Brendan Carr, Commissioner, FCC
Jonathan Handel, Entertainment/Technology Attorney & Labor Reporter, TroyGould and The Hollywood Reporter
Philip Hodgetts, President, Lumberjack System
James DeRuvo, Editor-in-Chief, DoddleNEWS
Male Voiceover: The Digital Production Buzz is brought to you by KeyFlow Pro. Media asset management software, designed to meet the needs of work groups at an affordable price.
Larry Jordan: Tonight on the Buzz, we are talking net neutrality. We start by going directly to the source. FCC Commissioner Brendan Carr joins us for an extended interview, explaining why the FCC felt it was necessary to change the current rules, what they hope to accomplish, and the process they went through in making this decision.
Larry Jordan: Next, Jonathan Handel, Entertainment and Labor Attorney of Counsel at TroyGould in Los Angeles. He shares his thoughts on the legal ramifications of this pending policy change.
Larry Jordan: Finally, Philip Hodgetts, the CEO of Lumberjack System contributes his perspective on what this new policy means for developers and media creators. All this, plus James DeRuvo with the weekly doddleNEWS update. The Buzz starts now.
Male Voiceover: Since the dawn of digital filmmaking. Authoritative: One show serves a worldwide network of media professionals. Current: Uniting industry experts. Production: Filmmakers. Post-production: And content creators around the planet. Distribution: From the media capital of the world in Los Angeles, California, the Digital Production Buzz goes live now.
Larry Jordan: Welcome to the Digital Production Buzz, the world’s longest running podcast for the creative content industry, covering media production, post-production and marketing around the world. Hi, my name is Larry Jordan.
Larry Jordan: We began planning this show a couple of months ago. At that time, we realized that there was a lot of shouting about net neutrality, but it was hard to see where the smoke ended and the fire started, so we decided to go right to the source. We start tonight’s show with an extended interview with FCC Commissioner Brendan Carr.
Larry Jordan: Commissioner Carr is a new Commissioner, before that he served the agency in a variety of legal staff positions for six years. Prior to that, as an Attorney, he represented clients in both trial and appellate court proceedings; including complex litigation involving the First Amendment and the Communications Act.
Larry Jordan: After Commissioner Carr’s interview, we look at the results of this ruling change from two perspectives, legal and media. We invited Jonathan Handel and Philip Hodgetts to share their perspectives on what this ruling means in more practical terms. My goal for all the interviews in tonight’s show to provide a balanced understanding of what’s going on. All of us have opinions, but sometimes those opinions are not supported by the facts. Tonight, I want to help us understand the facts, so we can develop more informed opinions.
Larry Jordan: Two other notes. For those listening live, I recorded the interview with Commissioner Carr yesterday, our other guests are live. Second, this morning, the New York Times reported that the FCC Inspector General is looking into charges that the Chairman of the FCC, Ajit Pai and his staff had improper communications with Sinclair Broadcasting prior to changing the rules governing media ownership. This is an important issue and we’ll discuss it during our segment with Jonathan Handel. The news broke too late for me to discuss it with Commissioner Carr.
Larry Jordan: I also want to say a special thanks to our Producer, Debbie Price, for all her work to arrange the interview with Commissioner Carr. By the way, I want to invite you to subscribe to our free weekly show newsletter at digitalproductionbuzz.com. Every issue, every week provides quick links to the different segments on the show, plus articles of interest to filmmakers. Best of all, it’s free and comes out every Saturday.
Larry Jordan: Now it’s time for our doddleNEWS update with James DeRuvo. Hello James.
James DeRuvo: Hello Larry.
Larry Jordan: What have we got for news this week?
James DeRuvo: Well, incredibly good news coming out of the camera sales industry. Camera sales were up in 2017. For the last ten years, smart phones have been steadily leaching camera market share and users preferring more mobile options because of convenience. But with great new cameras, including the Nikon D850, the Panasonic GH5 and others, camera sales actually increased by nearly ten percent in 2017.
Larry Jordan: You know, standalone camera sales increasing is not something I would expect. What’s driving the change?
James DeRuvo: Well, I think it’s due to the fact that those who have discovered photography and videography through the convenience of a smart phone are yearning for more. Ansel Adams may have said that the best camera’s the one that you have with you, but it’s clearly not the camera that you want after a while. I really think that, now that cameras have Wi-Fi and near field communications, photographers are starting to see that they can have the best of both worlds.
Larry Jordan: Well this is good news, camera sales are up. What’s next?
James DeRuvo: AMD is announcing a brand new CPU processor that also has a graphics processor on the same chip. It’s called the AMD Ryzen 5 2400 and it provides a four core computer processing and graphics processor in one chip, that operates at up to eight threads. AMD says that it’s 150 percent faster than an Intel i5-8400. This enables low budget computer builders now to bypass installing a dedicated discreet video graphics card and save a lot of money.
