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Note: As a courtesy to the other guests, who have not given permission for the transcription and uploading of their remarks to the Web, and to keep the transcription manageable, only the remarks of the host and Nicholas Johnson are presented here. (If the host, or either of the other two guests, would like to send an electronic transcription of their comments they will, of course, be included.)

Nicholas Johnson [NJ]:  Let me try out this idea at the outset and then maybe have a chance to come back to it.

We are all familiar with the concept of antitrust, and limitations on what companies can do in terms of marketplace competition and driving out competitors and so forth.  I think that marketplace is important.

But, I think what is much more important is what I call "the marketplace of ideas."  The ideas of the marketplace do not necessarily make for a marketplace of ideas.  Because the Supreme Court has decreed that with the right of free speech goes the right to censor everybody else.

So one of the things I’ll want to talk about this evening is what I have called,  throughout my life, "the separation of content and conduit." There are problems that are created for free speech in our society when you let the people who own the pipes also own the content that flows through them. What does that mean in competitive terms, not only in term of driving small competitors out of business, but in terms of driving ideas that they don’t like out of circulation?

[NJ]:  Well, I think we need to establish here at the outset the distinction between what Larry Lessig has characterized as "east coast code" and "west coast code."  And what he calls east coast code is what you are talking about – that which comes from Congress, the Federal Communications Commission, and government regulations.  What he calls west coast code is what comes from Silicon Valley and the people who are writing the software.

And there is, in fact, a lot more regulation coming from the west coast than there is from the east.

The reason you can send video and audio and photographs as well as text over the Internet is not an accident.  That’s not some God-given quality of computer chips and optic fiber. It’s because somebody has written software code that permits you to do it.  What we today think of as the World Wide Web was created by some very bright people who put in thousands of hours and then simply gave away the fruits of their effort for us to enjoy at no charge -- at least no charge for the use of their creation. When AT&T operated its "telephone" system with 100 million lines of code, it deliberately wrote that software in a way that would limit what could be transmitted -- at least transmitted most efficiently, what the system was designed to transmit -- to the human voice. Those who designed the Internet and Web protocols deliberately wrote the code so it would be open. They wanted it to be able to transmit things even they could not even imagine. They wanted to structure something that will carry anything you can digitize – anything you can put in packets can come out from the other end and look like what you put in at your end.  That was not decided by the Federal Communications Commission where I used to be a commissioner.  That was decided by the folks who wrote the software – the west coast code. So, I think we need to keep that in mind.

And that is, in fact, exactly what we are talking about in terms of network neutrality.  Are we going to let the phone companies be the regulatory bodies?  Are we going to let them write the west coast code?

[AB]:  We are talking about, not "the phone company" – not like in the olden days when there was just AT&T.  It’s been broken down.

[NJ]:  And now it is building back up again like it used to be!

No, no, I was just using that as an example from the past.

One of the problems we had at the Commission -- and we had a big computer study done by the Stanford Research Institute back when I was there in the '60s -- was that the telephone was not designed to carry computer traffic.  That’s why you have what’s called a "modem" -- which is short for a MODulator, DEModulator. What that means is you took a digital signal, turned it into an analog signal, transported it over the analog telephone wire, and then transformed it back into a digital signal.

[AB]:  That’s what the wireless box that I have now, I don’t have to dial like a fax machine.

[NJ]:  What you are now providing is a digital signal from one end to the other which is much more efficient.  So, it does matter who you let write the rules about this, rules that take the form of software.

[AB]:  So, would the FCC legislate it or would they be saddled with creating some kind of net neutrality rules?

[NJ]:  Well, everybody involved has a role in this.

If you encrypt a message that you send as an email.

Of course, if you send an e-mail with PGP encryption, or whatever, over the Internet, you thereby draw attention to yourself.  You have much more privacy if you don’t encrypt has always been my theory.

