i think the trend is much as i have only suspected. i think a likely result is a hodgepodge of wins and losses that will create a swiss cheese regime, which is what i have been concerned about all along. it is not about spectacular victory or loss. it is whether a coherent, holistic representation the government has made about how it would do this could end up -- stand up. it is my belief it will not stand up and will leave more confusion and complexity instead of finality despite that being what we were promised. i suspect any result will be considered for appeal to the supreme court. we would have four months to wait to find out. peter: when you were chairman of the fcc working on the net neutrality issue, did you ever think it would be at the point it is today? michael: no. in fact the absolutely

bipartisan prevailing view at the time was the way we were working on it was the commitment to the same open internet principles that garner attention today. it was an element of an unregulated infrastructure. it was an element of an infrastructure that not only guaranteed and promised innovative capacity that also promised protection from an overreaching government. it was freedom for everybody from every source. replicatetended to the mob out -- ma bell regime. people have forgotten what was invoke in the late 1990's in a strong bipartisan way captured by the 1996 statute was a commitment to entangle a century's worth of communications regulations built around railroads and ma bell. i don't think i could have

envisioned in 2015 the spectacular result we have seen with internet growth as part of our country and economy, it would be the government impulse to return to the 19th century as a regulatory model. peter: joining our conversation is john mckinnon who covers technology from the "wall street journal." john: talk more about the common carrier model and why that is not the kind of model you think is appropriate for this day and age. thinkk a lot of people they ought to carry everybody equally. what is wrong with that? michael: common carriage law is more than carrying everybody equally. that is part of the source of confusion. i hate to go back to the beginning of time, but common carrier is the notion the king of the realm has granted you exclusive use of the waterway. in exchange, you promise to serve all citizens equally on the thing turns and conditions.

weather was crossing the river or using a railroad service. part of that agreement was you were being granted monopolistic exclusivity. the trade-off for heavy regulation is you got to have was a control over assets -- exclusive control over assets. as the government became recommitted to -- committed to introducing competition, it sued for divorce. it broke the compact. you are no longer promised by the sovereign a sovereign-blessed monopoly or exclusivity like at&t enjoyed for the better part of a century. you were told to go out and compete. the minute you enter a market in competition, you have to be sensitive to the markets. common carrier almost presumed there won't be any competition, that it is a natural monopoly. one of the things i predict is not that this will be harmful to our industry, it will be harmful to the country because it will become a regime that serves as a

huge barrier for new entrants to provide those services. they have a long history of learning how to master long, complex regulatory regimes to their vantage. i will not be surprised if the same thing happens again. we have raised the cost of taking risks. the fcc used to have to constantly find new ways to try to make phone companies innovate because when you are a monopoly, your impetus to do so has been diminished. they tried to incent innovative actions by the carriers. in fact, under what we used to call the computer to, it led to the battle today over information services. the goal is to try to regulate provider so they would take more risk in the new data services. there has been a long movie needs -- lineage of trying to introduce competitive dynamics where it is widely

understood common carriage was a negative. in airlines and across many sectors of the economy when people became the satisfied at the level of price competition and innovation. when innovation is your hallmark, common carriage is not a weapon. it is interesting to me people still hold a near religious belief that the biggest companies if not the world who bring an astonishing amount of innovation to the market should remain largely unfettered from the same kind of regulatory impulse. it is an understanding of what innovation demands. it is surprising people don't understand the same thing is demanded of networks. they may be less sexy than some google app, but they are equally as innovative and complex. they require even more capital than software does. if you don't have a risk-reward potential around capital, you

won't spend it or you will spend it at a lower velocity. i think what has happened unfortunately in a lot of lazy thinking is common carriage or utility regulation is the same thing as saying something is important and indispensable. it is important to me, so why would it not be a utility? your foodstuffs are important to you. we don't regulate food stores. we have lots of things that are very important to society that we don't layer this kind of regulatory framework on. with net neutrality, people make it sound as if it has become so important and critical, why not think of it as a utility? i think it is the opposite. it has become so critical that it continues to expand and grow. but the dangers are serious. john: a lot of people came away from the argument thinking the judges probably were going to allow the fcc to assert that kind of jurisdiction.

