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Rudy Takala's Columns

FCC's Ajit Pai: Something changing in America about the First Amendment

Ajit Pai, the son of immigrants from India, grew up in Parsons, a city of 10,000 in rural Kansas, before going to Harvard University and the University of Chicago for law school. His parents came to the United States with "about $10 in their pockets, a willingness to work very hard, and a belief in the American Dream."

Appointed to serve on the Federal Communications Commission in 2012, Pai is one of the most outspoken proponents of free speech on the Internet in Washington. His campaign comes as the agency has assumed sweeping new regulatory authorities over the past several years.

In particular, the agency voted in 2015 to classify Internet service providers as Title II public utilities subject to FCC control. The approval was along party lines, over objections from Pai and his sole Republican colleague, Michael O'Rielly.

The FCC claimed authority to do so, in part, pursuant to a 1934 law governing telephone companies. It was necessary, Democrats said, to impose "net neutrality" regulations, theoretically aimed at preventing service providers from blocking or throttling traffic on the Web.

However, the rules also give the commission authority to engage in rate regulation and influence investment in new infrastructure. As part of the package, the commission even declared that ISPs have no right to freedom of speech, an aspect Pai calls a "dangerous" part of a larger effort to derail the "culture of the First Amendment."

At the same time, the FCC's budget has grown, and its Universal Service Fund, which comprises fees placed on telecommunication services, has exploded. The USF, originally intended to help low-income consumers gain access to telephone service by providing them with a subsidy of about $10 per month, has grown by nearly 50 percent under President Obama, from $7.2 billion in 2008 to $12.1 billion this year.

As a result of the Title II ruling, the Democratic majority now is talking about expanding that subsidy to cover Internet service, which means both the fund and the fee levied on consumers could continue to grow at an exponential rate, and an additional fee could now be imposed on Internet service. That would be bad news for a lot of people, Pai notes, and would be ironic, considering the commissioners agree that Internet is hard enough for some consumers to get even without new taxes.

Washington Examiner: On Jan. 28, you issued an opinion concurring with the idea that broadband Internet was not being deployed in a timely and reasonable fashion. What do you believe needs to be done and how does that differ from your colleagues in the majority?

Pai: Under the law, the FCC is required every year to make an assessment of whether broadband is being deployed in a reasonable and timely manner across the United States. Until the Obama administration, the answer to that question had been yes.

Starting in 2010, the administration, the FCC, started to answer in the negative. This time around, the majority answered that question again in the negative, saying it was not being deployed in a timely and reasonable manner. I agreed with them, unusual for a Republican commissioner, but on different grounds.

My position was that after seven years and over $63 billion spent, and a lot of government talk about this issue, if broadband wasn't being deployed reasonably and timely, it is due to the administration's policies.

We should more proactively, and in a bipartisan way, try to reform our policies to ensure the private sector had the maximum incentive to deploy broadband to all parts of the country.

Examiner: If you were to take three measures to encourage broadband deployment, what would they be?

Pai: One of them would be making deployment of broadband infrastructure much easier. That means making sure somebody who wants to build or expand a network can get easier access to pole attachments, to the conduit that's under the ground, and to other means of installing wired infrastructure.

On the wireless side, I would make it much easier for wireless companies to install infrastructure on federal lands. Right now, getting the requisite approvals to install on federal land takes about twice as long as it does on private land.

The third would be getting much more spectrum out in the marketplace. As the Internet becomes an increasingly mobile experience, and the applications on mobile devices become more bandwidth intensive, it is imperative that the FCC ensure that there's much more licensed and unlicensed spectrum that people can use.

Whether it's licensed spectrum that could be purchased in an auction by a wireless company, or unlicensed spectrum that innovators could use to build Wi-Fi-based applications, I think we need an all-of-the-above approach when it comes to the airwaves. So those are some of the things I would target, if we only had three choices.

Examiner: The House Energy and Commerce Committee passed the "No Rate Regulation of Broadband Internet Access Act" on Feb. 11. It would prohibit the FCC from engaging in rate regulation, or simply enshrine forbearance policies that the Democratic majority have said they support into law. In spite of saying they support that idea, Democrats are still very opposed to this legislation. Why is that?