Larry Jordan: What do you see the benefit of putting both the CPU and the GPU in the same chip?
James DeRuvo: I think this is going to be ideal for the entry level video editor, who is looking to edit 1080p video for like say the YouTube market and though you won’t be doing any severe visual effects on such a rig, those who are looking to learn basic editing functions, at the beginning of their career, this makes the Ryzen 5 2400 processor combo something that’s going to give them plenty of bang for their buck, when they’re building their computer.
Larry Jordan: From my perspective, the better that AMD does, the better for all of us. Competition is good, as we saw on the recent Intel security issues.
James DeRuvo: You know, the best thing about AMD existing is that they keep Intel honest. When there’s competition, that means they’re going to push innovation and there’s going to be greater attention to things like data security. Competition is a good thing.
Larry Jordan: Okay, that’s AMD. What’s our third story?
James DeRuvo: Sigma’s going wide with the new 14-24 F2.8 art lens. The art lens line is an impressive and ultra-sharp zoom lens line that Sigma has come up with for higher end video shooting and it’s designed for 15 megapixel plus cameras that are looking for a good wide angle image, but with sharp detail and nearly zero distortion. It’s built with three FLD and three SLD lens elements and three aspherical lens elements, plus a huge hypersonic autofocus motor that keeps everything quiet, so it’s going to have a little heft at about two and a half pounds.
Larry Jordan: Why your interest in Sigma?
James DeRuvo: I used to sell cameras and lenses when I was working my way through college and Sigma was the brand that you looked at when you wanted to get more bang for your buck. But in the past few years, they’ve shown that they can grow beyond that third party level of lens design and are putting out glass that can rival, or even surpass quality nameplate brands, like Canon and Nikon and I expect this 14-24 F2.8 art lens to be no different.
Larry Jordan: Our lead stories are, camera sales are up and AMD’s got a new chip and Sigma’s got a new lens. What other stories are you following this week?
James DeRuvo: Other stories we’re following this week include CNN becomes the highest profile network to announce layoffs to their Digital Streaming Division. This is really interesting, because, with YouTube’s Adpocalypse, it signals that there’s a shakeup in the profitability of online media. iPhone manufacturer, Foxconn wants to make RED cinema cameras for the masses that are $20,000 cheaper than the current RED line and Viacom buys VidCon, the largest YouTube creator convention, with plans to take it global.
Larry Jordan: Where can people go to see all of these stories?
James DeRuvo: All these stories and more can be found at doddlenews.com.
Larry Jordan: The Editor-in-Chief of doddleNEWS is James DeRuvo and, James, thanks for joining us this week. We’ll talk to you next Thursday.
James DeRuvo: Okay Larry, take care.
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Larry Jordan: Brendan Carr was nominated to serve as one of five Commissioners of the FCC by President Donald Trump. He was confirmed, unanimously, by the United States Senate on August 3 and sworn into office on August 11 of 2017. Prior to his appointment, Commissioner Carr served as the General Counsel of the FCC. In that role, he served as the Chief Legal Advisor to the Commission and the FCC staff on all matters within the agency’s jurisdiction. Welcome Commissioner Carr, it’s an honor to talk to you.
Brendan Carr: Well, thank you so much for having me on, I appreciate it.
Larry Jordan: To get us started, before we get into the specifics of net neutrality, how would you describe the role of the FCC?
Brendan Carr: You know, we have a really important role. When you look at tech and telecom in general, really to me it represents a tremendous amount of opportunity, particularly on the broadband side. You know, when consumers and businesses get connected to the internet, there’s a tremendous amount of economic opportunity, opportunity for jobs and, so, I think we need to do everything we can to lower barriers to entry and make sure that consumers get access to high speed broadband, no matter where they live.
Larry Jordan: The FCC covers more than just broadband. What are some of the other projects the Commission is currently focusing on?
Brendan Carr: That’s exactly right, we do a whole bunch of other stuff as well. On the media side, for instance, we’re in the process of trying to modernize and update our regulations that govern TV broadcasters, to radio broadcasters. We’re also really active in the public safety space. A lot of people heard there was that false alert about a ballistic missile that went out in Hawaii and we have some role to play in terms of overseeing that alert system as well.
Larry Jordan: Tonight, we’re looking specifically at net neutrality. How does the FCC define net neutrality?
Brendan Carr: It’s a good question. At the FCC, there’s really two pieces to this. One are the rules that we put in place, in the second piece, is the legal authority that we use to adopt those rules. On the rules side, there’s actually not a lot of disagreement, I would say, as to what the rules of the road should be.
Brendan Carr: You know, no-one wants to see blocking, throttling and discrimination by internet service providers or ISPs on the internet. The question is, what’s the best legal approach that recognizes those common rights, while at the same time, not imposing negative consequences in terms of decreases in investment and broadband deployment. We all want to see better, faster, cheaper broadband, the question is, how do we do that?
