>> host: this week on "the communicators," an update on internet regulation, we're going to be looking at the court case that's currently being decided and get an update on what it's been like since the fcc decided on net neutrality regulations. walter mccormick, president and ceo of u.s. telecom, and

chris lewis of public knowledge, he's the vice president there. mr. mccormick, in the year or so since the fcc made the decision on net neutrality, how has that affected your member companies? >> guest: it doesn't affect us operationally day-to-day because the open internet standards are standards that we agree with; the no blocking, the no throttling, the no paid authorization. we have supported their adoption as regulations under 706 authority, we support their enactment into law by the united states congress. but what we objected to was the way in which the fcc went about the open internet standards i. adopted them as regulations pursuant to common carrier authority. this is a 19th century form of regulation, originally applied to common carriers like railroads, trucking companies and airlines.

it has been repealed for all of those traditional common carriers, and we don't think common carrier regulation is the right form of regulation for the 21st century internet, so that's why we brought the suit. >> host: and some of your member companies include verizon, at&t. >> guest: frontier, and a hundred smaller companies. >> host: chris lewis, how has the telecom world changed in the past year? >> guest: well, we think, you know, like walter said, that the rules were common sense, that there was broad agreement on the general idea of open internet rules, and i think it's brought a lot of confidence from consumers that their rights online will be protected, you know, given the four million people that weighed in on the proceeding. there are a lot of folks who are watching this and wanted to make sure that the internet remained open and that innovators were able to innovate without having to ask for permission. and now they've got that

assurance, so that's a good thing. >> host: do you think if the ncc had not done what it did last year, that it would be any different today? >> caller: it could be different. there are a lot of new and different, innovative business methods, and they need to be tested against these basic open internet principles. if you didn't have rules, then they couldn't be. so that's why you need high level rules of the road. it's something that's been talked about for over a decade now, and the 2015 rules were structured in a way that they would be able to pass court muster, you know? we saw rules from 2010 overruled, and we saw the court basically say that the only way to make the strong, robust rules that consumers were demanding was to do it under reclassification of broadband as a title ii or common carrier service. and since the court pointed in that direction, that's the direction i think the fcc ultimately decided to go in

based off of that public ruling. >> host: what is public knowledge? >> guest: a nonprofit public interest advocacy group that's been around for 15 years or so. >> host: concentrating on intellectual work and copyright, things like that. >> guest: that's right. >> host: let's bring in alex byers of politico. >> chris, i want to start with you. something that sort of lived at the heart of what i think walter was saying is something we've heard from a lot of conservative groups which is that the push for title ii regulation, these stronger regulations or the basis wasn't even about net neutrality for a lot of the public interest groups, that what they really wanted were some of the things that come along with title ii; the fcc authority to regulate privacy or stronger universal service capabilities. what's your take on that? i mean, would you guys be fine if congress wrote a law that applied these, basically, agreed-upon rules but didn't go

with title ii, thereby sort of stripping the fcc of some of the things they have the authority to deal with thousand? >> guest: we've actually testified for the senate talking about the importance of making sure that when -- that if congress were to legislate and basically write the rules into law, that they need to be careful about unintended consequences, that there are basic values around communications networks that need to be protected. and some of those values include privacy or universal service. or insuring that the network works seamlessly which goes to the issue of interconnection and competition. >> sure, sure. >> guest: and it would be a shame if congress enacted a law to get to net neutrality that precluded the fcc from actually dealing with those important issues. >> sounds like it's fair to say that public knowledge, while thinking that title ii is the best way to solve the issue, also appreciates the fact that it also sort of bolsters some of these traditional consumer

