>> next on "the communicators," a discussion on net neutrality. ..

>> guest: so we're very pleased and also gratified that this discussion has led us to the right place on the legal interpretation and on these particular rules. >> matt, if i could start with you, i'd be curious to know what you think about judge williams' dissent and what you think of, you know, what the strongest, most compelling arguments that he made were. >> guest: well, having justice scalia's dissent in brand x many times, maybe i'm not the right one. he basically quibbled with the fcc's rationale. he had to concede the that the

fcc had the right to make the determination. following earlier supreme court precedent on that very question. so he questioned the fcc's reasons for doing so, the majority opinion, i think, answers that well, and it's a factual conversation in some ways. that's really not the court's place to make those factual determinations. they have to defer to the agency's understanding of the technology, and we think that's exactly what they got right here in in addition to a lot of other things based on those court cases. >> host: fred? >> guest: i think the strongest case is this is a paradigm shift in the way communications law has traditionally been viewed. it was designed to regulate the monopoly telephone network. the provisions in it were designed to protect consumers from a monopoly. fast forward to the early '80s, the fcc says, you know

what? we can foresee competition developing here. and if we have competition, the protections in the act will be taken care of by market forces. in other words, they have orders that say if there's enough competition, provider can't discriminate or customers would go to someone else. what shifted here that judge williams raised in his dissent is that the fcc didn't really rely on a competition rationale for the rules. so the reason he would say this decision in legal standard terms was arbitrary and capricious is he would say, okay, if you want to regulate broadband providers like you regulate the monopoly telephone network, you need to make a finding there's a lack of competition, because the fcc president says if there's competition, consumers will be protected from discrimination by people switching. and what the court did -- or what the fcc did that the court

approved was, they said, well, we don't need to make a finding of competition, but we note that switching costs are high according to the fcc when you can switch broadband providers, but that entails some cost, and because of that we don't think the competition will protect consumers. that's the paradigm shift. because that's not really a traditional competition analysis. it's something new. so the question becomes there are switching costs in lots of industries. in what other instances are switching costs now a reason to regulate? i think it's an open question. it's an interesting question, but that's one of the things that judge williams focused on. >> guest: yeah. although i think just to go back to where fred started in his first comment, we don't agree this is the first time this court or fcc has cone this. title. -- has done this. title ii rules have applied in competitive markets. in 1996, congress overhauled the

telecommunications act, but it left in place these common carrier protections in legal parlance that protect people from things like blocking or undue discrimination by their provider. the rationale, there is a lack of effective competition, and i think most people will understand they don't have that many choices for broadband as compared to the number of web sites they can visit. importantly, we've had these protections in place where wireless voice for the past two decades, for dsl at first for all dsl offerings and broadband offerings made by phone companies and even throughout this last ten years, smaller telephone companies. we've had them in place for business-grade broadband services. title ii is neither new, nor outdated even in competitive markets, and we're glad the fcc has turned to that understanding. >> turning to the majority opinion, what parts of that

opinion could be used by, you know, the industry to further its arguments? what kind of holes can it try and poke in that argument? you know, when it goes to an appeal? >> guest: yeah. i don't know that it's going to go up further. what we usually see on appeal is to the full circuit or to the supreme court. the supreme court could decide to take a case, although may not do so now with only eight justices, for other reasons if there's some sort of important question of law in play. i'm sure that some of the petitioners, some of the cable and phone companies will be tempted to seek further review. we really don't see weak points on which they're likely to win even in the up likely event -- unlikely event they do get that review by a higher court. >> do you see it as a barrier to getting a review? >> it's not a guarantee, they just don't have that to look to,

to suggest that the supreme court must decide some kind of split between two appellate courts. >> fred, do you agree on that? >> guest: i mean, to some extent. i think matt was pointing out part of what you have going on here is with review of a federal agency decision like this, it probably won't come up on review again, so you only have the opportunity for a circuit split. although, so the court could decide to take it without respect to that. although math's right, they don't have that to look to. much of the opinion references the earlier court decision overturning the previous fc cnet neutrality rules, and i can't remember if that was, if they tried to appeal that to the supreme court. in any event, it doesn't end up there. it didn't end up there. supreme court review isn't a given by any stretch. it's hard to say what will happen. the one interesting issue that i thought in the majority opinion that creates new law and/or is