But that’s a form of affecting what’s going on -- if you have a password protected website, or if you accept or reject cookies. All these are decisions that are made by somebody, and to some degree can be made by consumer too, as would be the cookies and the firewall and that sort of thing.  All that makes an enormous difference in terms of how much we pay, what we can do with the system, how much privacy we have, how open we are to hackers and people who are trying to do us harm.

[NJ]:  I think we have an enormous surplus [of optic fiber capacity].  I remember a conversation with some friends in Australia and we calculated that the telephone rate ought to be one penny a minute for overseas calls because everybody is laying optic fiber.

I know the utilization is very low.

In terms of your story about the technology, this is not a current story, and hopefully things have changed by now.  It was not that many years ago, half a dozen maybe, at least I heard that on the NASA spacecraft they were still using 486 computers on board to run them.  The point being that there are a lot of things we do with computers that really do not require the computers we have.  If what you are doing is primarily word processing you don’t even need a 486, you can use an old 8086 from the early 1980s.

[AB]:  One of the things I read on a site, I think it was called “Save the Internet” – it was their lie of the week.  And it said “broadband competition will protect internet freedom.”  Why can’t we just allow the free market to control these telcos and say if one of them is abusing it, and won’t let me get on to Google to watch videos or whatever, I will go to another, I’ll go to X-Wires or I will go to Mediacom.

[NJ]:  Let me give the next stage of my "separation of content and conduit," and again use AT&T and ancient history. This in not academic or philosophy. This is what we ought to be thinking about.

I’ve just come from Al Gore’s Power Point movie, “Inconvenient Truth,” shown just before I came into the studio.  He makes a very persuasive case that there are some things that are really so important that we’ve got to pay attention to them.

And I would say that network neutrality is one of them.  To put the contrast so you understand what I am talking about, in the old days with AT&T, there was literally a monopoly.  They owned everything from the handset, switching stations, long distance, manufacturing plant – it was all AT&T.  That’s about as monopolistic as you can get.

And yet, so far as I know, there were no ACLU suits against AT&T.  There was nobody complaining about censorship by AT&T.  Now, why was that?  There were things being said over the telephone that were not in AT&T’s best interest.

It was because the law, the regulations, the expectations, and the culture were committed to a couple of propositions.  One, everybody who wants a phone must be given a phone.  If necessary, AT&T had to build a new switching station with only one customer on it when its capacities were exceeded. And furthermore, they did it very fast; you could usually get a phone within 24 or 48 hours.

The second principle was, anyone with a phone can say anything over that phone they want to say.  Now, that’s not to say that if you are engaged in fraudulent stock sales, the Securities and Exchange Commission won’t come after you.Or if you are harassing somebody, or running a drug ring or something out of your home, you won't have trouble with the local police.  But you won’t have AT&T saying, "No, you can’t say that."

When I first came back to Iowa City from Washington, I served on Iowa City's Broadband and Telecommunications Commission for awhile. I happened to know Ted Turner because of having been on the FCC.  And he was starting up CNN.  And getting CNN sounded like a pretty nifty idea.  So, we talked amongst ourselves on the BTC, and I talked to some people who were cable subscribers, and everybody thought, "Yeah, let's do it." So I asked Ted Turner, "How much would that cost us?" And I think he said it was something like 15 cents per subscriber per month, $1.80 a year.  I checked again and everybody thought that was a pretty good price.

Now you asked about the marketplace. Well, there was a marketplace.  We had a community of willing buyers in Iowa City. We had a willing seller in Atlanta. There was the technology to deliver it, to complete this transaction. And yet it never happened.  Why did it not happen?  Because the people who owned the Iowa City cable system at that time thought maybe they’d get into the news business like CNN, and they did not want that competitor on their cable system.

That’s what we are talking about when you combine content and conduit.  This kind of censorship wasn’t a problem with AT&T. So if you had a cable system that was required by law and regulation to accept anything somebody wanted to distribute on the cable you wouldn't have had that problem we had trying to get CNN. If the cable system didn't have enough channels, tough. It would have to get out there and lay more channels, just like AT&T did.  That’s easy to do. It costs money, but it is certainly possible to do.

