WASHINGTON, D.C.— U.S. Sen. John Thune (R-S.D.), chairman of the Senate Committee on Commerce, Science, and Transportation today released the text of remarks he delivered yesterday evening as a keynote speech to open the “Reboot Congress” technology conference in Washington, D.C. Thune was introduced to the conference as its opening speaker by Berin Szoka of TechFreedom.

                      

Below are Sen. Thune’s remarks to the conference:

Thank you, Berin, for the introduction. And thank you to Garrett Johnson and Lincoln Labs for inviting me here this evening. You all have put together a wonderful program for Reboot Congress, and I’m honored to be kicking off the proceedings. It is not often that I get to speak before an audience with so many developers, designers, and other technology experts.

This conference is all about finding ways for Congress to “get stuff done,” and my Republican colleagues and I intend to get the Senate back to working for the American people. And when it comes to issues that affect the technology sector, conservatives have robust pro-innovation agenda, including:

• Fundamental tax reform and reducing the corporate tax rate, which will improve the tax code for all types of businesses, from start-ups to multinational corporations.

• High-skilled immigration reform to ensure that the best and brightest from all around the world come to the United States, where they will grow our economy and create job opportunities for Americans.

• Reinstating Trade Promotion Authority to open new markets overseas, to preserve cross-border data flows, and to protect American intellectual property abroad.

• And, clearing the way for much-needed patent reform, which was derailed last year by the anti-innovation trial lawyers and their Congressional allies.

As the new chairman of the Senate Commerce Committee, there is also a lot I want to accomplish on tech and telecom within the broad jurisdiction of my committee. Indeed, we have not wasted any time, having already started work on a small, low-profile technology issue that you may have heard about – net neutrality.

As I am sure many of you know, I have been working closely with my House colleagues, Energy & Commerce Committee Chairman Fred Upton and Communications Subcommittee Chairman Greg Walden, on trying to find a legislative solution to a problem that has vexed policymakers for more than a decade – how best to protect the open Internet.

I’ll be the first to tell you that I have long been skeptical that the Internet needs more government intervention to preserve its openness. The legal and regulatory uncertainty, however, about what the Federal Communications Commission (FCC) can and will do has become a major problem for people both at the edge of the Internet and at its core. Today, with a determined and self-confident FCC chairman being pushed by left-wing activists and by an increasingly imperious President, we find the FCC about to upend the wildly successful “light touch” regulatory framework that was first put in place during the Clinton Administration.

It was President Clinton who signed into law the bipartisan Telecommunications Act of 1996. The 1996 Act rightly established what is very obvious today – that “information services” are distinct from “telecommunications services” and should not be regulated the same as public utility telephone companies.

And it was President Clinton’s FCC chairman, William Kennard, who was responsible for implementing the 1996 Act. With great foresight and wisdom, Chairman Kennard laid the groundwork for the light regulatory touch that helped the United States to become the undisputed global leader in Internet investment, innovation, and usage. He believed that regulatory intervention is needed when “market-based incentives are not aligned with the needs of consumers.” But he also strongly felt that we should resist regulation because “there are market incentives that will drive openness in the broadband world.”

One of these incentives was the prospect of competing broadband pipes – a self-fulfilling prophecy thanks to the pioneering work started by Kennard and completed by FCC Chairman Michael Powell. Kennard envisioned cable companies competing with telephone companies, competing with wireless companies, competing with satellite companies, all offering broadband Internet access services – which is exactly what we have today. But even Kennard could not foresee a world where Internet search engines could become Internet service providers (ISPs) and mobile carriers.

The second market-based incentive he saw was the “culture of the Internet” itself. He observed that early Internet adopters grew up in a culture of network openness and that consumers would “insist that they have the same culture of openness in the broadband world.” Again, Kennard has been proven right. With nearly four million comments at the FCC on this subject, I think it is safe to say that broadband providers have heard the market speak ISPs should be extremely wary of upsetting their subscribers who demand unfettered access to the open Internet.

Broadband providers themselves seem to agree. During the period when the FCC had enforceable rules under the 2010 Open Internet Order, it did not bring a single action against a company violating those rules. Additionally, due to merger conditions, Comcast, Verizon, and AT&T have all been under some sort of voluntarily binding net neutrality commitments at one time or another, and the FCC has never found that they violated those commitments. Indeed, most broadband providers today have made it clear they have no intention to throttle or block access to lawful content, nor to enter into paid prioritization deals to create so-called “fast lanes.”

