Net Fix: FCC chief on solving the Open Internet puzzle (Q&A)

With a vote looming on new rules for Internet access, Tom Wheeler talks candidly with CNET News in an exclusive interview about legal challenges, President Obama's role and being the butt of late-night TV jokes.

FCC Chairman Tom Wheeler: "I have been trying to do what is the right thing to do for creating an open Internet." Brendan Smialowski/AFP/Getty Images

This story is part of a CNET special report looking at the challenges of Net neutrality, and what rules -- if any -- are needed to fuel innovation and protect US consumers.

Tom Wheeler, chairman of the Federal Communications Commission, never dreamed he'd be fodder for late-night TV comedians. But 12 months into his agency's rewrite of rules governing Internet access, he's still trying to explain his plan for saving the Internet.

A former wireless and cable industry lobbyist and venture capitalist appointed to lead the FCC in November 2013 by President Barack Obama, Wheeler became the butt of a humorous 13-minute rant on John Oliver's HBO show "Last Week Tonight" in June.

"Yes, the guy who used to run the cable industry's lobbying arm is now tasked with regulating it," Oliver said. "That is the equivalent of needing a babysitter and hiring a dingo. 'Here's $20 for kibble, please don't eat my baby.'"

What prompted Oliver's monologue? Wheeler's proposal for reinstating so-called net neutrality rules that a federal court struck down exactly one year ago today. The rules had prohibited broadband providers from blocking or slowing down Internet traffic and ensured that consumers and entrepreneurs alike had equal access to the Internet.

Wheeler's initial proposal was roundly criticized. Consumers, activists and congressional leaders, including Sen. Al Franken (D-Minn.), complained the FCC's fixes were weak and would create Internet "fast lanes." Those fast lanes would, in turn, let broadband providers, like Comcast and Verizon, charge Internet companies, such as Netflix and Amazon, for priority access to their networks.

In those 13 minutes, Oliver schooled viewers about Net neutrality -- a topic policy wonks have debated for more than a decade -- and implored Internet trolls to flood the FCC with comments trashing the chairman's proposal. And they did -- to the tune of a record 3.7 million comments.

"Right away, there were people who were saying, 'That isn't sufficient,'" Wheeler said in a 30-minute exclusive interview on Monday with CNET News.

It's easy to lose sight of what's at stake amid all the noise. On one side: Those who argue the only way to ensure the new rules would protect the Internet and withstand future legal challenges from broadband providers is to reclassify broadband as a Title II utility service under the 1934 Telecommunications Act. Such a move would essentially treat broadband the same as the old-style telephone network.

On the other side stand broadband providers and their supporters who counter that approach is too drastic and will stifle investment and innovation in the Internet.

How did all of this come about? The drama started on January 14, 2014, when the United States Court of Appeals sided with Verizon Communications in a lawsuit challenging the FCC's 2010 Open Internet rules. The court overturned those rules, which has left the Internet defenseless against potential abuses from broadband providers. The FCC's job, said Wheeler, is to fix that. And he is unapologetic for the controversy and debate it has created.

"I have been trying to do what is the right thing to do for creating an open Internet," Wheeler said. "To the extent that it became fodder for people that was one thing. To the extent that people called me names or demonstrated at my house, that kind of goes with the turf. I was trying to answer the question, 'What is it that this agency can do to make sure that we have an Open Internet?'"

Wheeler says he's listened to the people and that his thinking has changed dramatically in the past year, especially on the big question of broadband reclassification as a utility. He also talked about why wireless services shouldn't be exempt from Net neutrality regulation and why he believes the FCC's new proposal, to be presented on Feb. 5 and voted up or down on Feb. 26, won't lose another legal challenge.

And he said the FCC and President Obama -- who called an open Internet "essential to the American economy, and increasingly to our very way of life" -- are on the same page when it comes to protecting the Internet for consumers. For Wheeler, the White House's statement in November endorsing Net neutrality "put wind in our sails."

"The President and I never were pulling on opposite ends of the rope," Wheeler said. "We have been pulling in the same direction, which is figuring out how do we get an open Internet."

