 I'm Kevin Werbeck, I know many of you. I am a professor at the Wharton School at the University of Pennsylvania. I also, in full disclosure, have a consulting engagement with the FCC. But here I'm speaking purely on my own. This is an event that is jointly hosted by the Wharton School and by the Berkman Center for Internet and Society at Harvard University. My colleague, Yochai Benkler, is the co-organizer of the event. He'll speak in just a minute. Our topic today is the FCC's authority over broadband internet access. This is a critically important topic. Broadband is, at a minimum, one of the great infrastructure projects of our era. And in many ways, something much more than that. In many ways, it's a fundamental platform for the way that we'll interact and already are interacting with our families, our communities, our work environment, our government. So the question about the regulation of broadband, the question about how the FCC, Congress, other parts of the federal government relate to broadband access is a critically important one in a whole variety of areas, as I'm sure all of you know. And the immediate context for this event was the decision in April by the DC Circuit Court of Appeals rejecting the FCC's legal theory for sanctioning Comcast network management practices for their broadband access service. Shortly after that decision, Yochai and I started talking, and our sense was that there was a critical issue here about where things would go forward, a critical open question about what legal authority the FCC had, what trajectory the commission would take about broadband under the statute, and how this would play out. So we started putting this together. We felt that there were open questions and we needed an event to talk about it. The response has been really outstanding, as we'll see in a minute. We've got an extraordinary group of speakers from a wide range of perspectives here. Subsequent to that, Chairman Genakowski at the FCC announced his proposal, the so-called Third Way, a direction to move forward under Title II of the statute on broadband authority. And then just this week, the chairman of the major committees in the House and Senate put out an announcement about initiating a look at some of these issues of potentially revamping the Telecommunications Act. So we're proud to take full credit for all of those developments since we started putting this together. But we felt like there were still some open questions. There's still some very important issues, both about the legal dimensions of how things go forward as well as the substance. So that's what we're here to talk about today. I want to welcome all of you. I'm going to moderate both of the sessions. I'll just bring up my co-host, Yohai Bankler, to say a few introductory words and then we'll go into the first panel. So do you have this? So first of all, it's to say welcome to everyone for coming here and to say how pleased we are to be able to co-host this with the Wharton School and with Kevin. The effort to try to come from academia and provide a platform for an objective and diverse set of views about a set of questions is, I think, something that we both were trying to do and I think is important because these are, as Kevin said, really important issues. The only piece of context that I'd like to add is to zoom to the 10-year level instead of to the three months or the four months level. And to understand that, one of the things that's happening that is involved in the transition that we're in now is that we're in a decadal moment, in a sense, somewhat akin to the first broadband transition from dialogue to broadband when we talk about next generation networks. And whether it's that the speeds of the Wharton connections are massively greater, that the investment structure, be it in DOCSIS 3.0 or in fiber, is different and requires new investments that are different and perhaps different on both sides, whether it's the question of the degree to which, at long-last wireless and ubiquitous access, will really replace and displace, these are the questions that come together with this idea of next generation connectivity that is seen to be quite widely by people looking at policy to be a phase change like the first broadband transition was. And so in the context of this moment that is both in the market and the technology a phase shift and in the politics potentially a phase shift, being able to provide a platform for talking about whether the FCC should or shouldn't, can or can't seem to us to be a good idea on this longer term. And so thrilled to have everyone here and thrilled to have this collaboration to do it with. Terrific, so a couple of housekeeping notes. Please put your mobile phones on stun and we are recording this. We're not streaming the video live, but we are recording the video and we'll make it available on our website. So we will take questions for both of the panels. When we do take questions, we'll have to ask you to wait until the mic comes around so we get you on the video. So without further ado, let me bring up the first panel and then we'll get started. So as both you'll find I said we're really thrilled to have a group of people who are experts on these issues as well as in many cases people who have first hand knowledge and been involved in the development of the debate around the FCC and broadband for many years. In some ways this is an issue that's come to a head in the last few months, but it has a history that goes back at least 15 years at the FCC in terms of looking at the question of the internet and how it relates to the FCC's regulatory authority under the statute and in some ways well before that. So the first panel we wanted to look at the history and context of the debate because it's easy if you're focused on the immediate political fights to think that this is something that just sprang up yesterday, but the history is important and I think it will inform some of the discussions about where we should go forward. The three people we have on the panel I'll just briefly introduce them. I know many of you know them very well. John Nakahata is a partner at the DC law firm of Wiltshire and Grannis where he practices in telecommunications, internet cable regulation. He spent several years at the FCC between 1995 and 1998 and his bio actually says he was one of the principal architects of the FCC's implementation of the 1996 telecom act. So we have John to blame for any of these problems. He served in a number of roles at the commission including chief of staff for then chairman Bill Canard which was at one of the turning points when some of the questions about broadband first started to come by the agency's radar screen. Next to John we have Jessica Rosenwurzel. Jessica also spent time at the commission in the wire line bureau and then as a legal advisor to commissioner Michael Cops and now serves as the senior telecommunications council to the U.S. Senate Commerce Committee which oversees the FCC. And finally after her left John Wynhousen, John actually I didn't even realize it turns out was at the commission as well in the 1980s. I first encountered him subsequently when he was in Congress working as counsel to the Democrats on the Senate Commerce Committee during the period in which the 1996 telecom act was drafted. So John was actually involved in the drafting of the statute that still applies today. So if this John is not at fault then you certainly are. Subsequently John served as general counsel of the competition policy institute and president of the Association for Local Telecommunication Service and now has a private consulting firm. So let me start by asking a question to all three of you and then we can take it in turn as we'll start with John. So here we are, 14 years after the 1996 telecom act. At a point in time when broadband is not just something that's available to a few people but is something that a majority of Americans I believe at this point subscribe to, how is it that we've gotten to this point that we're still debating this basic initial question about the FCC's legal authority? Be John or that John? John, knock a hot, I'm sorry, we've had bad panelist selection. Actually it might make sense to start with John Nguyen has but because of the reason why we're debating it goes back to the, I think it goes back to the statute and goes back to the fact that the act itself wasn't written at a time when the internet is something, we didn't have the internet as we know it. It was something that was primarily drafted. I mean, a lot of the drafting of the