Q&A: FCC Chairman Tom Wheeler talks net neutrality, upcoming agenda

Tom Wheeler is in a buoyant mood these days.

On Monday, the D.C. Circuit Court of Appeals upheld the biggest — and most controversial — move the Federal Communications Commission has made under Wheeler’s tenure as chairman when it gave a stamp of approval to the agency’s net neutrality rules. The decision was not only a powerful rejoinder to Wheeler’s many critics, but also gave a boost to his efforts to push forward with new rules in other areas, most notably on privacy and opening up set-top boxes to competition.

Wheeler was in Palo Alto on Wednesday, in part to get a virtual reality demonstration at Stanford’s Virtual Human Interaction Lab. While in the area, he met me at a cafe on University Avenue to discuss the court decision, how the FCC is approaching the privacy and set-top box issues, and his future plans. This interview has been lightly edited for clarity.

Q: Why don’t we talk about the court decision, since that’s the topic of the day.

A: Oh, why not, huh?

Q: Yeah, why not. So you must be pretty excited about that.

A: It’s absolutely — it was a slam dunk. It was —

Q: I don’t know if you want to use that terminology, given the history.

A: Thank you. It was — thank you — but it was a forceful decision. And a very complete and thorough decision. I mean, they addressed every issue. And, obviously, we’re very happy.

Q: Is there anything that stands out for you about the decision? Any particular part of it that you think ought to be highlighted?

A: Well, I mean, I think the significant thing is that even the dissent said we have the authority to do this. He didn’t like the way we did it, but he said, “Yeah, you can do this.” That’s significant.

Q: Was there anything in the dissent or in the opinion itself that gives you pause, that worries you in terms of the next step? Because obviously these guys are going to appeal it, whether to the general en banc court or to the Supreme Court. Anything that you see that is worrisome at all for you?

A: Just the opposite. It strikes me that this was a decision that was written with such precision that they knew they were talking to the next level as well and wanted to address every issue.

Q: So, with this decision now behind you — we’ve been waiting for this decision for months —

A: It just seems like years!

Q: So what does this mean for you and for the agenda of the commission for the rest of the year? Does this open up any new avenues for you or change what you might have had planned?

A: We were operating on the assumption that this would be a positive decision, and I think in many ways it puts wind in our sails to continue on.

So, for instance, the privacy issue. I mean, it was fascinating that the court decision came down at the exact moment when there was a hearing being held in the House in which one of the themes was that the FCC had illegally overstepped its authority with the Open Internet order, and it was that alleged overstepping of its authority that cast the whole proposal that we have about privacy into a cocked hat.

And in the middle of that hearing there comes down a decision from the appeals court that says, “No, the FCC clearly has the authority.” And they even speak specifically in the order about privacy.  

Q: So you seem to be — you mention the privacy issue — you guys seem to be stepping out of the frying pan and into the fire in terms of controversy. You guys seem to be courting controversy with the set-top box proposal, with the privacy proposal.

What do you make of the objections that are being raised to both of those actions?

A: Look, nobody likes change. But the reality is that the marketplace has changed significantly. So let’s just walk through each of those, serially.

Congress was explicit in Section 629 (of the Communications Act) about set-top boxes. It doesn’t say, “The commission may.” It says, “The commission shall” have competitive navigation devices. Yet 99 percent of consumers don’t have any choice.

Q: One of the questions that’s come up is why now. There was an effort, what, five or six years ago to try — what was it, the AllVid, I think — effort to try to do something like this, and that kind of went by the wayside. What’s pressing now about trying to get this in place?

A: The difficulty heretofore in having a full realization of what Congress said had to be done was basically technological. You know, the CableCard that was put in place 20 years ago to try and comply was the state of the technology at that point in time. We are now at a point in time where is everything is moving to software, whether it be the software on boxes or the software in apps, that suddenly the ability to have this kind of competitive choice in navigation devices becomes technically possible. And so we need to seize the initiative.

And remember what Congress did. Congress said two years ago, We want you to bring together a group called DSTAC — the Downloadable Security Technology Advisory Committee — to advise on how to make this transition. And DSTAC led to this, because it talked about how this is now all software. … So the technology has created the opportunity for policy to catch up and deliver what Congress asked for in the first place.

Q: So one of the objections that’s raised about this is that DSTAC didn’t come out with a unanimous recommendation, that they came out with a couple of different options and didn’t put their imprimatur upon going down this path. So, how do you respond to that?

A: Well, DSTAC ended up coming out with two reports, two positions, one by consumer groups and one by cable groups. And what we’re trying to do is to blend the two together, which is what Congress asked us to do.

