WRFH/Radio Free Hillsdale 101.7 FM - The Hillsdale Interview: Phil Kerpen

Episode Date: May 17, 2024

Phil Kerpen, president of American Commitment, joins WRFH to disciss  why the Biden FCC’s internet re-regulation is the triumph of ideology over reality. Follow him on X at @Kerpen. From 05/17/24.

This is Michaela Estreth. Today I'm with Phil Kirpin, president and founder of American Commitment. He is discussing with us today Biden and FCC's internet re-regulation policies, which he termed triumph of ideology over reality. For more information on the American Commitment, you can visit their website at Americancommitment.org, and you can follow Phil on X at Kerpin. That's K-E-R-P-E-N. You're listening to Radio Free Hillsdale 101.1.com. 7 FM. Mr. Kirpin, thanks for joining us. Oh, my pleasure. Okay, so you wrote an article or responded to an announcement on Biden and FCC's internet re-regulation, and you titled it The Triumph of Ideology Over Reality. I was wondering if you could, just to start off, fill us in on some of the details. What is

the re-regulation? What are we looking at? Well, you might remember about seven years ago now, the Trump FCCC repealed the Obama net neutrality regulations on internet providers. Actually, they called it that, but to be more accurate, it was public utility regulation of internet providers under the 1934 Communications Act, which was designed for the old Ma Bell, AT&T, Monopoly. And when the Trump FCC said they were going to repeal those regulations, the media and the Democrats acted like this would be the end of the world, basically. I mean, it was one of the great hoaxes of all time.

They said that you'd have to pay for tweets and Facebook posts. They said that everything would load one. Dot, dot, dot, dot, dot, dot, dot, word, dot, dot, dot, dot, dot, dot, dot, time. They said they actually predicted mass death. There was an article I remember that said that the Internet would break if you deregulated it, and people couldn't get suicide prevention resources, and so they would all kill themselves. These were the kind of insane over-the-top things that they were saying would happen with deregulation, and, of course, the Trump FCC under then Chairman Ajit Pye went ahead anyway.

They said, you know, none of your crazy things are going to happen because competition would prevent, you know, companies from harming their customers. They'd switch to the competitor. Instead, if we deregulate, we're going to get more investment, lower prices, and so forth. And, you know, the experience we've had since then has proven that Chairman Pye was 100% correct, and the hoaxers who had all these outrageous predictions were 100% wrong. We had zero of the predicted negative. consequences of any kind. Instead, what we had was prices came down sharply. In fact, they came

down so sharply that Janet Yellen, who was Fed Chair at the time, said there was an idiosyncratic event in the telecom sector that caused the overall price level in the economy to go down. So in other words, prices went down so much for Internet service when it was deregulated that it actually lowered inflation throughout the whole economy, which is unheard of. And speeds went up, dramatically. Speeds for wired connections went up about 500 percent. Speeds for wireless went up about 800 percent with the 5G rollout. And so this is one of the most successful deregulations in history. And just on the merits, there was zero negative consequences of any kind. Prices went down a lot. Speeds went up a lot. We're getting a lot more. We're paying less.

Hard to argue that that's a bad thing. And yet that gets me to answer your question. Sorry for being long-winded about it, but nonetheless, As soon as they had three Democrats on the FCC, they voted to bring back the Obama regulations and more, because now they have equity regulations, digital discrimination regulations as well, as old-fashioned economic regulations. So they've brought back the regulations and then some. And it really is, I think you can only understand it as total ideological blinders. They don't care what actually happened, that they were proven wrong.

They've got the power. They've got enough votes. And so they're going to regulate the Internet because they can. And so that's where we are right now. Wow. So with the deregulation under Trump, why do you think the results were so drastically different in a beneficial way compared to what the media and the Democrats were predicting? Well, I think that, you know, part of it was that they were just making over the top claims to kind of try to score police. political points. But I also think that, you know, there's a mentality on the left that if the

government doesn't prohibit something, then it'll happen. That corporations are malevolent, and if regulators don't stop them from doing something harmful, then they will do that thing. And that's not how the world works at all, because if a phone or a cable company had blocked what website you could go to or slowed down traffic or redirected it or done any of the level of things that they predicted would happen, they would have lost all their customers. That's how a market system works. And, you know, we've got the phone and cable guys competing with each other like crazy. Now we've got the wireless guys, you know, not only do the, do we have three, you know,