Telecom Act occurs in the 1993, 94 timeframe, which to put that in internet context is roughly coincident with the introduction of the internet browser. So I mean, it's a different, the Telecom Act is a creature of a different world. And that became pretty apparent pretty quickly as the FCC began to try to grapple with how do you apply the statutory definitions to the world of the internet? And not surprisingly, there were two different views coming out of the Congress. And if you wanted to define the definition of being in a bad position in Washington terms, the FCC was caught in the one sense between a very deregulatory Commerce Committee Chairman Senator McCain who said, well, I think that these internet services are, should be treated as unregulated services. And a very universal service concerned Chairman of the Appropriations Committee, Senator Stevens, who took the view that in fact, any internet services, especially the internet access services and really even things like email, all involved transmission and so involved the provision of transmission to the public and therefore were telecommunication services. So the question has always come down to what the reason we've been dealing with these questions for 14 years and that they're unresolved is that they've been or in some ways got resolved and have been unresolved since then or re unresolved. Is that there is that the statute doesn't speak to it and that the answers are neither obvious nor clearly spelled out. John, we know that is that your recollection to well, yes and no. I'll introduce a different perspective on it right away, perhaps for the sake of debate. The way I see this, well, let me let me say put it this way. The debate that we're talking about now really started 3035 years ago as the FCC struggled with this decision about how to separate the regulated telecommunications or communications functions from the unregulated enhanced services, information services that was started really in the 1970s with the computer one, then computer two and then computer three decisions. And I suspect that we're still going to be debating those questions even 3035 years from now because I think what we've got here and stepping back trying to look at a bigger picture if you got two very important principles that we all agree on, I think, in terms of the principles. One is that you need to have the principle of common carriage, which I know takes some hits as a 19th century holdover and actually goes back much further than that in history. And the reason it goes back is it's sort of in my view in the category, not the same, but it's in the same category as things like free speech in First Amendment. It's a fundamental principle that if you're going to be offering communications to the general public, you ought to do so in a non-discriminatory way. So that's one important principle. There's another very equally important principle which is that you don't need to regulate stuff that doesn't need to be regulated. So if you've got information services that are being offered on a competitive basis and there are low barriers to entry and anyone entrepreneurs can get into that marketplace. Well, you don't need to regulate that set of services. And those two principles are equally strong, equally valid. And the question I think that the FCC started to investigate 35 years ago was how do you draw the boundary line between those? The 1996 act really tried to capture that debate and is very consistent with the computer inquiry lines of decisions. And I think you could say that the debate that we're having now, the reason that we're still debating these issues is that issue of how do you draw that boundary line is still relevant today. So one way I look at the current debate as we're now embarked on computer four. Jessica, you're okay. Well, let me put it more simply from a legislative perspective. Technology just moves at such a fast clip right now that our legislative and regulatory models, they struggle to keep pace. And you can imagine that when the Telecommunications Act was written, there was no one who was really contemplating the ubiquity of broadband service. There was probably nobody who thought that there would be 280 some odd million wireless handsets available in the marketplace and consumer's hands or that in their palms they'd be able to access the internet. Much less that the computer screen would be fusing with the television screen. And all of those changes are tremendously exciting for consumers, but they pose significant challenges for regulators and legislators. And that's really what we're struggling with right now. Well, let me just push on that. I mean, it's certainly true that the Congress is not a professional and a futureist society, and even some of us who were very tech-savvy in the mid-1990s didn't anticipate everything that was going to happen. But I mean, is it really the case that this world is totally foreign to anything that Congress could have imagined? Either John. Let's, again, go back to the 96 act a little bit and sort of set the stage here. A lot of what happened in the lead-up to the 1996 act, we have to keep in mind, was the effort to take communications policy away from Judge Green. And so a predominant motivational force behind the 1996 act was to say that the court should not be running communications policy, it really should be the expert government agency, the FCC. And this was, again, one of those universal things that applied across the boundary lines, Republicans and Democrats, if there is one thing that everybody agreed on, it's that Congress and the FCC should be making policy, not a single federal judge. So you had so many members of Congress saying from both sides of the aisle that the FCC is the expert agency. We really need to have, restore the authority back with the FCC because they're the ones that have the technical expertise. You know how it is in Congress, you start saying this enough over and over again, you actually begin to believe it. And so you had members on both sides of the aisle saying that the FCC was the proper location to restore this authority and to be making these technical decisions. It's not a place that Congress is very capable of addressing changes in technology. And so, yes, there were huge technological developments that occurred since 1996 act to today. What we were trying to do in the 1996 act is to recodify some of those basic principles that would carry us forward into the next century so that we wouldn't have to keep going back to Congress for legislative changes every few years based on technological changes. What we wanted to do is to give the FCC the authority to exercise its judgment about how those technological changes should fit within the policy framework that was being set up. So Kevin, I don't know if that exactly answers your question, but that's hopefully a bit of perspective. Anyone else have a perspective on that? I don't know that it couldn't have been foreseen, but there were certainly roads not taken. And so if we think back to the 1994, 95 timeframe, clearly in the air was the notion that the existing Communications Act structure to put it in more today more, well, these parlance that Kevin created was more oriented towards silos of applications than layers of functionality. And so you didn't really, I mean, well, the computer inquiry decisions, I think, were very much premised on a notion of trying to separate a transmission layer, which would be a basic layer and sort of a comic carrier service from a applications layer, which would be the information or enhanced service that wasn't totally mirrored in the structure of the Act, and particularly in the focus on comic carriage. And the cable industry in some ways leapfrogged the development of the regulation because the cable industry as a non-common carrier began offering both an integrated transmission and information service combination. The road not taken at the time was sort of early on, Vice President Gortz loaded the notion of Title VII. And do you need to sort of recreate, would there need to be a different set of statutory provisions, and I'm not saying that his necessarily were right, but I mean, but a different set of statutory provisions that would apply to an, sort of, even IP is probably not the right word to put on it, so even that is sort of recasting it, looking backwards. But I'll use that for an hour, an IP world where the transmission network would be capable of all different ranges of applications, video, voice, data. And that was the road, that was really the road not taken, and