To do this could actually stand up. And its my belief that it wont stand up, and it will leave more confusion and complexity than it will stability and finality despite that being what we were promised. I expect any result likely will be expected for repeal with the Supreme Court, and we have four minutes, probably, to wait to find out. Host when you were chairman of the fcc and working on the Net Neutrality issue, did you ever think it would be at the point that it is today . Guest no. In fact, the absolutely bipartisan, prevailing view at the time was way we were working on it wasnt called Net Neutrality then, but the commitment to the same open internet principles that garner attention today was it was an element of an unregulated infrastructure. It was an element of an infrastructure that not only guaranteed and promised end to end in innovative capacity, but one that also promised protection from an overreaching government. It was freedom for everybody from every source. You know, not one that was intended to replicate the ma bell, 100yearold common carrier regime. People have forgotten that what was in vogue in the late 90s in a strong, bipartisan way was a commitment to untangle a centurys worth of Communications Regulation built around railroads and ma bell. And i dont think i could have ever envisioned that in 2015 with the spectacular result that weve seen with internet growth, a critical part of our country, society and economy, that it would be the governments impulses to return to the 19th century as a regulatory model. Host well, joining our conversation today is John Mckinnon who covers technology for the wall street journal. Talk a little bit more about that common carrier model and why thats not the kind of model that you think is appropriate for this day and age. Whats so i think a lot of people think, well, you know, they ought to carry everybody equally, so whats wrong with that . Guest common carriage law is a lot more than carrying everybody equally, and i think thats part of the source of the confusion common carriage is fundamentally the motion that the ring of the realm has granted you exclusive use of the waterway, and in exchange you promise to serve all citizens equally on the same terms and conditions. Whether it was crossing the river thames or using a rail service. The tradeoff for the heavy regulation was that you got to have exclusive control over assets. In the 80s and 90s as the government became commit today reintroducing competition to Telecom Markets and the internet, it essentially sued for divorce. It broke the compact. You were no longer promised from the sovereign a sovereign, blessed monopoly or exclue zit like exclusivity like at t enjoyed for the better part of a century. And you have to be sensitive to the dynamics that drive markets and competition. Common carrier almost presumes that there wont be any competition, that its a natural monopoly. In fact, one of the things that i predict is this will be harmful to our industry, the telephone industry, itll be harmful to the country because it will become a regime that serves as a huge barrier. Incumbents have a long history of learning how to master large, complex regulatory regimes to their advantage, and i wont be surprised if the same thing happens again. Weve raised the costs of taking risks. The fcc used to have to constantly find new ways to try to make phone companies innovate. Because when you an exclusive common carrier monopoly, your incentives have been dramatically diminished. The fcc raised raised, then rated, and, in fact, under what we used to call the computer directly led to the with thing over Information Services. The goal was trying to deregulate infrastructure providers. Theres been a long lineage of trying to reintroduce innovation, Competitive Dynamics into a market and widely understood that common carriage was a negative to it. The same is true in airlines, the same is true across many sectors of the economy when people became dissatisfied with the level of price competition, the level of innovation. And when innovation is your hallmark, common carriage is not your weapon. Its interesting to me that people still hold a near religious belief, the Biggest Companies in the country if not the world, who bring an astonishing amount of innovation to the market should remain largely unfettered from the same kind of regulatory impulse. Its an understanding of what innovation demands there. Its surprising that people dont understand that the same thing is demanded of networks. They may beless sexy than be less sexy than some google app, but they require even more capital than software does. And if you dont have a risk reward potential around cap pal, you wont spend it capital, you wont spend it. Look, i think whats happened, unfortunately n a lot of lazy thinking is common carriage or utility regulation is the same thing as saying somethings important and indispensable. Right . Well, its really important to me, so why wouldnt it be a utility . Your food stuffs are really important to you, too, but we dont regulate the food store. We have lots of things that are very important to society, to people that we dont layer this kind of regulatory model. But unfortunately, the Net Neutrality debate, people made it sound as if its become so important and so critical, that why not make it a utility . Be i think the opposite. The dangers of that are serious. But a lot of people came away from that argument thinking that the judges as a whole probably were going to allow