Comcast Ex Parte of 11-4-14 in GN Docket 14-28
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Comcast Corporation 300 New Jersey Avenue, NW Suite 700 Washington, DC 20001 202.379.7121 November 4, 2014 VIA ELECTRONIC FILING Marlene H. Dortch Secretary Federal Communications Commission 445 12th Street, S.W. Washington, DC 20554 Re: In the Matter of Protecting and Promoting the Open Internet, GN Docket No. 14-28; Framework for Broadband Internet Service, GN Docket No. 10-127 Dear Ms. Dortch: On October 31, 2014, Lynn Charytan, David Don, and the undersigned from Comcast, and Matthew Brill of Latham & Watkins LLP, met with Julie Veach and Matthew DelNero of the Wireline Competition Bureau and Stephanie Weiner and Claude Aiken of the Office of General Counsel regarding the above-captioned proceeding. Consistent with Comcast’s previous submissions in this docket, we explained that, in adopting new rules to protect and promote the open Internet, the Commission should follow the guidance of the D.C. Circuit in Verizon v. FCC by relying on Section 706 of the Telecommunications Act of 1996 as legal authority.1 In particular, although Comcast and other leading broadband providers have made clear that they have no plans to enter into commercial arrangements to prioritize any edge provider content within their broadband Internet access services, we emphasized that Section 706, as construed by the court, provides ample authority for the Commission to adopt a strong presumption against paid prioritization arrangements. We further noted that none of the Title II reclassification theories or hybrid Title II/Section 706 theories in the record would result in greater protections for consumers, even apart from their many other downsides. We explained that presumptions are widely used in the law, and in particular are commonly used by Congress, courts, and the Commission, to restrict practices that are generally (but not 1 See Verizon v. FCC, 740 F.3d 623 (D.C. Cir. 2014). Ms. Marlene H. Dortch November 4, 2014 Page 2 invariably) viewed as anticompetitive or otherwise harmful.2 Moreover, the Commission could readily distinguish a presumption-based approach from the kind of ban on paid prioritization that the D.C. Circuit deemed impermissible in Verizon v. FCC. While the Verizon court held that “[S]ection 706 grants the Commission authority to promote broadband deployment by regulating how broadband providers treat edge providers,” it struck down the prior rule addressing paid prioritization based on its finding that it left “no room at all for individualized bargaining” between broadband providers and edge providers and thus amounted to an impermissible common-carrier mandate.3 Adopting a strong presumption against all paid prioritization—in a manner that clearly spells out the public interest showings a broadband provider would need to make in order to overcome the presumption—would enable the Commission to prevent anticompetitive arrangements while leaving at least some room for beneficial prioritization (and, therefore, comporting with the Verizon decision). And the Commission could do so without resorting to a risky and destabilizing reclassification approach under Title II— which, again, would not authorize anything more stringent than a rebuttable presumption in this context anyway. We noted that the Commission has used presumptions in the recent past in crafting analogous rules addressing potentially anticompetitive conduct by regulated entities. For instance, in the 2010 Program Access Order, the Commission established a rebuttable presumption to address competitive concerns over access to vertically integrated regional sports networks (“RSNs”). The rule adopted by the Commission presumes that “an unfair act involving a terrestrially delivered, cable-affiliated RSN has the purpose or effect” of significantly hindering or preventing an MVPD from providing satellite cable programming or satellite broadcast programming to subscribers or consumers, but allows cable operators to overcome that presumption by presenting evidence to the contrary.4 The Commission explained that this rebuttable presumption was warranted based on “categorical evidence” that RSN withholding tends to harm competition.5 We discussed how similar considerations could support a rebuttable presumption against paid prioritization, assuming the Commission finds (as it did in 2010) that paid prioritization arrangements can undermine competition among edge providers and dampen innovation and investment in the process.6 As in the RSN context, a rebuttable presumption thus would codify the inference that such arrangements are anticompetitive, and enable litigants to avoid “undertak[ing] repetitive examinations of [Commission] . precedent and the relevant historical evidence” in complaint proceedings.7 Moreover, just as a cable operator must show that an act of RSN withholding does not harm competition, an ISP faced with a presumption against paid prioritization 2 See, e.g., Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 716 (D.C. Cir. 2011) (explaining that a rebuttable presumption is warranted where “proof of one fact renders the existence of another fact so probable that it is sensible and timesaving to assume the truth of the inferred fact until the adversary disproves it.” (internal citations, quotation marks, and alterations omitted)). 