Michael Powell at Freedom2Connect

Former FCC chairman Michael Powell was one of the featured speakers at this year’s Freedom2Connect conference.

Powell was FCC chair until last year. It was on his watch that the cable-phone duopoly was formed, although he was quick to note he did not vote in favor of either decision.

He was interviewed by Jonathan Krim  (K)of Washingtonpost.com, with some questions from the audience.

K – I think Powell is perfect for this conversation because in my time covering tech policy for the Washington Post he was one of the few who both understood the technology and was willing to engage in the philosophical issues.

K – In 2002 the FCC spectrum policy task force released a report calling for shifting spectrum to licensed and unlicensed use. Since the FCC has done proceedings to follow through, but while those giving spectrum to incumbents have been completed, those with unlicensed have been sidetracked. As a result there is less spectrum available today than 2002. Do you agree with that? What’s going on.

Powell – You are talking about a radicalization of the spectrum management model, which is built entirely on the history of broadcast TV. Its legacy is television. So the 700 MHz and DTV transition take a lot more effort today.

I’ve beena big fan of open spectrum. We did try to strike a deal finding more.

Why does it get harder? Well, what do you want to talk about? There’s little in the government closet that’s easy to dispense. But spectrum requires mind numbing coordination. I have scars from the military on WiFi, and transportation spectrum, trying to free that up. To these people it means people we can’t find when we need to.

K – Why are we making more rapid progress with flexible use to incumbents than unlicensed? It would seem those conflicts exist across the band.

Powell - Increasing spectrum for uses that exist is easier. A lot of the companies that came to us urging new service rules were new companies. They wanted to come to auction. Sometimes the models are quasi-experimental.

My view of spectrum is it should be like a driver’s license. To me that’s flexibility, just as much for innovators as incumbents. Most of the heat we got came from incumbents.

K – The core net neutrality fight wouldn’t exist if there were more than a duopoly in broadband. That grew under your tenure, through your policies. So I’d like to get your thinking on the level of platform competition that exists and whether we have a competitive marketplace.

P – I’m not satisfied we’re where we should be. It’s a snapshot in time. It’s better than one provider. The average consumer has two and others coming. I’d like government to dedicate more resources to driving alternative platforms than the food fights that capture the imagination of the process.

I always believed the key was multiplatform competition. What we did in DSL and cable was trivial compared to what we did in power-line Internet and wireless. We should not rest until at minimum there’s a fixed, nomadic and expansive version of broadband.

We believe magical things happen at three. It gets much harder to act against network neutrality with three.

If you don’t get alternate platforms, you collapse into the 100 year old regulatory model. That will hurt incumbents and this community too.

K – You’ve outlined a bet. Your scheme was to eliminate intra-platform competition.

P – This is something I bristle over. The biggest promise for that capability was line sharing. That was key to what happened in Japan and Korea. In the telephone rule battle I dissented from eliminating line sharing, and tried to get it back again after the courts struck down the rules. You’re going to have to ask the majority at the FCC, who are all still there, why they decided to kill it.

Criticize me for whatever you like, but not for stuff I didn’t do.

K – In any event we now have a situation where a lot of things are happening, and we only have 2. A lot of people in this room are disturbed by the downstream functioning of 2. Are you confident 3 will come quickly enough?

P – You’re right to always be impatient. I do think in the history of infrastructure deployment we’ve worked pretty quickly. You want to go through the deployment history of electricity or indoor plumbing or railroads, I’ll stack broadband against it any day. You’re getting a 20-fold increase in the speed of change across all markets. The software industry is the fastest moving.

It’s understandable. To that community it’s an impatient pace. But remember this is a construction project. You’re talking of digging things up. There’s no belief that will ever proceed at the pace of application software. That said, I am very bullish. That’s why I like this country’s model that tried to generate multiple platforms instead of putting all eggs into one platform to get speed.

Monopoly is a great way to get universal service.

Creating competition is messier and slower, but it will have a bigger payoff. I wish as much energy at the commission would go into broadband over power line, and Wi-fi, and UWB, and WiMax, and Clearwire, and how do you lower the cost of capital.

I’m amazed at how few people understand how critical this issue is. I have talked until I’m blue in the face about this.

We should stop talking about tech policy as if it’s a utility. It’s about every facet of policy – it is education, social welfare, it is everything. And politicians keep draining this into its own bucket. I’m waiting for a candidate to say, my policy is about technology.

K – So would you say don’t regulate about net neutrality, while we only have two providers?

P – I talked about this as net freedoms, and still subscribe to it. But I’m also a student about the regulatiory process, and I’m worried. The gospel of open Internet and edge innovation has great merit, but I worry about waiting for the government to give it to you. It’s dangerous. The legislative process does not work well when it has a weak understanding of innovation. I can count on two hands the number of people who know this. They have a very shallow knowledge of current technology. Be careful of inviting legislation when they don’t understand things, because secondary consequences can be enormous. Second, live by the sword and die by the sword. Let the weight of inertia be on your side. Id like to position the industry to succeed if the government does nothing. If you need government to act for you you’re dead.

You’re going to get a very ambiguous bill, subject to massive differences in interpretation. If it goes on its own it could take 15-20 years.

Government also has a way of turning on people. It may be about networks today, but those same principles can be used against you in another context, and they would be.

Finally, be careful because you’re playing their game. Regulatory battles are an art form and these guys are the maestros. The average incumbent has 40 lawyers dedicated to this work – resources, ability, hundreds of years of experience. Then add the judicial process. Every decision will spend the next several years in court.

K – So should government be prohibited from launching municipal wireless networks?

