SOUNDING OFF MAY 23, 2013
In a 6-3 decision on Monday, the Supreme Court ruled that the Federal Communications Commission has broad power to decide what kinds of communications it oversees—including the internet, which didn’t exist when the commission was first set up. The ruling delighted those who want the FCC to watchdog things like net neutrality, the principle that internet service providers have to treat all sorts of traffic equally. And it served as a fitting capstone to the tenure of Julius Genachowski, who had stepped down as FCC chair the previous week.
In a wide ranging exit interview in Genachowski’s office on May 9, TNR’s legal affairs editor Jeffrey Rosen, who has known Genachowski since they were co-clerks on the U.S. Court of Appeals for the D.C. Circuit more than twenty years ago, interviewed Genachowski about net neutrality, judicial pushback, political polarization, Google and Facebook's power over free speech, and his greatest frustrations and successes.
Rosen: You just had your last commission meeting. How was it?
Genachowski: It was bittersweet. It’s been an extraordinary experience.
Rosen: Your biggest achievement has been net neutrality. Why did you decide to focus on it?
Genachowski: The net neutrality decisions that we made were part of a larger decision to focus the FCC on broadband. So this agency had been focused on yesterday’s communications technologies, focused on issues like indecency and the first, and one of the biggest decisions I made was focusing the agency on broadband, on unleashing the opportunities of wired and wireless broadband. On net neutrality, I inherited a radioactive battle between Internet service providers on one side and technology companies on the other side about the future shape of the Internet. And the debate was about whether or not the Internet should remain open to speakers and entrepreneurs or whether network operators should be able to essentially close the Internet. That was one part of the debate.
The other part of the debate was whether the government had a role in answering that question. I believe that the battle that was going on in the US was counterproductive. Net neutrality was essential for our economy, it was essential to preserve freedom and openness, both for economic reasons and free speech reasons and the government had a role in ensuring that Internet freedom was protected. And so, we jumped into that discussion and it took a number of months, a lot of heated back and forths, but ultimately we adopted a framework to preserve the freedom of openness of the Internet. This was three years ago.
Rosen: How has it worked out?
Genachowski: There are a couple things to notice about what’s happened. The first is that we’ve seen an increase in private investment and innovation across the broadband economy—both innovation and investment in Internet applications and services and an increase in innovation and investment in wired and wireless broadband networks. We’ve seen the pie get bigger. This is really important because one of the arguments that was made at the time that if the FCC adopted net neutrality rules that would stop investment in networks. In fact the opposite has happened; we’ve seen tremendous investment in both wired and wireless networks over the years.
Another important thing about how this has played is that I believe as a country now we’ve largely resolved the big debates that were generating so much controversy before 2008. There had not been a consensus about whether or not we should preserve Internet freedom in the United States. Now there is. There had not been a consensus about whether the government had a role in preserving Internet freedom and now there is. There is still a debate about the legal rationale underneath it and that is being litigated. I think it’s an unfortunate litigation that runs the risk of creating unnecessary uncertainty and unpredictability in the space after we’ve worked to increase certainty and predictability for investors across the ecosystem. But even if that litigation continues, over the last few years we have proved that we can have government rules preserving Internet freedom and the Internet economy can not only work—it can thrive.
Rosen: Let’s talk about the litigation, which led to your first net neutrality rules being struck down the D.C. circuit. Has judicial pushback been a problem throughout the net neutrality debate?
Genachowski: I’m concerned about a trend that I see in the courts of giving expert agencies less room to respond to changing technologies at precisely the time when the ability of the U.S. to respond to new technologies is so important. There’s been a totally sensible jurisprudence and tradition around deference to agency interpretation of statutes. I think that makes sense because of how unrealistic it is to assume that our legislative system can respond rapidly to changes in technology. We’re in a global digital economy where we’re in a bandwidth race around the world where every country wants to become the center of innovation for the 21st century. It’s very important that the U.S. be able to respond rapidly to that and so it’s my opinion precisely the wrong time to tie the hands agencies on a theory that Congress can just adopt new laws.
Rosen: Do you hope that the fact that net neutrality is working economically might persuade the DC Circuit to hold it the next time around? Will that be relevant in its decision?
Genachowski: I think it’s a very important fact. It demonstrates the rationality and judgment behind the commission’s decision. I think it should help convince decision makers that the open Internet rules that the commission adopted were sensible rules as a matter of policy but also sensible interpretation of the Communications Act.
Rosen: And what happens if the DC Circuit strikes it down? What happens to net neutrality next?
