FCC-10-201A1

Federal C(mmunicati(ns C(mmissi(n FCC 10-201

Bef(re theFederal C(mmunicati(ns C(mmissi(n

Washingt(n, D.C. 20554

In the Matter )f

Preserving the Open Internet

Br)adband Industry Practices

)))))

GN D)cket N). 09-191

WC D)cket N). 07-52

REPORT AND ORDER

Ad(pted: December 21, 2010 Released: December 23, 2010

By the C)mmissi)n: Chairman Genach)wski issuing a statement; C)mmissi)ner C)pps c)ncurring and issuing a statement; C)mmissi)ner Clyburn appr)ving in part, c)ncurring in part and issuing a statement; C)mmissi)ners McD)well and Baker dissenting and issuing separate statements.

TABLE OF CONTENTS

Para.

I. PRESERVING THE FREE AND OPEN INTERNET..............................................................1II. THE NEED FOR OPEN INTERNET PROTECTIONS .........................................................11

A. The Internet’s Openness Pr)m)tes Inn)vati)n, Investment, C)mpetiti)n, Free Expressi)n, and Other Nati)nal Br)adband G)als ............................................................13

B. Br)adband Pr)viders Have the Incentive and Ability t) Limit Internet Openness ...........20C. Br)adband Pr)viders Have Acted t) Limit Openness.......................................................35D. The Benefits )f Pr)tecting the Internet’s Openness Exceed the C)sts..............................38

III. OPEN INTERNET RULES.....................................................................................................43A. Sc)pe )f the Rules .............................................................................................................44B. Transparency .....................................................................................................................53C. N) Bl)cking and N) Unreas)nable Discriminati)n ..........................................................62D. Reas)nable Netw)rk Management....................................................................................80E. M)bile Br)adband.............................................................................................................93F. Other Laws and C)nsiderati)ns.......................................................................................107G. Specialized Services ........................................................................................................112

IV. THE COMMISSION’S AUTHORITY TO ADOPT OPEN INTERNET RULES ...............115A. Secti)n 706 )f the 1996 Act Pr)vides Auth)rity f)r the Open Internet Rules ................117B. Auth)rity t) Pr)m)te C)mpetiti)n and Investment In, and Pr)tect End Users )f,

V)ice, Vide), and Audi) Services...................................................................................124C. Auth)rity t) Pr)tect the Public Interest Thr)ugh Spectrum Licensing ...........................133D. Auth)rity t) C)llect Inf)rmati)n t) Enable the C)mmissi)n t) Perf)rm Its

Rep)rting Obligati)ns t) C)ngress..................................................................................136E. C)nstituti)nal Issues........................................................................................................138

V. ENFORCEMENT ..................................................................................................................151A. Inf)rmal C)mplaints........................................................................................................153B. F)rmal C)mplaints ..........................................................................................................154C. FCC Initiated Acti)ns......................................................................................................160


2

VI. EFFECTIVE DATE, OPEN INTERNET ADVISORY COMMITTEE, AND COMMISSION REVIEW......................................................................................................161

VII.PROCEDURAL MATTERS .................................................................................................164A. Final Regulat)ry Flexibility Analysis..............................................................................164B. Paperw)rk Reducti)n Act )f 1995 Analysis ...................................................................165C. C)ngressi)nal Review Act ..............................................................................................167D. Data Quality Act..............................................................................................................168E. Accessible F)rmats..........................................................................................................169

VIII.ORDERING CLAUSES.......................................................................................................170APPENDI_ A—Substantive RulesAPPENDI_ B—Pr)cedural RulesAPPENDI_ C—List )f C)mmentersAPPENDI_ D—Final Regulat)ry Flexibility Analysis

I. PRESERVING THE FREE AND OPEN INTERNET1. T)day the C)mmissi)n takes an imp)rtant step t) preserve the Internet as an

)pen platf)rm f)r inn)vati)n, investment, j)b creati)n, ec)n)mic gr)wth, c)mpetiti)n, and free expressi)n. T) pr)vide greater clarity and certainty regarding the c)ntinued freed)m and )penness )f the Internet, we ad)pt three basic rules that are gr)unded in br)adly accepted Internet n)rms, as well as )ur )wn pri)r decisi)ns:

i. Transparency. Fixed and m)bile br)adband pr)viders must discl)se the netw)rk management practices, perf)rmance characteristics, and terms and c)nditi)ns )f their br)adband services;

ii. N( bl(cking. Fixed br)adband pr)viders may n)t bl)ck lawful c)ntent, applicati)ns, services, )r n)n-harmful devices; m)bile br)adband pr)viders may n)t bl)ck lawful websites, )r bl)ck applicati)ns that c)mpete with their v)ice )r vide) teleph)ny services; and

iii. N( unreas(nable discriminati(n. Fixed br)adband pr)viders may n)t unreas)nably discriminate in transmitting lawful netw)rk traffic.

We believe these rules, applied with the c)mplementary principle )f reas)nable netw)rk management, will emp)wer and pr)tect c)nsumers and inn)vat)rs while helping ensure that the Internet c)ntinues t) fl)urish, with r)bust private investment and rapid inn)vati)n at b)th the c)re and the edge )f the netw)rk. This is c)nsistent with the Nati)nal Br)adband Plan g)al )f br)adband access that is ubiquit)us and fast, pr)m)ting the gl)bal c)mpetitiveness )f the United States.1

2. Just )ver a year ag), we launched a public pr)cess t) determine whether and what acti)ns might be necessary t) preserve the characteristics that have all)wed the Internet t) gr)w int) an indispensable platf)rm supp)rting )ur nati)n’s ec)n)my and civic life, and t) f)ster c)ntinued investment in the physical netw)rks that enable the Internet. Since then, m)re than 100,000 c)mmenters have pr)vided written input. C)mmissi)n staff held several public w)rksh)ps and c)nvened a Techn)l)gical Advis)ry Pr)cess with experts fr)m industry, academia, and c)nsumer adv)cacy gr)ups t) c)llect their views regarding key technical issues related t) Internet )penness.

1 Nati)nal Br)adband Plan at xi, 3–5.


3

3. This pr)cess has made clear that the Internet has thrived because )f its freed)m and )penness—the absence )f any gatekeeper bl)cking lawful uses )f the netw)rk )r picking winners and l)sers )nline. C)nsumers and inn)vat)rs d) n)t have t) seek permissi)n bef)re they use the Internet t) launch new techn)l)gies, start businesses, c)nnect with friends, )r share their views. The Internet is a level playing field. C)nsumers can make their )wn ch)ices ab)ut what applicati)ns and services t) use and are free t) decide what c)ntent they want t) access, create, )r share with )thers. This )penness pr)m)tes c)mpetiti)n. It als) enables a self-reinf)rcing cycle )f investment and inn)vati)n in which new uses )f the netw)rk lead t) increased ad)pti)n )f br)adband, which drives investment and impr)vements in the netw)rk itself, which in turn lead t) further inn)vative uses )f the netw)rk and further investment in c)ntent, applicati)ns, services, and devices. A c)re g)al )f this Order is t) f)ster and accelerate this cycle )f investment and inn)vati)n.

4. The rec)rd and )ur ec)n)mic analysis dem)nstrate, h)wever, that the )penness )f the Internet cann)t be taken f)r granted, and that it faces real threats. Indeed, we have seen br)adband pr)viders endanger the Internet’s )penness by bl)cking )r degrading c)ntent and applicati)ns with)ut discl)sing their practices t) end users and edge pr)viders, n)twithstanding the C)mmissi)n’s ad)pti)n )f )pen Internet principles in 2005.2 In light )f these c)nsiderati)ns, as well as the limited ch)ices m)st c)nsumers have f)r br)adband service, br)adband pr)viders’ financial interests in teleph)ny and pay televisi)n services that may c)mpete with )nline c)ntent and services, and the ec)n)mic and civic benefits )f maintaining an )pen and c)mpetitive platf)rm f)r inn)vati)n and c)mmunicati)n, the C)mmissi)n has l)ng rec)gnized that certain basic standards f)r br)adband pr)vider c)nduct are necessary t) ensure the Internet’s c)ntinued )penness. The rec)rd als) establishes the widespread benefits )f pr)viding greater clarity in this area—clarity that the Internet’s )penness will c)ntinue, that there is a f)rum and pr)cedure f)r res)lving alleged )pen Internet vi)lati)ns, and that br)adband pr)viders may reas)nably manage their netw)rks and inn)vate with respect t) netw)rk techn)l)gies and business m)dels. We expect the c)sts )f c)mpliance with )ur pr)phylactic rules t) be small, as they inc)rp)rate l)ngstanding )penness principles that are generally in line with current practices and with n)rms end)rsed by many br)adband pr)viders. C)nversely, the harms )f )pen Internet vi)lati)ns may be substantial, c)stly, and in s)me cases p)tentially irreversible.

5. The rules we pr)p)sed in the Open Internet NPRM and th)se we ad)pt t)day f)ll)w directly fr)m the C)mmissi)n’s bipartisan Internet P,licy Statement, ad)pted unanim)usly in 2005 and made temp)rarily enf)rceable f)r certain br)adband pr)viders in 2005 and 2007;3 )penness pr)tecti)ns the C)mmissi)n established in 2007 f)r users )f certain wireless

2 In this Order we use “br)adband” and “br)adband Internet access service” interchangeably, and “br)adband pr)vider” and “br)adband Internet access pr)vider” interchangeably. “End user” refers t) any individual )r entity that uses a br)adband Internet access service; we s)metimes use “subscriber” )r “c)nsumer” t) refer t) th)se end users that subscribe t) a particular br)adband Internet access service. Cf. infra n)te 172 (defining “c)nsumer” and “pers)n”). We use “edge pr)vider” t) refer t) c)ntent, applicati)n, service, and device pr)viders, because they generally )perate at the edge rather than the c)re )f the netw)rk. These terms are n)t mutually exclusive. See infra para. 20.3 See Appr,priate Framew,rk f,r Br,adband Access t, the Internet Over Wireline Facilities et al., P)licy Statement, 20 FCC Rcd 14986 (2005) (Internet P,licy Statement); SBC C,mmc’ns, Inc. and AT&T C,rp. Applicati,ns f,r Appr,val ,f Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 20 FCC Rcd 18290, 18392, para. 211 (2005); Veriz,n C,mmc’ns Inc. and MCI, Inc. Applicati,ns f,r Appr,val ,f Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 20 FCC Rcd 18433, 18537, para. 221 (2005); AT&T Inc. and BellS,uth C,rp. Applicati,n f,r Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 22 FCC Rcd 5662, 5663, para. 2 (2007).


4

spectrum;4 and a n)tice )f inquiry in 2007 that asked, am)ng )ther things, whether the C)mmissi)n sh)uld add a principle )f n)ndiscriminati)n t) the Internet P,licy Statement.5 Our rules build up)n these acti)ns, first and f)rem)st by requiring br)adband pr)viders t) be transparent in their netw)rk management practices, s) that end users can make inf)rmed ch)ices and inn)vat)rs can devel)p, market, and maintain Internet-based )fferings. The rules als) prevent certain f)rms )f bl)cking and discriminati)n with respect t) c)ntent, applicati)ns, services, and devices that depend )n )r c)nnect t) the Internet.

6. An )pen, r)bust, and well-functi)ning Internet requires that br)adband pr)viders have the flexibility t) reas)nably manage their netw)rks. Netw)rk management practices are reas)nable if they are appr)priate and tail)red t) achieving a legitimate netw)rk management purp)se. Transparency and end-user c)ntr)l are t)uchst)nes )f reas)nableness.

7. We rec)gnize that br)adband pr)viders may )ffer )ther services )ver the same last-mile c)nnecti)ns used t) pr)vide br)adband service. These “specialized services” can benefit end users and spur investment, but they may als) present risks t) the )pen Internet. We will cl)sely m)nit)r specialized services and their effects )n br)adband service t) ensure, thr)ugh all available mechanisms, that they supplement but d) n)t supplant the )pen Internet.

8. M)bile br)adband is at an earlier stage in its devel)pment than fixed br)adband and is ev)lving rapidly. F)r that and )ther reas)ns discussed bel)w, we c)nclude that it is appr)priate at this time t) take measured steps in this area. Acc)rdingly, we require m)bile br)adband pr)viders t) c)mply with the transparency rule, which includes enf)rceable discl)sure )bligati)ns regarding device and applicati)n certificati)n and appr)val pr)cesses; we pr)hibit pr)viders fr)m bl)cking lawful websites; and we pr)hibit pr)viders fr)m bl)cking applicati)ns that c)mpete with pr)viders’ v)ice and vide) teleph)ny services. We will cl)sely m)nit)r the devel)pment )f the m)bile br)adband market and will adjust the framew)rk we ad)pt t)day as appr)priate.

9. These rules are within )ur jurisdicti)n )ver interstate and f)reign c)mmunicati)ns by wire and radi). Further, they implement specific statut)ry mandates in the C)mmunicati)ns Act (“Act”) and the Telec)mmunicati)ns Act )f 1996 (“1996 Act”), including pr)visi)ns that direct the C)mmissi)n t) pr)m)te Internet investment and t) pr)tect and pr)m)te v)ice, vide), and audi) c)mmunicati)ns services.

10. The framew)rk we ad)pt aims t) ensure the Internet remains an )pen platf)rm—)ne characterized by free markets and free speech—that enables c)nsumer ch)ice, end-user c)ntr)l, c)mpetiti)n thr)ugh l)w barriers t) entry, and the freed)m t) inn)vate with)ut permissi)n. The framew)rk d)es s) by pr)tecting )penness thr)ugh high-level rules, while maintaining br)adband pr)viders’ and the C)mmissi)n’s flexibility t) adapt t) changes in the market and in techn)l)gy as the Internet c)ntinues t) ev)lve.

II. THE NEED FOR OPEN INTERNET PROTECTIONS11. In the Open Internet NPRM, we s)ught c)mment )n the best means f)r

preserving and pr)m)ting a free and )pen Internet.6 We n)ted the near-unanim)us view that the

4 Service Rules f,r the 698–746, 747–762 and 777–792 MHz Bands et al., Sec)nd Rep)rt and Order, 22 FCC Rcd 15289 (2007) (700 MHz Sec,nd Rep,rt and Order); 47 C.F.R. § 27.16.5 Br,adband Industry Practices, N)tice )f Inquiry, 22 FCC Rcd 7894, 7896, para. 8 (2007).6 See Preserving the Open Internet et al., N)tice )f Pr)p)sed Rulemaking, 24 FCC Rcd 13064, 13067–68, paras. 10, 16 (2009) (Open Internet NPRM).


5

Internet’s )penness and the transparency )f its pr)t)c)ls have been critical t) its unparalleled success.7 Citing evidence )f br)adband pr)viders c)vertly bl)cking )r degrading Internet traffic, and c)ncern that br)adband pr)viders have the incentive and ability t) expand th)se practices in the near future, we s)ught c)mment )n pr)phylactic rules designed t) preserve the Internet’s prevailing n)rms )f )penness.8 Specifically, we s)ught c)mment )n whether the C)mmissi)n sh)uld c)dify the f)ur principles stated in the Internet P,licy Statement, plus pr)p)sed n)ndiscriminati)n and transparency rules, all subject t) reas)nable netw)rk management.9

12. C)mmenters agree that the )pen Internet is an imp)rtant platf)rm f)r inn)vati)n, investment, c)mpetiti)n, and free expressi)n, but disagree ab)ut whether there is a need f)r the C)mmissi)n t) take acti)n t) preserve its )penness. C)mmenters wh) fav)r C)mmissi)n acti)n emphasize the risk )f harmful c)nduct by br)adband pr)viders, and stress that failing t) act c)uld result in irreversible damage t) the Internet.10 Th)se wh) fav)r inacti)n c)ntend that the Internet generally is )pen t)day and is likely t) remain s), and express c)ncern that rules aimed at preventing harms may themselves imp)se significant c)sts.11 In this Part, we assess these c)nflicting views. We c)nclude that the benefits )f ensuring Internet )penness thr)ugh enf)rceable, high-level, pr)phylactic rules )utweigh the c)sts. The harms that c)uld result fr)m threats t) )penness are significant and likely irreversible, while the c)sts )f c)mpliance with )ur rules sh)uld be small, in large part because the rules appear t) be c)nsistent with current industry practices. The rules are carefully calibrated t) preserve the benefits )f the )pen Internet and increase certainty f)r all Internet stakeh)lders, with minimal burden )n br)adband pr)viders.

A. The Internet’s Openness Pr(m(tes Inn(vati(n, Investment, C(mpetiti(n, Free Expressi(n, and Other Nati(nal Br(adband G(als

13. Like electricity and the c)mputer, the Internet is a “general purp)se techn)l)gy” that enables new meth)ds )f pr)ducti)n that have a maj)r impact )n the entire ec)n)my.12 The Internet’s f)unders intenti)nally built a netw)rk that is )pen, in the sense that it has n) gatekeepers limiting inn)vati)n and c)mmunicati)n thr)ugh the netw)rk.13 Acc)rdingly, the

7 Id. at 13065, 13069–71, paras. 3, 17–23.8 Id. at 13084, 13087–97, paras. 50, 57–80. 9 Id. at 13068, 13100–115, paras. 16, 88–141. The Open Internet NPRM recast the Internet P,licy Statement principles as rules rather than c)nsumer entitlements, but did n)t change the fact that pr)tecting and emp)wering end users is a central purp)se )f )pen Internet pr)tecti)ns.10 See, e.g., G))gle C)mments at i–ii; Netflix C)mments at 3–7; Skype C)mments at 1–5; V)nage C)mments at 1–10; Institute f)r P)licy Integrity (IPI) Reply at 1–7.11 See, e.g., C)mcast C)mments at 27–29; Time Warner Cable (TWC) C)mments at 1–2; AT&T Reply at 1–5; Veriz)n Reply at 1–8.12 Letter fr)m Wireline C)mpetiti)n Bureau, FCC, t) Marlene D)rtch, Secretary, FCC (filed Dec. 10, 2010) (WCB Letter 12/10/10), Attach. at 1–26, Tim)thy F. Bresnahan & M. Trajtenberg, General Purp,se Techn,l,gies: Engines ,f Gr,wth’?, 65 J. OF ECONOMETRICS 83–108 (1995); WCB Letter 12/10/10, Attach. at 156–159, RICHARD G. LIPSEY ET AL., ECONOMIC TRANSFORMATIONS: GENERAL PURPOSE TECHNOLOGIES AND LONG TERM ECONOMIC GROWTH 132 (2005); see als, G))gle C)mments at 15; Free Press PN Reply at 9.13 The Internet’s )penness is supp)rted by an “end-t)-end” netw)rk architecture that was f)rmulated and debated in standard-setting )rganizati)ns and f)undati)nal d)cuments. See, e.g., WCB Letter 12/10/10, Attach. at 17–29, Vint)n G. Cerf & R)bert E. Kahn, A Pr,t,c,l f,r Packet Netw,rk Interc,nnecti,n, COM-22 IEEE TRANSACTIONS OF COMMC’NS TECH. 637–48 (1974); WCB Letter 12/10/10, Attach. at 30–39, J.H. Saltzer et al., End t, End Arguments in System Design, Sec)nd Int’l C)nf. )n Distributed

(c)ntinued....)


6

Internet enables an end user t) access the c)ntent and applicati)ns )f her ch)ice, with)ut requiring permissi)n fr)m br)adband pr)viders. This architecture enables inn)vat)rs t) create and )ffer new applicati)ns and services with)ut needing appr)val fr)m any c)ntr)lling entity, be it a netw)rk pr)vider, equipment manufacturer, industry b)dy, )r g)vernment agency.14 End users benefit because the Internet’s )penness all)ws new techn)l)gies t) be devel)ped and distributed by a br)ad range )f s)urces, n)t just by the c)mpanies that )perate the netw)rk. F)r example, Sir Tim Berners-Lee was able t) invent the W)rld Wide Web nearly tw) decades after engineers devel)ped the Internet’s )riginal pr)t)c)ls, with)ut needing changes t) th)se pr)t)c)ls )r any appr)val fr)m netw)rk )perat)rs.15 Startups and small businesses benefit because the Internet’s )penness enables any)ne c)nnected t) the netw)rk t) reach and d) business with any)ne else,16 all)wing even the smallest and m)st rem)tely l)cated businesses t) access nati)nal and gl)bal markets, and c)ntribute t) the ec)n)my thr)ugh e-c)mmerce17 and )nline advertising.18 Because Internet )penness enables widespread inn)vati)n and all)ws all end users and edge pr)viders (rather than just the significantly smaller number )f br)adband pr)viders) t) create and determine the success )r failure )f c)ntent, applicati)ns, services, and devices, it maximizes c)mmercial and n)n-c)mmercial inn)vati)ns that address key nati)nal challenges—including impr)vements in health care, educati)n, and energy efficiency that benefit )ur ec)n)my and civic life.19

14. The Internet’s )penness is critical t) these )utc)mes, because it enables a virtu)us circle )f inn)vati)n in which new uses )f the netw)rk—including new c)ntent, applicati)ns, services, and devices—lead t) increased end-user demand f)r br)adband, which

(...c)ntinued fr)m previ)us page)C)mputing Systems, 509–12 (1981); WCB Letter 12/10/10, Attach. at 49–55, B. Carpenter, Internet Engineering Task F)rce (“IETF”), Architectural Principles ,f the Internet, RFC 1958, 1–8 (June 1996), www.ietf.)rg/rfc/rfc1958.txt; Lawrence R)berts, Multiple C,mputer Netw,rks and Interc,mputer C,mmunicati,n, ACM Symp)sium )n Operati)n System Principles (1967). Under the end-t)-end principle, devices in the middle )f the netw)rk are n)t )ptimized f)r the handling )f any particular applicati)n, while devices at netw)rk endp)ints perf)rm the functi)ns necessary t) supp)rt netw)rkedapplicati)ns and services. See generally WCB Letter 12/10/10, Attach. at 40–48, J. Kempf & R. Austein, IETF, The Rise ,f the Middle and the Future ,f End-t,-End: Reflecti,ns ,n the Ev,luti,n ,f the Internet Architecture, RFC 3724, 1–14 (March 2004), ftp://ftp.rfc-edit)r.)rg/in-n)tes/rfc3724.txt.14 See G))gle C)mments at 13 (“[T]he end-t)-end, )pen architectural principles underlying the Internet are its true genius, and the s)urce )f its unparalleled p)wer.”); Clearwire C)mments at 3; CDT C)mments at 7; Free Press C)mments at 44; Open Internet C)aliti)n (OIC) C)mments at i; V)nage C)mments at 2, 18.15 See WCB Letter 12/10/10, Attach. at 27–29, TIM BERNERS-LEE, WEAVING THE WEB 16 (2000).16 See, e.g., G))gle C)mments at 5–7; OIC C)mments at i, 3–12; V)nage C)mments at 4; _O C)mments at 13–14; see als, Nati)nal Br)adband Plan at 284 (“Br)adband and the Internet make it p)ssible f)r small businesses t) reach new markets and impr)ve their business pr)cesses.”).17 Business-t)-c)nsumer e-c)mmerce was estimated t) t)tal $135 billi)n in 2009. See WCB Letter 12/10/10, Attach. at 81–180, R)bert D. Atkins)n et al., The Internet Ec,n,my 25 Years After .c,m, INFO.TECH. & INNOVATION FOUND., at 24 (March 2010), available at www.itif.)rg/files/2010-25-years.pdf.18 The advertising-supp)rted Internet sustains ab)ut $300 billi)n )f U.S. GDP. See G))gle C)mments at 7.19 See Nati)nal Br)adband Plan at 199–217, 225–40, 247–59, 272–73 (discussing the benefits )f br)adband-enabled telew)rk); American Library Ass)ciati)n (ALA) C)mments at 1; G))gle C)mments at 8–11; Public Interest Adv)cates (PIA) C)mments at 5; _O C)mments at 9.


7

drives netw)rk impr)vements, which in turn lead t) further inn)vative netw)rk uses.20 N)vel, impr)ved, )r l)wer-c)st )fferings intr)duced by c)ntent, applicati)n, service, and device pr)viders spur end-user demand and enc)urage br)adband pr)viders t) expand their netw)rks and invest in new br)adband techn)l)gies.21 Streaming vide) and e-c)mmerce applicati)ns, f)r instance, have led t) maj)r netw)rk impr)vements such as fiber t) the premises, VDSL, and DOCSIS 3.0.22 These netw)rk impr)vements generate new )pp)rtunities f)r edge pr)viders, spurring them t) inn)vate further.23 Each r)und )f inn)vati)n increases the value )f the Internet f)r br)adband pr)viders, edge pr)viders, )nline businesses, and c)nsumers. C)ntinued )perati)n )f this virtu)us circle, h)wever, depends up)n l)w barriers t) inn)vati)n and entry by edge pr)viders, which drive end-user demand.24 Restricting edge pr)viders’ ability t) reach end users, and limiting end users’ ability t) ch))se which edge pr)viders t) patr)nize, w)uld reduce the rate )f inn)vati)n at the edge and, in turn, the likely rate )f impr)vements t) netw)rk infrastructure.25 Similarly, restricting the ability )f br)adband pr)viders t) put the netw)rk t) inn)vative uses may reduce the rate )f impr)vements t) netw)rk infrastructure.26

20 See, e.g., Skype Reply at 14; SONY Reply at 6; Metr)PCS C)mments at 16 (the Internet “is the m)del )f the virtu)us cycle: inn)vat)rs are creating c)ntent and applicati)n pr)ducts that c)nsumers desire, which drives c)nsumers t) purchase fr)m service and equipment pr)viders, which in turn drives investment in infrastructure and new techn)l)gy in resp)nse t) c)nsumer demand”); see als, Clearwire C)mments at 7; G))gle C)mments at 5–8, 17; OIC C)mments at 23–27; Letter fr)m Access Humb)ldt et al., t) Chairman Genach)wski et al., GN D)cket N). 09-191 (filed Dec. 1, 2010) at 1–2 (asserting that the “best way t) pr)m)te br)adband ad)pti)n is thr)ugh pr)grams that result in a new generati)n )f c)ntent creat)rs and inn)vat)rs,” and urging C)mmissi)n “t) pr)tect )ur l)cal ec)n)mies [and] c)mmunity-based inn)vati)n” thr)ugh )pen Internet rules). 21 We n)te that br)adband pr)viders can als) be edge pr)viders. See infra para. 20.22 See, e.g., C)mcast C)mments at 2, 8; Metr)PCS C)mments at 16; SONY C)mments at 5; Qwest C)mments, Factual Rec)rd Appendix at 6–10; Bright H)use Netw)rks PN C)mments at 7.23 F)r example, the increasing availability )f multimedia applicati)ns )n the W)rld Wide Web during the 1990s was )ne fact)r that helped create demand f)r residential br)adband services. Internet service pr)viders resp)nded by ad)pting new netw)rk infrastructure, m)dem techn)l)gies, and netw)rk pr)t)c)ls, and marketed br)adband t) residential cust)mers. See, e.g., WCB Letter 12/13/10, Attach. at 250–72, Chetan Sharma, Managing Gr,wth and Pr,fits in the Y,ttabyte Era (2009), www.chetansharma.c)m/y)ttabyteera.htm (Y)ttabyte). By the late 1990s, a residential end user c)uld d)wnl)ad c)ntent at speeds n)t achievable even )n the Internet backb)ne during the 1980s. See, e.g., WCB Letter 12/13/10, Attach. at 226–32, Susan Harris & Elise Gerich, The NSFNET Backb,ne Service: Chr,nicling the End ,f an Era, 10 CONNE_IONS (April 1996), available atwww.merit.edu/netw)rkresearch/pr)jecthist)ry/nsfnet/nsfnet_article.php. Higher speeds and br)adband’s “always )n” capability, in turn, stimulated m)re inn)vati)n in applicati)ns, fr)m gaming t) vide) streaming, which in turn enc)uraged br)adband pr)viders t) increase netw)rk speeds. WCB Letter 12/13/10, Attach. at 233–34, Link H)ewing, Twitter, Br,adband and Inn,vati,n, POLICYBLOG, Dec. 4, 2010, p)licybl)g.veriz)n.c)m/Bl)gP)st/626/TwitterBr)adbandandInn)vati)n.aspx.24 See, e.g., OIC C)mments at 34; V)nage C)mments at 2.25 See, e.g., G))gle C)mments at 34–36; Public Interest C)mmenters (PIC) C)mments at 28–30; see als, WCB Letter 12/10/10, Attach. at 81–130, J)seph Farrell & Philip J. Weiser, M,dularity, Vertical Integrati,n, and Open Access P,licies: T,ward a C,nvergence ,f Antitrust and Regulati,n in the Internet Age, 17 HARV. J. L. & TECH. 85, 95 (2003) (an )pen industry architecture “can facilitate inn)vati)n in individual c)mp)nents, spur market entry, and result in l)wer prices”).26 See infra para. 40. Cf. Part III.G.


8

15. Openness als) is essential t) the Internet’s r)le as a platf)rm f)r speech and civic engagement.27 An inf)rmed elect)rate is critical t) the health )f a functi)ning dem)cracy,28 and C)ngress has rec)gnized that the Internet “)ffer[s] a f)rum f)r a true diversity )f p)litical disc)urse, unique )pp)rtunities f)r cultural devel)pment, and myriad avenues f)r intellectual activity.”29 Due t) the lack )f gatekeeper c)ntr)l, the Internet has bec)me a maj)r s)urce )f news and inf)rmati)n, which f)rms the basis f)r inf)rmed civic disc)urse.30 Many Americans n)w turn t) the Internet t) )btain news,31 and its )penness makes it an unrivaled f)rum f)r free expressi)n. Furtherm)re, l)cal, state, and federal g)vernment agencies are increasingly using the Internet t) c)mmunicate with the public, including t) pr)vide inf)rmati)n ab)ut and deliver essential services.32

16. Televisi)n and radi) br)adcasters n)w pr)vide news and )ther inf)rmati)n )nline via their )wn websites, )nline aggregati)n websites such as Hulu,33 and s)cial netw)rking platf)rms.34 L)cal br)adcasters are experimenting with new appr)aches t) delivering )riginal

27 See, e.g., OIC C)mments at ii; PIA C)mments at 4–6; V)nage C)mments at 1–2.28 See Buckley v. Vale,, 424 U.S. 1, 49 n.55 (1976). 29 47 U.S.C. § 230(a)(3); see als, Ren, v. ACLU, 521 U.S. 844, 853 (1997) (“N) single )rganizati)n c)ntr)ls any membership in the Web, n)r is there any single centralized p)int fr)m which individual Web sites )r services can be bl)cked fr)m the Web.”) (citati)n )mitted).30 Cf. Turner Br,ad. Sys. v. FCC, 512 U.S. 622, 648, 663-64 (1994) (discussing value )f “diverse and antag)nistic” s)urces )f inf)rmati)n).31 See WCB Letter 12/10/10, Attach. at 133–41, PEW RESEARCH CTR. FOR PEOPLE AND THE PRESS, AMERICANS SPEND MORE TIME FOLLOWING THE NEWS; IDEOLOGICAL NEWS SOURCES: WHO WATCHES

AND WHY 17, 22 (Sept. 12, 2010), pe)ple-press.)rg/rep)rt/652/ (stating that “44% )f Americans say they g)t news thr)ugh )ne )r m)re internet )r m)bile digital s)urce yesterday”); WCB Letter 12/10/10, Attach. at 131–32, TVB LOCAL MEDIA MARKETING SOLUTIONS, LOCAL NEWS: LOCAL TV STATIONS ARE THE TOP

DAILY NEWS SOURCE, www.tvb.)rg/planning_buying/120562 (estimating that 61% )f Americans get news fr)m the Internet) (“TVB”). H)wever, acc)rding t) the Pew Pr)ject f)r Excellence in J)urnalism, the maj)rity )f news that pe)ple access )nline )riginates fr)m legacy media. See PEW PROJECT FOR

E_CELLENCE IN JOURNALISM, THE STATE OF THE NEWS MEDIA: AN ANNUAL REPORT ON AMERICAN JOURNALISM (2010), www.state)fthemedia.)rg/2010/)verview_key_findings.php (“Of news sites with half a milli)n visit)rs a m)nth ()r the t)p 199 news sites )nce c)nsulting, g)vernment and inf)rmati)n data bases are rem)ved), 67% are fr)m legacy media, m)st )f them (48%) newspapers.”).32 See, e.g., G))gle C)mments at 9; OIC C)mments at 2; Letter fr)m Emily Sheket)ff t) C)mm’r C)pps, FCC, GN D)cket N). 09-191, Attach. at 5 (filed Aug. 13, 2010); see als, Open Internet NPRM, 24 FCC Rcd at 13095–96, paras. 75–76; Nati)nal Br)adband Plan at 317–28.33 WCB Letter 12/13/10, Attach. at 240–43, Hulu, Media Inf,, www.hulu.c)m/ab)ut; WCB Letter 12/13/10, Attach. at 244–45, Hulu, News and Inf,rmati,n, www.hulu.c)m/channels/News-and-Inf)rmati)n#kind=sh)ws&s)rt=p)pular_t)day. Hulu aggregates televisi)n pr)grams and is a j)int venture )f Pr)vidence Equity Partners and Disney, NBC Universal, and News C)rp, which )perate the ABC, NBC, and F)x br)adcast netw)rks, respectively. See Hulu, Media Inf,, www.hulu.c)m/ab)ut. 34 See AT&T C)mments at 81; Telec)m Manufacturer C)aliti)n C)mments at 7; Metr) PCS C)mments at 12; M)t)r)la C)mments at 5; M)ti)n Picture Ass)ciati)n )f America (MPAA) C)mments at 5–6; V)nage C)mments at 13–14; Nati)nal Cable and Telec)mmunicati)ns Ass)ciati)n (NCTA) PN Reply at 2; Traci Patters)n, CEDMAGAZINE.COM, F,x ,ffers Web VOD play t, br,adcast affiliates (Mar. 1, 2007), www.cedmagazine.c)m/f)x-)ffers-web-v)d-play-t)-br)adcast.aspx; WCB Letter 12/10/10, Attach. at 17–71, Radi) Televisi)n Digital News Ass)ciati)n May 10, 2010 C)mments, GN D)cket N). 10-25, at 6–9 (RTDNA 10-25 C)mments); see als, s)urces cited infra, n)te 35. We use the term “br)adcasters” t) refer t) br)adcast netw)rks as well as l)cal stati)ns, many )f which air br)adcast televisi)n netw)rk

(c)ntinued....)


9

c)ntent, f)r example by creating neighb)rh))d-f)cused websites; delivering news clips via )nline vide) pr)gramming aggregat)rs, including AOL and G))gle’s Y)uTube; and )ffering news fr)m citizen j)urnalists.35 In additi)n, br)adcast netw)rks license their full-length entertainment pr)grams f)r d)wnl)ading )r streaming t) edge pr)viders such as Netflix and Apple.36 Because these sites are bec)ming increasingly p)pular with the public,37 )nline distributi)n has a strategic value f)r br)adcasters,38 and is likely t) pr)vide an increasingly imp)rtant s)urce )f funding f)r br)adcast news and entertainment pr)gramming.39

(...c)ntinued fr)m previ)us page)pr)gramming. The maj)r English- and Spanish-language televisi)n br)adcast netw)rks )wn appr)ximately 130 l)cal stati)ns serving a substantial p)rti)n )f the nati)n’s p)pulati)n. See WCB Letter 12/10/10, Attach. at 278–86, Paige Albiniak, B&C’s T,p 25 Stati,n Gr,ups 2010, BROADCASTING & CABLE (Apr. 12, 2010), www.br)adcastingcable.c)m/article/451325-B_C_s_T)p_25_Stati)n_Gr)ups_2010.php.35 See WCB Letter 12/10/10, Attach. at 3–4, Press Release, PR Newswire, Rayc)m and Datasphere t) Launch Hundreds )f Neighb)rh))d Websites in 35 Cities Acr)ss the U.S. (Mar. 3, 2010), available atwww.prnewswire.c)m/news-releases/rayc)m-and-datasphere-t)-launch-hundreds-)f-neighb)rh))d-websites-in-35-cities-acr)ss-the-us-86187412.html; WCB Letter 12/10/10, Attach. at 5–12, Erik Sch)nfeld, Syndicaster Adds AOL, Brightc,ve, and Y,uTube Distributi,n f,r L,cal TV News Clips, TECHCRUNCH, Apr. 14, 2009, techcrunch.c)m/2009/04/14/syndicaster-adds-a)l-brightc)ve-and-y)utube-distributi)n-f)r-l)cal-tv-news-clips; WCB Letter 12/10/10, Attach. at 72–73, Press Release, Br)adcast Interactive Media, Bel) C)rp Launches Y)uNews™ S)cial Media Platf)rm )n 16 Websites (Jan. 20, 2010), available at www.br)adcast-interactive.c)m/news/82170542.html; RTDNA 10-25 C)mments at 6–7.36 See WCB Letter 12/13/10, Attach. at 90–92, Stephen Cavendish, H,w t, Dr,p the B,x (and Survive),CHICAGO TRIBUNE, Sept. 30, 2010, at C1; WCB Letter 12/10/10, Attach. at 77–78, Claire Atkins)n, Primetime Netflix, N.Y. POST, Dec. 2, 2010, www.nyp)st.c)m/p/news/business/primetime_netflix_OMIP3b4KmH8)d_iLSickCN; WCB Letter 12/13/10, Attach. at 83–85, Paul B)nd, Studi,s Lick Their Lips Over New-L,,k Netflix, REUTERS, Aug. 16, 2010, www.reuters.c)m/article/idUSTRE6792T920100816. 37 M)t)r)la C)mments at 5; MPAA C)mments at 5–6; see als, WCB Letter 12/10/10, Attach. at 79–81, Press Release, c)mSc)re, Inc., C)mSc)re Releases Oct)ber 2010 U.S. Online Vide) Rankings (N)v. 1, 2010), available at www.c)msc)re.c)m/Press_Events/Press_Releases/2010/11/c)mSc)re_Releases_Oct)ber_2010_U.S._Online_Vide)_Rankings (sh)wing Hulu and br)adcast netw)rks in the t)p ten )nline vide) s)urces ranked by unique users and advertisements viewed); WCB Letter 12/13/10, Attach. at 316–19, Jed Williams, R,ku’s Channel St,re Brings OTT Opti,n t, L,cal TV, BIA KELSEY (Dec. 1, 2010), www.bl)g.bia.c)m/bia/2010/12/01/r)kus-channel-st)re-brings-)tt-)pti)n-t)-l)cal-tv/ (discussing c)nsumers’ interest in viewing l)cal televisi)n )nline).38 WCB Letter 12/10/10, Attach. at 13–16, Diana Marszalek, TV & Papers Ramp Up Similar Strategies, NETNEWSCHECK, Sept. 13, 2010, www.netnewscheck.c)m/article/2010/09/13/5774/tv--papers-ramp-up-similar-strategies; WCB Letter 12/13/10, Attach. at 86–88, Bridget Carey & Glenn Garvin, Sh,wtime f,r Univisi,n, THE MIAMI HERALD, Oct. 18, 2010, at G14.39 See WCB Letter 12/10/10, Attach. at 84–117, BORRELL ASSOCIATES INC., BENCHMARKING: TV WEB

SALES DEFY GRAVITY, GAIN 10%; TV WEB REVENUES & ONLINE AD SPENDING PROJECTIONS FOR 211MARKETS (Apr. 2010) at 5, 7 www.tvb.)rg/media/file/TVB_FF_TV_Basics.pdf ()nline revenues pr)jected t) increase 21% between 2009 and 2010); WCB Letter 12/10/10, Attach. at 118–20, Press Release, BIA/Kelsey, BIA/Kesley Raises Its Outl))k f)r Televisi)n Stati)n Revenues in 2010, as Industry Benefits fr)m Primary Electi)ns and Advertisers Returning t) L)cal TV (June 20, 2010), available at www.bia.c)m/pr100630-IITV2.asp (estimating 25% gr)wth in televisi)n stati)ns’ )nline revenues between 2009 and 2010); WCB Letter 12/13/10, Attach. at 293–97, Brian Steinberg, F,x t, Use Hulu Invent,ry f,r Advertisers ‘Make-G,,ds,’ ADVERTISING AGE, N)v. 23, 2010, www.adage.c)m/mediaw)rks/article?article_id=147256 (discussing the sale )f advertising time based )n

(c)ntinued....)


10

17. Unimpeded access t) Internet distributi)n likewise has all)wed new vide) c)ntent creat)rs t) create and disseminate pr)grams with)ut first securing distributi)n fr)m br)adcasters and multichannel vide) pr)gramming distribut)rs (MVPDs) such as cable and satellite televisi)n c)mpanies.40 Online viewing )f vide) pr)gramming c)ntent is gr)wing rapidly.41

18. In the Open Internet NPRM, the C)mmissi)n s)ught c)mment )n p)ssible implicati)ns that the pr)p)sed rules might have “)n eff)rts t) cl)se the digital divide and enc)urage r)bust br)adband ad)pti)n and participati)n in the Internet c)mmunity by min)rities and )ther s)cially and ec)n)mically disadvantaged gr)ups.”42 As we n)ted in the Open Internet NPRM, acc)rding t) a 2009 study, br)adband ad)pti)n varies significantly acr)ss dem)graphic gr)ups.43 We expect that )pen Internet pr)tecti)ns will help cl)se the digital divide by

(...c)ntinued fr)m previ)us page)TV netw)rks’ c)mbined televisi)n and )nline viewership). Americans rely heavily )n br)adcast televisi)n and radi) f)r news, see TVB, supra n)te 31 ()n a typical day 78% )f Americans get news fr)m a l)cal TV stati)n, 73% fr)m a br)adcast netw)rk, and 54% fr)m a radi) news pr)gram), and br)adcast netw)rk pr)gramming, as the m)st-watched pr)gramming )n TV, is highly valuable as a s)urce )f funding f)r netw)rks and l)cal affiliates alike. WCB Letter 12/10/10, Attach. at 1–19, TELEVISION BUREAU OF

ADVERTISING, INC., TV BASICS 11 (updated Oct. 2010), www.tvb.)rg/media/file/TVB_FF_TV_Basics.pdf, www.tvb.)rg/facts_and_figures/95487 (br)adcast netw)rks aired 98 )f the 100 t)p-rated sh)ws in the 2009–2010 seas)n).40 See MPAA PN Reply at 7; WCB Letter 12/13/10, Attach. at 326–623, FCC Open Internet W)rksh)p: Speech, Dem)cratic Engagement, and the Open Internet, Dec. 15, 2009 (“Dec. 15, 2009 W)rksh)p Tr.”), vide, available at www.)peninternet.g)v/w)rksh)ps/speech-dem)cratic-engagement-and-the-)pen-internet.html; Dec. 15, 2009 W)rksh)p Tr. at 52–60 (remarks )f Ruth Livier, YLSE); WCB Letter 12/13/10, Attach. at 322–25, Ylse, www.ylse.net/ab)ut (distributing studi)-quality vide)s )nline); Dec. 15, 2009 W)rksh)p Tr. at 40–43 (remarks )f J)nathan M))re, R)wdy Orbit IPTV, LLC); WCB Letter 12/13/10, Attach. at 320–21, R)wdy Orbit, www.r)wdy)rbit.c)m (aggregating sh)ws n)t carried )n cable )r br)adcast televisi)n), See als, Writer’s Guild )f America, West (WGAW) Reply at 5 ()pen Internet necessary t) pr)m)te c)ntent c)mpetiti)n and diversity); Independent Film & Televisi)n Alliance (IFTA) PN C)mments at 1–2 (same); Writer’s Guild )f America, East (WGAE) PN C)mments at 1–2 (same).41 See G))gle C)mments at 28; M)t)r)la C)mments at 5; MPAA C)mments at 5–6; DISH Reply at 4–5;WCB Letter 12/10/10, Attach. at 22–23, Online Vide, G,es Mainstream, EMARKETER, Apr. 28, 2010, www.emarketer.c)m/Article.aspx?R=1007664 (estimating that 29% )f Internet users y)unger than 25 say they watch all )r m)st )f their TV )nline, that as )f April 2010 67% )f U.S. Internet users watch )nline vide) each m)nth, and that this figure will increase t) 77% by 2014); WCB Letter 12/10/10, Attach. at 20–21, Chris Nuttall, Web TVs bigger f,r manufacturers than 3D, FINANCIAL TIMES, Aug. 29, 2010, www.ft.c)m/cms/s/2/0b34043a-9fe3-11df-8cc5-00144feabdc0.html (stating that 28 milli)n Internet-enabled TV sets are expected t) be s)ld in 2010, an increase )f 125% fr)m 2009); WCB Letter 12/13/10, Attach. at 291–92, Sandvine, News and Events: Press Releases, www.sandvine.c)m/news/pr_detail.asp?ID=288 (estimating that Netflix represents m)re than 20% )f peak d)wnstream Internet traffic). Cisc) expects )nline viewing t) exert significant influence )n future demand f)r br)adband capacity, ranking as the t)p s)urce )f Internet traffic by the end )f 2010 and acc)unting f)r 91% )f gl)bal Internet traffic by 2014. WCB Letter 12/10/10, Attach. at 40–42, Press Release, Cisc), Annual Cisc) Visual Netw)rking Index F)recast Pr)jects Gl)bal IP Traffic T) Increase M)re than F)urf)ld by 2014 (June 10,2010), www.cisc).c)m/web/MT/news/10/news_100610.html. 42 Open Internet NPRM, 24 FCC Rcd at 13098, para. 82.43 See PEW INTERNET & AM. LIFE PROJECT, HOME BROADBAND ADOPTION (June 2009). Appr)ximately 14 t) 24 milli)n Americans remain with)ut br)adband access capable )f meeting the requirements set f)rth in secti)n 706 )f the Telec)mmunicati)ns Act )f 1996, as amended. Inquiry C,ncerning the Depl,yment ,f Advanced Telec,mmunicati,ns Capability t, All Americans in a Reas,nable and Timely Fashi,n, and

(c)ntinued....)


11

maintaining relatively l)w barriers t) entry f)r underrepresented gr)ups and all)wing f)r the devel)pment )f diverse c)ntent, applicati)ns, and services.44

19. F)r all )f these reas)ns, there is little dispute in this pr)ceeding that the Internet sh)uld c)ntinue as an )pen platf)rm.45 Acc)rdingly, we c)nsider bel)w whether we can be c)nfident that the )penness )f the Internet will be self-perpetuating, )r whether there are threats t) )penness that the C)mmissi)n can effectively mitigate.

B. Br(adband Pr(viders Have the Incentive and Ability t( Limit Internet Openness

20. F)r purp)ses )f )ur analysis, we c)nsider three types )f Internet activities: pr)viding br)adband Internet access service; pr)viding c)ntent, applicati)ns, services, and devices accessed )ver )r c)nnected t) br)adband Internet access service (“edge” pr)ducts and services); and subscribing t) a br)adband Internet access service that all)ws access t) edge pr)ducts and services. These activities are n)t mutually exclusive. F)r example, individuals wh) generate and share c)ntent such as pers)nal bl)gs )r Faceb))k pages are b)th end users and edge pr)viders, and a single firm c)uld b)th pr)vide br)adband Internet access service and be an edge pr)vider, as with a br)adband pr)vider that )ffers )nline vide) c)ntent. Nevertheless, this basic tax)n)my pr)vides a useful m)del f)r evaluating the risk and magnitude )f harms fr)m l)ss )f )penness.

21. The rec)rd in this pr)ceeding reveals that br)adband pr)viders p)tentially face at least three types )f incentives t) reduce the current )penness )f the Internet. First, br)adband pr)viders may have ec)n)mic incentives t) bl)ck )r )therwise disadvantage specific edge pr)viders )r classes )f edge pr)viders, f)r example by c)ntr)lling the transmissi)n )f netw)rk traffic )ver a br)adband c)nnecti)n, including the price and quality )f access t) end users. A br)adband pr)vider might use this p)wer t) benefit its )wn )r affiliated )fferings at the expense )f unaffiliated )fferings.46

(...c)ntinued fr)m previ)us page)P,ssible Steps t, Accelerate Such Depl,yment Pursuant t, Secti,n 706 ,f the Telec,mmunicati,ns Act ,f 1996, as Amended by the Br,adband Data Impr,vement Act et al., Sixth Br)adband Depl)yment Rep)rt, 25 FCC Rcd 9556, 9557, para. 1 (2010) (Sixth Br,adband Depl,yment Rep,rt). 44 F)r example, J)nathan M))re f)unded R)wdy Orbit IPTV, an )nline platf)rm featuring )riginal pr)gramming f)r min)rity audiences, because he was frustrated by the lack )f representati)n )f pe)ple )f c)l)r in traditi)nal media. Dec. 15, 2009 W)rksh)p Tr. at 39–40, vide, available at www.)peninternet.g)v/w)rksh)ps/speech-dem)cratic-engagement-and-the-)pen-internet.html. The Internet’s )penness—and the l)w c)sts )f )nline entry—enables businesses like R)wdy Orbit t) launch with)ut having t) gain appr)val fr)m traditi)nal media gatekeepers. Id. We will cl)sely m)nit)r the effects )f the )pen Internet rules we ad)pt t)day )n the digital divide and )n min)rity and disadvantaged c)nsumers. See generally C)l)rOfChange C)mments; Dec. 15, 2009 W)rksh)p Tr. at 52–60 (remarks )f Ruth Livier, YLSE); 100 Black Men )f America et al. C)mments at 1–2; Free Press C)mments at 134–36; Center f)r Media Justice et al. C)mments at 7–9.45 See, e.g., Letter fr)m Alan Davids)n, G))gle, & Th)mas J. Tauke, Veriz)n, t) Chairman Genach)wski et al., GN D)cket N). 09-191 at 2 (filed Jan. 14, 2010) (“It is essential that the Internet remains an unrestricted and )pen platf)rm, where pe)ple can access the lawful c)ntent, services, and applicati)ns )f their ch)ice.”); Veriz)n C)mments at 1 (“Every)ne agrees the Internet sh)uld be )pen . . . .”); C)mcast Reply at i (n)ting the “near-universal acceptance that . . . the Internet must remain an unrestricted and )pen platf)rm”). 46 See, e.g., DISH C)mments at 2 (“Vertically-integrated br)adband pr)viders have the incentive and ability t) discriminate against c)mpetit)rs.”); G))gle C)mments at 35 (“Br)adband pr)viders will have a

(c)ntinued....)


12

22. T)day, br)adband pr)viders have incentives t) interfere with the )perati)n )f third-party Internet-based services that c)mpete with the pr)viders’ revenue-generating teleph)ny and/)r pay-televisi)n services. This situati)n c)ntrasts with the first decade )f the public Internet, when dial-up was the primary f)rm )f c)nsumer Internet access. Independent c)mpanies such as America Online, C)mpuServe, and Pr)digy pr)vided access t) the Internet )ver teleph)ne c)mpanies’ ph)ne lines. As br)adband has replaced dial-up, h)wever, teleph)ne and cable c)mpanies have bec)me the maj)r pr)viders )f Internet access service.47 Online c)ntent, applicati)ns, and services available fr)m edge pr)viders )ver br)adband increasingly )ffer actual )r p)tential c)mpetitive alternatives t) br)adband pr)viders’ )wn v)ice and vide) services, which generate substantial pr)fits. Interc)nnected V)ice-)ver-Internet-Pr)t)c)l (V)IP) services, which include s)me )ver-the-t)p V)IP services,48 “are increasingly being used as a substitute f)r traditi)nal teleph)ne service,”49 and )ver-the-t)p V)IP services represent a significant share )f

(...c)ntinued fr)m previ)us page)natural incentive t) use pri)ritizati)n t) fav)r their )wn services.”); see als, The Ad H)c Telec)mmunicati)ns Users C)mmittee (Ad H)c) C)mments at 8–9; ALA C)mments at 2; Free Press C)mments at 3–4, 22–23; IFTA C)mments at 10–12; Netflix C)mments at 3, 5; Skype C)mments at 2, 10–11; V)nage C)mments at 19; G))gle Reply at 16–17; V)nage Reply at 4.47 See WIRELINE COMPETITION BUREAU, FCC, HIGH-SPEED SERVICES FOR INTERNET ACCESS 3 (July 2009), available at hraunf)ss.fcc.g)v/ed)cs_public/attachmatch/DOC-292191A1.pdf; WCB Letter 12/10/10, Attach. at 43–44, Press Release, Leichtman Research Gr)up, Under 350,000 add Br)adband in the Sec)nd Quarter )f 2010: T)p Teleph)ne C)mpanies Rep)rt a Cumulative Net L)ss )f Br)adband Subscribers(Aug. 11, 2010), available at www.leichtmanresearch.c)m/press/081110release.html (rep)rting that the nineteen largest pr)viders )f br)adband Internet access service in the U.S. are all cable and teleph)ne c)mpanies and serve appr)ximately 73.5 milli)n subscribers, )r appr)ximately 93% )f all br)adband subscribers).48 The C)mmissi)n’s rules define interc)nnected V)IP as “a service that: (1) enables real-time, tw)-way v)ice c)mmunicati)ns; (2) requires a br)adband c)nnecti)n fr)m the user’s l)cati)n; (3) requires Internet pr)t)c)l-c)mpatible cust)mer premises equipment (CPE); and (4) permits users generally t) receive calls that )riginate )n the public switched teleph)ne netw)rk and t) terminate calls t) the public switched teleph)ne netw)rk.” 47 C.F.R. § 9.3. Over-the-t)p V)IP services require the end user t) )btain br)adband transmissi)n fr)m a third-party pr)vider, and pr)viders )f )ver-the-t)p V)IP can vary in terms )f the extent t) which they rely )n their )wn facilities. See SBC C,mmc’ns Inc. and AT&T C,rp. Applicati,ns f,r Appr,val ,f Transfer ,f C,ntr,l, WC D)cket N), 05-65, Mem)randum Opini)n and Order, 20 FCC Rcd 18290, 18337-38, para. 86 (2005).49 Tel. Number Requirements f,r IP-Enabled Servs. Pr,viders, Rep)rt and Order, Declarat)ry Ruling, Order )n Remand, and NPRM, 22 FCC Rcd 19531, 19547, para. 28 (2007); see als, V)nage C)mments at3–4. In merger reviews and f)rbearance petiti)ns, the C)mmissi)n has f)und the rec)rd “inc)nclusive regarding the extent t) which vari)us )ver-the-t)p V)IP services sh)uld be included in the relevant pr)duct market f)r [mass market] l)cal services.” See, e.g., Veriz,n C,mmc’ns Inc. and MCI, Inc. Applicati,n f,r Appr,val ,f Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 20 FCC Rcd 18433, 18480, para. 89 (2005); see als, Petiti,n ,f Qwest C,rp. f,r F,rbearance Pursuant t, 47 U.S.C. § 160(c) in the Ph,enix, Ariz,na Metr,p,litan Statistical Area, Mem)randum Opini)n and Order, 25 FCC Rcd 8622, 8650, para. 54 (2010) (Qwest Ph,enix Order). In c)ntrast t) th)se pr)ceedings, we are n)t perf)rming a market p)wer analysis in this pr)ceeding, s) we need n)t and d) n)t here determine with specificity whether, and t) what extent, particular )ver-the-t)p V)IP services c)nstrain particular practices and/)r rates )f services g)verned by secti)n 201. Cf. Qwest Ph,enix Order, 25 FCC Rcd at 8647–48, paras. 46–47 (discussing the general appr)ach t) pr)duct market definiti)n); id. at 8651–52, paras. 55–56 (discussing the need f)r evidence that )ne service c)nstrains the price )f an)ther service t) include them in the same pr)duct market f)r purp)ses )f a market p)wer analysis).


13

v)ice-calling minutes, especially f)r internati)nal calls.50 Online vide) is rapidly gr)wing in p)pularity,51 and MVPDs have resp)nded t) this trend by enabling their vide) subscribers t) use the Internet t) view their pr)gramming )n pers)nal c)mputers and )ther Internet-enabled devices.52 Online vide) aggregat)rs such as Netflix, Hulu, Y)uTube, and iTunes that are unaffiliated with traditi)nal MVPDs c)ntinue t) pr)liferate and inn)vate, )ffering m)vies and televisi)n pr)grams (including br)adcast pr)gramming) )n demand, and earning revenues fr)m advertising and/)r subscripti)ns.53 Several MVPDs have stated publicly that they view these services as a p)tential c)mpetitive threat t) their c)re vide) subscripti)n service.54 Thus, )nline edge services appear likely t) c)ntinue gaining subscribers and market significance,55 which will

50 See, e.g., WCB Letter 12/10/10, Attach. at 45–52, PriMetrica, Inc., Executive Summary t)TeleGe)graphy Rep)rt 6–7 (2009), available at telec)mbl)gs.in/wp-c)ntent/upl)ads/2010/05/TG10_Exec_Sum.pdf (“In the span )f 6 years, Skype [an )ver-the-t)p V)IP pr)vider] has emerged as the largest pr)vider )f cr)ss-b)rder c)mmunicati)ns in the w)rld, by far. . . . Given these immense traffic v)lumes, it’s difficult n)t t) c)nclude that at least s)me )f Skype’s gr)wth is c)ming at the expense )f traditi)nal carriers.”).51 See supra para. 17.52 See, e.g., WCB Letter 12/10/10, Attach. at 54–56, Press Release, C)mcast C)rp., Time Warner Inc. Ann)unces Widespread Distributi)n )f Cable TV C)ntent Online, (June 24, 2009), available atwww.c)mcast.c)m/Ab)ut/PressRelease/PressReleaseDetail.ashx?PRID=883 (ann)uncing a partnership between C)mcast and Time Warner t) devel)p a “TV Everywhere” m)del f)r the MVPD industry); see als, WCB Letter 12/13/10, Attach. at 247–49, J)hn M)ulding, TV Everywhere: M,re than One Authenticati,n M,del, VIDEONET, N)v. 16, 2010, www.v-net.tv/NewsDisplay.aspx?id=594&title=tv-everywhere-m)re-than-)ne-aggregati)n-m)del; DISH Reply at 5–8 (n)ting that AT&T, Cablevisi)n, C)mcast, DirecTV, Dish, Time Warner Cable, and Veriz)n all )ffer )nline vide) services, but that unlike their c)mpetit)rs, neither DirecTV n)r Dish are vertically integrated with br)adband pr)viders). 53 See supra para. 16.54 E.g., AT&T PN C)mments at 55–56 and 56, n.115 (wireless pr)viders permit the use )f Hulu, Y)uTube, and )ther applicati)ns that “c)mpete with their vide) services”); Annual Assessment ,f the Status ,f C,mpetiti,n in the Market f,r the Delivery ,f Vide, Pr,gramming, Supplemental N)tice )f Inquiry, 24 FCC Rcd 4401, 4417 n.82 (2009) (n)ting that in 2009, TWC President and CEO Glenn Britt stated that “the reality is we are starting t) see the beginnings )f c)rd cutting where pe)ple, particularly y)ung pe)ple, are saying all I need is br)adband, I d)n’t need vide)”); WCB Letter 12/13/10, Attach. at 89, TWC, Cauti,n C,ncerning F,rward-L,,king Statements (Aug. 2010), www.timewarnercable.c)m/C)rp)rate/invest)r_relati)ns/cauti)n_f)rward_statements.html (“c)mpanies that deliver pr)gramming )ver br)adband Internet c)nnecti)ns” identified as a s)urce )f “increased c)mpetiti)n”); WCB Letter 12/13/10, Attach. at 93–189, DirecTV, Inc. SEC F)rm 10-K, filed Feb. 26, 2010, at 11 (stating that “we face substantial c)mpetiti)n in the MVPD industry fr)m emerging digital media distributi)n pr)viders” and listing Hulu, Apple, AOL, Amaz)n, and Netflix am)ng its “Vide) via the Internet” c)mpetit)rs); WCB Letter 12/13/10, Attach. at 1–13, Transcript, Discussi)n with Ivan G. Seidenberg, Chairman and Chief Executive Officer, Veriz)n C)mmunicati)ns, Inc., G)ldman Sachs 19th Annual C)mmunic)pia C)nference, Sept. 23, 2010 at 8, 11, available atinvest)r.veriz)n.c)m/news/20100923; see als, OIC C)mments at 15.55 See, e.g., WCB Letter 12/10/10, Attach. at 5763, Ryan Fleming, New Rep,rt Sh,ws M,re Pe,ple Dr,pping Cable TV f,r Web Br,adcasts, DIGITAL TRENDS, Apr. 16, 2010, available atwww.digitaltrends.c)m/c)mputing/new-rep)rt-sh)ws-that-m)re-and-m)re-pe)ple-are-dr)pping-cable-tv-in-fav)r-)f-web-br)adcasts. C)ngress recently rec)gnized these devel)pments by expanding disabilities access requirements t) include advanced c)mmunicati)ns services. See Twenty-First Century C)mmunicati)ns and Vide) Accessibility Act, Pub. L. N). 111-260; see als, 156 CONG. REC. 6005 (daily ed. July 26, 2010) (remarks )f Rep. Waxman) (this legislati)n bef)re us . . . ensur[es] that Americans with disabilities can access the latest c)mmunicati)ns techn)l)gy.); id. at 6004 (remarks )f Rep. Markey)

(c)ntinued....)


14

put additi)nal c)mpetitive pressure )n br)adband pr)viders’ )wn services.56 By interfering with the transmissi)n )f third parties’ Internet-based services )r raising the c)st )f )nline delivery f)r particular edge pr)viders, teleph)ne and cable c)mpanies can make th)se services less attractive t) subscribers in c)mparis)n t) their )wn )fferings.57

23. In additi)n, a br)adband pr)vider may act t) benefit edge pr)viders that have paid it t) exclude rivals (f)r example, if )ne )nline vide) site were t) c)ntract with a br)adband pr)vider t) deny a rival vide) site access t) the br)adband pr)vider’s subscribers).58 End users w)uld be harmed by the inability t) access desired c)ntent, and this c)nduct c)uld lead t) reduced inn)vati)n and fewer new services.59 C)nsistent with these c)ncerns, delivery netw)rks that are vertically integrated with c)ntent pr)viders, including s)me MVPDs, have incentives t) fav)r their )wn affiliated c)ntent.60 If br)adband pr)viders had hist)rically fav)red their )wn

(...c)ntinued fr)m previ)us page)(“[T]he bill we are c)nsidering t)day significantly increases accessibility f)r Americans with disabilities t) the indispensable telec)mmunicati)ns . . . t))ls )f the 21st century.”); Letter fr)m Rick Chessen, NCTA, t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N). 09-191 at 2 n.6 (filed Dec. 10, 2010).56 See, e.g., V)nage C)mments at 3–4; WCB Letter 12/10/10, Attach. at 64–102, MICHAEL D. PELCOVITS

AND DANIEL E. HAAR, MICRA, CONSUMER BENEFITS FROM CABLE-TELCO COMPETITION 15–16, 21 (2007), available at www.micradc.c)m/news/publicati)ns/pdfs/Updated_MiCRA_Rep)rt_FINAL.pdf (finding “c)mpelling evidence” that teleph)ne c)mpanies face increasing c)mpetiti)n fr)m )ver-the-t)p V)IP )fferings and estimating that )ver the next five years c)nsumers will save )ver $6 billi)n fr)m the l)wer prices )ffered by these services as well as billi)ns m)re fr)m the c)mpetitive resp)nse )f the teleph)ne incumbents).57 See, e.g., DISH C)mments at 3–5; G))gle C)mments at 35.58 See, e.g., Free Press C)mments at 3. 59 See generally WCB Letter 12/10/10, Attach. at 23–27, Steven C. Sal)p & David Scheffman, Raising Rivals’ C,st, 73 AM. ECON. REV. 267–71 (1983); WCB Letter 12/10/10, Attach. at 1–23, Steven C. Sal)p & Th)mas Krattenmaker, Antic,mpetitive Exclusi,n: Raising Rivals’ C,sts t, Achieve P,wer ,ver Price, 96 YALE L.J. 214 (1986). See als, Andrew I. Gavil et al., ANTITRUST LAW IN PERSPECTIVE: CASES,CONCEPTS AND PROBLEMS IN COMPETITION POLICY 1153–92 (2d ed. 2008) (describing h)w p)licies f)stering c)mpetiti)n spur inn)vati)n). T) similar effect, a br)adband pr)vider may raise access fees t) disfav)red edge pr)viders, reducing their ability t) pr)fit by raising their c)sts and limiting their ability t) c)mpete with fav)red edge pr)viders.60 See G))gle C)mments at 30–31; Netflix C)mments at 7 n.10; V)nage Reply at 4; WCB Letter 12/10/10, Attach. at 28–78, Austan G))lsbee, Vertical Integrati,n and the Market f,r Br,adcast and Cable Televisi,n Pr,gramming, Paper f)r the Federal C)mmunicati)ns C)mmissi)n 31–32 (Sept. 5, 2007) (G))lsbee Study) (finding that MVPDs excluded netw)rks that were rivals )f affiliated channels f)r antic)mpetitive reas)ns). Cf. WCB Letter 12/10/10, Attach. at 85–87, DAVID WATERMAN & ANDREW

WEISS, VERTICAL INTEGRATION IN CABLE TELEVISION 142–143 (1997) (MVPD exclusi)n )f unaffiliated c)ntent during an earlier time peri)d); see als, H.R. Rep. 102-628 (2d Sess.) at 41 (1992) (“The C)mmittee received testim)ny that vertically integrated c)mpanies reduce diversity in pr)gramming by threatening the viability )f rival cable pr)gramming services.”). See infra Part II.C f)r )ther examples )f br)adband pr)viders bl)cking access t) c)ntent and services that p)se an actual )r p)tential c)mpetitive threat. In additi)n t) the examples )f actual misc)nduct that we pr)vide, see infra Part II.C, the G))lsbee Study pr)vides empirical evidence that cable pr)viders have acted in the past )n antic)mpetitive incentives t) f)recl)se rivals, supp)rting )ur c)ncern that these and )ther br)adband pr)viders w)uld act )n anal)g)us incentives in the future. We thus disagree that we rely )n “speculative harms al)ne” )r have failed t) adduce “empirical evidence.” Baker Statement at *1, *4 (citing AT&T Reply Exh. 2 at 45 (J. Greg)ry Sidak & David J. Teece, Inn,vati,n Spill,vers and the “Dirt R,ad” Fallacy: The Intellectual Bankruptcy ,f Banning Opti,nal Transacti,ns f,r Enhanced Delivery ,ver the Internet, 6 J. COMPETITION L. & ECON.

(c)ntinued....)


15

affiliated businesses )r th)se incumbent firms that paid f)r advantage)us access t) end users, s)me inn)vative edge pr)viders that have t)day bec)me maj)r Internet businesses might n)t have been able t) survive.61

24. Sec,nd, br)adband pr)viders may have incentives t) increase revenues by charging edge pr)viders, wh) already pay f)r their )wn c)nnecti)ns t) the Internet,62 f)r access )r pri)ritized access t) end users.63 Alth)ugh br)adband pr)viders have n)t hist)rically imp)sed such fees, they have argued they sh)uld be permitted t) d) s).64 A br)adband pr)vider c)uld f)rce edge pr)viders t) pay inefficiently high fees because that br)adband pr)vider is typically an edge pr)vider’s )nly )pti)n f)r reaching a particular end user.65 Thus br)adband pr)viders have the ability t) act as gatekeepers.66

25. Br)adband pr)viders w)uld be expected t) set inefficiently high fees t) edge pr)viders because they receive the benefits )f th)se fees but are unlikely t) fully acc)unt f)r the detrimental impact )n edge pr)viders’ ability and incentive t) inn)vate and invest, including the p)ssibility that s)me edge pr)viders might exit )r decline t) enter the market.67 The unacc)unted-

(...c)ntinued fr)m previ)us page)521, 571-72 (2010)). T) the c)ntrary, the empirical evidence and the misc)nduct that we describe bel)w validate the ec)n)mic the)ries that inf)rm )ur decisi)n t)day. M)re)ver, as we explain bel)w, by c)mparis)n t) the benefits )f the pr)phylactic measures we ad)pt, the c)sts ass)ciated with these )pen Internet rules are likely small. See infra para. 39.61 See, e.g., Letter fr)m Barbara van Schewick t) Marlene D)rtch, Secretary, FCC, GN D)cket N). 09-191 (filed Jan. 19, 2010) (van Schewick Jan. 19, 2010 Ex Parte Letter), Opening Statement at 4–7 (highlighting the risk that—in the absence )f Internet )penness n)rms—gatekeeper c)ntr)l and pay-f)r-pri)ritizati)n w)uld have prevented Skype and Y)uTube fr)m surviving because )f the threats they presented t) the legacy business )f teleph)ne-based netw)rk pr)viders and G))gle Vide), respectively); Letter fr)m M. Chris Riley, Free Press, t) Marlene D)rtch, Secretary, FCC, GN D)cket N). 09-191 (filed N)v. 24, 2010), Attach., M. Chris Riley and R)bb T)p)lski, “The Hidden Harms )f Applicati)n Bias,” at 3 n.7 and 7 (similar with respect t) Y)uTube’s threat t) RealVide)).62 See Free Press C)mments at 17 n.8; OIC C)mments at 27; V)nage Reply at 53.63 See, e.g., Free Press C)mments at 3; G))gle C)mments at 34; Red Hat C)mments at 2; G))gle Reply at 36; IPI Reply at 4; V)nage Reply at 4.64 See, e.g., AT&T C)mments at 108–137; C)mcast C)mments at 38–39; TWC C)mments at 54–55; Veriz)n C)mments at 71–77.65 S)me end users can be reached thr)ugh m)re than )ne br)adband c)nnecti)n, s)metimes via the same device (e.g., a smartph)ne that has Wi-Fi and cellular c)nnectivity). Even s), the end user, n)t the edge pr)vider, ch))ses which br)adband pr)vider the edge pr)vider must rely )n t) reach the end user. 66 Als) kn)wn as a “terminating m)n)p)list.” See, e.g., CCIA C)mments at 7; Skype C)mments at 10–11; V)nage C)mments at 9–10; G))gle Reply at 8–14. A br)adband pr)vider can act as a gatekeeper even if s)me edge pr)viders w)uld have bargaining p)wer in neg)tiati)ns with br)adband pr)viders )ver access )r pri)ritizati)n fees.67 See G))gle C)mments at 35, 59–61; OIC C)mments at 20–30; IPI Reply at 2; Ad H)c C)mments at 7, 15–17; ALA C)mments at 2; G))gle C)mments at 34; IFTA C)mments at 14; Netflix C)mments at 3–4; PAETEC C)mments at 24–25; PIC C)mments at 50–51; G))gle Reply at 37–38; IPI Reply at 4; WCBLetter 12/10/10, Attach. at 115–130, R)bin S. Lee & Tim Wu, Subsidizing Creativity thr,ugh Netw,rk Design: Zer, Pricing and Net Neutrality, 23 J. ECON. PERSPECTIVES, 61–76 (2009); WCB Letter 12/13/10, Attach. at 201–225, Nich)las Ec)n)mides, “Net Neutrality,” N,n-Discriminati,n and Digital Distributi,n ,f C,ntent Thr,ugh the Internet, 4 I/S: J.L. & POL’Y FOR INFO. SOCIETY 209, 232 (2008); WCB Letter

(c)ntinued....)


16

f)r harms t) inn)vati)n are negative externalities,68 and are likely t) be particularly large because )f the rapid pace )f Internet inn)vati)n, and wide-ranging because )f the r)le )f the Internet as a general purp)se techn)l)gy. M)re)ver, fees f)r access )r pri)ritized access c)uld trigger an “arms race” within a given edge market segment.69 If )ne edge pr)vider pays f)r access )r pri)ritized access t) end users, subscribers may tend t) fav)r that pr)vider’s services, and c)mpeting edge pr)viders may feel that they must resp)nd by paying, t)).

26. Fees f)r access )r pri)ritizati)n t) end users c)uld reduce the p)tential pr)fit that an edge pr)vider w)uld expect t) earn fr)m devel)ping new )fferings, and thereby reduce edge pr)viders’ incentives t) invest and inn)vate.70 In the rapidly inn)vating edge sect)r, m)re)ver, many new entrants are new )r small “garage entrepreneurs,” n)t large and established firms. These emerging pr)viders are particularly sensitive t) barriers t) inn)vati)n and entry,71 and may have difficulty )btaining financing if their )fferings are subject t) being bl)cked )r disadvantaged by )ne )r m)re )f the maj)r br)adband pr)viders.72 In additi)n, if edge pr)viders need t) neg)tiate access )r pri)ritized access fees with br)adband pr)viders,73 the resulting transacti)n

(...c)ntinued fr)m previ)us page)12/13/10, Attach. at 14–77, Barbara van Schewick, T,wards an Ec,n,mic Framew,rk f,r Netw,rk Neutrality Regulati,n, 5 J. ON TELECOMM. & HIGH TECH. L. 329, 378–80 (2007). 68 A br)adband pr)vider may hesitate t) imp)se c)sts )n its )wn subscribers, but it will typically n)t take int) acc)unt the effect that reduced edge pr)vider investment and inn)vati)n has )n the attractiveness )f the Internet t) end users that rely )n )ther br)adband pr)viders—and will theref)re ign)re a significant fracti)n )f the c)st )f f)reg)ne inn)vati)n. See, e.g., OIC C)mments at 20–24. If the t)tal number )f br)adband subscribers shrinks, m)re)ver, the s)cial c)sts unacc)unted f)r by the br)adband pr)vider c)uld als) include the l)st ability )f the remaining end users t) c)nnect with the subscribers that departed (f)reg)ne direct netw)rk effects) and a smaller p)tential audience f)r edge pr)viders. See, e.g., id. at 23. Br)adband pr)viders are als) unlikely t) fully acc)unt f)r the )pen Internet’s p)wer t) enhance civic disc)urse thr)ugh news and inf)rmati)n, )r f)r its ability t) enable inn)vati)ns that help address key nati)nal challenges such as educati)n, public safety, energy efficiency, and health care. See ARL et al. C)mments at 3; G))gle Reply at 39; American Rec)very and Reinvestment Act )f 2009, Pub. L. N). 111-5, 123 Stat. 115 (2009).69 See, e.g., OIC C)mments at 29; G))gle Reply at 40. 70 See, e.g., ALA C)mments at 3–4; C)l)rOfChange C)mments at 3; Free Press C)mments at 69; G))gle C)mments at 34; Netflix C)mments at 4; OIC C)mments at 29–30; DISH Reply at 10. Such fees c)uld als) reduce an edge pr)vider’s incentive t) invest in existing )fferings, assuming the fees w)uld be expected t) increase t) the extent impr)vements increased usage )f the edge pr)vider’s )fferings.71 Ad H)c C)mments at 15–16; ADTRAN C)mments at 17–18; American C)mp)sers F)rum et al. (ACF) C)mments at 3–6; C)l)rOfChange C)mments at 3–4; Debra Br)wn C)mments at 1; G))gle C)mments at 12; Philadelphia C)mments at 3; Red Hat C)mments at 2.72 See, e.g., G))gle C)mments at 59–61; Uni)n Square Ventures C)mments at 1; V)nage C)mments at 18; OIC Reply at 3–4.73 Neg)tiati)ns imp)se direct expenses and delay. See G))gle C)mments at 34. There may als) be significant c)sts ass)ciated with the p)ssibility that the neg)tiating parties w)uld reach an impasse. SeeALA C)mments at 2 (“The cable TV industry )ffers a telling example )f the ‘pay t) play’ envir)nment where s)me cable c)mpanies d) n)t )ffer their cust)mers access t) certain c)ntent because the c)mpany has n)t successfully neg)tiated financial c)mpensati)n with the c)ntent pr)vider.”). Edge pr)viders may als) bear c)sts arising fr)m their need t) m)nit)r the extent t) which they actually receive pri)ritized delivery.


17

c)sts c)uld further raise the c)sts )f intr)ducing new pr)ducts and might chill entry and expansi)n.74

27. S)me c)mmenters argue that an end user’s ability t) switch br)adband pr)viders eliminates these pr)blems.75 But many end users may have limited ch)ice am)ng br)adband pr)viders, as discussed bel)w.76 M)re)ver, th)se that can switch br)adband pr)viders may n)t benefit fr)m switching if rival br)adband pr)viders charge edge pr)viders similarly f)r access and pri)rity transmissi)n and pri)ritize each edge pr)vider’s service similarly.77 Further, end users may n)t kn)w whether charges )r service levels their br)adband pr)vider is imp)sing )n edge pr)viders vary fr)m th)se )f alternative br)adband pr)viders, and even if they d) have this inf)rmati)n may find it c)stly t) switch.78 F)r these reas)ns, a dissatisfied end user, )bserving that s)me edge pr)vider services are subject t) l)w transmissi)n quality, might n)t switch br)adband pr)viders (th)ugh they may switch t) a rival edge pr)vider in the h)pe )f impr)ving quality).

28. S)me c)mmenters c)ntend that, in the absence )f )pen Internet rules, br)adband pr)viders that earn substantial additi)nal revenue by assessing access )r pri)ritizati)n charges )n edge pr)viders c)uld av)id increasing )r c)uld reduce the rates they charge br)adband subscribers, which might increase the number )f subscribers t) the br)adband netw)rk.79 Alth)ugh this scenari) is p)ssible,80 n) br)adband pr)vider has stated in this pr)ceeding that it

74 See, e.g., G))gle C)mments at 34–35; Shane Greenstein N)tice )f Ex Parte, GN D)cket N). 09-191,Transacti,n C,st, Transparency, and Inn,vati,n f,r the Internet at 19, available at www.)peninternet.g)v/w)rksh)ps/inn)vati)n-investment-and-the-)pen-internet.html; van Schewick Jan. 19, 2010 Ex Parte Letter, Opening Statement at 7 (arguing that the l)w c)sts )f inn)vati)n n)t )nly make many m)re applicati)ns w)rth pursuing, but als) all)w a large and diverse gr)up )f pe)ple t) bec)me inn)vat)rs, which in turn increases the )verall am)unt and quality )f inn)vati)n). There are appr)ximately 1,500 br)adband pr)viders in the United States. See WIRELINE COMPETITION BUREAU, FCC, INTERNET

ACCESS SERVICES: STATUS AS OF DECEMBER 31, 2009 at 7, tbl. 13 (Dec. 2010) (FCC Internet Status Rep)rt), available at www.fcc.g)v/Daily_Releases/Daily_Business/2010/db1208/DOC-303405A1.pdf. The inn)vative pr)cess frequently generates a large number )f attempts, )nly a few )f which turn )ut t) be highly successful. Given the likelih))d )f failure, and that financing is n)t always readily available t) supp)rt research and devel)pment, the inn)vati)n pr)cess in many sect)rs )f the Internet’s edge is likely t) be highly sensitive t) the upfr)nt c)sts )f devel)ping and intr)ducing new pr)ducts. PIC C)mments at 50 (“[I]t is unlikely that new entrants will have the ability (b)th financially and with regard t) inf)rmati)n) t) neg)tiate with every ISP that serves the markets that they are interested in.”). 75 See, e.g., Veriz)n C)mments at 33.76 See infra paras. 32–33.77 See Skype C)mments at 11; see als, supra paras. 24–25.78 See Skype C)mments at 11-12; see als, infra para. 34. 79 See AT&T C)mments at 114, 135–37; TWC C)mments at 57-58; Veriz)n C)mments at 47–48, 70–74.80 Ec)n)mics literature rec)gnizes that access charges c)uld be harmful under s)me circumstances and beneficial under )thers. See, e.g., WCB Letter 12/10/10, Attach. at 1–62, E. Glen Weyl, A Price The,ry ,f Multi-Sided Platf,rms, 100 AM. ECON. REV. 1642, 1642–72 (2010) (the effects )f all)wing br)adband pr)viders t) charge terminating rates t) c)ntent pr)viders are ambigu)us); see als, WCB Letter 12/10/10, Attach. at 180–215, J)hn Musacchi) et al., A Tw,-Sided Market Analysis ,f Pr,vider Investment Incentives with an Applicati,n t, the Net-Neutrality Issue, 8 REV. OF NETWORK ECON. 22, 22–39 (2009) (n)ting that there are c)nditi)ns under which “a zer) terminati)n price is s)cially beneficial”). M)re)ver, the ec)n)mic literature )n tw)-sided markets is at an early stage )f devel)pment. AT&T C)mments, Exh. 3, Schwartz Decl. at 16; Jeffrey A. Eisenach (Eisenach) Reply at 11–12; cf., e.g., WCB Letter 12/10/10, Attach. at 156–

(c)ntinued....)


18

actually w)uld use any revenue fr)m edge pr)vider charges t) )ffset subscriber charges.81 In additi)n, these c)mmenters fail t) acc)unt f)r the likely detrimental effects )f access and pri)ritizati)n charges )n the virtu)us circle )f inn)vati)n described ab)ve. Less c)ntent and fewer inn)vative )fferings make the Internet less attractive f)r end users than w)uld )therwise be the case. C)nsequently, we are unable t) c)nclude that the p)ssibility )f reduced subscriber charges )utweighs the risks )f harm described herein.82

29. Third, if br)adband pr)viders can pr)fitably charge edge pr)viders f)r pri)ritized access t) end users, they will have an incentive t) degrade )r decline t) increase the quality )f the service they pr)vide t) n)n-pri)ritized traffic.83 This w)uld increase the gap in quality (such as latency in transmissi)n) between pri)ritized access and n)n-pri)ritized access, induce m)re edge pr)viders t) pay f)r pri)ritized access, and all)w br)adband pr)viders t) charge higher prices f)r pri)ritized access. Even m)re damaging, br)adband pr)viders might withh)ld )r decline t) expand capacity in )rder t) “squeeze” n)n-pri)ritized traffic, a strategy that w)uld increase the likelih))d )f netw)rk c)ngesti)n84 and c)nfr)nt edge pr)viders with a ch)ice between accepting l)w-quality transmissi)n )r paying fees f)r pri)ritized access t) end users.

30. M)re)ver, if br)adband pr)viders c)uld bl)ck specific c)ntent, applicati)ns, services, )r devices, end users and edge pr)viders w)uld l)se the c)ntr)l they currently have )ver whether )ther end users and edge pr)viders can c)mmunicate with them thr)ugh the Internet. C)ntent, applicati)n, service, and device pr)viders (and their invest)rs) c)uld n) l)nger assume that the market f)r their )fferings included all U.S. end users. And br)adband pr)viders might ch))se t) implement und)cumented practices f)r traffic differentiati)n that undermine the ability

(...c)ntinued fr)m previ)us page)79, Mark Armstr)ng, C,mpetiti,n inTtw,-Sided Markets, 37 RAND J. OF ECON. 668 (2006); WCB Letter 12/10/10, Attach. at 216–302, Jean-Charles R)chet & Jean Tir)le, Platf,rm C,mpetiti,n in Tw,-Sided Markets, 1 J. EUR. ECON. ASS’N 990 (2003).81 See G))gle Reply at 37.82 Indeed, demand f)r br)adband Internet access service might decline even if subscriber fees fell, if the c)nduct )f br)adband pr)viders disc)uraged demand by bl)cking end user access t) preferred edge pr)viders, sl)wing n)n-pri)ritized transmissi)n, and breaking the virtu)us circle )f inn)vati)n.83 See e.g., ALA C)mments at 2; G))gle C)mments at 35; OIC C)mments at 31; DISH Reply at 11; WCB Letter 12/10/10, Attach. at 131–55, J)n Peha, The Benefits and Risks ,f Mandating Netw,rk Neutrality, and the Quest f,r a Balanced P,licy, 1 INTER. J. OF COMM. 644, 653 (2007). Cf. WCB Letter 12/10/10, Attach. at 89–114, Raym)nd J. Deneckere & R. Prest)n McAfee, Damaged G,,ds, 5 J. OF ECON. & MGMT.STRATEGY 149 (Summer 1996) (sellers may find it pr)fitable t) degrade the quality )f their l)west tier )f service); Netflix PN C)mments at 3 (“The C)mmissi)n sh)uld ensure that specialized services d) n)t unreas)nably er)de capacity dev)ted t) br)adband Internet access services.”).84 See, e.g., CDT C)mments at 28–29; Free Press C)mments at 4, 22, 29–30, 37–43, 143–44; G))gle C)mments at 35–36; OIC C)mments at 31, 46; PIC C)mments at 29–30; Free Press Reply at 38; IPI Reply at 16; Letter fr)m Matthew F. W))d et al., Public Interest C)mmenters, t) Marlene D)rtch, Secretary, FCC, GN D)cket N). 09-51, 09-191, WC D)cket N). 07-52 at 3 (filed Aug. 6, 2010); Letter fr)m S. Derek Turner, Free Press, t) Chairman Genach)wski et al., FCC, GN D)cket N). 09-191, WC D)cket N). 07-52 at 4–5 (filed Aug. 3, 2010); WCB Letter 12/10/10, Attach. at 63–88, Jay Pil Ch)i & Byung-Che)l Kim, Net Neutrality and Investment Incentives, 41 RAND J. OF ECON. 446, 464–65 (Autumn 2010) (br)adband pr)viders have an incentive t) limit capacity expansi)n in )rder t) charge a greater premium f)r pri)rity service, th)ugh )ther fact)rs may als) affect investment incentives).


19

)f devel)pers t) create generally usable applicati)ns with)ut having t) design t) particular br)adband pr)viders’ unique practices )r business arrangements.85

31. All )f the ab)ve c)ncerns are exacerbated by br)adband pr)viders’ ability t) make fine-grained distincti)ns in their handling )f netw)rk traffic as a result )f increasingly s)phisticated netw)rk management t))ls. Such t))ls may be used f)r beneficial purp)ses, but they als) increase br)adband pr)viders’ ability t) act )n incentives t) engage in netw)rk practices that w)uld er)de Internet )penness.86

32. Alth)ugh these threats t) Internet-enabled inn)vati)n, gr)wth, and c)mpetiti)n d) n)t depend up)n br)adband pr)viders having market p)wer with respect t) end users,87 m)st w)uld be exacerbated by such market p)wer. A br)adband pr)vider’s incentive t) fav)r affiliated c)ntent )r the c)ntent )f unaffiliated firms that pay f)r it t) d) s), its incentive t) bl)ck )r degrade traffic )r charge edge pr)viders f)r access t) end users, and its incentive t) squeeze n)n-pri)ritized transmissi)n will all be greater if end users are less able t) resp)nd by switching t) rival br)adband pr)viders. The risk )f market p)wer is highest in markets with few c)mpetit)rs, and m)st residential end users t)day have )nly )ne )r tw) ch)ices f)r wireline br)adband Internet access service.88 As )f December 2009, nearly 70 percent )f h)useh)lds lived in census tracts where )nly )ne )r tw) wireline )r fixed wireless firms pr)vided advertised d)wnl)ad speeds )f at least 3 Mbps and upl)ad speeds )f at least 768 Kbps89—the cl)sest )bservable benchmark t) the minimum d)wnl)ad speed )f 4 Mbps and upl)ad speed )f 1 Mbps that the C)mmissi)n has used t) assess br)adband depl)yment.90 Ab)ut 20 percent )f h)useh)lds are in census tracts with )nly )ne pr)vider advertising at least 3 Mbps d)wn and 768 Kbps up.91 F)r Internet service with advertised d)wnl)ad speeds )f at least 10 Mbps d)wn and upl)ad

85 See OIC C)mments at 24; Free Press C)mments at 45. The transparency and reas)nable netw)rk management guidelines we ad)pt t)day, in particular, sh)uld reduce the likelih))d )f such fragmentati)n )f the Internet.86 See CCIA/CEA C)mments at 4; Free Press C)mments at 29–30, 143–46; G))gle C)mments at 32–34; Netflix C)mments at 3; OIC C)mments at 14, 79–82; DISH Reply at 8–9; IPI Reply at 9; V)nage Reply at 5. F)r examples )f netw)rk management t))ls, see, f)r example, WCB Letter 12/10/10, Attach. at 1–8, All)t Service Gateway, Pushing the DPI Envel)pe: An Intr)ducti)n, at 2 (June 2007), available atwww.sys)b.c)m/d)wnl)ad/All)tServiceGateway.pdf (“Reduce the perf)rmance )f applicati)ns with negative influence )n revenues (e.g. c)mpetitive V)IP services).”); WCB Letter 12/13/10, Attach. at 289–90, Pr)cera Netw)rks, PLR, www.pr)ceranetw)rks.c)m/cust)mpr)perties/tag/Pr)ducts-PLR.html; WCB Letter 12/13/10, Attach. at 283–88, Cisc), www.cisc).c)m/en/US/pr)d/c)llateral/ps7045/ps6129/ps6133/ps6150/pr)d_br)chure0900aecd8025258e.pdf (marketing the ability )f equipment t) identify V)IP, vide), and )ther traffic types). Vend)rs market their )fferings as enabling br)adband pr)viders t) “make )nly m)dest incremental infrastructure investments and t) c)ntr)l )perating c)sts.” WCB Letter 12/13/10, Attach. at 283, Cisc).87 See supra paras. 24-26. Because br)adband pr)viders have the ability t) act as gatekeepers even in the absence )f market p)wer with respect t) end users, we need n)t c)nduct a market p)wer analysis.88 See, e.g., FCC Internet Status Rep)rt at 49, tbl. 24; Nati)nal Br)adband Plan at 37; G))gle C)mments at 19–20; IFTA C)mments at 10–11; Netflix C)mments at 5; V)nage C)mments at 7–8; Br)adband Institute )f Calif)rnia (BBIC) Reply at 21; G))gle Reply at 3–7; IPI Reply at 14; OIC Reply at 14–15.89 See FCC Internet Status Rep)rt at 7, fig. 3(a). A br)adband pr)vider’s presence in a census tract d)es n)t mean it )ffers service t) all p)tential cust)mers within that tract. And the data reflect subscripti)ns, n)t netw)rk capability.90 Sixth Br,adband Depl,yment Rep,rt, 25 FCC Rcd at 9559, 9570, paras. 5, 21 (2010).91 See FCC Internet Status Rep)rt at 7, fig. 3(a).


20

speeds )f at least 1.5 Mbps up, nearly 60 percent )f h)useh)lds lived in census tracts served by )nly )ne wireline )r fixed wireless br)adband pr)vider, while nearly 80 percent lived in census tracts served by n) m)re than tw) wireline )r fixed wireless br)adband pr)viders.92

33. Including m)bile br)adband pr)viders d)es n)t appreciably change these numbers.93 The r)ll-)ut )f next generati)n m)bile services is at an early stage, and the future )f c)mpetiti)n in residential br)adband is unclear.94 The rec)rd d)es n)t enable us t) make a predictive judgment that the future will be m)re c)mpetitive than the past. Alth)ugh wireless pr)viders are increasingly )ffering faster br)adband services,95 we d) n)t kn)w, f)r example, h)w end users will value the trade-)ffs between the benefits )f wireless service (e.g., m)bility) and the benefits )f fixed wireline service (e.g., higher d)wnl)ad and upl)ad speeds).96 We n)te that the tw) largest m)bile br)adband pr)viders als) )ffer wireline )r fixed service;97 this c)uld dampen their incentive t) c)mpete aggressively with wireline ()r fixed) services.98

34. In additi)n, cust)mers may incur significant c)sts in switching br)adband pr)viders99 because )f early terminati)n fees;100 the inc)nvenience )f )rdering, installati)n, and

92 Id.93 In December 2009, nearly 60% )f h)useh)lds lived in census tracts where n) m)re than tw) br)adband pr)viders )ffered service with 3 Mbps d)wn and 768 Kbps up, while n) m)bile br)adband pr)viders )ffered service with 10 Mbps d)wn and 1.5 Mbps up. Id. at 8, fig. 3(b). M)bile br)adband pr)viders generally have )ffered bandwidths l)wer than th)se available fr)m fixed pr)viders. See Y)ttabyte at 13–14. 94 See Nati)nal Br)adband Plan at 40–42. A number )f c)mmenters discuss impediments t) increased c)mpetiti)n. See, e.g., Ad H)c C)mments at 9; G))gle C)mments, at 18–22; IFTA C)mments at 10–11; see als, WCB Letter 12/10/10, Attach. at 9–16, Th)mas M)nath et al., Ec,n,mics ,f Fixed Br,adband Netw,rk Strategies, 41 IEEE COMM. MAG. 132, 132–39 (Sept. 2003).95 Nati)nal Ass)ciati)n )f Telec)mmunicati)ns Office & Advis)rs (NATOA) C)mments, Attach. 5, Andrew Afflerback & Matthew DeHaven, A Technical Strategy f,r Ev,luti,n, at 31 (Jan. 13, 2010); Qualc)mm C)mments at 7.96 See supra n)te 93; Ad H)c C)mments at 9; G))gle C)mments at 21; V)nage C)mments at 8; IPI Reply at 14; WCB Letter 12/10/10, Attach. at 56–65, Vikram Chandrasekhar & Jeffrey G. Andrews, Femt,cell Netw,rks: A Survey, 46 IEEE COMM. MAG., Sept. 2008, 59, at 59–60 (explaining m)bile spectrum al)ne cann)t c)mpete with wireless c)nnecti)ns t) fixed netw)rks). We als) d) n)t kn)w h)w )ffers by a single wireless br)adband pr)vider f)r b)th fixed and m)bile br)adband services will perf)rm in the marketplace.97 See OIC C)mments at 71–72. Large cable c)mpanies that pr)vide fixed br)adband als) have substantial )wnership interests in Clear, the 4G wireless venture in which Sprint has a maj)rity )wnership interest. 98 OIC C)mments at 71–72; Skype C)mments at 10. In cellular teleph)ny, multimarket c)nduct has been f)und t) dampen c)mpetiti)n. See WCB Letter 12/10/10, Attach. at 1–24, P.M. Parker and L.H. Röller, C,llusive c,nduct in du,p,lies: Multimarket c,ntact and cr,ss ,wnership in the m,bile teleph,ne industry, 28 RAND J. OF ECON. 304, 304–322 (Summer 1997); WCB Letter 12/10/10, Attach. at 25–58, Meghan R. Busse, Multimarket c,ntact and price c,,rdinati,n in the cellular teleph,ne industry, 9 J. OF ECON. &MGMT. STRATEGY 287, 287–320 (Fall 2000). M)re)ver, s)me fixed br)adband pr)viders als) pr)vide necessary inputs t) s)me m)bile pr)viders’ )fferings, such as backhaul transp)rt t) wireline facilities.99 ARL et al. C)mments at 5; G))gle C)mments at 21–22; Netflix C)mments at 5; New Jersey Rate C)unsel (NJRC) C)mments at 17; OIC C)mments at 40, 73; PIC C)mments at 23; Skype C)mments at 12; OIC Reply at 20–21; Paul Misener (Amaz)n.c)m) C)mments at 2; see als, WCB Letter 12/10/10, Attach. at 59–76, Patrick _avier & Dimitri Ypsilanti, Switching C,sts and C,nsumer Behavi,r: Implicati,ns f,r Telec,mmunicati,ns Regulati,n, 10(4) INFO 2008, 13, 13–29 (2008). Churn is a functi)n )f many fact)rs. See, e.g., WCB Letter 12/10/10, Attach. at 1–53, 97–153, AT&T C)mments, WT D)cket N). 10-133, at 51

(c)ntinued....)


21

set-up, and ass)ciated dep)sits )r fees;101 p)ssible difficulty returning the earlier br)adband pr)vider’s equipment and the c)st )f replacing inc)mpatible cust)mer-)wned equipment;102 the risk )f temp)rarily l)sing service; the risk )f pr)blems learning h)w t) use the new service; and the p)ssible l)ss )f a pr)vider-specific email address )r website.103

C. Br(adband Pr(viders Have Acted t( Limit Openness35. These dangers t) Internet )penness are n)t speculative )r merely the)retical.