And once a cable company is sucking money out of both ends of that cable – they are charging the people who are putting programming into the system, they are charging the people who are taking the programming out of the system --

[AB]:  And you are charging for ads.

[NJ]:  Yes, of course -- and the owners are becoming rich beyond their wildest dreams of avarice, isn’t that enough?  Do they also have to own the programming?  And that is what I am concerned about.

[NJ]:  We talk about Microsoft and its Office programs, Windows, and the anti-trust case.  I mean there are ten thousand ways to screw over your competitors.  It doesn’t require that you absolutely drive them out of business or you make it impossible for people to reach them.  You just make it so the person who is using your software can see immediately your subsidiary corporation’s service, but has to go through 15 mouse clicks to get to the other guy's, and we are back into the power of west coast code.

[NJ]:  One of the ways in which some ISPs [Internet Service Providers] block viruses is to entirely block a site from which viruses have been coming.  The net result of that is to shut off those who would like to go to other material on that site from having any access. This is much more serious that blocking a virus that is known to be a virus.  A lot of people with this other site find they can’t receive or send e-mail.

Another issue that arises is spam. I don’t know of anybody that loves spam.  But, when we get it through the postal service, we call it junk mail and just throw it out without much complaint.

Somebody’s got to decide what is spam and what isn’t spam. And in the same way, following up on your question from the last half hour, somebody has to decide what is pornography and what’s not pornography.  And as Supreme Court Justice Potter Stewart once said, "I can’t define it, but I know it when I see it."  Well, that’s the way I feel about spam.  With my ISP, I complained -- they were blocking a lot of the spam, but I kept getting these requests from people that I should lower the interest on my mortgage -- which I found amusing since I don’t have one.  And I said why is all this coming through, and they said, "You know, these are legitimate businesses, and some people really want information about how they can reduce their mortgage payments."

[AB]:  So, if an Internet neutrality law was written, how would it both keep viruses out of my email and off my computer, protect families and children, and allow complete freedom of speech?  How do you write something like that?

[NJ]:  Let me address your concerns, really what you are asking.  To the extent possible, I believe that it is desirable to push these decisions to the ultimate consumer rather than have them made by Congress or the ISP or whatever.  Anybody who is operating a computer without virus protection, taking those risks, is both (a) a fool, and (b) somebody who has viruses on their computer.  There is virus protection software out there and I run it in real time, and on my entire computer every night,  and I haven’t had a problem with viruses.  Ditto with cookies and spyware, you get anti-spyware software and you run it regularly and it finds and removes the data mining cookies and pop-up ads from your computer.  In terms of pornography, you can identify sites you don’t want your kids going to.

[AB]: Some company, not X-Wires, might block access to some site.  Is that the biggest fear of not having a neutral net, do you think?

[NJ]:  Well, it is the other side of the same coin.  Suppose there is a large conglomerate corporation with multiple subsidiaries. One of its subsidiaries provides Internet access and another of its subsidiaries provides content.  So, one side of it is that you either block access to your competitors’ sites, or you make it difficult to get there, or it is very slow to get there, whatever. The other side of it is that you are promoting your own site.

[NJ]:  [Someone had commented that the network netutrality proponents were trying to solve a problem that had not yet arisen; the occasions of abuse are relatively isolated.] The number of little kids run over in front of elementary schools is relatively isolated, too, but that doesn’t keep us from having a 15 mile per hour speed limit in front of the school. What are the ways of dealing with anti-competitive behavior?  One is to have an enormous government agency monitoring everything that corporations are doing, duplicate auditing of their books and watching over them.  Another involves one of the purposes behind anti-trust laws: you structure this thing so they can’t engage in that behavior, right?  Now, had the abuse occurred before the merger the Antitrust Division is examining?  No, but preventing the merger is what is certainly understood by the current administration as a preemptive strike, right?  We are going to prevent from happening what the merged corporation would have every incentive to do, and that is what we are talking about here.