i think there was a perception they had problems with the way the fcc was asserting the jurisdiction. in other words, they could do the thing they wanted to do but not the way they wanted to do it. is that your perception? michael: i would say the way someone does something is critical. the judges don't make policy. they police whether you have complied with your legal duties and obligations in doing it. it is not the role to decide whether the fcc has made a wise or poor decision. i would rather have the conversation around that. let's say for a moment that somewhere within the ambiguity of that very old statute, it still does not answer the question of why they should exercise it in this way. playing around with what is allowed and not allowed often obscures the real question. fasterl title to produce internet for consumers? why will title ii result in cheaper prices? why will title ii incent

carriers to build in rural america? why will title ii advance our national ambitions? i have never heard any satisfactory answer to that question. it has all been built around the notion of three rules about openness, to which even the court acknowledged in the argument there are multiple ways to get to. you could have gotten to that same level of protection without a damaging regime. the court acknowledged that when the judge said, why did you not -- follow the roadmap i laid out for you? they did not. was chairman wheeler considering alternatives to title ii. the real question is why select this regime? on the court case, i would add one thing. a lot of the questioning you are referring to was about whether there was sufficient ambiguity in the statute.

there was an argument by the commission that they already answered the question. our argument was congress has spoken clearly as to what an information service is. understand one thing. just because it is ambiguous is not the end of the argument. you can find a statute is ambiguous, but the commission still has to execute that ambiguity faithfully with congress' wishes and consistent with the way the statute will be read. i think our counsel did a good job of saying even if you accept that ambiguity, the reading they have layered on that is completely inconsistent with everything we know about what congress was time to do. we will have to do. we will have to see. questionsere are about whether the statute is ambiguous, it does not completely answered the ultimate legal question. peter: you refer to some of the investments your industry has been making in expanding broadband.

one of the investments the cable companies have made is to set-top boxes. there seems to be some movement to get rid of the set-top boxes to open up that market. what is the harm in opening up that market? michael: because it is not the market anybody wants. it is stunning to me to see yet again -- i think this is tied to the next county question. when is it appropriate for the government to intervene in markets by any objective measure are functioning well? can anybody credibly argue the video market, the access to valuable content in new and amazing forms, is not running at light speed? that we are not seeing explosive innovation, constant new offerings. we have a company that used to mail you d.v.d.'s a handful of years ago that now has more sobs

that any pay-tv provider in the world, whose stock has appreciated greater than anybody could imagine, who is doing exceptionally well and now has a series of original content in the form netflix delivers. what is wrong with this market that we need the government to try to engineer yet another competitive alternative? a second thing that is wrong is consumers don't want it. if anything netflix and services are proving is that streaming is an invention that has overtaken what a lot of people have relied on this box to do. take dvr functionality. it is an important service. as streaming becomes more dominant, the need to record, skip through commercials, it becomes less significant to a lot of consumers. why? because they can stream it. i can stream it wants, 10 times. i can rewind, move it forward.

a lot of content is provided advertising free in suites of consumption. the market path has been moving and consumers have been responding to. advocates are saying we want to build a box and create another video service. we want to make the cable guys design, manufacture, inventory, deploy another box to make that possible. we think it is so retrograde. it is returning to the way competition was conceived in the 1990's and not the way competition is not only conceived in 2015, but has actually unfolded. one thing we think as a cable industry is a mistaken impression is this is not some great monopolistic market cable is trying to protect. if you go look at recent statements by a number of important senior c.e.o.'s in the industry, we are trying to get her boxes. consumers hate them.

we hate managing inventory. breaks, we have got to send a guy to your house in a truck. that is expensive. consumers are mad they have to wait for you to get there. when you move, you have to take that box across town and turn it in. this is something we would like to move away from into software. app, a littlen piece of software, you could download it and put it on any device you could invent. to me, that solves the mandate congress is considering in 1996. can our service run on competitive equipment? with an app, it can run on anything. that seems a complete answer to that concern. peter: does that mean the traditional cable business model is on its way out, the bundle, etc., because of new services, because people are cutting the cord? michael: no, but it means if the

government's objective is to make sure there is competitive dynamics, including competitive pressure on the industry, that competitive intensity is coming from streaming applications and services that have separately gone out and cobbled together a service, negotiated intellectual property rights to carry hbo or a particular show an offer a true substitute to what my members provide. if somebody really wanted to, we could argue why they should stay with us, that we will have to argue it on value. they could cut the cord and live on streaming services. the proposals bouncing around the commission now are forcing the customer to be stuck continuing to pay for cable and additional services. it seems even if you were trying to create competition, you would not do it in a way where the

