WHEN: Today, Wednesday, February 22nd
WHERE: CNBC's "Squawk on the Street"
Following is the unofficial transcript of a CNBC interview with FCC Chairman Ajit Pai on CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET) today, Wednesday, February 22nd. Following is a link to the interview on CNBC.com: http://video.cnbc.com/gallery/?video=3000595271.
All references must be sourced to CNBC.
DAVID FABER: NEARLY ONE MONTH INTO HIS ROLE AS FCC CHAIRMAN AND HE'S ALREADY CALLING FOR SWEEPING CHANGE AT THE AGENCY, INCLUDING INCREASED TRANSPARENCY, A DEREGULATION OF MEDIA COMPANIES AND THE ACTIVATION OF FM RADIO TECHNOLOGY IN SMARTPHONES. JOINING US NOW, THE NEW CHAIRMAN OF THE FCC AND AN OLD FRIEND OF THE SHOW, AJIT PAI. NICE TO HAVE YOU, AS CHAIRMAN FOR THE FIRST TIME, MR. PAI.
AJIT PAI: HEY, GOOD MORNING. GREAT TO BE WITH YOU.
FABER: LET'S START OFF ON NET NEUTRALITY, BECAUSE OF COURSE, AS IT SHOULD, IT'S ATTRACTED A GOOD AMOUNT OF ATTENTION. YOU WERE AN OUTSPOKEN OPPONENT COUPLE YEARS BACK WHEN YOUR COMMISSION DECIDED TO CLASSIFY BROADBAND UNDER TITLE 2 AND YOU HAVE SAID OUTRIGHT I FAVOR A FREE AND OPEN INTERNET AND OPPOSE TITLE 2. HOW QUICKLY ARE YOU GOING TO BE ABLE TO RE-REGULATE BROADBAND AS A TITLE 1 SERVICE, I GUESS, OR CERTAINLY NO LONGER AS TITLE 2?
PAI: THAT'S ONE OF THE THINGS WE ARE DISCUSSING, BUT I THINK THE END GOAL IS TO PRESERVE THE FREE AND OPEN INTERNET THAT WE HAD FOR TWO DECADES STARTING IN THE CLINTON ADMINISTRATION. THAT'S A FRAMEWORK THAT SERVED THE AMERICAN PUBLIC VERY WELL. AND THAT'S A FRAMEWORK THAT I HOPE WE'LL BE ABLE TO RETURN TO ON A BIPARTISAN BASIS IN THE FUTURE.
FABER: OKAY. BUT WHAT ABOUT ACTUALLY GETTING THIS DONE? CAN YOU GIVE US SOME SENSE HERE IN TERMS OF A TIMELINE? OR HOW QUICKLY YOUR AGENCY WANTS TO MOVE TO BE ABLE TO ABANDON WHAT WAS UNDERTAKEN BY CHAIRMAN WHEELER A FEW YEARS BACK WHEN IT CAME TO REGULATING BROADBAND?
PAI: WELL, I CAN'T GIVE YOU A SPECIFIC TIMEFRAME, BUT WHAT I CAN TELL YOU IS WE'RE STUDYING THE ISSUE VERY CAREFULLY. WE'RE SPEAKING TO MEMBERS OF CONGRESS WHO MIGHT HAVE AN INTEREST IN THIS AS WELL. AND AT THE END OF THE DAY. I THINK WE WANT TO DELIVER POSITIVE RESULTS FOR THE AMERICAN ONLINE CONSUMER. AND AS I SAID, FOR TWO DECADES THE PROOF WAS IN THE PUDDING THAT THE CONSUMER WAS BEST SERVED WITH LIGHT TOUCH REGULATION. I THINK THAT'S THE END RESULT THAT WE'RE HOPING TO ACHIEVE.
FABER: DO YOU THINK THERE'S ANY CHANCE THAT WE ACTUALLY COULD GET BROADBAND LEGISLATION? THAT WE COULD SEE THE LEGISLATIVE BODIES ACTUALLY ACT IN THIS AREA?