arguably inconsistent with existing law was their treatment of the first amendment question which isn't entirely clear. but that could pique the supreme court's interest possibly if they want to take that on. what the court did there, in a disclosure, i filed an amicus brief on the first amendment issue, so clearly i'm interested in them. but the court said, look, this is -- once you have a common carrier network, you know, the first amendment generally doesn't apply. but what's assumed in that analysis is that the fcc can force broadband providers to be common carriers, right? if the first amendment says you can't force somebody to make their network available on a common carrier bay kiss, which was my argument -- basis which was my argument, it gets a little more complicated, then that part of the opinion doesn't hold up. now, you know, implied in what the court said was that -- it's

implied, they weren't clear -- that broadband providers voluntarily held themselves out as being common carriers, and the court goes on to say if a broadband provider decides to curate the internet, the court said by their own terms the rules won't apply, and it might, you know, violate the first amendment if the fcc tried to force the rules to apply. it raises an interesting question, you know? my first thought went to the facebook service that was, you know, banned in india on net neutrality grounds where facebook made their service, you know, their social media network and some other weather and the like services available for free, and they paid the indian or -- [inaudible conversations] >> not a, not a -- >> guest: right. but as i understand it, india ruled against it because the broadband providers were getting paid by facebook.

so the question that's left open here is it appears from a reading from the court that's very well permissible in the u.s., and the fcc may not be able to do anything about it. that's an interesting issue the fcc may want to look at. >> guest: so where to start. india and their telecommunications laws, we probably don't have time for it today. [laughter] my understanding was facebook was not paying, but to say it was struck down is an easy and largely accurate description for what happened will. i think what the court did, and fred is right in some respects, it did leave out the option and the possibility because the if fcc left this open that some kind of curated service where the isp is editing and taking away choices from people or offering them special choices not necessarily requiring that company to become a common carrier would violate the first amendment, but that company might have first amendment rights. >> right. >> guest: so if they were, indeed, offering up an edited

internet service, that would perhaps trig ther. but the court left that for a later day. by definition, such a service might not be a broadband internet access service, and that might trigger first amendment review. i think the answer to that question is anything but true. >> can you think of any service that does pit that mold -- fit that mold today, -- and. [inaudible] >> guest: it's not generally what people want. there are such things as specialized and data services that allow you to connect to a single source, but that's not necessarily what we're talking about here. more of an editorial care, maybe a family-friendly isp or something like that that offered access to the internet -- >> did the fcc and the court, you know, together sort of through, you know, no conscious decision of their own

effectively create a new category of internet service? >> guest: i don't think it's also likely to happen because it's risky for the isp. if they put themselves out there as the speaker, suddenly they lose liability protections that have always protected isps. >> guest: so there's actually two providers that are doing this now, and they are relatively small. it's far from clear to me that a large provider has any interest in doing this. i'm not trying to suggest that. but i wrote a law review article on the first amendment issues and did quite a bit of research. i used an example there's a small isp in new york city that markets itself as friendly to those in the jewish faith. it blocks -- its server does not allow any of its subscribers to opt out. it blocks content it considers, you know, inconsistent with the moral principles of that faith. and, you know, they actually market that as their advantage. so they do provide a curated service. i always thought it was interesting there was never a

net neutrality complaint directed at them but, you know, they're small and may not be the main focus. so it is happening now, and, you know, to matt's point on it not being clear, this is also the kind of thing that can be brought up later on in what a court would call an as-applied challenge. a court can decide these rules as written don't, obviously, violate any constitutional right or provision. but if the fcc were, for example, to take action against this isp for their editorial, you know, decisions, they then could say, well, as this statute's being applied to me, it's violating my first amendment right. it's an issue that may or may not come up again. but it is happening to some small extent out there. >> host: so, matt wood, how does the net neutrality rules as promulgated encourage competition? what's the connection there? >> guest: it encourages

competition for the services we can all reach over the internet. so it allows companies on the edge of the internet, the so-called edge providers to innovate without permission, and that allows them not only to compete with the broadband providers and offer things like voice and video that broadband providers might otherwise have a lock on, it also allows them to come up with that next innovation that nobody can really dream up today. i don't know what we can put in that category safely now. everything we know of seems so ordinary, but, of course, social media and the power in that kind of platform is such a new thing, within the last decade or two. nobody had really dreamed that up in quite the same way, and now today it seems like such an important part of people's lives. it allows more competition on the edge of the network without that gatekeeper control that is ps might have. >> host: net flicks put out a statement -- netflix put out a state supporting this saying netflix will be able to reach consumers without isp

