FCC Commissioner Carr on Net Neutrality Decision (Audio)

repeal net neutrality. Thank you for being here, Thanks for having me. I appreciate it. Well. The FCC is going to be defending against many lawsuits. New York Attorney General Eric Schneiderman announced to lead a multi state lawsuit against the f SEC. Washington a G. Bob Ferguson will also sue Schneiderman's investigation and a few research studies showed that millions of public comments submitted were fake, and nineteen state a G s and others quested a delay in the

vote to investigate it. Why didn't the commission grant that delay? What was the rush to push this through? I think a lot of what you're hearing is misinformation about what the FCC ended up doing. Again, a lot of people are claiming that we quote ended net neutrality or ended the Internet as we know it simply not the case. We went back to the regulatory framework that governed the Internet that year and for twenty years before consumers were protected.

The Internet flourished under that framework. We simply went back to that same regulatory framework. Yes, but the whole point is there was a comment period which is required because you revoked a rule and the the a g S lawsuit is going to be based on a failure to follow the Administrative Procedure Act, and so my question is, what was the rush in doing that vote? Why not wait and investigate? We followed the administrati Procedure Act absolutely.

In April is when we opened up this rulemaking proceeding, we saw over four million vilenes get submitted in the SEC's record. We released the document more than three weeks before the FECs votes, So there's a tremendous amount of transparency here and anybody and everyone that wanted to participate, we're free to submit filings, and we reviewed the record and based our decision on the public's feedback. The there

was enormous public feedback against this though. Yeah, and there's a threshold legal question that we have to answer at the FCC, which is a technical one, which is is this a Title to telecom service or is it a Title one information service? And that's a legal determination that we have to make, and we looked at the record, looked at the law and our precedent, and we made

that determination. As you point out, there's a separate policy debate as well, and again, I think a lot of what you're seeing is sort of this perception that by repealing Title two that we are giving I s p s free reign to dominate consumers online experience. That's not what I want to see and that's not what our

vote did. We kept strong consumer protections in place. So I think a lot of what you're seeing is fear that I s p s are gonna have no legal restraints on what they do, whether we're gonna somehow move into some balkanized version of the Internet. Again, that's not the case. We are putting strong protections in place to make sure that we continue to have a free and

open Internet. Well, broadband providers say they'll not block or throttle legal contact content, but they may engage in paid prioritization or prioritize their own content or content from their partners. For example, A T and T already has its direct Now video streaming service to bypass mobile subscribers data limits,

so that may happen. No, not at all. So right now, under Title too, all of that activity that you describe blocking websites, paid priorization, throttling is lawful under the Title to framework. The d C Circuit made that clear when they reviewed the FECs rule. Now that we're appealing title to,

the Federal Trade Commission is empowered again. They lost their authority over I s p s during this two year experiment with Title two, and they're strong legal checks and place Section one of the Sherman Acts Section two of the Sherman Act. So if an I s P entered into an anti competitive agreement to do those things that you just talked about, those would be a violations of federally any trust law. Again, it's a shift from the

FCC being the lead enforcer here to the FTC. It's not a shift from having laws and restraints against I s p s towards which there are no restraints, but the FTC takes care of problems after the facts. The enforcement happens after the fact, and its authorities under question at the Ninth Circuit. So that's the first part of that. That's the same framework we have at the FCC. We

had net neutrality rules and then people file complaints. In fact, some alleged that we had fifty thou complaints, and then the FEC takes enforcement action. Our rules are not self enforcing. That's the same world we're going into with the Federal Trade Commission. They have standards, whether it's Section one or Section two, and then the question becomes enforcing those standards. There's no shift in that respect, and that's the FTC

is jurisdiction. There was a panel decision at the Ninth Circuit about a year ago that called their question and do UH called their authority in a question? That pain decision has now effectively been vacated by the full Ninth Circuits. The law to Land today is the Federal Trade Commission is fully empowered to take enforcement actions against I s P. The only thing that was holding them back before was the FEC Title two decisions. Well, there is going to

be an non bank hearing about that. So the Ninth Circuit is still going to rule. But let's move on the FCC order block states from making their own net neutrality rules, and one California state center said he's going to introduce a bill to impose net neutrality rules. There the attorneys general can sue, saying the f CC doesn't have authority to preempt state consumer protection rules and also the Commission did not ask for questions on that issue.

Do you see problems there? You have about forty five seconds. No, not at all. So there's actually two types of state laws. What are generally applicable consumer protection laws that consumers benefit from. Those are expressly not preempted by the FCC's decision to center their state laws that would look to mimic federal net neutrality laws simply by operation of law, our decision p M. So those uh, those laws. But again there will be state consumer protection laws that will continue to

apply after this decision. All right, well, you are in for a lot of lawsuits and uh we will keep following them. Thanks so much for being here on the show. That's FCC Commissioner Brendan Carr Walt Disney's deal to buy a chunk of twenty one Century Fox for roughly fifty two point four billion dollars is a tie up that

concentrates Hollywood movie making and sports broadcasting. The acquisition would make Disney the number one studio owner with more than a third of the market, and give a control over Fox's FX cable channel. It would also put Fox's regional sports networks under the same roof as Disney's ESPN. It will need approval from US ANTI Trust officials, who have a March nineteenth court date to stop a T and

