Nathan, it's great seeing you. So I always like to ask a little warm up question. So before you came to the renominated, the FCC outside of Washington, you know, the bill, the insiders of Washington didn't really know who you were, you have this blank slate, and then all sudden you get thrust into the FCC nomination process during a turbulent time. And you survived it, you made it through. But what made you decide to leave the warm weather of Florida and come to Washington and work at NTIA?
Well, you know, Rick, so I got hired to my dream job in Florida to work on work in developing a market around used wireless devices and for the company I was with was, among other things, the biggest device recycler in the world at the time. But just as important is putting used devices from where they originate in the most developed countries into countries where there's more of a market for them, which is very often in developing countries, and reduces environmental footprint gets more mileage out of the device. And it's also There are also various ancillary benefits to this at one removed for the device manufacturers. So I had been in the unusual position for an American have tried to compete directly against Huawei in different markets. And, and, you know, I realized they were really good. It made me it made me think, well, you know, if I have the chance to work on the policy side, what would I bring to the table that a more traditional telecom regulation background wouldn't necessarily prepare you for it? I guess, you know, the answer is the international competition device competition aspects, and then the what you need to know about the international device market in order to make that work from a business intelligence point of view. I thought that that would be interesting stuff to bring to DC. But I certainly didn't imagine that I'd be bringing it to the FCC, I just, I just thought I would sort of, you know, merge gently into the swamp, you know, sink to a nice, comfortable level. And to know, it's, it's it, I felt like we were really in a historic place, developing national consensus around the realities of the evolution in the telecom market and telecom capabilities and how those apply to commerce. So when I got the call from commerce, then no, that was an easy decision. I said, you know, this is my chance. They're not going to call me again, you know, like they, so I better make the most of it. And I don't know, but things seemed to have worked out.
So what did you learn at NTIA that you've now brought to your role as an FCC commissioner?
Well, the the NTIA is one of the you know, it's one of the unsung heroes of DC to some degree, although I guess it's a little more sun now. But, but, but in 2020, it wasn't wasn't necessarily one of the most widely known agencies, which is really a pity. It's a fantastic agency. The research lab out in Colorado has great staff and does great work. The engineering group, generally at NTIA is very strong. And we all owe a debt of gratitude to them where we should if we you know, if we were more familiar with their work, I guess, prior to being thrust into the limelight with bead. So, you know, the very first week I was at the NTIA, I got thrust into a really really thorny question where there is dispute between the federal government or private sector over spectrum allocation. So that's where I went from looking at spectrum allocation questions in from the perspective of someone who's trying to write options and get a futures market going, you know, and can opportunistically choose when to be and when not to be in the market, what what devices to be in, etc. So having to think about the larger question, How did these equities work out how to what are the downstream effects on everyone else? And then, of course, you know, bed on the other side of many issues of this type when it was at the FCC, maybe even had an issue. But the I guess the thing that you would learn, or that I learned working at NTIA that I couldn't have learned anyplace else, was just how complex these decisions are, and how many ways there are to get them wrong. And I think that's one area where the NTIA and the FCC work really well together and where everyone is really trying their hardest to do the best. And the other side of it is that the American approach to spectrum licensing, of course, auctions have become the international standard. And they were invented here, and even wanted up collecting some new bells for that. So that's good. It wanted to become an international standard. And what we've seen is a huge intensification of the degree to which the ordinary person can use telecommunications equipment services and have indirect benefits from those as well as public safety and other actors use them so so is it education or a number of friends?
Well, that's great. You one of the things that impressed me most when I first met you, was that you are such a policy wonk you'd like to deep dive on everything is I don't know how you spend your enough time in a day because it's never just a word the winds going you want to know every single detail, but here we are at the state of the net And it's been a few years since there was a major political fight on our favorite topic in this town net neutrality. So a town you know, in this town, everyone has a view. I'm sure he wouldn't I could take a poll here and everyone has a view. But what do you think is up next for net neutrality? Is it dead? Is it going forward? What's what's happening at the FCC?