protection components that go into telecom regulation. >> guest: sure. and those basic core values have been affirmed at the fcc in a unanimous vote by the commissioners. so, you know, we think that's a great place as an expert agency in communications networks for them to actually figure out the right way to apply them. >> got it. walter, let's talk about the lawsuit and in particular the oral arguments now that happened in december. the room, the courtroom was packed. i was there, i bet you guys were probably there as well, or if you weren't, you've seen the audio or the transcript. give me a little bit of your thinking how that went down. i think it was or sort of very interesting to see that the judge, who had written a great deal in the previous order that sort of started this second round or third round even of the debate, was sort of leading things again this time. i mean, i guess the basic question is based on what you saw, do you think that you're going to be successful in throwing out the fcc's decision

overall to reclassify broadband providers as a title ii service? >> guest: we're optimistic. optimistic because, first of all, the court understood that nobody was opposed to open internet standards. so there weren't even any questions about whether or not there should be open internet standards which i think really reflects the consensus. the court focused in on an issue of the way in which the fcc had gone about it. and by virtue of the questions the court was asking, we felt that the court was really delving into the central issues. first of all, does an agency have authority to just determine what the scope of its jurisdiction is going to be, or because an agency is a creation from congress that's really exercising delegated authority from the congress, does it need to get that delegation from the congress of the united states? so the court was asking questions like, well, the statute itself speaks in terms

of telecommunications and information services, and you as an agency have previously defined the internet as an information service. the court asked questions about the fact that the statute speaks in terms of the public switch network, and that's different from the ip networks. and it talks about the fact that one judge mentioned, you know, when you're on a public switch network, you don't have the ability to just simply call the ip network and vice versa, so how can you treat these as one network? the court asked questions related to, well, what really would constitute an information service if broadband internet access, which is specifically mentioned in the statute as an information service, is suddenly declared not to be an information service. so we felt that by virtue of the questions that the court was asking, the court was zeroing in on the real, key legal questions

in this case and it's cause for optimism. >> now, that's interesting, because i think based on what i had read after the case, a lot of folks thought at least two of the three judges were going in the other direction at least in terms of the broadest question, can the fcc reclassify broadband service as a telecommunications service. but, obviously, there were more questions below that. one of those being something that you just alluded to, the mobile issue with the public switch network. tell me a little bit about your thinking about how that went. and there was also this issue of whether the fcc has properly dealt with interconnection issues. i think those were areas where the judges were a little bit more skeptical of what the fcc had presented. do you guys feel like you're in a stronger position on mobile, for example? >> guest: at the end of the day, the statute, we think, is pretty clear. it defines commercial mobile services with great specificity. it defines information services

with great specificity. it defines what a telecommunications service is. and it specifically says that information services include broadband internet access. courts are, when called upon to engage in statutory construction, tend to look at the plain meaning of the statute. and when you couple the plain meaning of the statute with the fact that the fcc for well over a decade had indicated that these services were information services and not telecommunications services, we think leads to a pretty strong case that the fcc cannot simply call something that was one thing, you know, information service and suddenly decide we're going going to call that another thing simply because we can exercise jurisdiction -- >> sure. don't court, i mean, i'm not a lawyer, but don't appellate

courts tend to defer to agencies a fair bit? i felt like watching those arguments they had, the court was giving them a little bit of leeway there. >> guest: courts do offer deference to agencies within their area of expertise. but that deference is not unfettered. >> sure, yeah. >> guest: and it has to be exercised in a way that is consistent with what they call reasoned decision making. and that's because agencies are exercising authority that is not their own, but authority that has been delegated to them by the congress. >> host: chris lewis, what do you hear? >> guest: we actually felt very confident about the overarching question of reclassification. walter talked about how for over a decade now, well, up until the fcc reclassified -- [laughter] they had approached broadband as a title i or an information service. but we had the internet before that.

