to say whatever they think, but the reality speaks otherwise.
Let’s dig into some of the issues. Obviously, the big one that I think everybody wishes would go away ...
Oh, Part 33 accounting rule? Oh yes, sorry.
... is net neutrality. You had a big speech last week at the Newseum, an event hosted by FreedomWorks. Give us the very quick CliffsNotes version of this speech.
A CliffsNotes version is, the internet was free and open from the dawn of the internet age during the Clinton administration until 2015. In 2015, on a party-line vote, of course, the agency imposed Title II regulations on the internet service providers across this country, big and small. Going forward, I proposed a notice of proposed rulemaking in which we would, No. 1, propose to remove the Title II classification of ISPs; No. 2, propose to remove the so-called internet conduct standard; and, No. 3, ask for public input on how to preserve some of those core protections of an open internet that all of us favor.
The reason I said we were doing this was because infrastructure investment has lagged, competition with it has lagged. Especially in parts of the country like low-income rural and urban areas, we see something called digital redlining, where ISPs will simply say, “Look, there’s not enough return on investment here, especially with this regulatory overhang. We’re going to be even less likely to build out to those areas.” That’s something I want to avoid if we can.
Sure, but the big takeaway for folks who might be a little confused by this debate is that you want to roll back the work the Obama administration did, particularly to subject internet providers to utility-like regulation.
Exactly. We don’t want to impose monopoly-style regulation developed for Ma Bell in the 1930s to apply to every single company in the United States that is building out a broadband network. We would much rather have the free market light-touch approach that the Clinton administration adopted. That commitment was enshrined in law, where they said the internet should develop unfettered from federal and state regulation. We’re not saying the choice is either Title II or the Wild West. It’s that light-touch regulation, the middle ground, so to speak, that we’re looking to return to.
I was struck by the notice, though, the notice of proposed rulemaking. That’s the official start of this debate — for folks who don’t follow the ins and the outs of the FCC as we do. It really seemed to pose the question as to whether the FCC needed rules on the books at all when it came to blocking websites, slowing down connections or charging companies for faster access or faster delivery of their services. Could we see a world in which the FCC didn’t have any rules on net neutrality on its books as we go through this notice that you’ve put forward?
That’s the entire purpose of a notice of proposed rulemaking, to seek comment on what people think the rules of the road should be and what the legal framework for securing those rules should be. I’ve consistently said that, look, I believe in a free and open internet, and a part of that involves not blocking lawful content that consumers might want to access, being able to attach a device of your choice to the network, being able to get service information about your plan from your internet service provider. Those are the core things that have been on the minds of people since 2004, I believe, since then-Chairman Powell announced what he considered to be the four internet freedoms. The only question here is what legal framework can we adopt that secures those values and how can we make sure that we obviously preserve the free and open internet and the incentives to invest that benefit consumers.
It is possible that we don’t have any bright-line net neutrality rules at the FCC at the end of this proceeding. That’s a possibility here, right?
Look, that’s the reason why we have the notice of proposed rulemaking, to see what the rules should be. I haven’t made any determination. We’re going to wait until the facts come into the record and make that decision.
Some of the earlier reporting had suggested that you potentially favored a voluntary program where internet providers would say they would protect net neutrality. If they didn’t, maybe another agency would go after them for violating their promise to consumers. Is that an option on the table?
This is part of the reason why I wanted to make this proposal public. Unlike my predecessor, unlike the FCC in history, where traditionally things would be proposed and you, the American people, would only be able to see it after we voted, I wanted the American people to see exactly what it was I was proposing so they can see for themselves what’s on the table. Yeah, the plan that we made public is the plan.
Four million Americans put forward their voices last time we went through this. Lots of comments flooded the agency. I think it took down the agency’s website at one point.
Right.
John Oliver got involved. It seems like net neutrality, the rules that are on the books, are fairly popular.
Well, we have to remember that not all four million were in support of the rules. Some 1.6 million to 1.7 million were opposed. Secondly, this is not a numerical threshold. What we have to do at the agency is figure out the right regulatory framework to preserve a free and open internet and the incentive to invest in networks. I don’t think it’s a radical position to say that the Clinton administration got it right, that the Bush administration got it right, that the first six years of the Obama administration got it right.
This is a bipartisan issue historically. You just have to look at some of the comments of people over the years, from President Clinton to then-Senator Kerry and Senator Wyden in 1998, then-Chairman Kennard in 1990. Title II, in their view, at least at the time, was not the right approach.
Sure, but passions are pretty high.
Oh yeah.
What do you say to those millions of Americans who truly believe, and will probably write the agency again, that the version of net neutrality that they support isn’t the right version?
