What Should The Next Coummunications Act Look Like (PFF Event Transcript)

Progress on Point
Volume 17, Issue 11 June 2010
What Should the Next

Communications Act Look Like?*
Adam Thierer, Moderator
Link Hoewing
Walter McCormick
Peter Pitsch
Barbara Esbin
Ray Gifford
Michael Calabrese
Table of Contents
I. Introductions ...................................................................................................................... 1
II. Link Hoewing ..................................................................................................................... 4
III. Walter McCormick ............................................................................................................ 6
IV. Peter Pitsch ...................................................................................................................... 9
V. Barbara Esbin .................................................................................................................. 12
VI. Ray Gifford ..................................................................................................................... 14
VII. Michael Calabrese ......................................................................................................... 16
VIII. Discussion Among Panelists .......................................................................................... 18
IX. Questions & Answers...................................................................................................... 23
X. Speaker Biographies ........................................................................................................ 29
I. Introductions
Adam Thierer, President, The Progress & Freedom Foundation: Well, good morning,
everyone, and welcome to this mornings Progress & Freedom Foundation event on What
Should the Next Communications Act Look Like? My name is Adam Thierer. Im the president
*
This is an edited transcript of a PFF Congressional Seminar that took place on May 7, 2010 in Washington, DC.
The edited transcript has not been reviewed by the program participants. Speaker biographies are available
at the end of this transcript. The views expressed in this report are their own. Audio and video from this
event are available at: www.pff.org/events/The_Next_Communications_Act/index.html
1444 EYE STREET, NW SUITE 500 WASHINGTON, D.C. 20005

202-289-8928 mail@pff.org @ProgressFreedom www.pff.org
Page 2 Progress on Point 17.11
of Progress & Freedom Foundation, and I want to welcome you all here, and I appreciate you
coming out this morning.
So, this event came about, about a month ago I was sitting around with staff, and we were
thinking about events for the coming month, and I had this sort of Carnac the Magnificent
moment, where I put a copy of the Communications Act to my head and I said, I feel, around
March 6th or 7th, something important is going to happen. And lo and behold, look what Julius
threw on us yesterday, huh? So, my predictive powers never cease to amaze me.
No. Seriously, it was all serendipity, of course, but it couldnt be more timely. And we
appreciate the chairman for giving us that fodder to talk about today, among other things.
So, actually, this event came about after I heard Tom Tauke of Verizon deliver a terrific speech
about a month and a half ago, asking that question about do we need another Communications
Act reform, and if so, what it should look like. And he actually said in the speech, I quote, that
the Communications Act is a statute that is irrelevant to the ecosystem that has developed
today. And he made what I thought was a persuasive case about the Act and it needing a
second look. And of course, this is an easy sell to me because this is something that we at the
Progress & Freedom Foundation have spent a lot of time thinking about through the years.
15 years ago this monthin fact, this week 15 years agowe released the first major
publication of the Progress & Freedom Foundation, called The Telecom Revolution: An American
Opportunity. Not the prettiest binding. Bare-bones budget in those days. But we actually did an
event, just right next door, launching this. And someone to my right here was a co-author on
that project with me and was there with me that day, so its rather appropriate.
Peter Pitsch: And its been 15 years. I cant believe it.
Thierer: [laughs] Unfortunately, still, nobodys read it.
[laughter]
[Audience Member]: Change the cover.
[laughter]
Thierer: Then, 10 years after that project, in 2005, Ray Gifford here, along with Randy May,
Tom Lenard and several other of my colleagues at the Progress & Freedom Foundation, started
an exciting project called the Digital Age Communications Act Project, where we did a deep dive
into communications law reform and had an incredible group get togetherover 50 academics,
economists, lawyers, and so onto think about reform. And we came out with a series of white
papers, or red papers as they were, and looked at all aspects of Communications Act reform.
And I wont steal any more of Rays thunder by talking about it because Im sure he will today.
So, this is something weve put a lot of thought into at PFF, and given the actions of the FCC
yesterday, we think this discussion is more relevant than ever.
Progress on Point 17.11 Page 3
So, let me turn it over now to our all-star panel to discuss these issues, and whether or not we
do indeed need another Communications Act and, if so, what it should look like. And, as a
courtesy to our speakers, before I begin, please do mute your cell phones or mobile devices.
Now, Tom Tauke couldnt be here with us this morning as he was supposed to be, because hes
visiting the FCC. I cant imagine about what. But we really appreciate having our old friend, Link
Hoewing, here today to fill in for him.
Link is assistant vice president of Internet and technology issues for Verizon, and hes
responsible for identifying and assessing emerging issues, developing corporate positions on
Internet and technology policy issues and more. Links been a good friend for a long time. In
fact, the very first person who ever came to brief me, 20 years ago, when I came to town, was
Link Hoewing. It was a lament about Judge Greene and MFJ, I believe, at the time.
Link Hoewing: Its been a while.
Thierer: Yeah, its been a while. [laughs] At least were not there anymore. [laughs]
Were also joined by Walter McCormick, whos the president and CEO of the United States
Telecom Association and has more than 25 years of experience in the telecommunications and
transportation fields. Many moons ago, Walter served as general counsel of the US Department
of Transportation and as a general counsel of the Senate Commerce Committee. And Im glad
to have Walter here today because he has a really unique and wonderful historical perspective
on how this debate were having today relates back to many other debates weve had in
network industries many times before.
Peter Pitsch is associate general counsel at Intel and executive director of communications
policy for Intel. He manages their global spectrum and telecom policy team, and long ago he
served as chief of the Office of Plans and Policy at the FCC, and then chief of staff to the
chairman of the FCC. And missing from his bio is that brief think tank stint he did, which is
always ignored in your bio, but it was a great time for us because we got some great work out
of Peter at PFF. And, as well, he did a wonderful book, called The Innovation Age, which also
didnt get enough readers.
Pitsch: Again, it was the cover.
Thierer: Again, a bad cover. Lime-green cover on that thing.
Barbara Esbin is here with us this morning. Shes the senior fellow and director of PFFs Center
for Communications and Competition Policy. Unfortunately, I am sad to report that this will be
Barbaras last major event with us, because shes departing PFF soon to go back to the greener
pastures of the law firm profession. Certainly, a more remunerative job than the think-tank
work!
Were going to miss her greatly, but before she leaves us, shes agreed to come here today and
talk a little bit about some of the work shes been doing, which is really, in my mind,
cutting-edge and unique above all else. Shes done some incredible work looking at the
jurisdictional and statutory authority issues surrounding Title II, net neutrality, so on and so
forth. Before she came to PFF, Barbara served over 14 years at the FCC, in various capacities, at
the Enforcement Bureau and the Media Bureau.
My old boss, Ray Gifford, is here with us today. Hes a partner now at Wilkinson, Barker, and
Knauer and an expert in public utilities law as it relates to telecommunications and energy
matters. Previously, Ray served as chairman of the Colorado Public Utilities Commission. And
when he was president of PFF, he was the one who made the foolish decision to bring me in, so
you can all blame him for the radical nut that runs the place now.
And finally, my old friend, Michael Calabrese, is here. Hes the vice president of the New
America Foundation, where he directs its Wireless Future Program and helps to guide the
foundations work related to retirement security and the Next Social Contract initiative. So
welcome, Michael.
So, were going to get things started. Well go down to Link and come on down the panel. And
Ive asked the presenters to just provide a few minutes of opening comments, to kick us off,
about their general perspectives on this question we have on the table for discussion today.
And then well go back and have a round of moderated discussion, moderated by me, and then
well have audience questions.
So, Link, kick us off.
II. Link Hoewing