Brendan Carr: With these specific rules that the FCC put in place two years ago, with the specific legal authority we used, which is known as Title II, that ended up being a pretty heavy-handed approach to internet regulation and we saw a lot of negative consequences, in terms of broadband providers pulling back on investment. The approach we have right now is one that allows the Federal Trade Commission to take legal action if ISPs engage in anti-competitive conduct.
Larry Jordan: You’ve made the statement before about heavy-handed and limiting investment, but we’ve seen a lot of investment, especially in the broadband and wireless space over the last two years prior to this ruling. Why did the FCC feel it was necessary to change the current policy?
Brendan Carr: Up until the 2015 decision that opposed the Title II style net neutrality rules, we saw a tremendous amount of innovation and investment in the space, about $1.5 trillion in the years leading up to that 2015 decision. In the two years since that decision, we saw a sharp decline in investment by broadband providers, both large and small. That was the first time we saw a decline in investment outside of a recession, so, that was one of the pieces that were troublesome to us, when we were looking at whether to keep this Title II framework in place or not.
Larry Jordan: Well net neutrality has been actively discussed for probably, I guess, four or five years now and this particular rule making has been under discussion at least for the last seven or eight months. But it is not yet, as I understand it, official FCC policy. Could you describe the process, a ruling or proposed ruling goes through from first being discussed until it becomes in force?
Brendan Carr: The FCC adopted this Title II approach in 2015. That decision was actually upheld by the DC Circuit. In April of last year, 2017, the commission initiated a new rule making to examine that 2015 approach and then, in December, the end of last year, we adopted the order that reversed the Title II approach and went back to the same approach we had prior to 2015. Even though we adopted that order, there’s some additional procedural steps that have to be taken, in terms of Paperwork Review Act and those types of determinations before that December 2017 decision goes into effect. We’re still a matter of weeks away before that December 2017 order is in effect. Right now we still have the Title II regime that the Commission adopted in 2015.
Larry Jordan: What is the official flag, when it becomes the ruling?
Brendan Carr: Publication in the Federal Register and that should happen in the next couple of weeks.
Larry Jordan: You’ve been with the FCC for a long time, has any part of this rule making for net neutrality surprised you?
Brendan Carr: You know, I’ll say that this has just been an issue that the general public has a tremendous amount of interest in and I get that. We had 22 million submissions filed in our docket, which is, by an order of magnitude, larger than anything we ever had. That doesn’t surprise me, per se, I mean you’re talking about the intersection of, you know, the government and the internet and consumers absolutely cherish the free and open internet. They don’t want to see anything bad happen to it and neither do I. I think you get some headlines describing the FCC’s action as, you know, killing the internet or destroying net neutrality.
Brendan Carr: The issue, as we’re talking about it now, is much more nuanced than that and I think there is a wide room here for reasonable minds to disagree about what the FCC should do, but it’s a technical debate to some extent. Is the internet a Title II service under the Communications Act? Is it a Title I service? Is the Federal Trade Commission suited to handle this type of conduct, or is the FCC the only agency that can do this? But it is difficult to translate those types of debates to the headlines that a lot of people are seeing.
Larry Jordan: Let’s take a step back, away from the rule for just a moment. As a Commissioner and you’re one of five Commissioners on the FCC, what is your role in establishing policy? For example, does every Commissioner have a voice and a vote, or does everyone simply follow the lead of the Chairman, or, how do you feel you fit in as part of the team?
Brendan Carr: In many ways, the FCC operates like a mini Congress in that sense, which is that all five of us have our own votes and whatever three, four, or five Commissioners can agree on is what we end up passing. I think all of us work hard to try to find common ground wherever we can, but, you know, no-one is shy to express their view when they can. I’ve had occasions where I’ve dissented from the Chairman, the net neutrality decision that we did was a three/two and ended up being a party line vote. But 90 percent of what we do on the Commission ends up being unanimous and bipartisan.
Larry Jordan: What is the process of deliberating a change in policy? Do you sit in a room, or does everything have to be available to the public? Again, for people that haven’t ever watched an FCC deliberation, what’s the process like?
Brendan Carr: It’s interesting. There’s a law right now that prohibits any three of us from getting together and deliberating behind closed doors, sort of like part of an open government concept. But what happens, typically, is the Chairman will have an order, that’s his proposed approach to any issue. He’ll then circulate it to all of the Commissioners’ Offices. We’ll review the item, outside parties will come in and meet with each of the Commissioners individually and express their views.
Brendan Carr: We take the feedback we get from these meetings from outside stakeholders, review the record that we have in terms of comments that were filed, we review what the Chairman has proposed to do and if we agree 100 percent we sign off, if we have a tweak, we do that, if we completely disagree, then we’ll circulate among the Commissioners’ proposed revision and, if that proposed revision gets sufficient support, then that goes in the item that way.
