Net Neutrality

FCC Commissioner Ajit Pai: Net Neutrality is a "Solution That Won't Work to a Problem That Doesn't Exist"

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Net Neutrality is "a solution that won't work to a problem that doesn't exist," says Ajit Pai, a commissioner at the Federal Communications Commission (FCC).

Pai is an oustpoken opponent of expanding government control of the internet, including FCC Chairman Tom Wheeler's plan to regulate Internet Service Providers (ISPs) under the same Title II rules that are used to govern telephone-service providers as public utilities. Under current FCC regulations, ISPs are considered providers of "information services" and subject to essentially no federal regulation.

He is also sharply critical of President Barack Obama's very public push to influence policy at the FCC, which is technically an independent agency. Last year, it was widely believed that Wheeler, a former head of the National Cable & Telecommunications Association, would not push for Title II. Pai calls the president's actions—which included "creating a YouTube video of with very specific prescriptions as to what this agency should do"—unprecedented in his experience. Coupled with the fact that "the agency suddenly chang[ed]course from where it was to mimic the president's plan," says Pai, "suggests that the independence of the agency has been compromised to some extent."

The FCC is scheduled to vote Thursday, February 26 on Wheeler's plan.

Pai explains his opposition to Title II reclassifcation to Reason's Nick Gillespie. Citing independent studies of American competitiveness and booming investment in telecommunications infrastructure compared to Europe, Pai argues that consumers are thriving and the market is doing its job.

Regulating the internet like a utility company, says Pai, will threaten the kind of innovation we've taken for granted over the past 20 years. "Do you trust the federal government to make the Internet ecosystem more vibrant than it is today?" Pai asks. "Can you think of any regulated utility like the electric company or water company that is as innovative as the Internet?"

Runs about 30 minutes.

Produced by Todd Krainin. Cameras by Meredith Bragg and Krainin.

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INTERVIEW TRANSCRIPT: This is a rush transcript and should be compared to video and audio for accuracy.

reason:  Recently, the FCC chairman Tom Wheeler said that he's going to move forward with the FCC regulating the Internet under Title II regulations. That'll change the regulatory structure from that of an information service to a telecom. What is the most important thing that people need to know about that switch?

Pai: I think the most important thing that people need to know is that this is a solution that won't work to a problem that simply doesn't exist. Nowhere in the 332-page document that I've received will anyone find the FCC detailing any kind of systemic harm to consumers, and it seems to me that should be the predicate for certainly any kind of preemptive regulation—some kind of systemic problem that requires an industry-wide solution. That simply isn't here.

reason:  So you're simply saying the Internet is not broken.

Pai: I don't think it is. I think by and large, people are able to access the lawful content of their choice. While competition isn't where we want it to be—we can always have more choices, better speeds, lower prices, etc.—nonetheless, if you look at the metrics compared to, say, Europe, which has a utility-style regulatory approach, I think we're going pretty well.

reason:  The FCC recently redefined broadband, but using standards from the last roundup of where we were in terms of the number and variety of Internet connections. One of the things that people say is, "Well, we need to regulate the Internet because local ISPs like Time Warner or Comcast have an effective local monopoly on service." Is that accurate, and would that be enough of a reason to say, "Hey, we gotta do something"?

Pai: I certainly think there are a lot of markets where consumers want and could use more competition. That's why since I've become the commissioner, I've focused on getting rid of some of the regulatory underbrush that stands in the way of some upstart competitors providing that alternative—streamlining local permit rules, getting more wireless infrastructure out there to give a mobile alternative, making sure we have enough spectrum in the commercial marketplace—but these kind of Title II common carrier regulations ironically will be completely counterproductive. It's going to sweep a lot of these smaller providers away who simply don't have the ability to comply with all these regulations, and moreover it's going to deter investment in broadband networks, so ironically enough, this hypothetical problem that people worry about is going to become worse because of the lack of competition.

reason:  But you're also saying it doesn't exist. So do most people in America have a choice in broadband carriers, and do they have more choice than they did five years ago, and is there reason to believe they'll have more choice in another five years?