C)nduct )f this type has already c)me bef)re the C)mmissi)n in enf)rcement pr)ceedings. As early as 2005, a br)adband pr)vider that was a subsidiary )f a teleph)ne c)mpany paid $15,000 t) settle a C)mmissi)n investigati)n int) whether it had bl)cked Internet p)rts used f)r c)mpetitive V)IP applicati)ns.104 In 2008, the C)mmissi)n f)und that C)mcast disrupted certain peer-t)-peer (P2P) upl)ads )f its subscribers, with)ut a reas)nable netw)rk management justificati)n and with)ut discl)sing its acti)ns.105 C)mparable practices have been )bserved in the pr)visi)n )f m)bile br)adband services. After entering int) a c)ntract with a c)mpany t) handle )nline payment services, a m)bile wireless pr)vider allegedly bl)cked cust)mers’ attempts t) use c)mpeting services t) make purchases using their m)bile ph)nes.106 A nati)nwide m)bile pr)vider restricted the types )f lawful applicati)ns that c)uld be accessed )ver its 3G m)bile wireless netw)rk.107

(...c)ntinued fr)m previ)us page)(Aug. 2, 2010). The evidence in the rec)rd, e.g., AT&T C)mments at 83, is n)t pr)bative as t) the extent )f c)mpetiti)n am)ng br)adband pr)viders because it d)es n)t appr)priately is)late a c)nnecti)n between churn levels and the extent )f c)mpetiti)n.100 G))gle C)mments at 21–22. Of br)adband end users with a ch)ice )f br)adband pr)viders, 32% said paying terminati)n fees t) their current pr)vider was a maj)r reas)n why they have n)t switched service. FCC, BROADBAND DECISION: WHAT DRIVES CONSUMERS TO SWITCH—OR STICK WITH—THEIR

BROADBAND INTERNET PROVIDER 8 (Dec. 2010) (FCC Internet Survey), available athraunf)ss.fcc.g)v/ed)cs_public/attachmatch/DOC-303264A1.pdf.101 G))gle C)mments at 22; NJRC C)mments at 17. 102 NJRC C)mments at 17.103 See FCC Internet Survey at 7 (finding that 34% )f br)adband end users with a ch)ice )f pr)viders said giving up their current email address was a maj)r reas)n f)r n)t changing service); G))gle C)mments at 22; NJRC C)mments at 17. 104 See Madis,n River C,mmunicati,ns, LLC and affiliated c,mpanies, File N). EB-05-IH-0110; Acct. N).; FRN: 0004334082, C)nsent Decree, 20 FCC Rcd 4295 (EB 2005) (Madis,n River C,nsent Decree).105 C,mcast Netw,rk Management Practices Order, 23 FCC Rcd 13028, 13028, 13055–56, paras. 1, 47–48 (2008) (C,mcast Order); see als, WCB Letter 12/13/10, Attach. at 1–15, C)mcast C)rp)rati)n, Descripti)n )f Current Netw)rk Management Practices, d)wnl)ads.c)mcast.net/d)cs/Attachment_A_Current_Practices.pdf.106 ACLU PN C)mments at 8.107 See, e.g., Letter fr)m James W. Cicc)ni, AT&T Services, Inc., t) Ruth Milkman, Chief, Wireless Telec)mmunicati)ns Bureau, FCC, RM-11361, RM-11497 at 6–9 (filed Aug. 21, 2009) (“AT&T indicated t) Apple that it d)es n)t )bject t) Apple enabling V)IP applicati)ns f)r the iPh)ne that use Wi-Fi c)nnectivity . . . rather than AT&T’s 2G )r 3G wireless data services”); Sling C)mments at 4–11; DISH PN Reply at 7 (“In reality, it t))k nine m)nths )f regulat)ry scrutiny and pressure fr)m the public and DISH f)r AT&T t) ‘w)rk with’ DISH s) that AT&T subscribers c)uld access their Slingb)x )fferings )ver the wireless netw)rk. Other third-party applicati)n pr)viders have experienced similar restricti)ns. V)IP

(c)ntinued....)


22

36. There have been additi)nal allegati)ns )f bl)cking, sl)wing, )r degrading P2P traffic. We d) n)t determine in this Order whether any )f these practices vi)lated )pen Internet principles, but we n)te that they have raised c)ncerns am)ng edge pr)viders and end users, particularly regarding lack )f transparency. F)r example, in May 2008 a maj)r cable br)adband pr)vider ackn)wledged that it had managed the traffic )f P2P services.108 In July 2009, an)ther cable br)adband pr)vider entered int) a class acti)n settlement agreement stating that it had “ceased P2P Netw)rk Management Practices,”109 but all)wing the pr)vider t) resume thr)ttling P2P traffic.110 There is evidence that )ther br)adband pr)viders have engaged in similar degradati)n.111 In additi)n, br)adband pr)viders’ terms )f service c)mm)nly reserve t) the pr)vider sweeping rights t) bl)ck, degrade, )r fav)r traffic.112 F)r example, )ne maj)r cable pr)vider reserves the right t) engage, “with)ut limitati)n,” in “p)rt bl)cking, . . . traffic pri)ritizati)n and pr)t)c)l filtering.”113 Further, a maj)r m)bile br)adband pr)vider pr)hibits use )f its wireless service f)r “d)wnl)ading m)vies using peer-t)-peer file sharing services” and V)IP applicati)ns.114 And a cable m)dem manufacturer recently filed a f)rmal c)mplaint with the C)mmissi)n alleging that a maj)r br)adband Internet access service pr)vider has vi)lated )pen Internet principles thr)ugh )verly restrictive device appr)val pr)cedures.115

37. These practices have )ccurred n)twithstanding the C)mmissi)n’s ad)pti)n )f )pen Internet principles in the Internet P,licy Statement; enf)rcement pr)ceedings against Madis)n River C)mmunicati)ns and C)mcast f)r their interference with V)IP and P2P traffic,

(...c)ntinued fr)m previ)us page))perat)rs such as Skype have faced significant difficulty in gaining access acr)ss wireless Internet c)nnecti)ns.”).108 See WCB Letter 12/10/10, Attach. at 74, Amy Schatz, C,x Ab,ut t, Feel Wrath ,f Net Neutrality Activists, WASHINGTON WIRE, May 15, 2008, bl)gs.wsj.c)m/washwire/2008/05/15/c)x-ab)ut-t)-feel-wrath-)f-net-neutrality-activists.109 Chin v. RCN C,rp., N). 08 Civ. 7349, §3.2 (S.D.N.Y. July 31, 2009) (RCN Settlement Agreement), available at www.rcn.c)m/lehigh-valley/images/pdfs/legal/02-class-acti)n-settlement-agreement.pdf.110 See RCN Settlement Agreement § 3.2. RCN denied any wr)ngd)ing, but it ackn)wledges that in )rder t) ease netw)rk c)ngesti)n, it targeted specific P2P applicati)ns. See Letter fr)m Jean L. Kidd), RCN, t) Marlene D)rtch, Secretary, FCC, GN D)cket N). 09-191, WC D)cket N). 07-52, at 2–5 (filed May 7, 2010).111 A 2008 study by the Max Planck Institute revealed significant bl)cking )f BitT)rrent applicati)ns in the United States. C)mcast and C)x were b)th cited as examples )f pr)viders bl)cking traffic. See generally WCB Letter 12/10/10, Attach. at 75–80, MARCEL DISCHINGER ET AL., MA_ PLANCK INSTITUTE, DETECTING

BITTORRENT BLOCKING (2008), available at br)adband.mpi-sws.)rg/transparency/results/08_imc_bl)cking.pdf; see als, WCB Letter 12/13/10, Attach. at 235–39, Max Planck Institute f)r S)ftware Systems, Glasn)st: Results fr)m Tests f)r BitT)rrent Traffic Bl)cking, br)adband.mpi-sws.)rg/transparency/results; WCB Letter 12/13/10, Attach. at 298–315, CHRISTIAN

KREIBICH ET AL., NETALYZR: ILLUMINATING EDGE NETWORK NEUTRALITY, SECURITY, AND PERFORMANCE15 (2010), available at www.icsi.berkeley.edu/pubs/techrep)rts/TR-10-006.pdf.112 See generally Sand)val Reply at 43–54.113 WCB Letter 12/10/10, Attach. at 81–92, C)x C)mmunicati)ns, C)x High-Speed Internet Acceptable Use P)licy, ww2.c)x.c)m/ab)utus/p)licies.c)x.114 WCB Letter 12/10/10, Attach. at 30–34, Metr)PCS, Metr)WEB Terms )f Use, www.metr)pcs.c)m/pr)ducts/metr)web/terms_)f_use.aspx.115 See Z,,m Teleph,nics, Inc. v. C,mcast Cable C,mmunicati,ns, LLC, C)mplaint (N)v. 29, 2010).


23

respectively;116 C)mmissi)n )rders that required certain br)adband pr)viders t) adhere t) )pen Internet )bligati)ns;117 l)ngstanding n)rms )f Internet )penness; and statements by maj)r br)adband pr)viders that they supp)rt and are abiding by )pen Internet principles.118

D. The Benefits (f Pr(tecting the Internet’s Openness Exceed the C(sts

38. Widespread interference with the Internet’s )penness w)uld likely sl)w )r even break the virtu)us cycle )f inn)vati)n that the Internet enables, and w)uld likely cause harms that may be irreversible )r very c)stly t) und).119 F)r example, edge pr)viders c)uld make investments in reliance up)n exclusive preferential arrangements with br)adband pr)viders, and netw)rk management techn)l)gies may n)t be easy t) change.120 If the next rev)luti)nary techn)l)gy )r business is n)t devel)ped because br)adband pr)vider practices chill entry and inn)vati)n by edge pr)viders, the missed )pp)rtunity may be significant,121 and l)st inn)vati)n, investment, and c)mpetiti)n may be imp)ssible t) rest)re after the fact.122 M)re)ver, because )f the Internet’s r)le as a general purp)se techn)l)gy, er)si)n )f Internet )penness threatens t) harm inn)vati)n, investment in the c)re and at the edge )f the netw)rk, and c)mpetiti)n in many sect)rs, with a dispr)p)rti)nate effect )n small, entering, and n)n-c)mmercial edge pr)viders that drive much )f the inn)vati)n )n the Internet.123 Alth)ugh harmful practices are n)t certain t)

116 See supra para. 35.117 See supra n)te 3.118 See, e.g., Qwest PN C)mments at 2 (“Qwest and virtually all maj)r br)adband pr)viders have supp)rted the FCC Internet P)licy Principles and v)luntarily abide by th)se principles as g))d p)licy.”); Letter fr)m Kyle E. McSlarr)w, NCTA et al. t) Julius Genach)wski, Chairman, FCC et al. at 1–2 n.4 (dated Apr. 29, 2010) attached t, Letter fr)m R)bert W. Quinn, Jr., AT&T, t) Marlene D)rtch, Secretary, FCC at Attach A. (filed April 30, 2010), (“AT&T made a c)mmitment t) abide by the FCC’s Open Internet Principles when they were first f)rmulated in 2005 and we will c)ntinue t) d) s).”); see als, CenturyLink C)mments at 15; TIA C)mments at ii, 3, 20–22; C)mcast Reply at ii; Qwest Reply at 2–3; Shane Greenstein N)tice )f Ex Parte, GN D)cket N). 09-191, Transacti,n C,st, Transparency, and Inn,vati,n f,r the Internet at 13, available at www.)peninternet.g)v/w)rksh)ps/inn)vati)n-investment-and-the-)pen-internet.htm.119 See CDT Reply at 6 (“Unraveling a web )f discriminat)ry deals after significant investments have been made and business plans built w)uld be a difficult and c)mplicated undertaking b)th l)gistically and p)litically.”); see als, G))gle C)mments at 29–36.120 As )ne example, C)mcast’s transiti)n t) a pr)t)c)l-agn)stic netw)rk management practice t))k alm)st nine m)nths t) c)mplete. See Letter fr)m Kathryn A. Zachem, V.P., Regulat)ry Affairs, C)mcast C)rp., t) Marlene D)rtch, Secretary, FCC, WC D)cket N). 07-52 at 2 (filed July 10, 2008); Letter fr)m Kathryn A. Zachem, V.P., Regulat)ry Affairs, C)mcast C)rp., t) Marlene D)rtch, Secretary, FCC, WC D)cket N). 07-52 at Attach. B at 3, 9 (filed Sept. 19, 2008) (n)ting that the transiti)n required “lab tests, technical trials, cust)mer feedback, vend)r evaluati)ns, and a third-party c)nsulting analysis,” as well as trials in five markets).121 See CDT C)mments at 6; V)nage C)mments at 18.122 See CDT C)mments at 6; V)nage Reply at 5; cf. United States v. Micr,s,ft C,rp., 253 F.3d 34, 79 (D.C. Cir. 2001) (c)urt “may infer causati)n where exclusi)nary c)nduct is aimed at pr)ducers )f nascent c)mpetitive techn)l)gies,” n)twithstanding uncertainty )f pr))f). 123 See, e.g., ALA C)mments at 2; IFTA C)mments at 14. Even s)me wh) generally )pp)se )pen Internet rules agree that extracting access fees fr)m entities that pr)duce c)ntent )r services with)ut the anticipati)n )f financial reward w)uld have significant adverse effects. See WCB Letter 12/10/10, Attach. at 35–80, C. Sc)tt Hemphill, Netw,rk Neutrality and the False Pr,mise ,f Zer,-Price Regulati,n, 25 YALE J. ON REG.135, 161–62 (2008) (“[S])cial pr)ducti)n has distinctive features that make it unusually valuable, but als)

(c)ntinued....)


24

bec)me widespread, there are p)werful reas)ns f)r immediate c)ncern, as br)adband pr)viders have interfered with the )pen Internet in the past and have incentives and an increasing ability t) d) s) in the future. Effective )pen Internet rules can prevent )r reduce the risk )f these harms, while helping t) assure Americans unfettered access t) diverse s)urces )f news, inf)rmati)n, and entertainment, as well as an array )f techn)l)gies and devices that enhance health, educati)n, and the envir)nment.

39. By c)mparis)n t) the benefits )f these pr)phylactic measures, the c)sts ass)ciated with the )pen Internet rules ad)pted here are likely small.124 Br)adband pr)viders generally end)rse )penness n)rms—including the transparency and n) bl)cking principles—as beneficial and in line with current and planned business practices (th)ugh they d) n)t unif)rmly supp)rt rules making them enf)rceable).125 Even t) the extent rules require s)me additi)nal discl)sure )f br)adband pr)viders’ practices, the c)sts )f c)mpliance sh)uld be m)dest.126 In additi)n, the high-level rules we ad)pt carefully balance preserving the )pen Internet against av)iding unduly burdens)me regulati)n. Our rules against bl)cking and unreas)nable discriminati)n are subject t) reas)nable netw)rk management, and )ur rules d) n)t prevent br)adband pr)viders fr)m )ffering specialized services such as facilities-based V)IP.127 In sh)rt, rules that reinf)rce the )penness that has supp)rted the gr)wth )f the Internet, and d) n)t substantially change this highly successful status qu), sh)uld n)t entail significant c)mpliance c)sts.

40. S)me c)mmenters c)ntend that )pen Internet rules are likely t) reduce investment in br)adband depl)yment.128 We disagree. There is n) evidence that pri)r )pen Internet )bligati)ns have disc)uraged investment;129 and numer)us c)mmenters explain that, by

(...c)ntinued fr)m previ)us page)unusually vulnerable, t) a particular f)rm )f exclusi)n. That mechanism )f exclusi)n is n)t subject t) the pr)hibiti)ns )f antitrust law, m)re)ver, presenting a relatively str)nger argument f)r regulati)n.”), cited inPr)f. Tim Wu C)mments at 9 n.22.124 See Free Press C)mments at 76.125 See supra para. 11; infra n)te 137. We n)te that many br)adband pr)viders are, )r s))n will be, subject t) )pen Internet requirements in c)nnecti)n with grants under the Br)adband Techn)l)gy Opp)rtunities Pr)gram (BTOP). The American Rec)very and Reinvestment Act )f 2009 required that n)ndiscriminati)n and netw)rk interc)nnecti)n )bligati)ns be “c)ntractual c)nditi)ns” )f all BTOP grants. Pub. L. N). 111-5, § 6001(j), 123 Stat. 115 (c)dified at 47 U.S.C. § 1305). These n)ndiscriminati)n and interc)nnecti)n c)nditi)ns require BTOP grantees, am)ng )ther things, t) adhere t) the principles in the Internet P,licy Statement; t) display any netw)rk management p)licies in a pr)minent l)cati)n )n the service pr)vider's website; and t) )ffer interc)nnecti)n where technically feasible.126 See infra para. 57.127 See infra Part III.G.128 See, e.g., TWC C)mments at 33; Veriz)n Reply at 42–43. 129 See, e.g., Free Press C)mments at 4, 23–25; G))gle C)mments at 38–39; _O C)mments at 12. In making pri)r investment decisi)ns, br)adband pr)viders c)uld n)t have reas)nably assumed that the C)mmissi)n w)uld abstain fr)m regulating in this area, as the C)mmissi)n’s decisi)ns classifying cable m)dem service and wireline br)adband Internet access service as inf)rmati)n services included n)tices )f pr)p)sed rulemaking seeking c)mment )n whether the C)mmissi)n sh)uld ad)pt rules t) pr)tect c)nsumers. See Appr,priate Framew,rk f,r Br,adband Access t, the Internet Over Wireline Facilities et al., Rep)rt and Order and NPRM, 20 FCC Rcd 14853, 14929–35, paras. 146–59 (2005); Inquiry C,ncerning High-Speed Access t, the Internet Over Cable & Other Facilities et al., Declarat)ry Ruling and NPRM, 17 FCC Rcd 4798, 4839–48, paras. 72–95 (2002) (seeking c)mment )n whether the

(c)ntinued....)


25

preserving the virtu)us circle )f inn)vati)n, )pen Internet rules will increase incentives t) invest in br)adband infrastructure.130 M)re)ver, if permitted t) deny access, )r charge edge pr)viders f)r pri)ritized access t) end users, br)adband pr)viders may have incentives t) all)w c)ngesti)n rather than invest in expanding netw)rk capacity.131 And as described in Part III, bel)w, )ur rules all)w br)adband pr)viders sufficient flexibility t) address legitimate c)ngesti)n c)ncerns and )ther netw)rk management c)nsiderati)ns. N)r is there any persuasive reas)n t) believe that in the absence )f )pen Internet rules br)adband pr)viders w)uld l)wer charges t) br)adband end users,132 )r )therwise change their practices in ways that benefit inn)vati)n, investment, c)mpetiti)n, )r end users.133

41. The magnitude and character )f the risks we identify make it appr)priate t) ad)pt pr)phylactic rules n)w t) preserve the )penness )f the Internet, rather than waiting f)r substantial, pervasive, and p)tentially irreversible harms t) )ccur bef)re taking any acti)n.134 The Supreme C)urt has rec)gnized that even if the C)mmissi)n cann)t “predict with certainty” the future c)urse )f a regulated market, it may “plan in advance )f f)reseeable events, instead )f waiting t) react t) them.”135 M)re)ver, as the C)mmissi)n f)und in an)ther c)ntext, “[e]xclusive reliance )n a series )f individual c)mplaints,” with)ut underlying rules, “w)uld prevent the C)mmissi)n fr)m )btaining a clear picture )f the ev)lving structure )f the entire market, and addressing c)mpetitive c)ncerns as they arise. . . . Theref)re, if the C)mmissi)n exclusively relied )n individual c)mplaints, it w)uld )nly bec)me aware )f specific . . . pr)blems if and when the individual c)mplainant’s interests c)incided with th)se )f the interest )f the )verall ‘public.’”136

42. Finally, we n)te that there is currently significant uncertainty regarding the future enf)rcement )f )pen Internet principles and what c)nstitutes appr)priate netw)rk management, particularly in the wake )f the c)urt )f appeals’ vacatur )f the C,mcast Netw,rk Management

(...c)ntinued fr)m previ)us page)C)mmissi)n sh)uld require cable )perat)rs t) give unaffiliated ISPs access t) br)adband cable netw)rks); see als, AT&T C)mments at 8 (“[T]he existing principles already address any bl)cking )r degradati)n )f traffic and thus eliminate any the)retical leverage pr)viders may have t) imp)se [unilateral ‘t)lls’].”).130 See, e.g., CCIA/CEA C)mments at 7 (“[C])difying an )pen Internet access regime is the best s)luti)n f)r guiding existing market f)rces in a manner that enc)urages investment, inn)vati)n, and subscripti)n.”); Clearwire C)mments at 7 (“Openness is n)t merely an imp)rtant p)licy issue, it is g))d business practice.”); Free Press C)mments at 77; G))gle C)mments at 5–8, 37–39; PAETEC C)mments at 21–22; _O C)mments at 3–5 (ad)pti)n )f the pr)p)sed rules will increase _O’s incentive “t) invest further in its br)adband facilities”); CDT Reply at 9; SONY Reply at 5–6; _O Reply at 6 & n.13. 131 See supra para. 29. 132 See supra para. 28.133 See, e.g., IPI C)mments at 11 (“[A]ll)wing ISPs t) price discriminate d)es n)t ensure that ISPs will take the additi)nal revenue and reinvest it back in the Internet infrastructure.”). 134 See Star Wireless, LLC v. FCC, 522 F.3d 469, 475 (D.C. Cir. 2008) (finding that general bright-line pr)phylactic measures, such as the anti-c)llusi)n rule pr)hibiting c)llab)rating with c)mpeting applicants f)r licenses, are appr)priate when “the pr)bability )f abuse in transacti)ns between related )rganizati)ns is significant en)ugh that it is m)re efficient t) prevent the )pp)rtunity f)r abuse fr)m arising than it is t) try t) detect actual incidents )f abuse”); see als, IPI Reply at 9; V)nage Reply at ii.135 United States v. Sw. Cable C,., 392 U.S. 157, 176–77 (1968) (Sw. Cable).136 Telec,mms., Inc. and Liberty Media C,rp., Applicati)ns f)r C)nsent t) Transfer C)ntr)l )f Radi) Licenses, 9 FCC Rcd 4783, 4783 para. 21 (Cab. Bur. 1994).


26

Practices Order. A number )f c)mmenters, including leading br)adband pr)viders, rec)gnize the benefits )f greater predictability regarding )pen Internet pr)tecti)ns.137 Br)adband pr)viders benefit fr)m increased certainty that they can reas)nably manage their netw)rks and inn)vate with respect t) netw)rk techn)l)gies and business m)dels.138 F)r th)se wh) c)mmunicate and inn)vate )n the Internet,139 and f)r invest)rs in edge techn)l)gies,140 there is great value in having c)nfidence that the Internet will remain )pen, and that there will be a f)rum available t) bring

137 F)r example, AT&T has rec)gnized that )pen Internet rules “w)uld reduce regulat)ry uncertainty, and sh)uld enc)urage investment and inn)vati)n in next generati)n br)adband services and techn)l)gies.” SeeWCB Letter 12/10/10, Attach. at 94, AT&T Statement ,n Pr,p,sed FCC Rules t, Preserve an Open Internet, AT&T PUBLIC POLICY BLOG, Dec. 1, 2010, attpublicp)licy.c)m/g)vernment-p)licy/att-statement-)n-pr)p)sed-fcc-rules-t)-preserve-an-)pen-internet. Similarly, C)mcast ackn)wledged that )ur pr)p)sed rules w)uld strike “a w)rkable balance between the needs )f the marketplace and the certainty that carefully-crafted and limited rules can pr)vide t) ensure that Internet freed)m and )penness are preserved.” See David L. C)hen, FCC Pr,p,ses Rules t, Preserve an Open Internet, COMCASTVOICES, Dec. 1, 2010, bl)g.c)mcast.c)m/2010/12/fcc-pr)p)ses-rules-t)-preserve-an-)pen-internet.html; see als,, e.g., Final Brief f)r Interven)rs NCTA and NBC Universal, Inc. at 11–13; 19–22, C,mcast C,rp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010) (N). 08-1291). In additi)n t) br)adband pr)viders, an array )f industry leaders, venture capitalists, and public interest gr)ups have c)ncluded that )ur rules will pr)m)te investment in the Internet ec)system by rem)ving regulat)ry uncertainty. See Free Press C)mments at 10; G))gle C)mments at 40; PIC C)mments at 28; WCB Letter 12/10/10, Attach. at 91 (statement )f CALinn)vates.)rg), 96 (statement )f Larry C)hen, president )f the C)mmunicati)ns W)rkers )f America), 98 (statement )f R)n C)nway, f)under )f SV Angel), 99 (statement )f Craig Newmark, f)under )f craigslist), 105 (statement )f Dean Garfield, president and CEO )f the Inf)rmati)n Techn)l)gy Industry C)uncil), 111 (Dec. 8, 2010 letter fr)m Jeremy Liew, Managing Direct)r, Lightspeed Venture Partners t) Julius Genach)wski, FCC Chairman), 112 (Dec. 1, 2010 letter fr)m Jed Katz, Managing Direct)r, Javelin Venture Partners t) Julius Genach)wski, FCC Chairman), 127 (statement )f Gary Shapir), president and CEO )f the C)nsumer Electr)nics Ass)ciati)n), 128 (statement )f Ram Shriram, f)under )f Sherpal) Ventures), 132 (statements )f Rey Ramsey, President and CEO )f TechNet, and J)hn Chambers, Chairman and CEO )f Cisc)), 133 (statement )f J)hn D)err, Kleiner Perkins Caufield & Byers); _O Reply at 6.138 See, e.g., CCIA C)mments at 7–8; G))gle C)mments at 37; OIC C)mments at 34, 40; Skype C)mments at 4–5, 12; V)nage C)mments at 5–6; _O C)mments at 4, 12, 14–15; PAETEC C)mments at 8, 22–24; DISH Reply at 14; _O Reply at 5–6; Clearwire PN C)mments at 2. 139 See Dec. 15, 2009 W)rksh)p Tr., supra n)te 40, at 31–71, 90–91, 102–07.140 See, e.g., Uni)n Square Ventures C)mments at 1 (asserting that with)ut )pen Internet rules, “the businesses in which Uni)n Square Ventures invests c)uld be singled )ut and charged a different price f)r netw)rk access based s)lely )n the c)ntent they transmit acr)ss the netw)rk. Such practice w)uld be discriminat)ry and w)uld endanger inn)vati)n )n the Internet because it w)uld prevent small c)mpanies with little capital fr)m having equal access t) the audience )f gl)bal internet users that larger c)mpanies w)uld be capable )f accessing”); OIC C)mments App. A, Letter fr)m 28 Internet and techn)l)gy leaders t) Chairman Genach)wski (dated Oct)ber 19, 2009) (“An )pen Internet fuels a c)mpetitive and efficient marketplace, where c)nsumers make the ultimate ch)ices ab)ut which pr)ducts succeed and which fail. This all)ws businesses )f all sizes, fr)m the smallest startup t) larger c)rp)rati)ns, t) c)mpete, yielding maximum ec)n)mic gr)wth and )pp)rtunity.”); Letter fr)m 30 Venture Capitalists t) Chairman Genach)wski (dated Oct)ber 21, 2009) (“Open markets f)r Internet c)ntent will drive investment, entrepreneurship and inn)vati)n. F)r these reas)ns [)pen Internet rules are] pr)-investment, pr)-c)mpetiti)n, and pr)-c)nsumer.”); Free Press C)mments at 44–45 (asserting that the absence )f n)ndiscriminati)n pr)tecti)ns will have a large impact )n investments made in the applicati)n and c)ntent markets and that the “p)tential f)r discriminat)ry treatment and n)nstandard netw)rk management c)uld destr)y invest)r c)nfidence in the applicati)ns market, stifling gr)wth in the )ne segment that drives the inf)rmati)n ec)n)my”).


27

c)mplaints ab)ut vi)lati)ns )f )pen Internet standards.141 End users als) stand t) benefit fr)m assurances that services )n which they depend “w)n’t suddenly be pulled )ut fr)m under them, held rans)m t) extra payments either fr)m the sites )r fr)m them.”142 Pr)viding clear yet flexible rules )f the r)ad that enable the Internet t) c)ntinue t) fl)urish is the central g)al )f the acti)n we take t)day.143

III. OPEN INTERNET RULES

43. T) preserve the Internet’s )penness and br)adband pr)viders’ ability t) manage and expand their netw)rks, we ad)pt high-level rules emb)dying f)ur c)re principles: transparency, n) bl)cking, n) unreas)nable discriminati)n, and reas)nable netw)rk management. These rules are generally c)nsistent with, and sh)uld n)t require significant changes t), br)adband pr)viders’ current practices, and are als) c)nsistent with the c)mm)n understanding )f br)adband Internet access service as a service that enables )ne t) g) where )ne wants )n the Internet and c)mmunicate with any)ne else )nline.144

141 F)r this reas)n, we are n)t persuaded that alternative appr)aches, such as rules that lack a f)rmal enf)rcement mechanism, a transparency rule al)ne, )r reliance entirely )n technical advis)ry gr)ups t) res)lve disputes, w)uld adequately address the p)tential harms and be less burdens)me than the rules we ad)pt here. See, e.g., Veriz)n C)mments at 130–34. In particular, we reject the n)ti)n that C)mmissi)n acti)n is unnecessary because the Department )f Justice and the Federal Trade C)mmissi)n (FTC) “are well equipped t) cure any market ills.” Id. at 9. Our statut)ry resp)nsibilities are br)ader than preventing antitrust vi)lati)ns )r unfair c)mpetiti)n. See, e.g., News C,rp. and DIRECTV Gr,up, Inc., 23 FCC Rcd 3265, 3277–78, paras. 23–25 (2008). We must, f)r example, pr)m)te depl)yment )f advanced telec)mmunicati)ns capability, ensure that charges in c)nnecti)n with telec)mmunicati)ns services are just and reas)nable, ensure the )rderly devel)pment )f l)cal televisi)n br)adcasting, and pr)m)te the public interest thr)ugh spectrum licensing. See infra Part IV; see als, CDT C)mments at 8–9; C)mm’r J)n Lieb)witz, FTC, C,ncurring Statement ,f C,mmissi,ner J,n Leib,witz Regarding the Staff Rep,rt: “Br,adband C,nnectivity C,mpetiti,n P,licy” (2007), available atwww.ftc.g)v/speeches/leib)witz/V070000statement.pdf (“[T]here is little agreement )ver whether antitrust, with its requirements f)r ex p,st case by case analysis, is capable )f fully and in a timely fashi)n res,lvingmany )f the c)ncerns that have animated the net neutrality debate.”).142 Zittrain C)mments at 1.143 C)ntrary t) the suggesti)n )f s)me, neither the Department )f Justice n)r the FTC has c)ncluded that the br)adband market is c)mpetitive )r that )pen Internet rules are unnecessary. See McD)well Statement at *4; Baker Statement at *3. In the submissi)n in questi)n, the Department )bserved that: (1) the wireline br)adband market is highly c)ncentrated, with m)st c)nsumers served by at m)st tw) pr)viders; (2) the pr)spects f)r additi)nal wireline c)mpetiti)n are dim due t) the high fixed and sunk c)sts required t) pr)vide wireline br)adband service; and (3) the extent t) which m)bile wireless )fferings will c)mpete with wireline )fferings is unkn)wn. See DOJ Ex Parte Jan. 4, 2010, GN Dkt. N). 09-51, at 8, 10, 13-14.The Department specifically end)rsed requiring greater transparency by br)adband pr)viders, id. at 25-27, and rec)gnized that in c)ncentrated markets, like the br)adband market, it is appr)priate f)r p)licymakers t) limit “business practices that thwart inn)vati)n.” Id. at 11. Finally, alth)ugh the Department cauti)ned that care must be taken t) av)id stifling infrastructure investment, it expressed particular c)ncern ab)ut price regulati)n, which we are n)t ad)pting. Id. at 28. In 2007, the FTC issued a staff rep)rt )n br)adband c)mpetiti)n p)licy. See FTC, Br,adband C,nnectivity C,mpetiti,n P,licy (June 2007). Like the Department, the FTC staff did n)t c)nclude that the br)adband market is c)mpetitive. T) the c)ntrary, the FTC staff made clear that it had n)t studied the state )f c)mpetiti)n in any specific markets. Id. at 8, 105,156. With regard t) the merits )f )pen Internet rules, the FTC staff rep)rt recited arguments pr) and c)n, see, e.g., id. at 82, 105, 147-54, and called f)r additi)nal study, id. at 7, 9-10, 157. 144 The definiti)n )f “br)adband Internet access service” pr)p)sed in the Open Internet NPRMenc)mpassed any “Internet Pr)t)c)l data transmissi)n between an end user and the Internet.” Open

(c)ntinued....)


28

A. Sc(pe (f the Rules44. We find that )pen Internet rules sh)uld apply t) “br)adband Internet access

service,” which we define as:

A mass-market retail service by wire ,r radi, that pr,vides the capability t, transmit data t, and receive data fr,m all ,r substantially all Internet endp,ints, including any capabilities that are incidental t, and enable the ,perati,n ,f the c,mmunicati,ns service, but excluding dial-up Internet access service. This term als, enc,mpasses any service that the C,mmissi,n finds t, be pr,viding a functi,nal equivalent ,f the service described in the previ,us sentence, ,r that is used t, evade the pr,tecti,ns set f,rth in this Part.

The term “br)adband Internet access service” includes services pr)vided )ver any techn)l)gy platf)rm, including but n)t limited t) wire, terrestrial wireless (including fixed and m)bile wireless services using licensed )r unlicensed spectrum), and satellite.145

45. “Mass market” means a service marketed and s)ld )n a standardized basis t) residential cust)mers, small businesses, and )ther end-user cust)mers such as sch))ls and libraries.146 F)r purp)ses )f this definiti)n, “mass market” als) includes br)adband Internet access services purchased with the supp)rt )f the E-rate pr)gram that may be cust)mized )r individually neg)tiated. The term d)es n)t include enterprise service )fferings, which are typically )ffered t) larger )rganizati)ns thr)ugh cust)mized )r individually neg)tiated arrangements.147

46. “Br)adband Internet access service” enc)mpasses services that “pr)vide the capability t) transmit data t) and receive data fr)m all )r substantially all Internet endp)ints.” T)

(...c)ntinued fr)m previ)us page)Internet NPRM, 24 FCC Rcd at 13128, App. A. S)me c)mmenters argued that this definiti)n w)uld c)ver a variety )f services that d) n)t c)nstitute br)adband Internet access service as end users and br)adband pr)viders generally understand that term, but that merely )ffer data transmissi)n between a discrete set )f Internet endp)ints (f)r example, virtual private netw)rks, )r vide)c)nferencing services). See, e.g., AT&T C)mments at 96–100; C)mmunicati)ns W)rkers )f America (CWA) C)mments at 10–12; Sprint Reply at 16–17; see als, CDT C)mments at 49–50 (distinguishing managed ()r specialized) services fr)m br)adband Internet access service by defining the f)rmer, in part, as data transmissi)n “between an end user and a limited gr)up )f parties )r endp)ints”) (emphasis added).145 In the Open Internet NPRM, we pr)p)sed separate definiti)ns )f the terms “br)adband Internet access,” and “br)adband Internet access service.” Open Internet NPRM, 24 FCC Rcd at 13128, App. A § 8.3. F)r purp)ses )f these rules, we find it simpler t) define just the service.146 See, e.g., SBC C,mmc’ns Inc. and AT&T C,rp. Applicati,ns f,r Appr,val ,f Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 20 FCC Rcd 18290, 18335, para. 82 n.243 (2005) (“The C)mmissi)n has defined mass market cust)mers as residential and small business cust)mers that purchase standardized )fferings )f c)mmunicati)ns services.”); Applicati,ns ,f NYNEi C,rp. Transfer,r, and Bell Atlantic C,rp., Transferee, Mem)randum Opini)n and Order, 12 FCC Rcd 19985, 20016, para. 53 (1997) (“Residential and small business cust)mers are served primarily thr)ugh mass marketing techniques including regi)nal advertising and telemarketing.”).147 See, e.g., AT&T and BellS,uth C,rp., Mem)randum Opini)n and Order, 22 FCC Rcd 5662, 5709-10, para. 85 (2007) (“[E]nterprise cust)mers tend t) be s)phisticated and kn)wledgeable ()ften with the assistance )f c)nsultants), . . . c)ntracts are typically the result )f RFPs and are individually-neg)tiated (and frequently subject t) n)n-discl)sure clauses), . . . c)ntracts are generally f)r cust)mized service packages, and that the c)ntracts usually remain in effect f)r a number )f years.”).


29

ensure the efficacy )f )ur rules in this dynamic market, we als) treat as a “br)adband Internet access service” any service the C)mmissi)n finds t) be pr)viding a functi)nal equivalent )f the service described in the previ)us sentence, )r that is used t) evade the pr)tecti)ns set f)rth in these rules.

47. A key fact)r in determining whether a service is used t) evade the sc)pe )f the rules is whether the service is used as a substitute f)r br)adband Internet access service. F)r example, an Internet access service that pr)vides access t) a substantial subset )f Internet endp)ints based )n end users preference t) av)id certain c)ntent, applicati)ns, )r services;148

Internet access services that all)w s)me uses )f the Internet (such as access t) the W)rld Wide Web) but n)t )thers (such as e-mail); )r a “Best )f the Web” Internet access service that pr)vides access t) 100 t)p websites c)uld n)t be used t) evade the )pen Internet rules applicable t) “br)adband Internet access service.” M)re)ver, a br)adband pr)vider may n)t evade these rules simply by bl)cking end users’ access t) s)me Internet endp)ints. Br)adband Internet access service likely d)es n)t include services )ffering c)nnectivity t) )ne )r a small number )f Internet endp)ints f)r a particular device, e.g., c)nnectivity bundled with e-readers, heart m)nit)rs, )r energy c)nsumpti)n sens)rs, t) the extent the service relates t) the functi)nality )f the device.149 N)r d)es br)adband Internet access service include virtual private netw)rk services, c)ntent delivery netw)rk services, multichannel vide) pr)gramming services, h)sting )r data st)rage services, )r Internet backb)ne services (if th)se services are separate fr)m br)adband Internet access service). These services typically are n)t mass market services and/)r d) n)t pr)vide the capability t) transmit data t) and receive data fr)m all )r substantially all Internet endp)ints.150

48. Alth)ugh )ne purp)se )f )ur )pen Internet rules is t) prevent bl)cking )r unreas)nable discriminati)n in transmitting )nline traffic f)r applicati)ns and services that c)mpete with traditi)nal v)ice and vide) services, we determine that )pen Internet rules applicable t) fixed br)adband pr)viders sh)uld pr)tect all types )f Internet traffic, n)t just v)ice )r vide) Internet traffic. This reflects, am)ng )ther things, )ur view that it is generally preferable t) neither require n)r enc)urage br)adband pr)viders t) examine Internet traffic in )rder t) discern which traffic is subject t) the rules. Even if we were t) limit )ur rules t) v)ice )r vide) traffic, m)re)ver, it is unlikely that br)adband pr)viders c)uld reliably identify such traffic in all circumstances, particularly if the v)ice )r vide) traffic )riginated fr)m new services using unc)mm)n pr)t)c)ls.151 Indeed, limiting )ur rules t) v)ice and vide) traffic al)ne c)uld spark a c)stly and wasteful cat-and-m)use game in which edge pr)viders and end users seeking t) )btain the pr)tecti)n )f )ur rules c)uld disguise their traffic as pr)tected c)mmunicati)ns.152

148 See, e.g., K)shernet, www.k)shernet.c)m.149 T) the extent these services are pr)vided by br)adband pr)viders )ver last-mile capacity shared with br)adband Internet access service, they w)uld be specialized services. See infra Part III.G.150 We als) n)te that )ur rules apply )nly as far as the limits )f a br)adband pr)vider’s c)ntr)l )ver the transmissi)n )f data t) )r fr)m its br)adband cust)mers.151 This is true n)twithstanding the increasing s)phisticati)n )f netw)rk management t))ls, described ab)ve in Part II.B. See Arthur Callad) et al., A Survey ,n Internet Traffic Identificati,n, 11 IEEE COMMNC’NS SURVEYS & TUTORIALS 37, 49 (2009).152 See IETF, REFLECTIONS ON INTERNET TRANSPARENCY, RFC 4924 at 5 (Jul. 2007) (RFC 4924) (“In practice, filtering intended t) bl)ck )r restrict applicati)n usage is difficult t) successfully implement with)ut cust)mer c)nsent, since )ver time devel)pers will tend t) re-engineer filtered pr)t)c)ls s) as t) av)id the filters. Thus )ver time, filtering is likely t) result in inter)perability issues )r unnecessary c)mplexity. These c)sts c)me with)ut the benefit )f effective filtering . . . .”); IETF, CONSIDERATIONS ON THE USE OF A SERVICE IDENTIFIER IN PACKET HEADERS, RFC 3639 at 3 (Oct. 2003) (RFC 3639) (“Attempts

(c)ntinued....)


30

49. We rec)gnize that there is )ne Internet (alth)ugh it is c)mprised )f a multitude )f different netw)rks), and that it sh)uld remain )pen and interc)nnected regardless )f the techn)l)gies and services end users rely )n t) access it. H)wever, f)r reas)ns discussed in Part III.E bel)w related t) m)bile br)adband—including the fact that it is at an earlier stage and m)re rapidly ev)lving—we apply )pen Internet rules s)mewhat differently t) m)bile br)adband than t) fixed br)adband at this time. We define “fixed br)adband Internet access service” as a br)adband Internet access service that serves end users primarily at fixed endp)ints using stati)nary equipment, such as the m)dem that c)nnects an end user’s h)me r)uter, c)mputer, )r )ther Internet access device t) the netw)rk. This term enc)mpasses fixed wireless br)adband services (including services using unlicensed spectrum) and fixed satellite br)adband services. We define “m)bile br)adband Internet access service” as a br)adband Internet access service that serves end users primarily using m)bile stati)ns.153 M)bile br)adband Internet access includes services that use smartph)nes as the primary endp)ints f)r c)nnecti)n t) the Internet.154 The discussi)n in this Part applies t) b)th fixed and m)bile br)adband, unless specifically n)ted. Part III.E further discusses applicati)n )f )pen Internet rules t) m)bile br)adband.

50. F)r a number )f reas)ns, these rules apply )nly t) the pr)visi)n )f br)adband Internet access service and n)t t) edge pr)vider activities, such as the pr)visi)n )f c)ntent )r applicati)ns )ver the Internet.155 First, the C)mmunicati)ns Act particularly directs us t) prevent harms related t) the utilizati)n )f netw)rks and spectrum t) pr)vide c)mmunicati)n by wire and radi).156 Sec)nd, these rules are an )utgr)wth )f the C)mmissi)n’s Internet P,licy Statement.157 The Statement was issued in 2005 when the C)mmissi)n rem)ved key regulat)ry pr)tecti)ns fr)m DSL service, and was intended t) pr)tect against the harms t) the )pen Internet that might

(...c)ntinued fr)m previ)us page)by intermediate systems t) imp)se service-based c)ntr)ls )n c)mmunicati)ns against the perceived interests )f the end parties t) the c)mmunicati)n are )ften circumvented. Services may be tunneled within )ther services, pr)xied by a c)llab)rating external h)st (e.g., an an)nym)us redirect)r), )r simply run )ver an alternate p)rt (e.g., p)rt 8080 vs p)rt 80 f)r HTTP).”). Cf. RFC 3639 at 4 (“Fr)m this perspective )f netw)rk and applicati)n utility, it is preferable that n) acti)n )r activity be undertaken by any agency, carrier, service pr)vider, )r )rganizati)n which w)uld cause end-users and pr)t)c)l designers t) generally )bscure service identificati)n inf)rmati)n fr)m the IP packet header.”). Our rules are nati)nwide and d) n)t vary by ge)graphic area, n)twithstanding p)tential variati)ns acr)ss l)cal markets f)r br)adband Internet access service. Unif)rm nati)nal rules create a m)re predictable p)licy envir)nment f)r br)adband pr)viders, many )f which )ffer services in multiple ge)graphic areas. See, e.g., Level 3 C)mments at 13; Charter C)mments at iv. Edge pr)viders will benefit fr)m unif)rm treatment )f their traffic in different l)calities and by different br)adband pr)viders. Br)adband end users will als) benefit fr)m unif)rm rules, which pr)tect them regardless )f where they are l)cated )r which br)adband pr)vider they )btain service fr)m. 153 See 47 U.S.C. § 153(34) (“The term ‘m)bile stati)n’ means a radi)-c)mmunicati)n stati)n capable )f being m)ved and which )rdinarily d)es m)ve.”).154 We n)te that Secti)n 337(f)(1) )f the Act excludes public safety services fr)m the definiti)n )f m)bile br)adband Internet access service.155 But see AT&T C)mments at 32–34; NCTA C)mments at 48–49; Metr)PCS Reply at 31–34; TWC PN Reply at 11–12.156 See 47 U.S.C. § 151.157 When the C)mmissi)n ad)pted the Internet P,licy Statement, it pr)mised t) inc)rp)rate the principles int) “)ng)ing p)licymaking activities.” Internet P,licy Statement, 20 FCC Rcd at 14988, para. 5.


31

result fr)m br)adband pr)viders’ subsequent c)nduct.158 The C)mmissi)n has always underst))d th)se principles t) apply t) br)adband Internet access service )nly, as have m)st private-sect)rstakeh)lders.159 Thus, ins)far as these rules translate existing C)mmissi)n principles int) c)dified rules, it is appr)priate t) limit the applicati)n )f the rules t) br)adband Internet access service. Third, br)adband pr)viders c)ntr)l access t) the Internet f)r their subscribers and f)r any)ne wishing t) reach th)se subscribers.160 They are theref)re capable )f bl)cking, degrading, )r fav)ring any Internet traffic that fl)ws t) )r fr)m a particular subscriber.

51. We als) d) n)t apply these rules t) dial-up Internet access service because teleph)ne service has hist)rically pr)vided the easy ability t) switch am)ng c)mpeting dial-up Internet access services. M)re)ver, the underlying dial-up Internet access service is subject t) pr)tecti)ns under Title II )f the C)mmunicati)ns Act. The C)mmissi)n’s interpretati)n )f th)se pr)tecti)ns has resulted in a market f)r dial-up Internet access that d)es n)t present the same c)ncerns as the market f)r br)adband Internet access.161 N) c)mmenters suggested extending )pen Internet rules t) dial-up Internet access service.

52. Finally, we decline t) apply )ur rules directly t) c)ffee sh)ps, b))kst)res, airlines, and )ther entities when they acquire Internet service fr)m a br)adband pr)vider t) enable their patr)ns t) access the Internet fr)m their establishments (we refer t) these entities as “premise )perat)rs”).162 These services are typically )ffered by the premise )perat)r as an ancillary benefit t) patr)ns. H)wever, t) pr)tect end users, we include within )ur rules br)adband Internet access services pr)vided t) premise )perat)rs f)r purp)ses )f making service available t) their patr)ns.163 Alth)ugh br)adband pr)viders that )ffer such services are subject t)

158 See, e.g., Applicati,ns f,r C,nsent t, the Assignment and/,r Transfer ,f C,ntr,l ,f Licenses, Adelphia C,mmc’ns C,rp. et al., Mem)randum Opini)n and Order, 21 FCC Rcd 8203, 8299, para. 223 (2006) (the Internet P,licy Statement “c)ntains principles against which the c)nduct )f C)mcast, Time Warner, and )ther br)adband service pr)viders can be measured”); AT&T and BellS,uth C,rp., Mem)randum Opini)n and Order, 22 FCC Rcd 5662, 5726, para. 119 (2007) (similar).159 See, e.g., Appr,priate Framew,rk f,r Br,adband Access t, the Internet ,ver Wireline Facilities, Rep)rt and Order and N)tice )f Pr)p)sed Rulemaking, 20 FCC Rcd 14853, 14976 (2005) (Wireline Br,adband Order) (separate statement )f Chairman Martin); id. at 14980 (Statement )f C)mmissi)ner C)pps, c)ncurring); id. at 14983 (Statement )f C)mmissi)ner Adelstein, c)ncurring); Veriz)n June 8, 2009 C)mments, GN D)cket N). 09-51, at 86 (“These principles have helped t) guide wireline pr)viders’ practices and t) ensure that c)nsumers’ expectati)ns f)r their public Internet access services are met.”). The C)mmissi)n has c)nditi)ned wireline br)adband pr)vider merger appr)vals )n the merged entity’s c)mpliance with these )bligati)ns. See, e.g., SBC C,mmc’ns Inc. and AT&T C,rp. Applicati,ns f,r Appr,val ,f Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 20 FCC Rcd 18290, 18392, para. 211 (2005).160 See supra Part II.B. We thus find br)adband pr)viders distinguishable fr)m )ther participants in the Internet marketplace. See, e.g., Veriz)n C)mments at 36–39 (discussing a variety )f )ther participants in the Internet ec)system); Veriz)n Reply at 36–37 (same); NCTA C)mments at 47–49 (same); NCTA Reply at 22 (same).161 See Open Internet NPRM, 24 FCC Rcd at 13101, para. 91 n.209.162 See C,mmunicati,ns Assistance f,r Law Enf,rcement Act and Br,adband Access and Services, First Rep)rt and Order and Further N)tice )f Pr)p)sed Rulemaking, 20 FCC Rcd 14989, 15006–07, para. 36, n.99 (2005) (CALEA Order). C)nsistent with the C)mmissi)n’s appr)ach in the CALEA Order, “[w]e n)te . . . that the pr)vider )f underlying [br)adband service] facilities t) such an establishment w)uld be subject t) [the rules].” Id. at 15007, para. 36.


32

)pen Internet rules, we n)te that addressing traffic unwanted by a premise )perat)r is a legitimate netw)rk management purp)se.164

B. Transparency53. Pr)m)ting c)mpetiti)n thr)ugh)ut the Internet ec)system is a central purp)se )f

these rules. Effective discl)sure )f br)adband pr)viders’ netw)rk management practices and the perf)rmance and c)mmercial terms )f their services pr)m)tes c)mpetiti)n—as well as inn)vati)n, investment, end-user ch)ice, and br)adband ad)pti)n—in at least five ways. First, discl)sure ensures that end users can make inf)rmed ch)ices regarding the purchase and use )f br)adband service, which pr)m)tes a m)re c)mpetitive market f)r br)adband services and can thereby reduce br)adband pr)viders’ incentives and ability t) vi)late )pen Internet principles.165 Sec)nd, and relatedly, as end users’ c)nfidence in br)adband pr)viders’ practices increases, s) t)) sh)uld end users’ ad)pti)n )f br)adband services—leading in turn t) additi)nal investment in Internet infrastructure as c)ntemplated by Secti)n 706 )f the 1996 Act and )ther pr)visi)ns )f the c)mmunicati)ns laws.166 Third, discl)sure supp)rts inn)vati)n, investment, and c)mpetiti)n by ensuring that startups and )ther edge pr)viders have the technical inf)rmati)n necessary t) create and maintain )nline c)ntent, applicati)ns, services, and devices, and t) assess the risks and benefits )f embarking )n new pr)jects.167 F)urth, discl)sure increases the likelih))d that br)adband pr)viders will abide by )pen Internet principles, and that the Internet c)mmunity will

(...c)ntinued fr)m previ)us page)163 We n)te that the premise )perat)r that purchases the Internet service remains the end user f)r purp)ses )f )ur rules, h)wever. See infra Part III.D (discussing the applicati)n )f )ur definiti)n )f “reas)nable netw)rk management” in the c)ntext )f traffic unwanted by premise )perat)rs). M)re)ver, alth)ugh n)t b)und by )ur rules, we enc)urage premise )perat)rs t) discl)se relevant restricti)ns )n br)adband service they make available t) their patr)ns.164 See infra Part III.D. We als) d) n)t include within the rules free access t) individuals’ wireless netw)rks, even if th)se netw)rks are intenti)nally made available t) )thers. See Electr)nic Fr)ntier F)undati)n (EFF) C)mments at 25–28. N) c)mmenter argued that )pen Internet rules sh)uld apply t) individual )perat)rs )f wireless netw)rks in these circumstances.165 Br)adband pr)viders may have an incentive n)t t) pr)vide such inf)rmati)n t) end users, as d)ing s) can lessen switching c)sts f)r end users. Third-party inf)rmati)n s)urces such as C)nsumer Rep)rts and the trade press d) n)t r)utinely pr)vide such inf)rmati)n. See CDT C)mments at 31; CWA C)mments at 21; DISH C)mments at 2; G))gle C)mments at ii, 64–66; Level 3 C)mments at 13; Sand)val Reply at 60. Ec)n)mic literature in this area als) c)nfirms that p)licies requiring firms t) discl)se inf)rmati)n generally benefit c)mpetiti)n and c)nsumers. See, e.g., Mark Armstr)ng, Interacti,ns Between C,mpetiti,n and C,nsumer P,licy, 4 COMPETITION POLICY INT’L 97 113–16 (Spring 2008), eprints.ucl.ac.uk/7634/1/7634.pdf.166 See PIC Reply at 16–18; Free Press C)mments at 43–45; Ad H)c C)mments at ii; CDT C)mments at 5–7; ALA C)mments at 3; Nati)nal Hispanic Media C)aliti)n (NHMC) C)mments at 8; Nati)nal Br)adband Plan at 168, 174 (lack )f trust in Internet is significant fact)r preventing n)n-ad)pters fr)m subscribing t) br)adband services); 47 U.S.C. §§ 151, 230, 254, 1302. A recent FCC survey f)und that am)ng n)n-br)adband end users, 46% believed that the Internet is danger)us f)r kids, and 57% believed that it was t)) easy f)r pers)nal inf)rmati)n t) be st)len )nline. JOHN B. HORRIGAN, FCC SURVEY: BROADBAND

ADOPTION & USE IN AMERICA 17 (Mar. 2010), available at www.fcc.g)v/DiversityFAC/032410/c)nsumer-survey-h)rrigan.pdf.167 See, e.g., OIC C)mments at 89–91 (discl)sure requirements w)uld likely increase the speed )f inn)vati)n, especially in the wireless space); G))gle C)mments at 66–67 (failure t) pr)vide inf)rmati)n t) devel)pers inhibits inn)vati)n and investment); Data F)undry C)mments at 10; CDT C)mments at 31, 33.


33

identify pr)blematic c)nduct and suggest fixes.168 Transparency thereby increases the chances that harmful practices will n)t )ccur in the first place and that, if they d), they will be quickly remedied, whether privately )r thr)ugh C)mmissi)n )versight. Fifth, discl)sure will enable the C)mmissi)n t) c)llect inf)rmati)n necessary t) assess, rep)rt )n, and enf)rce the )ther )pen Internet rules.169 F)r all )f these reas)ns, m)st c)mmenters agree that inf)rming end users, edge pr)viders, and the C)mmissi)n ab)ut the netw)rk management practices, perf)rmance, and c)mmercial terms )f br)adband Internet access service is a necessary and appr)priate step t) help preserve an )pen Internet.170

54. The Open Internet NPRM s)ught c)mment )n what end users and edge pr)viders need t) kn)w ab)ut br)adband service, h)w this inf)rmati)n sh)uld be discl)sed, when discl)sure sh)uld )ccur, and where inf)rmati)n sh)uld be available.171 The resulting rec)rd supp)rts ad)pti)n )f the f)ll)wing rule:

A pers,n engaged in the pr,visi,n ,f br,adband Internet access service shall publicly discl,se accurate inf,rmati,n regarding the netw,rk management practices, perf,rmance, and c,mmercial terms ,f its br,adband Internet access services sufficient f,r c,nsumers t, make inf,rmed ch,ices regarding use ,f such services and f,r c,ntent, applicati,n, service, and device pr,viders t, devel,p, market, and maintain Internet ,fferings.172

55. The rule d)es n)t require public discl)sure )f c)mpetitively sensitive inf)rmati)n )r inf)rmati)n that w)uld c)mpr)mise netw)rk security )r undermine the efficacy )f reas)nable netw)rk management practices.173 F)r example, a br)adband pr)vider need n)t publicly discl)se

168 On a number )f )ccasi)ns, br)adband pr)viders have bl)cked lawful traffic with)ut inf)rming end users )r edge pr)viders. In additi)n t) the Madis)n River and C)mcast-BitT)rrent incidents described ab)ve, br)adband pr)viders appear t) have c)vertly bl)cked th)usands )f BitT)rrent upl)ads in the United States thr)ugh)ut early 2008. See Marcel Dischinger et al., supra n)te 111; Catherine Sand)val, Discl,sure, Decepti,n, and Deep-Packet Inspecti,n, 78 FORDHAM L. REV. 641, 666–84 (2009).169 See 47 U.S.C. §§ 154(k), 218.170 See, e.g., CDT C)mments at 31; CWA C)mments at 21; DISH C)mments at 2; G))gle C)mments at ii, 64; Level 3 C)mments at 13; Pr)f. Catherine Sand)val Reply at 30. Other c)mmenters supp)rt a transparency rule but )pp)se c)dificati)n )f )ther principles. See, e.g., LARIAT C)mments at 3–4; NTCA C)mments at 2; NTT C)mments at 2.171 See Open Internet NPRM, 24 FCC Rcd at 13110–11, paras. 125–29; Further Inquiry int, Tw, Under-Devel,ped Issues in the Open Internet Pr,ceeding, Public N)tice, 25 FCC Rcd 12637, 12641 (2010) (Open Internet PN).172 F)r purp)ses )f these rules, “c)nsumer” includes any subscriber t) the br)adband pr)vider’s br)adband Internet access service, and “pers)n” includes any “individual, gr)up )f individuals, c)rp)rati)n, partnership, ass)ciati)n, unit )f g)vernment )r legal entity, h)wever )rganized,” cf. 47 C.F.R. § 54.8(a)(6). We als) expect br)adband pr)viders t) discl)se inf)rmati)n ab)ut the impact )f “specialized services,” if any, )n last-mile capacity available f)r, and the perf)rmance )f, br)adband Internet access service. See infra Part III.G.173 C)mmenters disagree )n the risks )f requiring discl)sure )f inf)rmati)n regarding technical, pr)prietary, and security-related management practices. C,mpare, e.g., American Cable Ass)ciati)n (ACA) C)mments at 17; AFTRA et al. C)mments at ii, 16; C)x C)mments at 11; Fiber-t)-the-H)me C)uncil (FTTH) C)mments at 3, 27; Lib)ve C)mments at 4; Sprint C)mments at 16; T-M)bile C)mments at 39, with, e.g., Free Press C)mments at 117–18; Free Press Reply at 17–19; Digital Educati)n C)aliti)n (DEC) C)mments at 14; NJRC C)mments at 20–21. We may subsequently require discl)sure )f such

(c)ntinued....)


34

inf)rmati)n regarding measures it empl)ys t) prevent spam practices at a level )f detail that w)uld enable a spammer t) defeat th)se measures.

56. Despite br)ad agreement that br)adband pr)viders sh)uld discl)se inf)rmati)n sufficient t) enable end users and edge pr)viders t) understand the capabilities )f br)adband services, c)mmenters disagree ab)ut the appr)priate level )f detail required t) achieve this g)al.174 We believe that at this time the best appr)ach is t) all)w flexibility in implementati)n )f the transparency rule, while pr)viding guidance regarding effective discl)sure m)dels. We expect that effective discl)sures will likely include s)me )r all )f the f)ll)wing types )f inf)rmati)n, timely and pr)minently discl)sed in plain language accessible t) current and pr)spective end users and edge pr)viders, the C)mmissi)n, and third parties wh) wish t) m)nit)r netw)rk management practices f)r p)tential vi)lati)ns )f )pen Internet principles:175

Netw(rk Practices176

• C,ngesti,n Management: If applicable, descripti)ns )f c)ngesti)n management practices; types )f traffic subject t) practices; purp)ses served by practices; practices’ effects )n end users’ experience; criteria used in practices, such as indicat)rs )f c)ngesti)n that trigger a practice, and the typical frequency )f c)ngesti)n; usage limits and the c)nsequences )f exceeding them; and references t) engineering standards, where appr)priate.177

• Applicati,n-Specific Behavi,r: If applicable, whether and why the pr)vider bl)cks )r rate-c)ntr)ls specific pr)t)c)ls )r pr)t)c)l p)rts, m)difies pr)t)c)l fields in ways n)t prescribed by the pr)t)c)l standard, )r )therwise inhibits )r fav)rs certain applicati)ns )r classes )f applicati)ns.178

• Device Attachment Rules: If applicable, any restricti)ns )n the types )f devices and any appr)val pr)cedures f)r devices t) c)nnect t) the netw)rk. (F)r further

(...c)ntinued fr)m previ)us page)inf)rmati)n t) the C)mmissi)n; t) the extent we d), we will ensure that such inf)rmati)n is pr)tected c)nsistent with existing C)mmissi)n pr)cedures f)r treatment )f c)nfidential inf)rmati)n.174 C,mpare, e.g., AT&T C)mments at 191, 193; Bright H)use C)mments at 11 (high-level discl)sure is adequate) with, e.g., CDT C)mments at 31; G))gle C)mments at 66; Center f)r Media Justice et al. C)mments at 64; NJRC C)mments at 23; V)nage C)mments at ii, 23.175 In setting f)rth the f)ll)wing categ)ries )f inf)rmati)n subject t) the transparency principle, we assume that the br)adband pr)vider has ch)sen t) )ffer its services )n standardized terms, alth)ugh pr)viders )f “inf)rmati)n services” are n)t )bligated t) d) s). See generally paras. 45, 79. If the pr)vider tail)rs its terms )f service t) meet the requirements )f an individual end user, th)se terms must at a minimum be discl)sed t) the end user in acc)rdance with the transparency principle.176 See CCIA/CEA C)mments at 33; DEC C)mments at 11–12; Free Press C)mments at 112–13, 115–16 n.232; G))gle C)mments at 65–66; Inf)rmati)n Techn)l)gy Industry C)uncil (ITIC) C)mments at 10–12; PIC C)mments at 63–65; RNK C)mments at 7–8; S)ftware & Inf)rmati)n Industry Ass)ciati)n (SIIA) C)mments at 8.177 We n)te that the descripti)n )f c)ngesti)n management practices pr)vided by C)mcast in the wake )f the C)mcast-BitT)rrent incident likely satisfies the transparency rule with respect t) c)ngesti)n management practices. See C)mcast, Netw)rk Management Update, www.c)mcast.net/terms/netw)rk/update; C)mcast, C)mcast C)rp)rati)n Descripti)n )f Planned Netw)rk Management Practices t) be Depl)yed F)ll)wing the Terminati)n )f Current Practices, d)wnl)ads.c)mcast.net/d)cs/Attachment_B_Future_Practices.pdf.178 But see infra para. 73.


35

discussi)n )f required discl)sures regarding device and applicati)n appr)val pr)cedures f)r m)bile br)adband pr)viders, see paragraph 98, infra.)

• Security: If applicable, practices used t) ensure end-user security )r security )f the netw)rk, including types )f triggering c)nditi)ns that cause a mechanism t) be inv)ked (but excluding inf)rmati)n that c)uld reas)nably be used t) circumvent netw)rk security).

Perf(rmance Characteristics179

• Service Descripti,n: A general descripti)n )f the service, including the service techn)l)gy, expected and actual access speed and latency, and the suitability )f the service f)r real-time applicati)ns.

• Impact ,f Specialized Services: If applicable, what specialized services, if any, are )ffered t) end users, and whether and h)w any specialized services may affect the last-mile capacity available f)r, and the perf)rmance )f, br)adband Internet access service.

C(mmercial Terms180

• Pricing: F)r example, m)nthly prices, usage-based fees, and fees f)r early terminati)n )r additi)nal netw)rk services.

• Privacy P,licies: F)r example, whether netw)rk management practices entail inspecti)n )f netw)rk traffic, and whether traffic inf)rmati)n is st)red, pr)vided t) third parties, )r used by the carrier f)r n)n-netw)rk management purp)ses.

• Redress Opti,ns: Practices f)r res)lving end-user and edge pr)vider c)mplaints and questi)ns.

We emphasize that this list is n)t necessarily exhaustive, n)r is it a safe harb)r—there may be additi)nal inf)rmati)n, n)t included ab)ve, that sh)uld be discl)sed f)r a particular br)adband service t) c)mply with the rule in light )f relevant circumstances. Br)adband pr)viders sh)uld examine their netw)rk management practices and current discl)sures t) determine what additi)nal inf)rmati)n, if any, sh)uld be discl)sed t) c)mply with the rule.

57. In the Open Internet NPRM, we pr)p)sed that br)adband pr)viders publicly discl)se their practices )n their websites and in pr)m)ti)nal materials.181 M)st c)mmenters agree that a pr)vider’s website is a natural place f)r end users and edge pr)viders t) find discl)sures,182

and several c)ntend that a br)adband pr)vider’s )nly )bligati)n sh)uld be t) p)st its practices )n its website.183 Others assert that discl)sures sh)uld als) be displayed pr)minently at the p)int-)f-sale, in bill inserts, and in the service c)ntract.184 We agree that br)adband pr)viders must, at a

179 See CCIA/CEA C)mments at 33; Free Press C)mments at 112–13, 115–16 n.232; G))gle C)mments at 65–66; ITIC C)mments at 10–12; N)kia Siemens C)mments at 12; PIC C)mments at 63–65; SIIA C)mments at 8.180 See CCIA/CEA C)mments at 33; Free Press C)mments at 112–13, 115–16 n.232; G))gle C)mments at 65–66; PIC C)mments at 63–65; SIIA C)mments at 8.181 Open Internet NPRM, 24 FCC Rcd at 13110, para. 126.182 See, e.g., CDT C)mments at 36; Charter C)mments at 21; DEC C)mments at 3, 14; DISH C)mments at 6; NHMC C)mments at 9; OIC C)mments at 90; PIA C)mments at 65. 183 See, e.g., ACA C)mments at iv, 16; Bright H)use C)mments at 11.184 See, e.g., Netflix C)mments at 8; PIA C)mments at 64; NJRC C)mments at 19–20, 24; NHMC C)mments at 9; BBIC/BRC C)mments at 7.


36

minimum, pr)minently display )r pr)vide links t) discl)sures )n a publicly available, easily accessible website that is available t) current and pr)spective end users and edge pr)viders as well as t) the C)mmissi)n, and must discl)se relevant inf)rmati)n at the p)int )f sale. Current end users must be able t) easily identify which discl)sures apply t) their service )ffering. Br)adband pr)viders’ )nline discl)sures shall be c)nsidered discl)sed t) the C)mmissi)n f)r purp)ses )f m)nit)ring and enf)rcement. We may require additi)nal discl)sures directly t) the C)mmissi)n.185

58. We anticipate that br)adband pr)viders may be able t) satisfy the transparency rule thr)ugh a single discl)sure, and theref)re d) n)t at this time require multiple discl)sures targeted at different audiences.186 We als) decline t) ad)pt a specific f)rmat f)r discl)sures, and instead require that discl)sure be sufficiently clear and accessible t) meet the requirements )f the rule.187 We will, h)wever, c)ntinue t) m)nit)r c)mpliance with this rule, and may require adherence t) a particular set )f best practices in the future.188

59. Alth)ugh s)me c)mmenters assert that a discl)sure rule will imp)se significant burdens )n br)adband pr)viders, n) c)mmenter cites any particular s)urce )f increased c)sts, )r attempts t) estimate c)sts )f c)mpliance.189 F)r a number )f reas)ns, we believe that the c)sts )f the discl)sure rule we ad)pt t)day are )utweighed by the benefits )f emp)wering end users and edge pr)viders t) make inf)rmed ch)ices and )f facilitating the enf)rcement )f the )ther )pen Internet rules. First, we require )nly that pr)viders p)st discl)sures )n their websites and pr)vide discl)sure at the p)int )f sale, n)t that they bear the c)st )f printing and distributing bill inserts )r )ther paper d)cuments t) all existing cust)mers.190 Sec)nd, alth)ugh we may subsequently

185 See infra Part IV.D.186 But we expect that br)adband pr)viders will make discl)sures in a manner accessible by pe)ple with disabilities.187 S)me c)mmenters adv)cate f)r a standard discl)sure f)rmat. See, e.g., Adam Candeub et al. Reply at 7; Level 3 C)mments at 13; Sprint C)mments at 17. Others supp)rt a plain language requirement. See, e.g., NATOA C)mments at 7; NJRC C)mments at 19; IFTA C)mments at 16. Other c)mmenters, h)wever, argue against the imp)siti)n )f a standard f)rmat as inflexible and difficult t) implement. See, e.g., C)x C)mments at 10; Nati)nal Telec)mmunicati)ns C))perative Ass)ciati)n (NTCA) C)mments at 9; Qwest C)mments at 11. The appr)ach we ad)pt is similar t) the appr)ach ad)pted in the C)mmissi)n’s Truth-in-Billing Pr,ceeding, where we set )ut basic guidelines. Truth-in-Billing and Billing F,rmat, First Rep)rt and Order and Further NPRM, 14 FCC Rcd 7492, 7495–96, paras. 3–5 (1999). 188 We may address this issue as part )f a separate, )ng)ing pr)ceeding regarding transparency f)r c)mmunicati)ns services m)re generally. C,nsumer Inf,rmati,n and Discl,sure, N)tice )f Inquiry, FCC 09-68 (rel. Aug. 28, 2010). Relatedly, the C)mmissi)n has begun an eff)rt, in partnership with br)adband pr)viders, t) measure the actual speed and perf)rmance )f br)adband service, and we expect that the data generated by this eff)rt will inf)rm C)mmissi)n eff)rts regarding discl)sure. See C,mment S,ught ,n Residential Fixed Br,adband Services Testing and Measurement S,luti,n, Pleading Cycle Established, Public N)tice, 25 FCC Rcd 3836 (2010) (SamKn)ws pr)ject); C,mment S,ught ,n Measurement ,f M,bile Br,adband Netw,rk Perf,rmance and C,verage, Public N)tice, 25 FCC Rcd 7069 (2010) (same).189 See, e.g., NTCA C)mments at 9, 43–44; US Telec)m C)mments at 52; ADTRAN C)mments at i, 9, 11; Texas Public P)licy F)undati)n (TPPF) C)mments at 99; Telec)mmunicati)ns Industry Ass)ciati)n (TIA) C)mments at 31–32.190 In a separate pr)ceeding, the C)mmissi)n has determined that the c)sts )f making discl)sure materials available )n a service pr)vider’s website are )utweighed by the public benefits where the discl)sure requirement applies )nly t) entities already using the Internet f)r )ther purp)ses. See Standardized and Enhanced Discl,sure Requirements f,r Televisi,n Br,adcast Licensee Public Interest Obligati,ns, Rep)rt and Order, 23 FCC Rcd 1274, 1277–78, paras. 7–10 (2008).


37

determine that it is appr)priate t) require that specific inf)rmati)n be discl)sed in particular ways, the transparency rule we ad)pt t)day gives br)adband pr)viders s)me flexibility t) determine what inf)rmati)n t) discl)se and h)w t) discl)se it. We als) expressly exclude fr)m the rule c)mpetitively sensitive inf)rmati)n, inf)rmati)n that w)uld c)mpr)mise netw)rk security, and inf)rmati)n that w)uld undermine the efficacy )f reas)nable netw)rk management practices. Third, as discussed bel)w, by setting the effective date )f these rules 60 days after n)tice in the Federal Register ann)uncing the decisi)n )f the Office )f Management and Budget regarding its mandat)ry appr)val )f the inf)rmati)n c)llecti)n requirements c)ntained in the rules, we give br)adband pr)viders adequate time t) devel)p c)st effective meth)ds )f c)mpliance.

60. A key purp)se )f the transparency rule is t) enable third-party experts such as independent engineers and c)nsumer watchd)gs t) m)nit)r and evaluate netw)rk management practices, in )rder t) surface c)ncerns regarding p)tential )pen Internet vi)lati)ns. We als) n)te the existence )f free s)ftware t))ls that enable Internet end users and edge pr)viders t) m)nit)r and detect bl)cking and discriminati)n by br)adband pr)viders.191 Alth)ugh current t))ls cann)t detect all instances )f bl)cking )r discriminati)n and cann)t substitute f)r discl)sure )f netw)rk management p)licies, such t))ls may help supplement the transparency rule we ad)pt t)day.192

61. Alth)ugh transparency is essential f)r preserving Internet )penness, we disagree with c)mmenters that suggest it is al)ne sufficient t) prevent )pen Internet vi)lati)ns.193 The rec)rd d)es n)t c)nvince us that a transparency requirement by itself will adequately c)nstrain pr)blematic c)nduct,194 and we theref)re ad)pt tw) additi)nal rules, as discussed bel)w.

C. N( Bl(cking and N( Unreas(nable Discriminati(n

1. N( Bl(cking62. The freed)m t) send and receive lawful c)ntent and t) use and pr)vide

applicati)ns and services with)ut fear )f bl)cking is essential t) the Internet’s )penness and t) c)mpetiti)n in adjacent markets such as v)ice c)mmunicati)ns and vide) and audi)

191 See Sand)val C)mments at 4–5. F)r example, the Max Planck Institute analyzed data c)llected by the Glasn,st t))l fr)m th)usands )f end user, and f)und that br)adband pr)viders were discriminating against applicati)n-specific traffic. See WCB Letter 12/13/10, Attach. at 235–39, Max Planck Institute f)r S)ftware Systems, Glasn)st: Results fr)m Tests f)r BitT)rrent Traffic Bl)cking, br)adband.mpi-sws.)rg/transparency/results. Netalyzr is a Nati)nal Science F)undati)n-funded pr)ject that tests a wide range )f netw)rk characteristics. See Internati)nal C)mputer Science Institute, Netalyzer, netalyzr.icsi.berkeley.edu. Similar t))ls are being devel)ped f)r m)bile br)adband services. See, e.g., WindRider, M)bile Netw)rk Neutrality M)nit)ring System, www.cs.n)rthwestern.edu/~ict992/m)bile.htm.192 F)r an example )f a public-private partnership that c)uld enc)urage the devel)pment )f new t))ls t) assess netw)rk management practices, see FCC Open Internet Apps Challenge, www.)peninternet.g)v/challenge.193 See, e.g., Qwest C)mments at 44–45.194 See, e.g., Barbara van Schewick, Netw,rk Neutrality: What a N,n-Discriminati,n Rule Sh,uld L,,k Like at 22 (Dec. 14, 2010) (“In )rder f)r discl)sure t) have a disciplining effect, cust)mers need t) be able t) switch t) an)ther pr)vider that d)es n)t imp)se a similar restricti)n, and they need t) be able t) d) s) at l)w c)sts.”) (van Schewick Dec. 14, 2010 White Paper), attached t, Letter fr)m Barbara van Schewick, t) Marlene D)rtch, Secretary, FCC, GN D)cket N). 09-191 at Attach. A (filed Dec. 14, 2010); CCIA/CEA C)mments at 32; Frischmann C)mments at 5; ARL et al. C)mments at 5; Netflix C)mments at 5; NJRC C)mments at 16–17; OIC Reply at 16; Amaz)n.c)m C)mments at 2.


38

pr)gramming.195 Similarly, the ability t) c)nnect and use any lawful devices that d) n)t harm the netw)rk helps ensure that end users can enj)y the c)mpetiti)n and inn)vati)n that result when device manufacturers can depend )n netw)rks’ )penness.196 M)re)ver, the n)-bl)cking principle has been br)adly accepted since its inclusi)n in the C)mmissi)n’s Internet P,licy Statement. Maj)r br)adband pr)viders represent that they currently )perate c)nsistent with this principle and are c)mmitted t) c)ntinuing t) d) s).197

63. In the Open Internet NPRM, the C)mmissi)n pr)p)sed c)difying the )riginal three Internet P,licy Statement principles that addressed bl)cking )f c)ntent, applicati)ns and services, and devices.198 After c)nsiderati)n )f the rec)rd, we c)ns)lidate the pr)p)sed rules int) a single rule f)r fixed br)adband pr)viders:199

A pers,n engaged in the pr,visi,n ,f fixed br,adband Internet access service, ins,far as such pers,n is s, engaged, shall n,t bl,ck lawful c,ntent, applicati,ns, services, ,r n,n-harmful devices, subject t, reas,nable netw,rk management.

64. The phrase “c)ntent, applicati)ns, services” refers t) all traffic transmitted t) )r fr)m end users )f a br)adband Internet access service, including traffic that may n)t fit cleanly int) any )f these categ)ries.200 The rule pr)tects )nly transmissi)ns )f lawful c)ntent, and d)es

195 See CDT C)mments at 22–23; Nati)nal Ass)ciati)n )f Realt)rs (NAR) C)mments at 1–2; Netflix C)mments at 3–4; Red Hat C)mments at 2–3; SIIA C)mments at 5–6; AOL Reply at 3–4; G))gle Reply at 16–18; Skype Reply at 1, 5–6; Letter fr)m Ernest) Falc)n, PK, t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N)s. 09-191, 10-127, WC D)cket N). 07-52 (Oct. 28, 2010).196 The C)mmissi)n has l)ng pr)tected end users’ rights t) attach lawful devices that d) n)t harm c)mmunicati)ns netw)rks. See, e.g., Use ,f the Carterf,ne Device in Message T,ll Teleph,ne Service, 13 FCC 2d 420, 424 (1968); Amendment ,f Secti,n 64.702 ,f the C,mmissi,n’s Rules and Regulati,ns (Sec,nd C,mputer Inquiry), Final Decisi)n, 77 FCC 2d 384, 388 (1980); see als, Michael T. H)eker, Fr,m Carterf,ne t, the iPh,ne: C,nsumer Ch,ice in the Wireless Telec,mmunicati,ns Marketplace, 17 COMMLAW CONSPECTUS 187, 192 (2008); Kevin Werbach, The Federal C,mputer C,mmissi,n, 84 N.C. L.REV. 1, 21 (2005).197 As Qwest states, “Qwest and virtually all maj)r br)adband pr)viders have supp)rted the FCC Internet P)licy Principles and v)luntarily abide by th)se principles as g))d p)licy.” Qwest PN C)mments at 2–3, 5; see als,, e.g., C)mcast C)mments at 27; Clearwire C)mments at 1; Margaret B)les, AT&T ,n C,mcast v. FCC Decisi,n, AT&T PUB. POL’Y BLOG (Apr. 6, 2010), attpublicp)licy.c)m/br)adband-p)licy/att-statement-)n-c)mcast-v-fcc-decisi)n.198 Open Internet NPRM, 24 FCC Rcd at 13100–03, paras. 88–98.199 As described bel)w, we ad)pt a tail)red versi)n )f this rule f)r m)bile br)adband pr)viders. See infra Part III.E.1.b.200 See William Lehr et al. C)mments at 27 (“While the pr)p)sed rules )f the FCC appear t) make a clear distincti)n between applicati)ns and services )n the )ne hand (rule 3) and c)ntent (rule 1), we believe that there will be s)me activities that d) n)t fit cleanly int) these tw) categ)ries”); PIC C)mments at 39; RFC 4924 at 5. F)r this reas)n the rule may pr)hibit the bl)cking )f a p)rt )r particular pr)t)c)l used by an applicati)n, with)ut bl)cking the applicati)n c)mpletely, unless such practice is reas)nable netw)rk management. See Distributed C)mputing Industry Ass’n (DCIA) C)mments at 7 (discussing w)rk-ar)unds by P2P c)mpanies facing p)rt bl)cking )r )ther practices); Sandvine Reply at 3; RFC 4924. The rule als) is neutral with respect t) where in the pr)t)c)l stack )r in the netw)rk bl)cking c)uld )ccur. See infra n)te 235.


39

n)t prevent )r restrict a br)adband pr)vider fr)m refusing t) transmit unlawful material such as child p)rn)graphy.201

65. We als) n)te that the rule entitles end users t) b)th c)nnect and use any lawful device )f their ch)ice, pr)vided such device d)es n)t harm the netw)rk.202 A br)adband pr)vider may require that devices c)nf)rm t) widely accepted and publicly-available standards applicable t) its services.203

66. We make clear that the n)-bl)cking rule bars br)adband pr)viders fr)m impairing )r degrading particular c)ntent, applicati)ns, services, )r n)n-harmful devices s) as t) render them effectively unusable (subject t) reas)nable netw)rk management).204 Such a pr)hibiti)n is c)nsistent with the )bservati)n )f a number )f c)mmenters that degrading traffic can have the same effects as )utright bl)cking,205 and that such an appr)ach is c)nsistent with the traditi)nal interpretati)n )f the Internet P)licy Statement.206 The C)mmissi)n has rec)gnized that in s)me circumstances the distincti)n between bl)cking and degrading (such as by delaying) traffic is merely “semantic.”207

67. S)me c)ncerns have been expressed that br)adband pr)viders may seek t) charge edge pr)viders simply f)r delivering traffic t) )r carrying traffic fr)m the br)adband pr)vider’s end-user cust)mers.208 T) the extent that a c)ntent, applicati)n, )r service pr)vider

201 The “n) bl)cking” rule d)es n)t imp)se any independent legal )bligati)n )n br)adband Internet access service pr)viders t) be the arbiter )f what is lawful. See, e.g., WISPA C)mments at 12–13; see als, infra Part III.F.202 We n)te that MVPDs, pursuant t) secti)n 629 and the C)mmissi)n’s implementing regulati)ns, are already subject t) similar requirements that give end users the right t) attach devices t) an MVPD system pr)vided that the attached equipment d)es n)t cause electr)nic )r physical harm )r assist in the unauth)rized receipt )f service. See Implementati,n ,f Secti,n 304 ,f the Telec,mmunicati,ns Act ,f 1996, C,mmercial Availibility ,f Navigati,n Devices, Rep)rt and Order, 13 FCC Rcd 14775 (1998); 47 U.S.C. § 549; 47 C.F.R. §§ 76.1201–03. N)thing in this Order is intended t) alter th)se existing rules.203 F)r example, a DOCSIS-based br)adband pr)vider is n)t required t) supp)rt a DSL m)dem. See ACA C)mments at 13–14; see als, Satellite Br)adband C)mmenters C)mments at 8–9 (n)ting that an antenna and ass)ciated m)dem must c)mply with equipment and pr)t)c)l standards set by satellite c)mpanies, but that “c)nsumers can [then] attach . . . any pers)nal c)mputer )r wireless r)uter they wish”).204 We d) n)t find it appr)priate t) interpret )ur rule t) imp)se a blanket pr)hibiti)n )n degradati)n )f traffic m)re generally. C)ngesti)n )rdinarily results in degradati)n )f traffic, and such an interpretati)n c)uld effectively pr)hibit br)adband pr)viders fr)m permitting c)ngesti)n t) )ccur )n their netw)rks. Alth)ugh we expect br)adband pr)viders t) c)ntinue t) expand the capacity )f their netw)rks—and we believe )ur rules help ensure that they c)ntinue t) have incentives t) d) s)—we rec)gnize that s)me netw)rk c)ngesti)n may be unav)idable. See, e.g., AT&T C)mments at 65; TWC C)mments at 16–18; Internet Freed)m C)aliti)n Reply at 5.205 See, e.g., DCIA C)mments at 8; William Lehr et al. C)mments at 13, 14, 20; G))gle C)mments at 41, 58, 62, 77–78, 81–82; NAR C)mments at 2; Red Hat C)mments at 3; V)nage C)mments at 17; DISH Reply at 8–9; Skype Reply at 13–14.206 See, e.g., AT&T C)mments at 8; OIC Reply at 9–10.207 C,mcast Order, 23 FCC Rcd at 13053, para. 44.208 See supra n)te 63.


40

c)uld av)id being bl)cked )nly by paying a fee, charging such a fee w)uld n)t be permissible under these rules.209

2. N( Unreas(nable Discriminati(n68. Based )n )ur findings that fixed br)adband pr)viders have incentives and the

ability t) discriminate in their handling )f netw)rk traffic in ways that can harm inn)vati)n, investment, c)mpetiti)n, end users, and free expressi)n,210 we ad)pt the f)ll)wing rule:

A pers,n engaged in the pr,visi,n ,f fixed br,adband Internet access service, ins,far as such pers,n is s, engaged, shall n,t unreas,nably discriminate in transmitting lawful netw,rk traffic ,ver a c,nsumer’s br,adband Internet access service. Reas,nable netw,rk management shall n,t c,nstitute unreas,nable discriminati,n.211

69. The rule strikes an appr)priate balance between restricting harmful c)nduct and permitting beneficial f)rms )f differential treatment. As the rule specifically pr)vides, and as discussed bel)w, discriminati)n by a br)adband pr)vider that c)nstitutes “reas)nable netw)rk management” is “reas)nable” discriminati)n.212 We pr)vide further guidance regarding distinguishing reas)nable fr)m unreas)nable discriminati)n:

70. Transparency. Differential treatment )f traffic is m)re likely t) be reas)nable the m)re transparent t) the end user that treatment is. The C)mmissi)n has previ)usly f)und br)adband pr)vider practices t) vi)late )pen Internet principles in part because they were n)t discl)sed t) end users.213 Transparency is particularly imp)rtant with respect t) the discriminat)ry treatment )f traffic as it is )ften difficult f)r end users t) determine the causes )f sl)w )r p))r perf)rmance )f c)ntent, applicati)ns, services, )r devices.214

71. End-User C,ntr,l. Maximizing end-user c)ntr)l is a p)licy g)al C)ngress rec)gnized in Secti)n 230(b) )f the C)mmunicati)ns Act, and end-user ch)ice and c)ntr)l are t)uchst)nes in evaluating the reas)nableness )f discriminati)n.215 As )ne c)mmenter )bserves, “letting users ch))se h)w they want t) use the netw)rk enables them t) use the Internet in a way that creates m)re value f)r them (and f)r s)ciety) than if netw)rk pr)viders made this ch)ice,”

209 We d) n)t intend )ur rules t) affect existing arrangements f)r netw)rk interc)nnecti)n, including existing paid peering arrangements.210 See supra Part II.211 See supra n)te 172 (defining “c)nsumer” f)r purp)ses )f these rules).212 See infra Part III.D. We als) make clear that )pen Internet pr)tecti)ns c)exist with )ther legal and regulat)ry framew)rks. See infra Part III.F. Except as )therwise described in this Order, we d) n)t address the p)ssible applicati)n )f the n) unreas)nable discriminati)n rule t) particular circumstances, despite the requests )f certain c)mmenters. See, e.g., AT&T C)mments at 64–77, 108–12; PAETEC C)mments at 13; see als, AT&T C)mments at 56 (arguing that s)me existing agreements c)uld be at )dds with limitati)ns )n pay f)r pri)rity arrangements). Rather, we find it m)re appr)priate t) address the applicati)n )f )ur rule in the c)ntext )f an appr)priate C)mmissi)n pr)ceeding with the benefit )f a m)re c)mprehensive rec)rd. 213 See C,mcast Order, 23 FCC Rcd at 13058–59, paras. 52–53.214 See, e.g., id. at 13058-59, para. 52.215 “The rapidly devel)ping array )f Internet and )ther interactive c)mputer services . . . )ffer[] users a great degree )f c)ntr)l )ver the inf)rmati)n that they receive, as well as the p,tential f,r even greater c,ntr,l in the future as techn)l)gy devel)ps.” 47 U.S.C. § 230(a)(1)–(2) (emphasis added).


41

and “is an imp)rtant part )f the mechanism that pr)duces inn)vati)n under uncertainty.”216 Thus, enabling end users t) ch))se am)ng different br)adband )fferings based )n such fact)rs as assured data rates and reliability, )r t) select quality-)f-service enhancements )n their )wn c)nnecti)ns f)r traffic )f their ch))sing, w)uld be unlikely t) vi)late the n) unreas)nable discriminati)n rule, pr)vided the br)adband pr)vider’s )fferings were fully discl)sed and were n)t harmful t) c)mpetiti)n )r end users.217 We rec)gnize that there is n)t a binary distincti)n between end-user c)ntr)lled and br)adband-pr)vider c)ntr)lled practices, but rather a spectrum )f practices ranging fr)m m)re end-user c)ntr)lled t) m)re br)adband pr)vider-c)ntr)lled.218 And we d) n)t suggest that practices c)ntr)lled entirely by br)adband pr)viders are by definiti)n unreas)nable.

72. S)me c)mmenters suggest that )pen Internet pr)tecti)ns w)uld pr)hibit br)adband pr)viders fr)m )ffering their subscribers different tiers )f service )r fr)m charging their subscribers based )n bandwidth c)nsumed.219 We are, )f c)urse, always c)ncerned ab)ut anti-c)nsumer )r antic)mpetitive practices, and we remain s) here. H)wever, pr)hibiting tiered )r usage-based pricing and requiring all subscribers t) pay the same am)unt f)r br)adband service, regardless )f the perf)rmance )r usage )f the service, w)uld f)rce lighter end users )f the netw)rk t) subsidize heavier end users. It w)uld als) f)recl)se practices that may appr)priately align incentives t) enc)urage efficient use )f netw)rks.220 The framew)rk we ad)pt t)day d)es n)t prevent br)adband pr)viders fr)m asking subscribers wh) use the netw)rk less t) pay less, and subscribers wh) use the netw)rk m)re t) pay m)re.

73. Use-Agn,stic Discriminati,n. Differential treatment )f traffic that d)es n)t discriminate am)ng specific uses )f the netw)rk )r classes )f uses is likely reas)nable. F)r example, during peri)ds )f c)ngesti)n a br)adband pr)vider c)uld pr)vide m)re bandwidth t)

216 van Schewick Jan. 19, 2010 Ex Parte Letter. See als, id. at 4 n.6 ()bserving that: (1) the Internet “d)es n)t create value thr)ugh its existence al)ne. It creates value by enabling users t) d) the things they want )r need t) d);” (2) “[e]nabling widespread experimentati)n at the applicati)n-level and enabling users t) ch))se the applicati)ns they prefer is at the heart )f the mechanism that enables inn)vati)n under uncertainty t) be successful;” and (3) “[c])nsumers, n)t netw)rk pr)viders, sh)uld c)ntinue t) ch))se winners and l)sers )n the Internet”).217 In these types )f arrangements “[t]he br)adband pr)vider d)es n)t get any particular leverage, because the ability t) select which traffic gets pri)rity lies with individual subscribers. Meanwhile, an entity pr)viding c)ntent, applicati)ns, )r services d)es n)t need t) w)rry ab)ut striking up relati)nships with vari)us br)adband pr)viders t) )btain t)p treatment. All it needs t) w)rry ab)ut is building relati)nships with users and explaining t) th)se users whether and h)w they may want t) select the particular c)ntent, applicati)n, )r service f)r pri)rity treatment.” CDT C)mments at 27; see als, Amaz)n C)mments at 2–3; SureWest C)mments at 32–33. 218 We n)te that default settings set by br)adband pr)viders w)uld likely be c)nsidered m)re br)adband pr)vider-c)ntr)lled than end-user c)ntr)lled. See generally Jas)n Sc)tt J)hnst)n, Strategic Bargaining and the Ec,n,mic The,ry ,f C,ntract Default Rules, 100 YALE L.J. 615 (1990); Daniel Kahneman et al.,An,malies: The End,wment Effect, L,ss Aversi,n, and Status Qu, Bias, 5 J. ECON. PERSP. 193, 197–99(1991).219 See, e.g., Veriz)n C)mments at 70–71; AT&T C)mments at 10506; ALEC C)mments at 11; ALU C)mments at 8–9; Bright H)use C)mments at 7–8; CBW C)mments at 7–9. 220 See, e.g., CCIA C)mments at 14; CDT C)mments at 25–26; FTTH C)mments at 18 and Attach., A Netw,rk Engineer’s Primer at 20; OPASTCO C)mments at 15; T-M)bile C)mments at 20; Veriz)n C)mments at 56 & Attach. C, Michael D. T)pper Decl. at 57; but see Free Press C)mments at 54–55, 61–62; NJRC C)mments at 15; SONY C)mments at 7–8.


42

subscribers that have used the netw)rk less )ver s)me preceding peri)d )f time than t) heavier users.221 Use-agn)stic discriminati)n (s)metimes referred t) as applicati)n-agn)stic discriminati)n) is c)nsistent with Internet )penness because it d)es n)t interfere with end users’ ch)ices ab)ut which c)ntent, applicati)ns, services, )r devices t) use. N)r d)es it dist)rt c)mpetiti)n am)ng edge pr)viders.222

74. Standard Practices. The c)nf)rmity )r lack )f c)nf)rmity )f a practice with best practices and technical standards ad)pted by )pen, br)adly representative, and independent Internet engineering, g)vernance initiatives, )r standards-setting )rganizati)ns is an)ther fact)r t) be c)nsidered in evaluating reas)nableness. Rec)gnizing the imp)rtant r)le )f such gr)ups is c)nsistent with C)ngress’s intent that )ur rules in the Internet area sh)uld n)t “fetter[]” the free market with unnecessary regulati)n,223 and is c)nsistent with br)adband pr)viders’ hist)ric reliance )n such gr)ups.224 We make clear, h)wever, that we are n)t delegating auth)rity t) interpret )r implement )ur rules t) )utside b)dies.225

75. In evaluating unreas)nable discriminati)n, the types )f practices we w)uld be c)ncerned ab)ut include, but are n)t limited t), discriminati)n that harms an actual )r p)tential c)mpetit)r t) the br)adband pr)vider (such as by degrading V)IP applicati)ns )r services when the br)adband pr)vider )ffers teleph)ne service),226 that harms end users (such as by inhibiting end users fr)m accessing the c)ntent, applicati)ns, services, )r devices )f their ch)ice),227 )r that impairs free expressi)n (such as by sl)wing traffic fr)m a particular bl)g because the br)adband pr)vider disagrees with the bl)gger’s message).228

221 See, e.g., van Schewick Dec. 14, 2010 White Paper at 13.222 See CDT C)mments at 40 (“C)ngesti)n management practices sh)uld be agn)stic as t) b)th the c)ntent )f subscribers’ c)mmunicati)ns and the identities )f the parties with wh)m the subscribers are c)mmunicating.”); Ad H)c C)mments at 5–6 (“The agn)stic Internet has als) enabled vig)r)us c)mpetiti)n t) devel)p at the Internet’s ‘edge’ f)r new applicati)ns, equipment, c)ntent, and business pr)cesses.”); Free Press C)mments at 56 (n)ting that pr)t)c)l-agn)stic netw)rk management “d)es n)t select winners and l)sers )n the Internet by targeting specific applicati)n”).223 47 U.S.C. § 230(b)(2).224 Br)adband pr)viders’ practices hist)rically have relied )n the eff)rts )f such gr)ups, which f)ll)w )pen pr)cesses c)nducive t) br)ad participati)n. See, e.g., William Lehr et al. C)mments at 24; C)mcast C)mments at 53–59; FTTH C)mments at 12; Internet S)ciety (ISOC) C)mments at 1–2; OIC C)mments at 50–52; C)mcast Reply at 5–7. M)re)ver, Internet c)mmunity g)vernance gr)ups devel)p and enc)urage widespread implementati)n )f best practices, supp)rting an envir)nment that facilitates inn)vati)n. Seesupra Part II.A (discussing the benefits )f edge pr)viders having access t) a unif)rm service interface, c)nsisting )f a c)re set )f Internet standards and c)nventi)ns); CDT C)mments at 43–44.225 See, e.g., CDT C)mments at 38; ISOC C)mments at 2 (n)ting “that while )pen Internet standards pr)cesses are invaluable f)r establishing specificati)ns f)r best practices, the questi)n )f evaluating whether a given practice is implemented in a way that is reas)nable )r n)t (c)mpliance) is )utside )f their sc)pe”); OIC C)mments at 52; C)mcast Reply at 6 (n)ting that “the IETF itself demurs )n ‘p)licy-making’”).226 Cf., e.g., Madis)n River discussi)n supra para. 35.227 Cf., e.g., C)mcast-BitT)rrent discussi)n supra para. 35.228 Cf., e.g., CDT C)mments at 5 (describing decisi)n by Telus, )ne )f Canada’s largest br)adband pr)viders, t) bl)ck a web site created by an empl)yee lab)r uni)n that displayed inf)rmati)n ab)ut the uni)n’s c)ntract dispute with Telus); see als, Statement )f Andrew Jay Schwartzman, MAP, at FCC Open

(c)ntinued....)


