Powell Reason interview

Some interesting excerpts from a Reason magazine interview with FCC Chairman Powell from last August. 

Full version is here.

December 2004

The Reluctant Planner
FCC Chairman Michael Powell on indecency, innovation, consolidation, and competition
Interviewed by Drew Clark, Nick Gillespie, and Jesse Walker

His decision to loosen media ownership rules “insulted your intelligence and wounded democracy,” one newspaper columnist declares. He’s obsessed with “trying to save America’s virtue,” writes another. He has presided over “an end to an era of competition,” a consumer advocate argues. He’s Michael K. Powell, 41, arguably the most controversial chairman in the history of the Federal Communications Commission (FCC), the central planner charged with overseeing the structure and details of telecommunications in America.

(snip)

In August—one month prior to issuing the biggest fine of all, a $550,000 slap at CBS owner Viacom for its role in the Super Bowl halftime show featuring Janet Jackson’s bared breast—Powell sat down in his office to discuss these issues with reason Editor-in-Chief Nick Gillespie, reason Managing Editor Jesse Walker, and Drew Clark, senior writer for National Journal’s Technology Daily.

(snip)

Reason: You’ve done more than any other chairman to increase the number of megahertz devoted to unlicensed spectrum. Why?

Powell: The commission made an interesting error many years ago and issued the unlicensed band because they thought the spectrum was junk. We didn’t invent WiFi [wireless fidelity] or anything. The only thing I think we should be credited for is that we started to observe that very positive things were happening in that space, not just baby monitors and microwave ovens. Suddenly people were bringing very interesting products to consumers at very low cost.

We jumped on that and said this is something the government should reinforce rather than try to stamp out. Because the history of the FCC is, when something happens that it doesn’t understand, kill it. We tried to kill cable. We tried to kill long-distance. When [MCI founder] Bill McGowan starting stringing out microwave towers that threatened AT&T, the FCC tried to stop him. The FCC tried to kill cable because it was going to threaten broadcasting. I don’t want to make those mistakes. The philosophy of my commission is when we see something that’s disruptive but powerful, stop talking about killing it. Talk about empowering it.

So we jumped on WiFi and said, “Let’s see how far this can go.” It’s gone way farther than I would have imagined. I don’t think I could do unlicensed for all the spectrum in the United States and not melt down the universe, but can we pick selective bands under certain parameters and do that? Yeah. And it’s teaching us a lot about how much more we might be able to do with it.

Reason: What about unlicensed broadcasting? Why not let pirate stations operate if they’re not interfering with other stations nearby?

Powell: You just put in an enormous caveat: if they don’t interfere. The way we manage interference is through licensing. I could say, “Why don’t we just let everybody buy a car and get on the road and as long as they don’t run into anybody, it’s OK?” Well, because somebody who buys the car might be up to something that they shouldn’t be. Or maybe there’s no way to have a record-keeping function so that when the car wrecks I know who did the wrecking. You won’t be very happy if the interference is with the LAX tower as a plane’s landing and we find out—which has happened—that a pirate radio station was responsible for that and we didn’t even know who they were. Licenses are a way of knowing in advance who’s authorized to operate and that they have been given clear understanding about what the operating parameters are and that they’re legally obligated to follow them.

Reason: In a world where there is competition between cable and wireless and telephone for video and voice and data, what is the role of the FCC? Couldn’t we just eliminate it, shut its doors, hire a spectrum court, and pass antitrust enforcement over to Justice?

Powell: If you want to. So let’s engage in a hypothetical about putting yourself out of business. The communications system, let’s be blunt, is littered with social and political policies that have been embraced by the country and codified by the Congress, and it’s created an institution to administer them. Don’t ask me to defend it. I’m administrating it. The universal service program is a commitment by the United States to provide ubiquitous and affordable phone service. You can let the market do it and you can pay $300 a month for phone service in Montana.

Reason: You think that’s what you’d pay? You can get cellular service for $40 a month.

Powell: Yes. We have places in the United States where the cost of a basic land line would be $200 to $300.