Pai: I think there are hiccups any given consumer might experience in any given market. Nonetheless, if you look on the aggregate, Americans are much better off than they were five years ago, ten years ago. Speeds are increasing; the amount of choice is increasing. Something like 76 percent of Americans have access to three or more facilities-based providers. Over 80 percent of Americans have access to 25 mbps speeds. In terms of the mobile part of equation, there's no question that America has made tremendous strides. Eighty-six percent of Americans have access to 4G LTE. We have 50 percent of the world's LTE subscribers and only 4 percent of the population.

reason:  Many will say that part of the problem is that if Europe, for instance, is so much more advanced than we are in terms of the speed of connectivity, the price of a connection, and the variety: Is that just wrong?

Pai: That is wrong. If you look at the Akamai State of the Internet report, for example, or other objective data, there's no question that America is better off, especially considering our relatively lower population density—in terms of deployment, speeds, prices, whatever metric you choose. Moreover, if you look at investment, in the U.S. it's $562 per household. In Europe, it's only $244.

reason:  Why is that important?

Pai: I think it's important because we want to have a strong enough platform for innovation investment and online options as possible, but you won't get that if the private sector doesn't have the incentive to risk capital to build those networks. It's a pretty tough thing to build the nuts and bolts of the Internet, and if the regulatory system is one that second guesses you every single step of the way, regulates your rates, tells you what service plans are allowed or now, regulates the commercial arrangements you have both within users and companies, you're going to have the European situation essentially.

reason:  The critics of Title II, and I think we'd both count ourselves among them, will say these are laws put in play essentially in around 1935. It's for old-style telephone companies, and actually the FCC helped create a monopoly there. I don't know if he counts as your boss, but he head of the FCC Tom Wheeler says, "No, we're going to place the Internet under Title II, but we're going to use a light touch," and his predecessor Julius Genachowski also talked about that, and we're going to do a lot of forbearance. What is the forbearance process, and how would it actually work?

Pai: Forbearance is a process set up by Congress in 1996 to allow the FCC not to enforce a particular statute or regulation if it determined that that statute or regulation was no longer necessary to enforce in the public interest. And essentially, over the years, the FCC has said, "If a particular aspect of the marketplace is competitive, then we won't enforce regulations relating to it. But think about the weird jujitsu that the FCC will have to do in this context. On one hand, on a macro level, it's going to have to say that the broadband Internet access market is so uncompetitive that we need preemptive sweeping regulations along the lines of Title II. On the other hand, it's going to have to say the marketplace is competitive enough that we don't need to enforce a lot of these regulations. That's a conceptual problem that I don't think the proposal does a good job of addressing.

reason:  You've talked about the proposal as being well over 300 pages. There have been accounts that actually that's mostly footnotes and addenda, and that the rules are about eight or 10 pages. Is that accurate?

Pai: The rules are eight pages. However, the details with respect to forbearance, the regulations from which we will not be taking action—that alone is 79 pages. Moreover, sprinkled throughout the document, there are uncodified rules — rules that won't make it in the code of federal regulations that people will have to comply with in the private sector. On top of that, there are things that aren't going to be codified, such as the Internet Conduct Standard, where the FCC will essentially say that it has carte blanche to decide which service plans are legitimate and which are not, and the FCC sort of hints at what factors it might consider in making that determination.

reason:  What goes into something like that where you're saying, okay, "we're the regulators and we're here now, and you've got to pay attention to us, but we're not going to tell you what you actually need to do." I mean, that's passive-aggressive to the max, but is that a decisive strategy to say, "We want you to jump, but we're not going to tell you how high"?

Pai: I think part of the problem is that the rules don't give sufficient guidance to the private sector, regardless of whether they're public or not, and part of the reason I want them to be public soon, in advance of the vote, is I think the American public and particularly the people who'd be affected by it, deserve to see what regulations are going to be adopted before they're formally adopted.

reason:  We will eventually get to read the document, but this question of the secrecy of the document, where somebody — and maybe this is a bridge too far — but it's almost McCarthyite where we've got these regulations, and they're going to affect you, and you'll get to read them eventually. Why wouldn't the FCC just put the document out into the public when it was announced that it was going to be voted on? What is the history of the kind of secrecy of rule making or documentation in the FCC, and does this represent a break with that?