Here's an edited transcript of the conversation.

How would you explain the importance of the Open Internet to people living outside the Beltway? What should people know about how these potential rules will affect them?
Wheeler: The communications pathway that defines the 21st century is broadband. And the rules that will set up the expectations for the operation of that network are crucial to the success that consumers and innovators will have in using that network.

It's incredibly important for everybody, whether they are consumers who want to be able to access Facebook or Netflix, or whether they are entrepreneurs who need the ability to reach a mass of consumers quickly. It's also important to those companies who build the networks themselves to make sure they have the incentive to make the appropriate investment because in this country that's a private decision, whereas in other countries they use taxpayer dollars. So this is helping to shape the network that will be the backbone of the 21st century.

When your proposal in May 2014 was leaked, were you surprised by the backlash?
Right away, there were people who were saying, "That isn't sufficient." And I said well "We will put everything on the table." At the time, I had not had the interpretation of "commercially reasonable" that I came to understand was the legitimate fear of those who were concerned.

What do you mean by that? You didn't see the potential for an Internet "fast lane" that some critics talked about?
When it became clear that there was another interpretation, I thought this is too big a thing to risk. So that's why in the summer, I said let's start looking at a traditional, tried and true, "just and reasonable" test as the yardstick by which we determine what is appropriate behavior over broadband networks. And that's when we began exploring the options for using Title II under the Telecommunications Act.

How is "just and reasonable" different from "commercially reasonable?" Is there a legal difference?
"Commercially reasonable" has not been defined by rule making and redefined by litigation as has "just and reasonable." "Just and reasonable" has been a part of Title II forever. Matter of fact, it goes back to even before the Telecom Act.

The concern here was that when I saw "commercially reasonable," I interpreted it as saying the commercial service that the court described as a virtuous circle needed to be reasonable. But more and more consumers and innovators and entrepreneurs kept coming to me and saying "No, that hasn't been established by the court. And you may assert that, but what if it's challenged in court and the court ends up saying, 'No it's what is commercially right for the commercial vehicle?'"

I said, "We can't take that risk. How do we get to a definitional yardstick that is well known and talks about the consumer and the innovator and not just the network provider?" That was over the summer that we began to look at this different perspective.

Emotions have run high over Net neutrality. Here, protesters interrupt a meeting of the FCC commissioners on December 11, 2014. (Wheeler is second from left.) Brendan Smialowski/AFP/Getty Images

I want to take a step back here and talk about the controversy that the initial proposal ignited. You've been subjected to a lot of personal attacks since it went public last spring. Protesters picketed outside the FCC, people called you names, you've even been the punchline of a lengthy rant by comedian John Oliver-- although I guess some people might say that is a sign you've really made it in popular culture. How has this attention affected you and how you've been able to do your job?
I am a great Lincoln buff and Lincoln told the story of a guy who was tarred and feathered and run out of town on the rail and who reputedly said "You know, if it weren't for the singular honor of the thing, I'd just as soon walk."

The point is that I have been trying to do what is the right thing to do for creating an open Internet. To the extent that it became fodder for people that was one thing. To the extent that people called me names or demonstrated at my house, that kind of goes with the turf. I was trying to answer the question, "What is it that this agency can do to make sure that we have an Open Internet?"

If we have learned anything about the Internet, we have learned that nobody expected that a thing that Mark Zuckerberg did in his dorm room called Pigbook would become Facebook. And you can go right down the list of everything else that was never expected.

The key to innovation is an open network, and that is why I thought basing our regulation on the section of the Telecommunications Act that was suggested by the court would be enough to stand up to future legal challenges. But it became clear that it may not be sufficient and that it could allow the regulation to be interpreted differently than I had intended. That is when I actively began looking at reclassifying broadband as a Title II service. That is how the process evolved. And then of course the president jumped in, which certainly helped the process along.