Well, I guess you know, Rick, my answer to that I would ask you, and maybe everyone here to just think about it. You know, when's the last time your ISP blocked illegal website, prevented you from connecting an application of your choice, you know, whether that's whether that's a physical appliance, a TV, a phone, computer, tablet, baby monitor, any sort of any sort of smart device, smart fridges? If you have those smart toasters, do SAROS. You know, obviously, your ISP isn't stopping you from connecting any of those things. Your ISP isn't stopping you from and running any legal application either on your computer or as a network application. Your ISP is probably not blocking or throttling either. So my question is, do we not have de facto net neutrality at this moment, either in the terms that were first announced in 2004, by Chairman Powell, and was subsequently consecrated by vote of the commission the next year? Do we not have net neutrality de facto as a market practice now, in terms of disaffiliation, between fast lanes of affiliated content companies with ISPs? I think the growth of the OTT sector has conclusively answered that. So as far as what's next for net neutrality, I don't know where you go with net neutrality once you already have net neutrality. Of course, if net neutrality means different things to different people, if it means all the things that I've just laid out, then we have it without the need for a lot. I would also know that this these, the market practices today go beyond various net neutrality laws that Congress has offered up at different times. If the question is, what does it upcoming title to order look like? That's also that's also kind of fraught, it's very, we're in a very different legal environment now than we were in 2015. And I'm not really an appellate lawyer or an admin lawyer. But even I've noticed, you know, that that a system where you have to rewrite so much of the statute via the forbearance power, as we saw in the 2015, open Internet order might not be viable today, because the forbearance power might face broader scrutiny. And it's also probably the case that some of that some of the past case law on the forbearance power was maybe not as aggressively pursued into the question of the viability of the forbearance power itself. And if we wound up adopting an order that then wound up seeing the forbearance power sharply trimmed back, this would have implications for people who are not even ISPs. Right, it would have implications for everyone who is an Ilac. Really? So there's, there's there a lot of ways I think a title to order would have to be very, very carefully thought through. And I would question whether title two brings anything to the table in terms of expected consumer benefits. Now, you try to be fair to both sides, people who are big advocates of title two would say that, that what we really need are price caps, and must build requirements that we really need those in order to ensure that everyone that ISPs have got to provide everyone with physical access, and with reasonably priced access to, to the Internet, as with modern broadband, that this is a necessity to be a first class citizen of the United States in this day and age. And I want to give, I want to pause for a minute to acknowledge the force of those arguments. But I guess I would say once once you've got to build that requirement, and you've got a price cap, the thing that's missing is the money to fund it. And it's not clear to me that people are really prepared for the implications of a far greater federal involvement in broadband funding than has been the case up until this point, even under bead, and the infrastructure and Jobs Act and, and all the other programs that are out there. So I think there are ways to get to those outcomes without having to bring down the the the full force of title to having to trim it. And then having those trim those trimming approaches being being closely scrutinized in the courts. I think we can probably do better than that. But on the other hand, you know, no one really, no one really cares what I think on this question, Rick, if it's going to happen, it's going to happen regardless of what I have to say about it. But it's I think it's worth throwing up some of those flags right now.
