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, in the merger review context, DOJ and the FTC have clarified that “[m]ergers that cause a significant increase in concentration and result in highly concentrated markets are presumed to be likely to enhance market power, but this presumption can be rebutted by persuasive evidence showing that the merger is unlikely to enhance market power.”16 A rebuttable presumption in the paid prioritization context could be based on similar economic judgments about the likely competitive effects of particular arrangements.

A rebuttable presumption against paid prioritization would be readily distinguishable from an outright, de jure prohibition. In fact, the distinction between rebuttable presumptions and de jure prohibitions is an essential concept in a variety of familiar legal contexts. For instance, several areas of constitutional law employ the concept of “strict scrutiny”—which is, in essence, a rebuttable presumption of invalidity that shifts the burden to the government to justify the challenged regulation. In the context of the First Amendment, for example, Justice O’Connor has explained that “[w]ith rare exceptions, content discrimination in regulations of speech of private citizens . . . in a traditional public forum is presumptively impermissible, and this presumption is a very strong one.”17 At the same time, the Supreme Court has made clear that this strong presumption is not—and should not be—a conclusive one.18 Relatedly, on several occasions, the Supreme Court has struck down statutes on the grounds that the statutes created an irrebuttable presumption in violation of the Due Process Clause.19 The problem in those cases was not the existence of a presumption, but rather the fact that the presumption was conclusive rather than rebuttable. As Justice Marshall observed, “where the private interests affected are very important and the governmental interest can be promoted without much difficulty by a well-designed hearing procedure, the Due Process Clause requires the Government to act on an individualized basis, with general propositions serving only as rebuttable presumptions or other burden-shifting devices.”20

The Commission has relied on this well-established distinction in the course of adopting its own rebuttable presumptions. For example, when the Commission adopted a rebuttable presumption regarding withholding of cable-affiliated RSNs in the program access context, it expressly contrasted that approach from proposals to adopt a “per se” rule. Specifically, the Commission found that mixed evidence in the record regarding the competitive impact of RSN withholding counseled in favor of a “case-by-case approach” that employs a “rebuttable presumption that an unfair act involving a terrestrially delivered, cable-affiliated RSN has the purpose or effect set forth in Section 628(b),” and “reject[ed] the argument that the empirical evidence concerning RSNs is so uniform that it supports a per se rule.”21 The Commission explained that rebuttable presumption, unlike a per se rule, “allows us

15 Polygram Holding, 416 F.3d at 36, 37. 16 DOJ and FTC, Horizontal Merger Guidelines § 2.1.3 (2010). 17 City of Ladue v. Gilleo, 512 U.S. 43, 59 (1994) (O’Connor, J., concurring). 18 See, e.g., Grutter v. Bollinger, 539 U.S. 306, 326 (2003) (O’Connor, J.) (“Strict scrutiny is not strict in theory, but fatal in fact.”). 19 See, e.g., Cleveland Bd. of Educ. v. LaFleur, 414 U.S. 632 (1974); United States Dep’t of Agriculture v. Murry, 413 U.S. 508 (1973); Vlandis v. Kline, 412 U.S. 441 (1973); Stanley v. Illinois, 405 U.S. 645 (1972); Bell v. Burson, 402 U.S. 535 (1971). 20 Murry, 413 U.S. at 518 (Marshall, J., concurring) (emphasis added). 21 2010 Program Access Order ¶ 52. Ms. Marlene H. Dortch November 4, 2014 Page 5 to consider the facts and circumstances of each case.”22 And, notably, the D.C. Circuit drew the same distinction in its 2011 Cablevision decision affirming the adoption of the rebuttable presumption regarding RSN withholding, where it explained that the fact that the rebuttable presumption preserved the Commission’s ability to undertake a case-by-case analysis was “one reason why its rules survive . . . scrutiny.”23 Similarly, in an order establishing a framework for preempting “unreasonable” local zoning regulation of satellite earth stations, the Commission explained that “a rule based on presumptions of unreasonableness is less intrusive than a per se rule,” and that, in fact, “a workable set of rebuttable presumptions is preferable to a per se rule” where record evidence demonstrated that regulatory flexibility was warranted.24

In light of such precedent, we explained our strong expectation that a court would view a rebuttable presumption as distinct from the type of “ban” the Verizon court believed was applicable under the Commission’s 2010 Open Internet Order, as the theoretical possibility that a ban will be waived is not the same as the prospect that a presumption will be rebutted. As a threshold matter, it is not clear that the Verizon decision actually precludes the Commission from adopting a flat ban on paid prioritization that expressly includes the opportunity for a waiver. In defending the 2010 ban, the Commission never argued that a waiver was available, and certainly did not spell out what factors might support a waiver of that prohibition. And the Verizon decision does not even address the concept of a waiver—much less the effect a waiver opportunity might have on whether a ban on paid prioritization would violate the common-carrier prohibition.25 But even assuming the Verizon court understood the 2010 ban as incorporating the opportunity for a waiver, the Commission still would be able to distinguish such a regime from a presumption-based approach. Critically, a party typically must seek a waiver before engaging in prohibited conduct, whereas a party must overcome a presumption only after that conduct is challenged. The Commission has expressly recognized this distinction between the ex ante nature of waiver requests and the ex post operation of presumptions; as the Commission has explained, while a waiver “would require an application” by the party ahead of time citing considerations “of a highly specialized or unusual nature,” “presumptions . . . could be rebutted in the context of any particular case.”26 The Commission also has significant discretion as to