That Title II is not the same as an open internet. In fact, Title II takes us in the opposite direction by inhibiting competition, reducing investment in infrastructure. We had a free and open internet prior to 2015. As I said last week, we weren’t living in some digital dystopia until the FCC delivered these Depression-era rules to save us. I’m convinced that there are other paths to a free and open internet that are much more market friendly, much more consistent with I think what consumers want at the end of the day, which is better, faster and cheaper internet access. Title II simply doesn’t get us there.
What happens if there’s another flood of comments, we have John Oliver going back on television saying words that I probably shouldn’t say on Kara Swisher’s podcast about cable companies screwing around ...
It’s not on broadcast TV, so it’s okay.
Yeah, right. Let’s not get me fired at Month One on the job. What happens if we have millions and millions of Americans who file comments to the agency opposing the ideas that you’ve put forward?
Well, look, that’s part of the process. I wanted to make sure that we had a chance for the public to have its say. After that’s over, after that period is over, the agency takes stock of what’s in the record. Under the law, as enunciated by the D.C. Circuit Court of Appeals here, we have to have what’s called substantial evidence. We have to find in the record sufficient facts to justify what course of action we are going to take. There’s no numerical threshold that the courts have applied. They don’t say, “Okay, 51 percent say yes and 49 percent say no, then the decision is clear," or any proportion greater than that. They’ve said substantial evidence is the standard, so that’s the legal standard we’re going to apply going forward.
Do you think net neutrality advocates are being disingenuous sometimes when they talk about this issue?
Yes.
Why so?
Well, I mean, for example, saying that you’ll lose your internet access if these rules ... That’s simply absurd. Anyone who had internet access before these rules were applied in 2015 knows that that’s not the case. The parade of horribles that are consistently trotted out have no resonance in fact prior to 2015, and I continue to believe that they are overstated going forward.
I think those public interest groups probably would contend that the reason we haven’t seen the parade of horribles, the really bad things they’ve pointed out, is because there have been strong rules in the books.
Only over the last two years. We had no rules on the books prior to 2015 and look, we had a free and open internet. We had an internet economy that became the envy of the world, that made some of these providers globally known names. That’s a remarkable free-market success story that I think we should celebrate, as opposed to seeing it as a potential market failure that needs to be regulated based on 1934 rules.
I think there were about 800 startups that signed onto a letter that came out the day before you spoke saying that they needed net neutrality rules done the way the Obama administration did them to help them continue to operate, so that they didn’t have to worry about fast lanes and so forth. What do you say to them?
I say, look, we want the internet to continue to be this platform for innovation and investment. One of the things I notice when I travel around the world, which I’ve had the chance to do in this position, is that the rest of the world really envies the fact that, as Mark Cuban has said, the best place to start a business is on the internet in the United States. That’s a remarkable asset, I think, for us to have. Going forward, that’s exactly what we want to preserve.
A couple of years ago, Marc Andreessen — of course, the founder of the Netscape browser and who is now a very successful venture capitalist — he made the very perceptive point that you can’t have these pure net neutrality rules if you also want to have massive investment in networks, because the return on the investment simply isn’t going to be there. As he saw it, and as I see it, there’s a happy middle ground here, which is light-touch regulation. Don’t impose these Title II rules, which inhibit infrastructure and ultimately are worse for startups because more Americans won’t have internet access and/or will have slower or more expensive internet access. Let’s have light-touch regulation that preserves both of these worlds, where innovators can innovate and network operators can build and consumers are ultimately better off with that virtuous cycle.
Do you expect internet companies to file a court challenge when all is said and done?
I’m not sure who. I’m sure somebody is going to file. That’s the nature of the beast, as you know, for lo these many years, but I’m very confident that we are on sound legal footing. Just earlier this week, for instance, the D.C. Circuit explicitly said that the agency had authority under the so-called Brand X decision in 2005 to adopt a classification of internet service providers as an information service as opposed to the Title II telecommunications service.
Sure. We’re going to get back into that debate over fast lanes again, right? That was the big thing when Chairman Wheeler was figuring this out. Folks felt that there were going to be fast and slow lanes. In your mind, are there forms of these online fast lines ... the correct term is ... paid prioritization is what we’re talking about.
The key phrase in your question was “in your mind.”
Sure.