Genachowski: I believe that the FCC will win and I think the broadband data roaming case is a good indicator. I suspect that whoever loses the DC Circuit case will probably take it to the Supreme Court and there’s Supreme Court precedent in the area relevant that we believe strongly supports our position.
Rosen: Assuming that you lose, what are the other options for net neutrality? Will it be Congress? Will the agency try again?
Genachowski: All I can say, based on everything I have seen here in four years and the ten prior years I spent in the Internet media world, is that strong and balanced rules of the road to preserve Internet freedom and openness are the right answer for our economy, the right answer for speech and public debate in the United States.
Rosen: Describe your experience with Congress. There was opposition to net neutrality there.
Genachowski: Even though we have broad stakeholder support, net neutrality was still a divided vote at the commission and Congress took steps to overturn it. So the House of Representatives passed legislation that would have overturned our rules and the Senate legislation was defeated. That was the state of play three years ago. I would hope people would look at what we’ve seen in the American economy, what we’ve seen in the growth of broadband investment and innovation since then, we’d be willing to take a fresh look and say these rules makes sense and they’re working. The most important point I want to make is I am completely convinced that the commission has the authority to preserve a state Internet freedom and openness and spur competition on the Internet.
Rosen: Your experience with Congress highlights the power of lobbyists. You’ve expressed frustration about the ways that special interests can thwart good policy. Talk about that and the net neutrality debate. Is it frustrating?
Genachowski: In general I found that the more that debates can be about facts and data, the more likely government is to make sound decisions that benefit innovators and the American people. I worry about the forces that incentivize polarization. I think this is a broader issue for our country so I am an optimist about self-governance in the United States. I think we need to be top minded about the forces that are pushing toward polarization. They include redistricting in congress, the way we finance political campaigns, the way in which the institutions that enter public debate often enter from one extreme to the other. I think we have too few institutions dedicated to problem solving.
Rosen: What’s the connection between polarization and lobbying?
Genachowski: I think it’s natural for anyone that participates in a public debate to advocate for the most extreme version that they can, particularly if they believe that government tends to compromise. So if stakeholders believe that inevitably government will end up somewhere in the middle, they have an incentive to go to these extremes. It’s one of the reasons why at the FCC I’ve stayed away from using a frame of compromise and instead I’ve used a frame of problem solving. I think it’s both the right thing to do to get to the right answer but also think it can lead better to engagement from stakeholders. So if a government decision maker says we’re going to focus on identifying problems, or facts and data, what the solution set is, what the cost-benefits to different solutions are, and if the decision maker is willing to end up in different places of the spectrum depending on what the facts and data show, then that encourages a more substantive engagement with government decision making then an approach that signals that a government body will end up in the middle. Then everyone fights for the extremes because that ultimately defines the middle.
Rosen: You’ve been criticized from the Left for excluding wireless from the net neutrality rules and from the Right for the entire principle of net neutrality. How do you respond?
Genachowski: The agency didn’t exclude wireless from the net neutrality rules. It adopted somewhat different rules for wired and wireless because there are differences in the technologies and differences in the competitive market structure of the different categories. But just to be clear, Internet openness is protected on wireless broadband. If you’re a wireless broadband operator, you cannot block consumers’ access to the Internet, period.
Rosen: We’ve often talked about Brandeis, as you know he’s my hero, he was concerned with the curse of bigness. How concerned are you about bigness in the communications industry. You approved the Comcast and NBC merger and disapproved AT&T’s proposed merger with T-Mobile. Are you happy with that balance and what are some of the dangers of bigness in the future?
Genachowski: To me the touchstone is the competition, and insuring we have competitive markets with sufficient number of players to give the country the benefits of competition. What are the benefits of competition? More innovation, better products, better value. So competition is incredibly important and in this sector, because of the power of network effects, I think it always will be. In mobile the U.S. had been moving toward a duopoly in mobile service, a market where there would’ve been only two players providing mobile service. There would have been a dangerous thing for our innovation economy and for the ability of American innovators including especially small startups develop new products for mobile platform and reach consumers. So that transaction was an important one an important test for the agency and I’m completely convinced that the agency made the right decision in moving to block that merger.
It’s really important that we have an ecosystem where small innovative entrepreneurs can develop new products and access consumers and have a chance to succeed. So that’s why open Internet rules are important and that’s why competition is important because if you have a competitive landscape you increase the chances that one of the players will be an open player to provide access to all consumers. The level of capital investment that is required to go over and operate modern communications infrastructure is very significant. It’s not realistic to think that a small player, a very small player, an in-your-garage player can build out the infrastructure that’s required for us to have good wire to wire broadband data. So small can be incredibly important in an economy that is based so much around innovation and entrepreneurs.
