*1 It law. employment summary compliance with to known, survive she cannot have reminder manager’s a reads as senior this thus basis. judgment general com- office’s superior her a reasonable argues that next Morris that an admission obligations pliance Higginbotham knew —not that jury could infer or a counselor to meet with Morris wanted in the Title VII participated had Morris in obtain- employee assisting another was an EEO to meet with by asking process from her meeting apart ordi- ing such a contends support, Morris counselor. jury could in late 2007 No reasonable Higginbotham nary job duties. told that she more [ ] notified ] “not stand Morris’s reminder [ she would find that Morris Decl. or retaliation.” discrimination personally Morris was that Higginbotham ¶35. that also testified Higginbotham complaint process. in the involved an aware that OCR she was early 2008 has not introduced evi- Because Morris an EEO to meet with had asked employee jury to a reasonable sufficient for dence filing a step preliminary counselor—a Spears Higginbotham that either infer finally, also in And complaint. Title VII activity, the district any protected knew Higginbotham told early Morris summary judgment granted properly court times” “the “multiple other officials claim. retaliation to EPA on Morris’s an EEO required provide was Agency Id. 37. timely manner.” in a counselor IV contends, her together, Taken Morris Higginbotham informed statements court’s orders dis- the district affirm We requesting EEO employee was Morris claims and missing Morris’s termination counseling. summary judgment on her claim granting specula is too argument Morris’s retaliatory. was suspension her We judgment. And an summary to defeat tive granting court’s order the district reverse summary judg cannot survive employee claim that summary judgment on Morris’s “specu more than jury if can no ment do motivated racial suspension was her pro knew of her employer late” that her pro- for further and remand discrimination Shah, v. 638 F.3d Talavera activity. tected opinion. this ceedings with consistent 2011). (D.C. Morris never Cir. Higginbotham told that she asserts Morris con does
request was hers. Nor was aware her general EPA in
tend that as a Higginbotham result or that
request, Hamil Contra it.
could have known about Instead, during this
ton, at 1358. 666 F.3d Energy— Department
period, was TELECOM STATES counseling EEO UNITED EPA —that handled ASSOCIATION, al., in Morris’s office. employees et requests for Moreover, would not Morris’s statements Petitioners on no Higginbotham necessarily put have v. comment contrary, To the Morris’s tice. COM FEDERAL COMMUNICATIONS provide an “required was OCR United States MISSION and manner” timely was EEO counselor America, Respondents office in an devoted hardly extraordinary provide Energy, EPA had partment of meet Although entitled to Morris was counseling. funds for from the De- independent counselor EEO *2 Independent Telephone & Tele Alliance,
communications al.,
et Intervenors
No. 15-1063 15-1078, 15-1086,
Consolidated with 15-
1090, 15-1091, 15-1092, 15-1095, 15-1099,
15-1117, 15-1128, 15-1151, 15-1164
United States Court of Appeals,
District of Columbia Circuit.
Argued December June
Decided *11 cause for argued D. Keisler
Peter Associa- States Telecom petitioners United tion, joint him on the briefs et al. With *12 Angstr- H. Kellogg, K. Scott were Michael Estrada, eich, Theodore B. Ol- Miguel A. Bond, Coran, son, E. Stephen C. Jonathan Lamken, Jeffrey A. Wash- Trigg, S. Jenell DC, Solomon, P. H. Russell ington, David Chessen, Hanser, Neal M. Rick C. IL, Chicago, Michael S. School- Goldberg, Brill, er, A. Matthew T. Murchi- Matthew Walker, Ellis, son, Y. Helgi Jonathan C. Sullivan, Huston, M. R. Kathleen Michael Frederick Beckner Young, P. C. James Lawson, DC, III, L. Washington, David Gadsden, AL, Gary Phillips, L. and Chris- Corbett, Heimann. Dennis topher M. DC, M. Washington, and Kellam Conover appearances. entered cause for argued Brett A. Shumate Inc. and Alamo Broadband petitioners Berninger. him on the briefs Daniel With McBride, G. Eve Klindera were Andrew Reed, L. Wiley, Richard E. and Bennett Ross, Washington, DC. the cause for argued
Earl Comstock W. Network, et al. Full Service petitioners him the briefs were Robert J. With Graziano, and Michael A. Wash- Gastner ington, DC. Craig E. Gil-
Bryan N. Tramont more, DC, were on the briefs Washington, in support curiae Future for amicus Mobile Wireless Associa- petitioners of CTIA-The and AT&T Inc. tion Tramont, on the brief for Bryan N. was Indus- curiae Telecommunications amicus petitioners. try support Association DC, Hanser, en- Washington, Russell P. appearance. tered an Consovoy, Thomas R. McCar- William S. Arlington, Connolly, thy and J. Michael curiae VA, for amicus were on the brief sup- Association, for Boundless Innovation in Inc., Center Wireless AT&T port petitioners United States Telecom Association, American Cable CenturyLink, Association, National Cable & Telecommu- Wireless Internet Service Providers Asso- Association, nications CTIA-The Wireless ciation, Inc., Alamo and Daniel Broadband Association, Association, American Cable Berninger. Wireless Service Providers Asso- Elwood, John P. Todd, Kate Comerford ciation, Inc., CenturyLink, AT&T Alamo P. Lehotsky, DC, Steven Washington, Inc., Broadband and Daniel Berninger. were on the brief for amici curiae The McCarthy, Thomas R. William S. Conso- National Manufacturers, Association of et voy, and Connolly, Arlington, J. Michael in support petitioners. al. VA, were on the brief for amici curiae Christopher S. Yoo was on the brief for Congress support peti- Members *13 amicus curiae Christopher S. in sup- Yoo Association, tioners United States Telecom port petitioners. of National Cable & Telecommunications As- sociation, Association, CTIA-The Wireless Cory L. Andrews was on the brief for Association, American Cable In- Wireless amici curiae Former FCC Commissioner Association, ternet Service Providers Furchtgott-Roth Harold Washington and Inc., CenturyLink, AT&T Broad- Alamo Legal Foundation in support petitioners. of Inc., Berninger. band and Daniel Samp Richard A. appearance. entered an Benjamin R. Sperry was on the brief for Bader, Kazman, Hans Sam Washington, amici curiae International Center for Law DC, Lukas, McLean, VA, and Russell D. & Economics and Administrative Law were on the brief for amicus curiae Com- support Scholars in of petitioners United petitive Enterprise support Institute in of Association, States Telecom National Ca- petitioners. Association, ble & Telecommunications Kim M. and Honig Keenan David were Association, CTIA-The Wireless American on the Association, brief for amicus Cable curiae Multicultural Wireless Internet Ser- Association, Media, Inc., vice Providers AT&T Telecom Council in CenturyLink, Inc., Alamo Broadband and support of petitioners. Daniel Berninger. Spiwak Lawrence J. onwas the brief for Balto, DC, David A. Washington, was on amicus curiae Center for Ad- Phoenix
the brief for amicus curiae Richard Ben- Legal vanced Policy Economic Public nett of support petitioners United support petitioners. Studies in of Association, States Telecom National Ca- J. Kirsch William was on the for briefs Association, ble & Telecommunications support amicus William J. Kirsch in curiae Association, CTIA-The Wireless AT&T of petitioners. Inc., Association, American Cable Centu- ryLink, Wireless Internet Service Provid- DC, Boyden Gray, Washington, C. Adam Association, Inc., ers Alamo Broadband White, Winder, GA, J. and Adam R.F. Berninger. and Daniel Gustafson were on the for briefs interve- TechFreedom, nors et al. in of support Balto, DC, David A. Washington, was on Association, United States Telecom Na- Georgetown the brief for amici curiae Cen- tional Cable & Telecommunications Associ- ter for Policy Business and Public ation, Association, CTIA-The Wireless Thirteen Prominent Economists and Schol- Association, American Cable In- ars in Wireless support petitioners of United States Association, Association, Telecom ternet Service Providers National Cable & Association, Inc., Telecommunications CenturyLink, CTIA- AT&T Alamo Broad- respondents al. in case no. Inc., Berninger. Bradley support and Daniel band Sacramento, CA, Benbrook, an entered 15-1151. A. appearance. Christopher Sprigman Jon was on the Sallet, Counsel, B. General Jonathan Members of Con- brief for amici curiae Commission, and Federal Communications support respondents. gress Lewis, General Coun- M. Associate Jacob OH, Beck, Canton, Gregory A. North sel, respondents. for argued the causes for First Amendment was on the brief were William J. them on the brief
With support curiae in of re- Scholars as amici General, Attorney Baer, U.S. Assistant spondents. Justice, Gelfand, David I. Department General, Attorney Kris- Deputy Assistant on the Michael J. Burstein was brief Limarzi, Wiggers, Robert J. Nicko- ten C. of Administrative Law as amici Professors Gossett, Levin, Attorneys, David M. lai G. respondents. support curiae Counsel, Federal Commu- Deputy General Jay Andrew Schwartzman was on the Carr, Commission, James M. nications support for amicus curiae Tim Wu in brief Noveck, Dunne, and Scott M. Matthew J. respondents. Welch, Counsel, Fed- Richard K. Counsel. Commission, entered
eral Communications
Schwartzman,
Jay
Washington,
Andrew
appearance.
DC, was on the brief for amicus curiae
*14
Michalopou-
and Pantelis
Kevin Russell
in
Open
Rights
Internet Civil
Coalition
DC,
los,
argued the cause for
Washington,
support
respondents.
of
Communications, Inc.,
intervenors, Cogent
Moss,
Joseph
and Alexandra H.
C. Gratz
respondents.
them
support
et al. in
of
With
CA,
Francisco,
were on the brief for
San
Erick-
joint brief were Markham C.
on the
Inc.,
sup-
amici
et al. in
curiae Automattic
Guhr,
son, Stephanie
Roy,
A.
Andrew W.
port
respondents.
of
Gant,
E.
Hershel
Cooper,
Robert M.
Scott
Wancjer, Christopher Wright,
J.
Scott
A.
Markham
Erickson and Andrew
C.
W.
Blau,
Harris, Russell M.
Joshua M.
Blake
Guhr,
DC,
Washington,
were on the brief
Morris,
DC,
Bobeck,
Sarah J.
Washington,
in
for amicus curiae Internet Association
Francisco, CA,
Bankston, San
Kevin S.
support
respondents.
of
Schwartz,
Greenstein, Robert S.
Seth D.
Goldberg
T.
J. Carl Ceeere and David
Cheah,
Ammori,
A.
Marvin
Michael
Dee-
on
for amici
were
the brief
curiae Reed
Stallman,
F.
pak Gupta, Erik
Matthew
Hundt,
in
of
support
respondents.
et al.
Wood,
Ramsay,
James Bradford
Jennifer
Feld, Washington,
Murphy,
Jay
Harold
Francisco,
Anthony
Schoenberg,
P.
San
DC,
Bergmann, and Colleen L.
David
CA,
DC,
Deepak Gupta, Washington,
and
Hume and Patrick J.
Boothby. Hamish
Engine
on
brief
amici curiae
were
DC,
Whittle, Washington,
appear-
entered
Advocacy,
support
respondents.
al. in
of
et
ances.
Pasadena, CA,
Anthony
Segall,
R.
was
H.
Kellogg,
Angstreich,
Michael K.
Scott
on the brief for amici curiae
Guild
Writers
Olson,
Estrada, Theodore B.
Miguel A.
America,
support
respon-
of
et al. in
of
Coran,
Bond, Stephen E.
S.
Jonathan C.
dents.
Lamken,
Trigg, Jeffrey
Jenell
A.
Matthew
Hammond, Jonesboro, GA,
Allen
was
Murchison,
Brill,
A.
Matthew T.
Jonathan
the brief for amici curiae The Broadband
Walker,
Ellis,
R.
Helgi
Y.
and Michael
C.
and The Media Alli-
Huston,
DC,
Institute of California
were on the
Washington,
Inc.,
respondents.
joint
support
AT&T
et
ance in
of
brief for intervenors
McSherry
Spit-
requirements
and Arthur B.
crimination
Corynne
on broadband
zer,
DC,
Washington,
were on the brief for
providers.
opinion,
our second
Verizon
FCC,
(D.C.
2014),
amici curiae Electronic Frontier Founda-
v.
Eric Null was on the brief for amicus G. rules. We nonetheless vacated the anti- U.S., in curiae Consumer Union of the Inc. blocking provisions and anti-discrimination support respondents. because the Commission had chosen to Sternburg Henry and Alexandra classify broadband service as an informa- DC, Goldberg, Washington, were on the tion service under the Communications for amici curiae Computer brief & Com- Act of expressly prohibits which Industry sup- munications and Mozilla in applying Commission from common carri- port respondents. regulations er to such services. The Com- Krista L. was on the brief for amici Cox mission promulgated then the order at is- Association, Library curiae American et al. Open sue this case—the 2015 support of respondents. Order —in which it reclassified broadband Malone, MA, Phillip R. Cambridge, and service, service as a telecommunications Jeffrey T. Pearlman were on the brief for subject regulation to common carrier un- Meinrath, amici Zephyr curiae Sascha der Title II of the Communications Act. 45,707 Teachout and Users of the Internet The Commission also exercised its statu- in support respondents. tory authority to applying forbear from many provisions of Title II’s to broadband SRINIVASAN, TATEL Before: promulgated pro- service and five rules to WILLIAMS, Judges, Circuit Senior mote openness. separate internet Three Judge. Circuit groups petitioners, consisting primarily Opinion concurring part and their associa- dissenting part *15 filed Senior Circuit tions, challenge the arguing that Judge WILLIAMS. statutory authority the Commission lacks reclassify broadband as a telecommuni- SRINIVASAN, TATEL and Circuit service, that if cations even the Commis- Judges: authority sion has such its decision was years, For the third time in seven we arbitrary capricious, that and the Com- confront effort the Federal Commu- impermissibly mission classified mobile compel nications Commission to internet broadband as a commercial mobile ser- openness commonly known as net neu- — vice, impermissibly trality principle pro- that broadband —the II, provisions forbore from certain Title treat all traffic the viders must internet and that some of the rules violate the regardless same of source. In our first First For the reasons set Amendment. decision, FCC, Corp. v. 600 F.3d Comcast opinion, deny peti- forth in this we (D.C. 2010), 642 Cir. we held that for review. tions Commission had failed to cite statuto- ry authority justify that would its order I. a compelling provider broadband to ad- significant “one of the most tech- Called In open practices. here to certain internet of the 20th centu- nological advancements response, relying on section 706 of the Commerce, Sci- 1996, ry,” Senate Committee Telecommunications Act Transportation, Report on Online ence and imposing Commission issued an order Act, Privacy Rep. Sen. No. 107- transparency, anti-blocking, and anti-dis- Personal (2002), begun developing internet four have their own backbone has at ¶ users, networks, end broadband id. major participants: at 5688 198. networks, edge and providers, backbone Proponents openness “worry of internet users connect to the providers. Most end relationship about the between broadband provider, through broadband internet Verizon, providers edge providers.” and internet access high-speed
which delivers “They at 629. fear that broad- 740 F.3d technologies such as cable modem using providers might prevent band their end- (DSL) service, digital subscriber line ser accessing from user subscribers certain See vice, In optics. Protecting fiber re and edge providers altogether, might or de- (“2015 Promoting Open Internet grade quality of their end-user sub- Order”), or “the Open Internet Order” edge providers, access to certain scribers’ ¶ ¶ 5682-83 5751 346. FCC Red. favoring their either as means own interconnect Broadband with competing content or services or enable “long-haul fiber-optic backbone networks — edge them to collect fees from certain high-speed capable links and routers Id. Thus, providers.” example, for “a transmitting vast amounts of data.” Veri provider might like Comcast zon, In (citing 740 F.3d re Verizon ability limit its end-user subscribers’ MCI, Appli Inc. and Inc. Communications York New Times website access the if it Approval for of Transfer of Con cations spike wanted to traffic to its own news 18,433, trol, 18,493 20 FCC Red. website, might degrade quality (2005)). Netflix, Edge providers, like Goo the connection to a search website like Amazon, content, gle, “provide ser Bing competitor Google paid if a like vices, applications over the Internet.” Id. at 629 access.” Id. (citing prioritized Preserving re (“2010 Open Open Internet Or Understanding the issues raised der”), 17,905, 17,910 Red. 25 FCC attempt Commission’s current to achieve (2010)). bring together, To this all when an openness requires familiarity internet night’s end to check last user wishes base so, past efforts to do as well as with the ESPN.com, computer ball scores on his history regulation of broadband gen- more signal provider, sends a to his broadband erally. which in turn transmits it across the back provider, bone ESPN’s broadband A. signal which transmits the to ESPN’s com Much of the structure of the current Having signal, puter. received the ESPN’s *16 regulatory scheme derives from rules the computer packets breaks the scores into Commission established its 1980 Com- information which travel back across puter Computer II Order. The II rules provider ESPN’s broadband network to distinguished between “basic services” and the backbone and then across the end services, “enhanced services.” Basic such provider user’s broadband to the network service, telephone “pure as offered trans- user, end who will then know that the Nats capability mission over a communications years, to 3. In edge won 5 recent some path virtually transparent that is in terms providers, Google, such as Netflix supplied of its interaction with customer begun connecting directly have to broad information.” In re Amendment of Section networks, providers’ avoiding band thus Reg- 64.702 of the Commission’s Rules and the need to interconnect with the back II”), (“Computer ulations 77 F.C.C. 2d bone, Open 30 FCC ¶ (1980). ¶ 30, 420 96 Enhanced services consist- Red. at 5610 and some broadband AT&T, “any offering telecommuni- providers, such as Comcast and ed over the cations network which is more than a basic [the Communications only Act] to the ex- service,” example, transmission for one in tent that it is engaged providing tele- “computer processing applications which services.”). By contrast, communications content, code, act proto- are used to on the service,” an “information the successor to col, aspects and other of the subscriber’s service, an enhanced subject is not to Title information,” such as voicemail. Id. at 420 II. The Telecommunications Act defines a ¶ subjected services, 97. The rules basic “telecommunications service” as “the offer- services, but not enhanced to common car- ing of telecommunications for a directly fee rier treatment under II Title of the Com- to the public, or to such classes of users as ¶¶ munications Act. Id. at Among 5-7. effectively to be directly available to the things, requires other Title II that carriers public, regardless of the facilities used.” ... “furnish communication upon service 153(53). § Id. It defines telecommunica- 201(a), request,” § reasonable 47 U.S.C. transmission, tions as “the between or engage “unjust no or unreasonable dis- among points specified user, by the in charges, practices, crimination classifica- information of the choosing user’s without tions, facilities, regulations, services,” or change in the form or content of the infor- 202(a), § charge “just id. and reason- mation sent and received.” Id. 201(b). rates, § able” id. 153(50). § An information service is an II Computer recognized The rules also “offering of a capability for generating, services, category third “adjunct-to-ba- acquiring, storing, transforming, process- services, sic” services: enhanced such as ing, retrieving, utilizing, or making avail- “speed dialing, call forwarding, com- [and] able information via telecommunications.” assistance,” puter-provided directory 153(24). Id. appropriate regulatory facilitated use of a basic service. See re treatment therefore turns on what services Implementation of the Non-Accounting a provider offers to public: if it offers Safeguards (“Non-Accounting Safeguards telecommunications, subject that service is Order”), 21,958 21,905, 11 FCC Red. II regulation. to Title (1996). n. 245 Although adjunct-to-basic Tracking the approach Commission’s services fell within the definition of en- adjunct-to-basic services, Congress also services, hanced the Commission nonethe- effectively category created a third less treated them as basic because of their information services that facilitate use of role in facilitating basic services. See Com- a telecommunications service. The “tele- II, puter (explain- 77 F.C.C. 2d at 421 98 communications management exception” ing would treat as exempts from information service treat- an enhanced service those services used to ment —and thus treats as a telecommuni- “facilitate use of traditional [consumers’] “any cations use informa- [of services”). service— telephone control, management, tion for the service] later, years Congress, Fifteen borrowing operation sys- of a telecommunications framework, heavily Computer from the II management tem or the aof telecommu- enacted the Telecommunications Act of nications service.” Id. *17 1996, which amended the Communications The applied Commission first this statu- subjects Act. The Telecommunications Act tory in framework 1998 service,” a “telecommunications the succes- service, portion when it classified a sor of DSL ser- to basic to common carrier regulation under vice—broadband internet service furnished Title II. 47 U.S.C. 153(51) (“A telephone over a telecommunications carrier lines—as telecommunica- shall be treated as a common carrier Deployment under tions service. See In re
692
utory interpretation
Tele-
established
Chev
Offering Advanced
Services
Wireline
(“Advanced
De
ron
Inc. v. Natural Resources
Capability
U.S.A.
communications
24,-
Council,
24,012,
Inc.,
837,
Order”),
Red.
467
104 S.Ct.
13 FCC
U.S.
Services
fense
¶¶
(1998).
¶
2778,
(1984),
24,029-30
Accord-
3,
35-36
Four
the Commission
grated
functionally separate.”
... or
Id.
when it classified cable
approach
different
question
language
That
“turns not on the
pro-
modem service—broadband service
Act],
on the
Communications
but
[the
solely an infor-
over cable lines—as
vided
particulars
factual
of how Internet technol
Concerning
Inquiry
service.
re
mation
ogy
provided, ques
works and how it is
Access to the Internet over
High-Speed
tions Chevron leaves to the Commission to
(“Cable Broad-
Facilities
Cable and Other
resolve
the first instance.” Id. Examin
4798,
Order”), 17 FCC Red.
4823
band
¶¶
ing the classification at Chevron’s second
(2002). In its 2002 Cable Broad-
39-40
step
Court deferred
the Commission acknowl-
band
—reasonableness—the
high-
finding
to the Commission’s
“the
providing the information
edged that when
speed
provide
transmission used to
which,
[the
component of
service
broadband —
functionally
information
is a
inte
service]
Commission, consisted of
according to the
service,”
grated component of that
id. at
including
applications,
several distinct
998,
2688,
order,
upheld the
125 S.Ct.
newsgroups,
email and online
id. at 4822-
at
Three
id.
693 ¶ (2007) (mobile necessary 5901-02 the execution of its func- FCC Red. broadband); Appropriate tions.”); In re Framework Complaint In re Formal of Free Access to the Internet over for Broadband and Knowledge Against Press Public Com- (“2005 Broad- Facilities Wireline Wireline Corp. Secretly Degrading cast Peer- Order”), 14,853, 14,863- band 20 FCC Red. 13,028, to-Peer Applications, 23 FCC Red. ¶ (2005)(DSL). ¶¶ (2008). 13,034-41 Comcast, 14-22 In we vacated that order because the Commis-
B.
identify any grant
sion had failed to
Although the Commission’s classification statutory authority to which the order was
spared
providers
broadband
from
decisions
reasonably ancillary.
Commission made
would none-
C.
preserve principles
theless seek to
of inter-
Comcast,
Following
the Commission is-
In
openness.
net
the 2005 Wireline Broad-
inquiry, seeking
sued a notice of
comment
Order,
band
which classified DSL as
reclassify
on whether it should
broadband
service,
integrated information
the Com- as a telecommunications service. See In re
mission announced that should it “see evi- Framework for
Broadband
Ser-
providers
dence that
of telecommunica-
¶
vice,
(2010).
25 FCC Red.
7867 2
tions for Internet access or IP-enabled
reclassify broadband,
Rather than
howev-
violating
principles,”
services are
these
er, the
adopted
Open
Commission
the 2010
“not hesitate to take action to
would
ad-
17,905.
Internet Order. See 25 FCC Red.
dress
conduct.” 2005 Wireline Broad-
order,
In
promulgat-
¶
14,904
band
FCC Red.
96.
(1)
rule,
ed three
a transparency
rules:
Simultaneously, the Commission issued a
required
providers
which
broadband
policy
signaling
statement
its intention to
management prac-
“disclose the network
“preserve
promote
open
and
and inter-
tices,
characteristics,
performance
public
connected nature of the
Internet.”
terms and conditions of their broadband
Appropriate
In re
Framework for Broad-
(2)
services”;
rule,
an anti-blocking
which
band Access to the Internet over Wireline
prohibited
providers
broadband
from
Facilities,
14,986, 14,988
20 FCC Red.
content,
“blocking]
applications,
lawful
(2005).
(3)
services,
devices”;
or non-harmful
the Commission found reason to
rule,
an anti-discrimination
which estab-
act when Comcast customers accused the
“may
not
providers
lished
broadband
company
interfering
ability
with their
unreasonably
transmitting
discriminate in
Comcast,
applications.
access certain
17,906
lawful network traffic.” Id. at
voluntarily
at 644. Because
F.3d
Comcast
applied to
transparency
rule
both
adopted
practices
new
to address the cus-
broadband,
“fixed”
the service
consumer
concerns,
“simply
tomers’
Commission
home,
laptop
uses on her
when she is at
ordered
to make a set of disclo-
[Comcast]
broadband,
and “mobile”
the service a con-
describing the details of its new
sures
sumer uses on her iPhone when she is
company’s progress
and the
to-
approach
riding the bus to work. Id. The anti-block-
implementing
ward
it.” Id. at 645. As au-
only
ing
applied
rule
full
to fixed broad-
order,
thority for that
cit-
Commission
band,
prohibited
but
the order
mobile
4(i) “ancillary jurisdiction.”
ed its section
“bloekfing] law-
from
154(i) (“The
may
47 U.S.C.
websites,
blocking] applications
ful
acts,
perform any and all
make such rules
telepho-
video
orders,
compete with their voice or
regulations,
and issue such
may
ny services.” Id. The anti-discrimination
chapter,
inconsistent with this
be
*19
that,
rules
plained
Id.
its conclusion
absent
only to fixed broadband.
applied
rule
Commission,
in
Open
as those set forth
the [2010
the
mobile
such
According to
Order],
providers rep-
treatment
Internet
broadband
warranted
broadband
different
because,
things, “the mobile
among
openness
other
a threat
to Internet
resented]
very rapid inno-
in
ecosystem experiencing
ways
and could act
that would ultimate-
17,956 94,
id. at
and
change,”
speed
and
ly
vation
inhibit the
and extent of future
have more
for
choices
deployment.”
“most consumers
Id. at 645. For
broadband
fixed,”
than for
id. at
mobile broadband
example,
the Commission noted that
rules,
17,957
support of its
the
95. In
providers
“broadband
like AT & T and
primarily on section 706
relied
Commission
acknowledged
Time
have
that on-
Warner
Act, which re-
of the Telecommunications
Netflix and
aggregators
line video
such as
“encourage
the
quires that
compete directly
Hulu
with their own core
timely
on a reasonable and
deployment
(internal
service,”
subscription
video
id.
ca-
telecommunications
basis of advanced
omitted),
that,
marks
and
even
quotation
Americans,” 47
pability to all
U.S.C.
competition,
absent direct
“[b]roadband
1302(a).