Q: So one of the big objections, I think, both about the set-top box rulemaking and the privacy rulemaking that keeps being raised is that the FCC is tilting the balance, the playing field, away from the internet service providers and towards the Googles and Facebooks of the world. That the set-top box thing is a handout to the Googles in particular and Netflix in particular, that the privacy proposal is a handout to the Facebooks and Googles of the world who are immune from those provisions. How do you respond to that?

A: Well, I think that a well-tried lobbying strategy is that when you don’t have the facts on your side, invent a boogeyman. And the fact of the matter is that, you know, that Google provides video service with Google Fiber. And Google’s video service will have to abide by our set-top box rules. And Google’s internet access service will have to abide by our privacy rules. So when they are performing network activities, which is where we have jurisdiction, they will be regulated exactly the same way as the cable companies.

Q: So, I think many consumer groups are behind the effort on the privacy front. But at least some of them have objected to this very notion, that Google and Facebook are being exempted. Those are the companies that, if we look out at the entire landscape, those are the companies that are collecting all the data right now and have been collecting all the data for years. And those are the companies that pose the greatest threat to people’s privacy. Why are they exempt, and by exempting them from the ISP rules, again, doesn’t that favor one group of companies over another group of companies?

A: Well, there’s a couple of things here, Troy. One is we don’t have any jurisdiction over edge providers (companies like Google or Netflix that offer online content or services). The FTC has that jurisdiction. So you need to view things as, yes there is federal authority and responsibility, but it’s spread out across two agencies.

Second is that when you look at the network, the network is collecting information regardless of whether you go to Facebook or Google or Uber.

Q: By network, you mean your network connection.

A: Your ISP (internet service provider). And the ISP knows everything you’re doing on every site. And I can decide I don’t like what Google is collecting on me and switch to Bing or something else or go to Firefox or whatever the case may be. But as a consumer of Internet access service, I don’t have any choice. Sixty-two percent of all households in America have one choice in who provides their high-speed internet access service.

So you’ve got a situation where you’ve got an entity that has ubiquitous access to the most personal information, including your location information and what you do on every site that you go to. And you have the historical expectation that people have been raised to expect with their networks that the network isn’t going to collect information about you and resell it.

So, for instance, think about — have you got an iPhone or an Android?

Q: IPhone.

A: Think about your iPhone. You make a telephone call on your iPhone, and the FCC for decades has had rules that say that the fact that Troy is calling Air France is information that PacBell or Verizon or whoever your provider is can’t turn around and resell to a Paris tour operator or hotel or something like this.

On the same device, you go to visit the Air France website, and you don’t have those protections, those assurances. Talk about consumer confusion!

And so the expectation has always been that what I do on a network is my information, not the network’s information. And that’s all we’re saying. We’re not saying that the network can’t turn around and monetize that information. We’re just saying before they do it, they have to ask your permission.

Listen to a recording of our conversation:

Available on SoundCloud.

Q: So let me ask you about that. So you guys set up a scheme where you have some information that you are considering — you think ought to be considered — that people should assume that this information is being collected and there’s no — they have implied consent. You have an opt-in and opt-out, and then an area where you just can’t do it, basically.

A: Without permission.

Q: Without permission. So, my question is, first of all, do you think it’s possible — so a lot of the opt-in, opt-out stuff is based on the notion of informed consent. And a lot of the informed consent is often built around terms of service, privacy plans that are frankly impossible to read, even for people that are knowledgeable about this stuff. Most people never read these things. Maybe they click on them — maybe.

I’m just wondering the extent to which you think it’s possible for people to give informed consent over data collection given the reality that most people never click on these things.

A: We’ve asked a lot of questions about that in the notice of proposed rulemaking, and I’m anxious to see what some of the feedback is on that.

But there has to be a better way — the answer to the question is there has to be something other than, “Excuse me, all your information is my information.” I have to have the ability to raise my hand and say, “Not so fast.”

Q: But is an opt-out scheme enough for that? Meaning that, if I’m asking — if I’m a provider and I’m asking for your permission to do something and you have to take the step of opting into it, that seems a higher bar than having to opt out of something.

A: So, and it depends on how it’s effectuated. If I’ve got to do it on every single transaction, every single time, something — or should I do it where I’ve got the opportunity to go back and change my privacy settings. We’re asking all those kind of questions.

Q: I think the other thing that occurs in this whole debate about privacy and opt in and opt out is that often times, even when you’re opting into something or opting out — like you get a message on your iPhone saying an app wants to use your location information — it’s not often clear what it is, exactly, you’re accepting. And often times the choices are not granular.

So, the app says, “I want to use your location always or never.” You don’t have anything in between. And you don’t get any kind of informed consent about, oh, by the way, when you opt into that app, you’re opting into all their marketing partners who are using that app also.