Link Hoewing, Vice President, Internet and Technology Policy, Verizon: Well, since Tom Tauke
spoke at NDN a few weeks ago1 and kind of said everything there is to say, Im just going to
leave it at that. [laughs] It is a challenging topic, but I think there are some things that we can
talk about in terms of a policy framework going forward.
First, let me say that in looking at what the statements were yesterday from the FCC, on the
policy framework they proposed, one of the things that was talked about was that they believe
theres a consensus that theyre trying to amplify by this policy, and they termed it a third
way. I think Tom spoke to the right third way at the NDN speech, where he talked about the
need to have a statutory framework that works for the Internet ecosystem we have today.
So, ultimately, what Tom was saying was that the statute that were working under today, you
have to torture it to try to do anything to make it work with the Internet ecosystem we have
now. When you look at the old technologies that were essentially single-purposethey were
analog in most casesit just doesnt work for the Internet. And in fact, if you look at the
Congresss policy statement in 1996, section 230(b), it says that the Internet ought to be,
essentially, unfettered by state and federal regulations. So they recognized that; they just didnt
1
http://ndn.org/blog/2010/03/verizons-tom-tauke-future-internet-policy
know where it was going to go. And so I think thats why Tom spoke as he did, is that we need
to have a new policy framework, ultimately.
In the short term, we have been working, trying to come up with a consensus framework, with
Google, as you know, with a statement2 we made a few weeks ago in the [FCCs Preserving the
Open Internet] NPRM.3 And we laid out three or four things that we thought would help to
create a new framework that could work. And it was built around several things.
First, a standard for what you can do when a bad actor does do something in the Internet
ecosystem that is damaging. And so, we came up with a standard that says any of the players
on the Internet should not do anything that harms users or competition. And I think thats a
pretty important policy principle. Because what it says is that, take the Comcast case, in that
case, they were using reset packets and it clearly did harm a lot of users. They were not able to
use the Internet, some of them. So that principle basically says you cant do that kind of thing,
even if its network management to deal with congestion problems. Thats not appropriate. So I
think it would have worked as a way to manage that process.
So we first came up with a principle that we think is an important way to guide the system.
Second we said that it should be a case by case approach, not ex ante regulation which we have
used traditionally in communications policy. What we meant by that was that the FCC should
ultimately rely as much as possible on efforts to try to deal with the problem in the industry,
because thats how the Internet has worked. Its been a collaborative, competitive, innovative
system that generally has worked out most problems. But where that doesnt work, that people
can petition the FCC and using that standard, that framework, harms to users or competition,
judge whether in fact something is harmful or anticompetitive.
So that was the second piece of it.
The third piece of it was that there was a belief that we need to really try to get the industry to
do more to ensure transparency and accountability. So we focused a lot on what that means.
Transparency for example, it means to us at least, that with respect to things like your
broadband connection you should have a good understanding of what the speeds are youre
going to likely get on a regular basis. Whether in fact youre going to experience a lot of latency.
And those should be something you can compare across different providers. And so we are
actually working on trying to come up with those kinds of standards.
We think that kind of transparency should apply to all the Internet ecosystems, so that if you
have an application thats not working well or is harming peoples broadband connection in
some way, the industry should look at that, too. So thats part of transparency as well, making
2
http://fjallfoss.fcc.gov/ecfs/document/view?id=7020436839
3
http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-09-93A1.pdf
sure that all players let people know how their Internet access applications, content, [and]
services will affect their devices or their service.
And the final piece of that is that the industry should try to come up with a good, reputable
group of technologists, Internet experts, engineers, who, on a regular basis, meet to talk
through some of these issues so they dont all become policy debates. So, for example, again
the Comcast case, if there would have been an industry body, and I dont just mean industry
players, I mean also even advocates that have an engineering and technology background, they
should be part of the process; so should folks in the academic world. But they should be able to
meet regularly and look at some of these issues. So Comcast could have come in and said
Look, weve got a congestion problem. Its severe, its caused, we think, by P2P. How do we
deal with this? Have you guys got some ideas, because frankly, the ideas we are thinking about
we are not sure are going to work that well.
Thats the kind of thing were thinking about and were actually trying to work on that idea, too.
So in the short term, I think we did lay out a framework that we think could work. And if you
look at what the Supreme Court, I went back and looked at the decision in 2005, the Brand X
decision, and the DC circuit [decision4 in the Comcast v. FCC] and our own statement5 after the
Comcast case was decided, we all said that there was a way, we believed, to use the Title I
approach that the FCC uses now, but tie it statutorily to something that is a firm basis for the
FCC to oversee Internet access going forward.
And so I think that plus the framework we laid out in the VZ/Google joint statement6 is a way
to, in the short term, deal with the problem. In the longer term, we do need a new statutory
framework that Tom laid out at the NDN statement and Ill be happy to talk about it later,
because I dont want to dominate the whole discussion, so.
Thierer: Thank you, Link. Walter?
III. Walter McCormick

Walter McCormick, President & CEO, United States Telecom Association (USTelecom): Adam, thank
you. Its a real pleasure for me to be here. I had the very good fortune early in my career,
having the opportunity to work with the Senate Commerce Committee from the late 1980s to
the early 1990s and to focus on communications issues during that time. Its interesting to look
at sort of where the country was at that time, and what the aspirations were with regard to
communications and how those aspirations played out, and then to take a look at where we are
today and what the aspirations seem to be going forward.
4
http://pacer.cadc.uscourts.gov/common/opinions/201004/08-1291-1238302.pdf
5
http://newscenter.verizon.com/press-releases/verizon/2010/appeals-court-decision-on.html
6
http://googlepublicpolicy.blogspot.com/2009/10/finding-common-ground-on-open-internet.html
In the 1970s, it was the Carter administration. It was a period of very high inflation and low
productivity. And so under a Democratic president, a Democratic House, and a Democratic
Senate, there was launched a series of deregulation initiatives. There was deregulation of the
airline industry, deregulation of the trucking industry, deregulation of the railroad industry. And
the administration began a look at communications policy because it had been 40 years since
the passage of the 1934 act.
The 1934 act was premised on the idea that we should have one telephone company. It was a
natural monopoly, it should be like a public commons. And that anybody who wants to have
access to the network ought to be able to have access to the network at rates that were fair
and reasonable. Theyd be regulated by the government to make sure that they were fair and
reasonable.
And what was beginning to occur was that entrepreneurs were chafing. Bill McGowan was a
guy who bought capacity from AT&T, it was a WATS line to offer long distance service between
St. Louis and Chicago. And after a while he said: Why should I have to but his from AT&T? Id
like to invest on a facilities basis and Id like to compete directly.
In addition, communications began to move into a realm that became increasingly blurred with
computer functions. There was concern that this one company would want to also become the
one company with regard to computer technology.
So a Democratic administration and Democratic Congress undertook deregulation and they

said: Lets think about a different approach. There was, as you know, an antitrust suit brought
against AT&T and eventually 20 years later we passed the 1996 act. And the 1996 act really had
two principle goals. The first was lets see if we can have real competition in long distance. At
that time AT&T controlled 90% of the long distance industry. But we had Sprint and MCI
developing.
And similarly, what if local service isnt a natural monopoly? What if we could have competition
there? What if these long distance guys would compete? So lets try and open up the telephone
network to competition and see what we go.
So where are we today? Well where we are today is that its not just an AT&T network today.
We have long distance networks, Internet backbone networks we call them today. AT&T has
one, Verizon has one, Quest has one, Level 3 has one. In fact, in the United States, there are six
tier 1 backbone providers, long distance providers. There are also several non-tier 1 providers
who have networks of national scope.
In the local industry, the top 50 MSAs in this country have no fewer than six fiber-based
providers. These are facilities based providers in addition to cable MSOs and wireless providers.
The top 10 MSAs have nine providers. So, a lot of competition. Remember we were at a time in
the 1970s where the automobile industry was dominated by the big three and that was
considered to be a very competitive market. Today we have, in the long distance industry, six
tier 1 providers in the top 50 MSAs, six fiber-based providers in addition to the inter-modal
competition from wireless and cable.
So what are the aspirations going forward? Well the aspirations going forward I think were
pretty well laid out in the National Broadband Plan.7 It is deployment. It is adoption. Issues,
important issues, of how to protect people and our nations infrastructure from cyber security
threats and how to protect peoples privacy.
But the Federal Communications Commission doesnt have any clear authority in any of these
areas over the Internet. As Link said, its not the Federal Internet Commission. It was the
Federal Communications Commission. They were divided among broadcast and common
carriage. The Internet is both. With the Internet you can communicate on a broadcast basis,
sending information out to multiple people at the same time. You can communicate on a
narrowcast basis. You can communicate two ways.
The Internet is a convergence of all the prior forms of communications, and its unclear what
authority the FCC has. And as we all know, regulatory agencies, independent agencies that
come under the jurisdiction of the Commerce committees, only exercise delegated,
quasi-legislative power thats been specifically delegated by the Congress.
So we too think that what the Commissions going through is what we saw yesterday. The
Chairmans having to do contortions to try and figure out whether or not he has authority to
enter into a field that just simply did not exist upon the passage of prior acts.
We think that the action8 that was taken yesterday is without statutory authorization. We think
that the approach that hes taking, trying to get ever-narrower in defining his jurisdiction, to
now only include transport, doesnt have anything to do with what consumer really expect with
regard to the Internet.
This effort to try and simply define transport becomes almost impossible from the historic
context, because the historic context of transport was that there was a little electrical signal
going over a copper wire. Today, the minute you access the Internet by putting in an Internet
address, a dot-com address, immediately it moves into a computer function. Immediately. It is
an enhanced service, under the 1970s and early 80s Computer Inquiry9 kind of descriptions.
So we think that it is time for a new generation to define new aspirations, and to set new goals,
and to have those goals defined in terms of what the government can do, what the government
should do, and what the government should not do.
7
www.broadband.gov/download-plan
8
www.broadband.gov/the-third-way-narrowly-tailored-broadband-framework-chairman-julius-
genachowski.html
9
www.cybertelecom.org/ci
Finally, Ill just say that, as Adam has said, it appears that some people are kind of waxing
nostalgic for the old days of a single-provider, public commons, kind of enterprise. I find it
interesting, somewhat humorous, and really remarkable, because when I look at the statistics in
the National Broadband Plan of what has been unleashed in a competitive environment, it is
just truly incredible. As the Chairman has laid out, the growth in Internet access, from eight
million Americans to 200 million, in the course of nine years; coverage of 95% of Americans
with broadband of four megabits or more.
Think about that. We passed national health care. Universal health care, when fully
implemented, will cover 95% of Americans, and today we cover 95% of Americans with
broadband, and an adoption that has hit 50% in nine years, as compared with 35 years for cable
television. The competition policies that were really given birth during a Democratic
administration in the 1970s to deal with stagnant productivity have led to an extraordinary
telecommunications/Internet competitive marketplace today.
So, I think its time to define new objectives and have Congress define the new approach.
Thierer: Thank you, Walter. Peter Pitsch.
IV. Peter Pitsch