17,968-72
Red. at
FCC
powerful
... have
to
providers
incentives
¶¶ 117-23.
edge
from
accept
providers,
fees
either
excluding
competitors
return for
their
Verizon,
upheld the
we
Commission’s
granting
prioritized
them
access to end
provides
section 706
it au-
conclusion that
users,”
Importantly,
id. at 645-46.
more-
open internet rules.
thority
promulgate
to
over, the Commission found that “broad-
Commission, such
According to the
rules
providers
band
have the technical ... abil-
deployment because
encourage broadband
restrictions,”
ity
impose
noting
to
such
facilitate the ‘virtuous
they “preserve and
that
“little
that
dispute
there was
broad-
circle’ of innovation
has driven
technological
have the
abil-
band
Verizon,
of the Internet.”
explosive growth
ity
distinguish
between and discriminate
“consistent with ¶¶ 160(a). 154-85. the Commis- Specifically, U.S.C. certain Title applying from sion forbore now chal- groups petitioners Several service, includ- to broadband provisions II Association, Telecom lenge the Order: US mandatory unbundling 251’s
ing section along providers, of service an association Open Internet requirements. and associa- other with several ¶ 434, 5849-51 at 5804-05 Red. 30 FCC tions; Network, a service Full Service *21 ¶ 513. joined by providers; other such provider, Order, the Inc., portion pro- a In the third Alamo Broadband service open five inter- promulgated vider, Daniel joined by edge provider, an Commission rules, applied it to both fixed TechFreedom, net which a think tank Berninger. The first service. issues, broadband technology along and mobile with devoted to rules, it which the Commission’s in- three of individual provider and several service rules,” blocking, ban “bright-line called has intervened entrepreneurs, vestors and at prioritization. Id. paid throttling, petitioners US Telecom on the side ¶ anti-blocking and anti- 110. The 5647 joined provider, a service Cogent, Alamo. provid- broadband prohibit rules throttling users, and or- edge providers, by several content, applica- blocking “lawful ers from on the side of ganizations, has intervened services, devices” or tions, non-harmful or the Commission. impairing or throttling degrading —ac- — II, argu- petitioners’ we address part In ¶ 112, at 5648 5651 same. Id. cess to the that the Commission has no statuto- ments ¶ rule bars anti-paid-prioritization 119. authority reclassify to broadband as ry “favor[ing] from providers that, service and even telecommunications traffic ... either traffic over other some authority, it acted arbi- possesses if it such (mone- (a) for consideration exchange in III, capriciously. part In we trarily and otherwise) party, from a third or tary or challenges to the Commission’s address entity.” (b) affiliated Id. at to benefit arrange- interconnection regulation rule, as the The fourth known 5653 125. IV, II. In we con- part under Title ments Rule,” prohibits broad- “General Conduct arguments sider “unreasonably inter- from band authority classify mobile statutory to lacks unreasonably disadvan- fering] with or as a “commercial mobile broadband service (i) select, ability users’ taging] end that, event, in its decision service” and access, Internet access and use broadband arbitrary capricious. was and- to do so content, ap- the lawful service or V, the contention that the part we assess services, devices of their or plications, from impermissibly forbore Commission (ii) choice, ability to edge providers’ VI, part of Title II. In provisions certain content, services, applications, make lawful inter- challenges open consider to the we at to end users.” Id. or devices available VII, finally, part And we net rules. forth a The Commission set open the claim that some of evaluate guide list of factors nonexhaustive run afoul of the First internet rules Rule, of the General Conduct application Amendment. length at below. greater discuss
which we issues, ¶¶ these addressing Before Finally, 138-45. See id. at 5661-64 two important emphasize think it we trans- adopted an enhanced our re principles governing fundamental rule, upon the trans- parency which builds First, reviewing court. our as a sponsibility in its promulgated parency rule ... reviewing agency regulations and that we “role Open Internet Order is a limited one.” Ass’n American Rail fore them.” Regan, Carducci v. 714 F.2d (D.C. 1983). v. roads Interstate Commerce Commis Departing Cir. from (D.C. 1992). sion, 978 F.2d Cir. “deprive this rule would us in substantial job agency that an Our ensure has measure of that assistance of counsel [Congress’s] acted “within the limits of system which the assumes—a deficiency Chevron, delegation” authority, 467 U.S. that we can perhaps supply by other 865, 104 S.Ct. and that its action is means, altering but not without the charac- “arbitrary, capricious, an abuse of dis ter of our institution.” Id. With these two cretion, or otherwise not in accordance mind, critical principles we turn to the 706(2)(A). law,” Critically, U.S.C. first issue this case—the Commission’s “inquire agen we do not as to whether the reclassification of broadband as a “tele- matter; cy’s decision is wise a policy communications service.” indeed, substituting we are forbidden from judgment our for that of agency.” II. *22 Railroads,
Ass’n American
978 F.2d at
of
Order,
In
Open
the
Internet
(alteration
740
and internal quotation Commission determined that broadband
omitted).
marks
inquire
Nor do we
wheth
service satisfies the statutory definition of
many
er “some or
disap
economists would
a telecommunications service: “the offer
prove
[agency’s]
of
approach”
because
ing of telecommunications for a fee direct
panel
“we do not sit as a
of
a
referees on
153(53).
ly
public.”
to the
47 U.S.C.
In
professional
journal,
economics
but as a
X,
accordance with Brand
the Commission
panel
generalist judges obliged
to defer
arrived at
by examining
this conclusion
to a
judgment
agency
reasonable
perception
consumer
of what broadband
acting pursuant
congressionally delegat
providers
Order,
Open
offer. 2015
Internet
authority.” City
Angeles
ed
Los
v. U.S.
¶
X,
30 FCC Red. at 5750
In
342. Brand
Department
Transportation, 165 F.3d
Supreme
Court held that it was “con
(D.C.
1999).
972,
Second,
978
Cir.
we “sit
sistent with the statute’s terms” for the
only legal questions presented
to resolve
Commission to take into account “the end
argued by
parties.”
and
In re Cheney,
perspective”
user’s
in classifying a service
(D.C.
1096, 1108
2003),
334 F.3d
Cir.
vacat
as “information” or “telecommunications.”
ed
grounds
and remanded on other
sub
993,
sion’s decision .tv, ... to access of thousands service. MLB telecommunications Computer of websites.” & Communications to its first conclusion—that respect With Amicus Br. 7. As one Industry Association a stan- broadband as perceive consumers to- succinctly explains, consumers amicus ex- offering dalone —the day “pay telecommunications two providers offer that broadband plained Internet, and access is exact- access to the “a broadband types of services: separate content, they turn to ly they get. For what service,” at id. access Internet Auto- efforts ... of others.” creative [the] ability “the to transmit provides which Amicus Br. 1. mattic endpoints,” from Internet id. to and data “ ¶ 350; applications, ‘add-on’ at 5755 Indeed, impact given the tremendous content, generally that are and services third-party internet content has had ¶ 341, services,” id. information society, deny it would be hard to our storage pro- cloud-based email and such as experience. in the dominance It at 5773 found grams, id. decades, content past two this .Over “broad- perspective, consumer’s from the nearly every aspect of our has transformed today access service is suffi- band lives, choosing a profound from actions like of these information independent ciently leader, career, building falling separate offering.” it is a Id. services hailing ones like quotidian love to more ¶ 356. at 5757-58 The same as- watching cab and a movie. conclusion, the Com- of its support suredly pro- be for broadband cannot said *23 to record evidence demon- pointed mission applications. add-on viders’ own use broadband strating that consumers moreover, found, that The Commission content, third-party access to principally only consumers not focus on broadband applications. and other add-on not email offering of transmission but often households have more American “As using providers’ the broadband add- avoid Internet ac- access to broadband gained altogether, choosing instead “to on services service,” explained, cess high-speed their Internet connections use services market for Internet-based “the advantage competing to take of services than broadband by parties other provided Inter- by parties.” Open offered third access has flourished.” Internet ¶ Order, at For net 30 FCC Red. 5753 347. ¶ Indeed, from 2003 to at 5753 347. Id. services, instance, third-party email two increased number of websites Mail, “among and Yahoo! were Gmail 36 million” to “an “approximately from frequently most visited ten Internet sites By million.” Id. one esti- estimated 900 17, 2015, during January the week of mate, and You- edge providers, Netflix two approximately 400 million and 350 million Tube, In- percent peak for 50 of “account ¶ at respectively.” visits Id. 348. traffic in North America.” download ternet specifically consumers Some “even advise ¶ Id. at 5754 349. provider-based to use broadband on That consumers focus transmission a consumer can- email because address[ ] applications add-on the exclusion of if not take that email address with them he limit- Even the most hardly controversial. providers.” Id. or she switches contemporary ed examination of broad- Support Congress Amici Members of rely on usage reveals that consumers band many more exam- Respondents provide primarily third-party the service to access that consumers ples third-party content purchases “typical content. The consumer” content, provider use in lieu of broadband “third-party apps such broadband use examples abundantly that will be familiar sify tiers of service offerings and to distin- “[M]any to most internet users. consum- guish offerings their from those of compet- ers,” note, they spurned “have applica- itors.” Id.
tions ... offered their broadband Inter- advertisements, moreover, Those “link net provider, access service favor of higher speeds transmission and service re- applications services and offered third' liability with enhanced access to the Inter- ... parties, such as news and related con- at large any ‘points’ net may user nytimes.com washington- tent on or —to ¶ News; post.com Google pages home on wish reach.” Id. at 5756 352. For ‘my.yahoo’; Microsoft’s MSN or Yahool’s example, brags RCN its service is video content on Netflix or YouTube or Netflix,” watching “ideal for and Verizon Hulu; streaming music on Spotify or Pan- touts its service as “work[ing] well for Music; Apple dora or shopping and on-line uploading sharing videos on You- on Amazon.com or Target.com, as well as Tube.” Id. providers’ Based on the empha- many others in each category.” Members sis on how useful their services are for Congress for Resp’ts Amicus Br. 22. accessing content, third-party the Commis- In of its second support conclusion—that sion found that end users view broadband view, point from the user’s the standal- service as a mechanism to transmit data of offering one provides broadband service their own choosing to their desired desti- telecommunications —the Commission ex- i.e., as a telecommunications ser- nation — plained rely “[u]sers broadband vice. Internet access service to transmit ‘infor- mation- of the user’s choosing,’ ‘between or concluding qualifies broadband ” user,’ among points specified by the with- service, aas telecommunications the Com- changing out the form or content of that explained mission although Open information. 2015 30 often relies on certain information services (quoting FCC Red. 5761 361 47 U.S.C. users, to transmit content end these 153(50)); see also id. at 5762-63 services “do not turn broadband Internet *24 grounded Commission that determina- functionally access service into a integrat- tion record evidence that “broadband ed information “they service” because fall Internet access today service is marketed within system the telecommunications primarily as a conduit for the transmission ¶ management at exception.” Id. 5765 365. of data across Internet.” Id. at 5757 The Commission focused on two such ser- ¶ Specifically, providers broadband first, DNS, vices. The routes end users advertising speed focus their on the input who the name of a website to its example, transmission. For the Commis- address, allowing numerical IP users to quoted offering sion a Comcast ad “the having reach the website without to re- need, consistently speeds you fast even multidigit member its Id. at 5766 address. hours”; during peak promising ad RCN ¶ second, caching, 366. The refers to the ability upload “to and in a download process storing at copies of web content flash”; and a claiming Verizon ad network locations closer to users so that “[wjhatever demands, your life there’s a they can it more at 5770 quickly. access Id. plan perfect up- Verizon FiOS ¶ 372. The found that Commission DNS speed you.” at Id. load/download caching fit within the statute’s tele- (alteration (internal in original) quo- management exception communications omitted). tation marks The Commission “simply because both are used to services further observed that “fixed broadband speeds use transmission to clas- facilitate the of information transmission -3 oo 2006). (D.C. FCC, 450 F.3d Cir. other services.” can access
so that users
logical outgrowth
An
satisfies the
NPRM
Id.
oh
“expressly
if it
for comments
ask[s]
test
challenges
numerous
Petitioners assert
otherwise
particular
ma[kes]
a
issue or
reclassify
decision
to the Commission’s
a
contemplating
agency [is]
clear that the
merit,
Finding that none has
broadband.
Transportation,
particular change.” CSX
Significantly,
the classification.
uphold
we
Board,
Transportation
Inc. v.
colleague believes that
although our
Surface
2009).
(D.C.
1076, 1081
Cir.
F.3d
arbitrarily
capri-
Commission acted
broadband, he
ciously
it reclassified
when
NPRM satisfied
The Commission’s
statutory
has
that the Commission
agrees
say
the NPRM did
Although
this standard.
as a tele-
authority
classify
rely
considering
was
that the Commission
Concurring &
communications service.
“expressly
it also
asked
ing on section
Dissenting Op. at 748.
for comments” on whether
Commission
reclassify broadband:
seek
“[w]e
should
A.
comment on whether
the Commission
substan-
addressing petitioners’
Before
II
rely
authority
under Title
should
reclas-
challenges
tive
to the Commission’s
Act,
...
including
of the Communications
service, we must
of broadband
sification
whether we should revisit
Commis
arguments, both
procedural
consider two
of broadband Internet
sion’s classification
Telecom.
offered US
access service as an information service
First,
that the Com-
Telecom asserts
US
NPRM,
....”
29 FCC Red. at 5612 148
553 of the Admin-
mission violated section
(footnote omitted).
Act,
requires
Procedure
which
istrative
complaint—
US Telecom’s second
“include ...
either the
that an NPRM
provide
that the NPRM failed
mean
proposed
of the
rule or
or substance
terms
on the
ingful opportunity to comment
subjects and issues
description
per
reliance on consumer
Commission’s
553(b)(3).
According
involved.” 5 U.S.C.
equally without merit.
ception
Telecom, the
violated
—is
to US
Commission
X,
Supreme
explained
Court
Brand
pro-
the NPRM
requirement
this
because
that classification under the Communica
II;
706, not Title
posed relying on section
Act
tions
turns on “what
consumer
explained
never
product.”
the ...
perceives
be
finished
justify reclassification based on con-
would
this,
information services fit within the telecom-
munications management
exception.
In addressing petitioners’ first
exception,” the
explained,
“[The]
dissent
argument, we follow the Supreme Court’s
apply
“would seem to
to [DNS and cach- decision in Brand X and apply Chevron’s
DNS,
ing],
in particular,
scarcely
is
more
X,
two-step analysis. Brand
U.S.
”
than routing information ....
Id. at 981,
(“[W]e
apply
S.Ct. 2688
the Chev
1012-13,
(Scalia, J.,
sion that Brand X es B. tablished that the Act Communications ambiguous respect proper to the clas This brings petitioners’ us to substantive sification broadband. As the Commis challenges to Specifically, reclassification. out, points explained sion the Court they argue that the Commission lacks stat- provides whether a carrier a “telecommu utory authority reclassify broadband as *26 depends nications service” on whether it a They telecommunications service. also “offering” makes an of telecommunica that, argue if it authority, even has such X, tions. at 125 Brand U.S. S.Ct. adequately Commission failed to ex- 153(53) (“The 2688; § plain why it reclassified from see also 47 U.S.C. broadband an information service to a telecommunica- term ‘telecommunications service’ means unambiguously an infor- a that is for broadband offering of telecommunications ” First, (emphasis .... directly public persuades to the mation service. None us.
fee added)). “offering,” the Court The term contends that the statute’s US Telecom X, Brand held, 545 U.S. ambiguous. that broadband service text makes clear 989, 125S.Ct. 2688. each of the indepen- eight, “qualifies under def- parts service] dent of the [information X, Brand US Telecom
Seeking
escape
to
inition,”
Telecom Pet’rs’ Br. 30—
US
only that the
held
argues that the Court
capability
... a
namely, that it
classify
“offer[s]
as a telecommu-
could
Commission
storing,
trans-
generating, acquiring,
the “last mile” of trans-
nications service
mission,
as the
Telecom defines
retrieving, utilizing,
which US
forming, processing,
computer
user’s
between the end
span
information via tele-
making
available
Here,
computer.
provider’s
153(24).
the broadband
communications,”
§
47 U.S.C.
Ac-
however,
“the
classified
argues,
Telecom
broadband
cordingly, US
from the end
entire service
mutually
ex-
service “cannot fall within
a
way
edge providers”
to
as
user all the
category
clusive
of telecommunications
Telecom
service. US
telecommunications
(inter-
Br.
Telecom Pet’rs’
service.” US
Telecom,
According to
Br. 44.
US
Pet’rs’
omitted).
and footnote
quotation
nal
marks
in Brand X
ambiguity addressed
“[t]he
argument ignores
But this
that under
here because the Or-
bearing
thus has no
ser-
statute’s definition of “information
scope of whatever
goes beyond
der
vice,”
provided
are
“via tele-
such services
(sec-
contains.” Id.
ambiguity
statute]
[the
153(24).
§
communications.” 47 U.S.C.
(internal
original)
quota-
ond alteration
This, then, brings us back to the basic
omitted).
tion marks
providers make a
question: do broadband
dispute
this
need to resolve
We have no
offering of telecommunications?
standalone
Brand X decision was
because,
if
even
argument
provide
US Telecom’s
fails
mile,
only
the last
the Court focused
about
to that
unambiguous
question.
answer
functions broadband
on the nature of the
Telecom next claims that
US
users, not the
providers offered to end
part
§
of the
U.S.C.
enacted as
Com
pathway,
transmission
length of the
Decency
portion
munications
Act of
“offering”
ambiguous.
was
holding that the
earlier,
Act,
“confirms
As discussed
Commission of the Telecommunications
in the Order
adopted
approach
Congress
that
understood Internet access
ambiguous
was
concluding that
the term
to be an information service.” US Telecom
question presented
230(b)
the classification
Pet’rs’ Br. 33. Section
states
“offering” of broadband
here: whether the
...
policy
is the
United States
“[i]t
internet access service can be considered
promote
development
the continued
so,
doing
In
telecommunications service.
comput
the Internet and other interactive
in accordance with
acted
and other interactive media.”
er services
in Brand X that the
the Court’s instruction
230(b)(1).
turn,
§
section
U.S.C.
of broadband turns
proper classification
230(f)
computer
an “interactive
defines
particulars
“on the factual
of how
“any
used in this section” as
“[a]s
service”
provided,
it is
technology works and how
service, system,
information
or access soft
Chevron
questions
leaves to the Commis
provider
provides
ware
or enables
sion to
in the first instance.”
resolve
to a
computer
multiple
access
users
991, 125
U.S. at
S.Ct. 2688.
server,
including specifically a
computer
system
provides
access to
service or
argu
US Telecom makes several
230(f)(2). According
Id.
contrary position the
support
ments in
of its
Internet.”
*27
Telecom,
nology
this definition of “interactive
works and how it
provided,
US
in-
computer service” makes clear that an
questions Chevron leaves to the Commis-
formation service “includes an Internet ac-
sion to resolve in the first instance.” 545
US Telecom Pet’rs’ Br. 33.
cess service.”
991,
U.S. at
As Commission Amici of Congress Members der, however, “unlikely Congress it is that Support of Petitioners advance an addi attempt regulatory would to settle the sta- argument tional that post-Telecommunica tus of broadband Internet access services Act legislative history tions “demonstrates manner, oblique an and indirect such Congress delegated never that to the Com especially given opportunity to do so authority mission” to regulate adopted when the Telecommunications ¶ 386; Act of 1996.” 30 FCC Red. at 5777 service as a telecommunications service. Trucking see Whitman v. American Congress Members of Pet’rs Amicus Ass’ns, 457, 468, 903, 531 U.S. S.Ct. 4. In support, they point Br. out that Con (2001) (“Congress 149 L.Ed.2d ... does gress repeatedly has tried and failed to not alter the fundamental details of a regu- pnact open legislation, internet confirming, latory vague ancillary scheme in terms view, in their that the lacks not, provisions might say, does one —it authority to open issue internet But rules. mouseholes.”). elephants hide Supreme clear, as the Court has made regard courts do not Congress’s “atten
Finally, argues US Telecom that tion” to a matter statutory subsequently by context history “[t]he con resolved meaning firm plain statutory agency pursuant an statutory authority text.” US Telecom Pet’rs’ Br. 33. Accord “legislative history demonstrating a Telecom, ing to Computer US while the congressional meaning construction of the effect, II regime was in the Commission of the Trucking American Ass’ns statute.” “gateway classified allowing services ac Atchison, v. Topeka, Railway & Santa Fe cess to information stored par third Co., 397, 416-17, 387 U.S. 87 S.Ct. services, ties” as enhanced Congress (1967). Following ap L.Ed.2d 847 this incorporated that classification into the proach, rejected attempts we have to use Communications Act when it enacted the legislative history agency’s cabin Telecommunications Act’s informa statutory authority the manner amici service dichoto tion/telecommunications propose. For example, in Advanced Micro ” my. at ‘gateways,’ Id. 33-35. “Those US Board, peti Devices v. Civil Aeronautics insists, Telecom “involved the same ‘func challenged the tioners Civil Aeronautics tions and services associated with Inter adopting rules a more deferential Board’s ” net at (quoting access.’ Id. re approach regulation to the of international Federal-State Joint Board on Universal (D.C. cargo rates. 742 F.2d 1527-28 (1998)). Service, 11,501 13 FCC Red. 1984). Petitioners Cir. asserted argument a significant This suffers from authority promulgate Board had no nothing flaw: in the Telecommunications “Congress deliberately rules because es suggests Congress Act intended the course now advanced chewed place existing freeze in the Commission’s [Board],” id. at when it tried and Indeed, classifications of various services. legislation failed to enact have would reading such a of the Telecommunications put ratemaking “limits on the Board’s Act Supreme would conflict with the regarding cargo,” functions international holding Court’s in Brand X that classifi Rejecting petitioners’ argu id. cation of broadband “turns ... on the ment, particulars “Congress’s factual tech- fail- explained how we *28 704 observed, if FDA did have au- the pre- ... Court legislation d[oes]
ure to enact
industry,
rulemaking.” Id.
thority
regulate
at 1542
to
the tobacco
analogous
clude
Ass’ns, Trucking
and its fac-
American
statutory obligations
its
(citing
given
1608).
case,
416-18,
In that
regarding
S.Ct.
the harmful effects
findings
at
tual
U.S.
here,
was whether
tobacco,
relevant
had to
question
as
the
the FDA would have
ban
of
authority to
statutory
pro-
had
agency
clearly contrary
products,
tobacco
result
and, as we ex-
regulations,
mulgate
135-43,
congressional intent. See id.
at
to
con-
inaction or
“congressional
plained,
Congress sought
If
to “del-
tent similarly offer them.” Id. justified Commission treating third-party unpersuaded. 40. areWe caching differently DNS and services ground that when such services are First, explained “provided on a stand-alone basis enti- that the Communications Act’s telecommu provider ties other than the of Internet management nications exception encom service[,] access ... there passes those would be no services that would have qualified “adjunct-to-basic” telecommunications service under the to which [the Computer II regime. adjunct.” 2015 Open Open Internet services are] Order, 30 FCC Red. at 5766-67 30 FCC Red. at 5769 370 n. 1046. 160(a). Nothing ria are met. 47 U.S.C. given us no basis has Again, US Telecom any compara- of this Air Act EPA gave the reasonableness the Clean questioning a carrier uses a service conclusion. Once the Commis- authority. Accordingly, ble an information ordinarily be that would sug- does not extensive forbearance sion’s caching man- as DNS or service—such gest that the Order is unreasonable. —to service, that ser- age a telecommunications as an information longer qualifies vice no Act. the Communications under service We next consider US Telecom’s *30 service, uncon- though, when
The same
failed to
argument
service, re-
a telecommunications
nected to
adequately explain why, having long classi
service.
an information
mains
service,
as an information
fied broadband
makes one ad
TechFreedom
Intervenor
reclassify
it
to
it as a telecommuni
chose
step
argument.
two
It
ditional Chevron
APA,
the
we must
cations service. Under
Utility
resembles
that this case
contends
ac
the Commission’s
“determine whether
EPA, Group v.
Regulatory
which
Air
an abuse
‘arbitrary, capricious,
tions were
regula
EPA
Court reviewed
Supreme
the
discretion,
not in accor
or otherwise
”
statutory programs
certain
applying
tions
Verizon,
This case is
ac
ordinarily
agency
demands that an
statutory language,
rewriting
from
clear
for a
knowledge
explain
the reasons
express
statu-
the Commission followed
Verizon, 740 F.3d
changed interpretation.”
it
“forbear from
tory
requiring
mandate
not,
may
example,
for
agency
at 636. “An
applying any regulation
any provision”
or
policy sub silentio depart
prior
if
crite-
from a
of the Communications Act
certain
Commission, however,
disregard rules that are still on the
reached a
simply
different
Stations,
respect
books.” FCC v. Fox Television
conclusion with
to reclassification’s
Inc.,
129 S.Ct.
173 impact
U.S.
on broadband investment. It found
(2009).
said, although
That
L.Ed.2d 738
that “Internet
traffic
expected
grow
agency
good
“must show that there are
substantially in
coming years,” driving
...
it need
poliey[,]
reasons for the new
investment,
Open
not demonstrate to a court’s satisfaction
¶ 412;
FCC Red. at 5792
that Title II
policy
reasons
the new
are
regulation had not stifled investment when
than the
for the
one.”
better
reasons
old
Id.
applied
circumstances,
in other
id. at
¶ 414;
5793-94
“major
and that
infrastruc-
US Telecom contends that
ture
they
have indicated that
will
good
Commission lacked
reasons for re
in fact continue to invest under the [Title
classifying broadband because “as Verizon
framework,”
II]
id. at 5795 416. In
clear,
origi
made
and as the [Commission]
event, the Commission found that the vir-
nally recognized,
adopted
could have
cycle spurred by
open
tuous
internet
appropriate Open Internet
rules based
—
*31
provides
ample counterweight,
§
upon
reclassifying
706 without
broad
rules —
any
in that
harmful effects on broadband
(internal
band.” US Telecom Pet’rs’ Br. 54
outweighed by
investment “are far
positive
omitted).
citations
But the Commission did
effects on innovation and investment
in
Specifically,
not believe it could do so.
the
other
ecosystem
areas of the
that
core
[its]
necessary
Commission found it
to establish
polices
broadband
rules,
promote.”
will
Id. at
bright-line
anti-blocking,
three
conclusions,
reviewing
5791 410. In
anti-throttling,
these
anti-paid-prioritization
rules,
Order,
they
we ask not whether
“are correct
Open
2015
Internet
30 FCC
or
¶ 14,
Red. at 5607
all of
are
impose per
which
the ones that we would reach on our
obligations by
own,
se common carrier
requiring
only
they
but
whether
are reason-
(internal
providers
EarthLink,
broadband
to offer indiscrimi
able.”
