the names of the game today is populism. what is happening now in our country is that the oligarchs are thinking that they are going to use their superior dollars to control the political scene. ..

in this nation of ours we always believed and we believe in the american dream that if you work hard and play by the rules you out to be able to do well that we live in an america where few work hard and play by the rules you will have mounting debt and stagnating wages. this is not the land of opportunity. this is growing to be the land of economic stagnation and being stuck and we believe in our country and we love our country in the thing we love about it is you can come here and make something of yourself and we are living in the days that no matter how hard you work that's getting more difficult every day. ain't that something to start a conversation about? that's a conversation starter. [applause] we have to talk to the people out there. we have to talk to each other and we need to do it in a systematic way. we have got to do it in a fervent way. we have got to do it in a smart way and i'm telling you the wind is at our backs. you see the republicans -- the

conservative side has a very difficult job. they are trying to get the majority to support a program that serves only the 1%. we are trying to get a majority to support a program that supports everybody. they actually have a harder job than us which is why they are extremely comfortable with division lies, deceit and distraction. your problem is in my problem is we think because we are right that we are supposed to win. [laughter] and what we have found out is just being right if you are up against somebody who is utterly ruthless about pushing their program willing to shut down the government for 16 days, willing to raise prices on seniors, willing to cut social security with chained cpi willing to cut meals on wheels, willing to cut head start you were talking

about somebody who has done this and is fine with it then you had better figure you are not dealing with an ordinary kind of person with an ordinary conscious and sensibility. you are dealing with somebody else and you got to be clear on that. but we have an easier job because what we are talking is the good for the most people but we cannot be so naïve as to believe that alone is going to get us the victory we need and when i say victory what i mean is a green fair prosperous america and rest of the world. but let me tell you with the wind at our back we have a lot going for us because people all over this country are on the move. it's an exciting time. anybody familiar with the fact that on may 15, 150 cities saw fast food workers on strike? [applause]

and not just 150 cities with fast food workers on strike, mcdonald's, wendy's papa john's all of them. 30 other countries will strike in solidarity. they were striking in europe. man they were striking in asia. they were striking all over this globe and by the way the other nra, the restaurant, the national restaurant association is all upset about it. they are spying on the rest of the fast food workers. they are probably spying on us now. they are welcome. here is our strategy to defeat you. [applause] and by the way our real strategy is to raise the pay of americans to create working class prosperity. to have in america if you work hard you can do well. that's what we really want and what they don't know is they can win too if they get with the program. but if they stand against that

program and insist that hard-working people work at $2.13 an hour which is what the minimum wage for restaurant workers is, then we have got a problem, right? but if you think about it not only 130 -- 150 cities on the 15th, 130 cities on strike. where we going to go from here? maybe they will strike longer. maybe they will make some real demands on the wage theft of experience. it's not just fast food workers. what about the walmart workers? the walmart workers are striking. we were told that these people are unorganized and oh yes they are. they beg to differ. they beg to differ and oh what about how people in north carolina are responding to the right-wing legislative acts of this oligarch al pope.

this guy at all pope is a billionaire oligarch in north carolina and he basically threw a bunch of money round and got into the republican house and senate and not just any kind of republicans. far right. they cut unemployment. bright -- they try to undermine the vote through voter i.d. and worse and they did a whole range of things and of course as we all know dramatically changed the apportionment in the state to favor themselves and yet you know the people of north carolina are not crying in their soup. there are exley organizing and you have to remember this is the south. this is the south and they had one rally with 80,000 people, 55% of them were white. in the south it's incredibly important because what it means is human solidarity is overcoming history that has divided people along racial lines. this is incredibly important. we all should be really excited about it.

as a matter of fact one of the fastest-growing naacp chapters is an asheville carolina and if you go to asheville you know it's a predominantly white community started by white people. talk to william barber and said hey can we start in naacp and he said i don't know why not and they are growing it and there may consider man's because they know if they need employment in the need to go to the doctor and they need a better lives of your north carolina this thing is spreading to south carolina to georgia and even in missouri. i'm telling you whether it's fast food workers or folks in north carolina attacked by the right-wing swing or the national alliance for domestic workers organizing all over the place, restaurant opportunity centers are organizing all over the place demanding that this sub minimum wage be raised to a livable wage for people. there is something going on and

i'm going to tell you as a politician we have not gotten the memo quite yet. politicians see the light when they feel the heat. what i'm telling you and i just want to add the postal workers know that darryl issa and the folks who want to privatize them have them in their sights. they are doing something about it. they have this move to privatize the post office by partnering with the state and allowing nonsworn nonbackground checked people to handle your mail at staples and postal workers are protesting it. you need to get in line and carry a sign and you couple that with the immigration rights movement we are in a populous moment. the question is what are we going to do about it? i just want to add and build a little bit by pointing out that there are folks who thought they were not political. they thought i'm not into

politics, who are now drowning in politics. they are not drowning in politics but swimming on politics. one of them is a young woman named laguasia. she didn't get enough hours so she took two hours to work in another kfc. she lives in an apartment in new york city with four other adults in several children in an apartment that has one bedroom. she is like look i can't take this. $15 in a union. she has become the spokesperson 22 years old and remember there was a time that no one heard of martin luther king. he was some 26-year-old dude from atlanta leading something they're doing in montgomery. where? montgomery. where? alabama.

zero okay but people figured out after a while. my point is this movement is throwing out leaders all the time. minimum wage had kfc and she chose not to accept the situation and she is leading the chance that we can't survive on $7.25. if you want to see how smart this young lady is check out stephen colbert. she was on his show and he was throwing curve and she was catching all of them because she is smart like that. this movement is throwing up leaders. this movement is throwing up leaders. the president has said some very good things about income inequality and issuing an executive order to raise the pay of people who work for federal contractors. by the way this movement of federal workers supported by the progressive caucus and others have been pounded on this for over a year before it issued that executive order. that executive order was issued based on pressure from people

and on the other hand our president still talks about fast-track authority on the transpacific partnership and therefore even though he's doing one thing on one hand and something else with the other and we have to get him doing the same thing for both. [applause] and so what i'm saying to you is we have the power to do it because we are in this populous moment. we have the power to do it the seniors are waking up as they have seen people try to take their money from chained cpi. young people are swimming in loads of student debt and they know it's wrong because they know their parents before them them to nap is dead and they were able to go to school. people know. the question is what will the leaders do to make the change? that's you. that's us. what decision will we make and

what i'm saying is we have to make a clear demand, a cleared demand that the problem of this economy is not debt are the real problem is we don't have good jobs. we need to invest in this country and we need a blueprint and they plan that invests in the american people so that we can have not just civil rights and economic rights but we can never a prosperity. so we don't write in isolation. rewriter buzzett as the vertus of pretoria process where we have our plans from the progressive unity tell tell us whitney sabina's budget and then we talk with our friends or our economists like the economic policy institute and we talk to our friends at the campaign for and future and their friends from labor and they tell us what needs to be in this budget. we thought this budget which we

call the budget? what does it do? it makes people better off. that's why we called it the better off budget. we have been doing this for several years on the road now because we believe that the way to a better future is to chart a path to a better future in the budget is the way to do that. one of the first thing our budgets does is infrastructure investment. they better off budget starts by creating jobs. we believe that how you first describe the budget is extremely important and where is the republicans are talking about how much debt they have cut and other people tell them other stuff we come out the gate talking about this budget creates a .8 million jobs. that's what our budget does. our budget spends $820 billion as a down payment towards meeting our for structure needs. i am from minneapolis in five years ago we had our bridge fall into the mississippi. 13 people were killed, 100 more people were terrified with

serious back injuries so when we talk about repairing infrastructure guess it will make us more productive and yes it will put more people to work and yes it will improve our economy what it will also improve our public safety so it's a necessity that we do this. not only that the better off budget would create a national structure bank which would receive $25 billion in funding over five years using the funding as money to fund infrastructure investments around the country via loan guarantees. we argue for free trade did we believe american workers can make good products with anybody in the world. you all didn't correct me. fair trade. we believe in fair trade but we don't believe in this. we stand against nafta and nafta on steroids tpp. we also believe that wall street has to do better by america. we have the financial tracking

section tax on stocks and bonds and derivatives. our transaction tax which is called the robin hood tax would $350 billion a year. [applause] and in addition to that, in addition to that what it would do is it would stop this high-speed trading which is wreaking havoc on our economy and extremely dangerous. you will just read the book at michael lewis and it needs to be dug into. obviously if we raise the minimum wage but we also do something more important which is we strengthen labor rights. [applause] if america is a body politic the back bone of that body is organized labor and if organized labor is weakened the whole body is weakened. we have got to pass the employer free choice act. i'm going to tell you something

