Ajit Pai on What the FCC Has Done Right

Pai has focused on taking a market-based approach to regulating the nation's always-evolving telecommunications industry, with great success.


Since assuming the chairmanship of the Federal Communications Commission (FCC) in 2017, Ajit Pai has insisted on taking a market-based approach to regulating the nation's always-evolving telecommunications industry. He started his tenure by repealing Obama-era net neutrality rules, despite vocal opposition from congressional Democrats and progressive crusaders who worried that allowing internet service providers to offer products tiered by price and speed would lead to a massive gulf between internet haves and have-nots.

In a conversation with Reason's Nick Gillespie, Pai stands by that decision. "We saw predictions that this was the end of the internet," he says. But the internet is faster now than it was when net neutrality rules were repealed, and America's digital infrastructure was even able to withstand the massive changes in online behavior brought about by the coronavirus pandemic. Thanks to increased regulatory certainty, companies "were able to build a lot stronger networks in the last three years before anyone even heard of COVID," he says.

Q: You've said that your priority since becoming FCC chairman in January 2017 has been closing the digital divide. How is that going?

A: We're in the midst of the Rural Digital Opportunity Fund, a $20 billion reverse auction program. We're allocating money to underserved parts of the country through the market mechanism—not just by cutting a check to a fly-by-night operator and saying "vaya con Dios" but by using the auction mechanism that [Nobel-winning economist] Ronald Coase pioneered almost 60 years ago.

Q: How does an auction help people who don't have access to good broadband? 

A: The traditional model was a universal service fund program that essentially cuts a check to a rural telephone company. Those rural telephone companies didn't have a strong impetus to use that money to build out the networks, especially in these rural or Native lands.

What we did was set up a reverse auction where we encourage all kinds of companies using any technology—so long as it meets the FCC service thresholds—to compete for that funding. So we'll say for a certain census block, for example, "this is the amount of money that we estimate will be available." Anybody, from electric utilities, satellite companies, cable companies, telephone companies, whatever, [can] compete for that funding. So there's downward pressure on prices using the same market mechanism that will hopefully make sure that the best technology for that area will win ultimately and deliver a fiscally responsible result.

Q: What is an exciting use of next-generation 5G wireless internet?

A: I think from a consumer perspective, some of the early use cases we'll see are things like telehealth and connected care, generally just getting super high resolution and low latency. Gaming is another one. Augmented reality, virtual reality, that sort of thing.

On the industrial side, I know it's not as sexy, but the improvements in terms of efficiency and safety and productivity are going to be tremendous. Connected cars, for example, or precision agriculture increasing the yield in an environmentally sustainable way. All these types of things are at our fingertips.

Q: Let's talk about net neutrality. You and the Trump administration rolled those rules back. Has it worked?

A: In 2017, when I announced that we were going to move to reduce government involvement in internet regulation and restore the market-based approach that had served us well from 1996 until 2015, we saw predictions that this was the end of the internet. "You're going to have to pay $5 per tweet. Certain websites are going to be inaccessible." Fast-forward almost three years. Internet speeds today are twice as fast as they were in December 2017. Millions more Americans have access to the internet.

If anything, the internet is better than ever, especially during the pandemic. Europe, which has the net neutrality regulations that certain advocates in the U.S. love, had subpar infrastructure development the last few years due in part to these regulations. [Government officials] had to go hat in hand to these streaming companies—YouTube, Netflix, Hulu, etc.—in the early days of the pandemic and beg them to throttle content from [high definition] down to [standard definition].

So I think we made absolutely the right decision. And the fact that it's now receded into the background of most people's memories is, I think, a testament to the fact that we did the right thing.

This interview has been condensed and edited for style and clarity. For a podcast version, subscribe to The Reason Interview With Nick Gillespie.