These don’t exist. Prior to 2015, they didn’t exist. We’re talking about something that’s entirely hypothetical. In a vacuum, one could conceive of any number of arrangements that are either pro-competitive or anti-competitive. To me, as a recovering antitrust lawyer, that’s a classic question of antitrust. You want to determine, of course, is there vertical restraint, as it’s called in the business, that is impeding competition or is otherwise harming consumer welfare. That’s something the antitrust authorities, the Justice Department’s Antitrust Division, the Federal Trade Commission, for instance, are squarely empowered to police. To me, if there are two different ways to go, it could be pro-competitive or anti-competitive, then preemptively banning something in the absence of demonstrable market failure or harm seems to be a bit of an overreach.
Just to be clear for folks who, again, maybe don’t know the ins and outs of this debate that well, you don’t want to necessarily put into place restrictions from the get-go that say there can’t be fast lanes. You would rather see such fast lanes come into existence and then evaluate them on the merits?
Okay, here’s the basic approach. When you think about regulation ... This is an answer to your question. I’m not filibustering, I promise. If I don’t answer it, just come back to me.
Gladly.
A regulator has two choices. You can regulate before the fact — ex ante, as it’s called — or you can regulate after the facts, ex post. Ex ante regulation traditionally is most appropriate when you see that there’s market failure or when you see a marketplace is just so fundamentally broken, you have so much evidence in the record of bad behavior, like blocking websites or whatever, that there’s no optimal solution other than preemptive regulation of everybody.
Now, here, if we’re talking about a hypothetical harm, something that hasn’t happened yet, it seems to me that ex post regulation, after the fact, is appropriate because, No. 1, we don’t know if these will ever exist, but, No. 2, to the extent that they do exist, if some companies tried to pursue these arrangements, then on a case-by-case basis you can determine based on real facts, actual evidence that you can see and evaluate and test, whether or not something is competitive or not.
Given the cost that economists and others have identified with sweeping preemptive regulations in this space, it seems to me the lighter-touch approach would be to take a look after the fact. If people are behaving great, fine, no problem at all. If there are complaints about anti-competitive conduct, then we take a look at that and evaluate whether it’s anti-competitive. I guess that’s the answer to the question I would offer.
There could be a world in which the FCC does not have rules on paid prioritization or blocking or throttling on its books. It leaves it to other laws, and after the fact goes after companies that misbehave.
Well, that’s part of ... It could be, but that’s one of the things we’re exploring in the notice of proposed rulemaking, to figure out what the rules of the road should be.
How much of this starts with the fact that consumers are generally distrustful of telecom companies, of cable companies, internet providers? That seems to be really what’s at root here.
Oh, I absolutely get that. I mean, look, internet service providers send you a bill every month and they might not give you the service that you deserve. They might not be fast enough. They might not be cheap enough, not be optimal for you. I completely get that, but the solution, to me, is not to impose Title II regulation. It’s for the regulators, at least, to set up a regulatory framework that promotes competition, that promotes more infrastructure investment. That’s consistently the position I’ve taken. Title II regulations actually squeeze the smaller competitors who want to enter in the space and expand their networks.
Just last week, we heard from 22 small ISPs, companies that nobody has ever heard of in towns very few people will ever visit, and what they told us is, look, we are being inhibited. Title II hangs like a black cloud, as they put it, over our businesses. It keeps us from getting financing. It inhibits our willingness to build out our networks, and we simply are not able to provide more people with digital opportunity as a result of that.
The simple point I’m making is, whether you’re a cable company or wireless ISP or anybody else, if you’re looking to build out your networks, then the last thing we want is to inhibit that with Title II regulations that are meant to regulate monopolies. Ma Bell was the monopoly in 1934 that Title II was designed for. Main Street Broadband in Cannon Falls, Minnesota, Wave Wireless in my hometown of Parsons, Kansas, these aren’t corporate goliaths that are looking to screw over the consumers. These are the small companies we need to provide a competitive alternative to the big guys.
Yeah. Speaking of competition, though, the other half of this trust picture is the size of these companies.
Right.
It really feels at the moment that there is great opposition to bigness right now ...
Right.
... very, very big companies that are getting bigger. How do you square that away with some of the work that you’ve done to essentially make it easier for companies to gobble each other up?
Just look at the proposals that are on the table. As I said, I know it’s not sexy. I know that nobody is ever going to want to read a story about it, but ...
Please don’t say that to my bosses. That’s not good for me.
No, but it’s so important to me because, look, the proposals we got across the finish line just two weeks ago on a bipartisan basis ... wireline infrastructure. Can you think of anything more calculated to make your eyes glaze over than the phrase “wireline infrastructure?” Getting cheaper and faster access to poles if you’re a competitor, making it easier for you to string your competitive fiber in the conduit that goes under the ground, making it streamlined so you don’t have to jump through all of these state and local hoops just to be able to deploy a network, those are things that disproportionately benefit these small companies.