that's not in our budget but we better start thinking about. we need to make union organizing a civil right. [applause] i'm telling you we need to do this because if you fire somebody who is organized in a union without regard to whether whether -- who wins the union election but if you fire somebody who is organizing, everybody else gets scared and you kill the movement right there. you ought to be able to get a lawyer, sue for discovery get punitive damages just like if they fired an individual female or because you are black or you had a disability. that is what we need to do to really stand up for our rights. our budget restores democracy. we do campaign finance in order to establish representative democracy that truly reflects our diversity but most of all what we do this we stand on the side of working americans who love this country and believe that this country is worth fighting for. in the past our country said

women could not vote. raef americans fought and said we believe in the idea of liberty and justice for all and they established it that way. we have believe they should get a job and even though some people say union organizing should the crime people died trying to get unions. brave people stood up and establish them and then we had a country where we were relegated to second-class citizenship because of their race and we stood up and some people died and some people lost lives but we didn't quit. i'm telling you what we are facing right now is no less serious. the question is are we as serious? i don't believe we are less serious. i believe we are standing on the shoulders of giants and therefore we should see further than king and all the great heroes of the past who moved the progressive ball forward and we have got to live up to the moment we are in. let's go take our economy and our society forward and away

from these oligarchs everybody. thank you very much. [applause] the veterans affairs department inspector general released a report showing us to live as traders at a phoenix va facility significantly understated by three months the time new patients waited for their primary care appointment. the report also showed that 1700 veterans using the phoenix va hospital were kept on unofficial waitlist. while the initial report focus mostly on the phoenix facility is said that the inappropriate scheduling practices are systemic throughout the veterans health administradministr ation. we will hear more about the investigation and inspector general's findings later during a house veterans affairs committee hearing. the committee is called top officials from the veterans affairs department to testify about the delays and revelations that the b.a. destroyed secret waitlist. that house hearing is scheduled

for 7:30 p.m. eastern today. we will have it for you live here on c-span2's. after that we will continue c-span2's book tv primetime coverage leading leading off with author and poet maya angelou who passed away at her home today at the age of 86. we will take a look back at her appearance at the 2002 los angeles times book fest where she talked about her book a song flung up to heaven. later several other panel debates from this year but for some gun control from the annapolis book festival rate than a discussion about charity hosted by the tucson festival of books. booktv tonight on c-span2's beginning at about 9:30 p.m. eastern. the progressive policy institute yesterday took a look at the mcc net neutrality rules that would allow content providers like netflix to pay for fastlink service. the event begins with remarks by ruth milkman the chief of staff for mcc chair tom wheeler

followed by a panel discussion on the proposal. it's an hour and 45 minutes. >> good afternoon everybody. my name is will marshall. i'm president of the progressive policy institute and i want to welcome you to today's forum on should the fcc serve as the internet traffic cop? it's a real pleasure to see so many people here today read frankly we were worried that we wouldn't have some memorial weekend day attrition that i can see that the choice of falling on beaches is nothing compared to taking a deep dive into the intricacies of interconnection which is what we are going to do today. so i thank you all very much are coming out to have lunch in a debate with us on this important topic. the progressive policy institute has done a lot of work as i know many of you know on the

communications bill him in the united states. our chief economist martin mandela's talk about the rise of the data there is an economy which is the prime catalyst of investment ,-com,-com ma innovation and job growth in the united states and has been since the depths of the late recession. we believe that a high-growth economy requires regulatory policies that strike the right balance between really important public goals, innovation and investment in jobs on one side and protecting consumer interests and other public values on the other. ppi has done a lot of work lately on predatory improvement. just last week 20 members of congress bipartisan 10 in 10 republicans and democrats introduced a predatory improvement commission bill that was modeled on a proposal we created to provide a basis for reducing old and superfluous

regulation. we think that today's conversation is in keeping with this desire to create a regulatory framework for the continuation of this innovation that we have seen in the telecommunications internet sector. since the 1996 telecom act the fcc has been striving to get the balance right and we have outdoors and i hope you all get a copy of ppi brief on this topic by ed ehrlich called a brief history of internet regulations. compulsively readable account of how we have wrestled with how to manage and regulate the new information services that have pretty much much replaced old-style telephony. but today our topic is interconnection. sometimes as you all know that's often conflated with the open internet issues, the issues of net neutrality. we tackle those last march at a

ppi forum after the d.c. circuit courts ruling in and of the program called new principles toward progressive broadband policy but that's a separate and distinct issue and not the main focus of our conversation today. the question we want to grapple with is whether the terms by which networks connects to create this network of networks we call the internet up until now negotiated between private parties involved should now be subjected to fcc regulation. we have a terrific panel of experts here to do discuss this forum organized by hal singer. how is a principle at ppi senior fellow and a player coach when it comes to these issues. he's going to be on the panel and is also the author of another highly readable ppi policy brief on mandatory interconnection. should the fcc serve as internet traffic cop which i think alyssa dates these issues and gives us

a close analysis of the social costs and benefits of a mandatory interconnection regime which some people have proposed and offers a very creative alternative to top-down prescriptions were interconnection. all of this is in keeping with the progressive policy institute's central message to our fellow progressives. if we are serious about expanding opportunity and about reversing economic inequality and i think we are, we have to protect the environment for innovation and that is really the background against which we are going to have this discussion on interconnection today. i would like to now introduce, two introductions in reverse order of the folks you'll next be hearing from. i'm going to call in a keynote speaker to the podium in just a minute but first let me introduce the moderator of the show is going to take over after we hear from our keynote speaker

and then i will introduce ruth milkman. larry downes is her moderator today. he has done the job for us before and he's marvelous at it. i think you all know that larry is an internet analyst who writes regularly for the "harvard business review" and forms in cnet and the "washington post" among others. covering the intersection of text politics and business. he's the author of the bestseller unleashing the killer app digital strategies for market dominance which the "wall street journal" called one of the five most important books ever published on business technology and he is a new book out and i want to give a plug for it. big ring direction which challenges the conventional wisdom about disrupting the nation and help businesses deal with it. you will have to read the book to figure out how it does that but i'm sure it's worth it. also buries the project or actor for georgetown university's evolution of the innovation project. it's a great honor now to introduce our keynote speaker

who is ruth milkman who is known to all of you. she's the chief of staff to the fcc chairman tom wheeler book which puts her in the vortex of controversy. i'm sure you have not had many boring weeks lately. ms. milkman is serving her second stint as the chief of the fcc wireless telecom bureau and in between these stents to a special counsel to the chairman for innovation in government. between 1986 and 1998 she served as deputy chief of international and common carrier euro and a senior legal adviser to chairman reed hundt. she was also the founding law firm and served as a law clerk to judge j. harvey wilkinson the u.s. court of appeals with the fourth circuit. we are all fortunate today that in the midst of all the controversy swirling around the fcc she is able to take time out and give us her experience and deep expertise on the experience so without further ado ruth

please take the stage. [applause] >> thank you for that nice introduction and for inviting me here and for organizing such a great group of speakers on this really really important topic. i have been a communications lawyer for more years than i would care to admit it before it became hooked on telecom policy i was an english major and one of the great novels of the 20th century english literature is called howard's and it has a two word preface. only connect. so i'm one of the few people who can honestly say that my degree in english literature action of prepared me for my career at the fcc. since i joined the fcc in 1986

in government and private practice i have been interested in interconnection issues for a long time. .. rks. and network by definition connects, first the network connects component parts to one another. and that forms a whole and interconnection takes this to the next level. so interconnection is just a connection of one network to another to form the network of networks that will marshal reference. these connections and interconnections drive the networks valley. you are the source of the positive network effects that benefit the public and that's why from the very beginning interconnection has been a source of public policy concern. this link between interconnection and success, it's true of all networks. so they think about he ionsof

it is true all networks. so if you think about the nations of railroads is done, which evolved from sure i'm in the mid-1802 regional line interconnecting cities and eventually a transcontinental railroad knotwork, connect in the nation, allowing passengers and goods to traverse the country with unprecedented beet and ease. so to the electric grid. electrical networks in the united states began us in solar systems that service specific geographic areas but with the added in a long-distance power transmission and the electrification of the country in the early 20s and jury, the electric grid evolved and survived for an interconnected network, spanning large distances than allowing the lack of utilities to reap the benefits of economies of scale, increased reliability and thing. the communication networks are no different. the first telephones were not

networks, but individually wired together for private use. use of the device brat, telephones were wired to exchange his. exchange is wired together with trunks. transpired internetworks and eventually networks interconnected to the one the public switched telephone network in which consumers and business have relied for nearly a century. all of the successful network share a common theme. the interconnection that led to the network success was encouraged in intense mandated by governmental efforts and regulatory oversight. but it's important to not have adverse regulatory approaches to ensuring effective interconnection. some have involved a lighter touch. others are relatively hand. often price regulation is part of the package. at bottom however the fact is the knotwork without connection

and interconnections is one that simply doesn't work. disconnect did not hurt do not serve the public interest. flickr set to communication networks, interconnection is part of vice chairman wheeler has called that no are compact, which is that it is network values on which consumers have come to rely and it picked from their networks. the internet's connections that lead to its value as a platform for competition for civic engagement, for economic growth and as the chairman that bad commended manner in which networks interconnect to exchange internet traffic is a part of the network compact. those values that have traditionally covered excess will networks. plus, it is a question that must concern the commission. let me take a moment to unpack the question that is posed by today's event.

