
FCC to be led by Ajit Pai, staunch opponent of consumer protection rules - jawngee
http://arstechnica.com/tech-policy/2017/01/fcc-to-be-led-by-ajit-pai-staunch-opponent-of-consumer-protection-rules/
======
rashkov
Is there a sympathetic view of Ajit Pai that anyone could offer?

I can understand how he would be opposed to the pro-consumer agenda of
Wheeler's FCC. To be sure, there might be a better way of solving these
problems using a free market mechanism, instead of top-down regulation which
is antithetical to the libertarian/conservative ethos.

For example, previous HN discussions have surfaced how some european countries
have a deregulated last mile, giving the consumer a nearly zero-friction way
to switch between ISPs.

I just can't imagine Pai doing anything like this. I can only anticipate him
enhancing the monopolistic powers of the big ISPs.

~~~
entee
I'm quite opposed to the guy's ideas from what I've read so far, but here's
one perspective:

[http://www.nytimes.com/2010/03/21/opinion/21Benkler.html](http://www.nytimes.com/2010/03/21/opinion/21Benkler.html)

Some of the ways to look at it is that if providers can sell a fastlane to
Netflix they can reduce prices for the consumer. Other arguments that have
been advanced include having a fast lane for medical devices or emergency
services.

I could see an argument in favor if the rest of the marketplace was highly
competitive and you could just switch to a different provider if the provider
you had was behaving abusively. That's not the case in most of the US where
you have a duopoly at best for fast internet.

Personally, I find this guy's proposals to be bad policy for individual
consumers, but they're pretty great for ISPs. They would argue that in the end
that's great for consumers too, but as far as I am concerned, that remains to
be seen.

~~~
gshulegaard
> if providers can sell a fastlane to Netflix they can reduce prices for the
> consumer.

Historically, this is not shown to be how companies act. The implicit
assumption here is that a supplier has some sort of benevolent desire. But the
reality is that if a company can increase revenue, they will do so without
redistributing it to the benefit of their customers or even employees.

> They would argue that in the end that's great for consumers too, but as far
> as I am concerned, that remains to be seen.

We have seen it, and it's not great for consumers. Trickle-down economics is a
fallacy. It's also been debunked by Economists very thoroughly.

~~~
entee
I'm with you, I think it's not going to work, but these are the kinds of
arguments people make. In some ways it's a question of whose freedom are you
defending? The person who put the cable in ground or the person that cable
goes to. Both want complete freedom to use that cable as they see fit, but
those freedoms can be in tension. How do you choose?

This is one of the issues with "freedom" based arguments, in anything but a
trivial system freedoms collide and somebody has to make a call. Ajit Pai
seems to lean toward the cable-layer. I lean toward the cable-user. I think
he's wrong, but I'm not willing to question his motives. I think he also wants
the best for all, and disagrees that putting the consumer first works out
better in the long run.

~~~
gshulegaard
I thought about how the best respond to your comment. I think your intentions
are pure, but you conflate a lot of different issues together that it's kind
of difficult to respond.

So let's start with the economics.

At the heart of Capitalism is the idea of Perfect Competition[1]. There is no
ethical considerations in an Economic model, only a core set of assumptions
one of which is that each individual acts in their own self-interest. But just
because everyone acts selfishly doesn't mean that there can't be a benefit to
both parties. In fact trade rests on the idea that two parties can engage in a
mutually beneficial transaction[2] (and it is trivial to come up with an
example).

In a Perfectly Competitive market, a seller can't charge a high price because
another seller will undercut their price. Likewise, a buyer can't demand a
lower price, because no one will sell to them at a lower price. There is an
implicit "equilibrium" where the seller maximizes their profit and the buyer
maximizes their utility.

So in a way, you could say that the buyer and seller "freedoms collide", but
that precise collision should result in an mutually beneficial transaction of
sorts.

At this point you might be thinking that if competition means market
equilibrium, then why does HN want regulation at all?