T s plan take over of Time Warner. In an interview on Bloomberg TV, Disney Chief executive and chairman Bob Iger said the d is very pro consumer. What does combination will do? As I said a moment ago, was going to give the consumer opportunities not only to consume far greater amounts of high quality content, but to do so under extremely innovative, modern, modern circumstances. And we think, at least from a regulatory perspective, they focus just on

the consumer that that's actually quite a positive thing. Joining me is Bloomberg Senior litigation analyst Bloomberg Intelligence Senior litigation analyst Jennifer ree Jen we've been talking about horizontal versus vertical mergers a lot. Does this deal look more like the deals that the Justice Department typically tries to stop

as compared to the A T and T Time Warner deal. Well, it looks more like the kind of deals that that are more easily uh, that can more easily affect competition in a bad way, you know, because a horizontal deal is just a combination of two competitors, so automatically, on its face, it's concentrating a market, right, it's taking out

a competitor in more competitors are better. Period. So the question then becomes how much is it concentrating the market, and is it concentrating the market so much so that it could be harmful? So so it's a much more straightforward theory of harm than when you're looking at a vertical deal in the way that might harm a market. So what might be the sticking points here? Well, you know, first of all, I think, again, it's a horizontal deal. So we have two companies that have movie studios that

make movies and distribute movies. So you have an overlap right there, and and typically the way those overlaps are looked at, I think some people have said, wow, that's so much content, you know, block big blockbusters and award winning movies that may be coming out of Fox. But typically the way the regulators will look at that is say,

what is a market share? And they put those shares together and they do kind of a preliminary measure of market concentration by taking a some of the squares of those market shares and looking at what those numbers are. This is called the Herfandal Herschman Index, and it's something I knew that you knew that. It's well called the h H I here going forward because it's much easier. But this is something that's been used for many, many years.

It's within their guidelines. It's helpful to them because it just gives them a first glance, a first initial measure of whether it's concentrated. And you know, when you look at the most recent share figures for Fox and Disney and putting them together, those numbers don't look that bad. Really. Yeah, I know, it's surprising that it's surprising because when you hear about what's involved, it sounds like it would would

cause some problems. Well does the d o J as I said, is trying to block the A T and T Time Warner merger. Does their position in that suit tell us anything about what they might do here? Well, they're very different, and of course east each merger is meant to be taken for its own facts and the

circumstances that apply to those two merging companies. But I think if the A T and T suit tells us anything, what it tells us is that where there's a vertical issue and a possibility that it could be harmful, the behavioral conditions may not are unlikely to be accepted, because that's really what's happened there. In A T and T Time Warner. They always expected to have to have a remedy, but they thought it would behavioral, be behavioral rather than

selling assets. So in this Disney Fox deal there is a slight vertical aspect to it too, as well as

the horizontal where they may be licensing their content. Let's say, to some of these what we call the over the top providers like the Netflix of the world, or you know, the competitors, the other competitors that may be still up and coming, and and to that extent, what we do know from A T and T is, if there's a problem with that, they may have to be ready also to offer a structural remedy rather than a behavioral remedy. The antitrust breakup fee here is two point five billion dollars.

Does that mean that both parties view the antitrust risk as high? You know, it's funny because I've seen people interviewed and at one breath somebody will say, well, wow, this is so high. This they must think, must think this has massive risk, and somebody else saying, well, obviously Disney thinks this has low risk because they're you know, they're willing to pay to more. And that's exactly what

a high breakup fee tells you. It tells you nothing, because it tells you that Fox is going to protect himself itself just in case, which of course makes sense in such an uncertain environment. But it also tells you that Disney's lawyers have said, you should be confident that you're going to be able to get this through because you're putting this two point five billion dollars out there

and you're risking that. What did a lot of attention yesterday was President Trump saying that the Disney Fox deal would be good for jobs. Now, how does that factor into the antitrust analysis and does it put pressure on the regulators. Well, I'll tell you it's all very convoluted because really horizontal deals don't end up usually in creating jobs. Now, whether way down the road this could be job creating,

I don't know. But part of where you get those synergies, and they're talking about two billion dollars worth of cost synergies is because you have employment redundancies and people get laid off, so they are they are job killers more than they are job creators. And then the antitrust front, oddly, that goes the pro column that's on the good column in an antitrust analysis, because those pro competitive efficiencies that gaining efficiencies internally by combining are are what is weighed

against the possible harm. Right, So sometimes those costs the two billion and cost of finish efficiencies that are expected which include layoffs, are looked at as a good thing, usually by the regulators. So this is all very twisted. In five seconds, how long before we know whether the DJ is going to post this? Oh, it's going to be a long time. I think we're looking at a year at least. Really, Oh, yes, I think they'll scrutinize this for a long time. Right well, thanks as always

for being here. Jen. That's Bloomberg Intelligence Senior Litigation analyst Jennifer E. And for more of her analysis, you can go to b I go on the Bloomberg Terminal. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple Podcasts, SoundCloud and on Bloomberg dot com slash podcast. I'm June Rosso. This is Bloomberg. He did the duck to the end in Dundy