12
462 F.3d at
edge providers,
nate service to
omitted).
see Veri
Moreover,
quotation marks
“[a]n
zon,
light
Raising argu an additional dissipate and will time as the market- over ment, US Telecom asserts that reclassifi place approach.” internalizes Title II [the] cation “will undermine” investment Red. at Open 2015 30 FCC Br. broadband. US Telecom Pet’rs’ 54. The ¶ 410. This the kind of precisely too partial agrees, pointing specifically dissent 207, “predictive judgment[ ... within the subjects ] II to U.S.C. which Title agency’s expertise” private complaints. common carriers to field discretion Concurring Dissenting Op. & at guess. 756. The that we do not second uct”). Nothing suggests in Brand X argument, partial
In a related
power
compe-
dissent contends
market
or
an examination of
reclassifying
be
“good
lacked
reasons”
prerequisite
tition in the market
is a
rules, particularly the General
cause its
True,
classifying
partial
broadband.
as the
Rule,
future invest
Conduct
will decrease
notes,
Supreme
dissent
Court cited the
regulato
by increasing
ment
broadband
findings regarding
Commission’s
the level
uncertainty. Although US Telecom as
ry
competition
in the market
for cable
introduction to its brief that
serts
agen-
as further
for the
support
“will undermine future invest
the rules
cy’s
classify
cable broadband as
decision
pro
by large
ment
and small broadband
an information service. See id.
viders,”
it pro
Telecom Pet’rs’ Br.
US
(describing
the Commission’s
S.Ct.
point
elaboration on this
vides no further
sup-
conclusion
market conditions
challenges
and never
reclassification
taking
deregulatory
ported
approach
harm
ground
that the rules will
broad
service). But citing
cable broadband
before,
investment. As we have said
band
findings
Commission’s economic
as addi-
enough merely
to mention
“[i]t is
cry
support
approach
tional
for its
is a far
possible argument
the most skeletal
requiring
from
find
way,
leaving the court
to do counsel’s
power.
partial
market
dissent also
York Rehabilitation
work.” New
Care
in sup-
cites several Commission decisions
NLRB,
LLC v.
506 F.3d
Management,
port
proposition
that the Commis-
(D.C.
2007) (internal
quota
Cir.
nearly
sion has “for
four decades made the
omitted).
party
tion marks
Given that no
presence
prospect
competition
adequately
argument,
raised this
we de
*32
apply
touchstone for refusal to
Title II.”
Cheney,
cline to consider it.
In re
334
See
Concurring Dissenting Op.
&
at 749. All of
(Reviewing
F.3d at 1108
courts “sit to
cases, however,
only legal questions
the
presented
predate
resolve
and those
1996
parties.”).
the
argued
Act,
Telecommunications
which established
statutory
the
test that Brand X considered
Finally,
partial
the
dissent dis
apply
and that we
here.
agrees with our conclusion that the Com
“good
reclassify
mission had
reasons” to
a
Telecom raises
distinct arbi
US
because,
dissent,
according to the
it
partial
trary
capricious argument.
It contends
finding
power
failed to make “a
of market
satisfy
to
Commission needed
competitive
or at least a
consideration
heightened
justifying
standard for
re
its
Concurring Dissenting Op.
conditions.”
&
out,
Telecom points
classification. As US
nothing
requires
at 749. But
in the statute
Supreme
has held that
Court
“the
finding.
the Commission to make such a
requires
agency
provide
APA
to
more
Act,
as a
qualifies
Under
service
justification
poli
substantial
when ‘its new
long
service” as
as it
“telecommunications
cy
upon
findings
rests
factual
that contra
an “offering
constitutes
of telecommunica
underlay
prior policy;
dict those which
directly
public.”
tions for a fee
to the
prior policy
engendered
or when its
has
153(53).
above,
explained
As
su
U.S.C.
tak
serious reliance interests
must be
697,
at
pra
interpreting
provi
when
this
”
Mortgage
into account.’
v.
en
Perez
X,
sion in Brand
Court held
Supreme
—Ass’n,
-,
Bankers
U.S.
135 S.Ct.
that classification
broadband turns on
(2015)
1199, 1209,
(quot
that consumers
a standalone of
expressly considered the claims of reliance
supra
See
fering of transmission.
697-
*33
and found that
regulatory
“the
status of
99. It thus
requirement
satisfied the APA’s
appears
broadband Internet access service
agency provide
that an
expla
“reasoned
have, most, an
(along
indirect effect
disregarding
nation ...
for
cir
facts and
factors)
many
other
on investment.”
underlay
prior
cumstances that
...
Television,
Order,
Fox
policy.”
2015 Open
vice, the Commission
reclassify broad-
Only
it should
X.
five
inquiry whether
decided Brand
preme Court
service. Id.
a telecommunications
later,
band as
sought public
years
¶
at 5760 360.
on whether
it should reverse
comment
classify broadband as a tele
course and
finds the Commis-
partial
dissent
In re Frame
communications service. See
insufficient and con-
explanation
sion’s
Service,
it failed “to make
serious
cludes that
work for Broadband
¶
reli-
providers’]
shifting
[broadband
assessment
2.
this
FCC Red. at 7867
Given
Dissenting Op. at 748.
Concurring &
ance.”
treatment, it was not unreason
regulatory
conclu-
regard to the Commission’s
With
for the Commission to conclude
able
regulatory status of broad-
that the
sion
particular classification was
broadband’s
only an indirect effect
invest-
band had
than increased
important to investors
less
ment,
that this
dissent believes
partial
Contrary
colleague,
demand.
to our
“[w]e
“irrelevance” because
is an
explanation
factual
guess
see no reason to second
these
‘many
other factors’
proposition
“[t]he
determinations,
properly
since the court
and thus the
investment is a truism”
affect
invoking
policy
defers to
determinations
us little about how
explanation “tells
evaluating
com
[agency’s] expertise
prior classification “accounts
much” the
Transmis
plex market conditions.” Gas
robust broadband infrastruc-
the current
FERC,
v.
504 F.3d
Corp.
sion Northwest
at 746. But the Commission did
ture.” Id.
(D.C.
2007) (internal
quota
Cir.
regulatory
that the
simply
more than
state
omitted).
tion marks and alteration
one of
of broadband was
classification
factors. It went on to ex-
many relevant
3.
factors, namely, increased
plain why other
and increased com-
demand for broadband
Finally,
consider
Telecom’s
we
US
it,
signifi-
were more
petition
provide
.argument
that the Commission could not
investment. 2015
cant drivers of broadband
reclassify broadband without first deter
Red. at 5760
Open Internet
30 FCC
mining
that broadband
were
986;
412.
& n.
id. at 5792
We also
carriers
under
this
court’s
common
disagree
partial
with the
dissent’s asser-
Regu
test.
National Ass’n
NARUC
See
tion that the Commission
“misread[]
FCC,
latory Utility Commissioners v.
history of the classification of broadband”
(D.C.
1976);
F.2d 601
Cir.
National Ass’n
regulato-
when it found that
unsettled
Regulatory Utility Commissioners v.
ry
likely
treatment of broadband
diminish-
(D.C.
1976).
FCC,
IV. today provided universal access We now turn to the Commission’s treat- foreseeable future and to mobile broad- service, i.e., ment of mobile broadband present anticipated band and its fu- high-speed internet access for mobile de- penetration ture rates in the United smartphones vices such as and tablets. As States,” the Commission decided to “classi- above, explained permissi- fy! Internet access ] mobile broadband bly found that mobile broadband —like all subject commercial mobile service” to com- broadband —is a telecommunications ser- ¶ 399; Id. at 5786 regulation. mon carrier subject vice regulation common carrier ¶¶ generally see id. at 5778-88 under Title II of the Communications Act. 388-403. *37 332(d)(1). (“mobile respects, § In those public.” Id. and AT&T CTIA Petitioners the hallmarks of a reclas- mobile broadband bears challenge the Order’s petitioners”) private as a com- not a mobile broadband commercial—and hence sification of —mo- view, mo- remaining question service. In their mercial mobile service. The sole bile as, is, and must be treated in- bile broadband mobile broadband also “makes whether service, therefore and private mobile Id. terconnected service available.” regu- to common carrier subject cannot be defines “interconnect The statute argu- petitioners’ mobile reject lation. We that is interconnect ed service” as “service the re- and find that Commission’s ments (as network public ed with the switched as a of mobile broadband classification by regulation by are such terms defined is reasonable mobile service commercial Commission).” 332(d)(2). § Id. Until the by the record. supported Order, in turn defined the Commission of network” as a set “public switched A. landline) (cellular networks, telephone assessing In whether telephone numbers ten-digit with users’ reclassified mobile broadband permissibly up endpoints the interconnected of making mo- private rather than a as a commercial Specifically, “public network. switched service, begin with overview bile we carrier “[a]ny meant common network” statutory regulatory governing network ... that use[s] switched appli- the Commission’s framework and of Plan in con Numbering American North framework to mobile broad- cation of that provision with the of switched ser nection “commercial mo- band. The statute defines § version ef (prior vices.” 47 C.F.R. 20.3 ... “any service bile service” as mobile 2015). through The “North fective June profit and makes inter- provided that is (NANP) Numbering Plan” is the American (A) pub- to the connected service available ten-digit telephone numbering plan used (B) eligible classes of users lic or to such Implementa In re States. See United effectively available to a substan- as to be 3(n) of the Commu tion of Sections & 332 specified as portion public, tial of the (“1994 Order”), Act 9 FCC Red. nications 47 U.S.C. regulation by the Commission.” (1994). 1411,1437 60 n. 116 332(d)(1). “pri- then defines The statute strictly nega- in the vate mobile service” initially when the Commission tive, i.e., “any service ... that is as mobile “public established that definition mobile service or the not a commercial (i.e., network,” telephone cellular switched of a commercial mo- equivalent functional voice) major mobile mobile service was service, specified by regulation bile service; yet ex- mobile broadband did 332(d)(3). §Id. the Commission.” Noting “purpose public ist. that the public switched network is to allow the private mobile service is Because any- to or from messages send or receive category defined in relation to a residual nation,” in the the Commission ob- where service, the definition commercial mobile that pur- that the NANP fulfilled served opera service is the of commercial mobile “ubiquitous by providing users with pose purposes. our There is no tive one for at 1436-37 to all other users. Id. access” broadband meets three dispute that mobile ¶¶ Order, 59-60; Open see parts statutory the four of the definition Red. at 5779 391. Because mobile FCC Mobile of commercial mobile service. with the users could interconnect service”; voice pro it “is broadband is a “mobile defined network as then public switched and it is available “to profit”; vided for (the num- ten-digit telephone network public” portion or “a substantial bers), voice mobile was classified as a that the “hundreds of millions of consum- opposed “private”— “commercial”—as ers” already who “use[d] mobile broad- “mobile service.” FCC Red. band” as of 2015 could “send or receive *38 ¶ subject at 1454-55 102. It therefore was to anywhere communications or from in to common carrier treatment. nation, whether connected with other subscribers, mobile broadband fixed 2007, In the Commission first classified subscribers, or the hundreds of then-emerging platform of mobile millions of websites available to them over broadband. The Commission determined the Internet.” Id. significant Those devel- that mobile broadband users could not in- opments, found, “demon- public terconnect with the switched net- ubiquity ] and wide scale use of strate! telephone work—defined at the time as the mobile broadband Internet access service network —because mobile broadband uses ¶ today.” at Id. 5786 398. addresses, IP telephone numbers. See Order, Open 2015 Internet 30 FCC Red. at that, The upshot just as mobile voice ¶ 397; Order, 5784 2007 22 Wireless FCC (i.e., telephone) cellular service in 1994 ¶ Red. at 5917-18 45. Mobile broadband provided “ubiquitous access” for members thus was not considered “interconnect- public of the to communicate with one (or, therefore, ed service” a commercial another anywhere nation,” “from in the service), i.e., mobile a “service that is in- mobile broadband 2015 had come to public terconnected with the switched net- provide the same ubiquitous sort of access. work” as that term was then “defined ¶ ¶¶ 391, at Id. 5779-80 5785-86 398-99. the Commission.” 47 U.S.C. ubiquitous And the characterizing access 332(d)(2). § Presumably light of mobile both mobile voice and mobile broadband time, broadband’s “nascent” status at the stands in marked contrast to private “the Order, 2007 Wireless 22 FCC Red. at 5922 mobile such private service[s] as a ¶ 59, the gave no evident con- service, dispatch taxi services that offered sideration to expanding its definition of the users to a access discrete and limited set “public switched network” so as to encom- ¶ 404; endpoints.” at Id. 5789 see 1994 pass IP addresses in addition telephone ¶ Order, 9 FCC Red. at 1414 4. In recogni- numbers. similarity tion of the of mobile broadband Order, mobile voice as universal medium of In the 2015 the Commission de- for general public communication termined that it expand should its defini- —and dissimilarity of mobile tion broadband to public of the switched network private closed networks such as those used fashion to the current “reflect[] network ¶ by taxi companies police or local and fire landscape.” 391; 30 FCC Red. át 5779 see ¶ departments Commission in 2015 id. at 5786 399. The Commission took —the sought reclassify “today’s broadly avail- changes note of “evidence of the extensive able mobile broadband” service as a com- have occurred the mobile market- ¶ voice, mercial mobile service like mobile place.” instance, Id. 5785-86 398. For private rather than mobile service like as of nearly three-quar- the end of employed by police those closed or fire age popula- ters “of the entire U.S. 13+ department Open networks. 2015 communicating tion was with smart ¶ Order, 399; 2019,” 30 Red. at see phones,” “by according FCC to one ¶ Order, forecast, “North America 9 FCC Red. at 4. nearly will have Aligning mobile broadband with 90% its installed converted to mobile base[] similarly smart affording devices and connections.” Id. at 5785 voice based on their addition, access, moreover, ubiquitous keep- the Commission noted was in makes intercon- provided profit objective establish- Congress’s ing with public ... to the “commercial mo- nected available category of service ing a defined carrier subject portion public.” to common or ... a substantial bile services” symme- 332(d)(1). regulatory “creat[e] treatment: find Com- 47 U.S.C. We services.” 1994 mobile- try among similar of mobile broad- mission’s reclassification ¶ 2; Order, at 1413 see FCC Red. mobile service under band as a commercial Red. at 5786 30 FCC Open Internet and sup- to be reasonable that definition (May at 259 399; Rep. No. 103-111 H.R. demonstrating evidence ported by record 1993) that amendments to sec- (noting virtually univer- “rapidly growing to ensure “that intended tion 332 were service” to- use of mobile broadband sal *39 equivalent mobile provide that services Order, 30 FCC day. Open Internet in the same man- regulated services are ¶ support of its reclas- Red. at 5786 399. ner”). decision, relied the Commission sification achieving regula of that on, detail, In the interest of the evidence and recounted bringing mobile broad tory symmetry and broadband ser- growth mobile explosive as a with mobile voice alignment into band by universal use vice and its near service, the Commis ¶¶ mobile commercial 88-92, 5779 at 5635-38 public. See id. “public its definition updated sion ¶¶ ¶ 391, In the face of 5785-86 398-99. include both users network” to switched evidence, for conclud- that we see no basis ten-digit phone numbers and reachable required in ing that the Commission was by IP addresses. See 2015 reachable users classifying mobile broad- 2015 to continue Order, Red. at Internet 30 FCC Open “private” band as a mobile service. newly expanded definition 5779 391. network” thus covers “public switched B. common “the network includes principal ar- petitioners Mobile offer two ... that use[s] network carrier switched support position of their guments Plan, Numbering American the North must be mobile nonetheless broadband addresses, in connection with public IP rather private treated as a mobile service services.” Id. provision switched First, service. than a commercial mobile added) (alteration in original); (emphasis they “public switched network” argue 20.3; § see Bell Atlantic Tele 47 C.F.R. public art confined to the is term of (D.C. FCC, v. 206 F.3d phone Cos. Second, they telephone network. switched 2000) (“[T]he internet is a ‘distributed Cir. that, if the can contend even ”). network.’ And because packet-switched public switched expand definition now includes public switched network IP ad- encompass network to users with addresses, found that IP telephone dresses in addition to users with an “inter qualifies broadband mobile numbers, to broadband still fails mobile service,” i.e., in “service that is connected an “interconnected service.” qualify as switched net public terconnected with the 332(d)(2); § work” as redefined. U.S.C. In mobile reject arguments. both We Order, 30 FCC Open Internet see (or view, mobile petitioners’ ¶ 391, Red. at 5786 399. 5779-80 service) mobile any non-telephone —no universal, widespread, and es- matter how Commission, then, mo- According to the of communication for the sential a medium of the stat- parts meets all bile broadband always may become—must be public mobile utory definition of a “commercial service” and “private mobile considered regula- carrier subject service” to common a “commercial never be considered ... can tion: it is a “mobile service Nothing mobile in the statute tion of service.” “commercial mobile Any service.” compels attributing Congress such a qualify such service must as an “intercon- wooden, understanding service,” counterintuitive of nected defined the statute as Rather, categories. Congress those ex- “service that is interconnected with the pressly delegated to the Commission the public switched network.” 47 U.S.C. authority necessarily 332(d)(1) (2). to define—and hence § And Congress expressly — update categories’ revise—those gave the Commission the authority to de- key definitional components, “public public network, fine the switched id. switched network” and “interconnected 332(d)(2), § which the Commission exer- 332(d); Open service.” 47 U.S.C. see 2015 cised revising its definition in the Or- 30 FCC Red. at 5783-84 der. explained, As we have the Commis- ¶ 396. sion, relying on growing universality of mobile broadband as a medium of commu- case, “In this sort of there is no nication public, expanded for the the defi- rely presumptive delegation need to on the public nition of the switched network so agencies authority ambigu to' define that it now IP uses addresses addition ous or imprecise apjily terms we under the telephone numbers in connection with doctrine, *40 delegation Chevron for the of provision of switched services. interpretative authority express.” Wom en petitioners Involved in Farm Economies v. Mobile argue U.S. that Congress 994, Department Agriculture, “public 876 F.2d intended switched network” to (D.C. (citation 1989) omitted); 1000-01 Cir. forever—“public switched tele mean— University network,” see Rush phone Medical Center v. and that the Commission (7th Burwell, 2014); 763 F.3d 760 Cir. thus authority expand lacks the defini Order, Open Internet 30 FCC Red. at tion of the network to endpoints include 5783 396 & n. 1145.We find the Commis other telephone than numbers. We are un sion’s express persuaded. exercise definitional petitioners’ Mobile interpreta authority a to be reasoned and tion necessarily contemplates reasonable adding a interpretation of the statute. (“telephone”) We therefore critical word that Congress statute, sustain the Commission’s reclassification of left out of the an unpromising mobile as a commercial argument mobile avenue for an about meaning against petitioners’ See, service Congress mobile chal of the words e.g., used. Adi lenges. In light disposition, Sebelius, of that we need rondack Medical Center v. (D.C. 2014); not address the Commission’s alternative F.3d 699-700 Cir. Public finding broadband, Citizen, that mobile even if not Inc. v. Rubber Manufacturers service, (D.C. 2008). subject Ass’n, commercial mobile is still 533 F.3d Cir. to common carrier treatment If Congress as the “func meant for phrase “public equivalent” tional of a carry commercial mobile switched network” to the more re 332(d)(3); § service. See 47 meaning U.S.C. 2015 strictive attributed to it mobile (and Open Internet petitioners, Congress 30 FCC Red. at presum could ¶¶ would) 5788-90 404-08. ably have used the more limited— precise “public more switched —term ‘ Indeed, telephone Congress network.” another, used that precise
We first formulation petition consider mobile challenge updated ers’ to the Commission’s later-enacted statute. See 18 U.S.C. 1039(h)(4). Here, § “public though, Congress definition of network.” switched term, above, That as set out elected to general “pub forms use the more term integral component network,” statutory plain defini- lic switched which its authority to have come bur- definitional net- beyond telephone reach can
language compel intention to Open Internet Or- dened with an unstated alone. See works der, Red. at 5788 396. to forever retain a defini- FCC the Commission specific type “public to one tion confined 'decline to invoke Congress only did Not i.e., network,” net- telephone switched net- telephone “public switched the term work. work,” gave the Commission it also but authority to define the broader express reject petitioners’ mobile We therefore 47 U.S.C. instead. See term it used that the argument statuto- counter-textual 332(d)(2). conceive of petitioners Mobile must ry phrase “public switched network” art as a term of network” “public switched Congress as if had used be understood using a network tele- only to referring telephone net- phrase “public switched so, if that it is But were phone numbers. Instead, general phrase the more work.” have why Congress would far from clear network,” terms, by its “public switched term, to define the the Commission invited “public” that is both reaches network setting out its ostensi- simply than rather petitioners Mobile do not and “switched.” in- in the meaning statute. We bly fixed using IP ad- dispute that a network both that, in agree stead telephone “public” numbers is dresses and general defini- granting As the Commission ex- and “switched.” authority, Congress “expected tional plained, expansion of the network public network] notion switched [of IP include the use of addresses involves charged therefore the Commis- evolve and in that it “reflects the “switched” network continuing obligation to de- sion with the packet emergence growth switched Order, 30 Open fine it.” 2015 networks,” Internet Protocol-based ¶ 396. at 5783 FCC Red. *41 in that “public” also a network involves Congress, no moment that It is of “today’s Internet access net- broadband statute, “public used the term another unique addressing use their own works indicating in a context switched network” addresses, identifier, give a IP users telephone refer to the net an intention to universally recognized sending format for (re 1422(b)(1)(B)(ii) § work. See U.S.C. receiving messages across the coun- pub ferring public “the Internet or Open try and worldwide.” 2015 Internet network”). statute, unlike lic That switched Order, 30 FCC Red. 5779-80 332(d)(2), grant of au contains no section added). thus (emphasis The Commission thority to the Commission to define using a network permissibly considered during the time term. And it enacted was IP telephone numbers and addresses to longstanding prior, when the Commission’s “public switched network.” be regulatory “public definition of switched in effect. Because the Com network” was 2. “public had mission at time defined challenge petitioners Mobile next to the switched network” reference understanding of “inter the Commission’s network, it telephone unsurprising term, too, That is an connected service.” term to Congress would have assumed the part of the definition of commer integral meaning. assumption have that But that A service. commercial mobile cial mobile Congress no means indicates that meant interconnected ser “make[] service must of the definitional divest the Commission to ... a public ... to the vice available authority expressly granted had 332(d)(2). portion public.” substantial do not Commission section We 332(d)(1). § And “interconnected grant of U.S.C. Congress’s express understand service” is “service that is interconnected issue for the Commission therefore con- public with the switched network.” Id. cerned communications from mobile broad- 332(d)(2). § phrase As with the “public band users telephone users: whether network,” Congress gave switched the mobile “gives broadband subscribers the express authority to define capability to communicate to” users via the term “interconnected service.” Id. telephone § numbers. 47 C.F.R. 20.3. The Commission concluded that it
The Commission has does. defined “intercon- nected gives service” as a service “that Specifically, the Commission determined subscribers the capability to communicate that mobile broadband gives a subscriber to or receive communication from all other capability to communicate with a tele- public users on the switched network.” 47 phone through user the use of Voice over (prior C.F.R. 20.3 version effective (VoIP) Internet Protocol applications. See through 2015); June see 2015 Open Order, Open Internet 30 FCC Red. at Order, 30 FCC Red. at 5779 ¶¶ FaceTime, 5786-87 (Skype, 400-01. (We that, note in the 2015 Google Hangouts Voice and popular are the Commission excised the word “all” examples applications.) of VoIP VoIP tech- from that definition. But explain as we nology enables a mobile broadband user to below, the Commission considered that ad- send voice call from IP her address to justment a purely conforming one no recipient’s telephone number. As a re- effect; substantive prior we use the lan- sult, a mobile broadband user with a VoIP guage to confirm that mobile broadband application on her tablet can call her qualify would as interconnected service re- phone friend’s home number even if the gardless adjustment.) of the Commission’s caller’s tablet lacks cellular voice access question under the Commission’s (and assigned thus has no telephone num- service,” then, definition of “interconnected ber). When she dials her telephone friend’s is whether mobile “gives sub- number, the VoIP service sends the call capability scribers the to communicate to from her IP tablet’s address over the mo- or receive communication from all other bile broadband network to connect to the users on public switched network” as and, telephone network ultimately, to her encompass redefined to using devices both such, phone. friend’s home As mobile IP addresses and telephone numbers. 47 *42 broadband, VoIP, through “gives subscrib- § (prior C.F.R. 20.3 version effective ers the capability to communicate to” tele- 2015). 11, through June The Commission phone users. 47 C.F.R. 20.3. reasonably found that mobile broadband 2007, In the gives users that when Commission first con- “capability.” See 2015 Open Order, proper Internet 30 sidered the classification of FCC Red. at then- ¶¶ ¶ 390-91, 398, 5779-80 broadband, 5785-86 5787 nascent mobile the Commis- ¶ 401. sion had a different understanding about relationship the between mobile broadband matter, anAs initial there no dispute is time, and At that VoIP. the Commission “capability” about the of mobile broadband applications sepa- considered VoIP to be a subscribers to “communicate to” other mo- rate, service, non-integrated such that bile broadband users. As the Commission ability VoIP’s to connect internet tele- and explained in the Order—and as is undis- phone thought users was to render puted gives broadband ... its —“mobile mobile broadband an interconnected ser- capability users the to send and receive Order, communications from all vice. See 2007 22 other users of the Wireless FCC ¶ ¶ Internet.” at remaining Id. 5785 398. The Red. at 45. But 5917-18 when the Com- 720 that allow for ‘app stores’ “[independent nearly a decade the issue
mission revisited review, integration and downloading we now seamless the Order later in deter- “previous [e.g., applica- VoIP applications found that standalone relationship between handset did not mination about into the customer’s tions] access and Internet mobile broadband in 2007. Id. exist” of section the context in applications VoIP that, today, noted also The Commission the cur- accurately reflects longer 332 no dramatically faster: mobile broadband Open landscape.” technological rent speed connection “ex- average network at 5787 Order, Red. FCC Internet just years, going from an ploded” in three ¶ that VoIP concluded particular, 401. In kilobytes speed of 709 average connection integrated function as now applications average in 2010 to an per (kbps) second broadband, than rather as mobile aspect of 2,058 all devices speed kbps distinct, separate service. functionally 9,942 smartphones by 2013. 2015 kbps for mo- found that therefore The Commission Order, at 30 FCC Red. Open Internet “today, through the use of bile broadband ¶ result, access Partly as a 89 & n. 170. capability VoIP, ... subscribers gives on one’s mo- applications internet and endpoints.” all NANP communicate longer confined to small phone bile is no Id. Rather, “there of functions. has number conclusion, the Com- reaching that In growth” even since been substantial in “changes emphasized mission digi- more so since 2007—“in 2010—far convergence highlight ... marketplace particu- ... and in app economy tal VoIP” and data networks voice between mobile lar. at 5626 76. Id. since the Commission occurred that has addition, cited a let- the Commission classification of mobile addressed first that, because VoIP explained access 2007.” Id. ter which Internet (such sub- Apple before FaceTime applications The record as understanding, stantially supports Hangouts on Android Google devices and the rela- finding that the associated devices) well as pri- “bundled with the now come applications and tionship between VoIP every mary systems available operating dif- today significantly mobile broadband longer no “rare they smartphone,” are instance, For that of 2007. fers from they clearly functionally distinct” as were only device at iPhone —the Apple’s Calabrese, Letter Michael from “resembling a modern smart the time even Institute, al., Mar- Technology et Open released was just been phone”—had Dortch, FCC, Dkt. Nos. at GN lene H. only one mobile carrier. through available 2014) (“OTI (Dec. 11, 14-28 & 10-127 12/11 Feld, al., et Public Harold Letter from Letter”); Open see FCC, Dortch, H. Knowledge to Marlene Any 401 n. 1168. Red. at FCC (Dec. 19, 10-127 14-28 & Dkt. Nos. GN calls made with a de- distinction between Letter”). 2014) (“Public Knowledge 12/19 *43 dialing capacity and those vice’s “native” atten- drew the Commission’s Commenters has “in- through thus become made VoIP in 2007 that recognition “mobile tion to its 5; Letter at creasingly inapt.” OTI 12/11 mo- with a standard broadband available Knowledge Letter see Public 12/19 the users to phone ‘enable[d] bile time accordingly found that The Commission of websites’ and a limited selection access among ... is “[t]oday, mobile VoIP func- extremely limited offered primarily ways in which users increasing number (citing email.” Id. tionality such as indiscriminately ¶ between communicate Order, at 5906 11 22 FCC Red. Wireless public on the 43). endpoints IP limitations, NANP and of those & n. Because Open network.” 2015 That especially apparent switched is in light of Order, 401; Red. at 5787 see FCC regulatory the Commission’s definition of Resp’ts’ (relying finding). Br. 99 on that “interconnected regulation service.” The light developments, of those the Commis- calls for assessing whether mobile broad- reasonably sion determined that mobile band “gives subscribers the capability to today broadband is interconnected with communicate to” telephone users. 47 newly public defined switched network. added). § C.F.R. (emphasis 20.3 Mobile “gives capability It subscribers the to com- petitioners challenge do not the Commis- ... public municate to other on the users understanding sion’s “capability network,” recipient switched whether the communicate” suffices to establish an in- address, number, telephone has an IP or service, terconnected and we see no 20.3; § both. 47 C.F.R. In- Open see 2015 ground rejecting the Commission’s con- ternet 30 FCC Red. at 5779-80 clusion that mobile gives broadband sub- ¶¶ 391, 5785-87 398-401. scribers the “capability to communicate to” otherwise, In contending peti- mobile telephone through users VoIP. And al- argue tioners that mobile broadband though regulation itself also references “re- is not public “interconnected with the ceiving] communications from” others network,” 332(d)(2), § switched 47 U.S.C. network, id., petitioners mobile also do because mobile broadband does not allow challenge the Commission’s under- subscribers to interconnect with telephone standing capability that the either to “com- users unless step subscribers take the of municate to or receive communication using application. a VoIP Nothing added). enough, from” is id. (emphasis statute, however, compels the Commission Consequently, capability of mobile (and elusive) to draw a talismanic distinc- broadband users “to communicate to” tele- (i) tion between mobile broadband alone phone users via VoIP suffices to render (ii) connection, enabling a mobile and, importantly, most network — enabling broadband through connection users —“interconnected.” adjunct use of an application such as VoIP. petitioners Mobile they per- note what contrary, grants To the. the statute separate problem ceive to be a associated express authority to define running communications in the re- “interconnected service.” 47 U.S.C. (i.e., verse direction the capability of mo- 332(d)(2). And the Commission permissi- bile broadband users to “receive commu- bly authority exercised that to determine users). telephone nications from” That that —in light availability, of the increased problem ostensible pertains, not to mo- use, technological and functional inte- service, bile broadband but instead to gration applications of VoIP —mobile particular, mobile voice service. In mobile broadband should now be considered inter- that, petitioners argue public if telephone connected with the In- network. switched network can be defined to use deed, even for communications from one both IP addresses num- telephone another, mobile broadband user to mobile bers, voice service long- mobile would no generally conjunction works in qualify er as an “interconnected service” with a native third-party application because telephone users cannot establish (e.g., application some sort an email such result, a connection to IP users. The mo- as Gmail or a messaging application such submit, petitioners bile the one as WhatsApp) to facilitate transmission of everyone agrees network intended to was messages. conjunction users’ of mobile *44 qualify broadband as a commercial mobile service— and VoIP to enable IP-to-tele- phone necessarily communications is no different. a mobile voice—would become touch, your iPhone is or Mac when uncon- iPod areWe service.