Nevertheless, FCC Chairman Thomas Wheeler and President Obama both feel compelled to reverse the “information services” framework started under President Clinton. A framework, I should mention, that the FCC and Justice Department successfully defended before the Supreme Court as recently as 2005. Why do they want to do this? Because the FCC does not currently have enforceable Open Internet rules to use in case some ISP violates the openness demanded by its customers and the marketplace.

But, it is a terrible idea to reverse decades of settled Internet policy in order to enforce net neutrality using tools intended to oversee a government-sanctioned telephone monopoly. Opening Pandora’s Box like this is even worse when Congress stands ready to give the FCC the proper tools the agency needs. Especially when we can do so in a bipartisan manner that protects the openness of the Internet and maintains the light-touch regulatory regime.

The White House and the FCC, however, both appear determined to avoid meaningful bipartisan policymaking any way they can. Even if it means destabilizing the favorable regulatory environment that helped make the United States the global epicenter for technological innovation. And they appear willing to go to great lengths to advance their overreaching proposal and to avoid engaging directly with Congress.

Last week, there were reports that the White House created its own secret, parallel version of the FCC. Their mission – to push an unwilling FCC chairman to support Title II reclassification. Despite being an independent agency supposedly free from political influence by the Administration, this “shadow” FCC appears to have succeeded in bullying the real FCC.

Many of you here today recognize the danger of turning the Internet into a public utility. But many technologists have lost sight of the danger posed by section 706 of the Telecommunications Act. Internet companies, app developers, and online publishers should fear section 706 as much as the ISPs fear Title II.

Under the courts’ current interpretation of 706, set forth in last year’s Verizon decision, the FCC has nearly unlimited authority to do whatever it deems is necessary to promote the deployment of broadband. While this sounds like an innocuous power, the court affirmed the FCC’s view that the agency can regulate anything the Commission thinks could reduce the usage of broadband services.

In other words, if the FCC decides that a company’s vertically-integrated search practices could lead to slightly less innovation by competitors, thus creating a less robust online experience, the FCC could potentially use 706 to impose “search neutrality.” If the FCC decides that forcing, say, Netflix to create an app for the Blackberry platform would increase overall demand for more broadband services – the agency could mandate that under section 706. Some argue that rampant copyright infringement reduces incentives for creators to publish quality digital content; under that reasoning, the FCC could use 706 to mandate that websites police against pirated content. This interpretation of section 706 has yet to be tested before the Supreme Court, but the risk to innovation by this kind of government micromanagement should be clear.

The only limit placed on 706 by the Verizon decision is that it cannot be used to impose common carrier regulations. As such, once the FCC reclassifies broadband as a public-utility under Title II of the Communications Act of 1934 and combines that authority with section 706, it will have virtually unlimited ability to regulate any and every aspect of the Internet ecosystem. We have heard serious concerns from broadband providers and Internet companies alike about this boundless regulatory reach, which was never intended by Congress.

For instance, Amazon’s top lobbyist, Paul Misener, told my committee last month that he also has concerns about reclassification, and that he would welcome Congress establishing limits on the FCC’s authority. A proposal that I put forward with my House colleagues would do exactly that. As Mr. Misener said of the draft, “the brilliance of it is to establish really strong… excellent principles, but with a cap, a ceiling on top.” He further testified that Congress putting open Internet principles into statute while also telling the “agency not to overreach” “seems like the best way to…provide certainty to companies like [his] that need it.”

The FCC is headed down a dangerous road, littered with regulatory uncertainty, serious litigation risk, and harmful unintended consequences that will impact consumers. Congress, however, is the only entity that can settle this issue with true certainty. And we can do so in a way that will empower the FCC with the strong tools many believe are needed to protect the Internet while simultaneously ensuring the agency is appropriately limited in its reach and authority.

Last month, my House counterparts and I put forward a draft bill to start the public discussion about how to establish clear, updated, and reasonable rules of the digital road to protect an open Internet. Both chambers of Congress have since held legislative hearings on the subject that drew significant attendance and interest. However, my Democrat colleagues, along with some outside stakeholders, have made it clear to me they will not engage in our legislative process until after the FCC votes on the President’s proposal.

I am absolutely committed to working with Members on both sides of the aisle and in both chambers to find a bipartisan solution. Because I am unwilling to let our process die on the vine, I have asked my staff to convene off-the-record, legislative engagement sessions with stakeholders on all sides of the issue, beginning the first week of March. At that time, with the FCC’s controversial vote behind us, perhaps we will be able to focus less on the politics of the open Internet and more on the policy.

