Two weeks ago, the acclaimed journalist Terry Gross, interviewed Wall Street Journal reporter Amy Schatz about the question of net neutrality and the challenge to regulate the internet in anticipation of US congress's upcoming meetings to discuss current telecommunication laws (last reviewed in 1996 when the internet was hardly discussed); earlier last month the Federal Communications Commission announced that it plans to reclassify broadband Internet service as a telecommunications service so that high-speed Internet would be closely monitored by the FCC; This reclassification would also give the FCC control over net neutrality, the idea that information on the Web should be treated equally and cannot be blocked by broadband providers. The interview is insightful and probing and is worth reading in its own right. When pressed, Schatz tries to break down how this reassessment and re-regulation could change our internet experience.

Read the transcript from the interview below to get the scoop: This is FRESH AIR. I'm Terry Gross. The law hasn't kept up with new technology. Consider the Internet and broadband technology. The Communications Act of 1934 gave the FCC responsibility to oversee phone lines and airwaves. When the law was updated in 1996, it hardly mentioned the Internet. Now there's the question of whether Internet traffic should be regulated by the FCC, something the telecom industry opposes and many consumer groups and Internet companies support.

Yesterday, two Democrats, Senator John D. Rockefeller and Congressman Henry Waxman announced that they plan to hold meetings next month to begin the process of updating the Communications Act so that it directly addresses broadband service.

Amy Schatz covers technology policy and the FCC for the Wall Street Journal. We asked her to explain why this issue was important and what's at stake.

Amy Schatz, welcome to FRESH AIR. Before we get to the details of what each side wants, frame the debate for us. What are the principles that are being fought over now regarding regulation of the Internet?

Ms. AMY SCHATZ (Journalist, Wall Street Journal): Well, this comes down to an issue that's been bubbling in D.C. for a while and around the country and it's this idea of net neutrality. And the idea of net neutrality is really: What kind of regulations can be on the Internet? What can phone and cable companies do to your Internet lines? And can they do anything to your traffic or is -basically the idea here is that: Who's going to control those lines that go into your house? And there's never really been any rules that sort of talk expressly to Internet lines because we've always kind of relied on rules that were on phone. But it really gets into a really big issue as more Americans use the Internet to either make phone calls or watch movies or just connect with their kids and email and things like that. And so it's becoming a really, really big issue.

GROSS: So it's kind of like who controls the Internet? Is it the phone companies? Is it the government? Is it the FCC? And the communications laws that we have, do they say anything about that?

Ms. SCHATZ: Yeah, the communications laws we have were actually made in 1930s, so - and they've been updated a few times since then, but even the last time they were rewritten was back in 1996 and the Internet was barely even around at that point and it wasn't really mentioned in the law. And so the laws that they're relying on now are so old and really aren't written for the Internet. So that's one of the issues that they've been running into as they've tried to apply these rules to these new Internet lines, is that they weren't really written for those. They were written for the very specific things that happened with phones or cable lines. And so that's where they're running into a lot of problems, because this was just never meant to be this way and they were never meant to try to apply them this way, and so it's just been a very awkward fit.

GROSS: So let's get to the FCC. What is the FCC considering doing in terms of regulating the Internet?

Ms. SCHATZ: So they're basically talking about regulating Internet lines, and there's a difference between - because the FCC chairman, who gets really sort of offended when people say, oh, he wants to regulate the Internet. What they're really - and there's a difference because they are lines that Internet traffic go over and then there's the Internet traffic. And so they're really talking about the lines, the physical lines that come into your house or the little airwaves that are coming into your cell phone or your iPhone.

They're basically talking about just ensuring that there are rules in place that prevents companies from discriminating against other companies' traffic. And so that if there's data coming into your house, Comcast can't mess with it and they can't block you from doing things. They can't slow the traffic to make your experience really bad. And so the FCC's basically proposed some rules to give them power to stop that kind of behavior from happening.

GROSS: So the position the FCC is in now in trying to decide if and how it will try to regulate the Internet is connected to a suit that the FCC lost, where the FCC had challenged Comcast and then Comcast challenged the FCC. Would you describe what that case was about?

Ms. SCHATZ: Sure. So a couple of years ago there was a network engineer name Robb Topolski, and Robb was trying to download some movies or music or something by these peer-to-peer sharing services like BitTorrent, where it's just a way to share a really large file. (Unintelligible) Robb was having problems downloading something. And so being a network engineer and actually understanding how to do this stuff, he looked into it and figured out that Comcast was blocking traffic and that they were actually - not necessarily blocking, but they were doing something very technical to slow traffic and it was just causing him not to be able to download stuff, and this was happening across the country.