private mobile network.”); also Re- see the Wi-Fi same vinced. Hangouts, with Google ceive Voice calls the Commission’s starting point, aAs https://support.google.com/hangouts/ classification of the proper takes up Order 2016) (last June visited answer/6079064 broadband, voice. not mobile mobile “Google Voice” and (describing how a formal not conduct thus did mobile broad- “Hangouts” services allow would voice mobile of whether assessment telephone from band to receive calls users under service an interconnected qualify as Number?, users); https:// Skype is a What switched public definition the revised support.skype.com/en/faq/FA331/what-is-a- to ad- the Commission But network. were (last 2016) skype-number June visited proceeding, in a future dress that issue en- that, (describing “Skype how a Number” regardless presumably note would can “communi- to receive users mobile broadband users whether mobile voice ables users). their users from cate to” broadband telephone mobile calls from communica- they can “receive telephones, reasons, reject peti- mobile For we those users broadband from” mobile tion Commission’s argument tioners’ already ex- for the reasons through VoIP an as of mobile broadband classification capability That 20.3. plained. 47 C.F.R. impermissible service” “interconnected voice to render mobile would suffice supposed implications of its because under the Com- service” “interconnected Rather, of mobile voice. the classification of that definition regulatory mission’s found that permissibly the Commission term. Id. as inter- broadband now qualifies mobile Moreover, as insofar gives because it subscribers connected formally future may be asked to all users of the ability to communicate as qualifies voice address whether mobile newly public defined network. switched service, the Commission an interconnected “mobile the words of Commission: there time whether could assess at today, service access of communications exists the “capability” VoIP, messaging, and the use of through i.e., direction, capability in the reverse effectively gives sub- applications, similar to” users to “communicate of mobile voice communicate capability scribers Id. We telephones. their IP users from well as with endpoints with NANP all had information note that the Commission Open Inter- all of the Internet.” users indicating that proceeding before it in this Order, at 5787 net 30 FCC Red. (or computer) other a mobile broadband broad- Finally, finding that mobile enabling her to employ user can a service capabili- today “gives band subscribers IP address. calls to her telephone receive all NANP end- ty to communicate with Letter Knowledge Public See 12/19 added), confirms the points,” (emphasis id. commercial (describing n.50 television removal immateriality of the Commission’s service, Continuity demonstrating Apple’s regulatory defini- of the word “all” from its mo- with iPhone 6 user which enables an As men- “interconnected tion of service.” call an iPad user bile voice service earlier, until the regulation, tioned service); Continuity Use mobile broadband service as defined interconnected touch, iPad, iPhone, iPod your to connect capabil- gives “that subscribers the service Mac, https://support.apple.com/en-us/ communi- 2016) ity to to or receive communicate (last visited June HT204681 public on the from all other users (“With cation and re- Continuity, you can make (prior § 20.3 iPad, 47 C.F.R. network.” your from switched cellular calls phone ceive *45 2015) through version effective June & n. 1175. (Specifically, the Commission added). (emphasis updated In the defini- notes that the removal of “all” was meant tion, the Commission left that language to reiterate a carve-out that always has unchanged except it removed the existed in regulation: part another (current § word “all.” See 47 C.F.R. 20.3 the definition of “interconnected service” 2015). version effective June Mobile establishes that a service qualifies as “in- petitioners great significance attach to the terconnected” even if it “restricts access “all,” assuming removal of that the change ways,” certain limited such as a service enabled the Commission to find mobile that blocks access to 900 numbers. Id. broadband to an be “interconnected ser- 20.3); (quoting C.F.R. id. at 5787 though, vice” even according pe- to mobile ¶ 1172.) 402 n. titioners, capabil- broadband users have no end, then, In the the removal of “all” is ity telephone to communicate with users. consequence of no to the Commission’s “all,” By excising the word petition- mobile rationale finding for that mobile broad- assert, ers the Commission could find that band constitutes an “interconnected ser- mobile broadband is an interconnected ser- broadband, vice.” Mobile ability vice based on the Commission users to com- concluded, only reasonably gives municate with some in the network users the ca- (fellow users) broadband notwithstanding pability to communicate to all other users any capability the lack of to communicate newly defined public switched net- with others in the network (telephone work, address, whether users with an IP users). ability, Absent the latter mobile telephone number, users with a or users petitioners argue, mobile can- ¶ with both. See id. at 5787 401. Because actually not be considered “interconnect- mobile broadband thus can be considered ed” with the telephone network. service, an interconnected petitioners’ argument
Mobile rests on a permissibly acted in reclassifying mobile mistaken understanding of the Commis- broadband as a commercial mobile service sion’s -actions. The Commission did not subject to common regulation, carrier rest its finding that mobile broadband is private rather than a mobile service im- an solely “interconnected service” regulation. mune from such assumption that enough it would be for broadband subscribers to be able to com- (only municate with some in the network petitioners Mobile argue also users), IP fellow even if there were no “point Commission has failed to capability at all to communicate with oth- change in technology functionality users). (telephone ers contrary, To the justify mobile broadband” sufficient to Commission, explained, as found that mo- reclassifying mobile broadband aas com- through bile “gives broadband — VoIP — mercial mobile service. US Telecom Pet’rs’ ability subscribers to communicate Br. argument 68. This fares no better in with all NANP endpoints as well as with the mobile context than it did in the Title all users of the Open Internet.” 2015 In- II reclassification if context. Even ternet Red. at FCC 5787 401 Commission had demonstrated added). (emphasis accept Once we changed which, factual have, finding, as we we need not consider circumstances — above, described think it we has—mobile petitioners’ argument challenging what the petitioners’ argument would fail because merely characterizes as “conforming” change only provide with no Commission need a “rea- independent substantive effect. See id. at 5787-88 402 explanation” departing soned from its *46 Internet.” 2015 Television, to access the gy they use Fox See findings. prior (“[I]t Red. at 5638 is not 30 FCC 515-16, Open 129 S.Ct. at U.S. ¶ is demanded a mobile device justification consumers use further 92. When (such that a change[,] but access policy smartphone) fact of or the mere as a tablet is needed for disre- explanation internet, may reasoned a connec- they establish un- circumstances facts and garding or through mobile broadband tion either It has done prior policy.”). ... derlay home, in at a connection through Wi-Fi here. so office, shop. coffee Such airport at an or a land- originate from connections Wi-Fi
4. connection, a which is now line broadband agree with the Commission Finally, we regulated as a service telecommunications statutory con- to avoid a the need II. If a con- under Title common carrier of mobile in the treatment tradiction connection for some loses her Wi-Fi sumer support further provides broadband accessing the internet —in- reason while mo- as a commercial its reclassification instance, if she walks out cluding, for statutory two Each of the service. bile house, out of her and thus front door of re- covering broadband mobile schemes could switch au- range device Wi-Fi —her particu- a in a classifying service quires a a connection to tomatically from Wi-Fi com- subject it can be way lar before If connection. mobile mobile broadband II, Title treatment. Under carrier mon a mo- private were classified as broadband be classified as a “tele- must broadband service, ongoing her session would no bile III, Title service.” Under communications carrier treat- subject to common longer be as a must be classified broadband mobile sense, In that her mobile device ment. Because the mobile service.” “commercial regu- subject entirely different could be automatically do not classifications two happens latory depending rules on how tandem, must move in the internet at connected to be classification decisions. two distinct make change could particular moment—which contradictory result of clas- To avoid next, potentially minute to the from one broadband sifying mobile her awareness. even without under Title II while carriers common reclassify decision to The Commission’s immune from common rendering them as a commercial mobile mobile broadband III, under Title carrier treatment that counterintuitive out- prevents service Commission, reclassifying broad- upon regulatory by assuring come consistent mobile—as generally including band — treatment of fixed and mobile broadband. service, reclassified telecommunications contrast, By despite if mobile mo- as a commercial mobile broadband — “rapidly growing virtually public’s Internet Or- Open See 2015 bile service. ¶ today, of the service id. universal use” der at 5788 still be classified as 399—must statutory contradiction not Avoiding that service, broadband users “private” mobile regulatory treat- only consistent assures “the same Inter- may longer experience no II broadband across Titles ment of mobile no matter what openness protections net reg- III, consistent but it also assures access the Inter- technology they use to ulatory treatment of mobile broadband net.” Id. at 5638 92. broadband, in furtherance of the fixed “[bjroadband objective that Commission’s C. they expect able to should be users challenge the also petitioners Mobile open- to the same Internet will be entitled notice, par- sufficiency of the Commission’s what technolo- no matter protections ness ticularly respect to its public redefinition of tion of switched network inwas public switched network as play. well as its removal of the word “all” from the defini- addition, over the course of several tion of interconnected service. As noted months before finalization and release of *47 above, the APA requires that an NPRM (and others) petitioners mobile “include ... either the terms or substance submitted multiple letters to the Commis- proposed description rule or a sion concerning potential for redefining subjects and issues involved.” 5 U.S.C. public See, switched e.g., network. Let- 553(b). § But the APA requires also us to Henry AT&T, ter from G. Hultquist, to take “due account” of “the rule of prejudi- Dortch, FCC, Marlene H. GN Dkt. Nos. cial error.” Id. (Feb. 2015) (“AT&T 13, 14-28 & 10-127 Letter”); deficiency
A of notice is harmless Letter from Berg- Scott 2/13 mann, CTIA, if challengers had actual Dortch, FCC, notice of the to Marlene H. rule, 13-18, final Small at Lead Phase- GN Dkt. Nos. 14-28 & 10-127 Refiner (Feb. EPA, 506, Down 10, 2015); Task Force v. 705 F.2d Letter from Berg- Scott (D.C. 1983), mann, 549 if they CTIA, Cir. cannot Dortch, show FCC, Marlene H. prejudice in the form arguments they (Jan. GN Dkt. 14, Nos. 14-28 & 10-127 2015) presented (“CTIA would have to the if agency Letter”); Letter from 1/14 chance, given a Owner-Operator Indepen Gary AT&T, L. Phillips, to Marlene H. dent Drivers Ass’n v. Federal Motor Car Dortch, FCC, GN Dkt. Nos. 14-28 & 10- Administration, Safety 188, rier 494 (Feb. F.3d 2, 2015); 127 Letter from Scott Berg- (D.C. 2007). Cir. Both circumstances mann, CTIA, Dortch, FCC, H. Marlene here, present are each independently (Dec. 22, GN Dkt. Nos. 14-28 & 10-127 supports any our conclusion that lack of 2014) (“CTIA Letter”); Letter from 12/22 ultimately such, notice was harmless. As CTIA, Bergmann, Scott to Marlene H. we need not decide whether the Commis Dortch, FCC, GN Dkt. Nos. 14-28 & 10- gave sion adequate notice of its redefini (Oct. 2014) (“CTIA 17, Letter”). 10/17 public tion of the switched network in the previously We have charged petitioners NPRM. challenging agency, rule actual no- with
As petitioners mobile acknowl tice based on letters like those submitted edge, Vonage raised redefining the idea of petitioners. mobile See Sierra Club v. public (D.C. Costle, 298, 1981). switched network in its com 657 F.2d Cir. ments, pointing out the Commission’s “au But we have even more evidence actual thority interpret the key terms in petitioners th[e] notice here. Mobile note service], that, definition commercial [of mobile their in meetings letters with the including Commission, ‘interconnected’ and ‘public they discussed the substance ” Vonage here, switched network.’ Holdings arguments of their including issues 43, Corp. Comments at GN Dkt. 14- surrounding Nos. public the redefinition of 2014). 18, (July 28 & 10-127 peti Mobile switched network. See AT&T Letter 2/13 responded tioner CTIA to that point at 1 a (noting meeting representatives with comments, reply disputing Vonage’s un O’Rielly’s from Commissioners and Pai’s derlying assumption 11, 2015); that mobile February broad on offices CTIA 1/14 band users can telephone connect with all (noting meeting Letter at 1 a repre- with users, 45, see Reply CTIA Comments at sentatives from Commissioner Pai’s office 12, 2015); GN Dkt. Nos. 14-28 & 10-127 (Sept. January on CTIA Letter 12/22 2014), thereby recognizing that the defini- 1 (noting meeting representatives at a with Dortch, FCC, & 10- GN Dkt. Nos. 14-28 Counsel’s General
from the Commission’s 2014). (Oct. 17, from the Wire representatives office and on De Bureau Telecommunications less exchanges, petitioners mobile those 2014); at Letter CTIA cember 10/17 the same fiercely debated all of raised and meeting Commission’s (noting us, they now raise before thus arguments from representative Counsel General only presence not demonstrating on Octo Bureau Competition the Wireline notice, also the absence of new actual but 2014). Thus, if the redefinition even ber they might present the Com- arguments a “novel network was public switched Indeed, when asked mission on remand. the comment Vonage during proposal” petitioners mobile could argument, oral petitioners’ mobile clear from it is period, the issue of argument new list *48 actual notice they had own letters network. public redefinition of switched considering adoption was the Commission 74-79, Tr. 84-87. Arg. See Oral Mining See National proposal. of that allege & Health Adminis Safety petitioners also v. Mine Mobile Ass’n (D.C. 520, 531-32 Cir. tration, F.3d inadequate notice gave 1997). from the definition of removal of “all” failure, Any such service. interconnected letters, addition, letters from those however, harmless. As noted was also petitioners’ mobile supporting others above, claim only not does Commission groups from views, responsive letters and inconsequen “all” was that the removal of In- Technology Open like New America’s adjustment regulation, tial to the but Knowledge, peti- mobile Public stitute and our bearing no decision also has detailed, in a substantive engaged tioners Commission’s reclassification uphold precise about issues back-and-forth uphold would the Commis decision. We Reclassification of they challenge here. decision of whether the regardless sion’s and redefinition mobile broadband “all” from validly the focal removed were public switched network discussion, in service.” petition- which definition of “interconnected Mo of that points prejudice about technolo- cannot exchanged arguments petitioners thus show ers bile groups supporting a with the gy policy from lack of notice. See Steel Manu public EPA, switched definition 27 F.3d broader Ass’n v. facturers from CTIA and (D.C. 1994) Letters inability network. See (explaining that Cir. AT&T, from Michael Cala- supra-, Letter for rule comment on one rationale was Institute, brese, Technology to Mar- Open “adequate had agency harmless when Dortch, FCC, GN Dkt. Nos. 14-28 lene H. rule). for independent grounds” (Jan. 27, 2015); Ha- Letter from & 10-127 reasons, for those petitioners, Mobile fail Feld, Knowledge, to Marlene rold Public required by the APA prejudice to show the FCC, 14-28 Dortch, Dkt. Nos. & H. GN arguments of succeed on their insuffi- (Jan. 15, 2015); Letter from William 10-127 reject therefore their cient notice. We Verizon, Johnson, to Marlene H. H. challenges. FCC, 10- Dortch, GN Dkt. Nos. 14-28 & (Dec. 2014); Knowledge Public V. Letter; from Michael E. Glo- Letter 12/19 the Commission’s Dortch, FCC, Having upheld ver, Verizon, H. to Marlene services, (Oct. 29, reclassification of broadband both & 10-127 Dkt. Nos. 14-28 GN mobile, we consider next Full Letter; fixed and 2014); from Wil- Letter OTI 12/11 challenges to the Com- Verizon, Network’s Johnson, to Marlene H. Service liam H. mission’s decision to forbear from applying A.
portions of the Communications Act to
Full Service Network
argues
first
those services. Section 10 of the Communi-
that the Commission should have followed
provides
cations Act
that the Commission
regulatory requirements
its
governing for
applying any
“shall forbear from
regula-
petitions
bearance
even though it forbore
any provision”
tion or
of the Communica- of
its own accord. In the
the Com
tions Act to a telecommunications service
rejected
contention,
mission
this
stating
(1)
or carrier if three criteria are satisfied:
that “[b]ecause the Commission is forbear
“enforcement of such regulation
provi-
or
ing
motion,
on its own
it is
governed
necessary
sion is not
to ensure that” the
procedural
rules
they
insofar as
practices
carrier’s
just
“are
and reasonable
terms,
10(c)
apply,
their
to section
peti
and are not unjustly
unreasonably
or
dis-
tions for forbearance.” Id. at 5806
(2)
criminatory,”
160(a)(1);
§
47 U.S.C.
review an agency’s
“[W]e
in
regulation
“enforcement of such
provi-
or
terpretation of
regulations
its own
necessary
sion is not
protection
”
‘substantial deference.’
In re Sealed
consumers,”
160(a)(2);
(3)
id.
“for-
Case,
(D.C.
2001)
237 F.3d
Cir.
bearance from applying
provision
such
(quoting Thomas
University v.
regulation is
Jefferson
public
consistent with the
in-
*49
Shalala,
504, 512,
512
2381,
U.S.
114 S.Ct.
160(a)(3).
terest,”
§
id.
Under the third
(1994)).
from which
in sections
contained
by necessary implica- dling requirements
forbear, which
here,
the Commission would
section 251
252. As
indicated
251 and
relevant
tion
from all others. The
forbearing
carriers “to
consider
telecommunications
requires
a 2010 notice of
by citing
did so
NPRM
directly
indirectly”
interconnect
had
in which the
inquiry,
from
prohibits them
carriers and
other
classify
that, if it were to
contemplated
unreasonable or discriminato-
“impos[ing]
connectivity component of
Internet
resale
ry
on[ ]
conditions or limitations
service,
access
services.”
...
telecommunications
all but a
applying
forbear from
would
(b)(1).
251(a)(1),
“Incumbent local
§
U.S.C.
statutory provisions—
core
handful of
carrier[s],”
who
meaning carriers
exchange
and 254—to the
sections
service”
exchange
“provided telephone
addition,
service.
the effective date
area as of
particular
provi-
222 and 255 as
sections
identified
Act,
provide
must
the Telecommunications
from for-
excluded
that could be
sions
existing
to their
nondiscriminatory access
bearance,
they
attract-
noting that
have
access to network
and unbundled
networks
support
and broad
longstanding
ed
to allow service-level
elements
order
the broadband context.
251(c),
through resale. Id.
competition
(foot
NPRM,
at 5616 154
Red.
29 FCC
(h)(1).
con-
252 sets standards for
Section
omit
quotation marks
and internal
*50
tion,
using
market
...
and
provision
II
Covad Communica
ing
provisions.
Title
in
Indeed,
provision
of that
and context
Co.,
Full
definition
tions
450 F.3d
Full
anticipated that the Com
Act.”
Service
the [Communications]
Service Network
com
just
that. In its
(emphasis
would do
Br. 14-15
omit
mission
Network Pet’rs’
ments,
argued
Network
ted).
Full Service
to ‘local
“applies
section 251
Because
”
not forbear from
should
Commission
carriers,’ Full
Network
exchange
Service
here, thus demon
at issue
provisions
market,
contends,
as the
geographic
“the
“com
it had no trouble
strating that
definition in the
implies
name
and the
Honeywell Inter
ment[ing] meaningfully,”
confirms, is local
Act
[Communications]
national, Inc.,
at 445.
Letter
372 F.3d
See
(emphasis
at 15
not national.” Id.
and
Comstock,
for Full
Counsel
from Earl W.
251).
omitted)
§
(quoting 47 U.S.C.
TruConnect, to Mar
Network and
Service
EarthLink,
FCC,
Inc. v.
in
Our decision
Dortch, FCC,
Dkt. Nos. 14-28
lene H.
GN
argument.
this
F.3d
forecloses
(Feb. 20, 2015);
Earl
Letter from
10-127
&
There,
argu-
a similar
EarthLink made
Comstock,
for Full
Counsel
Service
W.
phrase
ment —that
inclusion
TruConnect, to Marlene H.
and
Network
10 meant
section
“geographic markets”
Dortch, FCC,
Dkt. Nos. 14-28 & 10-
GN
could not “forbear
(Feb.
2015).
127, at 1
separate
from
unbun-
a nationwide basis”
B.
section
“without
dling requirements in
regions individ-
considering more localized
contends that
Full
Service Network
argument,
this
ually.”
Rejecting
Id. at 8.
capri-
arbitrarily and
acted
of section
language
mandatory we focused on
ciously
forbearing
from
face,
and held that
“[o]n
the statute
bearance from the
provi-
interconnection
imposes
particular
no
mode of market
sions under
the section
frame-
251/252
analysis
geographic rigor.”
or level of
Id.
work.” 2015 Open Internet
30 FCC
Rather,
language simply
“the
contemplates
(footnote omitted).
Red. at 5849-50
might
that the FCC
sometimes forbear in Specifically, Full Service Network attacks
markets;
a subset of a carrier’s
it is silent
the Commission’s determination that sec-
about how to determine when such partial
tion
gives
it sufficient authority to
relief
appropriate.”
Id. For the same
ensure that broadband networks connect
reason, Full Service Network cannot rope
to one another for the mutual exchange of
section 251’s requirements into the Com-
traffic. Section 201 requires “every com-
analysis.
mission’s section 10
mon carrier
engaged
interstate or for-
eign
communication
wire or radio to
Full
argument
Service Network’s
is also
furnish such communication service upon
inconsistent with our decision in Verizon
request
and,
reasonable
therefor”
upon an
(D.C.
FCC,
Telephone Cos. v.