the choice was to stay working within the kind of application centric framework that was set up by the 34 Act. And I think that is what we continue to struggle with today. And it's frankly what I think you see with the members saying, we may need to go back and look at this again. So what we did get in the statute was these two categories, telecommunications and information service. So let me just ask each of you, what do you make of, what do those mean, fundamentally, what's the importance of that distinction? Well, it gets back to that fundamental, these two principles that I talked about earlier about what should be and should not be regulated. You know, we did base the decisions and the definitions of telecommunication services and information services based on the computer two and computer three lines of decisions coming out of the FCC. I know a lot of people said, well, why didn't you use BACESFIC and enhanced as the terminology then? Why did you use the telecommunication services and information services language? And the reason is because we were abrogating the MFJ. We were abrogating the court decision that used those terms. So we had to use that terminology so that it was clear that we were taking the authority away from the judge. But we also wanted to use the definitions that the FCC had used because we were handing it to the FCC. We wanted to build on the body of work that the FCC had done so far. And that was the effort to try to identify those two lines of thought. I know that there are some vague provisions in the 1996 Act. I will agree to that and certainly we've taken some hits from that, about that and including from the Supreme Court. But I would also say that some of that was not just an oversight, that it was actually intentional on our part not to decide some of these questions because, again, we did want to leave these to the FCC so that it could adapt its regulatory process to the changes in technology. And so those two terms really capture the two different philosophies, those two different core beliefs that are, again, I think are both accurate and valid and why that debate is gonna continue probably not just now, but for many years to come. Jesse, I mean, do you think it's a fundamental distinction or something specific to the statute? Well, as John mentioned, you can go back to computer two to look for the distinction between basic and enhanced services, which was roughly mirrored in the Telecommunications Act with telecommunication services and information services. And that construct has been useful, but as we approach a world where we have many more services, many more service providers, we are seeing a degree of functional integration that is making the application of those two binary constructs much more difficult. And I think that's what we're grappling with right now. I would just add in a note that I think John got it right with the Stevens report that interpreted the statutory provisions when the Stevens report issued by the FCC came out and said, yes, the 96 Act's terms were meant to build off of the computer two and computer three lines of decision. Yeah, so that's a good segue. I don't know, do you want to jump in with that? I wanted to get into sort of, now let's talk, let's move forward how the FCC has interpreted this. Or do you want to add something first John? No. Okay, so let me start with you then. So 1997, the FCC issued the so-called Stevens report to Congress. And then ultimately began the process of classifying broadband services. When you were there under Chairman Kennard, started the process of looking at cable mode of service and then completed the decision under Chairman Powell and Chairman Martin. So what was the agency trying to accomplish and what was the agency concerned about in going down that path? Well, I mean, the context of the Stevens report came up obviously, it was called the Stevens report because it was created by an appropriations writer, authored by Senator Stevens. Whose focus very much was on universal service and maintaining the stability of the Universal Service Fund. And who was very concerned and whose staff was very concerned that if the scope of services on which universal service was assessed was not extremely broad, the technology would find ways to flow around those definitions and ultimately the scope of assessed services would shrink. Not unreasonable concern, in fact, it's probably been proved out to some extent. But, and it was predictable also, frankly. So that was sort of what was the motivating concern, but the larger issue was with John Windhausen, I think it was averting to two. There was a very strong notion that the internet was growing up in a fairly unregulated space. And that that was a good thing. It was, there was a lot of, there was a lot of people did not need to ask permission to launch new internet-based services. The other part of it that was positive was from a policy perspective really was, internationally this was a force that was breaking down the power of the PTT, the international PTTs. The government-owned, the telecommunications services, and the national monopolists in each country. And I think if you remember back to the early 90s, international calling was extremely expensive. And there were many different ways that international calling was, calling rates were brought down, including some efforts by the FCC in terms of sort of using the US's volume of traffic as a way to force down what were called settlement rates. But another reason part of that was opening up lots of different alternatives, whether it be resale or the internet, as ways to flow around the facilities that were created by the national monopolies. And it's not at all surprising that VoIP service, for example, and in the Stevens report talks about, if you remember a company called IDT. And what IDT was doing was providing a way for people, and not unlike Skype today, was providing a way for people to talk to people, to friends and business associates in other countries using the internet and going around the national PTT structure and the international settlement structure. That was something that was important to maintain. It was an important downward pressure on an artificial monopoly structure that was propped up through the ITU. It's frankly also was important to maintain this. The other part about the internet is that as value-added services and not being subject to national licensing regimes, people were entering and getting into countries without having to get governmental approval. That was a democratizing force. You did not need to get the permission of the government necessarily to bring in the internet. That was all, these were all benefits of having it be unregulated, the internet being an unregulated service. Now, none of this was really fully doctrinally resolved. As I said, the notion of the computer too was you had a regulated transmission layer and that was a common carrier service and you had an unregulated information services, applications layer that wrote over that transmission layer that put anybody could buy the transmission layer from the basic service provider. That was a very simple and elegant concept and construct. The problem was it didn't necessarily match reality, is that there were certainly transmission providers that were not common carriers, cable being the most prominent example among them, but not the only example, the other example being internet backbone providers. The commission says, well, if we're gonna declare all transmission to be common carriers, which was the point of view that was being pushed by Senators Stevens and Burns at that point in time, it's based a fairly unpalatable choice of, and are we saying that anybody who moves bits is going to be a common carrier and going to have to be licensed? Okay, so essentially the agency had a choice of saying either we're going to pull a whole lot of stuff on the internet up to the level that historically regulated incumbent telephone companies or we're going to take a whole lot of stuff and push it down to this lightly or unregulated tier of what's under information services. That's a choice. From a statutory classification perspective, yes. The interesting thing was the answer was Senator Stevens and Burns was in fact the third way. So if you look at paragraph 47 of the Stevens report, it's in response to this concern, Senator Stevens and Burns maintained that commission could rely on its forbearance authority under section 10 to resolve any such problems. This sounds awfully familiar. And I don't mean that to