and during the first decade or so of the public internet, it was chat tide as a title ii -- classified as a title ii service. we felt very confident when we saw the judge asking questions about whether or not this had been settled or not. >> host: dsl was a title ii service. so there's been a little bit of both sides here. interesting. stepping away from the legalesee for a second, it seems over the last few months and really in this month i think one of the key net neutrality issues in practice has been the issue of zero rating which is, obviously, exempting certain traffic from day caps or data plans, those consumers aren't charged for them. it's a very interesting question with a lot of fierce debate on both sides about whether this is either a net neutrality violation or an awesome consumer benefit and whether it's something that would be good for

the internet and internet users going forward. what is your take on that, chris? i mean, regardless of net neutrality, i guess, is this going to be a good thing if zero rating becomes common? >> guest: you know, i think we're watching it closely. we've written on zero rating and basic data cap, data management practices. >> sure. >> guest: and in studying it, we felt the fcc needed to take a strong look at it and learn more about how companies are applying these practices. why? because we fear that it can be applied in a neutral way, or it could also be applied in a way that's anti-pet ttive ask and harms -- competitive and hams innovation -- harms innovation from materializing. we've seen some of the plans over the last few months, and some of them really give us pause. we're looking at the one from comcast and the one from at&t especially where those two are

not necessarily -- well, comcast has admitted they're not doing it because they have a congestion problem, they're just choosing to favor their own content and zero rate it while others may not be. >> host: so should a telecom company be allowed, in your view, to give unlimited online ability to a customer? >> guest: so as far as unlimited data, we want to make sure that those sorts of "free," you know, when we're talking about unlimited data and zero, we're talking about free data, that it's done in a way that doesn't preclude other new innovative services from coming along. so if you're going to apply it, let's say, to one video service, why not apply it to all video services? if the real concern is how you're managing video traffic, and i'm using video as an example because it's one of the

high band bid uses online. -- bandwidth uses online. >> guest: we believe the fcc's role is to protect the consumer, so this should be looked at from the standpoint of the consumer. the big question before the fcc is this: who should bear the costs of the internet? we believe that all of the costs should not necessarily simply be born by the end user and that the end users have to pay a rate that maybe doesn't reflect the use that they're making or the value that they're receiving. so, for example, why should a social, a wealthy social elite who has multiple hd televisions and is simultaneously streaming three channels of hd-tv to their home, why should their use with be subsidized by a low income consumer who wants to have internet access for e-mail, to

be able to allow their children to do homework and to be able to have health care function? we think that the fcc needs to be very, very careful here in making sure that the market is allowed to develop in a way that allows the greatest benefits to inure to the consumer. >> host: and you're shaking your head yes. >> guest: i think the high-level goal that walter's talking about is true, and i think that's why you have an expert agency to look at these specific business practices and apply them. you know, we're worried about consumers. you know, that's what drives us. and we don't want -- while we want consumers to be able to get the best deal they can, we also want to make sure that everyone has access to the great opportunities that the internet offers. and when you start to see a two-tiered internet created because of any competitive way that data caps and zero rating is applied, that causes concern, you know?

talk about access for education, for example, and the homework gap. a lot of the new, innovative education tools that are coming online today are video-based tools. this allows special education students, other students that need extra support to preteach -- prelearn and relearn content. if students are worried about a data cap because some video is exempted and other video, say their education services, are not, that's a concern. this is the sort of example that we're looking at as opposed to the broad, you know, goal that everyone has, you know, the most affordable broadband that they can. you know, how these practices are applied can impact people based off of limiting what services they can use. >> and, again, jumping back to not the rules or the legal theory behind the rules, but

what is happening or what would be happening in the real world. walter, you were talking about we generally agree on these principles of no blocking, no prioritization. at the same time, if i remember correctly when the last round of appellate case was happening, verizon v. the fcc, the lead plaintiff said but for these regulations, you know, my clients would be looking at these types of arrangements. so doesn't that sort of take a bite out of the contention from broadband providers at this point that they have no interest in pay prioritization or blocking or throttling? >> guest: no. i think because the fcc has adopted common carrier regulations and because that is the most pervasive form of economic regulation, it means that the fcc has basically