[NJ]:  One of the things we might at least say something about before the program is over is essentially a companion bill [to the proposed network neutrality legislation]. The telephone companies want to get into the provision essentially of cable television. But they want to go around the communities now doing the franchising with a national franchising system that would, among other things, run PATV [Iowa City's public access channels] out of business and run the cities out of business, so the cities would no longer be franchising.

One of the things we did at the FCC was to say to cable companies, "You may put cable in the communities, but you have to provide it to everybody in the community. Now, they may not all subscribe, but you at least have to run that cable down the street."

If the phone companies can come in and pick the wealthy parts of towns, and that sort of thing, and they don’t have to pay a franchise fee, and are subject to no regulation by the cities . . .

[Ben Anderson]:  How is that different than the satellite dish service or direct TV, or for that matter, the wireless service we started providing?  We broadcast a signal throughout town, but we are not necessarily able to get everywhere, obviously the cable company is a lot bigger and more powerful than we are.

[NJ]:  You are asking about the satellite. One of the great ironies and inconsistencies in this whole business is that you have certain regulation for an over the air station which has an impact on what most people are watching on cable, which is cable distribution of an over the air signal.  But the FCC has a different set of regulations for the cable services that do not involve an over the air signal, like HBO, or ESPN – everything except basically the network affiliated stations.  And they’ve got a different set of regulations for the direct TV satellite services and Internet services.

[AB]:  And this legislation would get rid of local franchising.

[NJ]:  It wouldn’t get rid of it, it would open up the opportunity for national franchising.

[NJ]:  They are kind of going through Congress together, and that is the reason I mentioned it. Some of the news stories people will read will be talking about both, so I thought it was deserving of some mention.

[[AB]:  What is the idea of internet neutrality?

[NJ]:  To me it suggests the ideas, the things we’ve been talking about for the last hour -- or the negative of them: the removal of inhibitions, the separation of content and conduit, the elimination of conflict of interest.

If you are in business, you know what’s it about. It’s not even just about making a profit, it is about making a bigger profit this quarter than you made last quarter.  There is a limit to how you can do that and not ultimately to bump it up against some things of questionable ethics. You are laying off lots of workers because you can’t increase your revenues, but you can decrease your costs. Now you have a newspaper with no journalists, but boy are you making money.

What we are trying to do is keep the Internet open so people can come up with new ideas, like sending audio or photos or video and these online global video games people play.

Caller question:  What will happen if legislation is passed to not to protect Internet neutrality?  What will be the immediate effect?

[NJ]:  Think about, in terms of what I was saying earlier, the job of a CEO. It is to maximize profits, to increase them every quarter over the previous quarter.  Now, if they have a conglomerate corporation that owns a movie studio and an Internet provider don’t you think they are going to see the advantage of promoting their subsidiaries' motion pictures over the motion pictures of others?

Or if they own a sporting club.  There is a famous instance when I was on the Commission. People were always sending me inside documents anonymously. And one I got was a memo to the staff from one of the managers at WCBS-AM in New York City. To paraphrase as best I remember, it read, "Listen you guys, if I’ve got to spell it out for you, I will.  CBS owns the Yankees.  Our bosses like to see their scores at the top of the news."

It's the most natural thing in the world that things like that are going to happen, or when an executive says, "We refuse to carry CNN because we don't own it."

We have a long and well documented history of corporate abuses of that kind in every conceivable industry not excluding mass media.

Why are we even talking about this in Congress?  Because with that size and power and revenue goes the ability to control the political process.  Until we can do something about campaign finance, and the fact that Washington D.C. is seeped in this culture of corruption, running a bizarre where you go in and buy your legislation, it won't change.  That’s why we are here talking about this problem.