Peter Pitsch, Associate General Counsel and Executive Director of Communications Policy,
Intel Corporation: Thank you, Adam. Walter, I cant help but think that you just described a
Telecom Revolution: An American Opportunity.
Thierer: Buy the book now!
[laughter]
Pitsch: Im going to complement the remarks of Link and Walter by giving a conceptual
overview of FCCs economic responsibilities, and then focus down on another important part of
the area. Not the Internet, per se, but the spectrum policy, which I think should be a focus of
any legislative attempts in this area.
Now, most people whove analyzed the economic responsibilities of the FCC have divided
things into three categories: the competition area, the subsidy area, and the spectrum area.
And I want to briefly talk about the competition and subsidy area, because I think there has
been enormous convergence over this period that Walter has talked about, with some residual
disagreement areas, and I want to focus on those. Then I want, as I say, to spend most of my
time talking about spectrum, which I think presents a unique opportunity in this environment,
and one that isnt getting enough attention, because there are many other hot topics.
Now, as to competition, there has been a sea change. We forget this. Walters remarks were
very useful in that regard. Today, the idea that we should have anything other than a
facilities-based telecom market is foreign. We all very much agree on that.
The only issue there is: are there any markets where there is significant market power that
require regulatory intervention? Its there where people disagree. There are some who say:
Only if there is a true bottleneck. There are others who say: Anything approaching substantial
market power. Im not going to resolve that. Actually, in the DACA10 report, they did an
excellent job of dealing with the interconnection issue and came out with a somewhat
surprising result there. Thats sort of a teaser for you.
On the subsidy area, again, enormous convergence. Weve gone from the world of hidden,
indirect, broad-brush subsidies to one where most people believe that the subsidy system
should be transparent, explicit, focused, non-distorted. They should be raised through funding
mechanisms that dont distort usage.
We were in a world, back in the 70s and 80s, where the indirect subsidies dramatically
suppressed demand for long distance. We moved away from that. Now most of those subsidies
are funded through direct, fixed charges on end users. It would be even better if we went to
general revenues. Thats probably not going to happen. But the fixed revenue is a much more
efficient way to deal with that, and any legislation we have ought to deal with that.
Similarly, theres broad consensus that the subsidies should get paid out in a competitively
neutral, technology neutral manner, and a non-distortive manner, shouldnt displace private
companies where theyre involved. The issue there that remains is how broad should those
subsidies be? Theres, again, general consensus that you can have legitimate network
externality justifications for government intervention. But one persons network externality is
another persons misuse of government funds.
Now, as to spectrum, again, broad convergence. We have gone from a world of command and
control, where the government decided how a chunk of spectrum would be used, what the
channel and technology would be, what the input requirements on interference would be,
frequently fragmented licenses that didnt have contiguous boundaries, to a world where the
FCC makes broad allocations, very flexible service assignments, does not dictate technology,
focuses on outputs, not inputs when it regulates interference, and has moved to auctions.
Its funny when I think about this because when I was at the FCC, we did the cellular licensing
and frankly, we did everything wrong. We did everything wrong. There were only two licenses.
We mandated an analog standard. They were noncontiguous licenses that took over 700
licenses to get a nationwide footprint. Its hard to believe that, but true.
The interference regulation was very intrusive. That was during the Reagan administration. OK.
In a bipartisan way, the country has reached consensus on a very much more market-based
approach to spectrum management where already by the Clinton administration, we moved to
auctions. The PCS rules, if you look at them, large contiguous licenses, technology neutralities,
service neutrality, much more competition in spectrum brought into play.
10
www.pff.org/daca/
And now, we have the National Broadband Plan. And that is what Id like to focus on in the
remainder of my remarks. They have come up with two key recommendations there, which
should be a part of any legislative effort in this phase. The first is something they call incentive
auctions. And the second is a broadening of the scope of the so-called Commercial Spectrum
Exchange Act.
We have auctions. We use them to make assignments among neutrally exclusive applicants, but
a number of economists and this, by the way, is also addressed to the DACA Report. But
economists inside the FCC, Evan Kwerel, many of you may know him, have long argued that one
of the ways we need to repurpose spectrum is to instead of bogging down in these battles
between one constituent group and another, we should structure auctions so that we can
create win-win opportunities.
And that is exactly what the FCC and the National Broadband Plan is proposed. And this, by the
way, isnt just about broadcasting. This could be used for mobile satellite and a number of other
areas. The principle idea, here, is that because the new, more valuable uses are so much more
valuable, theres an opportunity to structure an auction so that some of the proceeds could be
made available to incumbents who are willing to sell out at that price.
And if were interested in getting into the details of this, in a question &answer session, Ill be
glad to do that. But the fundamental idea is there is bipartisan support for this. Theres some
bipartisan opposition as well, but there is bipartisan support for this.
This really would work. We could free up hundreds of megahertz of incredibly valuable
spectrum by moving to this approach. And it would dramatically reduce the artificial scarcity
that we have for spectrum.
And theres one objection. I like to think that there is actually no disagreement on this
particular proposal, that this should happen. But sometimes the argument is made: Well, the
incumbents who would participate in this two-sided auction would capture a windfall gain.
The closing thought I want to leave you with is whenever you hear that argument, just
remember that today consumers are suffering a windfall loss. They are suffering the loss of
spectrum policies that lock in these uses. And remember that good economic evidence suggest
that the larger societal value from the spectrum is 10 times what the auction revenues would
be.
So, the loss to society in fewer minutes, lower quality, higher prices, from locking in these old
uses through this very rigid system is extremely high. And I would submit that any legislative
effort in this area should focus on giving the FCC the authority to use incentive based auctions.
Thierer: Thank you, Peter. Barbara.

V. Barbara Esbin
Barbara Esbin, Senior Fellow, The Progress & Freedom Foundation: I want to thank you,
Adam, for those kind words and I want to thank PFF for the rare opportunity Ive had for the
last two years to say what I really think, which you dont always get to do in this town. So, as my
closing performance, I will give some thoughts on the FCCs announced Third Way plan that
we all learned about yesterday.
As you all know, the FCC chairman has announced that the agency intends to pursue a Third
Way and attempt to create [a] narrowly tailored framework that would apply portions of Title II
to those portions of broadband Internet service that the agency redefines as
telecommunications service.
The reasons for this action that were given are to preserve the open Internet and implement
some features of the National Broadband Plan on a sounder legal basis without creating a
regulatory straightjacket that would stifle investment and innovation by ISPs. All I can say is
good luck with that.
While the goals sound reasonable, the regulatory contortions the commission must go through
to effectuate this plan are considerable. And there are no guarantees that at the end of the day,
investment in broadband networks will continue at the same levels weve seen under the FCCs
soon-to-be-abandoned light regulatory touch.
There really is no such thing as Title II Lite. The way this statute operates, once the service is
classified as common carrier or telecommunications, all provisions pertaining to that status
automatically attach. The general councils proposal that the commission will simultaneously
forbear from enforcing the vast majority of these provisions may be hard to accomplish.
One thing Commissioner Michael Copps has expressed concern about is that the FCC must
avoid another forbearance binge. The FCC has not yet addressed what I will call the flipside of
declaring that broadband Internet access is actually two separate services, one being a
telecommunications service.
The flipside is that by operation of law, this imposes common carrier status on entities that are
not operating under that status today. The courts have generally not permitted the FCC to
impose common carrier status based solely on the agencys notions of good policy. In fact, the
FCCs been struck down when it attempted to do so, concerning the provision of dark fiber in
the mid-90s.
To the extent the FCC has successfully imposed common carrier status in the past, it has done
so only where it can demonstrate that a provider has substantial market power or that the
service to be regulated was an essential input for competing providers.
Forced common carrier status via redefinition would need to be supported by similar record
evidence. But the FCCs own broadband reports, the findings of the National Broadband Plan,
and comments submitted in that docket by our nations antitrust authorities, that broadband
Internet service markets are not marked by monopoly and are for the most part, workably
competitive, all point in the opposite direction.
So, even assuming that the FCC could demonstrate a significant market failure warranting
common carrier treatment for the transmission component of broadband Internet, that finding
will complicate, if not preclude its ability to engage in that dreaded forbearance binge.
The forbearance authority that Congress gave the FCC in the 96 Act has three tests:
1. Whether enforcement of a regulation is no longer necessary to ensure that the charges,