43

76. F)r a number )f reas)ns, including th)se discussed ab)ve in Part II.B, a c)mmercial arrangement between a br)adband pr)vider and a third party t) directly )r indirectly fav)r s)me traffic )ver )ther traffic in the br)adband Internet access service c)nnecti)n t) a subscriber )f the br)adband pr)vider (i.e., “pay f)r pri)rity”) w)uld raise significant cause f)r c)ncern.229 First, pay f)r pri)rity w)uld represent a significant departure fr)m hist)rical and current practice. Since the beginning )f the Internet, Internet access pr)viders have typically n)t charged particular c)ntent )r applicati)n pr)viders fees t) reach the pr)viders’ retail service end users )r struck pay-f)r-pri)rity deals, and the rec)rd d)es n)t c)ntain evidence that U.S. br)adband pr)viders currently engage in such arrangements. Sec)nd this departure fr)m l)ngstanding n)rms c)uld cause great harm t) inn)vati)n and investment in and )n the Internet. As discussed ab)ve, pay-f)r-pri)rity arrangements c)uld raise barriers t) entry )n the Internet by requiring fees fr)m edge pr)viders, as well as transacti)n c)sts arising fr)m the need t) reach agreements with )ne )r m)re br)adband pr)viders t) access a critical mass )f p)tential end users.230 Fees imp)sed )n edge pr)viders may be excessive because few edge pr)viders have the ability t) bargain f)r lesser fees, and because n) br)adband pr)vider internalizes the full c)sts )f reduced inn)vati)n and the exit )f edge pr)viders fr)m the market.231 Third, pay-f)r-pri)rity arrangements may particularly harm n)n-c)mmercial end users, including individual bl)ggers, libraries, sch))ls, adv)cacy )rganizati)ns, and )ther speakers,232 especially th)se wh) c)mmunicate thr)ugh vide) )r )ther c)ntent sensitive t) netw)rk c)ngesti)n. Even )pen Internet skeptics ackn)wledge that pay f)r pri)rity may disadvantage n)n-c)mmercial uses )f the netw)rk, which are typically less able t) pay f)r pri)rity, and f)r which the Internet is a uniquely imp)rtant platf)rm.233 F)urth, br)adband pr)viders that s)ught t) )ffer pay-f)r-pri)rity services w)uld have an incentive t) limit the quality )f service pr)vided t) n)n-pri)ritized traffic.234 In light )f each )f these c)ncerns, as a general matter, it is unlikely that pay f)r pri)rity w)uld satisfy the “n) unreas)nable discriminati)n” standard. The practice )f a br)adband Internet access service pr)vider pri)ritizing its )wn c)ntent, applicati)ns, )r services, )r th)se )f its

(...c)ntinued fr)m previ)us page)Internet W)rksh)p: Speech, Dem)cratic Engagement, and the Open Internet, Dec. 15, 2009 (filed Dec. 17, 2009) at 1; ACLU PN C)mments at 9; Free Press PN C)mments at 24.229 The Open Internet NPRM pr)p)sed a flat ban )n discriminati)n and interpreted that requirement t) pr)hibit br)adband pr)viders fr)m “charg[ing] a c)ntent, applicati)n, )r service pr)vider f)r enhanced )r pri)ritized access t) the subscribers )f the br)adband Internet access service pr)vider.” Open Internet NPRM, 24 FCC Rcd at 13104–05, paras. 104, 106. In the c)ntext )f a “n) unreas)nable discriminati)n” rule that leaves interpretati)n t) a case-by-case pr)cess, we instead ad)pt the appr)ach t) pay f)r pri)rity described in this paragraph.230 See supra Part II.B; see als, PIC C)mments at 51 (expressing c)ncern ab)ut “market entrants [being required] t) neg)tiate separate pri)ritizati)n deals with the hundreds )f ISPs that serve the United States bef)re having an )pp)rtunity t) be nati)nally c)mpetitive”).231 See supra para. 25.232 See, e.g., Pr)f. Th)mas Nachbar N)v. 1, 2010 C)mments at 10 (c)nceding that “all)wing netw)rk pr)viders t) charge f)r preferred carriage may disadvantage n)n-c)mmercial c)ntent, applicati)n, and service pr)viders relative t) c)mmercial )nes”); Statement )f Michele C)mbs, The Christian C)aliti)n )f America, GN D)cket N). 09-191, WC D)cket N). 07-52, at 5 (filed Dec. 22, 2009) (expressing c)ncern ab)ut the impact )f pri)ritizati)n arrangements )n p)litical adv)cacy )rganizati)ns such as theirs); ALAC)mments at 2 (same f)r libraries); DEC C)mments at 7–12 (same f)r digital educati)n).233 See, e.g., Hemphill, supra n)te 123, at 161–62. 234 See supra para. 29.


44

affiliates, w)uld raise the same significant c)ncerns and w)uld be subject t) the same standards and c)nsiderati)ns in evaluating reas)nableness as third-party pay-f)r-pri)rity arrangements.235

77. Because we agree with the diverse gr)up )f c)mmenters wh) argue that any n)ndiscriminati)n rule sh)uld pr)hibit )nly unreas)nable discriminati)n, we decline t) ad)pt the m)re rigid n)ndiscriminati)n rule pr)p)sed in the Open Internet NPRM.236 A strict n)ndiscriminati)n rule w)uld be in tensi)n with )ur rec)gniti)n that s)me f)rms )f discriminati)n, including end-user c)ntr)lled discriminati)n, can be beneficial. The rule we ad)pt pr)vides br)adband pr)viders’ sufficient flexibility t) devel)p service )fferings and pricing plans, and t) effectively and reas)nably manage their netw)rks.237 We disagree with c)mmenters wh) argue that a standard based )n “reas)nableness” )r “unreas)nableness” is t)) vague t) give br)adband pr)viders fair n)tice )f what is expected )f them.238 This is n)t s). “Reas)nableness”

235 We reject arguments that )ur appr)ach t) pay-f)r-pri)rity arrangements is inc)nsistent with all)wing c)ntent-delivery netw)rks (CDNs). See, e.g., Cisc) C)mments at 11–12; TWC C)mments at 21–22, 65, 89–90; AT&T Reply at 49–53; Bright H)use Reply at 9. CDN services are designed t) reduce the capacity requirements and c)sts )f the CDN’s edge pr)vider clients by h)sting the c)ntent f)r th)se clients cl)ser t) end users. Unlike br)adband pr)viders, third-party CDN pr)viders d) n)t c)ntr)l the last-mile c)nnecti)n t) the end user. And CDNs that d) n)t depl)y within an edge pr)vider’s netw)rk may still reach an end user via the user’s br)adband c)nnecti)n. See CDT C)mments at 25 n.84; Ge)rge Ou C)mments (Preserving the Open and C)mpetitive Bandwidth Market) at 3; see als, Cisc) C)mments at 11; FTTH C)mments at 23–24. M)re)ver, CDNs typically pr)vide a benefit t) the sender and recipient )f traffic with)ut causing harm t) third-party traffic. Th)ugh we n)te disagreement regarding the impact )f CDNs )n )ther traffic, the rec)rd d)es n)t dem)nstrate that the use )f CDNs has any material adverse effect )n br)adband end users’ experience )f traffic that is n)t delivered via a CDN. C,mpare Letter fr)m S. Derek Turner, Free Press, t) Chairman Genach)wski et al., FCC, GN D)cket N). 09-191, WC D)cket N). 07-52, at 1–2 (filed July 29, 2010) with Letter fr)m Richard Bennett, ITIF, t) Chairman Genach)wski et al., FCC, GN D)cket N). 09-191, WC D)cket N). 07-52, Attach. at 12 (filed Aug. 9, 2010). Indeed, the same benefits derived fr)m using CDNs can be achieved if an edge pr)vider’s )wn servers happen t) be l)cated in cl)se pr)ximity t) end users. Everything )n the Internet that is accessible t) an end user is n)t, and cann)t be, in equal pr)ximity fr)m that end user. See J)hn Staurulakis Inc. C)mments at 5; Bret T. Swans)n Reply at 4. Finally, CDN pr)viders unaffiliated with br)adband pr)viders generally d) n)t c)mpete with edge pr)viders and thus generally lack ec)n)mic incentives ()r the ability) t) discriminate against edge pr)viders. See Akamai C)mments at 12; NASUCA Reply at 7; NCTA Reply at 25; see als, supra Part II.B. We likewise reject pr)p)sals t) limit )ur rules t) acti)ns taken at )r bel)w the “netw)rk layer.” See, e.g., G))gle C)mments at 24–26; V)nage Reply at 2; CDT Reply at 18; Pr)f. Sc)tt J)rdan (J)rdan) C)mments at 3; see als, Sc)tt J)rdan, A Layered Netw,rk Appr,ach t, Net Neutrality, INT’L J. OF

COMMC’N 427, 432–33 (2007) (describing the OSI layers m)del and the acti)ns )f r)uters at and bel)w the netw)rk layer) attached t, Letter fr)m Sc)tt J)rdan, Pr)fess)r, University )f Calif)rnia–Irvine, t) Office )f the Secretary, FCC, GN D)cket N). 09-191, WC D)cket N). 07-52 (filed Mar. 22, 2010). We are n)t persuaded that the pr)p)sed limitati)n is necessary )r appr)priate in this c)ntext.236 See, e.g., CWA C)mments at 14–16; N)kia C)mments at 10–11; TWC C)mments at 55, 58–61; TDS C)mments at 7. A few parties argued that such an appr)ach w)uld be inadequate. See, e.g., Nick)laus E. Leggett Jan. 5, 2010 C)mments at 3; Free Press C)mments at 79–80; OIC C)mments at 15–16, 35–36. 237 See Br)adcast Music Inc. (BMI) C)mments at 3–4; Internet Freed)m C)aliti)n C)mments at 3; Qwest C)mments at 34–36; AFTRA et al. Reply at 6–7.238 See, e.g., ACLJ C)mments at 5–7 (suggesting that ISPs cann)t kn)w what the agency will c)nsider “reas)nable” netw)rk management )r “discriminat)ry” treatment); Free Press C)mments at 85; Th)mas D. Sydn)r II C)mments at 6–9; Texas Office )f Public Utility C)unsel C)mments at 6–7.


45

is a well-established standard f)r regulatee c)nduct.239 As )ther c)mmenters have p)inted )ut, the term “reas)nable” is “b)th administrable and indispensable t) the s)und administrati)n )f the nati)n’s telec)mmunicati)ns laws.”240

78. We als) reject the argument that )nly “antic)mpetitive” discriminati)n yielding “substantial c)nsumer harm” sh)uld be pr)hibited by )ur rules.241 We are persuaded th)se pr)p)sed limiting terms are unduly narr)w and c)uld all)w discriminat)ry c)nduct that is c)ntrary t) the public interest.242 The br)ad purp)ses )f this rule—t) enc)urage c)mpetiti)n and rem)ve impediments t) infrastructure investment while pr)tecting c)nsumer ch)ice, free expressi)n, end-user c)ntr)l, and the ability t) inn)vate with)ut permissi)n243—cann)t be achieved by preventing )nly th)se practices that are dem)nstrably antic)mpetitive )r harmful t) c)nsumers. Rather, the rule rests )n the general pr)p)siti)n that br)adband pr)viders sh)uld n)t pick winners and l)sers )n the Internet—even f)r reas)ns that may be independent )f pr)viders’

239 As recently as 1995, C)ngress ad)pted the venerable “reas)nableness” standard when it rec)dified pr)visi)ns )f the Interstate C)mmerce Act. ICC Terminati)n Act )f 1995, Pub. L. N). 104-88, § 106(a) (n)w c)dified at 49 U.S.C. § 15501).240 AT&T Reply at 33–34 (“And n) )ne has seri)usly suggested that Secti)n 202 sh)uld itself be amended t) rem)ve the ‘unreas)nable’ qualifier )n the gr)und that the qualifier is t)) ‘murky’ )r ‘c)mplex.’ Seventy-five years )f experience have sh)wn that qualifier t) be b)th administrable and indispensable t) the s)und administrati)n )f the nati)n’s telec)mmunicati)ns laws.”); see als, C)mcast Reply at 26 (“[T]he C)mmissi)n sh)uld embrace the str)ng guidance against an )verbr)ad rule and, instead, devel)p a standard based )n ‘unreas)nable and antic)mpetitive discriminati)n.’”); Sprint Reply at 23 (“The unreas)nable discriminati)n standard c)ntained in Secti)n 202(a) )f the Act c)ntains the very flexibility the C)mmissi)n needs t) distinguish desirable fr)m impr)per discriminati)n.”); Th,mas v. Chicag, Park District, 534 U.S. 316, 324 (2002) (h)lding that denial )f a permit “when the intended use w)uld present an unreas)nable danger t) the health and safety )f park users )r Park District empl)yees” is a standard that is “reas)nably specific and )bjective, and d)[es] n)t leave the decisi)n ‘t) the whim )f the administrat)r’”) (citati)n )mitted); Camer,n v. J,hns,n, 390 U.S. 611, 615–16 (1968) (stating that “unreas)nably” “is a widely used and well underst))d w)rd, and clearly s) when juxtap)sed with ‘)bstruct’ and ‘interfere’”).241 See, e.g., Cisc) C)mments at 8 n.14; C)rning C)mments at 16; C)mcast Reply at 23–25; TIA Reply at 13–17. 242 See, e.g., Letter fr)m Barbara van Schewick, Stanf)rd Law Sch))l, t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N). 09-191, at 1–2 (filed Dec. 10, 2010) (n)ting that c)ncerns ab)ut discriminati)n g) bey)nd “antic)mpetitive” behavi)r )r harms t) c)mpetiti)n, as th)se terms are underst))d in antitrust law); United States v. FCC, 652 F.2d 72, (D.C. Cir. 1980) (“The agency’s determinati)n ab)ut the pr)per r)le )f c)mpetitive f)rces in an industry must theref)re be based, n)t exclusively )n the letter )f the antitrust laws, but als) )n the ‘special c)nsiderati)ns’ )f the particular industry. As the Supreme C)urt has said, res)luti)n )f the s)metimes-c)nflicting public interest c)nsiderati)ns ‘is a c)mplex task which requires extensive facilities, expert judgment and c)nsiderable kn)wledge )f the . . . industry. C)ngress left that task t) the C)mmissi)n . . . .” (qu)ting McLean Trucking C,. v. United States, 321 U.S. 67, 87 (1944)) (f))tn)tes )mitted). 243 See supra Parts I and II; Letter fr)m Pr)f. Barbara van Schewick, Pr)fess)r, Stanf)rd Law Sch))l, t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N). 09-191, WC D)cket N). 07-52, Attach. at 4 (filed Aug. 2, 2010) (van Schewick Aug. 2, 2010 Ex Parte Letter) ()bserving that such a rule w)uld “make[] it imp)ssible t) c)nsider the p)tential impact )f discriminat)ry c)nduct )n the Internet’s ability t) realize its s)cial, cultural and p)litical p)tential—imp)rtant aspects that the )pen Internet rules are intended t) pr)tect”).


46

c)mpetitive interests244 )r that may n)t immediately )r dem)nstrably cause substantial c)nsumer harm.245

79. We disagree with c)mmenters wh) argue that a rule against unreas)nable discriminati)n vi)lates secti)n 3(51) )f the C)mmunicati)ns Act f)r th)se br)adband pr)viders that are telec)mmunicati)ns carriers but d) n)t pr)vide their br)adband Internet access service as a telec)mmunicati)ns service.246 Secti)n 3(51) pr)vides that a “telec)mmunicati)ns carrier shall be treated as a c)mm)n carrier under this Act )nly t) the extent that it is engaged in pr)viding telec)mmunicati)ns services.”247 This limitati)n is n)t relevant t) the C)mmissi)n’s acti)ns here.248 The hallmark )f c)mm)n carriage is an “undertak[ing] t) carry f)r all pe)ple indifferently.”249 An entity “will n)t be a c)mm)n carrier where its practice is t) make individualized decisi)ns, in particular cases, whether and )n what terms t) deal” with p)tential

244 See van Schewick Aug. 2, 2010 Ex Parte Letter, Attach. at 2–3. See als,, e.g., Letter fr)m Chris Riley, P)licy C)unsel, Free Press, t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N). 09-191, WC D)cket N). 07-52, Attach. (filed N)v. 24, 2009) (arguing that certain types )f pri)ritizati)n are harmful, regardless )f any underlying antic)mpetitive m)tive )n the part )f the br)adband pr)vider).245 F)r example, sl)wing BitT)rrent packets might )nly affect a few end users, but it w)uld harm BitT)rrent. M)re significantly, it w)uld raise c)ncerns am)ng )ther end users and edge pr)viders that their traffic c)uld be sl)wed f)r any reas)n—)r n) reas)n at all—which c)uld in turn reduce incentives t) inn)vate and invest, and change the fundamental nature )f the Internet as an )pen platf)rm. See supra Part II.246 See, e.g., AT&T C)mments at 209–11; Veriz)n C)mments at 93–95; CTIA PN Reply at 20–21. We d) n)t read the Supreme C)urt’s decisi)n in FCC v. Midwest Vide, C,rp. as addressing rules like the rules we ad)pt t)day. 440 U.S. 689 (1979). There, the C)urt held that )bligati)ns )n cable pr)viders t) “h)ld )ut dedicated channels )n a first-c)me, n)ndiscriminat)ry basis . . . relegated cable systems, pr, tant,, t) c)mm)n-carrier status.” Id. at 700–01. N)ne )f the rules ad)pted in this Order requires a br)adband pr)vider t) “h)ld )ut” any capacity f)r the exclusive use )f third parties )r make a public )ffering )f its service.247 47 U.S.C. § 153(51). Secti)n 332(c)(2) c)ntains a restricti)n similar t) that )f § 3(51): “A pers)n engaged in the pr)visi)n )f a service that is a private m)bile service shall n)t, ins)far as such pers)n is s) engaged, be treated as a c)mm)n carrier f)r any purp)se under this Act.” Id. § 332(c)(2). Because we are n)t imp)sing any c)mm)n carrier )bligati)ns )n any br)adband pr)vider, including pr)viders )f “private m)bile service” as defined in § 332(d)(3), )ur requirements d) n)t vi)late the limitati)n in § 332(c)(2).248 C)urts have ackn)wledged that the C)mmissi)n is entitled t) deference in interpreting the definiti)n )f “c)mm)n carrier.” See AT&T v. FCC, 572 F.2d 17, 24 (2d Cir. 1978) (citing Red Li,n Br,ad. C,. v. FCC, 395 U.S. 367, 381 (1969)). In ad)pting the rule against unreas)nable discriminati)n, we rely, in part, )n )ur auth)rity under secti)n 706, which is n)t part )f the C)mmunicati)ns Act. C)ngress enacted secti)n 706 as part )f the Telec)mmunicati)ns Act )f 1996 and m)re recently c)dified the pr)visi)n in Chapter 12 )f Title 47, at 47 U.S.C. § 1302. The seven titles that c)mprise the C)mmunicati)ns Act appear in Chapter 5 )f Title 47. C)nsequently, even if the rule against unreas)nable discriminati)n were interpreted t) require c)mm)n carriage in a particular case, that result w)uld n)t run af)ul )f secti)n 3(51) because a netw)rk )perat)r w)uld be treated as a c)mm)n carrier pursuant t) secti)n 706, n)t “under” the C)mmunicati)ns Act.249 Nat’l Ass’n ,f Reg. Util. C,mm’rs v. FCC, 525 F.2d 630, 641 (D.C. Cir. 1976) (NARUC I) (qu)ting Sem,n v. R,yal Indemnity C,., 279 F.2d 737, 739 (5th Cir. 1960) and )ther cases); see als, Veriz)n C)mments at 93 (“‘[T]he primary sine qua n)n )f c)mm)n carrier status is a quasi-public character, which arises )ut )f the undertaking ‘t) carry f)r all pe)ple indifferently . . . .’” (qu)ting Nat’l Ass’n ,f Reg. Util. C,mm’rs v. FCC, 533 F.2d 601, 608 (D.C. Cir. 1976) (NARUC II)). But see CTIA Reply at 57 (suggesting that n)ndiscriminati)n is the sine qua n,n )f c)mm)n carrier regulati)n referred t) in NARUC II).


47

cust)mers.250 The cust)mers at issue here are the end users wh) subscribe t) br)adband Internet access services.251 With respect t) th)se cust)mers, a br)adband pr)vider may make individualized decisi)ns. A br)adband pr)vider that ch))ses n)t t) )ffer its br)adband Internet access service )n a c)mm)n carriage basis can, f)r instance, decide )n a case-by-case basis whether t) serve a particular end user, what c)nnecti)n speed(s) t) )ffer, and at what price. The )pen Internet rules bec)me effective )nly after such a pr)vider has v)luntarily entered int) a mutually satisfact)ry arrangement with the end user, which may be tail)red t) that user. Even then, as discussed ab)ve, the all)wance f)r reas)nable disparities permits cust)mized service features such as th)se that enhance end user c)ntr)l )ver what Internet c)ntent is received. This flexibility t) cust)mize service arrangements f)r a particular cust)mer is the hallmark )f private carriage, which is the antithesis )f c)mm)n carriage.252

D. Reas(nable Netw(rk Management80. Since at least 2005, when the C)mmissi)n ad)pted the Internet P,licy Statement,

we have rec)gnized that a fl)urishing and )pen Internet requires r)bust, well-functi)ning br)adband netw)rks, and acc)rdingly that )pen Internet pr)tecti)ns require br)adband pr)viders t) be able t) reas)nably manage their netw)rks. The )pen Internet rules we ad)pt t)day expressly pr)vide f)r and define “reas)nable netw)rk management” in )rder t) pr)vide greater clarity t) br)adband pr)viders, netw)rk equipment pr)viders, and Internet end users and edge pr)viders regarding the types )f netw)rk management practices that are c)nsistent with )pen Internet pr)tecti)ns.

81. In the Open Internet NPRM, the C)mmissi)n pr)p)sed that )pen Internet rules be subject t) reas)nable netw)rk management, c)nsisting )f “reas)nable practices empl)yed by a pr)vider )f br)adband Internet access service t): (1) reduce )r mitigate the effects )f c)ngesti)n

250 NARUC I, 525 F.2d at 641 (citing Sem,n, 279 F.2d at 739–40). C)mmenters assert that any )bligati)n that is similar t) an )bligati)n that appears in Title II )f the Act is a “c)mm)n carrier” )bligati)n. See, e.g., AT&T C)mments at 210–11. We disagree. Just because an )bligati)n appears within Title II d)es n)t mean that the imp)siti)n )f that )bligati)n )r a similar )ne results in “treating” an entity as a c)mm)n carrier. F)r the meaning )f c)mm)n carriage treatment, which is n)t defined in the Act, we l))k t) caselaw as discussed in the text.251 Even if edge pr)viders were c)nsidered “cust)mers” )f the br)adband pr)vider, the br)adband pr)vider w)uld n)t be a c)mm)n carrier with regard t) the r)le it plays in transmitting edge pr)viders’ traffic. Our rules permit br)adband pr)viders t) engage in reas)nable netw)rk management and, under certain circumstances, bl)ck traffic and devices, engage in reas)nable discriminati)n, and pri)ritize traffic at subscribers’ request. Bl)cking )r depri)ritizing certain traffic is far fr)m “undertak[ing] t) carry f)r all [edge pr)viders] indifferently.” See NARUC I, 525 F.2d at 641.252 See Sw. Bell Tel. C,. v. FCC, 19 F.3d 1475, 1481 (D.C. Cir. 1994) (“If the carrier ch))ses its clients )n an individual basis and determines in each particular case whether and )n what terms t) serve and there is n) specific regulat)ry c)mpulsi)n t) serve all indifferently, the entity is a private carrier f)r that particular service and the C)mmissi)n is n)t at liberty t) subject the entity t) regulati)n as a c)mm)n carrier.”) (internal qu)tati)n marks )mitted). Alth)ugh pr)m)ting c)mpetiti)n thr)ugh)ut the Internet ec)system is a central purp)se )f these rules, we decline t) ad)pt as a rule the Internet P,licy Statement principle regarding c)nsumers’ entitlement t) c)mpetiti)n. We agree with th)se c)mmenters that argue that the principle is t)) vague t) be reduced t) a rule and that the pr)p)sed rule as stated failed t) pr)vide any meaningful guidance regarding what c)nduct is and is n)t permissible. See, e.g., Veriz)n C)mments at 4, 53; TPPF C)mments at 7. A rule barring br)adband pr)viders fr)m depriving end users )f their entitlement t) c)mpetiti)n d)es n)t appear t) be a viable meth)d )f pr)m)ting c)mpetiti)n. We als) d) n)t wish t) duplicate c)mpetitive analyses carried )ut by the Department )f Justice, the FTC, )r the C)mmissi)n’s merger review pr)cess.


48

)n its netw)rk )r t) address quality-)f-service c)ncerns; (2) address traffic that is unwanted by users )r harmful; (3) prevent the transfer )f unlawful c)ntent; )r (4) prevent the unlawful transfer )f c)ntent.”253 The pr)p)sed definiti)n als) stated that reas)nable netw)rk management c)nsists )f “)ther reas)nable netw)rk management practices.”254

82. Up)n reviewing the rec)rd, we c)nclude that the definiti)n )f reas)nable netw)rk management sh)uld pr)vide greater clarity regarding the standard used t) gauge reas)nableness, expressly acc)unt f)r techn)l)gical differences am)ng netw)rks that may affect reas)nable netw)rk management, and )mit elements that d) n)t relate directly t) netw)rk management functi)ns and are theref)re better handled elsewhere in the rules—f)r example, measures t) prevent the transfer )f unlawful c)ntent.255 We theref)re ad)pt the f)ll)wing definiti)n )f reas)nable netw)rk management:

A netw,rk management practice is reas,nable if it is appr,priate and tail,red t, achieving a legitimate netw,rk management purp,se, taking int, acc,unt the particular netw,rk architecture and techn,l,gy ,f the br,adband Internet access service.

Legitimate netw)rk management purp)ses include: ensuring netw)rk security and integrity, including by addressing traffic that is harmful t) the netw)rk;256 addressing traffic that is unwanted by end users (including by premise )perat)rs), such as by pr)viding services )r capabilities c)nsistent with an end user’s ch)ices regarding parental c)ntr)ls )r security capabilities;257 and reducing )r mitigating the effects )f c)ngesti)n )n the netw)rk.258 The term “particular netw)rk architecture and techn)l)gy” refers t) the differences acr)ss access platf)rms such as cable, DSL, satellite, and fixed wireless.

83. As pr)p)sed in the Open Internet NPRM, we will further devel)p the sc)pe )f reas)nable netw)rk management )n a case-by-case basis, as c)mplaints ab)ut br)adband pr)viders’ actual practices arise.259 The n)velty )f Internet access and traffic management questi)ns, the c)mplex nature )f the Internet, and a general p)licy )f restraint in setting p)licy f)r Internet access service pr)viders weigh in fav)r )f a case-by-case appr)ach.260

84. In taking this appr)ach, we rec)gnize the need t) balance clarity with flexibility.261 We discuss bel)w certain principles and c)nsiderati)ns that will inf)rm the

253 Open Internet NPRM, 24 FCC Rcd at 13112–15, paras. 133–41.254 Id. 255 See, e.g., CCIA/CEA C)mments at 21–23, 26–27; CDT C)mments at 41; OIC C)mments at 67; EFF C)mments at 5, 10–18; G))gle C)mments at 72–73; PIC C)mments at 39, 41–44, 53–63. See als, infra Part III.F.256 See, e.g., AT&T C)mments at 75–78; CenturyLink C)mments at 8; Cisc) C)mments at 4; CWA C)mments at 24; TIA C)mments at 13–14.257 See, e.g., Cisc) C)mments at 4; CCIA C)mments at 18–19; GSM C)mments at 20–21; TIA C)mments at 13–14, 34. 258 See, e.g., CCIA C)mments at 12–17; C)x C)mments at 21–23, 30–33; TIA C)mments at 34.259 Open Internet NPRM, 24 FCC Rcd at 13112, para. 134. Several c)mmenters supp)rt this appr)ach. See, e.g., CDT C)mments at 38; Skype C)mments at 15; AOL Reply at 3.260 Open Internet NPRM, 24 FCC Rcd at 13112, para. 134 (citing C,mcast Order, 23 FCC Rcd at 13045–46, paras. 29–32). 261 S)me parties c)ntend that there will be uncertainty ass)ciated with )pen Internet rules, subject t) reas)nable netw)rk management, which will limit pr)vider flexibility, stifle inn)vati)n, and sl)w

(c)ntinued....)


49

C)mmissi)n’s case-by-case analysis. Further, alth)ugh br)adband pr)viders are n)t required t) seek permissi)n fr)m the C)mmissi)n bef)re depl)ying a netw)rk management practice, they )r )thers are free t) d) s), f)r example by seeking a declarat)ry ruling.262

85. We reject pr)p)sals t) define reas)nable netw)rk management practices m)re expansively263 )r m)re narr)wly than stated ab)ve.264 We agree with c)mmenters that the C)mmissi)n sh)uld n)t ad)pt the “narr)wly )r carefully tail)red” standard discussed in the C,mcast Netw,rk Management Practices Order.265 We find that this standard is unnecessarily restrictive and may )verly c)nstrain netw)rk engineering decisi)ns.266 M)re)ver, the “narr)wly tail)red” language c)uld be read t) imp)rt strict scrutiny d)ctrine fr)m c)nstituti)nal law, which we are n)t persuaded w)uld be helpful here. Br)adband pr)viders may empl)y netw)rk management practices that are appr)priate and tail)red t) the netw)rk management purp)se they seek t) achieve, but they need n)t necessarily empl)y the m)st narr)wly tail)red practice the)retically available t) them.

86. We als) ackn)wledge that reas)nable netw)rk management practices may differ acr)ss platf)rms. F)r example, practices needed t) manage c)ngesti)n )n a fixed satellite netw)rk may be inappr)priate f)r a fiber-t)-the-h)me netw)rk.267 We als) rec)gnize the unique netw)rk management challenges facing br)adband pr)viders that use unlicensed spectrum t) deliver service t) end users.268 Unlicensed spectrum is shared am)ng multiple users and techn)l)gies and n) single user can c)ntr)l )r assure access t) the spectrum. We believe the

(...c)ntinued fr)m previ)us page)pr)viders’ resp)nse time in managing their netw)rks. See, e.g., ADTRAN C)mments at 11–13; Barbara Esbin (Esbin) C)mments at 7. F)r example, s)me parties express c)ncern that that the definiti)n pr)p)sed in the Open Internet NPRM pr)vided insufficient guidance regarding what standard will be used t) determine whether a given practice is “reas)nable.” See, e.g., ADTRAN C)mments at 13; AT&T C)mments at 13; CDT C)mments at 38; PIC C)mments at 35–36, 39; Texas PUC C)mments at 6–7; Veriz)n Reply at 8, 75, 78. Others c)ntend that alth)ugh clarity is needed, the C)mmissi)n sh)uld n)t list categ)ries )f activities c)nsidered reas)nable. See, e.g., Free Press C)mments at 82, 85–86. We seek t) balance these interests thr)ugh general rules designed t) give pr)viders sufficient flexibility t) implement necessary netw)rk management practices, c)upled with guidance regarding certain principles and c)nsiderati)ns that will inf)rm the C)mmissi)n’s case-by-case analysis. 262 See 47 C.F.R. § 1.2 (pr)viding f)r “a declarat)ry ruling terminating a c)ntr)versy )r rem)ving uncertainty”).263 See, e.g., AT&T C)mments at 183–87; ITIF C)mments at 26–27.264 See, e.g., Free Press C)mments at 83–94; PIC C)mments at 37–51.265 See C,mcast Netw,rk Management Practices Order, 23 FCC Rcd at 13055–56, para. 47 (stating that, t) be c)nsidered “reas)nable” a netw)rk management practice “sh)uld further a critically imp)rtant interest and be narr)wly )r carefully tail)red t) serve that interest”); see als, AT&T C)mments at 186–87 (arguing that the C,mcast standard is t)) narr)w); Level 3 C)mments at 14; PAETEC C)mments at 17–18. But seeFree Press C)mments at 91–92 (stating that the C)mmissi)n sh)uld n)t retreat fr)m the fundamental framew)rk )f the C,mcast standard). A “reas)nableness” standard als) has the advantage )f being administrable and familiar. See supra para. 77.266 See, e.g., Level 3 C)mments at 14 (asserting that setting a restrictive standard may make )perat)rs less willing t) take pr)phylactic acti)ns when pr)blems )ccur). 267 See AT&T C)mments at 187; G))gle C)mments at 68; Hughes Netw)rk Systems PN C)mment at 3.268 See, e.g., LARIAT C)mments at 2–3.


50

c)ncept )f reas)nable netw)rk management is sufficiently flexible t) aff)rd such pr)viders the latitude they need t) effectively manage their netw)rks.269

87. The principles guiding case-by-case evaluati)ns )f netw)rk management practices are much the same as th)se that guide assessments )f “n) unreas)nable discriminati)n,” and include transparency,270 end-user c)ntr)l,271 and use- ()r applicati)n-) agn)stic treatment.272 We als) )ffer guidance in the specific c)ntext )f the legitimate netw)rk management purp)ses listed ab)ve.

88. Netw,rk Security ,r Integrity and Traffic Unwanted by End Users. Br)adband pr)viders may implement reas)nable practices t) ensure netw)rk security and integrity, including by addressing traffic that is harmful t) the netw)rk.273 Many c)mmenters str)ngly supp)rt all)wing br)adband pr)viders t) implement such netw)rk management practices.274 S)me c)mmenters, h)wever, express c)ncern that pr)viders might implement antic)mpetitive )r )therwise pr)blematic practices in the name )f pr)tecting netw)rk security.275 We make clear that, f)r the singling )ut )f any specific applicati)n f)r bl)cking )r degradati)n based )n harm t) the netw)rk t) be a reas)nable netw)rk management practice, a br)adband pr)vider sh)uld be prepared t) pr)vide a substantive explanati)n f)r c)ncluding that the particular traffic is harmful t) the netw)rk, such as traffic that c)nstitutes a denial-)f-service attack )n specific netw)rk infrastructure elements )r expl)its a particular security vulnerability.

89. Br)adband pr)viders als) may implement reas)nable practices t) address traffic that a particular end user ch))ses n)t t) receive. Thus, f)r example, a br)adband pr)vider c)uld pr)vide services )r capabilities c)nsistent with an end user’s ch)ices regarding parental c)ntr)ls,276 )r all)w end users t) ch))se a service that pr)vides access t) the Internet but n)t t)

269 See Appendix A, § 8.11. We rec)gnize that the standards f)r f)urth-generati)n (4G) wireless netw)rks include the capability t) pri)ritize particular types )f traffic, and that )ther br)adband Internet access services may inc)rp)rate similar features. Whether particular uses )f these techn)l)gies c)nstitute reas)nable netw)rk management will depend )n whether they are appr)priate and tail)red t) achieving a legitimate netw)rk management purp)se.270 See, e.g., RNK C)mments at 7 (arguing that transparency will help prevent impr)per practices fr)m masquerading as reas)nable netw)rk management); CCIA/CEA C)mments at 30–33. 271 See 47 U.S.C. § 230(b)(3).272 See supra para. 73.273 In the c)ntext )f br)adband Internet access service, techniques t) ensure netw)rk security and integrity are designed t) pr)tect the access netw)rk and the Internet against acti)ns by malici)us )r c)mpr)mised end systems. Examples include spam, b)tnets, and distributed denial )f service attacks. Unwanted traffic includes w)rms, malware, and viruses that expl)it end-user system vulnerabilities; denial )f service attacks; and spam. See IETF, REPORT FROM THE IAB WORKSHOP ON UNWANTED TRAFFIC MARCH 9–10, 2006, RFC 4948, at 31 (Aug. 2007), available at www.rfc-edit)r.)rg/rfc/rfc4948.txt.274 See, e.g., AT&T C)mments at 75, 184–86; Amaz)n C)mments at 3; C)mcast C)mments at 51, 58–59; Messaging Anti-Abuse W)rking Gr)up C)mments at 2–5; Veriz)n C)mments at 82; SIIA C)mments at 7. 275 See Free Press C)mments at 5, 78.276 See, e.g., G))gle C)mments at 72; NCTA C)mments at 30–31; M)bile Future PN C)mments at 5; Letter fr)m M)st Reverend Ge)rge H. Niederauer, Archbish)p )f San Francisc), Chairman, C)mmunicati)ns C)mmittee, United States C)nference )f Cath)lic Bish)ps, t) Chairman Genach)wski et al., FCC, GN D)cket N). 09-191, WC D)cket N). 07-52 (filed Oct. 23, 2009).


51

p)rn)graphic websites.277 Likewise, a br)adband pr)vider serving a premise )perat)r c)uld restrict traffic unwanted by that entity,278 th)ugh such restricti)ns sh)uld be discl)sed. Our rule will n)t imp)se liability )n a br)adband pr)vider where such liability is pr)hibited by secti)n 230(c)(2) )f the Act.279

90. We n)te that, in s)me cases, mechanisms that reduce )r eliminate s)me f)rms )f harmful )r unwanted traffic may als) interfere with legitimate netw)rk traffic. Such mechanisms must be appr)priate and tail)red t) the threat; sh)uld be evaluated peri)dically as t) their c)ntinued necessity; and sh)uld all)w end users t) )pt-in )r )pt-)ut if p)ssible.280 Discl)sures )f netw)rk management practices used t) address netw)rk security )r traffic a particular end user d)es n)t want t) receive sh)uld clearly state the )bjective )f the mechanism and, if applicable, h)w an end user can )pt in )r )ut )f the practice.

91. Netw,rk C,ngesti,n. Numer)us c)mmenters supp)rt permitting the use )f reas)nable netw)rk management practices t) address the effects )f c)ngesti)n, and we agree that c)ngesti)n management may be a legitimate netw)rk management purp)se.281 F)r example, br)adband pr)viders may need t) take reas)nable steps t) ensure that heavy users d) n)t cr)wd )ut )thers. What c)nstitutes c)ngesti)n and what measures are reas)nable t) address it may vary depending )n the techn)l)gy platf)rm f)r a particular br)adband Internet access service. F)r example, if cable m)dem subscribers in a particular neighb)rh))d are experiencing c)ngesti)n, it may be reas)nable f)r a br)adband pr)vider t) temp)rarily limit the bandwidth available t) individual end users in that neighb)rh))d wh) are using a substantially dispr)p)rti)nate am)unt )f bandwidth.282

92. We emphasize that reas)nable netw)rk management practices are n)t limited t) the categ)ries described here, and that br)adband pr)viders may take )ther reas)nable steps t) maintain the pr)per functi)ning )f their netw)rks, c)nsistent with the definiti)n )f reas)nable netw)rk management we ad)pt. As we stated in the Open Internet NPRM, “we d) n)t presume t) kn)w n)w everything that pr)viders may need t) d) t) pr)vide r)bust, safe, and secure Internet

277 See, e.g., TWC Reply at 25 (hyp)thesizing ab)ut a “br)adband Internet access service pr)vider [that] emulated Apple’s practices )f limiting access t) certain types )f sites (such as th)se inv)lving p)rn)graphy)”).278 See EFF C)mments at 26–27. See generally supra Part III.A.279 See 47 U.S.C. § 230(c)(2) (n) pr)vider )f an interactive c)mputer service shall be held liable )n acc)unt )f “(A) any acti)n v)luntarily taken in g))d faith t) restrict access t) )r availability )f material that the pr)vider )r user c)nsiders t) be )bscene, lewd, lascivi)us, filthy, excessively vi)lent, harassing, )r )therwise )bjecti)nable, whether )r n)t such material is c)nstituti)nally pr)tected; )r (B) any acti)n taken t) enable )r make available t) inf)rmati)n c)ntent pr)viders )r )thers the technical means t) restrict access t) material described in [subparagraph (A)]”). 280 F)r example, a netw)rk pr)vider might be able t) assess a netw)rk endp)int’s p)sture—see IETF,NETWORK ENDPOINT ASSESSMENT (NEA): OVERVIEW AND REQUIREMENTS, RFC 5209 (Jun. 2008); INTERNET ENGINEERING TASK FORCE, PA-TNC: A POSTURE ATTRIBUTE (PA) PROTOCOL COMPATIBLE WITH TRUSTED NETWORK CONNECT (TNC), RFC 5792 (Mar. 2010)—and tail)r p)rt bl)cking acc)rdingly. With the p)sture assessment, an end user might then )pt )ut )f the netw)rk management mechanism by upgrading the )perating system )r installing a suitable firewall. 281 See, e.g., ACA C)mments at iv, 10–11; Ad H)c C)mments at 24–25; C)vad C)mments at 6; G))gle C)mments at 68; DISH Reply at 19–21; V)nage Reply at 46–47.282 See, e.g., C)mcast C)rp)rati)n, Descripti)n )f Current Netw)rk Management Practices,d)wnl)ads.c)mcast.net/d)cs/Attachment_A_Current_Practices.pdf.


52

access t) their subscribers, much less everything they may need t) d) as techn)l)gies and usage patterns change in the future.”283 Br)adband pr)viders sh)uld have flexibility t) experiment, inn)vate, and reas)nably manage their netw)rks.

E. M(bile Br(adband

93. There is )ne Internet, which sh)uld remain )pen f)r c)nsumers and inn)vat)rs alike, alth)ugh it may be accessed thr)ugh different techn)l)gies and services. The rec)rd dem)nstrates the imp)rtance )f freed)m and )penness f)r m)bile br)adband netw)rks,284 and the rati)nales f)r ad)pting high-level )pen Internet rules, discussed ab)ve, are f)r the m)st part as applicable t) m)bile br)adband as they are t) fixed br)adband. C)nsumer ch)ice, freed)m )f expressi)n, end-user c)ntr)l, c)mpetiti)n, and the freed)m t) inn)vate with)ut permissi)n are as imp)rtant when end users are accessing the Internet via m)bile br)adband as via fixed. And there have been instances )f m)bile pr)viders bl)cking certain third-party applicati)ns, particularly applicati)ns that c)mpete with the pr)vider’s )wn )fferings; relatedly, c)ncerns have been raised ab)ut inadequate transparency regarding netw)rk management practices.285 We als) n)te that s)me m)bile br)adband pr)viders affirmatively state they d) n)t )pp)se the applicati)n )f )penness rules t) m)bile br)adband.286

94. H)wever, as explained in the Open Internet NPRM and subsequent Public N)tice,287 m)bile br)adband presents special c)nsiderati)ns that suggest differences in h)w and when )pen Internet pr)tecti)ns sh)uld apply. M)bile br)adband is an earlier-stage platf)rm than fixed br)adband, and it is rapidly ev)lving. F)r m)st )f the hist)ry )f the Internet, access has been pred)minantly thr)ugh fixed platf)rms—first dial-up, then cable m)dem and DSL services. As )f a few years ag), m)st c)nsumers used their m)bile ph)nes primarily t) make ph)ne calls and send text messages, and m)st m)bile pr)viders )ffered Internet access )nly via “walled gardens” )r stripped d)wn websites.288 T)day, h)wever, m)bile br)adband is an imp)rtant Internet access platf)rm that is helping drive br)adband ad)pti)n,289 and data usage is gr)wing rapidly.290 The m)bile ec)system is experiencing very rapid inn)vati)n and change, including an

283 Open Internet NPRM, 24 FCC Rcd at 13114, para. 140. 284 See, e.g., T-M)bile C)mments at 1 (“[T]he [m)bile wireless] market itself is driving )penness and supp)rting all )f the g)als articulated by the NPRM.”), 12–13; Veriz)n C)mments at 61; Veriz)n PN C)mments at 4 (“[T]he wireless br)adband marketplace is m)ving t)ward greater )penness, as exemplified by Veriz)n’s Open Devel)pment pr)gram . . . .”), 15.285 See New America F)undati)n C)mments at 2–3, App. A at 16; Sling C)mments at 5–11; V)nage C)mments at 9; Skype Reply at 6; Testim)ny )f Jeffrey Glueck, CEO, Skyfire, FCC W)rksh)p )n Inn)vati)n, Investment and the Open Internet, FCC (Jan. 13, 2010), reb))t.fcc.g)v/vide)-archives. See supra paras. 36-37.286 See Clearwire C)mments at 10–11; Sprint C)mments at 18–19; cf. ITIF PN C)mments at 7.287 See Open Internet NPRM, 24 FCC Rcd at 13117–24, paras. 154–74; Open Internet PN.288 Implementati,n ,f Secti,n 6002(b) ,f the Omnibus Budget Rec,nciliati,n Act ,f 1993 et al., F)urteenth Rep)rt, 25 FCC Rcd 11407, 11502–03, para 148 (2010) (F,urteenth Wireless C,mpetiti,n Rep,rt). 289 See, e.g., Latin)s f)r Internet Freed)m, et al. PN C)mments at i (“L)wer barriers t) ad)pti)n have facilitated the widespread use )f the m)bile Internet in c)mmunities )f c)l)r and l)w-inc)me areas, where many individuals w)uld )therwise g) with)ut Internet access alt)gether. . . . [M]any )f )ur c)nstituents rely exclusively )n m)bile wireless Internet access as their )nramp t) the web.”); Free Press PN Reply at 6.290 See, e.g., SANDVINE, FALL 2010 GLOBAL INTERNET PHENOMENA REPORT 12 (2010), www.sandvine.c)m/d)wnl)ads/d)cuments/2010%20Gl)bal%20Internet%20Phen)mena%20Rep)rt.pdf.


53

expanding array )f smartph)nes, aircard m)dems, and )ther devices that enable Internet access; the emergence and rapid gr)wth )f dedicated-purp)se m)bile devices like e-readers; the devel)pment )f m)bile applicati)n (“app”) st)res and hundreds )f th)usands )f m)bile apps; and the ev)luti)n )f new business m)dels f)r m)bile br)adband pr)viders, including usage-based pricing.291

95. M)re)ver, m)st c)nsumers have m)re ch)ices f)r m)bile br)adband than f)r fixed (particularly fixed wireline) br)adband.292 M)bile br)adband speeds, capacity, and penetrati)n are typically much l)wer than f)r fixed br)adband,293 th)ugh s)me pr)viders have begun )ffering 4G service that will enable )fferings with higher speeds and capacity and l)wer latency than previ)us generati)ns )f m)bile service.294 In additi)n, existing m)bile netw)rks present )perati)nal c)nstraints that fixed br)adband netw)rks d) n)t typically enc)unter.295 This puts greater pressure )n the c)ncept )f “reas)nable netw)rk management” f)r m)bile pr)viders,296 and creates additi)nal challenges in applying a br)ader set )f rules t) m)bile at this time. Further, we rec)gnize that there have been meaningful recent m)ves t)ward )penness in and )n m)bile br)adband netw)rks, including the intr)ducti)n )f third-party devices and applicati)ns )n a number )f m)bile br)adband netw)rks, and m)re )pen m)bile devices. In additi)n, we anticipate s))n seeing the effects )n the market )f the )penness c)nditi)ns we imp)sed )n m)bile pr)viders that )perate )n upper 700 MHz C Bl)ck (“C Bl)ck”) spectrum,297

which includes Veriz)n Wireless, )ne )f the largest m)bile wireless carriers in the U.S.298

291 M)bile Future PN Reply at 2 (“In less than three years, a m)bile applicati)ns market has emerged with annualized gr)wth rates exceeding 500%, giving c)nsumers access t) well )ver 300,000 apps fr)m at least 10 st)res.”); see als, Press Release, AT&T, AT&T Ann)unces New L)wer-Priced Wireless Data Plans t) Make M)bile Internet M)re Aff)rdable t) M)re Pe)ple (June 2, 2010), www.att.c)m/gen/press-r))m?pid=17991&cdvn=news&newsarticleid=30854 (ann)uncing new usage-based pricing plans). See generally F,urteenth Wireless C,mpetiti,n Rep,rt.292 C,mpare Nati)nal Br)adband Plan at 37 (Exh. 4-A) with 39-40 (Exh. 4-E); see als, supra paras. 32-33. H)wever, in many areas )f the c)untry, particularly in rural areas, there are fewer )pti)ns f)r m)bile br)adband. See F,urteenth Wireless C,mpetiti,n Rep,rt at para. 355, tbl. 39 & chart 48. This may result in s)me c)nsumers having fewer )pti)ns f)r m)bile br)adband than f)r fixed.293 See FCC Internet Status Rep)rt, at 30, tbl. 12.294 S)me fixed br)adband pr)viders c)ntend that current m)bile br)adband )fferings directly c)mpete with their )fferings. See Letter fr)m Michael D. Saperstein, Jr., Direct)r )f Regulat)ry Affairs, Fr)ntier C)mmunicati)ns, t) Marlene D)rtch, Secretary, FCC, GN D)cket N). 09-191 (filed Dec. 15, 2010) (discussing entry )f wireless service int) the br)adband market and its effect )n wireline br)adband subscribership) and Attach. at 1 (citing rep)rts that LTE is “a very practical and enc)uraging substituti)n f)r DSL, particularly when y)u l))k at rural markets”); Letter fr)m Malena F. Barzilai, Federal G)vernment Affairs, Windstream C)mmunicati)ns, Inc., t) Marlene D)rtch, Secretary, FCC, GN D)cket N). 09-191 (filed Dec. 15, 2010). As part )f )ur )ng)ing m)nit)ring, we will track such c)mpetiti)n and any impact these rules may have )n it. See infra para. 105.295 See, e.g., AT&T C)mments at 156–61; CCIA C)mments at 15–16; Veriz)n C)mments at 61–63; Leap Reply at 6–8; T-M)bile Reply at 16–23; TIA Reply at 8; CTIA PN C)mments at 2–3 (“[W]ireless netw)rks and the devices that )perate )n them have bec)me increasingly intertwined . . . .”), 9–12; ITIF PN C)mments at 16. But see, e.g., Free Press Reply at 29; PIC PN C)mments at 13–16.296 See, e.g., IFTA C)mments at 20; OIC C)mments at 37; Skype C)mments at 5–7; NCTA PN C)mments at 11–12; Free Press PN Reply at 8; OIC PN Reply at 3. 297 The first netw)rk using spectrum subject t) these rules has recently started )ffering service. See Press Release, Veriz)n Wireless, Blazingly Fast: Veriz)n Wireless Launches The W)rld’s Largest 4G LTE

(c)ntinued....)


54

96. In light )f these c)nsiderati)ns, we c)nclude it is appr)priate t) take measured steps at this time t) pr)tect the )penness )f the Internet when accessed thr)ugh m)bile br)adband. We apply certain )f the )pen Internet rules, requiring c)mpliance with the transparency rule and a basic n)-bl)cking rule.299

1. Applicati(n (f Openness Principles t( M(bile Br(adband

a. Transparency

97. The wide array )f c)mmenters wh) supp)rt a discl)sure requirement generally agree that all br)adband pr)viders, including m)bile br)adband pr)viders, sh)uld be required t) discl)se their netw)rk management practices.300 Alth)ugh s)me m)bile br)adband pr)viders argue that the dynamic nature )f m)bile netw)rk management makes meaningful discl)sure difficult,301 we c)nclude that end users need a clear understanding )f netw)rk management practices, perf)rmance, and c)mmercial terms, regardless )f the br)adband platf)rm they use t) access the Internet. Alth)ugh a number )f m)bile br)adband pr)viders have ad)pted v)luntary c)des )f c)nduct regarding discl)sure, we believe that a unif)rm rule applicable t) all m)bile br)adband pr)viders will best preserve Internet )penness by ensuring that end users have sufficient inf)rmati)n t) make inf)rmed ch)ices regarding use )f the netw)rk; and that c)ntent, applicati)n, service, and device pr)viders have the inf)rmati)n needed t) devel)p, market, and maintain Internet )fferings. The transparency rule will als) aid the C)mmissi)n in m)nit)ring the ev)luti)n )f m)bile br)adband and adjusting, as appr)priate, the framew)rk ad)pted t)day.

(...c)ntinued fr)m previ)us page)Wireless Netw)rk On Sunday, Dec. 5 (Dec. 5, 2010), available at news.vzw.c)m/news/2010/12/pr2010-12-03.html. Specifically, licensees subject t) the rule must pr)vide an )pen platf)rm f)r third-party applicati)ns and devices. See 700 MHz Sec,nd Rep,rt and Order, 22 FCC Rcd 15289; 47 C.F.R. § 27.16. The rules we ad)pt t)day are independent )f th)se )pen platf)rm requirements. We expect )ur )bservati)ns )f h)w the 700 MHz )pen platf)rm rules affect the m)bile br)adband sect)r t) inf)rm )ur )ng)ing analysis )f the applicati)n )f )penness rules t) m)bile br)adband generally. 700 MHz Sec,nd Rep,rt and Order, 22 FCC Rcd at 15364–65, 15374, paras. 205, 229. A number )f c)mmenters supp)rt the C)mmissi)n’s waiting t) determine whether t) apply )penness rules t) m)bile wireless until the effects )f the C Bl)ck )penness requirement can be )bserved. See, e.g., AT&T PN Reply, at 32–37; Cricket PN Reply at 11. We als) n)te that s)me pr)viders t)ut )penness as a c)mpetitive advantage. See, e.g., Clearwire C)mments at 7; Veriz)n Reply at 47–52.298 F,urteenth Wireless C,mpetiti,n Rep,rt, 25 FCC Rcd at 11442, para. 31.299 We n)te that secti)n 332(a) requires us, “[i]n taking acti)ns t) manage the spectrum t) be made available f)r use by the private m)bile service,” t) c)nsider vari)us fact)rs, including whether )ur acti)ns will “impr)ve the efficiency )f spectrum use and reduce the regulat)ry burden,” and “enc)urage c)mpetiti)n.” 47 U.S.C. § 332(a)(2), (3). T) the extent secti)n 332(a) applies t) )ur acti)ns t)day, we n)te that we have c)nsidered these fact)rs. See, e.g., supra at paras. 35–37, 93–96. 300 See, e.g., Cricket C)mments at 4 (a principle )f transparency will pr)tect c)nsumers and c)unterbalance abuses )f netw)rk management discreti)n, thereby f)stering an )pen marketplace that pr)m)tes inn)vati)n and c)mpetiti)n); Leap C)mments at 22–24; Metr)PCS C)mments at 64; Qwest C)mments at 11; CWA C)mments at 12–13; CDT C)mments at 31; Bright H)use C)mments at 10–11; PIC PN C)mments at 12; G))gle C)mments at iii, 4, 77; NJRC C)mments at 25; NATOA C)mments at 11; Texas PUC C)mments at 8–9; NASUCA C)mments at 24; IFTA C)mments at 20.301 See, e.g., CTIA C)mments at 11, 47; GSM Ass)ciati)n (GSM) C)mments at 25; Entertainment S)ftware Ass)ciati)n (ESA) C)mments at 2, 4; Telec)m Italia C)mments at 12; Veriz)n C)mments, Attach. B at 49; AT&T PN C)mments at 70; Veriz)n PN C)mments at 40–42.


55

98. Theref)re, as stated ab)ve,302 we require m)bile br)adband pr)viders t) f)ll)w the same transparency rule applicable t) fixed br)adband pr)viders. Further, alth)ugh we d) n)t require m)bile br)adband pr)viders t) all)w third-party devices )r all third-party applicati)ns )n their netw)rks, we n)netheless require m)bile br)adband pr)viders t) discl)se their third-party device and applicati)n certificati)n pr)cedures, if any; t) clearly explain their criteria f)r any restricti)ns )n use )f their netw)rk; and t) expediti)usly inf)rm device and applicati)n pr)viders )f any decisi)ns t) deny access t) the netw)rk )r )f a failure t) appr)ve their particular devices )r applicati)ns. With respect t) the types )f discl)sures required t) satisfy the rule, we direct m)bile br)adband pr)viders t) the discussi)n in Part III.B, ab)ve. Additi)nally, m)bile br)adband pr)viders sh)uld f)ll)w the guidance the C)mmissi)n pr)vided t) licensees )f the upper 700 MHz C Bl)ck spectrum regarding c)mpliance with their discl)sure )bligati)ns, particularly regarding discl)sure t) third-party applicati)n devel)pers and device manufacturers )f criteria and appr)val pr)cedures (t) the extent applicable).303 F)r example, these discl)sures include, t) the extent applicable, establishing a transparent and efficient appr)val pr)cess f)r third parties, as set f)rth in Rule 27.16(d).304

b. N( Bl(cking

99. We ad)pt a n) bl)cking rule that guarantees end users’ access t) the web and pr)tects against m)bile br)adband pr)viders’ bl)cking applicati)ns that c)mpete with their )ther primary service )ffering—v)ice and vide) teleph)ny—while ensuring that m)bile br)adband pr)viders can engage in reas)nable netw)rk management:

A pers,n engaged in the pr,visi,n ,f m,bile br,adband Internet access service, ins,far as such pers,n is s, engaged, shall n,t bl,ck c,nsumers fr,m accessing lawful websites, subject t, reas,nable netw,rk management; n,r shall such pers,n bl,ck applicati,ns that c,mpete with the pr,vider’s v,ice ,r vide, teleph,ny services, subject t, reas,nable netw,rk management.

We understand a “pr)vider’s v)ice )r vide) teleph)ny services” t) include a v)ice )r vide) teleph)ny service pr)vided by any entity in which the pr)vider has an attributable interest.305 We

302 See supra at paras. 54–61.303 700 MHz Sec,nd Rep,rt and Order, 22 FCC Rcd at 15371–72, para. 224 (“[A] C Bl)ck licensee must publish [f)r example, by p)sting )n the pr)vider’s website] standards n) later than the time at which it makes such standards available t) any preferred vend)rs (i.e., vend)rs with wh)m the pr)vider has a relati)nship t) design pr)ducts f)r the pr)vider’s netw)rk). We als) require the C Bl)ck licensee t) pr)vide t) p)tential cust)mers n)tice )f the cust)mers’ rights t) request the attachment )f a device )r applicati)n t) the licensee’s netw)rk, and n)tice )f the licensee’s pr)cess f)r cust)mers t) make such requests, including the relevant netw)rk criteria.”). 304 See 47 C.F.R. 27.16(d) (“Access requests. (1) Licensees shall establish and publish clear and reas)nable pr)cedures f)r parties t) seek appr)val t) use devices )r applicati)ns )n the licensees’ netw)rks. A licensee must als) pr)vide t) p)tential cust)mers n)tice )f the cust)mers’ rights t) request the attachment )f a device )r applicati)n t) the licensee’s netw)rk, and n)tice )f the licensee's pr)cess f)r cust)mers t) make such requests, including the relevant netw)rk criteria. (2) If a licensee determines that a request f)r access w)uld vi)late its technical standards )r regulat)ry requirements, the licensee shall expediti)usly pr)vide a written resp)nse t) the requester specifying the basis f)r denying access and pr)viding an )pp)rtunity f)r the requester t) m)dify its request t) satisfy the licensee’s c)ncerns.”).305 F)r the purp)ses )f these rules, an attributable interest includes equity )wnership interest in )r de fact,c)ntr)l )f, )r by, the entity that pr)vides the v)ice )r vide) teleph)ny service. An attributable interest als) includes any exclusive arrangement f)r such v)ice )r vide) teleph)ny service, including de fact, exclusive arrangements.


56

emphasize that the rule pr)tects any and all applicati)ns that c)mpete with a m)bile br)adband pr)vider’s v)ice )r vide) teleph)ny services. Further, degrading a particular website )r an applicati)n that c)mpetes with the pr)vider’s v)ice )r vide) teleph)ny services s) as t) render the website )r applicati)n effectively unusable w)uld be c)nsidered tantam)unt t) bl)cking (subject t) reas)nable netw)rk management).306

100. End users expect t) be able t) access any lawful website thr)ugh their br)adband service, whether fixed )r m)bile. Web br)wsing c)ntinues t) generate the largest am)unt )f m)bile data traffic,307 and applicati)ns and services are increasingly being pr)visi)ned and used entirely thr)ugh the web, with)ut requiring a standal)ne applicati)n t) be d)wnl)aded t) a device. Given that the m)bile web is well-devel)ped relative t) )ther m)bile applicati)ns and services, and enj)ys similar expectati)ns )f )penness that characterize web use thr)ugh fixed br)adband, we find it appr)priate t) act here. We als) rec)gnize that accessing a website typically d)es n)t present the same netw)rk management issues that d)wnl)ading and running an app )n a device may present. At this time, a pr)hibiti)n )n bl)cking access t) lawful websites (including any related traffic transmitted )r received by any plug-in, scripting language, )r )ther br)wser extensi)n) appr)priately balances pr)tecti)n f)r the ability )f end users t) access c)ntent, applicati)ns, and services thr)ugh the web and assurance that m)bile br)adband pr)viders can effectively manage their m)bile br)adband netw)rks.

101. Situati)ns have arisen in which m)bile wireless pr)viders have bl)cked third-party applicati)ns that arguably c)mpete with their teleph)ny )fferings.308 This type )f bl)cking c)nfirms that m)bile br)adband pr)viders may have str)ng incentives t) limit Internet )penness when c)nfr)nted with third-party applicati)ns that c)mpete with their teleph)ny services.309 S)me c)mmenters express c)ncern that wireless pr)viders c)uld fav)r their )wn applicati)ns )ver the applicati)ns )f unaffiliated devel)pers, under the guise )f reas)nable netw)rk management.310 A number )f c)mmenters assert that bl)cking )r hindering the delivery )f services that c)mpete with th)se )ffered by the m)bile br)adband pr)vider, such as )ver-the-t)p V)IP, sh)uld be pr)hibited.311 Acc)rding t) Skype, f)r example, there is “a c)nsensus that at a minimum, a ‘n) bl)cking’ rule sh)uld apply t) v)ice and vide) applicati)ns that c)mpete with

306 See supra para. 66; see als, supra para. 67.307 ALLOT COMMUNICATIONS, ALLOT MOBILETRENDS - GLOBAL MOBILE BROADBAND TRAFFIC REPORT

H2/2009 at 9 (2010), www.all)t.c)m/m)biletrends.html.308 See, e.g., Letter fr)m James W. Cicc)ni, AT&T Services, Inc., t) Ruth Milkman, Chief, Wireless Telec)mmunicati)ns Bureau, FCC, RM-11361, RM-11497 at 6–8 (filed Aug. 21, 2009); DISH PN Reply at 7 (“V)IP )perat)rs such as Skype have faced significant difficulty in gaining access acr)ss wireless Internet c)nnecti)ns.”). M)bile pr)viders bl)cking V)IP services is an issue n)t )nly in the United States, but w)rldwide. In Eur)pe, the B)dy )f Eur)pean Regulat)rs f)r Electr)nic C)mmunicati)ns rep)rted, am)ng )ther issues, a number )f cases )f bl)cking )r charging extra f)r V)IP services by certain Eur)pean m)bile )perat)rs. See EUROPEAN COMMISSION, INFORMATION SOCIETY AND MEDIA DIRECTORATE-GENERAL REPORT ON THE PUBLIC CONSULTATION ON “THE OPEN INTERNET AND NET NEUTRALITY IN

EUROPE” 2, (N)v. 9, 2010), ec.eur)pa.eu/inf)rmati)n_s)ciety/p)licy/ec)mm/library/public_c)nsult/net_neutrality/index_en.htm.309 See, e.g., Skype C)mments at 8–9; Skype Feb. 20, 2007 Petiti)n, RM-11361, at 13–16. 310 See, e.g., ITIC PN C)mments at 6; PIC PN C)mments at 20–21.311 LARIAT C)mments at 3; Skype C)mments at 9; ITIC PN C)mments at 6–7; Public Interest C)mmenters PN C)mments at 20–21.


57

br)adband netw)rk )perat)rs’ )wn service )fferings.”312 Clearwire argues that the C)mmissi)n sh)uld restrict )nly practices that appear t) have an element )f antic)mpetitive intent.313 Alth)ugh s)me c)mmenters supp)rt a br)ader n)-bl)cking rule,314 we believe that a targeted pr)phylactic rule is appr)priate at this time,315 and necessary t) deter this type )f behavi)r in the future.

102. The pr)hibiti)n )n bl)cking applicati)ns that c)mpete with a br)adband pr)vider’s v)ice )r vide) teleph)ny services d)es n)t apply t) a br)adband pr)vider’s )perati)n )f applicati)n st)res )r their functi)nal equivalent. In )perating app st)res, br)adband pr)viders c)mpete directly with )ther types )f entities, including device manufacturers and )perating system devel)pers,316 and we d) n)t intend t) limit m)bile br)adband pr)viders’ flexibility t) curate their app st)res similar t) app st)re )perat)rs that are n)t subject t) these rules.317

103. As indicated in Part III.D ab)ve, the reas)nable netw)rk management definiti)n takes int) acc)unt the particular netw)rk architecture and techn)l)gy )f the br)adband Internet access service. Thus, in determining whether a netw)rk management practice is reas)nable, the C)mmissi)n will c)nsider technical, )perati)nal, and )ther differences between wireless and )ther br)adband Internet access platf)rms, including differences relating t) efficient use )f spectrum. We anticipate that c)nditi)ns in m)bile br)adband netw)rks may necessitate netw)rk management practices that w)uld n)t be necessary in m)st fixed netw)rks, but c)nclude that )ur definiti)n )f reas)nable netw)rk management is flexible en)ugh t) acc)mm)date such differences.

312 Skype PN Reply at 6; see als, Sling Media C)mments at 1–2; DISH PN C)mments at 22–23 (any limits )r caps sh)uld apply equally t) all applicati)n pr)viders t) ensure fairness and pr)m)te c)mpetiti)n); OIC PN C)mments at 8–9.313 Clearwire C)mments at 11. 314 See, e.g., Free Press C)mments at 121; OIC C)mments at 36–40; DISH PN C)mments at 22–24; Skype C)mments at 8–9; Free Press PN C)mments at 21–23; PIC PN C)mments at 13–16; Skype PN Reply at 6. Other c)mmenters supp)rt )ur m)re targeted rule. See, e.g., CWA PN C)mments at 5315 See Letter fr)m J)nathan Spalter, Chairman, M)bile Future, t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N)s. 09-191 & 10-127, at 3 n.16 (filed Dec. 13, 2010) (supp)rting tail)red pr)hibiti)n )n bl)cking applicati)ns), citing AT&T C)mments at 65; T-M)bile C)mments, Declarati)n )f Grant Castle at 4. The n) bl)cking rule that we ad)pt f)r m)bile br)adband inv)lves distinct treatment )f applicati)ns that c)mpete with the pr)vider’s v)ice and vide) teleph)ny services, whereas we have ad)pted a br)ader traffic-based appr)ach f)r fixed br)adband. See supra para. 48. We ackn)wledge that this rule f)r m)bile br)adband may lead in s)me limited measure t) the traffic-identificati)n difficulties discussed with respect t) fixed br)adband. We find, h)wever, that the reas)ns f)r taking )ur cauti)us appr)ach t) m)bile br)adband )utweigh this c)ncern, particularly in light )f )ur intent t) m)nit)r devel)pments inv)lving m)bile br)adband, including this and )ther aspects )f the practical implementati)n )f )ur rules.316 F)r example, app st)res are )perated by manufacturers and )perating system devel)pers such as N)kia, Apple, RIM, G))gle, Micr)s)ft, and third parties such as GetJar. See als, AT&T PN C)mments at 63–66 (emphasizing the c)mpetitiveness )f the market f)r m)bile apps, including the variety )f s)urces fr)m which c)nsumers may )btain applicati)ns); T-M)bile PN C)mments at 21 (“The c)mpetitive wireless marketplace will c)ntinue t) discipline app st)re )wners . . . that exclude third-party apps fr)m their app st)res entirely, eliminating the need f)r C)mmissi)n acti)n.”). We n)te, h)wever, that f)r a few devices, such as Apple’s iPh)ne, there may be fewer )pti)ns f)r accessing and distributing apps.317 See supra at para. 50; see als, OIC PN C)mments at 9–10 (while c)nsumers have a meaningful ch)ice with respect t) applicati)ns and the ability t) d)wnl)ad and use applicati)ns )n a carrier’s netw)rk, app st)res sh)uld n)t be subject t) n)ndiscriminati)n )r )ther )pen Internet principles).


58

2. Ong(ing M(nit(ring104. Alth)ugh s)me c)mmenters supp)rt applying the n) unreas)nable discriminati)n

rule t) m)bile br)adband,318 f)r the reas)ns discussed ab)ve, we decline t) d) s), preferring at this time t) put in place basic )penness pr)tecti)ns and m)nit)r the devel)pment )f the m)bile br)adband marketplace. We emphasize that )ur decisi)n t) pr)ceed incrementally with respect t) m)bile br)adband at this time sh)uld n)t suggest that we implicitly appr)ve )f any pr)vider behavi)r that runs c)unter t) general )pen Internet principles. Bey)nd th)se practices expressly pr)hibited by )ur rules, )ther c)nduct by m)bile br)adband pr)viders, particularly c)nduct that w)uld vi)late )ur rules f)r fixed br)adband, may n)t necessarily be c)nsistent with Internet )penness and the public interest.

105. We are taking measured steps t) pr)tect )penness f)r m)bile br)adband at this time in part because we want t) better understand h)w the m)bile br)adband market is devel)ping bef)re determining whether adjustments t) this framew)rk are necessary. T) that end, we will cl)sely m)nit)r devel)pments in the m)bile br)adband market, with a particular f)cus )n the f)ll)wing issues: (1) the effects )f these rules, the C Bl)ck c)nditi)ns, and market devel)pments related t) the )penness )f the Internet as accessed thr)ugh m)bile br)adband; (2) any c)nduct by m)bile br)adband pr)viders that harms inn)vati)n, investment, c)mpetiti)n, end users, free expressi)n )r the achievement )f nati)nal br)adband g)als; (3) the extent t) which differences between fixed and m)bile rules affect fixed and m)bile br)adband markets, including c)mpetiti)n am)ng fixed and m)bile br)adband pr)viders; and (4) the extent t) which differences between fixed and m)bile rules affect end users f)r wh)m m)bile br)adband is their )nly )r primary Internet access platf)rm.319 We will investigate and evaluate c)ncerns as they arise. We als) will adjust )ur rules as appr)priate. T) aid the C)mmissi)n in these tasks, we will create an Open Internet Advis)ry C)mmittee, as discussed bel)w in paragraph 162, with a mandate that includes m)nit)ring and regularly rep)rting )n the state )f Internet )penness f)r m)bile br)adband.

106. Further, we reaffirm )ur c)mmitment t) enf)rcing the )pen platf)rm requirements applicable t) upper 700 MHz C Bl)ck licensees.320 The first netw)rks using this spectrum are n)w bec)ming )perati)nal.321

F. Other Laws and C(nsiderati(ns107. Open Internet rules are n)t intended t) expand )r c)ntract br)adband pr)viders’

rights )r )bligati)ns with respect t) )ther laws )r safety and security c)nsiderati)ns, including the

318 See, e.g, Free Press C)mments at 125–26; OIC C)mments at 36–39. See als,, e.g., Leap C)mments at 17–22; Sprint Reply at 24–26. A number )f c)mmenters suggest that )penness rules sh)uld be applied identically t) all br)adband platf)rms. See, e.g., CenturyLink C)mments at 22–23; C)mcast C)mments at 32; DISH Netw)rk PN C)mments at 17; NCTA PN C)mments at 11; Qwest PN C)mments at 12–19; SureWest PN C)mments at 18–20; TWC PN C)mments at 33–35; V)nage PN C)mments at 10–18; Windstream PN C)mments at 6–19.319 We n)te that m)bile br)adband is the )nly )r primary br)adband Internet access platf)rm used by many Americans. See, e.g., supra n)te 289.320 See 700 MHz Sec,nd Rep,rt and Order, 22 FCC Rcd at 15374–75, paras. 229–30.321 See Press Release, Veriz)n Wireless, Blazingly Fast: Veriz)n Wireless Launches The W)rld’s Largest 4G LTE Wireless Netw)rk On Sunday, Dec. 5 (Dec. 5, 2010), available atnews.vzw.c)m/news/2010/12/pr2010-12-03.html; Press Release, Veriz)n, Veriz)n Launches 4G LTE In 38 Maj)r Metr)p)litan Areas By The End Of The Year, Oct. 6, 2010, available atnews.vzw.c)m/news/2010/10/pr2010-10-01c.html.


59

needs )f emergency c)mmunicati)ns and law enf)rcement, public safety, and nati)nal security auth)rities. Similarly, )pen Internet rules pr)tect )nly lawful c)ntent, and are n)t intended t) inhibit eff)rts by br)adband pr)viders t) address unlawful transfers )f c)ntent. F)r example, there sh)uld be n) d)ubt that br)adband pr)viders can pri)ritize c)mmunicati)ns fr)m emergency resp)nders, )r bl)ck transfers )f child p)rn)graphy. T) make clear that )pen Internet pr)tecti)ns can and must c)exist with these )ther legal framew)rks, we ad)pt the f)ll)wing clarifying pr)visi)ns:

N,thing in this part supersedes any ,bligati,n ,r auth,rizati,n a pr,vider ,f br,adband Internet access service may have t, address the needs ,f emergency c,mmunicati,ns ,r law enf,rcement, public safety, ,r nati,nal security auth,rities, c,nsistent with ,r as permitted by applicable law, ,r limits the pr,vider’s ability t, d, s,.

N,thing in this part pr,hibits reas,nable eff,rts by a pr,vider ,f br,adband Internet access service t, address c,pyright infringement ,r ,ther unlawful activity.

1. Emergency C(mmunicati(ns and Safety and Security Auth(rities

108. C)mmenters are br)adly supp)rtive )f )ur pr)p)sal t) state that )pen Internet rules d) n)t supersede any )bligati)n a br)adband pr)vider may have—)r limit its ability—t) address the needs )f emergency c)mmunicati)ns )r law enf)rcement, public safety, )r h)meland )r nati)nal security auth)rities (t)gether, “safety and security auth)rities”).322 Br)adband pr)viders have )bligati)ns under statutes such as the C)mmunicati)ns Assistance f)r Law Enf)rcement Act,323 the F)reign Intelligence Surveillance Act,324 and the Electr)nic C)mmunicati)ns Privacy Act325 that c)uld in s)me circumstances intersect with )pen Internet pr)tecti)ns, and m)st c)mmenters rec)gnize the benefits )f clarifying that these )bligati)ns are n)t inc)nsistent with )pen Internet rules. Likewise, in c)nnecti)n with an emergency, there may be federal, state, tribal, and l)cal public safety entities; h)meland security pers)nnel; and )ther auth)rities that need guaranteed )r pri)ritized access t) the Internet in )rder t) c))rdinate disaster relief and )ther emergency resp)nse eff)rts, )r f)r )ther emergency c)mmunicati)ns.326 In the Open Internet NPRM we pr)p)sed t) address the needs )f law enf)rcement in )ne rule and the needs )f emergency c)mmunicati)ns and public safety, nati)nal, and h)meland security auth)rities in a separate rule.327 We are persuaded by the rec)rd that these rules sh)uld be c)mbined, as the interests at issue are substantially similar.328 We als) agree that the rule sh)uld f)cus )n the needs )f “law enf)rcement . . . auth)rities” rather than the needs )f “law enf)rcement.”329 The purp)se )f the safety and security pr)visi)n is first t) ensure that )pen Internet rules d) n)t restrict br)adband pr)viders in addressing the needs )f law enf)rcement

322 See, e.g., Intrad) C)mments at 1, 3.323 See 47 U.S.C. § 1002(a).324 See 50 U.S.C. §§ 1802(a)(4), 1804, 1805(c)(2).325 See 18 U.S.C. §§ 2518, 2705.326 Open Internet NPRM, 24 FCC Rcd at 13115–16, para 145.327 Open Internet NPRM, 24 FCC Rcd at 13115–16, paras. 143, 146.328 See PIC C)mments at 42–44. We intend the term “nati)nal security auth)rities” t) include h)meland security auth)rities.329 See PIC C)mments at 52–53; CCIA/CEA C)mments at 27–29; EFF C)mments at 19–23.


60

auth)rities, and sec)nd t) ensure that br)adband pr)viders d) n)t use the safety and security pr)visi)n with)ut the imprimatur )f a law enf)rcement auth)rity, as a l))ph)le t) the rules.330 As such, applicati)n )f the safety and security rule sh)uld be tied t) inv)cati)n by relevant auth)rities rather than t) a br)adband pr)vider’s independent n)ti)n )f law enf)rcement.

109. S)me c)mmenters urge us t) limit the sc)pe )f the safety and security rule, )r argue that it is unnecessary because )ther statutes give br)adband pr)viders the ability and resp)nsibility t) assist law enf)rcement.331 Several c)mmenters urge the C)mmissi)n t) revise its pr)p)sal t) clarify that br)adband pr)viders may n)t take any v)luntary steps that w)uld be inc)nsistent with )pen Internet principles, bey)nd th)se steps required by law.332 They argue, f)r example, that a br)ad excepti)n f)r v)luntary eff)rts c)uld swall)w )pen Internet rules by all)wing br)adband pr)viders t) cl)ak discriminat)ry practices under the guise )f pr)tecting safety and security.333

110. We agree with c)mmenters that the safety and security rule sh)uld be tail)red t) av)id the p)ssibility )f br)adband pr)viders using their discreti)n t) mask impr)per practices. But it w)uld be a mistake t) limit the rule t) situati)ns in which br)adband pr)viders have an )bligati)n t) assist safety and security pers)nnel. F)r example, such a limitati)n w)uld prevent br)adband pr)viders fr)m implementing the Cellular Pri)rity Access Service (als) kn)wn as the Wireless Pri)rity Service (WPS)), which all)ws f)r but d)es n)t legally require the pri)ritizati)n )f public safety c)mmunicati)ns )n wireless netw)rks.334 We d) n)t think it necessary )r advisable t) pr)vide f)r pre-depl)yment review by the C)mmissi)n, particularly because time may be )f the essence in meeting safety and security needs.335

2. Transfers (f Unlawful C(ntent and Unlawful Transfers (f C(ntent 111. In the NPRM, we pr)p)sed t) treat as reas)nable netw)rk management

“reas)nable practices t) . . . prevent the transfer )f unlawful c)ntent; )r . . . prevent the unlawful transfer )f c)ntent.” F)r reas)ns explained ab)ve we decline t) include these practices within the sc)pe )f “reas)nable netw)rk management.” H)wever, we c)nclude that a clear statement that )pen Internet rules d) n)t pr)hibit br)adband pr)viders fr)m making reas)nable eff)rts t) address the transfer )f unlawful c)ntent )r unlawful transfers )f c)ntent is helpful t) ensure that )pen Internet rules are n)t used as a shield t) enable unlawful activity )r t) deter pr)mpt acti)n against such activity. F)r example, )pen Internet rules sh)uld n)t be inv)ked t) pr)tect c)pyright infringement, which has adverse c)nsequences f)r the ec)n)my, n)r sh)uld they pr)tect child p)rn)graphy. We emphasize that )pen Internet rules d) n)t alter c)pyright laws and are n)t

330 See, e.g., EFF C)mments at 11; CDT Reply at 33.331 See EFF C)mments at 21; OIC C)mments at 64–66. 332 See EFF C)mments at 20–22; CCIA/CEA C)mments at 23, 30; PIC C)mments at 43–44.333 See EFF C)mments at 20–22. EFF w)uld require a pre-depl)yment waiver fr)m the C)mmissi)n if the needs )f law enf)rcement w)uld require br)adband pr)viders t) act inc)nsistently with )pen Internet rules. Id. at 22.334 See 47 C.F.R., Part 64, App.B.335 The Nati)nal Emergency Number Ass)ciati)n (NENA) w)uld enc)urage )r require netw)rk managers t) pr)vide public safety users with advance n)tice )f changes in netw)rk management that c)uld affect emergency services. See NENA C)mments at 5–6. Alth)ugh we d) n)t ad)pt such a requirement, we enc)urage br)adband pr)viders t) be mindful )f the p)tential impact )n emergency services when implementing netw)rk management p)licies, and t) c))rdinate maj)r changes with pr)viders )f emergency services when appr)priate.


61

intended t) pr)hibit )r disc)urage v)luntary practices undertaken t) address )r mitigate the )ccurrence )f c)pyright infringement.336

G. SpecialiXed Services112. In the Open Internet NPRM, the C)mmissi)n rec)gnized that br)adband

pr)viders )ffer services that share capacity with br)adband Internet access service )ver pr)viders’ last-mile facilities, and may devel)p and )ffer )ther such services in the future.337 These “specialized services,” such as s)me br)adband pr)viders’ existing facilities-based V)IP and Internet Pr)t)c)l-vide) )fferings, differ fr)m br)adband Internet access service and may drive additi)nal private investment in br)adband netw)rks and pr)vide end users valued services, supplementing the benefits )f the )pen Internet.338 At the same time, specialized services may raise c)ncerns regarding bypassing )pen Internet pr)tecti)ns, supplanting the )pen Internet, and enabling antic)mpetitive c)nduct.339 F)r example, )pen Internet pr)tecti)ns may be weakened if br)adband pr)viders )ffer specialized services that are substantially similar t), but d) n)t meet the definiti)n )f, br)adband Internet access service, and if c)nsumer pr)tecti)ns d) n)t apply t) such services.340 In additi)n, br)adband pr)viders may c)nstrict )r fail t) c)ntinue expanding netw)rk capacity all)cated t) br)adband Internet access service t) pr)vide m)re capacity f)r specialized services. If this )ccurs, and particularly t) the extent specialized services gr)w as substitutes f)r the delivery )f c)ntent, applicati)ns, and services )ver br)adband Internet access service, the Internet may wither as an )pen platf)rm f)r c)mpetiti)n, inn)vati)n, and free expressi)n.341 These c)ncerns may be exacerbated by c)nsumers’ limited ch)ices f)r br)adband pr)viders, which may leave s)me end users unable t) effectively exercise their preferences f)r br)adband Internet access service ()r c)ntent, applicati)ns, )r services available thr)ugh br)adband Internet access service) )ver specialized services.342

113. We agree with the many c)mmenters wh) adv)cate that the C)mmissi)n exercise its auth)rity t) cl)sely m)nit)r and pr)ceed incrementally with respect t) specialized services,343 rather than ad)pting p)licies specific t) such services at this time.344 We will

336 See, e.g., Stanf)rd University—DMCA C)mplaint Res)luti)n Center; User Generated C)ntent Principles, www.ugcprinciples.c)m (cited in Letter fr)m Linda Kinney, MPAA, t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N)s. 09-191, 10-137, WC D)cket N). 07-52 at 1 (filed N)v. 29, 2010)). Open Internet rules are n)t intended t) affect the legal status )f c))perative eff)rts by br)adband Internet access service pr)viders and )ther service pr)viders that are designed t) curtail infringement in resp)nse t) inf)rmati)n pr)vided by rights h)lders in a manner that is timely, effective, and acc)mm)dates the legitimate interests )f pr)viders, rights h)lders, and end users.337 Open Internet NPRM, 24 FCC Rcd at 13116–17, paras. 148–53.338 See, e.g., C)mcast C)mments at 60–61, 64–66; M)t)r)la C)mments at 14–16; Sprint Reply at 2–5; Veriz)n PN C)mments at 48.339 See Open Internet PN, 25 FCC Rcd at 12638–39; Open Internet NPRM, 24 FCC Rcd at 13116, para. 149; CCIA/CEA PN C)mments at 3–4; CDT PN C)mments at 1–2; Vari)us Adv)cates f)r the Open Internet PN Reply at 5.340 See, e.g., Netflix C)mments at 9–10; CDT C)mments at 46–48; V)nage C)mments at 27; Dish Netw)rk Reply at 12; _O Reply at 20–21.341 See, e.g., CDT C)mments at 46–49; IFTA C)mments at 18–19; S)ny Reply at 6–7.342 See supra paras. 32–33; see als, Free Press C)mments at 14; V)nage C)mments at 7–8; OIC C)mments at 71–73. 343 See, e.g., FCC v. F,x Televisi,n Stati,ns, Inc., 129 S.Ct. 1800, 1815 (2009) (“N)thing pr)hibits federal agencies fr)m m)ving in an incremental manner.”); Nat’l Cable & Telec,mms. Ass’n v. Brand i Internet

(c)ntinued....)


62

carefully )bserve market devel)pments t) verify that specialized services pr)m)te investment, inn)vati)n, c)mpetiti)n, and end-user benefits with)ut undermining )r threatening the )pen Internet.345 We n)te als) that )ur rules define br)adband Internet access service t) enc)mpass “any service that the C)mmissi)n finds t) be pr)viding a functi)nal equivalent )f [br)adband Internet access service], )r that is used t) evade the pr)tecti)ns set f)rth in these rules.”346

114. We will cl)sely m)nit)r the r)bustness and aff)rdability )f br)adband Internet access services, with a particular f)cus )n any signs that specialized services are in any way retarding the gr)wth )f )r c)nstricting capacity available f)r br)adband Internet access service. We fully expect that br)adband pr)viders will increase capacity )ffered f)r br)adband Internet access service if they expand netw)rk capacity t) acc)mm)date specialized services. We w)uld be c)ncerned if capacity f)r br)adband Internet access service did n)t keep pace. We als) expect br)adband pr)viders t) discl)se inf)rmati)n ab)ut specialized services’ impact, if any, )n last-mile capacity available f)r, and the perf)rmance )f, br)adband Internet access service. We may c)nsider additi)nal discl)sure requirements in this area in )ur related pr)ceeding regarding c)nsumer transparency and discl)sure.347 We w)uld als) be c)ncerned by any marketing, advertising, )r )ther messaging by br)adband pr)viders suggesting that )ne )r m)re specialized services, taken al)ne )r t)gether, and n)t pr)vided in acc)rdance with )ur )pen Internet rules, is “Internet” service )r a substitute f)r br)adband Internet access service. Finally, we will m)nit)r the p)tential f)r antic)mpetitive )r )therwise harmful effects fr)m specialized services, including fr)m any arrangements a br)adband pr)vider may seek t) enter int) with third parties t) )ffer such services.348 The Open Internet Advis)ry C)mmittee will aid us in m)nit)ring these issues.

IV. THE COMMISSION’S AUTHORITY TO ADOPT OPEN INTERNET RULES115. C)ngress created the C)mmissi)n “[f])r the purp)se )f regulating interstate and

f)reign c)mmerce in c)mmunicati)n by wire and radi) s) as t) make available, s) far as p)ssible, t) all pe)ple )f the United States . . . a rapid, efficient, Nati)n-wide, and w)rld-wide wire and

(...c)ntinued fr)m previ)us page)Servs., 545 U.S. 967, 1002 (2005) (Brand i) (“The C)mmissi)n need n)t immediately apply the p)licy reas)ning” underlying its classificati)n )f br)adband Internet services t) )ther categ)ries )f pr)viders t) which that reas)ning might apply).344 See, e.g., Free Press C)mments at 111; OIC C)mments at 92; PIC C)mments at 32; Fr)ntier PN C)mments at 4; OIC PN C)mments at 5; PAETEC PN C)mments at 2–3; PIC PN C)mments at 6–7.345 Our decisi)n n)t t) ad)pt rules regarding specialized services at this time inv)lves an issue distinct fr)m the regulat)ry classificati)n )f services such as V)IP and IPTV under the C)mmunicati)ns Act, a subject we d) n)t address in this Order. Likewise, the C)mmissi)n’s acti)ns here d) n)t affect any existing )bligati)n t) pr)vide interc)nnecti)n, unbundled netw)rk elements, )r special access )r )ther wh)lesale access under §§ 201, 251, 256, and 271 )f the Act. 47 U.S.C. §§ 201, 251, 256, 271.346 See supra III.A. S)me c)mmenters, including Internet engineering experts and analysts, emphasize the imp)rtance )f distinguishing between the )pen Internet and specialized services and state that “this distincti)n must c)ntinue as a m)st appr)priate and c)nstructive basis f)r pursuing y)ur p)licy g)als.” Vari)us Adv)cates f)r the Open Internet PN Reply at 3; see als, id. at 2.347 See C,nsumer Inf,rmati,n and Discl,sure et al., N)tice )f Inquiry, 24 FCC Rcd 11380 (2009).348 See, e.g., AICC PN Reply at 2 (n)ting c)ncerns regarding p)tential exclusive arrangements between br)adband pr)viders and third parties f)r the pr)visi)n )f specialized services); Clearwire PN C)mments at 13 (n)ting the risk )f antic)mpetitive c)nduct fr)m specialized services that inv)lve arrangements between br)adband pr)viders and affiliates and arguing “that th)se types )f arrangements sh)uld be subject t) particular scrutiny”).


63

radi) c)mmunicati)n service with adequate facilities at reas)nable charges, f)r the purp)se )f the nati)nal defense, [and] f)r the purp)se )f pr)m)ting safety )f life and pr)perty thr)ugh the use )f wire and radi) c)mmunicati)n.”349 Secti)n 2 )f the C)mmunicati)ns Act grants the C)mmissi)n jurisdicti)n )ver “all interstate and f)reign c)mmunicati)n by wire )r radi).”350 As the Supreme C)urt explained in the radi) c)ntext, C)ngress charged the C)mmissi)n with “regulating a field )f enterprise the d)minant characteristic )f which was the rapid pace )f its unf)lding” and theref)re intended t) give the C)mmissi)n sufficiently “br)ad” auth)rity t) address new issues that arise with respect t) “fluid and dynamic” c)mmunicati)ns techn)l)gies.351 Br)adband Internet access services are clearly within the C)mmissi)n’s subject matter jurisdicti)n352 and hist)rically have been supervised by the C)mmissi)n. Furtherm)re, as explained bel)w, )ur ad)pti)n )f basic rules )f the r)ad f)r br)adband pr)viders implements specific statut)ry mandates in the C)mmunicati)ns Act and the Telec)mmunicati)ns Act )f 1996.

116. C)ngress has dem)nstrated its awareness )f the imp)rtance )f the Internet and advanced services t) m)dern interstate c)mmunicati)ns. In Secti)n 230 )f the Act, f)r example, C)ngress ann)unced “the p)licy )f the United States” c)ncerning the Internet, which includes “pr)m)t[ing] the c)ntinued devel)pment )f the Internet” and “enc)urag[ing] the devel)pment )f techn)l)gies which maximize user c)ntr)l )ver what inf)rmati)n is received by individuals, families, and sch))ls wh) use the Internet,” while als) “preserv[ing] the vibrant and c)mpetitive free market that presently exists f)r the Internet and )ther interactive c)mputer services” and av)iding unnecessary regulati)n.353 Other statements )f c)ngressi)nal p)licy further c)nfirm the C)mmissi)n’s statut)ry auth)rity. In Secti)n 254 )f the Act, f)r example, C)ngress charged the C)mmissi)n with designing a federal universal pr)gram that has as )ne )f several )bjectives making “[a]ccess t) advanced telec)mmunicati)ns and inf)rmati)n services” available “in all regi)ns )f the Nati)n,” and particularly t) sch))ls, libraries, and health care pr)viders.354 T) the same end, in Secti)n 706 )f the 1996 Act, C)ngress instructed the C)mmissi)n t) “enc)urage the depl)yment )n a reas)nable and timely basis )f advanced telec)mmunicati)ns capability t) all Americans (including, in particular, elementary and sec)ndary sch))ls and classr))ms)” and, if it finds that advanced telec)mmunicati)ns capability is n)t being depl)yed t) all Americans “)n a reas)nable and timely basis,” t) “take immediate acti)n t) accelerate depl)yment )f such capability.”355 This mandate pr)vides the C)mmissi)n b)th “auth)rity” and “discreti)n” “t) settle )n the best regulat)ry )r deregulat)ry appr)ach t) br)adband.”356 As the legislative hist)ry )f the 1996 Act c)nfirms, C)ngress believed that the laws it drafted w)uld c)mpel the C)mmissi)n t) pr)tect and pr)m)te the Internet, while all)wing the agency sufficient flexibility

349 47 U.S.C. § 151.350 Id. § 152(a).351 Nat’l Br,ad. C,., Inc. v. United States, 319 U.S. 190, 219–20 (1943) (C)ngress did n)t “attempt[] an itemized catal)gue )f the specific manifestati)ns )f the general pr)blems” that it entrusted t) the C)mmissi)n); see als, FCC v. P,ttsville Br,ad. C,., 309 U.S. 134, 137, 138 (1940) (the C)mmissi)n’s statut)ry resp)nsibilities and auth)rity am)unt t) “a unified and c)mprehensive regulat)ry system” f)r the c)mmunicati)ns industry that all)ws a single agency t) “maintain, thr)ugh appr)priate administrative c)ntr)l, a grip )n the dynamic aspects” )f that ever-changing industry).352 See C,mcast C,rp. v. FCC, 600 F.3d 642, 646–47 (D.C. Cir. 2010).353 47 U.S.C. § 230(b). 354 47 U.S.C. § 254(b)(2), (6). 355 47 U.S.C. § 1302(a), (b).356 Ad H,c Telec,mms. Users C,mm. v. FCC, 572 F.3d 903, 906–07 (D.C. Cir. 2009).


64

t) decide h)w t) d) s).357 As explained in detail bel)w, C)ngress did n)t limit its instructi)ns t) the C)mmissi)n t) )ne secti)n )f the c)mmunicati)ns laws. Rather, it expressed its instructi)ns in multiple secti)ns which, viewed as a wh)le, pr)vide br)ad auth)rity t) pr)m)te c)mpetiti)n, investment, transparency, and an )pen Internet thr)ugh the rules we ad)pt t)day.

A. Secti(n 706 (f the 1996 Act Pr(vides Auth(rity f(r the Open Internet Rules117. As n)ted, Secti)n 706 )f the 1996 Act directs the C)mmissi)n (al)ng with state

c)mmissi)ns) t) take acti)ns that enc)urage the depl)yment )f “advanced telec)mmunicati)ns capability.”358 “[A]dvanced telec)mmunicati)ns capability,” as defined in the statute, includes br)adband Internet access.359 Under Secti)n 706(a), the C)mmissi)n must enc)urage the depl)yment )f such capability by “utilizing, in a manner c)nsistent with the public interest, c)nvenience, and necessity,” vari)us t))ls including “measures that pr)m)te c)mpetiti)n in the l)cal telec)mmunicati)ns market, )r )ther regulating meth)ds that rem)ve barriers t) infrastructure investment.”360 F)r the reas)ns stated in Parts II.A, II.D and III.B, ab)ve, )ur )pen Internet rules will have precisely that effect.

118. In C,mcast, the D.C. Circuit identified Secti)n 706(a) as a pr)visi)n that “at least arguably . . . delegate[s] regulat)ry auth)rity t) the C)mmissi)n,” and in fact “c)ntain[s] a direct mandate—the C)mmissi)n ‘shall enc)urage.’”361 The c)urt, h)wever, regarded the C)mmissi)n as “b)und by” a pri)r )rder362 that, in the c)urt )f appeals’ understanding, had held that Secti)n

357 S. Rep. N). 104-23, at 51 (1995) (“The g)al is t) accelerate depl)yment )f an advanced capability that will enable subscribers in all parts )f the United States t) send and receive inf)rmati)n in all its f)rms—v)ice, data, graphics, and vide)—)ver a high-speed switched, interactive, br)adband, transmissi)n capability.”). 358 47 U.S.C. § 1302.359 47 U.S.C. § 1302(d)(1) (defining “advanced telec)mmunicati)ns capability” as “high-speed, switched, br)adband telec)mmunicati)ns capability that enables users t) )riginate and receive high-quality v)ice, data, graphics, and vide) telec)mmunicati)ns using any techn)l)gy”). See Nati,nal Br,adband Plan f,r ,ur Future, N)tice )f Inquiry, 24 FCC Rcd 4342, 4309, App. para. 13 (2009) (“advancedtelec)mmunicati)ns capability” includes br)adband Internet access); Inquiry C,ncerning the Depl,yment ,f Advanced Telec,mms. Capability t, All Americans in a Reas,nable and Timely Fashi,n, 14 FCC Rcd 2398, 2400, para. 1 (Secti)n 706 addresses “the depl)yment )f br)adband capability”), 2406 para. 20 (same). Even when br)adband Internet access is pr)vided as an “inf)rmati)n service” rather than a “telec)mmunicati)ns service,” see Nat’l Cable & Telec,mm. Ass’n v. Brand i Internet Servs., 545 U.S. 967, 977–78 (2005), it inv)lves “telec)mmunicati)ns.” 47 U.S.C. § 153(24). Given Secti)n 706’s explicit f)cus )n depl)yment )f br)adband access t) v)ice, data, and vide) c)mmunicati)ns, it is n)t imp)rtant that the statute d)es n)t use the exact phrase “Internet netw)rk management.”360 47 U.S.C. § 1302(a). 361 See C,mcast, 600 F.3d at 658; see als, 47 U.S.C. § 1302(a) (“The C)mmissi)n . . . shall enc)urage the depl)yment )n a reas)nable and timely basis )f advanced telec)mmunicati)ns capability t) all Americans . . . by utilizing . . . price cap regulati)n, regulat)ry f)rbearance, measures that pr)m)te c)mpetiti)n in the l)cal telec)mmunicati)ns market, )r )ther regulating meth)ds that rem)ve barriers t) infrastructure investment.”). Because Secti)n 706 c)ntains a “direct mandate,” we reject the argument pressed by s)me c)mmenters (see, e.g., AT&T C)mments at 217–18; Veriz)n C)mments at 100–01; Qwest C)mments at 58–59; Letter fr)m Rick Chessen, Seni)r Vice President, Law and Regulat)ry P)licy, NCTA, t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N)s. 09-191 & 10-127, WC D)cket N). 07-52, at 7 (filed Dec. 10, 2010) (NCTA Dec. 10, 2010 Ex Parte Letter)) that Secti)n 706 c)nfers n) substantive auth)rity. 362 Depl,yment ,f Wireline Servs. Offering Advanced Telec,mms. Capability et al., Mem)randum Opini)n and Order and N)tice )f Pr)p)sed Rulemaking, 13 FCC Rcd 24012 (1998) (Advanced Services Order).