the fcc to assert that kind of juris texas. I think jurisdiction. I think there was a perception that they just had problems with the way the fcc was asserting the jurisdiction. In other words, they could do the thing they wanted to do, but maybe they couldnt do it the way they wanted to do it. Is that your perception or no . Guest first of all, the way someone does something is critical. The judges police whether youve complied faithfully with your legal duties and obligations in doing it. Its not their role to decide whether the fccs made a wise or poor decision. By the way, i would rather have the conversation around that. Lets just say for a moment that somewhere within the ambiguity of that very old statute the commission has power. Still doesnt answer the question about why they should exercise it in this way. And playing around with whats allowed and not allowed, to me, often obscures the real question. Why are title ii produce faster internet for consumers . Why will title ii result in cheaper prices . Why will title ii incent carriers to build in Rural America . Why will title ii advance our National Ambitions around infrastructure . I personally believe the government has never been forced to answer that question. And ive never even heard any satisfactory answer to that question. Its all been built around the notion of three rules four, depend on how you count about openness to which even the court argued. You could have gotten to that same level of protection without such a damaging regime. The court acknowledged that when the judge said why didnt you follow the road map you said i laid out for you in and you didnt. And even chairman wheeler for the vast majority of the time the proceeding was being considered was considering alternatives to title ii. So the real question is why select this regime. Now, on the court case, too, i would just at one thing. A lot of the questioning youre referring to, to be legalistic, was about whether there was sufficient ambiguity in the statute. There was an argument by the commission that under brand x at the Supreme Court they already answered the question its ambiguous. Our argument was that, no, congress has spoken quite clearly as to what an Information Service is. But understand one thing. Just because its ambiguous is not the end of the argument, right . You know, you can be found that the statutes ambiguous giving the commission a lot of defense, but the Commission Still that to execute that ambiguity faithfully with congress wishes and consistent with the way the statute can be read. And i think our counsel did a very good job of saying even if you accept that ambiguity, your honor, the reading theyve layered on that is complete hi inconsistent with everything we know about what congress was trying to do. So well have to see. So i wouldnt be on feuds about even if confused even if there are hostile questions about whether the statutes ambiguous, it doesnt answer the ultimate question. Host Michael Powell, you referred to some the investments your industry has been making in expanding broadband, etc. One of the investment it is the Cable Companies have made is in settop boxes. And there seems to be some movement to get rid of the settop boxes to open up that market. Whats the harm in opening up that market . Guest because its not the market anybody wants. I mean, its stunning to me to see yet again i mean, i think this is tied to the Net Neutrality question too. When is it appropriate for the government to intervene in markets that almost by any ostensible, objective measure are functioning really well if not explosively . Can anybody really credibly argue that the video market, the access to valuable content in new and amazing forms is not running at light speed . That we arent seeing explosive innovation, constant new offerings . Weve had a company that used to mail you dvds just a handful of years ago now has more subs than any pay tv provider in the world whose stock has appreciated greater than anybodys stock could imagine whos doing exceptionally well and now has a series of original content in the form that netflix delivers. Whats wrong with this market that we need the government to try to engineer yet another competitive alternative . The second thing thats wrong is consumers dont want more boxes. If theres anything netflix and hulu and amazon prime and so many of the services are proving, its that straining has been an invention that i think has overtaken what a lot of people have relied on this box to do. Take, for example, just dvr functionality. Its an important service, but as streaming becomes more dominant, the need to record, skip through commercials, much of that activity becomes less significant to a lot of consumers. Why . Because i can just stream it. I stream it once, i can rewind it, i can move it forward, a lot of advertising is being offered free. Thats the path the markets been moving. Thats the direction consumers have been responding to. For the advocates who are asking, oh, no, we want to build a box and create another Video Service around boxes, and we want to make the cable guys design, develop, build, manufacture, inventory and deploy another box so that would make that possible we think is so retrograde, its returning to the way competition was conceived in the 90s and not the way competition is not only conceived in 2015, but has actually unfolded. And the one thing we think as a capable industry that is as a cable industry is a mistaken impression, this is not some great monopolistic