practices, classifications, or regulations by, for, or in connection with a telecommunications
carrier service are quote: Just and reasonable and are not unjustly or unreasonably
discriminatory.
2. It asks whether enforcement is necessary to protect consumers and whether forbearance is
in the public interest.
3. Finally, the commission can consider whether forbearance will promote competition in the
market.
Once broadband Internet service is reclassified as containing a separate telecommunications
service, all of the provisions of Title II automatically attach. The FCC then has to justify each act
of forbearance under this three-pronged test. The question is if the FCC has to find that the
markets cannot protect consumers and competition in order to regulate the transmission
component of this service under Title II, how can it at the same time find that the markets will
protect consumers and competition for forbearance purposes?
There are no guarantees that it can either make this showing or that a court would accept this
justification. This is especially true in light of the Comcast decision. The Court accepted the
FCCs acknowledgement that it has no direct regulatory authority over Internet service
providers and found that the agencys justification of such regulation under its ancillary
jurisdiction did not, as they say, hold water.
The FCC is probably correct to abandon its attempt to adopt its proposed network neutrality
rules under the very same theories. But I think the courts will be highly skeptical of its attempt
to achieve the very similar results through the expedient of redefining the services into
something that it has unquestioned authority to regulate.
The FCCs proposal is therefore quite the high wire act. Were declaring markets to be
insufficiently competitive so that it can regulate, but sufficiently competitive so that it can
refrain from regulating. The danger would be in losing that fine balance.
More importantly, the information service classification was not a purely discretionary action
on the part of the FCC. None of the statutory service classifications quite fit broadband Internet
access service in 2002 and none quite fit it today. In order to make broadband Internet access
fit within the telecommunications service definition, the FCC must undo its previous
determinations that broadband Internet is a functionally integrated information and
transmission offering. To do so, the FCC must tease out the transmission component, treat that
component as if it is being offered separately to the public, declare that now there are two
separate services being offered to the public, and declare that one of them is a statutory
telecommunications service. It has to act as if this is factually true, even though there is no
change in the manner in which these services are provided to the public.
I know this for a fact. Weve had cable modem service in our house since the late 90s. We
subscribe to a single service, we receive a single bill. The service has a lot of capabilities. I dont
use them all, but the FCC and the Supreme Court have already determined it really doesnt
matter. It matters what is being offered. And what is being offered is an integrated capability to
do many things via transmission. We experience this as a single service.
This is the commonsense understanding the Supreme Court majority applied in the matter
when it upheld the FCCs cable modem decision in Brand X. The statute speaks in terms of what
is offered to consumers and what they think they are being offered. It is not written in terms of
what the FCC would like providers to offer.
For these reasons, the FCCs Third Way is fraught with significant legal risk. I believe the answer
is not to pursue this option at the administrative agency level. The answer is to have Congress
rewrite the act for the 21st century.
Thierer: There you go Ray, now to you.
VI. Ray Gifford

Ray Gifford, Partner, Wilkinson Barker Knauer, LLP: I actually think my role here is to be the
provincial naive on the panel. Which is to say, in about 2004, I was having lunch with my friend
and still law partner Kyle Dixon. It was over at the FCC. And he was talking about what he
wanted to do next, and I was talking to him about the joy and intellectual freedom of being in
the think tank. I downplayed the money aspect. [Laughs] This was post-triennial review era.
This was Brand X tumult. And we got to talking like geeks do, and having a conversation that I
think was had by Peter in the 90s, by Link and Tom in the last few weeks, which is the
Communications Act is completely unsuited to the reality both as consumers, carriers, and
regulators. I think probably the General Counsel of the FCC after his statement yesterday would
agree that it is inadequate.
And so as we sat there, I said, Well, Kyle what we should do is rewrite the Communications
Act. And why Im playing the role of provincial naive is I thought at the time, what was going to
happen is we were going to get a lot of smart people in the room. And we actually did get a
great swath of academics, technologists, lawyers, economists into five working groups. And
they worked on a general statutory framework, universal service framework, federal/state
spectrum, and institutional reform. And we really, I think, got an A-list group of scholars to
meet, come up with these five reports that were consensus reports. And I was reading them
last night and they hold up remarkably well.
And I what I thought at the time was going to happen is we would issue these reports and
everybody would see how self-evidently sensible and incisive what we were saying was, and
some Senator or Congressman would pick this up and say Well, lets pass this.
That didnt happen, and I only from time to time plunged into despair. But the Digital Age
Communications Act, I think why it still remains relevant is because it was written, first of all, as
a consensus document. I was counting while we are up here, five of the members of the
working group are now in the Obama administration somewhere, at the FCC, the FTC or even in
the White House.
What we were trying to write then was an enabling statute that would create an institutional
framework going forward. And we looked very methodically at different models that had
existed. We looked at the European Union model, we looked at the railroad Staggers Act11
model. For how do you handle the unique and complicated issues surrounding networks?
Thats where you get I think, Peter, to how we handled the interconnection issue, which was we
ended up with a soft interconnection mandate, probably only over Adam Thierers objection.
You need the libertarian in the room to keep everyone honest, as well.
But what DACA still has, I think, for communications policy reform is the idea that we can
analytically separate the competition policy aspects and concentrate on those and hopefully
handle them rigorously and honestly. It understands that networks have some unique qualities
that create challenges that dont exist elsewhere in the economy, surrounding interconnection,
for instance. It recognizes a social policy aspect to these communications networks in the
universal service realm. We dont say in those reports, lets just dump it. The economists
answer to universal service is very quick and satisfying, but completely impractical.
We also, I think, look and I think since then, the only thing that I would want to change and add
to is on the institutional reform issue. And I think Link touched upon this, which is that its a
commonplace that institutions matter and the cultures surrounding institutions matter. And
the FCC, you can criticize it from any number of directions, but whats the most remarkable
thing to me, as an outside observer, is the essential lawlessness of the place. And I dont mean
that in a ... Its a criticism to be sure, but its not meant to be that laden with judgment. It
doesnt follow procedures and protocols that normal, regular institutions would if industry and
consumers were going to rely on it. It follows a much more political rhythm. And what you see
coming out of the FCC are, so often, political documents. Which is why they have a record in
front of the courts that the Detroit Lions have.
[laughter]
Thierer: Or the Colorado Rockies, for that matter.
Gifford: Hey, weve got the best pitcher in baseball.
11
http://en.wikipedia.org/wiki/Staggers_Rail_Act
[laughter]
Gifford: So, what DACA does though, I think, is it does provide a framework to give some rigor
and some adaptability to the agency. And I think when we look at the institutional issues and
notions like self-governance that Verizon and Google discussed, the co-regulatory notions that
are being tried in the UK, Australia, New Zealand, theres a lot of regulatory innovation that can
go on.
And it should be consensus regulatory innovation. And so what I think DACA is worth exhuming
for is to take a look at what, at least five years ago and holds up pretty well, a broad consensus
of communication scholars thought was a sensible position and a sensible place for reform.
Thierer: Thank you, Ray.
Link Hoewing: Adam for the record, Id like to clarify that even though Ray used me in
referencing his comments about the FCC, I never use the word lawless. He did.
[laughter]
Thierer: Michael, bring us home.
VII. Michael Calabrese

Michael Calabrese, Vice President, New America Foundation: OK. I will also try to stick to your
assignment and just imagine what Congress should be considering in terms of a new
Communications Act for the 21st century which was interesting to see the statement this
week by Chairmen Rockefeller and Waxman said that they were prepared to step up and do
that. Although they said if necessary. Im not sure if they relished the prospect. But I think its
really needed because we are in year of convergence and cross-platform competition and yet
were still regulating within silos which are designed around analog services that were
completely distinct in terms of whether they were broadcast over the air or point-to-point over
wires.
And weve had a number of patches, such as Title VI for cable or Section 332 to add a regime
for cellular into the radio Title, but its really not at all the way to go. This third way approach,
outlined by Chairman Genachowski, I think, begins to point in the correct direction, but it
obviously is going to need to be generalized much further.
So, in the spirit of Tom Taukes, Five Principles which I expected to hear a little bit more of from
him. I actually have six principles that Ill share in terms of what this new communications act
should be premised on.
So the first is regulatory parity. Technological convergence needs to be matched by regulatory

convergence. So, as I suggested, a new act that I think should erase these regulatory silos to the
greatest extent possible and rely on simple rules of the road that are platform agnostic.
For example, the 96 Act did not anticipate that telephone companies and cable companies
would be using their wires to compete head-to-head in offering Internet access. And yet, cable
modems and DSL shortly became close substitutes and yet they were not regulated alike.
Likewise, Clearwires 4G mobile Internet access and soon Verizons LTE will be head-to-head
competitors and substitutes for those othersfor the wired offerings of DSL. And yet today,
these offerings are not regulated alike. If Carterfone12 and other basic consumer protections
are going to apply to one mode, they should apply to all. So, regulatory parity.
Second, I think along the lines that we heard from Chairman Genachowski yesterday, there
should be a re-affirmation that we will not regulate the Internet. And yet, at the same time,
reaffirm common carrier obligations.
The next communications act needs to make a clear distinction between the Internet and its on
and off ramps. Congress should reaffirm it will not regulate the Internet and yet apply equally
certain basic common carrier consumer protections to all facility based providers of last-mile
Internet access.
The rationale for nondiscrimination in transport is not primarily about preventing abuse of
monopoly power or rate regulation. The purpose is to ensure a nondiscriminatory conduit
service for essential infrastructure, to reduce transaction cost, to protect consumers, and to
ensure the positive network externalities of interconnection.
Internet access is increasingly an input into everything else in the economy. And so ensuring the
free flow of information is not only essential to our democracy, but to economic productivity
and equal opportunity. Its also essential to avoid vertical integration that leverages control of
pipes to gain advantages in adjacent markets.
It should be a light touch and forbear completely from regulation in other traditional telephone
regulations. For example, carriers should not be precluded from using tiered or premium
quality of service pricing with respect to end users and it could do this today.
This would harmonize wired and wireless services, consistent with the way Title III currently
classifies commercial mobile services as common carriers. And yet simultaneously forbears
from all but the most basic consumer protection and inner connection regulations.
Barbara said this was not likely to happen in terms of what was said yesterday, but its exactly
what the commission has done, with respect to commercial mobile service under Section 332.
And it seems to be fairly a good framework.
A third principle or pillar would be the one, actually I took this from Tom Tauke, is to empower
consumers. Which I see primarily in terms of protecting the consumers choice to use any
12
http://en.wikipedia.org/wiki/Carterfone
device, any application, access any content, or any web service. Along with that is, of course,
transparency, privacy, and access to individuals with disabilities.
And it was interesting that the FCC general counsel, yesterday, in his statement, basically these
were essentially the only provisions of Title II that they said they anticipated bringing to bear
were these essential consumer protections.
A fourth principle would be to ensure adequate competitionand this is more of a monitoring

