A Chat with FCC Chief Genachowski

A day after the Federal Communications Commission voted to explore new rules to prevent Internet service providers from blocking certain services and content, the agency's chairman, Julius Genachowski, stopped by BusinessWeek's offices to discuss regulations for an open Internet as well as other media, telecom, and technology issues. A final decision on so-called net neutrality regulations isn't expected for months. But the unanimous FCC vote on Oct. 22 is a significant early victory for Genachowski in what is a major—and controversial—policy priority for the chairman, who has been on the job for just three months. Below are edited excerpts from Genachowski's conversation with BusinessWeek staff members, compiled by senior writer Tom Lowry.

Q: You support a sweeping plan to make broadband more accessible in this country, an initiative that will require lots of private investment. At the same time, new regulations for a neutral Internet will certainly antagonize many of the companies that will be needed to make those investments. How do you reconcile that?

A: First of all, we are not regulating the Internet. What we did yesterday was launch a rule-making process where over the months ahead, we will be getting a lot of public input on what are fair, common-sense rules of the road to ensure that any small business, any entrepreneur, any speaker engaging in a lawful activity can have access to the Internet and the ability to reach an audience.

Q: When talking about net neutrality, is it a good idea to allow companies to charge more for better services on the Internet?

A: We need to make sure that our rules allow for business-model experimentation. Who knows exactly at this point how that will work? We want to make sure what we do welcomes technological changes, because the last thing we want to do is freeze anything in place.

Q: One element of your proposal for an open Internet that is being criticized calls for extending regulations to the wireless sphere. Why is it important to bring net neutrality to the wireless world?

A: Everyone would expect that the Internet would still be an open platform whether you're accessing it through something that is plugged into the wall or through an air card. But wired networks and wireless networks are different. There are different congestion issues. There are different network-management issues, and what different types of companies ought to be able to do—and what ought to be considered reasonable network management—will probably differ depending on the kinds of networks that are being operated.

Q: One effort you have been involved in is helping to create a national broadband plan with the goal of giving more Americans access to high-speed Internet services. Yet only $7 billion has been earmarked so far for this plan, which we calculated to be about $150 million per state. How will that make much of a dent?

A: It is completely fair to say that. There is no question that it will take a lot of private investment to do what's necessary. And we're looking at what are the ways we can [provide incentives for] private investment. We've tried to lay out some cost estimates for what it would take to achieve different goals for the country. But how that investment gets made, over what time period, toward what end, and by whom is something we haven't tackled yet. That is the next phase of the process we are in.

Q: All this assumes that greater broadband penetration is an important goal. What if there are people who simply don't want to use broadband? The adoption rates we've seen might be an argument for not spending a lot of money on extensive expansion.

A: We are doing a survey that will actually look at the reasons why people aren't signing up for broadband. There have been surveys before, and the evidence so far suggests that many of the people who don't sign up for broadband don't appreciate it and don't understand its benefits yet.

Q: How concerned are you about the available spectrum for wireless services?

A: We've been spending time on long-term spectrum policy because the data suggest we face a spectrum gap. The demands that are being created by the [Apple] (APPL) iPhone and other mobile broadband technologies threaten to outstrip the amount of spectrum available for commercial mobile, and it's important for the country that we get long-term planning right because it takes time to identify spectrum and put it on the market. We're looking at potential innovations in spectrum policy, such as secondary licensing for spectrum, and other, more creative ideas for unlicensed spectrum.

Q: In many ways, Google (GOOG) seems to have certainly identified itself with the Obama Administration or been supportive of a lot of its policies. In return it seems that in many areas of government, there has been sympathy for a lot of Google's positions. In terms of intellectual property, privacy, or antitrust, do you see any concerns we ought to be having about Google? After all, you might make a case that J. Edgar Hoover didn't have the kind of information on citizens that Google does on the people who use it.

A: I don't see any policies that are being made on the basis of any particular company. There are many privacy issues that have been raised about different companies that collect information from people who use the Internet. Those are legitimate issues, and they should be addressed. Privacy is not an issue where the FCC has much jurisdiction.

Q: How do you plan to enforce issues of indecency in the media?

A: I am an optimist about the power of technology to provide solutions in this area that are First Amendment-friendly and allow parents to make judgments with respect to their kids. One is objectionable content, and the other is educational content that parents would like to steer their kids toward [and away from objectionable programming]. Technology can be helpful on both.

Q: Do you have a stance on behavioral advertising on the Web? Is there a potential for abuse when Google, Facebook, and other companies collect all this data on users and then turn around and use that information to sell ads?

A: The short answer is, there are legitimate concerns in those areas. They tend to be Federal Trade Commission issues, not FCC issues.

Q: Has your position on cross-ownership rules in media changed given the dire state of the newspaper industry?

A: It is necessary to take into account the real facts of the marketplace. There are still reasons to be concerned about excessive media concentration, but it's also important to acknowledge the changes in the landscape and to make sure whatever rules the FCC has, that they fit the concerns of what is actually happening in the marketplace.

Q: You spent many years in the private sector (most recently as a venture capitalist). How important will it be for you to get beyond the usual political maneuvering in Washington to solicit greater input in formulating policy?

A: It's been too common in Washington that everything gets filtered through lawyers and lobbyists who ultimately interface with the FCC. There is no reason why we can't run processes to bring in other people. It requires some level of commitment on the part of companies to participate, but I think we are seeing that. And at the FCC itself, we are focused on bringing in people with different backgrounds, business backgrounds, engineers, etc., so that we actually have people speaking the same language as the companies we engage with.

Q: As someone who has known the President since your days together at Harvard Law School, how often do you speak with him now?

A: No one speaks to the President as much as they used to (laughter).

Q: We realize you are in the first few months of your chairmanship. But if there were two things you would want for your legacy at the end of your term, what would they be?

A: I think being able to point to a series of policies that promote innovation, investment, competition, and consumer empowerment across the landscape is [what I] aspire to and what I think the agency should aspire to. In each of the areas we have been pursuing—the broadband plan, mobile, open Internet—the focus is always on promoting investment, competition, and consumer choice. None of this is easy, but I think there is a path that really does make sense for the country. We are three months in, but we'll get together later, and you'll ask me how we're doing.

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