Pai: I'm not quite sure. All that legislation does is codify the commitment that FCC leadership made to Congress last year, that rate regulation was off the table. It seems to me if that is so, there is no harm in enshrining into law the principle that the FCC shouldn't be able to micromanage the rates that broadband providers are charging.

The fact that even that basic legislation couldn't get bipartisan support, I think, doesn't bode well for a bipartisan approach to Internet regulation going forward.

Examiner: The FCC's Universal Service Fund has grown from $7.2 billion in 2008 and to $12.1 billion this year, a 45 percent increase. Why has that been necessary?

Pai: The bulk of the growth is going to two programs. One is the Lifeline program, which provides subsidies to people for telephone service. The majority wants to expand the subsidy to cover broadband. I'm open to that conversation, but what I have said is that we need to root out waste, fraud and abuse in the current program before dramatically expanding it.

There are a number of cases of Lifeline fraud we've uncovered that a well-functioning program wouldn't allow. The program is twice as big as it was at the beginning of the Obama administration, and if we expand it to cover broadband, there's no telling how large the program is going to get.

The other program is E-Rate, which provides assistance to schools and libraries for telecom services. The majority has increased the budget for that program by several billion over the next couple of years. I would anticipate that's going to be another area of growth going forward.

As a result of the growth in these programs, the tax that every telephone customer pays is now around 18 percent. That is much higher than it was at the start of the administration, and that unfortunately falls on the back of low- and middle-income consumers.

Examiner: You've talked in the past about disruptive and innovative technology and companies. What role do you think the FCC has to play in encouraging those, or what do you think it's getting wrong?

Pai: Here it's more of a pan-agency approach that I have in mind. It seems to me that whether it's the FCC, the Federal Aviation Administration, the Department of Transportation, any of the alphabet soup agencies, there is quite often the instinct to apply legacy regulations to new and disruptive business models.

Whether it's something like Uber, AirBNB, or any of the companies using new technologies in ways that benefit consumers, I think the government needs to be more forward-looking, instead of reflexively applying regulations that have the effect of protecting incumbent players. We should think more broadly about how to incentivize this kind of innovation, because at the end of the day, the government's sole focus in my opinion should be on maximizing consumer welfare.

If a particular business is doing that in an innovative way, and consumers seem to like it, government shouldn't stand in the way as a gatekeeper between innovators and consumers.

Examiner: You've also spoken a lot about threats to the "culture of the First Amendment." What do you mean by that?

Pai: It seems to me that something is changing in American society, and particularly on college campuses. There's the old saying that I may not agree with what you say, but I'll fight to the death for your right to say it. That kind of ethos is increasingly rare.

That poses a special danger to a country that cherishes First Amendment speech, freedom of expression, even freedom of association. I think it's dangerous, frankly, that we don't see more often people espousing the First Amendment view that we should have a robust marketplace of ideas where everybody should be willing and able to participate.

Largely what we're seeing, especially on college campuses, is that if my view is in the majority and I don't agree with your view, then I have the right to shout you down, disrupt your events, or otherwise suppress your ability to get your voice heard.

That's something, I think, that poses a danger to what I call the culture of the First Amendment. The text of the First Amendment is enshrined in our Constitution, but there are certain cultural values that undergird the amendment that are critical for its protections to have actual meaning. If that culture starts to wither away, then so too will the freedom that it supports.

Examiner: Do you believe that those who oppose the culture of the First Amendment are at war against conservative points of view, including censorship on Twitter?

Pai: What I can say is that even though private actors like Twitter have the freedom to operate their platform as they see fit, I would hope that everybody embraces the concept of the marketplace of ideas. The proverbial street corner of the 21st century, where people can gather to debate issues is increasingly social media, which serves as a platform for public discourse. We should be sure that we don't foreclose any points of view, unless they pose a threat of violence or clearly violate the law.

Examiner: Is there a role for the FCC to play in keeping the political elite from trying to suppress Trump supporters?