Pai: Under the rules, only the chairman has the authority to disclose this document, and he's said both to congress and the public that he's not going to do so, and he's cited the traditional practice of the FCC, which is to not reveal these proposals until after they're voted on. And he's absolutely right, that is the traditional practice. However –

reason:  Is that a good practice?

Pai: Well, I think in this case, it absolutely is not. If you look at how great the public interest is in this issue, the folks who have been advocating for net neutrality have told us repeatedly that the Internet is something unique among the FCC's responsibilities, that 4 million people have commented, the president himself has made specific comments about it, and so I think if ever we were to make an exception to the traditional practice, this is it. Moreover, it's not that big of a leap to say that the FCC should be as open and transparent as the Internet itself. Simply publish the rules, let the American people see it, and I think they can make up their own minds. Now, one of the additional arguments that have been made is that we need to keep this document confidential so that various commissioners can suggest changes, etc., but by and large, I don't think it's a big surprise as to how the vote is going to come on February 26, and to the extent that that was the concern, I think it's misplaced. I think we should just get the document out there to the American public, especially to the extent that this wasn't our proposal in the spring, and it wasn't our proposal in the summer. This came, essentially, at the insistence of the White House, which I said, to this day, is asking the FCC to implement the president's plan.

reason:  What will the vote be? What's your prediction?

Pai: Most astute observers say that it will be 3-2, with the three Democrats in the majority, and the two Republicans, myself included, in the minority. But hope springs eternal, and if I can persuade people with either a tweet, op-ed, appearance, or newspaper statement…

reason:  You've criticized the proposal for not being public. When will it become public, and when will there be a kind of commenting period that goes into effect?

Pai: The FCC will vote on February 26 on this proposal. At that point, the document could be released at any time. Given the sheer breadth of this document, as well as what I would expect to be my dissent, at least one of my colleague's dissents, then typically the majority takes time to respond to our arguments, and there's a back-and-forth between the majority and minority. That takes, in some cases, weeks to iron out, so we could be well into March before this document sees the light of day.

reason:  There's also a question of what happens next. Because I'm assuming that all of the ISPs, or at least some, will sue to say this is another example of the FCC trying to assert authority or jurisdiction when it doesn't have any. I mean, that's a foregone conclusion. Does that suggest that Congress is the body that should be writing these rules?

Pai: I think so absolutely. When the Verizon v FCC decision came out a year ago, without knowing we'd end up here, I said, At this point the FCC's now been struck down twice by the courts in its attempts to adopt Internet regulations. The time has come for us to seek congressional guidance. We're trying to fit what some would consider to be a square peg of regulation into this round hole of the Communications Act, which as you pointed out, is over eight decades old.

reason:  What role did the White House play in creating the Title II decision? A year ago, everyone was saying, "Well, Wheeler is not going to go with Title II. He's a former lobbyist or employee of the cable industries. He's not going to do that." So what role did the White House play in enforcing this decision?

Pai: I think the White House changed the landscape dramatically with the president's announcement shortly after the midterm elections that he wanted the FCC to adopt Title II regulations and said—and it's still on his website—"I ask the FCC to implement this plan."

reason:  Now the FCC is technically an independent agency, right?

Pai: It is and always has been.

reason:  So is it a break with past protocols of the president kind of demanding certain things?

Pai: It is a break in my experience. I've served under a number of different chairmen during administrations of Republican and Democratic affiliation. I've never seen anything as high profile as this. There have been other examples of presidents weighing in with a letter or a phone call, that kind of thing. But creating a YouTube video of a website with very specific prescriptions as to what this agency should do, followed by the agency suddenly changing course from where it was to mimic the president's plan, I think suggests that the independence of the agency has been compromised to some extent.

reason:  How will the success of Title II regulation, with or without forbearance, be measured? We know from 1995 till now, over the past 20 years, we can say the rate of increase of speeds, connection, pricing, etc. it's followed this course. How will we know if Title II is successful, say, 10, 15, 20 years from now?