65

706(a) is n)t a grant )f auth)rity.363 In the Advanced Services Order, t) which the c)urt referred, the C)mmissi)n held that Secti)n 706(a) did n)t permit it t) enc)urage advanced services depl)yment thr)ugh the mechanism )f f)rbearance with)ut c)mplying with the specific requirements f)r f)rbearance set f)rth in Secti)n 10 )f the C)mmunicati)ns Act.364 The issue presented in the 1998 pr)ceeding was whether the C)mmissi)n c)uld rely )n the br)ad terms )f Secti)n 706(a) t) trump th)se specific requirements. In the Advanced Services Order, the C)mmissi)n ruled that it c)uld n)t d) s), n)ting that it w)uld be “unreas)nable” t) c)nclude that C)ngress intended Secti)n 706(a) t) “all)w the C)mmissi)n t) eviscerate [specified] f)rbearance exclusi)ns after having expressly singled )ut [th)se exclusi)ns] f)r different treatment in secti)n 10.”365 The C)mmissi)n acc)rdingly c)ncluded that Secti)n 706(a) did n)t give it independent auth)rity—in )ther w)rds, auth)rity )ver and ab)ve what it )therwise p)ssessed366—t) f)rbear fr)m applying )ther pr)visi)ns )f the Act.367 The C)mmissi)n’s h)lding thus h)n)red the interpretive can)n that “[a] specific pr)visi)n . . . c)ntr)ls )ne[] )f m)re general applicati)n.”368

119. While disav)wing a reading )f Secti)n 706(a) that w)uld all)w the agency t) trump specific mandates )f the C)mmunicati)ns Act, the C)mmissi)n n)netheless affirmed in the Advanced Services Order that Secti)n 706(a) “gives this C)mmissi)n an affirmative )bligati)n t) enc)urage the depl)yment )f advanced services” using its existing rulemaking, f)rbearance and adjudicat)ry p)wers, and stressed that “this )bligati)n has substance.”369 The Advanced Services Order is, theref)re, c)nsistent with )ur present understanding that Secti)n 706(a) auth)rizes the C)mmissi)n (al)ng with state c)mmissi)ns) t) take acti)ns, within their subject matter jurisdicti)n and n)t inc)nsistent with )ther pr)visi)ns )f law, that enc)urage the depl)yment )f advanced telec)mmunicati)ns capability by any )f the means listed in the pr)visi)n.370

120. In directing the C)mmissi)n t) “enc)urage the depl)yment )n a reas)nable and timely basis )f advanced telec)mmunicati)ns capability t) all Americans . . . by utilizing . . . price cap regulati)n, regulat)ry f)rbearance, measures that pr)m)te c)mpetiti)n in the l)cal telec)mmunicati)ns market, )r )ther regulating meth)ds that rem)ve barriers t) infrastructure investment,”371 C)ngress necessarily invested the C)mmissi)n with the statut)ry auth)rity t)carry )ut th)se acts. Indeed, the relevant Senate Rep)rt explained that the pr)visi)ns )f Secti)n 706 are “intended t) ensure that )ne )f the primary )bjectives )f the [1996 Act]—t) accelerate depl)yment )f advanced telec)mmunicati)ns capability—is achieved,” and stressed that these pr)visi)ns are “a necessary fail-safe” t) guarantee that C)ngress’s )bjective is reached.372 It

363 See C,mcast, 600 F.3d at 659. 364 See 47 U.S.C. § 160; see als, Advanced Services Order, 13 FCC Rcd at 24046, para. 73. 365 Advanced Services Order, 13 FCC Rcd at 24046, para. 73.366 C)nsistent with l)ngstanding Supreme C)urt precedent, we have underst))d this auth)rity t) include )ur ancillary jurisdicti)n t) further c)ngressi)nal p)licy. See, e.g., Amendment ,f Secti,n 64.702 ,f the C,mmissi,n’s Rules and Regulati,ns (Sec,nd C,mputer Inquiry), Final Decisi)n, 77 FCC 2d 384, 474 (1980), aff’d, C,mputer & C,mmc’ns Indus. Ass’n v. FCC, 693 F.2d 198, 211–14 (D.C. Cir. 1982) (CCIA). 367 Advanced Services Order, 13 FCC Rcd at 24046-48, paras. 74–77. 368 Bl,ate v. United States, 130 S. Ct. 1345, 1354 (2010) (citati)n and internal qu)tati)n marks )mitted). 369 Advanced Services Order, 13 FCC Rcd at 24046, para. 74.370 T) the extent the Advanced Services Order can be c)nstrued as having read Secti)n 706(a) differently, we reject that reading )f the statute f)r the reas)ns discussed in the text. 371 47 U.S.C. § 1302(a).372 S. Rep. N). 104-23, at 50–51 (1995).


66

w)uld be )dd indeed t) characterize Secti)n 706(a) as a “fail-safe” that “ensures” the C)mmissi)n’s ability t) pr)m)te advanced services if it c)nferred n) actual auth)rity. Here, under )ur reading, Secti)n 706(a) auth)rizes the C)mmissi)n t) address practices, such as bl)cking V)IP c)mmunicati)ns, degrading )r raising the c)st )f )nline vide), )r denying end users material inf)rmati)n ab)ut their br)adband service, that have the p)tential t) stifle )verall investment in Internet infrastructure and limit c)mpetiti)n in telec)mmunicati)ns markets.

121. This reading )f Secti)n 706(a) )bviates the c)ncern )f s)me c)mmenters that )ur jurisdicti)n under the pr)visi)n c)uld be “limitless” )r “unb)unded.”373 T) the c)ntrary, )ur Secti)n 706(a) auth)rity is limited in three critical respects. First, )ur mandate under Secti)n 706(a) must be read c)nsistently with Secti)ns 1 and 2 )f the Act, which define the C)mmissi)n’s subject matter jurisdicti)n )ver “interstate and f)reign c)mmerce in c)mmunicati)n by wire and radi).”374 As a result, )ur auth)rity under Secti)n 706(a) d)es n)t, in )ur view, extend bey)nd )ur subject matter jurisdicti)n under the C)mmunicati)ns Act. Sec)nd, the C)mmissi)n’s acti)ns under Secti)n 706(a) must “enc)urage the depl)yment )n a reas)nable and timely basis )f advanced telec)mmunicati)ns capability t) all Americans.”375 Third, the activity undertaken t) enc)urage such depl)yment must “utilize[e], in a manner c)nsistent with the public interest, c)nvenience, and necessity,” )ne ()r m)re) )f vari)us specified meth)ds.376 These include: “price cap regulati)n, regulat)ry f)rbearance, measures that pr)m)te c)mpetiti)n in the l)cal telec)mmunicati)ns market, )r )ther regulating meth)ds that rem)ve barriers t) infrastructure investment.”377 Acti)ns that d) n)t fall within th)se categ)ries are n)t auth)rized by Secti)n 706(a). Thus, as the D.C. Circuit has n)ted, while the statut)ry auth)rity granted by Secti)n 706(a) is br)ad, it is “n)t unfettered.”378

373 See, e.g., CenturyLink C)mments at 18; Esbin C)mments at 72.374 47 U.S.C. §§ 151, 152. The C)mmissi)n hist)rically has rec)gnized that services carrying Internet traffic are jurisdicti)nally mixed, but generally subject t) federal regulati)n. See, e.g., Nat’l Ass’n ,f Regulat,ry Util. C,mm’rs Petiti,n f,r Clarificati,n ,r Declarat,ry Ruling that N, FCC Order ,r Rule Limits State Auth,rity t, C,llect Br,adband Data, Mem)randum Opini)n and Order, 25 FCC Rcd 5051, 5054, paras. 8–9 & n.24 (2010). Where, as here, “it is n)t p)ssible t) separate the interstate and intrastate aspects )f the service,” the C)mmissi)n may preempt state regulati)n where “federal regulati)n is necessary t) further a valid federal regulat)ry )bjective, i.e., state regulati)n w)uld c)nflict with federal regulat)ry p)licies.” Minn. Pub. Utils. C,mm’n v. FCC, 483 F.3d 570, 578 (8th Cir. 2007); see als, La. Pub. Serv. C,mm’n v. FCC, 476 U.S. 355, 375 n.4 (1986). Except t) the extent a state requirement c)nflicts )n its face with a C)mmissi)n decisi)n herein, the C)mmissi)n will evaluate preempti)n in light )f the fact-specific nature )f the relevant inquiry, )n a case-by-case basis. We rec)gnize, f)r example, that states play a vital r)le in pr)tecting end users fr)m fraud, enf)rcing fair business practices, and resp)nding t) c)nsumer inquiries and c)mplaints. See, e.g., V,nage Order, 19 FCC Rcd at 22404–05, para. 1. We have n) intenti)n )f impairing states’ )r l)cal g)vernments’ ability t) carry )ut these duties unless we find that specific measures c)nflict with federal law )r p)licy. In determining whether state )r l)cal regulati)ns frustrate federal p)licies, we will, am)ng )ther things, be guided by the )verarching c)ngressi)nal p)licies described in Secti)n 230 )f the Act and Secti)n 706 )f the 1996 Act. 47 U.S.C. §§ 230, 1302.375 47 U.S.C. § 1302(a).376 Id.377 Id.378 Ad H,c Telec,mms. Users C,mm., 572 F.3d at 906–07 (“The general and gener)us phrasing )f § 706 means that the FCC p)ssesses significant albeit n)t unfettered, auth)rity and discreti)n t) settle )n the best regulat)ry )r deregulat)ry appr)ach t) br)adband.”).


67

122. Secti)n 706(a) acc)rdingly pr)vides the C)mmissi)n a specific delegati)n )f legislative auth)rity t) pr)m)te the depl)yment )f advanced services, including by means )f the )pen Internet rules ad)pted t)day. Our understanding )f Secti)n 706(a) is, m)re)ver, harm)ni)us with )ther statut)ry pr)visi)ns that c)nfer a br)ad mandate )n the C)mmissi)n. Secti)n 706(a)’s directive t) “enc)urage the depl)yment [)f advanced telec)mmunicati)ns capability] )n a reas)nable and timely basis” using the meth)ds specified in the statute is, f)r example, n) br)ader than )ther pr)visi)ns )f the C)mmissi)n’s auth)rizing statutes that c)mmand the agency t) ensure “just” and “reas)nable” rates and practices, )r t) regulate services in the “public interest.”379 Indeed, )ur auth)rity under Secti)n 706(a) is generally c)nsistent with—albeit narr)wer than—the understanding )f ancillary jurisdicti)n under which this C)mmissi)n )perated f)r decades bef)re the C,mcast decisi)n.380 The similarities between the tw) in fact explain why the C)mmissi)n has n)t heret)f)re had )ccasi)n t) describe Secti)n 706(a) in this way: In the particular pr)ceedings pri)r t) C,mcast, setting )ut the understanding )f Secti)n 706(a) that we articulate in this Order w)uld n)t meaningfully have increased the auth)rity that we underst))d the C)mmissi)n already t) p)ssess.381

379 See, e.g., 47 U.S.C. §§ 201(b) & 309(a).380 See supra n)te 366. In C,mcast, the c)urt stated that “‘[t]he C)mmissi)n . . . may exercise ancillary jurisdicti)n )nly when tw) c)nditi)ns are satisfied: (1) the C)mmissi)n’s general jurisdicti)nal grant under Title I [)f the C)mmunicati)ns Act] c)vers the regulated subject and (2) the regulati)ns are reas)nably ancillary t) the C)mmissi)n’s effective perf)rmance )f its statut)rily mandated resp)nsibilities.’” 600 F.3d at 646 (qu)ting Am. Library Ass’n v. FCC, 406 F.3d 689, 691–92 (D.C. Cir. 2005)) (alterati)ns in )riginal). The c)urt further ruled that the sec)nd pr)ng )f this test requires the C)mmissi)n t) rely )n specific delegati)ns )f statut)ry auth)rity. 600 F.3d at 644, 654. 381 Ign)ring that Secti)n 706(a) expressly c)ntemplates the use )f “regulating meth)ds” such as price regulati)n, s)me c)mmenters read pri)r C)mmissi)n )rders as suggesting that Secti)n 706 auth)rizes )nly deregulat)ry acti)ns. See AT&T C)mments at 216 (citing Petiti,n f,r Declarat,ry Ruling that pulver.c,m’s Free W,rld Dialup is Neither Telec,mm. N,r A Telec,mms. Serv., Mem)randum Opini)n and Order, 19 FCC Rcd 3307, 3319, para. 19 n.69 (2004) (Pulver Order)); Esbin C)mments at 52 (citing Inquiry C,ncerning High-Speed Access t, the Internet Over Cable and Other Facilities et al, Declarat)ry Ruling and N)tice )f Pr)p)sed Rulemaking, 17 FCC Rcd 4798, 4801, 4826, 4840, paras. 4, 47, 73, (2002) (Cable M,dem Declarat,ry Ruling) and Appr,priate Framew,rk f,r Br,adband Access t, the Internet Over Wireline Facilities et al., Rep)rt and Order and N)tice )f Pr)p)sed Rulemaking, 20 FCC Rcd 14853, 14894 para. 77 (2005) (Wireline Br,adband Rep,rt and Order)). They are mistaken. The Pulver Orderstated )nly that Secti)n 706 did n)t c)ntemplate the applicati)n )f “ec)n)mic and entry/exit regulati)n inherent in Title II” t) inf)rmati)n service Internet applicati)ns. Pulver Order, 19 FCC Rcd at 3379, para. 19 n.69 (emphasis added). The )pen Internet rules that we ad)pt t)day d) n)t regulate Internet applicati)ns, much less imp)se Title II (i.e., c)mm)n carrier) regulati)n )n such applicati)ns. M)re)ver, at the same time the C)mmissi)n determined in the Cable M,dem Declarat,ry Ruling and the Wireline Br,adband Rep,rt and Order that cable m)dem service and wireline br)adband services (such as DSL) c)uld be pr)vided as inf)rmati)n services n)t subject t) Title II, it pr)p)sed new regulati)ns under )ther s)urces )f auth)rity including Secti)n 706. See Cable M,dem Declarat,ry Ruling, 17 FCC Rcd at 4840, para. 73; Wireline Br,adband Rep,rt and Order, 20 FCC Rcd at 14929–30, 14987, para. 146. On the same day the C)mmissi)n ad)pted the Wireline Br,adband Rep,rt and Order, it als) ad)pted the Internet P,licy Statement, which rested in part )n Secti)n 706. 20 FCC Rcd 14986, para. 2 (2005). Our pri)r )rders theref)re d) n)t c)nstrue Secti)n 706 as exclusively deregulat)ry. And t) the extent that any pri)r )rder d)es suggest such a c)nstructi)n, we n)w reject it. See Ad H,c Telec,mms. Users C,mm., 572 F.3d at 908 (Secti)n 706 “direct[s] the FCC t) make the maj)r p)licy decisi)ns and t) select the mix ,f regulat,ry and deregulat,ry t,,ls the C)mmissi)n deems m)st appr)priate in the public interest t) facilitate br)adband depl)yment and c)mpetiti)n”) (emphasis added).


68

123. Secti)n 706(b) )f the 1996 Act382 pr)vides additi)nal auth)rity t) take acti)ns such as enf)rcing )pen Internet principles. It directs the C)mmissi)n t) undertake annual inquiries c)ncerning the availability )f advanced telec)mmunicati)ns capability t) all Americans and requires that, if the C)mmissi)n finds that such capability is n)t being depl)yed in a reas)nable and timely fashi)n, it “shall take immediate acti,n t) accelerate depl)yment )f such capability by rem)ving barriers t) infrastructure investment and by pr)m)ting c)mpetiti)n in the telec)mmunicati)ns market.”383 In July 2010, the C)mmissi)n “c)nclude[d] that br)adband depl)yment t) all Americans is n)t reas)nable and timely” and n)ted that “[a]s a c)nsequence )f that c)nclusi)n,” Secti)n 706(b) was triggered.384 Secti)n 706(b) theref)re pr)vides express auth)rity f)r the pr)-investment, pr)-c)mpetiti)n rules we ad)pt t)day.

B. Auth(rity t( Pr(m(te C(mpetiti(n and Investment In, and Pr(tect End Users (f, V(ice, Vide(, and Audi( Services

124. The C)mmissi)n als) has auth)rity under the C)mmunicati)ns Act t) ad)pt the )pen Internet rules in )rder t) pr)m)te c)mpetiti)n and investment in v)ice, vide), and audi) services. Furtherm)re, f)r the reas)ns stated in Part II, ab)ve, even if statut)ry pr)visi)ns related t) v)ice, vide), and audi) c)mmunicati)ns were the ,nly s)urces )f auth)rity f)r the )pen Internet rules (which is n)t the case), it w)uld n)t be s)und p)licy t) attempt t) implement rules c)ncerning )nly v)ice, vide), )r audi) transmissi)ns )ver the Internet.385

1. The C(mmissi(n Has Auth(rity t( Ad(pt Open Internet Rules t( Further Its Resp(nsibilities Under Title II (f the Act

125. Secti)n 201 )f the Act delegates t) the C)mmissi)n “express and expansive auth)rity”386 t) ensure that the “charges [and] practices . . . in c)nnecti)n with” telec)mmunicati)ns services are “just and reas)nable.”387 As described in Part II.B, interc)nnected V)IP services, which include s)me )ver-the-t)p V)IP services, “are increasingly being used as a substitute f)r traditi)nal teleph)ne service.”388 Over-the-t)p services theref)re d), )r will, c)ntribute t) the marketplace discipline )f v)ice telec)mmunicati)ns services regulated under Secti)n 201.389 Furtherm)re, c)mpanies that pr)vide b)th v)ice c)mmunicati)ns

382 47 U.S.C. § 1302(b).383 Id. (emphasis added).384 Sixth Br,adband Depl,yment Rep,rt, 25 FCC Rcd at 9558, paras. 2–3.385 See supra para. 48. Many br)adband pr)viders )ffer their service )n a c)mm)n carriage basis under Title II )f the Act. See Framew,rk f,r Br,adband Internet Serv., N)tice )f Inquiry, 25 FCC Rcd 7866, 7875, para. 21 (2010). With respect t) these pr)viders, the rules we ad)pt t)day are additi)nally supp)rted )n that basis. With the p)ssible excepti)n )f transparency requirements, h)wever, the )pen Internet rules are unlikely t) create substantial new duties f)r these pr)viders in practice.386 C,mcast, 600 F.3d at 645.387 47 U.S.C. § 201(b).388 Tel. N,. Requirements f,r IP-Enabled Servs. Pr,viders, Rep)rt and Order, Declarat)ry Ruling, Order )n Remand, and NPRM, 22 FCC Rcd 19531, 19547, para. 28 (2007). By definiti)n, interc)nnected V)IP services all)w calls t) and fr)m traditi)nal ph)ne netw)rks. See supra n,te 48.389 See NCTA Dec. 10, 2010 Ex Parte Letter (arguing that the C)mmissi)n c)uld exercise auth)rity ancillary t) several pr)visi)ns )f Title II )f the Act, including Secti)ns 201 and 202, “t) ensure that c)mm)n carrier services c)ntinue t) be )ffered )n just and reas)nable terms and c)nditi)ns” and t) “facilitate c)nsumer access t) br)adband-based alternatives t) c)mm)n carrier services such as V)ice )ver Internet Pr)t)c)l”); V)nage C)mments at 11–12 (“The C)mmissi)n’s pr)p)sed regulati)ns w)uld help

(c)ntinued....)


69

and br)adband Internet access services (f)r example, teleph)ne c)mpanies that are br)adband pr)viders) have the incentive and ability t) bl)ck, degrade, )r )therwise disadvantage the services )f their )nline v)ice c)mpetit)rs.390 Because the C)mmissi)n may enlist market f)rces t) fulfill its Secti)n 201 resp)nsibilities,391 we p)ssess auth)rity t) prevent these antic)mpetitive practices thr)ugh )pen Internet rules.392

126. Secti)n 251(a)(1) )f the Act imp)ses a duty )n all telec)mmunicati)ns carriers “t) interc)nnect directly )r indirectly with the facilities )f )ther telec)mmunicati)ns carriers.” 393 Many )ver-the-t)p V)IP services all)w end users t) receive calls fr)m and/)r place calls t)

(...c)ntinued fr)m previ)us page)preserve the c)mpetitive balance between pr)viders electing t) )perate under Title II and th)se )perating under Title I.”); G))gle C)mments at 45–46 (“The widespread use )f V)IP and related services as cheaper and m)re feature-rich alternatives t) Title II services has significant effects )n traditi)nal teleph)ne pr)viders’ practices and pricing, as well [as] )n netw)rk interc)nnecti)n between Title II and IP netw)rks that c)nsumers use t) reach each )ther, g)ing t) the heart )f the C)mmissi)n’s Title II resp)nsibilities.”) (f))tn)tes and citati)ns )mitted); Letter fr)m Devendra T. Kumar, C)unsel t) Skype C)mmunicati)ns S.A.R.L., t) Marlene H. D)rtch, Secretary, FCC, GN D)cket N). 09-191, WC D)cket N). 07-52 (filed N)v. 30, 2010) (arguing that the C)mmissi)n has auth)rity ancillary t) Secti)n 201 t) pr)tect internati)nal V)IP calling); _O C)mments at 20 (n)ting the impact )f, inter alia, V)IP )n the C)mmissi)n’s “traditi)nal framew)rk” f)r regulating v)ice services under Title II); Letter fr)m Alan In)uye et al., )n behalf )f ALA, ARL and EDUCAUSE, t) Chairman Julius Genach)wski et al., GN D)cket N). 09-191, WC D)cket N). 07-52 at 4-5 (filed Dec. 13, 2010) (citing examples )f h)w libraries and higher educati)n instituti)ns are using br)adband services, including V)IP, t) replace traditi)nal c)mm)n carrier services). In previ)us )rders, the C)mmissi)n has embraced the use )f V)IP t) av)id )r c)nstrain high internati)nal calling rates. See Universal Serv. C,ntributi,n Meth,d,l,gy et al., Rep)rt and Order and N)tice )f Pr)p)sed Rulemaking, 21 FCC Rcd 7518, 7546, para. 55 & n.187 (2006) (“[I]nterc)nnected V)IP service is )ften marketed as an ec)n)mical way t) make interstate and internati)nal calls, as a l)wer-c)st substitute f)r wireline t)ll service.”), rev’d in part sub n,m. V,nage H,ldings C,rp. v. FCC, 489 F.3d 1232 (D.C. Cir. 2007); Rep,rting Requirements f,r U.S. Pr,viders ,f Int’l Telec,mms. Servs., N)tice )f Pr)p)sed Rulemaking, 19 FCC Rcd 6460, 6470, para. 22 (2004) (“Impr)vements in the packet-switched transmissi)n techn)l)gy underlying the internet n)w all)w pr)viders )f V)IP t) )ffer internati)nal v)ice transmissi)n )f reas)nable quality at a price l)wer than current IMTS rates.”) (f))tn)te )mitted); Int’l Settlements P,licy Ref,rm, N)tice )f Pr)p)sed Rulemaking, 17 FCC Rcd 19954, 19964, para. 13 (2002) (“This ability t) engage in least-c)st r)uting, as well as alternative, n)n-traditi)nal services such as IP Teleph)ny )r V)ice-Over-IP, in c)njuncti)n with the benchmarks p)licy have created a market dynamic that is pressuring internati)nal settlement rates d)wnward.”). In additi)n, NCTA has explained that, “[b]y enabling c)nsumers t) make inf)rmed ch)ices regarding br)adband Internet access service,” the C)mmissi)n c)uld c)nclude that transparency requirements “w)uld help pr)m)te the c)mpetitiveness )f V)IP and )ther br)adband-based c)mmunicati)ns services” and “thereby facilitate the )perati)n )f market f)rces t) discipline the charges and )ther practices )f c)mm)n carriers, in fulfillment )f the C)mmissi)n’s )bligati)ns under secti)ns 201 and 202” )f the Act. NCTA Dec. 10, 2010 Ex Parte Letter at 2–3.390 See supra Part II.B.391 See CCIA, 693 F.2d at 212; see als, Orl,ff v. FCC, 352 F.3d 415, 418–19 (D.C. Cir. 2003).392 We reject the argument asserted by s)me c)mmenters (see, e.g., AT&T C)mments at 218–19; Veriz)n C)mments at 98–99) that the vari)us grants )f rulemaking auth)rity in the Act, including the express grant )f rulemaking auth)rity in Secti)n 201(b) itself, d) n)t auth)rize the pr)mulgati)n )f rules pursuant t) Secti)n 201(b). See AT&T C,rp. v. I,wa Utils. Bd., 525 U.S. 366, 378 (1999) (“We think that the grant in § 201(b) means what it says: The FCC has rulemaking auth)rity t) carry )ut the ‘pr)visi)ns )f this Act.’”). 393 47 U.S.C. § 251(a)(1).


70

traditi)nal ph)ne netw)rks )perated by telec)mmunicati)ns carriers.394 The C)mmissi)n has n)t determined whether any such V)IP pr)viders are telec)mmunicati)ns carriers. T) the extent that V)IP services are inf)rmati)n services (rather than telec)mmunicati)ns services), any bl)cking )r degrading )f a call fr)m a traditi)nal teleph)ne cust)mer t) a cust)mer )f a V)IP pr)vider, )r vice-versa, w)uld deny the traditi)nal teleph)ne cust)mer the intended benefits )f telec)mmunicati)ns interc)nnecti)n under Secti)n 251(a)(1). Over-the-t)p V)IP cust)mers acc)unt f)r a gr)wing share )f teleph)ne usage.395 If calls t) and fr)m these V)IP cust)mers were n)t delivered efficiently and reliably by br)adband pr)viders, all users )f the public switched teleph)ne netw)rk w)uld be limited in their ability t) c)mmunicate, and C)ngress’s g)al )f “efficient, Nati)n-wide, and w)rld-wide” c)mmunicati)ns396 acr)ss interc)nnected netw)rks w)uld be frustrated. T) the extent that V)IP services are telec)mmunicati)ns services, a br)adband pr)vider’s interference with traffic exchanged between a pr)vider )f V)IP telec)mmunicati)ns services and an)ther telec)mmunicati)ns carrier w)uld interfere with interc)nnecti)n between tw) telec)mmunicati)ns carriers under Secti)n 251(a)(1).397

2. The C(mmissi(n Has Auth(rity t( Ad(pt Open Internet Rules t( Further Its Resp(nsibilities Under Titles III and VI (f the Act

127. “The C)mmissi)n has been charged with br)ad resp)nsibilities f)r the )rderly devel)pment )f an appr)priate system )f l)cal televisi)n br)adcasting,”398 which arise fr)m the C)mmissi)n’s m)re general public interest )bligati)n t) “ensure the larger and m)re effective use )f radi).”399 Similarly, the C)mmissi)n has br)ad jurisdicti)n t) )versee MVPD services, including direct-br)adcast satellite (DBS).400 C)nsistent with these mandates, )ur jurisdicti)n

394 See supra Part II.B.395 See id.396 47 U.S.C. § 151.397 See als, 47 U.S.C. § 256(b)(1) (directing the C)mmissi)n t) “establish pr)cedures f)r . . . )versight )f c))rdinated netw)rk planning by telec)mmunicati)ns carriers and )ther pr)viders )f telec)mmunicati)ns service f)r the effective and efficient interc)nnecti)n )f public telec)mmunicati)ns netw)rks used t) pr)vide telec)mmunicati)ns service”); C,mcast, 600 F.3d at 659 (ackn)wledging Secti)n 256’s )bjective, while adding that Secti)n 256 d)es n)t “‘expand[] . . . any auth)rity that the C)mmissi)n’ )therwise has under law”) (qu)ting 47 U.S.C. § 256(c)). 398 See United States v. Sw. Cable C,., 392 U.S. 157, 177 (1968); see als, id. at 174 (“[T]hese )bligati)ns require f)r their satisfacti)n the creati)n )f a system )f l)cal br)adcasting stati)ns, such that ‘all c)mmunities )f appreciable size (will) have at least )ne televisi)n stati)n as an )utlet f)r l)cal self-expressi)n.’”); 47 U.S.C. §§ 307(b) (C)mmissi)n shall “make such distributi)n )f licenses, . . . am)ng the several States and c)mmunities as t) pr)vide a fair, efficient, and equitable distributi)n )f radi) service t) each )f the same”), 303(f) & (h) (auth)rizing the C)mmissi)n t) all)cate br)adcasting z)nes )r areas and t) pr)mulgate regulati)ns “as it may deem necessary” t) prevent interference am)ng stati)ns) (cited in Sw. Cable, 392 U.S. at 173–74). 399 Nat’l Br,ad. C,., 319 U.S. at 216 (public interest t) be served is the “larger and m)re effective use )f radi)”) (citati)n and internal qu)tati)n marks )mitted).400 See 47 U.S.C. § 303(v); see als, N.Y. State C,mm’n ,n Cable Televisi,n v. FCC, 749 F.2d 804, 807–12 (D.C. Cir. 1984) (uph)lding the C)mmissi)n’s exercise )f ancillary auth)rity )ver satellite master antenna televisi)n service); 47 U.S.C. § 548 (discussed bel)w).


71

)ver vide) and audi) services under Titles III and VI )f the C)mmunicati)ns Act pr)vides additi)nal auth)rity f)r )pen Internet rules.401

128. First, such rules are necessary t) the effective perf)rmance )f )ur Title III resp)nsibilities t) ensure the “)rderly devel)pment . . . )f l)cal televisi)n br)adcasting”402 and the “m)re effective use )f radi).”403 As discussed in Parts II.A and II.B, Internet vide) distributi)n is increasingly imp)rtant t) all vide) pr)gramming services, including l)cal televisi)n br)adcast service.404 Radi) stati)ns als) are pr)viding audi) and vide) c)ntent )n the Internet.405 At the same time, br)adband pr)viders—many )f which are als) MVPDs—have the incentive and ability t) engage in self-interested practices that may include bl)cking )r degrading the quality )f )nline pr)gramming c)ntent, including br)adcast c)ntent, )r charging unreas)nable additi)nal fees f)r faster delivery )f such c)ntent. Absent the rules we ad)pt t)day, such practices je)pardize br)adcasters’ ability t) )ffer news (including l)cal news) and )ther pr)gramming )ver the Internet, and, in turn, threaten t) impair their ability t) )ffer high-quality br)adcast c)ntent.406

129. The C)mmissi)n likewise has auth)rity under Title VI )f the Act t) ad)pt )pen Internet rules that pr)tect c)mpetiti)n in the pr)visi)n )f MVPD services. A cable )r teleph)ne c)mpany’s interference with the )nline transmissi)n )f pr)gramming by DBS )perat)rs )r stand-al)ne )nline vide) pr)gramming aggregat)rs that may functi)n as c)mpetitive alternatives t) traditi)nal MVPDs407 w)uld frustrate C)ngress’s stated g)als in enacting Secti)n 628 )f the Act, which include pr)m)ting “c)mpetiti)n and diversity in the multichannel vide) pr)gramming market”; “increase[ing] the availability )f satellite cable pr)gramming and satellite br)adcast

401 See, e.g., G))gle C)mments at 45 & n.142; V)nage C)mments at 13–15; V)nage Reply C)mments at 25; _O C)mments at 20–21.402 Sw. Cable, 392 U.S. at 177; see 47 U.S.C. § 303(f) & (h) (establishing C)mmissi)n’s auth)rity t) all)cate br)adcasting z)nes )r areas and t) pr)mulgate regulati)ns “as it may deem necessary” t) prevent interference am)ng stati)ns) (cited in Sw. Cable, 392 U.S. at 173–74). 403 Nat’l Br,ad. C,., 319 U.S. at 216; see als, 47 U.S.C. §§ 303(g) (establishing C)mmissi)n’s duty t) “generally enc)urage the larger and m)re effective use )f radi) in the public interest”), 307(b) (“[T]he C)mmissi)n shall make such distributi)n )f licenses . . . am)ng the several States and c)mmunities as t) pr)vide a fair, efficient, and equitable distributi)n )f radi) service t) each )f the same.”).404 See supra Parts II.A and II.B.405 See supra Part II.A. 406 See Parts II.A. and II.B. NCTA has n)ted that “[t]he C)mmissi)n c)uld decide that, based )n the gr)wing imp)rtance )f br)adcast pr)gramming distributed )ver br)adband netw)rks t) b)th televisi)n viewers and the business )f br)adcasting itself, ensuring that br)adcast vide) c)ntent made available )ver br)adband netw)rks is n)t subject t) unreas)nable discriminati)n )r antic)mpetitive treatment is necessary t) preserve and strengthen the system )f l)cal br)adcasting.” NCTA Dec. 10, 2010 Ex Parte Letter at 3; see als, id. (“Facilitating the availability )f br)adcast c)ntent )n the Internet may als) help t) f)ster m)re efficient and intensive use )f spectrum, thereby supp)rting the C)mmissi)n’s duty in secti)n 303(g) t) ‘generally enc)urage the larger and m)re effective use )f radi) in the public interest.’”) (qu)ting 47 U.S.C. § 303(g)). 407 See supra paras. 16-17, 22-23. The issue whether )nline-)nly vide) pr)gramming aggregat)rs are themselves MVPDs under the C)mmunicati)ns Act and )ur regulati)ns has been raised in pending pr)gram access c)mplaint pr)ceedings. See, e.g., VDC C,rp. v. Turner Netw,rk Sales, Inc., Pr)gram Access C)mplaint (Jan. 18, 2007); Sky Angel U.S., LLC v. Disc,very C,mmc’ns LLC, Pr)gram Access C)mplaint (Mar. 24, 2010). N)thing in this Order sh)uld be read t) state )r imply any determinati)n )n this issue.


72

pr)gramming t) pers)ns in rural and )ther areas n)t currently able t) receive such pr)gramming”; and “spur[ring] the devel)pment )f c)mmunicati)ns techn)l)gies.”408

130. When C)ngress enacted Secti)n 628 in 1992, it was specifically c)ncerned ab)ut the incentive and ability )f cable )perat)rs t) use their c)ntr)l )f vide) pr)gramming t) impede c)mpetiti)n fr)m the then-nascent DBS industry.409 Since that time, the Internet has )pened a new c)mpetitive arena in which MVPDs that )ffer br)adband service have the )pp)rtunity and incentive t) impede DBS pr)viders and )ther c)mpeting MVPDs—and the statute reaches this anal)g)us arena as well. Secti)n 628(b) pr)hibits cable )perat)rs fr)m engaging in “unfair )r deceptive acts )r practices the purp)se )r effect )f which is t) prevent )r hinder significantly the ability )f an MVPD t) deliver satellite cable pr)gramming )r satellite br)adcast pr)gramming t) c)nsumers.”410 An “unfair meth)d )f c)mpetiti)n )r unfair act )r practice” under Secti)n 628(b) includes acts that can be antic)mpetitive.411 Thus, Secti)n 628(b) pr)scribes practices by cable )perat)rs that (i) can impede c)mpetiti)n, and (ii) have the purp)se )r effect )f preventing )r significantly hindering )ther MVPDs fr)m pr)viding c)nsumers their satellite-delivered pr)gramming (i.e., pr)gramming transmitted t) MVPDs via satellite f)r retransmissi)n t) subscribers).412 Secti)n 628(c)(1), in turn, directs the C)mmissi)n t) ad)pt rules pr)scribing

408 47 U.S.C. § 548(a). The Act defines “vide) pr)gramming” as “pr)gramming pr)vided by, )r generally c)nsidered c)mparable t) pr)gramming pr)vided by, a televisi)n br)adcast stati)n.” 47 U.S.C. § 522(20). Alth)ugh the C)mmissi)n stated nearly a decade ag) that vide) “‘streamed’ )ver the Internet” had “n)t yet achieved televisi)n quality” and theref)re did n)t c)nstitute “vide) pr)gramming” at that time, see Cable M,dem Declarat,ry Ruling, 17 FCC Rcd at 4834, para. 63 n.236, intervening impr)vements in streaming techn)l)gy and br)adband availability enable such pr)gramming t) be “c)mparable t) pr)gramming pr)vided by . . . a televisi)n br)adcast stati)n,” 47 U.S.C. § 522(20). See supra Part II.A–II.B. (discussing increasing use )f, and end-user demand f)r, )nline streaming )f vide) c)ntent, including br)adcast c)ntent). This finding is c)nsistent with )ur predicti)n m)re than five years ag) that “[a]s vide) c)mpressi)n techn)l)gy impr)ves, data transfer rates increase, and media adapters that link TV t) a br)adband c)nnecti)n bec)me m)re widely used, . . . vide) )ver the Internet will pr)liferate and impr)ve in quality.” Ann. Assessment ,f the Status ,f C,mpetiti,n in the Mkt. f,r the Delivery ,f Vide, Pr,gramming, N)tice )f Inquiry, 19 FCC Rcd 10909, 10932, para. 74 (2004) (citati)n )mitted). 409 See Cable Act )f 1992, Pub. L. N). 102-385, § 2(a)(5), 106 Stat. 1460, 1461 (“Vertically integrated pr)gram suppliers . . . have the incentive and ability t) fav)r their affiliated cable )perat)rs )ver n)naffiliated cable )perat)rs and pr)gramming distribut)rs using )ther techn)l)gies.”); H.R. Rep. N). 102-862, at 93 (1992) (C)nf. Rep.), reprinted in 1992 U.S.C.C.A.N. 1231, 1275 (“In ad)pting rules under this secti)n, the c)nferees expect the C)mmissi)n t) address and res)lve the pr)blems )f unreas)nable cable industry practices, including restricting the availability )f pr)gramming and charging discriminat)ry prices t) n)n-cable techn)l)gies.”); S. Rep. N). 102-92, at 26 (1991), reprinted in 1992 U.S.C.C.A.N. 1133, 1159 (“[C]able pr)grammers may simply refuse t) sell t) p)tential c)mpetit)rs. Small cable )perat)rs, satellite dish )wners, and wireless cable )perat)rs c)mplain that they are denied access t), )r charged m)re f)r, pr)gramming than large, vertically integrated cable )perat)rs.”).410 See 47 U.S.C. § 548(b); see Nat’l Cable & Telec,mms. Ass’n v. FCC, 567 F.3d 659, 662 (D.C. Cir. 2009) (NCTA).411 Review ,f the C,mmissi,n’s Pr,gram Access Rules and Examinati,n ,f Pr,gramming Tying Arrangements, First Rep)rt and Order, 25 FCC Rcd 746, 779, para. 48 & n.190 (2010) (citing Exclusive C,ntracts f,r Pr,visi,n ,f Vide, Serv. in Multiple Dwelling Units and Other Real Estate Devs., Rep)rt and Order and Further N)tice )f Pr)p)sed Rulemaking, 22 FCC Rcd 20235, 20255, para. 43, aff’d, NCTA, 567 F.3d 659); see als, NTCA, 567 F.3d at 664–65 (referring t) “unfair dealing” and “antic)mpetitive practices”). 412 See 47 U.S.C. § 548(b); NCTA, 567 F.3d at 664. In NCTA, the c)urt held that the C)mmissi)n reas)nably c)ncluded that the “br)ad and sweeping terms” )f Secti)n 628(b) auth)rized it t) ban exclusive

(c)ntinued....)


73

unfair practices by cable )perat)rs and their affiliated satellite cable pr)gramming vend)rs.413 Secti)n 628(j) pr)vides that teleph)ne c)mpanies )ffering vide) pr)gramming services are subject t) the same rules as cable )perat)rs.414

131. The )pen Internet rules directly further )ur mandate under Secti)n 628. Cable )perat)rs, teleph)ne c)mpanies, and DBS )perat)rs alike are seeking t) keep and win cust)mers by expanding their MVPD )fferings t) include )nline access t) their pr)gramming.415 F)r example, in pr)viding its MVPD service, DISH ()ne )f the nati)n’s tw) DBS pr)viders) relies significantly )n )nline disseminati)n )f pr)gramming, including vide)-)n-demand and )ther pr)gramming, that c)mpetes with similar )fferings by cable )perat)rs.416 As DISH explains, “[a]s m)re and m)re vide) c)nsumpti)n m)ves )nline, the c)mpetitive viability )f stand-al)ne MVPDs depends )n their ability t) )ffer an )nline vide) experience )f the same quality as the )nline vide) )fferings )f integrated br)adband pr)viders.”417 The )pen Internet rules will prevent practices by cable )perat)rs and teleph)ne c)mpanies, in their r)le as br)adband pr)viders, that have the purp)se )r effect )f significantly hindering ()r alt)gether preventing) delivery )f vide)

(...c)ntinued fr)m previ)us page)agreements between cable )perat)rs and building )wners that prevented )ther MVPDs fr)m pr)viding their pr)gramming t) residents )f th)se buildings. The c)urt )bserved that “the w)rds C)ngress ch)se [in Secti)n 628(b)] f)cus n)t )n practices that prevent MVPDs fr)m ,btaining satellite cable )r satellite br)adcast pr)gramming, but )n practices that prevent them fr)m ‘pr)viding’ that pr)gramming ‘t) subscribers )r c)nsumers.’” NCTA, 567 F.3d at 664 (emphasis in )riginal).413 47 U.S.C. § 548(c)(1).414 47 U.S.C. § 548(j).415 DISH Reply at 4–5 (“Pay-TV services c)ntinue t) ev)lve at a rapid pace and pr)viders increasingly are integrating their vast )fferings )f linear channels with )nline c)ntent,” while “c)nsumers are ad)pting )nline vide) services as a c)mplement t) traditi)nal, linear pay-TV services” and “specifically desire Internet vide) as a c)mplement t) . . . [MVPDs’] traditi)nal TV )fferings.”) (f))tn)tes and citati)ns )mitted). We find unpersuasive the c)ntenti)n that this Order fails t) “grapple with the implicati)ns )f the market f)rces that are driving MVPDs . . . t) add Internet c)nnectivity t) their multichannel vide) )fferings.” McD)well Statement at *24 (f))tn)te )mitted). Our analysis takes acc)unt )f these devel)pments, which are discussed at length in Part II.A, ab)ve.416 Id. at 5–8 & n.20 (discussing “DishOnline service,” which “all)ws DISH t) )ffer )ver 3,000 m)vies and TV sh)ws thr)ugh its ‘DishOnline’ Internet vide) service,” and n)ting that “the success )f DishOnline is critically dependent )n br)adband access pr)vided and c)ntr)lled by DISH’s c)mpetit)rs in the MVPD market”); DISH PN C)mments at 2–3; DISH Netw)rk, Watch Live TV Online OR Rec)rded Pr)grams with DishOnline, www.dish-systems.c)m/pr)ducts/dish_)nline.php (“‘DISHOnline.c)m integrates DISH Netw)rk’s expansive TV pr)gramming lineup with the vast am)unt )f )nline vide) c)ntent, adding an)ther dimensi)n t) )ur ‘pay )nce, take y)ur TV everywhere’ pr)duct platf)rm.’”); see als, supra Part II.A. Much )f the regular subscripti)n pr)gramming that DISH )ffers )nline is satellite-delivered pr)gramming. See DISH Netw)rk, Watch Live TV Online OR Rec)rded Pr)grams with DishOnline, www.dish-systems.c)m/pr)ducts/dish_)nline.php (n)ting that cust)mers can watch c)ntent fr)m cable pr)grammers such as the Disc)very Channel and MTV). Thus, we reject NCTA’s argument that “[t]here is n) basis f)r asserting that any cable )perat)r )r c)mm)n carrier’s practices with respect t) Internet-delivered vide) c)uld . . . ‘prevent )r significantly hinder’ an MVPD fr)m pr)viding satellite cable pr)gramming.” NCTA Dec. 10, 2010 Ex Parte Letter at 5. 417 DISH Reply at 7.


74

pr)gramming pr)tected under Secti)n 628(b).418 The C)mmissi)n theref)re is auth)rized t) ad)pt )pen Internet rules under Secti)n 628(b), (c)(1), and (j).419

132. Similarly, )pen Internet rules enable us t) carry )ut )ur resp)nsibilities under Secti)n 616(a) )f the Act,420 which c)nfers additi)nal express statut)ry auth)rity t) c)mbat discriminat)ry netw)rk management practices by br)adband pr)viders. Secti)n 616(a) directs the C)mmissi)n t) ad)pt regulati)ns g)verning pr)gram carriage agreements “and related practices” between cable )perat)rs )r )ther MVPDs and vide) pr)gramming vend)rs.421 The pr)gram carriage regulati)ns must include pr)visi)ns that prevent MVPDs fr)m “unreas)nably restrain[ing] the ability )f an unaffiliated vide) pr)gramming vend)r t) c)mpete fairly by discriminating in vide) pr)gramming distributi)n,” )n the basis )f a vend)r’s affiliati)n )r lack )f affiliati)n with the MVPD, in the selecti)n, terms, )r c)nditi)ns )f carriage )f the vend)r’s pr)gramming.422 MVPD practices that discriminat)rily impede c)mpeting vide) pr)gramming vend)rs’ )nline delivery )f pr)gramming t) c)nsumers affect the vend)rs’ ability t) “c)mpete fairly” f)r viewers,423 just as surely as MVPDs’ discriminat)ry selecti)n )f vide) pr)gramming f)r carriage )n cable systems has this effect. We find that discriminat)ry practices by MVPDs in their capacity as br)adband pr)viders, such as bl)cking )r charging fees f)r terminati)n )f )nline vide) pr)gramming t) end users, are “related” t) pr)gram carriage agreements and within )ur mandate t) ad)pt regulati)ns under Secti)n 616(a).424

C. Auth(rity t( Pr(tect the Public Interest Thr(ugh Spectrum Licensing

133. Open Internet rules f)r wireless services are further supp)rted by )ur auth)rity, under Title III )f the C)mmunicati)ns Act, t) pr)tect the public interest thr)ugh spectrum

418 N)twithstanding suggesti)ns t) the c)ntrary, the C)mmissi)n is n)t required t) wait until antic)mpetitive harms are realized bef)re acting. Rather, the C)mmissi)n may exercise its ancillary jurisdicti)n t) “plan in advance )f f)reseeable events, instead )f waiting t) react t) them.” Sw. Cable, 392 U.S. at 176-77 (citati)n and internal qu)tati)n marks )mitted); see als, Star Wireless, LLC v. FCC, 522 F.3d at 475.419 See Open Internet NRPM, 24 FCC Rcd at 13099, para. 85 (discussing r)le )f the Internet in f)stering vide) pr)gramming c)mpetiti)n and the C)mmissi)n’s auth)rity t) regulate vide) services).420 47 U.S.C. § 536(a).421 Id. An MVPD is “a pers)n such as, but n)t limited t), a cable )perat)r, a multichannel multip)int distributi)n service, a direct br)adcast satellite service, )r a televisi)n receive-)nly satellite pr)gram distribut)r, wh) makes available f)r purchase, by subscribers )r cust)mers, multiple channels )f vide) pr)gramming.” 47 U.S.C. § 522(13). A “vide) pr)gramming vend)r” is any “pers)n engaged in the pr)ducti)n, creati)n, )r wh)lesale distributi)n )f vide) pr)gramming f)r sale.” 47 U.S.C. § 536(b); see als, supra n)te 408 (discussing definiti)n )f “vide) pr)gramming”). A number )f vide) pr)gramming vend)rs make their pr)gramming available )nline. See, e.g., Hulu.c)m, www.hulu.c)m/ab)ut; Bi)graphy Channel, www.bi)graphy.c)m; Hallmark Channel, www.hallmarkchannel.c)m. See als, supra Part II.A.422 47 U.S.C. § 536(a)(1)–(3); see als, 47 C.F.R. § 76.1301 (implementing regulati)ns t) address practices specified in Secti)n 616(a)(1)–(3)).423 47 U.S.C. § 536(a)(3).424 The Act d)es n)t define “related practices” as that phrase is used in Secti)n 616(a). Because the term is neither explicitly defined in the statute n)r susceptible )f )nly )ne meaning, we c)nstrue it, c)nsistent with dicti)nary definiti)ns, t) c)ver practices that are “akin” )r “c)nnected” t) th)se specifically identified in Secti)n 616(a)(1)–(3). See Black’s Law Dicti,nary 1158 (5th ed. 1979); Webster’s Third New Int’l Dicti,nary 1916 (1993). The argument that Secti)n 616(a) has n) applicati)n t) Internet access service )verl))ks that the statute expressly c)vers these “related practices.”


75

licensing.425 C)ngress has entrusted the C)mmissi)n with “maintain[ing] the c)ntr)l )f the United States )ver all the channels )f radi) transmissi)n.”426 Licensees h)ld C)mmissi)n-granted auth)rizati)ns t) use that spectrum subject t) c)nditi)ns the C)mmissi)n imp)ses )n that use.427 In c)nsidering whether t) grant a license t) use spectrum, theref)re, the C)mmissi)n must “determine . . . whether the public interest, c)nvenience, and necessity will be served by the granting )f such applicati)n.”428 Likewise, when identifying classes )f licenses t) be awarded by aucti)n and the characteristics )f th)se licenses, the C)mmissi)n “shall include safeguards t) pr)tect the public interest” and must seek t) pr)m)te a number )f g)als, including “the devel)pment and rapid depl)yment )f new techn)l)gies, pr)ducts, and services.”429 Even after licenses are awarded, the C)mmissi)n may change the license terms “if in the judgment )f the C)mmissi)n such acti)n will pr)m)te the public interest, c)nvenience, and necessity.”430 The C)mmissi)n may exercise this auth)rity )n a license-by-license basis )r thr)ugh a rulemaking,431

even if the affected licenses were awarded at aucti)n.432

134. The C)mmissi)n previ)usly has required wireless licensees t) c)mply with )pen Internet principles, as appr)priate in the particular situati)n bef)re it. In 2007, when it m)dified the service rules f)r the 700 MHz band, the C)mmissi)n t))k “a measured step t) enc)urage additi)nal inn)vati)n and c)nsumer ch)ice at this critical stage in the ev)luti)n )f wireless br)adband services.”433 Specifically, the C)mmissi)n required C bl)ck licensees “t) all)w cust)mers, device manufacturers, third-party applicati)n devel)pers, and )thers t) use )r devel)p the devices and applicati)ns )f their ch))sing in C Bl)ck netw)rks, s) l)ng as they meet all applicable regulat)ry requirements and c)mply with reas)nable c)nditi)ns related t) management )f the wireless netw)rk (i.e., d) n)t cause harm t) the netw)rk).”434 The )pen Internet c)nditi)ns we ad)pt t)day likewise are necessary t) advance the public interest in inn)vati)n and investment.435

135. AT&T c)ntends that the C)mmissi)n cann)t apply “neutrality” regulati)ns t) wireless br)adband services )utside the upper 700 MHz C Bl)ck spectrum because any such regulati)ns “w)uld unlawfully rescind critical rulings in the C)mmissi)n’s 700 MHz Sec,nd

425 See, e.g., NCTA Dec. 10, 2010 Ex Parte Letter at 3 (discussing auth)rity ancillary t) Title III).426 47 U.S.C. § 301. 427 47 U.S.C. §§ 304, 316(a)(1). We thus disagree with c)mmenters wh) suggest in general that there is n)thing in Title III t) supp)rt the imp)siti)n )f )pen Internet rules. See, e.g., EFF C)mments at 6 n.13.428 47 U.S.C. § 309(a); see als, 47 U.S.C. § 307(a) (“The C)mmissi)n, if public c)nvenience, interest, )r necessity will be served thereby, subject t) the limitati)ns )f this [Act], shall grant t) any applicant theref)r a stati)n license pr)vided f)r by this [Act].”).429 47 U.S.C. § 309(j)(3).430 47 U.S.C. § 316(a)(1).431 See WBEN Inc. v. United States, 396 F.2d 601, 618 (2d Cir. 1968).432 See 47 U.S.C. § 309(j)(6); Celtr,nix Telemetry v. FCC, 272 F.3d 585 (D.C. Cir. 2001).433 700 MHz Sec,nd Rep,rt and Order, 22 FCC Rcd at 15363, para. 201.434 Id. at 15365, para. 206.435 See supra Part III.E. In additi)n, the use )f m)bile V)IP applicati)ns is likely t) c)nstrain prices f)r CMRS v)ice services, similar t) what we described earlier with regard t) V)IP and traditi)nal ph)ne services. See supra para. 125.


76

Rep,rt and Order )n which pr)viders relied in making multi-billi)n d)llar investments,”436 and that ad)pting these regulati)ns m)re br)adly t) all m)bile pr)viders w)uld vi)late the Administrative Pr)cedure Act.437 We disagree. As explained ab)ve, the C)mmissi)n retains the statut)ry auth)rity t) imp)se new requirements )n existing licenses bey)nd th)se that were in place at the time )f grant, whether the licenses were assigned by aucti)n438 )r by )ther means.439 In this case, parties were made well aware that the agency might extend )penness requirements bey)nd the C Bl)ck, diminishing any reliance interest they might assert.440 T) the extent that AT&T argues that applicati)n )f )penness principles reduced aucti)n bids )n the C Bl)ck spectrum,441 we find that the reas)ns f)r the price differences between the C Bl)ck and )ther 700 MHz spectrum bl)cks are far m)re c)mplex. A number )f fact)rs, including unique aucti)n dynamics and significant differences between the C Bl)ck spectrum and )ther bl)cks )f 700 MHz spectrum442 c)ntributed t) these price differences. In balancing the public interest fact)rs we are required t) c)nsider, we have determined that ad)pting a targeted set )f rules that apply t) all m)bile br)adband pr)viders is necessary at this time.443

D. Auth(rity t( C(llect Inf(rmati(n t( Enable the C(mmissi(n t( Perf(rm Its Rep(rting Obligati(ns t( C(ngress

136. Additi)nal secti)ns )f the C)mmunicati)ns Act pr)vide auth)rity f)r )ur transparency requirement in particular. Secti)n 4(k) pr)vides f)r an annual rep)rt t) C)ngress that “shall c)ntain . . . such inf)rmati)n and data c)llected by the C)mmissi)n as may be c)nsidered )f value in the determinati)n )f questi)ns c)nnected with the regulati)n )f interstate . . . wire and radi) c)mmunicati)n” and pr)vide “rec)mmendati)ns t) C)ngress as t) additi)nal legislati)n which the C)mmissi)n deems necessary )r desirable.”444 The C)mmissi)n

436 AT&T PN Reply at 32. AT&T asserts that winners )f n)n-C-Bl)ck licenses paid a premium f)r licenses n)t subject t) the )pen platf)rm requirements that applied t) the upper 700 MHz C Bl)ck licenses. Id. at 33–34.437 AT&T C)mments at 233–34.438 Celtr,nix, 272 F.3d at 589.439 The C)mmissi)n may act by rulemaking t) m)dify )r imp)se rules applicable t) all licensees )r licensees in a particular class; in )rder t) m)dify specific licenses held by particular licensees, h)wever, the C)mmissi)n generally is required t) f)ll)w the m)dificati)n pr)cedure set f)rth in 47 U.S.C. § 316. SeeC,mm. f,r Effective Cellular Rules v. FCC, 53 F.3d 1309, 1319–20 (D.C. Cir. 1995).440 See generally, 700 MHz Sec,nd Rep,rt and Order, 22 FCC Rcd at 15358–65. In the 700 MHz Sec,nd Rep,rt and Order, the C)mmissi)n stated that its decisi)n t) limit )pen-platf)rm requirements t) the C Bl)ck was based )n the rec)rd bef)re it “at this time,” id. at 15361, and n)ted that )penness issues in the wireless industry were being c)nsidered m)re br)adly in )ther pr)ceedings. Id. at 15363. The public n)tice setting pr)cedures f)r the 2008 aucti)n advised bidders that the rules g)verning aucti)ned licenses w)uld be subject t) “pending and future pr)ceedings” bef)re the C)mmissi)n. See Aucti,n ,f 700 MHz Band Licenses Scheduled f,r January 24, 2008, Public N)tice, 22 FCC Rcd 18141, 18156, para. 42 (2007).441 See, e.g., AT&T PN Reply at 34–35.442 See, e.g., 47 C.F.R. §§ 27.5(b)–(c), 27.6(b)–(c), 27.14, 27.53(c)–(e).443 See supra Part III.E.444 47 U.S.C. § 154(k). In a similar vein, Secti)n 257 )f the Act directs the C)mmissi)n t) rep)rt t) C)ngress every three years )n “market entry barriers” that the C)mmissi)n rec)mmends be eliminated, including “barriers f)r entrepreneurs and )ther small businesses in the pr)visi)n and )wnership )f telec)mmunicati)ns services and inf)rmati)n services.” 47 U.S.C. § 257(a) & (c); see als, C,mcast, 600

(c)ntinued....)


77

has previ)usly relied )n Secti)n 4(k), am)ng )ther pr)visi)ns, as a basis f)r its auth)rity t) gather inf)rmati)n.445 The C,mcast c)urt, m)re)ver, “readily accept[ed]” that “certain asserti)ns )f C)mmissi)n auth)rity c)uld be ‘reas)nably ancillary’ t) the C)mmissi)n’s statut)ry resp)nsibility t) issue a rep)rt t) C)ngress. F)r example, the C)mmissi)n might imp)se discl)sure requirements )n regulated entities in )rder t) gather data needed f)r such a rep)rt.”446 We ad)pt such discl)sure requirements here.

137. Finally, the C)mmissi)n has br)ad auth)rity under Secti)n 218 )f the Act t) )btain “full and c)mplete inf)rmati)n” fr)m c)mm)n carriers and their affiliates.447 T) the extent br)adband pr)viders are affiliated with c)mmunicati)ns c)mm)n carriers, Secti)n 218 all)ws the C)mmissi)n t) require the pr)visi)n )f inf)rmati)n such as that c)vered by the transparency rule we ad)pt t)day.448 We believe that these discl)sure requirements will assist us in carrying )ut )ur rep)rting )bligati)ns t) C)ngress.

E. C(nstituti(nal Issues138. S)me c)mmenters c)ntend that )pen Internet rules vi)late the First Amendment

and am)unt t) an unc)nstituti)nal taking under the Fifth Amendment. We examine these c)nstituti)nal arguments bel)w, and find them unf)unded.

1. First Amendment139. Several br)adband pr)viders argue that )pen Internet rules are inc)nsistent with

the free speech guarantee )f the First Amendment.449 These c)mmenters generally c)ntend that because br)adband pr)viders distribute their )wn and third-party c)ntent t) cust)mers, they are

(...c)ntinued fr)m previ)us page)F.3d at 659; NCTA Dec. 10, 2010 Ex Parte Letter at 3 (“[S]ecti)n 257’s rep)rting mandate pr)vides a basis f)r the C)mmissi)n t) require pr)viders )f br)adband Internet access service t) discl)se the terms and c)nditi)ns )f service in )rder t) assess whether such terms hamper small business entry and, if s), whether any legislati)n may be required t) address the pr)blem.”) (f))tn)te )mitted). 445 See, e.g., New Part 4 ,f the C,mmissi,n’s Rules C,ncerning Disrupti,ns t, C,mmc’ns, Rep)rt and Order and Further N)tice )f Pr)p)sed Rulemaking, 19 FCC Rcd 16830, 16837, paras. 1, 12 (2004) (extending C)mmissi)n’s rep)rting requirements f)r c)mmunicati)ns disrupti)ns t) certain pr)viders )f n)n-wireline c)mmunicati)ns, in part based )n Secti)n 4(k)); DTV C,nsumer Educ. Initiative, Rep)rt & Order, 23 FCC Rcd 4134, 4147, paras. 1, 2, 28 (2008) (requiring vari)us entities, including br)adcasters, t) submit quarterly rep)rts t) the C)mmissi)n detailing their c)nsumer educati)n eff)rts related t) the DTV transiti)n, in part based )n secti)n 4(k)); Review ,f the C,mmissi,n’s Br,ad. Cable and Equal Emp’t Opp,rtunity Rules and P,licies, Sec)nd Rep)rt and Order and Third N)tice )f Pr)p)sed Rulemaking, 17 FCC Rcd 24018, 24077, paras. 5, 195 (2002) (pr)mulgating rec)rdkeeping and rep)rting requirements f)r br)adcast licensees and )ther regulated entities t) sh)w c)mpliance with equal )pp)rtunities hiring rules, in part based )n secti)n 4(k)). 446 600 F.3d at 659. All, )r nearly all, pr)viders )f br)adband Internet access service are regulated by the C)mmissi)n ins)far as they )perate under certificates t) pr)vide c)mm)n carriage service, )r under licenses t) use radi) spectrum. 447 47 U.S.C. § 218.448 Cf. US West, Inc. v. FCC, 778 F.2d 23, 26–27 (D.C. Cir. 1985) (ackn)wledging C)mmissi)n’s auth)rity under Secti)n 218 t) imp)se rep)rting requirements )n h)lding c)mpanies that )wned l)cal teleph)ne c)mpanies).449 See, e.g., AT&T C)mments at 235–44; AT&T Reply at 167–73; Veriz)n C)mments at 111–18; Veriz)n Reply at 108–17; TWC C)mments at 44–50; TWC Reply at 51–56.


78

speakers entitled t) First Amendment pr)tecti)ns.450 Theref)re, they argue, rules that prevent br)adband pr)viders fr)m fav)ring the transmissi)n )f s)me c)ntent )ver )ther c)ntent vi)late their free speech rights. Other c)mmenters c)ntend that n)ne )f the pr)p)sed rules implicate the First Amendment, because pr)viding br)adband service is c)nduct that is n)t c)rrectly underst))d as speech.451

140. In arguing that br)adband service is pr)tected by the First Amendment, AT&T c)mpares its pr)visi)n )f br)adband service t) the )perati)n )f a cable televisi)n system, and p)ints )ut that the Supreme C)urt has determined that cable pr)grammers and cable )perat)rs engage in speech pr)tected by the First Amendment.452 The anal)gy is inapt. When the Supreme C)urt held in Turner I that cable )perat)rs were pr)tected by the First Amendment, the critical fact)r that made cable )perat)rs “speakers” was their pr)ducti)n )f pr)gramming and their exercise )f “edit)rial discreti)n )ver which pr)grams and stati)ns t) include” (and thus which t) exclude).453

141. Unlike cable televisi)n )perat)rs, br)adband pr)viders typically are best described n)t as “speakers,” but rather as c)nduits f)r speech. The br)adband Internet access service at issue here d)es n)t inv)lve an exercise )f edit)rial discreti)n that is c)mparable t) cable c)mpanies’ ch)ice )f which stati)ns )r pr)grams t) include in their service. In this pr)ceeding br)adband pr)viders have n)t, f)r instance, sh)wn that they market their services as benefiting fr)m an edit)rial presence.454 T) the c)ntrary, Internet end users expect that they can )btain access t) all )r substantially all c)ntent that is available )n the Internet, with)ut the edit)rial interventi)n )f their br)adband pr)vider.455

142. C)nsistent with that understanding, br)adband pr)viders maintain that they qualify f)r statut)ry immunity fr)m liability f)r c)pyright vi)lati)ns )r the distributi)n )f )ffensive material precisely because they lack c)ntr)l )ver what end users transmit and receive.456

450 See AT&T C)mments at 235; Veriz)n C)mments at 112.451 See, e.g., G))gle Reply at 28; PK Reply at 23; Free Press C)mments at 137–38.452 AT&T C)mments at 235.453 Turner Br,ad. Sys., Inc. v. FCC, 512 U.S. 622, 636 (1994) (Turner I) (internal qu)tati)n marks )mitted); see als, L,s Angeles v. Preferred C,mmc’ns, Inc., 476 U.S. 488, 494 (1986).454 See, e.g., AT&T, AT&T U-verse, www.att-services.net/att-u-verse.html (AT&T U-verse: “Cust)mers can get the inf)rmati)n they want, when they want it”); Veriz)n, FiOS Internet, www22.veriz)n.c)m/Residential/FiOSInternet/Overview.htm and Veriz)n, High Speed Internet, www22.veriz)n.c)m/Residential/HighSpeedInternet (Veriz)n FiOS and High Speed Internet: “Internet, plus all the free extras”).455 See Veriz)n C)mments at 117 (“[B]r)adband pr)viders t)day pr)vide traditi)nal Internet access services that )ffer subscribers access t) all lawful c,ntent and have str)ng ec)n)mic incentives t) c)ntinue t) d) s).”) (emphasis added).456 See 17 U.S.C. § 512(a) (a “service pr)vider shall n)t be liable . . . f)r infringement )f c)pyright by reas)n )f the pr)vider’s transmitting, r)uting, )r pr)viding c)nnecti)ns f)r” material distributed by )thers )n its netw)rk); 47 U.S.C. § 230(c)(1) (“[N]) pr)vider )r user )f an interactive c)mputer service shall be treated as the publisher )r speaker )f any inf)rmati)n pr)vided by an)ther inf)rmati)n c)ntent pr)vider”); see als, Rec,rding Indus. Ass’n ,f Am., Inc. v. Veriz,n Internet Servs., Inc., 351 F.3d 1229, 1234 (D.C. Cir. 2003) (discussing in c)ntext )f subp)ena issued t) Veriz)n under the Digital Millennium C)pyright Act Secti)n 512(a)’s “f)ur safe harb)rs, each )f which immunizes ISPs fr)m liability fr)m c)pyright infringement”), cert. denied, 543 U.S. 924 (2004). F)r example “Veriz)n.net, the h)me page f)r Veriz)n Internet cust)mers, c)ntains a n)tice explicitly claiming c)pyright )ver the c)ntents )f the page. In

(c)ntinued....)


79

In additi)n, when defending themselves against subp)enas in litigati)n inv)lving alleged c)pyright vi)lati)ns, br)adband pr)viders typically take the p)siti)n that they are simply c)nduits )f inf)rmati)n pr)vided by )thers.457

143. T) be sure, br)adband pr)viders engage in netw)rk management practices designed t) pr)tect their Internet services against spam and malici)us c)ntent, but that practice bears little resemblance t) an edit)r’s ch))sing which pr)grams, am)ng a range )f pr)grams, t) carry.458 Furtherm)re, this Order d)es n)t limit br)adband pr)viders’ ability t) m)dify their )wn webpages, )r transmit any lawful message that they wish, just like any )ther speaker. Br)adband pr)viders are als) free under this Order t) )ffer a wide range )f “edited” services. If, f)r example, a br)adband pr)vider wanted t) )ffer a service limited t) “family friendly” materials t) end users wh) desire )nly such c)ntent, it c)uld d) s) under the rules we pr)mulgate t)day.459

144. AT&T and NCTA argue that )pen Internet rules interfere with the speech rights )f c)ntent and applicati)n pr)viders t) the extent they are prevented fr)m paying br)adband pr)viders f)r higher quality service.460 Purchasing a higher quality )f terminati)n service f)r )ne’s )wn Internet traffic, th)ugh, is n)t speech—just as pr)viding the underlying transmissi)n service is n)t. Teleph)ne c)mm)n carriers, f)r instance, transmit users’ speech f)r hire, but n) c)urt has ever suggested that regulati)n )f c)mm)n carriage arrangements triggers First Amendment scrutiny.461

145. Even if )pen Internet rules did implicate expressive activity, they w)uld n)t vi)late the First Amendment. Because the rules are based )n the characteristics )f br)adband Internet access service, independent )f c)ntent )r viewp)int, they w)uld be subject t) intermediate First Amendment scrutiny.462 The regulati)ns in this Order are triggered by a br)adband pr)vider )ffering br)adband Internet access, n)t by the message )f any pr)vider.

(...c)ntinued fr)m previ)us page)c)ntrast, the terms )f service )f Veriz)n Internet access explicitly disclaim any affiliati)n with c)ntent transmitted )ver the netw)rk.” PK Reply at 22.457 See, e.g., Charter C,mmc’ns, Inc., Subp,ena Enf,rcement Matter, 393 F.3d 771, 777 (8th Cir. 2005) (subp)enas served )n Charter were n)t auth)rized because “Charter’s functi)n” as a br)adband pr)vider “was limited t) acting as a c)nduit f)r the allegedly c)pyright pr)tected material” at issue); Veriz,n Internet Servs., 351 F.3d at 1237 (accepting Veriz)n’s argument that federal c)pyright law “d)es n)t auth)rize the issuance )f a subp)ena t) an ISP acting as a mere c)nduit f)r the transmissi)n )f inf)rmati)n sent by )thers”).458 We rec)gnize that in tw) cases, federal district c)urts have c)ncluded that the pr)visi)n )f br)adband service is “speech” pr)tected by the First Amendment. In Itasca, the district c)urt reas)ned that br)adband pr)viders were anal)g)us t) cable and satellite televisi)n c)mpanies, which are pr)tected by the First Amendment. Ill. Bell Tel. C,. v. Vill. ,f Itasca, 503 F. Supp. 2d 928, 947–49 (N.D. Ill. 2007). And in Br,ward C,unty, the district c)urt determined that the transmissi)n functi)n pr)vided by br)adband service c)uld n)t be separated fr)m the c)ntent )f the speech being transmitted. C,mcast Cablevisi,n ,f Br,ward Cnty., Inc. v. Br,ward Cnty., 124 F. Supp. 2d 685, 691–92 (S.D. Fla. 2000). F)r the reas)ns stated, we disagree with the reas)ning )f th)se decisi)ns. 459 See TWC C)mments at 45; see als, supra Part III. 460 AT&T Reply at 170; NCTA Reply at 40. 461 See CWA Reply at 13–14.462 See Turner I, 512 U.S. at 642. Regulati)ns generally are c)ntent neutral if justified with)ut reference t) c)ntent )r viewp)int. Id. at 643; BellS,uth C,rp. v. FCC, 144 F.3d 58, 69 (D.C. Cir. 1998); Time Warner Entm’t C,., L.P. v. FCC, 93 F.3d 957, 966–67 (D.C. Cir. 1996).


80

Indeed, the p)int )f )pen Internet rules is t) pr)tect traffic regardless )f its c)ntent. Veriz)n’s argument that such regulati)n is presumptively suspect because it makes speaker-based distincti)ns463 likewise lacks merit: Our acti)n is based )n the transmissi)n service pr)vided by br)adband pr)viders rather than )n what pr)viders have t) say. In any event, speaker-based distincti)ns are permissible s) l)ng as they are “‘justified by s)me special characteristic )f’ the particular medium being regulated”464—here the ability )f br)adband pr)viders t) fav)r )r disfav)r Internet traffic t) the detriment )f inn)vati)n, investment, c)mpetiti)n, public disc)urse, and end users.

146. Under intermediate scrutiny, a c)ntent-neutral regulati)n will be sustained if “it furthers an imp)rtant )r substantial g)vernment interest . . . unrelated t) the suppressi)n )f free expressi)n,” and if “the means ch)sen” t) achieve that interest “d) n)t burden substantially m)re speech than is necessary.”465 The g)vernment interests underlying this Order—preserving an )pen Internet t) enc)urage c)mpetiti)n and rem)ve impediments t) infrastructure investment while enabling c)nsumer ch)ice, end-user c)ntr)l, free expressi)n, and the freed)m t) inn)vate with)ut permissi)n—ensure the public’s access t) a multiplicity )f inf)rmati)n s)urces and maximize the Internet’s p)tential t) further the public interest. As a result, these interests satisfy the intermediate-scrutiny standard.466 Indeed, the interest in keeping the Internet )pen t) a wide range )f inf)rmati)n s)urces is an imp)rtant free speech interest in its )wn right. As Turner Iaffirmed, “assuring that the public has access t) a multiplicity )f inf)rmati)n s)urces is a g)vernmental purp)se )f the highest )rder, f)r it pr)m)tes values central t) the First Amendment.”467 This Order pr)tects the speech interests )f all Internet speakers.

147. Time Warner and Veriz)n c)ntend that the g)vernment lacks imp)rtant )r substantial interests because the harms fr)m pr)hibited practices supp)sedly are speculative.468 This ign)res actual instances )f harmful practices by br)adband pr)viders, as discussed in Part II.B. In any event, the C)mmissi)n is n)t required t) stay its hand until substantial harms already have )ccurred. On the c)ntrary, the C)mmissi)n’s predictive judgments as t) the devel)pment )f a pr)blem and likely injury t) the public interest are entitled t) great deference.469

463 Veriz)n C)mments at 115.464 Turner I, 512 U.S. at 660–61 (qu)ting Minneap,lis Star & Tribune C,. v. Minn. C,mm’r ,f Revenue, 460 U.S. 575, 585 (1983)).465 Turner I, 512 U.S. at 662 (internal qu)tati)n marks )mitted).466 These interests are c)nsistent with the C)mmunicati)ns Act’s charge t) the C)mmissi)n t) make available a “rapid and efficient” nati)nal c)mmunicati)ns infrastructure, 47 U.S.C. § 151; t) pr)m)te, c)nsistent with a “vibrant and c)mpetitive free market,” “the c)ntinued devel)pment )f the Internet and )ther interactive c)mputer services”; and t) “enc)urage the devel)pment )f techn)l)gies which maximize user c)ntr)l )ver what inf)rmati)n is received,” 47 U.S.C. § 230(b)(1)–(3). Indeed, AT&T c)ncedes that “[t]here is little d)ubt that preservati)n )f an )pen and free Internet is an ‘imp)rtant )r substantial g)vernment interest.’” AT&T C)mments at 237 (qu)ting Turner I, 512 U.S. at 662).467 512 U.S. at 663. The Turner I C)urt c)ntinued: “Indeed, it has l)ng been a basic tenet )f nati)nal c)mmunicati)ns p)licy that the widest p)ssible disseminati)n )f inf)rmati)n fr)m diverse and antag)nistic s)urces is essential t) the welfare )f the public.” Id. (internal qu)tati)n marks )mitted). See als, FCC v. Nat’l Citizens C,mm. f,r Br,ad., 436 U.S. 775, 795 (1978) (NCCB) (qu)ting Ass,ciated Press v. United States, 326 U.S. 1, 20 (1945)). 468 See Time Warner C)mments at 48; Veriz)n C)mments at 117.469 See NCCB, 436 U.S. at 814.


81

148. In sum, the rules we ad)pt are narr)wly tail)red t) advance the imp)rtant g)vernment interests at stake. The rules apply )nly t) that p)rti)n )f the end user’s link t) the Internet )ver which the end user’s br)adband pr)vider has c)ntr)l. They f)rbid )nly th)seacti)ns that c)uld unfairly impede the public’s use )f this imp)rtant res)urce. Br)adband pr)viders are left with ample )pp)rtunities t) transmit their )wn c)ntent, t) maintain their )wn websites, and t) engage in reas)nable netw)rk management. In additi)n, they can )ffer edited services t) their end users. The rules are narr)wly tail)red because they address the pr)blem at hand, and g) n) farther.470

2. Fifth Amendment Takings

149. C)ntrary t) the claims )f s)me br)adband pr)viders,471 )pen Internet rules p)se n) issue under the Fifth Amendment’s Takings Clause. Our rules d) n)t c)mpel new services )r limit br)adband pr)viders’ flexibility in setting prices f)r their br)adband Internet access services, but simply require transparency and prevent br)adband pr)viders—when they v,luntarily carry Internet traffic—fr)m bl)cking )r unreas)nably discriminating in their treatment )f that traffic. M)re)ver, this Order inv)lves setting p)licies f)r c)mmunicati)ns netw)rks, an activity that has been )ne )f this C)mmissi)n’s central duties since it was established in 1934.

150. Absent c)mpelled permanent physical )ccupati)ns )f pr)perty,472 takings analysis inv)lves “essentially ad h)c, factual inquiries” regarding such fact)rs as the degree )f interference with “investment-backed expectati)ns,” the “ec)n)mic impact )f the regulati)n” and “the character )f the g)vernment acti)n.”473 In this regard, takings law makes clear that pr)perty )wners cann)t, as a general matter, expect that existing legal requirements regarding their pr)perty will remain entirely unchanged.474 As discussed in Part II, the hist)ry )f br)adband Internet access services )ffers n) basis f)r reas)nable reliance )n a p)licy regime in which pr)viders are free t) c)nceal )r discriminate with)ut limit, and the rules we ad)pt t)day sh)uld

470 AT&T c)ntends (AT&T C)mments at 219–20) that )ur rules w)uld c)nflict with pr)hibiti)ns c)ntained in Secti)n 326 )f the Act against “cens)rship” )f “radi) c)mmunicati)ns” )r interference with “the right )f free speech by means )f radi) c)mmunicati)n.” 47 U.S.C. § 326. F)r the same reas)ns that )ur rules d) n)t vi)late the First Amendment, they d) n)t vi)late Secti)n 326’s statut)ry pr)hibiti)n.471 See, e.g., Veriz)n C)mments at 119–23; AT&T C)mments at 244–48.472 Veriz)n c)ntends that “[t]) the extent the pr)p)sed rules w)uld pr)hibit the )wner )f a br)adband netw)rk fr)m setting the terms )n which )ther pr)viders can )ccupy its pr)perty, the rule w)uld give th)se pr)viders the equivalent )f a permanent easement )n the netw)rk – a f)rm )f physical )ccupati)n.” Veriz)n C)mments at 119 (citing L,rett, v. Telepr,mpter Manhattan CATV C,rp., 458 U.S. 419, 430 (1982)). N)t s). Such transmissi)ns are neither “)ccupati)ns” n)r “permanent.” See L,rett,, 458 U.S. at 435 n.12; see als, Cablevisi,n Sys. C,rp. v. FCC, 570 F.3d 83, 98 (2d Cir. 2009) (uph)lding C)mmissi)n’s finding that a must-carry )bligati)n did n)t c)nstitute a physical )ccupati)n because “the transmissi)n )f WRNN’s signal d)es n)t inv)lve a physical )ccupati)n )f Cablevisi)n’s equipment )r pr)perty”). In additi)n, t) the extent br)adband pr)viders v)luntarily all)w any cust)mer t) transmit )r receive inf)rmati)n, the imp)siti)n )f reas)nable n)n-discriminati)n requirements w)uld n)t be a taking under L,rett,. See Hilt,n Washingt,n C,rp. v. District ,f C,lumbia, 777 F.2d 47 (D.C. Cir. 1985); Yee v. City ,f Esc,ndid,, 503 U.S. 519, 531 (1992).473 Penn Cent. Transp. C,. v. City ,f N.Y., 438 U.S. 104, 124 (1978).474 Lucas v. S.C. C,astal C,uncil, 505 U.S. 1003, 1027 (1992); Gen. Tel. C,. ,f the Sw. v. United States, 449 F.2d 846, 864 (5th Cir. 1971); see als, Hispanic Inf,. & Telec,mms. Netw,rk v. FCC, 865 F.2d 1289, 1294–95 (D.C. Cir. 1989).


82

n)t imp)se substantial new c)sts )n br)adband pr)viders.475 Acc)rdingly, )ur Order d)es n)t raise c)nstituti)nal c)ncerns under regulat)ry takings analysis.

V. ENFORCEMENT151. Pr)mpt and effective enf)rcement )f the rules ad)pted in this Order is crucial t)

preserving an )pen Internet and pr)viding clear guidance t) stakeh)lders. We anticipate that many )f the disputes that will arise regarding alleged )pen Internet vi)lati)ns—particularly th)se centered )n engineering-f)cused questi)ns—will be res)lvable by the parties with)ut C)mmissi)n inv)lvement. We thus enc)urage parties t) endeav)r t) res)lve disputes thr)ugh direct neg)tiati)n f)cused )n relevant technical issues, and t) c)nsult with independent technical b)dies. Many c)mmenters end)rse this appr)ach.476

152. Sh)uld issues devel)p that are n)t res)lved thr)ugh private pr)cesses, the C)mmissi)n will pr)vide backst)p mechanisms t) address such disputes.477 In the Open Internet NPRM, the C)mmissi)n pr)p)sed t) enf)rce )pen Internet rules thr)ugh case-by-case adjudicati)n, a pr)p)sal that met with alm)st universal supp)rt am)ng c)mmenters.478 The C)mmissi)n als) s)ught c)mment )n whether it sh)uld ad)pt c)mplaint pr)cedures specifically g)verning alleged vi)lati)ns )f )pen Internet rules, and whether any )f the C)mmissi)n’s existing rules pr)vide a suitable m)del.479

A. Inf(rmal C(mplaints153. Many c)mmenters urge the C)mmissi)n t) ad)pt inf)rmal c)mplaint pr)cedures

that equip end users and edge pr)viders with a simple and c)st-effective )pti)n f)r calling attenti)n t) )pen Internet rule vi)lati)ns.480 We agree that end users, edge pr)viders, and )thers sh)uld have an efficient vehicle t) bring p)tential )pen Internet vi)lati)ns t) the C)mmissi)n, and indeed, such a vehicle is already available. Parties may submit c)mplaints t) the C)mmissi)n pursuant t) Secti)n 1.41 )f the C)mmissi)n’s rules.481 Unlike f)rmal c)mplaints, n) filing fee is required. We rec)mmend that end users and edge pr)viders submit any c)mplaints thr)ugh the C)mmissi)n’s website, at http://esupp)rt.fcc.g)v/c)mplaints.htm. The C)nsumer and G)vernmental Affairs Bureau will als) make available res)urces explaining these

475 This hist)ry likewise refutes the asserti)n that pri)r C)mmissi)n decisi)ns “engendered seri)us reliance interests” that w)uld be unsettled by )ur ad)pti)n )f )pen Internet rules. Baker Statement at *11 n.41 (citati)n and internal qu)tati)n marks )mitted).476 See, e.g., Bright H)use Netw)rks C)mments at 10; CCIA C)mments at 2, 34; G))gle-Veriz)n J)int C)mments at 4 (“A r)bust r)le f)r technical and industry gr)ups sh)uld be enc)uraged t) address any challenges )r pr)blems that may arise and t) help guide the practices )f all players ….”); WISPA C)mments at 14–16; DISH Netw)rk Reply at 24–26; Qwest Reply at 32.477 Pr)viders and )ther parties may als) seek guidance fr)m the C)mmissi)n )n questi)ns ab)ut the applicati)n )f the )pen Internet rules in particular c)ntexts, f)r instance by requesting a declarat)ry ruling. See 47 C.F.R. § 1.2.478 See, e.g., ACA C)mments at v, 19–20; C)rning Inc. C)mments at 14–15; Ericss)n C)mments at 24; G))gle-Veriz)n J)int C)mments at 4; ITIC C)mments at 7–8; Netflix C)mments at 10–11; Qwest C)mments at 50; RCA C)mments at 19, 25–26; TIA C)mments at 44–46.479 Open Internet NPRM at 13124–25, paras. 175–76.480 See, e.g., ACA C)mments at v, 19–20; Ad H)c C)mments at 27; G))gle C)mments at 87–92; OIC C)mments at 68; Micr)s)ft Reply at 13–14.481 47 C.F.R. § 1.41.


83

rules and facilitating the filing )f inf)rmal c)mplaints. Alth)ugh individual inf)rmal c)mplaints will n)t typically result in written C)mmissi)n )rders, the Enf)rcement Bureau will examine trends )r patterns in c)mplaints t) identify p)tential targets f)r investigati)n and enf)rcement acti)n.482

B. F(rmal C(mplaints154. Many c)mmenters pr)p)se that the C)mmissi)n ad)pt f)rmal c)mplaint

pr)cedures t) address )pen Internet disputes.483 We agree that such pr)cedures sh)uld be available in the event an )pen Internet dispute cann)t be res)lved thr)ugh )ther means. F)rmal c)mplaint pr)cesses permit any)ne—including individual end users and edge pr)viders—t) file a claim alleging that an)ther party has vi)lated a statute )r rule, and asking the C)mmissi)n t) rule )n the dispute. A number )f c)mmenters suggest that existing C)mmissi)n pr)cedural rules c)uld readily be utilized t) g)vern )pen Internet c)mplaints.484

155. We c)nclude that ad)pting a set )f pr)cedures based )n )ur Part 76 cable access c)mplaint rules will best suit the needs )f )pen Internet disputes that may arise.485 Alth)ugh similar t) the c)mplaint rules under secti)n 208, we find that the Part 76 rules are m)re streamlined and thus preferable.486

156. Under the rules we ad)pt t)day, any pers)n may file a f)rmal c)mplaint.487 Bef)re filing a c)mplaint, a c)mplainant must first n)tify the defendant in writing that it intends t) file a c)mplaint with the C)mmissi)n f)r vi)lati)n )f rules ad)pted in this Order.488 After the c)mplaint has been filed, the defendant must submit an answer, and the c)mplainant may submit a reply.489 In s)me cases, the facts might be unc)ntested, and the pr)ceeding can be c)mpleted based )n the pleadings. In )ther cases, a th)r)ugh analysis )f the challenged c)nduct might

482 As with )ur )ther c)mplaint rules, the availability )f c)mplaint pr)cedures d)es n)t bar the C)mmissi)n fr)m initiating separate and independent enf)rcement pr)ceedings f)r p)tential vi)lati)ns. See 47 C.F.R. § 0.111(a)(16).483 See, e.g., ACA C)mments at 19–20; PIC C)mments at 70–71; WISPA C)mments at 14–16.484 See ACA C)mments at 19 (adv)cating f)r the use )f rules g)verning cable carriage c)mplaints); G))gle C)mments at 87–92 (adv)cating f)r the use )f rules g)verning secti)n 208 c)mplaints); Netflix C)mments at 10–11 (same); RCA C)mments at iii, 19 (same); OIC C)mments at 68–70 (adv)cating f)r the use )f a new set )f rules devel)ped specifically f)r )pen Internet disputes).485 The C)mmissi)n is auth)rized t) res)lve f)rmal c)mplaints—and ad)pt pr)cedural rules g)verning the pr)cess—pursuant t) secti)ns 4(i) and 4(j) )f the Act. 47 U.S.C. §§ 154(i), 154(j). In additi)n, secti)n 403 )f the Act enables the C)mmissi)n t) initiate inquiries and enf)rce )rders )n its )wn m)ti)n. 47 U.S.C. § 403. Inherent in such auth)rity is the ability t) res)lve disputes c)ncerning vi)lati)ns )f the )pen Internet rules.486 The Part 76 rules were pr)mulgated t) address c)mplaints against cable systems. See 1998 Biennial Regulat,ry Review – Part 76 – Cable Televisi,n Service Pleading and C,mplaint Rules, Rep)rt and Order, 14 FCC Rcd 418, 420, para. 6 (1999) (“1998 Biennial Review”). F)r example, a l)cal televisi)n stati)n may bring a c)mplaint, pursuant t) the Part 76 rules, claiming that it was wr)ngfully denied carriage )n a cable system. See 47 C.F.R. § 76.61. S)me c)mplaints alleging )pen Internet vi)lati)ns may be anal)g)us, such as th)se br)ught by a c)ntent )r applicati)n pr)vider claiming that br)adband pr)viders—many )f which are cable c)mpanies—are unlawfully bl)cking )r degrading access t) end users.487 See 47 C.F.R. § 8.12. 488 As with )ther f)rmal c)mplaint pr)cedures, a filing fee will be required. See 47 C.F.R. § 1.1106.489 See 47 C.F.R. §§ 8.14(b), (c).


84

require further factual devel)pment and briefing.490 Based )n the rec)rd devel)ped, C)mmissi)n staff ()r the C)mmissi)n itself) will issue an )rder determining the lawfulness )f the challenged practice.

157. As in )ther c)ntexts, c)mplainants in )pen Internet pr)ceedings will ultimately bear the burden )f pr))f t) dem)nstrate by a prep)nderance )f the evidence that an alleged vi)lati)n )f the rules has )ccurred.491 A number )f c)mmenters pr)p)se, h)wever, that )nce a c)mplainant makes a prima facie sh)wing that an )pen Internet rule has been vi)lated, the burden sh)uld shift t) the br)adband pr)vider t) dem)nstrate that the challenged practice is reas)nable.492 This appr)ach is appr)priate in the c)ntext )f certain )pen Internet c)mplaints, when the evidence necessary t) apply the )pen Internet rules is pred)minantly in the p)ssessi)n )f the br)adband pr)vider. Acc)rdingly, we require a c)mplainant alleging a vi)lati)n )f the )pen Internet rules t) plead fully and with specificity the basis )f its claims and t) pr)vide facts, supp)rted when p)ssible by d)cumentati)n )r affidavit, sufficient t) establish a prima facie case )f an )pen Internet vi)lati)n. In turn, the br)adband pr)vider must answer each claim with particularity and furnish facts, supp)rted by d)cumentati)n )r affidavit, dem)nstrating the reas)nableness )f the challenged practice. At that p)int, the c)mplainant will have the )pp)rtunity t) dem)nstrate that the practice is n)t reas)nable. Sh)uld experience reveal the need t) adjust the burden )f pr))f in )pen Internet disputes, we will d) s) as appr)priate.

158. Several c)mmenters urge the C)mmissi)n t) ad)pt timelines f)r the c)mplaint pr)cess.493 We rec)gnize the need t) res)lve alleged vi)lati)ns swiftly, and acc)rdingly will all)w requests f)r expedited treatment )f )pen Internet c)mplaints under the Enf)rcement Bureau’s Accelerated D)cket pr)cedures.494

159. In res)lving f)rmal c)mplaints, the C)mmissi)n will draw )n res)urces fr)m acr)ss the agency—including engineering, ec)n)mic, and legal experts—t) res)lve )pen Internet c)mplaints in a timely manner. In additi)n, we will take int) acc)unt standards and best practices ad)pted by relevant standard-setting )rganizati)ns, and such )rganizati)ns and )utside advis)ry gr)ups als) may pr)vide valuable technical assistance in res)lving disputes. Further, in )rder t)

490 The rules give the C)mmissi)n discreti)n t) )rder )ther pr)cedures as appr)priate, including briefing, status c)nferences, )ral argument, evidentiary hearings, disc)very, )r referral t) an administrative law judge. See 47 C.F.R. §§ 8.14(e)–(g).491 See, e.g., C,nsumer.net, LLC v. Veriz,n C,mmunicati,ns, Inc., Mem)randum Opini)n and Order, 25 FCC Rcd 2737, 2740, para. 10 (Enf. Bur. 2010).492 See, e.g., Ad H)c C)mments at 27; G))gle C)mments at 90 (“F)r example, after a web c)ntent )r applicati)ns pr)vider makes a prima facie case that its packets are being degraded )r )therwise discriminated against by the br)adband pr)vider, the burden sh)uld shift t) the br)adband pr)vider t) dem)nstrate by a prep)nderance )f the evidence that either: (i) it is n)t engaging in any activity )r practice that degrades the web c)ntent pr)vider’s packets relative t) )ther web sites; )r (ii) such practice falls within a reas)nable netw)rk management practice excepti)n.”); G))gle-Veriz)n J)int C)mments at 4–7; OIC C)mments at 48–49; PIC C)mments at 70–71; DISH Netw)rk Reply at 23; TIA Reply at 18–19. 493 See, e.g., Ad H)c C)mments at 27; G))gle C)mments at 88; G))gle-Veriz)n J)int C)mments at 4–7; NJ Rate C)unsel C)mments at 11–12; PK et al. C)mments at 71; Qwest C)mments at 51; Micr)s)ft Reply at 13.494 See 47 C.F.R. § 1.730. Furtherm)re, f)r g))d cause, pursuant t) 47 C.F.R. § 1.3, the C)mmissi)n may sh)rten the deadlines )r )therwise revise the pr)cedures herein t) expedite the adjudicati)n )f c)mplaints.


85

facilitate pr)mpt decisi)n-making, when p)ssible we will res)lve )pen Internet f)rmal c)mplaintsat the bureau level, rather than the C)mmissi)n level.495

C. FCC Initiated Acti(ns160. As n)ted ab)ve, in additi)n t) ruling )n c)mplaints, the C)mmissi)n has the

auth)rity t) initiate enf)rcement acti)ns )n its )wn m)ti)n. F)r instance, secti)n 403 )f the Act permits the C)mmissi)n t) initiate an inquiry c)ncerning any questi)n arising under the Act, and secti)n 503(b) auth)rizes us t) issue citati)ns and imp)se f)rfeiture penalties f)r vi)lati)ns )f )ur rules. Sh)uld the C)mmissi)n find that a br)adband Internet pr)vider is engaging in activity that vi)lates the )pen Internet rules, we will take appr)priate enf)rcement acti)n, including the issuance )f f)rfeitures.496

VI. EFFECTIVE DATE, OPEN INTERNET ADVISORY COMMITTEE, AND COMMISSION REVIEW161. As described bel)w in Part VII.B, s)me )f the rules ad)pted in this Order

c)ntain new inf)rmati)n c)llecti)n requirements subject t) the Paperw)rk Reducti)n Act (PRA). Our rules addressing transparency are am)ng th)se requiring PRA appr)val. The discl)sure rule is essential t) the pr)per functi)ning )f )ur )pen Internet framew)rk, and we theref)re make all the rules we ad)pt in this Order effective 60 days after the date )f Federal Register n)tice ann)uncing the decisi)n )f the Office )f Management and Budget regarding appr)val )f the inf)rmati)n c)llecti)n requirements.

162. T) assist the C)mmissi)n in m)nit)ring the state )f Internet )penness and the effects )f )ur rules, we intend t) create an Open Internet Advis)ry C)mmittee. The C)mmittee, t) be created in c)nsultati)n with the General Services Administrati)n pursuant t) the Federal Advis)ry C)mmittee Act, will be an inclusive and transparent b)dy that will h)ld public meetings. It will be c)mprised )f a balanced gr)up including c)nsumer adv)cates; Internet engineering experts; c)ntent, applicati)n, and service pr)viders; netw)rk equipment and end-user-device manufacturers and suppliers; invest)rs; br)adband service pr)viders; and )ther parties the C)mmissi)n may deem appr)priate. The C)mmittee will aid the C)mmissi)n in tracking devel)pments with respect t) the freed)m and )penness )f the Internet, in particular with respect t) issues discussed in this Order, including technical standards and issues relating t) m)bile br)adband and specialized services.497 The C)mmittee will rep)rt t) the C)mmissi)n and make rec)mmendati)ns it deems appr)priate c)ncerning )ur )pen Internet framew)rk.

163. In light )f the pace )f change )f techn)l)gies and the market f)r br)adband Internet access service, and t) evaluate the efficacy )f the framew)rk ad)pted t)day f)r preserving Internet )penness, the C)mmissi)n will review all )f the rules in this Order n) later than tw) years fr)m their effective date, and will adjust its )pen Internet framew)rk as appr)priate.

495 The rules ad)pted t)day explicitly auth)rize the Enf)rcement Bureau t) res)lve c)mplaints alleging )pen Internet vi)lati)ns.496 See 47 U.S.C. §§ 403, 503(b); 47 C.F.R. § 1.80.497 See supra paras. 104-105, 113-114.