critical impulse for alternative services is our stuff. that is not robust competition. we see cord cutting. every newspaper talks about cord cutting. it talks about content companies stock prices under pressure because of ad migration to digital, subscription loss. that is real competitive heat. the other thing we hear is consumers want a better pay-tv experience. you have to let the companies have the innovative breathing room to do the innovating consumers are asking for. many software-based services to innovate that. every sixge software months. i cannot swap out a box every six months. if you want recommendation engines were a media-rich interface you either have to have equipment that is cloud-based like comcast or you have got to have your service is reduced to software so you can constantly and continuously upgrade.

john: how important is the consumer data piece in this big debate over set-top boxes or whatever follows after? michael: it is important for two points. number one, many of those who are proponents of the policy are proponents for the reason you suggest, which is about -- it is an opportunity to get access to valuable personal data around consumers' viewing habits, searches, choices. as we have learned by watching silicon valley, big datasets are the goal. they are the holy gale of modernization. clearly, this is an effort to get government assistance, to get access to content that would allow you to collect the metadata around that content. network, youe tv 1

have negotiated with charter or comcast for carriage. you have negotiated for what channel you sit on, what tier you will be on. you have negotiation around advertising, what the splits will be. you may have any number of other digital rights. and give that deal to you that can be sucked out the back door through a box and put into google's box, who does not negotiate for access to the content, that is merely taking it and you are free to strip out all the stuff you negotiated for, you are allowing one set of commercial interests to monetize valuable property they did not negotiate for and enjoy all of the benefits of doing so without having to share that with the content owner. if you ask me, that is lately unfair. not only illegal potentially but unfair. it is somebody's intellectual property. most of the leading alternative providers have been willing to negotiate. netflix, hulu, amazon prime all

go to the programming market and negotiate for their rights. the other thing that happens is a lot of the proponents argue that once they do that, they are not a cable service provider so they are not subject to the privacy protections of a cable provider. when a cable company gets access to content and there is metadata thelved, we are subject to government to napoli a privacy protections. if you bring that over here and google can do that, they're clear position is we do that not ofject to the protection that because we are not a cable provider. i will give you an example. izeo got in trouble because it was revealed the electronics manufacturer was using in theions -- cameras televisions and spying on your video consumption habits and collating data sets and monetizing them. they got caught doing it.

they offered their explanation. one of the most telling things i heard them say is we are not a cable company and not subject to the privacy protections cable companies are. we feel free to do this. i think this is another effort to get into that kind of. expectation. we can do these things. we are not regulated so we don't have to. as the fcc chairman says with regularity, we won't regulate them. to happen is going with this initiative? do you foresee some rulemaking soon? michael: i want to be fair about this. ais is something we see constituency who promoted the same proposals in 2010. the commission rejected them in 2010. they seem to be using the issue of downloadable security, which is really about how you secure content, to try to create another expansive reading of their rights similar to what they did in 2010.

what we refer to as the all bid proposal. we don't know where the commission is yet. my hope and urging will be that the commission will see this is an invitation to intervene in an otherwise unhealthy and expensive market. there is no role for them there. it would be a very laborious process. when we invented cable cars come it took four or five years to develop and manufacture them, put them in inventory. if you have to do that again for a box, that is what will be required. you will have a government-supervised standard manufacturing effort. my worry is we get them done five years from now, no one will be interested in using them. i think they have other priorities that are more important, particularly in the last year of this commission. it certainly will be our argument that there are more important things for them to spend their limited time and resources on.

what is it like to serve on the fcc during an election year? michael: it is a time of extraordinary caution normally. i was once told by a white house chief of staff when i was chairman, it might be the best advice i ever got. understand one thing. to a white house, the fcc is a goes on,t if the light a better go off as fast as possible. the political apparatus does not want to see controversy spin out of a regulatory agency that they have to explain or deal with. normally if they commission is well-run, there is an appropriate amount of caution about the agenda. the last thing you need to do is trigger some big, heated controversy that could be used or misused in a campaign. at the same time, it is the last year of leadership in this form.