Full because the Service Network next chal Commission could use virtual lenges co-location, finding Commission’s that where local exchange “the carriers availability of protections adequately other maintain equipment third-party pro- that use, addresses commenters’ concerns for- implement about viders can section 201’s 730 it had found the that because termined without requirement connection”
“physical 251, it as to section Id. at 1446. So 10 criteria met issues. section raising constitutional correct is that “resolve whether broad- Full Network had no reason to while Service limit on the imposes one Atlantic service could consti- Bell Internet access band ” 201, section that under reach under exchange Commission’s service’ ‘telephone tute that the Commis- also demonstrates case 513 n. 251. Id. at 5851 section authority regulate network retains sion jurisdic- approved Commission’s We section. under that connections Communications, approach tional Core argues Next, Network Full Service (D.C. 139, FCC, 144 592 F.3d Cir. Inc. v. 152(b), “prevent[s] the Com- which section 2010). in that Although petitioners case solely intrastate action taking from mission general framework challenged never goal,” interstate further[s] it because analysis, ... the Commission’s “end-to-end Board, 525 v. Iowa Utilities Corp. AT&T of a commu- which the under classification 721, 142 366, 381, L.Ed.2d 119 S.Ct. U.S. turns local interstate nication as (1999), the Commission from prohibits 835 are in origin and destination whether authority under [sec- its interstate “us[ing] state,” recognized at we the same id. Internet regulate broadband 201 to tion] ‘tele- an intrastate is access service special is be- [d]ial-up traffic internet the [Com- under exchange service’ phone interstate communica- cause involves Act,” Full Network Service munications] through tions that are local delivered omitted) (quoting (emphasis Br. 17 Pet’rs’ calls; simultaneously implicates it thus 153(54)). According § Full 47 U.S.C. § regimes of both 201 and of Network, erred the Commission Service regime §§ 251-252. subset Neither whether broad- refusing to determine intersect, They dial-up of the other. “telephone ex- qualifies band service internet traffic within intersec- falls that definition service” because change 251(i)’sspecif- § overlap, tion. Given this from classi- the Commission would prevent saving authority ic of the Commission’s jurisdictionally inter- internet as fying the any negative impli- § against under 201 state. the Commis- cations from renders Order, “reaf- In the provisions at least reading sion’s conclusion” that longstanding firm[ed] [its] reasonable. jurisdic- within its service falls Id.; Regulatory see also Ass’n National Open service. 2015 an interstate tion as FCC, v. Utility F.2d Commissioners at Red. FCC 1984) (“[W]e (D.C. have Cir. Order, 17 431; Broadband see Cable power has broad concluded that the FCC ¶ 59; In re GTE Tele- FCC Red. intrastate facilities regulate physically Tariff No. GTOC phone Operating Cos. they are for interstate commu- where used 1148, 13 Red. FCC GTOC Transmittal No. nication.”). sure, To be Core Communica- (1998). ¶¶ 22,466, 22,474-83 “The 16-32 *52 access, internet dial-up concerned tions open and ar- global inherently Internet’s involves similar but because broadband chitecture,” reasoned, the Commission interstate infor- mix of local and facilities analysis jurisdictional “mak[es] end-to-end networks, meaningful no mation see we extremely impossible— difficult—if interpretation ap- between distinction In- involve the when the services issue at and in Core Communications Order, proved Internet Open ternet.” 2015 ¶ offered here. Nor do (internal one the Commission quotation Red. at 5803 431 FCC any obligate Commis- omitted). see reason to also de- we marks legal Order, sion to determine the status of each In the the Commission identified underlying “hypothetical regulatory obli- two bases for forbearing from sections 251 gation! First, ]” could result from and 252. par- it considered evidence from ticular Communications Act provision prior argued commenters who that “last-mile to undertaking unbundling requirements the section 10 forbearance ... led to de- analysis. FCC, pressed AT & T Inc. v. investment 452 F.3d the European (D.C. 2006). 830, marketplace.” 836-37 Cir. 2015 Open Inter- Order, net 30 FCC Red. at 5796 417. Full Service argu Network’s final Those commenters identified several stud- especially ment is not appears clear. It ies suggesting that mandatory unbundling claim that provided inade had reduced investment in broadband in- quate support for its forbearance decision. frastructure in Europe relative to the Pointing out that in prior proceedings the United States. See Letter from Maggie mandatory Commission had found that un- Verizon, McCready, Dortch, to Marlene H. bundling telephone context would FCC, (Jan. GN Dkt. Nos. 14-28 & 10-127 promote competition emphasizing 26, 2015); Letter from Kathryn Zachem, Congress passed section 251 to foster com Comcast, Dortch, FCC, Marlene H. GN petition, Full Service argues Network 10-127, (Dec. Dkt. Nos. 14-28 & at 5-7 surely “[section requires sup 10] more to 2014) (identifying Martin H. Thelle & Bru- port forbearance by than an assertion Basalisco, no Copenhagen Economics, How FCC that ‘other authorities’ adequate are Europe Can Catch Up With the US: A public and the interest will be better Contrast of Contrary Two Broadband served enhancing agency’s discre (2013)); Models Letter from Christopher S. tion.” Full Service Br. Network Pet’rs’ Dortch, FCC, Yoo to Marlene H. GN Dkt. In evaluating Full Service Net 14-28, 10-127, (June 10, 2014). Nos. 09-191 argument work’s the Commission The Commission reasoned that its decision failed to provide adequate justification for to forbear from section 251’s unbundling decision, its forbearance guided by we are requirement, in combination regula- “the traditional ‘arbitrary capricious’ tion provisions II, under other of Title standard,” Cellular would avoid problems Telecommunications similar and encour- FCC, age & Internet deployment Ass’n v. further 330 F.3d because (D.C. 2003), scheme regulatory 507-08 “establishes the pre- Cir. under which “the dictability needed all agency must sectors of the examine the relevant data industry prudent facilitate and articulate a satisfactory explanation planning, business imposing without undue for its action including a rational connec that might burdens interfere with entre- tion between the facts found and the preneurial opportunities.” Open In- made,” Farm, choice State 463 U.S. ternet 30 FCC Red. at 5796 417. (internal quotation S.Ct. 2856 marks omitted). applied We have this standard to The Commission also identified “numer- section 10 forbearance decisions and have or, ous concerns about the at a burdens — “consistently decisions], deferred to [such minimum, regulatory uncertainty —that except in cases where the Commission de by sudden, would be fostered substantial viated explanation without past from its expansion potential of the actual or regula- decisions or did not discuss section 10’s tory requirements obligations relative FCC, criteria at all.” Verizon v. 770 F.3d to the quo status from the near-term *53 (D.C. 2014) (internal Cir. citations past,” many which broadband omitted). subject any were not aspect of Title II. competition that the Commission’s conclu- lieves reaching this In at 5839
Id.
experi-
contrary
precedent.
from its
to its own
analysis
drew
was
sion, the Commission
industry, which
however,
mobile voice
despite
the
and
Notably,
ence with
Id. at 718.
Title II
market-based
a
under
“thrived
assertion,
id. at
see
dissent’s
partial
the
significant forbear-
included
that
regime”
715-16,
Network has never
Full Service
invest-
that robust
“demonstrating
ance,
misapplied
that
claimed
light-touch
with a
inconsistent
ment is not
10(a) factors,
failed
any of the section
¶ 423.
at 5799-800
Id.
regime.”
II
Title
required
effect as
analyze competitive
argues that
Network
Service
Full
10(b),
contrary to
for
its
or acted
section
‘vibrant
predictions
“prior
Commission’s
Indeed,
pressed
when
precedent.
bearance
rec
...
‘cannot be
competition’
intermodal
Full Service Network
argument,
oral
at
” Full
realities.’
marketplace
onciled
argu
make these
intent to
disclaimed
Reply Br.
Pet’rs’
Network
Service
Full
Arg. Tr. 139-40.
Service
ments. Oral
Order, 30
Open Internet
(quoting 2015
the Com
regarding
argument
Network’s
¶ 330). As we noted
at 5743
FCC Red.
con
analysis was
competition
mission’s
however,
agency’s predictive
above,
“[a]n
251’s
that section
fined to its contention
that are within
areas
judgments about
competition required
on local
focus
expertise
and
field of discretion
agency’s
a local market
to perform
Commission
re
particularly
entitled
are
deferential
analysis
part
inquiry.
as
of its forbearance
they are reasonable.”
view,
long as
(internal
acknowledges,
partial dissent
As
quota
EarthLink,
F.3d at
omitted).
case,
this
the Com
the Commis
“fully supports
EarthLink
marks
tion
about the
judgments
predictive
&
Concurring
that
Dissent
mission’s
sion” on
score.
unbundling would have
mandatory
effect
According
partial
to the
ing Op. at 778.
perfectly
were
deployment
on broadband
10(b) in
dissent, however, by citing section
by record evi
supported
and
reasonable
a
brief,
presented
Network
its
Full Service
provided evidence
Multiple studies
dence.
challenge to
Commission’s
broader
unbundling harmed invest
mandatory
that
But
at 715-16.
competition analysis. Id.
evidence, combined
Europe. Such
ment in
10(b)
section
Full
Network cited
Service
using
experience
with the Commission’s
once,
its
only in the context of
only
program for mo
regulatory
“light
touch”
“must eval
Commission
argument
“a rational con
voice, demonstrates
bile
us
10]
section
provision [under
uate each
and the
found
the facts
nection between
of that provi
and context
ing the definition
applying
from
sec
forbear
made” to
choice
which,
Act,”
in the
context
“[i]n
sion
Farm,
463 U.S.
251 and 252. State
tions
link’ to the Internet
the local ‘connection
(internal quotation
103 S.Ct.
company
and cable
phone
omitted).
noth
demands
The APA
marks
... must be made on
provides,
service
ing more.
Full Ser
market-by-market basis.”
local
much of
agrees with
dissent
partial
(emphasis
Pet’rs’ Br. 15
vice Network
this,
believes
nonetheless
but
omitted).
argu
We
addressed
have
arbitrarily
capri-
acted
above,
Full Service
ment
Network
it both
“attempt[ing] to have
ciously by
10(b) argument.
no other section
makes
competition
a lack of
when it found
ways”
pres
Full
Network never
Because
Service
decision, but simulta-
reclassification
its
arguments
briefs the
made
ents
jus-
competition to
neously
adequate
found
dissent,
arguments
those
lie
partial
Concurring Dissenting
&
tify forbearance.
scope of our review.
outside the
also be-
partial dissent
Op. at 777. The
*54
VI.
mission “with affirmative authority to en
act measures encouraging
deployment
turn next to petitioners’ challenges
We
of broadband infrastructure” and that the
particular
adopted by
to the
rules
“reasonably
had
interpreted
earlier,
Commission. As noted
the Com-
section 706
empower
to
it to promulgate
promulgated
mission
five rules in the Or-
rules governing
providers’
broadband
(i)
(ii)
banning
der: rules
blocking,
throt-
treatment of Internet
traffic.” Id. at 628.
(iii)
tling,
paid
and
prioritization, 2015
so,
In doing
we also found that the Com
Open Internet
30 FCC Red. at 5647
justification
mission’s
those rules—
(iv)
110;
Rule,
a General Conduct
id. at
they
“that
preserve
will
and facilitate the
136;
(v)
and
an
transpar-
enhanced
‘virtuous circle’ of innovation that
¶¶
has driv
rule,
ency
id. at 5669-82
154-85. Peti-
explosive
en the
growth of the Internet”—
tioners
and Berninger
(together,
Alamo
was reasonable
supported by
and
Alamo)
substan
challenge
anti-paid-prioritiza-
tial evidence. Id. We ultimately struck
beyond
tion rule as
the Commission’s au-
down the anti-blocking and anti-discrimi
thority. US Telecom challenges the Gener-
nation rules on
ground
they
that
al Conduct Rule
unconstitutionally
to common
regulation
amounted
carrier
vague.
reject
challenges.
We
both
without any accompanying determination
A.
broadband
should
regu
be
lated as common carriers. See id. at 655-
challenge
anti-paid-
upheld
58. But we
the Commission’s trans
rule,
prioritization
petitioner Alamo con
parency rule as a permissible and reason
that,
tends
even with reclassification of
able exercise of its section 706 authority,
aas
telecommunications ser
one that did not improperly impose com
vice, the Commission
authority
lacks
mon
obligations
carrier
on broadband pro
promulgate such a rule under
section
viders.
201(b)
See id. at 659.
303(b)
Because our findings
of Title II and section
with regard to the Commission’s 706
Commission, however,
Title III.
au
thority
necessary
were
grounded
to our decision
in
“multiple, comple
rules
uphold
transparency rule,
mentary
those
legal
sources of
find
authority” —not
ings cannot
only
III,
II
be dismissed as dicta.
Titles
and
but
Semi
also section 706
Florida,
nole
of the
Tribe
Florida v.
Act
517 U.S.
Telecommunications
of 1996
(now
44, 67,
1302).
codified at 47
S.Ct.
734
colleague’s sugges-
our
brings
That
us to
is otherwise
or
thority under section 706
a “central
(if,
Order embodies
tion that
the
authority
of
exercise
improper
relied
here,
in that the Commission
paradox[ ]”
and reiterate
held Verizon
in
as we
Act to “in-
Telecommunications
on the
place).
in
first
exists
the
authority
Act
though
even
the
regulation”
crease
only that Verizon was
wrong
argues
Alamo
”
regulation.’
“intended to ‘reduce
was
of the Commis-
question
on the antecedent
&
Op. at 770.
Concurring
Dissenting
We
under
rules
authority
promulgate
to
sion’s
terms,
Act,
aimed
Alamo,
The
are unmoved.
Unfortunately for
all.
706 at
section
“encourage
deployment
the
of new
rapid
on the exis-
precedent
Verizon
established
technologies.” Tele-
au-
telecommunications
rulemaking
of the Commission’s
tence
L. 104-
Act of
Pub.
communications
and thus controls
section 706
thority under
If,
reiterate here
110
as we
reject
Stat
Consequently, we
here.
our decision
(and
agrees), section
partial
as the
dissent
to the Commission’s
challenges
Alamo’s
rulemaking au-
grants
706
authority
anti-paid-
the
and to
section
grant of
thority,
unsurprising
it is
that the
rule.
prioritization
authority might occasion the
rulemaking
Alamo
picks up where
colleague
Our
regulation. And
of additional
promulgation
even if Verizon’s
that,
off,
arguing
leaves
(and
Veri-
if,
was true
as is true here
the existence about
conclusions
zon),
geared
pro-
is
regulation
the new
authority
were
section
Commission’s
of new
deployment
the effective
moting
dicta,
Verizon’s
conclusions about
not mere
technologies such as
telecommunications
authority (including the
scope of that
the
broadband,
entirely
con-
regulation
the
the
reliance
Commission’s
permissibility
objectives.
with the Act’s
sistent
innovation)
cycle”
were
“virtuous
on the
Concurring &
Dissenting Op. at 769.
dicta.
B.
conclusions, however, were
Both sets
“requires
Due
Clause
The
Process
transparen-
necessary
upholding
to our
regulations]
of laws [or
the invalidation
Verizon,
that a
regulations
objectives
is some conduct
there
address
merely because
grasp,”
achieve,
fair
provision’s
would have
within the
meant
clearly falls
are
“supposed re-
require.”
described
regulations
the Court
warning of what
applications”
in all
vagueness
quirement
Mining Co. v. Fed-
Coal
Freeman United
need not
Id. at 2561. We
“tautology.”
aas
Health Review
Safety &
Com-
eral Mine
Johnson,
implications
full
decide
(D.C.
mission,
Cir.
108 F.3d
the General Con-
conclude
because we
1997).
process require-
due
Rule satisfies
duct
here. The Commis-
That standard met
apply
if we do
ments even
Hoffman’s
objectives the
“the
has articulated
sion
challenges.
for facial
elevated bar
Rule
meant
is]
Conduct
[General
addresses two
Vagueness doctrine
achieve,”
complement
as a
id.: to serve
*57
“first,
regulated parties
that
concerns:
and advance
cen-
bright-line
rules
them
required of
so
know what is
should
to
ability
consumers’
goal
protecting
tral
of
second,
accordingly;
preci
may act
they
choosing.
of their
access internet content
necessary so that
guidance are
and
sion
Order, 30 FCC
Open
See 2015
law do not act
an
enforcing the
those
¶¶ 135-37. The Commis-
Red. at 5659-60
discriminatory way.”
arbitrary or
Fox
guide
factors that will
sion set forth seven
Television,
at 2317. Petitioners
132 S.Ct.
un-
of what constitutes
the determination
Rule
that
the General Conduct
is
argue
with, or disadvan-
reasonable interference
it fails
unconstitutionally vague because
of,
ac-
edge-provider
taging
end-user
adequate notice
regulated entities
provide
effects;
control; competitive
cess: end-user
unpersuaded.
prohibited. We are
of what is
innovation,
protection; effect
consumer
at issue
Fox
the circumstances
Unlike
investment,
free
deployment;
or broadband
Television,
2317-18, the Commission
id. at
and
agnosticism;
expression; application
retroactively to enforce a
here did not seek
at
See id.
5661-64
practices.
standard
against
predating the
policy
new
conduct
¶¶
The
articulation
139-45.
Commission’s
Conduct
adoption. The General
policy’s
of
objectives
specification
and
of the Rule’s
We
applies purely
Rule
find
prospectively.
application
inform its
the factors
will
gives sufficient notice to
the Rule
rough
prohibited
area of
“mark out
prohibited
of
conduct
affected entities
conduct,”
satisfy due pro-
which
suffices
forward.
going
DiCola,
Finally, the
are
Nonbinding opinions thus
the General Conduct
Rule.
accompanying
the
cedure
lingering
any potential
in-
advisory processes,
it of
Rule cures
characteristic
deficiency. The Commission
constitutional
Anti-
Department of Justice
cluding the
it would allow
Order that
announced
the
pro-
review letter
Division’s business
trust
advisory opinion
an
companies to obtain
cedure,
model for the
as the
which served
conduct
any “proposed
concerning
Expecting
id.
process. See
Commission’s
rules,” in
to “en
the
order
may implicate
final,
deci-
to issue
irrevocable
Bureau
guidance
to seek
companies
able
proposed
permissibility
sions on
prac
open Internet
of certain
propriety
actual effects of
seeing the
conduct before
them.” 2015
implementing
tices before
anomalous re-
produce
could
that conduct
at 5706
Red.
30 FCC
Open
sults.
¶¶
issued
opinions
will be
229-30.
per-
certain
colleague also identifies
Our
pub
Bureau and “will be
Enforcement
advisory-opinion
in the
deficiencies
ceived
¶¶ 229, 231.
Id. at 5706-07
licly available.”
however,
dis-
Notably,
partial
process.
result,
did
although the Commission
As a
argument
no
General
sent makes
during the
reach a definitive resolution
unconstitutionally vague.
Rule is
Conduct
permissibility
as to the
rulemaking process
Rather,
arguing
Commission’s
prac
Conduct Rule
under the General
arbitrary
zero-rating
usage caps,
of broadband
tices such
reclassification
¶ 151, companies that
at 5666-67
criticizes
partial
see id.
dissent
capricious,
may
pursue
practices
those sorts
seek to
on the
advisory-opinion process
there
advisory opinion
petition
could choose to
that the Bureau
grounds
infraction. The
an inadvertent
avoid
and that the
offering
from
answers
refrain
guidance
prospective
to obtain
opportunity
Concurring &
will be slow. See
process
with “re
provides regulated entities
thus
Insofar as those
Dissenting Op. at 755-56.
DiCola,
uncertainty.”
[remaining]
from
lief
*59
petition-
to
may
germane
seem
criticisms
509;
Hoffman, 455 U.S.
at
see also
77 F.3d
we find them
vagueness challenge,
ers’
498, 102
1186.
at
S.Ct.
if
Bureau’s discre-
Even
the
unpersuasive.
advisory-opin-
that the
argue
Petitioners
an answer
provide
whether to
tion about
opinions
is insufficient because
process
ion
in
problematic
the absence
could be
conduct,
existing
for
cannot be obtained
in
Rule- as to the
guidance
the
further
or
subject
pending inquiry,
to a
conduct
here,
as ex-
prohibits,
kinds of conduct
possibility].”
a “mere
conduct that is
provide
guid-
Rule
such
the
does
plained,
Red. at 5707
30 FCC
Open
advisory-opinion procedure sim-
ance. The
advisory opinions
But the fact that
232.
an
resource available
acts as
additional
ply
or
present
for
conduct
cannot be used
un-
particular
in
companies
instances
to
integral to the
inquiry is
pending
conduct
Moreover,
partial
the
dissent’s
certainty.
encourage provid-
procedure’s purpose—to
pro-
about the slowness
suppositions
proactive
compliance”
to
about
ers
“be
the
of firm
solely from
absence
cess stem
actions
guidance
proposed
obtain
before
issue
the Bureau must
deadlines which
¶ 229. Peti-
them. Id. at 5706
implementing
at this
There is no indication
opinion.
guidance
out that
the
point
tioners also
however,
will fail to
that the Bureau
point,
not bind-
provided
advisory opinions
in
is
timely guidance.
offer
¶¶
The Bureau’s
ing.
at 5708
See id.
end,
advisory-opinion proce-
In the
issuing an
ability
adjust
to
its views after
valuable
expected
provide
can
to
dure
be
however,
negate
advisory
does
opinion,
(even
to
guidance
imperfect)
if
companies
procedure’s
usefulness for
seeking
comply
to
with the General Con-
action ...
Lujan,
at issue.”
504 U.S. at
procedure
duct Rule. The
thereby allevi- 561,
A.
Amendment
not require plaintiffs
does
allege
moving
Before
to the merits of the
they “will in fact”
regulation
violate the
challenge, we must
intervenor
address
Co
order to
injury.
demonstrate an
Susan B.
gent’s argument that Alamo
Berninger
—
Anthony
Driehaus,
U.S.-,
List v.
lack standing
bring
this claim. Because
2334, 2345,
134 S.Ct.
mean that”
subject
to nondiscrimination
and been
its discretion
to exercise
seek
would
im-
to those
by
obligations akin
prohibited
equal
practices
access
explore business
Columbia,
raising any
587
rules without
posed
District
the rules. Ord v.
2009).
(D.C.
Alamo
1136,
Cir.
Those obli-
question.
First
F.3d
Amendment
“inten-
manifested its
carrier’s
adequately
thus
a common
neutral
gations affect
has
argu-
course of conduct
in a
not a carri-
engage
speech,
of others’
tion
transmission
interest,
a constitutional
message.
with
ably affected
of its own
er’s communication
Driehaus,
by [regulation].”
proscribed
but
constitutionality of
each
Because
(internal quotation marks
at 2342
134 S.Ct.
ultimately
on the same
rules
rests
on
omitted).
inability
through
to follow
Its
together.
the rules
analysis,
consider
we
injury in fact
constitutes
intention
provid-
rules
bar broadband
generally
The
review of
purposes
pre-enforcement
for
denying
downgrading
from
or
end-user
ers
the rules.
favoring
and from
certain
access to content
effect,
it. In
access to
by speeding
content
by the
is fortified
That conclusion
to offer
they
require
un
judicial
review
“strong presumption
that transmits data
Act” and
service
a standardized
Administrative Procedure
der the
con-
willing
nondiscriminatory basis. Such a
understanding that “the courts’
on a
review is
pre-enforcement
squarely within
bounds
permit
straint falls
ness
in the
regulation.
claims are rooted
peak
carriage
when
common
at its
traditional
Republican
New York
First Amendment.”
of com
“basic characteristic”
1126,
SEC,
v.
799 F.3d
Committee
State
“requirement
carriage
[to]
mon
is the
(internal
2015)
(D.C.
quotation
Cir.
public indis
out to serve the
oneself
hold[ ]
omitted).
In order “to avoid
marks
(in
Verizon,
criminately.”
internet
speech produced
for
that serve as conduits
internet
provision of
only to the
apply
pro-
Amendment
by others receive First
as to which
carriage,
as common
access
however,
circumstances,
In
tection.
those
man-
and nondiscrimination
access
equal
in indiscrimi-
engaged
are not
the entities
prob-
no First Amendment
present
dates
all
nate,
of
and
neutral
transmission
lem.
of com-
speech, as is characteristic
users’
various
their amici offer
and
Petitioners
instance,
newspa-
both
carriage. For
mon
ser-
distinguishing broadband
for
grounds
companies use a
television
and “cable
pers
carriage,
common
kinds of
vice from other
space
reprint
to
of their available
portion
For
persuasive.
find
we
none of which
retransmit)
(or
of oth-
the communications
automatically
instance,
do not
the rules
some
ers,
providing
the same time
while at
on the
concerns
First Amendment
raise
Angeles v.
City
content.”
Los
original
of
material
transmitted
ground that
Communications, Inc., 476 U.S.
Preferred
speech
to be
happens
through broadband
494,
2034,
488,
743 (internal (1994) quotation speaker. 497 But the 129 L.Ed.2d Order itself excludes such omitted). Supreme Court providers marks from the rules. The Order de- applied therefore intermediate First fines broadband internet access service as (but scrutiny ultimately to Amendment i.e., a “mass-market retail a ser- service”— must-carry upheld) constraining rules vice that is “marketed and sold on a stan- company concerning discretion of a cable “provides dardized basis”—that the capa- carry to on its chan- programming which bility to transmit data to and receive data 661-62, 114 nel menu. See id. at S.Ct. substantially from all or all Internet end- points.” Open Order, Internet ¶ FCC Red. at 5745-46 336 & n. 879. That newspapers contrast to and cable definition, terms, by its only includes those companies, the exercise of editorial discre- providers broadband that hold themselves entirely respect tion is absent with to neutral, out as indiscriminate conduits. subject providers broadband to the Order. may Providers that to opt exercise editori- printed page Unlike with the and cable instance, al discretion —for by offering ac- technology, providers broadband no face only cess to a limited segment of websites limiting range po- such constraints specifically catered to certain content— they tential content can make available to would not offer a standardized service that providers subscribers. Broadband thus are can reach make, “substantially all” required they endpoints. not to nor have tradi- made, The rules therefore would tionally editorial decisions about apply providers, such as the speech Open which to transmit. See 2015 FCC has affirmed. 81,146 See FCC Br. 80 FCC Red. at 5753 n.53. ¶ 5869-70 549. In that With standard broadband internet ac regard, the role of broadband cess, contrast, there is no editorial limi analogous telephone companies: to that of tation on users’ access to lawful internet neutral, they plat- act as indiscriminate result, content. aAs when a subscriber speech forms for transmission of uses her broadband service to access inter and all users. net content of choosing, her own she does course, providers,
Of
broadband
like not understand the accessed content
telephone companies,
capacity
can face
reflect her
provider’s
broadband
editorial
every
constraints from time to time. Not
judgment
viewpoint.
