Am I close on that?
PAI: I think you’re pretty close. First of all, net neutrality is one of
the most successful marketing slogans of all time. Because who
could be against neutrality? But if you peel back the layers of the
onion and think through carefully what the economic and legal and
other implications are of it, it is essentially the government deciding
how this very dynamic marketplace should be governed.
The internet is one of the greatest free-market innovations in his-
tory. At the dawn of the internet age in the 1990s, none of us could
have foreseen how substantially this would affect American society,
As you know, there is always a faction
within this country and beyond that sees a
marketplace that’s unregulated as a prob-
lem to be solved. So that has largely
been the impulse, that we needed to
have the Depression-era rules applied
to this marketplace, notwithstanding
that there’s been no market failure, be-
cause otherwise what will happen? Con-
sumers could be harmed. But that simply
hasn’t been our experience for two decades,
prior to the imposition of these rules.
And that’s the argument I consistently
tried to make: If it ain’t broke, don’t fix it.
And the “fix” in this case is probably going to be worse than any problem that its
advocates could have conceived.
RUSH: Exactly. By the way, speaking of
the word games that are played, something I’ve noticed, you probably have too, the word “regulation” is being done away with, and
it’s being replaced by the word “protections.”
PAI: [Laughs] Yes.
RUSH: That’s one of the ways the opponents of President Trump are
seeking to cast regulations. They’re not onerous, they are protections for poor people who are being affected by these massively unfair entities. Which gets to my next question to you on the structure
of net neutrality. Who owns the internet? Who owns the pipes? You
just talked about how it’s one of the greatest things that happened.
It just evolved, and it had a totally democratic appeal. Anybody who
wanted to could access it. But is there ownership here of the pipes?
I know that Comcast owns its cables. But Comcast just provides
data for the line. Who owns the line? Where is ownership of this?
PAI: That’s a good question. The internet itself is simply a network
of networks. There is no owner of the internet as such. There are
various entities, companies that build infrastructure such as fiber or
wireless towers or other infrastructure that helps connect one network to another. They might have ownership over that piece of it.
But that’s one of the great things about the internet, is that it’s developed with this cacophony of companies vying to connect infrastructure that interconnects with everybody else. In that sense,
there really is a democratic system of governance where no one company or no one entity dominates the entire network.
RUSH: All right, and that’s crucial. Now I happened to read a par-
tial transcript of a recent Congressional oversight hearing, when
Senator Ron Johnson gave you his analogy to the internet, compar-
ing it to building a bridge in a neighborhood over a creek. I read
this, Chairman Pai, on a tech blog. I read tech blogs. Technology’s
my hobby, but it’s also where I keep track of young millennial po-
litical thought. And young political technical people are all-in on
net neutrality. They hate the ISPs, they hate Comcast, they hate
Verizon, they hate AT&T — because they charge people money.
Now one of these guys disagreed with Ron Johnson’s analogy to
you, and he came up with his own analogy for his readers. It’s not
very long. I want to run it by you, because this is how he’s trying to
define net neutrality for his readers:
Let’s say you live on an island, and you want to pay a company to
build a bridge to deliver supplies to you. You agree to pay that
company a set fee per month for building the bridge. And in re-
turn you expect unlimited use of that bridge and the ability to
bring your supplies over. But the bridge is administered by
Trump’s FCC. So net neutrality doesn’t apply. So the bridge
builder says, “Okay, I’ll build the bridge, but I get to choose
what supplies you get.” The bridge company has a contract
with Budweiser, so you can bring all the Budweiser across
that bridge you want, but if you want to bring any other
beer, you have to pay for it.
I guess the bridge is the internet. [Laughs] Could you
help me understand what he’s trying to say?
PAI: I think what he’s trying to say is that there’s a misplaced view of
what the internet environment is actually like. So to play along with
his analogy, he’s essentially saying that the person who owns that
bridge essentially is a monopolist. That you only have one path from
getting to point B from point A. And that monopolist has not only
the incentive, but is in fact exercising the ability to charge a toll to
certain companies who want to use that bridge. And so to use his
analogy, he’s got a contract with Budweiser, and so Bud’s going across
the bridge no problem, but he’s extracting what the economist would
call “monopoly rents” by charging everybody else $5 extra per case to
use the bridge.
Now whatever validity that analogy might have in theory, that’s
simply not how the internet works now. If you look at how traffic
goes on the internet, there is no single bridge owner who is a gatekeeper for all of that traffic. Internet traffic goes over a number of
different networks at any given point in time. And moreover, to the
extent that there was only one provider in a particular area who
owned the metaphorical bridge, we have simply not seen evidence
that there’s a systemic problem with people charging the Craft Beer
Company, to use the analogy, to use that network.
PAI: If there were such evidence, you would have expected the prior
“There is always a faction within this country who see a marketplace
that’s unregulated as a problem to be solved.” — AJIT PAI