function. The FCC should have the authority and flexibility to maintain a proactive competition
policy.
Fifth is universal service, which has been mentioned, I think, by others. The congress should
recommit the nation to ensuring the universal access and affordability of an evolving level of
advanced communications services. I agree with all of what Peter said earlier about that, and
what Tom Tauke said in his earlier speech. Which is that any subsidies, in addition to being
transparent, should be non-distorting, probably by being given directly to consumers, and
should certainly be platform and technology neutral.
Then a final principle that I think should be explicitly included is, concerning spectrum policy.
Whether or not its a separate title any longer, that probably doesnt need to be the case. But
the new law should declare that the allocation and assignment of spectrum, should in all cases
maximize flexibility, and should also strive for a productive balance between exclusively
licensed, shared bands and unlicensed access. Congress should also anticipate the cognitive
radio13 technologies, and the sheer demand for spectrum access from pervasive connectivity,
and an Internet increasingly of things in addition to people will make exclusive licensing by
band and frequency increasingly obsolete.
Which doesnt mean you dont have the equivalent of licensing rights, but it may well be the
bandwidth, more than it is to a specific frequency. So the next communications act should be
certainly open to that evolution. It should reassert not only that licenses are temporary, but
that any residual, unused capacity remains available for allocation in the public interest, when
its not being used.
Specifically the law should require that both NTIA and the FCC, make unused spectrum capacity
accessible on a temporary, opportunistic basis to the greatest extent feasible, given the
available technologies. Because we have an abundance of spectrum, but just no permission
from the government to actually make use of it. So I will stop there; a lot to chew on.
Thierer: Thank you Michael.
VIII. Discussion Among Panelists

Hoewing: Adam can I respond to one point that Michael made?
13
http://en.wikipedia.org/wiki/Cognitive_radio
Thierer: Sure.
Hoewing: A lot of what he said about what Toms speech, is a good characterization of a lot of
his comments. I do think, on the regulatory, parity issue though, if you listen to what Michael
said, all of his comments go back to network providers again, in terms of how they ought to be
treated and a new policy framework. If you look at what we said in the Verizon/Google joint
statement, and what Tom said in his speech, he talked about an Internet ecosystem.
We believe that even though its highly unlikely to happen very often, that there can be
damaging activities by any player in the Internet ecosystem, depending on what kind of market
power they have. So let me give you an example, and Im not saying this has happened but this
is an example of something that could happen. If you have an operating system on your
computer, and most people do today, it has to interface with all this software on your
computer generally speaking, and they use things called APIs. Theyre basically hooks that allow
these things to work together. Your browser only works, because it works with the operating
system, or the computers CPU, and with the BIOS and everything else in the computer that runs
it. So if the operating system company, for whatever reason, maybe it has its own competing
browser for example, gives the wrong APIs to the browser maker, the browser wont work.
Now is the consumer always going to know that? The answer is probably not. Now I believe
that the way the Internet works today, theres so much vigilance and so many folks that would
catch things like that, that it would get caught. But the point is it can happen. So whatever we
do in this policy framework, were not just talking about applying it to network providers. I
think it has to be, when we say parity, I think the harms to users competition standard we
talked about should apply to all the players in the Internet ecosystem.
The other thing that he mentioned was common carrier regulation. Again if you look at the
FCCs announcement yesterday, they did talk, and Barbara explained this quite well on the
forbearance issue, how thats not as easy as it sounds like it is to do.
But one of the points is, that the things they said would include, like take section 201. If you
read that section, it talks a lot about prices, practices, classifications. Now I dont know how the
FCC is going to implement that but that clearly looks like theres talk there about price
regulation. They may not even intend to do that but I think its because, as we said this, you
have to torture the statute to try to make it fit the Internet. So thats why we are talking a lot
about trying to come up with a new statute.
Gifford: Isnt one of the threshold questions: Do you need a specialized communications
regulator? Because what you just talked about as anti-competitive conduct in the browser
market sounds suspiciously like something that the Department of Justice handled in the
1990s. Depends on what your point of view is on whether it handled it well or not. I know that
a lot of folks have said, and I think Ive written, I think Adams probably written pieces that say
let the Federal Trade Commission regulate this stuff which horrifies my friend Jim DeLong who
used to work at the Federal Trade Commission
Thierer: Better them than the FCC.
Gifford: And in DACA what we came up with was a Federal Trade Commission Act framework
for communications. Spectrum may be a little different because it has some specialized
qualities but do we really need the national spectrum coordinating office and registry and then
to hand all of the other roles like competition policy to agencies that have historically done it in
a more true and straightforward fashion, albeit imperfectly?
Thierer: Barbara, you had something you wanted to say?
Esbin: I just wanted to clarify one point and Michael raised it and the General Counsels paper
yesterday addressed it as well, the wireless model. At some point when I was at the
Commission and I was there over two different periods of time, but the wireless model was
held up as the ideal light regulatory framework and that is because Congress permitted the FCC
to deregulate the rates of commercial mobile radio service providers and that is the key
difference today. There is no act of Congress permitting the FCC to implement its third way.
Now the wireless model might be a great basis for the next act in terms of how much regulation
do you need in a competitive marketplace, but its hard to use that analogy today because of
the lack of legislative authority.
Calabrese: Can I just answer Barbara?
Thierer: Sure, go ahead.
Calabrese: The Commission contends that theres nothing in the Act that precludes it from
forbearing on all of those same Title II, those traditional, you know, rate regulations and so on,
provisions in Title II, you know with respect to Internet access. I mean is there anything thats
stopping it from forbearing or you just dont believe that theyll forbear forever?
Esbin: I just, I think there is a factual problem when it comes to forbearance. The core of
forbearance really is whether market conditions will protect consumers and competition. I
dont understand the basis on which they believe they can impose common carrier status if not
market failure. If theres a market failure, then how can the market protect consumers? I think
their motives are pure and they will attempt to forbear to the maximum extent possible, Im
just not certain they can pull it off.
Calabrese: See what I think explains it is the same distinction that would probably cause some
disagreement between Link and I and thats this question of whether you can separate the
transport service from the information service. Because I think what theyre saying and what I
was trying to say earlier is that the on and off ramps to the Internet can be regulated separately
and should be under the sort of basic common carrier non-discrimination requirements
whereas there may be enough competition to justify forbearing with respect to the information
service and everything else.
Hoewing: On that point, Barbara talked about the fact that she buys a service that is a uniform
service. It includes transport and the information service piece of it. And the commission, under
Chairman Kennard, first addressed the regulatory status of Internet access service in its report
it was asked to give to Congress in 1998. The commission began by examining the relevant
terms: telecommunications service, information service. And it concludedand this is 1998
that the two terms are mutually exclusive, in that an integrated information service cannot
simultaneously be said to contain a telecommunications service, even though it has
telecommunications components.
Then, after conducting a thorough examination of the features and functionalities that are part
and parcel of Internet access, the commission concluded that its an integrated information
service and does not contain a telecommunications service. So you cant break that out now
and say its now something, also, magical that we can break out, because the commission
precedent isnt that way.
Calabrese: So at that time, back in the Kennard days, and even for some years after, they had
that mentality because the Internet access service was being provided by separate companies,
by all the dial-up, by AOL, EarthLink, CompuServe, what have you, that were riding on the
transport. They were riding on top.
To them, that was the ISP. The ISP was not the phone company. The ISP was a separate
company that was riding on top of the wires. Whereas, by the time it got to Brand X, as you
read in the dissent, Justice Scalia and the two other dissenters found it just completely
implausible that there was not a telecom service integrated alongside whatever other advanced
or additional services...
Thierer: Lets hear from Barbara real quick, and then were going to go to Q&A.
Esbin: At the time period Michaels describing, I was in what was then called the Cable Services
Bureau. I went there shortly after passage of the 96 Act.
The first large topic I was asked to research was whether the cable modem service was a cable
service, a telecommunications service, or an information service. This was 1996. Everyone was
fully aware that there was a new kind of broadband Internet access service that provided
all-in-one. It was ISP. There was a transport element.
The readings in the Stevens Report,14 the universal service report to Congress in 1998, were
developed against this backdrop, as well as the backdrop of dial-up access, where there were
two services. You used your phone line. You subscribed to the phone company. You had an
Internet access provider ([a] separate fee). Those consumers bought two services. Cable
modem subscribers, as Ive already said, have bought one service from the time the thing was
rolled out. So that report was written in full knowledge that there were many ways to provide
Internet access.
14
www.cybertelecom.org/voip/fccstevens.htm
Thierer: So, before we get to questions and answers, I want to ask one question to the panel.
In particular, I want to hear what Walter and Peter have to say about this, which is, when you
talk about needing a new communications framework, we have to talk about the political
reality of how we would get one. And both of you have extensive experience, in different
capacities: Hill, FCC.
Is there really an appetite for this? What are the ingredients that are necessary? The Telecom
Act of 96 was a hard slog, and many of us remember the many predecessors that came before
it, going back even through the Hollings bill and the Democratic Congress and beyond that.
What does it take? Are we going to get it? Any appetite for it? Because Ive got to say, Im
skeptical. I dont necessarily see it. Walter?
McCormick: I guess that I would say this. I think that if you ask people, Should we update the
law? I think that people say Yeah. I mean, why not? Its been 15 years, and it would make
sense to update the law.
But when you then go to the next layer, it is a political axiom that you need to have consensus
on the problem before you can have consensus on the solution. And theres not a lot of
consensus on what is exactly the problem that Congress should address. When the National
Broadband Plan lays out that weve gone from eight million Americans to 200 million Americans
taking broadband in the last eight years, its pretty impressive. When it lays out that theres
been 500 billion in investment, thats pretty impressive.
When you take a look at consumer surveys, and consumer surveys show that satisfaction is at
extraordinary levels with regard to their Internet access, and that consumers dont perceive any
problems, politicians sort of wonder, Why am I spending my time on this, fixing whats not
broken?
So, I think that, to some extent, this very intense debate that we have is a debate thats within a
very small subset of the nation, and that the one area where there is an acknowledged
problem, consensus on the problem, is that theres five percent of Americans that dont have
access to broadband, fixed broadband. Its going to cost $24 billion to serve them. And how
long is it going to take? Thats the one area theres a lot of consensus. But frankly, thats the
one thats also being largely addressed.
So, yeah, I agree that there will be some challenge in getting momentum going behind
legislation.
Thierer: Peter, any thought on that before I go to questions?
Pitsch: Just briefly, I think Walters right. If theres not a consensus that theres a problem,
were not going to see legislation. The problem can come from two directions. For example, if
the FCC proceeds in this direction and its reversed in court, then there will be a consensus that
theres a problem. Some people want to go in one direction, and some people want to go in
another direction, but I think that would be providing impetus for change.
I also think another way this gets solved, frankly, is through more work in the direction of what
Verizon and Google have already done. I think that things like that could obviate the need for
more intrusive regulation, and would also reduce the pressure for legislation.
The last thing Ill say is I do think there is a problem in the spectrum space. The services we all
have are wonderful, and the industry has done a great job. But anyone whos been following
the growth of data and the problems that are arising with the use of smart phones realizes that
there is going to be a tremendous increase in demand. And if we dont get spectrum, and do
other things, but if we dont get additional spectrum, there is going to be a big problem.
IX. Questions & Answers