Pai: I think we'll have to use as objective a metric as we can to measure such things as broadband availability, especially in areas of this country that are harder to serve. I think we'll have to look at prices to see whether they've increased or not, and this plan in particular opens the door to billions of dollars in new fees being added to people's broadband bills.

reason:  Why does it do that?

Pai: If you look at your phone bill, you'll see a line that says, "Universal Service Fee." That applies only to your voice service right now. But treating broadband internet access as essentially telephone service, the FCC explicitly opens the door in this document to the assessment of universal service fees at the federal and state level.

reason:  Now I'm assuming that proponents are also saying, "No, that's part of the forbearance. We won't actually insist on that." Is that accurate, or is it just that the problem is there are few cases where the government grants itself power and then doesn't eventually start exercising it.

Pai: If you were able to see this document—which you are not—you would see that it explicitly says that in a few months, it says, that we, the FCC, are expected to get a recommendation on how to consider broadband for purposes of this universal service fund fee program. Given the trajectory of the universal service fund policies from the lifeline program to what is called [e-rate?], etc., agencies spending billions of dollars and is looking to expand it even further, it's impossible for us to spend money from the universal service fund on this programs without including contributions from the providers, which are essentially fees based on broadband connections.

reason:  Wireless voice has been regulated under Title II for some time now, right?

Pai: Wireless voice has. Wireless data has not.

reason:  Does wireless voice give us any indication of whether or not Title II will be a real heavy millstone, or does it show that being regulated under Title II reduces or retards innovation? What's the experience?

Pai: I think there are a number of lessons to be drawn there. First, wireless voice, if you look at the data prior to the introduction to the smart phone, wireless voice was essentially a commodity that you didn't see a lot of innovation or investment in that space, for obvious reasons. It's not something that carriers were spending a lot of time thinking about and investing in, but once mobile data used stared to explode with the introduction of the iPhone in 2007, all of a sudden, you saw carriers scrambling to upgrade their networks, to spend more money on spectrum to deliver some of those high-bandwidth applications and so forth, so this argument that wireless voice having been regulated by Title II has been a success and so we can do the same for mobile data is absurd on its face. Secondly, I'm not an engineer by training, but if you look at what some of the engineers are saying about wireless voice in particular, some of the next generation of voice products, such as voice over LTE, require very specific things like priority coding in order for them to work. But if net neutrality rules are as strict as they appear to be, then things like priority coding are necessarily going to be in the crosshairs, and so I think there's a dispute between how do you advance high bandwidth applications like data and how do you preserve the ability of people to innovate when it comes to applications like voice that require low latency, and I don't think net neutrality does a good job of addressing either of those.

reason:  Everyone says they want a free and open Internet. What are the points of agreement, and then where does it get fuzzy?

Pai: I think former Chairman Powell put it best when he said in 2004 that there were four basic Internet freedoms that he thought everyone should agree with: the freedom to access lawful content of one's choice, the freedom to access applications that don't harm the network, the freedom to attach devices to the network, and the freedom to get information about your service plan. Everybody, or virtually everybody agrees on that. I certainly do. The question is how do we operationalize that? In my view, the federal government is a pretty poor arbiter of what is reasonable and what is not, and it's exceptionally poor when it comes to having a track record of promoting innovation and investment in broadband networks. That's something the private sector has done a remarkable job on its own.

reason:  What are the instances that Net Neutrality proponents can point to where ISPs or other network operators have actually arbitrated those open network principles?

Pai: There are scattered examples that people often cite—an ISP that nobody's ever heard of called Madison River almost a decade ago—some have targeted Metro PCS, which was acquired by T-Mobile. Metro PCS, upstart competitor of course, basically had no market power to speak of compared to the other carriers, wanted to make a splash in the marketplace, so it offered its consumers virtually unlimited data plans for $40, so you could stream YouTube for example without it counting against your data cap, all for $40.

reason:  But it was basically you could only stream YouTube videos, right? The rest of the web, you really couldn't get on it.

Pai: Exactly. So critics called it a net neutrality violation, called it a walled garden which was bad for consumers. And it's telling that they didn't go after one of the major incumbents, which now they complain about vociferously. They went after an upstart competitor.

reason:  So it's basically someone saying, "We're going to give you less for less, but if you want it, you can have it."