86

VII. PROCEDURAL MATTERS

A. Final Regulat(ry Flexibility Analysis

164. As required by the Regulat)ry Flexibility Act (RFA),498 an Initial Regulat)ry Flexibility Analysis (IRFA) was inc)rp)rated int) the Open Internet NPRM.499 The C)mmissi)n s)ught written public c)mment )n the p)ssible significant ec)n)mic impact )n small entities regarding the pr)p)sals addressed in the Open Internet NPRM, including c)mments )n the IRFA. Pursuant t) the RFA, a Final Regulat)ry Flexibility Analysis is set f)rth in Appendix D.

B. Paperw(rk Reducti(n Act (f 1995 Analysis165. This d)cument c)ntains new inf)rmati)n c)llecti)n requirements subject t) the

Paperw)rk Reducti)n Act )f 1995 (PRA), Public Law 104-13. It will be submitted t) the Office )f Management and Budget (OMB) f)r review under Secti)n 3507(d) )f the PRA. OMB, the general public, and )ther federal agencies are invited t) c)mment )n the new inf)rmati)n c)llecti)n requirements c)ntained in this pr)ceeding. In additi)n, we n)te that pursuant t) the Small Business Paperw)rk Relief Act )f 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we previ)usly s)ught specific c)mment )n h)w the C)mmissi)n might further reduce the inf)rmati)n c)llecti)n burden f)r small business c)ncerns with fewer than 25 empl)yees.

166. In this present d)cument, we require br)adband Internet access service pr)viders t) publicly discl)se accurate inf)rmati)n regarding the c)mmercial terms, perf)rmance, and netw)rk management practices )f their br)adband Internet access services sufficient f)r end users t) make inf)rmed ch)ices regarding use )f such services and f)r c)ntent, applicati)n, service, and device pr)viders t) devel)p, market, and maintain Internet )fferings. We have assessed the effects )f this rule and find that any burden )n small businesses will be minimal because (1) the rule gives br)adband Internet access service pr)viders flexibility in h)w t) implement the discl)sure rule, and (2) the rule gives pr)viders adequate time t) devel)p c)st-effective meth)ds )f c)mpliance.

C. C(ngressi(nal Review Act

167. The C)mmissi)n will send a c)py )f this Rep)rt and Order t) C)ngress and the G)vernment Acc)untability Office pursuant t) the C)ngressi)nal Review Act, see 5 U.S.C. § 801(a)(1)(A).

D. Data Quality Act168. The C)mmissi)n certifies that it has c)mplied with the Office )f Management

and Budget Final Inf)rmati)n Quality Bulletin f)r Peer Review, 70 Fed. Reg. 2664 (2005), and the Data Quality Act, Pub. L. N). 106-554 (2001), c)dified at 44 U.S.C. § 3516 n)te, with regard t) its reliance )n influential scientific inf)rmati)n in the Rep)rt and Order in GN D)cket N). 09-191 and WC D)cket N). 07-52.500

E. Accessible F(rmats

169. T) request materials in accessible f)rmats f)r pe)ple with disabilities (braille, large print, electr)nic files, audi) f)rmat), send an e-mail t) [email protected])v )r call the

498 See 5 U.S.C. § 603.499 See Open Internet NPRM, 24 FCC Rcd at 13136–52 (App. C).500 See Letter fr)m Wireline C)mpetiti)n Bureau, FCC, t) Marlene D)rtch, Secretary, FCC, GN D)cket N). 09-191, WC D)cket N). 07-52 (filed Dec. 13, 2010).


87

C)nsumer & G)vernmental Affairs Bureau at 202-418-0530 (v)ice), 202-418-0432 (tty). C)ntact the FCC t) request reas)nable acc)mm)dati)ns f)r filing c)mments (accessible f)rmat d)cuments, sign language interpreters, CARTS, etc.) by e-mail: [email protected])v; ph)ne: (202) 418-0530 (v)ice), (202) 418-0432 (TTY).

VIII. ORDERING CLAUSES170. Acc)rdingly, IT IS ORDERED that, pursuant t) secti)ns 1, 2, 3, 4, 201, 218,

230, 251, 254, 256, 257, 301, 303, 304, 307, 309, 316, 332, 403, 503, 602, 616, and 628, )f the C)mmunicati)ns Act )f 1934, as amended, and secti)n 706 )f the Telec)mmunicati)ns Act )f 1996, as amended, 47 U.S.C. §§ 151, 152, 153, 154, 201, 218, 230, 251, 254, 256, 257, 301, 303, 304, 307, 309, 316, 332, 403, 503, 522, 536, 548, 1302, this Rep)rt and Order IS ADOPTED.

171. IT IS FURTHER ORDERED that Part 0 )f the C)mmissi)n’s rules IS AMENDED as set f)rth in Appendix B.

172. IT IS FURTHER ORDERED that Part 8 )f the C)mmissi)n’s Rules, 47 C.F.R. Part 8, IS ADDED as set f)rth in Appendix A and B.

173. IT IS FURTHER ORDERED that this Rep)rt and Order shall bec)me effective 60 days after the date )f Federal Register n)tice ann)uncing the decisi)n )f the Office )f Management and Budget regarding appr)val )f the inf)rmati)n c)llecti)n requirements c)ntained in the rules c)ntained in Appendix A.

174. IT IS FURTHER ORDERED that the C)mmissi)n’s C)nsumer and G)vernmental Affairs Bureau, Reference Inf)rmati)n Center, SHALL SEND a c)py )f this Rep)rt and Order, including the Final Regulat)ry Flexibility Analysis, t) the Chief C)unsel f)r Adv)cacy )f the Small Business Administrati)n.

FEDERAL COMMUNICATIONS COMMISSION

Marlene H. D)rtchSecretary


88

APPENDI^ ASubstantive Rules

Part 8 )f Title 47 )f the C)de )f Federal Regulati)ns is added as f)ll)ws:

PART 8 – PRESERVING THE OPEN INTERNET

Sec.8.1 Purp)se.8.3 Transparency.8.5 N) Bl)cking.8.7 N) Unreas)nable Discriminati)n.8.9 Other Laws and C)nsiderati)ns.8.11 Definiti)ns.

AUTHORITY: 47 U.S.C. §§ 151, 152, 153, 154, 201, 218, 230, 251, 254, 256, 257, 301, 303, 304, 307, 309, 316, 332, 403, 503, 522, 536, 548, 1302

§ 8.1 Purp(se.

The purp)se )f this Part is t) preserve the Internet as an )pen platf)rm enabling c)nsumer ch)ice, freed)m )f expressi)n, end-user c)ntr)l, c)mpetiti)n, and the freed)m t) inn)vate with)ut permissi)n.

§ 8.3 Transparency.

A pers)n engaged in the pr)visi)n )f br)adband Internet access service shall publicly discl)se accurate inf)rmati)n regarding the netw)rk management practices, perf)rmance, and c)mmercial terms )f its br)adband Internet access services sufficient f)r c)nsumers t) make inf)rmed ch)ices regarding use )f such services and f)r c)ntent, applicati)n, service, and device pr)viders t) devel)p, market, and maintain Internet )fferings.

§ 8.5 N( Bl(cking.

A pers)n engaged in the pr)visi)n )f fixed br)adband Internet access service, ins)far as such pers)n is s) engaged, shall n)t bl)ck lawful c)ntent, applicati)ns, services, )r n)n-harmful devices, subject t) reas)nable netw)rk management.

A pers)n engaged in the pr)visi)n )f m)bile br)adband Internet access service, ins)far as such pers)n is s) engaged, shall n)t bl)ck c)nsumers fr)m accessing lawful websites, subject t) reas)nable netw)rk management; n)r shall such pers)n bl)ck applicati)ns that c)mpete with the pr)vider’s v)ice )r vide) teleph)ny services, subject t) reas)nable netw)rk management.

§ 8.7 N( Unreas(nable Discriminati(n.

A pers)n engaged in the pr)visi)n )f fixed br)adband Internet access service, ins)far as such pers)n is s) engaged, shall n)t unreas)nably discriminate in transmitting lawful netw)rk traffic )ver a c)nsumer’s br)adband Internet access service. Reas)nable netw)rk management shall n)t c)nstitute unreas)nable discriminati)n.


89

§ 8.9 Other Laws and C(nsiderati(ns.

N)thing in this part supersedes any )bligati)n )r auth)rizati)n a pr)vider )f br)adband Internet access service may have t) address the needs )f emergency c)mmunicati)ns )r law enf)rcement, public safety, )r nati)nal security auth)rities, c)nsistent with )r as permitted by applicable law, )r limits the pr)vider’s ability t) d) s).

N)thing in this part pr)hibits reas)nable eff)rts by a pr)vider )f br)adband Internet access service t) address c)pyright infringement )r )ther unlawful activity.

§ 8.11 Definiti(ns.

(a) Br)adband Internet access service. A mass-market retail service by wire )r radi) that pr)vides the capability t) transmit data t) and receive data fr)m all )r substantially all Internet endp)ints, including any capabilities that are incidental t) and enable the )perati)n )f the c)mmunicati)ns service, but excluding dial-up Internet access service. This term als) enc)mpasses any service that the C)mmissi)n finds t) be pr)viding a functi)nal equivalent )f the service described in the previ)us sentence, )r that is used t) evade the pr)tecti)ns set f)rth in this Part.

(b) Fixed br)adband Internet access service. A br)adband Internet access service that serves end users primarily at fixed endp)ints using stati)nary equipment. Fixed br)adband Internet access service includes fixed wireless services (including fixed unlicensed wireless services), and fixed satellite services.

(c) M)bile br)adband Internet access service. A br)adband Internet access service that serves end users primarily using m)bile stati)ns.

(d) Reas)nable netw)rk management. A netw)rk management practice is reas)nable if it is appr)priate and tail)red t) achieving a legitimate netw)rk management purp)se, taking int) acc)unt the particular netw)rk architecture and techn)l)gy )f the br)adband Internet access service.


90

APPENDI^ BPr(cedural Rules

AUTHORITY: 47 U.S.C. §§ 151, 152, 153, 154, 201, 218, 230, 251, 254, 256, 257, 301, 303, 304, 307, 309, 316, 332, 403, 503, 522, 536, 548, 1302

§ 0.111 Functi(ns (f the Bureau.

Amend § 0.111(a) )f the rules t) add subsecti)n (24) as f)ll)ws: Res)lve c)mplaints alleging vi)lati)ns )f the )pen Internet rules.

FORMAL COMPLAINTS

§ 8.12 F(rmal C(mplaints

Any pers)n may file a f)rmal c)mplaint alleging a vi)lati)n )f the rules in this part.

§ 8.13 General pleading requirements.

(a) General pleading requirements. All written submissi)ns, b)th substantive and pr)cedural, must c)nf)rm t) the f)ll)wing standards:

(1) A pleading must be clear, c)ncise, and explicit. All matters c)ncerning a claim, defense )r requested remedy sh)uld be pleaded fully and with specificity.

(2) Pleadings must c)ntain facts that, if true, are sufficient t) warrant a grant )f the relief requested.

(3) Facts must be supp)rted by relevant d)cumentati)n )r affidavit.

(4) The )riginal )f all pleadings and submissi)ns by any party shall be signed by that party, )r by the party’s att)rney. C)mplaints must be signed by the c)mplainant. The signing party shall state his )r her address and teleph)ne number and the date )n which the d)cument was signed. C)pies sh)uld be c)nf)rmed t) the )riginal. Each submissi)n must c)ntain a written verificati)n that the signat)ry has read the submissi)n and t) the best )f his )r her kn)wledge, inf)rmati)n and belief f)rmed after reas)nable inquiry, it is well gr)unded in fact and is warranted by existing law )r a g))d faith argument f)r the extensi)n, m)dificati)n )r reversal )f existing law; and that it is n)t interp)sed f)r any impr)per purp)se. If any pleading )r )ther submissi)n is signed in vi)lati)n )f this pr)visi)n, the C)mmissi)n shall up)n m)ti)n )r up)n its )wn initiative imp)se appr)priate sancti)ns.

(5) Legal arguments must be supp)rted by appr)priate judicial, C)mmissi)n, )r statut)ry auth)rity. Opp)sing auth)rities must be distinguished. C)pies must be pr)vided )f all n)n-C)mmissi)n auth)rities relied up)n which are n)t r)utinely available in nati)nal rep)rting systems, such as unpublished decisi)ns )r slip )pini)ns )f c)urts )r administrative agencies.

(6) Parties are resp)nsible f)r the c)ntinuing accuracy and c)mpleteness )f all inf)rmati)n and supp)rting auth)rity furnished in a pending c)mplaint pr)ceeding. Inf)rmati)n submitted, as well as relevant legal auth)rities, must be current and updated as necessary and in a timely manner at any time bef)re a decisi)n is rendered )n the merits )f the c)mplaint.


91

(7) Parties seeking expedited res)luti)n )f their c)mplaint may request acceptance )n the Enf)rcement Bureau’s Accelerated D)cket pursuant t) the pr)cedures at secti)n 1.730 )f the C)mmissi)n’s rules.

(b) C)pies t) be Filed. The c)mplainant shall file an )riginal c)py )f the c)mplaint, acc)mpanied by the c)rrect fee, in acc)rdance with part 1, subpart G (see § 1.1106) and, )n the same day:

(1) File three c)pies )f the c)mplaint with the Office )f the C)mmissi)n Secretary;

(2) Serve tw) c)pies )n the Market Disputes Res)luti)n Divisi)n, Enf)rcement Bureau;

(3) Serve the c)mplaint by hand delivery )n either the named defendant )r )ne )f the named defendant’s registered agents f)r service )f pr)cess, if available, )n the same date that the c)mplaint is filed with the C)mmissi)n.

(c) Prefiling n)tice required. Any pers)n intending t) file a c)mplaint under this secti)n must first n)tify the p)tential defendant in writing that it intends t) file a c)mplaint with the C)mmissi)n based )n acti)ns alleged t) vi)late )ne )r m)re )f the pr)visi)ns c)ntained in this part. The n)tice must be sufficiently detailed s) that its recipient(s) can determine the specific nature )f the p)tential c)mplaint. The p)tential c)mplainant must all)w a minimum )f ten (10) days f)r the p)tential defendant(s) t) resp)nd bef)re filing a c)mplaint with the C)mmissi)n.

(d) Friv)l)us pleadings. It shall be unlawful f)r any party t) file a friv)l)us pleading with the C)mmissi)n. Any vi)lati)n )f this paragraph shall c)nstitute an abuse )f pr)cess subject t) appr)priate sancti)ns.

§ 8.14 General f(rmal c(mplaint pr(cedures.

(a) C)mplaints. In additi)n t) the general pleading requirements, c)mplaints must adhere t) the f)ll)wing requirements:

(1) Certificate )f service. C)mplaints shall be acc)mpanied by a certificate )f service )n any defendant.

(2) Statement )f relief requested.

(i) The c)mplaint shall state the relief requested. It shall state fully and precisely all pertinent facts and c)nsiderati)ns relied )n t) dem)nstrate the need f)r the relief requested and t) supp)rt a determinati)n that a grant )f such relief w)uld serve the public interest.

(ii) The c)mplaint shall set f)rth all steps taken by the parties t) res)lve the pr)blem.

(iii) A c)mplaint may, )n request )f the filing party, be dismissed with)ut prejudice as a matter )f right pri)r t) the ad)pti)n date )f any final acti)n taken by the C)mmissi)n with respect t) the petiti)n )r c)mplaint. A request f)r the return )f an initiating d)cument will be regarded as a request f)r dismissal.

(3) Failure t) pr)secute. Failure t) pr)secute a c)mplaint, )r failure t) resp)nd t) )fficial c)rresp)ndence )r request f)r additi)nal inf)rmati)n, will be cause f)r dismissal. Such


92

dismissal will be with)ut prejudice if it )ccurs pri)r t) the ad)pti)n date )f any final acti)n taken by the C)mmissi)n with respect t) the initiating pleading.

(b) Answers t) c)mplaints. Unless )therwise directed by the C)mmissi)n, any party wh) is served with a c)mplaint shall file an answer in acc)rdance with the f)ll)wing requirements:

(1) The answer shall be filed within 20 days )f service )f the c)mplaint.

(2) The answer shall advise the parties and the C)mmissi)n fully and c)mpletely )f the nature )f any and all defenses, and shall resp)nd specifically t) all material allegati)ns )f the c)mplaint. C)llateral )r immaterial issues shall be av)ided in answers and every eff)rt sh)uld be made t) narr)w the issues. Any party against wh)m a c)mplaint is filed failing t) file and serve an answer within the time and in the manner prescribed by these rules may be deemed in default and an )rder may be entered against defendant in acc)rdance with the allegati)ns c)ntained in the c)mplaint.

(3) Facts must be supp)rted by relevant d)cumentati)n )r affidavit.

(4) The answer shall admit )r deny the averments )n which the adverse party relies. If the defendant is with)ut kn)wledge )r inf)rmati)n sufficient t) f)rm a belief as t) the truth )f an averment, the defendant shall s) state and this has the effect )f a denial. When a defendant intends in g))d faith t) deny )nly part )f an averment, the answer shall specify s) much )f it as is true and shall deny )nly the remainder, and state in detail the basis )f that denial.

(5) Averments in a c)mplaint are deemed t) be admitted when n)t denied in the answer.

(c) Reply. In additi)n t) the general pleading requirements, replies must adhere t) the f)ll)wing requirements:

(1) The c)mplainant may file a reply t) a resp)nsive pleading that shall be served )n the defendant and shall als) c)ntain a detailed full sh)wing, supp)rted by affidavit, )f any additi)nal facts )r c)nsiderati)ns relied )n. Unless expressly permitted by the C)mmissi)n, replies shall n)t c)ntain new matters.

(2) Failure t) reply will n)t be deemed an admissi)n )f any allegati)ns c)ntained in the resp)nsive pleading, except with respect t) any affirmative defense set f)rth therein.

(3) Unless )therwise directed by the C)mmissi)n, replies must be filed within ten (10) days after submissi)n )f the resp)nsive pleading.

(d) M)ti)ns. Except as pr)vided in this secti)n, )r up)n a sh)wing )f extra)rdinary circumstances, additi)nal m)ti)ns )r pleadings by any party will n)t be accepted.

(e) Additi)nal pr)cedures and written submissi)ns.

(1) The C)mmissi)n may specify )ther pr)cedures, such as )ral argument )r evidentiary hearing directed t) particular aspects, as it deems appr)priate. In the event that an evidentiary hearing is required, the C)mmissi)n will determine, )n the basis )f the pleadings and such )ther pr)cedures as it may specify, whether temp)rary relief sh)uld be aff)rded any party pending the hearing and the nature )f any such temp)rary relief.


93

(2) The C)mmissi)n may require the parties t) submit any additi)nal inf)rmati)n it deems appr)priate f)r a full, fair, and expediti)us res)luti)n )f the pr)ceeding, including c)pies )f all c)ntracts and d)cuments reflecting arrangements and understandings alleged t) vi)late the requirements set f)rth in the C)mmunicati)ns Act and in this part, as well as affidavits and exhibits.

(3) The C)mmissi)n may, in its discreti)n, require the parties t) file briefs summarizing the facts and issues presented in the pleadings and )ther rec)rd evidence.

(i) These briefs shall c)ntain the findings )f fact and c)nclusi)ns )f law which that party is urging the C)mmissi)n t) ad)pt, with specific citati)ns t) the rec)rd, and supp)rted by relevant auth)rity and analysis.

(ii) The schedule f)r filing any briefs shall be at the discreti)n )f the C)mmissi)n. Unless )rdered )therwise by the C)mmissi)n, such briefs shall n)t exceed fifty (50) pages.

(iii) Reply briefs may be submitted at the discreti)n )f the C)mmissi)n. Unless )rdered )therwise by the C)mmissi)n, reply briefs shall n)t exceed thirty (30) pages.

(f) Disc)very.

(1) The C)mmissi)n may in its discreti)n )rder disc)very limited t) the issues specified by the C)mmissi)n. Such disc)very may include answers t) written interr)gat)ries, dep)siti)ns, d)cument pr)ducti)n, )r requests f)r admissi)ns.

(2) The C)mmissi)n may in its discreti)n direct the parties t) submit disc)very pr)p)sals, t)gether with a mem)randum in supp)rt )f the disc)very requested. Such disc)very requests may include answers t) written interr)gat)ries, admissi)ns, d)cument pr)ducti)n, )r dep)siti)ns. The C)mmissi)n may h)ld a status c)nference with the parties, pursuant t) § 8.15 )f this part, t) determine the sc)pe )f disc)very, )r direct the parties regarding the sc)pe )f disc)very. If the C)mmissi)n determines that extensive disc)very is required )r that dep)siti)ns are warranted, the C)mmissi)n may advise the parties that the pr)ceeding will be referred t) an administrative law judge in acc)rdance with paragraph (g) )f this secti)n.

(g) Referral t) administrative law judge.

(1) After reviewing the pleadings, and at any stage )f the pr)ceeding thereafter, the C)mmissi)n may, in its discreti)n, designate any pr)ceeding )r discrete issues arising )ut )f any pr)ceeding f)r an adjudicat)ry hearing bef)re an administrative law judge.

(2) Bef)re designati)n f)r hearing, the C)mmissi)n shall n)tify, either )rally )r in writing, the parties t) the pr)ceeding )f its intent t) s) designate, and the parties shall be given a peri)d )f ten (10) days t) elect t) res)lve the dispute thr)ugh alternative dispute res)luti)n pr)cedures, )r t) pr)ceed with an adjudicat)ry hearing. Such electi)n shall be submitted in writing t) the C)mmissi)n.

(3) Unless )therwise directed by the C)mmissi)n, )r up)n m)ti)n by the Enf)rcement Bureau Chief, the Enf)rcement Bureau Chief shall n)t be deemed t) be a party t) a


94

pr)ceeding designated f)r a hearing bef)re an administrative law judge pursuant t) this paragraph (g).

(h) C)mmissi)n ruling. The C)mmissi)n ()r the Enf)rcement Bureau )n delegated auth)rity), after c)nsiderati)n )f the pleadings, shall issue an )rder ruling )n the c)mplaint.

§ 8.15 Status c(nference.

(a) In any pr)ceeding subject t) the part 8 rules, the C)mmissi)n may in its discreti)n direct the att)rneys and/)r the parties t) appear f)r a c)nference t) c)nsider:

(1) Simplificati)n )r narr)wing )f the issues;

(2) The necessity f)r )r desirability )f amendments t) the pleadings, additi)nal pleadings, )r )ther evidentiary submissi)ns;

(3) Obtaining admissi)ns )f fact )r stipulati)ns between the parties as t) any )r all )f the matters in c)ntr)versy;

(4) Settlement )f the matters in c)ntr)versy by agreement )f the parties;

(5) The necessity f)r and extent )f disc)very, including )bjecti)ns t) interr)gat)ries )r requests f)r written d)cuments;

(6) The need and schedule f)r filing briefs, and the date f)r any further c)nferences; and

(7) Such )ther matters that may aid in the disp)siti)n )f the pr)ceeding.

(b) Any party may request that a c)nference be held at any time after an initiating d)cument has been filed.

(c) C)nferences will be scheduled by the C)mmissi)n at such time and place as it may designate, t) be c)nducted in pers)n )r by teleph)ne c)nference call.

(d) The failure )f any att)rney )r party, f)ll)wing advance n)tice with an )pp)rtunity t) be present, t) appear at a scheduled c)nference will be deemed a waiver and will n)t preclude the C)mmissi)n fr)m c)nferring with th)se parties )r c)unsel present.

(e) During a status c)nference, the C)mmissi)n may issue )ral rulings pertaining t) a variety )f matters relevant t) the c)nduct )f the pr)ceeding including, inter alia, pr)cedural matters, disc)very, and the submissi)n )f briefs )r )ther evidentiary materials. These rulings will be pr)mptly mem)rialized in writing and served )n the parties. When such rulings require a party t) take affirmative acti)n, such acti)n will be required within ten (10) days fr)m the date )f the written mem)rializati)n unless )therwise directed by the C)mmissi)n.

§ 8.16 C(nfidentiality (f pr(prietary inf(rmati(n.

(a) Any materials filed in the c)urse )f a pr)ceeding under this part may be designated as pr)prietary by that party if the party believes in g))d faith that the materials fall within an exempti)n t) discl)sure c)ntained in the Freed)m )f Inf)rmati)n Act (FOIA), 5 U.S.C. 552(b).


95

Any party asserting c)nfidentiality f)r such materials shall s) indicate by clearly marking each page, )r p)rti)n there)f, f)r which a pr)prietary designati)n is claimed. If a pr)prietary designati)n is challenged, the party claiming c)nfidentiality will have the burden )f dem)nstrating, by a prep)nderance )f the evidence, that the material designated as pr)prietary falls under the standards f)r n)ndiscl)sure enunciated in FOIA.

(b) Submissi)ns c)ntaining inf)rmati)n claimed t) be pr)prietary under this secti)n shall be submitted t) the C)mmissi)n in c)nfidence pursuant t) the requirements )f § 0.459 )f this chapter and clearly marked “N)t f)r Public Inspecti)n.” An edited versi)n rem)ving allpr)prietary data shall be filed with the C)mmissi)n f)r inclusi)n in the public file within five (5) days fr)m the date the unedited reply is submitted, and shall be served )n the )pp)sing parties.

(c) Except as pr)vided in paragraph (d) )f this secti)n, materials marked as pr)prietary may be discl)sed s)lely t) the f)ll)wing pers)ns, )nly f)r use in the pr)ceeding, and )nly t) the extent necessary t) assist in the pr)secuti)n )r defense )f the case:

(1) C)unsel )f rec)rd representing the parties in the pr)ceeding and any supp)rt pers)nnel empl)yed by such att)rneys;

(2) Officers )r empl)yees )f the parties in the pr)ceeding wh) are named by an)ther party as being directly inv)lved in the pr)ceeding;

(3) C)nsultants )r expert witnesses retained by the parties;

(4) The C)mmissi)n and its staff; and

(5) C)urt rep)rters and sten)graphers in acc)rdance with the terms and c)nditi)ns )f this secti)n.

(d) The C)mmissi)n will entertain, subject t) a pr)per sh)wing, a party’s request t) further restrict access t) pr)prietary inf)rmati)n as specified by the party. The )ther parties will have an )pp)rtunity t) resp)nd t) such requests.

(e) The pers)ns designated in paragraphs (c) and (d) )f this secti)n shall n)t discl)se inf)rmati)n designated as pr)prietary t) any pers)n wh) is n)t auth)rized under this secti)n t) receive such inf)rmati)n, and shall n)t use the inf)rmati)n in any activity )r functi)n )ther than the pr)secuti)n )r defense )f the case bef)re the C)mmissi)n. Each individual wh) is pr)vided access t) the inf)rmati)n by the )pp)sing party shall sign a n)tarized statement affirmatively stating, )r shall certify under penalty )f perjury, that the individual has pers)nally reviewed the C)mmissi)n's rules and understands the limitati)ns they imp)se )n the signing party.

(f) N) c)pies )f materials marked pr)prietary may be made except c)pies t) be used by pers)ns designated in paragraphs (c) and (d) )f this secti)n. Each party shall maintain a l)g rec)rding the number )f c)pies made )f all pr)prietary material and the pers)ns t) wh)m the c)pies have been pr)vided.

(g) Up)n terminati)n )f the c)mplaint pr)ceeding, including all appeals and petiti)ns, all )riginals and repr)ducti)ns )f any pr)prietary materials, al)ng with the l)g rec)rding pers)ns wh) received c)pies )f such materials, shall be pr)vided t) the pr)ducing party. In additi)n,


96

up)n final terminati)n )f the pr)ceeding, any n)tes )r )ther w)rk pr)duct derived in wh)le )r in part fr)m the pr)prietary materials )f an )pp)sing )r third party shall be destr)yed.

§ 8.17 Review.

(a) Interl)cut)ry review.

(1) Except as pr)vided bel)w, n) party may seek review )f interl)cut)ry rulings until a decisi)n )n the merits has been issued by the C)mmissi)n’s staff, including an administrative law judge.

(2) Rulings listed in this paragraph are reviewable as a matter )f right. An applicati)n f)r review )f such ruling may n)t be deferred and raised as an excepti)n t) a decisi)n )n the merits.

(i) If the staff’s ruling denies )r terminates the right )f any pers)n t) participate as a party t) the pr)ceeding, such pers)n, as a matter )f right, may file an applicati)n f)r review )f that ruling.

(ii) If the staff’s ruling requires pr)ducti)n )f d)cuments )r )ther written evidence, )ver )bjecti)n based )n a claim )f privilege, the ruling )n the claim )f privilege is reviewable as a matter )f right.

(iii) If the staff’s ruling denies a m)ti)n t) disqualify a staff pers)n fr)m participating in the pr)ceeding, the ruling is reviewable as a matter )f right.

(b) Petiti)ns f)r rec)nsiderati)n. Petiti)ns f)r rec)nsiderati)n )f interl)cut)ry acti)ns by the C)mmissi)n’s staff )r by an administrative law judge will n)t be entertained. Petiti)ns f)r rec)nsiderati)n )f a decisi)n )n the merits made by the C)mmissi)n’s staff sh)uld be filed in acc)rdance with §§ 1.104 thr)ugh 1.106 )f this chapter.

(c) Applicati)n f)r review.

(1) Any party t) a part 8 pr)ceeding aggrieved by any decisi)n )n the merits issued by the staff pursuant t) delegated auth)rity may file an applicati)n f)r review by the C)mmissi)n in acc)rdance with § 1.115 )f this chapter.

(2) Any party t) a part 8 pr)ceeding aggrieved by any decisi)n )n the merits by an administrative law judge may file an appeal )f the decisi)n directly with the C)mmissi)n, in acc)rdance with §§ 1.276(a) and 1.277(a) thr)ugh (c) )f this chapter.


97

APPENDI^ CList (f C(mmenters

NPRM C(mments501

C(mmenter Abbreviati(n100 Black Men )f America et al. (filed by Sylvia Aguilera) 100 Black Men )f America

et al.2Wire, Inc. (filed by J)nathan Sym)nds) 2Wire4Inf), Inc. 4Inf)ACT 1 Gr)up et al. (filed as W)rld WideTechn)l)gy, Inc) ACT 1 Gr)up et al.Adam Candeub and Daniel J)hn McCartney Candeub/McCartneyThe Ad H)c Telec)mmunicati)ns Users C)mmittee Ad H)cADTRAN, Inc. ADTRANAdventia Inn)vative Systems (filed by Din) R)dwell) AdventiaAfrican American Chamber )f C)mmerce - Milwaukee AACCAfrican Meth)dist Episc)pal Church AMECAkamai Techn)l)gies, Inc. Akamai Alabama State C)nference )f the NAACP Alabama State NAACPAlcatel-Lucent ALUAlliance f)r Digital Equality (filed by Julius H)llis) ADEAlliance f)r Telec)mmunicati)ns Industry S)luti)ns ATISAmaz)n.c)m Amaz)nAmerican Arab Chamber )f C)mmerce (filed by Ahmed Chebbani)

American Arab CC

American Ass)ciati)n )f Pe)ple with Disabilities AAPDAmerican Business Media ABMAmerican Cable Ass)ciati)n ACAAmerican Center f)r Law and Justice ACLJAmerican Civil Rights Uni)n ACRUAmerican C)nsumer Institute CCR ACIAmerican C)uncil )f the Blind ACBAmerican Federati)n )f Televisi)n & Radi) Artists, Direct)rs Guild )f America, Internati)nal Alliance )f Theatrical Stage Empl)yees, Screen Act)rs Guild

AFTRA et al.

American H)me)wners Grassr))ts Alliance AHGAAmerican Indian Chamber )f C)mmerce )f Wisc)nsin AICCWAmerican Legislative Exchange C)uncil ALECAmerican Library Ass)ciati)n ALAAmericans f)r Pr)sperity AFPAmericans f)r Tax Ref)rm and Media Freed)m Pr)ject (filed by Christ)pher Butler)

ATR

Americans f)r Techn)l)gy Leadership (filed by Randy Sk)glund)

ATL

501 This Appendix lists maj)r c)mmenters and the sh)rt f)rms by which they are cited in the Order. The C)mmissi)n als) received tens )f th)usands )f brief c)mments in this pr)ceeding, which are n)t listed here but which were c)nsidered.


98

Annie McGrady Annie McGradyAnti-Defamati)n League ALDArts+Labs Arts+LabsAsian American Justice Center (filed by Karen K. Narasaki) AAJCAssemblyw)man Debbie Smith Assemblyw)man SmithAss)ciati)n f)r C)mpetitive Techn)l)gy ACTAss)ciati)n )f Research Libraries, EDUCAUSE, Internet2, NYSERNet, and ACUTA

ARL et al.

AT&T Inc. AT&TAut)mati)n Alley (filed by Ken R)gers) Aut)mati)n AlleyBall State University Center f)r Inf)rmati)n and C)mmunicati)ns Science

Ball State University Center

Barbara S. Esbin, Seni)r Fell)w and Direct)r )f the Center f)r C)mmunicati)ns

Barbara S. Esbin,

The Berr)teran Gr)up The Berr)teran Gr)upBig Br)thers Big Sisters )f Will and Grundy C)unties Big Br)thers Bright H)use Netw)rks, LLC Bright H)use Br)adBand Institute )f Calif)rnia and the Br)adband Regulat)ry Clinic (filed by Pr)f. Allen S. Hamm)nd, IV)

BBIC/BRC

Br)adcast Music, Inc. BMIBT Americas Inc. BT AmericasCamiant, Inc. CamiantCareer Link Inc. Career Link C)nnecticut Ass)ciati)n f)r United Spanish Acti)n, Inc. CAUSACDMA Devel)pment Gr)up, Inc. CDGCenter f)r Dem)cracy & Techn)l)gy CDTCenter f)r Individual Freed)m CFIFCenter f)r Rural Strategies Center f)r Rural StrategiesCentral Washingt)n Hispanic Chamber )f C)mmerce CWHCCCenturyLink CenturyLinkChamber )f C)mmerce )f St. J)seph C)unty St. J)seph Chamber )f

C)mmerce Charter C)mmunicati)ns CharterChrist)pher Sacca Christ)pher SaccaCincinnati Bell Wireless LLC CBWCisc) Systems, Inc. Cisc)City )f Philadelphia PhiladelphiaClearwire C)rp)rati)n Clearwire C)aliti)n )f Min)rity Chambers C)aliti)n )f Min)rity

ChambersC)l)rOfChange.)rg C)l)rOfChangeC)mcast C)rp)rati)n C)mcastC)mmunicati)ns W)rkers )f America CWAC)mpetitive Enterprise Institute CEICOMPTEL COMPTELC)mpTIA C)mpTIAC)mputer & C)mmunicati)ns Industry Ass)ciati)n CCIA


99

C)mputer C)mmunicati)ns Industry Ass)ciati)n, C)nsumer Electr)nics Ass)ciati)n

CCIA/CEA

C)mputing Techn)l)gy Industry Ass)ciati)n (filed by Mike Wendy)

C)mpTIA

CONNECT CONNECTC)nnecticut Techn)l)gy C)uncil (filed by Matthew Nemers)n) C)nn. Tech. C)uncilC)nsumer P)licy S)luti)ns C)nsumer P)licy S)luti)nsC)rning Inc)rp)rated C)rning C)rp)rati)n f)r Nati)nal Research Initiatives CNRIC)uncil )f Baptist Past)rs )f Detr)it & Vicinity, Inc. C)uncil )f Baptist Past)rs C)vad C)mmunicati)ns C)mpany C)vadC)x C)mmunicati)ns, Inc C)xCraig Settles (Successful.c)m) Craig SettlesCricket C)mmunicati)ns, Inc. CricketCTIA - The Wireless Ass)ciati)n CTIACWA Indiana State C)uncil CWA IndianaCWA L)cal 4900 CWA L)cal 4900Damian Kulash Damian KulashData F)undry, Inc. Data F)undryDavid D.F. Uran, May)r, City )f Cr)wn P)int, Indiana UranDeb)rah Turner Deb)rah TurnerDebra Br)wn Debra Br)wnDerek Leebaert Derek LeebaertDigital Educati)n C)aliti)n Digital Educati)n C)aliti)nDickins)n Area Partnership Dickins)n Area

PartnershipThe Disability Netw)rk (filed by Mike Zelley) Disability Netw)rk DISH Netw)rk L.L.C. DISHDistributed C)mputing Industry Ass)ciati)n DCIAD)wnt)wn Springfield, Inc. D)wnt)wn SpringfieldEastern Kentucky’s Y)uth Ass)ciati)n f)r the Arts, Inc. EKYAAEc)n)mic Devel)pment C)uncil )f Livingst)n C)unty (filed by Fred Dillingham)

Livingst)n EDC

Eight Mile B)ulevard Ass)ciati)n 8MBAEl Centr) El Centr)Electr)nic Fr)ntier F)undati)n EFFElgin Area Chamber Elgin Area ChamberElizabeth A. D))ley, Ed. D Elizabeth A. D))ley, Ed. DEntertainment S)ftware Ass)ciati)n ESAEricss)n Inc. Ericss)nErie Neighb)rh))d H)use Erie Neighb)rh))d H)useFiber-t)-the-H)me C)uncil FTTH C)uncilFree Press Free PressThe Free State F)undati)n Free State F)undati)nFuture )f Privacy F)rum FPFGe)rge Ou Ge)rge OuGenesee Regi)nal Chamber )f C)mmerce (filed by Tim Herman)

Genesee Regi)nal Chamber )f C)mmerce


100

Ge)rget)wn/Sc)tt C)unty Kentucky Chamber )f C)mmerce Ge)rget)wn/Sc)tt C)unty Chamber )f C)mmerce

Ge)rgia Min)rity Supplier Devel)pment C)uncil GMSDCGl)bal Cr)ssing N)rth America, Inc. Gl)bal Cr)ssing Gl)bal Intellectual Pr)perty Center Gl)bal Intellectual

Pr)perty CenterG))gle Inc. G))gleGreat River Ec)n)mic Devel)pment F)undati)n Great River The Greater Centralia Chamber )f C)mmerce & T)urism Office Greater Centralia Greater K)k)m) Ec)n)mic Devel)pment Alliance Greater K)k)m) Ec)n)mic

Devel)pment AllianceThe Greenlining Institute Greenlining GSM Ass)ciati)n GSM GVNW C)nsulting, Inc. GVNWHamilt)n C)unty Alliance Hamilt)n C)unty AllianceHannah Miller Hannah MillerHB Clark HB ClarkHispanic Leadership Fund Hispanic Leadership FundHispanic Techn)l)gy and Telec)mmunicati)ns Partnership HTTPHm)ng/American Friendship Ass)ciati)n, Inc. Hm)ng/American

Friendship Illin)is Hispanic Chamber )f C)mmerce Illin)is Hispanic Chamber Independent Creat)r Organizati)ns Independent Creat)r

Organizati)nsIndependent Film & Televisi)n Alliance IFTAIndependent Teleph)ne & Telec)mmunicati)ns Alliance ITTAIndiana Secretary )f State (filed by T)dd R)kita) Indiana Secretary )f StateIndianap)lis Urban League Indianap)lis Urban LeagueInf)rmati)n and C)mmunicati)ns Manufacturers and Service Pr)viders (filed by Paul Brunat), 2Wire, Inc.)

Inf)rmati)n and C)mmunicati)ns Manufacturers

Inf)rmati)n Techn)l)gy and Inn)vati)n F)undati)n ITIFInf)rmati)n Techn)l)gy Industry C)uncil ITICInstitute f)r Emerging Leaders, Inc. IELInstitute f)r P)licy Inn)vati)n IPIInternet Freed)m C)aliti)n Internet Freed)m C)aliti)nInternet S)ciety ISOCIntrad) Inc. and Intrad) C)mmunicati)ns Inc. Intrad)Jared M)rris Jared M)rrisJeanne K. Magill, Pabst Farms Devel)pment Inc. Jeanne K. MagillJ)e Armstr)ng, Tennessee State Representative J)e Armstr)ngJ)e H)mnick J)e H)mnickJ)hn Staurulakis, Inc. J)hn StaurulakisJ)hns)n C)unty B)ard )f C)mmissi)ners J)hns)n C)unty J)liet Regi)n Chamber )f C)mmerce & Industry J)liet Chamber Kankakee C)unty Farm Bureau Kankakee Karen Maples Karen Maples Chairman Kenneth D. K)ehler, McHenry C)unty B)ard Kenneth D. K)ehler


101

Kentucky C)mmissi)n )n the Deaf and Hard )f Hearing Kentucky C)mmissi)n )n the Deaf

Lake Superi)r C)mmunity Partnership LSCPLakew))d Chamber )f C)mmerce (filed by Patty Ryan) Lakew))d Chamber Latin American Chamber )f C)mmerce )f Charl)tte LACCCLatin Chamber )f C)mmerce )f Nevada Latin Chamber )f NevadaLaurence Brett Glass, d/b/a LARIAT LARIATLawrence C)unty Ec)n)mic Gr)wth C)uncil Lawrence C)unty

Ec)n)mic Gr)wth C)uncilLawrence M)rr)w Lawrence M)rr)wLeadership East Kentucky Leadership East KentuckyLeap Wireless Internati)nal, Inc. and Cricket C)mmunicati)ns, Inc.

Leap

Level 3 C)mmunicati)ns LLC Level 3Links Techn)l)gy S)luti)ns, Inc. LinksLisa Marie Hanl)n, TelTech C)mmunicati)ns LLC Lisa Marie Hanl)nManeesh Pangasa Maneesh PangasaMary-Anne W)lf Mary-Anne W)lfMatthew J. Cybulski Matthew J. CybulskiMay)r Brad Stephens May)r Brad StephensMay)r Le)n R)ckingham, Jr. May)r Le)n R)ckingham,

Jr.May)r Rud)lph Clay, Gary, Indiana May)r Rud)lph ClayMcAllen S)luti)ns McAllen S)luti)nsMedia Acti)n Grassr))ts Netw)rk, C)l)rOfChange.)rg, Presente.)rg, Applied Research Center, Afr)-Netizen, Nati)nal Ass)ciati)n )f Hispanic J)urnalists, Native Public Media, and Rural Br)adband P)licy Gr)up

MAG-Net

Messaging Anti-Abuse W)rking Gr)up MAAWGMetr)PCS C)mmunicati)ns, Inc. Metr)PCSMichele H)dges, Tr)y Chamber Michele H)dgesMid-Atlantic C)mmunity Papers Ass)ciati)n, )n behalf )f Ass)ciati)n )f Free C)mmunity Papers, C)mmunity Papers )f Michigan, Free C)mmunity Papers )f New Y)rk, C)mmunity Papers )f Fl)rida, Midwest Free C)mmunity Papers, C)mmunity Papers )f Ohi) and West Virginia, S)utheastern Advertising Publishers Ass)ciati)n, Wisc)nsin C)mmunity Papers (filed by Jim Haigh)

C)mmunity Papers C)mmenters

Mississippi Center f)r Educati)n Inn)vati)n Mississippi Center f)r Educati)n Inn)vati)n

Mississippi Center f)r Justice Mississippi Center f)r Justice

MLB Advanced Media, L.P. MLBAMM)bile Future M)bile FutureM)ti)n Picture Ass)ciati)n )f America, Inc. MPAA

M)t)r)la, Inc. M)t)r)la

Nati)nal Ass)ciati)n f)r the Advancement )f C)l)red Pe)ple NAACP

Naci)nal Rec)rds Naci)nal Rec)rds


102

Nate Z)lman Nate Z)lman

Nati)nal Ass)ciati)n )f Manufacturers NAM

Nati)nal Ass)ciati)n )f Realt)rs NAR

Nati)nal Ass)ciati)n )f State Utility C)nsumer Adv)cates NASUCA

Nati)nal Black Chamber )f C)mmerce NBCC

Nati)nal Cable & Telec)mmunicati)ns Ass)ciati)n NCTA

Nati)nal C)uncil )f La Raza NCLR

Nati)nal Exchange Carrier Ass)ciati)n, Inc. NECA

Nati)nal Farmers Uni)n NFU

Nati)nal F)undati)n f)r W)men Legislat)rs High Speed Internet Caucus (filed by R)bin Read)

NFWL High Speed Caucus

Nati)nal Hispanic Media C)aliti)n NHMC

Nati)nal Organizati)n )f Black Elected Legislative W)men NOBEL W)men

Nati)nal Organizati)ns Nati)nal Organizati)ns

Nati)nal Rural Health Ass)ciati)n NRHA

Nati)nal Spinal C)rd Injury Ass)ciati)n (filed by K. Eric Lars)n)

NSCIA

Nati)nal Taxpayers Uni)n NTU

Nati)nal Telec)mmunicati)ns C))perative Ass)ciati)n NTCA

Nati)nal Urban League Nati)nal Urban League

Nati)nal Ass)ciati)n )f Telec)mmunicati)ns Office & Advis)rs NATOA

Nati)nal Emergency Number Ass)ciati)n NENA

The Nebraska Rural Independent C)mpanies Nebraska C)mpanies

Netflix, Inc Netflix

Netw)rk 2010 Netw)rk 2010

New America F)undati)n New America F)undati)n

New Jersey Rate C)unsel NJRC

New Y)rk State Office )f Chief Inf)rmati)n Officer/Office f)rTechn)l)gy (CIO/OFT) (filed by David Salway)

NY CIO/OFT

Nick)laus E. Leggett Leggett

N)kia Siemens Netw)rks US LLC NSN

N)rthern Nevada Black Cultural Awareness S)ciety N)rthern Nevada Black Cultural Awareness S)ciety

Nipp)n Telegraph and Teleph)ne C)rp)rati)n NTT

Office )f the May)r, City )f Peru City )f Peru

Older Adults Techn)l)gy Services, Inc. OATS

Operati)n Acti)n U.P. (filed by J)hn Marshall) Operati)n Acti)n

Organizati)n f)r the Pr)m)ti)n & Advancement )f Small Telec)mmunicati)n C)mpanies

OPASTCO

Open Internet C)aliti)n OIC


103

Open Media and Inf)rmati)n C)mpanies Initiative Open MIC

Oreg)n State Grange Oreg)n State Grange

May)r Ge)rge Pabey, City )f East Chicag), Indiana May)r Pabey

PAETEC H)lding C)rp. PAETEC

Patricia Dye Patricia Dye

Pr)f. Barbara A. Cherry Pr)f. Barbara A. Cherry

David Clark, William Lehr, and Steve Bauer (filed by William Lehr)

David Clark et al.

Pr)fess)r Sc)tt J)rdan Pr)fess)r Sc)tt J)rdan

Pr)perty Rights Alliance PRA

Public Interest Adv)cates Public Interest Adv)cates

Public Interest C)mmenters (filed by Public Kn)wledge et al.) PIC

QUALCOMM Inc)rp)rated QUALCOMM

Qwest C)mmunicati)ns Internati)nal Inc. Qwest

R. L. Barnes R. L. Barnes

Rainb)w PUSH C)aliti)n Rainb)w PUSH

Rec)rding Industry Ass)ciati)n )f America RIAA

Red Hat, Inc. Red Hat

Rev. W.L.T. Littlet)n Rev. W.L.T. Littlet)n

Richm)nd Chamber )f C)mmerce Richm)nd Chamber )f C)mmerce

RNK C)mmunicati)ns RNK

R)bert K. McEwen dba P)werView Systems R)bert K. McEwen

R)bert Steele, C))k C)unty C)mmissi)ner R)bert Steele

Rural Cellular Ass)ciati)n RCA

Safe Internet Alliance (filed by Linda Criddle) Safe Internet Alliance

Saint _avier University (filed by Maureen C)nn)r Kelly) St. _avier Univ.

Sandvine Inc)rp)rated Sandvine

Satellite Br)adband C)mmenters Satellite Br)adband

SavetheInternet.c)m SavetheInternet.c)m

Sc)tt Cleland Sc)tt Cleland

Sean S)well Sean S)well

The Seni)r Alliance (filed by B)b Br)wn) Seni)r Alliance

Seth J)hns)n Seth J)hns)n

Shelby C)unty Devel)pment C)rp)rati)n Shelby C)unty

Skype C)mmunicati)ns S.A.R.L. Skype

Sling Media, Inc. Sling

Karen Kerrigan, President & CEO, Small Business & Entrepreneurship C)uncil

SBE C)uncil

Smithville Teleph)ne C)mpany Smithville


104

S)ftware & Inf)rmati)n Industry Ass)ciati)n SIIA

S)ngwriters Guild )f America SGA

S)ny Electr)nics Inc. S)ny

S)uthern Wayne C)unty Regi)nal Chamber )f C)mmerce SWCRCC

Sprint Nextel C)rp)rati)n Sprint

Steve F)rte, Chief Strategy Officer, Telerik Steve F)rte

St. L)uis S)ciety f)r the Blind and Visually Impaired (filed by David C. Ekin)

St. L)uis S)ciety

SureWest C)mmunicati)ns SureWest

TDS Telec)mmunicati)ns C)rp. TDS Telec)m

Telec)m Italia, S.P.A. Telec)m Italia

Telec)m Manufacturer C)aliti)n Telec)m Manufacturer C)aliti)n

Telec)mmunicati)ns Industry Ass)ciati)n TIA

TeleDimensi)ns, Inc. TeleDimensi)ns

Telef)nica S.A. Telef)nica

Teleph)ne Ass)ciati)n )f Maine TAM

Texas Office )f Public Utility C)unsel TxOPC

Texas Public P)licy F)undati)n TPPF

Texas Statewide Teleph)ne C))perative, Inc. TSTCI

Th)mas C. P))rman, President, Zanesville-Muskingum C)unty Chamber )f C)mmerce

Th)mas C. P))rman

Th)mas D. Sydn)r II, Seni)r Fell)w and Direct)r, Center f)r the Study )f Digital Pr)perty at the Pr)gress & Freed)m F)undati)n

Th)mas D. Sydn)r II

Th)mas Richard Reinsel, Executive in Residence, Sewickley Oak Capital

Th)mas Richard Reinsel

Tim Wu, Pr)fess)r at C)lumbia Law Sch))l Tim Wu

Time Warner Cable Inc. Time Warner

T-M)bile USA, Inc. T-M)bile

U.S. Chamber )f C)mmerce U.S. Chamber

Uni)n Square Ventures (filed by Brad Burnham) Uni)n Square

United Service Organizati)ns )f Illin)is USC )f Illin)is

United States Telec)m Ass)ciati)n USTelec)m

UNITY: J)urnalists )f C)l)r, Inc. UNITY

Upper Peninsula Ec)n)mic Devel)pment Alliance (filed by J)el Schultz)

UPEDA

Upper Peninsula Health Plan UPHP

Urban League )f Metr)p)litan Seattle Urban League )f Metr)p)litan Seattle

Veriz)n and Veriz)n Wireless Veriz)n

Veriz)n, G))gle Veriz)n, G))gle

Village )f Mayw))d Village )f Mayw))d


105

Vincent Watts )f the Greater Stark C)unty Urban League Vincent Watts

V)ice )n the Net C)aliti)n VON C)aliti)n

V)nage H)ldings C)rp. V)nage

V)t) Latin) V)t) Latin)

Washingt)n State Grange Washingt)n State Grange

Wayne Br)ugh, James Gattus), Hance Haney, Ryan Radia, and James Lakely

Wayne Br)ugh et al.

Wireless C)mmunicati)ns Ass)ciati)n Internati)nal, Inc. WCAI

Wireless Internet Service Pr)viders Ass)ciati)n WISPA

Writers Guild )f America, East AFL-CIO WGAE

_O C)mmunicati)ns, LLC _O

YWCA )f St. J)seph C)unty St. J)seph YWCA

NPRM Reply C(mments

Reply C(mmenter Abbreviati(nAircell LLC Aircell Akamai Techn)l)gies, Inc. Akamai Alarm Industry C)mmunicati)ns C)mmittee AICCAlcatel-Lucent ALUAlliance f)r Digital Equality ADEAmerican Ass)ciati)n )f Independent Music A2IMAmerican Cable Ass)ciati)n ACAAmerican H)me)wners Grassr))ts Alliance AHGAAmerican Legislative Exchange C)uncil ALECAmerican Federati)n )f Televisi)n & Radi) Artists, Direct)rs Guild )f America, Internati)nal Alliance )f Theatrical Stage Empl)yees, Screen Act)rs Guild

AFTRA et al.

Americans f)r Tax Ref)rm Digital Liberty Pr)ject ATR Digital Liberty Pr)ject

AOL Inc. AOLAss)ciati)n f)r C)mpetitive Techn)l)gy ACTAT&T Inc. AT&TBlack Leadership F)rum, Inc. BLFBret Swans)n, President, Entr)py Ec)n)mics LLC Bret Swans)nBright H)use Netw)rks, LLC Bright H)use Br)adband Institute )f Calif)rnia and Br)adband Regulat)ry Clinic

BBIC & BRC

Br)adcast Music, Inc. et al. BMI et al.Cablevisi)n Systems C)rp)rati)n Cablevisi)n Calif)rnia C)nsumers f)r Net Neutrality CCNNCalif)rnia Public Utilities C)mmissi)n CPUCCarb)n Discl)sure Pr)ject CDPCenter f)r Dem)cracy & Techn)l)gy CDT


106

Center f)r Individual Freed)m CFIFCenter f)r Media Justice, C)nsumers Uni)n, Media Access Pr)ject, and New America

Center f)r Media Justice et al.

Charter C)mmunicati)ns CharterC)l)rOfChange.)rg (filed by James Rucker) C)l)rOfChange.)rgC)mcast C)rp)rati)n C)mcastC)mmunicati)ns W)rkers )f America CWAC)mmunicati)ns W)rkers )f America—District 2 in West Virginia

CWA: D2WV

C)mmunicati)ns W)rkers )f America—L)cal 3806 CWA: 3806C)mmunicati)ns W)rkers )f America—L)cal 4900 CWA: 4900COMPTEL COMPTELC)mputer & C)mmunicati)ns Industry Ass)ciati)n CCIACREDO Acti)n CREDOCTIA—The Wireless Ass)ciati)n CTIADaniel Ly)ns, Pr)fess)r, B)st)n C)llege Law Sch))l Ly)nsDigital Entrepreneurs Digital EntrepreneursDigital S)ciety Digital S)cietyDISH Netw)rk L.L.C. DISHEarthLink, Inc. EarthLinkElectr)nic Fr)ntier F)undati)n EFFFree Press Free PressFuture )f Privacy F)rum FPFGe)rge Ou Ge)rge OuG))gle Inc. G))gleThe Greenlining Institute Greenlining GSM Ass)ciati)n GSM Hance Haney Hance HaneyThe Heartland Institute Heartland InstituteIndependent Teleph)ne & Telec)mmunicati)ns Alliance ITTAInf)rmati)n Techn)l)gy and Inn)vati)n F)undati)n ITIFInf)rmati)n Techn)l)gy Industry C)uncil ITICInstitute f)r Liberty IFLInstitute f)r P)licy Integrity IPIIntellectual Pr)perty and C)mmunicati)ns Law Pr)gram at Michigan State University C)llege )f Law, filed by Daniel J)hn McCartney, Fell)w

MSU IPCLP

Internati)nal D)cumentary Ass)ciati)n, Film Independent, and )thers

Internati)nal D)cumentary Ass)ciati)n et al.

Internet Freed)m C)aliti)n Internet Freed)m C)aliti)n

Internet Inn)vati)n Alliance IIA

J)int Center f)r P)litical and Ec)n)mic Studies J)int Center

Karen Kerrigan, President & CEO, Small Business & Entrepreneurship C)uncil

SBE C)uncil

Lab)r C)uncil f)r Latin American Advancement LCLAA

Latin)s in Inf)rmati)n Sciences & Techn)l)gy Ass)ciati)n LISTA

Laurence Brett Glass, d/b/a LARIAT LARIAT


107

Lawerence E. Denney, Speaker )f the H)use, State )f Idah) Representative Denney

League )f United Latin American Citizens League )f United Latin American Citizens

Leap Wireless Internati)nal, Inc. and Cricket C)mmunicati)ns, Inc.

Leap

Maneesh Pangasa Maneesh Pangasa

Media Acti)n Grassr))ts Netw)rk, C)l)rOfChange.)rg, Presente.)rg, Applied Research Center, Afr)-Netizen, Nati)nal Ass)ciati)n )f Hispanic J)urnalists, Native Public Media, and Rural Br)adband P)licy Gr)up

MAG-Net et al.

Micr)s)ft C)rp. Micr)s)ft

Ministerial Alliance Against the Digital Divide MAADD

M)bile Future M)bile Future

M)bile Internet C)ntent C)aliti)n MICC

M)ti)n Picture Ass)ciati)n )f America, Inc. MPAA

Nati)nal Ass)ciati)n f)r the Advancement )f C)l)red Pe)ple NAACP

Nati)nal Ass)ciati)n )f Manufacturers NAM

Nati)nal Ass)ciati)n )f State Utility C)nsumer Adv)cates NASUCA


Nati)nal Farmers Uni)n NFU

Nati)nal Hispanic Caucus )f State Legislat)rs (filed by Jas)n Ll)renz)

NHCSL

Nati)nal Hispanic Media C)aliti)n NHMC


Nati)nal Organizati)n )f Black Elected Legislative W)men et al. (filed by Alma M)rales R)jas, MANA—A Nati)nal Latina Organizati)n)

NOBELW et al.

Nati)nal Taxpayers Uni)n NTU

Nati)nal Telec)mmunicati)ns C))perative Ass)ciati)n NTCA

Nich)las Bramble, Inf)rmati)n S)ciety Pr)ject at Yale Law Sch))l

Nich)las Bramble

Office )f the Att)rney General )f Virginia Virginia Att)rney General



Perf)rming Arts Alliance Perf)rming Arts Alliance

Phil Kerpen, Vice President, Americans f)r Pr)sperity Phil Kerpen

Pr)fess)r Barbara A. Cherry, Indiana University Pr)f. Barbara A. Cherry

Pr)fess)r Catherine Sand)val and Br)adband Institute )f Calif)rnia

Pr)f. Catherine Sand)val

Pr)fess)r Christ)pher S. Y)), Pr)fess)r and F)unding Direct)r, Center f)r Techn)l)gy, Inn)vati)n, and C)mpetiti)n, University )f Pennsylvania

Y))

Public Kn)wledge Public Kn)wledge


108

Qwest C)mmunicati)ns Internati)nal, Inc. Qwest

Rec)rding Industry Ass)ciati)n )f America RIAA

Rural Cellular Ass)ciati)n RCA

Sandvine Inc. Sandvine

SavetheInternet.c)m SavetheInternet.c)m

Sean Kraft Sean Kraft


S)ngwriters Guild )f America SGA

S)ny Electr)nics Inc. S)ny

Sprint Nextel C)rp. Sprint

Stephen Beck, Pr)fess)r )f music techn)l)gy and digital media at L)uisiana State University

Stephen Beck

stic.man )f Dead Prez stic.man )f Dead Prez


Tech C)uncil )f Maryland TCM

TechAmerica TechAmerica

Telec)m Manufacturer C)aliti)n Telec)m Manufacturer C)aliti)n


Th)mas W. Hazlett, Pr)fess)r at Ge)rge Mas)n University Th)mas W. Hazlett

Time Warner Cable Inc. TWC


tw telec)m, inc. TWTC

U.S. Chamber )f C)mmerce U.S. Chamber

United States Hispanic Chamber )f C)mmerce USHCC



Via Christi Health System eCare-ICU, filed by Elizabeth C)wb)y )n March 9, 2010

Via Christi


Winst)n-Salem Urban League Winst)n-Salem Urban League

Writers Guild )f America, West, Inc. WGAW

W)rld Institute )n Disability et al. (filed by The Advanced C)mmunicati)ns Law & P)licy Institute at New Y)rk Law Sch))l)

W)rld Institute )n Disability et al.

_O C)mmunicati)ns, LLC _O


109

Public N(tice C(mments

C(mmenter Abbreviati(n4G Americas, LLC 4GADTRAN, Inc. ADTRANAlarm Industry C)mmunicati)ns C)mmittee AICCAlcatel-Lucent ALUAmerican Ass)ciati)n )f Independent Music A2IMAmerican C)nsumer Institute CCR ACIAmerican Federati)n )f Televisi)n & Radi) Artists, Direct)rs Guild )f America, Internati)nal Alliance )f Theatrical Stage Empl)yees, Screen Act)rs Guild

AFTRA et al.

American Library Ass)ciati)n, Ass)ciati)n )f Research Libraries, EDUCAUSE

ALA et al.

Americans f)r Tax Ref)rm Digital Liberty Pr)ject ATR Digital Liberty Pr)ject

Ass)ciati)n f)r C)mpetitive Techn)l)gy ACTAT&T Inc. AT&TBright H)use Netw)rks, LLC Bright H)use BT Americas Inc. BT AmericasCDMA Devel)pment Gr)up, Inc. CDGCenter f)r Dem)cracy & Techn)l)gy CDTCenter f)r Individual Freed)m CFIFCenter f)r S)cial Media, filed by Jessica Clark Center f)r S)cial MediaCenturyLink CenturyLinkCharter C)mmunicati)ns CharterClearwire C)rp)rati)n Clearwire C)mmunicati)ns W)rkers )f America CWAC)mpetitive Enterprise Institute CEIC)mputer & C)mmunicati)ns Industry Ass)ciati)n CCIACricket C)mmunicati)ns, Inc. CricketCTIA—The Wireless Ass)ciati)n CTIADISH Netw)rk L.L.C. DISHEricss)n Inc. Ericss)nFiber-t)-the-H)me C)uncil FTTH C)uncilFree Press Free PressThe Free State F)undati)n Free State F)undati)nFr)ntier C)mmunicati)ns Fr)ntierFuture )f Music C)aliti)n FMCG. Baeslack G. BaeslackGSM Ass)ciati)n GSM Hance Haney Hance HaneyHispanic Techn)l)gy & Telec)mmunicati)ns Partnership (filed by Jas)n Ll)renz)

HTTP

Hughes Netw)rk Systems, LLC Hughes Independent Film & Televisi)n Alliance IFTAInf)rmati)n Techn)l)gy Industry C)uncil ITICInf)rmati)n Techn)l)gy and Inn)vati)n F)undati)n ITIF


110

Internet Inn)vati)n Alliance IIAI)nary C)nsulting I)naryKaren Kerrigan, President & CEO, Small Business & Entrepreneurship C)uncil

SBE C)uncil

Latin)s f)r Internet Freed)m and Media Acti)n Grassr))ts Netw)rk

Latin)s f)r Internet Freed)m

M3_ Media, Inc. M3_ MediaMabuhay Alliance Mabuhay AllianceMetr)PCS C)mmunicati)ns, Inc. Metr)PCSMike Riley Mike RileyM)bile Future M)bile FutureM)bile Internet C)ntent C)aliti)n MICC


Nati)nal C)aliti)n )n Black Civic Participati)n NCBCP


Nati)nal Exchange Carrier Ass)ciati)n, Inc., Nati)nal Telec)mmunicati)ns C))perative Ass)ciati)n, Organizati)n f)r the Pr)m)ti)n & Advancement )f Small Telec)mmunicati)n C)mpanies, Eastern Rural Telec)m Ass)ciati)n, Western Telec)mmunicati)ns Alliance

NECA et al.

Netflix, Inc Netflix



Pr)fess)r Sc)tt J)rdan Pr)fess)r Sc)tt J)rdan

Public Interest C)mmenters (filed by Bent)n F)undati)n et al.) PIC

QUALCOMM Inc)rp)rated Qualc)mm


Smartc)mm, LLC Smartc)mm

S)uthern C)mpany Services, Inc. S)uthern

Sprint Nextel C)rp)rati)n Sprint

SureWest C)mmunicati)ns SureWest


Time Warner Cable Inc. TWC


tw telec)m inc. TWTC




Wireless C)mmunicati)ns Ass)ciati)n Internati)nal, Inc. WCAI

Windstream C)mmunicati)ns, Inc. Windstream

Writers Guild )f America, East AFL-CIO WGAE

Writers Guild )f America, West, Inc. WGAW


111

Public N(tice Reply C(mments

Reply C(mmenter Abbreviati(nAkamai Techn)l)gies, Inc. Akamai Allbritt)n C)mmunicati)ns C)mpany Allbritt)nAlliance f)r Digital Equality ADEAmerican Cable Ass)ciati)n ACAAmerican Library Ass)ciati)n ALAAmericans f)r Tax Ref)rm Digital Liberty Pr)ject ATR Digital Liberty

Pr)jectAss)ciati)n f)r C)mpetitive Techn)l)gy ACTAss)ciati)n )f Research Libraries ARLAT&T Inc. AT&TCalif)rnia C)nsumers f)r Net Neutrality CCNNCenturyLink CenturyLinkC)mputer & C)mmunicati)ns Industry Ass)ciati)n CCIACONNECT CONNECTCricket C)mmunicati)ns, Inc. CricketCTIA - The Wireless Ass)ciati)n CTIADISH Netw)rk L.L.C. DISHFree Press Free PressGeneral C)mmunicati)n, Inc. GCIHarris C)rp)rati)n Harris Institute f)r P)licy Integrity Institute f)r P)licy

IntegrityInf)rmati)n Techn)l)gy and Inn)vati)n F)undati)n ITIFInternet Inn)vati)n Alliance IIAMegaPath, Inc. and C)vad C)mmunicati)ns C)mpany MegaPath/C)vadM)bile Future M)bile FutureM)ti)n Picture Ass)ciati)n )f America, Inc. MPAANati)nal Ass)ciati)n )f State Utility C)nsumer Adv)cates NASUCA


Nati)nal Medical Ass)ciati)n NMA

Nich)las Bramble, Inf)rmati)n S)ciety Pr)ject at Yale Law Sch))l

Nich)las Bramble


J)hn Palfrey Palfrey

Public Kn)wledge Public Kn)wledge

Public Interest C)mmenters (filed by Public Kn)wledge et al.) PIC



Susan Jac)bi Susan Jac)bi


TechAmerica TechAmerica

Time Warner Cable Inc. Time Warner


112


Vari)us Adv)cates f)r the Open Internet Vari)us Adv)cates f)r the Open Internet



Christ)pher S. Y)) Y))


113

APPENDI^ DFinal Regulat(ry Flexibility Analysis

1. As required by the Regulat)ry Flexibility Act )f 1980, as amended (RFA),1 an Initial Regulat)ry Flexibility Analysis (IRFA) was included in the Open Internet NPRM in GN D)cket N). 09-191 and WC D)cket N). 07-52.2 The C)mmissi)n s)ught written public c)mment )n the pr)p)sals in these d)ckets, including c)mment )n the IRFA. This Final Regulat)ry Flexibility Analysis (FRFA) c)nf)rms t) the RFA.3

A. Need f(r, and Objectives (f, the Rules2. T)day the C)mmissi)n takes an imp)rtant step t) preserve the Internet as an

)pen platf)rm f)r inn)vati)n, investment, j)b creati)n, ec)n)mic gr)wth, c)mpetiti)n, and free expressi)n. T) pr)vide greater clarity and certainty regarding the c)ntinued freed)m and )penness )f the Internet, we ad)pt three basic rules that are gr)unded in br)adly accepted Internet n)rms, as well as )ur )wn pri)r decisi)ns:

i. Transparency. Fixed and m)bile br)adband pr)viders must discl)se the netw)rk management practices, perf)rmance characteristics, and terms and c)nditi)ns )f their br)adband services;

ii. N( bl(cking. Fixed br)adband pr)viders may n)t bl)ck lawful c)ntent, applicati)ns, services, )r n)n-harmful devices; m)bile br)adband pr)viders may n)t bl)ck lawful websites, )r bl)ck applicati)ns that c)mpete with their v)ice )r vide) teleph)ny services; and

iii. N( unreas(nable discriminati(n. Fixed br)adband pr)viders may n)t unreas)nably discriminate in transmitting lawful netw)rk traffic.

We believe these rules, applied with the c)mplementary principle )f reas)nable netw)rk management, will emp)wer and pr)tect c)nsumers and inn)vat)rs while helping ensure that the Internet c)ntinues t) fl)urish, with r)bust private investment and rapid inn)vati)n at b)th the c)re and the edge )f the netw)rk. This is c)nsistent with the Nati)nal Br)adband Plan g)al )f br)adband access that is ubiquit)us and fast, pr)m)ting the gl)bal c)mpetitiveness )f the United States.4

3. Just )ver a year ag), we launched a public pr)cess t) determine whether and what acti)ns might be necessary t) preserve the characteristics that have all)wed the Internet t) gr)w int) an indispensable platf)rm supp)rting )ur nati)n’s ec)n)my and civic life, and t) f)ster c)ntinued investment in the physical netw)rks that enable the Internet. Since then, m)re than 100,000 c)mmenters have pr)vided written input. C)mmissi)n staff held several public w)rksh)ps and c)nvened a Techn)l)gical Advis)ry Pr)cess with experts fr)m industry,

1 See 5 U.S.C. § 603. The RFA, see 5 U.S.C. §§ 601–12, has been amended by the Small Business Regulat)ry Enf)rcement Fairness Act )f 1996 (SBREFA), Pub. L. N). 104-121, Title II, 110 Stat. 857 (1996).2 See Preserving the Open Internet; Br,adband Industry Practices, N)tice )f Pr)p)sed Rulemaking, 24 FCC Rcd 13064, 13136–52 (2009) (Open Internet N,tice).3 See 5 U.S.C. § 604.4 Nati)nal Br)adband Plan at xi, 3–5.


114

academia, and c)nsumer adv)cacy gr)ups t) c)llect their views regarding key technical issues related t) Internet )penness.

4. This pr)cess has made clear that the Internet has thrived because )f its freed)m and )penness—the absence )f any gatekeeper bl)cking lawful uses )f the netw)rk )r picking winners and l)sers )nline. C)nsumers and inn)vat)rs d) n)t have t) seek permissi)n bef)re they use the Internet t) launch new techn)l)gies, start businesses, c)nnect with friends, )r share their views. The Internet is a level playing field. C)nsumers can make their )wn ch)ices ab)ut what applicati)ns and services t) use and are free t) decide what c)ntent they want t) access, create, )r share with )thers. This )penness pr)m)tes c)mpetiti)n. It als) enables a self-reinf)rcing cycle )f investment and inn)vati)n in which new uses )f the netw)rk lead t) increased ad)pti)n )f br)adband, which drives investment and impr)vements in the netw)rk itself, which in turn lead t) further inn)vative uses )f the netw)rk and further investment in c)ntent, applicati)ns, services, and devices. A c)re g)al )f this Order is t) f)ster and accelerate this cycle )f investment and inn)vati)n.

5. The rec)rd and )ur ec)n)mic analysis dem)nstrate, h)wever, that the )penness )f the Internet cann)t be taken f)r granted, and that it faces real threats. Indeed, we have seen br)adband pr)viders endanger the Internet’s )penness by bl)cking )r degrading c)ntent and applicati)ns with)ut discl)sing their practices t) end users and edge pr)viders, n)twithstanding the C)mmissi)n’s ad)pti)n )f )pen Internet principles in 2005. In light )f these c)nsiderati)ns, as well as the limited ch)ices m)st c)nsumers have f)r br)adband service, br)adband pr)viders’ financial interests in teleph)ny and pay televisi)n services that may c)mpete with )nline c)ntent and services, and the ec)n)mic and civic benefits )f maintaining an )pen and c)mpetitive platf)rm f)r inn)vati)n and c)mmunicati)n, the C)mmissi)n has l)ng rec)gnized that certain basic standards f)r br)adband pr)vider c)nduct are necessary t) ensure the Internet’s c)ntinued )penness. The rec)rd als) establishes the widespread benefits )f pr)viding greater clarity in this area—clarity that the Internet’s )penness will c)ntinue; that there is a f)rum and pr)cedure f)r res)lving alleged )pen Internet vi)lati)ns; and that br)adband pr)viders may reas)nably manage their netw)rks and inn)vate with respect t) netw)rk techn)l)gies and business m)dels. We expect the c)sts )f c)mpliance with )ur pr)phylactic rules t) be small, as they inc)rp)rate l)ngstanding )penness principles that are generally in line with current practices and with n)rms end)rsed by many br)adband pr)viders. C)nversely, the harms )f )pen Internet vi)lati)ns may be substantial, c)stly, and in s)me cases p)tentially irreversible.

6. The rules we pr)p)sed in the Open Internet NPRM and th)se we ad)pt t)day f)ll)w directly fr)m the C)mmissi)n’s bipartisan Internet P,licy Statement, ad)pted unanim)usly in 2005 and made temp)rarily enf)rceable f)r certain pr)viders in 2005 and 2006;5

)penness pr)tecti)ns the C)mmissi)n established in 2007 f)r users )f certain wireless spectrum;6

and a n)tice )f inquiry in 2007 that asked, am)ng )ther things, whether the C)mmissi)n sh)uld

5 See Appr,priate Framew,rk f,r Br,adband Access t, the Internet Over Wireline Facilities et al., P)licyStatement, 20 FCC Rcd 14986 (2005) (Internet P,licy Statement); SBC C,mmc’ns, Inc. and AT&T C,rp. Applicati,ns f,r Appr,val ,f Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 20 FCC Rcd 18290, 18392, para. 211 (2005); Veriz,n C,mmc’ns Inc. and MCI, Inc. Applicati,ns f,r Appr,val ,f Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 20 FCC Rcd 18433, 18537, para. 221 (2005); AT&T Inc. and BellS,uth C,rp. Applicati,n f,r Transfer ,f C,ntr,l, Mem)randum Opini)n and Order, 22 FCC Rcd 5662, 5663, para. 2 (2007).6 Service Rules f,r the 698–746, 747–762 and 777–792 MHz Bands et al., Sec)nd Rep)rt and Order, 22 FCC Rcd 15289 (2007) (700 MHz Sec,nd Rep,rt and Order); 47 C.F.R. § 27.16.


115

add a principle )f n)ndiscriminati)n t) the Internet P,licy Statement.7 Our rules build up)n these acti)ns, first and f)rem)st by requiring br)adband pr)viders t) be transparent in their netw)rk management practices, s) that end users can make inf)rmed ch)ices and inn)vat)rs can devel)p, market, and maintain Internet-based )fferings. The rules als) prevent certain f)rms )f bl)cking and discriminati)n with respect t) c)ntent, applicati)ns, services, and devices that depend )n )r c)nnect t) the Internet.

7. An )pen, r)bust, and well-functi)ning Internet requires that br)adband pr)viders have the flexibility t) reas)nably manage their netw)rks. Netw)rk management practices are reas)nable if they are appr)priate and tail)red t) achieving a legitimate netw)rk management purp)se. Transparency and end-user c)ntr)l are t)uchst)nes )f reas)nableness.

8. We rec)gnize that br)adband pr)viders may )ffer )ther services )ver the same last-mile c)nnecti)ns used t) pr)vide br)adband service. These “specialized services” can benefit end users and spur investment, but they may als) present risks t) the )pen Internet. We will cl)sely m)nit)r specialized services and their effects )n br)adband service t) ensure, thr)ugh all available mechanisms, that they supplement but d) n)t supplant the )pen Internet.

9. M)bile br)adband is at an earlier stage in its devel)pment than fixed br)adband and is ev)lving rapidly. F)r that and )ther reas)ns discussed bel)w, we c)nclude that it is appr)priate at this time t) take measured steps in this area. Acc)rdingly, we require m)bile pr)viders t) c)mply with the transparency rule, which includes enf)rceable discl)sure )bligati)ns regarding device and applicati)n certificati)n and appr)val pr)cesses; we pr)hibit pr)viders fr)m bl)cking lawful websites; and we pr)hibit pr)viders fr)m bl)cking applicati)ns that c)mpete with pr)viders’ v)ice and vide) teleph)ny services. We will cl)sely m)nit)r the devel)pment )f the m)bile br)adband market and will adjust the framew)rk we ad)pt t)day as appr)priate.

10. These rules are within )ur jurisdicti)n )ver interstate and f)reign c)mmunicati)ns by wire and radi). Further, they implement specific statut)ry mandates in the C)mmunicati)ns Act (“Act”) and the Telec)mmunicati)ns Act )f 1996 (“1996 Act”), including pr)visi)ns that direct the C)mmissi)n t) pr)m)te Internet investment and t) pr)tect and pr)m)te v)ice, vide), and audi) c)mmunicati)ns services.

11. The framew)rk we ad)pt t)day aims t) ensure the Internet remains an )pen platf)rm—)ne characterized by free markets and free speech—that enables c)nsumer ch)ice, end-user c)ntr)l, c)mpetiti)n thr)ugh l)w barriers t) entry, and the freed)m t) inn)vate with)ut permissi)n. The framew)rk d)es s) by pr)tecting )penness thr)ugh high-level rules, while maintaining br)adband pr)viders’ and the C)mmissi)n’s flexibility t) adapt t) changes in the market and in techn)l)gy as the Internet c)ntinues t) ev)lve.

B. Summary (f the Significant Issues Raised by the Public C(mments in Resp(nse t( the IRFA and Summary (f the Assessment (f the Agency (f Such Issues

12. A few c)mmenters discussed the IRFA fr)m the Open Internet NPRM. The Center f)r Regulat)ry Effectiveness (CRE) argued that the Open Internet NPRM’s IRFA was defective because it ineffectively f)ll)wed 5 U.S.C. §§ 603(a) (“Such analysis shall describe the impact )f the pr)p)sed rule )n small entities.”) and 603(c) (“Each initial regulat)ry flexibility analysis shall als) c)ntain a descripti)n )f any significant alternatives t) the pr)p)sed rule which acc)mplish the stated )bjectives )f applicable statutes and which minimize any significant

7 Br,adband Industry Practices, N)tice )f Inquiry, 22 FCC Rcd 7894, 7896, para. 8 (2007).


116

ec)n)mic impact )f the pr)p)sed rule )n small entities.”).8 CRE d)es n)t pr)vide any case law t) supp)rt its interpretati)n that the C)mmissi)n is in vi)lati)n )f these aspects )f the statute, n)r d)es CRE attempt t) argue that SBEs have actually )r the)retically been harmed.9 Rather, CRE is c)ncerned that by n)t f)ll)wing its reading )f these parts )f the law, the C)mmissi)n is being hyp)critical by n)t being transparent en)ugh. CRE rec)mmends that the C)mmissi)n publish a revised IRFA f)r public c)mment.10 We disagree: we believe that the IRFA was adequate and that the )pp)rtunity f)r SBEs t) c)mment in a publicly accessible d)cket sh)uld rem)ve any p)tential harm t) )penness that CRE is c)ncerned with,11 as well as any harms t) SBEs that c)uld )ccur by n)t f)ll)wing CRE’s interpretati)n )f the law.

13. The Smithville Teleph)ne C)mpany (Smithville) n)tes that many ILECs have vastly fewer empl)yees than the 1500 )r less that is required t) be rec)gnized as a small business under the SBA. F)r instance, Smithville states that it has seven empl)yees.12 Smithville als) )bserves that s)me )ther small ILECs in Mississippi have staffs )f 8, 4, 2, 3, and 21. Smithville argues that c)mpanies )f this size d) n)t have the res)urces t) fully analyze issues and participate in C)mmissi)n pr)ceedings. Smithville w)uld like the C)mmissi)n t) use the data that it regularly receives fr)m carriers t) set a carrier size where exempti)ns fr)m pr)p)sed rules and less c)mplex rep)rting requirements can be set. In the present case, h)wever, we determine that this is n)t necessary. We expect the c)sts )f c)mpliance with these rules t) be small, as the high-level rules inc)rp)rate l)ngstanding )penness principles that appear t) be generally in line with m)st br)adband pr)viders’ current practices. We n)te that Smithville d)es n)t cite any particular s)urce )f increased c)sts, )r attempt t) estimate c)sts )f c)mpliance.13 N)netheless, the C)mmissi)n attempts t) ease any burden that the transparency rule may cause by )nly requiring discl)sure )n a website and at the p)int )f sale, making the transparency rule flexible. In additi)n, by setting the effective date )f these rules 60 days after n)tice in the Federal Register ann)uncing the decisi)n )f the Office )f Management and Budget regarding appr)val )f the inf)rmati)n c)llecti)n requirements c)ntained in the rules, the Order gives br)adband pr)viders adequate time t) devel)p c)st-effective meth)ds )f c)mpliance. Finally, t) the extent that the transparency rule imp)ses a new )bligati)n )n small businesses, we find that the flexibility built int) the rule addresses any c)mpliance c)ncerns.14

14. The American Cable Ass)ciati)n (ACA) n)tes that the C)mmissi)n has an )bligati)n t) “include in the FRFA a c)mprehensive discussi)n )f the ec)n)mic impact its acti)ns will have )n small cable )perat)rs.”15 The ACA cites its )ther c)mments, which ask the

8 Center f)r Regulat)ry Effectiveness Jan. 8, 2010 C)mments, filed by Jim T)zzi, GN D)cket N). 09-191, at 7.9 See Center f)r Regulat)ry Effectiveness Jan. 8, 2010 C)mments, filed by Jim T)zzi, GN D)cket N). 09-191, at 7–8.10 Center f)r Regulat)ry Effectiveness Jan. 8, 2010 C)mments, filed by Jim T)zzi, GN D)cket N). 09-191, at 8.11 We als) n)te that we are n)t sure h)w )penness is impr)ved by guessing at the number )f burden h)urs that a small entity c)uld incur fr)m )ur rules, with)ut receiving c)mments fr)m small entities first. We w)uld argue that such systematic guessing w)uld n)t be regulat)rily effective.12 Smithville Teleph)ne C)mpany Jan. 14, 2010 C)mments, GN D)cket N). 09-191.13 See, e.g., NTCA C)mments at 9, 43–44; US Telec)m C)mments at 52; ADTRAN C)mments at i, 9, 11; TPPF F)undati)n C)mments at 99; TIA C)mments at 32. 14 See infra para. 56. 15 ACA Jan. 14, 2010 IRFA C)mments, GN D)cket N). 09-191, WC D)cket N). 07-52, at 4.


117

C)mmissi)n t) clarify that the c)dified principles w)uld n)t )bligate br)adband service pr)viders t) (1) “empl)y specific netw)rk management practices,” (2) “imp)se affirmative )bligati)ns dealing with unlawful c)ntent )r the unlawful transfer )f c)ntent,” (3) “acc)mm)date lawful devices that are n)t supp)rted by a br)adband pr)vider’s netw)rk,” and (4) “pr)vide inf)rmati)n regarding a c)mpany’s netw)rk management practices thr)ugh any rep)rting, rec)rdkeeping, )r means )ther than thr)ugh a c)mpany’s website )r webpage.”16 Addressing ACA’s arguments with regard t) cable )perat)rs, and fixed br)adband pr)viders in particular, (1), the C)mmissi)n is n)t requiring specific netw)rk management practices. The C)mmissi)n )nly requires that any netw)rk management be reas)nable; the C)mmissi)n d)es n)t require that any specific practice be empl)yed. Regarding (2), the rules d) n)t imp)se affirmative )bligati)ns dealing with unlawful c)ntent )r the unlawful transfer )f c)ntent. We state that the “n) bl)cking” rule d)es n)t prevent )r restrict a br)adband pr)vider fr)m refusing t) transmit material such as child p)rn)graphy. In resp)nse t) (3), the Order clarifies that the “n) bl)cking” rule pr)tects )nly devices that d) n)t harm the netw)rk and )nly requires fixed br)adband service pr)viders t) all)w devices that c)nf)rm t) publicly available industry standards applicable t) the pr)viders’ services. Directly addressing ACA’s c)ncern, the Order n)tes that a DOCSIS-based pr)vider is n)t required t) supp)rt a DSL m)dem. In resp)nse t) (4), the discl)sure requirement in t)day’s Order d)es n)t require additi)nal f)rms )f discl)sure, )ther than, at a minimum, requiring br)adband pr)viders t) pr)minently display )r pr)vide links t) discl)sures )n a publicly available, easily accessible website that is available t) current and pr)spective end users and edge pr)viders as well as t) the C)mmissi)n, and discl)sing relevant inf)rmati)n at the p)int )f sale.

C. Descripti(n and Estimate (f the Number (f Small Entities t( Which the Rules Apply

15. The RFA directs agencies t) pr)vide a descripti)n )f, and, where feasible, an estimate )f, the number )f small entities that may be affected by the rules ad)pted herein.17 The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small )rganizati)n,” and “small g)vernmental jurisdicti)n.”18 In additi)n, the term “small business” has the same meaning as the term “small business c)ncern” under the Small Business Act.19 A “small business c)ncern” is )ne which: (1) is independently )wned and )perated; (2) is n)t d)minant in its field )f )perati)n; and (3) satisfies any additi)nal criteria established by the Small Business Administrati)n (SBA).20

1. T(tal Small Entities

16 ACA Jan. 14, 2010 IRFA C)mments, GN D)cket N). 09-191, WC D)cket N). 07-52, at 2–3; ACA Jan. 14, 2010 C)mments, GN D)cket N). 09-191, WC D)cket N). 07-52, at 10–14 (asking the C)mmissi)n t) “make clear the regulati)ns d) n)t imp)se” vari)us )bligati)ns).17 5 U.S.C. § 604(a)(3).18 5 U.S.C. § 601(6).19 5 U.S.C. § 601(3) (inc)rp)rating by reference the definiti)n )f “small-business c)ncern” in the Small Business Act, 15 U.S.C. § 632). Pursuant t) 5 U.S.C. § 601(3), the statut)ry definiti)n )f a small business applies “unless an agency, after c)nsultati)n with the Office )f Adv)cacy )f the Small Business Administrati)n and after )pp)rtunity f)r public c)mment, establishes )ne )r m)re definiti)ns )f such term which are appr)priate t) the activities )f the agency and publishes such definiti)n(s) in the Federal Register.”20 15 U.S.C. § 632.


118

16. Our acti)n may, )ver time, affect small entities that are n)t easily categ)rized at present. We theref)re describe here, at the )utset, three c)mprehensive, statut)ry small entity size standards.21 First, nati)nwide, there are a t)tal )f appr)ximately 27.2 milli)n small businesses, acc)rding t) the SBA.22 In additi)n, a “small )rganizati)n” is generally “any n)t-f)r-pr)fit enterprise which is independently )wned and )perated and is n)t d)minant in its field.”23 Nati)nwide, as )f 2002, there were appr)ximately 1.6 milli)n small )rganizati)ns.24 Finally, the term “small g)vernmental jurisdicti)n” is defined generally as “g)vernments )f cities, t)wns, t)wnships, villages, sch))l districts, )r special districts, with a p)pulati)n )f less than fifty th)usand.”25 Census Bureau data f)r 2002 indicate that there were 87,525 l)cal g)vernmental jurisdicti)ns in the United States.26 We estimate that, )f this t)tal, 84,377 entities were “small g)vernmental jurisdicti)ns.”27 Thus, we estimate that m)st g)vernmental jurisdicti)ns are small.

2. Internet Access Service Pr(viders17. Internet Service Pr,viders. The 2007 Ec)n)mic Census places these firms, wh)se

services might include v)ice )ver Internet Pr)t)c)l (V)IP), in either )f tw) categ)ries, depending )n whether the service is pr)vided )ver the pr)vider’s )wn telec)mmunicati)ns facilities (e.g., cable and DSL ISPs), )r )ver client-supplied telec)mmunicati)ns c)nnecti)ns (e.g., dial-up ISPs). The f)rmer are within the categ)ry )f Wired Telec)mmunicati)ns Carriers,28

which has an SBA small business size standard )f 1,500 )r fewer empl)yees.29 These are als) labeled “br)adband.” The latter are within the categ)ry )f All Other Telec)mmunicati)ns,30

which has a size standard )f annual receipts )f $25 milli)n )r less.31 These are labeled n)n-br)adband. The m)st current Ec)n)mic Census data f)r all such firms are 2007 data, which are detailed specifically f)r ISPs within the categ)ries ab)ve. F)r the first categ)ry, the data sh)w that 396 firms )perated f)r the entire year, )f which 159 had nine )r fewer empl)yees.32 F)r the

21 See 5 U.S.C. §§ 601(3)–(6).22 See SBA, Office )f Adv)cacy, “Frequently Asked Questi)ns,” web.sba.g)v/faqs.23 5 U.S.C. § 601(4).24 INDEPENDENT SECTOR, THE NEW NONPROFIT ALMANAC & DESK REFERENCE (2002).25 5 U.S.C. § 601(5).26 U.S. CENSUS BUREAU, STATISTICAL ABSTRACT OF THE UNITED STATES: 2006, Secti)n 8, page 272, tbl. 415.27 We assume that the villages, sch))l districts, and special districts are small, and t)tal 48,558. See U.S.CENSUS BUREAU, STATISTICAL ABSTRACT OF THE UNITED STATES: 2006, secti)n 8, page 273, tbl. 417. F)r 2002, Census Bureau data indicate that the t)tal number )f c)unty, municipal, and t)wnship g)vernments nati)nwide was 38,967, )f which 35,819 were small. Id.28 U.S. Census Bureau, 2007 NAICS Definiti)ns, “517110 Wired Telec)mmunicati)ns Carriers,” www.census.g)v/naics/2007/def/ND517110.HTM#N517110.29 13 C.F.R. § 121.201, NAICS c)de 517110.30 U.S. Census Bureau, 2007 NAICS Definiti)ns, “517919 All Other Telec)mmunicati)ns,” www.census.g)v/naics/2007/def/ND517919.HTM#N517919.31 13 C.F.R. § 121.201, NAICS c)de 517919 (updated f)r inflati)n in 2008).32 U.S. Census Bureau, 2007 Ec)n)mic Census, Subject Series: Inf)rmati)n, “Establishment and Firm Size,” NAICS c)de 5171103 (released N)v. 19, 2010) (empl)yment size). The data sh)w )nly tw) categ)ries within the wh)le: the categ)ries f)r 1-4 empl)yees and f)r 5-9 empl)yees.


119

sec)nd categ)ry, the data sh)w that 1,682 firms )perated f)r the entire year. 33 Of th)se, 1,675 had annual receipts bel)w $25 milli)n per year, and an additi)nal tw) had receipts )f between $25 milli)n and $ 49,999,999. C)nsequently, we estimate that the maj)rity )f ISP firms are small entities.

18. The ISP industry has changed since 2007. The 2007 data cited ab)ve may theref)re include entities that n) l)nger pr)vide Internet access service and may exclude entities that n)w pr)vide such service. T) ensure that this FRFA describes the universe )f small entities that )ur acti)n might affect, we discuss in turn several different types )f entities that might be pr)viding Internet access service.

3. Wireline Pr(viders19. Incumbent L,cal Exchange Carriers (Incumbent LECs). Neither the C)mmissi)n n)r

the SBA has devel)ped a small business size standard specifically f)r incumbent l)cal exchange services. The appr)priate size standard under SBA rules is f)r the categ)ry Wired Telec)mmunicati)ns Carriers. Under that size standard, such a business is small if it has 1,500 )r fewer empl)yees.34 Acc)rding t) C)mmissi)n data,35 1,311 carriers have rep)rted that they are engaged in the pr)visi)n )f incumbent l)cal exchange services. Of these 1,311 carriers, an estimated 1,024 have 1,500 )r fewer empl)yees and 287 have m)re than 1,500 empl)yees. C)nsequently, the C)mmissi)n estimates that m)st pr)viders )f incumbent l)cal exchange service are small businesses that may be affected by )ur pr)p)sed acti)n.

20. C,mpetitive L,cal Exchange Carriers (C,mpetitive LECs), C,mpetitive Access Pr,viders (CAPs), Shared-Tenant Service Pr,viders, and Other L,cal Service Pr,viders. Neither the C)mmissi)n n)r the SBA has devel)ped a small business size standard specifically f)r these service pr)viders. The appr)priate size standard under SBA rules is f)r the categ)ry Wired Telec)mmunicati)ns Carriers. Under that size standard, such a business is small if it has 1,500 )r fewer empl)yees.36 Acc)rding t) C)mmissi)n data,37 1005 carriers have rep)rted that they are engaged in the pr)visi)n )f either c)mpetitive access pr)vider services )r c)mpetitive l)cal exchange carrier services. Of these 1005 carriers, an estimated 918 have 1,500 )r fewer empl)yees and 87 have m)re than 1,500 empl)yees. In additi)n, 16 carriers have rep)rted that they are “Shared-Tenant Service Pr)viders,” and all 16 are estimated t) have 1,500 )r fewer empl)yees. In additi)n, 89 carriers have rep)rted that they are “Other L)cal Service Pr)viders.” Of the 89, all have 1,500 )r fewer empl)yees. C)nsequently, the C)mmissi)n estimates that m)st pr)viders )f c)mpetitive l)cal exchange service, c)mpetitive access pr)viders, Shared-Tenant Service Pr)viders, and )ther l)cal service pr)viders are small entities that may be affected by )ur acti)n.

21. We have included small incumbent LECs in this present RFA analysis. As n)ted ab)ve, a “small business” under the RFA is )ne that, inter alia, meets the pertinent small business size standard (e.g., a teleph)ne c)mmunicati)ns business having 1,500 )r fewer empl)yees), and

33 U.S. Census Bureau, 2007 Ec)n)mic Census, Subject Series: Inf)rmati)n, “Establishment and Firm Size,” NAICS c)de 5179191 (released N)v. 19, 2010) (receipts size).34 13 C.F.R. § 121.201, NAICS c)de 517110.35 FCC, WIRELINE COMPETITION BUREAU, INDUSTRY ANALYSIS AND TECHNOLOGY DIVISION, TRENDS IN

TELEPHONE SERVICE, tbl. 5.3, Page 5-5 (Aug. 2008) (TRENDS IN TELEPHONE SERVICE). This s)urce uses data that are current as )f N)vember 1, 2006.36 13 C.F.R. § 121.201, NAICS c)de 517110.37 TRENDS IN TELEPHONE SERVICE, tbl. 5.3.


120

“is n)t d)minant in its field )f )perati)n.”38 The SBA’s Office )f Adv)cacy c)ntends that, f)r RFA purp)ses, small incumbent LECs are n)t d)minant in their field )f )perati)n because any such d)minance is n)t “nati)nal” in sc)pe.39 We have theref)re included small incumbent LECs in this RFA analysis, alth)ugh we emphasize that this RFA acti)n has n) effect )n C)mmissi)n analyses and determinati)ns in )ther, n)n-RFA c)ntexts.

22. Interexchange Carriers. Neither the C)mmissi)n n)r the SBA has devel)ped a small business size standard specifically f)r pr)viders )f interexchange services. The appr)priate size standard under SBA rules is f)r the categ)ry Wired Telec)mmunicati)ns Carriers. Under that size standard, such a business is small if it has 1,500 )r fewer empl)yees.40 Acc)rding t) C)mmissi)n data,41 300 carriers have rep)rted that they are engaged in the pr)visi)n )f interexchange service. Of these, an estimated 268 have 1,500 )r fewer empl)yees and 32 have m)re than 1,500 empl)yees. C)nsequently, the C)mmissi)n estimates that the maj)rity )f I_Cs are small entities that may be affected by )ur acti)n.

23. Operat,r Service Pr,viders (OSPs). Neither the C)mmissi)n n)r the SBA has devel)ped a small business size standard specifically f)r )perat)r service pr)viders. The appr)priate size standard under SBA rules is f)r the categ)ry Wired Telec)mmunicati)ns Carriers. Under that size standard, such a business is small if it has 1,500 )r fewer empl)yees.42 Acc)rding t) C)mmissi)n data, 33 carriers have rep)rted that they are engaged in the pr)visi)n )f )perat)r services. Of these, an estimated 31 have 1,500 )r fewer empl)yees and 2 has m)re than 1,500 empl)yees.43 C)nsequently, the C)mmissi)n estimates that the maj)rity )f OSPs are small entities that may be affected by )ur pr)p)sed acti)n.