Rosen: Speaking of competition, the old business model for journalism is collapsing. You did a thoughtful report on the future of journalism. Is there a future business model for journalism and what do you think the future will bring?
Genachowski: So first, the opportunities. The Internet wired and wireless offers entirely new ways for journalists to reach an audience. As the Internet audience gets larger, and as the business model and the revenue models on the Internet get stronger that ought to lead to new opportunities for journalists using multiple platforms to reach an audience. Having said that, it’s clear that right now that there is a real challenge, and the challenges in journalism are not spread around easily. There’s a particular challenge around what we call local accountability journalism; coverage of local government, local city councils, local agencies, local managers. Next at the state level. We have a problem there with national news largely because of the market size. Local journalism is a real issue. It’s a hard challenge for government because anytime that you have government and journalism in the same sentence, the other words that should be in the sentence are First Amendment and the government has to be very cautious in thinking about what it can do to help journalism. What we did conclude was there are some sensible steps that can be taken that would facilitate effective journalism. One example is government moving more rapidly to putting information online. The more government information that can be online whether it’s streaming government meetings, putting government reports and data online, the cost of journalism is in part the cost of reporting. It’s not the only reason government should be putting its information online but it would be one of the benefits of accelerating that enterprise at all the different levels of government.
We also concluded driving universal broadband access would help journalism because the larger the market is, the more opportunities there are for revenue generation. And the third is an open Internet is important for the future of journalism because that’s what gives new journalists and journalistic enterprises the ability to reach an audience.
Rosen: There are concerns about the power over free speech and privacy concentrated in Internet Service Providers like Facebook and Google. The FTC decided not to bring in a antitrust suit against Google. Are current regulations adequate to ensure that Google’s power is being exercised responsibly or do we need new regulatory structure?
Genachowski: I think that one, competition is the touchstone and two, this will be a topic that can and should be discussed and debated on an ongoing basis. It’s a new world and we’re facing a new set of issues that many are unprecedented. The values that we are all thinking to promote are consistent. Competition, free speech, innovation. The challenges are very new and so the debate and the discussion that we started to have as a society is a very important one. As we have it, we should keep in mind that one of the dangerous things we can do in this area is take a snap shot and assume that if you take a look at it a few months later that the world is still the same. The world is moving so quickly, which is one of the reasons I think two things. One is having people in decision making positions in government who really understand technology and the direction that the world is going in and second, a real vibrant robust engagement between all the stakeholders is very important. You’ll find that throughout the valley of the technology community there are many different opinions and that’s a healthy thing.
Rosen: The last time there was a national debate about concentrated power and regulation in the Progressive era it seems like there was less polarization and it was possible to pass reforms in state legislatures and Congress. The polarization we’re talking about now makes it harder to pass sensible regulations if they’re necessary.
Genachowski: I think it’s true that it’s harder to block something in government than to get something done. I’m trying to make a point here that’s nuanced. One of the ways to facilitate government action in a polarized environment is to work to increase the consensus about what the right answer is. It doesn’t work in a consensus model to give people veto power but at the same time having ongoing public discussions in a lot of different forums, with a lot of different people from different parts of the landscape, really engaging and narrowing the issues, organizing the facts and data -- the optimist in me says that provides an opportunity for broadening of consensus. Quite appropriately in a democratic society a certain level of consensus should be required before government acts. Consensus in this area is a challenge and I don’t mean unanimity. I mean a broad enough census for a democracy to act. It hard because of how fast moving these technologies are and how complex the issues are.
Rosen: Does net activism a role here? Net activism blocked SOPA and PIPA, which some people, including me, thought was a good thing. Is that kind of activism useful?
Genachowski: I felt it is, in the same way pamphlets had a role in 18th and 19th centuries. In some ways the Internet is reawakening something that we lost over time – namely, the ability for almost anyone to reach and speak to a relevant audience. The audiences in the 18th and 19th centuries were local. In a local market you can have a pamphlet, you can get it in front of people, and influence the debate and the dialogue. As we moved to a national market, or larger local markets, it became harder to do that and now the Internet is enabling people anywhere to participate in the discussion to connect, organize and to influence outcomes. It’s a very important thing in America and we’re seeing it around the world. That gets us to the issue of global Internet freedom, and the threats to that which is something I am very concerned about. I’m concerned about it because of this. One of the things that the Arab Spring has done is it has awakened dictators to the risk of the Internet poses to their job retention and since the Arab Spring we have seen an real increase in efforts around the world to censor or close the Internet. And those steps include both obvious blatant forms of censorship but also the pursuit of what is purported to be economic regulation of the global Internet. Changing the basic business model of the Internet in a way that would have the effect of closing off people in countries to people with Internet traffic.