poke fun at Chairman Janakowski or at Austin Schlick. Because- Never a good idea to poke fun. No, because frankly all it means is that I'm getting old, right? I mean the definition of old in Washington is when you've seen everything come around for at least the second time, if not the third, so. All right, well let me ask the other two people on the panel for your take on this. Do you think that this is the same issue that we were dealing with then? I mean it's very similar. It's just an upgrade with the technology and the technology is going to continue to change so I think we're still going to be trying to answer these questions in the future. It is interesting though to go down memory lane and revisit some of those debates at that time that the Stevens report was being discussed because then you were in a situation where all of the telephone industry was asking the FCC to regulate the internet. They're because of this concern about VoIP that John referred to, not just internationally but also domestically VoIP carriers were seen as providing a very similar service to traditional telephone service and yet they weren't paying universal service charges in the same way that traditional phone companies were. So there was a lot of effort by the industry to say a certain regulatory jurisdiction here over voice over the internet technology. So these things tend to go in cycles around and around, even back further there was something called the interspan service that AT&T was offering in the 70s where it was co-mingling common carrier services with data processing services and the question was well how should that be regulated? Is there a contamination theory here that should say as soon as you attach a single information service to a telecom component that the whole thing becomes information services? Well, we'll know that the FCC rejected that and maybe one example of why is for instance voicemail. You wouldn't want to take a basic pure telephone service and slap voicemail onto it and then say okay now the whole thing is unregulated but yet on the other hand if you are integrating telecommunications just as a sub-component to an overall information services package at some point yes it does become more fitting to move it in the information services and unregulated category. So that's why these issues have a long history and they're gonna continue to have a future with us as well. I think what you hear thematically is that there's an effort to try despite the statute to treat like services the same. And when you look back over the last decade you see in 2002 the FCC classified cable modem services as an information service and then on the heels of the brand X decision from the Supreme Court chose to reclassify a wire line broadband information access service as an information service and then subsequently did something similar in 2006 with broadband over power line and then walked over to the wireless side and did the same in 2007. So there's an effort notwithstanding the statute to try to treat similar services the same particularly if they are fungible from a consumer perspective but it is challenging because the statute was not built for that kind of treatment and so there is an effort to try to figure out how to harmonize these services and their treatment perhaps despite what the law actually calls for as it was enacted. So what if anything has changed? I mean John mentioned one thing in the environment in terms of the concern particularly in the late 90s about the international effects of what the FCC might do. Clearly technology's advanced broadband is more widespread. Are there any differences fundamentally from when the FCC was initially considering this or not? Well the marketplace continues to change, sure. And one of the evaluations that the FCC has to be engaged in is a continual analysis of that marketplace to see where the market power may be, where there's an opportunity for certain providers to gain an unfair advantage in the marketplace or discriminate against others. That is a constantly changing analysis that has to be done. So and John Nakahara is right in some ways that we didn't really have a full understanding in 1996 of what the internet was going to be and what the technologies. Now it wasn't that we were clueless at that stage. I do remember when we passed the telecom act out of the Senate in 1995 where we dealt with long distance entry and abrogating the MFJ and burglar alarms and HDTV and all these hundreds of provisions, the headline in the Washington Post when the act passed the Senate was the Senate acts to regulate indecency on the internet. That was the headline, that was the one thing that the Washington Post picked out and it was very clearly that we knew the internet was there. We didn't know about broadband but we did have a section 706 which began to sort of talk about advanced services. So we had an inkling of what was going on and what was going to happen but we didn't really fully appreciate the tremendous demand for broadband services and the tremendous growth in those services. And so that is what's changed. I mean we need to really have a regulatory regime that does respect the fact that broadband is, well, taking over the world, that's probably too strong but it is going to become the predominant way of communicating in the future. Well so one thing that has changed at least in the regulatory structure is we talked about computer two, computer three and those rules, those FCC rules were enforced when these decisions were made in the late 90s and have largely been abandoned. The FCC also chose to eliminate line sharing requirements in the 2003 I believe to try any review. Do any of those changes make a substantial difference in terms of the context for deciding this broadband authority question? Not sure whether those things make a clear difference. It does shape the doctrinal discussion a little bit in the sense that there is no, well I mean going back to the definition of common carrier services, which is famously circular but even in the DC circuits articulation of it, one of the prongs for being a common carrier service is that you were required to be a common carrier service which always struck me as being the ultimate and circular too. Is that there's nobody who's really required to provide transmission on a standalone basis anymore? You can elect to provide it, you can elect to provide it on a standalone basis or you can choose to provide it on an integrated basis and that's probably, that's differently different than 1999. But the other difference, clear difference in the marketplace is, maybe not, difference, evolution in the market is maybe a better way to put it, is the robustness of multiple facilities-based players both on the wired side with cable sort of emerging and it's, and really actually being the predominant broadband medium, but also with significant development on the traditional telco side and then with the growth of wireless services which substitute to at least some extent. I'll set a view on that, okay. Well then, let's fast forward a little bit. So, as I believe Jessica mentioned, 2005, the Supreme Court decides the brand X case upholds the agency's classification decision as an information service. What's the impact of that decision today? What does that tell us about the authority the commission has and what does it tell us about the authority the commission doesn't have? Jessica, take a stand at it. Well, certainly it's a Supreme Court decision so we hope that the FCC will pay heed. I feel duty bound to say that. But I suspect it can be read in different ways too. There are probably people who look at it on the one hand as suggesting that it is more logical to look at these services functionally integrated and on the other hand, there'll be people who look at it as chiefly a Chevron decision and it defines the outer boundaries of appropriate decision making by the FCC. In either case, I'm sure it's going to influence the way both the FCC and the Congress move ahead as they try to identify a way forward for all these issues. Kevin, I don't have too much to add to what Jessica said, I mean, the majority opinion very clearly said this was a Chevron analysis where they were deferring to the FCC and its analysis and its judgment about how these boundary lines should be drawn. It is kind of just as a footnote, very interesting to see how many people are quoting Scalia's dissent from that decision as if that was the majority opinion. And he certainly put it much more colorfully in his writing than the majority did so it certainly