whether i is should be subject to the obligations of the kind of onerous the public switched telephone networks. in night viewers can jittery and interconnection to the public switched telephone network. first, think about cpe. her six ba establish standards for allowing technically compatible devices to attach to telephone networks. no money changes hands for competitive manufacturers of equipment can build and deploy an incredible variety of voice and data equipment for use of the public network without seeking prior permission from either the commission were from telephone companies. next, can better long-distance interconnection and access charges. the availability of my career

trent mission equipment after world war ii significantly lowered economic insect logical barriers to entry for long-distance communication. but to compete successfully, competitors like mci needed to interconnect long-haul private lancet at&t's local networks so they could connect subscribers do not strivers and vice versa. in large part, it was at&t's failure to interconnect with such competitors, including strategies involving degradation of interconnection that triggered the justice department investigation that in turn led to the bell system breakout. in 1982, the fcc approved a near post investiture access lan, which was an important component of competition in the long-distance market. wireless carriers space different interconnection landscape. wireless providers have long been operating pursuant to what

are essentially little and keep arrangements for wireless to wireless interconnection and this remark has proven successful for the wireless industry. in addition, decreasing price of wireless to wireline interconnection over time has facilitated growth. are these scripts and wireless. finally when my wireless example and i cannot give you all these wireless examples as that's what i spent most of the last four years doing. take about voice and data roaming obligations for wireless providers, and other form of interconnection, recognizing the importance of roaming or mobile consumers the commission has required a number of years mobile while service providers to provide automatic voice roaming in 2011 and the fcc adopt the rules requiring facilities-based providers of commercial mobile data services to offer data roaming agreements to other such providers of commercial bully breeds full

terms and conditions subject to certain limitations. for both voice and data, mobile wireless service providers enter into roaming agreements with each other so customers will be able to roam and receive service automatically regardless of their location. turning back to interconnection for i is his. what have we and where are we today? as the internet evolves over time, models of interconnection for internet traffic exchange developed including. i'm a paid transmit enemies of content delivery networks are cdn's. witnessing such arrangements, some people said paid transit could be the model for interconnection pricing for all types of communications networks, not just internet background. they suggested the fcc could get out of the business of regulating interconnection and communication networks

altogether. others said that perryman transit arrangements for the results of an initial set of circus dances and were not transferable to other communication networks and indeed might not even be stable for the back phone providers. over the years i think it is fair to say the interconnection between isps has not always been less. in october 1996, 2 large isps cut of their connections for over a week due to a dispute. the winter of 1997, do you not come and the item bbn, key members of the commercial internet exchange left the cix router, which was the first commercial interconnection point. similar incidents continued into this decade. for example, 2005, level three terminated. omission of a cogent ne2000 make him a cogent terminated its peering agreement with talia. we are also aware of more recent disputes that have disputes have erupted between comcast and level three and 2010 and cogent

and comcast and verizon earlier this year. these disputes seem to involve degradation of service is arising from congestion it. point, particularly during peak usage times. as such disputes said that drop, the fcc has received a number of points of view on the manner in which the current traffic exchange regimes are or are not working. so one question might be days. are these disputes just business negotiations that can be resolved adequately in the marketplace? are a morning i never break down of the functioning marketplace of interconnection and traffic exchange on the internet? we don't know the answer are we at the fcc to the answer. review in this in this audience dear. renewed reneged to learn more about how the marketplace is or is not functioning.

so how will the commission learn more? the commission will be revealing a permission that interconnection on the internet in a number of contacts. first come as you all know, the sec recently adopted a notice of proposed rulemaking record in rules to protect and promote an open internet. the question of how networks exchange internet traffic such as through. was outside the scope of the 2010 open internet or drama says that the proposed scope of the 2014 notice of proposed rulemaking. some parties have sought to expand the scope of the 2014 notice to include issues relating to internet phone providers, including issues of traffic exchange such as peering transit and also see the hands. so we are seeking comment on this question in order to hear from those who may disagree with suggested treatment of traffic

exchange and will learn from those comments. in addition, we expect the parties will continue to raise concerns and provide to the commission about isp interconnection practices. these avenues and no doubt others will serve the public interest in gaining a better understanding on the internet today at the moment we have many more questions than answers. for that reason among others i'm very much looking forward to the discussion of the panel today and in the future discussions of these interesting and topics. thank you. [applause] >> thank you very much. i'd like to ask the panelists well, now and located

>> dab. and while we are doing not, let me just tell you i'm not going to get a few long introductions. you're the full bias that do, so i will briefly introduce the panelists once they've had a chance to sit down. john, just hang out here for a second. and while that is happening, what we've done is you just heard about some terms of peering and transit in cbs, interconnection. some of you may be familiar as those for some of you with a lot of technical virgin. we've asked her good friend jon peha from carnegie mellon he university look of his technical background and how they sit in with the architecture. it is a daunting task to do in a short period of time. afterwards, john will join the panels we can have a more thorough discussion about the

policy as well as the economic and technical issues involved. so let me turn it over to john. thank you. >> thank you. so all i will be doing is telling you everything you ever needed to know about interconnection networks in 15 minutes and what the fuss is about. start with the internet feels like one big network when we use it. if that were the case, the enough such thing as interconnection. but the internet has been up work of networks. there are back over 66,000 independent autonomous networks but somehow work as one in each network in areas connected to one or more neighboring networks and not misinformation i said make travel from network to network to network before it finally gets to its intended recipient. for example i have a student right now in uganda and i sent her a message this morning and

amazingly from whatever network i am not, is somehow figures out how to get my message to her in uganda. there are several challenges here. one of them, how does the network i am connected to know which of the neighbors can move that file towards her. that is a technical problem. that's a batting problem. also, not only does there have to be apache uganda, but every network along the way has to be right to carry this information. why should it has cost of this had to be some incentive? the solution to both of these challenges is buried in the magic of interconnection agreements. an interconnection agreement is first to networks come together and agree on the technical and business issues of exchanging internet traffic, including while i carry traffic and if so which traffic like kerry? talking here about internet traffic which is very clearly described his telephone won't even let technology converging

is quite different. this is the internet and these agreements are unregulated and highly confidential. we don't really know what the agreements look like. but we do now they see two basic categories. they are peering and transit. maybe talk a little bit about each of those possibilities. hairiness player networks reciprocally survived connectivity to each customer. in this figure and i should thank bill norton or d from the green network to the blue network says, hey, if you want to talk to any of the customers of the green network, they're over here. i know how to reach them. send me your packets. and a similar announcement goes the other way, from the blue network to the green network. that solves our technical problem. now all the customers of the green network can talk to all the customers of the blue network. similarly in this figure, the

blue network is peering with the red network. so all of their customers can talk to each other. note peer something not transsieve. green and blue are peering, blue and red are peering, but customers of the green network have no way to communicate with customers of the red network, not through peering. we need something else for that. so that technically what is going on. in terms of the business arrangements they vary. traditionally, historically, peering was settlement free. we'll search eve other's customers and no money will exchange hands. that worked among peers and equals, if a small network approach as large network today, that small network will be asked to pay money. that is paid peering. technically the staple but there is money involved. the other arrangement is transit. through transit one network is able to provide access to the entire rest of the internet. some subset of it they agreed to. so, in this case, we have a

customer and a transit provider, the light blue network in my slide is the customer and it is going to the orange transit provider, saying let me communicate with all of the internet. and the transit provider says, here, i will send us announcements, here is every network in the world that i know how to reach. if you want to communicate with any of them, just send me your packets. i know how to reach them. and similarly all the light blue one sends announcement, if you want to talk to any of my customers, here is where you reach those. once those are exchanged, anybody in the light blue network can communicate to anyone anywhere in the world, assuming the transit provider knows everybody. everybody in this case, includes both transit providers direct customers. since this transit provider in my figure is peering with the yellow transit provider, it includes the yellow transit provider's customers too. technically that is what is going on. business arrangements, well the light blue network here is going

to pay, and they are going to pay depending how much traffic they send to the transit network and how much traffic they get back from the transit network. once you put those two types of agreements together you can put, create a little order in the chaos that is the internet. you can create something called a tier one network. a network is tier one if it is able to send traffic to the entire internet without paying anybody any peering or transit fees. is not easy to be a transit network or a tier one network. you have to know about all those 66,000 networks in the world. you have to run a big infrastructure. you have to be a highly reliable. it's a lot of work. once you do this you're in a new business. you can now offer transit services to any isp who wants it for a fee, which is exactly what happens. tier one networks, charge, tier 2 networks to provide transit service. tier 1 networks compete with each other to do this there is a lot of competition.