Larry Jordan: Is it even legal for two of you to have a cup of coffee and talk an issue through?
Brendan Carr: Two of us we can, yes and, in fact, more than two of us can meet together, we just can’t discuss issues or agency business together.
Larry Jordan: You can talk about golf, but you can’t talk about policy?
Brendan Carr: That’s right. There are efforts underway in Congress that will potentially change that law; that would allow us to meet directly and deliberate and see where we can find common ground. But right now we have staff that principally negotiate and interact with the other offices.
Larry Jordan: Oh that’s right, you’ve got a team behind you, so you could have your staff people talk without you getting involved.
Brendan Carr: Yes, that’s principally how it happens. All five offices will have staff members meet together in a group and that’s a lot of time how this stuff is discussed and debated.
Larry Jordan: I keep forgetting that you have people.
Brendan Carr: Good people, yes.
Larry Jordan: You mentioned that you’ve got 22 million public comments. Now the Pew Research did some analysis on this and there’s some significant debate as to whether some of those comments are legitimate or not. But let us pretend, just for the sake of discussion, that some percentage of those comments are legitimate, from people who are concerned about both sides of the issue. What role do public comments play in developing your policy?
Brendan Carr: It plays a big part, at the end of the day. The public’s views on these issues are ones that deserve and need to be heard. At the same time, you know, we have to look at what the law requires and if I think, as I do in this case, that broadband legally is classified as a Title I service and not as a Title II service, my hands are tied by the law in that respect. We need to be aware of what the public’s views are, we need to take those into account and we need to respond to them in our document, so it’s an important piece of it.
Larry Jordan: You mentioned earlier that net neutrality is a very hot topic today, because it touches just about all of us. As I was doing my research for our interview, I’ve lost count of the number of politicians, lobbying organizations, activist groups and Attorneys General that want to go to court to sue over this. What’s it like on the inside, watching all this develop, knowing that chaos is going to ensue as soon as you publish in the Federal Register?
Brendan Carr: It’s a good question. The decision that we’ve made, there’s some people that are really big fans of it, there’s others that really are not big fans of it. I have heard from all of them, my Twitter account has been pretty active and I’ve learned some new turns of phrases through that approach. At the end of the day, we make the best judgement call that we can, based on the record in the law before us and we sort of let the chips fall where they may. At that point, there’s no doubt that this decision is going to be appealed, there’s efforts underway in Congress to overturn the decision and I think it’s great that everyone has a view on this and is passionate about this issue. I welcome all of those efforts to participate in these proceedings.
Larry Jordan: I appreciate that you’re saying that it’s great, but is it really great, or does it give you an ulcer at night?
Brendan Carr: No, not to me. I think some of the vitriol that’s been directed, for instance, at our agency’s Chairman, Ajit Pai, in my mind has gone way behind the line. I mean, the level of racist attacks, the death threats that he’s getting, he had to cancel some appearances on the advice of Federal Protective Service. That type of stuff certainly goes well beyond. I have not had that type of stuff directed, at that level, towards me. You know, look, there’s plenty of room for reasonable debate here, some of it has crossed the line, like I said, but there’s no doubt that people are passionate about this issue and I think that’s a great thing to see.
Larry Jordan: How would you answer the young student saying that you’re messing with my internet?
Brendan Carr: What I would say is, think back two years ago, to 2015. That was prior to the FCC’s heavy-handed Title II approach. Consumers were protected. The internet thrived. Businesses of all sizes were benefiting from a free and open internet. Title II, the decision we imposed in 2015, is not the thin line between where we are today and some Mad Max version of the internet and we’re not experimenting with some radical new approach to regulation, we’re going back to an approach we had in 2015 and that was in place on a bipartisan basis for 20 years before that.
Brendan Carr: I would be pretty fired up myself if what we were doing was giving ISPs a complete blank check to dictate consumers’ experience on the internet. That’s not what we’re doing. When we made that 2015 decision, it stripped the Federal Trade Commission, which is our nation’s premiere Consumer Protection Agency, of 100 percent of its authority to take action against ISPs. This authority has now been restored, so that’s Section One of the Sherman Act.
Brendan Carr: Section Two of the Sherman Act is, if an ISP engages in anti-competitive conduct, enters an anti-competitive agreement that would result in acting in a non-neutral way by blocking, or throttling, or discriminating, that would be a per se violation of the Federal Trade Commission laws. Similarly, if a vertically integrated ISP has an affiliation with a content provider and starts discriminating against an unaffiliated content provider, that would be an action under Section Two of the Sherman Act.
Brendan Carr: I think this high level headline that people read about, that the FCC are killing the internet, or completely stripping away a free and open internet is not true. We have restored the authority of the Federal Trade Commission that can take action against this type of anti-competitive conduct.