3 Verizon v. FCC, 740 F.3d 623, 649, 657 (D.C. Cir. 2014). 4 Review of the Commission’s Program Access Rules and Examination of Programming Tying Arrangements, First Report and Order, 25 FCC Rcd 746 ¶ 52 (2010) (“2010 Program Access Order”). 5 Id. 6 Preserving the Open Internet; Broadband Industry Practices, Report and Order, 25 FCC Rcd 7905 ¶ 76 (2010) (“2010 Open Internet Order”). 7 2010 Program Access Order ¶ 52. Ms. Marlene H. Dortch November 4, 2014 Page 3 would be required to demonstrate affirmatively that such an arrangement poses no competitive harm and should be permitted. We further discussed how Congress used a similar approach in Section 253 of the Communications Act to promote competition in local markets for telecommunications services by removing legal barriers to entry.8 Section 253(a) contains a proscription on any state or local statute or regulation that “prohibit[s] or ha[s] the effect of prohibiting the ability of any entity to provide any interstate or intrastate telecommunications service.”9 Subsections (b) and (c) of the same section, however, preserve state and local laws that, among others things, “protect the public safety and welfare,” “safeguard the rights of consumers,” or “manage the public rights-of-way” in a competitively neutral manner.10 Thus, notwithstanding the seemingly categorical ban in subsection (a), Section 253 creates, in effect, a rebuttable presumption that state and local laws that create barriers to entry into telecommunications markets are preempted, subject to a showing by the state or municipality that those regulations nevertheless should be permitted because they serve the public interest in certain enumerated ways.11 A rebuttable presumption against paid prioritization would operate in a similar fashion, by requiring an affirmative showing by the ISP that the conduct at issue both benefits the public interest and would not raise the “barriers to entry” that have concerned the Commission in this context.12 We also explained that antitrust law makes similar use of rebuttable presumptions to single out and restrict arrangements that are likely to be anticompetitive. For example, under the “quick look” analysis for arrangements with a “close family resemblance” to per se unlawful arrangements, courts employ a rebuttable presumption that such arrangements will harm competition.13 The D.C. Circuit applied this presumption in Polygram Holding when evaluating an arrangement “between joint venturers to restrain price cutting and advertising with respect to products not part of the joint venture,” which the court said “looks suspiciously like a naked price fixing agreement between competitors.”14 Just as the Commission might determine in the context of paid prioritization arrangements, the court explained that a “rebuttable presumption of illegality” applied to the price- cutting restraints and, “in order to avoid liability, the defendant must either identify some reason the restraint is unlikely to harm consumers or identify some competitive benefit that plausibly offsets the 8 Sprint Telephony PCS, L.P. v. City of San Diego, 543 F.3d 571, 575 (9th Cir. 2008) (quoting Telecommunications Act of 1996, Pub.L. No. 104–104, 110 Stat. 56, 56). 9 47 U.S.C. § 253(a). 10 Id. § 253(b), (c). 11 See, e.g., New Jersey Payphone Ass’n, Inc. v. Town of W. New York, 299 F.3d 235, 240 (3d Cir. 2002) (“In the case of a dispute over a local regulation of rights of way, once the party seeking preemption sustains its burden of showing that a local municipality has violated Section 253(a) by formally or effectively prohibiting entry into the [telecommunications] market, the burden of proving that the regulation comes within the safe harbor in Section 253(c) falls on the defendant municipality.”). 12 2010 Open Internet Order ¶ 76. 13 Polygram Holding, Inc. v. FTC, 416 F.3d 29, 37 (D.C. Cir. 2005). 14 Id.; see also Food Lion, LLC v. Dean Foods Co., 739 F.3d 262, 274-75 (6th Cir. 2014) (explaining that “quick look” analysis shifts the “presumptions” in a manner that requires a defendant to “justify the agreement at issue on procompetitive grounds by providing some ‘competitive justification’ for the restraint at issue”). Ms. Marlene H. Dortch November 4, 2014 Page 4 apparent or anticipated harm.”15 Similarly,