tier 1 networks peer, not generally, peer with each other settlement free. you see the hierarchy where the red tier 1 networks are connected to each other and tear 2 networks get their transit service from tear 1 and some cases smaller networks get their service from a tier 2. that is the internet at least as we understood it about a decade ago but it's been changing. there are a few new things we need to understand. one of them is tear 2s a decade ago generally didn't connect with each other, that's been changing. more and more tear 2 networks are peering with each other to bypass the tear 1. in my top figure here in the slide, you see, ispa and ispb, both connected to a tier 1 transit provider and all the traffic flowing between them goes through that transit provider and they pay for it. you say what if they were to direct connectly as if in the lower figure? that means both of them would no

longer have to pay transit fees for that traffic. they save money. on other hand there is a cost. they have to pay for peering connection which costs real money. basically if there is enough traffic flowing between them this deal can be worthwhile and they can save some money. increasingly we're seeing tier 2 networks peering with each other. another change over the last decade is the rise of content distribution networks or cdns. traditional way of thinking about this is the left side, the left figure in my graph and my slide where content provider says, all right, here is my content, everybody in the world come get it from the servers but they may have to get it from all the way across the internet. that is slow and inefficient and actually much better if you can have them get that content from someplace close by. so they rely on cdns which are a collection of geographically distributed servers which copies of content can be stored. there are companies like akamai

and limelight and others that offer this service. some build their own networks which can be quite big. of course if you're really big, you don't have to go to a cdn at all. really big might in this case look like google which run as huge, global network, carrying an enormous amount of traffic that they just run themselves and they can interconnect directly with their very large networks because they're very large themselves. so when you put all of that together, if you are a content provider and you want to get your content to say, customers of a given isp, how do you do it? you have three main choices. one of those choices you can build your own big network and you wan peer directly with that isp. second choice, you can contract with a transit provide, a bunch of them out there and the transit provider will carry your traffic from your system over to that isp and reach those customers. or, a third option you can go to commercial cdn and say, you host

my content near those customers. any of those are possible. well, actually whether a cdn makes it depends on your application. for some application this is is great idea and for some it doesn't work as well which is another question. let me bring to the most controversial discussion in this world which is the comcast and netflix discussion. start with a caveat. i have no idea what is going on with comcast and netflix. i read lots and lots of accounts, but everything i read i consider basically from unreliable sources. so i will be a little careful here but it seems that netflix is, for a while, served comcast customers via transit network such as cogent and level 3 and probably a few others and netflix and also cogent were complaining that there was congestion on the transit connections. and after a while we know that netflix and comcast announced that they are in a peering arrangement. we assume it is paid peering. that netflix is paying.

so how do we understand this? how do we think about this? let me first talk about how i think we should not think about this but a lot of the press articles i read seem to. they annoy me and matter of therapy i i want to spread my annoyance on to all of you. there is a narrative that says, if content-heavy network like a network with lots of netflix content peers with an provider like comcast, one group says this inevitably transit traffic a burden on the content provider so the content heavy network should pay the cost of this burden. there is another work that says this kind of peering arrangement inevitably generates traffic that benefits both networks so the peering arrangement should be settlement free. both of these arguments are wrong. you start to see that they're wrong, peering doesn't generate traffic. end systems generate traffic. if i am a customer of comcast and i want to watch a netflix video and netflix is willing to show it to me, the netflix video

goes through the comcast network, peering, no peering, doesn't matter. is the end systems that generate. now there are cases where peering matters but we need to peer a little more closely in terms of how much traffic comcast would have to carry. it matsers if end systems react to congestion in the network. they end the peering path and transit path, one of them is much more congested than the other and that actually seems to be what is going on here, right? what seems to be happening, we think, is that there was congestion in the transit links but the direct peer did not have that congestion. why does that matter? some application it is wouldn't. so happens for netflix streaming if you're watching a netflix video and you're watching high-definition and congestion comes along, that application will automatically revert to low definition. so it will back off because of that, congestion reduces the

load. so, seems by both accounts there was congestion. the interest question is why. first of all, stress, part of the point of story is you can't look at peering relationship in isolation. you have to look at the broader context to make sense of this. the interest question is why. there are some people who say, well, comcast likes the idea of congestion on their transit links. it got companies like netflix to enter into this paid peering arrangement and have to pay comcast. there are others who say that is ridiculous. comcast wouldn't like congestion. note that wouldn't just affect netflix. that would affect a lot of traffic and comcast says this was about cutting out middleman. this was about saving transit fees. if it was about congestion those transit providers were being unreasonable and weren't doing their part to relief it. which of these story is right? i don't have a clue. i have only got unreliable sources here. let me wrap that up. interconnection agreements are a central part of making a network

of network like the internet work. they take lots of forms. there is peering, there is transit, there is paid, there is unpaid. all the result today of private, unregulated negotiations and those agreements are changing. there are new rules for cdn and content provider networks. an increasing number of peering relationships and changing financial terms and the question is why? maybe we'll address that in the next panel. >> thank you. [applause] >> [inaudible]. we have discussion on number of fronts about this before i introduce my panelists, i want to tell you if you're following this discussion on twitter, the hashtag for our event today, is hashtag fc cnet rules. fccentrules. if you have questions and comments as we're going feel

free to do so. i have extremely distinguished panel to talk about these issues from variety of standpoints. i will introduce them real quickly and i will tell you the layout of all of this. i will ask everybody a opening question and ask everybody a closing question at the end. i have about three hours of questions clearly we'll not get to. we'll save time at very end, last 20 minutes or so, for your questions. if you have them, prepare them and we'll get to you when we can. let me introduce the panelists from my left down to the end. first is kevin warbacmh associate professor the legal studies and business ethics at university of pennsylvania of are worth ton school. hal singer, progressive policy institute and principal with economists incorporated. professor jer fahlaber, professor emeritus business ethics an public poll i wharton business school and chief economist of fcc. anna maria coke evacuations.

georgetown, policy center and. -- cove evacuations. kovacs. start with a quick question for all of you. john just explained that interconnection with refers to the back end of internet. currently it is regulated it is by thousand thousands of these private and confidential agreements between network operators, most of which are so far, at least we understand are done even on a handshake basis. not a lot of them are even written down. i will ask each of you very quickly to give me your top line here. what role, if any do you think the fcc should be playing in regulating those agreements? i will start with kevin and go down the line. >> sure. i think he started us off exactly in the right place which interconnection is essential to all communication networks and essential to internet. i think it's a false dichotomy to suggest there is this internet world and which is this

purely private nirvana and there is this communications world and there is heavily regulated area where the fcc decide on every agreement. that was a false dichotomy in the past. it is more of a false dichotomy now as we go into the future. those worlds are converging. we're going into a transition where the public switch telephone network is converging into an ip network. the fundamental question in that environment, is it appropriate to say, there is no role for a public policy backstop? i think that would be the wrong approach. i think for all the reasons that we've heard, interconnection is essential and, interconnection is a key opportunity for anticompetitive behavior. and for results that would constrain the information ecosystem. so i think it is absolutely right to say the fcc should not micromanage the process. for the most part it shouldn't be setting prices in the same way that it has for regulated incumbent telecommunications carriers. but i think it is important to

have an fcc public policy backstop. one of the reasons was the reason that john gave us. we don't know. we're all speculating about this because all of these agreements are totally outside of the discussions that we have in public policy circles. but, all along, the fcc has been there in the background. the fcc never said, we're never going to have anything to do with internet interconnection. what they said was, we belief traditionally this is competitive market we don't need to get involved in. that was a factual determination. the world is changing. >> okay. hal? >> thanks. i look at this from a economic perspective, simply, what are the benefits from imposing mandatory interconnection, what are the costs and i tried to lay those out in a short policy brief that was left with you and very quickly on the benefit side of the ledger, if you force these networks to interconnect you might be able to minimize the amount of disruptions.