So I’m just kind of wondering how you guys are looking at this debate.

A: So, when you go to the AT&T website and say, I want to be taken off, I don’t want this to happen, you have to go to 21 different companies that they sell the ads to, that they sell your information to. And then you have to — and if you’re going to do that on your mobile device, that’s separate. And if you ever change your browser or clear your browser history, you’ve got to start all over again.

There have to be better ways. And again, this is a process that — we’re in the middle of building a record on this. And we’ll make decisions based upon what we’re finding in this process.

Q: So one of the issues that came up in the privacy proceeding — another one of the issues — is this whole notion of “pay for privacy,” what AT&T in particular is experimenting with with their GigaPower. And I was wondering how you guys are looking at that particular issue, like how you’re going to evaluate it.

A: So we’ve asked about that as well. And, again, I don’t want to prejudge it at this point in time, but privacy — well, I don’t want to prejudge it at this point in time, because how we go about dealing with that issue is a topic specifically addressed in the rulemaking, that we’re trying to gather input and information on, so we can make a decision.

Now I know — and I’m skipping all your questions here by saying, we’re developing it, which happens to be the truth that we have to — so, these are tough issues. And the purpose for having a rulemaking like this is to get everybody on the record. And as you know, the record continues right up until a couple weeks before the actual vote.

Q: Do you see the commission making some bright lines, where it says, “You absolutely can’t do this, even with opt in?”

A: You’ve got the right to ask that question, but I’m going to say I’m still — and I don’t mean to be cute, but we’re still working on this.

Q: So, the New York Times did this great series, I think it was last year, on arbitration and how all these companies are putting arbitration clauses into their contracts, forbidding consumers from joining together and doing class-action lawsuits. One of your fellow agencies, the Consumer Financial Protection Bureau, is taking a step against this, where they’re saying financial companies are not going to be able to do this anymore, that consumers can’t waive their rights to class-action suits.

The New York Times pointed out some of the biggest offenders, if you want to use that term, of this are telecommunications companies — AT&T, Verizon. And it’s dramatically reduced actions that are being taken against those companies. I was wondering if this is an issue that the FCC is looking at and whether there’s any chance the FCC might step in on this issue.

A: So, there have been some folks who have asked us to look at that and consider it, and we are. And I haven’t made a judgement on the specifics of that petition.

Q: Do you expect that the FCC might do something on that before the presidential election, or this year?

A: Troy, we’ve laid out where we’re going. We’re going to do set-top boxes. We’re going to do business data services, and open up the competition there. We’re going to do privacy. And then we’ve got, you know, a dozen other important but less headline-grabbing kinds of issues. We’re working hard. And what are the issues that we’re dealing with?

Q: So the presidential election’s coming up. There’s going to be a new administration come January. Should the Democrats win, would you plan on staying on? Do you plan on stepping down? What are your plans?

A: (U.S. Senate Committee on Commerce, Science and Transportation) Chairman Thune and others have been constantly asking me will I step down. I think that every president has the right to select who he or she wants to have running the agency.

Q: So it’s up to them?

A: Sure.

Q: So assuming you do step down, at the request of whoever becomes president, what do you see as your legacy?

A: I hate that question, Troy.

Q: It’s a natural one. Come on.

A: Look, I feel blessed that I get to have this job at this point in history, because technology is changing so rapidly, the nature of networks is changing so rapidly. And how society through its governmental structure reacts to that is something that I get to be involved in — Wow! It doesn’t get much better than that. And I’ll let what we’ve done speak for itself.

And we’ll just push on. I keep saying to everybody, “We’re going to run through the tape.” We’ve got a few months left here, and we will be churning hard on the last day.

Q: What do you see yourself doing next?

A: I’ll be 71, Troy.

Q: That’s young, man.

A: So, the answer to your question is there is currently a debate in Wheeler household. Because one of the things that interesting in a job like this — and any job in government — is the impact it has on your family and your spouse.

So what am I going to do after this? I’m going to rent — my plan is — I’m going to rent an apartment in Rome and a Vespa for at least six weeks. Now, she doesn’t like the Vespa idea.

Q: I can see that, especially in Rome.

A: She says, “I’d like you to reach 72.” So she’s currently pushing for London and no Vespa. But that’s what I’m going to do.

Photo: Tom Wheeler, chairman of the Federal Communications Commission, outside the Blue Bottle cafe in Palo Alto on Wednesday, June 15, 2016. Wheeler had just gotten a virtual reality demonstration at Stanford’s Virtual Human Interaction Lab. (Troy Wolverton/Mercury News).

 

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