Thierer: Lets go to some audience questions. And when the mic comes to you, please identify
yourself and state your affiliation clearly and ask a question.
David Torgerson: Im Dave Torgerson with USDA. I really disagree with what you said. I think
theres a lot...
Thierer: Who?
Pitsch: All of us. [laughs]
Torgerson: The framing of the question. Because I talk to lots of consumers. I have my informal
groups and so on. Theres complaint about every server. And the thing is, the competition down
on the ground appears to beIve got to take an annual leave to say all this stuff...
Thierer: How about a question, too?
Torgerson: The question is, I look at this as a consumer problem. Consumers are being
under-served. And this stuff about the rural areas, I think the politics will take care of that. But I
also look at it professionally, that we have a perception that our Internet service and telecom
isnt as good as what they have in Europe. And they have all sorts of excessive regulation on
things, in a lot of areas. Why is that perception out there, and whats wrong with it?
Thierer: OK. So why cant we be Greece? No.
[laughter]
Thierer: Anybody want to..?
Torgerson: At least Germany.
[laughter]
McCormick: Id like to just take a stab at that. To some extent, if you point to Korea, or these
places where we say: Well, oh they have the most wonderful Internet, its so fast. It really
does harken back to 1975, where people said You know we have the most wonderful
telephone system in the world. We have one provider. The most wonderful telephone system
in the world.
But when people really began to look at it they said, But why wouldnt it be improved if other
people could compete against that system? And so today we have all of these providers that
are constantly competing.
So what I see is that we have a marketplace that is developing more rapidly than any of those
other counties and when you look at the innovation thats occurring, where is all the Internet
innovation occurring? Routers and browsers, they were invented here. All social networking
was invented here. The new devices that consumers like, like iPads and iPhones and Droids are
being invented here.
And the commercialization of the Internet with Amazon and with eBay and if you look at search
engines where were they invented? They were invented here. The United States, because of
our competition policy, is the hotbed of Internet innovation. And its probably the reason why
Americans spend more time utilizing the Internet than citizens in any other country on this
planet.
So that would be my response.
Thierer: Anybody else on that one?
Audience Member: I have two choices I can either go to Verizon or Comcast, I dont have any
other choices. I live in an urbanized, I live in Prince Georges County. The zip code I am in was
the first one to get both DSL and fiber optics. And I still have only two choices.
Link Hoewing: OK, so I did a blog post on Verizons policy blog Id invite you all to look at called
A Lack of Facts Can Disprove Your Case.15 Basically it was a rebuttal to some comments that
Sasha Meinrath made and thats what he said. He said we had a dismal record of broadband in
the United States.
Now Im in a consumer services company. And its a competitive industry, so we know that we
dont always get it right and we know we have to keep improving. So dont let me try to say
that we always get it right, and we cant do more. We have to do more. Thats absolutely true.
And we got more broadband speeds that we have to provide people.
But in my blog post, I literally have 25 facts, everything from investment to deployment of fiber
technology in this country which far exceed whats going on in Europe, to going from 2G
wireless, which is 144 kilobits per second, to now already 4G. Verizon is beginning to deploy
that this year. We could be talking 10 meg speed on that service and maybe even higher. Were
not going to try to, were being conservative. But 10 megs on a wireless network in just a few
years with billions of dollars in investment to make that happen.
15
http://policyblog.verizon.com/BlogPost/727/ALackofFactsCanDisproveYourCase.aspx
If you look at this blog post, I think youll see that the record is actually quite good. I look at it
like the Olympics. When you look at the statistics the reason youll always hear that were
behind Europe is because they cite one stat, usually, the OECD number, 15th in the world,
based on the number of connections per hundred people. If you use that metric, the United
Sates in 1996 when we had 95% penetration of phone service would have been 16th in the
world in phone service. Its just a bad metric. And its not bad to have metrics and its not bad
to measure them, but to me its more like the Olympics. Are we first in every metric you can
look at? No. But on the Olympics as a whole, we were the leading nation in the world. And I
think on the whole, we are a leading broadband nation.
There are some areas, as Walter said, weve got some work to do. Certainly we need more
speed, and I think wireless is going to be a competitive alternative over time. I dont know if you
saw the testimony two weeks ago in the House, but the satellite providers, Wild Blue said they
were launching a new satellite that could get eight megs down and two megs up, I think, or
something in that range. Thats a pretty good service. So it is continuing to evolve, but I think all
of that is indications of a positive and successful story.
Thierer: Let me try to get a couple more questions from the audience, weve got a chance. In
the back, can you identify yourself and ask a question?
Jonathan Moody: Thank you again to the panel. My name is Jonathan Moody at the American
Legislative Exchange Council, an association of state legislators and private sector members. In
your opinion, this is an issue that our state legislators care about and are working on, but can
you give a little advice on what the states can be doing and priorities that they should be
focusing on?
Thierer: Good question, anyone? I dont know. Ray you want to jump in there, as a former
state guy? But anybody want to jump in on what the role of the states is here, because thats
always a tricky question in the field of network economics and regulatory reform. You know,
should the states be preempted? Do they have a role here?
Gifford: I think the states are largely now focused on universal service issues and coming from
a big square state There are a lot of very strange distortions both in federal universal service
policy and those also are creating problems in state universal service policy. Because a number
of states have their own funds that are facing similar challenges that the federal fund is, which
is youre basically taxing a diminishing base. And to raise the same amount of money, you need
to crank that rate higher and higher.
So the two big things that I think states are doing is mapping efforts. Im not sure if thats make
work or if its going to yield any real benefits, but a lot of states have mapping efforts
underway.
On the universal service front, I think the fact is Lawrence Whites quotation that competition
is the enemy of subsidy, is whats creating the contradiction there. And Im not sure theres
any neat way for the states, much less the federal government, to handle that because when
you can escape the subsidy regime, people will do it. And what you have happening is a never-
ending game of catch me if you can to keep folks into the subsidy and access regime. And the
appetite to reform that is very difficult given the political economy that states face.
Thierer: Barbara you have a quick comment on that?
Esbin: More in the way of an observation. The state jurisdiction question is interesting also in
terms of the FCCs announced third way. Once Internet access has been declared to have two
separate components, a telecommunications service component and an information service
component, it becomes for all intents and purposes common carrier telecommunications
service and states have their own set of authority over intrastate telecommunications services.
So the FCC, once it forbears, states cannot regulate that thing that has been subject to
forbearance. But for the pieces of Title II that are not forborne from by the FCC, states that
have authority over intrastate aspects of these things are free to regulate under their own law.
Unless the FCC does a third act on the high wire, which is simultaneously preempt inconsistent
state regulation. Theres a lot going up on that wire, thats all Ill say.
Thierer: Michael?
Calabrese: Along those lines of what Barbara said is that, Barbara was at a panel event along
these lines earlier in the week and one irony is that if the Commission had, after Comcast, in a
sense abandoned the field in the sense of not regulated the transport component under Title II
then we were speculating on would we start to have, start to see 50 different net neutrality
regulations around the country. And I dont think that would have been a welcome
development by the carriers, either. Its not going to be a perfect world.
Esbin: No, its not a perfect world but most states have state laws, even sometimes in their
constitution, that give the state authority to regulate intrastate common carrier services or
telecommunication services and there are very few authorizations, I believe, of that nature
concerning information services.
So again, there are these annoying jurisdictional problems that arise when you have a
regulatory framework based on service-specific definitions. And that is the one thing I would
say is critical to the next communications act. It should not look like the last one.
Thierer: Do we have any more final questions? Oh, right here.
Adam Bender: Hi. Adam Bender with Communications Daily. Weve talked a lot about the
process challenges to doing the Third Way. But if the FCC is able to implement it, whats the
practical effect that it would have on ISPs and other businesses? Including wireless.
Thierer: Including wireless. Anybody on that one?
McCormick: I think that to go this route to try and re-label one part of the Internet ecosystem
as common carriage and to not address it in the context of the integration of the ecosystem is
just simply market distorting. It doesnt address the fundamental aspirations that the country
has with regard to the Internet.
The uncertainty that has been unleashed by the FCC launching this proceeding in the midst of
challenging economic times, youve taken the one sector of the economy that is producing jobs,
robust innovation and is a source of overwhelming consumer satisfaction, and you are
subjecting it to a high degree of uncertainty. As every Wall Street analyst has said, this
uncertainty now means that they cant model what the industry, what the people in the
business are going to be able to do and not do going forward.
And it, I think, undermines any momentum whatsoever that the commission had with regard to
the larger national broadband plan because now everyone is fixated on this debate. And it
completely blew up any kind of momentum and consensus that the commission had developed
with regard to what the real priorities of the nation are.
Hoewing: The other point Id make on that is in a letter16 that a lot of the industry players sent
to the FCC a few days ago, they also pointed out that the uncertainty isnt just in our industry. If
you look at the Supreme Court case, its not even certain that whatever policies the FCC tried to
impose in this space would just be limited to broadband providers. It could be other Internet
players as well that get covered. So the source of uncertainty could spread wider than just our
industry.
Calabrese: Just note though that theres uncertainty from different directions, and the
trade-off that Chairman Genachowski emphasized yesterday is that if you did not do this youd
have the uncertainty of every individual order by the commission being challenged in court and
battling it out under Title I. And so in some ways really a single decision that restores the status
quo from before the Comcast ruling, in other words the understanding we all had just a couple
months ago, seems to be a greater level of less uncertainty than we would otherwise have.
Thierer: Im going to have one final question for the panel in a second but I want to ask Ray
one specific question which is, as you may recall, Ray, when we had the DACA project underway
I argued it had one major failing. The one and really only failing of the project was we ignored
the fact that the Communications Act was as much about media as it is about communications.
And if were going to have a conversation about are we going to have another Communications
Act, you have to ask the question: Is media policy going to be part of it and what should it be?
And you have that whole different universe of public interest regulation that is at work there.
What do we do? Do we break that out? Do we keep it bundled in? How do you balance that,
because we didnt do it in DACA.
Gifford: No, we didnt. I think one of the things we tried to do is at least create some analytical
separation between what is competition policy, what is universal service policy, and what is
social policy above and beyond that. And one of the frustrating things about communications
16
http://fjallfoss.fcc.gov/ecfs/document/view?id=7020442659
law, such as it is, is all the stuff gets completely mixed up in an indecipherable stew, and so
people (A) just talk past each other, and (B) it turns into the analytic mush that were used to.
So at the very least I think what the aspiration of DACA was, and what any legal reform should
aspire to do, is at least create some clarity within the analytical categories youre trying to
accomplish. So if weve got media policy thats focused on competition policy issues as opposed
to social policy issues, youd at least want to create those categories so theres some clarity
there.
Im not sure theres a neat way to do that because Im not a media policy guy. But thats what I
think the underlying architecture of DACA was, was to say all right, if you have a competition
policy issue, lets treat it that way on a case by case basis in an adjudicatory manner and not as
a swallow the ocean, lets think about stuff DACA.
Thierer: Right. So my final question to the panel, and well start down at Michael and come on
down to Link, is hopefully yes or no but you can elaborate a bit if youd like, briefly. Will we
see major Communications Act reform of any sort within the next three to five years in
Congress? Michael?
Calabrese: [laughs] Tough one. I would say probably not completed. [laughs]
Thierer: Not complete, but started.
Calabrese: Yeah, I think...
Thierer: A start would be good.
Calabrese: I think well start it next Congress.
Thierer: OK. Ray, any chance?
Gifford: I think I agree with Michaelstarted. And in some sense this is a conversation that
started five, six years ago.
Thierer: Youre going to agree with that, too, Barbara?
Esbin: My other answer is I dont know, but that sounds right to me.
Thierer: Peter?
Pitsch: Id say it depends what happens in the courts.
Thierer: OK. Walter.
McCormick: Id say yes. I think the conversation has begun. And if you look at the 96 Act, it
really began almost 20 years before that. I think that its very, very clear that the courts are not
going to approve the FCCs recent decision because the lack of jurisdiction is just so clear. So
thats going to lead to some momentum for an updating the laws.
Thierer: Link?
Hoewing: If you frame the question as Internet policy reform, in other words creating Internet
policy for the country, I think there is a better chance than people might think that well see
some comprehensive reform. The reason is that its not just about some of these issues were
talking about today but privacy, online security, all those issues that Tom mentioned in his
speech also are part of the Internet policy framework that we need to look at.
And I think all those things are under a lot of stress and theres certainly a lot of belief that we
need to do some things in those spaces. So if you look at it in that context, I think the answer is
that weve got a better shot than people think.
The other thing Id point to by the way is in this NRPM process, and I dont know that people
recognize this, but I think theres been a steady consensus developing over the last periods of
comments in the NPRM that suggest that people do see more continuity in some of these areas
than you might expect.
For example, I dont know if people know this but a majority of the filings, a vast majority of the
filings did not support net neutrality regulation, for example, or said that thats not really the
key issue. Its actual broadband adoption or some other issue thats more concerned. What
they pointed to in many cases - ITIC, the Information Technology Industry Council is a good
example - was some of the things we talked about on the Google filing.
So I think there were more people saying some of those ideas are actually worth looking at as a
framework going forward. So theres more consensus probably than people think.
Thierer: OK, great. Well before we close I just want to remind everyone that PFFs next event is
on Thursday, May 20th, and thats on the question of Can Government Save the Press? That
will be in the Reagan Center. It deals with a major proceeding that the FCC is closing comments
down on today on the future of media. So I hope you join us on again, Thursday, May 20th for
that discussion.
In the meantime, wont you please all join me in thanking this wonderful panel for this
discussion today.
X. Speaker Biographies
Link Hoewing is vice president - Internet and Technology Policy at Verizon, the
countrys largest telecommunications provider. He is responsible for identifying and
assessing emerging issues, developing corporate positions on Internet and technology
industry issues, and working with high technology industry members, interactive
technology associations, and research institutes and think tanks. Previous
responsibilities include external affairs positions at Bell Atlantic and Telecom New
Zealand, as well as eight years as a Congressional legislative aide. Hoewing has a
bachelors degree from Carthage College and a masters in Public Administration from
American University.
Peter Pitsch is associate general counsel and executive director of communications