deserves more airtime given the language that he used. It's more fun to read the dissent but the dissent did not carry the day in that instance but having said that, if the FCC changes its mind and seems to have a, what the majority seem to say is as long as the FCC was making a reasonable decision based on its analysis of the marketplace that it would defer to the FCC's judgment which then opens the door to the question well can the FCC then change direction or alter that boundary line and draw it in a slightly different place based on an update of its analysis. And I think there's an argument that the Supreme Court decision would allow the FCC to do that but again within boundary lines. I mean they can't totally wipe out and start from a clean slate. I would suggest the Supreme Court and all the courts are going to look to see whether the FCC can build upon the body of work that it's done so far and make adjustments to that based on changes in the marketplace since then. Yeah and that's, I mean I think we'll get on the second panel into some more of these questions about the proposed way of going forward but I just want to try and make sure we complete the story in terms of how this has evolved. Chairman Jeneckowski in announcing this third way proposal said that to paraphrase that there's been a long standing consensus, some sort of bipartisan consensus essentially that there's some baseline rules that should apply to broadband access service and perhaps some similar set of services but the agency shouldn't regulate too much and apply the full panoply of common carriage rules. Is that right? Is there some core that we can look to and say well we may disagree fundamentally about how to get there and whether there's legislation needed or so forth but there's some level of consensus or is that even saying too much? Well you know the computer two and computer three lines of decision do seem to establish a precedent for the third way. Again it's not an exact situation because the technology has changed but if you, those lines of decision from the FCC do seem to say that you can separate out the transmission component from the information services component and that's what computer two did with structural separation, computer three did with ONA and CEI plan so what they were trying to do is to say yes the Bell companies could provide an integrated package of information services and telecom services but they also had to offer the telecom services component separately as a standalone measure to competing information service providers so that seems to be at a very high level the kind of precedent that might be valuable useful for the FCC to refer back to and the chairman, Janakowski to look back to as he crafts this third way. Now again it has to be updated with the new technology and it can't just be a complete replacement or rather complete taking from the past and moving it automatically to the present but there is a principle there there is a germ of a thought of yes you can separate out the telecom functions from the information services functions but I think doctrinally that's actually a more revolutionary step than maybe John's characterizing it here because the core germ of one of the core parts of even the computer decision, computer decision certainly followed through in the post 96 act jurisprudence was that the notion of telecommunication services and information services are mutually exclusive categories you are one or the other but you're not both and in some ways that is actually the seminal point in the jurisprudence and that's not a statute I mean the commission interpreted statute that way but it interpreted statute that was not it's not spelled out in a statute that way but there were versions of the communications act of what became the 96 act that did in fact spell it out and those provisions were dropped ultimately but it's overturning that point can you be and it sort of teed up directly here which is can you be both a teller are you not can you be are you both a common carrier and an information provider when you offer an integrated internet access service to the public at large and Jessica you have to deal with all the politics and so therefore I'm sure you're limited what you can say but do you have a sense that there's a room for consensus somewhere in the middle here? I think when you push all the political rhetoric aside what you'll find is nobody no matter where they sit on this debate is really interested in applying a series of old style telephone rules to new fangled broadband services the important thing in the end is to identify not so much which title all of these services fit in as what your principles and priorities are as we head into this new communications world how do we make sure that broadband is ubiquitous how do we make sure that consumers are protected how do we make sure that public safety officials for instance have the access to the networks they need and then separately how do we make sure that we provide proper incentives for private investment and those principles probably should guide our dialogue more than some deeply embedded notion of what title these services best belong in and so that's I think what we bring to it from the legislative perspective right now or at least with my boss we do. All right so I'm gonna start I'm gonna invite people to ask questions from the audience we'll get a microphone to come around let's see let's see. While we're doing it let me just ask you one follow-up question guys I may have to ask so there was this announcement on Monday by your boss and the other committee chairman what can you say about what did that process come from and where's it likely to go? Well if April's not the cruelest month it's a complicated month for anyone who follows telecommunications policy and obviously in the aftermath of the Comcast decision a lot of time energy and effort has been expended at trying to identify just how the FCC should manage what that decision says and how it should look to broadband services in the future especially in light of their recent efforts with the national broadband plan. So it was the thinking of what I would say are the four majority leaders in the Congress on these issues which would be Senator Rockefeller Senator Kerry on the Senate side Congressman Waxman and Congressman Boucher on the House side that they would harness all this energy and try to bring it into a single and more thoughtful forum so that we could work to identify ways both small and large that we could update the communications act. Now that's clearly not a simple or easy task but it is something that we think is compelled by the evolution of technology and has been accelerated by that Comcast decision. Get the mic over here, Chris and then, and then, yeah, the front row over here and then we'll get, I'll get back to you in a sec. So yeah, and just state your name and affiliation for the, yeah, back to you. I'm Chris Savage, I'm with Davis Wright Tremaine which is a law firm but I'm not here on behalf of any particular client. I'd like to ask the panel a question that is probably boring and difficult as compared to interesting and fun which is as a practicing lawyer, all this policy stuff is great but I've got this statute sitting in front of me and I guess I'd like the panel's view of, suppose we don't change the law and it's just what it is. Do you guys have any thoughts now that we understand more about how the internet works as to whether or not internet transmission is or isn't a telecom service? I'm gonna help you, Chris, I'm sorry. I'm sorry. Certainly not without a fee but shout out. Yes, yeah, I charge people for my answers because I'm just trying to get it for free but seriously, the question is let's assume there's going to be, by 2012, a comprehensive, thoughtful rewrite of the act that deals with all this. Nonetheless, we have a year or two of dealing with the laws that exist today and I'm just very curious about people's thoughts about that because that's when I go back to the office what I gotta deal with is the laws that exist today. And I think it's a bit of a judgment call. I don't think it's a black and white question and I've seen some of the discussion about DNS lookup services being, you know, they were initially categorized as an information services type of thing but then you can make the argument that's very similar to telephone numbers and routing a basic common carrier feature. So, and 800 numbers, yes. But I'm not qualified to weigh in on that, I'm sorry. Well, I think the answer, doctrinally, is