cut through major competitors in wireless, but they're also starting to compete for home internet connections as well. So wireless is competing with wired with T-Mobile's big push into home internet. And so, you know, the market works much better, even than any right. regulator could in preventing behavior that would harm customers because no company wants to lose its customers. That's the most basic incentive in a market system. And so I think that this assumption that we always get from the left that, you know, if government doesn't prohibit something, if regulators aren't keeping a strict watch on somebody, you're going to get all this bad behavior,

well, it tends not to actually happen because a company that would do that would destroy their business, right? They would lose their customers. They would, the shareholders would revolve. It would be a disaster. And so I think that's fundamentally why none of the negative things they predicted actually happened. In terms of why the positive things happened, well, you lift this huge cloud of regulators coming in saying how much you can charge, what kind of services you can offer, et cetera, et cetera, and it becomes much easier to raise capital and much easier to justify investments in upgrading networks. And so what we got with a lot more investment, a lot more competition between companies. And in particular, we saw sort of a pricing

war with companies competing over customers, and so prices dropped a lot, and we had kind of what you hope to have in a competitive free market. You've got competition driving down prices, private investment, driving technological improvements and improvements in speed, and so it was very, you know, it was very successful. I think it was probably more successful even than the G. Pice thought it would be when he did it. Wow. Okay. That makes a lot of sense. Thank you. If you're just now joining us. I'm Michaela Estruth here with Phil Kirpin and we are talking about Biden and the FCC's plan to introduce re-regulation over the internet. Phil has been explaining what that means and what happened under Trump when he deregulated it and now what Biden is trying to do in the FCC voting on

that. And I was wondering Mr. Kirpin if you could just explain the specific regulations that they're trying to implement. Have they discussed those at all? Yeah, they've got their two kind of sets of rules, and they've already voted to approve both of them, but they've not yet taken effect. And so one was what they call their digital discrimination order. And this is kind of amazing because they actually said in the report, they said, we've not found any evidence of any intentional discrimination. And then they said, but we're going to regulate Internet providers based on any business practice

they engage in that might have a disparate impact on race or sex or any of the other laundry list of protected characteristics. And this regulation had an effective date of, I think, March 22nd, but they said they're going to not enforce it for six months while kind of illegal challenges to it move forward. And so they've approved it. It's kind of technically in effect, but it's not actually in effect yet. It's going to take effect later this fall unless the courts prevent it. And this is really going to harm in particular some of these lower-cost plans. that get offered, especially in lower-income areas, because now you've got a big problem if you're an

internet provider, anything you do that offers services at different prices or that differentiate services, somebody can complain that has a disparate impact on race or some other protected characteristic, and you can get a huge fine, get cracked down on. So I think what we're going to see if that actually takes effect is kind of the same pricing everywhere pretty much from providers for everything, and you're going to see less promotional offers, and less, you know, discounting in lower-income areas, which is going to harm lower-income people in particular. So I think that's a very destructive regulation.

And then the other part of what they did is what they called a net neutrality regulation, but really they voted to reclassify Internet service providers as public utilities under the 1934 Telecom Act. This was the same thing that Obama had done for a few years. And the impact of that is – it's kind of interesting. because in theory this means they could regulate prices, they could regulate build out, they could regulate how the networks interconnect, they could regulate the products that are offered, it gives them essentially total regulatory control over every aspect of these companies' businesses, but the same time they voted to do it, they said we're not really going to exercise most of the powers

that we're giving ourselves. They kind of said, you know, we're going to use it if we have to, which on the one hand, you know, it's better than having lots of prospective regulation with lots of costs attached to it, but on the other, it will have a big negative impact on investment in particular because how can you spend billions of dollars building out a network if you're not quite sure what the rules are going to be if they're kind of saying, for now we're not going to mess with you, but we could any time. And so it's really the uncertainty that comes with it that that's going to be harmful. And I don't, Mikhail, I don't want to be like the left was when they said,

oh, if you do regulate, they're going to be dead bodies in the streets, the internet will stop working. It's going to be a disaster. I try not to traffic in hyperbole. but it seems to me pretty clear that if you deregulate and speeds zoom up and prices come down, then if you re-regulate, the opposite will happen. And, you know, I don't think speed are going to drop because the networks that have been deployed have already been deployed. But I don't think, you know, I don't think if regulations are, and it's not going to keep increasing in speed the way it has been. And I'm not going to tell you that prices are going to shoot up overnight,