market cables trying desperately to protect. If you look at recent statements by a number of very important senior ceos in the industry, were trying to get rid of boxes. Its a pain point. Consumers hate them. We hate manage inventory, we hate, you know, when the box breaks, youve got to come out, weve got to send a guy to your house in a truck. Thats expensive. Consumers are mad that they have to wait for you to get there, and when you move, you got to take that box, schlepp across town, turn it in. This is something we would like to move away from into software. Of if cable was an app, right . A little piece of Software Just like, by the way, every over Great Internet Service is an app, you can download it and put it on any device you can invent t. Can our service run on competitive equipment, with an app it can run on anything. And it seems to me thats a complete answer to that concern. Host well, does that mean that the Business Model, the traditional cable Business Model is on its way out, the bundle, etc. Because of all these new services . Because people are cutting the cord . Guest no. But it means if the governments objective is to make sure theres Competitive Dynamics, including Competitive Pressure and heat on incumbent industries, that competitive intensity is coming from streaming applications and services that have separately gone out, cobbled together a service, negotiated for the intellectual Property Rights to carry hbo or carry a particular show and offer a true substitute to what my members provide. If somebody really wanted to, you know, we could argue why they should stay with us, but well have to argue it on value. They could cut the cord and go live on streaming services or provide for an alternative. The proposals bouncing around at the commission right now are actually forcing a customer to be stuck, continuing to pay for cable and then buy these additional services. Seems to me even if you were trying to create competition to us, you wouldnt do it in a way where the critical input to the alternative service is our stuff. I mean, thats not a particularly robust kind of competition. So we see cord cutting. Every newspaper that i read talks about cord cutting, about content Companies Stock prices under pressure because of ad migration to dimmingal. To digital, to subscription loss. Thats real competitive heat. The other thing we hear is Consumers Want a better pay tv experience. Well, then you have to let the companies have the innovative breathing room to do the innovating consumers are asking for. We need softwarebased services so we can innovate faster. I can change out a piece of software every six months. If you want a better guide or recommendation engines or you want a mediarich interface, youre either going to have to have equipment thats cloudbased much like comcast has been approaching it to tate finish or youve got to have your software reduced to services. So how important is a consumer data piece in this big debate over settop boxes or whatever follows after settop boxes . Guest its really important for two points. Number one, i think many of those who are proponents of the policy are proponents for the very reason you suggest, which is its an opportunity to get set to an enormous amount of personal data valuable personal data. Guest valuable personal data around consumers viewing habits, searches, choices. As weve learned by watching Silicon Valley rise, big data sets are the gold, they are holy grail of monetization. And clearly, this is an effort to get government assistance, to get access to content that would allow you to collect the metadata around that content. If youre the tv one network, you negotiated effectively with charter or comcast for carriage. Youve negotiated for what channel you sit on, what tier youll be on. You had a negotiation around tezzing, what advertising, what the splits will be. You may have any number of other digital rights. If i give that deal to you and then that can be sucked out the back door through a box and put into googles box, right . Who doesnt negotiate with tv one for access to the content but is merely taking it, and then youre free to strip out all that stuff he negotiated for, youre allowing one set of commercial interests to monetize valuable property that they didnt negotiate for and enjoy all the repneumonia rahtive benefits of doing so without having to share that with the content owner. If you ask me, thats just blatantly unfair. Not only illegal, potentially, but unfair. Its somebodys intellectual property. Somebodys sweat went into creating it. And by the way, most of the leading alternative providers have been willing to negotiate, netflix, hulu, amazon prime, all go to the market and negotiate for their rights. Another thing happens, john, theyre not subject to the private protections that a Cable Provider is. You know . When a Cable Company gets access to content and metadata involved, were subject to the governments full panoply of Privacy Protection with respect to what we can do. If you bring that over here and google or tivo can do that, their very clear position is we to that not subject to the protection, because were not a Cable Provider. But theyre watching the same thing and the same risk. Give you an example, vizio got in trouble a couple of weeks ago because it was revealed that this Consumer Electronics manufacturer was using cameras in their television and spying on your video Consumption Habits and collecting data sets and monetizing them. And they got caught doing