It's been just over two weeks since Julius Genachowski stepped down as FCC Chairman after four years in charge of the nation's communications policy, and he looks extremely relaxed. You would too: in the past four years Genachowski's FCC has dealt with everything from the rise of LTE networks and the explosion of mobile devices to the net neutrality debate and the government's coordinated opposition to the AT&T / T-Mobile merger. And significant challenges and changes remain: someone will eventually buy Sprint, demand for spectrum continues to rise, and the TV industry feels ripe for disruption. Obama appointee Tom Wheeler will have plenty to do once he's confirmed by the Senate and takes over from interim Chairwoman Mignon Clyburn.
But even though Genachowski is out of politics now — and seriously planning to play in the World Series of Poker — he's still passionate about telecommunications and the internet. I caught up with him at the D11 conference in LA last week, where we discussed his tenure as Chairman and the challenges that lay ahead for the broadband industry.
So what have you been up to?
Spending time with my kids! And working on the list of house husband activities that my wife has set aside for me.
You also joined the Aspen Institute?
Yes, I joined the Aspen Institute, which is a terrific nonpartisan center. They have a wonderful effort that focuses on the impact of communications technology on society and our economy. They do great analyses of different issues and convene people to get things done. I've done many projects with them in the past, and I'm really excited to be affiliated with Aspen.
You made tremendous strides during your term, but broadband still lags behind in the US. Now that you have a little perspective, what are the changes you would have liked to see?
Four years ago, key US broadband metrics were moving in the wrong direction, and now they're moving in the right direction. That's a very healthy thing for the country.
You see the change in mobile broadband. Four years ago, there was no question that we were behind South Korea and Japan in mobile innovation. In mobile infrastructure we were behind Europe. Four years later, the tables have turned. There's no question that the US is leading the world in mobile innovation.
"There's no question that the US is leading the world in mobile innovation."
But wouldn't that have happened anyway? It's not like Verizon and AT&T didn't know they needed to build faster networks.
(Laughs) To the extent that there has been correlation during my tenure at the FCC, that's fine.
But so much credit for the turnaround goes to the folks at the large network companies who are investing at faster rates than anywhere else in the world. So much credit goes to the entrepreneurs building all the cool stuff we're using on mobile platforms and devices.
"Networks don't get faster without capital investment."
We focused the FCC on broadband to help. The agency had previously been unfocused — working on older communications technologies, yesterday's technologies. When I came in I said the mission of this agency is to unleash the opportunities of broadband.
When you do that, you ask yourself, "what are the kinds of things we can do to encourage more and faster investment in networks?" Networks don't get faster without capital investment. We did a series of things early in my tenure to signal to the major potential investors and broadband networks that this administration would be friendly and encouraging to private investment. So we did things like tackle obstacles to broadband investment like the difficulties around tower sites. We made it easier and much faster and less costly to place towers.
You just won a Supreme Court case validating that policy.
Yes, we won that at the Supreme Court just recently. We adopted rules to make it easier for companies to attach wires to utility poles. We pushed through initiatives like digging once — when someone's digging up a street, fiber can get laid at the same time. We took on the controversial issue of net neutrality, and resolved it in a way that provided incentives for investment to innovators, entrepreneurs, investors, internet services and applications, as well as investors in networks.
So what we've seen in the last four years is an increase in private investment across the ecosystem both for internet applications and service companies and the networks. And major investment decisions were accelerated. A big and important example of that is the investment in 4G LTE. Verizon accelerated a decision to roll out 4G LTE, after people questioned when and whether they would ever do it. That led to other companies saying "we're in a competitive environment, we have to invest in in 4G LTE too."
You look at the US now, and on wireless capital expenditure we're growing faster than any other country in the world, including China.
One of the challenges for the FCC is that you work with industry to help develop products and services, but you also focused the agency on protecting consumers. You said to AT&T that if they bought T-Mobile, they'd ruin the market. Net neutrality is still a contentious issue that's being litigated.
What's the balance between creating policy that enables companies to create a big profitable services and protecting consumer interests?
From the very start, I thought there were four key principles that the agency should focus on: driving private investment, driving innovation, promoting competition, and protecting consumers.
The process that we tried to run on every issue went through all four. Sometimes they're in tension, and you have to think through the costs and benefits and make the right decision. But they're in tension less frequently than one might think: when policies are adopted that improve the speeds of our networks, or drive faster innovation, they're very important consumer initiatives.
"The FCC issued more fines over the last four years than it did in any other four-year period in its history."
At the same time, I thought it was critical to make clear to the companies that operated in the space that the rules were the rules and violations of the rules would be treated very seriously. Measured by dollar amount, the FCC issued more fines over the last four years than it did in any other four-year period in its history. Record-setting fines and settlements, including settlements over mystery fees and other consumer ripoffs. So it's a fundamental part of what we do, and I think it's understood by everyone that it's core to the FCC's mission.
You were very active, but it was almost a soft power. I asked you about AT&T and FaceTime the last time we spoke and you weren't happy with that, but there wasn't a lawsuit, or a big public statement. Then there were things like net neutrality and AT&T / T-Mobile that were very public. How did you find the balance?
If you're in government, the right thing to do is be focused on solving real problems, and asking what's the best solution to a particular problem. I tend to be non-ideological about it. Sometimes the solution is a very clear, very strong, very forceful set of rules. Sometimes the solution is convening outside stakeholders and encouraging them to work things out. I think it would be a mistake to say there's only one technique and that the debate should be about the technique.
You mentioned some examples. I thought it was important that we have enforceable rules on the books to preserve internet freedom. We were in a time of changing business models around the sector. A lot of questions had been raised. We just needed to make clear that we would have an enforceable right to send and receive information over the internet, period.