Well the trouble with Perfect Competition is that it is an impossible ideal:

> there is no actual perfectly competitive market in the real world [1]

This is because of all the conditions required for Perfect Competition. Some
of my favorites are:

* A large number of buyers and sellers

* Perfect information

* Homogenous products

* No externalities

Some examples of real-world American failures pertaining to these examples:

* A large number of buyers and sellers -- Internet providers. There are few providers outside of Time Warner and Comcast.

* Perfect information -- Health care. When was the last time you saw hospitals post surgery prices online so you could pick most affordable option? Oh wait, an Oklahoma Surgery Center did that [3] and you know what happened? Californians flew out to have surgery because even with travel it was far cheaper than their local alternatives.

* Homogenous products -- Coke vs. Pepsi. You could argue they are homogenous (both soda pop), but most people would disagree. Moreover with recipe protections, it may very well be impossible/illegal for Pepsi to make an exact clone of Coke or vice-versa.

* No externalities -- Pollution (e.g. Global Warming). Pollution is often a cost to society as a whole and not on a corporation. If dumping your factory run-off directly into the river is cheaper than properly disposing of it, most companies would choose to do just that (e.g. the Mississippi pollution levels [4]).

Well so if Perfect Competition is impossible, then what should we do?

This is where Government regulation comes in and where there is often a
debate. But from an Economic standpoint, I think it is pretty safe to say that
we should do everything we can to _maximize competition_.

That's why most of HN is fond of Tom Wheeler. By and large his policies
protected net neutrality and ensured that ISPs couldn't artificially favor one
service over another thereby reducing competition. How could a Hulu compete
with a Netflix if Netflix just shelled out massive amounts of capital to buy
"fast lanes" with contractual non-competes with all the major ISPs in America?

But that was my point. The argument that ISPs will "reinvest" this new revenue
into improving service for their customers is a fallacy. ISPs will only invest
in things that increase revenue...not because they _want_ their customers to
have $10 cheaper internet service.

[1]
[https://en.wikipedia.org/wiki/Perfect_competition](https://en.wikipedia.org/wiki/Perfect_competition)

[2] [https://en.wikipedia.org/wiki/Trade](https://en.wikipedia.org/wiki/Trade)

[3] [http://kfor.com/2013/07/08/okc-hospital-posting-surgery-
pric...](http://kfor.com/2013/07/08/okc-hospital-posting-surgery-prices-
online/)

[4] [http://www.stltoday.com/lifestyles/health-med-
fit/health/mis...](http://www.stltoday.com/lifestyles/health-med-
fit/health/mississippi-river-is-second-most-polluted-u-s-
waterway/article_bce8579e-7449-11e1-9b27-001a4bcf6878.html)

~~~
entee
Ha! I'm not sure who you're trying to convince, I keep saying I agree with
you!

I'm merely phrasing things a little differently. A fully free market with no
regulation or intervention, as you point out, is frequently impossible.
Especially with in infrastructure where natural monopolies abound. Free
markets have a tendency to become monopolies or abusive without efforts to
maintain competition, and as you point out we have to encourage competition.
But this requires making tradeoffs.

The person who put the cable in the ground feels they are free in this
(theoretical, but non-existent) free market, to charge whoever they want
whatever they want to use the cable. The person using the cable has no choice
but to accept those terms because there isn't effective competition. Wheeler
chooses the freedom of the consumer to choose versus the freedom of the
provider in order to favor competition among providers.

I agree with this balance, Wheeler was good, I don't like this new guy at all
so far.

My original objective was to try to explore the other guy's point of view, to
give some of the arguments they would give in favor. I find them unconvincing,
but those are the arguments those opposed to net neutrality give.

------
givinguflac
"Pai consistently opposed consumer protection regulations during the 3-year
chairmanship of Democrat Tom Wheeler, who left the FCC today. Pai opposed net
neutrality rules and, after Trump's victory, said those rules' "days are
numbered." He also opposed lower rate caps for inmate calling, rules designed
to give TV consumers cheaper alternatives to rented set-top boxes, rules that
protect the privacy of ISP customers, an update to the 31-year-old Lifeline
phone subsidy program to help poor people buy Internet service, a speed
increase in the FCC's broadband standard, an investigation of AT&T and Verizon
charging competitors for data cap exemptions, and preemption of state laws
that restrict expansion of municipal broadband."

Sounds like a real winner.