it, and theyve offered their explanation. But one of the most telling things i heard them is were not a Cable Company and not subject to the Privacy Protection that the Cable Companies are. We feel were free to do this. I think this is just another effort to get boo that kind of culture and expectation. Were not regulated, so we wont have to. And as the fcc chairman seems to say with regularity, you know, we dont regulate them. And we wont regulate them. So whats going to happen with this initiative . Do you foresee some rulemaking soon . Guest i dont know. And i want to be fair about this. I mean, this is something we see a constituent t city who promoted the same proposals in 2010. The commission rejected them in 2010. They seem to be using the issue of downloadable security which is really about how you secure content when it goes into another form to try to create another expansive rating of their rights similar to what they did in 2010, what we referred to as [inaudible] proposal. We dont know where the commission is yet. I mean, my hope and urging will be that the commission will see that this is an invitation to intervene in an otherwise unhealthy and expanse expansive market. By the way, it would be a very laborious process. When we inch vented cable cars, it took four or five years to design them, develop them, manufacture them, put them in inventory. You have to do that again for a box, thats whats going to be required. Youre going to have a governmentsupervised technical standard and moring effort. And my manufacturing effort. And my worry is five years from now nobody will be interested in using them anyway. And i hope the Commission Sees the wisdom of this. I think they have other priorities that are more important particularly in the last year of this commission. And it certainly will be our argument that there are much more important things for them to spend their limited time and resources on. Host Michael Powell, whats it like to serve on the fcc during an Election Year . Guest its, its a time of extraordinary caution normally. You know, i was once told by a white house chief of staff when i was chairman, the best advice i ever got. He said understand one thing, to a white house the fcc is a place that if the light dose on, it better go off as fast as possible to, you know . The political apparatus does not want to see controversy spin out of a Regulatory Agency that then they have to own or explain or deal with. And normally if a commissions well run, theres an appropriate amount of caution about what the agenda is, because the last thing you need to do is trigger, you know, some big, heated controversy that could be used or misused in a campaign. At the same time, you know, its the last year. Its the last year of leadership in this form, and theyre often out to, you know, set out their own legacy, and they want to finish the unfinished. So theres a tension in which youre sort of racing to the finish line to do the things you want to be part of your tenure at the same time you have to be sensetize today the political sensitized to the Political Climate in which you operate. One thing they have to deal with, i think, is this proposed merger of charter and time warn cable. Have you had any surprises in the process that theyve been using so far to review that . How do you think its going to turn out . Not really. I think if im being completely candid, i dont think we know anything. And i think its been really quiet. I havent seen any tea leaves floated or balloons floated or any sign of, you know, hes intensifying activity. But thats usually what its like through this phase of the, of merger reviews. Ive seen in, many, many of them. Involving cable, not involve aring cable. Long, look, theres a long period, its hard work. And i think theres a long period where staff and everyone is just deep in the boxes trying to figure out what theyve got. So im not overly surprised. But in another couple month, a month or so, i think youll start to get a rising temperature of interest, people will be looking for some signal of whats happening. I think that were probably 30 days from when people start to ask, start openly asking questions what do the commissioners think about this. Host one other issue they have to work on is spectrum auctions coming up in march, the first round. Whats the dog that your organization has in that fight . And whats this issue about the use of unlicensed spectrum . Guest i mean, to be clear, we dont have a particular dog in the auction fight. Its a very complex auction. Probably the most, most definitely the most complex the commission has ever attempted. It has really tricky variables associated with it, and im no expert in the design or the details. Thats licensed spectrum for sale largely. You know . And, you know, can i say whether a Cable Company has interest in licensed spectrum . I dont know, not that im aware. Certainly if the cable industry became interested in being a competitor to spectrum, it would have some interest to us. I dont know that to be the case. But, look, i think what youre really getting at is that, you know, all of spectrum is a government resource. Its important to remember that. No one gets spectrum other than as a licensee. And a licensee means youre given permission to use. Sometimes you pay for that permission to use, sometimes access to that spectrum is provided without renumeration for use. The former is licensed spectrum, right . The verizons, the a, the ask, the at ts, the tmobiles of the world who write very, very