HH: Pleased to welcome now Chairman Ajit Pai, the man atop the Federal Communications Commission. Chairman Pai’s commission sits in turn atop radio and television, and of course, now the internet, at least for a couple more weeks. Chairman Pai, welcome to the program. It’s great to have you. As I said, I’m a radio guy first, and so I wanted to start with just a radio question. The AM revitalization project at the FCC…
HH: We need some more power. You know, the clutter is screwing up our signals. When are we going to get like up to 2 milivolts for our stations?
AP: We’re working on it, and that’s been part of the problem I’ve heard from AM broadcasters around the country, is that the noise floor, as it’s called, is so much that everything from power lines to your electric clock might interfere with an AM signal. So we’re trying to find a consensus working with engineers and broadcasters to see if we can make some noise there.
HH: Because we remain in floods, fires, hurricanes, people go to AM radio, and the signals are becoming increasingly difficult. You used to have to worry about bleed out in the rural America, but now it’s really about too many devices screwing up our signals.
AP: It really is, and you’ve put your finger on why this is so important. I have personally been to Houston and Miami and Puerto Rico in the wake of the hurricanes, and I have heard first hand from folks who said AM broadcasters were in some cases the lifeline for people in a moment of desperation.
HH: All right, let’s turn to net neutrality. You are much in the news. In a couple of weeks, you’re going to be taking up an order as to whether or not to reverse the 2015 rule making that the commission undertook on net neutrality. Ben Thompson, who runs a great blog devoted to tech, tech strategy or something like that…
HH: That’s it, Stratechery. Ben wrote that net neutrality, I’ll say it again, who can be against it? In other words, that it’s just a slogan. Is he right?
AP: And I would urge any of your viewers to read carefully what Ben said, because he said essentially the choice is between regulating before the fact or regulating after the fact. If you preemptively regulate before anything bad happens, there are a lot of costs that come along with it. And that’s why he cited, he explicitly said Ajit Pai is right by saying we should return to the market-based approach, have after the fact regulation by the Federal Trade Commission to make sure there’s no anti-competitive conduct. And that’s significantly not only because of who he is. He’s a tech entrepreneur, after all, but also because he supports neutrality. And he recognizes that we can’t have a free and open internet with these light touch rules, because we had one from 1996 until 2015.
HH: You know, when I was reading the Stratechery piece, and it took a long time, because this is not my wheelhouse. I’m a radio guy, but I’m reading through it, and it seemed to me to be counterintuitive where he ended up. But he ended up with let’s stay deregulated at least for a period certain to see what happens. Is that carrying the day with any of your critics when an influential tech strategist like Ben Thompson comes along and says yeah, Pai’s right?
AP: I think it does make a difference. And when he, and when Marc Andreesen and Mark Cuban and others who have made their living based on these online platforms, when they say look, we need to have rules that promote more investment in infrastructure, and what we need is more competition, not preemptive regulation from Washington, I would hope that people of good faith who are entering this debate would take those comments with some credence.
HH: Now I have a proposition for you having covered this on the radio for years. Not one in a hundred people know what net neutrality means. I really…
HH: If they haven’t got, they don’t even understand that Facebook is running on algorithms, right? So they’re not really understanding net neutrality. How did net neutrality end up winning the slogan war if nobody understands what it means?
AP: Well, it’s a very seductive marketing slogan, and over the years, it’s morphed into basically whatever people want it to mean. Originally, it was meant to say you know, last mile connections. That’s where we need to focus our attention. Now, it simply means any content on the internet – should it be regulated or should it not be. And so that’s one of the reasons why I’ve tried to focus on the facts. And if you look at the detailed order that we’ve made public for the first time ever, well before the FCC’s vote, we go into painstaking detail as to what it is that a free and open internet means, and why our proposed framework, President Clinton’s framework, is the right one for that internet.
HH: Okay, I’m not given to conspiracy theories, Mr. Chairman. But if you look at the FANG companies, they love the fact that the debate is over the ISP providers. How much of this is hey, worry about your Netflix streaming, and don’t pay any attention to the fact that we’ve got market concentration issues that we don’t want the Anti-Trust Division to look at?
AP: Some have voiced the concern that this is a case of, as we say in Washington, regulating one’s rivals and urging federal agencies to regulate one part of the industry instead of one’s own. I will leave that to others to debate. What I am focused on is making sure that we have a free and open internet for the entire internet economy. And to me, at least, by taking this light touch approach at the FCC, by empowering the Federal Trade Commission to take action against any competitive conduct from whatever company or whatever part of the economy, I think we’ll be able to allow everyone to innovate, and for consumers to benefit going forward.
HH: Some of the best writers about regulatory overburden talk about pathway of evolution. Whenever you regulate, a pathway appears, and you go down it a bit. But the problem with changing course is that people have proceeded down a bit. Are those two years since the commission’s order under President Obama’s commission definitive? Will it cost too much to make the change back now?