Just a month ago, I was in Detroit, met with a small competitive ISP named Rocket Fiber, and they are trying to provide an alternative to the big cable and telecom incumbents. What they’ve told me is, look, without utility pole access, without some of the rights of way, without being able to get into the ground and string our conduit, we just don’t have a business case, period. It’s prohibitively expensive. What we did at the FCC last month, or earlier this month, was to take a look at that and tee up a bunch of different ideas that don’t redound to the benefit of the big companies necessarily; it’s more the Rocket Fibers, the tiny companies that need access. Our goal is to lower the cost element for those small companies so that they have the confidence and the ability to deploy in places like Detroit or Parsons or wherever it might be.
Sure, but consumers still look at this and they see companies getting bigger, and then the companies are out on their earnings calls talking about how they think they can continue to get bigger under this administration.
All I can tell you is what I’ve said consistently going back to even when I was a nominee before the Senate Commerce Committee, November 30th of 2011, which is that I will evaluate every single transaction that’s in front of me based on the facts and the record. I’m not going to simply allow more consolidation or that kind of thing just because of some ideology. It’s a very fact-based approach, and I have a long history of doing this, going back to my time as a junior lawyer at the Justice Department in the Antitrust Division, where I evaluated mergers like this. I worked on the team that ended up blocking the merger of WorldCom and Sprint, for example. We took a careful look at the facts and made the appropriate judgment. That’s exactly the type of framework I will apply at the FCC.
Your predecessor was rather public in his views that he didn’t think we should go from four major wireless carriers down to three. What are your thoughts about that?
Look, I don’t take a preexisting view as to what the optimal market structure is. I don’t think any regulator who embraces regulatory humility and intellectual honesty about economics can say whether three or four or five is the optimal number. What I do want to see is a competitive wireless marketplace. We’ll see what happens, if a transaction is presented before us. I want to see some of the documents. Companies traditionally have to file what are called 4(c) documents with the Justice Department that suggest what the efficiencies would be from the transaction, what some of the competitive harms could be. That’s the kind of evidence we want to see before making a judgment as to what the number of competitors on a national basis should be.
You’re not going to foreclose on, hypothetically, Sprint and T-Mobile becoming one company. You’re not automatically opposed to that.
I never pronounce judgment on any transaction, big or small, without looking at the facts. As President Obama once said, I try to think about these things before I say something about them.
We are at the point, though, that we’re reexamining the country’s media ownership rules. That’s the big thing that you teed up while you were speaking at NAB, the broadcaster trade show in Vegas just a few weeks ago.
Yeah. To me, it seems pretty simple that some of these regulations that were imposed as early as 1975 have become yellowed with age. I think that, as I said at NAB a couple weeks ago, if you were to tell somebody, “Well, the FCC has these rules with respect to the ownership of companies that generate news, but it excludes this thing called the internet, and the internet doesn’t matter anymore,” that’s just an absurd proposition in 2017 as newspapers are declining and going out of business altogether, broadcast TV and radio are having an even tougher time of it, especially in smaller markets, where the revenue streams just aren’t there. It seems to me that we should allow some of these regulations to be relaxed in recognition of the fact that the marketplace has changed. This is not 1975 anymore.
One of the regulations I think you’re looking to relax is the ownership cap. That’s that 39 percent limit on how much a broadcaster is able to reach within the country. Is that really what’s on the plate here?
Well, one of the things we pointed out when we repealed the so-called UHF Discount decision last month, I believe it was, was simply to say, look, you can’t do one without the other. You can’t get rid of the UHF discount ...
Just to be clear with folks, that was a program in place ... or I guess a rule in place ... that changed the way you calculated your footprint.
Exactly. The simple point we made was that, legally speaking, you can’t remove that discount without also examining the national ownership cap. The two of them go together because the UHF discount feeds into how that national ownership cap is calculated. All I said was, let’s return to the status quo, take a fresh look at the issue, and try to figure out what the optimal structure is for this going forward.
There the industry does have, potentially, the ability to get bigger. We could end up in a place where the ownership cap is much higher than it is now in companies, whether it’s Fox and Tribune and Sinclair, or some other combination thereof, are able to do more and buy more of each other.
Well, two points. They can always present a transaction, of course, for our consideration, and we’ll make the appropriate judgment. No. 2, the national ownership cap hasn’t stood in the way of a lot of these transactions in the past. Transactions are always going to come and go, depending on what the regulatory framework is. We’re simply convinced that we have to have a set of rules that reflect the marketplace of 2017, not the marketplace of yesteryear.