certainly disruptions of anyone's service impose as serious cost but in my review of the episodes looking back in history of the internet, we don't see a lot of disputes. he mentioned a few but in fact what struck me with how few there were relatively could have occurred. i counted to six major disputes and only half led to service outage for consumers and other half it led to disruptns of fou read to a service outage work to msn the other half that did lead to disruption done three, or, five days. so that is on the benefit side and the tempting, but it's not huge. if the probability of the disruptions occurring as close to zero, the expect did benefit of imposing connection is small as well. on the cost side of the ledger, what i'm worried is if you start telling networks they must connect, you could upset the make or buy decision. you could start to undermine the

goals of section 706, which is to encourage deployment. some people point to sprint and t-mobile's reluctance to deploy their spectrum into rural areas. they point to the fact mandatory interconnection and data roaming agreements causes them to want to take the buy decision so i'm a bit worried what are we due to incentives. also of these little mild folks and content providers who are now getting a little taste of what it's like to be a blast file access. what i tried to do a slayer concert benefits and i am worried the costs may exceed the benefits and that would cause me to look for something a bit less interventionist or in a sit in and out right and data replication to interconnect. >> i am also an economist. i have an even simpler view then how does here. my question is what works. and to note also the connection is not just a communications incursion here at it occurs in

any business in which the producer of sound and that could be canteens or movies has to distribute some into customers or distributors like markets are comcast. they all do this via voluntary private agreements. all over the economy. what do we see? pc competitive markets. we almost never have any trouble. so my question is do we want to regulate this? this is working. distributing peace through supermarkets works. nobody's calling for regulation of supermarkets because of this. why recalling for regulation? has since changed? you've got 30 years of success of the problems are at most amendments. why are we going to come in here and say the fcc has to look at this. they have to look at these

agreements. we have to see whether they are correct. the fcc has a pretty terrible reputation as an adjudicator. why is that in any sense going to improve matters? it seems to me this is really clear. we have a system that works. stay away from it. >> ana maria appear at >> my background is as a financial analyst at telecom for a very long time. so i have a very long memory about the disputes over access charges can a settlement reached in the international arena, all of that. i think what we have seen in the way of disputes around the internet in terms of disputes the peering and transit are truly minimal. and so, i also calmed down on the side of saying it is essential, but everyone be able to interconnect. but we have now several decades

of history in the internet save private agreements can in fact -- commercial agreements can get a spare and are in a break down, we really should not be intervening because the rigidities of the regulation that into the system would probably create far more chaos than the occasional dispute to have between perkiness. >> john. >> so if i were to create an internet from scratch, i would imagine cases where you have problems, market failure, particularly as some providers had enough market power. i can imagine cases where you wouldn't have any. i look at the internet today and i can't tell. i can see something is changing. whether that's an indication or not i can't tell. to me frs to say the fcc should

be involved, we have to first say there is a problem affecting that they can do something to make it better. in order to even ask those questions, i would like to see more information gathered. i think that is where the fcc can do something constructive to try to shed a little bite to see if there's anything we have to be concerned about. >> great. so that's a fairly wide range of opinions. let's dive into the sit little bit more. so kevin and how, you've got dueling papers that come at this from a different perspective. when they come back to you guys next. kevin, you have great in a couple of papers that interposing the fcc pier would not say how details, but some sec and are both ends, both for voices and make this transition, but you've also said all traffic aside from boys who have a lot of benefits. can you kind of briefly list

some of those benefit that you describe? >> sure. again, i take issue sum up with the notion that this is a purely unregulated space where we're debating should the fcc be interposed? the fcc has been there all along, although it hasn't mandated the interconnection rules we have our title ii common carriers. it's also not ready to hear the fcc. we have lots of room still have a sense assert practices and they are in part to get the data. we need to know more. the data doesn't just appear. the data appears that there's a machine i say the data has to be made available in some way. one of them as formally decided

issues is to stay for dr. chalabi. this is about what happens to the edge of the access providers that were. it is not what happens on the network of a comcast or at&t when the traffic goes all the way. that is that the net is how the site is about. in many ways it the same issue. the question is what they would have been in a dispute that comcast netflix is that comcast the access provider was deliberately degrading netflix traffic in order to extort netflix states have anti-competitive fee. i don't think that is what happened. by all indications i read the same unreliable sources john does. it seems that this was resolved in amicable or reasonable commercial negotiations. but let's say that is that happening. an immensely that is not so different than that tetralogy that they would do the exact same thing to do great traffic and differentiate traffic on its

network. to the extent that we care about the nature of the information environment that were there then, to the extent we care about openness to innovation, that we care and a provider can come on the internet with new services and reach customers and reach everything else without going through gatekeepers they try to keep it out. to the extent we care about that, we need to think about having a regulatory backstop at this private interconnection agreements. it is not just about the disputes. it is do we believe somehow magically it will work itself out given the way the network is changing and that we have providers who have market power and they have market power once a customer chooses them. even if there's multiple choices for isps, when you have large broadband isps, they control traffic to customers. in that environment, to say there is no role for public policy, to say some practices

are beyond the pale i think his troubled son. >> so this cannot but the last conversation. we talk about a regulatory backstop, you talk about the fcc. you don't think there's a roller alternative of the ftc in this process? >> there is a possibility for the ftc. there's different kinds of agencies. the fcc as more of an ability to adjudicate inks in real time and given the nature of the way things have traditionally been done. saying this is purely because of her protection issue, which is what the ftc decided to would be too limited. that's an interesting debate to have. the first principle is to say we need to understand there is the possibility of real harm to consumers and to innovation and economic growth in the market place and making a great discussion. in some of my mouth review

papers i argued for a specific adjudication regimes, happy to talk about that. the first principle is the cancer with a notion anything goes. >> your paper, the one you have today coming election went the cost side of the equation here. can you list out some of the costs that may be endured by the system if we had a more active role for the sec and interconnection? >> i spoke at the principal cost, upsetting the incentive to continue to deplane expand their networks i also mention quickly what happens if google or content provider or a transit provider knows that it has the fcc's backing when it goes into negotiations. and i decided the margin that to make a certain last mile investment in its network. another cost i had, but i'm worried about is unraveling these voluntary agreements we see between content providers

and isps. so netflix and comcast voluntarily entered into an agreement. if netflix looks out the window and see the cogent or level three assistants can get a better deal, you would upset the voluntary agreement. why set up settings when economists? or something efficient about doing a deal that puts cost in the place it should be in my put downward pressure on the price of broadband access. if you tell an isp the only way could raise money is on the backs of its customers come it can make finance transit, can't make money a cdn service. you basically put up or pricing pressure for consumers. >> okay. let me come back to you. say a little bit more, you are clear and firm about your position on this. but other elements go into your thinking to case against fcc above and interconnection is so strong? is it based on economics, experience, both?

>> let me mention for the decade from 1990 to 2005, the sec said everything it could in every possible language that said we will never regulate internet. that's a idea. i'm regulation and deregulation, whatever. we seem to be changing our mind. to say the sec has always been there when they are denying his shading things a bit. i talk about my regulation is generally light touch regulation, which in my view this sort of like the phrase jumbo shrimp. it's kind of an oxymoron. there is such a thing. let me tell you what history shows not just about fcc regulation, but every industry-specific regulations are tied in the 20th century from rabbo's tracks to power et cetera, airlines, what have you. there's two things that happen.

once a commission interested itself in a particular area, puts a sign out this is open for business, which is basically what we did when they did the open internet order. what happens? firms realize i don't get to make money looking to customers and making investments. i make money by going to the regulators and getting them to favor me in disfavor others. the phrase economists use for this is that the team and not as what it does. it opens up with the king. for 30 years, we never had any complaints about interconnection since 2010 we've had a number of complaining. why? open for business. the second thing that happens in this is the most dangerous part of it is even though the commissioners may say we want to limit how much we regulate,

okay, that won't happen. it will be under constant pressure to expand the regulatory red. we seen this happen now. level three and 20 tenths of us try to leverage network and shouting to be beijing and interconnection. at the time quite wisely, no, no, no. that is not network tetralogy. we are not going to touch that.e fcc and network neutrality into in interconnection. into interest in interconnection. how much more do we expect? it will encompass the whole internet eventually. camel's nose under the tent, okay? there's a backstop, light touch regulation. doesn't happen that way, guys. just look at what regulation has done in the past. it's a disaster. if you love the bell system and title ii regulation, you'll love

this with the internet. was that clear enough? [laughter] >> well, we'll let the audience audience -- anne marie, a lot of your work, as you said, is how investors think about the broadband infrastructure. what could you tell us about how investors might respond to a more active role for the fcc this regulating interaction? >> one of the things investors do is look at data, and whether you're looking at data from cisco or telegeography or any number of other sources, what you're going to see is tremendous growth not only in the amount of traffic that runs over the internet, but as john pointed earlier, a tremendous amount of flexibility in the way the internet has evolved to respond to that. and what we have evolved out of the network of networks that

john talked about is really a network of innovators, millions of them around the globe. and what has made all of that possible is the tremendous flexibility of the commercial, very highly informal as someone said earlier, handshake agreements in many cases to change rapidly. and one thing, you know, some regulation has some advantages, but one thing that regulation does not offer is flexibility. once you encode something in law, you're kind of stuck with it for a very long time, for an awful lot of litigation. and so i think a major concern for investors and why i think investors would be very concerned to see government regulation of the internet is that that flexibility which enables the whole ecosystem -- not just the network layer, but

all of the application layers, service and layers above that -- would suddenly become rigidified. anywhere sitting in that ecosystem -- anyone sitting in that ecosystem is going to have to start thinking about how do i make sure that my application sitting up here is not suddenly going to be subject to regulation. what keeps me from being a telecom service when so many of the things out there not being regulated could qualify? so i think what you would find is a tremendous concern about that lack of flexibility, and you would find investment drying up. >> okay. >> john, let me ask you a technical question. so part of this discussion, and i alluded to this earlier when we were talking to kevin, part of this discussion is about voice traffic. so as we're completing the ip transition and moving off of the tdm network and on to all ip networks, one of the questions

is whether or not interconnection requirements on the voice network, how and if those translate to the, to an ip network and whether or not it's kind of just expanding that to all traffic and treating them all under different kinds of interconnection rules. if we were just talking about voice traffic, from a technical stand point is it possible for isps to distinguish voice packets from other packets and subject, you know, just those to interconnection rules? and if so, is there a way of doing it without introducing other kinds of technologies that maybe have some downsides that we have seen in other contexts? >> so complicated question. let me divide that into two cases. there is a voiceover ip service that would broke look to you like a normal telephone. they're never mixed together with other internet traffic.