sorted authority over every aspect of our business and has even indicated that to the extent the companies want to engage in innovative offerings, they can go seek advisory opinions from the enforcement bureau. this is exactly the kind of mother may i approach to innovation that we wanted to seek to avoid with regard to the internet. we think it's fine for the federal communications commission to come in where there are identifiable harms that are leading to anticompetitive abuses or consumer injury, but it's another thing for the federal communications commission to be involved in sort of a central planning of the economy and to have to spin out hypotheticals and what-ifs with regard to every new business application that is being offered only when it is offered by an internet service provider. so that's really the concern. if it had just been the bright

line rules, if they had been adopted pursuant to 706 or as an alternative -- >> so the bright line rules are good even though there was an indication previously that maybe some providers would be looking at things that potentially could have run afoul of them? >> guest: we're comfortable with the bright line rules. >> okay. chris, any thoughts? >> guest: well, the bright line rules that were created in 2010 were overturned, and i think we all wanted bright line rules. >> sure. >> guest: so, you know, you have to get them in the way that's legally possible. so, you know, we support it going forward with the rules we have. >> got it. let's turn away from net neutrality to an issue that i think actually both of you probably, if i've read the filing correctly, agree on to a fair extent, and that's thish lieu -- the issue of lifeline which the fcc is looking at modernizing sometime in 2016. i was looking at the data the

other day and found that there's about 13 million people or so, i might be a little bit off there, that are currently enrolled in lifeline, but estimates there might be as many as 40, 45 million people eligible for the program. why are so many people not taking advantage of what would seem to be a pretty useful subsidy for them, and is there anything that you think the fcc can do to make it more attractive to them or even, for walter, i guess, your own organization? i'll let anyone take that, whoever wants to go first. >> guest: so it's difficult to be poor. >> yeah. >> guest: and when you're poor, one of the things that's particularly difficult is having to comply with all kinds of paperwork requirements to take advantage of every program that's out there that's aimed at providing you with some ability to have sustenance. with regard to the lifeline program, today even though you qualify for other low income

programs, you have to separately go prove your qualifications to the lifeline provider -- >> sure. >> guest: -- whether that's wire line telephone company, wireless, cable company. we think it ought to be the federal government that decides whether or not you qualify for this program. and that would help streamline it for poor people. >> sure. chris? >> guest: right. i think we both support the program. the question is how do we make it most efficient for folks who have to go to multiple programs like walter said, how do we make it efficient for the company that are providing the service? and so we're glad that the fcc is looking at different options in the record to figure out how to do it in the simplest way. but also to look at while you try to make it simple, while you try to take some of the waste and fraud out of it, how do you extend that to broadband? that's really where all of these services, voice and video, are

converging on to. >> host: i think there's another issue you both agree on, and that is the charter/time warner merger. chris lewis, why is public knowledge against that? >> guest: well, we've raised concerns about the increasing consolidation of the cable market. you know, the charter merger would make the company as large as probably the biggest company out there, that's comcast, and yet we still continue to see a local monopoly in the cable market, and that has not improved prices for consumers. we continue to see them go up. and so the consolidation of the market has been a real concern for us, you know? >> host: you've got a netflix or an apple tv, etc., competing? >> guest: well, they compete, but they only compete when they can get connected to the network. and so most people still have to go to that cable company for that access to the internet.

and, you know, most consumers only have access to one or two high-speed internet choices. and if one of walter's companies isn't in that market, then it's just the cable industry. >> guest: let me respond to that. first of all, this is a big merger. we're not opposed to the merger per se, and i would take issue with the idea that it's a cable monopoly. monopoly means one, and we know that today consumers can get video from the cable company, from local telephone company, from satellite companies, they can get video programming over the top from netflix, they can have roku boxes and apple tv. so there are a variety of video choices out there. but here's what we want the fcc to do. we want the fcc to impose some common sense conditions to make sure that the competition that exists today continues to exist in this particular area. the cable industry's a highly

