Mark Cuban joined Glenn for a full hour on TheBlaze TV to discuss the impending decision on net neutrality. Cuban has been an outspoken opponent of net neutrality, and laid out the impact that the legislation could have on entrepreneurs.
Scroll down for a transcript of this segment - Watch the full video on demand now at TheBlaze TV
Glenn: Okay, so I want to start with net neutrality, because you are one of the more outspoken people on this, and you say that it’s going to destroy the Internet as we know it.
Mark: It’s hard to destroy the Internet, but at the same time, I think it’s going to create so much uncertainty that we won’t be able to progress as quickly as we have over the last 20 years.
Glenn: Do you see a Department of the Internet?
Mark: I think that’s what the potential for this rulemaking at the FCC could turn into. I mean, the FCC will have no problem being the Department of the Internet even though they’ll deny that moniker. You know, what it comes down to is that the net has worked. You know, I was writing up something today for somebody in Congress. They had asked me just for something little, and there’s really only two laws that matter for the Internet. One is Moore’s law that says technology is going to double in speed basically.
Glenn: Which it has.
Mark: Which it has, right? And the second is Metcalfe’s law, which says the more devices you add to a network, the more valuable the network becomes, which has been the foundation of the Internet itself and social networking. The more people connected, the more valuable it becomes, and now we’re getting to the Internet of things, the more devices you can connect. Those are the only two laws we need because those have spurred competition. We’re not in an industry where the technology has become stagnant and there’s no more enhancements, and so we need regulation to try to make things happen, right? We’re not there, and so as long as the technology is allowed to advance, we’re okay.
Glenn: Show me where the internet…even with porn…you know, there’s a lot of bad things on the Internet.
Mark: There’s a lot of bad things everywhere.
Glenn: There’s a lot of bad things everywhere. Show me where the Internet has failed. Show me where the problem is.
Mark: They can’t, right? So, if you start looking at the foundation of the net neutrality argument, step number one is well, we’re afraid that the big companies, the big ISPs, are going to prevent access to websites. Well, that’s never happened. There has never been a legal website that that happened.
Glenn: Can I tell you, do you know where that’s happening? That’s happening, and you know this because of your television venture, and I can tell you this because of my television venture. Where that happens is where there’s regulation. In satellite and cable television, you’re blocked, I’m blocked. I could go online and do whatever I want and let the system work it out, let the people decide.
Mark: On one hand, we try to get paid when we’re on satellite and cable. On the other hand, it’s just one for all, and it’s à la carte for the most part over the top.
Mark: But if you start introducing regulation, then that creates a lot of uncertainty, and the amount of uncertainty will grow not just because the FCC is involved, but because the FCC is involved, there will be all kinds of legal challenges as well, and who knows what direction that’ll take the Internet as well. And so, whether it’s the legal uncertainty, whether it’s the FCC, whether it’s the turnover in the FCC in the future, I mean, we don’t need it.
Glenn: So, tell me why people like Twitter. Tell me why people are coming out and saying we should do this.
Mark: I think the Zeitgeist right now of Silicon Valley, it’s a groupthink that says we need to find somebody to demonize, you know? And it’s always been that way, whether it was IBM way back in the day, then Microsoft. There was always somebody.
Glenn: I don’t buy into that because it doesn’t make sense. The people who are out in Silicon Valley know that the internet works. Why would they be saying…?
Mark: The way it’s presented out there is that we want to keep things the way they are, right? Which makes no sense to me, because the beauty of the Internet is it doesn’t stay the same.
Glenn: It always changes.
Mark: Yeah, it’s always evolving, but I guess if they’re trying to protect your business, if you want things to be the same, why wouldn’t Twitter support it, or why wouldn’t Facebook support it? But in reality, it just makes no sense.
Glenn: Can you make the other side’s case? Make the other side’s case.
Mark: Yeah, of course. You demonize big companies, you know, AT&T bad, Comcast bad, Time Warner bad. Do you like your cable company? Do you like your cable service? Nobody likes their cable service, right?
Glenn: But does anybody really like what government does?
