Monday, March 30, 2015

Remarks from FCC Commissioners Pai and O’Rielly at FSF’s “Future of the Internet” Conference

The videos are up from the Free State Foundation’s seventh annual telecom policy conference entitled “The Future of the Internet: Free Market Innovation or Government Control?” The distinguished series of panels and speakers delivered wonderful discussions and statements on various issues within telecommunications policy.
In one of the panels, Free State Foundation President Randolph May had the privilege of speaking with FCC Commissioners Ajit Pai and Michael O’Rielly. The conversation covered many aspects of the FCC’s Open Internet Order and its preemption of state laws restricting municipal broadband in North Carolina and Tennessee.
When asked which part of the FCC’s Open Internet Order is most troubling, Commissioner Pai said the reduction in broadband competition that will result from massive cost increases is most concerning. Commissioner O’Rielly, on the other hand, finds the uncertainty resulting from the general conduct standard most troubling.
About 10 minutes into the video, Commissioner Pai spoke out against the advisory opinions of the Open Internet Order:
The key to American entrepreneurship and innovation, I would think, is the fact that we’ve generally had an approach of permissionless innovation - that entrepreneurs don’t have to go to regulators, who stand as gatekeepers, who decide ultimately which business models are going to be allowed to proceed and which are not allowed to proceed.
I think the danger of this enforcement bureau advisory opinion is twofold. Number One - that it represents the very essence of innovation by permission. And secondly, it is also done by delegated authority. The five commissioners themselves will never have a chance to weigh in on some of these innovative services and products that may come before us.
The two Commissioners not only expressed concern that this Order went beyond the FCC’s authority, but they questioned the need for Internet regulations in general. Around the 17 minute mark, Commissioner Pai stated:
The predicate for regulation should be the existence of a problem that can be demonstrated with some specificity and it, generally speaking, should be industry-wide to the extent that we are adopting industry-wide regulations. But if you look at the Order, all you see is isolated niche examples that don’t suggest anything about a current market failure.
Commissioner O’Rielly added that the FCC has gone way beyond its authority and that the Order lacks any limitations to that authority:
[The order] is a double layer [of Title II and Sec. 706]
with no limitation.

In terms of wireless regulation, Commissioner O’Rielly questioned the consistency of the FCC. He mentioned that the FCC generally would not include wireless in its broadband statistics because it did not consider wireless a broadband service. Yet, when it came to rulemaking, the FCC thought wireless should be regulated with wireline broadband services.

Many of the Order’s opponents have expressed concern about how these rules will shape the perception of the United States on the international stage. Now that the United States has adopted strict Internet rules, it likely could lead to other countries, who have not done so already, adopting similar Internet regulations. Of course, violations of free speech and content control are some of the foreshadowing consequences of government regulation of the Internet. Approximately 30 minutes into the video, Commissioner O’Rielly said he is “very worried about the international implications of this decision.”
Around the 36 minute mark, the conversation changed to the forbearance process. Commissioner O’Rielly described why he thinks this Order does not allow for a forbearance process, but instead a “fauxbearance” process:
The Commission is saying - the only thing we really need is 201…because we can doing anything we want under 201, under just and reasonable. And in that scenario, there is no forbearance. Every situation that they can envision being tripped up in another provision can be dealt with in 201. So I don’t see any argument that this is light touch. It’s the opposite.
Finally, around the 45 minute mark, the conversation switched to the preemption of state laws restricting municipal broadband in North Carolina and Tennessee. Commissioner Pai stated that the FCC does not have the legal authority for preemption:
To me, the most problematic aspect was that it was

I think it’s pretty clear that if Section 253 didn’t serve as a sufficient basis for having clear statement that Congress intended giving the FCC preemptive authority, there is no way Sec. 706 did.
Commissioner O’Rielly, on the other hand, said that the idea of the government acting as a competitor in the broadband service market does not sit well with him:
On the policy merits, I do not agree with municipal broadband. I think it’s an affront to capitalism. I do not think it should be allowed, but that is not my decision to make. That is for states and others to make.
The FCC’s Open Internet Order was a popular topic at the conference but other topics such as video policy, spectrum auctions, and universal service were also discussed. Check out and subscribe to the Free State Foundation’s YouTube page for more videos from the conference and past events.