So following up on that question, do you think the FCC has the authority to regulate Internet companies like Google Facebook, tick tock, you know, some of and some of your colleagues have called Tiktok a national security threat, they're out there here. But you know, what do you think does the FCC have authority to do something in that space? Well,
I wouldn't say that we don't have any tools whatsoever. You know, there, there was, I think, a pretty wide ranging public debate over whether the FCC had any authority to, to provide an agency interpretation of section 230. I think it was pretty conclusively addressed by Tom Johnson's blog post in October 2020. It's funny, I have to keep calling it a blog post, even though it was written like a very tight Legal Brief, except with a little, you know, informal language here and there. But at the time, Tom was the General Counsel of the FCC. And I think he did a great job rounding up the relevant law and drawing the right conclusions from it. So I don't think there's much question that there is some ability to interpret that. And if and, you know, there's, there's, it's also possible and I'm not saying that this is happening within the commission, but I just want to point to it as a possibility. It's also possible that if there were a defensible interpretation found that went along the lines of the sort of safe harbors that we're accustomed to seeing condition on standards of conduct, that would be very normal in securities law, then it would I think, be conceivable to use the question of, of a conduct standard to condition the immunities that are granted under 230. But this is, but this is really just talking about, you know, a fairly narrow corner of the question of Internet regulation writ large. And, you know, the first thing is, I don't know what an Internet company is, I mean, I can go on Amazon buy shoes, or I can go on Walmart and buy shoes, or, you know, whatever. I mean, it's there. There are lots of there are lots of streaming services out there. Is everyone an Internet company, because they have a streaming service is, you know, is a mom and pop shop is? Are they an Internet company? Because they can do ecommerce? I don't know that it's really a well defined category. And yet at the same time, there's no question that many things that would have been delivered as traditional telephony services, and that we would have regulated and that people expect us to regulate. So for example, in providing functional equivalents for the disabled, those are things where the FCC can't mandate that if it's a service that's delivered via an app like zoom, instead of via traditional telephony, we can't use some of the benefit, granting capability that Congress has given us because it's no longer within our regulated sphere of competence. Likewise, in terms of in terms of immediate delivery, we always assumed that the FCC was the media regulator in the United States. But OTT video is almost totally unregulated. And there's not been a move yet to create a regulator with competence there or to bring it in line with broadcast and cable reg. So I don't really know what the answer is there either. Just generally speaking, the theme is increasingly, that there's been a sector in the economy that we all use every day. And that's very important and that we like and don't want to damage. But that is completely unregulated. And that this also creates, you know, disparities and unequal playing fields when the competition is heavily regulated. And sometimes it creates absurdities, where, you know, for example, we're very upset under our regs about broadcast consolidation. But there's no problem whatsoever with OTT consolidation, because it's assumed to be a national or international or for intergalactic for all, I know market and, and looking at things in this way it becomes, you know, it becomes increasingly hard to justify, but these aren't really our calls to make those reside with Congress.
So you spoken a lot about your interest in cyber in cybersecurity issues, the Biden ministration just released its strategy. What role do you see the FCC having in cybersecurity?
Well, I think it's really important that we step up and act in the areas where we're good at cybersecurity. And in the areas where we're not, we should back off and leave that to the domain experts. I don't think there's a broad mandate for the FCC to act in cybersecurity generally. However, signal security is another question. Signal security is another question. And that might take the form of, for example, relatively low power, but insidious worm or virus that that can be used to co opt devices, whether there's your infrastructure devices or personal devices to allow for, for example, mass Wi Fi, D authorization, or privilege, privilege escalation within corporate Wi Fi networks, or distributed denial of spectrum attacks via by the use of older devices and the security vulnerabilities that they bring with them when they're no longer supported. Because in many cases, you don't really know what the support term on an individual device is going to be. And so and there's no way that you can force manufacturers to own supportive of devices for short amount of time under current framework. Now. There's since their potential threats to the public use of spectrum both here and then and then in terms of devices being used outside of their authorized FCC use, but within capabilities that could for example, be flashed into firmware with the new firmware. I can. Because of this, I think there is an angle for us to start addressing the single security question as to exactly how far up the stack we go, I think we stay pretty low. It's not clear to me, though, that we stay entirely at the physical device level anymore, when software control over devices is, you know, is so prominent. And, again, I view this as an emerging field 10 years ago, we wouldn't have been that worried about it. Now we're talking about putting a lot of personal information on IoT devices, we're talking about finding greater economically, more impactful uses for IoT devices. So that means that we're, we have massive device proliferation, which is what we want, we aim for that we want there to be a really vibrant manufacturing and development sector there, right, we're freeing up spectrum so that this can happen. We're looking at other countries that are seeing greater adoption of industrial public safety and medical 5G and saying, you know, we want those advantages in the United States, we don't want to be a technological backwater, we don't want our people to live worse than they would otherwise because we can't plan to deal with this. But on the other hand, if you don't close the security threats on this, and if the FCC doesn't do its part in closing them, then we're leaving vulnerabilities that could be pretty alarming. You know, once once you start talking about automatic traffic routing, once you start talking about people's medical information, implanted medical devices, all that kind of thing. Now that sector, that's an example of a sector that's worked really hard to close this question, and they did it through the FDA. But I think that's exactly why the FCC has to step up when there isn't a regulator that says focused on the question is the FDA when there's not when the stakes aren't as high with any individual device? And I think there is room for us to act there.