4. Wireless Pr(viders – Fixed and M(bile24. F)r reas)ns discussed ab)ve in the text )f the Order, the C)mmissi)n has

distinguished wireless fixed br)adband Internet access service fr)m wireless m)bile br)adband Internet access service. Specifically, the C)mmissi)n decided that fixed br)adband Internet access service pr)viders, whether wireline )r wireless, must discl)se their netw)rk management practices and the perf)rmance characteristics and c)mmercial terms )f their br)adband services; may n)t bl)ck lawful c)ntent, applicati)ns, services )r n)n-harmful devices; and may n)t unreas)nably discriminate in transmitting lawful netw)rk traffic. Als) f)r the reas)ns discussed ab)ve, the C)mmissi)n decided that wireless m)bile br)adband Internet access service pr)viders must discl)se their netw)rk management practices and perf)rmance characteristics and c)mmercial terms )f their br)adband service and may n)t bl)ck lawful websites )r bl)ck applicati)ns that c)mpete with their v)ice )r vide) teleph)ny service. Thus, t) the extent the wireless services listed bel)w are used by wireless firms f)r fixed and m)bile br)adband Internet access services, t)day’s acti)ns may have an impact )n th)se small businesses as set f)rth ab)ve

38 5 U.S.C. § 601(3).39 Letter fr)m Jere W. Gl)ver, Chief C)unsel f)r Adv)cacy, SBA, t) William E. Kennard, Chairman, FCC (filed May 27, 1999). The Small Business Act c)ntains a definiti)n )f “small business c)ncern,” which the RFA inc)rp)rates int) its )wn definiti)n )f “small business.” 15 U.S.C. § 632(a); 5 U.S.C. § 601(3). SBA regulati)ns interpret “small business c)ncern” t) include the c)ncept )f d)minance )n a nati)nal basis. 13 C.F.R. § 121.102(b).40 13 C.F.R. § 121.201, NAICS c)de 517110.41 TRENDS IN TELEPHONE SERVICE, tbl. 5.3.42 13 C.F.R. § 121.201, NAICS c)de 517110.43 TRENDS IN TELEPHONE SERVICE, tbl. 5.3.


121

and further bel)w. In additi)n, f)r th)se services subject t) aucti)ns, we n)te that, as a general matter, the number )f winning bidders that claim t) qualify as small businesses at the cl)se )f an aucti)n d)es n)t necessarily represent the number )f small businesses currently in service. Als), the C)mmissi)n d)es n)t generally track subsequent business size unless, in the c)ntext )f assignments and transfers )r rep)rtable eligibility events, unjust enrichment issues are implicated.

25. Wireless Telec,mmunicati,ns Carriers (except Satellite). Since 2007, the Census Bureau has placed wireless firms within this new, br)ad, ec)n)mic census categ)ry.44 Pri)r t) that time, such firms were within the n)w-superseded categ)ries )f “Paging” and “Cellular and Other Wireless Telec)mmunicati)ns.”45 Under the present and pri)r categ)ries, the SBA has deemed a wireless business t) be small if it has 1,500 )r fewer empl)yees.46 F)r the categ)ry )f Wireless Telec)mmunicati)ns Carriers (except Satellite), preliminary data f)r 2007 sh)w that there were 11,927 firms )perating that year.47 While the Census Bureau has n)t released data )n the establishments br)ken d)wn by number )f empl)yees, we n)te that the Census Bureau lists t)tal empl)yment f)r all firms in that sect)r at 281,262.48 Since all firms with fewer than 1,500 empl)yees are c)nsidered small, given the t)tal empl)yment in the sect)r, we estimate that the vast maj)rity )f wireless firms are small.

26. Wireless C,mmunicati,ns Services. This service can be used f)r fixed, m)bile, radi)l)cati)n, and digital audi) br)adcasting satellite uses. The C)mmissi)n defined “small business” f)r the wireless c)mmunicati)ns services (WCS) aucti)n as an entity with average gr)ss revenues )f $40 milli)n f)r each )f the three preceding years, and a “very small business” as an entity with average gr)ss revenues )f $15 milli)n f)r each )f the three preceding years.49 The SBA has appr)ved these definiti)ns.50 The C)mmissi)n aucti)ned ge)graphic area licenses in the WCS service. In the aucti)n, which c)mmenced )n April 15, 1997 and cl)sed )n April 25, 1997, seven bidders w)n 31 licenses that qualified as very small business entities, and )ne bidder w)n )ne license that qualified as a small business entity.

27. 1670–1675 MHz Services. This service can be used f)r fixed and m)bile uses, except aer)nautical m)bile.51 An aucti)n f)r )ne license in the 1670–1675 MHz band c)mmenced )n

44 U.S. Census Bureau, 2007 NAICS Definiti)ns, “517210 Wireless Telec)mmunicati)ns Categ)ries (Except Satellite),” www.census.g)v/naics/2007/def/ND517210.HTM#N517210.45 U.S. Census Bureau, 2002 NAICS Definiti)ns, “517211 Paging”; www.census.g)v/epcd/naics02/def/NDEF517.HTM.; U.S. Census Bureau, 2002 NAICS Definiti)ns, “517212 Cellular and Other Wireless Telec)mmunicati)ns,” www.census.g)v/epcd/naics02/def/NDEF517.HTM.46 13 C.F.R. § 121.201, NAICS c)de 517210 (2007 NAICS). The n)w-superseded, pre-2007 C.F.R. citati)ns were 13 C.F.R. § 121.201, NAICS c)des 517211 and 517212 (referring t) the 2002 NAICS).47 U.S. Census Bureau, 2007 Ec)n)mic Census, Sect)r 51, EC0751I1 Inf)rmati)n: Industry Series: Preliminary Summary Statistics f)r the United States: 2007, NAICS c)de 517210 (issued Oct. 20, 2009), factfinder.census.g)v/servlet/IBQTable?-fds_name=EC0700A1&-_clearIBQ=Y&-ds_name=EC0751I1&-NAICS2007=51721.48 Id.49 Amendment ,f the C,mmissi,n’s Rules t, Establish Part 27, the Wireless C,mmunicati,ns Service (WCS), Rep)rt and Order, 12 FCC Rcd 10785, 10879, para. 194 (1997).50 See Letter fr)m Aida Alvarez, Administrat)r, SBA, t) Amy Z)sl)v, Chief, Aucti)ns and Industry Analysis Divisi)n, Wireless Telec)mmunicati)ns Bureau, FCC (filed Dec. 2, 1998) (Alvarez Letter 1998).51 47 C.F.R. § 2.106; see generally 47 C.F.R. §§ 27.1–.70.


122

April 30, 2003 and cl)sed the same day. One license was awarded. The winning bidder was n)t a small entity.

28. Wireless Teleph,ny. Wireless teleph)ny includes cellular, pers)nal c)mmunicati)ns services, and specialized m)bile radi) teleph)ny carriers. As n)ted, the SBA has devel)ped a small business size standard f)r Wireless Telec)mmunicati)ns Carriers (except Satellite).52 Under the SBA small business size standard, a business is small if it has 1,500 )r fewer empl)yees.53 Acc)rding t) Trends in Teleph,ne Service data, 413 carriers rep)rted that they were engaged in wireless teleph)ny.54 Of these, an estimated 261 have 1,500 )r fewer empl)yees and 152 have m)re than 1,500 empl)yees.55 Theref)re, m)re than half )f these entities can be c)nsidered small.

29. Br,adband Pers,nal C,mmunicati,ns Service. The br)adband pers)nal c)mmunicati)ns services (PCS) spectrum is divided int) six frequency bl)cks designated A thr)ugh F, and the C)mmissi)n has held aucti)ns f)r each bl)ck. The C)mmissi)n initially defined a “small business” f)r C- and F-Bl)ck licenses as an entity that has average gr)ss revenues )f $40 milli)n )r less in the three previ)us calendar years.56 F)r F-Bl)ck licenses, an additi)nal small business size standard f)r “very small business” was added and is defined as an entity that, t)gether with its affiliates, has average gr)ss revenues )f n)t m)re than $15 milli)n f)r the preceding three calendar years.57 These small business size standards, in the c)ntext )f br)adband PCS aucti)ns, have been appr)ved by the SBA.58 N) small businesses within the SBA-appr)ved small business size standards bid successfully f)r licenses in Bl)cks A and B. There were 90 winning bidders that claimed small business status in the first tw) C-Bl)ck aucti)ns. A t)tal )f 93 bidders that claimed small business status w)n appr)ximately 40 percent )f the 1,479 licenses in the first aucti)n f)r the D, E, and F Bl)cks.59 On April 15, 1999, the C)mmissi)n c)mpleted the reaucti)n )f 347 C-, D-, E-, and F-Bl)ck licenses in Aucti)n N). 22.60 Of the 57 winning bidders in that aucti)n, 48 claimed small business status and w)n 277 licenses.

30. On January 26, 2001, the C)mmissi)n c)mpleted the aucti)n )f 422 C and F Bl)ck Br)adband PCS licenses in Aucti)n N). 35. Of the 35 winning bidders in that aucti)n, 29

52 13 C.F.R. § 121.201, NAICS c)de 517210.53 Id.54 TRENDS IN TELEPHONE SERVICE, tbl. 5.3.55 Id.56 See Amendment ,f Parts 20 and 24 ,f the C,mmissi,n’s Rules – Br,adband PCS C,mpetitive Bidding and the C,mmercial M,bile Radi, Service Spectrum Cap et al., Rep)rt and Order, 11 FCC Rcd 7824, 7850–52, paras. 57–60 (1996) (“PCS Rep,rt and Order”); see als, 47 C.F.R. § 24.720(b).57 See PCS Rep,rt and Order, 11 FCC Rcd at 7852, para. 60.58 See Alvarez Letter 1998.59 See Br,adband PCS, D, E and F Bl,ck Aucti,n Cl,ses, Public N)tice, D)c. N). 89838 (rel. Jan. 14, 1997).60 See C, D, E, and F Bl,ck Br,adband PCS Aucti,n Cl,ses, Public N)tice, 14 FCC Rcd 6688 (WTB 1999). Bef)re Aucti)n N). 22, the C)mmissi)n established a very small standard f)r the C Bl)ck t) match the standard used f)r F Bl)ck. Amendment ,f the C,mmissi,n’s Rules Regarding Installment Payment Financing f,r Pers,nal C,mmunicati,ns Services (PCS) Licensees, WT D)cket N). 97-82, F)urth Rep)rt and Order, 13 FCC Rcd 15743, 15768, para. 46 (1998).


123

claimed small business status.61 Subsequent events c)ncerning Aucti)n 35, including judicial and agency determinati)ns, resulted in a t)tal )f 163 C and F Bl)ck licenses being available f)r grant. On February 15, 2005, the C)mmissi)n c)mpleted an aucti)n )f 242 C-, D-, E-, and F-Bl)ck licenses in Aucti)n N). 58. Of the 24 winning bidders in that aucti)n, 16 claimed small business status and w)n 156 licenses.62 On May 21, 2007, the C)mmissi)n c)mpleted an aucti)n )f 33 licenses in the A, C, and F Bl)cks in Aucti)n N). 71.63 Of the 12 winning bidders in that aucti)n, five claimed small business status and w)n 18 licenses.64 On August 20, 2008, the C)mmissi)n c)mpleted the aucti)n )f 20 C-, D-, E-, and F-Bl)ck Br)adband PCS licenses in Aucti)n N). 78.65 Of the eight winning bidders f)r Br)adband PCS licenses in that aucti)n, six claimed small business status and w)n 14 licenses.66

31. Specialized M,bile Radi, Licenses. The C)mmissi)n awards “small entity” bidding credits in aucti)ns f)r Specialized M)bile Radi) (SMR) ge)graphic area licenses in the 800 MHz and 900 MHz bands t) firms that had revenues )f n) m)re than $15 milli)n in each )f the three previ)us calendar years.67 The C)mmissi)n awards “very small entity” bidding credits t) firms that had revenues )f n) m)re than $3 milli)n in each )f the three previ)us calendar years.68 The SBA has appr)ved these small business size standards f)r the 900 MHz Service.69 The C)mmissi)n has held aucti)ns f)r ge)graphic area licenses in the 800 MHz and 900 MHz bands. The 900 MHz SMR aucti)n began )n December 5, 1995, and cl)sed )n April 15, 1996. Sixty bidders claiming that they qualified as small businesses under the $15 milli)n size standard w)n 263 ge)graphic area licenses in the 900 MHz SMR band. The 800 MHz SMR aucti)n f)r the upper 200 channels began )n Oct)ber 28, 1997, and was c)mpleted )n December 8, 1997. Ten bidders claiming that they qualified as small businesses under the $15 milli)n size standard w)n 38 ge)graphic area licenses f)r the upper 200 channels in the 800 MHz SMR band.70 A sec)nd aucti)n f)r the 800 MHz band was held )n January 10, 2002 and cl)sed )n January 17, 2002 and included 23 BEA licenses. One bidder claiming small business status w)n five licenses.71

61 See C and F Bl,ck Br,adband PCS Aucti,n Cl,ses; Winning Bidders Ann,unced, Public N)tice, 16 FCC Rcd 2339 (2001).62 See Br,adband PCS Spectrum Aucti,n Cl,ses; Winning Bidders Ann,unced f,r Aucti,n N,. 58, Public N)tice, 20 FCC Rcd 3703 (2005).63 See Aucti,n ,f Br,adband PCS Spectrum Licenses Cl,ses; Winning Bidders Ann,unced f,r Aucti,n N,. 71, Public N)tice, 22 FCC Rcd 9247 (2007).64 Id.65 See Aucti,n ,f AWS-1 and Br,adband PCS Licenses Cl,ses; Winning Bidders Ann,unced f,r Aucti,n 78, Public N)tice, 23 FCC Rcd 12749 (WTB 2008).66 Id.67 47 C.F.R. § 90.814(b)(1).68 47 C.F.R. § 90.814(b)(1).69 See Letter fr)m Aida Alvarez, Administrat)r, SBA, t) Th)mas Sugrue, Chief, Wireless Telec)mmunicati)ns Bureau, FCC (filed Aug. 10, 1999) (Alvarez Letter 1999).70 See C,rrecti,n t, Public N,tice DA 96-586 “FCC Ann,unces Winning Bidders in the Aucti,n ,f 1020 Licenses t, Pr,vide 900 MHz SMR in Maj,r Trading Areas,” Public N)tice, 18 FCC Rcd 18367 (WTB 1996).71 See Multi-Radi, Service Aucti,n Cl,ses, Public N)tice, 17 FCC Rcd 1446 (WTB 2002).


124

32. The aucti)n )f the 1,053 800 MHz SMR ge)graphic area licenses f)r the General Categ)ry channels began )n August 16, 2000, and was c)mpleted )n September 1, 2000. Eleven bidders w)n 108 ge)graphic area licenses f)r the General Categ)ry channels in the 800 MHz SMR band and qualified as small businesses under the $15 milli)n size standard.72 In an aucti)n c)mpleted )n December 5, 2000, a t)tal )f 2,800 Ec)n)mic Area licenses in the l)wer 80 channels )f the 800 MHz SMR service were awarded.73 Of the 22 winning bidders, 19 claimed small business status and w)n 129 licenses. Thus, c)mbining all f)ur aucti)ns, 41 winning bidders f)r ge)graphic licenses in the 800 MHz SMR band claimed status as small businesses.

33. In additi)n, there are numer)us incumbent site-by-site SMR licenses and licensees with extended implementati)n auth)rizati)ns in the 800 and 900 MHz bands. We d) n)t kn)w h)w many firms pr)vide 800 MHz )r 900 MHz ge)graphic area SMR service pursuant t) extended implementati)n auth)rizati)ns, n)r h)w many )f these pr)viders have annual revenues )f n) m)re than $15 milli)n. In additi)n, we d) n)t kn)w h)w many )f these firms have 1,500 )r fewer empl)yees, which is the SBA-determined size standard.74 We assume, f)r purp)ses )f this analysis, that all )f the remaining extended implementati)n auth)rizati)ns are held by small entities, as defined by the SBA.

34. L,wer 700 MHz Band Licenses. The C)mmissi)n previ)usly ad)pted criteria f)r defining three gr)ups )f small businesses f)r purp)ses )f determining their eligibility f)r special pr)visi)ns such as bidding credits.75 The C)mmissi)n defined a “small business” as an entity that, t)gether with its affiliates and c)ntr)lling principals, has average gr)ss revenues n)t exceeding $40 milli)n f)r the preceding three years.76 A “very small business” is defined as an entity that, t)gether with its affiliates and c)ntr)lling principals, has average gr)ss revenues that are n)t m)re than $15 milli)n f)r the preceding three years.77 Additi)nally, the l)wer 700 MHz Service had a third categ)ry )f small business status f)r Metr)p)litan/Rural Service Area (MSA/RSA) licenses—“entrepreneur”—which is defined as an entity that, t)gether with its affiliates and c)ntr)lling principals, has average gr)ss revenues that are n)t m)re than $3 milli)n f)r the preceding three years.78 The SBA appr)ved these small size standards.79 An aucti)n )f 740 licenses ()ne license in each )f the 734 MSAs/RSAs and )ne license in each )f the six Ec)n)mic Area Gr)upings (EAGs)) c)mmenced )n August 27, 2002, and cl)sed )n September 18, 2002. Of the 740 licenses available f)r aucti)n, 484 licenses were w)n by 102 winning bidders. Seventy-tw) )f the winning bidders claimed small business, very small business )r entrepreneur status and w)n a t)tal )f 329 licenses.80 A sec)nd aucti)n c)mmenced )n May 28,

72 See 800 MHz Specialized M,bile Radi, (SMR) Service General Categ,ry (851–854 MHz) and Upper Band (861–865 MHz) Aucti,n Cl,ses; Winning Bidders Ann,unced, Public N)tice, 15 FCC Rcd 17162 (2000).73 See 800 MHz SMR Service L,wer 80 Channels Aucti,n Cl,ses; Winning Bidders Ann,unced, Public N)tice, 16 FCC Rcd 1736 (2000).74 See generally 13 C.F.R. § 121.201, NAICS c)de 517210.75 See Reall,cati,n and Service Rules f,r the 698–746 MHz Spectrum Band (Televisi,n Channels 52–59), Rep)rt and Order, 17 FCC Rcd 1022 (2002) (Channels 52–59 Rep,rt and Order).76 See Channels 52–59 Rep,rt and Order, 17 FCC Rcd at 1087–88, para. 172.77 See id.78 See id., 17 FCC Rcd at 1088, para. 173.79 See Alvarez Letter 1999.80 See L,wer 700 MHz Band Aucti,n Cl,ses, Public N)tice, 17 FCC Rcd 17272 (WTB 2002).


125

2003, cl)sed )n June 13, 2003, and included 256 licenses: 5 EAG licenses and 476 Cellular Market Area licenses.81 Seventeen winning bidders claimed small )r very small business status and w)n 60 licenses, and nine winning bidders claimed entrepreneur status and w)n 154 licenses.82 On July 26, 2005, the C)mmissi)n c)mpleted an aucti)n )f 5 licenses in the L)wer 700 MHz band (Aucti)n N). 60). There were three winning bidders f)r five licenses. All three winning bidders claimed small business status.

35. In 2007, the C)mmissi)n reexamined its rules g)verning the 700 MHz band in the 700 MHz Sec,nd Rep,rt and Order.83 An aucti)n )f 700 MHz licenses c)mmenced January 24, 2008 and cl)sed )n March 18, 2008, which included, 176 Ec)n)mic Area licenses in the A Bl)ck, 734 Cellular Market Area licenses in the B Bl)ck, and 176 EA licenses in the E Bl)ck.84 Twenty winning bidders, claiming small business status (th)se with attributable average annual gr)ss revenues that exceed $15 milli)n and d) n)t exceed $40 milli)n f)r the preceding three years) w)n 49 licenses. Thirty three winning bidders claiming very small business status (th)se with attributable average annual gr)ss revenues that d) n)t exceed $15 milli)n f)r the preceding three years) w)n 325 licenses.

36. Upper 700 MHz Band Licenses. In the 700 MHz Sec,nd Rep,rt and Order, the C)mmissi)n revised its rules regarding Upper 700 MHz licenses.85 On January 24, 2008, the C)mmissi)n c)mmenced Aucti)n 73 in which several licenses in the Upper 700 MHz band were available f)r licensing: 12 Regi)nal Ec)n)mic Area Gr)uping licenses in the C Bl)ck, and )ne nati)nwide license in the D Bl)ck.86 The aucti)n c)ncluded )n March 18, 2008, with 3 winning bidders claiming very small business status (th)se with attributable average annual gr)ss revenues that d) n)t exceed $15 milli)n f)r the preceding three years) and winning five licenses.

37. 700 MHz Guard Band Licensees. In 2000, in the 700 MHz Guard Band Order, the C)mmissi)n ad)pted size standards f)r “small businesses” and “very small businesses” f)r purp)ses )f determining their eligibility f)r special pr)visi)ns such as bidding credits and installment payments.87 A small business in this service is an entity that, t)gether with its affiliates and c)ntr)lling principals, has average gr)ss revenues n)t exceeding $40 milli)n f)r the preceding three years.88 Additi)nally, a very small business is an entity that, t)gether with its affiliates and c)ntr)lling principals, has average gr)ss revenues that are n)t m)re than $15 milli)n f)r the preceding three years.89 SBA appr)val )f these definiti)ns is n)t required.90 An aucti)n )f 52 Maj)r Ec)n)mic Area licenses c)mmenced )n September 6, 2000, and cl)sed )n

81 See L,wer 700 MHz Band Aucti,n Cl,ses, Public N)tice, 18 FCC Rcd 11873 (WTB 2003).82 See id.83 700 MHz Sec,nd Rep,rt and Order, Sec)nd Rep)rt and Order, 22 FCC Rcd 15289, 15359 n. 434 (2007).84 See Aucti,n ,f 700 MHz Band Licenses Cl,ses, Public N)tice, 23 FCC Rcd 4572 (WTB 2008).85 700 MHz Sec,nd Rep,rt and Order, 22 FCC Rcd 15289.86 See Aucti,n ,f 700 MHz Band Licenses Cl,ses, Public N)tice, 23 FCC Rcd 4572 (WTB 2008).87 See Service Rules f,r the 746–764 MHz Bands, and Revisi,ns t, Part 27 ,f the C,mmissi,n’s Rules, Sec)nd Rep)rt and Order, 15 FCC Rcd 5299 (2000) (746–764 MHz Band Sec,nd Rep,rt and Order).88 See 746–764 MHz Band Sec,nd Rep,rt and Order, 15 FCC Rcd at 5343, para. 108.89 See id.90 See id. at 5343, para. 108 n.246 (f)r the 746–764 MHz and 776–794 MHz bands, the C)mmissi)n is exempt fr)m 15 U.S.C. § 632, which requires Federal agencies t) )btain SBA appr)val bef)re ad)pting small business size standards).


126

September 21, 2000.91 Of the 104 licenses aucti)ned, 96 licenses were s)ld t) nine bidders. Five )f these bidders were small businesses that w)n a t)tal )f 26 licenses. A sec)nd aucti)n )f 700 MHz Guard Band licenses c)mmenced )n February 13, 2001, and cl)sed )n February 21, 2001. All eight )f the licenses aucti)ned were s)ld t) three bidders. One )f these bidders was a small business that w)n a t)tal )f tw) licenses.92

38. Air-Gr,und Radi,teleph,ne Service. The C)mmissi)n has previ)usly used the SBA’s small business size standard applicable t) Wireless Telec)mmunicati)ns Carriers (except Satellite), i.e., an entity empl)ying n) m)re than 1,500 pers)ns.93 There are fewer than 10 licensees in the Air-Gr)und Radi)teleph)ne Service, and under that definiti)n, we estimate that alm)st all )f them qualify as small entities under the SBA definiti)n. F)r purp)ses )f assigning Air-Gr)und Radi)teleph)ne Service licenses thr)ugh c)mpetitive bidding, the C)mmissi)n has defined “small business” as an entity that, t)gether with c)ntr)lling interests and affiliates, has average annual gr)ss revenues f)r the preceding three years n)t exceeding $40 milli)n.94 A “very small business” is defined as an entity that, t)gether with c)ntr)lling interests and affiliates, has average annual gr)ss revenues f)r the preceding three years n)t exceeding $15 milli)n.95 These definiti)ns were appr)ved by the SBA.96 In May 2006, the C)mmissi)n c)mpleted an aucti)n )f nati)nwide c)mmercial Air-Gr)und Radi)teleph)ne Service licenses in the 800 MHz band (Aucti)n N). 65). On June 2, 2006, the aucti)n cl)sed with tw) winning bidders winning tw) Air-Gr)und Radi)teleph)ne Services licenses. Neither )f the winning bidders claimed small business status.

39. AWS Services (1710–1755 MHz and 2110–2155 MHz bands (AWS-1); 1915–1920 MHz, 1995–2000 MHz, 2020–2025 MHz and 2175–2180 MHz bands (AWS-2); 2155–2175 MHz band (AWS-3)). F)r the AWS-1 bands, the C)mmissi)n has defined a “small business” as an entity with average annual gr)ss revenues f)r the preceding three years n)t exceeding $40 milli)n, and a “very small business” as an entity with average annual gr)ss revenues f)r the preceding three years n)t exceeding $15 milli)n.97 F)r AWS-2 and AWS-3, alth)ugh we d) n)t kn)w f)r certain which entities are likely t) apply f)r these frequencies, we n)te that the AWS-1 bands are c)mparable t) th)se used f)r cellular service and pers)nal c)mmunicati)ns service. The C)mmissi)n has n)t yet ad)pted size standards f)r the AWS-2 )r AWS-3 bands but pr)p)ses t) treat b)th AWS-2 and AWS-3 similarly t) br)adband PCS service and AWS-1 service due t)

91 See 700 MHz Guard Bands Aucti,n Cl,ses: Winning Bidders Ann,unced, Public N)tice, 15 FCC Rcd 18026 (WTB 2000).92 See 700 MHz Guard Bands Aucti,n Cl,ses: Winning Bidders Ann,unced, Public N)tice, 16 FCC Rcd 4590 (WTB 2001).93 13 C.F.R. § 121.201, NAICS c)des 517210.94 Amendment ,f Part 22 ,f the C,mmissi,n’s Rules t, Benefit the C,nsumers ,f Air-Gr,und Telec,mmunicati,ns Services et al., Order )n Rec)nsiderati)n and Rep)rt and Order, 20 FCC Rcd 19663, paras. 28–42 (2005).95 Id.96 See Letter fr)m Hect)r V. Barret), Administrat)r, SBA, t) Gary D. Michaels, Deputy Chief, Aucti)ns and Spectrum Access Divisi)n, Wireless Telec)mmunicati)ns Bureau, FCC (filed Sept. 19, 2005).97 See Service Rules f,r Advanced Wireless Services in the 1.7 GHz and 2.1 GHz Bands, Rep)rt and Order, 18 FCC Rcd 25162, App. B (2003), m,dified by Service Rules f,r Advanced Wireless Services In the 1.7 GHz and 2.1 GHz Bands, Order )n Rec)nsiderati)n, 20 FCC Rcd 14058, App. C (2005).


127

the c)mparable capital requirements and )ther fact)rs, such as issues inv)lved in rel)cating incumbents and devel)ping markets, techn)l)gies, and services.98

40. 3650–3700 MHz band. In March 2005, the C)mmissi)n released a Rep,rt and Order and Mem,randum Opini,n and Order that pr)vides f)r nati)nwide, n)n-exclusive licensing )f terrestrial )perati)ns, utilizing c)ntenti)n-based techn)l)gies, in the 3650 MHz band (i.e., 3650–3700 MHz).99 As )f April 2010, m)re than 1270 licenses have been granted and m)re than 7433 sites have been registered. The C)mmissi)n has n)t devel)ped a definiti)n )f small entities applicable t) 3650–3700 MHz band nati)nwide, n)n-exclusive licensees. H)wever, we estimate that the maj)rity )f these licensees are Internet Access Service Pr)viders (ISPs) and that m)st )f th)se licensees are small businesses.

41. Fixed Micr,wave Services. Micr)wave services include c)mm)n carrier,100 private-)perati)nal fixed,101 and br)adcast auxiliary radi) services.102 They als) include the L)cal Multip)int Distributi)n Service (LMDS),103 the Digital Electr)nic Message Service (DEMS),104

and the 24 GHz Service,105 where licensees can ch))se between c)mm)n carrier and n)n-c)mm)n carrier status.106 At present, there are appr)ximately 31,428 c)mm)n carrier fixed licensees and 79,732 private )perati)nal-fixed licensees and br)adcast auxiliary radi) licensees in the micr)wave services. There are appr)ximately 120 LMDS licensees, three DEMS licensees, and three 24 GHz licensees. The C)mmissi)n has n)t yet defined a small business with respect t) micr)wave services. F)r purp)ses )f the IRFA, we will use the SBA’s definiti)n applicable t) Wireless Telec)mmunicati)ns Carriers (except satellite)—i.e., an entity with n) m)re than 1,500 pers)ns.107 Under the present and pri)r categ)ries, the SBA has deemed a wireless business t) be small if it has 1,500 )r fewer empl)yees.108 F)r the categ)ry )f Wireless Telec)mmunicati)ns Carriers (except Satellite), preliminary data f)r 2007 sh)w that there were 11,927 firms )perating

98 Service Rules f,r Advanced Wireless Services in the 1915–1920 MHz, 1995–2000 MHz, 2020–2025 MHz and 2175–2180 MHz Bands et al., N)tice )f Pr)p)sed Rulemaking, 19 FCC Rcd 19263, App. B (2005); Service Rules f,r Advanced Wireless Services in the 2155–2175 MHz Band, N)tice )f Pr)p)sed Rulemaking, 22 FCC Rcd 17035, App. (2007); Service Rules f,r Advanced Wireless Services in the 2155-2175 MHz Band, Further N)tice )f Pr)p)sed Rulemaking, 23 FCC Rcd 9859, App. B (2008).99 The service is defined in secti)n 90.1301 et seq. )f the C)mmissi)n’s Rules, 47 C.F.R. § 90.1301 et seq.100 See 47 C.F.R. Part 101, Subparts C and I.101 See 47 C.F.R. Part 101, Subparts C and H.102 Auxiliary Micr)wave Service is g)verned by Part 74 )f Title 47 )f the C)mmissi)n’s Rules. See 47 C.F.R. Part 74. Available t) licensees )f br)adcast stati)ns and t) br)adcast and cable netw)rk entities, br)adcast auxiliary micr)wave stati)ns are used f)r relaying br)adcast televisi)n signals fr)m the studi) t) the transmitter, )r between tw) p)ints such as a main studi) and an auxiliary studi). The service als) includes m)bile TV pickups, which relay signals fr)m a rem)te l)cati)n back t) the studi).103 See 47 C.F.R. Part 101, Subpart L.104 See 47 C.F.R. Part 101, Subpart G.105 See id.106 See 47 C.F.R. §§ 101.533, 101.1017.107 13 C.F.R. § 121.201, NAICS c)de 517210.108 13 C.F.R. § 121.201, NAICS c)de 517210 (2007 NAICS). The n)w-superseded, pre-2007 C.F.R. citati)ns were 13 C.F.R. § 121.201, NAICS c)des 517211 and 517212 (referring t) the 2002 NAICS).


128

that year.109 While the Census Bureau has n)t released data )n the establishments br)ken d)wn by number )f empl)yees, we n)te that the Census Bureau lists t)tal empl)yment f)r all firms in that sect)r at 281,262.110 Since all firms with fewer than 1,500 empl)yees are c)nsidered small, given the t)tal empl)yment in the sect)r, we estimate that the vast maj)rity )f firms using micr)wave services are small. We n)te that the number )f firms d)es n)t necessarily track the number )f licensees. We estimate that virtually all )f the Fixed Micr)wave licensees (excluding br)adcast auxiliary licensees) w)uld qualify as small entities under the SBA definiti)n.

42. Br,adband Radi, Service and Educati,nal Br,adband Service. Br)adband Radi) Service systems, previ)usly referred t) as Multip)int Distributi)n Service (MDS) and Multichannel Multip)int Distributi)n Service (MMDS) systems, and “wireless cable,” transmit vide) pr)gramming t) subscribers and pr)vide tw)-way high speed data )perati)ns using the micr)wave frequencies )f the Br)adband Radi) Service (BRS) and Educati)nal Br)adband Service (EBS) (previ)usly referred t) as the Instructi)nal Televisi)n Fixed Service (ITFS)).111 In c)nnecti)n with the 1996 BRS aucti)n, the C)mmissi)n established a small business size standard as an entity that had annual average gr)ss revenues )f n) m)re than $40 milli)n in the previ)us three calendar years.112 The BRS aucti)ns resulted in 67 successful bidders )btaining licensing )pp)rtunities f)r 493 Basic Trading Areas (BTAs). Of the 67 aucti)n winners, 61 met the definiti)n )f a small business. BRS als) includes licensees )f stati)ns auth)rized pri)r t) the aucti)n. At this time, we estimate that )f the 61 small business BRS aucti)n winners, 48 remain small business licensees. In additi)n t) the 48 small businesses that h)ld BTA auth)rizati)ns, there are appr)ximately 392 incumbent BRS licensees that are c)nsidered small entities.113 After adding the number )f small business aucti)n licensees t) the number )f incumbent licensees n)t already c)unted, we find that there are currently appr)ximately 440 BRS licensees that are defined as small businesses under either the SBA )r the C)mmissi)n’s rules. In 2009, the C)mmissi)n c)nducted Aucti)n 86, the sale )f 78 licenses in the BRS areas.114 The C)mmissi)n )ffered three levels )f bidding credits: (i) a bidder with attributed average annual gr)ss revenues that exceed $15 milli)n and d) n)t exceed $40 milli)n f)r the preceding three years (small business) will receive a 15 percent disc)unt )n its winning bid; (ii) a bidder with attributed average annual gr)ss revenues that exceed $3 milli)n and d) n)t exceed $15 milli)n f)r the preceding three years (very small business) will receive a 25 percent disc)unt )n its winning bid; and (iii) a bidder with attributed average annual gr)ss revenues that d) n)t exceed $3 milli)n f)r

109 U.S. Census Bureau, 2007 Ec)n)mic Census, Sect)r 51, EC0751I1 Inf)rmati)n: Industry Series: Preliminary Summary Statistics f)r the United States: 2007, NAICS c)de 517210 (rel. Oct. 20, 2009), factfinder.census.g)v/servlet/IBQTable?_bm=y&-fds_name=EC0700A1&-_clearIBQ=Y&-ds_name=EC0751I1&-NAICS2007=51721&-_lang=en.110 Id.111 Amendment ,f Parts 21 and 74 ,f the C,mmissi,n’s Rules with Regard t, Filing Pr,cedures in the Multip,int Distributi,n Service and in the Instructi,nal Televisi,n Fixed Service and Implementati,n ,f Secti,n 309(j) ,f the C,mmunicati,ns Act—C,mpetitive Bidding, MM D)cket N). 94-131, PP D)cket N). 93-253, Rep)rt and Order, 10 FCC Rcd 9589, 9593, para. 7 (1995).112 47 C.F.R. § 21.961(b)(1).113 47 U.S.C. § 309(j). Hundreds )f stati)ns were licensed t) incumbent MDS licensees pri)r t) implementati)n )f Secti)n 309(j) )f the C)mmunicati)ns Act )f 1934, 47 U.S.C. § 309(j). F)r these pre-aucti)n licenses, the applicable standard is SBA’s small business size standard )f 1500 )r fewer empl)yees.114 114 Aucti,n ,f Br,adband Radi, Service (BRS) Licenses, Scheduled f,r Oct,ber 27, 2009, N,tice and Filing Requirements, Minimum Opening Bids, Upfr,nt Payments, and Other Pr,cedures f,r Aucti,n 86, Public N)tice, 24 FCC Rcd 8277 (2009).


129

the preceding three years (entrepreneur) will receive a 35 percent disc)unt )n its winning bid.115 Aucti)n 86 c)ncluded in 2009 with the sale )f 61 licenses.116 Of the ten winning bidders, tw) bidders that claimed small business status w)n 4 licenses; )ne bidder that claimed very small business status w)n three licenses; and tw) bidders that claimed entrepreneur status w)n six licenses.

43. In additi)n, the SBA’s Cable Televisi)n Distributi)n Services small business size standard is applicable t) EBS. There are presently 2,032 EBS licensees. All but 100 )f these licenses are held by educati)nal instituti)ns. Educati)nal instituti)ns are included in this analysis as small entities.117 Thus, we estimate that at least 1,932 licensees are small businesses. Since 2007, Cable Televisi)n Distributi)n Services have been defined within the br)ad ec)n)mic census categ)ry )f Wired Telec)mmunicati)ns Carriers; that categ)ry is defined as f)ll)ws: “This industry c)mprises establishments primarily engaged in )perating and/)r pr)viding access t) transmissi)n facilities and infrastructure that they )wn and/)r lease f)r the transmissi)n )f v)ice, data, text, s)und, and vide) using wired telec)mmunicati)ns netw)rks. Transmissi)n facilities may be based )n a single techn)l)gy )r a c)mbinati)n )f techn)l)gies.”118 The SBA has devel)ped a small business size standard f)r this categ)ry, which is: all such firms having 1,500 )r fewer empl)yees. T) gauge small business prevalence f)r these cable services we must, h)wever, use the m)st current census data that are based )n the previ)us categ)ry )f Cable and Other Pr)gram Distributi)n and its ass)ciated size standard; that size standard was: all such firms having $13.5 milli)n )r less in annual receipts.119 Acc)rding t) Census Bureau data f)r 2002, there were a t)tal )f 1,191 firms in this previ)us categ)ry that )perated f)r the entire year.120 Of this t)tal, 1,087 firms had annual receipts )f under $10 milli)n, and 43 firms had receipts )f $10 milli)n )r m)re but less than $25 milli)n.121 Thus, the maj)rity )f these firms can be c)nsidered small.

5. Satellite Service Pr(viders44. Satellite Telec,mmunicati,ns Pr,viders. Tw) ec)n)mic census categ)ries address

the satellite industry. The first categ)ry has a small business size standard )f $15 milli)n )r less in average annual receipts, under SBA rules.122 The sec)nd has a size standard )f $25 milli)n )r less in annual receipts.123 The m)st current Census Bureau data in this c)ntext, h)wever, are

115 Id. at 8296.116 Aucti,n ,f Br,adband Radi, Service Licenses Cl,ses, Winning Bidders Ann,unced f,r Aucti,n 86, D,wn Payments Due N,vember 23, 2009, Final Payments Due December 8, 2009, Ten-Day Petiti,n t, Deny Peri,d, Public N)tice, 24 FCC Rcd 13572 (2009).117 The term “small entity” within SBREFA applies t) small )rganizati)ns (n)npr)fits) and t) small g)vernmental jurisdicti)ns (cities, c)unties, t)wns, t)wnships, villages, sch))l districts, and special districts with p)pulati)ns )f less than 50,000). 5 U.S.C. §§ 601(4)–(6). We d) n)t c)llect annual revenue data )n EBS licensees.118 U.S. Census Bureau, 2007 NAICS Definiti)ns, “517110 Wired Telec)mmunicati)ns Carriers,” (partial definiti)n), www.census.g)v/naics/2007/def/ND517110.HTM#N517110.119 13 C.F.R. § 121.201, NAICS c)de 517110.120 U.S. Census Bureau, 2002 Ec)n)mic Census, Subject Series: Inf)rmati)n, tbl. 4, Receipts Size )f Firms f)r the United States: 2002, NAICS c)de 517510 (rel. N)vember 2005).121 Id. An additi)nal 61 firms had annual receipts )f $25 milli)n )r m)re.122 13 C.F.R. § 121.201, NAICS c)de 517410.123 13 C.F.R. § 121.201, NAICS c)de 517919.


130

fr)m the (last) ec)n)mic census )f 2002, and we will use th)se figures t) gauge the prevalence )f small businesses in these categ)ries.124

45. The categ)ry )f Satellite Telec)mmunicati)ns “c)mprises establishments primarily engaged in pr)viding telec)mmunicati)ns services t) )ther establishments in the telec)mmunicati)ns and br)adcasting industries by f)rwarding and receiving c)mmunicati)ns signals via a system )f satellites )r reselling satellite telec)mmunicati)ns.”125 F)r this categ)ry, Census Bureau data f)r 2002 sh)w that there were a t)tal )f 371 firms that )perated f)r the entire year.126 Of this t)tal, 307 firms had annual receipts )f under $10 milli)n, and 26 firms had receipts )f $10 milli)n t) $24,999,999.127 C)nsequently, we estimate that the maj)rity )f Satellite Telec)mmunicati)ns firms are small entities that might be affected by )ur acti)n.

46. The sec)nd categ)ry )f All Other Telec)mmunicati)ns c)mprises, inter alia, “establishments primarily engaged in pr)viding specialized telec)mmunicati)ns services, such as satellite tracking, c)mmunicati)ns telemetry, and radar stati)n )perati)n. This industry als) includes establishments primarily engaged in pr)viding satellite terminal stati)ns and ass)ciated facilities c)nnected with )ne )r m)re terrestrial systems and capable )f transmitting telec)mmunicati)ns t), and receiving telec)mmunicati)ns fr)m, satellite systems.”128 F)r this categ)ry, Census Bureau data f)r 2002 sh)w that there were a t)tal )f 332 firms that )perated f)r the entire year.129 Of this t)tal, 303 firms had annual receipts )f under $10 milli)n and 15 firms had annual receipts )f $10 milli)n t) $24,999,999.130 C)nsequently, we estimate that the maj)rity )f All Other Telec)mmunicati)ns firms are small entities that might be affected by )ur acti)n.

6. Cable Service Pr(viders47. Because secti)n 706 requires us t) m)nit)r the depl)yment )f br)adband regardless

)f techn)l)gy )r transmissi)n media empl)yed, we anticipate that s)me br)adband service pr)viders may n)t pr)vide teleph)ne service. Acc)rdingly, we describe bel)w )ther types )f firms that may pr)vide br)adband services, including cable c)mpanies, MDS pr)viders, and utilities, am)ng )thers.

48. Cable and Other Pr,gram Distribut,rs. Since 2007, these services have been defined within the br)ad ec)n)mic census categ)ry )f Wired Telec)mmunicati)ns Carriers; that categ)ry is defined as f)ll)ws: “This industry c)mprises establishments primarily engaged in )perating and/)r pr)viding access t) transmissi)n facilities and infrastructure that they )wn and/)r lease f)r the transmissi)n )f v)ice, data, text, s)und, and vide) using wired telec)mmunicati)ns netw)rks. Transmissi)n facilities may be based )n a single techn)l)gy )r a

124 13 C.F.R. § 121.201, NAICS c)des 517410 and 517910 (2002).125 U.S. Census Bureau, 2007 NAICS Definiti)ns, “517410 Satellite Telec)mmunicati)ns,” www.census.g)v/naics/2007/def/ND517410.HTM.126 U.S. Census Bureau, 2002 Ec)n)mic Census, Subject Series: Inf)rmati)n, “Establishment and Firm Size (Including Legal F)rm )f Organizati)n),” tbl. 4, NAICS c)de 517410 (rel. N)v. 2005).127 Id. An additi)nal 38 firms had annual receipts )f $25 milli)n )r m)re.128 U.S. Census Bureau, 2007 NAICS Definiti)ns, “517919 All Other Telec)mmunicati)ns,” www.census.g)v/naics/2007/def/ND517919.HTM#N517919.129 U.S. Census Bureau, 2002 Ec)n)mic Census, Subject Series: Inf)rmati)n, “Establishment and Firm Size (Including Legal F)rm )f Organizati)n),” tbl. 4, NAICS c)de 517910 (issued N)v. 2005).130 Id. An additi)nal 14 firms had annual receipts )f $25 milli)n )r m)re.


131

c)mbinati)n )f techn)l)gies.”131 The SBA has devel)ped a small business size standard f)r this categ)ry, which is: all such firms having 1,500 )r fewer empl)yees. T) gauge small business prevalence f)r these cable services we must, h)wever, use current census data that are based )n the previ)us categ)ry )f Cable and Other Pr)gram Distributi)n and its ass)ciated size standard; that size standard was: all such firms having $13.5 milli)n )r less in annual receipts.132 Acc)rding t) Census Bureau data f)r 2002, there were a t)tal )f 1,191 firms in this previ)us categ)ry that )perated f)r the entire year.133 Of this t)tal, 1,087 firms had annual receipts )f under $10 milli)n, and 43 firms had receipts )f $10 milli)n )r m)re but less than $25 milli)n.134 Thus, the maj)rity )f these firms can be c)nsidered small.

49. Cable C,mpanies and Systems. The C)mmissi)n has als) devel)ped its )wn small business size standards, f)r the purp)se )f cable rate regulati)n. Under the C)mmissi)n’s rules, a “small cable c)mpany” is )ne serving 400,000 )r fewer subscribers, nati)nwide.135 Industry data indicate that, )f 1,076 cable )perat)rs nati)nwide, all but eleven are small under this size standard.136 In additi)n, under the C)mmissi)n’s rules, a “small system” is a cable system serving 15,000 )r fewer subscribers.137 Industry data indicate that, )f 7,208 systems nati)nwide, 6,139 systems have under 10,000 subscribers, and an additi)nal 379 systems have 10,000–19,999 subscribers.138 Thus, under this sec)nd size standard, m)st cable systems are small.

50. Cable System Operat,rs. The C)mmunicati)ns Act )f 1934, as amended, als) c)ntains a size standard f)r small cable system )perat)rs, which is “a cable )perat)r that, directly )r thr)ugh an affiliate, serves in the aggregate fewer than 1 percent )f all subscribers in the United States and is n)t affiliated with any entity )r entities wh)se gr)ss annual revenues in the aggregate exceed $250,000,000.”139 The C)mmissi)n has determined that an )perat)r serving fewer than 677,000 subscribers shall be deemed a small )perat)r, if its annual revenues, when c)mbined with the t)tal annual revenues )f all its affiliates, d) n)t exceed $250 milli)n in the aggregate.140 Industry data indicate that, )f 1,076 cable )perat)rs nati)nwide, all but ten are small

131 U.S. Census Bureau, 2007 NAICS Definiti)ns, “517110 Wired Telec)mmunicati)ns Carriers,” (partial definiti)n), www.census.g)v/naics/2007/def/ND517110.HTM#N517110.132 13 C.F.R. § 121.201, NAICS c)de 517110.133 U.S. Census Bureau, 2002 Ec)n)mic Census, Subject Series: Inf)rmati)n, tbl. 4, Receipts Size )f Firms f)r the United States: 2002, NAICS c)de 517510 (rel. N)v. 2005).134 Id. An additi)nal 61 firms had annual receipts )f $25 milli)n )r m)re.135 47 C.F.R. § 76.901(e). The C)mmissi)n determined that this size standard equates appr)ximately t) a size standard )f $100 milli)n )r less in annual revenues. Implementati,n ,f Secti,ns ,f the 1992 Cable Act: Rate Regulati,n, Sixth Rep)rt and Order and Eleventh Order )n Rec)nsiderati)n, 10 FCC Rcd 7393, 7408 (1995).136 See BROADCASTING & CABLE YEARBOOK 2006, at A-8, C-2 (Harry A. Jessell ed., 2005) (data current as )f June 30, 2005); TELEVISION & CABLE FACTBOOK 2006, at D-805 t) D-1857 (Albert Warren ed., 2005).137 47 C.F.R. § 76.901(c).138 TELEVISION & CABLE FACTBOOK 2006, at F-2 (Albert Warren ed., 2005) (data current as )f Oct. 2005). The data d) n)t include 718 systems f)r which classifying data were n)t available.139 47 U.S.C. § 543(m)(2); see 47 C.F.R. § 76.901(f) & nn. 1–3.140 47 C.F.R. § 76.901(f); see FCC Ann,unces New Subscriber C,unt f,r the Definiti,n ,f Small Cable Operat,r, Public N)tice, 16 FCC Rcd 2225 (Cable Services Bureau 2001).


132

under this size standard.141 We n)te that the C)mmissi)n neither requests n)r c)llects inf)rmati)n )n whether cable system )perat)rs are affiliated with entities wh)se gr)ss annual revenues exceed $250 milli)n,142 and theref)re we are unable t) estimate m)re accurately the number )f cable system )perat)rs that w)uld qualify as small under this size standard.

7. Electric P(wer Generat(rs, Transmitters, and Distribut(rs51. Electric P,wer Generat,rs, Transmitters, and Distribut,rs. The Census Bureau

defines an industry gr)up c)mprised )f “establishments, primarily engaged in generating, transmitting, and/)r distributing electric p)wer. Establishments in this industry gr)up may perf)rm )ne )r m)re )f the f)ll)wing activities: (1) )perate generati)n facilities that pr)duce electric energy; (2) )perate transmissi)n systems that c)nvey the electricity fr)m the generati)n facility t) the distributi)n system; and (3) )perate distributi)n systems that c)nvey electric p)wer received fr)m the generati)n facility )r the transmissi)n system t) the final c)nsumer.”143 The SBA has devel)ped a small business size standard f)r firms in this categ)ry: “A firm is small if, including its affiliates, it is primarily engaged in the generati)n, transmissi)n, and/)r distributi)n )f electric energy f)r sale and its t)tal electric )utput f)r the preceding fiscal year did n)t exceed 4 milli)n megawatt h)urs.”144 Acc)rding t) Census Bureau data f)r 2002, there were 1,644 firms in this categ)ry that )perated f)r the entire year.145 Census data d) n)t track electric )utput and we have n)t determined h)w many )f these firms fit the SBA size standard f)r small, with n) m)re than 4 milli)n megawatt h)urs )f electric )utput. C)nsequently, we estimate that 1,644 )r fewer firms may be c)nsidered small under the SBA small business size standard.

D. Descripti(n (f Pr(jected Rep(rting, Rec(rdkeeping, and Other C(mplianceRequirements f(r Small Entities

52. As indicated ab)ve, the Internet’s legacy )f )penness and transparency has been critical t) its success as an engine f)r creativity, inn)vati)n, and ec)n)mic devel)pment. T) help preserve this fundamental character )f the Internet, the Order requires that br)adband pr)viders must, at a minimum, pr)minently display )r pr)vide links t) discl)sures )n a publicly available, easily accessible website that is available t) current and pr)spective end users and edge pr)viders as well as t) the C)mmissi)n, and at the p)int )f sale. Pr)viders sh)uld ensure that all website discl)sures are accessible by pers)ns with disabilities. We d) n)t require additi)nal f)rms )f discl)sure. Br)adband pr)viders’ discl)sures t) the public include discl)sure t) the C)mmissi)n; that is, the C)mmissi)n will m)nit)r public discl)sures and may require additi)nal discl)sures directly t) the C)mmissi)n. We anticipate that br)adband pr)viders may be able t) satisfy the transparency rule thr)ugh a single discl)sure, and theref)re d) n)t require multiple discl)sures targeted at different audiences. This affects all classes )f small entities menti)ned in Appendix

141 See BROADCASTING & CABLE YEARBOOK 2006, at A-8, C-2 (Harry A. Jessell ed., 2005) (data current as )f June 30, 2005); TELEVISION & CABLE FACTBOOK 2006, at D-805 t) D-1857 (Albert Warren ed., 2005).142 The C)mmissi)n d)es receive such inf)rmati)n )n a case-by-case basis if a cable )perat)r appeals a l)cal franchise auth)rity’s finding that the )perat)r d)es n)t qualify as a small cable )perat)r pursuant t) § 76.901(f) )f the C)mmissi)n’s rules. See 47 C.F.R. § 76.909(b).143 U.S. Census Bureau, 2002 NAICS Definiti)ns, “2211 Electric P)wer Generati)n, Transmissi)n and Distributi)n,” www.census.g)v/epcd/naics02/def/NDEF221.HTM.144 13 C.F.R. § 121.201, NAICS c)des 221111, 221112, 221113, 221119, 221121, 221122, n. 1.145 U.S. Census Bureau, 2002 Ec)n)mic Census, Subject Series: Utilities, “Establishment and Firm Size (Including Legal F)rm )f Organizati)n),” tbl. 4, NAICS c)des 221111, 221112, 221113, 221119, 221121, 221122 (rel. N)v. 2005).


133

D, part C, supra, and requires pr)fessi)nal skills )f entering inf)rmati)n )nt) a webpage and an understanding )f the entities’ netw)rk practices, b)th )f which are easily managed by staff )f these types )f small entities.

E. Steps Taken t( MinimiXe the Significant Ec(n(mic Impact (n Small Entities,and Significant Alternatives C(nsidered

53. The RFA requires an agency t) describe any significant alternatives that it has c)nsidered in reaching its pr)p)sed appr)ach, which may include (am)ng )thers) the f)ll)wing f)ur alternatives: (1) the establishment )f differing c)mpliance )r rep)rting requirements )r timetables that take int) acc)unt the res)urces available t) small entities; (2) the clarificati)n, c)ns)lidati)n, )r simplificati)n )f c)mpliance )r rep)rting requirements under the rule f)r small entities; (3) the use )f perf)rmance, rather than design, standards; and (4) an exempti)n fr)m c)verage )f the rule, )r any part there)f, f)r small entities.146

54. The rules ad)pted in this Order are generally c)nsistent with current industry practices, s) the c)sts )f c)mpliance sh)uld be small. Alth)ugh s)me c)mmenters assert that a discl)sure rule will imp)se significant burdens )n br)adband pr)viders, n) c)mmenter cites any particular s)urce )f increased c)sts, )r attempts t) estimate c)sts )f c)mpliance. F)r a number )f reas)ns, we believe that the c)sts )f the discl)sure rule we ad)pt t)day are )utweighed by the benefits )f emp)wering end users t) make inf)rmed ch)ices and )f facilitating the enf)rcement )f the )ther )pen Internet rules. First, we require )nly that pr)viders p)st discl)sures )n their websites and at the p)int )f sale, n)t that they bear the c)st )f printing and distributing bill inserts )r )ther paper d)cuments t) all existing cust)mers. Sec)nd, alth)ugh we may subsequently determine that it is appr)priate t) require that specific inf)rmati)n be discl)sed in particular ways, the transparency rule we ad)pt t)day gives br)adband pr)viders flexibility t) determine what inf)rmati)n t) discl)se and h)w t) discl)se it. We als) expressly exclude fr)m the rule c)mpetitively sensitive inf)rmati)n, inf)rmati)n that w)uld c)mpr)mise netw)rk security, and inf)rmati)n that w)uld undermine the efficacy )f reas)nable netw)rk management practices. Third, by setting the effective date )f these rules 60 days after n)tice in the Federal Register ann)uncing the decisi)n )f the Office )f Management and Budget regarding appr)val )f theinf)rmati)n c)llecti)n requirements c)ntained in the rules, we give br)adband pr)viders adequate time t) devel)p c)st effective meth)ds )f c)mpliance. Thus, the rule gives br)adband pr)viders—including small entities—sufficient time and flexibility t) implement the rules in a c)st-effective manner. Finally, these rules pr)vide certainty and clarity that are beneficial b)th t) br)adband pr)viders and t) their cust)mers.

F. Rep(rt t( C(ngress55. The C)mmissi)n will send a c)py )f the Order, including this FRFA, in a rep)rt

t) be sent t) C)ngress and the G)vernment Acc)untability Office pursuant t) the C)ngressi)nal Review Act.147 In additi)n, the C)mmissi)n will send a c)py )f the Order, including this FRFA,

146 5 U.S.C. § 603(c).147 See 5 U.S.C. § 801(a)(1)(A).


134

t) the Chief C)unsel f)r Adv)cacy )f the SBA. A c)py )f the Order and FRFA ()r summaries there)f) will als) be published in the Federal Register.148

148 See 5 U.S.C. § 604(b).


135

STATEMENT OFCHAIRMAN JULIUS GENACHOWSKI

Re: Preserving the Open Internet, GN D)cket N). 09-191, Br,adband Industry Practices, WC D)cket N). 07-52

Let me start with a qu)te: “The Web as we kn)w it [is] being threatened.” That’s Tim Berners-Lee, the invent)r )f the W)rld Wide Web, in a recent article. He c)ntinued, “A neutral c)mmunicati)ns medium is the basis )f a fair, c)mpetitive market ec)n)my, )f dem)cracy, and )f science. Alth)ugh the Internet and the Web generally thrive )n lack )f regulati)n, s)me basic values have t) be legally preserved.”

T)day, f)r the first time, the FCC is ad)pting rules t) preserve basic Internet values. While the C)mmissi)n had in the past pursued bipartisan enf)rcement )f Open Internet principles, we have n)t had pr)perly ad)pted rules. N)w, f)r the first time, we’ll have enf)rceable, high-level rules )f the r)ad t) preserve Internet freed)m and )penness.

As we stand here n)w, the freed)m and )penness )f the Internet are unpr)tected. N) rules )n the b))ks t) pr)tect basic Internet values. N) pr)cess f)r m)nit)ring Internet )penness as techn)l)gy and business m)dels ev)lve. N) rec)urse f)r inn)vat)rs, c)nsumers, )r speakers harmed by impr)per practices. And n) predictability f)r Internet service pr)viders, s) that they can effectively manage and invest in br)adband netw)rks. That will change )nce we v)te t) appr)ve this str)ng and balanced )rder.

The v)te )n this )rder c)mes after many m)nths )f debate – which has )ften pr)duced m)re heat than light. Alm)st every)ne says that they agree that the )penness )f the Internet is essential – that )penness has unleashed an en)rm)us wave )f inn)vati)n, ec)n)mic gr)wth, j)bcreati)n, small business generati)n, and vibrant free expressi)n.

But despite a shared allegiance t) the Internet as an )pen platf)rm, there has been intense disagreement ab)ut the r)le )f g)vernment in preserving Internet freed)m and )penness.On )ne end )f the spectrum, there are th)se wh) say g)vernment sh)uld d) n)thing at all )n )pen Internet. On the )ther end are th)se wh) w)uld ad)pt extensive, detailed and rigid regulati)ns. B)th sides imp)se tests )f ide)l)gical purity. T) s)me, unless their test is met, )pen Internet rules are “fake net neutrality.” T) )thers, unless their test is met, )pen internet rules are “a g)vernment take)ver )f the Internet.”

F)r myself, I reject b)th extremes in fav)r )f a str)ng and sensible, n)n-ide)l)gical framew)rk – )ne that pr)tects Internet freed)m and )penness and pr)m)tes r)bust inn)vati)n and investment thr)ugh)ut the br)adband ec)system. Because n)ne )f these g)als are abstracti)ns. They live )r die n)t in ide)l)gy )r the)ry, but in practice – in the hard w)rk )f grappling with techn)l)gy, business, and real-w)rld c)nsumer experiences.

N)w, in this issue we enc)unter familiar arguments – we’ve heard s)me t)day – the kind tr)tted )ut t) )pp)se alm)st any g)vernment acti)n. We are t)ld by s)me, f)r example, n)t t) try t) fix what isn’t br)ken, and that rules )f the r)ad pr)tecting Internet freed)m w)uld disc)urage inn)vati)n and investment. But c)untless inn)vat)rs, invest)rs and business executives say just the )pp)site, including many wh) generally )pp)se g)vernment acti)n.


136

Over the c)urse )f this pr)ceeding we have heard fr)m s) many entrepreneurs, engineers, venture capitalists, CEOs and )thers w)rking daily t) invent and distribute new Internet pr)ducts and thereby maintain U.S. leadership in inn)vati)n. Their message has been clear: the next decade )f inn)vati)n in this sect)r is at risk with)ut sensible FCC rules )f the r)ad. As )ne leading early stage invest)r put it, in th)ughts ech)ed in a letter we receiving fr)m 30 pr)minent venture capitalists: “the lack )f basic ‘rules )f the r)ad’ f)r what netw)rk pr)viders and )thers can and can’t d) is starting t) hamper inn)vati)n and gr)wth.” And as we heard in a letter fr)m m)re than tw) d)zen leading techn)l)gy CEOs: “C)mm)n sense baseline rules are critical t) ensuring that the Internet remains a key engine )f ec)n)mic gr)wth, inn)vati)n, and gl)bal c)mpetitiveness.”

The inn)vat)rs, entrepreneurs, and tech leaders rec)gnize, as I d), the vital need f)r massive investment in br)adband infrastructure. Based )n their in-market experience – they als) tell us that br)adband pr)viders have natural business incentives t) leverage their p)siti)ns as gatekeepers )f the Internet in ways that w)uld stifle inn)vati)n and limit the benefits )f the Internet. They p)int )ut that, even after the C)mmissi)n )n a bipartisan basis ann)unced )pen Internet principles in 2005, we have seen clear and tr)ubling deviati)ns fr)m )pen practices.

Given the imp)rtance )f an )pen Internet t) )ur ec)n)mic future, given the p)tentially irreversible nature )f s)me harmful practices, and given the c)mpetiti)n issues am)ng br)adband pr)viders, it is essential that the FCC fulfill its hist)ric r)le as a c)p )n the beat t) ensure the vitality )f )ur c)mmunicati)ns netw)rks and t) emp)wer and pr)tect c)nsumers )f th)se netw)rks. N)w at the same time, g)vernment must n)t )verreach by imp)sing rules that are )verly restrictive )r that assume perfect kn)wledge ab)ut this dynamic and rapidly changing marketplace.

We kn)w that – t) meet )ur br)adband speed and depl)yment g)als f)r the c)untry –br)adband pr)viders must have the business incentives t) invest many billi)ns )f d)llars t) build )ut their netw)rks, the ability t) run their netw)rks effectively, and the flexibility t) experiment with new business m)dels t) further drive private investment.

T)day, we are ad)pting a set )f high-level rules )f the r)ad that strikes the right balance between the imperatives. We’re ad)pting a framew)rk that will increase certainty f)r businesses, invest)rs, and entrepreneurs.

In key respects, the interests )f edge inn)vat)rs – the entrepreneurs creating Internet c)ntent, services, and applicati)ns – br)adband pr)viders, and American c)nsumers are aligned. Inn)vati)n at the edge catalyzes c)nsumer demand f)r br)adband. C)nsumer demand spurs private investment in faster br)adband netw)rks. And faster netw)rks spark ever-c))ler inn)vati)n at the edge.

I believe )ur acti)n t)day will f)ster an )ng)ing cycle )f massive investment, inn)vati)n and c)nsumer demand b)th at the edge and in the c)re )f )ur br)adband netw)rks. Our acti)n will strengthen the Internet j)b-creati)n engine. Our acti)n will advance )ur g)al )f having America’s br)adband netw)rks be the freest and fastest in the w)rld. Our acti)n will ensure Internet freed)m at h)me, a necessary f)undati)n t) fight f)r Internet freed)m ar)und the w)rld.

The crux )f the )rder we are ad)pting – which is based )n a str)ng and s)und legal framew)rk – is straightf)rward. Here are the key principles it enshrines, and the key rules designed t) preserve Internet freed)m and )penness:


137

First, c)nsumers and inn)vat)rs have a right t) kn)w the basic perf)rmance characteristics )f their Internet access and h)w their netw)rk is being managed. The transparency rule we ad)pt t)day will give c)nsumers and inn)vat)rs the clear and simple inf)rmati)n they need t) make inf)rmed ch)ices in ch))sing netw)rks )r designing the next killer app. Shining a light )n netw)rk management practices will als) have an imp)rtant deterrent effect )n bad c)nduct.

Sec)nd, c)nsumers and inn)vat)rs have a right t) send and receive lawful traffic – t) g) where they want, say what they want, experiment with ideas – c)mmercial and s)cial, and use the devices )f their ch)ice. The rules thus pr)hibit the bl)cking )f lawful c)ntent, apps, services, and the c)nnecti)n )f devices t) the netw)rk.

Third, c)nsumers and inn)vat)rs have a right t) a level playing field. N) central auth)rity, public )r private, sh)uld have the p)wer t) pick winners and l)sers )n the Internet; that’s the r)le )f the c)mmercial market and the marketplace )f ideas. S) we are ad)pting a ban )n unreas)nable discriminati)n. And we are making clear that we are n)t appr)ving s)-called “pay f)r pri)rity” arrangements inv)lving fast lanes f)r s)me c)mpanies but n)t )thers. The )rder states that as a general rule such arrangements w)n’t satisfy the n)-unreas)nable-discriminati)n standard – because it simply isn’t c)nsistent with an )pen Internet f)r br)adbandpr)viders t) skew the marketplace by fav)ring )ne idea )r applicati)n )r service )ver an)ther by selectively pri)ritizing Internet traffic.

F)urth, the rules rec)gnize that br)adband pr)viders need meaningful flexibility t) manage their netw)rks t) deal with c)ngesti)n, security, and )ther issues. And we als) rec)gnize the imp)rtance and value )f business-m)del experimentati)n, such as tiered pricing. These are practical necessities, and will help pr)m)te investment in, and expansi)n )f, high-speed br)adband netw)rks. S), f)r example, the )rder rules make clear that br)adband pr)viders can engage in “reas)nable netw)rk management”.

Fifth, the principle )f Internet )penness applies t) m)bile br)adband. There is )ne Internet, and it must remain an )pen platf)rm, h)wever c)nsumers and inn)vat)rs access it. And s) t)day we are ad)pting, f)r the first time, br)adly applicable rules requiring transparency f)r m)bile br)adband pr)viders, and pr)hibiting them fr)m bl)cking websites )r bl)cking certain c)mpetitive applicati)ns.

As I have said f)r many m)nths, as many inn)vat)rs and entrepreneurs have t)ld us, and as the facts and rec)rd bear )ut, there are differences between m)bile and fixed br)adband that are relevant in determining what acti)n g)vernment sh)uld take f)r m)bile at this time. Am)ng the differences: unique technical issues inv)lving spectrum and m)bile netw)rks, the stage and rate )f inn)vati)n in m)bile br)adband; and market structure. Als), )ne )f the largest m)bile br)adband pr)viders has just begun pr)viding 4G service using wireless spectrum subject t) )penness c)nditi)ns ad)pted in c)nnecti)n with the aucti)n )f that spectrum.

Imp)rtantly, )ur )rder makes clear that we are n)t end)rsing )r appr)ving practices that the )rder d)esn’t pr)hibit, particularly c)nduct that is barred f)r fixed br)adband. And we affirm )ur c)mmitment t) an )ng)ing pr)cess t) ensure the c)ntinued ev)luti)n )f m)bile br)adband in a way that’s c)nsistent with Internet freed)m and )penness. Any reducti)n in m)bile Internet )penness w)uld be a cause f)r c)ncern—as w)uld any reducti)n in inn)vati)n and investment in m)bile br)adband applicati)ns, devices, )r netw)rks that depend )n Internet )penness.


138

Sixth, and finally, t)day’s )rder rec)gnizes the imp)rtance )f vigilance – vigilance in pr)mptly enf)rcing the rules we are ad)pting and vigilance in m)nit)ring devel)pments in areas such as m)bile and the market f)r specialized services, which may affect Internet )penness. That’s why I’m pleased that we’ve c)mmitted t) create an Open Internet Advis)ry C)mmittee that will assist the C)mmissi)n in m)nit)ring the state )f Internet )penness and the effects )f )ur rules.

We’re als) launching an Open Internet Apps Challenge )n challenge.g)v that will f)ster private-sect)r devel)pment )f applicati)ns t) emp)wer c)nsumers with inf)rmati)n ab)ut their )wn br)adband c)nnecti)ns, which will als) help pr)tect Internet )penness.

The rules )f the r)ad we ad)pt t)day are r))ted in ideas first articulated by Republican Chairmen Michael P)well and Kevin Martin, and end)rsed in a unanim)us FCC p)licy statement in 2005. And they are gr)unded in the rec)rd we have devel)ped )ver the last 14 m)nths, including m)re than 100,000 public c)mments, numer)us public w)rksh)ps, and hundreds )f meetings with stakeh)lders ranging acr)ss the spectrum.

I am pr)ud )f this pr)cess, which has been )ne )f the m)st transparent in FCC hist)ry. And I am pr)ud )f the result, which has already garnered br)ad supp)rt – fr)m the techn)l)gy industry, including TechNet, the Inf)rmati)n Techn)l)gy Industry C)uncil, the Internet Inn)vati)n Alliance and the hundreds )f techn)l)gy c)mpanies th)se gr)ups represent, as well as many )ther techn)l)gy c)mpanies; supp)rt fr)m invest)rs )f all sizes, including s)me )f the nati)n’s preeminent venture capitalists and angel invest)rs.

Our framew)rk has als) drawn supp)rt fr)m key c)nsumer, lab)r, and civil rights gr)ups, a list that includes the C)nsumer Federati)n )f America, C)nsumers Uni)n, the Center f)r Dem)cracy and Techn)l)gy, and the C)mmunicati)ns W)rkers )f America. I thank them and the )ther gr)ups that have w)rked )n this issue. And )ur framew)rk has been supp)rted by a number )f br)adband pr)viders as well, wh) rec)gnize the sensible balance )f )ur acti)n and the value )f bringing a level )f certainty t) this fraught issue.

Our acti)n t)day culminates recent eff)rts t) find c)mm)n gr)und )n this challenging issue – here at the FCC, as well by private parties, and in C)ngress. I thank each )f th)se wh) t))k their time )ver the last several m)nths t) take )n these difficult issues, seeking t) bridge gaps and find s)luti)ns, and wh) supp)rted us in )ur eff)rts.

I want t) praise and thank my c)lleagues C)mmissi)ners C)pps and Clyburn particularly, f)r their visi)n and c)nstancy in pushing this C)mmissi)n t) f)cus )n the interest )f c)nsumers.Their w)rk has certainly impr)ved )ur rules and )rder. As C)mmissi)ner McD)well and C)mmissi)ner Baker p)inted )ut, virtually all )f )ur decisi)ns are bipartisan )r unanim)us, and I l))k f)rward t) w)rking t)gether )n a series )f items t) serve the public and gr)w the ec)n)my. And I can’t express en)ugh appreciati)n t) the remarkable staff )f the FCC, wh) have w)rked s) hard – and s) well – t) wrestle with difficult issues and turn c)mplex ideas int) simple rules. This includes many )ffices and bureaus at the FCC, including the Office )f General C)unsel, the Office )f Strategic Planning, the Office Engineering and Techn)l)gy, and the Wireline, Wireless, Media, C)nsumer, Enf)rcement, and Internati)nal Bureaus. Thank y)u all. And thank y)u t) all the staff )n the 8th fl))r, and in particular t) the extra)rdinary team I’m lucky t) have in the Chairman’s )ffice. Eddie Lazarus, Zac Katz, Rick Kaplan, J)sh G)ttheimer, Jen H)ward, Daniel Ornstein, and Maria Gagli) – y)u’ve each g)ne well ab)ve and bey)nd the call )f duty. I


139

ap)l)gize t) y)ur families. But I kn)w they j)in me in h)n)ring y)ur service. Thanks t) the w)rk )f these incredible public servants, t)day a strengthened FCC is ad)pting rules t) ensure that the Internet remains a p)werful platf)rm f)r inn)vati)n and j)b creati)n; t) emp)wer c)nsumers and entrepreneurs; and pr)tect free expressi)n.

These rules will increase certainty in the marketplace; spur investment b)th at the edge and in the c)re )f )ur br)adband netw)rks, and c)ntribute t) a 21st century j)b-creati)n engine in the United States. Finally, these rules fulfill many pr)mises, including a pr)mise t) the future – a pr)mise t) the c)mpanies that d)n’t yet exist, and the entrepreneurs wh) haven’t yet started w)rk in their d)rm r))ms )r garages. F)r all that, I am pr)ud t) cast my v)te.


140

CONCURRING STATEMENT OF COMMISSIONER MICHAEL J. COPPS


In years t) c)me, I h)pe we can l))k back )n this day as an imp)rtant turning p)int in the struggle t) ensure the c)ntinued )penness )f the Internet against p)werful gatekeeper c)ntr)l. On numer)us fr)nts in the Open Internet Order bef)re us t)day, the C)mmissi)n is taking strides f)rward. On )thers, I pray that )ur timidity will n)t undermine the spirit )f the Order that we are ad)pting. The Internet was b)rn )n )penness, thrived )n )penness and will achieve its full p)tential )nly thr)ugh c)ntinued )penness. It is my fervent desire that, with this Order, we start t) write the next chapter in the great Internet success st)ry—)ne )f c)ntinued )penness, inn)vati)n with)ut needing permissi)n fr)m any)ne, and expanded access f)r all Americans. We cann)t aff)rd t) permit special interests t) relegate the awes)me )pp)rtunity-creating p)wer )f the )pen Internet int) the sad hist)ry )f “what might have beens.”

All)wing gigantic c)rp)rati)ns—in many cases, m)n)p)ly )r du)p)ly br)adband Internet access service pr)viders—t) exercise unfettered c)ntr)l )ver Americans’ access t) the Internet n)t )nly creates risks t) techn)l)gical inn)vati)n and ec)n)mic gr)wth, but it p)ses a real threat t) freed)m )f speech and the future )f )ur dem)cracy. Increasingly )ur nati)nal c)nversati)n, )ur s)urce f)r news and inf)rmati)n, )ur kn)wledge )f )ne an)ther, will depend up)n the Internet. Our future t)wn square will be paved with br)adband bricks. It must be accessible t) all—n)t handed )ver t) a handful )f gatekeepers wh) can c)ntr)l )ur access. As I have l)ng argued—and as many students )f the medium have written—previ)us telec)mmunicati)ns and media techn)l)gies, als) c)nceived in )penness, eventually fell victim t) c)ns)lidated c)ntr)l by a few p)werful interests, speculative mania by invest)rs, and mistaken g)vernment p)licies which assumed that wise public p)licy was n) public p)licy. We’re supp)sed t) learn fr)m hist)ry; t)) )ften we d)n’t. Increasingly, the private interests wh) c)ntr)l )ur Twenty-first century inf)rmati)n infrastructure resemble th)se wh) seized the master switch, as Tim Wu’s new b))k calls it, )f the last century’s c)mmunicati)ns netw)rks.

In 2003, I cauti)ned, s)mewhat dramatically perhaps—but n)t inaccurately—that the “Internet may be dying . . . because entrenched interests [were] p)siti)ning themselves t) c)ntr)l the Internet’s ch)ke-p)ints.” I called then—as I have repeatedly since—f)r clear rules t) maintain )penness and freed)m )n the Internet and t) fight discriminati)n )ver ideas, c)ntent and techn)l)gies. Tw) years later, I was able t) c)nvince my c)lleagues t)—at a minimum—ad)pt an Internet P,licy Statement that c)ntained the basic rights )f Internet end-users t) access lawful c)ntent, run applicati)ns and services, c)nnect devices t) the netw)rk and enj)y the benefits )f c)mpetiti)n. N)w, at l)ng last, we ad)pt at least s)me c)ncrete rules t) prevent gatekeepers fr)m circumventing the )penness that made the Internet the Internet and fr)m stifling inn)vati)n, investment and j)b creati)n.

All we need t) d) is l))k at )ur hist)ry at the FCC as a cauti)nary tale. It wasn’t all that l)ng ag) (well, at least, when y)u’re my age) that )ne netw)rk—AT&T—ran the wh)le sh)w. AT&T had the p)wer t) decide h)w the netw)rk w)uld be used. When inn)vat)rs sh)wed up at the d))r with ideas and new techn)l)gies, they were )ften greeted with a c)urte)us but quick “g) away.” F)r a l)ng time, the FCC fully supp)rted this type )f netw)rk, and in fact served as its pr)tect)r. It was th)ught that )nly thr)ugh c)mprehensive c)ntr)l by a single c)mpany c)uld the quality, safety and scale ec)n)mies )f the netw)rk be guaranteed. Bigger was better, and


141

unif)rmity and stability were th)ught t) be w)rth the price )f l)st )pp)rtunities f)r inn)vati)n and c)nsumer benefits.

All )f this began t) change in the late 1960s when an inn)vat)r called Carter Electr)nics C)rp)rati)n devel)ped a device that c)nnected m)bile radi)-teleph)ne systems t) the wireline netw)rk. This device, called the Carterf)ne, had a cradle int) which a regular handset was placed. It c)nverted v)ice signals t) radi) signals with)ut the need f)r a direct electrical c)nnecti)n. But the entrenched incumbent claimed that all)wing this inn)vative and f)reign attachment w)uld bring d)wn its entire system. Why? Because the entrenched incumbent didn’t build it, sell it and c)ntr)l it. S)und familiar?

Over the c)mplaints )f a p)werful special interest, the C)mmissi)n w)rked up en)ugh c)urage t) change tack, stand up t) the netw)rk gate-keeper and d) the right thing, requiring the netw)rk )perat)r t) permit attachment )f this new applicati)n int) the existing netw)rk. In spite )f all the m)n)p)list’s alarm bells that this decisi)n meant the end )f netw)rk quality and the end )f reliable service as we knew it, just the )pp)site came t) pass. The idea )f having a netw)rk that c)uldn’t discriminate against inn)vat)rs wh) wanted t) impr)ve it finally began t) break the ch)ke-h)ld that the gatekeeper had )n the system.

Years after the Carterf,ne decisi)n, as we entered the early days )f the Internet age, the C)mmissi)n reaffirmed its p)licy )f )penness and c)mpetiti)n by pr)tecting freed)m )n b)th the access layer and the architectural layer )f the netw)rk. In the C,mputer Inquiries, earlier C)mmissi)ns mandated that c)mm)n carriers that )wn transmissi)n pipes used t) access the Internet must )ffer th)se pipes )n n)n-discriminat)ry terms t) independent Internet Service Pr)viders, am)ng )thers. Thr)ugh these decisi)ns the C)mmissi)n f)stered c)mpetiti)n by ensuring that cust)mers c)uld reach independent pr)viders. C)ngress then m)ved, in pr)visi)ns )f the Telec)mmunicati)ns Act )f 1996, t) pr)tect the architectural layer. C)ngress said that l)cal teleph)ne c)mpanies with ch)ke-p)int c)ntr)l )f physical infrastructures w)uld have t) unbundle their transmissi)n netw)rks.

Sadly, b)th )f these p)licies were, in fairly sh)rt )rder, decimated by the tw) C)mmissi)ns that served between 2001 and 2009. Over my strenu)us )bjecti)ns—and th)se )f my c)lleague J)nathan Adelstein—the FCC t))k American c)nsumers )n a danger)us deregulat)ry ride, m)ving the transmissi)n c)mp)nent )f br)adband )utside )f the statut)ry framew)rk that applies t) telec)mmunicati)ns carriers. When th)se C)mmissi)ns st)pped treating advanced telec)mmunicati)ns as telec)mmunicati)ns, they relegated American c)mpetitiveness t) the sidelines. I d)n’t like t) see my c)untry )n the sidelines. Neither d) m)st Americans. And remember, this was a maj)r flip-fl)p fr)m the hist)ric—and successful—appr)ach )f requiring n)ndiscriminati)n in )ur c)mmunicati)ns netw)rks. Because )f the err)rs )f th)se previ)us C)mmissi)ns, a c)urt t)ld us earlier this year that the legal framew)rk up)n which the FCC built its acti)n against C)mcast f)r disrupting peer-t)-peer traffic was inadequate.

Since the decisi)n in C,mcast, the “G))d Ship FCC” has f)und itself adrift with)ut the t))ls needed t) keep even the m)st basic c)nsumer pr)tecti)ns afl)at in t)day’s c)mmunicati)ns netw)rks. T)day, we finally try t) patch the h)le left by the C,mcast decisi)n by ad)pting certain rules t) preserve the )penness )f the Internet. T) be clear, we d) n)t anch)r )urselves )n what I believe t) be the best legal framew)rk. N)r have we crafted rules as str)ng as I w)uld have liked. But, with t)day’s acti)n, we d) n)netheless appear t) steer )urselves back t)ward a better c)urse.


142

I had h)ped that we w)uld m)ve full-thr)ttle t) rest)re the kind )f p)licies that had w)rked in the past. I wanted t) put th)se eight years )f public p)licy aberrati)n—s)me, me included, dare call them years )f abdicati)n—t)tally behind us. S) I pushed—pushed as hard as I c)uld—t) get br)adband telec)mmunicati)ns back where they bel)nged, under Title II )f )ur enabling statute, where hard-w)n c)nsumer-friendly pr)tecti)ns that had been built up )ver many years pr)vided a framew)rk under which business c)uld d) its j)b )f building and managing this great c)mmunicati)ns enterprise—making hands)me pr)fits in the pr)cess—while )perating within a public p)licy framew)rk giving them certainty and giving c)nsumers the pr)tecti)ns they needed and deserved. I wanted t) g) back t) that balancing act that had generally w)rked, f)r s) many years, f)r the c)mm)n g))d. S), yes, I c)ntinue t) believe that a reasserti)n )f )ur Title II auth)rity w)uld have pr)vided the surest f)undati)n f)r future C)mmissi)n acti)n. And I n)te with interest that the C)mmissi)n’s Reclassificati,n d)cket will remain )pen.

There is m)re that I w)uld have liked in this Order. I w)uld have preferred a general ban t) disc)urage br)adband pr)viders fr)m engaging in “pay f)r pri)rity”—pri)ritizing the traffic )f th)se with deep p)ckets while c)nsigning the rest )f us t) a sl)wer, sec)nd-class Internet. I als) believe we sh)uld have d)ne m)re t) strip l))ph)les fr)m the definiti)n )f “br)adband Internet access service” t) prevent c)mpanies falsely claiming they are n)t br)adband c)mpanies fr)m slipping thr)ugh. We’ve made s)me impr)vements )n the definiti)n, but I still have s)me w)rries. I als) argued f)r real parity between fixed and m)bile—read wireline and wireless—techn)l)gies. After all, the Internet is the Internet, n) matter h)w y)u access it, and the milli)ns )f citizens g)ing m)bile n)wadays f)r their Internet and the entrepreneurs creating inn)vative wireless c)ntent, applicati)ns and services sh)uld have the same freed)ms and pr)tecti)ns as th)se in the wired c)ntext. I had )ther areas )f c)ncern ab)ut s)mething less than a bright-line n)ndiscriminati)n rule, keeping “reas)nable netw)rk management” within b)unds, and the substituti)n )f m)nit)ring f)r the certainty )f enf)rcement in t)) many areas.

S), in my b))k, t)day’s acti)n c)uld—and sh)uld—have g)ne further. G)ing as far as I

w)uld have liked was n)t, h)wever, in the cards. The simpler and easier c)urse f)r me at that p)int w)uld have been dissent—and I c)nsidered that very, very seri)usly. But it became ever m)re clear t) me that with)ut s)me acti)n t)day, the wheels )f netw)rk neutrality w)uld grind t) a screeching halt f)r at least the next tw) years. S), reserving the right t) dissent thr)ugh)ut, I spent the past three weeks in intensive discussi)ns—with all interested parties—ab)ut h)w we might be able t) d) s)mething t) ensure the c)ntinued )penness )f the Internet and t) put c)nsumers—n)t Big Ph)ne )r Big Cable—in c)ntr)l )f their )nline experiences. In the end, I believe we made s)me pr)gress. N)t nearly s) much as I had h)ped, but m)re, I think, than many pe)ple expected. The language in the Order that we will h)pefully appr)ve t)day m)ves the item, in my mind, fr)m unacceptable t) s)mething in which I can c)ncur. That is what I intend t) d).

Am)ng the many impr)vements t) the Order we achieved, we n)w at least c)nclude that “pay f)r pri)rity” arrangements w)uld generally vi)late )ur “n) unreas)nable discriminati)n” rule. We have als) explicitly changed the text )f the definiti)n )f “br)adband Internet access service” t) cl)se a l))ph)le that, while pr)tecting residential cust)mers, w)uld have je)pardized the )pen Internet rights )f small businesses, educati)nal instituti)ns and libraries. We insisted )n pr)viding greater c)ntext t) the definiti)n s) that br)adband c)mpanies cann)t easily evade the )pen Internet pr)tecti)ns. We have expanded )ur transparency requirements t) give c)nsumers the inf)rmati)n they need t) make an inf)rmed ch)ice by requiring discl)sure )n the br)adband pr)vider’s website and als) at the p)int )f sale. In discussing the “n) unreas)nable discriminati)n” standard, we put particular emphasis )n keeping c)ntr)l in the hands )f users and


143

preserving an applicati)n-blind netw)rk—a key part )f making the Internet the inn)vative platf)rm it is t)day. Given the imp)rtance )f preserving the )pen Internet, we have als) pr)vided f)r “r)cket d)cket” expedited treatment t) address c)nsumer c)mplaints. Rules )n the b))ks are simply a t))l waiting t) be wielded unless the C)mmissi)n makes a pri)rity )f enf)rcing them.

While it is n) secret that I w)uld have liked t) see much m)re in the m)bile secti)n )f t)day’s Order, I believe the impr)vements we have made can start us )n a path t)ward full parity with fixed br)adband. After all, we clearly rec)gnize t)day that “[t]here is )ne Internet, which sh)uld remain )pen f)r c)nsumers and inn)vat)rs alike, alth)ugh it may be accessed thr)ugh different techn)l)gies and services.” M)re narr)wly, we have managed t) better refine the acti)ns we d) take t)day. F)r example, we clarify that a wireless br)adband pr)vider cann)t bl)ck applicati)ns that c)mpete with n)t )nly its )wn c)mpetitive v)ice and vide) teleph)ny applicati)ns, but als) with th)se in which it has an attributable interest.

Separate and apart fr)m t)day’s Order, we as a C)mmissi)n must rec)gnize that we have much urgent business t) address t) ensure a truly c)mpetitive m)bile br)adband envir)nment—including res)lving the pending pr)ceedings related t) early terminati)n fees (ETFs), handset exclusivity arrangements, inter)perability in the 700 MHz band, and data r)aming, t) name s)me )f the pending decisi)ns this C)mmissi)n needs t) make.

It is n)t the j)b )f just the FCC )r g)vernment writ large, )r just c)nsumers ands citizens, )r just inn)vat)rs and entrepreneurs t) keep )ur inf)rmati)n infrastructure )pen and dynamic. It is the j)b )f all )f us. Why is this imp)rtant? Because we have in )ur grasp n)w the m)st p)werful and pr)mising c)mmunicati)ns techn)l)gy in all )f hist)ry. If we all)w this )pp)rtunity-creating techn)l)gy the freed)m and )penness it needs t) reach its full p)tential, we can prepare )ur kids f)r a future that )ur c)untry is finding m)re and m)re challenging. We will give )ur sch))ls p)werful new t))ls t) educate us, y)ung and )ld. We will be able t) depl)y these t))ls t) impr)ve )ur health, decrease )ur energy dependence, and create )pp)rtunities f)r wh)le c)mmunities that are being left behind in this new century—rural c)mmunities, the inner cities, min)rities, Indian c)untry, and th)se with disabilities. The Internet has be accessible t) all, resp)nsive t) all, and aff)rdable t) all. That’s what this c)untry w)rked f)r—and largely achieved—in building )ut electricity and plain )ld teleph)ne service t) all )ur citizens. It is what we n)w need t) w)rk f)r with )ur Twenty-first century br)adband infrastructure.

If vigilantly and vig)r)usly implemented by the C)mmissi)n—and if upheld by the c)urts—t)day’s Order c)uld represent an imp)rtant milest)ne in the )ng)ing struggle t) safeguard the awes)me )pp)rtunity-creating p)wer )f the )pen Internet. While I cann)t v)te wh)leheartedly t) appr)ve the )rder, I will n)t bl)ck it by v)ting against it. It is a first step in the right directi)n—n)t that first sturdy step I h)pe my newest grandchild will take, but at least f)rward, if s)mewhat hesitant, m)vement.

T)day’s maj)rity was crafted by discussi)n, respectful c)nsiderati)n )f )ne an)ther’s th)ughts, and give-and-take. I w)uld have welc)med a little m)re “give,” but I supp)se the Chairman might see it differently. In any event, I thank him f)r his engagement and his c)mmitment. I want t) pay special tribute t) my c)lleague C)mmissi)ner Mign)n Clyburn. We shared many )f the same c)ncerns, I think it is fair t) say, and her th)ughtful and creative w)rk, al)ng with her heartfelt c)mmitment t) make this item w)rk f)r c)nsumers—all c)nsumers—had a l)t t) d) with making this a better Order.


144

Finally, I want t) express a deep sense )f gratitude t) staff. Mine was great in every aspect )f this endeav)r. J)hn Giusti and Margaret McCarthy w)rked creatively and tirelessly int) the wee h)urs )f many nights and thr)ugh s)me awfully l)ng weekends. S), t)), C)mmissi)ner Clyburn’s excellent team, Dave Grimaldi and Angie Kr)nenberg. I kn)w many f)lks in the Chairman’s )ffice sacrificed similarly, especially Rick Kaplan, Zac Katz and Eddie Lazarus.Literally d)zens )f pe)ple in the Bureaus have w)rked mightily here, t)). I thank them all.

Thanks apart, )ur j)b d)esn’t end t)day. We haven’t finished any race here. We haven’t guaranteed an )pen Internet g)ing f)rward. We will have, I suspect, a l)t )f new r)ads t) build—and s)me )ther r)ads, even )nes that we lay )ut in t)day’s Order, that may require repaving and repair bef)re l)ng. If that happens, I h)pe we will be fast )ff the mark t) d) whatever needs t) be d)ne. S) better than lapsing int) a year )f p)st-game armchair analysis, impugning m)tivati)ns and all the rest, let’s instead get t) w)rk )n the huge j)b at-hand. Our challenge is n)thing sh)rt )f hist)ric—it is t) ensure that the liberating p)tential )f )ur Twenty-first century c)mmunicati)ns t))ls are used t) pr)vide the )pp)rtunities )ur citizens—all )ur citizens—require t) be fully pr)ductive citizens )f a fully pr)ductive c)untry.

Thank y)u.


DISSENTING STATEMENT OF COMMISSIONER ROBERT M. McDOWELL


Thank y)u, Mr. Chairman. And thank y)u f)r y)ur s)licit)usness thr)ugh)ut this pr)ceeding. In the spirit )f the h)lidays, with g))d will t)ward all, I will present a c)ndensed versi)n )f a m)re in-depth statement, the entirety )f which I respectfully request be included in this Rep)rt and Order.

At the )utset, I w)uld like t) thank the selfless and tireless w)rk )f all )f the career public servants here at the C)mmissi)n wh) have w)rked l)ng h)urs )n this pr)ject. Alth)ugh I str)ngly disagree with this Order, all )f us sh)uld rec)gnize and appreciate that y)u have spent time away fr)m y)ur families as y)u have w)rked thr)ugh weekends, the h)lidays )f Thanksgiving and Chanukah, as well as deep int) the Christmas seas)n. Such h)urs take their t)ll )n family life, and I thank y)u f)r the sacrifices made by y)u and y)ur l)ved )nes.

F)r th)se wh) might be tuning in t) the FCC f)r the first time, please kn)w that )ver 90 percent )f )ur acti)ns are n)t )nly bipartisan, but unanim)us. I challenge any)ne t) find an)ther p)licy making b)dy in Washingt)n with a m)re c)nsistent rec)rd )f c)nsensus. We agree that the Internet is, and sh)uld remain, )pen and freed)m enhancing. It is, and always has been s), under existing law. Bey)nd that, we disagree. The c)ntrasts between )ur perspectives c)uld n)t be sharper. My c)lleagues and I will deliver )ur statements and cast )ur v)tes. Then I am c)nfident that we will m)ve )n t) )ther issues where we can find c)mm)n gr)und )nce again. I l))k f)rward t) w)rking )n public p)licy that is m)re p)sitive and c)nstructive f)r American ec)n)mic gr)wth and c)nsumer ch)ice.

William Shakespeare taught us in The Tempest, “What’s past is pr)l)gue.” That time-tested axi)m applies t) t)day’s C)mmissi)n acti)n. In 2008, the FCC tried t) reach bey)nd its legal auth)rity t) regulate the Internet, and it was slapped back by an appellate c)urt )nly eight sh)rt m)nths ag). T)day, the C)mmissi)n is ch))sing t) ign)re the recent past as it attempts the same act. In s) d)ing, the FCC is n)t )nly defying a c)urt, but it is circumventing the will )f a large, bipartisan maj)rity )f C)ngress as well. M)re than 300 Members have warned the agency against exceeding its legal auth)rity. The FCC is n)t C)ngress. We cann)t make laws. Legislating is the s)le d)main )f the directly elected representatives )f the American pe)ple. Yet the maj)rity is determined t) ign)re the gr)wing ch)rus )f v)ices emanating fr)m Capit)l Hill in what appears t) s)me as an )bsessive quest t) regulate at all c)sts. S)me are saying that, instead )f acting as a “c)p )n the beat,” the FCC l))ks m)re like a regulat)ry vigilante. M)re)ver, the agency is further angering C)ngress by ign)ring increasing calls f)r a cessati)n )f its acti)ns and ch))sing, instead, t) m)ve ahead just as Members leave t)wn. As a result, the FCC has pr)v)catively charted a c)llisi)n c)urse with the legislative branch.

Furtherm)re, )n the night )f Friday, December 10, just tw) business days bef)re the public w)uld be pr)hibited by law fr)m c)mmunicating further with us ab)ut this pr)ceeding, the C)mmissi)n dumped nearly 2,000 pages )f d)cuments int) the rec)rd. As if that weren’t en)ugh, the FCC unl)aded an additi)nal 1,000 pages int) the rec)rd less than 24 h)urs bef)re the end )f the public c)mment peri)d. All )f these extreme measures, defying the D.C. Circuit, C)ngress,


146

and undermining the public c)mment pr)cess, have been depl)yed t) deliver )n a misguided campaign pr)mise.

N)t )nly is t)day the winter s)lstice, the darkest day )f the year, but it marks )ne )f the darkest days in recent FCC hist)ry. I am disapp)inted in these “ends-justify-the-means” tactics and the d)ubts they have created ab)ut this agency. The FCC is capable )f better. T)day is n)t its finest h)ur.

Using these new rules as a weap)n, p)litically fav)red c)mpanies will be able t) pressure three p)litical app)intees t) regulate their rivals t) gain c)mpetitive advantages. Litigati)n will supplant inn)vati)n. Instead )f investing in t)m)rr)w’s techn)l)gies, preci)us capital will be diverted t) pay lawyers’ fees. The era )f Internet regulat)ry arbitrage has dawned.

And t) say that t)day’s rules d)n’t regulate the Internet is like saying that regulating highway )n-ramps, )ff-ramps, and its pavement d)esn’t equate t) regulating the highways themselves.

What had been b)tt)m-up, n)n-g)vernmental, and grassr))ts based Internet g)vernance will bec)me p)liticized. T)day, the United States is aband)ning the l)ng-standing bipartisan and internati)nal c)nsensus t) insulate the Internet fr)m state meddling in fav)r )f a preference f)r t)p-d)wn c)ntr)l by unelected p)litical app)intees, three )f wh)m will decide what c)nstitutes “reas)nable” behavi)r. Thr)ugh its acti)ns, the maj)rity is inviting c)untries ar)und the gl)be t) d) the same thing. “Reas)nable” is a subjective term. N)t )nly is it perhaps the m)st litigated w)rd in American hist)ry, its definiti)n varies radically fr)m c)untry t) c)untry. The precedent has n)w been set f)r the Internet t) be subjected t) state interpretati)ns )f “reas)nable” by g)vernments )f all stripes. In fact, at the United Nati)ns just last Wednesday, a renewed eff)rt by representatives fr)m c)untries such as China and Saudi Arabia is calling f)r what )ne press acc)unt says is, “an internati)nal b)dy made up )f G)vernment representatives that w)uld attempt t) create gl)bal standards f)r p)licing the internet.”1 By n)t just sancti)ning, but enc,uraging m)re state intrusi)n int) the Internet’s affairs, the maj)rity is fueling a gl)bal Internet regulat)ry pandemic. Internet freed)m will n)t be enhanced, it will suffer.

My dissent is based )n f)ur primary c)ncerns:

1) N)thing is br)ken in the Internet access market that needs fixing;

2) The FCC d)es n)t have the legal auth)rity t) issue these rules;

3) The pr)p)sed rules are likely t) cause irreparable harm; and

4) Existing law and Internet g)vernance structures pr)vide ample c)nsumer pr)tecti)n in the event a systemic market failure )ccurs.

Bef)re I g) further, h)wever, I ap)l)gize if my statement d)es n)t address s)me imp)rtant issues raised by the Order, but we received the current draft at 11:42 p.m. last night and my team is still c)mbing thr)ugh it.