You said things in your statement that are important, but don’t trivialize them and say, just set up a court for spectrum. We are that court. You can put it in something else you want to call a court, but that’s who we are, and we’ve been doing it for 70-something years and we’re probably the best in the world at it.

Universal service is not an economic policy; it’s a social policy. Public interest obligations on broadcasters, as much as you may want to disagree with them and as much I might want to disagree—they’re just social and political policy.

(snip)

Reason: What about the price consumers are bearing by having government regulation of electronic equipment, like the broadcast flag for Hollywood?

Powell: Specifically what?

Reason: The price of innovation being reduced by someone having to come and beg your agency for approval to implement a new consumer-friendly device like TiVo.

Powell: I think the premise of your question is false. The notion that a complete laissez-faire deployment of equipment always will produce a quicker and more optimal, more innovative solution is not accurate. You wouldn’t have a personal computer if there weren’t a standard. You wouldn’t have the production of content if there weren’t protections for the creators of content.

Reason: Do you think the current copyright extensions are legitimate?

Powell: I’m not a copyright expert. I have no interest in becoming a place to resolve digital copyright issues more broadly.

Now, the broadcast flag is about a very specific problem associated with the transition to digital television. To me that has a greater good associated with it, which is recouping $70 billion of [spectrum] assets to deploy at a higher and better use.

Reason: Are you going to be able to stop digital piracy of copyrighted materials?

Powell: You’ll never stop free downloading, but can iTunes be compelling enough to restrict the bleeding enough to create a rough balance? The copying machine lets you copy a book, but there are certain transaction costs and barriers. I still think the vast majority of people want to do things legally, and if it’s cheap and compelling enough, they’ll do it legally. Millions of consumers still buy DVDs quite happily, so I don’t think the answer is you’ve got to stop everything. I think the answer is you have to deter the most egregious abuses so that the producers will continue to produce.

Reason: Let’s turn that around. Can you have enough piracy to get big content promoters to give people the things they want?

Powell: Well, I think the music industry is a beautiful case in point. They might kill me for saying so, but I think [Napster inventor] Shawn Fanning did America a service. If Napster hadn’t woken them up, I don’t think you would have had MP3 players. I don’t think you would’ve had iTunes. I don’t think you would’ve had the iPod. I don’t think you would’ve had the idea of the single-song transaction.

There’s a long tradition of that in communication technology. If you didn’t have Bill McGowan breaking the law, you would’ve never had MCI. You would’ve never had a competitive long-distance industry. If you didn’t have [Dish Network founder] Charlie Ergen, who dared to say “I’m going to pop up a few satellites and challenge broadcasters in a different way.…”

What’s bright about this future is there’s so much more power in radical innovators and their work that there’ll be constant new challenges to innovate or die.

Reason: Two weeks ago the FCC approved the FBI request to permit wiretapping of voice-over-Internet calls, even though the law clearly exempts the Internet.

Powell: Tentatively concluded. An important distinction.

Reason: What was the rationale for that, if the Internet is exempted?

Powell: The question presented to us was, could something be a telecommunications service under the provisions of digital wiretap law even if ultimately it became an information service under the Telecom Act—two different statutes? The tentative conclusion was it could be.

Reason: Everyone’s saying you’ve bent over backward because you want the Department of Justice to support your appeal on the Brand X Internet Services decision, which would have permitted regulation of cable modems. Is that what’s going on here?

Powell: I think that’s too cynical, but parts of it are true. The Brand X decision is the scariest and worst decision that exists on the books today for the future of the Internet. I think it’s been underobserved and underappreciated how dangerous it is. It says that every Internet transport provider just became a telephone company. That means broadband over power line, that means WiFi, that means ultrawideband, third generation wireless. The costs to consumers in the cable industry alone are breathtaking.

(snip)

Comments

[Marta]

I don't think the FCC spokesman is taknig it one step further, that's always what the law has been. Anytime someone purchases a Part 15 device, they essentially become an FCC licensee. Most folks just don't know it. A lot of the early wireless ISPs thought they could do anything in the 2.4 Ghz band until the requirements of Part 15 became widely known in the industry. BPL vendors and system operators operating under Part 15 thought the same as well.