If it were other
telephone
get through
call will be able to
wise—if the accessed content were some
moment,
instantaneously
every
just
at
imputed
provider—
how
to the broadband
at
might
service
websites
be slowed
provider
would have First Amendment
times
of significant
because
network de-
centrally
interests more
at stake. See Fo
But
temporary capac-
mand.
those kinds of
Rights,
rum
Academic & Institutional
ity constraints do not resemble the struc-
63-65,
1297;
Prune-
U.S.
S.Ct.
tural
confronting newspapers
limitations
Robins,
v.
Shopping
Yard
Center
447 U.S.
companies.
naturally
and cable
The latter
74, 86-88,
100 S.Ct.
If provider a broadband nonetheless happens the content an end user were to choose to exercise editorial discre- provider access. Because broadband does instance, by tion—for a limited picking set not—and is not understood users to— carry offering of websites to that ser- “speak” providing when neutral access to experience vice as a curated internet —it might qualify carriage, then as a First Amendment internet content as common *64 justify open no to the the two statutes do not poses bar but
First Amendment adopted. rules the Commission has rules. internet gives of II Application Title Com- VIII. 201(b) § mission'authority apply of the reasons, deny the foregoing we For the 201(b). Act, § Communications U.S.C. for review. petitions interpreta- The Commission invokes a new ordered. So § 201 on paid tion of to sustain its ban But it failed to offer a prioritization. has WILLIAMS, Judge, Senior Circuit interpretation. reasonable basis for that dissenting part: concurring in part basis, such a the ban is not in Absent majority opin- 706(2)(A) much of the agree I with § accordance law. 5 U.S.C. my &(C). constrained to dissent. ion but am must be va- the Commission’s Order
view
of Title II also removes an
Application
reasons:
cated for three
obstacle to most of the Commission’s reli
justification of its
I. The Commission’s
§
ance on
706 of the Telecommunications
of broadband from
switch
classification
1996,
1302, namely any
§
Act
of
U.S.C.
service to a Title II
a Title I information
treating
rules that have the effect of
for want
service fails
telecommunications
subject firms as common carriers. See Ver
(a)
decisionmaking,
of
Its assess
reasoned
Inc. v.
izon Communications
Federal
providers’ reliance on
ment of broadband
Commission,
Communications
740 F.3d
classification disre
the now-abandoned
(D.C.
2014).
But
Cir.
the limits of
record, in violation of its obli
gards the
§
it
inadequate
justify
706 itself render
gation under F.C.C. v. Fox Television Sta
paid prioritization
the ban on
and kindred
502, 515,
tions, Inc.,
556 U.S.
S.Ct.
rules.
(2009).
Further
§ 201. But that
understanding
the Commission’s failure
I agree
majority
with the
that the Com-
*65
obligations
to meet its
under Fox Televi- mission’s reclassification of
in-
broadband
sion,
obligation
explain
above all the
ternet as a telecommunications service
why
a
promotes
such
ban
the “virtuous may
run
any statutory
not
afoul of
dictate
(as
observes)
cycle,”
majority
which
is
in the Telecommunications Act. But
in
primary justification
for reclassifica-
changing
interpretation,
its
the Commis-
tion under Title II. Thus a discussion criti-
sion failed to meet
require-
modest
part
opinion
cal to
I of this
is deferred to ments of Fox Television.
I
part
indulgence
II.
ask the reader’s
for
Fox
that an agency switching
states
pol-
any resulting confusion.
icy
always
must as
“show that there are
good reasons for the
policy.”
new
556 U.S.
I
preface
should
the discussion
ac-
special
1. Broadband Investment —Historical Broad- 2. This uses the (116 million), Capex, Telecom between 2010 and 2014 which band Provider United States $2,951 Association, gives average per https://www. at an household. available were ustelecom.org/broadband-industry-stats/ Between 2006 and there fewer households, average likely investment/historical-broadband-provider- so the is above $3,000 capex. per household. content, competition an supposes past one that firms’ invest- or increase No service, on a of rules should high-speed ap- ment reliance set offer would make immunity regulatory change. give plication appropriate them of Title II more as a agency at least to requires But Fox than it at policy matter now was the time assessment of such reli- make a serious Declaratory Ruling issue in ance. The has failed to do so. Commission Brand X. (b) Changed The Commission major- I I confess do not understand the facts. changes, neither of which
identifies two ity’s view that the section of Fox on very linked to logically seems radical circumstances, above, changed quoted First, it regime. argues the new con- triggered long agency’s so as the cur- now use broadband “to access sumers rent view of the circumstances is sustaina- content, party applications third and ser- Maj. Op. 709. ble. Whatever soundness ¶¶ 330, 346-47. But that is vices.” Order view, inapplicable of such a seems nothing new. In the Order from well over a where, here, agency explicitly in- affirmed, X ago decade that Brand changed “Changed vokes circumstances: “may said that consumers ob- factual circumstances cause us to revise many companies tain functions from our In- earlier classification of broadband operator the cable has not even a whom ternet access service.” Order 330. relationship” contractual instead from (c) reasoning. Perhaps recognizing New provider. their cable internet service De- frailty facts, changed its claims of claratory Ruling Proposed and Notice of the Commission tries to cover its bases ¶¶ 25, Rulemaking, 17 F.C.C. Red. 4798 switching approach to the alternative set (2002) (“Declaratory n. 153 Ruling”). & Fox, a straightforward forth disavowal Second, points empha- the Order to the prior of its interpretation of the 1996 Act that providers put “speed sis on the See, policy e.g., related views. Order reliability separately of transmission from ¶ 360 n. 993. ¶¶ 330, and over” other features. Order justifies The Commission its reclassifica- *68 Again, nothing there is new about entirely in arguments tion almost terms of from provid- these statements broadband provision that such services as DNS and ers, advertising speed who have been for caching, provided by when a broadband Dissenting decades. See Statement of provider, do not turn the overall service (“Pai Ajit Pai to Commissioner Order Dis- Rather, into an “information service.” sent”) 357-58; Dissenting at Statement of in those functions its view fit within O’Rielly Michael Commissioner to Order 153(24)’s exception for telecommunica- put at 391. As Justice Scalia it in an undis- ¶ dissent, systems management. tions puted segment of his X Order 365- Brand (like Thus, providers pizzerias) the “ad- 81. Commission set for itself a quick delivery” classification, as an “advan- highly vertise[] technical task of con- tage! competitors.” over ] 545 U.S. 1007 cluding that broadband internet access 1, (Scalia, J., dissenting). n. 125 2688 S.Ct. could fit within the literal terms of the pertinent statutory sections. And it accom-
At no
the
point does
Commission seri-
plished
That it
the task.
could do so is
ously try
quantify
to
alleged changes
these
hardly
in
the
surprising
view of
broad
speed
in the role or
of internet service
X,
leeway provided by
gave
Brand which
it
if
providers.
changes
Even
there were
internet,
authority
policy judgment
to reverse the
degree
aspects
in these
of the
explain why an in- had made in the decision there under re-
Commission doesn’t
view,
crease in
third-party
Declaratory Ruling.
consumer access to
doing
per-
But in
so the Commission
not of the definitions of “enhanced ser-
service,”
Hamlet without
the Prince —a
vice” and “basic
formed
but instead of
power
by
market
or at least a con-
a choice
finding
regulate
Commission to
stringently,
discretion,
conditions. The
more
competitive
sideration of
cer-
X
Declaratory Ruling
sustained Brand
tain
provided
entities
ser-
that
enhanced
propositions
invoked serious economic
as
vice.
example,
the basis for its conclusion. For
vestment and innovation
Brand X shows that
power,
market
¶ 5,
X,
market.” Id.
Brand
quoted
recognized the
Court
relevance of market
(internal
quo-
U.S. at
Yet in the of by the cations Act as Amended strategy and prior sion contradicted Act, Improvement Broadband Data to offer market explicitly declined (2015) (“2015 F.C.C. Red. 1375 83 Broad- do not ad- analysis: rules power “[T]hese Furthermore, Report”). band 93% of with, dress, designed to deal are not Americans have access to three or more or maintenance of market acquisition mobile broadband which abuse, potential.” power or its real Or- —access margin operate at least at the must fact, see, many der 11 n. 12. as we’ll competition suppliers with of fixed broad- arguments assert policy the Commission’s Implementation band. In re Section power, of market what sound like claims 6002(b) Budget the Omnibus Reconcilia- through any of the fact- going but without Report tion Act Annual and Anal- analysis to sustain gathering or needed of1993: ysis Competitive Market Conditions such claims. Wireless, Respect to Mobile Seven- finding made no on market The Order ¶ 51, Report, teenth 29 F.C.C. Red. 15311 have to power; in order to do so would (2014). III.A.2 Chart questions. of basic Most answer a number below, notably, Figure shown in there 1: fairly large competitors Figure number of American Households’ Access
are markets, most with 74% of American to Fixed Broadband Providers *70 Report, Chart 2. This is like setting Source: 2015 Broadband standard for cars that requires for seven space passengers. The emphasizes how few The Commission suggest data seem to that many American Mbps, have access to 25 but that people unwilling families are to pay the extra to in economic grounded criterion is not be sure that all can members have continu- analysis. example, For Netflix—a service ous, simultaneous, separate high- access to high speeds that demands —recommends connectivity (perhaps some of speed them only Mbps high-definition quality for its conversation?). engage read? in The fact Mbps for its standard defini- service and 3 the Commission strains so much to Netflix, quality. Internet Connection tion justify arbitrary its criterion shows how Recommendations, https://help. Speed out of reality line with such a criterion is. likely explana- A netflix.com/en/node/306. The weakness of the Commission’s reason- why tion for there has not been more ing suggests purpose that its main in set- higher speeds many peo- rollout of is that ting may simply “standard” be to make ple pay price are reluctant to for extra appear that millions of Americans are at Indeed, in- Report it. the 2015 Broadband mercy only supplier, of one best dicates that fewer than 30% of customers two, critically needed access to the Mbps for whom 25 broadband is available modern All bothering world. without actually Report order it. 2015 Broadband conduct an analysis! economic ¶ 1). (including Table 3 and Chart course, Of if the Commission had as- many That provid- markets feature few power, sessed market it would have need- offering Mbps ers service at or above is market, ed to define the relevant to under- hardly surprising. In a competitive world stand the extent to which of providers rapidly improving technology, it’s unrea- speeds different and different services expect sonable to that all firms will simul- compete with each defining other. When taneously breakthrough ser- launch purposes assessing markets for competi- in in everywhere, especially vices a context tion, Department and Justice Feder- potential which more than 70% of the cus- al Trade Commission use the “small but latest, priciest tomers decline to use the non-transitory significant and increase service. (“SSNIP”) price” test. The test tries to The Commission established the 25 a market actor can whether determine Mbps standard its 2015 Broadband Re- hypothetical benefit from a increase ¶ port explanations superficial 45. Its seem price, indicating power. market U.S. De- mar- example, at best. For it relies on the Trade partment of Justice and the Federal keting of broadband materials Commission, Merger Horizontal Guide- touting availability benefits (2010) (“Horizontal Merger lines Guide- Mbps. speeds greater at or than 25 Id. lines”). But the did not con- Perhaps the authors of the Order test, say duct cannot how it such we of a experience have never had the sales- would come out. something more ex- person trying to sell geo- competition Because broadband pensive buyer inquired than the about— simple market share graphically specific, and, coincidentally, lucrative for more data at a national level are of limited value. jus- salesperson. The Commission also large provide But firms that service that 10 arguing tifies the standard consumers, every- albeit not numbers Mbps “participate would be insufficient to where, class, files, likely potential to rank as seem in an online download lim- broadly. these competitors quite time” and to With stream a movie at the same mind, we can look at U.S. subscriber [high-definition] videos.” Id. 39. “[v]iew *71 leading mar- four providers. each of the firms broadband across numbers for Research, 6J/.5,000 ket, Assuming single About Order n. 211. that a Leichtman Quarter person in the Third does not switch more than once in a Add Broadband 2015, http://www.leichtmanresearch.com/ year, that rate of churn means that 18.72% and construct a press/111715release.html, year, of customers switch each Index, which in Herfindahl-Hirschman suggesting quite competition. robust Inter- 1,445 This level is in points. fact is estingly, especially the Commission is hard Department Range of Justice’s for “Un- rate, id., in churn on declines which is, concentrated Markets” —that markets absence of increased concentration or power. firm has market Horizon- where no switching might some new obstacle to well Merger report at 18-19. I tal Guidelines suggest increased consumer satisfaction. the data used to construct the index. below claims, switching To bolster its data (and fact, upward this number is biased points to documents in Commission which finding power), market thus biased toward parties rulemaking conclusory to the make compa- since the data for several smaller purportedly showing assertions that 27 one, grouped only making as if for nies are percent of mobile broadband do consumers if it seem as there is more concentration though not switch “dissatisfied” with their than there in fact is. current carriers. Order 98. Without a Similarly, the Commission scoffs at what plausible measure of “dissatisfaction” regards low turnover customers’ (none offered), meaning- the number is providers, use of mobile service but the less. actually quite rate of turnover looks sub- Table 1: Fixed points average stantial. Broadband Subscribers monthly churn rates of 1.56% in mobile Provider
Subscribers Number Percent Cable Companies 22,868,000 25.55%
Comcast 13,016,000 14.54% Cable Time Warner 5,441,000 6.08% Charter 2,784,000 3.11% Cablevision 1,202,400 1.34% Suddenlink 1,067,000 1.19% Mediacom 712,300 0.80% WOW (WideOpenWest) 496,865 0.56% Cable ONE Other Private Cable Major 6,675,000 7.46% Companies 54,262,565 60.62% Total Cable Companies Telephone 15,832,000 17.69%
AT&T 9,223,000 10.30% Verizon 6,071,000 6.78% CenturyLink 2,415,500 2.70% Frontier 1,109,600 1.24% Windstream 313,982 0.35% FairPoint 281,300 0.31% Cincinnati Bell 35,246,382 39.38% Total Telephone 89,508,947 100.00% Total Broadband Leichtman Research. Source: press articles in the conventional frequent Leichtman Research.
Source: “cutting about fixed broadband customers’ though making any finding never Even reliance on complete the cord” in favor of power, on market the Commission seems interesting suggests it would be an mobile always speak of fixed and mobile almost inquiry. a separately. Of course to de- suggest is intended to requires this. But if the None of the above gree statute could not have made were the least bit serious that the Commission firm in finding every a dysfunction might about the market sustainable actions, every power. relevant market has market provide support for its would (1) points: My simply two. The aim is to make two competition consider between the transportation platform cannot like or is a degree power of market such *73 i.e., assumed, market, the itself aiming as two-sided a business to be acknowledge in its disclaimer of seems “facilitate interactions between members ¶ 12; power, Order n. in market interest groups,” ... two distinct customer (2) reliance on the Commission’s and Schmalensee, & Richard David S. Evans ¶ costs,” switching id. 81 “high consumers’ Organization The Industrial Markets II), (discussed is an part in which below Platforms, with Two-Sided 3 COMPETI- that the have implicit assertion 151, INTERNATIONAL TION POLICY empirical question an poses power, market (2007), which in this case would be in of resolution and is susceptible that is (Two-sided edge providers and users. mar- assertion the Commission’s tension with all, barely are at kets discussed with the power addressing “market or that it is not only any mentions of sort in the Order at abuse, potential.” real ¶¶ 897.) 151 n. & n. 339 n. evidently aimed at circum- In a move at Although the Commission seems one (de- power market issue venting the whole to characterize broadband internet point origin program as a Title II’s spite ¶ market, access as two-sided see id. monopoly regulation), any develops particular it nowhere conse- theory, cycle” “virtuous to wit rests on its taps from that quences classification or “innovations edges at the fact that the scholarly into the vast treatment of the demand, enhance consumer the network subject. question may The answer to the in investments broad- leading expanded light well shed on the reasonableness of that, turn, spark in infrastructure band regulations, the in of the but view Commis- edge.” at the Order new innovations sion’s non-reliance on the distinction we clearly expects policy The Commission go need not there. increases in broad- adopted here cause I do not understand the Commission to investment. band claim that its new rules will have a direct general problem I see no idea. positive effect on in broadband. investment Indeed, captures it seems to me positive expected effect is from the about sector of the important truth which, way eyes, in the Commission’s Though may the subsectors com- economy. encourage rules demand for new rents, prosperity of each pete over content, supply which it believes will prosperity on the depends subsector indirectly spur demand for and investment least it does so unless some others —at in broadband access. technology replaces one wholly disruptive effect, The direct of which the Commis- produc- American wheat of the subsectors. railroads, lines, really speak, unequivo- sion doesn’t seems ers, steamship American cally negative, petitioner globe consumers around the United States and wheat (“USTA”) cycle; in a virtuous de- participate argues. medical Telecom Association doctors, inventors, hospitals, pa- vice 4 (“Individually USTA Pet’rs’ Br. and col- cycle. Inno- participate tients a virtuous lectively, these rules will undermine future sure, vation, especially to be robust by large investment and small broadband application technology the information providers, to the detriment of consum- sectors, relationship a mutual between but ers.”); imposing see also id. Bésides economy. pervades subsectors regulatory compliance, usual costs of uncertainty policy, Order increases There is an economic classification issue reason and the most recent really tack- which both that the Commission does not suggest econometric evidence re- rigorous le: whether broadband internet access is Baker, R. Nicholas mitments of resources: the Bureau is free duce investment. Scott Davis, Measuring will, Eco- change Bloom & Steven J. its mind at and as the Uncertainty, 131 Policy nomic only opinions will be issued at the staff QuaRtekly 2016). (forthcoming level, the Commission reserves its freedom of ECONOMICS Journal economy- (Though paper is focused contrary to act to the staffs conclusions effects, uncertainty and it is policy wide any time. Order 235.1 do not understand would why linkage hard to see shown this to mean that the Commission will seek setting.) apply industry-specific in an penalties against parties acting in reliance *74 fact, acknowledges that the Order itself effect, opinion on an it is still in while but “stymie” to innova- vague rules threaten parties in of a receipt opinion favorable are ¶ tion, proceeds then to Order but they may that on notice be forced to shut adopt vague rules. program down a the minute the Bureau
Here, major uncertainty a source of is reverses itself or the Commission counter- Standard, which for- the Internet Conduct mands the Bureau. providers “unreasonably to
bids broadband affording fragile Besides rather assur- unreasonably or disadvan- interfere with ance, advisory process promises the to be access to internet content. tage” consumer “[Sjtaff will have the slow. discretion to 8.11. All of these terms— C.F.R. parties requesting opinions, ask as well as “interfere,” “unreasonably,” and “disad- parties may other have information vantage” vague ones that increase —are request may relevant to the or that be Indeed, uncertainty regulated parties. for conduct, impacted by proposed the for ad- policy the FCC itself is uncertain what the ¶ Id. ditional information.” 233. Given means, as indicated the FCC Chair- possible requests these information from man’s admission that even he “do[esn’t] ones, parties, including various adverse proscribed. really know” what conduct is unsurprising is that the Commission is un- Conference, February 2015 Press commitment, willing give any to timeliness (165:30- http://goo.gl/oiPX2M available at explicitly “declin[ing] any to establish firm 166:54). announce a The Commission does [requests advisory to rule on for deadlines “nonexhaustive list” of seven factors to be response or opinions] issue letters.” Id. assessing providers’ practices, used in in- ¶ 234. control,” cluding pro- “end-user “consumer tection,” innovation,” palliative procedures The effect of these “effect and “free ¶¶ may very large be for the expression.” Order 138-45. But these considerable vague unhelp- providers. They surely factors themselves are and service are accus- resolving uncertainty. ful at having lawyers up, tomed to their suit in angles, participate pro- research all the palli- an effort to The Commission made ceedings given after notice has been to all negative ate the effect of its “standards” potentially adversely parties, affected by establishing procedure obtaining a for receive, stretch, green a after an indefinite ¶¶ It advisory opinions. Order 229-39. del- fry, light or a red one. For smaller egated authority opinions to issue such provider service firms whose internet Bureau, thereby perhaps its Enforcement likely depend on innovative growth is general mindset on how telegraphing the sort (precisely business models to be broadly prohibitions it intends its likely run afoul of the Commis- seem complete read. But the Bureau has discre- II.B), prescriptions; part broad see sion’s provide an answer at tion on whether advisory Further, costly procedure will given all. advice slow Order pre- to those provide longterm provide only com- a mild antidote will basis for (the supposition spe- of course that these new rules negative effect. This scriptions’ regulation’s be- general pattern general) cific will cure some mate- fits than for small firms ing more burdensome problem, rial will avert some threat larger spread regu- firms can large, as burdening either is now internet over more units of out- lation’s fixed costs reasonably expected could be to do so ab- Crain, Crain & W. Mark put. See Nicole V. Why, sent the intervention. Commission’s Regulatory Costs on Small Impact, know, precisely, the observer wants to has (2010). im- evaluating And Firms 7 repudiated policy the Commission broadband, on investment which pact judgment it made “broadband assures us the Order will regulato- should exist in a minimal services stimulate, surely quality relevant as well ry promotes environment that investment quantity. competitive and innovation market”? Further, vague- the breadth and given Declaratory Ruling 5. The answer evi- standards, many of the acts for ness of the dently turns on the Commission’s conclu- driven to seek advice will which firms are sion that in- have *75 As head of the likely picayune. be rather (or dulged indulge) will in behavior that in proved Aeronautics Board its what Civil cycle.” threatens the internet’s “virtuous waning days, got Alfred Kahn a to be its Indeed, majority points to the need to night in the middle of the from an call reclassify that the broadband so Commis- trying appli- airline to find out whether its sion promulgate could the rules as the “ sheep Virginia from to transport cation to ‘good Commission’s reason’ for [its] “The matter England approved. had been 707, Maj. in change position,” Op. and sheep were in urgent, was because only indeed its reason. But the record Kahn, Dudley, heat!” E. Susan Alfred multiple thinking contains reasons for 1917-2010, Remembering the Father of rules will Commission’s new retard Deregulation, 34 REGULATION Airline cycle,” rather than enhance the “virtuous (2011). 8, internet know The we wasn’t and the Commission’s failure to answer requesting ap- firms bureaucratic built objections those renders its decision arbi- proval every move. trary capricious. I and now turn to those Furthermore, § ap- 47 U.S.C. which arguments, first in the context of 47 U.S.C. providers they once are plies to broadband II.A) §§ (part and then in the II, subject uncertainty to Title increases § (part context of 706 of the 1996 Act yet “[a]ny person more. Section 207 allows II.B). claiming damaged by to be common complaint ... either make to carrier [to] II ..., ... bring suit for recovery damages Having reclassified broadband service for which may II, common carrier be liable under such under Title the Commission has relied provisions chapter.” of this In other specific provisions on two to sustain its words, exposes 201(b) reclassification broadband § actions: of the Communications supposed- to the direct claims of Act, 201(b), § 47 U.S.C. and 706 of the ly injured parties, increasing further un- Telecommunications Act of 47 U.S.C. short, certainty and risk. the Order’s § petitioners 1302. The contend that nei- probable direct effect on investment in ther provides adequate support for the unambiguously negative. broadband seems Furthermore, Commission’s actions. mentioned, just effect, argu- the Commission’s hoped-for
As to the indirect positive depends directly idea that it will be on the ments here bear on the reason- justify it- of the reclassification decision derstood distinctions rates. ableness Kahn, Regula- self. Alfred E. The Economics of (different (1988), costs), tion at 63 63-64 A (different demand, elasticities as would (con- Alamo Broadband Inc. and Petitioners sensitivity), be reflected time 88-94 Berninger (“Alamo-Berninger”) ar- Daniel gestion). The Alamo-Berninger brief cites properly if Title II could gue that even be chairman’s FCC observation Con- service, that Title applied gress, nothing “There is in Title II that authority pro- no gives the Commission prohibits paid prioritization,” Hearing be- rate distinctions. Alamo- hibit reasonable fore the Subcommittee on Communications Berninger Berninger Br. 17-19. is a would- Technology and of the United States edge provider working be on new technolo- Representatives House of Committee on gy provide that he believes could much Commerce, Energy Technology and if telephone only enhanced service—but he Commission, the United States House Vid- jitter, that “latency, could be assured 20, 2014), (May eo at 44:56 available packet loss the transmission of com- http://go.usa.gov/3aUmY, but that need not quality munication will threaten voice [not] important, detain More general princi- us. destroy proposition the value utility ples public regulation rate have high-definition service.” Declaration of always allowed reasonable rate distinc- 13, 2015, Berninger, Daniel October at 2. tions, many determining factors rea- ready pay He is for the assurance of Kahn, sonableness. Reg- Economics of service, and asserts that the *76 high-quality ulation, that, (noting very at 63 “from the paid prioritization ban on Commission’s beginning, regulated companies have been will obstruct successful commercial devel- permitted to discriminate in the economic opment Berninger ap- of his innovation. sense, charging different rates for various small, exactly of inno- pears be sort services”). adopted by But the- ban edge provider vative that the Commission prohibits Commission rate differentials for designed claims its Order is to assist. priority handling regardless of factors that the words of Shel Silverstein’s children’s would render them reasonable under help song, “Some kind of is the kind of understandings. Although above the Order help we all can do without.” waiver, it provides possibility for the course, purposes, ques- For our cautions, “An applicant seeking waiver re- whether, Alamo-Berninger is as the tion high lief under this rule faces a bar. We argues, brief the section of the statute only in granting such relief ex- anticipate II, invoked the Commission under Title ceptional Order 132. cases.” 201(b), ban, namely § authorizes the or; precisely, more whether the Commission Second, discussing in a case the terms any interpretation offered reasonable has “unjust” and “unreasonable” as used 201(b) encompass §of that would the ban. 201(b) 202(a), § § and its fraternal twin “open[ that those words a rather ] we said by way A points number of back- play agency area for the free large First, ground: nothing sug- the Order 415, FCC, v. F.3d discretion.” 352 gests paid prioritization ban al- Orloff (D.C. 2003); 420 Cir. see also Global Cross any exception lows for rate distinctions Telecomms., v. Tele ing Metrophones Inc. transmission, differing based on costs of comms., 45, 1513, Inc., 550 127 S.Ct. U.S. time-sensitivity material transmit- (2007) ted, (recognizing 167 L.Ed.2d levels at the time of congestion or transmission, authority un- broad to define historically all variables Commission’s 201(b)). § principal under and 202. Its discussions of the practice^]”