1 J)hn Hilvert, UN Mulls Internet Regulati,n Opti,ns, ITNEWS, Dec. 17, 2010, http://www.itnews.c)m.au/News/242051,un-mulls-internet-regulati)n-)pti)ns.aspx.


147

I. N(thing Is Br(ken in the Internet Access Market That Needs Fixing.

All levels )f the Internet supply chain are thriving due t) r)bust c)mpetiti)n and l)w market entry barriers. The Internet has fl)urished because it was privatized in 1994.2 Since then, it has migrated further away fr)m g)vernment c)ntr)l. Its success was the result )f b)tt)m-up c)llab)rati)n, n)t t)p-d)wn regulati)n. N) )ne needs permissi)n t) start a website )r navigate the Web freely. T) suggest )therwise is n)thing sh)rt )f fear m)ngering.

Myriad suppliers )f Internet related devices, applicati)ns, )nline services and c)nnectivity are driving pr)ductivity and j)b gr)wth in )ur c)untry. Ab)ut eighty percent )f Americans )wn a pers)nal c)mputer.3 M)st are c)nnected t) the Internet. In the meantime, the Internet is g)ing m)bile. By this time next year, c)nsumers will see m)re smartph)nes in the U.S. market than feature ph)nes.4 In additi)n t) c)untless applicati)ns used )n PCs, gr)wth in the number )f m)bile applicati)ns available t) c)nsumers has g)ne fr)m nearly zer) in 2007 t) half a milli)n just three years later.5 M)bile app d)wnl)ads are gr)wing at an annual rate )f 92 percent, with an estimated 50 billi)n applicati)ns expected t) be d)wnl)aded in 2012.6

Fixed and m)bile br)adband Internet access is the fastest penetrating disruptive techn)l)gy in hist)ry. In 2003, )nly 15 percent )f Americans had access t) br)adband. Just seven years later, 95 percent d).7 Eight ann)unced nati)nal br)adband pr)viders are building )ut facilities in additi)n t) the c)nstructi)n w)rk )f sc)res m)re l)cal and regi)nal pr)viders. M)re c)mpetiti)n is )n the way as pr)viders light up recently aucti)ned spectrum. Furtherm)re, the C)mmissi)n’s w)rk t) make unlicensed use )f the televisi)n “white spaces” available t) c)nsumers will create even m)re c)mpetiti)n and c)nsumer ch)ice.

In sh)rt, c)mpetiti)n, investment, inn)vati)n, pr)ductivity, and j)b gr)wth are healthy and dynamic in the Internet sect)r thanks t) bipartisan, deregulat)ry p)licies that have spanned f)ur decades. The Internet has bl)ss)med under current law.

P)licies that pr)m)te abundance and c)mpetiti)n, rather than the rati)ning and unintended c)nsequences that c)me with regulati)n, are the best antid)tes t) the p)tential

2 And at this juncture, I need t) dispel a pervasive myth that br)adband was )nce regulated like a ph)ne c)mpany. The FCC’s 2002 cable m)dem )rder did n)t m)ve br)adband fr)m Title II. It f)rmalized an eff)rt t) insulate br)adband fr)m antiquated regulati)ns, like th)se ad)pted t)day, that started under then-FCC Chairman Bill Kennard. Furtherm)re, after the Supreme C)urt’s Brand i decisi)n, all )f the FCC v)tes t) classify br)adband techn)l)gies as inf)rmati)n services were bipartisan. A m)re th)r)ugh hist)ry is attached t) this dissent as “Attachment A”. 3 See Aar)n Smith, Pew Internet & American Life Pr)ject, Americans and their gadgets (Oct. 14, 2010) at 2, 5, 9 (76 percent )f Americans )wn either a deskt)p )r lapt)p c)mputer; 4 percent )f Americans have “tablet c)mputers”).4 R)ger Entner, Nielsenwire, Smartph,nes t, Overtake Feature Ph,nes in U.S. by 2011 (Mar. 26, 2010).5 See Distim), GigaOm, S)ftpedia (links at: http://www.distim).c)m/appst)res/st)res/index/c)untry:226; http://giga)m.c)m/2010/10/25/andr)id-market-clears-100000-apps-milest)ne/; and http://news.s)ftpedia.c)m/news/4-000-Apps-in-Wind)ws-Ph)ne-Marketplace-171764.shtml).6 See Chetan Sharma, Sizing Up the Gl,bal M,bile Apps Market (2010) at 3, 9.7 Federal C)mmunicati)ns C)mmissi)n, C,nnecting America: The Nati,nal Br,adband Plan at 20 (rel. Mar. 16, 2010) (Nati,nal Br,adband Plan).


148

antic)mpetitive behavi)r feared by the rules’ pr)p)nents. But d)n’t take my w)rd f)r it. Every time the g)vernment has examined the br)adband market, its experts have c)ncluded that n) evidence )f c)ncentrati)ns )r abuses )f market p)wer exists. The Federal Trade C)mmissi)n (FTC), )ne )f the premier antitrust auth)rities in g)vernment, n)t )nly c)ncluded that the br)adband market was c)mpetitive, but it als) warned that regulat)rs sh)uld be “wary” )f netw)rk management rules because )f the unkn)wn “net effects … )n c)nsumers.”8 The FTC rendered that unanim)us and bipartisan c)nclusi)n in 2007. As I discussed earlier, the br)adband market has bec)me )nly m)re c)mpetitive since then.

M)re recently, the Department )f Justice’s Antitrust Divisi)n reached a similar c)nclusi)n when it filed c)mments with us earlier this year.9 While it s)unded )ptimistic regarding the pr)spects f)r br)adband c)mpetiti)n, it als) warned against the temptati)n t) regulate “t) av)id stifling the infrastructure investments needed t) expand br)adband access.”10

Disturbingly, the C)mmissi)n is taking its radical step t)day with)ut c)nducting even a rudimentary market analysis. Perhaps that is because a market study w)uld n)t supp)rt the Order’s predetermined c)nclusi)n.

II. The FCC D(es N(t Have the Legal Auth(rity t( Issue These Rules.

Time d)es n)t all)w me t) refute all )f the legal arguments in the Order used t) justify its claim )f auth)rity t) regulate the Internet. I have included a m)re th)r)ugh analysis in the supplemental secti)n )f this statement, h)wever. N)netheless, I will t)uch )n a few )f the legal arguments end)rsed by the maj)rity.

Overall, the Order is designed t) circumvent the D.C. Circuit’s C,mcast decisi)n,11 but this new eff)rt will fail in c)urt as well. The Order makes a first-time claim that s)meh)w, thr)ugh the deregulat)ry bent )f Secti)n 706, in 1996 C)ngress gave the C)mmissi)n directauth)rity t) regulate the Internet. The Order admits that its rati)nale requires the C)mmissi)n t) reverse its l)ngstanding interpretati)n that this secti)n c)nveys n) additi)nal auth)rity bey)nd what is already pr)vided elsewhere in the Act.12 This new c)nclusi)n, h)wever, is suddenly c)nvenient f)r the maj)rity while it grasps f)r a f)undati)n f)r its predetermined )utc)me. Instead )f “rem,v[ing] barriers t) infrastructure investment,” as Secti)n 706 enc)urages, the Order fashi)ns a legal ficti)n t) c)nstruct additi,nal barriers. This m)ve is arbitrary and caprici)us and is n)t supp)rted by the evidence in the rec)rd )r a change )f law.13 The

8 Federal Trade C)mmissi)n, Internet Access Task F)rce, Br)adband C)nnectivity C)mpetiti)n P)licy FTC Staff Rep)rt (rel. June 27, 2007) at 157.9 See Ex Parte Submissi)n )f the U.S. Dept. )f Justice, GN D)cket N). 09-51 (dated Jan. 4, 2010). 10 Id. at 28.11 C,mcast C,rp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010).12 Order, ¶ 118.13 While it is true that an agency may reverse its p)siti)n, “the agency must sh)w that there are g))d reas)ns.” FCC v. F,x Televisi,n Stati,ns, Inc., 129 S. Ct. 1800, 1811 (2009). M)re)ver, while F,x held that “[t]he agency need n)t always pr)vide a m)re detailed justificati)n than what w)uld suffice f)r a new p)licy created )n a blank slate,” the C)urt n)ted that “[s])metimes it must – when, f)r example, its new p)licy rests up)n factual findings that c)ntradict th)se which underlay its pri)r p)licy; )r when its pri)r

(c)ntinued....)


149

C)mmissi)n’s gamesmanship with Secti)n 706 thr)ugh)ut the year is reminiscent )f what was attempted with the c)nt)rti)ns )f the s)-called “70/70 rule” three years ag). I )bjected t) such factual and legal manipulati)ns then, and I )bject t) them n)w.

Furtherm)re, the Order desperately sc)urs the Act t) find a tether t) m))r its alleged Title I ancillary auth)rity. As expected, the Order’s legal analysis ign)res the fundamental teaching )f the C,mcast case: Titles II, III, and VI )f the C)mmunicati)ns Act give the FCC the p)wer t) regulate specific, rec)gnized classes )f electr)nic c)mmunicati)ns services, which c)nsist )f c)mm)n carriage teleph)ny, br)adcasting and )ther licensed wireless services, and multichannel vide) pr)gramming services.14 Despite the desires )f s)me, C)ngress has n,testablished a new title )f the Act t) p)lice Internet netw)rk management, n)t even implicitly. The absence )f statut)ry auth)rity is perhaps why Members )f C)ngress intr)duced legislati)n t) give the FCC such p)wers. In )ther w)rds, if the Act already gave the C)mmissi)n the legal tether it seeks, why was legislati)n needed in the first place? I’m afraid that this leaky ship )f an Order is attempting t) sail thr)ugh a regulat)ry f)g with)ut the necessary ballast )f factual )r legal substance. The c)urts will easily sink it.

In an)ther act )f legal sleight )f hand, the Order claims that it d)es n)t attempt t) classify br)adband services as Title II c)mm)n carrier services. Yet functi)nally, that is precisely what the maj)rity is attempting t) d) t) Title I inf)rmati)n services, Title III licensed wireless services, and Title VI vide) services by subjecting them t) n)ndiscriminati)n )bligati)ns in the absence )f a c)ngressi)nal mandate. What we have bef)re us t)day is a Title II Order dressed in a threadbare Title I disguise. Thankfully, the c)urts have seen this bait-and-switch maneuver by the FCC bef)re – and they have struck it d)wn each time.15

(...c)ntinued fr)m previ)us page)p)licy has engendered seri)us reliance interest that must be taken int) acc)unt.” Id. (internal citati)ns )mitted).14 The D.C. Circuit in C,mcast set f)rth this framew)rk in very plain English:

Thr)ugh the C)mmunicati)ns Act )f 1934, ch. 652, 48 Stat. 1064, as amended )ver the decades, 47 U.S.C. § 151 et seq., C)ngress has given the C)mmissi)n express and expansive auth)rity t) regulate c)mm)n carrier services, including landline teleph)ny, id.§ 201 et seq. (Title II )f the Act); radi) transmissi)ns, including br)adcast televisi)n, radi), and cellular teleph)ny, id. § 301 et seq. (Title III); and “cable services,” including cable televisi)n, id. § 521 et seq. (Title VI). In this case, the C)mmissi)n d)es n)t claim that C)ngress has given it express auth)rity t) regulate C)mcast’s Internet service. Indeed, in its still-binding 2002 Cable M,dem Order, the C)mmissi)n ruled that cable Internet service is neither a “telec)mmunicati)ns service” c)vered by Title II )f the C)mmunicati)ns Act n)r a “cable service” c)vered by Title VI. In re High-Speed Access t, the Internet Over Cable and Other Facilities, 17 F.C.C.R. 4798, 4802, P 7 (2002), aff'd Nat’l Cable & Telec,mms. Ass’n v. Brand i Internet Servs., 545 U.S. 967, 125 S. Ct. 2688, 162 L. Ed. 2d 820 (2005).

600 F.3d at 645.15 See, e.g., id.; FCC v. Midwest Vide, C,rp, 440 U.S. 689 (1979) (Midwest II).


150

The Order’s expansive grasp f)r jurisdicti)nal p)wer here is likely t) alarm any reviewing c)urt because the eff)rt appears t) have n) limiting principle.16 If we were t) accept the Order’s argument, “it w)uld virtually free the C)mmissi)n fr)m its c)ngressi)nal tether.”17 “As the [Supreme] C)urt explained in Midwest Vide, II, ‘with)ut reference t) the pr)visi)ns )f the Act’ expressly granting regulat)ry auth)rity, ‘the C)mmissi)n’s [ancillary] jurisdicti)n … w)uld be unb)unded.’”18 I am relieved, h)wever, that in the Order, the C)mmissi)n is explicitly refraining fr)m regulating c)ffee sh)ps.19

In sh)rt, if this Order stands, there is n) end in sight t) the C)mmissi)n’s p)wers.

I als) have c)ncerns regarding the c)nstituti)nal implicati)ns )f the Order, especially its trampling )n the First and Fifth Amendments. But in the )bservance )f time, th)se th)ughts are c)ntained in my extended written remarks.

III. The C(mmissi(n’s Rules Will Cause Irreparable Harm t( Br(adband Investment and C(nsumers.

DOJ’s c)gent )bservati)n fr)m last January regarding the c)mpetitive nature )f the br)adband market raises the imp)rtant issue )f the likely irreparable harm t) be br)ught ab)ut by these new rules. In additi)n t) g)vernment agencies, invest)rs, investment analysts, andbr)adband c)mpanies themselves have t)ld us that netw)rk management rules w)uld create uncertainty t) the p)int where crucial investment capital will bec)me harder t) find. This p)int was made )ver and )ver again at the FCC’s Capital F)rmati)n W)rksh)p )n Oct)ber 1, 2009. A diverse gathering )f invest)rs and analysts t)ld us that even rules emanating fr)m Title I w)uld create uncertainty. Other evidence suggests that Internet management rules c)uld n)t )nly make it difficult f)r c)mpanies t) “predict their revenues and cash fl)w,” but a new regime c)uld “have the perverse effect )f raising prices t) all users” as well.20

Additi)nally, t)day’s Order implies that the FCC has price regulati)n auth)rity )ver br)adband. In fact, the D.C. Circuit n)ted in its C,mcast decisi)n last spring that the C)mmissi)n’s att)rneys )penly asserted at January’s )ral argument that “the C)mmissi)n c)uld s)meday subject [br)adband] service t) pervasive rate regulati)n t) ensure that … [a br)adband] c)mpany pr)vides the service at ‘reas)nable charges.’”21 N)thing indicates that the C)mmissi)n

16 F)r example, in the C,mcast case, FCC c)unsel c)nceded at )ral argument that the ancillary jurisdicti)n argument there c)uld even enc)mpass rate regulati)n, if the C)mmissi)n ch)se t) pursue that path. Id. at 655 (referring t) Oral Arg. Tr. 58-59). 17 Id.18 Id. (qu)ting Midwest Vide, II, 440 U.S. at 706).19 Order, ¶ 52.20 H)ward Buskirk, Invest,rs, Analysts Uneasy Ab,ut FCC Directi,n ,n Net Neutrality, COMM. DAILY, Oct. 2, 2009, at 2; see als, Nati)nal Cable & Telec)mmunicati)ns Ass)ciati)n C)mments at 19; Veriz)n and Veriz)n Wireless Reply C)mments at 17–18. 21 C,mcast, 600 F.3d at 655 (referring t) Oral Arg. Tr. 58-59).


151

has changed its mind since then. In fact, the Order appears t) supp)rt b)th indirect and direct price regulati)n )f br)adband services.22

M)re)ver, as l)bbying gr)ups accept this Order’s invitati)n t) file c)mplaints asking the g)vernment t) dist)rt the market further the C)mmissi)n will be under increasing pressure fr)m p)litical interest gr)ups t) expand its p)wer and influence )ver the br)adband Internet market. In fact, s)me )f my c)lleagues t)day are c)mplaining that the Order d)esn’t g) far en)ugh. Each c)mplaint filed will create m)re uncertainty as the enf)rcement pr)cess bec)mes a de fact,rulemaking circus, just as the C)mmissi)n attempted in the ill-fated C,mcast/BitT,rrent case.23 H)w d)es this framew)rk create regulat)ry certainty?24 Even the Eur)pean C)mmissi)n rec)gnized the harm such rules c)uld cause t) the capital markets when it decided last m)nth n,tt) imp)se measures similar t) these.25

Part )f the argument in fav)r )f new rules alleges that “giant c)rp)rati)ns” will serve as h)stile “gatekeepers” t) the Internet. First, in the alm)st nine years since th)se fears were first sewn, net regulati)n l)bbyists can p)int t) fewer than a handful )f cases )f alleged misc)nduct, )ut )f an infinite number )f Internet c)mmunicati)ns. All )f th)se cases were res)lved in fav)r )f c)nsumers under current law.

M)re imp)rtantly, h)wever, many br)adband pr)viders are n)t large c)mpanies. Many are small businesses. Take, f)r example, LARIAT, a fixed wireless Internet service pr)vider serving rural c)mmunities in Wy)ming. LARIAT has t)ld the C)mmissi)n that the imp)siti)n )f netw)rk management rules will impede its ability t) )btain investment capital and will limit the c)mpany’s “ability t) depl)y new service t) currently unserved and underserved areas.”26 Furtherm)re, LARIAT ech)es the views )f many )thers by asserting that, “[t]he imp)siti)n )f regulati)ns that w)uld drive up c)sts )r hamper inn)vati)n w)uld further deter future )utside investment in )ur c)mpany and )thers like it.”27 Additi)nally, “[t]) mandate )verly [burdens)me] netw)rk management p)licies w)uld f)ster l)wer quality )f service, raise )perating c)sts (which in turn w)uld raise prices f)r all subscribers), and/)r create a large backl)g )f adjudicative pr)ceedings at the C)mmissi)n (in which it w)uld be pr)hibitively expensive f)r

22 See, e.g., Order, ¶ 76.23 See F,rmal C,mplaint ,f Free Press and Public Kn,wledge Against C,mcast C,rp,rati,n f,r Secretly Degrading Peer-t,-Peer Applicati,ns, File N). EB-08-IH-1518, Mem)randum Opini)n and Order, 23 FCC Rcd. 13,028 (2008) (C,mcast Order). C)mcast and BitT)rrent settled their dispute, in the absence )f net neutrality rules, f)ur m)nths bef)re the C)mmissi)n issued its legally flawed )rder. See, e.g., David Kirkpatrick, C,mcast-BitT,rrent: The Net’s Finally Gr,wing Up, CNN.COM, Mar. 28, 2008, at http://m)ney.cnn.c)m/2008/03/27/techn)l)gy/c)mcast.f)rtune/index.htm24 Furtherm)re, as C)mmissi)ner Baker has n)ted, with this Order the C)mmissi)n is inviting parties t) file petiti)ns f)r declarat)ry rulings, which will likely result in c)mpetit)rs asking the g)vernment t) regulate their rivals in advance )f market acti)n. I am hard pressed t) find a better example )f a “m)ther-may-I” paternalistic industrial p)licy making apparatus.25 Neelie Kr)es, Vice President f)r the Digital Age, Eur)pean C)mmissi)n, Net Neutrality – The Way F)rward: Eur)pean C)mmissi)n and Eur)pean Parliament Summit )n “The Open Internet and Net Neutrality in Eur)pe” (N)v. 11, 2010). 26 LARIAT C)mments at 2-3. 27 Id. at 3.


152

small and c,mpetitive ISPs t) participate)”.28 LARIAT als) n)tes that the imp)siti)n )f net neutrality rules w)uld cause immediate harm such that “[d]ue t) immediate deleteri)us impacts up)n investment, these damaging effects w)uld be likely t) )ccur even if the C)mmissi)n’s Order was later invalidated, nullified, )r effectively m)dified by a c)urt challenge )r C)ngressi)nal acti)n.” 29 Other small businesses have ech)ed these c)ncerns.30

Less investment. Less inn)vati)n. Increased business c)sts. Increased prices f)r c)nsumers. Disadvantages t) smaller ISPs. J)bs l)st. And all )f this is in the name )f pr)m)ting the exact )pp)site? The evidence in the rec)rd simply d)es n)t supp)rt the maj)rity’s )utc)me driven c)nclusi)ns.

In sh)rt, the C)mmissi)n’s acti)n t)day runs directly c)unter t) the laudable br)adband depl)yment and ad)pti)n g)als )f the Nati)nal Br)adband Plan. N) g)vernment has ever succeeded in mandating investment and inn)vati)n. And n)thing has been h)lding back Internet investment and inn)vati)n, until n)w.

IV. Existing Law Pr(vides Ample C(nsumer Pr(tecti(n.

T) reiterate, the Order fails t) put f)rth either a factual )r legal basis f)r regulat)ry interventi)n. Repeated g)vernment ec)n)mic analyses have reached the same c)nclusi)n: n) c)ncentrati)ns )r abuses )f market p)wer exist in the br)adband space. If market failure were t) )ccur, h)wever, America’s antitrust and c)nsumer pr)tecti)n laws stand at the ready. B)th the Department )f Justice and the Federal Trade C)mmissi)n are well equipped t) cure any market ills.31 In fact, the Antitrust Law Secti)n )f the American Bar Ass)ciati)n agrees.32 N)where d)es the Order attempt t) explain why these laws are insufficient in its quest f)r m)re regulati)n.

28 Id. at 5 (emphasis added). 29 Letter fr)m Brett Glass, d/b/a LARIAT, t) Julius Genach)wski, Chairman, FCC, et al., at 2 (Dec. 9, 2010) (LARIAT Dec. 9 Letter).30 See, e.g., Letter fr)m Paul C)nlin, President, Blaze Br)adband, t) Marlene H. D)rtch, Secretary (Dec. 14, 2010) (Blaze Br)adband Dec. 14 Letter). 31 Secti)n 2 )f the Sherman Act, 15 U.S.C. § 2, pr)hibits c)nduct that w)uld lead t) m)n)p)lizati)n. In the event )f abuse )f market p)wer, this is the main statute that enf)rcers w)uld use. In the c)ntext )f p)tential abuses by br)adband Internet access service pr)viders, this statute w)uld f)rbid: (1) Exclusive dealing – f)r example, the )nly way a c)nsumer c)uld )btain streaming vide) is fr)m a br)adband pr)vider’s preferred partner site; (2) Refusals t) deal (the )ther side )f the exclusive dealing c)in) – i.e., if a cable c)mpany were t) assert that the )nly way a c)ntent delivery netw)rk c)uld interc)nnect with it t) stream unaffiliated vide) c)ntent t) its cust)mers w)uld be t) pay $1 milli)n/p)rt/m)nth, such acti)n c)uld c)nstitute a “c)nstructive” refusal t) deal if any )ther c)ntent delivery netw)rk c)uld deliver any )ther traffic f)r a $1,000/p)rt/m)nth price; and (3) Raising rivals’ c)sts – achieving essentially the same results using different techniques.

Secti)n 5 )f the Federal Trade C)mmissi)n Act, 15 U.S.C. § 45, essentially acc)mplishes the same curative result, )nly thr)ugh the FTC. It generally f)rbids “unfair c)mpetiti)n.” This is an effective statute t) emp)wer FTC enf)rcement as l)ng as Internet access service is c)nsidered an “inf)rmati)n service.”The FTC Act explicitly d)es n)t apply t) “c)mm)n carriers.”

See als,, 15 U.S.C. §13(a), et seq. 32 ABA C)mment )n Federal Trade C)mmissi)n W)rksh)p: Br)adband C)nnectivity C)mpetiti)n P)licy, 195 Pr)ject N). V070000 (2007).


153

M)re)ver, f)r several years n)w, I have been adv)cating a p)tentially effective appr)ach that w)n’t get )verturned )n appeal. In lieu )f new rules, which will be tied up in c)urt f)r years, the FCC c)uld create a new r)le f)r itself by partnering with already established, n)n-g)vernmental Internet g)vernance gr)ups, engineers, c)nsumer gr)ups, academics, ec)n)mists, antitrust experts, c)nsumer pr)tecti)n agencies, industry ass)ciati)ns, and )thers t) sp)tlight allegati)ns )f antic)mpetitive c)nduct in the br)adband market, and w)rk t,gether t) res)lve them. Since it was privatized, Internet g)vernance has always been based )n a f)undati)n )f b)tt)m-up c)llab)rati)n and c))perati)n rather than t)p-d)wn regulati)n. This truly “light t)uch” appr)ach has created a near-perfect track rec)rd )f res)lving Internet management c)nflicts with)ut g)vernment interventi)n.

Unf)rtunately, the maj)rity has n)t even c)nsidered this idea f)r a m)ment. But )nce t)day’s Order is )verturned in c)urt, it is still my h)pe that the FCC will c)nsider and ad)pt this c)nstructive pr)p)sal.

In sum, what’s past is indeed pr)l)gue. Where we left the saga )f the FCC’s last net neutrality )rder bef)re was with a spectacular failure in the appellate c)urts. T)day, the FCC seems determined t) make the same mistake instead )f learning fr)m it. The )nly illness apparent fr)m this Order is regulat)ry hubris. F)rtunately, cures f)r this malady are )btainable in c)urt. F)r all )f the f)reg)ing reas)ns, I respectfully dissent.

* * *

Extended Legal Analysis: The C(mmissi(n Lacks Auth(rity t( Imp(se

Netw(rk Management Mandates (n Br(adband Netw(rks.

The Order is designed t) circumvent the effect )f the D.C. Circuit’s C,mcast decisi)n,33

but that eff)rt will fail. Careful c)nsiderati)n )f the Order sh)ws that its legal analysis ign)res the fundamental teaching )f C,mcast: Titles II, III, and VI )f the C)mmunicati)ns Act regulate specific, rec)gnized classes )f electr)nic c)mmunicati)ns services, which c)nsist )f c)mm)n carriage teleph)ny, br)adcasting and )ther licensed wireless services, and multichannel vide) pr)gramming services.34 Despite any p)licy desires t) the c)ntrary, C)ngress has n)t yet

33 C,mcast C,rp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010).34 The D.C. Circuit in C,mcast set f)rth this framew)rk in very plain English:

Thr)ugh the C)mmunicati)ns Act )f 1934, ch. 652, 48 Stat. 1064, as amended )ver the decades, 47 U.S.C. § 151 et seq., C)ngress has given the C)mmissi)n express and expansive auth)rity t) regulate c)mm)n carrier services, including landline teleph)ny, id.§ 201 et seq. (Title II )f the Act); radi) transmissi)ns, including br)adcast televisi)n, radi), and cellular teleph)ny, id. § 301 et seq. (Title III); and “cable services,” including cable televisi)n, id. § 521 et seq. (Title VI). In this case, the C)mmissi)n d)es n)t claim that C)ngress has given it express auth)rity t) regulate C)mcast’s Internet service. Indeed, in its still-binding 2002 Cable M,dem Order, the C)mmissi)n ruled that cable Internet service is neither a “telec)mmunicati)ns service” c)vered by Title II )f the C)mmunicati)ns Act n)r a “cable service” c)vered by Title VI. In re High-Speed Access t, the Internet Over Cable and Other Facilities, 17 F.C.C.R. 4798, 4802, P 7 (2002), aff'd Nat’l Cable & Telec,mms. Ass’n v. Brand i Internet Servs., 545 U.S. 967, 125 S. Ct. 2688, 162 L. Ed. 2d 820 (2005).

600 F.3d at 645.


154

established a new title )f the Act t) g)vern s)me )r all parts )f the Internet – which includes the )perati)n, )r “management,” )f the netw)rks that supp)rt the Internet’s functi)ning as a new and highly c)mplex c)mmunicati)ns platf)rm f)r diverse and interactive data, v)ice, and vide) services. Until such time as lawmakers may act, the C)mmissi)n has n) p)wer t) regulate Internet netw)rk management.

As detailed bel)w, the pr)visi)ns )f existing law up)n which the Order relies aff)rd the C)mmissi)n neither direct n)r ancillary auth)rity here. The t)rtured l)gic needed t) supp)rt the Order’s c)nclusi)n requires that the agency either reverse its )wn interpretati)n )f its statut)rily granted express p)wers )r rely )n sweeping pr)nunciati)ns )f ancillary auth)rity that lack any “c)ngressi)nal tether” t) specific pr)visi)ns )f the Act.35 Either path will fail in c)urt.

Instead, the judicial panel that ends up reviewing the inevitable challenges is highly likely t) rec)gnize this eff)rt f)r what it is. While )stensibly eschewing reclassificati)n )f br)adband netw)rks as Title II platf)rms, the Order imp)ses the m)st basic )f all c)mm)n carriage mandates: n)ndiscriminati)n, albeit with a vague “we’ll kn)w it when we see it” caveat f)r “reas)nable” netw)rk management. This may be )nly a pale versi)n )f c)mm)n carriage (at least f)r n)w), but it is still quite discernible even t) the untrained eye.

A. Reversal (f the C(mmissi(n’s Interpretati(n (f Secti(n 706 Cann(t Pr(vide Direct Auth(rity f(r Netw(rk Management Rules.

Less than )ne year ag), the C)mmissi)n in attempting t) defend its C,mcast/BitT,rrent decisi)n at the D.C. Circuit “[a]ckn)wledged that it has n) express statut)ry auth)rity )ver [an Internet service pr)vider’s netw)rk management] practices.”36 The C)mmissi)n was right then, and the Order is wr)ng n)w. C)ngress has never c)ntemplated, much less enacted, a regulat)ry scheme f)r br)adband netw)rk management, n)twithstanding the significant revisi)n )f the C)mmunicati)ns Act undertaken thr)ugh the Telec)mmunicati)ns Act )f 1996 (1996 Act).37 It is an exercise in legal ficti)n t) c)ntend )therwise.

Any analysis )f an arguable basis f)r the C)mmissi)n’s p)wer t) act in this area must begin with the rec)gniti)n that br)adband Internet access service remains an unregulated “inf)rmati)n service” under Title I )f the C)mmunicati)ns Act.38 Overtly, the Order d)es n)t

35 Id. at 655. 36 Id. at 644.37 The scattered references t) the Internet and advanced services in a few pr)visi)ns )f the 1996 Act, see,e.g., 47 U.S.C. §§ 230, 254, d) n)t c)nstitute a c)ngressi)nal eff)rt t) systemically regulate the management )f the new medium. A better reading )f the 1996 Act in this regard is that C)ngress rec)gnized that the emergence )f the Internet meant that s)mething new, exciting, and yet still am)rph)us was c)ming. Rather than act prematurely by establishing a detailed new regulat)ry scheme f)r the Net, C)ngress ch)se t) leave the Net unregulated at that time.38 Inquiry C,ncerning High-Speed Access t, the Internet Over Cable & Other Facilities; Internet Over Cable Declarat,ry Ruling; Appr,priate Regulat,ry Treatment f,r Br,adband Access t, the Internet Over Cable Facilities, GN D)cket N). 00-185, CS D)cket N). 02-52, Declarat)ry Ruling and N)tice )f Pr)p)sed Rulemaking, 17 FCC Rcd. 4,798 (2002) (Cable M,dem Declarat,ry Ruling); Appr,priate Framew,rk f,r Br,adband Access t, the Internet Over Wireline Facilities et al., CC D)cket N)s. 02-33, 01-337, 95-20, 98-10, WC D)cket N)s. 04-242, 05-271, Rep)rt and Order and N)tice )f Pr)p)sed Rulemaking, 20 FCC Rcd. 14,853 (2005) (Wireline Br,adband Order); Appr,priate Regulat,ry Treatment

(c)ntinued....)


155

purp)rt t) change this legal classificati)n.39 Yet a reviewing c)urt will l))k bey)nd the Order’s characterizati)n )f the C)mmissi)n’s acti)n t) scrutinize what the new c)dified rules – and the directives and warnings set f)rth in the text – actually d).40 Dispassi)nate analysis will lead t) the c)nclusi)n that the Order attempts t) relegate this type )f inf)rmati)n service t) c)mm)n carriage by effectively applying maj)r Title II )bligati)ns t) it. The Title I disguise will n)t be c)nvincing.

The threadbare nature )f the disguise bec)mes clear with scrutiny )f the Order’s claims f)r a legal basis f)r the new regulati)ns. The Order’s )nly seri)us eff)rt t) assert direct auth)rity is based )n Secti)n 706.41 The Order gl)sses )ver the key p)int that n) language within Secti)n 706 – )r anywhere else in the Act, f)r that matter – best)ws the FCC with explicit auth)rity t) regulate Internet netw)rk management. Rather, Secti)n 706’s explicit f)cus is )n “depl)yment” and “availability” )f br)adband netw)rk facilities.42 S) what precisely is the nexus between Secti)n 706’s f)cus )n br)adband depl)yment and availability and the Order’s f)cus )n netw)rk management )nce the facilities have been depl)yed and the service is available? The Order seems t) imply that Secti)n 706 s)meh)w pr)vides the C)mmissi)n with netw)rk management auth)rity because if the g)vernment lacks such p)wer, s)me American might have less access t) the Internet. This rati)nale is c)ntrary t) the pr)visi)n’s language and ill)gical )n its face. Imp)sing new regulati)ns )n netw)rk pr)viders in the business )f depl)ying br)adband43 will have the )pp)site effect )f what Secti)n 706 seeks t) d). Instead, the imp)siti)n )f netw)rk management rules will likely depress investment in depl)yment )f br)adband thr)ugh)ut )ur nati)n.44 This )utc)me will pr)ve true n)t simply f)r the large pr)viders tracked by Wall Street

(...c)ntinued fr)m previ)us page)f,r Br,adband Access t, the Internet Over Wireless Netw,rks, WT D)cket N). 07-53, Declarat)ry Ruling, 22 FCC Rcd. 5,901 (2007) (Wireless Br,adband Order). 39 Order, ¶¶ 121-23.40 See, e.g., Marsh v. Oreg,n Natural Res. C,uncil, 490 U.S. 360, 378 (1989) (“in the c)ntext )f reviewing a decisi)n ... c)urts sh)uld n)t aut)matically defer t) the agency’s express reliance )n an interest in finality with)ut carefully reviewing the rec)rd and satisfying themselves that the agency has made a reas)ned decisi)n based )n its evaluati)n )f the significance – )r lack )f significance – )f the new inf)rmati)n.”). 41 T) the degree that the Order suggests that )ther secti)ns in the Act pr)vide it with direct auth)rity t) imp)se new Internet netw)rk management rules, such arguments are n)t legally sustainable. F)r the reas)ns set f)rth in Secti)n B )f this extended legal analysis, infra, the claimed bases f)r extending even ancillary auth)rity are unc)nvincing, which renders c)ntenti)ns ab)ut direct auth)rity untenable.42 47 U.S.C. §§ 1302 (a), (b).43 The Nati)nal Br)adband Plan even n)ted that, “[d]ue in large part t) private investment and market-driven inn)vati)n, br)adband in America has impr)ved c)nsiderably in the last decade.” Federal C)mmunicati)ns C)mmissi)n, C,nnecting America: The Nati,nal Br,adband Plan at 3 (rel. Mar. 16, 2010) (Nati,nal Br,adband Plan). N)te that during this same time peri)d )f investment, n) netw)rk management rules existed. 44 The C)mmissi)n has been warned ab)ut this c)nsequence many times in the recent past. F)r example, during the C)mmissi)n’s Oct)ber 2009 Capital F)rmati)n W)rksh)p, several investment pr)fessi)nals raised red flags ab)ut a Title I appr)ach t) Internet regulati)n. Trade press acc)unts rep)rted Chris King, an analyst at Stifel Nic)laus, as saying that “[w]hen y)u l))k at the telec)m sect)r )r cable sect)r, )ne )f the things that scares them t) death is net neutrality.... Any regulati)n that w)uld limit severely [Veriz)n’s and AT&T’s] ability t) c)ntr)l their )wn netw)rks t) manage traffic )f their )wn netw)rks c)uld certainly have a negative r)le in their levels )f investment g)ing f)rward.” H)ward Buskirk, Invest,rs, Analysts Uneasy Ab,ut FCC Directi,n ,n Net Neutrality, COMM. DAILY, Oct. 2, 2009, at 1. Similarly, T)m Aust, a

(c)ntinued....)


156

analysts but f)r the small businesses that supply vital and c)mpetitive br)adband )pti)ns t) c)nsumers in many l)cales acr)ss the nati)n.45

A cl)ser reading )f the statut)ry text bears )ut this assessment. Turning specifically t) the language )f Secti)n 706(a), the pr)visi)n )pens with a p)licy pr)n)uncement that the C)mmissi)n “shall enc)urage the depl)yment )n a reas)nable and timely basis )f advanced telec)mmunicati)ns capability t) all Americans.”46 As C,mcast already has p)inted )ut, “under Supreme C)urt and D.C. Circuit case law statements )f p)licy, by themselves, d) n)t create ‘statut)rily mandated resp)nsibilities.’”47 Rather, “[p])licy statements are just that – statements )f p)licy. They are n)t delegati)ns )f regulat)ry auth)rity.”48 The same h)lds true f)r c)ngressi)nal statements )f p)licy, such as the )pening )f Secti)n 706, as it d)es f)r any agency’s p)licy pr)n)uncements.

The Order makes a strenu)us eff)rt t) argue that Secti)n 706 is n)t limited t) deregulat)ry acti)ns, a herculean task taken )n because the Order rests nearly all )f its heavy weight )n this thin f)undati)n.49 Secti)n 706 d)es refer t) )ne specific regulat)ry pr)visi)n –

(...c)ntinued fr)m previ)us page)seni)r analyst at GE Asset Management, stated that regulat)ry risk is “ultimately unkn)wable because it’s s) br)ad and it can be s) quick. F)r a c)mpany it means that they can’t predict their revenues and cash fl)ws as well, near )r l)ng term.” Id. at 2. 45 Netw)rk management regulati)ns will affect the investment )utl))k f)r transmissi)n pr)viders large and small. In the latter categ)ry, Brett Glass, the s)le pr)priet)r )f LARIAT, a wireless Internet service pr)vider in Wy)ming, has filed c)mments expressing c)ncern that the imp)siti)n )f netw)rk management rules will impede his ability t) )btain investment and will limit his “ability t) depl)y new service t) currently unserved and underserved areas.” LARIAT C)mments at 2–3. He stated that “[t]he imp)siti)n )f regulati)ns that w)uld drive up c)sts )r hamper inn)vati)n w)uld further deter future )utside investment in )ur c)mpany and )thers like it.” Id. at 3. Specifically, he argues that “[t]) mandate )verly [burdens)me] netw)rk management p)licies w)uld f)ster l)wer quality )f service, raise )perating c)sts (which in turn w)uld raise prices f)r all subscribers), and/)r create a large backl)g )f adjudicative pr)ceedings at the C)mmissi)n (in which it w)uld be pr)hibitively expensive f)r small and c)mpetitive ISPs t) participate). Id. at 5. “Due t) immediate deleteri)us impacts up)n investment, these damaging effects w)uld be likely t) )ccur even if the C)mmissi)n’s Order was later invalidated, nullified, )r effectively m)dified by a c)urt challenge )r C)ngressi)nal acti)n.” Letter fr)m Brett Glass, d/b/a LARIAT, t) Julius Genach)wski, Chairman, FCC, et al., at 2 (Dec. 9, 2010) (Glass Dec. 9 Letter). See als, Letter fr)m Paul C)nlin, President, Blaze Br)adband, t) Marlene H. D)rtch, Secretary (Dec. 14, 2010) (Blaze Br)adband Dec. 14 Letter). 46 47 U.S.C. § 1302(a).47 C,mcast, 600 F.3d at 644.48 Id. at 654.49 In supp)rt )f its jurisdicti)nal arguments, the Order cites t) language in Ad H,c Telec,mms. Users C,mm. v. FCC, 572 F.3d 903 (D.C. Cir. 2009). In that case, the D.C. Circuit d)es, in fact, state that “[t]he general and gener)us phrasing )f § 706 means that the FCC p)ssesses significant albeit n)t unfettered, auth)rity and discreti)n t) settle )n the best regulat)ry )r deregulat)ry appr)ach t) br)adband – a statut)ry reality that assumes great imp)rtance when parties impl)re c)urts t) )verrule FCC decisi)ns )n this t)pic.” Ad H,c Telec,mms., 572 F.3d at 906–07. But, there are several reas)ns why that statement in Ad H,c Telec,mms. cann)t be used f)r the pr)p)siti)n that Secti)n 706 pr)vides the FCC with the auth)rity t) imp)se netw)rk management rules. First, it is n)table that the petiti)ners in Ad H,c Telec,mms. were challenging )ne )f the FCC’s f)rbearance decisi)ns. As such, the FCC was n)t relying )n Secti)n 706 auth)rity al,ne in that case, it was als) relying )n it’s f)rbearance auth)rity which is specifically delegated

(c)ntinued....)


157

price cap regulati)n.50 Readers sh)uld keep in mind, h)wever, that at the time Secti)n 706 was enacted, 1996, price cap regulati)n )f incumbent l)cal exchange carriers was c)nsidered t) be deregulat,ry when c)mpared t) the legacy alternative: rate-)f-return regulati)n. The pr)visi)n’s remaining language is even m)re br)ad and deregulat)ry. F)r instance, the end )f secti)n 706(a) states that the FCC sh)uld expl)re “,ther regulating meth)ds that rem,ve barriers t, infrastructure investment.”51 Additi)nally, its c)unterpart subsecti)n, Secti)n 706(b), states that if the FCC’s annual inquiry determines that advanced telec)mmunicati)ns is n)t “being depl)yed t) all Americans in a reas)nable and timely fashi)n” the FCC shall take acti)n t) “rem,ve[e] barriers t, infrastructure investment and ... pr)m)t[e] c)mpetiti)n in the telec)mmunicati)ns market.”52 As discussed ab)ve, the Order’s acti)ns will have the )pp)site effect.

M)re)ver, the Order’s new interpretati)n )f Secti)n 706(a) is self serving and )utc)me determinative. The Order admits that its rati)nale requires reversing the C)mmissi)n’s l)ngstanding interpretati)n )f that subsecti)n as c)nveying n) auth)rity bey)nd that already pr)vided elsewhere in the Act.53 This arbitrary and caprici)us m)ve is n)t supp)rted by evidence in the rec)rd )r a change in law.54 The Order )ffers the excuse that “[i]n the particular

(...c)ntinued fr)m previ)us page)t) the FCC pursuant t) Secti)n 10. The D.C. Circuit made this p)int in C,mcast, when it rejected the FCC’s use )f Ad H,c Telec,mms. f)r its Secti)n 706 auth)rity arguments. C,mcast, 600 F.3d at 659 (“In [Ad H,c Telec,mms.], h)wever, we cited secti)n 706 merely t) supp)rt the C)mmissi)n’s ch)ice between regulat)ry appr)aches clearly within its statut,ry auth,rity under ,ther secti,ns ,f the Act.”) (emphasis added). Sec)nd, the text )f Secti)n 706(a) actually lists “regulat)ry f)rbearance” as an example )f )ne )f the t))ls that the FCC may empl)y in )rder t) “enc)urage the depl)yment )n a reas)nable and timely basis )f advanced telec)mmunicati)ns capability t) all Americans.” 47 U.S.C. § 1302(a). By c)ntrast, netw)rk management regulati)ns are n)t listed in Secti)n 706 )r anywhere else in the Act. Finally, as the D.C. C)urt reiterated in C,mcast, 600 F.3d at 659, the central issue that it f)cused )n in Ad H,c Telec,mms. was n)t jurisdicti)nal; rather it was whether the FCC’s underlying f)rbearance decisi)n had been arbitrary and caprici)us, specifically “when and h)w much” can the FCC f)rbear fr)m Title II )bligati)ns. Ad H,c Telec,mms., 572 F.3d at 904. M)re)ver, the c)urt was very clear in n)ting that such auth)rity was “n)t unfettered.” Id. at 907.50 On that n)te, the Order even highlights the fact that “706(a) expressly c)ntemplates the use )f “regulating meth)ds” such as price regulati)n.” See Order, n. 381. This aside is an unsettling f)reshad)w )f h)w these rules c)uld be used t) regulate br)adband rates in the future, thr)ugh either ad h,cenf)rcement cases )r declarat)ry rulings. 51 47 U.S.C. § 1302(a) (emphasis added). This f)cus )n infrastructure investment makes sense in light )f C)ngress’ express c)ncern that br)adband facilities quickly reach “elementary and sec)ndary sch))ls and classr))ms,” id., which in 1996 may have lacked the ec)n)mic appeal )f business and residential districts as early targets f)r infrastructure upgrades.52 47 U.S.C. § 1302(b).53 Order, ¶ 120.54 While it is true that an agency may reverse its p)siti)n, “the agency must sh)w that there are g))d reas)ns.” FCC v. F,x Televisi,n Stati,ns, Inc., 129 S. Ct. 1800, 1811 (2009). M)re)ver, while F,x held that “[t]he agency need n)t always pr)vide a m)re detailed justificati)n than what w)uld suffice f)r a new p)licy created )n a blank slate,” the C)urt n)ted that “[s])metimes it must – when, f)r example, its new p)licy rests up)n factual findings that c)ntradict th)se which underlay its pri)r p)licy; )r when its pri)r p)licy has engendered seri)us reliance interest that must be taken int) acc)unt.” Id. (internal citati)ns )mitted). This warning is thr)wn int) sharp f)cus by the billi)ns )f d)llars invested in br)adband

(c)ntinued....)


158

pr)ceedings pri)r t) C,mcast, setting )ut the understanding )f Secti)n 706(a) that we articulate in this Order w)uld n)t meaningfully have increased the auth)rity that we underst))d the C)mmissi)n already t) p)ssess.” 55 In )ther w)rds, apparently, the agency’s c)nfused understanding )f the limits )f its ancillary auth)rity meant that the C)mmissi)n then did n)t have t) rest )n Secti)n 706(a) in )rder t) )verreach by “pursu[ing] a stand-al)ne p)licy )bjective” n)t m))red t) “a specifically delegated p)wer.”56

The Order’s reliance )n Secti)n 706(b) as pr)viding a statut)ry f)undati)n f)r netw)rk management regulati)ns is similarly flawed. That subsecti)n requires that the FCC determine )n an annual basis whether “advanced telec)mmunicati)ns capability is being depl)yed t) all Americans in a reas)nable and timely fashi)n.”57 C)ngress then further directed the C)mmissi)n, if the agency’s determinati)n were negative, t) “take immediate acti)n t) accelerate depl)yment )f such capability by rem,ving barriers t, infrastructure investment and by pr)m)ting c)mpetiti)n in the telec)mmunicati)ns market” (emphasis added).58

T) justify its use )f this trigger, the Order p)ints t) the fact that appr)ximately six m)nths ag), the C)mmissi)n )n a divided 3-2 v)te issued a rep)rt finding – f)r the first time in hist)ry – that “br)adband depl)yment t) all Americans is n)t reas)nable and timely.”59 This determinati)n, in c)nflict with all previ)us rep)rts dating back t) 1999, was b)th perplexing and unsettling. It ign)red the impressive strides the nati)n has made in devel)ping and depl)ying br)adband infrastructure and services since issuance )f the first 706 Rep)rt. Amazingly en)ugh, the m)st recent 706 Rep)rt managed t) find failure even while p)inting t) data (first made public in the Nati)nal Br)adband Plan) sh)wing that “95% )f the U.S. p)pulati)n lives in h)using units with access t) terrestrial, fixed br)adband infrastructure capable )f supp)rting actual d)wnl)ad speeds )f at least 4 Mbps.”60 In fact, )nly 15 percent )f Americans had access t) residential br)adband services in 2003.61 Only seven years later, 95 percent enj)yed access, making

(...c)ntinued fr)m previ)us page)infrastructure since the C)mmissi)n first began enunciating its decisi)ns against Title II classificati)n )f br)adband Internet netw)rks. See, e.g., AT&T C)mments at 19; Veriz)n C)mments at 22. 55 See Order, ¶ 122; see als, C,mcast C,rp. v. FCC, 600 F.3d 642, 658 (D.C. Cir. 2010) (n)ting that “[i]n an earlier, still binding )rder, h)wever, the C)mmissi)n ruled that secti)n 706 ‘d)es n)t c)nstitute an independent grant )f auth)rity.’” (qu)ting Depl,yment ,f Wireline Servs. Offering Advanced Telec,mms. Capability, CC D)cket N). 98-147, Mem)randum Opini)n and Order, 13 FCC Rcd. 24,012, 24,047 ¶ 77 (1988)). 56 C,mcast, 600 F.3d at 659.57 47 U.S.C. § 1302(b).58 Id.59 Inquiry C,ncerning the Depl,yment ,f Advanced Telec,mmunicati,ns Capability t, All Americans in a Reas,nable and Timely Fashi,n, and P,ssible Steps t, Accelerate Such Depl,yment Pursuant t, Secti,n 706 ,f the Telec,mmunicati,ns Act ,f 1996, GN D)cket N). 09-137, Sixth Br)adband Depl)yment Rep)rt, 25 FCC Rcd. 9,556, 9,558 ¶¶ 2–3 (2010). C)mmissi)ner Baker and I dissented fr)m the July 2010 ad)pti)n )f the latest Secti)n 706 Rep)rt.60 Nati,nal Br,adband Plan at 20. 61 See J)hn H)rrigan, Pew Internet and American Life Pr)ject, H,me Br,adband Ad,pti,n 2009, 11 (2009).


159

br)adband the fastest penetrating disruptive techn)l)gy in hist)ry.62 At the time that I dissented fr)m the 706 Rep)rt, I expressed c)ncern that its findings c)uld be a pretext f)r justifying additi)nal regulati)n, rather than “rem)ving barriers t) infrastructure investment.”63 Unf)rtunately, this Order reveals that my fears were well f)unded.

One is left t) w)nder where this asserti)n )f p)wer, if left unchecked, may lead next.64 As f)r the Order itself, the sh)rt-term path is clear: It will be challenged in c)urt. Once there, the C)mmissi)n must struggle with the fact that the empirical evidence in this d)cket dem)nstrates “n) relati)nship whatever” between the plain meaning )f Secti)n 706 and the netw)rk management rules being ad)pted.65

B. Eff(rts t( Advance New Arguments f(r Exercising Ancillary Auth(rity Will N(t Survive C(urt Review.

In spite )f the D.C. Circuit’s decisi)n in C,mcast, the Order attempts t) c)ntinue t) assert ancillary auth)rity as an)ther basis f)r its imp)siti)n )f netw)rk management rules. T) b)lster the C)mmissi)n’s case this time, the Order p)ints t) s)me pr)visi)ns )f the Act that it failed t) cite the first time ar)und. Its arguments f)r new and putatively better bases f)r netw)rk management rules fall victim largely t) the same weaknesses the c)urt identified bef)re.

Eff)rts t) defend a valid exercise )f the agency’s ancillary p)wers are subject t) a tw)-part test – and the “central issue,” as the D.C. Circuit already has explained, is whether the C)mmissi)n can satisfy the sec)nd pr)ng )f the test.66 Under it, “[t]he C)mmissi)n may exercise this ‘ancillary’ auth)rity )nly if it dem)nstrates that its acti)n ... is ‘reas)nably ancillary t) the ... effective perf)rmance )f its statut)rily mandated resp)nsibilities.’”67

Th)se “statut)rily mandated resp)nsibilities” must be c)ncrete and readily identifiable. As the Supreme C)urt instructed in NARUC II and the D.C. Circuit reiterated in C,mcast, “the C)mmissi)n’s ancillary auth)rity ‘is really incidental t), and c)ntingent up)n, specifically

62 Nati,nal Br,adband Plan at 20. 63 47 U.S.C. § 1302(b).64 If the C)mmissi)n is successful with this asserti)n )f auth)rity, the agency c)uld use Secti)n 706 as an essentially unfettered mandate t) imp)se n)t )nly new regulati)ns but t) pick winners and l)sers – all with)ut any grant )f auth)rity fr)m C)ngress t) intervene in the marketplace in such a c)mprehensive manner. In fact, this Order has already d)ne s). F)r example, it decides that these new netw)rk management rules will apply t) br)adband Internet service pr)viders but n)t t) edge pr)viders. See Order,¶ 50. The Order makes an interesting attempt t) justify this line-drawing. It rati)nalizes, inter alia, that because the new regulat)ry scheme is putatively an )utgr)wth )f the C)mmissi)n’s Internet P,licy Statement, which was n)t aimed at edge pr)viders, the Order’s new mandates sh)uld n)t apply t) th)se entities either. This argument is irrati)nally selective at best and arbitrary and caprici)us at w)rst. If the C)mmissi)n’s Internet P,licy Statement was the “template” f)r the rules, why isn’t the substance )f the rules the same as the previ)us principles? In particular, why d)es the Order add n)ndiscriminati)n t) the regulati)ns when that c)ncept was never part )f the previ)us principles? 65 C,mcast, 600 F.3d at 654. 66 Id. at 647. 67 Id. at 644 (citing Library Ass’n v. FCC, 406 F.3d 689, 692 (D.C. Cir. 2005).


160

delegated p,wers under the Act.’”68 F)r the ancillary auth)rity arguments t) prevail here, the Order must identify specific subsecti)ns within Title II, III )r VI that pr)vide the ancillary h))k, and then sh)w h)w the C)mmissi)n’s asserti)n )f p)wer will advance the regulated services directly subject t) th)se particular pr)visi)ns. Existing c)urt precedent sh)ws that sweeping generalizati)ns are n)t sufficient.69 N)r may the general framew)rk )f )ne title )f the Act – such as c)mm)n carriage )bligati)ns – be grafted up)n services subject t) an)ther title that d)es n)t include the same )bligati)ns.70 And l)ng descripti)ns )f services delivered via br)adband netw)rks d) n)t substitute f)r hard legal analysis.71

M)re)ver, arguments must be advanced )n “a case-by-case basis” f)r each specific asserti)n )f jurisdicti)n.72 C,mcast explains that the C)mmissi)n must “independently justif[y]” any acti)n resting )n ancillary auth)rity by dem)nstrating in each and every instance h)w the acti)n at issue advances the services actually regulated by specific pr)visi)ns )f the Act.73 The D.C. Circuit apparently was c)ncerned ab)ut the C)mmissi)n’s ability t) grasp this p)int, f)r the

68 Id. at 653 (emphasis in )riginal) (citing Nat’l Ass’n ,f Regulat,ry Util. C,mm’rs v. FCC, 533 F.2d 601, 612 (D.C. Cir. 1976) (NARUC II)). 69 C,mpare Order, ¶ 133 ()pining that Open Internet rules f)r wireless services are supp)rted by Title III )f the C)mmunicati)ns Act pursuant t) the C)mmissi)n’s auth)rity “t) pr)tect the public interest thr)ugh spectrum licensing”) with C,mcast, 600 F.3d at 651 (“each and every asserti)n )f jurisdicti)n ... must be independently justified as reas)nably ancillary t) the C)mmissi)n’s p)wer”) (emphasis in )riginal).70 See C,mcast, 600 F.3d. at 653 (discussing h)w the NARUC II c)urt “f)und it ‘difficult t) see h)w any acti)n which the C)mmissi)n might take c)ncerning tw,-way cable c)mmunicati)ns c)uld have as its primary impact the furtherance )f any br,adcast purp)se.’”) (emphasis added); id at 654 (discussing the Midwest Vide, II c)urt’s rec)gniti)n that the C)mmunicati)ns Act bars c)mm)n carrier regulati)n )f br)adcasting and theref)re rejecting the imp)siti)n )f public access )bligati)ns )n cable because the rules w)uld “relegate[ ] cable systems ... t) c)mm)n-carrier status.”). 71 The fact that s)me regulated services may be mixed )n the same transmissi)n platf)rm with unregulated traffic d)es n)t aff)rd the C)mmissi)n sc)pe t) imp)se legal )bligati)ns )n all data streams being distributed via that system. F)r example, the D.C. Circuit als) has rejected )ther past C)mmissi)n eff)rts t) extend its ancillary reach )ver all services )ffered via a transmissi)n platf)rm merely because the platf)rm pr)vider uses it t) pr)vide )ne type )f regulated service al)ng with )ther services n)t subject t) the same regulat)ry framew)rk. See id. at 653 (citing NARUC II, 533 F.2d at 615–16, that )verturned a series )f C)mmissi)n )rders that preempted state regulati)n )f n)n-vide) uses )f cable systems, including precurs)rs t) m)dern cable m)dem service); NARUC II, 533 F.2d at 616 (“[T]he p)int-t)-p)int c)mmunicati)ns ... inv)lve )ne c)mputer talking t) an)ther....”). The Order appears t) be silent )n this issue.72 C,mcast, 600 F.3d at 651. As the C)mcast decisi)n explained, alth)ugh “the C)mmissi)n’s ancillary auth)rity may all)w it t) imp)se s)me kinds )f )bligati)ns )n cable Internet pr)viders,” it d)es n)t f)ll)w that the agency may claim “plenary auth)rity )ver such pr)viders.” Id. at 650. T) d) s), w)uld “run[ ] af)ul” )f the Supreme C)urt precedent set f)rth in S,uthwestern Cable and Midwest Vide, I.” Id. See als,id. (“N)thing in Midwest Vide, I even hints that S,uthwestern Cable’s rec)gniti)n )f ancillary auth)rity )ver )ne aspect )f cable televisi)n meant that the C)mmissi)n had plenary auth)rity )ver all aspects )f cable.”).73 Id. at 651. It f)ll)ws that the p)tential f)r years )f litigati)n )ver individual enf)rcement cases is high, thereby leading t) a peri)d )f pr)l)nged uncertainty that likely will disc)urage further investment in br)adband infrastructure, c)ntrary t) the directives )f Sec. 706.


161

)pini)n makes it repeatedly.74 In d)ing s), the c)urt directed the C)mmissi)n t) m)re cl)sely study the agency’s failures in NARUC II and Midwest Vide, II t) c)mprehend the limits )f its ancillary reach.75

The Order’s claim )f ancillary jurisdicti)n is n)t c)nvincing with respect t) Title II because, inter alia, it inv)kes )nly Secti)n 201 in supp)rt )f its n)ndiscriminati)n mandate.76 Yet in a glaring )missi)n, Secti)n 201 d)es n)t reference n)ndiscriminati)n – that c)ncept is under the purview )f Secti)n 202, which appears n)t t) be inv)ked in the Order.77 (By this

74 See, e.g., id. at 651, 653. F)r example, the c)urt untangled the C)mmissi)n’s arguments ab)ut the implicati)ns )f language in Brand i f)r the agency’s asserti)n )f auth)rity )ver Internet netw)rk management by explaining that:

[n])thing in Brand i, h)wever, suggests that the C)urt was aband)ning the fundamental appr)ach t) ancillary auth)rity set f)rth in S,uthwestern Cable, Midwest Vide, I, and Midwest Vide, II. Acc)rdingly, the C)mmissi)n cann)t justify regulating the netw)rk management practices )f cable Internet pr)viders simply by citing Brand i’s rec)gniti)n that it may have ancillary auth)rity t) require such pr)viders t) unbundle the c)mp)nents )f their services. These are alt)gether different regulat)ry requirements. Brand i n) m)re dictates the result )f this case than S,uthwestern Cable dictated the results )f Midwest Vide, I, NARUC II, and Midwest Vide, II. The C)mmissi)n’s exercise )f ancillary auth)rity )ver C)mcast’s netw)rk management practices must, t, repeat, “be independently justified.” (emphasis added) (internal citati)n )mitted).

75 Id. at 653–54. 76 It is curi)us that in reciting several pr)visi)ns )f Title II as p)tential bases f)r ancillary jurisdicti)n, the Order av)ids the m)st )bvi)us )ne: Secti)n 202(a), which explicitly auth)rizes the n)ndiscriminati)n mandate imp)sed )n Title II c)mm)n carriers. This )versight is especially curi)us given the Order’s reliance )n the statut)ry can)n )f “the specific trumps the general” in revising the agency’s interpretati)n )f Secti)n 706. See Order, ¶¶ 117-23 (distinguishing Depl,yment ,f Wireline Services Offering Advanced Telec,mmunicati,ns Capability, CC D)cket N). 98-147, Mem)randum Opini)n and Order and N)tice )f Pr)p)sed Rulemaking, 13 FCC Rcd. 24,012 (1998) (Advanced Services Order) as limited )nly t) the determinati)n that the general pr)visi)ns )f Secti)n 706 did n)t c)ntr)l the specific f)rbearance pr)visi)ns )f Secti)n 10). That can)n w)uld seem t) apply here as well, given that Secti)n 202(a) certainly is m)re specific ab)ut n)ndiscriminati)n than is Secti)n 706. Perhaps reliance )n Secti)n 202(a) as a basis f)r ancillary auth)rity was )mitted here in )rder t) av)id re)pening divisi)ns )ver p)tential Title II reclassificati)n? Of c)urse, any eff)rt t) classify br)adband Internet access as a c)mm)n carrier service w)uld c)nfr)nt a different set )f seri)us legal and p)licy pr)blems, see, e.g., Cable M,dem Declarat,ry Ruling, GN D)cket N). 00-185, CS D)cket N). 02-52, Declarat)ry Ruling and N)tice )f Pr)p)sed Rulemaking, 17 FCC Rcd. 4,798 (2002); Wireline Br,adband Order, CC D)cket N)s. 02-33, 01-337, 95-20, 98-10, WC D)cket N)s. 04-242, 05-271, Rep)rt and Order and N)tice )f Pr)p)sed Rulemaking, 20 FCC Rcd. 14,853 (2005); Wireless Br,adband Order, WT D)cket N). 07-53, Declarat)ry Ruling, 22 FCC Rcd. 5,901 (2007), but vi)lati)n )f this basic can)n )f statut)ry c)nstructi)n w)uld n)t be am)ng them.77 Secti)n 202(a)’s pr)hibiti)n against “unjust )r unreas)nable discriminati)n” carries with it decades )f agency and c)urt interpretati)n which is much different fr)m the Order’s “n)ndiscriminati)n” mandate. F)r instance, the Order questi)ns the reas)nableness )f tiered pricing and paid pri)ritizati)n. Under the case hist)ry )f Secti)n 202, tiered pricing and c)ncepts similar t) paid pri)ritizati)n are n)t presumed t) c)nstitute “unjust )r unreas)nable discriminati)n.” See, e.g., Nat’l Ass’n ,f Regulat,ry Util. C,mm’rs v. FCC, 737 F.2d 1095, 1133 (D.C. Cir. 1984) (“But when there is a neutral, rati)nal basis underlying apparently disparate charges, the rates need n)t be unlawful. F)r instance, when charges are gr)unded in relative use, a single rate can pr)duce a wide variety )f charges f)r a single service, depending )n the am)unt )f the service used. Yet there is n) discriminati)n am)ng cust)mers, since each pays equally acc)rding t) the v)lume )f service used.”); C,mpetitive Telec,mm. Ass’n v. FCC, 998 F.2d 1058, 1064

(c)ntinued....)


162

)missi)n, it appears that the Order may be attempting an end run ar)und the m)st explicit Title II mandates because )f )ther c)nsiderati)ns.) N)r are the arguments successful with respect t) the Title III and VI pr)visi)ns cited in the Order because th)se statut)ry mandates address services that are n)t subject t) c)mm)n carriage-style n)ndiscriminati)n )bligati)ns absent explicit applicati)n )f statut)ry directives.78

In additi)n, the Order’s expansive grasp f)r jurisdicti)nal p)wer here is likely t) alarm any reviewing c)urt because the eff)rt appears t) have n) limiting principle.79 The D.C. Circuit’s warning in C,mcast against )ne f)rm )f )verreaching – the misreading )f p)licy statements as blanket extensi)ns )f p)wer – applies here as well:

N)t )nly is this argument flatly inc)nsistent with S,uthwestern Cable, Midwest Vide, I, Midwest Vide, II, and NARUC II, but if accepted it w)uld virtually free the C)mmissi)n fr)m its c)ngressi)nal tether. As the C)urt explained in Midwest Vide, II, “with)ut reference t) the pr)visi)ns )f the Act” expressly granting regulat)ry auth)rity, “the C)mmissi)n’s [ancillary] jurisdicti)n ... w)uld be unb)unded.” Indeed, C)mmissi)n c)unsel t)ld us at )ral argument that just as the Order seeks t) make C)mcast’s Internet service m)re “rapid” and “efficient,” the C)mmissi)n c)uld s)meday subject C)mcast’s Internet service t) pervasive rate regulati)n t) ensure that the c)mpany pr)vides the service at “reas)nable charges.” Were we t, accept that the,ry ,f ancillary auth,rity, we see n, reas,n why the C,mmissi,n w,uld have t, st,p there, f,r we can think ,f few examples ,f regulati,ns that apply t, Title II c,mm,n carrier services, Title III br,adcast services, ,r Title VI cable services that the C,mmissi,n, relying ,n the br,ad p,licies articulated in secti,n 230(b) and secti,n 1, w,uld be unable t, imp,se up,n Internet service pr,viders. If in Midwest Vide, I the C)mmissi)n “strain[ed] the )uter limits )f even the )pen-ended and pervasive jurisdicti)n that has ev)lved by decisi)ns )f the C)mmissi)n and the c)urts,” and if in NARUC IIand Midwest Vide, II it exceeded th)se limits, then here it seeks t) shatter them entirely.80

(...c)ntinued fr)m previ)us page)(D.C. Cir. 1993) (“By its nature, § 202(a) is n)t c)ncerned with the price differentials between qualitatively different services )r service packages. In )ther w)rds, s) far as ‘unreas)nable discriminati)n’ is c)ncerned, an apple d)es n)t have t) be priced the same as an )range.’”). 78 See, e.g., 47 U.S.C. § 153(11); FCC v. Midwest Vide, C,rp, 440 U.S. 689, 705 (1979) (Midwest II) (c)nstruing the statute t) pr)hibit treating br)adcasters – and, by extensi)n, cable )perat)rs – as c)mm)n carriers). See als, infra pp. 21-25. With respect t) th)se Title III services that are subject t) s)me c)mm)n carriage regulati)n, m)bile v)ice service pr)viders bear )bligati)ns pursuant t) explicit pr)visi)ns )f Title II )f the Act, including but n)t limited t) the pr)visi)n )f aut)matic v)ice r)aming (Secti)ns 201 and 202); maintainance )f privacy )f cust)mer inf)rmati)n, including call l)cati)n inf)rmati)n explicitly (Secti)n 222); interc)nnecti)n directly )r indirectly with the facilities and equipment )f )ther telec)mmunicati)ns carriers (Secti)n 251); c)ntributi)n t) universal service subsidies (Secti)n 254); and )bligati)n t) ensure that service is accessible t) and usable by pers)ns with disabilities (Secti)n 255).79 F)r example, in the C,mcast case, the FCC c)unsel c)nceded at )ral argument that the ancillary jurisdicti)n argument there c)uld even enc)mpass rate regulati)n, if the C)mmissi)n ch)se t) pursue that path. C,mcast, 600 F.3d at 655. 80 Id. at 655 (emphasis added).


163

S)me )f the Order’s m)st n)tew)rthy flaws are addressed bel)w.

1. The Order’s patchw(rk citati(n (f Title II pr(visi(ns d(es n(t pr(vide the necessary supp(rt f(r extending c(mm(n carriage (bligati(ns t( br(adband Internet access pr(viders.

C,mcast instructs the C)mmissi)n that the inv)cati)n )f any Title II citati)n as a basis f)r ancillary jurisdicti)n must be sh)wn t) be “integral t) teleph)ne c)mmunicati)n.”81 The Order’s eff)rts t) meet this legal requirement are thin and unc)nvincing – and in s)me instances d)wnright perplexing. F)r example, it p)ints t) Secti)n 201 in arguing that it pr)vides the C)mmissi)n with “express and expansive auth)rity”82 t) ensure that the “charges [and] practices in c)nnecti)n with”83 telec)mmunicati)ns services are “just and reas)nable”.84 The Order c)ntends that the use )f interc)nnected V)IP services via br)adband is bec)ming a substitute service f)r traditi)nal teleph)ne service and theref)re certain br)adband service pr)viders might have an incentive t) bl)ck V)IP calls )riginating )n c)mpetit)rs’ netw)rks. The Order then stretches Secti)n 201’s language c)ncerning “charges” and “practices” t) try t) b)lster the claim that it pr)vides a sufficient nexus f)r ancillary jurisdicti)n )ver p)tential behavi)r by n)nregulated service pr)viders that c)nceptually w)uld best be characterized as “discriminati)n.”85 There are at least tw) )bvi)us weaknesses in this rati)nale. First, the Order ign)res the D.C. Circuit’s instructi)n that the C)mmissi)n has “expansive auth)rity” )nly when it is “regulating c)mm)n carrier services, including landline teleph)ny.”86 Yet br)adband Internet access pr)viders are n)t c)mm)n carriers and the Order purp)sely av)ids declaring them t) be s). Sec)nd, the Order seems t) pretend that the plain meaning )f Secti)n 201’s text is syn)nym)us with that )f Secti)n 202, which d)es address “discriminati)n” but is n)t directly inv)ked here.

81 Id. at 657–58 (discussing Nat’l Ass’n ,f Regulat,ry Util. C,mm’rs v. FCC, 880 F.2d 422, 425 (D.C. Cir. 1989) (NARUC III) and n)ting that “the C)mmissi)n had emphasized that ‘[)]ur pri)r preempti)n decisi)ns have generally been limited t) activities that are cl)sely related t) the pr)visi)n )f services and which affect the pr)visi)n )f interstate services.’ The term ‘services’ referred t) ‘c)mm)n carrier c)mmunicati)n services’ within the sc)pe )f the C)mmissi)n’s Title II jurisdicti)n. ‘In sh)rt,’ the C)mmissi)n explained, ‘the interstate teleph)ne netw)rk will n)t functi)n as efficiently as p)ssible with)ut the preemptive detariffing )f inside wiring installati)n and maintenance.’ The C)mmissi)n’s pre-empti)n )f state regulati)n )f inside wiring was thus ancillary t) its regulati)n )f interstate ph)ne service, precisely the kind )f link t) express delegated auth)rity that is absent in this case.” (qu)ting Detariffing the Installati,n and Maintenance ,f Inside Wiring, CC D)cket N). 79-105, Mem)randum Opini)n and Order,1 FCC Rcd. 1,190, 1,192, ¶ 17 (1986)). 82 Order, ¶ 125 (qu)ting C,mcast, 600 F.3d at 645). 83 47 U.S.C. § 201(b).84 Id.85 The term “discriminati)n” in the c)ntext )f c)mmunicati)ns netw)rks is n)t a syn)nym f)r “antic)mpetitive behavi)r.” While the w)rd “discriminate” has carried negative c)nn)tati)ns, netw)rk engineers c)nsider it “netw)rk management” – because in the real w)rld the Internet is able t) functi)n )nly if engineers may discriminate am)ng different types )f traffic. F)r example, in )rder t) ensure a c)nsumer can view )nline vide) with)ut dist)rti)n )r interrupti)n, certain bits need t) be given pri)rity )ver )ther bits, such as individual emails. This type )f activity is n)t necessarily antic)mpetitive.86 C,mcast, 600 F.3d at 645 (citing t) Secti)n 201).


164

The Order’s reliance )n Secti)n 251(a)(1) is flawed f)r similar reas)ns. That pr)visi)n imp)ses a duty )n telec)mmunicati)ns carriers “t) interc)nnect directly )r indirectly with the facilities )f )ther telec)mmunicati)ns carriers.”87 The Order n)tes that an increasing number )f cust)mers use V)IP services and p)sits that if a br)adband Internet service pr)vider were t) bl)ck certain calls via V)IP, it w)uld ultimately harm users )f the public switched teleph)ne netw)rk. All p)licy aspirati)ns aside, this jurisdicti)nal argument fails as a legal matter. As the Order admits, V)IP services have never been classified as “telec)mmunicati)ns services,” i.e., c)mm)n carriage services, under Title II )f the Act.88 Theref)re, as a c)r)llary matter, br)adband Internet service pr)viders are n)t “telec)mmunicati)ns carriers” – )r at least the C)mmissi)n has never declared them t) be s). The effect )f the Order is t) d) indirectly what the C)mmissi)n is reluctant t) d) explicitly.

2. The language (f Title III and VI pr(visi(ns cann(t be wrenched (ut (f c(ntext t( imp(se c(mm(n carriage (bligati(ns (n n(n-c(mm(n carriage services.

The Order makes a rather breathtaking attempt t) find a basis f)r ancillary auth)rity t) imp)se n)ndiscriminati)n and )ther c)mm)n carriage mandates in statut)ry schemes that since their incepti)n have been distinguished fr)m c)mm)n carriage. This eff)rt, t)), will fail in c)urt, f)r it fl)uts Supreme C)urt precedent )n valid exercises )f ancillary auth)rity, as reviewed in detail in C,mcast. If the “derivative nature )f ancillary jurisdicti)n”89 has any )bjectively discernible b)undaries, it must bar the C)mmissi)n fr)m taking )bligati)ns explicitly set f)rth in )ne statut)ry scheme established in the Act – such as the n)ndiscriminati)n mandates )f Title II –and grafting them int) different statut)ry schemes set f)rth in )ther secti)ns )f Act, such as Title III and Title VI, that either directly )r indirectly eschew such )bligati)ns. Here, the Act itself explicitly distinguishes between br)adcasting and c)mm)n carriage.90 And the Supreme C)urt l)ng ag) drew the line between Title VI vide) services and Title II-style mandates by f)rbidding the C)mmissi)n t) “relegate[] cable systems ... t) c)mm)n-carrier status”.91

The Order’s eff)rt t) search high and l)w thr)ugh pr)visi)ns )f the C)mmunicati)ns Act t) find h))ks f)r ancillary jurisdicti)n may be at its m)st risible in the br)adcasting c)ntext. The

87 47 U.S.C. 251(a)(1).88 See V,nage H,ldings C,rp,rati,n Petiti,n f,r Declarat,ry Ruling C,ncerning an Order ,f the Minnes,ta Public Utilities C,mmissi,n, WC D)cket N). 03-211, Mem)randum Opini)n and Order, 27 FCC Rcd. 22,404 ¶¶ 14, 20–22 (2004).89 See C,mcast, 600 F.3d at 654. 90 47 U.S.C. § 153(11). 91 See C,mcast, 600 F.3d at 654 (citing Midwest Vide, II, 440 U.S. 689, 700–01) (C)mmissi)n c)uld n)t “relegate[ ] cable systems ... t) c)mm)n-carrier status”). Alth)ugh the Midwest Vide, II case predated c)ngressi)nal enactment )f cable regulati)n, n)ne )f the statut)ry amendments )f the C)mmunicati)ns Act since that time – the 1984 Cable Act, the Cable C)nsumer Pr)tecti)n and C)mpetiti)n Act )f 1992, and the Telec)mmunicati)ns Act )f 1996 – have imp)sed any f)rm )f Title II-style n)ndiscriminati)n mandates )n the multichannel vide) services regulated pursuant t) Title VI. T) the c)ntrary, the c)urt has rec)gnized that by its nature MVPD service inv)lves a degree )f edit)rial discreti)n that places it )utside the Title II )rbit. See, e.g., Denver Area Educ. Telec,mm. C,ns,rtium, Inc., v. FCC, 518 U.S. 727 (1996) (DAETC) (uph)lding § 10(a) )f the 1992 Cable Act, which permitted cable )perat)rs t) restrict indecency )n leased access channels).


165

attempt here seems hardly seri)us, given that the legal discussi)n is limited t) a )ne-paragraph discussi)n that cites t) n) specific secti)n within Title III.92 Rather, it stands its gr)und )n the )bservati)n that TV and radi) br)adcasters n)w distribute c)ntent thr)ugh their )wn websites –c)upled with the hyp)thetical c)ntenti)n that s)me p)ssible future “self-interested” act by br)adband pr)viders c)uld p)tentially have a negative effect )n the emerging business m)dels that may pr)vide imp)rtant supp)rt f)r the br)adcast )f l)cal news and )ther pr)gramming.93

This is far fr)m the kind )f tight ancillary nexus that the Supreme C)urt upheld in S,uthwestern Cable and Midwest Vide, I,94 and it is even m)re attenuated than the jurisdicti)nal stretch that the C)urt rejected in Midwest Vide, II.95 One w)nders h)w far this new the)ry f)r an ancillary reach c)uld p)ssibly extend. Many br)adcasters f)r years have benefitted thr)ugh the sales )f tapes and DVDs )f their pr)gramming marketed thr)ugh paper catal)gs. D)es the rati)nale here mean that the C)mmissi)n has p)wer t) regulate the management )f that c)mmunicati)ns platf)rm, t))?

The equally generalized Title III arguments based )n “spectrum licensing” apparently are intended t) supp)rt jurisdicti)n )ver the many p)int-t)-p)int wireless services that are n)t p)int-t)-multip)int br)adcasting. They, t)), appear )ff-p)int.96 F)r example, the Order’s recitati)n )f a l)ng array )f Title III pr)visi)ns (e.g., maintenance )f c)ntr)l )ver radi) transmissi)ns in the U.S., imp)siti)n )f c)nditi)ns )n the use )f spectrum) seems misplaced. If this )verview is intended t) serve as analysis, it c)ntains a l)gical flaw: M)st )f the rules ad)pted t)day are n)t being applied – yet – t) m)bile br)adband Internet access service.97 Certainly the C)mmissi)n

92 Order, ¶ 128.93 Id.94 United States v. S,uthwestern Cable, 392 U.S. 157 (1968) (uph)lding a limit )n cable )perat)rs’ imp)rtati)n )f )ut-)f-market br)adcast signals); United States v. Midwest Vide, C,rp., 406 U.S. 649 (1972) (Midwest Vide, I) (plurality )pini)n uph)lding FCC rule requiring cable pr)visi)n )f l)cal )riginati)n pr)gramming); id. at 676 (Burger, C.J., c)ncurring) (“Cand)r requires ackn)wledgment, f)r me, at least, that the C)mmissi)n’s p)siti)n strains the )uter limits )f even the )pen-ended and pervasive jurisdicti)n that has ev)lved by decisi)ns )f the C)mmissi)n and the c)urts.”). With respect t) the l)cal )riginati)n pr)gramming mandate at issue in Midwest Vide, I, the C)mmissi)n rep)rtedly “stepped back fr)m its p)siti)n during the c)urse )f the ... litigati)n” by “suspend[ing] the ... rule and never reinstat[ing] it.” T. BARRON CARTER, JULIET L. DEE & HARVEY L. ZUCKMAN, MASS COMMUNICATIONS LAW 522–23 (West Gr)up 2000). 95 Midwest Vide, II, 440 U.S. at 694–95 (rejecting rules mandating cable pr)visi)n )f public access channels, which the FCC claimed were justified by “l)ngstanding c)mmunicati)ns regulat)ry )bjectives” t) “increas[e] )utlets f)r l)cal self-expressi)n and augment[ ] the public’s ch)ice )f pr)grams”). 96 One theref)re must w)nder whether by this argument the Order seeks t) pave the way f)r future regulati)n )f m)bile br)adband Internet services. The Order has taken great pains t) explain that t)day’s treatment )f m)bile br)adband Internet access service pr)viders is in c)nsumers’ best interest. Hist)ry suggests that the Order may merely be p)stp)ning the inevitable. In fact, the new rule (Secti)n 8.7) need )nly be amended by )mitting )ne w)rd: “fixed.” The C)mmissi)n will be p)ised t) d) just that when it reviews the new regulati)ns in tw) years.97 Taking the Order at its apparent w)rd that it is n)t (yet) applying all new mandates )n wireless br)adband Internet service pr)viders, it must be that the Order inv)kes the C)mmissi)n’s Title III licensing auth)rity t) imp)se the rules )n fixed br)adband Internet access service pr)viders – that is, cable service pr)viders, c)mm)n carriers, )r b)th. If s), this is curi)us )n its face because these services are regulated

(c)ntinued....)


166

need n)t depend )n the full sweep )f Title III auth)rity t) imp)se the “transparency” rule; it need )nly act in )ur pending “Truth-in-Billing” d)cket.98 Similarly, with regard t) the “n) bl)cking” rule, the Order need )nly rest )n the pr)visi)ns )f Title III discussed in the 700 MHz Sec,nd Rep,rt and Order, where this rule was )riginally ad)pted.99

With respect t) the asserted Title VI bases f)r ancillary jurisdicti)n, the Order actually d)es p)int t) three specific pr)visi)ns, but n)ne pr)vides a firm f)undati)n f)r extending the C)mmissi)n’s auth)rity t) enc)mpass Internet netw)rk management. The Order first cites Secti)n 628, which is designed t) pr)m)te c)mpetiti)n am)ng the multichannel vide) pr)gramming distribut)rs (MVPDs) regulated under Title VI, such as cable )perat)rs and satellite TV pr)viders. The best-kn)wn elements )f this pr)visi)n auth)rize )ur pr)gram access rules, but the C)mmissi)n recently has strayed – )ver my dissent – bey)nd the plain meaning )f the statut)ry language t) read away explicit c)nstraints )n )ur p)wer in this area.100 Apparently the C)mmissi)n is ab)ut t) make a bad habit )f d)ing this.

Of c)urse, Secti)n 628 d)es n)t explicitly refer t) the Internet, much less the management )f its )perati)n. The C)ngressi)nal framers )f the Cable C)nsumer Pr)tecti)n and C)mpetiti)n Act )f 1992, )f which Secti)n 628 was a part, were c)ncerned ab)ut, and specifically referenced, vide) services regulated under Title VI.101 Yet the Order empl)ys a general statut)ry reference t) “unfair meth)ds )f c)mpetiti)n )r unfair )r deceptive acts )r practices” as a h))k f)r a br)ad exercise )f ancillary jurisdicti)n )ver an unregulated netw)rk )f netw)rks.102 This time the the)ry rests largely )n the c)ntenti)n that, absent netw)rk management regulati)n, netw)rk pr)viders might impr)perly interfere with the delivery )f “)ver the t)p” (OTT) vide) pr)gramming that may c)mpete f)r viewer attenti)n with the platf)rm pr)viders’ )wn MVPD services.103 The Order cites t) n) actual instances )f such behavi)r,

(...c)ntinued fr)m previ)us page)under Titles VI and II, respectively, and as a legal matter the C)mmissi)n d)es n)t “license” either cable service pr)viders )r c)mm)n carriers.98 See Truth-in-Billing and Billing F,rmat, CC D)cket N). 98-170, N)tice )f Inquiry, 24 FCC Rcd. 11,380 (rel Aug. 28, 2009) (Aug. 2009 Truth-in-Billing NOI). 99 See Service Rules f,r the 698-746, 747-762 and 777-792 MHz Bands, WT D)cket N). 06-150, Rep)rt & Order, 22 FCC Rcd 15289 (2007). 100 See Review ,f the C,mmissi,n’s Pr,gram Access Rules and Examinati,n ,f Pr,gramming Tying Arrangements, MB D)cket N). 07-198, First Rep)rt and Order, 25 FCC Rcd. 746 (2010) (Terrestrial L,,ph,le Order); id. at 822 (McD)well, C)mm’r dissenting) (“Secti)n 628 refers t) ‘satellite’-delivered pr)gramming 36 times thr)ugh)ut the length )f the pr)visi)n, including 14 references in the subsecti)ns m)st at issue here. The plain language )f Secti)n 628 bars the FCC fr)m establishing rules g)verning disputes inv)lving terrestrially delivered pr)gramming, whether we like that )utc)me )r n)t.”). This FCC decisi)n currently is under challenge bef)re the D.C. Circuit. See Cablevisi,n Systems C,rp,rati,n v. FCC, N). 10-1062 (D.C. Cir. filed March 15, 2010).101 See 47 U.S.C. § 522(13) (defining “multichannel vide) pr)gramming distribut)r”). S)me )f the transmissi)n systems used by such distribut)rs, such as satellites, als) are regulated under Title III. 102 Order, ¶ 130 (citing 47 U.S.C. § 548(b)).103 The D.C. Circuit has upheld the C)mmissi)n’s reliance )n Secti)n 628(b) t) help drive the pr)visi)n )f c)mpetitive Title VI multichannel vide) pr)gramming services int) apartment buildings and similar “multi-dwelling unit” devel)pments, see Nat’l Cable & Telc,ms. Ass’n v. FCC, 567 F.3d 659 (D.C. Cir. 2009), but the p)licy thrust )f that case unquesti)nably c)ncerned Title VI vide) services. As the Order

(c)ntinued....)


167

h)wever, n)r d)es it grapple with the implicati)ns )f the market f)rces that are driving MVPDs in the )pp)site directi)n – t) add Internet c)nnectivity t) their multichannel vide) )fferings.104

The sec)nd Title VI pr)visi)n up)n which the Order stakes a claim f)r ancillary jurisdicti)n is Secti)n 616, which regulates the terms )f pr)gram carriage agreements.105 The specific text and statut)ry design )f this pr)visi)n make plain that it addresses independently pr)duced c)ntent carried by c)ntract as part )f a transmissi)n platf)rm pr)vider’s Title VI MVPD service, and n)t a situati)n in which there is n) privity )f c)ntract and the service is Internet access. The Order attempts t) make much )f Secti)n 616’s rather br)ad definiti)n “vide) pr)gramming vend)r” with)ut grappling with the inc)ngruities created when )ne tries t) sh)ve the pr)visi)n’s explicit directives ab)ut carriage c)ntract terms int) the Internet c)ntext.106 In fact, the applicati)n )f Secti)n 616 here is )nly c)mprehensible if )ne c)nceives )f it as a new flav)r )f c)mm)n carriage, with all the key c)ntract terms supplied by statute.107 Such a reading,

(...c)ntinued fr)m previ)us page)ackn)wledges, it is an )pen questi)n as t) whether OTT vide) pr)viders might s)meday be made subject t) Title VI, with all )f the attendant legal rights and )bligati)ns that c)me with that classificati)n. Order at n.417. But it is misleading in suggesting that the regulat)ry classificati)n )f OTT vide) pr)viders has been pending )nly since 2007. Id. On the c)ntrary, it has been pending bef)re the C)mmissi)n since at least 2004 in the IP Enabled Services d)cket, WCB D)cket 04-36, and the agency has c)nsistently av)ided answering the questi)n ever since. While I d) n)t prejudge the )utc)me )f that issue, I questi)n the selective inv)cati)n )f secti)ns )f Title VI here as a basis f)r ancillary jurisdicti)n. Such )verreaching seems t) )perate as a way )f pr)l)nging )ur av)idance )f an increasingly imp)rtant, albeit c)mplex, matter.104 See, e.g., Letter fr)m William M. Wiltshire, C)unsel f)r DIRECTV, t) Marlene H. D)rtch, Secretary, FCC, at 1 (Oct. 1, 2010) (DIRECTV Oct. 1 Ex Parte Letter) ()utlining the wealth )f inn)vative devices currently available in the market, including AppleTV, B)xee, and R)ku); Adam Satarian) & Andy Fixmer, ESPN t, Web Simulcast, Make Pay TV Online Gatekeeper, BLOOMBERG, Oct. 15, 2010, at http://www.bl))mberg.c)m/news/2010-10-15/espn-t)-stream-channels-t)-time-warner-cable-users-t)-c)mbat-web-rivals.html (explaining ESPN’s plan t) begin streaming its sp)rts channels )nline t) Time Warner Cable Inc. cust)mers as part )f the pay-TV industry’s strategy t) fend )ff Internet c)mpetit)rs); Walter S. M)ssberg, G,,gle TV: N, Need T, Tune In Just Yet, WALL ST. J., N)v. 18, 2010, at D1 (c)mparing G))gle TV techn)l)gy t) its rivals Apple TV and R)ku); L)uis Trager, Netflix Plans Rapid W,rld Spread ,f Streaming Service, COMM. DAILY, N)v. 19, 2010, at 7 (examining Netflix’s plans t) )ffer a streaming-)nly service in c)mpetiti)n with Hulu Plus, as well as its plans f)r expansi)n w)rldwide).105 47 U.S.C. § 536.106 F)r example, Secti)n 616(a)(1) bars cable )perat)rs fr)m linking carriage t) the acquisiti)n )f a financial interest in the independent pr)grammers’ channel – a restraint b)rr)wed fr)m antitrust principles that is readily understandable in the c)ntext )f a traditi)nal cable system with a limited am)unt )f s)-called “linear channel” space. The c)nstruct d)es n)t c)nf)rm easily t) the Internet setting, which is characterized by a c)nsiderably m)re flexible netw)rk architecture that all)ws end users t) make the c)ntent ch)ices – and which aff)rds them access t) literally milli)ns )f ch)ices that d) n)t resemble “vide) pr)gramming” as it is defined in Title VI, see 47 U.S.C. §522(20), including but n)t limited t) simple, text-heavy websites, vide) sh)rts and all manner )f pers)nalized exchanges )f data.107 The federal g)vernment first inv)lved itself in setting basic rates, terms, and c)nditi)ns in the c)ntext )f service agreements between railr)ads and their cust)mers, but at least )ne hist)rian (and f)rmer FCC c)mmissi)ner) traced the “‘ancient law’ )f c)mm)n carriers” back t) the devel)pment )f stage c)aches and canal b)ats. See GLEN O. ROBINSON, “THE FEDERAL COMMUNICATIONS ACT: AN ESSAY ON ORIGINS AND

REGULATORY PURPOSE,” IN A LEGISLATIVE HISTORY OF THE COMMUNICATIONS ACT OF 1934, 26 (Max D. Paglin, ed. 1989) (n)ting that a 19th Century Supreme C)urt case identified the c)ncept emerging as far back as the reign )f William and Mary).


168

h)wever, w)uld be in c)nsiderable c)nflict with the rati)nale )f Midwest Vide, II,108 as the D.C. Circuit in C,mcast already has n)ted.109

In sh)rt, the Order’s eff)rts t) find a s)lid gr)unding f)r exercising ancillary p)wer here – and thereby imp)sing sweeping new c)mm)n carriage-style )bligati)ns )n an unregulated service – strain credulity. P)licy c)ncerns cann)t )verc)me the limits )f the agency’s current statut)ry auth)rity. The C)mmissi)n sh)uld heed the cl)sing adm)niti)n )f C,mcast:

[N])twithstanding the “difficult regulat)ry pr)blem )f rapid techn)l)gical change” p)sed by the c)mmunicati)ns industry, “the all)wance )f wide latitude in the exercise )f delegated p)wers is n)t the equivalent )f untrammeled freed)m t) regulate activities )ver which the statute fails t) c)nfer ... C)mmissi)n auth)rity.” Because the C)mmissi)n has failed t) tie its asserti)n )f ancillary auth)rity )ver C)mcast’s Internet service t) any “statut)rily mandated resp)nsibility,” we ... vacate the Order.110

The same fate awaits this new rulemaking decisi)n.

C. The Order Will Face Seri(us C(nstituti(nal Challenges.

It is reas)nable t) assume that br)adband Internet service pr)viders will challenge the FCC ruling )n c)nstituti)nal gr)unds as well.111 C)ntrary t) the Order’s thinly supp)rted

108 In Midwest Vide, II, the Supreme C)urt invalidated FCC rules that w)uld have required cable )perat)rs t) pr)vide public access channels. The C)urt reas)ned that, in the absence )f explicit statut)ry auth)rity f)r such mandates, the public access rules am)unted t) an indirect eff)rt t) imp)se Title II c)mm)n carriage )bligati)ns – and that, in turn, c)nflicted with the Title III basis f)r the agency’s ancillary jurisdicti)n claim. See 440 U.S. at 699-02. 109 C,mcast, 600 F.3d at 654. 110 C,mcast, 600 F.3d at 661 (internal citati)ns )mitted). 111 The Order inc)rrectly asserts that the new netw)rk management rules raise n) seri)us questi)ns ab)ut a Fifth Amendment taking )f an Internet transmissi)n platf)rm pr)vider’s pr)perty. At the )utset, the Order t)) quickly dismisses the p)ssibility that these rules may c)nstitute a per se permanent )ccupati)n )f br)adband netw)rks. Under L,rett, v. Telepr,mpter Manhattan CATV C,rp., a taking )ccurs when the g)vernment auth)rizes a “permanent physical )ccupati)n” )f pr)perty “even if they )ccupy )nly relatively insubstantial am)unts )f space and d) n)t seri)usly interfere with the [)wner’s] use )f the rest )f his [pr)perty].” 458 U.S. 419, 430 (1982). Here, the new regulat)ry regime effectively auth)rizes third-party )ccupati)n )f s)me p)rti)n )f a br)adband ISP’s transmissi)n facilities by c)nstraining the facility )wner’s ability t) decide h)w t) best manage the traffic running )ver the br)adband platf)rm. The new strictures have parallels t) the C)mmissi)n’s decisi)n t) grant c)mpetitive access pr)viders the right t) the exclusive use )f a p)rti)n )f l)cal teleph)ne c)mpany’s central )ffice facilities – an acti)n which the D.C. Circuit held c)nstituted a physical taking. Bell Atlantic Tel. C,s. v. FCC, 24 F.3d 1441, 1445 (D.C. Cir. 1994).

But even assuming arguend, that the regulati)ns may n)t c)nstitute a physical taking, they still trigger seri)us “regulat)ry takings” c)ncerns. T)day’s situati)n differs fr)m the )ne at issue in Cablevisi,n Systems C,rp. v FCC, where the c)urt held that Cablevisi)n had failed “t) sh)w that the regulati)n had an ec)n)mic impact that interfered with ‘distinct investment backed expectati)ns.’” 570 F.3d 83, 98–99 (2d Cir. 2009). Here, many )bvi)us investment-backed expectati)ns are at stake: Netw)rk )perat)rs have raised, b)rr)wed, and spent billi)ns )f d)llars t) build, maintain, and m)dernize their br)adband plant –based at least in part )n the expectati)n that they w)uld rec)up their investment )ver future years under the deregulat)ry appr)ach t) br)adband that the C)mmissi)n first ad)pted f)r cable in 2002 and quickly

(c)ntinued....)


169

asserti)ns, br)adband ISPs are speakers f)r First Amendment purp)ses – and theref)re challenges )n that basis sh)uld n)t be s) lightly dismissed. There are several reas)ns f)r being c)ncerned ab)ut legal infirmities here.