policy for Intel Corporation. He manages Intels global spectrum and telecom policy
team. Prior to joining Intel, Peter was the president of Pitsch Communications from
1989 to 1998, which represented telecommunications clients before the Federal
Communication Commission (FCC) and Congress. From 1981 to 1989, Peter served
at the FCC as chief of the Office of Plans and Policy and then chief of staff to the
chairman of the FCC. From 1980 to 1981, Peter was a staff member of the Reagan
Administration Transition Team which developed recommendations for reforming the Federal Trade
Commission (FTC) with special focus on antitrust issues. He also worked as a senior attorney at
Montgomery Ward, Inc. from 1979 to 1981 and served as an attorney at the FTC from 1976 to 1979.
While at the FTC he was an attorney-advisor to Commissioner Calvin Collier. Pitsch received a B.A. in
economics from the University of Chicago in 1973 and his J.D. from Georgetown University Law Center
in 1976. He is a member of the District of Columbia Bar, the Virginia State Bar and the Federal
Communications Bar Association. He authored the book, The Innovation Age, and has written and
lectured extensively on telecom and regulatory issues.
Walter B. McCormick Jr. is the President & CEO of the United States Telecom
Association (USTelecom), the nations premier broadband trade association
representing service providers and suppliers in the new telecommunications
marketplace. A respected Washington veteran with more than 25 years
experience in telecommunications, Mr. McCormick joined USTelecom in 2001
and has guided the organizations evolution into one of the top trade
associations in the nations capital. Prior to joining USTelecom, Mr. McCormick
served as President & CEO of the American Trucking Associations. There he led a broad corporate
restructuring that resulted in a reinvigorated membership, record dues revenues, and significant
legislative victories. His background also includes service as General Counsel of the U.S. Department of
Transportation; as General Counsel of the U.S. Senate Committee on Commerce, Science and
Transportation; and as a partner with Bryan Cave LLP, an international law firm of more than 500
lawyers, where he headed the practice group on Regulatory Affairs, Public Policy and Legislation. During
his tenure on the professional staff of the U.S. Senate, he was recognized by Roll Call magazine as one of
the 50 most influential staffers on Capitol Hill. Mr. McCormick holds degrees in journalism and law from
the University of Missouri. He has studied international economics and political science at Georgetown
University, and has completed the program for senior managers in government at Harvard Universitys
John F. Kennedy School of Government. He is a member of the Presidents National Security
Telecommunications Advisory Committee, the Board of Trustees of Rockhurst University, the Federal
Communications Bar Association, the District of Columbia Bar, and the Missouri Bar.
Raymond L. Gifford counsels communications, electric and gas utilities and