Well, we're talking cybersecurity and Alan Davidson was here earlier today talking about the broadband resources that are going out $40 billion. And so now we have this group of folks who are now coming online and pushing hard for that. So you have another layer of cybersecurity to worry about, but how do you think the FCC is doing this mission to close the digital divide? And make sure that everyone has access to high speed Internet access?
Well, you know, it's sort of an interesting question, right? Because you can close the digital divide by putting more resources into existing technology. But you can also close the digital divide by opening up new areas of of access that weren't really imagined before. Now, if you think back to 2004, one of the reasons that people really liked the idea of legally mandated net neutrality or titled to net neutrality, or some approach was they were concerned about local cable companies getting getting monopolistic windfalls, and they were concerned about anti consumer behavior in that area. And I'm not saying anyone did that I'm not, you know, assessing the rights or wrongs, I'm just saying that was an area of concern. Well, we've never had greater diversity in terms of physical media, and in terms of population coverage, for broadband, and it's really remarkable if you look at the growth of the satellite sector, or the fixed wireless sector, and that's independent, of course of the huge amounts of capital, they're being plowed into new fiber builds at this moment, all over the country, sometimes public money, sometimes private money, sometimes a mix. But if you look at the diversity of media, there are there are now two companies and you know, I don't do endorsements, I can't name them on stage. But you know, it's reported in the trade press that have gone from they've gone from trailing positions to leading positions number one and two in the country through deployment of fixed wireless access. Now, that's that's leading in terms of population covered, not in terms of population subscribed, but these are still very, you know, these are, it's a very fast growing sector. How did we get there, not exactly through benefit, we got there through auctioning the seabound. Right, we got there by not looking at it in terms of needing to redistribute resources, so much as in terms of needing to remove regulatory brakes on the development of a sector that wanted to invest. And I think that's a that's a really interesting counterpoint to the idea that we always need a program, sometimes what we need is fewer programs, you know, sometimes what we need is, AI, it's not as simple as just going in and cutting red tape, I don't want to get a caricature of the process. But sometimes what we need to do is to look at the resources that are available and say, what's the highest and best use of it? How close are we say that? What are the obstacles? Who's going to get hurt along the way, you know, what, what can we do to mitigate, or, or avoid that harm? But unless we're trying to be creative about this kind of thing, and recast how we're approaching the question, there's never really going to be enough to go around. It's it's much easier when you just have abundant spectrum and abundant fiber and abundant technological diversity. And, and all of a sudden, someone you know, who lived where they had one cable provider before, might not might now have two plus two fixed wireless companies plus satellite that's really inspiring. Now, it's not to say we don't have other programs as well. I'm proud of our dwarf I think that's going to come out that's that's going to be successful. And I'm also proud of the mapping initiatives that are going to help us address the problems in all of the existing build outs. It's it's a it's an insoluble dilemma. Right. Do we do we spend the money now? Do we wait until conditions are perfect before spending it? There's never exactly a right time. So. So I think those are those are some valuable efforts as well. And then I'm also very happy about our engagement with specific communities with specific needs, such as a tribal governments, and on this front. And generally, it's nice to see greater contacts opening up with state governments, with state governments developing greater capacity for broadband offices and for national mapping standards. So what are the things going on on that front, but before anything else, I'd point to just technological expansion of capacity is our single biggest success story.