but I do think we're going to get higher prices because there's going to be lessons investment, there's going to be less competition. And so it seems clear to me that if we go down this path over time, we're going to pay more and get less, as often happens with regulation. And, you know, one of the things to watch, though, of course, is, you know, the courts might stop these rules or President Trump could get elected again and he could repeal them again, which would be a pretty interesting thing to watch in terms of will they use the same over-the-top in sane claims and try to stoke a panic again, or will they be somewhat chastened by the fact that none of the stuff they said last time actually happened.

I don't know. That would be something to watch in that scenario. Yeah, it's funny that you said that because my next question was going to be if really the results that the media and the Democrats were predicting for deregulation was actually going to be what happened with re-regulation. But kind of going off of that, I think we all kind of remember 2020 during COVID and when there was a lot of mixed messaging and a lot of videos being blocked or taken down eventually for misinformation.

Is that something that we could anticipate again if these regulations pass? Well, I'm going to take that in two parts. First, I'm going to talk about what happened during COVID, because I think that it's a really good additional proof that we were on the right path with a deregulated free market approach, because when the lockdowns hit, demand for Internet traffic surge, something like 30 or 40 percent overnight, because so many meetings and things that have been happening in the real world were suddenly happening on Zoom and online.

And in the U.S., we basically handled it fine. I mean, you might have had a call drop here and there, but basically we had the access network capacity to handle that huge overnight jump in demand. In Europe, where they have a regulated utility model, like what the Democrats want here, they had big problems. They had shortages. They had their regulators calling up YouTube, calling up Netflix, telling them to downgrade their streams, reduce the resolution of their stream.

so the network didn't break. So I think the sort of, from an economic standpoint, the COVID experience is another very good argument for a deregulated competitive market and sort of a cautionary tale in terms of what happened in Europe. Now, on the second part of your question, which is the kind of jaw-boning social media censorship that we saw where the government didn't say, you must take this down, but they kind of said, hey, you should probably take this down, and the companies kind of went along with that. I think that there's a very, very, very real risk that as internet providers become regulated utilities under the thumb of FCC bureaucrats for their ability to be in business and to make money and kind of every aspect

of their business falls under FCC regulation. I think there's a very real risk that we could see, you know, somebody in the federal government calling them up and saying, hey, you know, we can't tell you what to do, but you might want to voluntarily block this dangerous climate disinformation website or this COVID denial site or whatever it might be. And I think that when somebody has total economic control over you, it's pretty hard to say no to their, quote, voluntary requests of that nature. And so I do think that economic regulation bears a risk of content control, and they'll never admit it, and I'll never come out and openly say that's their plan, because that would violate the First Amendment. But when you have economic power over companies,

that brings with it the power of suggestion in other ways. And so I do very much share the concern that's been expressed that that might actually be the motivation for what they're doing is to have kind of an economic grip on these companies so that it can be leveraged for, in a quote, voluntary blocking of dissent. If you're just now joining us, I'm Michaela Estreuth with Phil Kirpin, the president and founder of American commitment. we're talking about Biden and the FCC's new regulation policies over the internet. Mr. Kirpin, would you, you've referenced before that this is likely an ideological focus instead of an economic focus. And I was wondering if you could give some specific examples of that ideology that you think

that Biden and FCC might be pushing for. Well, the kind of the original godfather of the net neutrality movement is a guy named Robert McChesney, who's an avowed market. college professor at the University of Illinois, and he founded a group called Free Press, and the Obama version of these regulations actually cited his group like a dozen times in their order. The Biden administration's FCC was smart enough not to do that, and so they cited, you know, somewhat more mainstream sources, but it's still the same policy. And if you look at the writings of McChesney, he says things like, you know, we're going to brick by brick destroy the

capitalist system and rebuild society as some socialist principles and the time. And the time to fully divest the media capitalists in the phone and cable companies is not here at hand, but then neutrality is a step towards that. And so there's a very clear ideological impulse and ideological underlay behind this idea that, you know, the means of communication ought to be controlled by government. And, you know, as I was just saying, I don't think it's primarily economic, or I mean, I don't think the economics of it are the goal. I think there are means.