AP: Not at all, and I think past is going to be prologue. As I said, President Clinton adopted a free market approach in 1996. We had that approach for almost 20 years until 2015. Once we return to that framework, I’m confident that the $1.5 trillion dollars we saw in terms of infrastructure investment prior to 2015 will be replicated going forward. And secondly, the important point, I think, people need to understand is that we do have cops on the beat. We are going to be protecting the consumers going forward. And so we’re simply returning to the market-based framework that has served everybody so well.
HH: Some of these FANG companies are becoming content providers. Twitter, Facebook, they are actually producing content. At the FCC, are you beginning to view them in the way that you would view my radio show as content that has to be monitored in the way that is appropriate in the public interest?
AP: So I take a free market approach. These are private companies that have tried to innovate on this online platform. And the content that goes over their networks, I don’t think, should be regulated by the FCC. Others may have a debate about that, but at the end of the day, I think we want to create rules of the road that provide for a competitive marketplace, and let companies innovate as long as they’re not behaving anti-competitively or otherwise violating the law. I don’t think the FCC should have a role in stepping in.
HH: How can you not be behaving anti-competitively when you’re as big as Facebook is, when your algorithms are so powerful, when you’re Google and the EU is worried about this? How can you not be anti-competitive?
AP: So that’s a debate that’s happening on Capitol Hill and in other, some agencies. And the question is should you practice what you preach? If you’re urging the FCC, for instance, to adopt heavy-handed regulations on internet service providers because you believe the importance of free expression online, should you behave similarly and allow for expression on your platform? Should you be transparent with consumers about what you’re doing and why? And that’s an important policy debate that I think some on Capitol Hill are engaging in right now.
HH: A couple of weeks ago, I spoke with former Democratic nominee Hillary Clinton, and we chanced to come upon a book we both agreed was vital, which is World Without Mind by Franklin Foer. It worries about where we are headed with these enormous concentrations of power. How does that get to your desk? Or do you just say hey, go talk to the Anti-Trust Division about that, that’s not for me?
AP: Partly, it’s for the Anti-Trust Division to worry about, but even at the FCC, we do worry about concentrated marketplaces. We want there to be competitive marketplaces whether we’re talking about the wireless industry or the radio business. And so we also have to be on our guard that the public interest, which is our standard, is always met. If the transaction that’s before us, if it’s an application for a regulatory solution that’s before us, we always scrutinize everything through that lens of the public interest. And part of that public interest determination requires a competitive market.
HH: Do you have an open mind on net neutrality? Could someone persuade you to keep the rule as this order hearing goes forward?
AP: Well, looking at the record as we did, we had an unprecedented amount of input. We’ve come to the conclusion that the right approach was the Clinton free market approach from the 1990s all the way…
HH: You’re not changing.
AP: I’m not going to change at this point. If there are certain tweaks that people want to talk about in terms of the free market approach, I’m open to that. But at the end of the day, I think that the comments from everybody from Ben Thompson to other edge providers, to the other folks who have submitted comments on the record, I think it persuaded us that we’re on the right track.
HH: Okay, a last question, Mr. Chairman. Congress has not spoken. This is an old statute that you’re operating under. It’s like the Clean Power Plan being promulgated under the Clean Air Act. It just doesn’t work. Should Congress get a new statutory construct in place for the monitoring of internet service providers and content providers?
AP: This is certainly something that I think Congress has the prerogative, and in some cases, the interest in doing. And I’ve long said that where the FCC often gets into trouble not just in court, but in public opinion, is when we try to shoehorn the marketplace of today into these antiquated frameworks from yesterday. In this case, putting the internet under the rules that were created in 1934 to handle Ma Bell, the telephone monopoly. And so if Congress sees fit to set rules for the digital road for the entire internet economy, I think that’s something that would give certainty to the marketplace and to consumers alike.
HH: And you were personally threatened because of this, as was your family. Has that, have they laid off? Did the word get through that left, right and center simply do not accept that kind of behavior?
AP: I would certainly hope so, but I will say that it’s an ongoing problem that we’ve had to deal with, and it’s been an extremely unpleasant, to say the least, for me, and I’m used to some of it, but especially for my wife and my kids. And they’re not part of this public policy debate, nor should they be brought into the debate.
HH: So it’s ongoing? It’s still going on?
AP: Unfortunately, yeah, there’s some security issues that we’ve had to tend to.
HH: Ah, the world in which we live. Chairman, thank you for coming in and talking to me about this, good luck in the rule making ahead. Don’t forget, radio also needs some help when you get back to…
AP: We’re on it.
HH: We’re on it. We’re on it. I’ll be right back, America. Don’t go anywhere. We still need our radio. That’s why I’ll be lobbying. I’ll be right back.
End of interview.