“unreasonable concept have occurred in the context of not infinite. “large” But is 202(a), “any unjust § which bars or unrea- Third, under review in in the order Or- in charges, prac- sonable discrimination § focused on 202 but the Commission loff ...,” 201(b), § tices etc. Section relied on it § summarized mentioned 201. We here, very is similar just practice “if a is and rea holding that but does not include the word “discrimina- just § it must also be sonable under (“All 201(b) § charges, practices, tion.” Orloff, § under 201.” reasonable and classifications, regulations and for and in v. Air- (citing F.3d at 418 Orloff Vodafone connection with such communication ser- Licenses LLC Verizon Wire Touch d/b/a vice, reasonable, just shall be (2002)(“De less, 17 F.C.C. Red. classification, charge, practice, reg- such ... the same defenses to offer[ ] fendants unjust ulation that or unreasonable is 201(b) they claim as do to the the section ....”) unlawful declared be The Order’s 202(a) reject claim. OrlofPs sec section We 201(b) language explaining §of its view 201(b) 201(b) noted, tion claim. As section difference, doesn’t mention this so evident- ‘unjust only or unreason declares unlawful ly the interpretation Commission’s doesn’t practices. common-carrier For the able’ rely on it. [regarding section reasons discussed The Commission’s decisions under 202(a)], we find Defendants’ concessions plainly recognized permissibility have reasonable.”)). practices to be of reasonable rate differences. In In re (at Fourth, the least for the Commission Dev. Operational, Spectrum Tech. & moment) provide allows ISPs consum- Fed., Requirements Meeting State & for differing differing levels of service at ers Safety Agency Local Pub. Commc’n Re- brief, says in its “The Order prices. As quirements Through the Year regulate example, does not rates —for (2000), example, F.C.C. Red. 16720 for (and do) can some issued an declaring order reasonably charge consumers more for premium charges prioritized emergen- faster service or more data.” Commission cy unjust mobile services were not *77 (for now) Br. The statement is true In full with the unreasonable. usual accord But the vis-a-vis rates to consumers. ban understanding regulation, of rate the Com- paid prioritization obviously regulates said, mission “Section 202 ... does not paid by edge providers; it rates —the rates prevent treating carriers from users differ- insists that the rate for as- incremental ently; only unjust it bars or unreasonable quality or enhanced of service must sured may discrimination. Carriers differentiate Although I cannot claim that be zero. among long users so as there is a valid parties’ exposition- technology of the (em- doing feason for so.” Id. at 16730-31 me, it clear to seems evident that that, original). It phasis reasoned “in quality delivery a affecting factors situations, emergency non-[emergency] only consumer include whatever ser- ‘similarly customers are not simply situat- (and go into promised vice characteristics [emergency] personnel” ed’ with because delivered) at the consumer end speed but ability of “the to communicate [the latter] along the route. “Paid also circumstances delays during emergencies without is es- below) (discussed peering” would be unin- Id. at 16731. Even sential.” when Com- telligible if it were otherwise. engages regula- mission full-scale rate (which mind, background points With these I purports tion it to eschew in the Order), turn to explicitly recognizes the Commission’s treatments it that reason- §§ “unjust” price appropriate under 201 able differentials are “unreasonable” 201(b), § in question says nothing where the services are unlike. which about dis- See, crimination, e.g., 202(a), § In re AT&T Communications rather than which 12, only Revisions to F.C.C. No. 6 F.C.C. does. The I reason can discern is that Tariff ¶ (1991). interpretation § Red. 7039 8 the Commission’s established, clearly more was obvious- Tellingly, prioritized emergency ly didn’t ban reasonable discriminations. decision the mobile services Commission Accordingly, the jumped Commission over § did not see fit to discuss 201 at all. The 201(b), §to about it which had said rela- principle underlying the Commission’s un tively little. § derstanding of 202 was a broad one— that allowance of differential rates based the passage where the Order claims public 201(b), § on “valid reasons” advances the in support from ap- explains any pears terest. the lack of to acknowledge Whatever it has never § reference to interpreted Commission’s rec support section to ognition that differential rates were not sweeping quality-of-service ban on premi- inherently unjust ums, but, or unreasonable under speaking of its anti-discrimina- § requires, as a minimum of (evidently coherent tion decisions both under 201(b) reasoning, explanation 202(a)), §§ that it offer some says it that “none of §in why pre precedents the same words 201 should those practices involved clude such differentials. See v. Vo the Commission has twice found threaten Orloff AirTouch Licenses LLC to create develop- Veri barriers to broadband d/b/a dafone Wireless, zon 17 F.C.C. Red. ment should be removed under sec- (finding justness reasonableness and tion under 706.” Order 292. This is an odd form § 202 to be sufficient for finding statutory interpretation. the same Finessing any 201). under Of this is no more effort to fit agency course action within the than a recognition principle, statutory language, only of the prevail claims that the ing throughout practice the era of federal regula banned threatens broadband de- just works, tion of natural monopolies, ployment. Maybe theory that it is but it receiving and reasonable that customers can do only by sturdy showing so of how speed reliability extra pay posed should extra the banned conduct a “threat.” As see, for it. A pervasive example classic and is we’ll made Commission has no gas the differential in natural showing, sturdy transmission such let alone a one. interruptible between firm and service. Indeed, I can find no indication—and See, e.g., Fort Pierce Utilities Auth. of presents none—that FERC, City Fort Pierce v. 730 F.2d agencies regulating monopo- natural (D.C. 1984). 785-86 Cir. lies, such as Interstate Commerce *78 Commission, I simply Energy Regulatory note that the ban here is Federal on rates, Commission, in normally issue ad- or Federal Communications differences statutory language barring attempted dressed under Commission—has ever to use “just discrimination. So it is' at least anomalous its mandate to assure that rates are the here on and reasonable”3 to invalidate a rate dis- Commission relies See, 1887, e.g., prohibited be 3. Interstate Commerce Act of such service is and declared to (“All Act, charges any unlawful.”); § 24 Stat. made for Federal Power 16 U.S.C. made, service rendered or to be rendered in the ("All charges § de- 824d rates and transportation passengers property of or manded, utility by any public or received for aforesaid, therewith, or in connection or for or in connection with the transmission or sale receiving, delivering, storage, handling energy subject jurisdiction of electric to the of property, just; of such shall be and reasonable Commission, regulations and and all rules every unjust charge and and unreasonable conclusion unreasonably dis- serts Commission’s “[t]he that was
tinction century paid prioritization allowance of would over a of criminatory. uproot [that To explana- disadvantage types edge provid- certain of with so little interpretation —and supported by extraordinary. well-established truly ers] tion—is literature, body including of economic §of 201 the Com- interpretation In its working papers.” Commission staff Order a “threat” to the its claim of mission rests is, put simply, This claim to false. 126. theory mentioned above: cycle” “virtuous points to four economics The Commission edges of the network “innovations articles, supports none of which the conclu- demand, leading to ex- consumer enhance rates, that all in even sion distinctions in broadband infra- investments panded service, in when based on differentials will that, turn, spark in new innova- structure aggregate welfare afforded reduce ¶ 7, cycle and the edge,” at the Order tions Indeed, a set of economic transactions.4 on and on. repeats plainly didn’t look at the is what underlies the key question articles. None of them even addresses paid prio- that a ban on idea Commission’s price distinctions calibrated to variations content, giving to more ritization will lead service; quality they rather are devoted (or, re- cycle spin equivalently, extra of price to the sort differences addressed by paid ducing drag prioritiza- caused Act, by the Robinson-Patman U.S.C. tion). way In what will an Order 7. targeting sellers who sell the same prioritization paid ban on across-the-board good, quality of the same at different (and edge provider content thus increase say that prices. Three some circum- demand)? Or, putting it terms consumer against price stances rules differentials “threat,” paid prioritization does of a how (to repeat, can be beneficial the articles pro- flourishing edge threaten the against differentials not re- speak rules (and community thus consumer de- vider service), quality they lated to not that mand, deployment)? and thus broadband paper, are The fourth still with- beneficial.5 see, fact, as we’ll Commission’s sphere non-quality-related price paid prioritization has del- hypothesis distinctions, is still worse for the Commis- any not to eterious effects seems rest sion, that “a concluding price flat ban” on Further, analysis. the Order evidence or (even assuming no differen- discrimination critiques and alternatives. fails to address quality, tial in cost and unlike the Commis- rule) by the sion “could have welfare con- support I look first to the offered adverse analysis sequences,” for its claim. The Order as- and that “the does not pertaining affecting or to such rates or Degree Input Price Discrimination in Markets: reasonable, just charges be Output Welfare, shall 90 Am. Econ. Rev. 240, (“Third charge just rate or that is not and rea- Degree such Price Discrimi- (2000) 240-246 unlawful.") nation”). hereby declared to be sonable is Katz, Katz, ("uni- Discrimination, 4. Michael L. at 1454 Price Discrimination and Price pricing price form is more efficient than dis- Competition, Monopolistic 52 Econometrica (1984) (“Price crimination when the number of uninformed 1453-71 Discrimina- Katz, Katz, small”); tion”); Michael L. consumers is Pricing, Output and Wel- Non-Uniform *79 ("there improving may scope at 37 be fare, 50 Rev. for Output Monopoly, and under Welfare 37, (1983) through regulation” performance 37-56 market (“Output Econ. Stud. Katz, Yoshida, discrimination); Degree price Michael L. Welfare"); Third The Ef- Welfare ("[i]n general, Discrimination, at 244 we Third-Degree Price Price Discrimination in fects of Intermediate Good required reg- Markets, expect” the condition for 77 Am. Econ. Rev. cannot Yoshida, true). 154, (1987); improve welfare to be 154-167 ulation to Yoshihiro Third Series, (1986), implementable reveal whether there is No. 18 is an interesting regulation form of that welfare- would be possible consideration of the welfare losses Katz, improving.” Effects, The at may that follow from pricing that collects a Welfare 165 . high proportion of fixed costs from usage fees. As with the Atkinson & Barnekov no probably
It is coincidence paper, its connection paid prioritization articles, author of three of these Michael unclear, Katz, opinion is and the Commission’s a former chief economist at the Com- mission, filed a declaration in this writers have made no effort even to identi- proceed- connection, ing opposing type regulation fy a explain much less it. In broad, adopted overly in the Order as es- discussing possible a anti-discrimination pecially given the behavior banned rule, paper posits one under which a responsible only was at most for hypotheti- firm may adopt “any combination of two- Protecting Promoting cal harms. Con- tariffs, discounts, part volume and so forth sumer Benefits Derived from the internet: required but is to offer the same set of Katz, July Declaration of Michael L. prices to all customers.” Id. at 44. Al- (“Katz Declaration”), at 2-3. I will though it isn’t clear that the paper gives critique discuss his and the alternatives he rule, an endorsement to such a such an shortly. offers endorsement support would not the Com-
The points Order also to two old Com- quality-of-service mission’s ban on based mission reports support it claims its differentials. argument. They Order 126 n. 297. do not. I apologize taking for the reader One, Jay M. Atkinson Christopher & C. through parade this of irrelevancies. But it Barnekov, Competitively A Ap- Neutral these that the Commission has
proach Interconnection, to Network OPP analytical staked claim to support its Series, Working Paper No. at 15 paid prioritization poses the idea that a (2000), deals with network interconnection deployment. serious risk to broadband pricing and a keep” advocates “bill and point episodes The Commission does (“under system split equally which carriers supposedly supporting paid its view that solely those costs that are incremental to prioritization significant constitutes interconnection, all remaining and recover ¶ 69, is, threat. Order 79 n. 123. It how- customers,” costs from own their accord- ever, merely pointing to a of epi- handful ii). ing report, to the id. Unlike the among large sodes number of trans- cited, articles does address variations by many actions conducted service, quality only argue but Furthermore, providers. neither in this ability provider of one to lower its Order nor in the 2010 Broadband quality doesn’t undermine the case for “bill ¶¶ 17915-26, 20-37, keep” quality-lowering because the Red. at' cit- 25 F.C.C. provider will “the impact bear main itself.” support, ed this Order as Order at 20. an interesting proposition, Id. This is through n. sift does but, truth, assuming it doesn’t connect im- any episode the evidence to show that in any way paid obvious to a flat ban on to max- paired ability of the internet prioritization; if the Commission knows a flour- imize consumer satisfaction and the connection, way to make that it hasn’t ishing edge providers aggregate, revealed it. particular edge to harm opposed whether, it show if second, provider. Nor does Brock, Telephone Gerald W. harm, a far narrower rule there was Pricing to Promote Universal Service and (For Freedom, problem. Working Paper Economic OPP would not have handled *80 group edge pro- throt- as a small innovative provider a broadband example, if —or subgroup. the as a provider’s content at viders edge tled an provider pro- as the broadband same time no- gets Having It worse. set forth the content, assuming no vided similar then — poses a threat paid prioritization tion that against for action justification grounds — deployment to broadband much so as —so could be discerned. Com- such behavior justify jettisoning interpreta- historic 616(a)(3) § the Communications pare 201(b), 202(a), resting §§ tion of and 536(a)(3).) Act, his dissent U.S.C. conclusory parties assertions of notion on Pai, using to the Commissioner scholarly irrelevant material —the and feistier than would suit a perhaps terms respond to criti- then fails to court, summarized it as follows: in the rec- proposed cisms and alternatives continuing of these The evidence ord, in clear violation of the demands of none; anecdote, all threats? There is it’s Farm, 43, 51, State 103 S.Ct. U.S. hysteria. A and small ISP hypothesis, allegedly blocked VoIP North Carolina in the I start with comments record Bit- ago. capped a decade Comcast calls explaining problems the that the ban on upload congestion traffic to ease
Torrent paid prioritization could cause the Face- eight years ago. Apple introduced suggest broadband market. The comments first, cellular networks Time over Wi-Fi by effectively banning pricing struc- and stale Examples picayune later. this people some sub- tures could benefit story enough aren’t tell coherent (and stantially, impose but minimal seem- neutrality. bogeyman about net nev- others, justifiable) on the ingly quite costs easy. er had it so paid prioritization replace ban on could Judge Pai Dissent at 333. And Silberman’s cycle cycle, a vicious in which virtuous episodes mar- observations about regulatory overreach reduces the number precursor order va- support shalled to available, quality reducing services cated Verizon applicable today seem as broadband, in turn demand for reduc- as then: ing the content and services available ow- was to locate ing
That the Commission
able
to the reduced number of users. In-
only
potential examples
four
of such con- vestment would suffer as the number of
(or
is, frankly, astonishing.
grow
In such a
declines
fails to
as it other-
duct
users
have).
where,
notes,
industry
wise would
large
Verizon
connections are
be-
billions of
formed
example,
joint
For
comment
edge providers
tween users and
each
International Center for Law & Economics
think
year, one
there should be
would
paints
picture
TechFreedom
examples
just
ample
type
about
which innovation and investment could be
of conduct.
substantially
paid
harmed
the ban on
Verizon,
(Judge
Perhaps the Commission way to going out of its despite paid this. But ment” for rules other than the ban *82 217.) Katz that were irrele- rely papers prioritization. Order vant, deigned to never Generalizing point made Profes- expressed he about concerns reflect on the capacity Hurwitz: Unless there is for sor and consumer welfare. harm to innovation packets go speed all at the same and for
Furthermore,
single-minded
in
focus
speed
optimal
packets
that
to be
for the
(and
“edge”
only
at the
some
on innovation
speed
important,
for which
is most
there
that),
at
the Commis-
kinds of innovation
(1)
(2)
prioritization
must be either
iden-
arguments
process
that the
of
ignored
sion
go
for all traffic. If all
at
speed
tical
service is itself one
providing speed,
optimal
same
then service is below
innovation,
only
technology
in
where
for
packets
speed
impor-
for the
which
is
strategies
in
and business mod-
pricing
but
If
and
unpaid prioritization,
tant.
there is
els,
maximization of the
can contribute to
pack-
it
to the senders of
is made available
A
of
internet’s value to all users.
comment
prioritization
important,
ets for which
point:
Hurwitz makes the
Professor Justin
(1)
get
those senders
a free ride on
then
suggests that
tradi-
Current
research
charged
part
packet
costs
to other
send-
best-effort,
tional,
non-prioritized rout-
(2)
ers and
those senders have less incen-
may yield substantially inefficient
ing
improve
packets’ technological
tive to
their
may
resource. It
well
use
network
capacity
capacity.
to use less transmission
out to be the case that efficient
turn
paid prioritization
Allowance
eliminates
streaming video re-
routing of data like
unpaid prioritization.
those two defects of
prioritization.
It
quires
router-based
prominent
paid
critic of the ban on
One
routing
that
may even turn out
efficient
Brennan,
prioritization Timothy
—
necessarily
data is
streaming
video
chief economist at
Commission’s
the time
may
harmful to other data —it
not be
initially
production,
Order was
who
implement
single
a
network
possible
has called the rules “an economics-free
efficiently
that
handles data
architecture
zone”6—offered
alternative that ad-
differentiated characteristics.
If
argument
these concerns. His
dressed
case,
may certainly
it
this is the
then
be
If
goes
potential
as follows.
some
content
that
“commercially reasonable”
stream-
entry
providers might refrain from
for fear
ing
providers pay
premium
video
for
poor
might
advantageous
that
service
stifle
data,
handling
of their
efficient
(thus
interactions with other sites
thwart-
for
compensate
negative
order to
ing
cycle),
the virtuous
that fear could be
impose
externalities
those uses
assuaged by requiring that
min-
ISPs meet
upon other users and uses.
quality
imum
standards. Brennan writes
(Gus) Hurwitz at 17
Comments of Justin
2014). (Professor
18,
may
(July
Hurwitz
quality
a minimum
standard does not
mistakenly operating on the
have been
quality
above-minimum
preclude
ser-
belief that the Commission would allow for
pricing
vices and
schemes that could
“commercially
practices.
reasonable”
improve
improve
incentives to
broad-
rejected
ultimately
a ban on
networks
facilitate innovation
band
and
“commercially
practices,
unreasonable”
development
marketing
created no
Order
but
defense
Moreover,
audio and video content.
commercial
for
of its
reasonableness
quality
an ex-
minimum
standard should reduce
bans. The Commission did create
http://www.wsj.com/articIes/economics-
6. See
free-obamanet-1454282427.
impediments
conges-
And the
Lyons
the costs of
Comments of Daniel
Net Neutrality and Non-
necessary
management
(July
tion
under net
29, 2014),
discrimination Norms in Telecommunica-
neutrality.
tions,
(“Lyons
1029 Aaiz. L. Rev. 1029
Comments of International Center
Comments”)
at
cite Thomas
Ha-W.
Law & Economics
TechFreedom
zlett & Joshua D. Wright, The Law and
see also id. at 47. This is a
48;
proposal
Neutrality,
Economics
Network
based on the notion
consumers value
IND. L. REV.
for the
(2012),
things prevented by
but
argument that there is much to be learned
(perhaps
offers an alternative
solves a
*83
law,
from antitrust
which treats vertical
hypothetical) problem at which the Order
arrangements on a rule-of-reason basis. To
(relieving
is aimed
content
argument
the
that antitrust enforcement is
ensuring
fear discussed above and thus
the
costly, time-consuming
unpredictable,
and
cycle),
significant
virtuous
without such
Wright
Hazlett and
acknowledge
point
the
costs as those the commentators discussed.
argue that it
responsible
but
has been
for
response.
The Order offers no
genuine
some of the
triumphs
the tele-
drag
Notice that
the
on innovation to
industry,
communications
such as the
which these commentators allude has a
break-up
Lyons
of AT&T: The
submission
cycle
clear adverse effect on the virtuous
finds
Department
confirmation
the
of
sure,
invoked
Commission. To be
as
Justice’s Ex Parte
Submission
the general
edge
a
investment at the
.matter
proceeding, arguing that
up
“antitrust is
to
provider and the
will mutually
ISP level
be
protecting
the task of
from
consumers
ver-
reinforcing, but sound incentives for inno-
tical
that
competition.”7
contracts
threaten
provide
vation at both levels will
more
The
given
silent treatment
to three of its
to
per
benefit enhancements
consumers
former chief
apt sign
economists seems an
dollar invested.
of the Commission’s
it
thinking
pursued
already
I’ve
noted with bemusement the
through
its forced march
economic ration-
disregard
argu-
Commission’s utter
of
ality.
ments
of its former chief econo-
two
mists,
Brennan,
justifica-
Michael Katz and Tim
The Commission does invoke
cycle”
were submitted into the record. Lest
tions other than the “virtuous
to
understated,
I
point
support
example,
be
should also
its Order. For
it asserts
third,
yet
... overwhelmingly sup-
mention
views of
a
record
“[t]he
Hazlett,
appear
ports
proposition
Thomas W.
also
several
the Internet’s
CenturyLink points
ability
submissions.
critical
openness
to Thom-
is
to its
to serve as
Weisman,
speech
as W. Hazlett
Dennis L.
a
for
platform
engage-
and civic
Market Power in U.S. Broadband
ment,”
Indus-
for which it cites
from
comments
tries,
Organiza-
organizations.
three
77 & n. 118.
Order
38 Review of
Industrial
(2011),
however,
proposition
attempt,
tion for the
that The Order makes no
to
rules,
pro-
explain
particular
there is no evidence that broadband
how these
and the
§
earning supra-normal
language
goals.
viders are
rates of
of
relate to these
A
may
why
openness
return. This
be another clue
raw assertion that the internet’s
promotes
speech,
general
clear of
free
in a
Commission steers
claim of
while
(at
surely
as-
power.
market
sense
true
least on some
Lyons
(quoting
7.
at 1070
Thomas
Competition:
Comments
ic Issues in Broadband
A Nation-
Future,
Wright,
&
D.
W. Hazlett
Joshua
al
Plan
Our
Ex Parte
Law and
Broadband
for
Department
45 Ind. L.
Neutrality,
the United States
Economics
Network
Submission
of
(2010).
(2012)).
Justice,
See also In re Econom-
sumptions about
ness”),
reasoning
support A
Plan
Fu-
enough
National Broadband
Our
ture,
prioritization.
Ex Parte Submission
the United
paid
a ban on
Justice,
Department
States
2010 WL
Further,
any claim that
having eschewed
(2010).
possess
power,
it
market
found the ISPs
(“[T]hese
Second,
finding
rules do not
even a valid
of market
Order
11 n.
with,
address,
designed
power
step
would not
much of a
to-
and are not
deal
be
validating
market
a
acquisition
paid prioritiza-
or maintenance of
wards
ban on
abuse,
years
power
potential”),
linking
Eight
or its
real or
tion or
of “market-
Trade
Commission invokes
kind
before the
Federal
Com-
argument fundamentally
study
publish-
ordered a
power-lite.” The
mission
staff
occupy
“gatekeeper”
Connectivity
role
ed the results. Broadband
is that ISPs
Policy,
may
Competition
use that role to block content
Federal Trade Com-
(2007),
might injure
They might
https://www.
them:
mission
available at
whose flow
prioritize
ftc.gov/sites/defaulVflles/documents/
to do this in order to
their
want
provid-
reports/broadband-connectivity-
other content
content over that of
*84
(or
purposes
competition-policy/v070000report.pdf.
other
inconsis-
As
perhaps
ers
net).
later,
they
report
of the
And
DOJ
non-com-
tent with efficient use
with
was
might
impedi-
power
able to do this because
mittal on the issue of market
but
be
(1)
switching
ments to customers’
will enable
reviewed
ISP incentives to discriminate
others’ content
not to
them to restrict
without
and
discriminate under conditions of
(2)
72-75,
power,
in the form of custom- market
at
incurring
penalty
id.
variet-
¶¶
paid prioritization, assessing
er cancellations. Order
79-82.
ies of
their
benefits,
risks and
id. at 83-97. Instead of
reliance on market-
The Commission’s
building
a nuanced assessment
on the FTC
ways.
in a
power-lite
puzzling
is
number of
(or
paper
staff
for that matter contradict-
First,
fact—the
primary
the Commission’s
it),
ing
adopted
pro-
the Commission
a flat
switching
begs the
existence of
costs—
hibition, paying no attention to circum-
question
why
of
the Commission did not
specific
stances under which
varieties of
look
other forms of evidence for market
paid prioritization
(again, assuming
would
Guidelines,
power.
Merger
Horizontal
See
power) adversely
favorably
market
or
af-
delays
of
(saying that “the costs and
fect the value of the internet to all users.
switching products” are taken into account
evaluation,
In the absence of such an
in implementing
hypothetical monopo-
scathing
paid prioriti-
terms
Order’s
about
test).
list
If the
one
Commission relies on
zation,
justification
used as a
for the other-
possible
power,
source of market
one won-
unexplained
wise
switch in interpretation
it
not seek data that
why
ders
would
would
¶
201(b),
§of
fall flat. Order 292.
sources,
pull together
range
the full
may
It
including
Finally,
argument
market concentration.
be
the Commission’s
Department
paid prioritization
largely
that the
of Justice’s submis-
would be used
¶
incumbents,”
Inquiry
by
sion in the Notice of
that ultimate-
“well-heeled
Order
(so
n.286,
ly
only
factually
led to the
In re A
ungrounded
see
National
is
Future,
Plan
24 far
appears)
Broadband
Our
but contradicts the Com-
(and
(2009),reviewing
reasoning
F.C.C. Red. 4342
some of mission’s decision
be-
decision)
conclusion,
reaching
the data but
no
led hind its
not to
apply
paid
to believe that a
prioritization
types
paid prioriti-
serious
ban
empty.
come
inquiry
up
caching technology.8
would
In re Eco-
zation
use
arbitrarily
capriciously
8. Since I would conclude that the Commis-
sion acted
in its
Caching
storage
frequently
is the
ac-
shaping, prioritization, resource reserva-
tion,
cessed data in a location closer to some
or other forms
preferential
traffic
provider
users of the data. The
(a)
management, either
in exchange for
(in
caching service
some contexts called a
otherwise)
(monetary
consideration
or
network)
delivery
content
thus increases
(b)
party,
from a third
to benefit an
speed
at which the end user can access
¶
entity.”
affiliated
Order
If caching
is
effect,
the data.
n.
Order
372 & 1052. In
preferential
form of
traffic manage-
then,
prioritizes
it
in question.
the content
ment —and I
why
cannot see
it is not—
(some-
provided
It is
sometimes
ISPs
paid
then
access to
providers’
broadband
times at
expense
edge providers)
caching facilities
paid prioriti-
violates the
Id.
parties.
and sometimes
third
ban,
zation
or at
rate would do so but
example,
For
Netflix
agree-
has entered
for the Commission’s decision in 205 that
ments with
large
pro-
several
it will evaluate
arrangements
such
on a
viders to obtain direct access to their con-
case-by-case basis rather
than condemn
networks, i.e.,
delivery
tent
storage
cached
them root-and-branch.
