Pai Says Net Neutrality Heat Clouds 'Common Ground' on Open Internet, Urges Legislative Fix
FCC Chairman Ajit Pai said net neutrality "passion and heat" obscure "common ground" for upholding a free and open internet that stimulates broadband network investment, consumer choice and digital opportunity. The right solution is for Congress and stakeholders to hammer out legislation on consensus policies targeting internet blocking, throttling and anti-competitive arrangements, and then move on, he said Thursday evening in Q&A at the Cato Institute. State and local internet regulation is a "recipe for chaos," he said.
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Net neutrality is "one of the most seductive marketing slogans of all time because essentially it means whatever you want it to mean," Pai said. "Who could be against neutrality?" He said the "original" concept that a "bottleneck" should be regulated "morphed into a notion of all traffic should be created equally," with differing interpretations, but ultimately it's a question of "government control of the platform." He recognized agreement was difficult due to the overall "toxic" political environment, "grandstanding" by politicians, "fundraising" by groups and "fear-mongering" about the "end of the internet" without telecom regulation.
Despite all the divisiveness, Pai said he's hopeful "reason will prevail" with an ultimate return to a bipartisan "light-touch" approach, as he said existed before the previous FCC's 2015 net neutrality order. He said libertarianism, which Cato promotes, informs his approach, as he looks to find market-oriented solutions and remove "outdated" regulation. In a personal aside, he credited Cato interviewer Kat Murti, senior digital outreach manager, with being the first person in his six years at the FCC to pronounce his first name correctly (at 0:55-1:20 and 2:05-2:20, here, video below). "To all the South Indians out there, you know exactly what I'm talking about," he laughed.
Pai said paid prioritization is a complex subject, as such arrangements with faster-delivery or quality-of-service guarantees could be either good or bad for competition and consumers depending on the details. While paid prioritization of telehealth service could be positive, he said, "We don't want anti-competitive arrangements that essentially work to squelch startup activity.” But the FTC could review those on a case-by-case basis under antitrust law, he said, calling the FCC's 2015 "flat ban" on paid prioritization, regardless of potential consumer benefits, "very heavy-handed."
Google's deals with news publishers to deliver their traffic more quickly to mobile devices is an example of existing paid prioritization, Pai said, asking if Google's "Accelerated Mobile Pages" project is pro- or anti-competitive. "I think some of the critics would say, well, it’s anti-competitive when done by an internet service provider, but not anti-competitive when it’s done by Google," he said: "I’m looking for some intellectual consistency here, and that can only be found, I think, through rigorous application of" FTC principles.
Pai repeatedly defended the December FCC order undoing "utility-style" regulation of broadband as a telecom service under Communications Act Title II. He said the order reclassifying broadband as a less-regulated Title I information service and eliminating net neutrality rules will promote network investment while protecting consumers and competition. Modified transparency rules require ISPs to disclose their broadband practices, backed up by renewed FTC enforcement against unfair and deceptive trade practices under Title I (it doesn't oversee Title II common carriers).
The 2015 Title II order was unnecessary and harmful, treating ISPs as "slow-moving" utilities such as water and electric companies that aren't known for innovation, Pai said. "You don't want the internet to operate as your DMV," with traffic growing "exponentially," and IoT, 5G wireless connectivity and "virtual and augmented reality" applications looming, he said. "You want smart networks, not dumb pipes." Net neutrality proponents justified Title II based on "scattered examples" of ISP market practices, including the blocking of VoIP traffic by Madison River, a small RLEC, he said.
What really concerns consumers is the lack of better broadband access and competition, Pai said. The long-term answer is more broadband deployment and entry, because that will give consumers choice if ISPs misbehave, he said, but "ironically," Title II regulation meant for traditional monopolies invites new monopolies because it discourages the deployment of next-generation networks. Treating upstart ISPs, such as Rocket Fiber, as dominant companies "doesn't make sense," he said, citing their need to secure pole attachments and rights-of-way, which is why the FCC is focused on removing obstacles. He said new broadband deployment can provide competition in urban areas, and, bolstered by Connect America Fund support, can give more rural areas advanced, high-speed access, helping close the digital divide. He also hailed satellite broadband from low-earth-orbit constellations the agency has started to approve.
AT&T buying Time Warner, court-approved over DOJ opposition, was a classic antitrust issue, Pai said. "Regulation before the fact" is a "sledgehammer approach," while antitrust enforcement is "carefully tailored" to address competitive concerns. The deal closed Thursday (see personals section).