PAI: I THINK THAT BOTH HOUSES OF CONGRESS ARE ACTIVELY CONSIDERING THAT ISSUE. I CERTAINLY STAND READY TO ASSIST THEM IN THE EFFORTS. THE OTHER THING THEY'RE CONSIDERING, WHICH IS IMPORTANT I THINK, IS INCLUDING BROADBAND AS PART OF AN INFRASTRUCTURE PACKAGE. AND I VERY VIGOROUSLY PROPOSED THAT BECAUSE I THINK WHAT AMERICANS REALLY WANT IS BETTER, FASTER, CHEAPER INTERNET ACCESS. AND FOR CONGRESS TO BE ABLE TO GIVE THE FCC, TO GIVE THE PRIVATE SECTOR MORE TOOLS TO PROMOTE BROADBAND DEVELOPMENT THROUGHOUT THE COUNTRY, I THINK THAT'S SOMETHING THAT WOULD REALLY ADDRESS A NEED THAT AMERICAN CONSUMERS HAVE EXPRESSED.
FABER: ALRIGHT, WELL, HOW WOULD YOU ADVISE THEM TO GO ABOUT DOING THAT AND/OR HOW WOULD YOU GO ABOUT DOING THAT AS THE FCC CHAIR?
PAI: SO LAST SEPTEMBER I PUT ON THE TABLE A LOT OF DIFFERENT PROPOSALS FOR DOING THAT, CREATING WHAT I'VE CALLED 'GIGABIT OPPORTUNITY ZONES,' TO GIVE THE PRIVATE SECTOR THE MAXIMUM INCENTIVE TO DEPLOY IN LOW INCOME, RURAL AND URBAN AREAS. I'VE ALSO TALKED ABOUT THINGS THE FCC CAN AND SHOULD DO TO REMOVE SOME OF THE REGULATORY BARRIERS TO INFRASTRUCTURE INVESTMENT. THOSE ARE SOME OF THE THINGS THAT HAVE KEPT THE PRIVATE SECTOR FROM BUILDING OUT IN A LOT OF CASES. WIRELESS INFRASTRUCTURE MAKING SURE OUR RULES ARE STREAMLINED SO THAT THE NETWORKS OF TOMORROW CAN BE BUILT WITH RELATIVE EASE. THOSE ARE SOME OF THE TOOLS IN THE TOOL BOX THAT WE HAVE. AND SOME OF THE TOOLS I HOPE CONGRESS WILL GIVE US IN THE TIME TO COME.
FABER: AS WE MOVE DEEPER INTO THIS YEAR, MR. CHAIRMAN, THERE IS A BELIEF AT LEAST CERTAINLY AMONGST MANY OF THE BANKERS AND LAWYERS, AND CEOs THAT I SPEAK TO IN THE TELECOMMUNICATIONS INDUSTRY, THAT WE WILL SEE MORE CONSOLIDATION. THERE'S BEEN A LOT OF TALK ALREADY ABOUT THE POSSIBILITY OF GOING FROM FOUR TO THREE WIRELESS PROVIDERS. I KNOW YOU'RE NOT GOING TO TALK SPECIFICALLY ABOUT ANY NAMES, BUT I AM CURIOUS IF YOU COULD GIVE US AT LEAST YOUR VIEW. DO YOU THINK THAT THE WIRELESS INDUSTRY AS IT CURRENTLY STANDS IS BENEFITTING FROM HAVING FOUR COMPETITORS AND CONCEIVABLY WOULD BE HURT SHOULD THERE BE FURTHER CONSOLIDATION?
PAI: WELL, I CAN'T FORECAST HOW I WOULD VIEW MARKET STRUCTURE IN THE CONTEXT OF A PROPOSED TRANSACTION, BUT WHAT I CAN SAY IS THE MARKETPLACE RIGHT NOW IS EXTREMELY COMPETITIVE AS DELIVERING UNPARALLELED VALUE TO AMERICAN CONSUMERS. AND IF YOU JUST LOOK AT THE LAST COUPLE OF WEEKS, YOU KNOW, SOME OF THE NATIONAL CARRIERS ARE VIGOROUSLY COMPETING AGAINST EACH OTHER TO GIVE NEW OR EXPANDED UNLIMITED DATA PLANS. THAT'S SOMETHING THAT'S GOOD FOR CONSUMERS. THE S.E.C. FOR ITS PART HAS ALLOWED THESE COMPANIES TO OFFER DATA FOR FREE TO CONSUMERS, WHICH IS SOMETHING THAT THEY LIKE. AND SO, YOU KNOW, I THINK THE MARKETPLACE IS VERY HEALTHY. AND HOW A POTENTIAL TRANSACTION WOULD AFFECT THAT MARKET IS SOMETHING THAT I CAN'T OBVIOUSLY HYPOTHESIZE ABOUT. WE'D HAVE TO LOOK AT A PARTICULAR TRANSACTION AND THE PARTICULAR FACTS IN ORDER TO MAKE A DETERMINATION. BUT AT THE END OF THE DAY, OUR GOAL IS TO MEET THE PUBLIC INTERESTS.
