Hope may have carried the day in the last election, but as the campaign slogans yellow like yesterday’s newspaper the workmanlike business of regulatory choices grinds on. Silicon Flatirons, in its tenth year of highlighting digital regulatory policy, convened a conference of policy all stars to discuss the future of the Internet, or more specifically, the choices currently confronting government as it regards regulation of those companies that deliver broadband to your business, home, and telephone. On hand were the Chairman of the FTC, the omnipresent Brad Feld, numerous academic luminaries in the field of digital law, as well as corporate and consumer advocates with cogent warnings of potential disaster on both sides. While the digital domain might be considered the Wild West, or the undiscovered frontier among its entrepreneurial rough riders, it should be remembered that government has a historical monopoly on taming the most feral within industry.
Overview Address – Bill Kovacic – Chairman, FTC
William Kovacic, current Federal Trade Commission (FTC) chairman, opened the conference focusing on opportunities for the FTC, or more generally any agency, to regulate more effectively. Among the challenges to this change, Kovacic noted legacy, an attitude of putting out the existing fire rather than anticipating problems, as well as a short-term focus which leads to “picking of the low hanging fruit rather than planting trees.” This short-termism generates a chronic underinvestment in capital expenditures (e.g. a total re-engineering of the FTC website) which could improve long-term results. Kovacic’s prescriptions to improve the FTC included a clear definition of the agency’s mission, more focus on proactive problem solving, internal evaluation and scrutiny, and a clear procedure for evaluation of programs and processes.
Panel 1 – The Internet’s Challenge to Policy Makers
- Phil Weiser (moderator), Professor of Law and Telecommunications at CU
- Kathryn Brown, Senior VP at Verizon
- Brad Feld, Managing Director at Foundry Group
- Dale Hatfield, Adjunct Professor at CU and former CTO of the FCC
- Kathleen O’Brien Ham, VP at T-Mobile USA
- William Kovacic, FTC chairman
- Bryan Tramont, partner at Wilkinson Barker Knauer and former FCC Chief of Staff
The lead in presentation drove the first panel discussion down a regulatory-heavy path with significant discussion on agency reform. Brad Feld was a notable exception to this focus, questioning any real need for regulation in this arena. Feld drew a distinction between broadband – essentially a transport mechanism – and the internet, or the actual programs and functions people use (e.g. Gmail, twitter). Feld is of the belief that “broadband” (or an alternative that emerges) that serves as the infrastructure to deliver the internet will eventually develop to support the demands created through internet application innovation.
Several panelists felt the current method of spectrum allocation inefficient, or not providing sufficient spectrum to uses consumers might value. Among the issues noted were difficulty finding information on current spectrum “owners” and flawed secondary markets due both to imperfect information and current restrictions on sale. The discussion also spanned into the financial crisis, noting a view that regulators placed too much faith in the financial markets to self-regulate. This evaluation may inevitably lead to over-regulation of other markets including the internet in the near-term. As Kovacic put it “The US system isn’t particularly good at getting the dosage right.”
Panel 2 – The Evolution of the Internet’s Architecture
- Paul Ohm (moderator), Associate Professor of Law at CU
- Edward Felten, Professor of Computer Science at Princeton
- Shane Greenstein, Professor Management and Strategy at Kellogg
- Christopher Yoo, Professor of Law and Communications at UPenn
- Dorothy Atwood, Senior VP at AT&T
- Mark Cooper, Director of Research at Consumer Federation of America
- Andrew McLaughlin, Head of Global Policy and Government Affairs at Google
The second panel began with three presentations of academic perspectives on the internet. Greenstein offered criteria to measure healthy behavior within the internet industry. According to Greenstein, the market was healthy when the following “symptoms” were evident: Economic experiments to evaluate what strategies work in reality, vigorous standards competition to establish norms for business, entrepreneurial invention to continue technological progress, absence of unilateral bargaining power.
Yoo focused on changes in the internet architecture that challenge the network. Yoo noted that multiple pathways now exist for a piece of information to travel from origin to destination giving “backbone” companies (central arteries for transport of data) less bargaining power. He also cited a two-sided market with content networks (i.e. sites that produce content) on one side and a consumer “eyeball network” on the other side. While current internet practice dictates the eyeball network pay the fees to those providing data transit (e.g. Comcast or Verizon), that payment model has not always been the norm in other two-sides markets – for a time broadcasters paid affiliates to carry their channels. In panel reactions, McLaughlin noted a belief that a “layered model” of the internet was better suited (with network, transportation, application) to analysis than the two-sided model presented by Yoo. Among McLaughlin’s objections was the increasing blurring of content providers and users as user generated content becomes more influential.
Felten focused on what represented reasonable network management. A key distinction must be made between the aspirations for network management (e.g. treating one kind of traffic like Voice-over-IP at a higher priority than a software download) and the reality that is implemented as current technology will not be entirely accurate. Felten noted the potential for consumers to play a role in specifying the type of data in transit which removes the need for an algorithm.
Reactions from the panel included those of Cooper whose key focus was maximizing freedom of speech on all platforms including the internet. In this vain, Cooper was less concerned with regulating companies based on “who they are” but rather on “what they do” – a sentiment echoed by Atwood who felt the inclination to focus on regulation of internet service providers (ISPs) is driven at least in part by the legacy of phone company regulation.
Panel 3 – The Evolution of Regulatory Institutions for an Internet Age
- Andrew Crain (moderator), VP and Deputy General Council at Qwest
- Howard Shelanski, Professor of Law at UC Berkeley
- Gigi Sohn, Founder of Public Knowledge
- James Speta, Professor of Law at Northwestern
- Jonathan Nuechterlein, Partner at WilmerHale
- Judge Stephen Williams of the U.S. Court of Appeals, D.C. Circuit
The third panel also started with presentations from three of the panelists. Speta questioned the FCC’s current authority to actually regulate ISPs. Speta felt this authority was far from certain, noting the need to clarify the realm of the FCC versus the FTC which serves a key authority in other industries. Shelanski also focused on the unclear boundaries between regulatory agencies in the realm of the internet and the need for any agency in power to establish “flexible, targeted, and responsive” policy. Shelanski highlighted a need for Congress to step in and establish both improvements in the FCC and any areas where the FTC might be better suited to take jurisdiction. Nuechterlein commented on these duplicative authorities, commenting that it only leads to more regulation since one agency will not reverse another’s prerogative to intervene but may assert itself in cases where the other abstained.
Sohn focused on the advice for FCC reform that came out of a recent conference entitled “Reforming the Federal Communications Commission.” The four specific recommendations were:
- Engage in strategic planning and innovative research
- Better management of transparent rule-making
- Effective communication to the public (starting with an enhanced website)
- Change to the agency structure including organization and staff
Accord among the final panel existed regarding the need for reform within the FCC. This reform could start with greater transparency and accessibility – like an easily searchable website.
The conference continues Monday morning with presentations from Verizon CTO Richard Lynch, Qualcomm founder Irwin Jacobs and a panel discussing internet content and services.