First, the Order is t)) quick t) rely )n simplistic service labels )f the past in brushing )ff First Amendment arguments. F)r example, while it )stensibly av)ids classifying br)adband pr)viders as Title II c)mm)n carriers, it still indirectly alludes t) )ld case law c)ncerning the speech rights )f c)mm)n carriers by dismissing br)adband ISPs as mere “c)nduits f)r speech” undeserving )f First Amendment c)nsiderati)n.112 There is g))d reas)n t)day t) call int) questi)n well-w)rn c)nventi)nal wisd)m dating fr)m the era )f g)vernment-sancti)ned m)n)p)lies ab)ut c)mm)n carriers’ freed)m )f speech, particularly in the c)ntext )f a c)mpetitive marketplace.113 Indeed, at least tw) sitting Justices have signaled a willingness t) wrestle with the implicati)ns )f the issue )f c)mm)n carriers’ First Amendment pr)tecti)ns.114

(...c)ntinued fr)m previ)us page)extended t) )ther types )f facilities. M)re)ver, t)day’s acti)n c)uld result in significant ec)n)mic hardships f)r platf)rm pr)viders even if they have n) debt l)ad t) pay )ff. F)r example, the Order ann)unces the g)vernment’s “expectati)n” that platf)rm pr)viders will build-)ut additi)nal capacity f)r Internet access service bef)re )r in tandem with expanding capacity t) acc)mm)date specialized services. Order, ¶ 114. Alth)ugh pr)perty )wners may n)t be able t) expect existing legal requirements regarding their pr)perty t) remain entirely unchanged, t)day’s vague “expectati)n” places a n)table burden )n platf)rm pr)viders – heavy en)ugh, given their legitimate investment-backed expectati)ns since 2002, t) am)unt t) a regulat)ry taking under Penn Central Transp. C,. v. City ,f New Y,rk, 438 U.S. 104 (1978). 112 Order, ¶ 144 (citing CWA Reply at 13-14, which cites t) Turner Br,adcasting System, Inc. v. FCC, 512 U.S. 622 (1994) and Time Warner Entertainment, L.P. v. FCC, 93 F.3d 957 (D.C. Cir. 1996)). 113 The Supreme C)urt has never directly addressed the First Amendment issues that w)uld be ass)ciated with a g)vernment c)mpulsi)n t) serve as a c)mm)n carrier in a marketplace that )ffers c)nsumers alternatives t) a m)n)p)ly pr)vider. This is n)t surprising, f)r the c)urts have had n) )pp)rtunity t) pass )n the issue; the FCC in the m)dern era has f)und that it served the public interest t) waive c)mm)n carrier status )n numer)us )ccasi)ns. See, e.g., In re Australia-Japan Cable (Guam) Limited, 15 FCC Rcd. 24,057 (2000) (finding that the public interest w)uld be served by all)wing a submarine cable )perat)r t) )ffer services )n a n)n-c)mm)n carrier basis because AJC Guam was unable t) exercise market p)wer in light )f ample alternative facilities); In re Tyc,m Netw,rks Inc., et al., 15 FCC Rcd, 24,078 (2000) (examining the public interest pr)ng )f the NARUC I test, and determining that TyC)m US and TyC)m Pacific lacked sufficient market p)wer given the abundant alternative facilities present). In fact, in the m)re than 85 rep)rted cases in which the FCC has addressed c)mm)n carrier waivers in the past 30 years, it has )nly imp)sed c)mm)n carriage )n an unwilling carrier )nce – and in that instance the agency later reversed c)urse and granted the requested n)n-c)mm)n carrier status up)n receiving the required inf)rmati)n that the applicant previ)usly )mitted. In re Applicati,ns ,f Martin Marietta C,mmunicati,ns Systems, Inc.; F,r Auth,rity t, C,nstruct, Launch and Operate Space Stati,ns in the D,mestic Fixed-Satellite Service, 60 Rad. Reg. 2d (P & F) 779 (1986).114 The Order is flatly wr)ng in asserting that “n) c)urt has ever suggested that regulati)n )f c)mm)n carriage arrangements triggers First Amendment scrutiny.” Order, ¶ 144 (emphasis added). In Midwest Vide, II, the C)urt stated that the questi)n )f whether the imp)siti)n )f c)mm)n carriage w)uld vi)late the First Amendment rights )f cable )perat)rs was “n)t friv)l)us.” 440 U.S. 689 (1979), 709 n.19. In DAETC, 518 U.S. 727 (1996), the plurality )pini)n appeared split )n, am)ng )ther things, the c)nstituti)nal validity )f mandated leased access channels. Justice Kennedy reas)ned that mandating c)mm)n carriage w)uld be “functi)nal[ly] equivalent[t]” t) designating a public f)rum and that b)th g)vernment acts theref)re sh)uld be subject t) the same level )f First Amendment scrutiny. Id. at 798 (Kennedy, J., c)ncurring in part, c)ncurring in the judgment in part, and dissenting in part). Justice

(c)ntinued....)


170

Similarly, the Order )ffhandedly rejects the anal)gies drawn t) First Amendment precedent c)ncerning cable )perat)rs and br)adcasters, based )nly )n the unremarkable )bservati)n that cable )perat)rs and br)adcasters exercise a n)tew)rthy degree )f edit)rial c)ntr)l )ver the c)ntent they transmit via their legacy services.115 In s) d)ing, the Order disregards the fact that at least tw) federal district c)urts have c)ncluded that br)adband pr)viders, whether they )riginated as teleph)ne c)mpanies )r cable c)mpanies, have speech rights.116 Alth)ugh the Order ackn)wledges the cases in t)day’s Order, it makes n) eff)rt t) distinguish )r challenge them. Instead, the Order simply “disagree[s] with the reas)ning )f th)se decisi)ns.”117

Sec)nd, I questi)n the Order’s breezy asserti)n that br)adband ISPs perf)rm n) edit)rial functi)n w)rthy )f c)nstituti)nal rec)gniti)n. The Order rests the weight )f its argument here )n the fact that br)adband ISPs v)luntarily dev)te the vast maj)rity )f their capacity t) uses by independent speakers with very little edit)rial inventi)n by the platf)rm pr)vider bey)nd “netw)rk management practices designed t) pr)tect their Internet services against spam and malici)us c)ntent.”118 But what are acts such as pr)viding quality )f service (Q)S) management and c)ntent filters if n)t edit)rial functi)ns?119

And the mere act )f )pening )ne’s platf)rm t) a large multiplicity )f independent v)ices d)es n)t divest the platf)rm )wner )f its First Amendment rights.120 The Order cites n) legal precedent f)r determining h)w much “edit)rial discreti)n” must be exercised bef)re a speaker can merit First Amendment pr)tecti)n. Newspapers pr)vide )ther speakers access t) their print

(...c)ntinued fr)m previ)us page)Th)mas’ analysis went even further in questi)ning the )ld [dicta] ab)ut c)mm)n carriers’ speech rights. See id. at 824–26 (Th)mas, J., c)ncurring in the judgment in part and dissenting in part) (stating that “C)mm)n carriers are private entities and may, c)nsistent with the First Amendment, exercise edit)rial discreti)n in the absence )f a specific statut)ry pr)hibiti)n”).115 Order, ¶ 140 (citing, e.g., Turner Br,adcast Systems, Inc v. FCC, 512 U.S. 622, 636 (1994) (Turner I)). 116 Illin,is Bell Teleph,ne C,. v. Village ,f Itasca, 503 F. Supp. 2d 928 (N.D. Ill. 2007) (anal)gizing br)adband netw)rk pr)viders t) cable and DBS pr)viders); C,mcast Cablevisi,n ,f Br,ward C,unty, Inc. v. Br,ward C,unty, 124 F. Supp. 2d 685 (S.D. Fla. 2000) (relying )n Supreme C)urt precedent in Ex parte Jacks,n, 96 U.S. 727, 733 (1878) and L,vell v. Griffin, 303 U.S. 444, 452 (1938), the c)urt c)ncluded that the message, as well as the messenger, receives c)nstituti)nal pr)tecti)n because the transmissi)n functi)npr)vided by br)adband services c)uld n)t be separated fr)m the c)ntent )f the speech being transmitted). 117 Order, n. 458. 118 Order, ¶ 143.119 In additi)n, the Order’s citati)n t) a C)pyright Act pr)visi)n, U.S.C. § 230(c)(1), t) supp)rt the pr)p)siti)n that br)adband pr)viders serve n) edit)rial functi)n, see Order, ¶ 142, ign)res the fact that br)adband ISPs engage in edit)rial discreti)n – as permitted under an)ther pr)visi)n )f the C)pyright Act, 17 U.S.C. § 230(c)(2) – t) bl)ck malici)us c)ntent and t) restrict p)rn)graphy. See Batzel v. Smith, 333 F.3d 1018, 1030 n.14 (9th Cir. 2003) (n)ting that § 230(c)(2) “enc)urages g))d Samaritans by pr)tecting service pr)viders and users fr)m liability f)r claims arising )ut )f the rem)val )f p)tentially ‘)bjecti)nable’ material fr)m their services.... This pr)visi)n insulates service pr)viders fr)m claims premised )n the taking d)wn )f a cust)mer’s p)sting such as breach )f c)ntract )r unfair business practices.”). 120 N)r d)es the availability )f alternative venues f)r speech undercut the platf)rm )wner’s First Amendment rights t) be able t) effectively use its )wn regulated platf)rm f)r the speech it wishes t) disseminate. See, e.g., Nat’l Cable Televisi,n Ass’n v. FCC, 33 F.3d 66 (D.C. Cir. 1994).


171

“platf)rms” in the f)rm )f classified and display advertising, letters t) the edit)r, and, m)re recently, reader c)mments p)sted in resp)nse t) )nline news st)ries. Advertising hist)rically has filled 60 percent )r m)re )f the space in daily newspapers,121 and publishers rarely turn away ads in these difficult ec)n)mic times122 – th)ugh they still may exercise s)me min)r degree )f “edit)rial discreti)n” t) screen )ut “malici)us” c)ntent deemed inappr)priate f)r family c)nsumpti)n. Under the Order’s rati)nale, w)uld newspaper publishers theref)re be deemed t) have relinquished rights t) free speech pr)tecti)n?

Third, it is undisputed that br)adband ISPs merit First Amendment pr)tecti)n when using their )wn platf)rms t) pr)vide multichannel vide) pr)gramming services and similar )fferings. The Order ackn)wledges as much but simply asserts that the new regulati)ns will leave br)adband ISPs sufficient r))m t) speak in this fashi)n123 – unless, )f c)urse, hints elsewhere in the d)cument c)ncerning capacity usage c)me t) pass.124 S) while the Order c)ncedes, as it must, that netw)rk management regulati)n c)uld well be subject t) heightened First Amendment review, it disregards the m)st significant hurdle p)sed by even the intermediate scrutiny standard.125 The Order dev)tes all )f its sparse discussi)n t) the first pr)ng )f the intermediate scrutiny test, the “substantial” g)vernment interest,126 while wh)lly failing t) address the sec)nd

121 See, e.g., McInnis & Ass)ciates, “The Basics )f Selling Newspaper Advertising,” Newspaper Print and Online ad Sales Training, at http://www.ads-)n-line.c)m/samples/Y)ur_Publicati)n/chapter)ne2.html(visited 12/7/10). This rati) has remained relatively c)nstant f)r decades. See R)bert L. J)nes & R)y E. Carter Jr., “S)me Pr)cedures f)r Estimating ‘News H)le’ in C)ntent Analysis,” The Public Opini)n Quarterly, V)l. 23, N). 3 (Autumn, 1959), pp. 399-403, pin cite t) p. 400 (n)ting measurements )f n)n-advertising newsh)les as l)w as 30 percent, with an average ar)und 40 percent) (available at http://www.jst)r.)rg/stable/2746391?seq=2) (visited 12/7/10).122 Alan Mutter, “R)bust ad rec)very bypassed newspapers,” Reflecti)ns )f a News)saur (Dec. 3, 2010) (available at http://news)saur.bl)gsp)t.c)m/) (visited 12/7/10).123 Order, ¶¶ 145-46.124 Order, ¶¶ 112-14.125 Alth)ugh the Order addresses )nly intermediate scrutiny, the p)tential f)r applicati)n )f strict scrutiny sh)uld n)t be disregarded c)mpletely. Alth)ugh the C)urt in Turner I declined t) apply strict scrutiny t) the statut)rily mandated must-carry rules, the netw)rk management mandates established by t)day’s Order may be distinguishable. F)r example, while rules g)verning the act )f r)uting data packets might arguably be c)ntent neutral regulati)ns, applicati)n )f the rules in the real w)rld may effectively dictate antecedent speaker-based and c)ntent-based ch)ices ab)ut which data packets t) carry and h)w best t) present the speech that they emb)dy. 125 American Library Ass’n v. Ren,, 33 F.3d 78 (D.C. Cir. 1994). 126 Under First Amendment jurisprudence, it typically is n)t difficult f)r the g)vernment t) c)nvince a c)urt that the agency’s interest is imp)rtant )r substantial. See, e.g., Carey v. Br,wn, 447 U.S. 455, 464–65 (1980) (“even the m)st legitimate g)al may n)t be advanced in a c)nstituti)nally impermissible manner”); Sim,n & Schuster, Inc. v. Members ,f the N.Y. State Crime Victims Bd., 502 U.S. 105 (1991) (finding that the state interest was c)mpelling, but the S)n )f Sam law was n)t narr)wly tail)red t) advance that )bjective). But I questi)n whether the Order will survive even this pr)ng )f the test because the C)mmissi)n lacks evidence )f a real pr)blem here t) be s)lved. Tw) examples plus s)me ec)n)mic the)rizing may be insufficient t) dem)nstrate that the asserted harms t) be addressed are, in fact, real and systemic. See Century C,mmunicati,ns C,rp. v. FCC, 835 F.2d 292, 300 (D.C. Cir. 1987) (suggesting that t) establish a real harm the C)mmissi)n has the burden )f pr)ducing empirical evidence such as studies )r surveys). The C)mmissi)n’s m)st recent Secti)n 706 Rep)rt, which – )ver the dissent )f C)mmissi)ner Baker and me – reversed c)urse )n 11 years’ w)rth )f c)nsistent findings that advanced services are being

(c)ntinued....)


172

and typically m)st difficult pr)ng f)r the g)vernment t) satisfy: dem)nstrating that the regulat)ry means ch)sen d)es n)t “burden substantially m)re speech than is necessary.”127 And what is the burden here? One need l))k n) further than the Order’s discussi)n )f specialized services t) find it. It ann)unces an “expectati)n” that netw)rk pr)viders will limit their use )f their )wn capacity f)r speech in )rder t) make r))m f)r )thers – an expectati)n that may rise t) the level )f effectively requiring the platf)rm pr)vider t) pay extra, in the f)rm )f capacity build-)uts, bef)re exercising its )wn right t) speak.128 Such a vague expectati)n creates a chilling effect )f the type that c)urts are well placed t) rec)gnize.129

Yet the Order makes n, eff)rt, as First Amendment precedent requires, t) weigh this burden against the putative benefit.130 Instead, Br)adband ISP speakers are left in the dark t) gr)pe their way thr)ugh this regulat)ry f)g. Bef)re speaking via their )wn br)adband platf)rms, they must either: (1) guess and h)pe that they have left en)ugh capacity f)r third party speech, )r (2) g) hat in hand t) the g)vernment f)r pre-clearance )f their speech plans.

Finally, it sh)uld be n)ted )ne )f the underlying p)licy rati)nales f)r imp)sing Internet netw)rk management regulati)ns effectively turns the First Amendment )n its head. The F)unders crafted the Bill )f Rights, and the First Amendment in particular, t) act as a bulwark against state attempts t) trample )n the rights )f individuals. (Given that they had just w)n a war against g)vernment tyranny, they were wary )f recreating the very ills that had sparked the Rev)luti)n – and which s) many new Americans had sacrificed much t) )verc)me.) M)re than 200 years later, )ur daily challenges may be different but the c)nstituti)nal principles remain the same. The First Amendment begins with the phrase “C)ngress shall make n) law” f)r a reas)n. Its restraint )n g)vernment p)wer ensures that we c)ntinue t) enj)y all )f the vig)r)us disc)urse, c)nversati)n and debate that we, al)ng with the rest )f the w)rld, n)w think )f as quintessentially American.

C(nclusi(n

F)r the f)reg)ing reas)ns, I respectfully dissent.

(...c)ntinued fr)m previ)us page)depl)yed )n a timely basis, is n) f)undati)n )n which this part )f the argument can securely rest. See supra Secti)n A. 127 Turner I, 512 U.S. at 662.128 See Order, ¶ 114 (“We fully expect that br)adband pr)viders will increase capacity )ffered f)r br)adband Internet access service if they expand netw)rk capacity t) acc)mm)date specialized services. We w)uld be c)ncerned if capacity f)r br)adband Internet access service did n)t keep pace.”). 129 See F,x v. FCC, 613 F.3d 317 (2d Cir. 2010) (h)lding that the FCC’s indecency p)licy “vi)lates the First Amendment because it is unc)nstituti)nally vague, creating a chilling effect”). 130 See, e.g., Order, ¶¶ 146-48.


173

ATTACHMENT A

Letter )f FCC C)mmissi)ner R)bert M. McD)well t) the H)n. Henry A. Waxman, Chairman, C)mmittee )n Energy and C)mmerce, U.S. H)use

)f Representatives (May 5, 2010)


174

Office )f C)mmissi)ner R)bert M. McD)well

Federal C)mmunicati)ns C)mmissi)n

Washingt)n, D.C. 20554

May 5, 2010

The H)n)rable Henry A. WaxmanChairmanC)mmittee )n Energy and C)mmerceUnited States H)use )f RepresentativesWashingt)n, DC 20515

Dear Chairman Waxman:

Thank y)u f)r the )pp)rtunity t) testify bef)re y)u and y)ur c)lleagues )n the Subc)mmittee )n C)mmunicati)ns, Techn)l)gy and the Internet )n March 25 regarding the Nati)nal Br)adband Plan.1 As I testified at the hearing, the C)mmissi)n has never classified br)adband Internet access services as "telec)mmunicati)ns services" under Title II )f the C)mmunicati)ns Act. In supp)rt )f that asserti)n, I respectfully submit t) y)u the instant summary )f the hist)ry )f the regulat)ry classificati)n )f br)adband Internet access services.

In the wake )f the privatizati)n )f the Internet in 1994, C)ngress )verwhelmingly passed the landmark Telec)mmunicati)ns Act )f 1996 (1996 Act) and President Clint)n signed it int) law. Pri)r t) this time, the C)mmissi)n had never regulated "inf)rmati)n services" )r "Internet access services" as c)mm)n carriage under Title II. Instead, such services were classified as "enhanced services" under Title I. T) the extent that regulated c)mm)n carriers )ffered their )wn enhanced services, using their )wn transmissi)n facilities, the FCC required the underlying, l)cal transmissi)n c)mp)nent t) be )ffered )n a c)mm)n carrier basis.2 N) pr)vider )f retail inf)rmati)n services was ever required t) tariff such service. With the 1996 Act, C)ngress had the )pp)rtunity t) reverse the C)mmissi)n and regulate inf)rmati)n services, including Internet access services, as traditi)nal c)mm)n carriers, but ch)se n)t t) d) s). Instead, C)ngress c)dified the C)mmissi)n's existing classificati)n )f "enhanced sevices" as "inf)rmati)n services" under Title I.

1 Oversight ,f the Federal C,mmunicati,ns C,mmissi,n: The Nati,nal Br,adband Plan: Hearing Bef,rethe Subc,mm. ,n C,mmunicati,ns, Techn,l,gy, and the Internet ,f the H,use C,mm. ,n Energy andC,mmerce, 111th C)ng., 2d Sess. (March 25, 2010).2 S)me wh) are adv)cating that br)adband Internet access service sh)uld be regulated under Title II cite t)the C)mmissi)n's 1998 GTEADSL Order t) supp)rt their asserti)n. See GTE Teleph,ne Operating C,s.,CC D)cket N). 98-79, Mem)randum Opini)n and Order, 13 FCC Red. 22,466 (1998) {GTEADSL Order).The GTE ADSL Order, h)wever, is n)t )n p)int, because in that )rder the C)mmissi)n determined thatGTE-ADSL service was an interstate service f)r the purp)se )f res)lving a tariff questi)n.


175

Tw) years after the 1996 Act was signed int) law, C)ngress directed the C)mmissi)n t) rep)rt )n its interpretati)n )f vari)us parts )f the statute, including the definiti)n )f "inf)rmati)n service."3 In resp)nse, )n April 10,1998, under the Clint)n-era leadership )f Chairman William Kennard, the C)mmissi)n issued a Rep,rt t, C,ngress finding that "Internet access services are appr)priately classed as inf)rmati)n, rather than telec)mmunicati)ns, services."4 The C)mmissi)n reas)ned as f)ll)ws:

The pr)visi)n )f Internet access service ... )ffers end users inf,rmati,n-service capabilities inextricably intertwined with data transp,rt. As such, we c,nclude that it is appr,priately classed as an "inf,rmati,n service"5

In reaching this c)nclusi)n, the C)mmissi)n reas)ned that treating Internet access services as telec)mmunicati)ns services w)uld lead t) "negative p)licy c)nsequences."6

T) be clear, the FCC c)nsistently held that any pr)vider )f inf)rmati)n services c)uld d) s) pursuant t) Title I.7 N) distincti)n was made in the way that retail pr)viders )f Internet access service )ffered that inf)rmati)n service t) the public. The )nly distincti)n )f n)te was under the C)mmissi)n's C,mputer Inquiry rules, which required c)mm)n carriers that were als) pr)viding inf)rmati)n services t) )ffer the transmissi)n c)mp)nent )f the inf)rmati)n service as a separate, tariffed telec)mmunicati)ns service. But again, this requirement had n) effect )n the classificati)n )f retail Internet access service as an inf)rmati)n service.

In the meantime, during the waning days )f the Clint)n Administrati)n in 2000, the C)mmissi)n initiated a N)tice )f Inquiry (NOI) t) examine f)rmalizing the regulat)ry classificati)n )f cable m)dem services as inf)rmati)n services.8 As a result )f the Cable M,dem NOI, )n March 14, 2002, the C)mmissi)n issued a declarat)ry ruling

3 Departments )f C)mmerce, Justice, and State, the Judiciary, and Related Agencies Appr)priati)ns Act,1998, Pub. L. N). 105-119,111 Stat. 2440,2521-2522, § 623.4 Federal-State B,ard ,n Universal Service, CC D)cket N). 96-45, Rep)rt t) C)ngress, 13 FCC Red.11501, K 73 (1998) {Rep,rt t, C,ngress).5 Id. at 180 (emphasis added).6 Id. at Tj 82 ("Our findings in this regard are reinf)rced by the negative p)licy c)nsequences )f ac)nclusi)n that Internet access services sh)uld be classed as 'telec)mmunicati)ns.'").7 As Seth P. Waxman, f)rmer S)licit)r General under President Clint)n, wr)te in an April 28,2010 lettert) the C)mmissi)n, "[t]he C)mmissi)n has never classified any f)rm )f br)adband Internet access as aTitle II 'telec)mmunicati)ns service* in wh)le )r in part, and it has classified all f)rms )f that retail serviceas integrated 'inf)rmati)n services' subject )nly t) a light-t)uch regulat)ry appr)ach under Title I. Thesestatut)ry determinati)ns are )ne reas)n why the Clint)n Administrati)n rejected pr)p)sals t) imp)se ')penaccess' )bligati)ns )n cable c)mpanies when they began pr)viding br)adband Internet access in the late1990s, even th)ugh they then held a c)mmanding share )f the market. The Internet has thrived under thisappr)ach." (Emphasis in the )riginal.)8 Inquiry C,ncerning High-Speed Access t, the Internet Over Cable and Other Facilities, GN D)cket N).00-185, N)tice )f Inquiry, 15 FCC Red 19287 (2000) (Cable M,dem NOI).


176

classifying cable m)dem service as an inf)rmati)n service.9 In the C)mmissi)n's Cable M,dem Declarat,ry Ruling, it p)inted )ut that "[t]) date ... the C)mmissi)n has declined t) determine a regulat)ry classificati)n f)r, )r t) regulate, cable m)dem service )n an industry-wide basis."10

Only )ne m)nth earlier, )n February 14, 2002, in its N)tice )f Pr)p)sed Rulemaking11 regarding the classificati)n )f br)adband Internet access services pr)vided )ver wireline facilities, the C)mmissi)n undersc)red its view that inf)rmati)n services integrated with telec)mmunicati)ns services cann)t simultane)usly be deemed t) c)ntain a telec)mmunicati)ns service, even th)ugh the c)mbined )ffering has telec)mmunicati)ns c)mp)nents.

On June 27,2005, the Supreme C)urt upheld the C)mmissi)n's determinati)n that cable m)dem services sh)uld be classified as inf)rmati)n services.12 The C)urt, in uph)lding the C)mmissi)n's Cable M,dem Order, explained the C)mmissi)n's hist)rical regulat)ry treatment )f "enhanced" )r "inf)rmati)n" services:

By c)ntrast t) basic service, the C)mmissi)n decided n)t t) subject pr)viders )f enhanced service, even enhanced service ,ffered via transmissi,n wires, t) Title II c)mm)n-carrier regulati)n. The C)mmissi)n explained that it was unwise t) subject enhanced service t) c)mm)n-carrier regulati)n given the "fast-m)ving, c)mpetitive market" in which they were )ffered.13

Subsequent t) the Supreme C)urt uph)lding the C)mmissi)n's classificati)n )f cable m)dem service as an inf)rmati)n service in its Brand i decisi)n, the C)mmissi)n with,ut dissent issued a series )f )rders classifying all br)adband services as inf)rmati)n services: wireline (2005)14, p)werline (2006)1* and wireless (2007).16 C)nsistent with

9 Inquiry C,ncerning High- Speed Access t, the Internet Over Cable and Other Facilities; Internet Over Cable Declarat,ry Ruling; Appr,priate Regulat,ry Treatment f,r Br,adband Access t, the Internet Over Cable Facilities, GN D)cket N). 00-185, CS D)cket N). 02-52, Declarat)ry Ruling and N)tice )f Pr)p)sed Rulemaking, 17 FCC Red 4798 (2002) (Cable M,dem Declarat,ry Ruling), aff'd, Nat'I. Cable & Telec,mms. Ass'n v. Brand i Internet Servs., 545 U.S. 967 (2005) (Brand i).10 Id. at H 2.11 Appr,priate Framew,rk f,r Br,adband Access t, the Internet ,ver Wireline Facilities, Universal Service Obligati,ns ,f Br,adband Pr,viders, CC D)cket N). 02-33, N)tice )f Pr)p)sed Rulemaking, 17 FCC Red 3019 (2002) (Wireline Br,adband NPRM).12 Brand i, 545 U.S. 967.13 Id. at 977 (emphasis added, internal citati)ns t) the C)mmissi)n's C,mputer Inquiry II decisi)n )mitted).14 Appr,priate Framew,rk f,r Br,adband Access t, the Internet ,ver Wireline Facilities; Universal Service Obligati,ns ,f Br,adband Pr,viders; Review ,f Regulat,ry Requirements f,r Incumbent LEC Br,adband Telec,mmunicati,ns Services; C,mputer III Further Remand Pr,ceedings: Bell Operating C,mpany Pr,visi,n ,f Enhanced Services; 1998 Biennial Regulat,ry Review—Review ,f C,mputer III and ONA Safeguards and Requirements; C,nditi,nal Petiti,n ,f the Veriz,n Teleph,ne C,mpanies f,r F,rbearance Under 47 U.S.C. § I60(c)with Regard t, Br,adband Services Pr,vided Via Fiber t, the Premises; Petiti,n ,f the Veriz,n Teleph,ne C,mpanies f,r Declarat,ry Ruling ,r, Alternatively, f,r Interim Waiver with Regard t, Br,adband Services Pr,vided Via Fiber t, the Premises; C,nsumer Pr,tecti,n in the Br,adband Era, CC D)cket N)s. 02-33, 95-20, 98-10,01-337, WC D)cket N)s. 04-242,


the C)urt's characterizati)n, the C)mmissi)n made these classificati)ns t) catch up t) market devel)pments, t) treat similar services alike and t) pr)vide certainty t) th)se entities pr)visi)ning br)adband services, )r c)ntemplating d)ing s). Pri)r t) these rulings, h)wever, such services were never classified as telec)mmunicati)ns services under Title II.

Again, I thank y)u f)r pr)viding the )pp)rtunity t) testify bef)re y)ur C)mmittee and t) pr)vide this analysis regarding the regulat)ry classificati)n )f br)adband Internet access services. I l))k f)rward t) w)rking with y)u and y)ur c)lleagues as we c)ntinue t) find ways t) enc)urage br)adband depl)yment and ad)pti)n thr)ugh)ut )ur nati)n.

Sincerely,

R)bert M. McD)well

cc: The H)n)rable J)e Bart)nThe H)n)rable Rick B)ucher The H)n)rable Cliff Steams

05-271, Rep)rt and Order and N)tice )f Pr)p)sed Rulemaking, 20 FCC Red 14853 (2005) {Wireline Br,adband Order), affd, Time Warner Telec,m, Inc. v. FCC, 507 F.3d 205 (3d Cir. 2007).1J United P,wer Line C,uncil's Petiti,n f,r Declarat,ry Ruling Regarding the Classificati,n ,f Br,adband ,ver P,wer Line Internet Access Service as an Inf,rmati,n Service, WC D)cket N). 06-10, Mem)randum Opini)n and Order, 21 FCC Red 13281 (2006).16 Appr,priate Regulat,ry Treatment f,r Br,adband Access t, the Internet Over Wireless Netw,rks, WT D)cket N). 07-53, Declarat)ry Ruling, 22 FCC Red 5901 (2007).


APPROVING IN PART, CONCURRING IN PARTSTATEMENT OF

COMMISSIONER MIGNON L. CLYBURN

Re: Preserving the Open Internet, GN D)cket N). 09-191, Br,adband Industry Practices,WC D)cket N). 07-52.

A few weeks ag), I discussed the imp)rtance )f c)llab)rati)n in tackling the imp)rtant, yet difficult p)licy issues bef)re us t)day. I want t) thank the th)usands )f stakeh)lders wh) engaged with us )ver the past 16 m)nths in crafting a framew)rk that gives b)th br)adband pr)viders and c)nsumers clear guidance ab)ut what pr)vider behavi)r is and is n)t acceptable. It was a result )f all )f y)ur engagement—fr)m the filings y)u made t) the many meetings we had—that we have been able t) get t) this p)int t)day. Y)ur dedicati)n t) the pr)cess and that )f th)se wh)m y)u represent sh)uld be c)mmended.

Of c)urse, as we all kn)w, c)mpr)mises typically must be made as many different interests c)llab)rate )n critical and significant issues. As a result )f such c)mpr)mise, it is )ften the case that )ne cann)t be c)mpletely satisfied with the result. N)netheless, it is my belief that we have made real pr)gress in this pr)ceeding, and thr)ugh this Order, we are ensuring that the Internet will remain )pen f)r the benefit )f many c)nsumers. After all, they are the ultimate beneficiaries )f an )pen Internet.

Left t) my )wn devices, there are several issues I w)uld have tackled differently. As such, I am appr)ving in part and c)ncurring in part t) t)day’s Order. While I appreciate the Chairman’s rec)gniti)n )f s)me )f my c)ncerns, and the adjustments made in the Order t) allay th)se c)ncerns, there are several areas in the Order I w)uld have strengthened s) that m)re c)nsumers w)uld benefit fr)m the pr)tecti)ns we are ad)pting.

First, I w)uld have extended all )f the fixed rules t) m)bile, s) that th)se c)nsumers wh) heavily )r exclusively rely up)n m)bile br)adband w)uld be fully pr)tected. There is evidence in )ur rec)rd that s)me c)mmunities, namely African American and Hispanic, use and rely up)n m)bile Internet access much m)re than )ther s)ci)-ec)n)mic gr)ups. While this Order d)es n)t g) as far as I w)uld like in pr)tecting m)bile c)nsumers, I am pleased that it is quite clear that we are n)t pre-appr)ving any acti)ns by m)bile pr)viders that w)uld vi)late the fixed rules and the general principles )f Internet )penness. M)re)ver, the Order pr)vides f)r the )ng)ing m)nit)ring )f the m)bile br)adband marketplace, including the C)mmissi)n’s intenti)n t) create an Open Internet Advis)ry C)mmittee. That b)dy’s specific missi)n will be t) assess and rep)rt t) the C)mmissi)n new devel)pments and c)ncerns in the m)bile br)adband industry. I expect that the C)mmittee will cl)sely )bserve the effects disparate rules f)r fixed and m)bile pr)viders will have )n c)nsumers wh) have ch)sen t) cut the br)adband c)rd and the effects )n interm)dal c)mpetiti)n. T) that end, the C)mmissi)n will stand ready t) pr)tect m)bile c)nsumers fr)m any acti)ns by pr)viders that are inc)nsistent with an )pen Internet.

Sec)nd, I w)uld have pr)hibited pay f)r pri)rity arrangements alt)gether. The Order stresses the vari)us harmful effects )f these arrangements, including the seri)us threat t) inn)vati)n )n the Internet. I believe that pr)hibiting such arrangements w)uld be m)re appr)priate based )n the evidence bef)re us. Nevertheless, sh)uld pr)viders enter such arrangements, and they are subsequently challenged at the C)mmissi)n, pr)viders will have t) dem)nstrate that the pay f)r pri)rity arrangement is n)t harmful and is c)nsistent with the public interest.

Third, an )pen Internet sh)uld be available t) all end users—residential, enterprise, f)r-pr)fit, )r n)t. This Order g)es a l)ng way t)ward pr)tecting an )pen Internet f)r residents, small businesses, sch))ls, libraries, patr)ns )f c)ffee sh)ps, b))kst)res, and the like, but I w)rry that th)se wh) may n)t fit


179

int) these categ)ries will have t) neg)tiate f)r access t) the )pen Internet, and they may be denied such access. We sh)uld carefully m)nit)r whether an )pen Internet truly is available t) all end users and c)rrect c)urse, if needed. I als) h)pe that the af)rementi)ned Open Internet Advis)ry C)mmittee can track any harmful effects f)r th)se end users wh) d) n)t currently qualify f)r the pr)tecti)ns ad)pted t)day and rec)mmend C)mmissi)n acti)n as necessary.

Finally, earlier this year I stated my preference f)r the C)mmissi)n’s legal auth)rity )ver br)adband Internet access service. While the r)ute taken here is n)t the )ne I )riginally preferred, I believe that it is appr)priate f)r the C)mmissi)n t) act t) pr)tect an )pen Internet. I kn)w there will be many lawyers studying the legal auth)rity cited in this Order in the weeks, m)nths and perhaps years ahead, and judicial review ultimately will determine the fate )f this Order. I sincerely h)pe that the C)mmissi)n’s auth)rity t) pr)tect c)nsumers’ access t) an )pen Internet is upheld.

T)day, the Internet is as critical t) the nati)n f)r c)mmunicating as )ur legacy teleph)ne, br)adcast, and m)bile ph)ne systems. As described m)re fully in the Order, with)ut an )pen Internet, c)nsumers will have fewer ch)ices and )pp)rtunities, which has the p)tential t) impact many aspects )f their lives—their ability t) )btain an educati)n, telec)mmute, l))k f)r a j)b, search inf)rmati)n )nline, sh)p, make investment decisi)ns, c)mmunicate with friends, family and c)lleagues, )btain news, and I c)uld g) )n and )n. Acc)rdingly, I believe that it is necessary and appr)priate that br)adband pr)viders )perate pursuant t) a legal and p)licy framew)rk that ensures the Internet remains )pen under the C)mmissi)n’s watchful eye.


DISSENTING STATEMENT OF COMMISSIONER MEREDITH ATTWELL BAKER


Preserving the )pen Internet is n)n-neg)tiable: it is a bedr)ck principle shared by all in the Internet ec)n)my, a building bl)ck )n which we can all agree. And, the Internet is )pen t)day. The evidentiary rec)rd in )ur pr)ceeding has reaffirmed that g)vernment acti)n is n)t necessary t) preserve it. Yet the maj)rity acts, and acts decisively, t) ad)pt Net Neutrality rules, imp)sing the heavy hand )f g)vernment int) h)w br)adband netw)rks will be managed and )perated. The data m)st certainly d)es n)t drive us t) this result. In the final analysis, the C)mmissi)n intervenes t) regulate the Internet because it wants t), n)t because it needs t).

I cann)t supp)rt this decisi)n. It is n)t a c)nsumer-driven )r engineering-f)cused decisi)n. It is n)t m)tivated by a tangible c)mpetitive harm )r market failure. The maj)rity bypasses a market p)wer analysis alt)gether, and acts )n speculative harms al)ne. The maj)rity is unable t) identify a single )ng)ing practice )f a single br)adband pr)vider that it finds pr)blematic up)n which t) base this acti)n. In the end, the Internet will be n) m)re )pen t)m)rr)w than it is t)day.

Further, the maj)rity regulates an entire sect)r )f the Internet with)ut any legitimate legal auth)rity t) d) s). The D.C. Circuit )nly m)nths ag) rejected )ur attempt t) enf)rce Net Neutrality principles.1 The C)mmissi)n will return t) c)urt with the same basic infirmities: n) explicit statut)ry auth)rity t) supp)rt its acti)n, and a legal the)ry that w)uld give the C)mmissi)n an unb)unded right t) ad)pt any p)licies it desires t) pr)m)te its particular visi)n )f the Internet.

The maj)rity d)es all )f this with)ut any apparent appreciati)n )f the regulat)ry c)sts and dist)rtive effect )f g)vernment micr)management )f br)adband netw)rks. Did the C)mmissi)n kill the future )f the Internet t)day? Of c)urse n)t. But, in this dynamic industry, the maj)rity als) has n) rati)nal means by which t) estimate the real damage it d)es t) the future devel)pment )f business m)dels, netw)rk management techniques, and c)re netw)rks. The C)mmissi)n puts its thumb )n the scale as t) where inn)vati)n in the Internet ec)n)my will be f)cused, and h)w future netw)rks will be financed. The Order repeatedly expresses c)ncerns ab)ut the significant c)nsequences t) Internet edge c)mpanies if their incentive t) inn)vate, invest, and c)mpete is chilled. The maj)rity ign)res the same grave c)nsequences )f g)vernment acti)n chilling the netw)rks’ anal)g)us incentives t) inn)vate, invest, and c)mpete. It is regrettable the maj)rity did n)t take a m)re h)listic view )f the Internet ec)n)my.

I keep returning t) what sh)uld be a thresh)ld questi)n: why d) we intervene in the )ne sect)r )f the ec)n)my that is w)rking s) well t) create high-paying j)bs, unt)ld c)nsumer ch)ice, and entrepreneurial )pp)rtunity? Pick any statistic, the st)ry is )ne )f success.

Our c)mpetiti)n-f)cused regulat)ry appr)ach has attracted )ver half a trilli)n d)llars t) build netw)rk infrastructure this decade.2 Billi)ns m)re have been invested in devices and applicati)ns that ride )n th)se netw)rks. Tablets and smartph)nes will fill st)ckings this h)liday seas)n, straining the capacity )f even the m)st advanced netw)rks. Over 95 percent )f American h)useh)lds have access t) a

1 C,mcast C,rp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010)(“C,mcast”).

2 USTelec)m C)mments at 5 (detailing that “cumulative capital expenditures by br)adband pr)viders fr)m 2000-2008 were )ver half a trilli)n d)llars, and private investment in br)adband infrastructure has gr)wn c)nsistently fr)m 2003 thr)ugh 2008.”).


181

r)bust terrestrial br)adband )ffering.3 Eighty percent )f th)se h)useh)lds have ch)ice )f at least tw) pr)viders.4 This time next year, the c)ntinued depl)yment )f 4G wireless )fferings pr)mise even greater br)adband c)mpetiti)n and amazing new functi)nalities. Each day, c)nsumers benefit fr)m new services, faster c)nnecti)ns, and the latest and greatest applicati)ns. The C)mmissi)n’s )wn surveys reveal that 93 percent )f br)adband subscribers are happy with their service.5

The facts, the law, and the p)licy cann)t supp)rt this decisi)n. S) again, why d) we act? The )nly plausible reas)n left is t) deliver )n )ne )f the President’s campaign pr)mises. I must respectfully dissent.

I have seven principal )bjecti)ns t) this decisi)n. First, the factual rec)rd d)es n)t supp)rt g)vernment interventi)n. Sec)nd, the maj)rity’s claim that c)nsumers will benefit fr)m this g)vernment )verreach is unsupp)rted and deeply flawed. Third, the maj)rity’s f)cus )n preserving netw)rk )perat)rs’ current c)nditi)ns will dist)rt t)m)rr)w’s Internet. F)urth, the maj)rity puts the C)mmissi)n in the unw)rkable r)le )f Internet referee. Fifth, the maj)rity fails t) marshal a sustainable legal f)undati)n. Sixth, the maj)rity’s decisi)n t) act a legislat)r, n)t regulat)r, is a mistake that may undermine )ur agency’s missi)n. And, lastly, )pp)rtunity c)st. By that I mean, we have squandered m)nths )n this eff)rt, diverting res)urces and p)litical capital away fr)m real pr)blems that lie within )ur c)re c)mpetencies, like universal service and spectrum ref)rm.

THE IMPORTANCE OF REGULATORY CERTAINTY

Bef)re I address th)se c)ncerns directly, I w)uld like t) t)uch )n the questi)n )f regulat)ry certainty. The Net Neutrality and the Title II pr)ceedings have been an ec)n)mic drag )n )perat)rs f)r )ver a year. While Net Neutrality has been bantered ab)ut as a p)licy issue since at least 2002, it was n)t until the Title II debate this Spring that this uncertainty triggered c)nsiderable real w)rld c)nsequences.6 It has affected j)bs, investment, and inn)vati)n. I empathize with businesses that desperately need certainty t) help jump start eff)rts t) invest and rec)ver ec)n)mically. It was )ur stable regulat)ry f)undati)n that gave invest)rs and inn)vat)rs the c)nfidence t) pump billi)ns int) the Internet ec)n)my f)r much )f the last decade, and I share the desire t) find a new stable f))ting t) m)ve f)rward.

3 CONNECTING AMERICA: THE NATIONAL BROADBAND PLAN, The Federal C)mmunicati)ns

C)mmissi)n, GN D)cket N). 09-51, 20 (2010).

4 Id.

5 FCC W)rking Paper, “Br)adband satisfacti)n: What c)nsumers rep)rt ab)ut their br)adband Internet pr)vider,” at 3 (Dec. 2010) (finding that 93 percent )f users are satisfied, )r s)mewhat satisfied, with their br)adband service).

6 Jeffry Bartash, C,mcast, Cablevisi,n St,cks Decline ,n Cl,udy Outl,,k, Wall Street J)urnal, May 10, 2010; David Barden, Bank )f America – Merrill Lynch, Internet Regulati,n Back ,n the Fr,nt Burner (May 5, 2010) (n)ting that Title II regulati)n c)uld “threaten” b)th “j)bs and investment” acr)ss the Internet ec)system.); Craig M)ffett, Quick Take—U.S. Telec,mmunicati,ns, U.S. Cable & Satellite Br,adcasting: The FCC G,es Nuclear, Bernstein Research, May 5, 2010 (n)ting that “[m]arkets abh)r uncertainty” and that he expects “a pr)f)undly negative impact )n capital investment” fr)m the pr)p)sed rules.”).


182

I )bject, h)wever, t) the maj)rity suggesting that its acti)n is premised )n pr)viding regulat)ry certainty.7 At best, the maj)rity s)lves a pr)blem )f its )wn making. They initiated the immediate pr)ceeding and the highly c)ntr)versial Title II d)cket in June, igniting a crisis acr)ss much )f the industry and investment c)mmunity. By s)me acc)unts, the maj)rity has used this self-generated uncertainty as leverage in the neg)tiati)ns leading up t) this decisi)n, a tactic I have reservati)ns ab)ut the g)vernment using t) manufacture supp)rt. I als) have s)me apprehensi)n that )ur legally precari)us acti)n t)day cann)t pr)vide the certainty pr)mised, and that )ur decisi)n may unf)rtunately add t) the uncertainty. By av)iding definiti)ns )f key terms, questi)ning but n)t banning practices, c)uching decisi)ns as “at this time” repeatedly, and inviting b)th case-by-case c)mplaints and declarat)ry rulings,this acti)n—in t)) many ways—is a first step, n)t a last step.8

THERE IS NO FACTUAL BASIS TO SUPPORT GOVERNMENT INTERVENTION.

Five years ag), in ad)pting the Internet P)licy Statement, FCC Chairman Kevin Martin n)ted that “c)mpetiti)n has ensured c)nsumers have the[] rights [)utlined in the P)licy Statement] t) date, and I remain c)nfident that it will c)ntinue t) d) s).”9 It has. The Federal Trade C)mmissi)n (“FTC”) in its 2007 Net Neutrality rep)rt c)ncluded that there was “n) significant market failure )f dem)nstrated c)nsumer harm” t) supp)rt Net Neutrality.10 Our review revealed the same. C)mpetiti)n and c)nsumer demand have ensured that the Internet remains )pen, and the maj)rity )ffers n) rec)rd evidence t) suggest )therwise. The FTC accurately f)und that c)nsumers “have a p)werful c)llective v)ice …[and] a str)ng preference f)r the current )pen access t) Internet c)ntent and applicati)ns.”11

The maj)rity has res)rted t) metaph)r: there are cracks in the infrastructure. But, )ur rec)rd d)es n)t supp)rt a c)nclusi)n )f any structural failing. At best, there is a burned-)ut bulb in the Christmas lights. We endeav)r t) replace the entire electrical system t) fix it. There is n) systemic pr)blem—n) crisis )f magnitude—t) justify the maj)rity’s )verreach.

The maj)rity’s repeated fallback is that netw)rk )perat)rs have incentives t) act badly. Thr)ugh)ut the decisi)n, the maj)rity presumes a malign intent )n the part )f br)adband pr)viders f)r which there is n) factual f)undati)n. The language is c)nsistently hyp)thetical—the w)rd “c)uld” al)ne appears )ver 60 times. The maj)rity’s rati)nale is flatly inc)nsistent with a decade )f actual industry practice, which is dev)id )f any such gl)bal misc)nduct. The Order als) fails t) explain why )ther parts

7 If regulat)ry certainty is )ne )f the maj)rity’s pri)rities, they sh)uld have als) cl)sed the Title II d)cket

t)day, slamming shut the d))r )n pr)p)sals t) apply highly intrusive m)n)p)ly-era c)mm)n carrier restricti)ns )n c)mpetitive br)adband platf)rms.

8 The Order states that the C)mmissi)n will “review all )f the rules in this Order n) later than tw) years fr)m their effective, and will adjust its )pen Internet framew)rk as appr)priate.” T) pr)m)te regulat)ry certainty, this future pr)ceeding sh)uld mirr)r )ur biennial review pr)cess under which the C)mmissi)n’s task is limited t) determining whether any rule is n) l)nger in the public interest as a result )f meaningful c)mpetiti)n. See 47 U.S.C. § 161. It w)uld be hard t) suggest that this Order pr)vides any certainty if the C)mmissi)n intends t) c)nduct an )pen-ended review in 2013.

9 Appr,priate Framew,rk f,r Br,adband Access t, the Internet ,ver Wireline Facilities, P)licy Statement, Separate Statement )f Chairman Kevin Martin, FCC 05-150 (2005).

10 Federal Trade C)mmissi)n, “Br)adband C)nnectivity C)mpetiti)n P)licy,” at 11 (June 2007) (“FTC Rep,rt”).

11 Id.


183

)f the Internet c)mmunity d) n)t have similar incentives, )r h)w such incentives al)ne c)uld justify such sweeping acti)n.

If the incentives and ability f)r misc)nduct are s) str)ng, )ne w)uld assume the evidentiary rec)rd w)uld include widespread examples )f anti-c)mpetitive c)nduct resulting in c)nsumer harm. There is n) such evidence. The Order pr)vides )nly the same handful )f dated examples )f past c)nduct. There is n) attempt t) p)rtray any )f th)se is)lated incidents as representative )f bigger issues, and, tellingly, n) examples )f any )ng)ing misc)nduct are )ffered. The c)urts have clearly stated that rules cann)t be based )n claims that w)uld “ameli)rate[] a real industry pr)blem” where an agency “cite[es] n) evidence … [)f] an industry pr)blem.”12

Fr)m an ec)n)mist’s perspective, incentives al)ne are an inadequate basis t) supp)rt this decisi)n. Drs. Sidak and Teece explain that, “there is n) empirical evidence )r supp)rt in ec)n)mic the)ry that such incentives exist )r are sufficiently str)ng as t) )utweigh c)untervailing incentives.”13

The maj)rity ign)res th)se c)untervailing incentives as well as the empirical evidence )n the rec)rd, relying )nly )n speculative harms. They d) n)t find market p)wer )n the part )f netw)rk )perat)rs, asserting n) need t) d) s). The maj)rity sidesteps )ur )wn analysis that dem)nstrates that c)mpetiti)n is str)ng and gr)wing. Alm)st tw)-thirds )f br)adband cust)mers find switching t) be easy, and )ver a third )f h)useh)lds have switched in the past three years.14

Given the n)nexistent factual rec)rd )f c)nsumer harm, the maj)rity is left t) grandi)se declarati)ns ab)ut the Internet as an “indispensable platf)rm supp)rting )ur nati)n’s ec)n)my and civic life” t) mask the clear deficiencies in its analysis. In d)ing s), they ign)re the FTC’s Net Neutrality Rep)rt’s cauti)n that regulat)rs “sh)uld be wary )f enacting regulati)n s)lely t) prevent pr)spective harm.”15 The FTC was especially c)ncerned with “adverse effects )n c)nsumer welfare” and “pr)duct

12 Nat’l Fuel Gas Supply C,rp. v. FERC, 468 F.3d 831, 843, 844 (D.C. Cir. 2006)(finding that “if [an agency]

ch))ses t) rely s)lely )n a the)retical threat, it will need t) explain h)w the p)tential danger …unsupp)rted by a rec)rd )f abuse, justifies such c)stly pr)phylactic rules.”); see als, BellS,uth Telec,mmunicati,ns Inc. v. FCC, 469 F.3d 1052, 1060 (D.C. Cir. 2006)(finding that “the agencies’ predictive judgment gives [it] n) license t) ign)re the past when the past relates directly t) the questi)n at issue,”).

13 J. Greg)ry Sidak and David J. Teece, “Inn)vati)n Spill)vers and the ‘Dirt R)ad’ Fallacy: The Intellectual Bankruptcy )f Banning Opti)nal Transacti)ns f)r Enhanced Delivery )ver the Internet,” at 46. F)rthc)ming in 6 J,urnal ,f C,mpetiti,n Law & Ec,n,mics (2010) (attached as Exhibit 2 t) AT&T Reply C)mments); see als, id. at 45 (explaining that “[u]ntil empirical evidence is presented that netw)rk pr)viders in fact have a substantial – and n)t merely the)retical – incentive t) f)recl)se c)mpeting c)ntent and applicati)ns and that this incentive is likely t) )utweigh c,untervailing incentives, we believe that … appr)priate supp)rt f)r such regulati)n is lacking.”); see als, Declarati)n )f Gary S. Becker and Dennis W. Carlt)n at 5 (attached as Attachment A t) Veriz)n C)mments)(c)ncluding that “[t]he absence )f widespread c)mplaints ab)ut antic)mpetitive discriminati)n indicates that the FCC’s c)mpetitive c)ncerns are )verstate in the current Internet envir)nment.”); Declarati)n )f Marius Schwartz at 39 (attached as Exhibit 3 t) AT&T C)mments) (c)ntending that “[g]eneralized references t) future irreversible harm sh)uld n)t suffice t) justify intrusive regulati)n in advance )f clear evidence )f a pr)blem, especially when similar alarms have c)nsistently been pr)ven wr)ng.”).

14 FCC W)rking Paper, “Br)adband decisi)ns: What drives c)nsumers t) switch – )r stick with – their br)adband Internet pr)vider,” at 1-2, 5 (Dec. 2010)(finding that “63% )f br)adband ad)pters with a ch)ice )f multiple pr)viders said it w)uld be easy t) switch pr)viders,” and that “37% )f h)me br)adband users had switched Internet service pr)viders (ISPs) in the last three years.”).

15 2007 FTC Rep,rt at 11.


184

and service inn)vati)n.”16 I share the FTC’s c)ncerns. By regulating in anticipati)n )f speculative harms, the maj)rity cann)t evaluate pr)perly the regulat)ry c)sts )f its acti)ns, )r target its acti)ns t) diminish any unintended c)nsequences. The C)mmissi)n has failed t) take the appr)ach I w)uld have preferred: t) f)cus any acti)n )n narr)wly tail)red s)luti)ns t) address d)cumented industry-wide abuses.

CONSUMERS WILL NOT BENEFIT FROM NET NEUTRALITY.

The maj)rity repeatedly c)uches this as a pr)-c)nsumer )r c)nsumer-driven appr)ach. They try t) frame this as big business gatekeeper versus the c)nsumer. This c)ntenti)n cann)t withstand scrutiny. Up)n cl)ser inspecti)n, the Order is f)cused )n pr)m)ting the edge—Internet applicati)ns and services—)ver netw)rks and c)nsumers.

In the sh)rt-term, c)nsumers will receive the same br)adband service they d) t)day and benefit fr)m the same )pen Internet. In the mid- and l)ng-term, c)nsumers may well be w)rse )ff as g)vernment micr)management will dist)rt the future devel)pment )f br)adband netw)rks and services. Depl)yment eff)rts t) ensure that all Americans have access t) br)adband will be put at risk. Br)adband ad)pti)n eff)rts t) attract the third )f American h)useh)lds that d) n)t subscribe will be challenged. Aff)rdability c)ncerns will be magnified by f)rcing m)re )f the c)st )f netw)rk investment )nt) c)nsumers. And b)th c)nsumers and entrepreneurs will be adversely affected if netw)rk upgrades and impr)vements are delayed )r f)rg)ne, frustrating the ability t) create )r t) use the next great applicati)n )r service. F)rgive me if I d) n)t view these p)tential devel)pments as pr)-c)nsumer.

The Order’s analysis )f the new rules als) c)ntradicts any declared c)nsumer f)cus. With respect t) paid pri)ritizati)n, the maj)rity c)ncludes that pri)ritizati)n arrangements with c)nsumers “w)uld be unlikely t) vi)late” the n)ndiscriminati)n requirement. In stark c)ntrast, pri)ritizati)n arrangements with third party Internet c)mpanies “w)uld raise significant cause f)r c)ncern.” In )ther w)rds, the maj)rity suggests that charging end-user cust)mers is fine, but charging Internet c)mpanies may be pr)blematic. While the maj)rity is careful n)t t) )utlaw charging Internet c)mpanies, the apparent disc)uragement )f such practices is misplaced. It sweeps t)) br)adly and may f)recl)se current and future devel)pments that c)uld be pr)-c)mpetitive and pr)-c)nsumer. It als) may create w)rkability issues under which a future quality-)f-service c)mmitment t) the end-user c)nsumer cann)t be satisfied with)ut a c)rresp)nding business relati)nship with the edge c)mpany. Ec)n)mic the)ry is clear that there is p)tential value in tw)-sided markets, which c)uld pr)m)te inn)vative business m)dels and services, and reduce the c)sts )f service t) end-users, p)tentially increasing br)adband ad)pti)n.17 By seeking t) carve

16 Id.

17 See Declarati)n )f Michael D. T)pper at 54 (attached as Attachment C t) Veriz)n C)mments) (arguing that “[c])ntractual pricing arrangements between br)adband pr)viders and applicati)n and c)ntent pr)viders may result in the pr)visi)n )f new and better services. A tw)-sided pricing m)del where b)th c)nsumers and c)ntent pr)viders pay fees may als) be a m)re efficient way f)r netw)rk pr)viders t) rec)ver the substantial fixed c)sts )f building, impr)ving, and maintaining br)adband access netw)rks.”). The Order ackn)wledges this ec)n)mic the)ry, yet disc)unts its imp)rt suggesting “n) br)adband pr)vider has stated in this pr)ceeding that it actually w)uld use any revenue fr)m edge pr)vider charges t) )ffset subscriber charges.” There is c)nsiderable expert testim)ny )n the rec)rd regarding the p)tential )f tw)-sided markets t) reduce end-user pricing and benefit c)nsumers, and the maj)rity sh)uld have addressed the pr)-c)nsumer p)tential in a m)re f)rthright manner. See, e.g., Declarati)n )f Michael L. Katz, “Ec)n)mic Arguments in the Netw)rk Neutrality Pr)ceeding” at 30 (attached as Attachment B t) Veriz)n Reply C)mments) (explaining that “strategies such as tw)-sided pricing and )ffering )f menus )f service )pti)ns can pr)m)te increased ad)pti)n. Specifically, netw)rk )perat)rs might use revenue fr)m arrangements with )nline service )r applicati)n pr)viders t) subsidize the c)sts )f c)nsumer access, which w)uld increase ad)pti)n.”); Declarati)n )f Marius Schwartz at 18 (attached as Exhibit 3 t) AT&T C)mments)

(c)ntinued....)


185

)ut applicati)n pr)viders fr)m future c)mpensati)n m)dels, the practical effect )f this decisi)n may be that the bulk )f the c)sts )f building )ut next-generati)n netw)rks—estimated t) be $182 billi)n by 2015—will be b)rne by c)nsumers.18

A similar preference f)r edge c)mpanies )ver c)nsumers is reflected in the maj)rity’s appr)ach t) transparency.19 Transparency sh)uld be ab)ut giving c)nsumers the basic t))ls t) make an inf)rmed decisi)n. We sh)uld be w)rking acr)ss the Internet ec)n)my t)wards standardized discl)sures t) inf)rm c)nsumer ch)ice, and shed sunlight—b)th g))d and bad—)n practices )f netw)rks, applicati)ns, and devices. That is n)t the appr)ach the maj)rity takes. The language in the Order is exceedingly prescriptive, and the all-enc)mpassing appr)ach seemingly prejudices C)mmissi)n c)nsiderati)n )f these matters in pending pr)ceedings.20 Specifically, the maj)rity seeks t) micr)manage h)w inf)rmati)n is c)nveyed t) br)adband c)nsumers ab)ut their service. In my experience, g)vernment inv)lvement in c)nsumer discl)sures is n)t a recipe f)r clarity. By d)ing s), the Order sets up a transparency regime that may be s) detailed and engineering-f)cused, )nly Internet c)mpanies and special interest gr)ups c)uld find them useful. The average c)nsumer will be n) better )ff.

The maj)rity’s repeated sp)tlight )n pr)tecting Internet c)mpanies represents an apparent preference f)r the Internet edge )ver netw)rks and c)nsumers.21 This is a fatal err)r, because n) ch)ice was necessary. In this instance, having y)ur cake and eating it t)) was an actual )pti)n. The C)mmissi)n sh)uld have s)ught t) maintain an envir)nment in which c)mpanies acr)ss the Internet ec)n)my c)ntinue t) have the incentives t) invest and inn)vate. In the maj)rity’s quest t) address the unsubstantiated allegati)n that br)adband pr)viders may try t) pick winners and l)sers, the g)vernment has picked its )wn winners. By pr)m)ting the edge )ver netw)rks, we render the future devel)pment )f

(...c)ntinued fr)m previ)us page)

(describing that “if br)adband pr)viders were t) charge fees t) c)ntent pr)viders (and, indirectly, )nline advertisers), the likely result w)uld be l)wer prices )r )ther impr)ved terms t) c)nsumers.”).

18 R)bert C. Atkins)n and Ivy E. Schultz, “Br)adband in America,” C)lumbia Institute f)r Tele-Inf)rmati)n, 68 (N)v. 11, 2009) (“CITI Rep,rt”).

19 The f)cus )n netw)rks as the s)litary challenge with respect t) Internet transparency strains credibility. In the text )f the Order, the maj)rity references privacy and )ther c)nsiderati)ns that seem m)re applicable t) c)ncerns c)nsumers have primarily ab)ut applicati)ns and websites, n)t underlying br)adband netw)rks. This )nly undersc)re that these issues are best left t) C)ngress )r cr)ss-industry gr)ups w)rking t)wards best practices and a m)re h)listic and c)nsistent appr)ach. Given the C)mmissi)n’s )verall lack )f auth)rity t) act in this area, it is regrettable the maj)rity is willing t) draw artificial lines within the Internet ec)n)my, an)int certain players as gatekeepers, and cherry pick the type )f player and c)nduct it wishes t) regulate in an arbitrary manner.

20 C,nsumer Inf,rmati,n and Discl,sure Truth-in-Billing F,rmat IP-Enabled Services, N)tice )f Pr)p)sed Rulemaking, CG D)cket N). 09-158, FCC 10-180 (2010).

21 Equally unc)nvincing is the claim that new entrepreneurs—the next G))gle, the next Yah))!—are the beneficiaries )f the rules. The maj)rity has crafted rules that will pr)vide a regulat)ry advantage f)r th)se c)mpanies that benefit the m)st fr)m t)day’s business m)dels. In particular, th)se edge c)mpanies with their )wn multi-milli)n d)llar—if n)t multi-billi)n d)llar—infrastructures c)mprised )f private netw)rks, server farms, and c)ntent delivery netw)rks will benefit. F)r new ventures, the Order may dissuade netw)rks and new entrants fr)m experimenting in new ways t) reach c)nsumers, t) c)mpete with better financed and established Internet c)mpanies, and t) f)rmulate pr)-c)nsumer, pr)-c)mpetiti)n business m)dels that d) n)t yet exist.


186

netw)rks a sec)ndary matter. This is the antithesis )f the virtu)us cycle )f Internet investment the maj)rity esp)uses.

THE ORDER MAY INHIBIT THE DEVELOPMENT OF TOMORROW’S INTERNET.

One )f my primary misgivings with this Order is that it fails t) c)nfr)nt in a f)rthright manner the substantial risk that this acti)n may dist)rt the future )f the Internet. The Order’s f)cus is )n maintaining the “status qu)” and “current practices” in h)w netw)rks are managed and )perated. Given the dynamic nature )f the Internet, this is the wr)ng )bjective. The Internet is n)t a mature market. There c)ntinues t) be a great am)unt )f experimentati)n in business m)dels, business relati)nships, cust)mer usage patterns and expectati)ns. The maj)rity’s appr)ach will inhibit the ability )f netw)rks t) freely ev)lve and experiment, and t) seek )ut the differentiati)n that breeds )pp)rtunity and c)nsumer ch)ice. The threat )f g)vernment censure will unmistakably chill new devel)pments, including th)se that w)uld be pr)-c)nsumer and pr)-c)mpetiti)n. Inn)vate at y)ur )wn risk is the wr)ng message t) send.

The stakes are heightened because netw)rks cann)t stand still. Estimates pr)ject that by 2014 the Internet will be f)ur times the size it was last year, and m)bile data will d)uble each and every year.22 The gr)wing prevalence )f real-time applicati)ns and bandwidth-intensive applicati)ns like HD televisi)n will )nly intensify the challenges faced by netw)rk )perat)rs. CITI estimates that the bulk )f the $182 billi)n t) be invested in the next five years will be f)cused )n “increasing br)adband capacity and speed in currently served areas.”23 The capacity required t) meet the escalating demands )f existing users—let al)ne new users—will strain the res)urces )f all )perat)rs, and test netw)rk management practices.

T) give s)me c)ntext t) the challenge, I p)se this basic questi)n: w)uld y)u be happy t) have y)ur Internet c)nnecti)n (e.g., speed, latency, and features) fr)m 2005? I kn)w I w)uld n)t. When we l))k back in 2015, h)w will we answer that questi)n ab)ut t)day? H)w much )f the 2010 netw)rk did we just l)ck in f)r )ur future selves? There are t)) many variables f)r us t) make a reliable predicti)n, which undersc)res that the C)mmissi)n sh)uld act with m)re humility and in much m)re targeted ways when faced with industry shaping decisi)ns.

The measuring stick f)r if, and h)w far, we have fallen behind will increasingly be netw)rks )verseas. The maj)rity has taken a far m)re interventi)nist appr)ach t) Net Neutrality than )ther gl)bal regulat)rs. The Eur)pean C)mmissi)n’s Neelie Kr)es has c)nsistently called )n regulat)rs t) “av)id )ver-hasty regulat)ry interventi)n,” and t) steer clear )f “unnecessary measures which may hinder new efficient business m)dels fr)m emerging.”24 As a result, )perat)rs )verseas fr)m Eur)pe and Asia – free fr)m prescriptive rules and )min)us warnings – will be the )nes inn)vating, and creating value f)r c)nsumers and businesses. As a result, the United States may cede its r)le as experimenter, inn)vat)r,

22 Cisc) Visual Netw)rking Index: F)recast and Meth)d)l)gy, 2009-2014 (June 2, 2010) (available at

http://www.cisc).c)m/en/US/s)luti)ns/c)llateral/ns341/ns525/ns537/ns705/ns827/white_paper_c11-481360_ns827_Netw)rking_S)luti)ns_White_Paper.html).

23 CITI Rep,rt at 68.

24 Remarks )f Neelie Kr)es, “Net Neutrality in Eur)pe,” Address at ARCEP C)nference (Apr. 13, 2010) (available at http://eur)pa.eu/rapid/pressReleasesActi)n.d)?reference=SPEECH/10/153); see als, Remarks )f Neelie Kr)es, “Net Neutrality, the Way F)rward,” Eur)pean C)mmissi)n and Eur)pean Parliament Summit )n The Open Internet and Net Neutrality in Eur)pe (N)v. 11, 2010) (available at http://eur)pa.eu/rapid/pressReleasesActi)n.d)?reference=SPEECH/10/643 ) (adv)cating that regulat)rs “av)id regulati)n that might deter investment.”).


187

and market leader in Internet netw)rks and techn)l)gies. The ec)n)mic implicati)ns )f that f)r this nati)n c)uld be stark f)r )ur )verall gl)bal c)mpetitiveness and f)r j)b creati)n.

The maj)rity als) fails t) acc)unt pr)perly f)r a pr)minent Wall Street analyst’s recent )bservati)n that “[b]uilding netw)rks is hard. Earning a return )n them is even harder.”25 By the maj)rity’s acti)n, the C)mmissi)n may have further increased the degree )f difficulty. I am tr)ubled by the negative treatment s) many vital c)mp)nents )f )ur m)dern br)adband netw)rks receive in this Order. We have turned paid pri)ritizati)n int) a dirty w)rd, a danger)us t))l. T) me, it is ab)ut quality )f service, and )ptimizing services f)r real-time applicati)ns. I reject that such measures are anti-c)mpetitive )n their face. In fact, 4G wireless netw)rks have pri)ritizati)n built int) the standard t) pr)vide )ptimized service acr)ss classes )f )fferings.26 The rec)rd c)ntains evidence )f )ther services and )fferings under which pri)ritizati)n is )ffered t)day in a pr)-c)nsumer, pr)-c)mpetitive manner, typically in c)mmercial settings.

Specialized services—a term the C)mmissi)n created in this d)cket—receives n) better handling. Specialized services have been )ne )f the primary drivers )f greater v)ice and vide) c)mpetiti)n in the United States. They have als) been fundamental in justifying the huge c)st necessary t) build-)ut t)day’s Internet, and will be central t) the analysis in raising additi)nal risk capital t) impr)ve existing netw)rks and depl)y new netw)rks. Relatedly, specialized services have als) helped t) )ffset the c)sts )f br)adband t) c)nsumers. The C)mmissi)n sh)uld be pr)m)ting specialized services t) help spark greater br)adband depl)yment.

Netw)rk management is similarly characterized as a p)tential l))ph)le f)r misc)nduct, n)t an engineering marvel that enables services t) )perate, mitigate c)ngesti)n, thwart threats b)th d)mestic and f)reign, and bl)ck unwanted materials. These are n)t dumb pipes f)r which netw)rk management is used f)r )nly nefari)us purp)ses.

I d) n)t think the maj)rity believes any )f these services )r functi)nalities t) be inherently pr)blematic, but the )verwhelming f)cus )n the p)tential f)r wr)ngd)ing is misplaced. It is fair t) highlight p)tential areas )f c)ncerns, but )nly in the c)ntext )f a m)re balanced and neutral presentati)n that )utlines the different dimensi)ns )f t)day and t)m)rr)w’s netw)rks m)re )bjectively. I care ab)ut h)w these issues are presented because even if the rules are silent ab)ut many )f these issues, the text and t)ne )f the Order will inf)rm )perat)rs’ assessment )f the p)tential risks )f g)vernmental rebuke in determining whether t) appr)ve an engineer’s pr)p)sal f)r a new appr)ach, a new practice, )r a new business m)del t) serve c)nsumers better.

THE COMMISSION IS MISCAST AS THE INTERNET’S REFEREE.

The genius )f the Internet is that there is n) central c)mmand, n) unitary auth)rity t) dictate h)w inn)vati)n is t) )ccur. N) )ne must ask f)r permissi)n. The maj)rity has altered fundamentally that winning f)rmula, f)rcing the C)mmissi)n int) the r)le )f judging h)w the Internet and br)adband netw)rks will ev)lve. By ad)pting rules that will require significant interpretati)n, by creating new undefined terms, and by muddling its analysis with warnings and cauti)nary n)tes, the maj)rity has ensured that new inn)vati)n and new practices will be subject t) its appr)val, and the c)rresp)nding

25 Craig M)ffett, "Weekend Media Blast: Building Netw)rks is Hard ... Earning a Return )n Them is Even

Harder," Bernstein Research (Dec. 17, 2010).

26 See 3rd Generati)n Partnership Pr)ject (3GPP), “Technical Specificati)n Gr)up Services and System Aspects; P)licy and charging c)ntr)l architecture (Release 9)” December 2009 (available at: http://)fdm.jp/3GPP/Specs/23203-930.pdf).


188

delay and uncertainty. As netw)rks, devices, and applicati)ns c)ntinue t) ev)lve and c)nverge, the maj)rity’s artificial line-drawing )f imp)sing regulat)ry c)sts )nly )n netw)rks will necessarily plunge this agency int) a definiti)nal quagmire. As it d)es, I fear the g)vernment will assume t)) pr)minent a r)le in shaping t)m)rr)w’s Internet.

I have related administrative c)ncerns with )ur ability t) administer the regime established t)day.27 The maj)rity has n)w given the C)mmissi)n a significant resp)nsibility t) manage a space as dynamic as the Internet. G)vernment will be hard pressed t) manage the next-generati)n )f the Internet as well as c)mpetiti)n and c)nsumer demand has d)ne f)r the previ)us generati)ns. We will need t) address issues that arise in a timely, th)ughtful, and technical manner. N)n-g)vernmental gr)ups like the Br)adband Internet Technical Advis)ry Gr)up (BITAG) sh)uld be the primary f)rum f)r disputes, and the C)mmissi)n w)uld be wise t) rely )n such expert res)urces.28 These gr)ups have the ability t) craft engineering-based s)luti)ns in a m)re flexible, resp)nsive, and efficient manner.

THE COMMISSION LACKS AUTHORITY TO ADOPT NET NEUTRALITY RULES.

“The FCC, like )ther federal agencies, ‘literally has n) p)wer t) act . . . unless and until C)ngress c)nfers p)wer up)n it.’”29 The Supreme C)urt has cauti)ned that “the C)mmissi)n’s estimati)ns )f desirable p)licy cann)t alter the meaning )f the federal C)mmunicati)ns Act.”30 C)ngress has never given the C)mmissi)n auth)rity t) regulate Internet netw)rk management, a fact validated by the c)urt in C,mcast. Lacking any statut)ry auth)rity t) act in this area, the C)mmissi)n’s eff)rt t) establish Net Neutrality rules sh)uld have been a n)n-starter.31 T) paraphrase the D.C. Circuit, I “find n)thing in the statute, its legislative hist)ry, the applicable case law, )r agency practice indicating that C)ngress meant t) pr)vide the sweeping auth)rity the FCC n)w claims…the agency’s strained and implausible interpretati)ns )f the definiti)nal pr)visi)ns … d) n)t lend credence t) its p)siti)n.”32

27 By naming itself Internet referee, the C)mmissi)n has als) intr)duced a new strategic )pti)n int) every

c)mmercial dispute in the Internet sect)r. Parties will have the ability t) try t) manipulate )ur pr)cedures f)r their c)mmercial gain, )r as simple leverage t) extract c)ncessi)ns in private deals. This is n)t c)njecture. In the buildup t) this Order, we have seen c)untless different disputes acr)ss the Internet sect)r be labeled as Net Neutrality issues. I fear actual engineering issues will be subsumed by c)mmercial and p)litical c)nsiderati)ns.

28 BITAG is an independent n)n-pr)fit )rganizati)n, “wh)se missi)n is t) bring t)gether engineers and )ther similar technical experts t) devel)p c)nsensus )n br)adband netw)rk management practices )r )ther related technical issues that can affect users’ Internet experience, including the impact t) and fr)m applicati)ns, c)ntent and devices that utilize the Internet.” (available at http://members.bitag.)rg/kwspub/h)me/).

29 American Library Ass’n v. FCC, 406 F.3d 689, 691, 698 (D.C. Cir. 2005) (“ALA”) (citing L,uisiana Public Service C,mmissi,n v. FCC, 476 U.S. 355, 374 (1986)).

30 MCI Telec,mmunicati,ns C,rp. v. AT&T C,., 512 U.S. 218, 234 (1994) (“MCI”).

31 See Remarks )f Chairman Julius Genach)wski, “Preserving Internet Freed)m and Openness” (Dec. 1, 2010) (explaining that “this pr)p)sal w)uld build up)n the str)ng and balanced framew)rk devel)ped by Chairman Henry Waxman”).

32 ALA, 406 F.3d at 704.


189

The maj)rity, h)wever, tries the everything-but-the-kitchen-sink defense – 24 different claimed statut)ry bases. The maj)rity elects sheer quantity t) make up f)r quality, and, in d)ing s), c)nt)rts the letter and spirit )f the Act t) try t) justify rules ad)pted in a result-)rientated pr)cess. The bulk )f the legal supp)rt is based )n ancillary auth)rity gr)unds. The maj)rity has swapped in a different set )f statut)ry pr)visi)ns fr)m the )nes the C,mcast c)urt rejected, but these pr)visi)ns share the same inherent infirmity. The c)urts have l)ng required any regulati)n t) be “reas)nably ancillary t) the effective perf)rmance )f the C)mmissi)n’s vari)us resp)nsibilities.”33 Ancillary auth)rity has devel)ped as a gap filler t) pr)vide the C)mmissi)n with the t))ls t) c)nduct the tasks explicitly directed by C)ngress. The maj)rity’s intent here is t) regulate br)adband platf)rms, n)t pr)tect traditi)nal v)ice, vide), br)adcast )r audi) services. The references t) direct auth)rity are a pretext t) try t) aggregate the desired auth)rity, which w)uld be far greater than any gap filling exercise. In the end, these ancillary auth)rity claims are indistinguishable fr)m the )nes rejected by the c)urt in C,mcast.

I will, theref)re, f)cus )n secti)n 706(a), which receives the bulk )f the maj)rity’s analysis. I am n)t persuaded by the maj)rity’s attempt t) twist a 14-year )ld deregulat)ry p)licy statement int) a grant )f direct auth)rity. The maj)rity’s view )f secti)n 706(a) is inc)nsistent with a plain reading )f the statute, s)und n)ti)ns )f statut)ry interpretati)n, and )ver a decade )f c)nsistent C)mmissi)n and judicial precedent.

As the C)mmissi)n has explained repeatedly, secti)n 706(a) “gives this C)mmissi)n an affirmative )bligati)n t) enc)urage the depl)yment )f advanced services, relying )n )ur auth)rity established elsewhere in the Act.”34 Our decisi)ns are “inf)rmed” by secti)n 706.35 It is a guidep)st as t) h)w t) use )ur statut)rily mandated resp)nsibilities. The C)mmissi)n held l)ng ag) that the “m)st l)gical statut)ry interpretati)n is that secti)n 706 d)es n)t c)nstitute an independent grant )f auth)rity.”36

And that is precisely h)w the C)mmissi)n has successfully inc)rp)rated secti)n 706 int) its decisi)n-making f)r )ver a decade. The C)mmissi)n has repeatedly explained that “the directives )f secti)n 706 … require that we ensure that )ur br)adband p)licies pr)m)te infrastructure investment, c)nsistent with )ur )ther )bligati)ns under the Act.”37

The maj)rity effectively attempts t) rewrite this straightf)rward pr)visi)n and its clear-cut hist)ry. This is ultimately an unsuccessful gamble. The c)re )f the maj)rity’s analysis is its mischaracterizati)n )f the 1998 Advanced Services Order. Under the maj)rity’s view, the C)mmissi)n has )nly interpreted a single clause fr)m secti)n 706(a)—regulat)ry f)rbearance—n)t the secti)n as a

33 United States v. S,uthwestern Cable C,., 392 U.S. 157, 178 (1968).

34 Depl,yment ,f Wireline Servs. Offering Advanced Telec,mms. Capability, Mem)randum Opini)n and Order and N)tice )f Pr)p)sed Rulemaking, 13 FCC Rcd 24012, ¶ 74 (1998) (“Advanced Services Order”).

35 Review ,f the Secti,n 251 Unbundling Obligati,ns ,f Incumbent L,cal Exchange Carriers, Rep)rt and Order )n Remand and Further N)tice )f Pr)p)sed Rulemaking, 18 FCC Rcd 16978, ¶ 278 (2003).

36 Advanced Services Order, ¶ 77.

37 Qwest Petiti,n f,r F,rbearance Under 47 U.S.C. § 160(c) fr,m Title II and C,mputer Inquiry Rules with Respect t, Br,adband Services, Mem)randum Opini)n and Order, 23 FCC Rcd 12260, ¶ 52 (2008); see als, Appr,priate Framew,rk f,r Br,adband Access t, the Internet Over Wireline Facilities, Rep)rt and Order and N)tice )f Pr)p)sed Rulemaking, 20 FCC Rcd 14853,¶ 19 (2005) (“Wireline Br,adband Order”) (finding that “the directives )f secti)n 706 )f the 1996 Act require that we ensure that )ur br)adbandp)licies pr)m)te infrastructure investment, c)nsistent with )ur )ther statut)ry )bligati)ns under the Act.”).


190

wh)le.38 The C)mmissi)n raised this identical argument t) the C,mcast c)urt, and it was appr)priately rejected.39 In June, subsequent t) the C,mcast decisi)n, in the Title II pr)ceeding, the C)mmissi)n seemingly aband)ned this the)ry by asking if it sh)uld “change[] its c)nclusi)n that secti)n 706(a) is n)t an independent grant )f auth)rity.”40 In d)ing s), the C)mmissi)n suggested n) caveat )r limitati)n tied t) the f)rbearance auth)rity. The c)urt this April and the agency this June g)t it right: the C)mmissi)n sh)uld n)t deviate fr)m its hist)ric understanding )f secti)n 706(a) as a p)licy statement.41 Pursuing this strained reading )f secti)n 706(a) t) serve as the c)rnerst)ne )f the maj)rity’s legal auth)rity t) regulate the Internet is uns)und.

Even if secti)n 706 were a grant )f auth)rity, that pr)visi)n c)uld n)t supp)rt t)day’s prescriptive and investment-chilling acti)n that erects, n)t rem)ves, barriers t) br)adband netw)rk

38 Even if the Advanced Services Order interpretati)n were limited t) the “regulat)ry f)rbearance” language

as the maj)rity n)w claims, there is n) reas)nable reading under which that interpretati)n w)uld n)t be c)ntr)lling )n secti)n 706(a) as a wh)le. Specifically, the term “regulat)ry f)rbearance” appears in the middle )f a list, and every item )n the list is prefaced by the same language, the language auth)rizing the C)mmissi)n t) “utiliz[e] in a manner c)nsistent with the public interest, c)nvenience, and necessity,” the vari)us t))ls listed. Thus, if the C)mmissi)n f)und n) independent auth)rity t) f)rbear, there c)uld then be n) independent auth)rity t) take any )ther acti)n menti)ned in secti)n 706(a). It w)uld be ill)gical t) suggest that s)me )f the items )n the list c)nvey independent auth)rity while )thers d) n)t.

39 C,mcast, 600 F.3d at 658-59. The maj)rity’s expansive reading )f the 2008 Ad H,c decisi)n is equally misplaced. Ad H,c Telec,m. Users C,mmittee v. FCC, 572 F.3d 903 (D.C. Cir. 2009). In that case, the c)urt upheld a deregulat)ry measure (special access relief) that was pursuant t) the C)mmissi)n’s secti)n 10 f)rbearance auth)rity, n)t secti)n 706(a). Id., 572 F.3d at 907. The C,mcast c)urt already rejected the maj)rity’s claim, explaining that the c)urt in Ad H,c “cited secti)n 706 merely t) supp)rt the C)mmissi)n's ch)ice between regulat)ry appr)aches clearly within its statut)ry auth)rity under )ther secti)ns )f the Act.” C,mcast, 600 F.3d at 659. The C,mcast c)urt c)ncluded explicitly that, “[n])where did [the D.C. Circuit] questi)n the C)mmissi)n's determinati)n that secti)n 706 d)es n)t delegate any regulat)ry auth)rity. The C)mmissi)n's reliance )n secti)n 706 thus fails.” Id. Tellingly, the C)mmissi)n’s )wn brief in that case characterized secti)n 706 in the manner it has always been underst))d: "Guided by the deregulat)ry mandate )f secti)n 706, the C)mmissi)n - in a series )f decisi)ns affirmed by the c)urts - has taken measures designed t) ease regulat)ry burdens )n pr)viders )f br)adband services.” Brief f)r Resp)ndents at 8, Ad H,c Telec,m. Users C,mmittee v. FCC, 572 F.3d 903 (D.C. Cir. 2009) (N). 07-1426). This is a deregulat)ry p)wer.

40 Framew,rk f,r Br,adband Internet Service, N)tice )f Inquiry 25 FCC Rcd 7866, ¶ 36 (2010).

41 By attempting t) manipulate )ur pri)r interpretati)n, the maj)rity has als) failed t) pr)vide pr)cedurally an adequate justificati)n t) change the interpretati)n )f secti)n 706(a) fr)m p)licy statement t) direct auth)rity. The Supreme C)urt recently emphasized that when an agency changes its p)siti)n it “must sh)w that there are g))d reas)ns f)r the new p)licy.” FCC v. F,x Televisi,n Stati,ns, 129 S.Ct. 1800, 1811 (2009). There is a heightened burden here because the “pri)r p)licy has engendered seri)us reliance interests.” Id. Netw)rk )perat)rs have invested billi)ns int) their infrastructure relying )n the deregulat)ry appr)ach t) br)adband netw)rks best evidenced, until n)w, by the secti)n 706 deregulat)ry p)licy statement. The C)mmissi)n, theref)re, must pr)vide “a m)re detailed justificati)n than w)uld suffice f)r a new p)licy created )n a blank slate.” Id., at 1811. N)t )nly d)es the C)mmissi)n fail t) )ffer any justificati)n, it als) failed t) establish a factual rec)rd )n this questi)n. In an)ther pr)ceeding, the C)mmissi)n asked the right questi)ns ab)ut “revisit[ing] and chang[ing] its c)nclusi)n that secti)n 706(a) is n)t an independent grant )f auth)rity.” Framew,rk f,r Br,adband Internet Service, N)tice )f Inquiry 25 FCC Rcd 7866, ¶ 36 (2010). We further asked what “findings w)uld be necessary t) reverse that interpretati)n.” Id. The C)mmissi)n failed t) pr)perly justify a change in interpretati)n, and is, theref)re, n)t entitled t) d) s) in this pr)ceeding.


191

infrastructure investment. The text )f secti)n 706(a) is clear: it is ab)ut “enc)urag[ing]” br)adband “depl)yment,” with clear deregulat)ry f)cus )n “rem)v[ing] barriers t) infrastructure investment.”42 The D.C. Circuit has held “secti)n 706(a) identifies )ne )f the Act’s g)als … namely, rem)ving barriers t) infrastructure investment.”43 The C)mmissi)n itself has repeatedly held the same.44 Secti)n 706 is ab)ut depl)yment )f br)adband netw)rk infrastructure, and the C)mmissi)n has n) auth)rity t) erect )bstacles in the name )f rem)ving them. The maj)rity attempts t) muddle the issue, referring t) “)verall investment in Internet infrastructure.” It strains all credibility t) c)ntend that imp)sing Net Neutrality )bligati)ns w)uld d) anything t) pr)m)te br)adband depl)yment.45 Investment in )ther parts )f the Internet—in applicati)ns and devices—is n)t relevant t) a secti)n 706 analysis.

By reading )ut )f the pr)visi)n any deregulat)ry f)cus, the explicit br)adband depl)yment purp)se, and the rem)val )f barrier limitati)n, the C)mmissi)n has given itself plenary auth)rity t) regulate the Internet. Anything that pr)m)tes the “virtu)us cycle” in the Internet ec)system c)uld be regulated under this analysis. This is my biggest c)ncern with the maj)rity’s secti)n 706(a) analysis. In essence, the maj)rity has replaced an unb)unded ancillary auth)rity rejected by the C,mcast c)urt with an equally unb)unded direct auth)rity under secti)n 706(a).

The maj)rity is quite candid that this was its intent: it s)ught a p)wer as br)ad as its pre-C,mcast understanding )f its ancillary auth)rity. The Order explains that “)ur auth)rity under Secti)n 706(a) is generally c)nsistent with… ancillary jurisdicti)n … bef)re the C,mcast decisi)n.” The C,mcast c)urt had significant c)ncerns with the C)mmissi)n’s legal the)ries under which “if accepted it w)uld virtually free the C)mmissi)n fr)m its c)ngressi)nal tether.”46 The same fundamental c)ncern applies here with equal f)rce: trading )ne unlimited p)wer f)r an)ther is far fr)m c)mf)rting t) me, )r the c)urts. I als)

42 47 U.S.C. § 1302(a).

43 United States Telec,m Ass'n v. FCC, 359 F.3d 554, 579 (D.C. Cir. 2004).

44 See, e.g., Wireline Br,adband Order, ¶ 19.

45 The curs)ry attempt t) use secti)n 706(b) as direct auth)rity suffers a similar fate. That pr)visi)n directs the C)mmissi)n t) evaluate the depl)yment )f advanced services. The maj)rity’s acti)n bears n) l)gical c)nnecti)n with C)ngress’s directive t) “take immediate acti)n t) accelerate depl)yment )f such capability by rem)ving barriers t) infrastructure investment and by pr)m)ting c)mpetiti)n in the telec)mmunicati)ns market.” 47 U.S.C. § 1302(b). The maj)rity raises barriers here, n)t l)wers them, and takes steps that will n)t accelerate br)adband depl)yment. Further, it making the negative finding triggering this auth)rity, the C)mmissi)n )utlined the “immediate” steps it intended t) take, n)ting “several [active] pr)ceedings” related t) implementing rec)mmendati)ns t) the Nati)nal Br)adband Plan and “)ther[ pr)ceedings] still be t) be c)mmenced.” Inquiry C,ncerning the Depl,yment ,f Advanced Telec,mmunicati,ns Capability t, All Americans in a Reas,nable and Timely Fashi,n, and P,ssible Steps t, Accelerate Such Depl,yment Pursuant t, Secti,n 706 ,f the Telec,mmunicati,ns Act ,f 1996, Amended by the Br,adband Data Impr,vement Act, Order, FCC 10-129, ¶ 29 (2010). The Net Neutrality pr)ceeding—initiated pri)r t) that finding—was never menti)ned as )ne )f the steps required by secti)n 706(b). I als) have instituti)nal c)ncerns in the lack )f discussi)n )f h)w the secti)n 706(b) p)wer functi)ns, given it has never been ev)ked bef)re. We sidestep the questi)n )f what happens if a subsequent secti)n 706 rep)rt finds br)adband depl)yment t) be timely again. The attempt t) use this p)wer s) br)adly here als) undersc)res the need f)r a m)re searching and analytically s)und appr)ach t) the secti)n 706 rep)rts. The C)mmissi)n’s finding )f nati)nwide untimely and unreas)nable depl)yment was, am)ng )ther defects, )verly br)ad. The analysis sh)uld have been significantly m)re granular t) identify particular ge)graphic areas )r c)mmunities f)r which depl)yment has lagged, and I h)pe we c)rrect that err)r in future rep)rts.

46 C,mcast, 600 F.3d at 655.


192

have t) believe a c)urt will be skeptical )f the timing and manner in which the maj)rity has disc)vered secti)n 706(a) t) be a superp)wer, unl)cked )nly after an adverse c)urt )pini)n and p)litical pressure t) find s)me legal f)undati)n t) justify Net Neutrality rules.

T) that end, it is als) instructive where in the Act secti)n 706 was l)cated. C)ngress placed this pr)visi)n – the pr)visi)n the maj)rity w)uld make the centerpiece )f all br)adband and Internet regulati)n g)ing f)rward – in a f))tn)te t) a n)n-substantive regulat)ry requirement.47 I am “c)nfident that C)ngress c)uld n)t have intended t) delegate a decisi)n )f such ec)n)mic and p)litical significance t) an agency in s) cryptic a fashi)n.”48 I agree with the Supreme C)urt’s analysis that “we must be guided t) a degree by c)mm)n sense as t) the manner in which C)ngress is likely t) delegate a p)licy decisi)n )f such ec)n)mic and p)litical magnitude t) an administrative agency.”49 The C)mmissi)n lacks auth)rity t) ad)pt Net Neutrality rules under any )f the legal the)ries put f)rth in the Order.

THE COMMISSION ACTS IMPROPERLY AS A QUASI-LEGISLATIVE BODY. The C)mmissi)n ad)pts rules that are alm)st w)rd-f)r-w)rd a draft bill under c)nsiderati)n in

C)ngress. We are a creature )f C)ngress, n)t C)ngress itself. Using a legislative pr)p)sal t) base )ur acti)n undersc)res that the maj)rity acts bey)nd the appr)priate r)le )f an independent agency. The maj)rity d)es what C)ngress c)uld n)t, )r w)uld n)t d). They ad)pt legislati)n and the implementing )rder all in )ne step. By definiti)n, the maj)rity d)es much m)re than the pr)p)sed draft bill by exercising its )wn discreti)n and judgment. The draft bill w)uld have given the C)mmissi)n very specific resp)nsibilities and p)wers. In c)ntrast, by d)ing it themselves, the maj)rity has created a sweeping Internet p)licy with)ut any jurisdicti)nal limits. When the Federal C)mmunicati)ns C)mmissi)n feels c)mpelled t) explicitly “decline t) apply )ur rules directly t) c)ffee sh)ps, b))kst)res, [and] airlines,” it illustrates the br)ad sc)pe )f these rules, and the lack )f any ascertainable )uter limits t) )ur claimed auth)rity.

By this acti)n, the maj)rity has blurred the line between legislat)r and regulat)r. In d)ing s), this decisi)n raises br)ader c)ncerns ab)ut )ur agency’s instituti)nal credibility. The l)ng-term c)ncern is that a pattern )f acti)n t) seek )ut perceived harms bey)nd )ur c)re c)mpetencies may er)de the trust in the C)mmissi)n t) be an expert agency )n th)se things f)r which C)ngress has given us clear statut)rily mandated resp)nsibilities. This is n)t meant t) be alarmist: the vast maj)rity )f )ur p)rtf)li) is d)ne )n a c)nsensus and bipartisan basis well within )ur delegated auth)rity. The bad news is that big decisi)ns garner far m)re attenti)n, and can affect )ur standing in a dispr)p)rti)nate manner. Instituti)nally, we must resist the desire t) stretch )ur auth)rity bey)nd its breaking p)int t) capture s)me real )r perceived c)ncern. Here, given the lack )f any rec)rd evidence )f an immediate crisis t) res)lve, the appr)priate appr)ach sh)uld have been t) all)w C)ngress t) deliberate )n the pr)per means t) address netw)rk management c)ncerns. The Supreme C)urt has stressed that if a statute “falls sh)rt )f pr)viding [auth)rity f)r an agency t) ad)pt] safeguards desirable )r necessary t) pr)tect the public interest, that is a pr)blem f)r C)ngress, and n)t the [agency] )r the c)urts, t) address.”50

47 Secti)n 706 was ultimately c)dified at secti)n 1302, twelve years after it was enacted.

48 FDA v. Br,wn & Williams,n, 529 U.S. 120, 160 (2000).

49 Id., 529 U.S. at 121; see als,, MCI, 512 U.S. at 231 (“It is highly unlikely that C)ngress w)uld leave the determinati)n )f whether an industry will be entirely, )r even substantially, rate regulated t) agency discreti)n and even m)re unlikely that it w)uld achieve that thr)ugh such a subtle device…”).

50 B,ard ,f G,vern,rs ,f Fed. Reserve Sys. v. Dimensi,n Fin. C,rp., 474 U.S. 361, 374 (1986).


193

When the C)mmissi)n makes p)litical decisi)ns and takes acti)ns best left t) elected )fficials, )ur pr)ceedings inevitably turn m)re partisan and m)re c)ntr)versial. This agency lacks the instituti)nal capability )f handling divisive issues )f this imp)rt. Indeed, issues )f this magnitude, with such significant l)ng-term c)nsequences, are decisi)ns that sh)uld be left t) C)ngress. That is particularly true here given the clear interest )f C)ngress in the subject matter. Over 300 members )f C)ngress have expressed c)ncern with the C)mmissi)n’s appr)ach t) regulating the Internet,51 and a v)cal min)rity has )ffered its supp)rt f)r the maj)rity’s appr)ach.52 Last week, 29 U.S. Senat)rs “str)ngly urge[d the C)mmissi)n] t) aband)n [its] decisi)n t) imp)se new restricti)ns )n” br)adband services.53 In their view, “this is an unjustified and unnecessary expansi)n )f g)vernment c)ntr)l,” and the resulting “c)st )f th[is] acti)n will be measured in investment f)reg)ne, inn)vati)n stifled, and m)st imp)rtantly, j)bs l)st.”54 The inc)ming leadership )f the H)use Energy and C)mmerce C)mmittee last week wr)te n)ting that this “is likely the m)st c)ntr)versial item the FCC has had bef)re it in at least a decade. It h)lds huge implicati)ns f)r the future )f the Internet, investment, inn)vati)n, and j)bs.”55 Taken as a wh)le, the )nly appr)priate c)urse )f acti)n was t) defer t) C)ngress.

THE COMMISSION HAS STRAYED FROM A PRO-JOBS CONSENSUS AGENDA.

Regrettably, this pr)ceeding has led me t) questi)n )ur pri)rities. The C)mmissi)n repeatedly m)ved Net Neutrality t) the t)p )f )ur t)-d) list, an issue that is the cause célèbre )f the instituti)nal left. But, fr)m a legal and factual perspective, it remains a s)luti)n in search )f a pr)blem. In c)ntrast, acti)n languishes in )ther areas where there is bipartisan supp)rt and )bjective evidence )f real pr)blems necessitating pr)mpt g)vernment acti)n. The C)mmissi)n unanim)usly ad)pted a J,int Statement ,n Br,adband this Spring that called f)r acti)n )n the nati)n’s c)re c)mmunicati)ns challenges: br)adband depl)yment and ad)pti)n; spectrum ref)rm; universal service and intercarrier c)mpensati)n ref)rm; and a public safety netw)rk.56 Our f)cus bel)ngs )n that agenda, an actual pr)-gr)wth, pr)-j)bs game plan f)cused appr)priately )n infrastructure and private investment as rec)mmended by the Nati)nal Br)adband Plan.

Starting t)day, we sh)uld red)uble )ur eff)rts t) craft p)licies t) create the incentives and regulat)ry envir)nment necessary t) attract the billi)ns in risk capital necessary t) expand and impr)ve )ur br)adband infrastructure. That capital is the critical first step in the f)rmati)n )f new high-paying j)bs laying the fiber and building the t)wers. Central t) th)se p)licies sh)uld be spectrum ref)rm. The maj)rity’s c)ncerns ab)ut p)tential gatekeepers w)uld be best addressed by building m)re r)ads: 4G and next generati)n wireless )fferings can be the third, f)urth, fifth, and sixth br)adband ch)ice f)r c)nsumers. That is why a spectrum p)licy f)cused )n 4G is critical, and the need f)r a clear r)admap t)

51 See e.g., Letter fr)m Ranking Member J)e Bart)n et al t) H)n)rable Julius Genach)wski (N)v. 19, 2010);

Sara Jer)me, “Hutchins)n pans net-neutrality pr)p)sal,” The Hill (Dec. 1, 2010); Press Release, “Up)n Urges FCC t) Cease and Desist )n Net Neutrality” (Dec. 1, 2010).

52 See e.g., Press Release, “Kerry, D)rgan, Wyden Urge FCC t) Act This Year )n Open Internet,” (N)v. 30, 2010).

53 Letter fr)m Senat)r J)hn Ensign et al t) H)n)rable Julius Genach)wski (Dec. 15, 2010).

54 Id.

55 Letter fr)m Chairman Fred Upt)n et al t) H)n)rable Julius Genach)wski (Dec. 16, 2010).

56 J,int Statement ,n Br,adband, FCC 10-42, ¶ 3 (Mar. 16, 2010).


194

industry ab)ut future spectrum availability is param)unt t) help enable greater br)adband c)mpetiti)n and c)nsumer ch)ice.

* * *

I fear that t)day’s acti)n is n)t the end )f this debate because )f its significant c)nsequences f)r the Internet, f)r the jurisdicti)nal auth)rity )f this agency, and f)r the pr)per r)le )f the FCC. This debate may well m)ve t) different f)ra, but I fear it will c)ntinue t) take up t)) much )f the )xygen in )ur c)mmunity.

That said, I remain always the )ptimist. When we w)rk t)gether, there is s) much g))d we can d). I h)pe the New Year brings a fresh perspective )n )ur nati)n’s c)mmunicati)ns challenges and a renewed f)cus )n w)rking c)llab)ratively t)gether.

FCC-10-201A1

Documents

Transcript of FCC-10-201A1