interfeerchlts netflix is not really an edge provider, is it? >> guest: netflix does something where they directly connect with the isp providers using facilities spread around the country, and they have their own, you know, backbone delivery networks. not necessarily owned by them, that they lease. the larger providers, google does that. this is another thing judge williams brought up in his dissent. if the concern is that some companies could get an advantage -- and by that, i mean edge companies or companies who aren't your last mile, you know, isp that you sub skype to get access to the internet -- the worry was, you know, large companies will pay the isps to get an advantage, and it'll get there faster, higher quality x that'll harm competition on the edge. judge williams pointed out the largest providers are already getting a significant speed advantage by owning their own backbone facilities and owning,

you know, paying for prime interconnection points that a lot of smaller providers either can't afford or they're paying a third party that isn't the isp, but there are now these third party networks that provide these services. so advantages are still going on. and this was raised with the fcc that, you know, if you really want to prevent these types of advantages, you have to address these cashing networks. and the fcc said, no, we're just not going to look into that. they just didn't want to address it. >> guest: some of that is true, but i think netflix is undoubtedly an edge provider. they are on the other side of the network from the user, and that's really what we're talking about here. a lot of people like to talk about net neutrality as a battle between companies, netflix on one side, comcast on the other. really what we're talking about is comcast customers' rights, and is anything that their common carrier does unreasonably interfering with that company's

customers' opportunity to reach different web traffic, to stream the vid you they want, to talk to whomever they want, to say what they want online. so netflix is an edge provider. it's not really a legal determination, and the fact that some of their content might move more quickly as some sort of speed limit where everything must move at the same speed, that's not really true. i think people understand that intuitively. they buy different speed tiers at home. somebody might have a faster connection than somebody else. it's about whether or not there is any unreasonable interference or discrimination or roadblock that the cable company puts in the way x. doing something to improve the quality of your own stream if netflix has more servers than i do, for example, they can serve video more quickly than i can, but that doesn't mean they are somehow damaging or making my service or my video less appealing to viewers. >> guest: let me use a different example than netflix to illustrate. a potential answer to your

question about how does net neutrality promote more competition. so the fcc's theory is that the broadband service providers have an incentive and ability to block or charge edge providers to deliver traffic. the fcc says that will reduce the amount of edge providers who want to provide traffic which will reduce demand for the internet and, therefore, the isps themselves would use as much infrastructure. in other words, the isps are their own worst enemies. they're going to do things that actually hurt them in the long run. this is what i meant by a paradigm shift, that virtuous circle that the fcc talks about, it doesn't just necessarily apply to isps. so who else stands as somebody in between a consumer and an edge service? and i put this in the fcc record and, again, they just really didn't address it. but another thing is, you know, if you use the mobile internet, and a lot of consumers today are

only using mobile devices to access the internet, you have to have a mobile operating system. there's really only two. we have 96 plus percent market share, and that's google's android or apple's iphone operating system. both of them charge application developers to be able to be on that platform, and they charge consumers for the phone, at least in apple's case. so they're making money that way. and they sayyou want to have your app on our phone, you have to be in our app store. and they charge 30%. so the fcc in their order says, look, we're really worried that isps are going to charge excessive prices, and it's going to reduce the edge providers, and you go down the chain. the app space is exploding. 30% is about double what the fcc historically has considered a reasonable rate of return under their statutory, regulatory, you

know, authority. and that doesn't seem to be dissuading the app providers at all. but put that aside. if the theory is now part of the law of communications, why doesn't it apply to the other gatekeepers on the internet that are charging people upstream 30% or what have you? i don't know. >> before we talk about that, i want to ask about the implications this ruling will have for legislation on net neutrality and, you know, there's been a lot of talk in the runup to this decision about whether or not republicans and democrats can come together to write rules or write legislation that would supersealed the fcc's -- supersede the fcc's regulation. what does this decision mean for that process now? >> guest: users have the right law in place today, and it's going to take a lot to convince me we can do better in congress. the fcc has some leverage now, and i think this sets as the

floor what we have today. and if we're going to improve upon that, there are ways to talk about doing that. but we're not going to allow these protections to be swept aside in order to make way for some kind of compromise that wouldn't really protect people as well as the laws we have on the books right now. i'd love to go back to the virtuous cycle notion, though, and talk about that in relation to the statute. there are calls to open up the discussion and look at other gatekeepers and talk about not just the app makers and the operating system makers, the apples of the world, but also those social media and internet giants. that's an interesting conversation, but the virtuous cycle idea had been the only thing the fcc could rely on. and they swept aside that disability, they faced, by going back to title ii and by treating irk sps -- isps as carriers once again. the only justification we have for net neutrality rules is this notion that somehow without good content online, we'll see a dip in broadband investment. and we'll see less and less