Are you worried about interference from the Trump administration when it comes to some of these deals? I mean, you guys aren’t looking at the AT&T-Time Warner merger. That’s in the hands of the Justice Department, but the president has been incredibly outspoken on that. He’s very close to the likes of Rupert Murdoch. Are you worried about independence here?
I’m certainly not. I’ve never gotten any hint from him or from anybody else that they wanted me to make a certain decision. To the contrary, the consistent message they’ve given me, starting on the day I got the phone on call January 23rd when I was designated as chairman, was we have now made the decision that you are the appropriate person to lead this agency. Lead this agency. Do what you think is right, and we will back you up. We are not going to sit here and interfere with you or micromanage you in any way whatsoever.
I guess that gets us back to the question of bigness and what consumers think about this. It does seems to be there’s great opposition to mergers like AT&T and Time Warner, some of the things that have been discussed with respect to Sinclair. It just seems like there’s an outpouring of opposition to this stuff, while at the same time it looks like the government is making it easier for these sorts of combinations to happen.
Two different points. One, we haven’t been presented with any transaction yet.
Fair.
Secondly, the prior administration okayed something like $250 billion worth of transactions and consolidation, so as I pointed out recently, it’s funny to hear this criticism now when just the last couple of years it’s okayed the number of transactions that have raised consumers’ ire.
What happens from here for the FCC? We obviously have media ownership on the plate.
Right.
We have net neutrality, which might outlast me on this earth in terms of the debate that still has to be solved. What do the next six months for the FCC look like?
Well, it’s a really forward-looking agenda. I’m going to follow through on some of our proposals on infrastructure. I’ve been working with members of Congress on what I’ve called gigabit opportunity zones to essentially allow tax incentives to go to companies that want to build out in low-income rural and urban areas.
I’ve had conversations with members of minority communities, National Urban League and others, to try to figure out if there’s a way to promote more digital opportunity and entrepreneurship in areas that historically have been on the wrong side of the digital divide. I’m going to keep focusing on that issue because I think it’s right for America. Hopefully, we’ll be able to ... these efforts will bear some bipartisan fruit in the time to come.
That being said, does it seem, though, that tech and telecom issues are becoming more partisan? Everybody feeds me this line that things are fine, but ...
Yeah, look, it’s unfortunate. I think Washington has become more politically polarized, and tech policy along with it has. It’s really unfortunate. I still remember when the first hearings I went to on Capitol Hill was about a bill called Tauzin-Dingell, and it was a Republican chairman and Democratic ranking member joining ranks to introduce a bill. I don’t even remember what the bill was about anymore, to be honest with you, but by modern standards, it is remarkable that you would see a chairman and ranking member agreeing on anything as far-reaching as that. My hope is that we can try to return to that model. I try to meet with as many members of Capitol Hill on both sides as I can.
You were there today.
I was just over there today and met with House and Senate members, Republicans and Democrats. As I said, meeting with Senator King, the one thing I told him which resonated with him was that, look, rural broadband is not a Republican issue. It’s not a Democratic issue. It’s an American issue. I truly believe that in my heart. Look, the things that we tee up for the public’s consideration, some of them might have more of a political tinge to it, but by and large, the bread-and-butter work of the FCC, at least as far as I see it, is on delivering digital opportunity. That is something that I don’t see as a partisan issue in the least.
The agency is down two commissioners. Have you spoken with the president about filling those slots?
I have not yet, no, but I hope whoever those new colleagues will be that they come on board and share our vision of being an active, energetic agency that’s focused on the consumer.
Your former colleague Jessica Rosenworcel, a Democrat, was on the commission. President Obama put her up at the very end of his term, but she didn’t get confirmed, didn’t get that far. Do you think she should come back?
That’s up to the White House to decide in consultation with members of the Senate. She was a terrific colleague. I really enjoyed working with her. She and I came through literally on the same day, as you remember, in May of 2012. I’ve really enjoyed her insights. Even when we’re on opposite sides of an issue, I can always have an intellectually honest discussion with her. That’s one of the great things about Washington.
We went through an entire podcast without me giving you any sort of trouble on football. It happened.
I’m impressed. I was going to say, as an Eagles fan, I was expecting something more. “We bestowed Andy Reid upon you, ha ha ha ha ha,” but nothing at all. I really admire your restraint and wish you well with Alshon and some of the new people on board. It’s going to be an exciting season for the Eagles.
Yeah, we’re basically a federal entitlement program for dying athletes. On that note, Chairman, thanks so much for joining us.
Thanks again for having me.
This article originally appeared on Recode.net.