Mark: Well, that’s the tradeoff, but at the end of the day, if there is a utility, and now the Internet has become a utility, so the argument is well, if the Internet’s a utility, it should be regulated.
Glenn: Define utility.
Mark: Utility is something, is a service, a product that is ubiquitous in need. Everybody needs it. Everybody who has a home of some sort needs electricity. We’ve decided that. Everybody needs water. We’ve decided that those are utilities. The Internet and providing data is a utility, and I’m fine with it being called a utility, but unlike those where the product is what the product is, right? Electricity, which drives everything, hasn’t really changed all that much. The grids have changed some. The security needs have changed, but how you receive electricity and how you plug in, when was the last time it changed, you know? Same with water, when was the last time it changed? There is no change there, and so regulating the need, and they also have finite resources that they’re consuming. We can always create more bandwidth. There’s 100 ways to create more bandwidth, whether it’s fiber, whether it’s copper.
Glenn: I read somewhere in England they just finished an experiment, and now they believe they can increase the speed where you can download 18 movies in one second through light.
Mark: Yeah, that’s nothing. That’s peer-to-peer, right? That’s line of sight, right, for fiber, and then there’s the thing called P-wire or P-ware where it’s a reutilization of cell towers where they can increase just using traditional-type cell towers the way their networked together an increase wireless speeds by 1,000 times.
Glenn: Even this idea that somebody could choke down Netflix, which, by the way, was resolved and not resolved to get back to the way it was. It actually worked out better for Netflix.
Mark: Well, it was even worse than that, right? Netflix went cheap, right? Look, and let me just be clear, I’m a big shareholder in Netflix, and I’m a big proponent of Netflix stock, and to me it’s not a conflict to say I’m against net neutrality and for Netflix, because Netflix doesn’t need net neutrality. They wanted to find a CDN, a content distributor, and they went the cheapest way, which was Cogent, and that created their problem with Comcast, which they worked out, like you said. That’s what businesses do, they have conflict, they work them out.
Mark: You don’t need to legislate a business conflict.
Glenn: So, that worked out, plus we have Moore’s law that demonstrates, I mean—
Mark: It’s going to keep on getting better.
Glenn: It’s going to keep getting better and better and better, and there’s nothing that says the future to me anything better than the Telecommunications Act of 1933.
Mark: Yeah, or ’96, right? They’re there, and I’ll give you another reference point in terms of the uncertainty of FCC chairmen. I forget the guy’s name, but I was reading something that Tom Wheeler, the current chairman, wrote about when he first came in about his vision, right, and what he saw, and he talked about the networks of the past, correctly. He talked about the telegraph. He even talked about railroads connecting the company, and then he started talking about and referencing wireless to a certain extent, and what he said was if the FCC hadn’t aggregated the spectrum, we wouldn’t be where we are with wireless, and he was right, but what he also said was the FCC chairman at the time called wireless frivolous. So, all that spectrum was there to their credit, but it took 15 years to do anything with it and put us behind.
Glenn: Look at what happened when we broke down Ma Bell. Everybody fought and said you can’t stop that regulation, that’s going to be bad for the phone system, you can run your truck over a phone, which you could at the time because they owned the phones, and that’s the only thing that was good about it. It was dependable and indestructible, but there was no leap of technology.
Mark: Okay, let me contribute a little fun fact, right? This building, right, there was a company called Printronix that was the first tenant in this building at the communication studio here who was the company that sued that broke up Ma Bell.
Glenn: Oh, you’re kidding me?
Mark: Nope, that’s the honest-to-God truth.
Glenn: Man, I love that.
Mark: Because I ended up buying that company for my first company, MicroSolutions and taken a part of it, so there’s a little fun fact.
Glenn: So, it broke up. As soon as we got regulation out, look what happened to phones.