And so a group of sort of public interest groups investigated this and concluded that in fact Comcast was slowing traffic. And so they filed a complaint with the FCC and the FCC looked into it and said, yup, Comcast wasn't telling anybody what was going on and they were deliberately slowing traffic. And so they basically slapped Comcast on the wrist and said you're not allowed to do this and - because you're violating our net neutrality principles - and cut it out. And so Comcast said, well, the FCC didn't kind of go through all the administrative stuff that you have to go through to sanction somebody, and they took them to court and they said, look, the FCC doesn't have rules. They only have these like weird principles they came up with years ago, and you can't do this stuff.

And a district court recently concluded that in fact Comcast was right. The FCC had not done what they should've been doing to sort of adequately enforce their principles, because you can't enforce a principle, you can only enforce a rule. It gets very complicated. But bottom line is the court basically said, you know, the FCC, you're going to have to come back to us and explain this to us and justify what you do a little bit better.

GROSS: So the court didn't say that the FCC has no authority to do this. It said it - applied - it took the wrong approach...

Ms. SCHATZ: Exactly.

GROSS: ...and it needs to come back and figure out a better approach if it wants to ensure net neutrality.

Ms. SCHATZ: Exactly. They just basically said you need to do a do-over. That, you know, the way you tried it didn't work for us and that if you want to try to do this again, you know, knock yourselves out, but to try to find to do it a different way. And that's what the FCC's trying to do.

GROSS: So what are some consumer groups' fears about the Internet being controlled by the phone companies with no regulation?

Ms. SCHATZ: So, for net neutrality, it comes down to two issues; and for consumer groups they're really concerned that the Comcasts and the AT&Ts of the world are going to restrict what consumers can do in their homes and what they can access on the Internet. So there's a fear that if Comcast cuts a deal with Amazon that you may not be able to buy a book from Barnes & Noble as easily as you could buy it from Amazon.com. You know, it's not necessarily happening right now, but there is a fear that if you give too much power to the phone and cable companies over the lines that are coming into consumers' homes, that that could be really bad for consumers and it will restrict consumer choice.

GROSS: And a lot of Internet companies want some regulation as well. Companies like Google, for instance, and Amazon. So what are their concerns?

Ms. SCHATZ: That gets to the other side of the net neutrality debate, because I've always considered that a sort of two-prong thing here. One is the consumer side and the other side is really the business side. And companies like Amazon, or Google, or eBay don't want phone companies putting up toll booths basically in between them and consumers. And they don't want the Comcast of the world or AT&T or whomever to be able to charge them more to reach you. And so they want to make sure that the FCC or somebody is in the way to prevent that from happening and really changing the way that the Internet has acted in the past, which is the Internet was designed as sort of this best effort system, which is that, you know, they were going to make the best effort they can to get the little packets to your PC but they don't really guarantee the delivery of those little packets.

And so, you know, one of the things that the phone and cable companies have been looking at is trying to offer sort of guaranteed delivery - which would be sort of like a UPS overnight service, versus just your regular mail service. And, you know, so there are pros and cons to that but the Internet companies like Google are really concerned that they're going to get hit up for extra money on the back end.

GROSS: Okay. Meanwhile, the telecom companies don't want any regulation. What are their concerns?

Ms. SCHATZ: One of the reasons why is because, you know, these networks - you know, the Internet, the way it was built, it's a fairly complicated thing and they don't want government regulators coming in and telling them how they can, you know, run their lines or what they can do with their lines. You know, we went through - a couple years ago the FCC was looking into this issue and there was this big public hearing out in Stanford. And during this hearing it was like three, four hours long. And in the middle of it, you know, you had all these FCC commissioners who were basically, you know, some of them were lawyers, some not. And they were listening to all these network engineers try to explain to them how packets would go over these Internet lines and these networks and pinging and all this other stuff. And it got to the point where, you know, I covered the stuff. I'm pretty good at this but even I was hopelessly lost. And you could see every FCC commissioner was hopelessly lost too.

This gets really really complicated. And so, you know, for the phone companies or the cable companies who were basically trying to sell you the service and make as money as they can off of the service, they don't want the government coming in and telling them well, you have to run your packet this way or something because they're concerned that government won't be able to keep up with industry and what they're having to do with these networks as they're trying to grow them and make your speed faster.

GROSS: I think one of the concerns of the telecom companies is that they've made investments in the Internet based on the premise that the government wouldn't regulate it. Now they think it's unfair that those investments might be compromised in some way if the government changes their minds and decides it's going to regulate the Internet.

Ms. SCHATZ: And that's the major concern. It sort of depends. It's a sort of matter of degrees and how much control does the government want to have over what kind of practices they are doing. And so, you know, if you listen to some of the lobbying and you listen to some of the hand-wringing that's going on with Comcast and everybody - they're saying that the FCC wants to run all their lines. You know, they want to run all the network traffic and do all this stuff, and that's not necessarily the case. Basically what the FCC and the Obama administration are really saying is that, you know, somebody has to be the cop on the beat here. Someone has to have the authority to stop bad practices if they start happening and if that's the case, then it needs to be the FCC.