information technology companies on state and federal aspects of regulation,
administrative law, and competition policy. He is an expert in public utilities law as
it relates to telecommunications and energy matters. He litigates on behalf of
clients in state and federal courts, and serves as an expert witness on utility
regulation in federal and state courts, and at state utility commissions. In addition,
Mr. Giffords law and policy work focuses on antitrust, competition policy and
intellectual property law. Before returning to private law practice, Mr. Gifford served as President of
The Progress & Freedom Foundation, a non-profit think-tank that studies the digital revolution as it
relates to regulation of network industries. Before that, he was Chairman of the Colorado Public Utilities
Commission serving as the chief regulator in the state of Colorado of the telecommunications,
electricity, natural gas and transportation industries. Mr. Gifford began his regulatory career as First
Assistant Attorney General for Regulatory Law in the Colorado Attorney Generals office. Immediately
after graduating from law school, he clerked for the Honorable Richard P. Matsch of the United States
District Court for the District of Colorado. Mr. Gifford has authored a number of articles on smart grid,
broadband and communications law.
Michael Calabrese is Vice President of the New America Foundation directs the
Wireless Future Program and helps to guide the Foundations work related to
retirement security and the Next Social Contract Initiative. Previously, Mr.
Calabrese served as Director of Domestic Policy Programs at the Center for
National Policy, as General Counsel of the Congressional Joint Economic
Committee, and as pension and employee benefits counsel at the national AFL-
CIO. An attorney and graduate of both Stanford Business and Law Schools, Mr.
Calabrese speaks and writes frequently on issues related to spectrum, wireless
broadband, and Internet policy, as well as on Next Social Contract issues related to improving retirement
security and health coverage. He has co-authored three books and published opinion articles in The New
York Times, The Washington Post, The Atlantic Monthly and other leading outlets.
Barbara Esbin is Senior Fellow and Director of the Center for Communications and
Competition Policy at The Progress & Freedom Foundation. Esbin served for over
fourteen years at the Federal Communications Commission, most recently as
Special Counsel in the Market Disputes Resolution Division of the Enforcement
Bureau. Before joining the Enforcement Bureau at the FCC, Esbin spent four years
as Associate Bureau Chief at the Commissions Media Bureau. There, she
represented the Bureau on a number of inter-agency efforts and led the review of
several major industry mergers and rulemakings addressing cable and broadband
competition issues. Esbin has also served as Associate Bureau Chief of the Cable Services Bureau, Special
Counsel for Competition and Senior Policy Advisor at the Wireless Telecommunications Bureau, and
Attorney-Advisor and Assistant Tariff Division Chief of the Common Carrier Bureau. She has spent time
in private practice, specializing in cable and broadband regulatory issues between her two FCC
engagements, and electric utility regulation prior to joining the FCC. Esbin had two judicial clerkships in
the North Carolina appellate system and is a graduate of the Duke University School of Law and Antioch
College.
Adam Thierer is President of The Progress & Freedom Foundation (PFF) and the
Director of PFFs Center for Digital Media Freedom (CDMF). As Director of the
CDMF, Thierer analyzes public policy developments that impact the economic and
social aspects of the media industry, including related First Amendment issues.
Prior to joining PFF in 2005, Adam was Director of Telecommunications Studies at
the Cato Institute and a Fellow in Economic Policy at The Heritage Foundation. His
work on communications, high-technology, and media policy has been featured in
The Wall Street Journal, The Washington Post, The New York Times, USA Today,
Forbes, The Economist, Newsweek, and others. He also writes regularly for The Technology Liberation
Front blog. Adam is the author or editor of seven books on media regulation and child safety issues,
mass media regulation, Internet governance, intellectual property, regulation of network industries, and
the role of federalism within high-technology markets. Adam has served as a member of Harvard Law
Schools Internet Safety Technical Task Force, a Blue Ribbon Working Group on child safety organized
by Common Sense Media, the iKeepSafe Coalition, and the National Cable & Telecommunications
Association, and he is also an advisor to the American Legislative Exchange Councils Telecom & IT Task
Force. He also serves on the National Telecommunications and Information Administrations Online
Safety and Technology Working Group. In 2008, he received the Family Online Safety Institutes Award
for Outstanding Achievement. Adam earned his B.A. in journalism and political science at Indiana
University, and received his M.A. in international business management and trade theory at the
University of Maryland.
Related PFF Publications

The Constructive Alternative to Net Neutrality Regulation and Title II Reclassification
Wars, Adam Thierer & Mike Wendy, Progress on Point 17.9, May 2010.
The FCCs Title II Lite (as a Lead Balloon!) & the Looming Broadband Tax, James
Dunstan, Progress Snapshot 6.9, May 11, 2010.
Ancillariness, the Definition Wars, and the Next Communications Act, Barbara Esbin,
Progress on Point 17.8, May 6, 2010.
FCC Comments of Barbara S. Esbin In the Matter of Preserving the Open Internet,
Broadband Industry Practices, Barbara Esbin, Jan. 14, 2010.
Net Neutrality, Slippery Slopes & High-Tech Mutually Assured Destruction, Berin
Szoka & Adam Thierer, Progress Snapshot 5.11, October 2009.
Net Neutrality: A Further Take on the Debate, Barbara Esbin, Progress on Point
16.26, December 9, 2009.
FCC Reform: Scalpel or Steamroller? Barbara Esbin, Progress on Point 15.15, Sept.
2008.
Comments of Barbara S. Esbin In the Matter of Preserving the Open Internet
Broadband Industry Practices, Barbara Esbin, January 14, 2010.
The First Amendment, the Internet & Net Neutrality: Be Careful What You Wish For,
Robert Corn-Revere, Progress on Point 16. 28, December 17, 2009.
A Skeptics Primer on Net Neutrality, Kyle Dixon, Raymond L. Gifford, Thomas M.
Lenard, Randolph J. May & Adam Thierer, Progress on Point 13.14, June 2006.
Report from the DACA Working Group on Regulatory Framework, March 2006.
Report from the DACA Working Group on Universal Service, December 2005.
The Progress & Freedom Foundation is a market-oriented think tank that studies the digital revolution and its
implications for public policy. Its mission is to educate policymakers, opinion leaders and the public about issues
associated with technological change, based on a philosophy of limited government, free markets and civil liberties.
Established in 1993, PFF is a private, non-profit, non-partisan research organization supported by tax-deductible
donations from corporations, foundations and individuals. The views expressed here are those of the authors, and do not
necessarily represent the views of PFF, its Board of Directors, officers or staff.
The Progress & Freedom Foundation 1444 Eye Street, NW Suite 500 Washington, DC 20005
202-289-8928 mail@pff.org @ProgressFreedom www.pff.org

What Should The Next Coummunications Act Look Like (PFF Event Transcript)

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Progress on Point

Volume 17, Issue 11 June 2010

What Should the Next

1444 EYE STREET, NW SUITE 500 WASHINGTON, D.C. 20005

Peter Pitsch: And its been 15 years. I cant believe it.

Thierer: [laughs] Unfortunately, still, nobodys read it.

[Audience Member]: Change the cover.

Link Hoewing: Its been a while.

Pitsch: Again, it was the cover.

Thierer: Again, a bad cover. Lime-green cover on that thing.

So, Link, kick us off.

II. Link Hoewing

So that was the second piece of it.

Thierer: Thank you, Link. Walter?

III. Walter McCormick

So a Democratic administration and Democratic Congress undertook deregulation and they

Thierer: Thank you, Walter. Peter Pitsch.

IV. Peter Pitsch

Thierer: Buy the book now!

Thierer: Thank you, Peter. Barbara.

1. Whether enforcement of a regulation is no longer necessary to ensure that the charges,

Thierer: There you go Ray, now to you.

VI. Ray Gifford

Thierer: Or the Colorado Rockies, for that matter.

Gifford: Hey, weve got the best pitcher in baseball.

Thierer: Thank you, Ray.

Thierer: Michael, bring us home.

VII. Michael Calabrese

So the first is regulatory parity. Technological convergence needs to be matched by regulatory

A fourth principle would be to ensure adequate competitionand this is more of a monitoring

Thierer: Thank you Michael.

VIII. Discussion Among Panelists

Thierer: Better them than the FCC.

Thierer: Barbara, you had something you wanted to say?

Calabrese: Can I just answer Barbara?

Thierer: Sure, go ahead.

Thierer: Peter, any thought on that before I go to questions?

IX. Questions & Answers

Pitsch: All of us. [laughs]

Thierer: How about a question, too?

Thierer: OK. So why cant we be Greece? No.

Thierer: Anybody want to..?

Torgerson: At least Germany.

So that would be my response.

Thierer: Anybody else on that one?

Thierer: Barbara you have a quick comment on that?

Thierer: Do we have any more final questions? Oh, right here.

Thierer: Including wireless. Anybody on that one?

Thierer: Not complete, but started.

Calabrese: Yeah, I think...

Thierer: A start would be good.

Calabrese: I think well start it next Congress.

Thierer: OK. Ray, any chance?

Thierer: Youre going to agree with that, too, Barbara?

Pitsch: Id say it depends what happens in the courts.

Thierer: OK. Walter.

Peter Pitsch is associate general counsel and executive director of communications

Raymond L. Gifford counsels communications, electric and gas utilities and

Related PFF Publications

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