And the tribal friend, I've had several conversations with some tribal leaders. And the problem for them has been that they don't even have a personnel infrastructure, let alone technical infrastructure to even apply. And I've heard stats of 50% of the eligible tribes have not even applied and I think that has to do with us trying to do more to get folks into educate of how they can actually apply for these funds coming out of NTIA, we were talking about resources that are out there. One of the oldest policy issues that I remember from back in my days, was the FCC is Universal Service Fund, you know, all the dollars that are coming from that where they're going in this new broadband era, you know, how do you see the broadband rollout FCC universal mean, the universal fund, how all that playing together?
Yeah, it's the well, the USF really, it's funny back in the day, and by back in the day, I mean, you know, 100 years ago, universal service meant that the telephone service should have the same look and feel so is universal service in this in the sense that your iPhone doesn't act differently in Atlanta than it does in Chicago, right? The idea was that you should have consistency of you know, dial tone of the way that routing and long distance work, all that somehow, the term went through sea change. And now when we talk about universal service, we're talking about getting service to everyone. And I think, pointing out that distinction. You said, I'm a little bit of a nerd here. So I'm going to nerd out just a little bit. I mean, every report the so people who are people who were there for it or who just studied, it will recall that the the Bell system prior to breakup was based on cross subsidies, it was it was based on it was based on frankly, very often having pricing tiers of service that were rather disconnected from the underlying costs or provision in order to ensure that you could have the you could subsidize things in various ways. So you know, if you had a long line with with light traffic that was not transparent to the consumer, you were charging on a distance basis, and it was 18 t's problem to get that line fully utilized. Or, likewise, the same technical service provided to business and to a household were built on a differential basis that the business was paying for the household. And likewise, between urban and rural, because obviously an urban you have, you have infrastructure, advantages to skill that you don't have in rural. So the whole system was built on huge numbers of behind the scenes subsidies, and those, those were substantially weakened by by the breakup. First of all, they were weakened again, and 89. And by the time you get to 96, there's there's not much left of that. So you wind up with the idea of a fund to get to universality of service. 1996 Let's recall that was that was the era when, when you had pop up, pop up long distance providers, I still remember dialing 1010 321 You know, that kind of thing. Right. And it was it was a time when when landline phone service was a huge business. And the USF was built around this idea, you know that we would probably never have to raise the USF percentage around contribution factor over over about 5%. And now it's routinely over 30%. It's hard to plan for in advance to because you don't know what it's going to be quarter to quarter. I mean, you can guesstimate, but if you're a bulk buyer of service, your bill might be 10 million bucks off where you thought it would be upward down and that's the error bars are just painful. So So looking at the USF now we've got we've got a long history at this point. So some entities have been dependent on USF money and have built their budgets around it and they're training around it and they're specialized people who just work with USF issues who've been doing this for 27 years. And there's there's a huge amount of dependence there that you can't just remove overnight. At the same time the base for USF funding is dwindling and dwindling. I mean, I I've got a landline in my house but it's not connected to surface and you know, a lot of new builds don't have a landline at all. And personally I've I I've been primarily on my cell phone since 2010 or there abouts. Just I was I was at the time I was a lawyer in private practice so I wasn't at home any way, and you might as well get my calls when they're alive instead of on an answering machine when I get home at 11:30pm. Right. So. So I guess what I'm saying is you look at the at the USF programs, and there's there's a huge amount of dependency there that's based on path dependence from how we go from 96. To today. And yet, it seems massively unsustainable. And I guess I would say, Look, if you look at a social network, what adds value to a social network? Not individual nodes, but the size of the network itself, right, this is this is well understood. And if you are a company that relies on having a large user base, and that large user base is enabled by telecommunications infrastructure to which you are structurally a non contributor, then I guess you have to ask yourself the question, do we even want to be non contributors to this? Like, do we even want to place the burden of maintaining the infrastructure that our business depends on on parties that are not beholden to us and are going to try