¶¶ 198-205,
on their networks. See Order
Curiously, although the Commission
(noting
200 n. 504
that Netflix has entered
seems to
absolutely
be
confident in its
Comcast,
into direct arrangements with
policy
paid prioritization,
view on
recog-
Verizon,
Cable,
AT&T);
Time Warner
actually
nizes that it
experience
lacks
see
also http://www.bloomberg.com/bw/
subject.
objector
argued
One
artieles/2014-02-24/netflixsdeal-with-
201(b)
Commission could not apply
comeast-isnt-about-net-neutrality-except-
paid prioritization because “no broadband
that-it-is.
caching
Contracts under which
providers have entered into such arrange-
*85
supplied by
by
broadband
or
plans
ments or even have
to do so.” Order
third parties
paid
are often called
peering
¶ 291 n. 748 (quoting NCTA Comments at
arrangements.
name,
Regardless of the
29).
contradicting
Instead of
premise,
they
expenses
involve
incurred directly or
responded by
Commission
noting that
indirectly by
edge
provider, using a
at
Verizon
argument
oral
a provider
had
caching technology to store content closer
said that but for the Commission’s 2010
users,
to end
so as to assure accelerated
rules it
pursuing
arrange-
would be
such
transmission of its content via a broadband
ments. Id. So all the claims about the harm
provider.
by paid prioritization
threatened
are at
Although the
acknowledges
Commission
projections.
best
sawWe
earlier the irrele-
caching
that
agreements
many
raise
of the
vance of the studies on which the Commis-
types
same issues as other
of paid prioriti-
projections.
sion relied to make those
toAs
zation, it expressly declines to adopt regu-
caching,
plenty
with which it has
of famil-
them,
governing
opting
lations
instead
iarity,
temperate
the Commission uses the
disputes
hear
arrange-
related to such
¶
approach.
wait-and-see
See Order
203.
§§
ments under
201 & 202 and to “contin-
seriously
The Commission never
tries to
¶
ue to monitor” the situation. Order
205.
hesitancy
reconcile its
here with its claims
paid prioritization
The Order defines
as
arising
paid prioritization
that harms
from
management
“the
of a
provid-
are so extreme as to call for an abandon-
er’s
directly
indirectly
network to
or
favor
traffic,
longtime precedents
ment of
interpret-
some traffic over other
its
including
¶
201(b).
202(a)
through
§§
techniques
ing
use of
such as traffic
and
292.
See Order
153(24),
regardless
management exception,
reclassification decision
of whether
47 U.S.C.
caching
DNS and
fit the
I will not
that.
telecommunications
address
Reply
does note that the dis-
(September
The Commission
Comments
2014)).
caching
primarily
“are
putes over
between
The Commission never answers the
¶
sophisticated entities.” Order 205. But as
objection (except
first
insofar as it is en-
matters,
that
says
it never
how
affects
we
second).
tangled with the
As to the second
on the
In-
remain
the dark
distinction.
says only
it
it does “not seek to
deed,
sophistication
and
the size
disrupt
legitimate
may
benefits that
might exacerbate con-
entities involved
edge providers
accrue to
that have invest-
likely
are
to create a fast
cerns
ISPs
ed in enhancing
delivery
of their ser-
providers.
large edge
lane for
¶
vices to end users.” Order
That
128.
also notes that
answer seems to confirm
deep
The Commission
ADTRAN’s com-
packet
inspection along
plaint:
other simi-
split policy
Commission’s
will
—
types
management
lar
of network traffic
advantages”
“cement the
secured
those
rely
packet
on
characteristics —is the who invested in interconnecting networks.
underlying
paid priori-
technical means
Oddly, the
supports
the ban
tization that it condemns. With that tech-
paid prioritization
tending
as
to prevent
nology,
says,
an ISP can examine the
“the
of the Internet
into a
bifurcation]
packets
they go by
content of
of data as
‘fast’
willing
pay
lane
those
and able to
prioritize
some over others. See Order
else,”
and a
everybody
‘slow’lane for
“
If the
Commission believes that this
protecting
‘user-generated video and
factor
plays
justifying
technical
a role
independent filmmakers’ that lack the re-
treatment,
explain why.
different
it fails to
major
sources of
film
pay priori-
studios to
suggests
packet
Insofar as it
inspec-
ty
126;
rates.” Order
see also id. n. 286
abused, id,.,
tion might
explains
be
it never
(quoting
commenter’s concern over ad-
why
against
rules
such abuse would not fit vantages going to “well-heeled incum-
understanding
historic
of unreasonable
bents”).
short, then,
the Commission is
(and
unjust
or
discrimination
that of the
against
lanes,
slow lanes and fast
price regulatory systems).
historic
against advantages for the
established
oddity
of the Commission’s view is
except when it isn’t.
well-heeled—
nicely captured in its
a pro-
treatment of
The Commission’s favored treatment of
competition argument
submitted
AD-
*86
(wait-and-see)
paid peering
over paid prio-
TRAN opposing
paid prioritiza-
the ban on
(banned) brings
ritization
to mind the
(1)
tion.
argued
ADTRAN
the ban
practice
sheltering
Commission’s
the
would
competition by disabling
hobble
monopoly
historic AT&T
competition.
from
edge providers
some
securing
from
the
Weiser, 11-12,
See Nuechterlein &
40.
prioritization that
via
others obtain
Con-
Contrary to the conventional notion that
(“CDNs”) (the
Delivery
tent
Networks
only regulatees enjoy the
un-
benefits of
premise is that some edge providers, per-
favor,
agency
reasoned
the Order here
volume,
haps
relatively
because of
low
do
suggests a different selection of beneficia-
CDNs;
not have access to
ries:
edge providers
dominant
such as Net-
does
premise),
not contest the
ADTRAN
Google.
flix and
See Order
197 n. 492.
7,
(2)
at
Comment
J.A.
and
would
question posed by
Another
the Order
advantages enjoyed by
“cement the
the
but never answered is the Commission’s
largest edge providers
presently
ob-
superior
idea that
if
services are priced,
tain the functional equivalent
priority
by
usage
access
their
will track the
constructing their own extensive
size and re-
directly
using
networks that
interconnect
sources of the firms
them.
with
One
instead,
the
(quoting
ISPs.” Order
expect,
ADTRAN would
that firms would
and
pay
speed
quality
sign
extra for extra
decision shows no
that it has exam-
the extent that those transit enhancements
contentions,
countervailing
ined serious
goods
increased the value of
services
arbitrary
that decision is
and capricious.
not ship
to the end user. Firms do
medical
Accordingly,
promulgation
its
of the
by air rather than rail or truck
supplies
is,
§
rules under
expla-
absent a better
rich
powerful
because the firms are
nation,
not
accordance with law. 5
are).
(though
They
doubtless some
use air
706(2)(A)
(C).
§
U.S.C.
&
freight
doing
where
so enhances the effec-
enough
of their
justify
tiveness
service
B
point explains
the extra cost. This obvious
Alamo-Berninger
objections
raise two
why Berninger
petitioner
is a
here.
§
the Commission’s reliance on
706 of the
disparate
The Commission’s
treatment
Act,
§
support
U.S.C.
as
for
types
prioritization
appear
of two
rules,
especially
new
the bans on paid
economically indistinguishable suggests ei-
(i.e.,
prioritization, blocking and throttling
ther that
it is ambivalent about the ban
statutory theory
offered
the Com-
itself or that
it
has
considered the
mission
anas
alternative to its
reliance
economics of the various relevant classes
201). First,
§
Alamo-Berninger develop a
of transactions.
perhaps
Or
Commis-
§
comprehensive claim that
grants
present
sion is drawn to its
stance because
power
Commission no
to issue rules. Ala-
populist
enables it to revel in
rhetorical
mo-Berninger Br. 9-16. On its face the
disrupt-
flourishes without a serious risk of
argument
quite compelling,
seems
see also
ing the net.
Dissent,
370-75,
Pai
I agree
but
the explanation,
Whatever
the Order
majority
that the Verizon court’s rul-
fails to offer a reasoned basis for its view
dictum,
ing on that issue was not mere
but
that paid prioritization
“unjust
or unrea-
necessary
was
to the
upholding
court’s
meaning
sonable” within the
or a
transparency
Maj. Op.
rules.
733.
why
reasoned
explanation
paid prioriti-
Second, Alamo-Berninger raise,
albeit
problematic,
zation is
or answers to com-
form,
conclusory
rather
argument
critiques
menters’
I
alternatives.
note
purpose
“the
of section 706 is to move
objections
that all
fully
these
would be
away
exactly
from
the kind of common-
applicable
applied
even as
to ISPs with
imposed
carrier duties
this Order. Thus
power.
market
[adopted
...
in the
rules
frus-
Order]
It is true that the Commission has as-
trate the
purpose
statute and are
supposed
serted the conclusion that
Alamo-Berninger Br.
therefore unlawful.”
edge
beneficent effect of its new rules on
(pursuant
class will
to its
issue,
passages
On
of Verizon
this
cycle theory)
virtuous
enhance demand for
*87
§
giving
reading “virtually
706 a broad
internet
services and thus demand for
—
Internet,”
power
regulate
unlimited
to
the
access
broadband
services. See Order
¶
dissent,
in
predictions
Judge
410.9
as
Silberman observed
The Commission’s
are
deference,
endorsing the
due considerable
but when its
mission’s
dicta, Alamo-Berning
subject
decision to
broad-
theory,
coupling
as
its
cle”
were
Alamo-Berninger
§
Br. 16.
II
reliance on
706.
With band to Title
and its
argue.
er
transparency
Alamo-Berninger
argues,
of the
brief
exception
the narrow
As the
down the Verizon
struck
rules,
points away
§
court
from the
Commission’s
ground
they
on the
of broadband under Title II
rules at issue
classification
Alamo-Berninger
on the
Br. 15.
imposed common-carrier duties
and its Order.
carriers,
legislation
so in
II
from the era of
impermissibly
legacy
Title
is
153(51) (providing
telephone
§§
service. It has no in-
light
monopoly
of 47 U.S.C.
provision
competi-
carrier can be
herent
for evolution to a
telecommunications
(of
hope
under
all
“as a common carrier
this
tive market. It fits cases where
treated
markets)
706,
only
engaged
competitive
the extent that it is
is lost. Section
to
[Act]
services”)
contrast,
Act and
providing
part
in
telecommunications
as
of the 1996
332(c)(2)(similar
terms,
&
persons
limitation as to
seeks to facilitate a shift from
private
“a
mobile
In-
engaged
providing
regulated monopoly
competition.
service”).
deed,
F.3d at 650. The sole rules
Act of 1996
the Telecommunications
not struck down
transparency
were
begins by describing
itself as
Judge
Although
rules.
Silberman would
promote competition
Act
and
[a]n
[t]o
on
upheld
have
them the basis of 47 U.S.C.
regulation
reduce
order to secure low-
9,
257,
§
they
see
Furthermore,
except
innovation
specific
consider
the
§
encourages:
may
measures that
the extent
their successes
bring
average
down
costs across the indus-
The Commission and each State com-
Id.;
try.
application,
for some details of
regulatory jurisdiction
mission
over
see
with
Telephone
telecommunications services shall en- United States
Association v.
courage
deployment
(D.C.
1999).
on a reasonable FCC,
amply take unbundling requirements refuses to were intended again here obviously Doing so would Full promote competition, id. at 20. Ser- position. reclassify broad- decision to argu- undermine its this vice dedicates a subsection to *91 Strategic ambiguity II. Title brief, 18-20, band under concluding ment in its id. at But dispositions. strate- policy best fits competi- Congress’s promote that intent to underly- key propositions gic ambiguity tion, of a lack of together with evidence just polite is regulatory choices ing its nationwide, that “47 competition means arbitrary capricious decision- name surely sup- § more to requires U.S.C. 160 making. than an assertion port forbearance are ade-
F.C.C. that ‘other authorities’ public interest will be better quate and the in justifying out that points Full Service by enhancing agency’s discre- served II of Title application pursued angle tion.” Full the same Service its 2005 reliance on the broadly repudiated “you argument, asserting in oral that can’t “competitive potentially emergence any- say waiving that Section 251 is about offerings,” see providers and competitive thing competition, ¶ but that’s the whole 864, saying instead that Order 330 n. purpose Arg. of that section.” Oral Tr. 142. judgments on which the predictive “the in the Cable Modem Commission relied § requires exchange 47 U.S.C. 251 local anticipating vibrant Declaratory Ruling with vari- provide competitors carriers to for fixed broad competition intermodal advantages, mostly notably ous “access to reconciled with current band cannot be network elements on an unbundled basis.” ¶ 330; in sup realities.” Order marketplace ¶ (re- 251(c)(3); § 47 U.S.C. cf. Order reading this of the Cable Modem port of ferring access as “last-mile to such unbun- Declaratory Ruling, the Order cites dling”). Full seeks such access to Service Broadband Wireline Classification providers’ (governed facilities (2005). Red. 14853 Order F.C.C. §in procedures set out 252 for 864; invoking Br. 18. Besides 330 n. FSN negotiating agreements), asserting these conclusory repudiation the Commission’s necessary ability that such access is to its view, Full of its former Service stresses in local markets for broadband compete to purposes, points § to pro-competitive 251’s 13; Br. Telecom internet. FSN see U.S. by the that data accumulated (D.C. FCC, 554, Ass’n v. 359 F.3d Cir. widespread lack of com it contends show 2004) (“The sought to foster a [1996 Act] facilities, among petition local distribution competitive market in telecommunications. competition the state of argues To enable new firms to enter the field to the exer highly relevant Commission’s advantages despite the of the incumbent § under 47 U.S.C. cise of forbearance (“ILECS”), exchange local carriers the Act respect provisions to aimed at least with gave the Federal Communications Com- Br. stimulating competition. FSN 18- to powers require mission broad ILECs 160(b) 20; (requiring § 47 U.S.C. Commis to other make ‘network elements’ available “will sion to consider whether forbearance carriers.”). telecommunications conditions”); promote competitive market see, As we shall the Commission’s rea Moreover, Full Maj. Op. cf. 732-33. Ser soning in the Order resembles that of the argument ties its to the specifically vice Agency Protection Utili that, Environmental statutory requirements, noting in 47 —EPA, 160(b), ty Regulatory Group Air v. U.S. “Congress U.S.C. directed -, L.Ed.2d 372 134 S.Ct. the FCC evaluate the effect forbearance (2014) (“UARG”). Agency justified There the inter- the forbearance is by competitive permitting requirements conditions, preted certain demonstrates its unwillingness apply green- under the Air Act to Clean to apply statutory scheme. Even if the gases, acknowledged apply- house but Commission’s forbearance itself were rea- ing Congress specified the thresholds that alone, standing forbearance, sonable regulate the relevant sections would too paired decision, with the reclassification many unacceptable firms and create costs. arbitrary Or, was and capricious. to note agency on its power therefore relied massive, implication, reverse insuf- interpret ambiguous statutory terms to ficiently justified forbearance infects the requirements, increasing “tailor” the (or apply decision to purport apply) permitting thresholds from 100 or 250 tons logical Title II. The inconsistency is fatal *92 100,000 (i.e., magni- to tons three orders of (The to both. Commission offers no opposi- tude). Id. at 2444-45. The Court held that tion to USTA’s contention that reclassifica- agency’s construing combined choice— tion and forbearance are intertwined and ambiguous statutory provision apply an to therefore stand or fall together. USTA dramatically reducing while its substantive 21.) Intervenor Br. application In unreasonable. so hold- —was explicitly While the statute envisions ing, it the core “reaffirm[ed] administra- forbearance, it only does so under enu principle agency may tive-law that an not forbear, merated conditions. To the Com statutory rewrite clear terms to suit its mission must determine that enforcement own of oper- sense how the statute should provision of a necessary is to ensure not ate.” Id. at 2446. reasonable, just, nondiscriminatory that prin- Commission violates core charges practices protect or to con here, ciple apply where it seeks to Title II sumers, 160(a)(1)-(2), § 47 U.S.C. and that providers to broadband internet while for- forbearance “is public consistent with the bearing majority from vast of Title II’s 160(a)(3). interest,” § In making id. these statutory requirements. As did EPA in determinations, “the Commission shall UARG, candor, though perhaps with less consider whether forbearance from en recognizes that the statu- forcing provision regulation will tory provisions naturally flowing from re- conditions, promote competitive market classification of broadband under Title II including the extent to which such for posed by do fit the issues broadband bearance competition among will enhance access II service. “This is Title tailored for providers of telecommunications services.” Century. application 21st Unlike the of 160(b). § broadly Id. These conditions are II companies Title to incumbent wireline framed, emphasis but on consumer Century, the 20th utility-style swath of reasonable, protection, competition, and provisions (including tariffing) will not be nondiscriminatory plainly rates is intend fact, applied. ... In Title II has never implement policy goal ed to the 1996 Act’s applied way.” been such a focused Order ' competition of in a that promoting context ¶ 38. historically had been dominated firms Although requires the 1996 Act power, assuring with market while that application Commission to forbear from protected. consumers are any provisions Chapter of Title 47’s part The Commission relied in on the 5 when the conditions of 47 U.S.C. 160(a) unbundling rules met, 104-104, IV, § idea that enforcement are L. Title Pub. (Feb. investment, 8, 1996), unduly specifically § 401 would deter the Commission’s forbearance, findings massive without that such enforcement would collide with ¶¶ Services, Inc., 17 Red. 24319 17- encourage advanced services F.C.C. “duty to But, (2002), perhaps granted for- deployment.” Order apply replace one of rates with a that this concern would bearance to set recognizing unbundling, the universally compulsory different set of rates based on forward- to confronted claims that it looking Commission also cost estimates believed bet- often have local mar- petitioner’s operating ter reflected the these responded But it power. costs; ket finding competition no was neces- refutation but with factual claims not with In re sary guide replacement. evidence of “persuasive assertion Application Petition Forbearance from unnecessary predicate competition” 19SI, is the Communications Act As ¶ 439. This assertion to forbearance. Order Amended, Previously Authorized that, view in line with the Commission’s (1997), is Seros., 12 F.C.C. Red. 8408 compe- amount of “although there is some 203(c), from Commission forbore allow- Internet access ser- tition for broadband ing petitioner charges to refund excess vice, key respects.” Order is limited pointed to consumers. As the Commission sufficiently vague language 444. The order, out that brief forbearance served competition state of between cover interest, public consumers and the since outright monopoly perfect competition. consumers would receive the refund. Id. *93 ¶10. current
The claimed its past practice, matches its of- forbearance group The use of the third Commission’s in fering a list of orders which it forbore suggests that its opinion-writing staff was competition little or no consid- giving while asleep group at the comprises switch. ¶ cases). (listing n. 1305 eration. Id. 439 rulings, In Implementation three re of not But the cited orders do vindicate 3(n) Sections & 332 the Communica of They groups: fall into three Commission. Act, (1994),10 1411 tions 9 F.C.C. Red. (1) forbearing provisions from orders Qwest Corp. re Petition Forbearance of for all, economic issues at directly involving 160(c) § Pursuant to U.S.C. in the 17 (2) requirements, orders reporting such as Area, 20 Omaha Metro. Statistical F.C.C. import with no of clear economic but evi- (2005), In re Red. 19415 and Petition of (3) competition, and relationship dent to Qwest Corp. Forbearance Pursuant evidently competition orders related to 160(c) Phoenix, § U.S.C. in the Arizona 17 analyzed competi- where the Commission Area, Metro. Statistical 25 F.C.C. Red. intensely. tion (2010).Yet in each decision the 8622 Com easily addressed. The group The first is analysis of mission conducted detailed grant Commission’s of forbearance from competition. of 9 F.C.C. Red. the state See ir- seemingly requirements noneconomic is ¶¶ (considering 1411 135-54 of numbers of forbear- relevant to the arbitrariness trends, etc., falling price competitors, provision precisely from a aimed at ance concluding provid that “all service CMRS fostering competition. ers, licensees, than service other cellular ¶ 137, currently power,” lack market id. at posed The second set of orders economic and, recounting after an extensive of fac competi- no evident link to concerns but tors, making finding a cautious tion. In In re Iowa Telecommunications 3(N) Act, quashed by & 332 the Communications 10 10. This order was later another of Comm’n, order, Corp. (1995). In re Petition Unsurprisingly, that Arizona F.C.C. Red. 7824 of Authority Entry to Extend Over Rate and State analy- order also contains a detailed market Regulation All Commercial Mobile Radio ¶¶ See, e.g., id. at 42-68. sis. of Implementation Services & In re Sections d “fully competitive,” could not find cellular e unbundling on both investment and ¶¶ ¶ 154);
id. F.C.C. Red. 19415 28- competition. We concluded this for shares, (analyzing supply market and bearance was not arbitrary capricious cost, elasticity, firm demand size and partly because the Commission had of competition); resources to assess 25 F.C.C. “very strong fered record evidence” of “ro ¶¶ Red. in- (assessing 41-91 whether bust intermodal competition from cable firm power by cumbent had market careful providers,” [broadband] who maintained a definition, consideration of market factors market share of about 60%. Id. at 582. affecting competition, assessment of the Both we and the Commission took for SSNIPs). effects of granted that findings competition were central such forbearance decision. I position quality am no to assess the justified The Commission its forbearance analyses, of these but the entire batch of in terms of competition: primary “A bene decisions cited Order 439 n. 1305 fit of unbundling hybrid is, loops provides (indeed, no support for the idea —that idea) spur competitive deployment of undermines that the Commission services to the appears mass practice has an established neglecting market — be obviated the existence of power deciding market a broad whether to for- (I competitor band service provision leading po bear from a with a such as sition in the interesting marketplace.” discuss below an In re exception, the Review of FCC, Unbundling order reviewed EarthLink v. Section 251 Obligations (D.C. 2006).) Carriers, F.3d 1 Cir. Incumbent Local Exch. (2003). Now, F.C.C. Red. 16978 292 when Given the Commission’s assertions else- forbearing from unbundling requirements limited, competition where that and its far broadly, more the Commission asserts lack of analysis economic on either the findings competition that no are neces forbearance issue or the Title II classifica- *94 sary. Rather than justifying change its tion, the reclassify combined decisions to position, it denies having any made and forbear —and to assume sufficient change. competition as well as a lack of it—are arbitrary capricious. and The Commission unnecessary, It is in concluding that bicyclist acts like a who rides now on the the Commission has failed to meet its sidewalk, street, now the personal con- obligation State Farm to reconcile its re- venience dictates. decisions, classification and forbearance resolve whether the Commission has ade- inaptness of the Order’s 439 n. quately competition pur- considered for prior 1305 citations of its decisions is con- 160(b). poses § of 47 U.S.C. See Order by firmed forbearance decisions that have ¶¶ 501-02. difficulty, The Commission’s Telecom, In reached this court. U.S. its mentions competition, of lies in its at- 578-83, F.3d at example, for we considered tempts ways. to have it both It asserts the Commission’s decision to forbear from there is too competition little unbundling requirements high-fre- for the maintain the classification of broadband quency portion copper hybrid loops and (remember, as an information service (but for broadband not from unbundling is the sole function of its discussion requirements for portion the narrowband costs), switching (implicitly) but that there hybrid loops). reviewing In that forbear- decision, enough competition is for broad forbear- ance which was far than narrower ance to be today, appropriate. spot, the forbearance before us This sweet gave we assuming detailed consideration to the Commission’s the statute allows the Commis- analysis it, likely effects of more limit- sion to find is never defined. power by agency Full effects of market close responding Service’s narrow required conduct,
claim—that the Commission was firm supervision of but forbore analysis market competition to do a provisions constraining from aimed at mar- relies on our de- market —the Commission power by compelling ket firms to share F.C.C., in EarthLink v. 462 F.3d cision facilities, perform their all with no effort to (D.C. 2006), rejected indeed we Cir. where power analysis. a market The Order’s com- unbundling from a claim that forbearance bined reclassification-forbearance decision required § such an under U.S.C. arbitrary capricious. is issue, analysis. that narrow EarthLink On fully supports the Commission. irony The ultimate of the Commission’s But there are considerable ironies in the that, patchwork refusing unreasoned supporting its Order here Commission’s conditions, inquire competitive into it and the order re- pointing to EarthLink legal shunts broadband service onto the
viewed there. The current Order manifests monopolies. track to natural Be- suited re- repudiation a double of the one under provides cause that track little economic first, rejects it now view EarthLink: space seeking entry firms market new second, § interpretation of former relatively seeking expansion small firms complete reflects the Commission’s through innovations in business models or force of abandonment of its views technology, the Commission’s decision competition. intermodal bringing chance of has decent about the order, In the EarthLink the Commis- (but by conditions under which some no § proposition sion invoked 706 for the all) ground- means of its actions could be relieving companies local distribution from prevalence monopoly. ed—the of incurable investment, regulation encourage would bloom, competition thus let suf- would I would vacate the Order. competition ficiently to offset loss to Now, refusing unbundling.
from to order course, the Commission invokes saddling
for the idea that such firms with
regulation encourage will investment. And in the EarthLink order the Com SANDS, Laura Petitioner repudiated mission relied on its now idea *95 v. competition play that intermodal would NATIONAL LABOR RELATIONS assuring adequate competition. big role BOARD, Respondent 7, citing See 462 F.3d Petition For for Telephone Compa bearance the Verizon United Food and Commercial Workers 160(c), nies Pursuant U.S.C. Union, International Local ¶¶ 21,496 Now, Red. 21-23. without F.C.C. Intervenor. undertaking the inconvenience of a market No. 14-1185 power analysis, the Commission has ren competi dered its confidence intermodal Appeals, United States Court of (to phrase “inoperative” tion borrow District of Columbia Circuit. pur Watergate proceedings) from the for Argued February reclassification, poses (perhaps) but unbundling. Decided June sum, regu- the Commission chose to designed temper late under a Title notes section 251 obli- implement tracts that ted). up “further and sought NPRM Thé gations. that course of action. comment” on dated argues first Full Network Service Thus, Full Network “should Service Id. 10(a)(3)’s deter public interest that section that” the Commission anticipated have regula each “must mination be made forbearing from all remain would consider
Notes
notes the Commission to, change amounts factual asserted rules, of telecommuni- tougher the stocks has met finally the Commission whether companies outperformed cations showing minimal “that there burden of might market. Order 360. This broader I policy.” for the new good are reasons if had interesting per- be in that order. address them analysis sophisticated trying formed a (a) The Order deals with reli- Reliance. hold other factors constant. the absence summarily, noting, “As a ance interests