in the world today, they may actually be converted back to old circuits and then back to ip again and sort of a leftover of the legacy circuit switch days. i can imagine the world where, hopefully, where that sort of art official technology change -- artificial technology change will go away and they'll all be ip packets, but they'll all be voice. and it won't be any different from what it is today. contrast that with something like sciech where the -- skype where the voice packets are all mixed together with all the internet traffic, and now i can't tell it apart unless i use deep packet inspection. interesting question. the first kind of voiceover service is probably going to live on for the foreseeable future even as we go to ip. we will have internet connection that technically is ip but in terms of business arrangements looks a lot like telephone. but the more we mix these

together i'm -- technically, i don't know how we're going to separate them. and from a policy perspective, i'm actually getting a little worried as we start to treat these different types of traffic differently as to why and how we're treating it differently, and if it's because of exerting market power or just normal business. >> yeah, well, go ahead, anna maria and then jerry. >> well, to me, looking at it again from the investment perspective, think about someone who's designing a game, right? i want to invest in someone who's designing a game. i want that kid this his garage to think about the -- that kid in his garage to think about the best possible game, not to think about how to design it in a way that will keep the voice part of the game out of regulation, you know? look at skype. you figure out how to divide voice from the video packets, what's skype going to look like? how are they going to sort of arbitrage the rules to stay out from under the regulation?

that's what i meant when i said earlier that for investors, the huge concern is going to be eliminating a lot of innovation and a lot of flexibility because the energy that now goes into those is going to go into regulatory arbitrage. how do i design my product, my service to avoid regulation? >> jerry? go ahead. >> this was a very interesting point which was the transition from the old public switch telephone network, the copper wires, to eventually to ip. and i want to commend two folks. one is kevin, he has a great paper on this. t i disagree with all his conclusions, but it's a great paper. [laughter] the other thing i want to mention that chairman wheeler has teed this issue up, and it's an ugly issue. i'm glad he did it. somebody's got to look at it because, you know, telephony, wire telephony is in freefall. and we've got a lot of companies that have all kinds of obligations to maintain copper

wire in a situation where that's a dying, dying market. i mean, okay? and we have to figure out how to do that. now, the only thing i don't want to have happen is that the death of the pstm become the tail that wags the interconnection dog. and i think we have to keep our view on what do we want interconnection to look like? do we want it to be title ii regulated, or do we want to continue as a free market thing? and i don't want the death of pstn to really determine that outcome. i think that would be a mistake. >> i don't want to mischaracterize your position on this, kevin, so let he just clarify this. is your view that however the fcc gets involved or more involved or stays involved with interconnection, do you see a distinction between voice traffic and all other traffic in terms of what that regime would look like, or do you see a similar set of rules, similar

set of regulations applying to all of them, and if so, is it 251 and 252 of the existing act? >> there's a set of legacies. the paper that jerry's talking about is called "no dial tone," and the issue there is we have a set of industries that is subject to certain regulation, and the problem is the way things have evolved, that regulation is all or nothing, and once traffic goes to ip as a technical matter, the argument is suddenly all those rules go away. while the industry stays the same. while you still have the existing structure of the communications industry where we have no longer legally mandated monopolies but still some very powerful, very dominant players, and players that understand how to play that regulatory arbitrage game. you can't just say, guess what, ip is magic pixie dust, now you're in the internet, and now it's a get out of jail free card. that's the flip be side about the concern that you're hearing about regulatory arbitrage is an

arbitrage that goes the other way. so as that transition happens -- and i agree with jerry, a difficult set of issues, but one that appropriately the fcc is taking on, and the industry is taking on as well -- we need to work through what the transition looks like. at the end of the day, no, it doesn't make sense to say there's some magic about voice packets that's somehow different than any other kind of packets. at the end of the day, i think we need one interconnection regime which is, again, why i've been trying to argue these distinctions we've historically made between what happens on the pstn and what happens to voice traffic that somehow is not on the pstn, what happens to net flew central -- net neutrality on the network versus off the network, all these distinctions ultimately don't make sense n. the middle there's a lot we have to do to maintain relationships and to manage a transition. i think that's appropriate. but the ender of the day, the question

to maintain relationships and to manage a trend nation. i think that is appropriate. the question is what we want to have. what i am worried about is what jerry said at the beginning. i would hate to see the internet turning to a supermarket that is just selling isps. that is not what the internet is today. that is not the kind of open platform that is generated so much extraordinary innovation. that's a traditional market. it controls was on the shelf space than they have the power of life and death over every purveyor of products by allocating the shelf space. and it is a linear market. this distributor to market. nothing comes back the other way. that is not the internet we've had over the past two decades and that's not the internet we should gather the future. >> the sec can only work with the post-the sec has available by law. we mention drainage and section 251, section 252 good deals on

the network. interesting enough, if that was within a toolset that the ftc was going to use to get more involved here, though it also kind of ask an interesting question about the role of state regulators in that process. i want to ask all of you or any of you that an opinion, is there, legal aside, should there be a role in managing interconnection and if so what should the rule be as distinct from the federal role? who wants to take that on? john has a short and there. >> let me mention one thing however because we haven't talked about this at all. if we have problems with terminating access monopolies, if we have some problem that was otherwise a competitive industry where it might get us a market power committee and urge that is not regulation.

it is antitrust. the same answer applies at the state level. getting the state regulators involved they certainly know what the states are. but can they do something in the antitrust arrangement of state attorney generals take action that they think is necessary because it is the appropriate place to have action if we have whatever problems might arise with interconnection, that is what we ought to be doing. >> ana maria. >> i don't believe that something that you love a of this state has a role in what is global traffic effect to believe. when you talk about 251, 252, you are talking about title ii. as i said perhaps more cryptically earlier, i could very easily see you two coming in under title ii. i could easily see skype coming

in under title ii. i could see also the new services and applications that actually fit the definition when you start missing bride and into that arena. i don't believe it would be very productive not only for those large existing services, which have well-funded owners who can actually deal with, you know, margin of law firms involved. the real damage but the next google that we are all trying to protect in all this discussion that doesn't have that kind -- those kinds of resources that would also find it though fighting in 50 different state arenas and a whole bunch of court. that just doesn't make a lot of sense. >> i don't think either side of this debate once the states involved.

>> goes on the record one way or the other. the mac i would be a complete nightmare. i want to elaborate on something jerry said he agreed antitrust as a backstop is a transit provider for cdm items excluded from a deal for anti-dramatic reasons. we have something else that is important and i mentioned this in the policy brief and that is we're about to get a new set of rules designed to protect as revisers and content providers and add providers and device makers. >> you're talking about the open at a quick >> or want to point out isn't just antitrust we would be leaning on. antitrust plus whatever new protections will, for content providers, including nondiscrimination rule. so to me, they will wait to tee up the policy debate is once you have antitrust and once you have the rules aim to protect content providers, what extra protection are you kidding by overlaying

and interconnection obligations? for me it's a small amount of protection you are buying. the only folks who are really helping out will be a stand-alone transit providers of content delivery networks. it is just not obvious to me what additional protections are needed, what kind of social purpose is served at breathing life into intermediaries and i mean that in the loving sense. i said someone from a level three when i called them intermediary. i didn't mean anything pejorative. whether you're getting the as at the martian? that the key policy question addressed. >> let's be clear. do you see a role for states in terms of interconnection regulation and if not how you keep them out? >> what could states contribute to any aim in this regime are world. i think there is a good argument to a slightly strong oral and universal service because it goes straight to the ground and

they are familiar with variations which still looks as, even in a global internet interconnected world and states perhaps have a perhaps have a role of consumer protection again because they are close to the end users and may have the better understand name and a better capacity to resolve some of those issues. i think in terms of an overall connection regime for the internet or i.t.-based services, there is a reason to say that has to go through 50 state commissions and a me agree that magnifies a regulatory problem. but i think there are some of these issues that come into play where, for example, if you have a rural provider being blocked for traffic not been delivered, a state could have symbolize a fact-finding honor and it spew so they could talk about how to

do that. i don't think that israeli court in these issues were talking about. >> john. >> averting a comment on whether we regulate transparency versus regulation, but assuming you're going to regulate coming that could interconnection between two big networks. each of those networks operated dozens of states and they probably have interconnection points in half a dozen states. maybe a dozen states. if you have a dozen different sets of state regulations, what does that do to interconnection agreements and how can you find with the problem is if you are looking at what is going on in the day. >> i guess to me that is one reason i was happy to see section 706 as sort of the preferred mode in the open internet order that came out, even though title ii is also raise. he seems to me that leads the sec a lot more flexibility in all of these areas in terms of

what it was trying to the not regulation and what it would exclude. it's lovely for kevin to save database role, but not that role. but if you've actually, as they know he has insensibly look at 251 and 252, states initiate staff. states come back and say, wait a minute, i think voip was under my jurisdiction. it is kind of hard to prevent that if you brought in that regime. and what that then means is a very lengthy process during which investors have no idea what the outcome is going to be during which the intention of the companies that are involved is focused on legal issues as opposed to their business. so that to me is the concern. >> did you not to follow up? >> sure.