Pai: You either get to eat all you can eat at a restaurant, or you don't get to eat at all.

reason:  So that's the idea of net neutrality? 

Pai: Essentially.

reason:  So then Metro PCS merged with T-Mobile, and then that became kind of moot, and Verizon carried that court case into its final stages.

Pai: Exactly.

reason:  So what do you think are the main drivers behind net neutrality? From my perspective, when I look at things from a kind of public-choice economics angle, what I tend to see are companies like Netflix, Amazon to a certain degree, Google, eBay, other players who are very big and have done very well with the way that the Internet works now. They kind of want to freeze everything in place, and this to me seems a lot like the robber barons who were, when rail roads were starting to be regulated were like, "Great, let's regulate things and fix our market positions." Is that wrong to think of that in those terms?

Pai: I certainly think there are particular companies that might see a strategic advantage in having the FCC inject itself for the first time into the nuts and bolts of the Internet's operation. So for example, regulating the rates and terms on which ISPs and edge providers have to interconnect. That's something that, if you're not getting what you think is a good deal through private commercial agreements, might be helpful to have an FCC backstop. I think there are a lot of other people, smaller entrepreneurs and innovators that we hear from that are worried that ISPs might end up acting as gatekeepers and keeping their content off the web.

While I understand their concern, I nonetheless think that No. 1, there's no existing example of that, and No. 2, the way to solve that is through case-by-case adjudication using the anti-trust laws or Federal Trade Commission authority, or even FCC authority to the extent we have it. It is not imposing Title II regulations, which ultimately and ironically are going to limit the progress of this online platform. I think all these startups and innovators are based here for a reason. It's because we have the best Internet infrastructure in the world, but that network doesn't have to exist. People don't have to invest in it, and ultimately, this could be counterproductive for them too.

reason:  You've called out Netflix in particular, which has probably been the most vocal proponent of net neutrality and of Title II regulation. They apparently have a system where the way that they code some of their streams, they gain an advantage on existing networks by the way that they code it that essentially they've created a fast lane on today's Internet. Why would that be wrong?

Pai: So to be clear, I don't think that Netflix should be subject to regulation, but when it came to this question, we heard an allegation in the fall from people who are pushing open video standards—everyone from ISPs to Level 3 to Limelight and the like, and they wanted to create a system in which essentially, traffic would be recognized as being video traffic, and then you could optimize the network to deliver it more efficiently, better experience for the end user. Netflix, we heard, was encrypting some of that traffic to make it difficult, if not impossible, for that traffic to be recognized as video traffic, so I simply asked them: What's the gist of your response to these allegations, in particular, allegations that they had done encryptions selectively, and they had picked in particular, encryption against the ISPs that were using open video standards before encryption…

reason:  So that they were kind of sliding by with that and not having to stay in the same line that all other video was…

Pai: Exactly. And if the interest is truly in a free and open Internet, then one could make the argument that what the company's arguing for when it comes to ISP behavior should apply equally to edge provider behavior?

reason:  How did they respond?

Pai: Well they responded that they employed encryption. To preserve the privacy of their customers, they didn't deploy it selectively. In any case, there weren't any ongoing FCC proceedings.

reason:  Netflix was also involved in a kind of large battle—it's not quite net neutrality, but they were saying basically that Comcast in particular and a couple of other large ISPs that customers were suffering through extended buffering times where the quality of the stream and the reliability wasn't so good. The ISPs said, "Look, Netflix is generating a huge amount of traffic, and we need to build out our networks in order to handle this traffic and prioritize it." And Comcast in particular, they have a new deal with Netflix where Netflix basically pays them more so that they get a faster pipe into the ISP. Is that the way the system should work? Is there any reason to believe that ISPs were purposefully slowing down the stream of Netflix to their customers so that they could go back to Netflix and say, "You better pay the toll, or people are going to get a real choppy image?" 