JIM CRAMER: MR. PAI, JIM CRAMER, GOOD TO HAVE YOU ON THE SHOW. THANK YOU SO MUCH.
PAI: APPRECIATE IT.
CRAMER: TRY TO GET A SENSE OF THIS NEW ADMINISTRATION VERSUS THE OLD. YOU STARTED BY SAYING LIGHT TOUCH REGULATION. I THINK A LOT OF PEOPLE ARE BUYING STOCKS BASICALLY THINKING THAT THE GOVERNMENT'S GOING TO GET OUT OF THE WAY OF BUSINESS. IS THAT YOUR SENSE? AND HOW DOES IT PLAY OUT ON A DAILY BASIS? HOW DO COMPANIES BENEFIT IF YOU TAKE A LIGHTER TOUCH?
PAI: THAT'S A GOOD QUESTION. SO SOME PEOPLE THINK THAT THE GOVERNMENT SHOULD PREEMPTIVELY REGULATE EVERY MARKETPLACE REGARDLESS OF WHETHER THERE'S A MARKET FAILURE. OTHERS MIGHT SAY THE GOVERNMENT HAS NO ROLE WHATSOEVER. MY OWN VIEW IS THAT LIGHT TOUCH REGULATION MEANS THAT WE CREATE BROAD REGULATORY FRAMEWORKS TO PROTECT CONSUMERS TO ENSURE AN OVERALL COMPETITIVE MARKETPLACE. BUT WE SHOULDN'T MICROMANAGE HOW THESE COMPANIES OPERATE THEIR BUSINESSES IN THE ABSENCE OF EVIDENCE OF A MARKET FAILURE. AND SO LIGHT TOUCH REGULATION IN THIS CONTEXT MEANS THAT WE LET THIS DYNAMIC INDUSTRY, ARGUABLY THE MOST DYNAMIC THE FREE MARKET HAS EVER KNOWN, DEVELOP. AND IF THERE ARE TARGETED CASES WHERE ACTION MIGHT BE NECESSARY AND THE F.C.C. HAS AUTHORITY TO ACT, THEN WE TAKE ACTION. BUT OTHERWISE, WE DON'T SIT IN JUDGMENT FROM WASHINGTON, D.C. MY OWN VIEW IS THAT THE INTERNET SHOULD BE RUN BY TECHNOLOGISTS AND ENGINEERS AND BUSINESS PEOPLE. NOT BY LAWYERS AND BUREAUCRATS HERE IN THE NATION'S CAPITAL.
FABER: YOU KNOW, CHAIRMAN PAI, JIM MENTIONS OF COURSE THE NEW ADMINISTRATION. THEY COME IN WITH A DEREGULATORY APPROACH. BUT INTERESTINGLY THERE IS A VIEW AT LEAST AMONGST MANY INVESTORS THAT THE PRESIDENT WILL HAVE POTENTIALLY A ROLE TO PLAY IN SOME OF THE DEALS THAT COULD COME BEFORE YOUR AGENCY AND/OR OF COURSE THE DEPARTMENT OF JUSTICE. HE HAS SPOKEN OPENLY FOR EXAMPLE ABOUT CNN AND POTENTIALLY AT LEAST SEEMINGLY PAVED THE WAY FOR OPPOSITION TO A TIME WARNER-AT&T DEAL BECAUSE OF THAT. MASA SON PAID A VISIT TO TRUMP TOWER. MANY PEOPLE THEREFORE SOMEHOW THINK THAT SOFTBANK WILL BE ABLE TO RECEIVE BENEFICIAL TREATMENT SHOULD IT TRY TO PUT SPRINT AND T-MOBILE TOGETHER. AS THE HEAD OF AN INDEPENDENT AGENCY THAT'S NOT SUPPOSED TO BE CONTROLLED BY THE PRESIDENT, WHAT WILL YOU DO IF PRESIDENT TRUMP TRIES TO DICTATE MERGER OUTCOMES?