they want to finish the unfinished. there is a tension in which you are racing to the finish line to do things you want to be part of your tenure. at the same time, you have to be sensitized to the political climate in which you operate. john: one thing they have to deal with i think is the merger of charter and time warner cable. have you had any surprises in the process they have been using to review that? how do you think it will turn out? michael: if i am being completely candid, i don't think we know anything. i think it has been really quiet. i have not seen any tea leaves ofated or any sign intensifying activity. that is usually what it is like through this phase of merger reviews. i have seen many of them, involving cable, not involved in

cable. when peopleong time are combing through documents and identifying ancillary questions. it is hard work. there's a long time when staff is deep in the boxes try to figure out what they have got. in another couple of months, i think you will start to get a rise in temperature of interest where people will be looking for some signal of what is happening. i think that we are probably 30 days from that where they start opening -- openly asking questions of the commission. peter: they have to work on the spectrum auctions in march. what is the dog your organization has in that fight? what is the issue on unlicensed spectrum? michael: we don't have a particular dog in the auction fight. it is a very complex auction. thenitely the most complex

commission has attempted. it has really tricky variables associated with it. i am no expert in the design or details. licensed spectrum for sale largely. can i say whether a cable company has interest in licensed spectrum? i don't know, not that i'm intimately aware. if the cable industry became interested in being a competitor for spectrum, it would have some interest to us. i don't know that to be the case. i think what you are getting at is all of spectrum is a government resource. it is important to remember that. no one gets spectrum other than as a licensee. that means you are given permission to use. sometimes you pay for that permission. sometimes access is provided without renumeration for use. license-centric.

the t-mobile's of the world who gain large checks to exclusive rights to use public property. be other area has proved to a space of innovation without permission and amazingly powerful, which is unlicensed. consumers understand it as wi-fi. it is not the only use of unlicensed spectrum. it has become the dominant use. 68% of all most all internet traffic takes place on wi-fi. bysome estimates or 2017 -- 2017, 87% of all homes will be dependent on wi-fi. wi-fi has become the in-home utility for the connection for the internet of things. even though it is unlicensed, i think the government has to start getting sensitive because they are the interference manager. there is one job the commission will always have. somebody has to be a traffic

management cop around spectrum. wi-fi spectrum is critical to the country's needs and innovation growth. it is very important to the cable industry because we provide that service to our consumers as well. number one, whenever there is a spectrum question, we argue forcefully the commission dedicate some attention to carving out some amount for wireless use. the war is always over how much, how extensive. the same thing goes on in congress. the other thing that goes on is are there things happening that could destroy the use of wi-fi? it runs in a space where it is unlicensed and you are not guaranteed the same way a licensed spectrum carrier is guaranteed exclusive use. the commission would have a hard time explaining to american consumers if suddenly wi-fi did not work or stopped working in some significant measure. one reason this is so serious to

us, you have had this experience. i'm willing to guess 80% of the time when a consumer complaints their broadband stinks or does not work well or i am not getting what i was promised, usually what they are complaining about is their wi-fi. most of the time, the key measure the speed comcast or charter is delivering to your house, it is at the speed you bought and were promised. you plug it into a five-year-old wireless router and pop up your laptop, and it is crummy. and you think it is comcast's fault. in reality, it is the link between you and that box that is crummy. i live in a condo. at night, i can see 30 wi-fi networks. that amount of interference cuts down on my function. andn't appreciate that think i have that internet service. what i really have is that wi-fi. if wi-fi is going to be this ,ritical link to our devices

the government is going to have to be sensitive about making sure that functions properly. peter: we have one minute left. john: talk about the future of cable television and the future of everything else you're talking about. there seems to be a bit of a fight potentially developing between the cable industry and the wireless industry over this particular part of the spectrum, and probably over a lot of other issues. how do you see that playing out, the existential question? michael: i would say there is a lot of alignment as well. the country's infrastructure providers are a bit of fraternity with obvious reasons. they understand the cost and expense to dig up streets and roads to bring infrastructure to consumers. that is a special business we are all in. it is kind of like the united nations but we are all

self-interested. america is not going to do anything not in its own self-interest. the same is probably true in industry. i think it has a bright future because we build the critical in frustration -- infrastructure on which the technology rests. we need to make sure those are aligned so the perception continues to grow, become better, faster, more capable word is like a d.v.d.. if the d.v.d. player stinks, it does not matter how good the songs are on the final or plastic because you will not get the full functionality. powell and john mckinnon. >> c-span is brought to as a public service by your local

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