Pai: From a procedural standpoint, neither of those parties ever filed a formal complaint with us, so we don't have what you might consider objective evidence from the parties as to what exactly the nitty gritty of the situation was. So all I can say is based on what I've read in the press. That said, I think the nature of the dispute illustrates the folly of involving the government in referring some of those disputes in real time. We simply don't have the ability to determine who was right and who was wrong I don't think. Even if we had the legal authority to do it, which I don't necessarily think we do, but ultimately, if you look at the end result, these arrangements, which have been commercially reasonable according to both parties given that they signed it, have been good for consumers. Again, if there's some kind of systemic problem when it comes to peering and transit, and other kinds of interconnection, I'm certainly willing to have an open mind about it, but I think in the absence of that, we should let the commercial arrangements work themselves out.

reason:  When you say it's been good for consumers. That gets lost in a lot of this, where we're talking about this as if it's a battle between Comcast and Netflix or this company and that company, but ultimately, the measure of all kind of economic regulation, and certainly anti-trust law, is how it effects the consumer. That Netflix has to pay more to deliver its service, or the ISP has to eat more costs, that's not the same thing as saying the customer is in a bad position.

Pai: Exactly, and I'm an antitrust lawyer by training, and that's why I view everything through the prism of consumer welfare, and that's why I find it amusing when some of my coworkers say, "Oh, you're just shilling for ISPs or looking out for big business." At the end of the day, my sole concern is: What is going to produce a better digital experience in the digital age, and I truly believe that removing some of these regulations that are impeding on IP-based investment and getting rid of some of these antiquated regulations, is the best way to promote competition, promote consumer welfare—not over-the-top 80-year-old regulations that have been proven not to work.

reason:  Mark Cuban recently said at a tech conference, that in letting the FCC enforce net neutrality, "The government will fuck everything up." Do you agree with that?

Pai: Well, as an FCC regulator, I certainly can't say that I agree with his use of one of the seven dirty words (laughs), but I will say that the gist of his sentiment is absolutely right. I mean, do you trust the federal government to make the Internet ecosystem more vibrant than it is today? Can you think of any regulated utility like the electric company or water company that is as innovative as the Internet? I think what he, what Marc Andreessen, who developed the Netscape browser, what other entrepreneurs are seeing is that this is something that's worked really well, and there's no reason for the FCC to mess it up by inserting itself into areas where it hasn't been before.

reason:  You've also been critical of the idea that if the U.S. government gets involved in the regulation of our Internet, that that sends a particular message to other countries that's not particularly good. Explain what you mean by that.

Pai: On the international stage, a lot of foreign governments, especially oppressive governments, would love nothing more than to have more direct control over both the infrastructure of the Internet and the content that rides over those networks. The U.S., to its credit, has spoken with a single voice against such efforts, but I think to the extent to Title II and the FCC's plans to micromanage the same nuts and bolts of the network, it becomes harder for us on the international stage to make that case, to persuade other countries to go down the same road. And I would note that this is the exact same position that the Obama administration itself took in 2009 and 2010 when one of our ambassadors at the State Department said specifically that he was concerned that Title II style regulation would send a negative message to oppressive governments and would lead them to block or otherwise degrade certain kinds of Internet traffic.

reason:  You mentioned the "seven dirty words." Reason interviewed Michael Powell, the FCC commissioner about 10 years ago, and at that point, there were two issues that were kind of forward: One was the double standards of regulating over-the-air broadcasts—television and radio—by one standard—and then cable and other things under the First Amendment. Essentially the FCC has content-regulation power over what goes on on broadcast. He was a proponent of saying there should be one standard, and he was saying it should be the First Amendment, that broadcast television should have the same legal standing as, say, a newspaper or a cable TV channel. Where does that stand now? It's odd because the vast majority of people get even their over-the-air broadcast content all though a pipe, all though cable. Is there any movement on that? Is there any sense that the FCC is just going to say, "Let's just get rid of content regulation once and for all"?

Pai: A couple of years ago, the Supreme Court rendered a decision which kicked that question back to us, and we've been looking to the agency's leadership to formulate a response, and thus far, I'm not aware of any particular proposal the chairman is going to put on the table with respect to that, but if he comes up with a new way to thread that needle, I'll certainly approach it…

reason:  Is it time for us to just grow up and say, "You know what, the content regulation that was put in place for broadcast material—we should just get rid of that"?