pretty straightforward. Internet transmission or internet service, internet transmission is not a telecommunication service. I mean, that's what the FCC's held to date, the DNS and other aspects of internet access are not telecommunication service. Whether the FCC changes its mind is a different question. There's obviously a lot of difficult boundary cases the FCC's considering right now, whether MPLS is type services and should be considered information services or telecommunication services. And so under what circumstances or not and that's where, you know, people come to talk to people and Chris liked me all the time. But it's, you know, that's doctrinally where we are. I think the question is how, one of the questions opened up by the reopening of the debate over definitions is how much of that then gets thrown in a cocked hat and you do have to start revisiting those questions all over again. So, Link, and then Link coming with Verizon and maybe ironically enough, I can't tell you what a telecommunication service is either despite the fact that I work for a telecommunication company. But there is one large elephant in the room, Kevin, that I think has been totally ignored by this debate and it happens a lot in these debates and that is that the cable industry was never treated as a common carrier. It always offered an integrated service and at one point it now offers voice service but as far as I know, they didn't offer telecommunications in the early days either and that gets totally ignored in this debate. Doesn't that crash into this whole thing in a big way? Isn't it an important part of it? I think I said that. I don't think I ignored it. Link, I think back to said that one of the problems is that the computer two construct divided the world into transmission layer which would be a regulated common carrier service and an information service which would be unregulated and in fact one of the things that happened is the cable industry leapfrogged that and the cable industry is doing both as a non-common carrier service. So yes, it is the elephant in the room but it's here. Let's go back to the history. I mean, did John Wynnehausen, to what extent was that within the mindset of the Congress in 96 that you'd have providers who are not historically common carriers being offering these kinds of services? Well actually, theoretically what we were trying to stay technology neutral in the 1996 act and so we were trying to say the same rules should apply to all technologies regardless of your history but it should be more related to your presence in the marketplace. So for instance in the, to divert for a second in the section 251 analysis of the unbundling provisions you know there's a very clear assumption or not assumption but clearly written into the act that whether the, in that case the ILAC is using fiber or wireless or other technologies, well wireless is in title three but regardless of the technologies you were supposed to apply the unbundling provisions regardless of how the call was rooted or what technologies were in particular. So that was sort of the flavor of the environment that we were trying to get away from the silos to get away from your history, historical categorization and treat the same services fairly and equally. That was what we were trying to do now. Did we succeed in doing that entirely? No, I don't think it was possible to completely succeed. I know the FCC also took that technology neutral approach as best it could but it's difficult to do and it's a long process to try to get there. Well and the web of consequences of any statutory classification make that difficult. So what was one of the impetus, it's not saying that it's the sole impetus at all but one of the things that out there is if you say that cable service was a telecommunications service, you potentially have immediately immediate implications for the application of the pull attachment rates. And universal service and those were clearly things that overhung some of the debates then and now. So I saw Scott Cleveland on the right and then Mark Cooper on the left just describing where you're standing. Very accurately. Scott Cleveland on netcompetition.org. A rather simple question but should the foundation of FCC regulatory authority meaning the interpretation or reinterpretation of definitions, should that change like the FCC's definition of the public interest changes with basically what three votes that the FCC says it is at any given time? Is that a normative question or what? I mean it's a democracy, you have election, you have three people who vote. I'm not quite sure what that means but. You know to me the question is, would you rather have the FCC making those decisions or members of Congress making those decisions and you know. The question was that Congress already did it. Or the courts I mean. That's a question, I'm just wondering, the main question the question is, is it a good policy to change your trajectory that hundreds of billions of dollars in investment and this is monotony of the set and then all of a sudden three votes say no, we're gonna change your trajectory, you have it all there. Okay, but it's got. This is like 500 years of debate about the importance of starry decisis. I mean. No and I mean we understand your view and it's part of we'll get to more into this in the second panel. I think we want to try and keep this a little more focused on the background. This conversation has in fact. I'm sorry, Mark, just to introduce yourself for the recording. Mark Cooper, Consumer Federation. The discussion has properly reflected the actual history of the way this issue has unfolded over 10 years. That is, the entire discussion has been about interconnection and carriage or transmission. Which were the essence of what has gone on. The question I have is that there are at least four other public interest principles in Title II that are now clearly implicated. Universal service, privacy, access for consumers with disabilities, and consumer protection. Which in fact have received almost no vetting in the regulatory and judicial process that led us to this point in time. If those four issues are now entered either at the regulatory agency or before the courts, how does that change the consideration, particularly with the question of changing one's mind? Because if the regulatory agency and the courts never considered four fifths of the implications of their decision, then you're really not changing your mind. You're making a de novo decision in 80% of the issues that the agency should have considered in making the original decision. Well, I guess I'm not quite sure the factual premise is right. If you think about the Stevens report, the Stevens report was asked for specifically because of concerns about universal service. I mean, the one thing that was front and center in the late 90s discussions, in addition to issues of non-discrimination, which were certainly on the table because the cable open access debate was going on in it's sort of either first or first and a half generation. The universal service was clearly there. I do think that issues like disabilities access have gotten less discussion because in that context, but universal service has clearly been part of the discussion since the beginning. Wait, if you look at the broadband wire line decision, the one that sort of rounded everything up and finished it off, there were 50 pages devoted to transmission and one page devoted to universal service. And that one page said, we're gonna have to think about this. And that proceeding has never been completed nor have the other three proceeding. So to say that it was considered, the Stevens report said, we care about universal service and then it disappears from the stage. Go back and look at the record. There's almost no examination of the implications for universal service up to and concluding the last official document which said, boy, we better think about this and there it is. I guess I would think that there's been lots of examination of the issue. I think that there has not been a, I mean, the conclusion has not been to applying universal service assessment to standalone, to standalone, I'm sorry, to integrated offerings of internet access capability, but it certainly is something that's been examined. Let me try and rephrase and redirect a little what I think Mark was going. Should this be predominantly a competition, telecom policy debate or should it be broader? I mean, John, you made reference to this sort of very broad kind of two categories of regulation or not, which clearly