>> the nose under the camels had. look, set the sec in the 1990s. they didn't want me to the word internet in my title because they thought it would scare people. i got to because counsel for new technology policy. we were dealing with all these issues of voip in 1998, when the fcc put a something called the stevens report, which if you look at it closely says essentially phone to phone carrier voice over ip is a telecommunications service. we are just not going to say that right now because they want to let the market grow. and what, we had open internet host 2010 to 2014 or most of them were overturned by the court to no investment to dry up and all the internet didn't become this regulated thing that everyone's afraid of. it doesn't necessarily go all one way or the other. the one thing i will -- the one thing i learned about in the transition and this gets fairly technical. but the efficient way to do ip

internet connection is with a smaller number of interconnection points. the legacy interconnection of the kind of interconnection on the phone system. you basically have interconnection all around the country. there are lots of companies interconnected in the phone network in lots of different places. look at companies like comcast, the third-largest phone company in the u.s. which other traffic in something like four or five places across the country. that is where we are going to go to and i don't think regulations should stop that. if you have a world where there's hundreds of providers around the country that have interconnection into the network any say guess what it's all gone, if you want to carry your traffic all the way to cleveland and interconnect with us here in this way, have at it. i think we made a transition and maybe states have a role there. but i don't think that inevitably means we'll have 50 sets of rules and states are going to be around because

there's a transition period. >> we will hold you to that. i want to ask him or questions and i'll turn it over to the icann can remind you if you follow the discussion on twitter, the hash tag is fcc net rules. to ask questions before i turn it over. a couple of you have talked about netflix and i want to explore that a little bit. beyond the actual relationship they have a comcast but we know they develop around tdm technology around the world for some years in its recently announced new transit agreements with a number of isps, not just comcast. there has been a lot of discussion that described this as the first of kind arrangement and a dangerous one. i got a hum of the sun article last week from dan rayburn vacated nice chart showing the fall of the main content providers including google, apple, microsoft and all the direct relationships they had wasn't complete, but we isps

and intermediaries -- is there a better word? >> now. i just know they don't like that one. let me ask all of you what you're inspired by. are these kinds arrangements, which are much more wide red and some of the reporters have suggested. are these arrangements dangerous and is the son in the sec should encourage, discourage nothing about? >> i would be on the side of encouraging commercial agreements possibly by simply doing nothing about them, which is the way they've evolved for a couple of decades. another piece recently was google saying they are going to be pairing with netflix settlement free and i think it's lovely. one set of companies reached an arrangement that works for them at reached a different

arrangement. google fiber works for them. you know, that is fine. i don't see any reason to intervene in that. and i think just one piece of data that is at least worth thinking about in this context, which comes from netflix on website is the fact that they had the speed test that they are showing around the globe and there is no place on any isp that they run higher than four megabits per second. that includes google's fiber and fiber all over him and maybe a comment saturday. .. choices that work for it with a whole range of different isps. >> yeah.

>> so i think these sorts of engagements should be encouraged. they're going to happen. and i think as an economist if we see content providers, large content providers basically vertically integrating into cdn networks into transit, they're doing it because they must be getting better terms than if they were trying to go through an intermediary. and so you start to get concerned for the intermediary who gets squeezed out of the relationship whether it's cogent or level iii. but i just want to point out there's still a lot of traffic from small and medium-sized content providers that's going to continue to use these intermediaries. level iii announced in its earnings call that netflix was not even the top 30 of its customers. so in that sense, you know, you think these guys are going to do just fine without the regulator breathing life into their business models. >> yeah. this is a red herring. the rules are not to protect one set of companies. the rules are about protecting the openness of the internet

ecosystem. so here's a data, packet clearing which is an organization that studies things like peering did a study in 2011. they looked at 144,000 peering agreements. they had data from 86% of all of the internet providers this the world. do you want to guess what percentage of them were settlement-free? 99.73%. all right? very, very few had any positive charge of the sort that exists in this netflix/comcast arrangement. well, you might say, all right, that's because traffic would equal netflix is different because it generates so much traffic. what percentage of netflix are settlement free? over 99%. now, i think absolutely that deal with comcast, the deal they have with other parties may very well be spirally legitimate -- entirely legitimate. again, every indication we have suggests that this was hashed out between two parties. netflix got some benefits, and

that's fine. and i think we should allow for that differentiation to exist among companies. one reason, you know, it's funny, for you in the audience, i'm the one farther to the left in this debate, but in the net neutrality debate -- >> not far. >> well, okay, to the left. this terms of i'm the one here that's advocating for some role in the interconnection, and the net neutrality i often find myself on the other side where i'm suggesting the approach that chairman wheeler suggested in the net neutrality or the open internet notice of proposed rulemaking which would allow for companies to do some level of private agreements as long as there was not a slow lane and someone was degraded, i think that's a reasonable approach if it can be done in a way that has a backstop. but it's the same issue. just because two parties sign a contract doesn't necessarily mean that there isn't anticompetitive behavior, that it's not, essentially, an extortion relationship.

we need some he can nhl to get that -- mechanism to get that data to have some sort of backstop. within that, absolutely, go at it. and i think it's entirely reasonable to think there will be some of these deals like the ones that we're seeing that have a price, have a charge, and that's fine. but if we go so far as to say that anything is allowed because we just assume that parties are doing a competitive deal, that's when we have the danger of closing off the openness of the internet and that freedom for innovation that we've all benefited from. and once that's gone, it's going to be hard to ever get it back. >> john and gerry. there are agreements that bring tremendous peering and interconnection agreements that bring tremendous efficiencies. we know that. to pick an extreme case, there are isps in africa that not all that long ago used to have to send a transit provider on a different continent and then back to africa to get to an isp

nearby. that they can peer directly is a huge win. we want to encourage lots of those arrangements. but there is something new going on here which is interesting. a dozen years ago i wrote a paper which i called "the benefits and risks of net neutrality," which i described if you had a broadband provider that had market power, they're always going to be able to exert that in the broadband ma market. but at that time -- market. but there were new technologies that said, well, they could apply that separately in the video market or the web market or the voice market, and if they can openly discriminate, there might be some interesting new problems we've got to keep our eyes on. and i thought that had nothing to do with interconnection. at the time, it did have nothing to do with interconnection. now it's a little less clear. now that we have interconnection agreements just with a video provider, you start to raise those questions again, you know? is this treated differently because this is a video provider that, by the way, competes with

the capable service? i don't know. with the cable service. i don't know. i don't see any evidence of problem. one deal isn't going to make me worry that there's a problem, but it seems to me this is something we ought to be watching and we need a little, again, transparency in peering agreements. >> gerry, go ahead. >> the issue of do these things happen, could they possibly happen, yes, indeed. could we be signing contracts with guns to heads? possible. but there's certainly legal recourse to things like that. we don't necessarily need a regulator to stop that. you know, contract law is sufficiently strong to cover that. so to me, people sign voluntary contracts, end of story, okay? if not, bring a suit. one of the things i want to point out, this should be very clear here. we're talking about disputes about interconnection and what have you, and we sort of think about, well, ken says we're

talking about the -- kevin says we're talking about the open internet or customers, or we're talking about small, innovative providers. we're not. these disputes are between big companies, okay? and many regulatory disputes are between big companies, because they're fighting over the rents. that's what this is about. it's about comcast and verizon and cogent and netflix fighting over the rent. and to pretend it's anything else, you know, you don't understand regulation or business. >> all right. well, let me -- i'm going to stop there. i'm going to ask one last quickie question, and then i'm going to turn it over. so we've been hostly well behaved here, we were talking about interconnection -- mostly well behaved here. >> red herring. [laughter] >> we were talking about interconnection which is the back end and, obviously, you know, the elephant in the room here is discussions about the front end. and we've mentioned a couple times that the nprm that was issued a couple weeks ago on new