P – Not in my judgement. The government can be good when it tries to stimulate demand. The government is a huge demand creator. If it worked, as a buyer or through its influences, to create broadband demand then that’s good.

Absolutely we know two networks is not enough. I would worry however if muni networks were run by muni bureaucrats. They don’t innovate. We saw this in public safety. At the end of the day it’s always the same problem – government is broke.

It’s a mistake to rely on the Cincinnati city council to provide critical broadband for you and innovate over time.

K- What I have mainly heard is a frame about private property rights. Is it fair for consumers to think of the Internet as a public place, even understanding there are rules and tariffs. But fundamentally what grew up was this was greenfield, and a public place, not necessarily a public utility. And the argument has been to pull away from that and create a series of private places.

P – Enterpreneurs want to be paid. As long as you need one of the drivers of investment to be private gain, it’s too facile to say it all belongs to the American public. Why should they, they didn’t invent it? So long as there’s a producer chasing value in exchange for compensation it’s the private sector driving innovation.

Advocates of the public space run when it comes to paying for stuff. We’re broke, it’s going to stay broke for a long time. The TVA for broadband is not coming.

David Isenberg – At the FCC you did at least three really great things, one of which survives, which is that you committed to creating more technological literacy. You initiated the spectrum policy re-think, and that stopped when you left. The third thing that was great was articulation of the four Internet freedoms, which have now been watered down and made subject to service agreements and network providers’ assessments etc.  The four freedoms and spectrum reform stopped. Why did you leave? More important what is the prognosis going forward and what would you advise us as potential activists to do?

P – On spectrum reform these things are wars. The way you win is go three steps forward and be prepared to go two steps back. I giggle about spectrum items that were outright heresy – like giving unlicensed users whitespace in the broadcast spectrum. Now its openly being talked about. When we floated taking the DTV spectrum back in 2009 we were attacked by broadcasters with enormous vigor. My only wuss-out was I didn’t do it myself, but Congress picked it up. And I consider the return of that prime beachfront property by 2009 an enormous victory. Other things have stopped. It’s a cautionary time. If you put your marbles in the regulatory process remember the commissioners and legislature turn over, and you can run into a group who doesn’t see it your way and it comes to a screeching half.

Four freedoms are the same thing. You can’t be commissioner for life. I don’t like their switce at the end of it. When all of a sudden an Internet concept has a footnote attached referring to the Telecommunications Act you’ve got a problem. I know the meaning of those words and my view is it’s not constructive. And that’s what Congress is thinking it should codify.

Calabrese – Should Congress tell the FCC to complete the DTV proceeding, and open up channels 2-51?

P – The Congress is going to mandate it.

You’re on thin statutory ground how you interpret a statute. The Congress can make the law what it wants. We were trying to apply the statute in a creative way. We might have lost. The fact Congress will pass a law means we saved three years of wasted time. And I would be open to some of that being for unlicensed.

The most important thing is when you talk about a different public policy challenge are you trying to advance your goals and take advantage of opportunity?

Q – You described your concern about Cincinnati providing broadband. Most municipal wireless coops are ideal. But in some areas there are one or no providers. And in New Orleans the mayor is trying to provide service while state laws and the telco interfere to stop it. Should private actors limit the government when it’s the only way to get the third pipe?

P – Play it on a grown up field. Nothing surprises me that, in New Orleans, the telco is going to try and prevent it. When things go to the government it’s a game where you have to take on companies in the marketplace and state capitols as well. Your community has a long way to go to be better organized, to have a unified voice, to make good cases and convert it into simple language. We can wring our hands or just get there earlier.

Q – Is the common carrier a good model for where we’re headed?

P – I’ll be honest. I loathe the common carrier model. I don’t think it’s as glorious as you suggest. That’s not the same thing as not being vigilant to anti-competitive behavior. One of the real problems is it grants a state supported monopoly, a level of exclusivity.

A huge part of the history of common carriers is the back and forth between the Crown and the monopolist about the limits of the benefit and grants given consumers. If you marry a monopolist you build a lot of rules. You used to have 5 year rate-makings in states to set the price of telephone service. You have people coming with documents several feet high demanding a specific rate of return. The other thing that happens is those industries don’t innovate – the government must practically pay for innovation. I’m not sure I want the model for the Internet to be 16-gauge rails, or that Theodore Vail’s AT&T is where the future lies. I think those are commodities in industrial sized industries that aren’t good models for the future.

Q – You have said a lot about what we should not do. What should we do? Do you have tactical advice?

P – What is success? At moments in time in regulation and market expectation there is a short window for setting the consumer a set of expectations it’s hard to pull back from. This is important. In this period accepting broadband, with consumers seeing the value proposition of open end-to-end use of the Internet.

There’s no success here at the mass market level. They have to see the Slingbox, they have to see the TiVo, they have to integrate it in their lives. That is easier with generational change. I would spend all my time with 12-17 year olds, because they will have a different expectation set. They will be 25 year olds fast. And I would make it difficult for companies to take things away, because they would suffer for it from consumers. Try moving $12.95 DSL consumers to $40.

It’s hard in public policy where you gt to the stage of battle to win against the powerful interests. I focus more on being the teacher. Long before the war comes the teaching, so it matters who is up there talking to staffers, inviting them to see technology, demonstrate it, visit facilities – it’s a missionary effort. You have to involve the country and its representatives to appreciate this before it gets to TV ads and bill markups. And I don’t think that goes on enough. I used to do that because I am a geek and like it. But you’ll have commissioners who never leave Washington think what this is on papers. There are a lot of ways in which you can become the teacher so when you do battle they know what you are talking about.