sweeps in a lot of other kinds of issues. Is that the right way for us to be framing it? Is Mark right that we should take into consideration his broader concern? You got it? Oh, I think so. I mean, I think that's an argument that you do need to evaluate the full panoply of provisions and effects on consumers in the marketplace that will result from any attempt to change the definitions or how you apply the definitions. So in other words, what I'm saying is the court decision, the Comcast case that came out is understandable that the court was only considering that particular facts of that case brought before it, and that's certainly what courts do is evaluate only that, but the danger of that court decision is that it did say that it would make this evaluation on a case-by-case basis. And so that sets up a process to continue to have to go back to the courts every single time there's a consumer protection issue or an issue with disabilities or an issue with all the other provisions that Mark just mentioned have to be reevaluated on a case-by-case basis. Well, that's a tremendous waste to society as a whole because of all the litigation costs that are incurred. I think so what I'm trying to say is that is an argument for the FCC. I think trying to look at the whole piece of this and all the different pieces together in a more comprehensive way to come up with an approach to these regulatory definitions in a way that's going to make the most sense looking across the board at Universal Service and Disabilities Access and the marketplace of all these different kinds of marketplaces. Jessica, do you have any sense of the extent to which those other Universal Service privies and so forth that will be part of the process on the Hill? Yeah, I think Mark's point is that classification has consequences and he's right. In terms of a legislative perspective, perhaps the interest is less strong and precisely which title of the statute these services fit in than whether or not we create a structure that is capable of delivering the public goods that members care about like for instance, Universal Service privacy protection ensuring that the disabled have access to baseline of services and the like. So those priorities I think will be more prominent in the legislative process than they've been in the recent regulatory discussion. Other questions? By the way Kevin just one other comment if I may just as an exercise I think it's kind of fun to think back as we're looking at these issues not what the 1996 Act contained but what the 1934 Act was all about. Now go back and put yourself in the minds of the legislators who are drafting that Act which set out the broad parameters of how communications policy should be regulated or not and it's an interesting exercise and interesting thought process. Art Brodsky from Public Knowledge and I've actually done that. I don't know if you remember Max Paglin's book that he came out with some years ago which reprinted some of the hearings from the 34 Act and some of that stuff about getting telegraph services that's rural areas and how it was too expensive and they couldn't possibly do it and talking about reserving public interest spectrum for people other than broadcasters and it just carries right through. So I've done that exercise and it's a lot of fun but there wasn't a question. The question is, I'm fascinated by this tension between on one hand principles and on the other hand let's call it marketplace. On one hand you have sort of a relatively timeless non-discrimination principle called the 201202 part and then Jessica you're just talking about the need to make sure investment isn't hampered. How do you, does one of those trump the other? I don't think so but candidly we'll acknowledge that it is difficult to try to reconcile the two and at least on the Senate side add 100 senators in and it's even more complex. Which is one of the reasons that a lot of these issues do get deferred to a regulatory agency with unelected individuals who can contemplate and think a little bit more deeply about what the right structure should be but we may be reaching the ends of how appropriate it is for them to continue to do that under the current statute. I guess we can go back to Chris and the sky I don't know if I just want to ask. Okay and then you'll have. I'll ask a history question then and John you were there for when Chairman Knard decided struggled with this question that we're struggling with and you said it always comes back. Can you give us more color on why he thought it wasn't a good idea to apply title two services to information services? Well rather than a comment on what Bill thought or not thought since I think the FCC rules don't allow me to do that. And I think what's laid out in the Stevens report discussion really is a, and you really see through in some of the findings in section 230 that there was a predominant notion that the internet should be unregulated. And that sort of overall impulse was certainly in the air in 1989. And it wasn't, there were good reasons behind it some of which we've talked about earlier but also because the market was evolving incredibly, the marketplace was evolving incredibly quickly. And the choice at the time was it was not to go down the road of classifying all transmission as a title two service and then forebearing. And there were a lot of different types of transmission that were being offered even then as non-common carrier forms. And I think that that's, you have to go back and look at that as historical context but it's also, no decisions are made in a vacuum. We did not come up in a world where all transmission was treated as a regulated service and we also did not come up in a world where Congress rewrote, unlike the EU where there was earlier legislative attempts to try to create a more harmonized regime, that didn't happen in the United States. Yohai, I wanna make a question and then we'll get back to you. So just trying to capture a little bit of what I heard that I think is useful to focus on and then focus you on the one thing that the fifth part of what Mark left out which is competition and what's changed. If I read John, the story you're telling, John Wienerhaus, that I'm of a trajectory of a basic problem which is to say you have components of the service that are not competitive because of entry barriers, because of a set of classes of stable problems and components that are competitive, enhanced services at the time it was also a CPE, it was also long distance and trying to solve that tension between competitive and uncompetitive as a way of not that there's a basic long-term tension between non-discrimination and non-regulation but rather that in order to get a well-functioning market you need to take and separate out those parts of the service that are hard to build a competitive market on and those parts that are easy and try as best you can to narrow your regulation only to those parts that need it in order to allow competition and move away from the others. In that regard, like electricity, we've got generation, we've got transmission, we've got toasters, they're all connected to the electrical system but we understand they all use electricity but we understand them as having different market proposals. So where I see John Nakahata going into the details of what the argument was here and what was there, it seems to me that there's a basic line in the historical line that you're drawing that there's this genuinely difficult set of markets to deal with that combine really stably stubborn problems that aren't amenable to competition and things that are and that the role of an expert agency unlike something that stands on star decisis is to look, okay, we tried this for a decade. Did it work? Didn't it work? What percentage of the market has real competition? What doesn't? Let's go back and look at it. That's the trajectory that I'm hearing here and I wonder whether you agree. Let me see if I understand and reinterpret or maybe put it in my own words. So it's very difficult to draw that line, yes, between the two types of markets and the two types of services and categories that we're talking about. And no matter where you draw the line, there are gonna be some really close calls and judgment calls and people are gonna complain on one side if they fall on one side or the other of the line. And those people will say, oh, this regulatory thing doesn't make any sense. But I would submit, the fact that it's difficult to draw a line doesn't mean that you should get rid of the line. What that means is that