Pai: I think that's one of the things we're heard from people who say that times have changed from the days of [the Pacifica case] back in the 1970s. At the same time, we also hear from a number of people who say that a lot of folks who still rely on over-the-air broadcasting count on that medium being safe for kids within that window of time, so those are the balances and considerations we're going to have to figure out. But there's no question it's one of the challenging issues especially given the legal context. 

reason:  The other thing huge then had to do with ownership rules and media concentration. We have a company like Comcast, and then Comcast and NBC and Time Warner are merging, but you don't hear the same fears really that you did a decade or 20 years ago that two or three corporations own all of the media. Have we moved past that once and for all, or is there a reason to be worried about a company like, say, Comcast becoming a major deliverer of content as well as a major content provider, as well as politically a huge player?

Pai: I've been very outspoken in my opposition to the media ownership rules, which in some cases remain unaltered since 1975, and I think that outside of major markets, and even inside major markets, you see newspapers shuttering, you see radio stations struggling, you see TV broadcasters finding it more difficult to do the hard legwork of gathering local news and distributing it. I think in that context, it's incumbent upon the agency to modernize its regulations, to recognize that cross ownership has some virtues. If you have a radio station and a newspaper, they can collaborate and distribute the news over multiple platforms. That makes a lot of financial sense. And it's good for the consumer at the end of the day. It's been almost eight years since we last looked at this.

reason:  So you're saying that in fact, in the Internet age, people can get news even if the same person—let's say, Lady Bird Johnson, who owned TV and radio stations in Austin, Texas—you would still be able to get a wide variety of news.

Pai: Absolutely. And I think about my own news consumption, and I'm a very active user of Twitter, and I use that more or less as news curation, and so I get a lot of my news through links I find through Twitter.

reason: Talk a little about your ideological geneaology. Where do your ideas come from? You're obviously very pro-free market. You mention you're an antitrust lawyer by trade. You're a Republican appointee by Obama, so what are the ideas that motivate your thinking process in terms of regulation?

Pai: I think, going back to college at Harvard and then law school at the University of Chicago, I was exposed to a view of the world through the lens of economics that recognized that when government is relatively restrained in terms of its intervention in the economy, there is unbounded possibility for the consumer or the citizen, and that's why I've been outspoken since I've been at the FCC in favor of policies that I think will get the government out of the equation to the extent necessary to allow innovation to flourish. And I think there's no question that capitalism, generally speaking, has been the greatest source of human benefit—much greater than any government program that's ever been designed. If you look at how many people have been lifted out of poverty by free market ideas, it's tremendous. And it's that kind of innovation that people often take for granted, because we live naturally in the moment, and so it's hard to see the sweep of history, but I can tell you that for people as old as me, I remember 20 years ago when the Internet was at its inception, it was hard to get news, it was hard to do certain things that we now take for granted on a smartphone. But now, thanks to people in the private sector taking the risk, investing the capital, and being able to count on a regulatory system that didn't micromanage them, that's delivered unparalleled value.

reason:  How did you ever get appointed under Obama?

Pai: (laughs) I guess I slipped through. No, I was recommended by Sen. Mitch McConnell (R-Ky.) for one of the Republican positions, and by tradition, the Senate minority leadership gets a fair degree of deference, and I had the good fortune to get the president's agreement as well.

reason:  Would you have any sense what the Internet will look like in 20 years, or if we'll even have the Internet?

Pai: Boy, it's tough to forecast, but I do think we are going to be incredibly connected in ways we can't even conceive. My wife sometimes think I'm crazy when I say this, but it's not inconceivable to say we'll have a future in which people will have chips embedded in their arms, which contain all sorts of information they're able to connect wirelessly using those chips to all kinds of services and applications, from healthcare to ecommerce. The car is going to be incredibly connected in ways that might obviate the need for active management of the car. The Internet of things, in short, is going to be tremendous, and I think that's something both as a consumer and as a former commissioner I guess I'll be at that time, I can't wait to see.