Was that messaged the right way? Because I agree with you on net neutrality, but there's an entire other half of the political spectrum which thinks that's ridiculous. Did you sell that the right way?
Historically, there was argument about even that fundamental proposition. There was one telecom CEO [AT&T's Ed Whitacre] who famously said "these are our networks, no one is going to tell us what to do with them."
"people have a right to send and receive information on the internet."
One of the things that came out of the intense and loud public debate that we had in 2009 and 2010 was that we won the proposition that people have a right to send and receive information on the internet. We won another debate, which is that the government has a role in enforcing that right. That was also a controversial proposition. But by the end of the day, when we put the framework in place, it was supported by a very broad array of stakeholders including the bulk of companies both on the internet side and on the network side. I think people get it now, and I think more importantly, the business and social norms around internet openness are settling into the cement of the industry.
Except for mobile. The handsets aren't open, and except for the iPhone, they come loaded with carrier software. What's the next step in mobile?
The most important thing for people to understand is that the basic rule that people have a right to send information over the internet even — when they are using wireless devices — is part of the framework. If a carrier blocks a consumer's access to the internet, they are violating our rules.
Now, there are some elements of the rules around network management where the rules adopted were different for wireless than wired. And we had our reasons, and people can debate them. One, technically, managing a wireless network is different than a wired network. The capacity issues are much more complex and we concluded it was appropriate to take that into account. Second, the wireless broadband market is more competitive than the wired broadband market, and the more competition there is in a market, the less need there is for regulation.
"If a carrier blocks a consumer's access to the internet, they are violating our rules."
We were very clear in the order we adopted that the agency would continue to monitor issues that arose in and around wireless broadband and get engaged as things came up if there were threats to openness. So when something like AT&T blocking FaceTime came up, the commission played a role of convening the parties. And there were very strong feelings on all sides.
When I've ask you about TV, you've generally brushed me off, which is fine — but there is change happening in the market. Aereo, whether or not it's successful, is irritating the shit out of the broadcasters. They're saying they'll drop broadcast and go cable-only. Do you want that spectrum back? Do you think it's a viable plan?
"Let's reduce regulatory barriers to other spectrum."
One, there's been a tremendous amount of focus on over-the-top video because I think that's a key part of the future of a healthy TV market. By healthy TV market, I mean healthy for viewers, for innovation, and for all companies participating in it. That's why from the beginning, when we were reviewing the Comcast / NBC transaction and net neutrality rules, protecting over-the-top video was a high priority. Two, spectrum. I've made it clear that the country has a significant challenge around freeing up spectrum for mobile broadband. I developed an idea called incentive auctions to transfer spectrum from broadcasting to mobile broadband.
We did a piece on that. Is the idea of broadcasters selling spectrum to go cable-only what you envisioned happening because of incentive auctions? Is that a good outcome?
Over time, the US is going to have to be creative and forceful in freeing up spectrum for mobile broadband. We need to be looking everywhere: military spectrum. Inefficient uses in the commercial market. New ideas like spectrum sharing. We should be looking at dramatically increasing the amount and the nature of unlicensed spectrum on the market.
The first step to me was very clear: reducing the number of broadcasters using spectrum. Over the years there's been a very significant overallocation of over-the-air TV stations — in a market like New York there are 28 full power 6MHZ licenses. There's no one who argues that's not too much.
So we can have the debate about network affiliates in markets like NY, and thats fine. I can see strong arguments on both sides. But let's not have that debate hold up this very sensible idea to take as many of the non-network affiliates as we can and provide a way for them to exit or share spectrum. And that's now happening with the support of the major TV networks. They recognize that they are multiplatform content companies that will benefit from being able to distribute over multiple platforms including mobile broadband, and that can't happen without more spectrum.
Shouldn't we use all the spectrum for the [internet]?
In the foreseeable future, I think the agency and government are on the right track. Let's see this incentive auction recover a lot of spectrum. Let's reduce regulatory barriers to other spectrum, let's recover more spectrum from government.
"The mobile market can only absorb a certain amount of spectrum at a time."
The mobile market can only absorb a certain amount of spectrum at a time, and I think the agency's on the right track now. We'll hit the target of 300 MHz by 2015. It'll take some work, but I believe the government will hit the 500 MHz target by 2020. I'm a big believer in focus. Let's focus on executing the initiatives that are in place that will free up between 300-500 MHz over the next seven years.
I do want to say one thing, just to be clear about this: the last four years have been a very exciting period in tech / media / telecom sector, in and around wired and wireless broadband. That doesn't mean that the country has solved all of the challenges — in fact the the challenges ahead are very significant. We need to keep pushing to increase broadband speeds and capacity. The country will need to continue to stay focused on competition and consumers. Preserving internet freedom and openness will continue to be an issue at home and internationally, where it is very much a significant issue. We have to implement major policies like incentive auctions and universal service reform. There's a lot of important work ahead. I think what I'm proud of is that the train is moving in the right direction.
Actually, I should say the bits are moving in the right direction.
Your successor, Tom Wheeler, what would you say to him?
Tom is going to be great. He's strong and smart and knowledgeable. I've known him for many years. He's really focused on doing what's right for the country, for the sector, for innovation, for investment, for competition and consumers. I'm really excited about his nomination. I'm very pleased that Mignon Clyburn is acting chairman now. She's done a great job. I think he commission is in great hands.
"The bits are moving in the right direction."
Last thing: when you were the Chairman, I always asked what phone you had, and you were always switching. Now you're a private citizen. What're you carrying?
(Laughs) This is an iPhone on Verizon.
Is that what you're sticking with?
You know, it's a competitive market.