you shouldn't get, you wouldn't wanna, therefore, regulate everything and you also wouldn't wanna deregulate everything because if most observers, I believe, people can correct me if I'm wrong, but I think most observers believe that general computer two, computer three decisions were very successful in promoting the internet and promoting the availability of enhanced and information services because it sets some basic rules of the road that all entrepreneurs and internet providers could get access to the basic network and then build upon it with new and innovative services. So I think that general framework was the right one. Now, where the exact line you draw is going to be difficult and going to lead to litigation and debates and frustration for those who are right on that line. But in general, stepping back, looking at the big picture, I think there is value in drawing a line somewhere and I'm not an expert to say exactly where that line should or shouldn't be drawn, but there does seem to be a value in drawing that line. And I think what you describe is the general regulatory or deregulatory project. It is trying to distinguish areas where the market functions and delivers the social goods that you want and some areas where it doesn't. Classification, of course, is a clumsy tool in that because at least in terms of the way the FCC statute or the Communications Act works because it's a classification generally tends to be an on-off switch that can only be mitigated to some extent with the application of forbearance. I think the other part of that reality though is that the FCC and regulators in general have had a hard time dealing with oligopoly competition issues rather than monopoly competition issues. And so the regulatory tools were crafted really with the idea of monopoly in mind and don't necessarily work as well in oligopolistic settings. The good example of this was in the long-distance industry where people were concerned at one point about having only a few large players and having people be able to use the tariff mechanism to price signal and raise prices in the marketplace among a couple of players. And in fact that led to the FCC abolishing the tariffing mechanism for the long-distance market. So I mean it is the means by which you control market power from a regulatory standpoint I think are not as clear in when you're dealing with oligopoly. Let me just try on a follow-up and then we'll get to Rick. It would seem to me though at least as a purely descriptive matter the exercise that the commission has been undergoing the last 14 years so on this issue is predominantly this classification question. Is it's in one bucket or the other? And that gets to these questions that you described John about the worry about putting it in the regulated Title II bucket. Whereas it seems like now both the approach that the Martin commission took in the Comcast decision of trying to construct some theory under Title I and the one that Chairman Genakowski has proposed the so-called third way are attempts to segment to do something more like what Yochai is talking about and say this is a category of things that we should apply one set of rules and this is a different category of things. Does that sound right in terms of something that's at least different in the nature of the enterprise now versus over the historical period? I always love to sub the panel when I'm moderating. Kevin, let me, I'm sorry, I didn't quite understand the question if it could be rephrased. The question is, is it fair to say that most of the effort at the FCC, most of the fight on broadband internet regulation has been about either or. Title I, information service, largely unregulated. Title II, telecommunication service, traditionally regulated. Whereas now at least the effort over the last year both under Chairman Martin and under Chairman Genakowski seems to be about can we piece out elements of either of them based on market conditions and dynamics that may suggest something more nuanced? Or was that what they were trying to do all along? That's not the panel. All right. I mean here, my view is that that's what people have been doing all along. You see it in, like I said, Senator Stevens and Burns talked about use of Title II and forbearance. The active debate at the FCC at the time of the cable modem decision and the wireline broadband internet disorder was a debate between non-regulated Title I and Title I plus some restrictions and information and Title II with forbearance. So I think it's just, we may be in the third repeat of the proposals rather than really, I mean, with some variations at each phase so it's not like everything's completely the same. Okay, let's take one or two more then wrap up, Vicki, I think. Much of the focus is on, I'm sorry, just an answer yourself. I'm sorry, Rick, with Google. Much of the focus this morning has been on kind of the market power or market concentration type analysis as the basis for drawing lines. I wonder since just the panel looking at history, the other prongs of common carriage I think maybe holds some relevance as well namely if you kind of look back and the writings of people like Brett Frishman and Barbara Cherry and Susan Crawford, there are other elements here in addition to market power. One is this notion of sort of an essential input whether it's transportation infrastructure or communications infrastructure going back hundreds of years. That's something that the courts and the regulators and certainly Congress have found to be important considerations. The other is the use of public resources, rights of way, pole attachments, spectrum which of course is a national resource. To what extent do you think either this FCC or a future Congress would or should take these kinds of considerations as they're looking to debate the question of how to draw these lines? Rick, those are all key components of the analysis. I agree that they should be factored into the FCC's review. I mean, this is I think another reason why it's helpful to have a comprehensive look across the board at all of these factors. The common carrier functionality, I mean that whole concept is really unrelated. The duty to serve everyone is really unrelated to your market power position. I mean that's tied to if you're offering yourself out to the public, then you have these certain obligations to serve the public in a discriminant way. That's whether you have market power or not at least according to that my understanding of that historical line of thought and that basic principle. So it's not just a market power analysis, you're right. Market power analysis may have more to do with once you define it and categorize it, okay, how much of the regulations would apply to you in that category and you can argue that you can adjust the amount of regulation based on the market position. But also the other factors like rights of way, use and spectrum use, those also have to be taken into account as well. All right, let me ask all of you one final question and then we'll wrap up this session, which is, so we've been talking about history, let's flip it around. If we get back together again in say 14 years, will we still be having this debate or is there hope that that will be to another stage? Depends on how successful Jessica and her boss are. As a congressional staffer, I'll just say that's above my pay grade. Well, you've heard me say this earlier on. I do think we're likely to be revisiting this question for many years to come because there are two very, very significant important principles that are at stake here and both of them are very valuable. They've been with us for many, many years and they're likely to continue to be value to us many years in the future. I know in the 1996 act what we were hoping, it didn't turn out this way, but what we were hoping is to create such a much more competitive landscape for basic telecommunication services that the kind of debates we're having now would be much different today and in the future that you wouldn't have this market power would not be as much of an issue and maybe we'd only be thinking about the issues that Rick just mentioned and Mark just mentioned before, but we're not in that universe. So, predictions 14 years from now, will we have a more competitive marketplace than we do today? Well, I hope so, but I'm not ready to guarantee that. I tried that once 14 years ago, it didn't work. All right, well, we'll bring you all back in 2024. We'll book this same room if it's still here. Please join me in thanking the panelists for this great discussion.