~~~
6stringmerc
It should be an interesting comparison with Pai, an obviously experienced and
qualified individual for the FCC post with perspectives that many find
offensive, and DeVoss, who is obviously an inexperienced and unqualified
individual for the Secretary of Education post, to see which actually gets
more done.

~~~
shostack
In this case I think many would prefer the least effective one.

------
neduma
I dont want to sound like a broken record but if you want to help protect Net
Neutrality you should support groups like ACLU and the Electronic Frontier
Foundation and Free Press who are fighting to keep Net Neutrality.

[https://www.aclu.org/](https://www.aclu.org/)

[https://www.eff.org/](https://www.eff.org/)

[https://www.freepress.net/](https://www.freepress.net/)

also you can set them as your charity on
[https://smile.amazon.com/](https://smile.amazon.com/)

------
wfo
Nearly everything Trump will do, every appointment he will make, every order
he will sign will be very bad for the vast majority of Americans and the
country as a whole. He is not an honest, earnest, free-market loving
Republican with good intentions and a desire to see the country succeed.

I don't know why there's this sense that in the tech community we are immune.
We have a beautiful free and open technical world, where everyone has equal
access to information and commerce, where large companies cannot use their
power to obliterate startups so startups can thrive, where competition is
healthy and the consumer wins. Don't fool yourself into thinking it doesn't
depend on a favorable government to exist. Don't fool yourself into thinking
Trump won't do his best to get rid of it.

~~~
ricardonunez
I think so, he is big in old money. Oil, coal, bringing factories back, etc.,
sparking innovation was not one of the things he campaigned. He is going to
make immigration more difficult, and people will not have confidence in coming
here. Other countries are already investing on it, so they will take
advantage.

------
nova22033
He worked for Jeff Sessions...no no surprise there..

------
JustSomeNobody
This is bad for consumers. Everything I have read of what this guy has said,
it's like he purposely opposes anything pro consumer.

~~~
wmeredith
He supports his paying constituents: big telecom.

------
guelo
I wonder if Netflix will survive this as Comcast will be able to just cut them
off and offer customers their own service.

~~~
wmf
Comcast is already extorting as much money as they want from Netflix; it's not
clear that Comcast would benefit from cutting them off.

~~~
guelo
Without netflix it would stop a lot of cordcuting.

------
gm-conspiracy
Can somebody explain to me what the reclassification of internet from
"information services" to "common carrier" accomplished (besides cellphone
companies buying consumer satellite tv companies)?

~~~
wayzel
When VOIP and other communication services started to sprout in the 1990s the
FCC let them coast without taxation for about a decade. They then reclassified
all such services as common carriers so that they could be taxed as such.
Common carriers must pay into various tax funds such as LNP (which funds
citizens' rights to port their phone numbers between carriers), NANPA (which
maintains the North American Numbering scheme), and USF (which subsidizes
telephony buildout or services to areas that the private market would
otherwise ignore). Most consumers see these as various charges as a roughly
20% up-charge on their bill.

~~~
1_2__3
You're referring to only one aspect of common carrier status. There's a whole
host of regulations that apply - or not - if you're a common carrier.

And I'm sorry are you honestly claiming that those cost 20% of an internet
bill? Because of so you're gonna have to cite a source for that one. Between
your selective choice for what you claim is CC status, combined with a claim
that a $50 monthly bill is $10 attributable to CC, makes me think you're
pushing an agenda rather than sharing facts.

~~~
wayzel
I should have been more clear: those taxes relate to communication services
(VOIP) that interconnect with the public telecommunications network, e.g let
you call phone numbers. They are not taxes for Internet access. And yes, there
are a large number of other more restrictive regulations. Sources here:
[https://apps.fcc.gov/edocs_public/attachmatch/DOC-335228A1.p...](https://apps.fcc.gov/edocs_public/attachmatch/DOC-335228A1.pdf)
(warning - PDF)

------
ricardonunez
Any large corporation in favor of net neutrality like Amazon and Netflix,
should join Google and make fiber happen nationwide.