Now, some people may ask, why should conservatives want to find a legislative solution when the courts will likely strike down the FCC’s latest net neutrality overreach. My understanding is that Chairman Wheeler is relying on all sorts of legal contortions and clever lawyer tricks in order to pound the square peg of the Internet into the round hole of Title II. In particular, the apparent legal rationale for applying Title II to wireless data seems quite weak.

Even so, it is a fool’s errand to predict how the courts will decide. You only have to look at the Verizon decision to see how unpredictable the judicial process can be. While many cheered when the D.C. Circuit rightfully struck down the FCC’s unlawful 2010 order, the court simultaneously granted the FCC far more power than anyone ever expected when it found section 706 to be a nearly unbridled grant of authority.

Conservatives should know by now that we cannot rely on the courts to rein in this Administration. We are two weeks away from three unelected regulators reversing almost two decades of Internet policy, and this is completely a consequence of having outdated laws that are ill-suited for today’s digital marketplace. Congress has deferred to the FCC for too long. If we continue to be bystanders while the FCC moves forward, we will be guaranteeing years of legal and regulatory uncertainty that will chill both innovation and investment. Congress must reassert our constitutional prerogative to make policy, because the only way to protect the open Internet while preserving the bipartisan light touch regime is to find a bipartisan legislative solution.

Working to keep the Internet free and open is a top priority for me, but it is not the only issue that I want to tackle this year. My colleagues on the House Energy & Commerce Committee last year started a process to consider an update to the Communications Act. Two weeks ago at the American Enterprise Institute, I shared some of my thoughts on why this effort to modernize our telecom laws is so important for the technology sector.

For instance, the Senate Commerce Committee held a hearing this morning on the Internet of Things (IoT). This amazing trend holds immense potential to empower consumers and create economic opportunities. But without sufficient access to wireless spectrum, IoT will never fully realize that potential. I think there is real bipartisan interest in ensuring we have the right spectrum policies in place, and I hope we can accomplish meaningful spectrum reform over the next two years.

The Internet of Things also raises important questions about privacy, since IoT devices can collect so much consumer and business data. These privacy considerations are real, but I encourage policymakers to resist the urge to jump head first into regulating this dynamic marketplace. Let’s tread carefully and thoughtfully before we consider stepping in with a “government knows best” mentality that could halt innovation and growth.

Unfortunately, not everyone agrees with charting a cautious path forward on privacy. The Internet of Things is still in its infancy, but just last month the Federal Trade Commission (FTC) issued a staff report making recommendations for broad-based privacy legislation that did not include any meaningful cost-benefit justifications. Even more concerning is the President’s European-style baseline privacy bill, which the White House should be releasing any day now. My office is hearing that, if the President’s proposal became law, it might completely stop the growth of the Internet of Things because it is so aggressive.

Net neutrality has become a political circus that distracts policymakers and techies alike from focusing on other important technology priorities, like ensuring our privacy laws are flexible enough to protect consumers while still encouraging experimentation and innovation. Many in the tech industry worry about ISPs becoming gatekeepers, but unlike the government, at least the broadband providers have to worry about market pressures.

When I think about threats to the future of the Internet, my biggest fear is government overreach. I worry that online innovation could soon be subjected to a “mother may I?” system where startups have to hire regulatory lawyers instead of engineers. Or where companies and entrepreneurs will have to worry first about what the government thinks, before even considering what consumers might think. That is where the FCC is headed later this month, and perhaps the FTC too, if the President has things his way.

We also have countries overseas who want to bring the global Internet under the thumb of their repressive regimes. The more control over the Internet that Americans cede to the federal government, the easier it will be for foreign governments to justify taking control of the Internet.

When it comes to the digital economy, the United States is unquestionably the envy of the world. But we cannot allow ourselves to get complacent. Policymakers must be as nimble as our world-class businesses and our foreign competitors. It is a testament to the ingenuity of American businesses that they have been able to adapt and succeed with technology laws that are increasingly out-of-date. While I do not doubt that they can and will continue to work around the growing shortcomings of our nation’s laws, American businesses and consumers deserve better from our government. Congress has a responsibility to ensure that our statutes and regulations are appropriately and narrowly tailored for today’s economy and for the future.

From telecom regulations to cybersecurity, from Internet governance to spectrum policy, there is a lot of work that can and must be done to modernize our laws. I am eager to take on this challenge, and I look forward to engaging with technology experts like the ones here today to ensure our nation’s laws are as forward-looking as our nation’s innovators and entrepreneurs.

Thank you.

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