integrated industry. they have cable labs that only does research and development for cable companies. they have cable marketing that only does marketing for cable companies. we don't want to see cable programming that's only programming for cable companies. we want cable programming to continue to be available to other multichannel video providers whether it's offered by telephone companies, satellite companies or other broadband service providers x. in that regard, new charter would have control over a lot of programming. john malone has control over a lot of programming. we want to make sure that there are common sense conditions, sure, that new charter cannot favor itself or be favored with regard to programming. the apparentlies to this merger -- parties to this merger have indicated this is something they would not do otherwise, so we think that the commission should have no objection to imposing these conditions. >> host: walter mccormick, isn't that the same oorgt chris

lewis is making in favor of net neutrality regulations? >> guest: i don't think it's the same argument at all. first of all, i indicated that with regard to net neutrality that we support the standards, that we would support their adoption and regulation, we would support their enactment into law. and this is not a case even with net neutrality regulations where they're being imposed because of some monopoly. consumers today have a variety of ways to access the internet. they are being imposed because it is felt that those particular standards are the way in which an open internet should operate, and i don't know of a single internet service provider in the country whether it's a wireline telephone company, a capable company or a wireless company that seeks to operate a business model in conflict with the open internet standards. >> go ahead, chris. >> guest: by the way, we agree with walter's point about program access.

we think it's consistent, as you're saying, with the idea of letting consumers have access to all the options available online. >> you brought up dr. john malone, cable industry magnate who has a lot of programming interests and also about a 20% or so stake in charter. charter has preemptively offered some concessions that they say would limit to the point of not being an issue his interests in charter vis-a-vis his interests in other programming. does u.s. telecom think that those conditions are sufficient, or would you like to see the fcc go even farther in making sure john malone's hands stay far away from programming decisions? >> guest: we want to see his hands stay very far away from charter's programming decisions. >> and, chris, i don't remember exactly what it was you said, but you talked about charter's going to be almost as big as comcast. i think new charter will have about 19 million or so

subscribers to comcast's 22 or so. comcast, obviously, has a lot of the high-speed broadband connections which is what the fcc, for example, has focused a lot on, connections of 25 megabits or more. charter has a minimum service tier of 60 megabits per second. they bill themselves as a broadband-first company that doesn't have settop box piece or modem fees and has committed to net neutrality. are you still worried that even though they seem to have right now some characteristics we're friendly to on line video, those aren't sufficient to block any harms that might come from future business opportunities? >> guest: we have been encouraged by some of the showings that we've seen from charter. you talked act not -- about not having settop box piece. i believe, correct me if i'm wrong, they're not capping their data right now. >> right. no data caps. >> guest: right. which we're seeing from comcast. >> sure. >> guest: again, we don't know

why, they don't have a congestion reason to do it. so those are encouraging. but there are multiple parts to this marketplace. it's not just the video marketplace, it is the broadband marketplace. and when it comes to broadband, there are just very few opportunities for consumers to get access through their cable company or perhaps one telephone company. >> host: chris lewis, hoe closely is public -- how closely is public knowledge following the spectrum auctions that are happening next month? >> guest: very closely, yeah. we're watching it very closely. we're excited for the opportunity to see some of the medium-sized companies, not the two leading wireless companies, get at quality spectrum to make them more competitive. >> host: are you satisfied with the set-asides? >> guest: i think we'll judge it at the end of the auction, you know? we pushed for probably stronger rules than we got, but we're hopeful that we can get a competitive result out of this.

>> host: mr. mccormick. >> guest: we're looking forward to the auction. [laughter] >> host: how to closely are you following them? >> guest: well, the companies individually are following the auctions. >> host: right. >> guest: so we tend to represent the companies on the wire line/broadband side, so we're not advocates of -- our, so is not advocates for particular policy with regard to the auctions except to say this: it's important to get the spectrum out there, it's important to get the auctions underway, and i know our companies are looking forward to getting on with it. >> host: walter mccormick is president and ceo of u.s. telecom, and he is retiring at the end of 2016. chris lewis, vice president of public knowledge and alex byers of politico. thank you, gentlemen. >> thanks. >> the issue that i'mte