and disintermediate us if they can, and maybe you'll say, Yeah, you know, I'm a pirate, always the Black Flag, I'm not afraid of being disintermediated, because I'm just better and faster and tougher. But, but it's, it strikes me that, increasingly, when you look at the benefit of the network effects, if an ISP as a new customer, that's just a customer to that ISP, you know, they may or may not be a particularly profitable customer is one customer. But the creation of that ISP customer probably also creates a Google customer, and a Microsoft customer, and an Amazon customer, quite possibly a Netflix customer. And, of course, customers for all of the ancillary services, even if they don't directly have an Amazon account, odds are that they touch AWS in some way, that sort of thing. And so if we were to, if we were to look back at Bill and say, you know, monopoly era bill and say, Bill has to establish universal service, because its network is too valuable for people to be left off of, and they can't be full participants in American life. That's sort of what we're saying about the high quash programs and other things that are subsidized by USF today. And therefore, we have to ask ourselves, who's the logical? What's the logical contribution base for this? And if the answer is obvious, but there's no regulatory framework for it, and there's no regulatory framework for it, because there's no legal framework for it? Well, then I guess we understand the challenge before us. But at this point, the USF charges are, I guess, the other thing is, they're so high that anyone who doesn't have to pay them has found a way to run around them. And the basis is already down by about two thirds from what it was at its peak, it's just gonna get smaller and smaller. So no future in it. As it lies, we got to revise it.
So going from USF now, there's a lot of effort around satellite at the FCC to get a new person in your office that your office but the FCC focusing on satellite. So what's going on there? What's the FCC is interests? And what areas are they focusing on?
Well, so one number that I found really striking when I came across it, Rick is that about 80% of the satellites that went up went up in the last five years. So the emergent Elio satellite business is, you know, is, you know, immensely impactful now, low Earth orbit satellites, per se, are nothing new. I mean, if you think back to the earliest days of iridium, that was a Motorola initiative, I would say late 90s. And those are all new low Earth orbit satellites, and there are 66 of them. So constellations aren't new, either, it's not new as a concept. Still, there's a difference between there's a difference between 66 and like 3000. And there are now multiple constellations, some of which are already, you know, are already deploying in skill that are moving to be, you know, at that number. So the FCC, I think, grew up in an environment. You know, and let's not forget our heritage goes back to the earliest days of the New Deal, right? So we grew up in an environment that didn't have satellite, and then when it had satellite, they were sparse, high and large, and very often operated by national governments or by international consortia. So you go from that, to, to the current environment where there's a huge private low Earth orbit satellite business. And, and these guys, you know, they come to Silicon Valley very often in their mentality. So they're, they're asking us all the time, why can't I switch the frequency I'm using? Why can I deliver services to the ships instead of planes, because I, I've gotten worship customers and the plane customers dropped out, wherever it might be, we need to be more nimble. We need to, we need to be flexible in how we address the question of frequencies, power levels, intended directions orbits, more so than in the past, because it's a more rapidly changing marketplace. And then we need to think about debris in a new way as well. Low Earth Orbit debris isn't as bad as high debris, it doesn't last as long. But on the other hand, we're putting a lot of satellites up there. On the third hand, those satellites are very often highly coordinated. So we need a regulatory framework that understands that highly coordinated satellites don't have like atomic individual risk in the same sense, like I mean, I drive down 495 All the time. I would worry if any car could just randomly you know, jump three see to the left or to the right, right? They do something. Yeah, yeah. And I worry, but, but if if all of them were doing that all the time, then you would say, okay, you've got a certain risk level. On the other hand, if people are generally staying in their lanes and staying within 30 miles or sort of the speed limit, then, you know, then that it's a you've got a slightly different sensitivity. So. So I'm very happy to be at this FCC right now, at this time working on satellite, because the chairwoman has taken such great steps to take it in the right direction. I've got really high hopes that we are going to keep supporting American leadership in this area.
Well, Nathan, thank you for all you're doing at the FCC and sharing your insights with this group. And I look forward to see what happens out in space and and earth and everywhere else that the FCC seems to be now. So thank you very much,