PAI: WELL, AT THE END OF THE DAY THE TEST THAT WE ARE STATUTORILY REQUIRED TO APPLY IS THE PUBLIC INTEREST STANDARD. AND WE HAVE TO MAKE OUR OWN INDEPENDENT JUDGMENT AS TO WHETHER THE CONSUMMATION OF A PARTICULAR DEAL WOULD BENEFIT CONSUMERS AND COMPETITION OR NOT. AND THAT'S HISTORICALLY A JUDGMENT THAT HAS BEEN MADE BY THE INDUSTRY – BY THE AGENCY – BY LOOKING SOBERLY AT THE FACTS AND THE LAW. AND THAT'S THE APPROACH THAT I WOULD TAKE IF ANY TRANSACTION WERE PRESENTED TO ME FOR CONSIDERATION.
FABER: IN YOUR BIOGRAPHY THAT WAS PUBLISHED UPON YOUR TAKING THIS OFFICE, ALONG THE LINES OF SELECTED ISSUES, ONE OF THEM WAS THE FIRST AMENDMENT. YOU WERE SAID TO BE AN OUTSPOKEN DEFENDER OF THE FIRST AMENDMENT, THEY EVEN POINTED TO THE FACT THAT YOU CANCELED A STUDY BY THE FCC INTO ANSWERING THE QUESTION AS TO WHY REPORTERS COVER SOME STORIES AND NOT OTHERS. THANK YOU FOR DOING THAT.
PAI: I APPRECIATE THAT.
FABER: WE HAVE A PRESIDENT THOUGH WHO CALLED THE MEDIA THE ENEMY OF THE AMERICAN PEOPLE. DO YOU THINK THAT HE RISKS UNDERMINING THE FIRST AMENDMENT?
PAI: WELL, YOU KNOW, I'M AFRAID THAT'S A POLITICAL DEBATE THAT IS ABOVE MY PAY GRADE, BUT WHAT I CAN SAY AND I SAID IN THE CONTEXT OF THE STUDY THAT YOU MENTIONED IS THAT WE DON'T WANT THE GOVERNMENT TO BE IN A POSITION WHERE WE'RE SENDING, YOU KNOW, MONITORS OR RESEARCHERS INTO NEWSROOMS AND ASKING THEM TO DOCUMENT FOR THE GOVERNMENT WHY THEY'RE CHOOSING TO COVER SOME STORIES AND NOT OTHERS. THAT'S ONE OF THE CLASSIC EDITORIAL JUDGMENT THAT I THINK PROPERLY BELONGS WITH YOU AND TO YOUR COUNTERPARTS AT OTHER NEWS ORGANIZATIONS. AND THAT'S THE KIND OF FIRST AMENDMENT FREEDOM THAT I'VE CONSISTENTLY STOOD UP FOR.
FABER: AND FINALLY, MR. CHAIRMAN, WHY ARE YOU AGAINST ALLOWING PEOPLE TO BUY THEIR SET TOP BOXES?
PAI: MY OWN VIEW IS THAT AMERICAN CONSUMERS HAVE MOVED BEYOND THE TRADITIONAL 1990s SET TOP BOX TECHNOLOGY. WHAT THEY WANT IS TO GET RID OF THE BOX AND EMBRACE NEWER TECHNOLOGIES LIKE APPS. AND THAT'S CONSISTENTLY WHAT I SAID LAST FALL WHEN THE FORMER CHAIRMAN'S PROPOSAL WAS ON THE TABLE IS THAT LET'S MOVE AWAY FROM THIS CLUNKY TECHNOLOGY AND ENABLE PEOPLE TO TAKE CHARGE OF THEIR OWN VIDEO EXPERIENCE. AND THE WAY TO DO THAT, I THINK, WOULD BE TO ALLOWING THEM TO ACCESS THIS INFORMATION ON THEIR SMARTPHONES, TABLETS, USING APPS THAT ARE IN MOST CASES FREE OF CHARGE. I THINK THAT'S ULTIMATELY WHERE THE CONSUMER INTEREST LIES.
FABER: WELL, MR. CHAIRMAN, WE APPRECIATE YOUR SPENDING A LITTLE TIME WITH US AND CERTAINLY LOOK FORWARD TO FUTURE APPEARANCES AS WELL. THANK YOU.
PAI: I'M LOOKING FORWARD TO IT. THANKS.
FABER: ALRIGHT, AJIT PAI, THE FCC CHAIRMAN.
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