Rosen: Talk about the young tech executives who are basically making decisions about free speech for the world. They have an awful lot of power and it’s large unregulated. Is it too much power? Is the “trust us” model of Google and Facebook model adequate to protect free speech in the 21st century?
Genachowski: I’m not sure. I think this is a brand new topic that absolutely worthy of the kind of exploration. Often in these situations one has to ask what is the alternative and approaches that involve the government we should look at with real caution. There are times when the government must act but appropriately in these areas we must approach them with caution. In and around the Internet we have seen the development of the stakeholder models that have helped the Internet go from an idea to the flourishing thing that we see. Multi stakeholder models could be part of the solution. But it seems to me we’re at the stage of needing transparency about how decisions are made when we’re debating what the issues and the risks are and what the solutions might be. So your recent piece is a real contribution to helping get people the education that they need to start having this debate. I worry about uniformed debates that we can have in American society. Those end up being bumper sticker wars that are too often beside the point and don’t accomplish anything. The healthy debate we need in the U.S. on multiple issues has to require some basic education and facts. So that’s an important part in the stage we are in and it needs to continue.
Rosen: You said net neutrality may be central to the future of free speech too. Explain why. Right now the companies not to be favoring certain content for political reasons but could they do so in the future? Could net neutrality prevent that?
Genachowski: The open internet rules we adopted were targeted at the infrastructure companies that have gatekeeper control over internet traffic and that was an area that concluded that the risk of discriminatory action was high we took steps in a strong and balanced way to preserve the internet freedom we know
Rosen: Brandeis and other founders of the FTC and FCC saw a special role for expert regulations who would get deference from courts in solving complicated problems. Do you really need some kind of judicial deference in solving these hard problems about how to translate constitutional values in light of new technologies?
Genachowski: I think you do. I think that gives our expert agencies a real obligation to run a fair process and to be open and honest about decision-making and an obligation to translate complex technical issues into words that can be understood widely. Its very helpful for an expert agency to adopt that requirement for itself. At the core, if it does anything, it ensures that you can explain to your mom what you’re doing and why you’re doing it. If you need expert agencies because these issues are hard and they’re rapidly moving, one of the obligations of expert agencies is to be able to explain and to engage in a public way in the discussion.
Rosen: Any final thoughts?
Genachowski: High speed internet is incredibly important to the future of our country, it’s important to our economy, it supports job creation, it’s spurred private investment and it’s important to tackling very important social challenges like education and healthcare. So at one time the U.S. was moving in the wrong direction on wired and wireless broadband. For example, if we had this conversation four years ago and we talked about mobile innovation, we would have said, wow, mobile has this great opportunity for innovation but it looks like all the innovation is happening in South Korea and Japan. And if we talked about mobile infrastructure we would have said oh wow 3G is this exciting new platform. Europe has gotten ahead of the U.S. in 3G and those things would have been right.
Today I think we’ve turned things around in the United States and the US is the leader in mobile innovation around the world. The applications around the world that people are using are American apps. They’re Google, and Twitter and Facebook. Wasn’t true four years ago. And in infrastructure where we had fallen behind on 3G, we’re leading the world on 4G. We have more 4G subscribers than the rest of the world combined and if you are an innovator on the 4G platform then you basically have to come to the United States. Investment in wireless infrastructure is moving in a terrific direction. So to the last three years, the US is growing faster in wireless tech apps than in any other country in the world. The projections for 2013 are that the US will grow 14% year over year in wireless tech apps, and China is 9%, so we’re growing faster than China. All of Asia is 4%, and Europe is flat. Our wired broadband is also moving in a strong direction. So in the last four years the US has gone from on broadband speeds from 22nd globally to 8th. We’ve laid more fiber in the U.S. in each of the last two years, 2012 and 2011, than in any years since 2000 and more than Europe. When we think about the big challenges for the US in the 21st century global economy this is moving in the right direction. There are significant challenges ahead. We need to keep pushing to increase broadband speeds and capacity. We’ll need to keep pushing on competition, with the ongoing threats to Internet freedom in both the US and globally. But I’m proud that in 2013 we’ll be tackling those issues in a country with a position of strength and the FCC is a revitalized agency where a terrific staff of incredibly talented people is focused on the important mission of harnessing advanced communications technology to benefit our economy and to benefit all Americans.
Jeffrey Rosen is the Legal Affairs Editor at The New Republic. Follow Jeffrey on Twitter @RosenJeffrey.