Larry Jordan: Let us assume, just for the sake of this question, that the policy proves to be counterproductive, that, for whatever reason it doesn’t work and I don’t care what the reason is. Is there a process whereby the FCC could revisit or modify this ruling, or, is the only way to change it through court action?
Brendan Carr: Well obviously I’m very confident of the steps that we’ve taken, but I will take the bait on your hypothetical. Yes there is. There is an appeal process that people can take advantage of, that would have a Court of Appeals reverse the FCC’s action. But the other thing to keep in mind is that Congress is also, obviously, fully empowered to pass laws in this space and should Congress decide to step in, in an act specific net neutrality legislation, I would fully support that effort. I have no problem with that.
Larry Jordan: You’ve been with the FCC for a long time, not just as a Commissioner, which is relatively short, but as legal counsel, which has been fairly extensive. As you look at the duration that you’ve been with the Commission, how has it changed, or is it pretty much the same over the years?
Brendan Carr: It’s a good question. I think, by and large, a lot of what we do is the same, we have an extremely talented professional staff, you know, we work below the headlines 90 plus percent of the time and do some really good but weedy work. Net neutrality, it’s like our Olympics, every two to four years we have a really high profile obviously divisive issue that comes through here and a lot of people view the FCC through that lens. That’s the only time they hear of us. But we do a lot of sort of weedy stuff behind the scenes where we find a lot of common ground.
Brendan Carr: One of those is on infrastructure deployment, which is a hot topic these days. There’s a lot of Federal State local rules that govern the deployment of broadband infrastructure, so the fiber, the coax, the antennas. We’re taking a really close look at how we can cut some of the regulatory red tape there. At the end of the day, that’s really what consumers care about, getting better, faster, and cheaper broadband. By stripping away some of the red tape that’s there with the permitting processes, we can drive down the cost of deployment, which means we’re going to get deployment to more and more consumers.
Brendan Carr: Those are the types of things that, below the headlines, we’re really working hard on.
Larry Jordan: Before I wrap up, Commissioner, is there anything you want to add to the conversation about net neutrality, that we have not yet talked about?
Brendan Carr: No, I think we’ve covered it. I think there’s actually a tremendous amount of common ground here, no-one wants to see blocking, throttling, discriminating. It’s a question of legal authority and whether the FCC or the Federal Trade Commission is best suited as the authority to do it. I think, at the end of the day, consumers are not going to notice a difference. They’re going to continue to be protected, continue to have a free and open internet. I think the difference we are going to see is that there’s going to be even more investment in this space, which again is going to enure to the benefit of consumers.
Larry Jordan: For people that want to keep track of this issue and learn more about what the FCC is doing on a daily basis, where can they go on the web?
Brendan Carr: Well to start, if they’re on Twitter, they can follow me there, Brendan Carr FCC and then also the FCC’s website is fcc.gov.
Larry Jordan: That website is fcc.gov and Brendan Carr is one of the five Commissioners of the FCC and, Commissioner Carr, thank you so very much for joining us today.
Brendan Carr: Thanks for having me on, I appreciate it.
Larry Jordan: Jonathan Handel is an Entertainment and Technology Attorney of Counsel at TroyGould in Los Angeles. He’s also the Contributing Editor on Entertainment Labor Issues for the Hollywood Reporter. Hello Jonathan, welcome back.
Jonathan Handel: Larry, it’s a pleasure.
Larry Jordan: Put your legal hat on today, rather than your labor hat. You’ve heard how Commissioner Carr defines net neutrality, how would you define it?
Jonathan Handel: Well, let’s be really specific about it. It’s a principle that ISPs should enable access to all content, all applications on the internet, regardless of where they come from and without, in any way, favoring, disfavoring, or blocking particular products or websites. It means that the internet connection should be a dumb tube, a dumb pipe, a dumb wire, whatever you want to think of it, that connects you to everything online, whatever it is that you want.
Jonathan Handel: There is an example of a nation that does not have net neutrality, that shows what things could turn into and that is in Portugal. You can get your internet connection for a certain price and then, if you pay €5 extra a month, you get a package that speeds up access to music, another five or six Euros for popular video sites and so on and so forth. That’s the risk here.
Jonathan Handel: We’ve heard the Commissioner say that no-one wants blocking, throttling, or paid prioritization, but the reality is that there is someone that wants those things and that is many of the ISPs. The ISPs are also largely the same companies that deliver your cable television subscription, so Comcast, Spectrum. Most people have no choice other than their local cable company when it comes to also getting internet service. Those companies make a lot of money off a product that people increasingly don’t want, which is cable TV subscription, what people want is Netflix and Amazon and Hulu and so forth.