people taking up broadband service. what we have now is a restoration of the law that says carriers are, indeed, different. and fred and others may disagree with that analysis. they're by no means the only gatekeepers, but they are the ones the fcc is squarely in charged with keeping in line that prevent the cable and transmission companies from unreasonably interfering. that doesn't mean apple can't have a role in people's choices online. obviously, apple does. but it does mean comcast cannot fair its own -- favor its own video in order to prevent somebody from switching to somebody else. it's not really the case because comcast or verizon or whomever can make a lot of money by controlling people's access and keeping them paying for two services. so it would be in the isps' self-interest economically to keep people paying for cable tv. and even if that dampened

broadband investment and demand, comcast still makes out well because they're receiving two revenue streams by keeping people tie today that cord. >> guest: well, i want to disagree with one thing. the question i was positing was what is the difference between the isp's ability to impact edge providers and the mobile -- and that's not the only example -- or any other gatekeeper. somebody who has a platform that somebody else has to access to get to consumers. my point is i don't see a difference. there was a historical difference because the networks worked differently. that's been erased. most of the time the answer i get when i raise this question is, well, the fcc doesn't have jurisdiction over mobile operating systems. i don't think that's correct legally. then i -- >> so you do think that the fcc has jurisdiction over mobile operating systems? >> guest: i think they either have direct jurisdiction or my point would be even, you know, some years ago there were people

who support net neutrality as a policy who were would that the fcc didn't have jurisdiction to do it. so they said, look, use your ancillary title i authority or they went to congress and proposed bills. and i just find it interesting, nobody's saying anything about these oh gatekeepers. nobody wants to talk about it. >> so we have so far seen chairman wheeler say very clearly that he has no intention of regulating edge providers, you know, online services using the net neutrality rules. could that change? do you see that changing? >> i don't think so. i think we see this in the privacy context too. and fred suggesting that distinction has been erased between different kinds of gatekeepers, what i think his argument actually may be is those kinds of gatekeeper powers have been replicated by new players. we've seen this in the privacy debate too. if we can't keep people's pryce from being -- privacy from being

regulated, i think that seems like a pretty nonsensical idea, to avoid the protections that we have and decide not to use them just because they might not be complete. so as i said, we're interested in this conversation. not through ancillary authority, not through section 706. those are the kinds of things that, luckily, have been swept away by the fcc. returning to a much more common sense and solid understanding of the legal authority they have here and winning this court case so decisively. but that doesn't mean we should sweep away the protections we have in favor of some other, new regime that has yet to materialize. >> host: so, matt wood, what's the practical effect of this decision and what's next? >> guest: the fcc can continue to play a role in these decisions, and we think that's a good thing. they don't have to worry about coming up with another almost fourth bite in the am having lost in -- apple having lost in court a couple times before. and they now once again understand broadband as an

essential communications service rather than as something that is mysteriously and inextricably intertwined with the content that we all get on the internet. so we're happy that the fcc has that authority. what they do with it is yet to be seen, you know, there are questions that will come up that we can't yet predict. that's not a scary thing, because the fing cc should be -- fcc should be involved in that conversation. not setting rules when it doesn't have all the facts, but having the power to protect people from unreasonable interference that the isps could cause for their use of the internet. >> host: and fred campbell, same question. >> guest: i think we're going to see the law continue to expand. i mean, the history of these types of things is once you set the precedent people will start to, for example, file complaints under the fcc's new rule of, you know, you can't do anything to disadvantage the claim that some rule is too vague. so we'll see people start to file complaints to test various

business models which will get the fcc more involve inside sort of the way the internet is packaged and sold by isps. and you do have, i think, a risk that some will try to expand this to other gatekeepers on the internet, because there will be app developers who don't want to pay 30% anymore. and they've got pretty good arguments that, you know what? we're in the same position with them as we are with the isp. so i think over time this will start to develop more, and then maybe we'll get, you know, a better sense of what its real impact's going to be. >> host: and brian fung of the washington post, what are you going to be looking for next? >> well, i think everyone's going to be waiting to see how the internet industry responds and whether or not they're going to look to escalate this case, and if so, how? >> host: brian fung, fred campbell, matt wood, thank you all very much. >> guest: thank you. >> guest: thanks. >> members of the