Mark: I don’t want to pretend that I’m an expert in the ’33 law, even the ’96, even though I’ve talked to commissioners for the last 15 years about it. To me, the foundation is you don’t know how politics—look at current chairman Wheeler’s approach, right? He had one approach to net neutrality which was very light, you know, don’t really need to do a whole lot, we don’t need to pass anything. Then all of a sudden Verizon sues and wins, so that opened the door, but he didn’t change his position. Then President Obama comes in and says here’s my position on net neutrality, and now all of a sudden Commissioner Wheeler changes his position and says it’s because these 4 million comments came in, the point being not that he doesn’t have the right to change his mind, not that the president doesn’t have the right to say something. That process is going to be repeated with the next chairman and president and then the next chairman and president and then the next chairman and president, because the Internet is going to continue to evolve to some extent. We don’t need that uncertainty.
Glenn: So, are you for…because I heard you kind of backed down a bit when you were pushed and said well, would you be for Congress doing this?
Mark: We’re different, right? I don’t necessarily, and I said that because from what I’ve heard from what Congress is doing from the couple people looking at doing something, it was a very simple reconfirmation of what everybody already agrees on, that no website will be blocked, no legal website will be blocked, right, and just basic 1-2-3-type stuff that’s just like saying two plus two is four. That’s why. So, based off of what I’ve heard, I don’t have the problem. Now, if they go into all new territory, yeah, then that brings up a whole different set.
Glenn: I’ve been concerned that once you open the door, I mean, I was under the Telecommunications Act of 1933 when I first got into radio. I got into radio when I was 13 years old, and I had to take a test to be able to be on the air. I mean, it was nuts. We already have people in Congress, we have people in the administration questioning who’s a journalist, who’s not a journalist. Once you open this door, isn’t it possible and probable over time that they decide who gets to open up what websites, who gets to call themselves journalists?
Mark: Yeah, to a super extreme, yes, that’s always possible, right? I think at some point then, the people’s will will come in, and democracy takes over and capitalism takes over, and we go from maybe an open Internet to a closed Internet where people have access to something that’s not considered Internet.
Glenn: What does that mean?
Mark: Meaning that if I wanted to use wireless and create my own network, right, my own private network by dropping nodes all around Dallas, Texas and then connecting that to a whole ’nother network and then connecting that to another network and not connected to the Internet at all, I could, right? It’s expensive, but that cost will continue to drop.
Glenn: That would be like what cable did until they started to regulate cable.
Mark: Well, in some respects, yeah, but it would be a private network, and there’s lots of smaller corporate private networks that government doesn’t have access to, and you could open those up or create your own. So, if they took it too far, then I think there would be a marketplace reaction.
Glenn: So, what’s your biggest concern about this then?
Mark: The uncertainty.
Glenn: What does that do?
Mark: So, here’s some what I think are logical conclusions that aren’t too extreme, right?
Glenn: Do you dismiss the extreme that the government, I mean, you’re really outspoken on privacy. Look what the hell the NSA is doing that they told us they weren’t doing. Five years ago, wouldn’t you have said that would be extreme?
Mark: No, because I know.
Glenn: You knew five years ago? Ten years ago?
Mark: Yeah, ten years ago, maybe, right, because yeah, we weren’t already there. So, if you go to the technological base, right now one of the big concerns is video, right? Netflix is an example. Are people going to be able to get Netflix or video or streaming video or are the incumbents, the big bad guys, Comcast, Time Warner, AT&T, going to slow it down because it’s competition to their content? Well, if you think about the technology of television because it’s pretty much all digital right now, this show, you’re taking a source with all the cameras, you’re going to go through an encoder, right, and you’re going to ship some to your cable and satellite partners, and you’re going to ship some to your Internet subscribers. It’s basically the same technology in both directions, right?
So, what net neutrality says is you can’t give an advantage to any one type of delivery, right? So, you can’t advantage your cable subscribers or satellite subscribers over your Internet subscribers. You’re a perfect test case, and so if net neutrality is taken to its logical extension and it’s against paid prioritization, then providing your bits to cable and satellite is the equivalent of paid prioritization, which means you should not be able to do that.
Glenn: Wait, because like Home Shopping Network, they pay to be on that channel.