GROSS: Well, I'll tell you what, let's take a short break here and then we'll talk some more about net neutrality. My guest is Amy Schatz of the Wall Street Journal.

This is FRESH AIR.

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GROSS: My guest is Amy Schatz of the Wall Street Journal. She has been reporting for about five years on the telecom industry, tech policy and the FCC, and we're talking about net neutrality, which is basically the requirement that interest providers treat all net traffic equally and not charge more for certain transmissions.

As the FCC is trying to figure out what if anything it wants to do on the issue of net neutrality, it's also dealing with a big report - a 360 report it released in March, on what's wrong with the U.S. broadband and with proposals for expanding Internet service. What are some of the things that we should know about that are proposed in that report?

Ms. SCHATZ: So the idea of this was that there's a general feeling that the U.S. is falling behind in the Internet and that although we have more subscribers to the Internet than I think anyone in the world, if you look at it on a per capita basis, that we're really more down in the 15th, about 15th in the world range. And so there's a thought that, you know, we need to do something to make sure that every American can get online at a pretty fast rate of speed and that it's not too expensive for them. And so, I think really the two main things that they really talked about in this report was that they need more airwaves, because more Americans are using cell phones as really as Internet browsers.

You know, you often replace your laptop or your PC at home with looking at things on your iPhone or your other smartphone and as anybody who has an iPhone in an urban area can tell you, there could be some congestion sometimes and you might need a few more airwaves out there. And so the FCC said, you know, we really need some more airwaves, because the growth in this is just going to explode. If you think it's bad now it's going to get 10 times worse in the next couple of years. And so they said well, we have to find some more airwaves. And one big chunk of airwaves that they think would suit quite well for this would be the airwaves that are being used right now by a lot of TV broadcasters because TV broadcasters got great airwaves because they want to ensure that everybody can see the TV and that you could watch TV in your basement if you wanted to.

And so the TV broadcasters gave up, you know, a lot of airwaves a couple of years ago when we all transitioned to digital TV. But the FCC says that they could probably give up a few more, especially in urban areas on the East Coast and other areas where you know, you are seeing a lot of congestion. The other big thing they said was like, you know, we really have to change the federal subsidy plan that we have which pays for phone service. It subsidizes phone service in really rural areas where it can cost you an unbelievable amount of money to reach a branch or something. And so they said, you know, look, this is great. We've been using this for phone lines but this is crazy because most people are using wireless phones now. And so we should really change this plan to pay for broadband instead.

The other big thing here is that they're going to say well, look, and this fund is $8 billion a year and it's paid for by everybody out of their phone bill. It's called the USF fee. And the USF fee is like a buck or two bucks on every phone bill every month, and they're going to use that money, instead of paying for phone lines or to subsidize phone lines, they're going to subsidize broadband instead.

GROSS: Would you say we're at a turning point now and that we're - that America is on the verge of deciding what the future of the Internet is going to look like?

Ms. SCHATZ: It is in a lot of ways and I think one thing that a lot of folks really feel like, they just want faster more reliable cheaper broadband lines. You know, it's gotten to the point where if you don't have broadband in your house you're falling behind. You know, I live in the District of Columbia and I realized this week that I can't even go to the DMV anymore to reregister my car. I can only do it online. And they're - increasingly across the country people are finding this. And that if you don't have broadband service people aren't going to come to your community. They're not going to move there if they can't get decent broadband. And so it's something that so many Americans now rely on broadband. It's just an integral part of their lives. Whether it's for keeping in touch with their kids or, you know, watching the news or just finding out what's going on or playing games or whatever. You know, it's just hard to imagine at this point, you know, going back to a pre-Internet world.

GROSS: So that raises the question, should the Internet be like a public utility since people rely on it for their job searches, their home searches, their news reading, their communications with family?

Ms. SCHATZ: Yeah. And that kind of gets back to the idea of net neutrality too, which is this idea that, you know, it is a public good and it is sort of like a public utility, even though it was paid for by private companies and that someone has to be there to ensure that people have access to it. And, you know, the FCC is sort of struggling with this a little bit, but they're trying to sort of figure out a way to make sure that people in parts of the country who don't have Internet access right now - and they're a lot of people out there, probably about 23 percent of, I think it was 23 percent of households who don't even have Internet - high-speed Internet service.

There's still one megabit per second less in terms of speed, which is practically crawling at this point. You can barely get on some of these Internet sites if you don't have - if you've got speed that slow. And so, you know, one of the things that the FCC is really trying to do is sort of bring this up to a public utility level. This idea that it's important to have electricity and it's important to have running water and it's really important to have Internet service. And they're sort of elevating it to that level.

GROSS: Well. Amy Schatz, thank you so much for talking with us.

Ms. SCHATZ: Thanks for having me on.

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