And I think that the idea behind this ideology is, you know, you get control of the communication system, and then you can push the socialist ideology using that control over that system. And I don't think it's a coincidence that the same group, free press, and the same guy, Robert McChesney, who founded all this net neutrality stuff, were the foremost supporters in the U.S. of Hugo Chavez and his regime of censorship in Venezuela. And they, you know, they, you know, praised him to the rafters. There are all kinds of quotes of that effect.

And so, you know, I try not to, you know, fall into conspiracies and that kind of thing. But when the people who are supporting a policy say what their goal is, I think you have to take seriously that it is part of that larger ideology. Wow. That's crazy that they quoted him that many times. That really stood out to me in what you just said. One final question for you, Mr. Kirpun, but it kind of has a long, when did answer, I'm assuming. Just kind of looking ahead over the next couple months with this plan. what would have to happen for it to be passed?

And then kind of looking forward to November in the presidential election, which way could this go? Could this be another four years with Biden? Or could this be easily overturned if Trump was reelected? I was wondering if you could just take us through those. Yeah, they've already voted. So they had a three two party line vote at the FCC, but it's not yet been published in the Federal Register.

And so when it actually gets published, that's when it'll take effect. But, you know, the fact that it's hanging out there, I think, already has a negative impact on investment. And in particular, you know, we've got this situation where Biden's got $65 billion of our tax money. It's supposed to go to broadband under the Bipartisan Infrastructure Act. And now you've got all these companies that are kind of like, you know,

there are all these areas where the economics are not that good for building out and serving them because they're remote rural areas. And if I take the subsidy money and do it, am I going to end up still losing money because of regulations. and so they're sort of not sure what to do, and there's a lot of uncertainty on that. There is, you know, the moment the final thing is issued, there's going to be litigation. And so, you know, the courts may put a hold on it. They may block it.

If Trump does win, I would think he can reverse it again. The only wildcard in this is that the court may significantly revise, the Supreme Court may significantly revise its views on administrative law in general, depending on how they decide two cases that they just. heard, but if not yet issued the decisions on, they could overturn the Chevron Doctrine, which is the precedent that basically says courts should defer to regulatory agencies. And if they overturn that, the litigation will proceed a little differently. It'll probably be more about what judges think is the best reading of the statute as opposed

to, you know, whether the agency is allowed to interpret it the way they want. I do think that, you know, the arguments against these regulations are pretty strong either way, though, and so there's a good chance of success in the courts. I never like to count on the courts. The courts let us down frequently. And so I would like to see this issue resolved with some finality by Congress. It would be great if Trump gets back in to repeal it again, but it's not a good thing to have very expensive regulations, sort of swing on and off, depending on what parties in the White House. It would be much better if Congress could get their act together and decide this issue with some finality. But they've not done really

anything on internet regulation since the 1996 Telecom Act, which, by the way, was one of the rare times they actually got things right. They didn't regulate, and that's why the internet grew the way it did. But it would be nice to see them kind of step in and resolve this in a deregulatory way. Well, thank you, Mr. Gippen. Before we close, is there anything else that you have to add that my questions didn't address that you think is important for this discussion? No, I think we're pretty well covered. I would just tell people, They can go to Americancommitment.org, and they can read more about this. I've got a recent paper on kind of the story of what happened with deregulation.

With Casey Mulligan, the great economist from the University of Chicago, you can read that paper on our website. And there's also a form there if you want to send a letter to Congress on this. We've got a pre-written letter or you can edit it however you like, and all of our stuff is on Americancommitment.org. Great. Well, thank you, Mr. Kirpin, for joining us. And as he said, you can go to Americancommitment.org for more information on that website and all that they do there. And you can also follow Phil Kirpin at Kirpen on X, which is K-E-R-P-E-N. Mr. Kirpin, thanks so much for joining us.

All right. Have a good one. That was Phil Kirpen, president and founder of American Commitment, a conservative 501 organization. For more information on his organization, you can go to American Commitment.com. and follow him on X at Kirpin. That's KERPEN. I was interviewing him discussing the FCC's new internet re-regulation policies passed under Biden, which he termed as a triumph of ideology over reality. Thanks for joining us. This is Michaela Estruth, and you're listening to Radio Free Hillsdale 101.1.7 FM.