Mark: They pay to have their bits delivered in a prioritized manner over the open Internet so that they don’t buffer, right? So again, if you think about your cable coming from big, bad, nasty cable provider, and it’s one pipe and it’s all digital, it’s all bits, they take a segment of that, and they allocate it for your TV channels. Those are, let’s just say six megabits per HD channel times however many channels. That’s a lot of bandwidth allocated to television versus just 10, 25, 50, 100, even a gigabit for Internet. It’s not inconceivable, and I would tell you that someone will sue and it will become likely that they will say you have to combine all that bandwidth together. So, if you’re getting 100 to make it easy six megabit channels of HD, that’s six gigabytes. That’s six gigabytes if you say you know what, you can’t just deliver all that for television, we want to open that up to the Internet so all the Glenn Becks and Blazes can deliver their over-the-top video in an equal manner, now all of a sudden you have 6.1 gigabits available in this example.
Glenn: And you have to fracture it to everything.
Mark: Yeah, and it’s just open Internet. Now all of a sudden your traditional television, so if I’m getting Blaze on my big bad cable provider, it might start buffering, and I probably need new equipment in my home that maybe the government is going to force you to buy, but it gets worse, right? So, now if all video delivered could be perceived as television, right, because it’s all in the same pipe…bits are bits. No matter what anybody says in government, no matter what any technologically savvy person says, bits are bits. They don’t care if it’s text, data, or video, whatever it is, it’s just a bit, and you have your pipe that’s allocated in different ways through a lot of different mechanisms, but net neutrality at its base says all that data should be delivered together, and no one should have priority. So, if there’s no priority for television and it’s just part of the open Internet and delivery, your traditional television watching the evening news, it’s over, right? Either (a) you’re going to have to get new equipment in order to make it all be part of one pipe.
Glenn: I’m actually for this in concept. I hate the way it’s being done, but it would force you actually, wouldn’t it force the cable companies to allow me to do everything à la carte? There’s no reason I have 500 channels. I don’t want to pay for 500 channels.
Mark: Yes, you do. You may not want 500, but you want it in bundles. Otherwise—
Glenn: The money.
Mark: Yeah, it gets very expensive, and look at the music industry, right? So, when everything is à la carte, the expense doesn’t come in creating the content, right? The expense comes in marketing the content. So, we could take a phone and you and I can sing Sinatra, and maybe it’s just the best song ever, but in order for it to get heard, we have to compete with everybody. And when you’re in an open market like that and it’s à la carte, sure, a couple songs sneak through and become hits, but the big four music labels still control 70%. I saw something in Billboard that it was a higher percentage of record sales or music sales today than it was in 1998 because the cost to stand out is so much more expensive.
Glenn: Right, but doesn’t Comcast, Universal, NBC already control, I mean, the big four already control most of the content?
Mark: Well, yes and no, right, because I would tell you that Netflix subsidizes all that content now, and without Netflix, that same content isn’t being created and there’s a unique dependency on Netflix. You look at the turnover, you know, I’m on a show that keeps on growing, Shark Tank, right, because it’s a great show.
Mark: On ABC, yeah, and they put us on Friday nights because they thought we were going to die because it used to be Friday nights was the day to go, the point being that it’s hard to know which content is going to stand out and rise to the top. But let’s keep on going on the conclusion. So, if everything is funneled through the open Internet, and let’s just say it’s à la carte, right? Now, all of a sudden you see a different set of rules potentially being applied. I guarantee you that the FCC met the same organization that fought for eight years over Janet Jackson and her wardrobe malfunction, eight years to enforce that. There’s going to be somebody that comes along and says you know what, we need decency standards applied to all the content on the Internet because now that is coming through the same pipe, and it’s open to everybody. We need education requirements. Remember Bill Clinton said you had to have a certain amount of educational content?
Glenn: You have the Fairness Doctrine again.
Mark: In a lot of respects, yes, applied to the Internet, so this goes into the law of unexpected consequences or unintended consequences that you don’t know what’s going to happen when all of these things change. You know, you talk about Twitter, you would think companies like Twitter and Facebook have thought through the technological aspects of it. I don’t think they have, and so all of a sudden if there is no such thing as a prioritized bit, then all of that digital television going through the same pipe, all those voters who like to get FOX News or MSNBC, they’re going to freak out because you’re going to have to go to their website to get it or you’re going to have to have a special box that identifies the channels and brings it to you.