large checks in order to gain exclusive rights to use public property. But the other area has proved to be a space of innovationing without permission, amazingly powerful, which is unlicenseed. Consumers largely understand as wifi, though it isnt necessarily the only use of unlicensed spectrum. It has become the dominant use. 68 of almost all internet traffic takes place on wifi. But some estimates, by 2017 87, 83, cant remember exactly, 8387 of all homes will be dependent on wifi. Wifi has become the inhome utility for the connection of everything internet of things. So even though its unlicensed, i think the government has to also start getting really, really sensitive, because they are the interference cop manager. Theres one job that the commission will always have, somebody has to be a Traffic Management cop around spectrum. And wireless wifi spectrum is really critical to the countrys needs and innovation growth. Its very important to the cable industry because we provide that service to our consumers as well. So number one, whenever theres a spectrum question, we argue quite forcefully that the commission dedicate some effort and attention to carving out some amount for wireless use. The war is always over how much, how extensive. Same thing goes on in congress. The other thing i think that dose on is are there things that are happening that could destroy the effective use of wifi and unlicensed. True, it runs in a space in which its best efforts, and youre not guaranteed in the same way that a licensed spectrum carrier is guaranteed exclusive use. But let me tell you something, the commission would have a hard time explaining to American Consumers if suddenly why fife stopped working wifi stopped working in some significant measure. One reason this is so serious to us, youve had this experience. Im willing to guess that 80 of the time when a consumer complains that their broadband stinks or doesnt work well or im not getting what im promised, usually what theyre actually complaining about is their wifi, right . Most of the time if you go measure the speed that comcast, charter or cox is delivering to your house, its at speed that you bought and were promised. Then you plug it into a 5yearold lnnxsus wireless router, and you think its their fought. In reality, its the link between you and that box. I live in a condo. At night i can see 30 wifi networks, okay . That amount of interference cuts down on my functionality. But if i dont appreciate that, i think i have bad internet service. What i really have is bad wifi. If wifi is going to be this Critical Link to our devices whether its amazon, echo or your laptop, the government is going to have to be sensitive about making sure that functions properly. Host John Mckinnon, we have one minute left. Talk about the future of Cable Television and the future of Everything Else youre talking about. In other words, there seems to be a bit of a fight potentially developing between the cable industry and the Wireless Industry over this particular part of the spectrum and probably over a lot of orr issues too other issues too. How do you see all that playing out . Its an existential question. Guest yeah. Quickly, i would say theres a lot of alignment as well. The countrys infrastructure providers are a bit of a fraternity. They understand the costs and risks of what it means to dig up streets and roads and blast through mountains in order to bring infrastructure to consumers in every hamlet that they live. Thats a potential business that were all in. Look, its kind of like the united nations, but were all selfinterested. At the end of the day, americas not going to do anything not in its selfinterests no matter what the u. N. Is talking about. The same is probably true in industry. But, look, i think it has a Bright Future because we build the Critical Infrastructure on which all the innovation were so excited about rests. And the country needs to insure that policy and incentives are aligned so that infrastructure continues to grow, become better, faster, more capable, or its like a dvd in a difd player. If the dvd player stinks, it doesnt matter how good the songs are because youre not going to get the full functionality of it. Host Michael Powell is president and see i dont have of the National Cable and television association, and John Mckinnon covers technology for the wall street for the wall street journal. Cspan, created by americas Cable Companies pa years ago 35 years ago and brought to you as a Public Service by your local cable or satellite provider. Coming up later this morning, well take you to a National Security forum here in washington d. C. Some of the speakers include general Joseph Dunford and Deputy Defense secretary robert work. The events cohosted by the center for a new American Security and defense one. Our live coverage begins in about half an hour from now at 9 00 eastern here on cspan2. Cspan takes you on the road to the white house. Best access to the candidates at town hall meetings, speeches, rallies and meet and greets. Were taking your comments on twitter, facebook and by phone. And always, every Campaign Event we cover is available on our web site, cspan. Org. On friday democratic president ial candidate Martin Omalley visited a mosque in sterling, virginia. He was joined by Muslim Leaders to talk about the recent shootings in san bernardino, california, and his opposition to republican candidate donald trump whos calling for a u. S. Ban on muslim immigrants. The former jan governor also