Jonathan Handel: The trouble is, Netflix is useless if it doesn’t come over your internet connection at a decent speed and that’s where you get the rub. A company that is also delivering cable TV has an incentive to make its products and applications faster, easier, more bundled, a cheaper price if you buy this and that together. We already see bundling of cable TV and internet service as it is and that’s anti-competitive. The idea that the Federal Trade Commission would step in is really I think something of a fantasy for several reasons.
Larry Jordan: Commissioner Carr said that one of the reasons for the change in policy was to move this from a Title II to a Title I authority. Could you describe what this means in English?
Jonathan Handel: What it means is less regulation and less assurance that companies will behave in a way that is favorable to consumers. Title II, in its unadulterated form, is the way telephone companies are regulated, common carriers they’re called. Title I is for information services, where the company is providing the content. What the FCC had in its 2015 regulations was not unadulterated Title II, in other words, ISPs were not being as heavily regulated as telephone companies were. There were hundreds and hundreds of the regulations that go with Title II that were lifted off the backs of the companies for that regulation.
Jonathan Handel: The fact also is that, prior to 2015, we had a 2010 net neutrality order from the FCC and so it’s simply not the case and that that, in turn, followed in the spirit of a 2005 proclamation from the FCC. It’s not the case that, prior to 2015, it was this sort of unregulated nirvana and now we’re just going back to that, this is a very different regulatory regime that the FCC has put in place.
Larry Jordan: The Commissioner describes this as a technical debate between Title II and Title I. Would you agree with that description?
Jonathan Handel: Only in the same sense that it’s a technical debate as to whether providing abortion clinics, they have to be within 500 miles, 200 miles. You know, the devil is in the details in everything. I can tell you that you have the right to social security in your retirement, but we only have one social security office open per state and the line is five miles long. That’s a technical detail.
Jonathan Handel: This is a very common legalistic and lawyer kind of move, when things get highly regulated, is to characterize the debate as technical, talk about subsections and so forth and bring people to believe that there’s no real difference, we’re just sort of re-juggling the paragraph numbering as it were. That’s simply not the case here.
Larry Jordan: This morning, the New York Times reported that the Independent Inspector General of the FCC is investigating the Chairman of the FCC. What’s this story about?
Jonathan Handel: Well, that story is with regard to a separate rule making, it was a set of rule changes that the FCC enacted, that make it easier for a single broadcaster to own more and more stations across the country. As soon as that change went into effect, Sinclair Broadcasting announced purchases that they were making that would give them reach into seven out of ten American households. Who is Sinclair Broadcasting? David Smith, the Head of Sinclair, is a very close friend of Donald Trump’s and Sinclair is more conservative than Fox is.
Jonathan Handel: We’re not going to get too political on this show, I know, but it is important to recognize that the discussion of regulatory burden and heavy-handed regulation and so forth is a standard Republican discussion. If you agree with it, you may choose to vote in one direction, if you don’t agree with it, you may choose to vote in the Democratic direction and there are obviously a lot of other reasons people vote for different parties.
Larry Jordan: Now this investigation that the Inspector General is conducting, does this have any impact on the pending finalization of net neutrality?
Jonathan Handel: No, it won’t have a direct impact on net neutrality, unless the Inspector General also finds that there was some kind of improper contact with corporate lobbyists or whomever in the net neutrality context. It does simply serve to underscore that, as technical and in the weeds as these discussions get, that these are discussions that are very important to, you know, the very wealthy corporate interest.
Larry Jordan: From what I understand, lawsuits over this ruling can’t start until the ruling is officially published in a federal register. Is that a true statement?
Jonathan Handel: That’s not quite right, it turns out. There’s some ambiguity and, in order to stay on the safe side of that ambiguity, more than 21 States have actually filed lawsuits against these regulations already in mid-January. They filed them actually in the Court of Appeals, rather than in the District Court, in other words, there isn’t a whole new trial or fact finding, the Court of Appeals has to decide, among other things, whether the action by the FCC was arbitrary and capricious. In other words, just two years earlier, the FCC enacted certain regulations and two years later what had changed? Nothing except the Presidential Election and the composition of the FCC.
Jonathan Handel: The Federal Trade Commission, meanwhile, has one Democrat, one Republican on it and three vacancies, so, we don’t know how they would rule, if they get cases from these new rulings. Another important point is, the FTC rules after the fact, in other words a potential violation occurs, it taints the marketplace and then you have to persuade the Federal Trade Commission stocked with Trump appointees, ultimately, to take action, as opposed to having rules in advance that set clear guidelines.
Jonathan Handel: The issue of investment in this area is an important one, but what you didn’t hear the Commissioner say was, give us any proof of causality, no proof that a change in regulations is what made people disinvest.
Larry Jordan: In the little bit of time we’ve got left, what advice do you have for us? Do we wait and see what’s happening, or, what should we be doing as media people?