It's interesting you bring up President Obama. Did his November statement in support of Net neutrality and reclassifying broadband as Title II really help the FCC's process? It seemed to me, as an outsider, that he was giving you a little nudge because maybe he didn't think you'd move in that direction on your own. I thought he sort of threw you under the bus.
I said at the time we are an independent agency, and we are. We will make our decisions based on our processes. We are not a cabinet agency, where the White House makes the decision and then we implement it. The fact of the matter is, though, that the President and I never were pulling on opposite ends of the rope. We have been pulling in the same direction, which is figuring out how do we get an open Internet. And as you know, the FCC had been working on a hybrid approach. So when the President came out, it put wind in our sails.

Internet service providers have said that if broadband is reclassified as a Title II service, they will file suit. How do you expect to defend your proposal in court?
We think we have a clear legal case. I can assure you that we are writing this with the full expectation that it will be reviewed by the court, so we will make sure we are on sound footing.

But the very fact that the new rules are likely to end up back in court just prolongs this whole process, doesn't it? This also means there will be uncertainty in the market, which broadband operators claim will slow investment and stifle innovation.
What we are working to bring out is the gold standard of the Open Internet. The message that it will deliver to innovators, consumers and ISPs is, "Here is the model going forward." We are building these rules on the basis that they will be in effect when published in the federal register or with the appropriate time lapses afterward and that they will be in effect during the course of any challenge in court. And we also expect to eventually prevail in court.

Let's say the FCC does prevail in court. Broadband providers argue that reclassifying broadband as a Title II utility will stifle innovation because they won't invest in their networks for fear the FCC will force them to share their networks or set rates on broadband. Are these concerns legitimate?
I have said all along that I don't think that rate regulation is appropriate in this area.

I came out of the wireless business. I think there is a model that we can look to that was wildly successful there, which is section 332 of the Communications Act, in which, wireless carriers by statute are regulated as Title II "common carriers." And the Congress told the commission to forbear from regulation that is inappropriate to the kind of more competitive, non-monopoly service that is being offered by mobile carriers, with the exception of sections 201 and 202, where you find the "just and reasonable" provisions and section 208 where you find the consumer protection provisions.

I think that is a pretty good model. It clearly has not thwarted investment in the wireless industry. I mean, golly, there has been $300 billion -- that's with a "b" -- invested in the wireless industry. So this regulation clearly hasn't thwarted innovation there. In fact, we have the most innovative mobile technology in the world. It clearly has not thwarted the ability for the carriers to make a profit.

And it clearly hasn't thwarted the ability for them to spend money in auctions, as we see by the ongoing auction. Bidding on the current spectrum auction is up to $45 billion. That's the largest spectrum auction ever held.

In the 2010 Open Internet rules, wireless was treated differently than wireline networks. You've indicated you don't think that should be the case in the 2014 rules. What has changed?
I'll tell you a story. I was about to go on stage at the CTIA convention in September, and I am standing backstage listening to the preceding speaker, who was the chairman of CTIA, extolling about how 55 percent of the Internet goes over wireless devices. And I knew that I was about to go out and deliver a speech, in which I would say to the wireless industry that I thought they should be covered in Open Internet. I kept saying to myself, 'Oh my goodness. Listen to that statistic. He is setting me up for what I am about to go out and say, that wireless can't carry 55 percent of the Internet's traffic and expect to be exempt from Open Internet requirements.' I said that in September and that is my strong view today.

Senate Democrats have introduced a Net neutrality bill specifically to ensure that broadband providers can't create fast lanes on the Internet. And Republicans are working on legislation that would ensure broadband providers can't block traffic but would not use Title II. Given that you are about to release the FCC's proposal, what's the role of Congress in all of this?
Congress obviously has a role. They write the statutes that we operate under. We are working to introduce the gold standard in terms of open Internet rules. My hope is that Congress can react to it. My hope is that they will turn around and turn our regulation into statute, which would make the whole lawsuit question moot -- because Congress would have decided.

Congress has been very involved in the FCC's process. I have had endless meetings with members of Congress. There have been letters and filings of great extent. We continue our dialogue with Congress. We have been at this for a year, and it's time to shoot.

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