Pai: Certainly. I think one aspect of it is, the FCC using the bully pulpit that it has to continue advocating for free speech. That means keeping government-funded researchers out of broadcast newsrooms, which is something I pushed for a year and a half ago. It also involves just talking about the importance of the First Amendment to make sure all parts of the public are aware the government takes this seriously, and preserve robust public discourse for everybody.

Examiner: How much of an impact do you see the next president being able to have on this issue?

Pai: What I can say is that I would hope whoever the president is, Americans would return to the tradition that we've had of respectful and robust public debate. That's something increasingly becoming rare. I think it's critical that the American public be in the driver's seat when it comes to this issue. No one should have a monopoly on the ability to get a point across.

Examiner: Relatedly, the FCC last year denied a petition that would have forced so-called edge providers like Google and Facebook from honoring "Do Not Track" requests from users. Those same companies supported Title II regulations to enable the FCC to control ISPs. Is there any contradiction in the fact that those companies have supported regulating others but get to escape regulation themselves?

Pai: This is one of the interesting aspects of the net neutrality decision. On one hand, the FCC is hell bent on applying 20th century utility regulations to one part of the digital ecosystem, but is turning an entirely blind eye to another.

It strikes me that if the FCC is going to support, as it has in court, this argument that everybody from Internet service providers to edge providers are involved in the so-called "virtuous circle," in which network improvement and application adoption incentivize the growth of the Internet, then there should be uniform regulation. We can't pick winners and losers in the Internet marketplace.

One of the dangers I've talked about is that while today, the FCC is drawing this particular line, a future FCC could well decide to expand jurisdiction and cover those edge providers. That's something I don't think would be good for consumers, and certainly wouldn't be good for edge providers.

That's one of the reasons I think that Title II regulations are a solution that won't work in search of a problem that doesn't exist.

Examiner: Speaking of Title II, the circuit court is set to rule on its legality any day. How do you see that turning out?

Pai: I hesitate to offer a prediction, because in the past, I think predictions have been pretty far off. However the court decides, though, my hope is that the FCC will finally focus on what really matters to the American consumer, which is broadband deployment and competition, as opposed to one-size-fits-all utility-style regulation addressing ephemeral concerns that net neutrality advocates have consistently talked about.

Examiner: What other issues are big on your agenda in 2016?

Pai: It's sort of wrapped up in getting rid of regulatory barriers to infrastructure investment. One of them is embracing the Internet Protocol, or IP transition. There are a lot of FCC rules on the books that still require these telephone companies to maintain fading copper infrastructure that's been around forever, in some cases for a century.

What those companies and consumers of those companies have been telling us is, look, we want to be able to introduce next generation technologies like fiber. But by definition, every dollar that you require on copper is one that can't be spent on fiber.

I've suggested, unsuccessfully thus far, that the FCC embrace that transition, to ensure there's greater competition from fiber-based companies. That would ultimately be a good thing for everybody. It wouldn't benefit just big telephone companies. I've met with small fiber providers — RG Fiber in Kansas, Southern Light in Louisiana — companies with relatively limited resources. They're willing and able to deploy fiber in some hard to serve areas of the country if the regulatory framework is optimal.

That's the kind of result the FCC is squarely positioned to deliver, and I certainly hope we deliver it in the near future.

Examiner: Why are Democrats resistant to that?

Pai: Some argue that if even a single consumer still relies on a copper-based landline, regulations should still require these companies to spend a huge amount of money maintaining that copper network.

There are also so-called public interest advocates who are effectively special interests here in Washington, who raise Chicken Little arguments that if the FCC allows companies to retire this copper infrastructure, they're going to throw the diminishing number of consumers who still rely on this infrastructure into a brave new world where they might not get the services and products that they want.

When you actually talk to those consumers, and I have, from Carbon Hill, Ala., to Fargo, N.D., they tell me they want the same access to fiber and other modern technologies that people in big cities get. And I think ultimately the agency risks making itself look like an ostrich if it ignores the fact that consumers themselves are driving this transition. Copper landlines are increasingly going the way of the dodo, precisely because consumers are opting for IP-based services.

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