Jonathan Handel: Educating oneself and conveying to Congress and to the President what your feelings are on this issue, one way or the other. There’s nothing else, that I see, that one can do. The regulations are there, they’re going to be challenged in court. You know, elections have consequences, that’s where the process is.
Larry Jordan: Jonathan, for people that want to keep track of what you’re writing and thinking, where can they go on the web?
Jonathan Handel: Great place for this discussion is THR Esquire, the legal section of the Hollywood Reporter website, which is hollywoodreporter.com.
Larry Jordan: Jonathan Handel is an Entertainment and Technology Attorney and the Contributing Editor on Entertainment Labor Issues for the Hollywood Reporter. Jonathan, thanks for joining us.
Jonathan Handel: Thanks very much Larry.
Larry Jordan: Bye-bye.
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Larry Jordan: Philip Hodgetts is a Technologist and the CEO of both Intelligent Assistance and Lumberjack System. Tonight, we want his opinion on the impact of this potential ruling on media and tech. Hello Philip, welcome back.
Philip Hodgetts: Hi Larry.
Larry Jordan: I know you’ve listened to both Commissioner Carr and Jonathan Handel. From a developer’s point of view, how would you describe net neutrality?
Philip Hodgetts: As a developer, I rely on the internet for two things, one is getting the word out about our products to people, wherever they may have that need, and the other thing is running web applications that people need to be able to access from anywhere. My concern is that, without rules in place that force these things to be treated neutrally, that it may be that I cannot get my word out to certain people, because they don’t subscribe to the right level of connection from their ISP. I worry that they’ll be blocked from web applications like Lumberjack, because they didn’t pay the right unlock code to their ISP.
Philip Hodgetts: You know, if ISPs behave well, we’ll have nothing to worry about.
Larry Jordan: The FCC says that they want to allow a free and open internet, so why should we be concerned at all?
Philip Hodgetts: Well, if you are of the persuasion that large corporations who claim to be only beholden to their shareholders are always going to act in the interests of their customers, then you have absolutely nothing to worry about. If you don’t hold that opinion, and I don’t hold that opinion, then I think we need to be concerned; because these multifaceted media companies that generally control the last mile to our home, don’t always behave well and that does concern me.
Larry Jordan: Who do you think the rules are likely to impact the most, media creators or people that distribute media?
Philip Hodgetts: I honestly believe it will probably hit distribution far harder, because, as Jonathan said, many of the companies that are controlling the service provider for your internet connection are also large media companies that have large libraries and have services, like cable television, that they would rather sell you themselves. It happened that an ISP in France required Google to pay them to cover the YouTube traffic on their network, because YouTube was making up 50 percent of their network. If Google hadn’t have paid the ISP to carry YouTube, then those customers in France would be without YouTube.
Larry Jordan: Is it a question of paying more to get the same service? I mean, what is it that makes these different speed levels bad?
Philip Hodgetts: It’s a differential access, I think, is the problem. If an ISP has a television service of their own and they want to throttle, let’s say, Netflix, as has happened in the past, then that would mean that access to Netflix was degraded, that people would think the Netflix service was not as good as the service provided by the cable provider and they would be able to protect their existing business, rather than being disrupted by a new service provider who offers a different type of experience, like Netflix or YouTube, or any number of other providers that we’re going to see pop up in the future.
Larry Jordan: We’ve been talking a lot about the point of view of media and media distribution, but there’s a second component which is developers and development. Increasingly, companies such as yourself are building web access into their products invisibly, using what are called APIs, or Application Program Interfaces. What’s the impact of this ruling on products that rely on connected access to the web?
Philip Hodgetts: For example, we have had a web service in one of our apps for quite a while, that takes the text from a transcript and it generates automatic keywords. We are at liberty to choose whichever service we want in a number of competing services. Similarly, given another app that we’re working on, which is going to be calling on speech to text APIs from a particular provider. Now, if your company’s ISP actually is associated with, let’s say, for example, IBM Watson, it will favor calls to IBM Watson over calls to a UK based Speechmatics.
Philip Hodgetts: My customer will never know the difference, but it will perceive that our application has slowed down. Or, if they haven’t subscribed to the right level of access Lumberjack simply will not work for them, because they don’t have access to that particular part of the web.
Larry Jordan: Well, as a developer, whose business is focused on the web, are you changing how your business works, because of these pending new rules and, if so, or if not, why?
Philip Hodgetts: It’s very hard to predict what is going to happen. I mean, on one hand you have the Commissioner and the other members of the Commission who voted in favor of this change saying that things are going to go on the same as they always have, and then you have other people that are much more concerned that the ISPs will return to behaving badly, as they did before these regulations were brought in, in 2015.
Philip Hodgetts: I don’t think it’s time to start panicking just yet, we need to see what’s really going to happen. I mean, if there was a problem, I would rather the FCC issue a ruling that affected every ISP in the country than, you know, little old Lumberjack System having to fight Spectrum, because they’re blocking my API. You know, we do not have the legal firepower, the money to back that fight, so we would be forced into using a second rate API because it was what the ISP preferred.