open internet rules, one of the discussions that came out of that and that's certainly part of the data collection the fcc is doing is about the applicability of title ii which is the old, essentially, the old pstn set of rules as a basis for the fcc enforcing or, in fact, getting involved in this. i just want to go down the line here, and we'll go the opposite order. this time i'll start with you, john, and come back this way. do you think that this is a wise road to go down, or do you think otherwise? >> title ii for the interconnection or title ii for the open internet? >> title ii for the open internet. for the cus end -- customer end. >> i think i am not yet sure we can achieve what e need to achieve without title ii, so at in this point i'm going to abstain from that. >> all right. ann that maria? >> i think it would be a disaster which is why i said earlier i was glad to see 706 is

the more viable option. i think all layers of the broadband ecosystem get sucked into regulation. whether that's intended or not, it would be done through state commission suits, it would be done through suits of individuals who feel that they can gain something in that process. it's really not avoidable. so i think it is far wiser to start out in a limited way and make, see if that works rather than start out with something that is potentially 20 years of litigation pretty much stopping innovation. >> gerry? >> it's hard to improve on their statement. it really is. >> okay. [laughter] >> i would say this, i don't -- if we have to have something, i think where chairman wheeler is

pointing us to nondiscrimination, and it's hard to argue about that. the only problem i have with that -- again, who'd be against nondiscrimination? but i think it's the nose in the tent argument, and i think that's where you're going which is to say once it's in, it's going to expand, as you mentioned. that's my concern. >> hal? >> so i think using 706 authority is the right way to go. i think chairman wheeler's instinct, initial instinct was the correct one. i think that you have to tolerate some priority deals but police them on a case-by-case basis after the fact for any, you know, if discrimination rears its ugly head. but bringing title ii in is like installing a fire hydrant in the kitchen for the chance of putting out a kitchen fire. it's aesthetically not pleasing, and your kids could flood the kitchen. >> could be fun on a hot day. >> i'm on record, i think 706 can get the fcc to where the it

needs to go, and it's the simplest way forward, and i think it's a reasonable approach. just a couple of days ago there was a decision in the tenth circuit about the universal service intercarrier compensation rules which added further legal sanction, judicial sanction saying that 706 is a viable path forward from the fcc. i think the whole legal debate about network neutrality was really a debate about does the fcc have a leg to stand on in jurisdiction once you're out of the legacy traditional public switch telephone network world, and the answer is, yes, it does. and so i think that's a reasonable way to go forward. but we're going to have this fight tight, as we should, about the difference between that and the title ii regime, what this means to be a public utility, and i hope that the preceding will hopefully get all that on the table. >> well, that was -- i'm not going to argue with a good answer. let he turn it over and see if

there are any questions in the audience. and if you'll wait until a microphone shows up, i've got one on the back, on this side of the room. just briefly introduce yourself and keep your question brief, thank you. >> [inaudible] fcc. we've dope and gave -- done and gave a quick history lesson of all the interconnection disputes that we've had in probably regard time. one that hasn't been mentioned is the retrans issue, namely where you have two entities and a content provider and a distribution entity hashing out the appropriate interconnection fee if you like. it's not quite the same, but it has some of the same hallmarks. and i wonder if experience or success or than success depending on how you see that where there's a largely unregulated negotiation, if that could be seen as a harbinger of things to come, or if is that

sufficiently different that it is not a precedent or an indicator? >> right. so you guys understand. all right. go ahead, kevin. >> thank you. so i was going to -- so that ooh's the answer to gerry's notion that the it's a private contract, we should just let it happen. what's been the result when you have this classic holdout problem with retransmission for video, you have companies doing this game of chicken where they cut off service to customers. they're starting now to block traffic on their internet services for customers, and the ultimate result is programming costs spiral up and up. you wonder why your cable bill keeps going up? one big reason is that the resolution of these disputes over retransmission where the fcc is really hamstrung by the rules and the ways interpreted, the congressional mandate to get involved here. the easy result is these parties eventually agree to deals which raise prices and give consumers

lots of channels they don't actually want. so that's what i'm afraid of. i think that to say that interconnection happens in a private way is great, and i think there definitely should be room for private deals. but if we get to that point for interconnection, i think it would be a real tragic outcome. >> hal and then anna maria. >> i do think there are some lessons from retransmission consent. i don't know if i'd draw the same ones as kevin, but it seems to me you have two behemoths that are trying to cut up the rents. and in that kind of bilateral negotiation, there's very little room for regulation to do something good. we're just kind of putting our thumb on the sale and pushes the pents to the party who has better lob bests. i would -- lobbyists. if you told the content provider in those situations that it had to license its content or else, you know, there was no way it could walk away from the deal, you know, that, of course, would

affect the terms and, number two, it might even create more disputes than you have currently. >> anna maria? >> i think one major difference which is we're still going to have no blocking on the internet at the access level, it's not going to be possible for the access provider to block the content provider. and the -- layers, at levels above that there is a choice of networks for, say, netflix to reach me, right? so if my access provider can't block and netflix can get to me through a whole web of connections all over the internet, how do you get to that problem? >> john? >> of course, i'm happy to say we do not yet see evidence of those kind of failed negotiations on a massive scale. they happened a few times, and that's not good, but they're not happening as often as in this scenario. if they started to happen more

often i, frankly, would first hope that we would see third party organizations -- i happen to be part of btag, for example, or other extra government organizations perhaps playing a mediation role. but we'll have to see if we get there. i hope we don't. >> gerry, did you want -- >> yeah. something that hasn't come up and i think is relevant here particularly when we're talking about the fcc kind of jumping in and regulating here is when we have interconnection regulation of the telephone network which in the old bell system days worked pretty well because it was pretty easy to do, but there was a period when we had things called clix. does everybody remember that? okay. so we introduced a kind of partially competitive/partially regulated network, and everything went to hell in a hand basket. the whole thing about intercarrier compensation, terminating access fees.

i don't know if you remember, clex were positioning themselves in front of dial-up isps. remember no ez? yeah -- remember those? they jacked their terminating rates up very high, and the ilx could not respond, okay? it was a disaster which was eventually fixed in 2004 by the fcc. but, of course, they were the ones that created the problem to begin with because it was partially regulated. okay? partially competitive, partially regulated. what i'm trying to do is to avoid making that happen in the internet, having it partially regulated and partially competitive. because we know what happens this that case. it's a disaster. >> other questions? i have one in the front here. just wait one minute. >> mike nelson with microsoft and georgetown university. is there anything we can learn by looking overseas? the same discussion is starting

to happen in other countries, and i'm just curious if they've got a different way of talking about it or another way of approaching it, when we're seeing a growing number of problems there as well. >> two answers to that question. one is in response to what gerry just said, the disaster of dial-up internet access was when the carriers, the bell operating companies came to the fcc and said the internet traffic is congesting our switches, we need to impose permanent access charges on dial-up internet, the fcc said, no. the result of which was that the internet market in the did not have permanent charges for most subscribers unlike most of the rest of the world. the result of that was the internet exploded in the u.s. far more quickly and developed far more sophisticated ways than anywhere else in the world. so, absolutely, there was arbitrage, and there was rent seeking by some of those clecs, i but there was also a

benefit. and that's one lesson historically. the lesson today on this issue is if you look at oecd papers on this, what they talk about is most of the rest of the world has settlement-free interconnection. and part of that is they have different market structures where they've required open access to broadband providers which almost every other developed country in the world, we haven't done in the u.s. so they have different sores of issues -- sorts of issues. the this includes the finding that patients waited an average of 115 days for first appointment. in light of the report colorado senator mark udall became the

first democrat to call for secretary should sickies resignation. tonight the house veterans' affairs committee is holding yemen waiting times. congressman jeff miller chairs the hearing. it is about to begin. this is live coverage on c-span2 [inaudible conversations] [inaudible conversations]

[inaudible conversations] >> welcome, everybody, to our hearing. tonight we are going to discuss the continued lack of compliance by the va with the subpoena for documents the committee issued on 88. first of want to ask unanimous consent that representative sheila jackson from the state of texas' be allowed to join us. she said she would be a little bit late. i would like task unanimous consent for that. hearing no objections, so ordered.

an interim report that confirmed a complete -- appointments sizzling manipulation than substantiated that the significant delays and access to care have negatively impacted the quality of care at the phoenix va medical center. they have expanded the investigation and has opened cases regarding 42 va medical center's. the allies he clearly found that an appropriate schedule and practices are systemic throughout the va. the allies see and turn findings make it all the more urgent to come clean and fully comply with our subpoena. veterans of this has taken that will not stand for the park cover. further, to fulfil our congressional oversight duties it is absolutely essential to receive the documents we have

requested. the scope of the may subpoena was very narrow and was sufficiently to it -- sufficiently tailored to provide reasonable time to produce the documents. this subpoena simply demanded production by may 1910 volume else and written correspondence sent and received by certain va officials between the ninth of april and eight of may regarding the destruction or disappearance of alternate or antrum waitlists that the phoenix va medical center. my staff was told that the committee would only be receiving a partial response on the original due date and that va would produce additional documents, rolling basis over an indefinite and undefined amount of time thereafter. if this committee were to acquiesce to the va deal of rewriting of the subpoenas terms it would perpetuate va belief thse