Philip Hodgetts: Until we see what’s going to fall down, you know, maybe it will be dealt with at the stake level, maybe it will be perfect as the Commission suggests. I’m a little more pessimistic, but, until we get something in place, now is not the time to panic.
Larry Jordan: What I’m hearing is, there’s a lot of potential for downside and, at best, everything is going to stay the same. There’s a lot of potential for cost increase and speed to decrease, but, until it’s actually an official ruling and we see what happens, all we can do is guess. Am I hearing that correctly?
Philip Hodgetts: That is correct. At the moment, everybody that is projecting the future is just simply projecting their version of what the future may contain. I, by nature, am a fairly optimistic person. What worries me is that these changes will start to happen without it being obvious to everyone, in the same way that Comcast throttled BitTorrent, a protocol used for transferring large files and used by a lot of distributions of Linux among other legitimate uses.
Philip Hodgetts: Yes, it has some not legitimate uses as well, but Comcast throttled it and made that protocol not work on their network without telling anyone and without making it properly until the FCC stopped in and made them stop.
Larry Jordan: It’s like Jonathan said, the FCC explained what it was doing, but hasn’t explained the cause that was driving the change.
Philip Hodgetts: Well I think it’s fairly obvious that the FCC, like a lot of political appointments, are doing the bidding of the masters that paid for them to get to where they are and that’s the political reality of our system. I mean, whatever side of politics you it on, that’s going to have that same reality. You know, we get political appointments and, as Jonathan said, elections have consequences.
Larry Jordan: For people that want to read what you’re thinking about this and get more information, where can they go on the web?
Philip Hodgetts: If they want to learn more about what I’m thinking about this, I think they should look at the Take 1 transcript tomorrow, but, if they want to learn more about what I say generally, philiphodgetts.com is a great place to go.
Larry Jordan: Philiphodgetts.com is an excellent place to go and Philip Hodgetts is a Technologist and the CEO of both Intelligent Assistance and Lumberjack System, and, besides, you need to write a blog on this anyway Philip, you’ve got nothing else to do.
Philip Hodgetts: I probably should, I’ve got it all researched now anyway, so probably should do that.
Larry Jordan: Philip, thanks for joining us, we’ll talk to you soon.
Philip Hodgetts: Thank you Larry.
Larry Jordan: Bye-bye.
Larry Jordan: I’ve been thinking a lot about this show over the last few weeks. Open access to the internet is one of the most critical elements in today’s society. Any changes that appear to threaten that should and do cause an immediate outcry. But, in these highly political times, it’s easy for any important issue to become reduced to headlines and soundbites. We live in an era of instant polarization.
Larry Jordan: As we listened to Commissioner Carr, he told us that everyone at the FCC believes in a free and open internet, and I’m willing to give him the benefit of the doubt. An open internet is a good thing. But that isn’t the issue, the issue is how is this freedom to be supported and enforced? We are all agreed on the ultimate goal, but there is a great deal of disagreement on how those goals are going to be achieved.
Larry Jordan: Tonight, I decided to help all of us better understand what is actually going on. This means, taking the time to look at the legal foundation the FCC is using, to determine who is responsible for enforcing what and why, and that can’t be done in a soundbite. This ruling will ultimately be decided in the courts, or the Congress. In the case of the courts, the decision will be made on the current law, in the case of Congress, the decision will be based on new laws that Congress creates. In both cases, the policy will be defined in a mountain of minutia.
Larry Jordan: We can and do describe an entire movie in one sentence. We can and do decide whether to watch a movie based on just a few words. But whether that movie is worth watching can only be determined as we spend the time to watch the whole thing. With movies and policy, it’s the details that make all the difference. Just something I’m thinking about.
Larry Jordan: I want to thank our guests for this week, FCC Commissioner Brendan Carr, Jonathan Handel of Counsel at TroyGould, Philip Hodgetts, the CEO of Lumberjack System, and James DeRuvo, the Editor-in-Chief of doddleNEWS.
Larry Jordan: There’s a lot of history in our industry and it’s all posted to our website, at digitalproductionbuzz.com. Here you’ll find thousands of interviews all online and all available to you today. Remember to sign up for our free weekly show newsletter that comes out every Saturday.
Larry Jordan: Talk with us on Twitter @DPBuZZ and Facebook at digitalproductionbuzz.com. Our theme music is composed by Nathan Dugi-Turner, with additional music provided by smartsound.com. Text transcripts are provided by Take 1 Transcription. Visit take1.tv to learn how they can help you. Our Producer is Debbie Price, my name is Larry Jordan and thanks for listening to the Digital Production Buzz.
Larry Jordan: The Digital Production Buzz is copyright 2018, by Thalo LLC.
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