22 Id. 23 Cablevision, 649 F.3d at 716-18; see also Nat’l Ass’n of Broadcasters v. FCC, 569 F.3d 416, 427 (D.C. Cir. 2009) (rejecting NAB’s argument that a rebuttable presumption that protects low-power FM stations under the Commission’s rules operates as a per se rule, noting that the argument “ignores the six factors that a full-power station may contest” and “the rebuttable nature of the presumption”). 24 Preemption of Local Zoning Regulation of Satellite Earth Stations, Report and Order and Notice of Proposed Rulemaking, 11 FCC Rcd 5809 ¶¶ 24-25 (1996) (emphasis added); see also Implementation of Section 207 of the Telecommunications Act of 1996; Restrictions on Over-the-Air Reception Devices: Television Broadcast and Multichannel Multipoint Distribution Service, 11 FCC Rcd 6357 ¶ 4 (1996) (characterizing the rule adopted in the local zoning context as “a rebuttable presumption of unreasonableness rather than a per se preemption”). 25 See Verizon, 740 F.3d at 657. 26 Preemption of Local Zoning Regulation of Satellite Earth Stations, Notice of Proposed Rulemaking, 10 FCC Rcd 6982 ¶ 65 (1995). The need to rebut a presumption based on context-specific factors explains why facial challenges to analogous Commission presumptions have consistently been deemed unripe—and why a legal challenge to the Commission’s adoption of a presumption against paid prioritization should likewise fail. See Cellco Partnership v. FCC, 700 F.3d 534, 548-49 (D.C. Cir. 2012) (holding that Verizon’s facial challenge to the “commercial reasonableness” standard in the data roaming context was not ripe, and that arguments about the application of the standard could be brought only on an “as applied” basis, “should the Commission apply the data Ms. Marlene H. Dortch November 4, 2014 Page 6 whether to even address a waiver request, and a “pocket-veto” of such a request would preclude an ISP from entering into a paid prioritization arrangement in the first place. By contrast, a presumption- based approach would enable an ISP to explore possible arrangements without awaiting advance approval from the Commission—but, of course, at the ISP’s own peril. Moreover, the fact that a broadband provider could enter into other types of two-sided market arrangements with edge providers that do not entail prioritization at all, such as third-party payment arrangements,27 further bolsters the conclusion that the presumption-based regime described herein comports with the limits recognized by the D.C. Circuit in Verizon.

With respect to the substance of a rebuttable presumption against paid prioritization, we discussed how the Commission could incorporate core drivers of the “virtuous circle” it has identified into a multifactor test that would need to be satisfied to overcome the presumption. For example, we noted that the Center for Democracy & Technology (“CDT”) had proposed an alternative to the “commercial reasonableness” standard described in the NPRM, under which a broadband provider would need to demonstrate that a paid prioritization arrangement is “consistent with Internet openness.”28 In particular, the broadband provider would need to show that its arrangement does not undermine (a) the “technical and practical ability of broadband Internet access subscribers to access and use the lawful Internet content, applications, services, and devices of their choice without interference from their provider of broadband services,” or (b) “the traditional and practical ability of developers of independent online content, applications, services, or devices to make those offerings available to interested Internet users everywhere without having to negotiate for or obtain any kind of permission or agreement from those users’ providers of Internet service.”29 We explained that such a standard offers a promising means of promoting the Commission’s policy objectives in a legally sustainable way, without the needless risks associated with Title II reclassification theories.30

Finally, we discussed how, in contrast to such a presumption under Section 706, proposals to reclassify broadband Internet access under Title II and Mozilla’s hybrid Title II/Section 706 theory are unsound from a policy and legal standpoint. As a policy matter, subjecting broadband services to Title II regulation would threaten to undermine the investment-friendly climate the Commission has worked hard to foster under the Title I classification it has repeatedly endorsed. And, to avoid the application of overly burdensome, ill-fitting common-carrier requirements in the competitive broadband ecosystem, we explained that the Title II proposals advanced in the record would require substantial forbearance, thus presenting significant complexities and risks that would further compound the

roaming rule so as to treat Verizon as a common carrier”); Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 716 (D.C. Cir. 2011) (“Given that petitioners’ challenge on this point is purely facial, we have no occasion to consider whether the Commission’s rebuttable presumptions might function differently in practice.”). 27 See Letter of Henry Hultquist, AT&T Services Inc., to Marlene H. Dortch, FCC, GN Docket Nos. 14-28 & 10- 127, at 5 (filed Oct. 24, 2014) (describing other potential two-sided arrangements “not involving prioritization of packets”). 28 Reply Comments of Center for Democracy & Technology, GN Docket Nos. 14-28 & 10-127, at 3 (Sept. 15, 2014). 29 Id. 30 We also indicated that CDT’s proposal to link the concepts of individualized negotiations and specialized services, such that “specialized services [would] become the vehicle for creating the flexibility in terms that the D.C. Circuit has held the common carrier prohibition to require,” id. at 6, warrants further consideration. Ms. Marlene H. Dortch November 4, 2014 Page 7 regulatory uncertainty that would flow from adopting any such theory. Indeed, while the Commission has occasionally granted broad forbearance from discrete requirements on a nationwide basis (such as the requirement that eligible telecommunications carriers provide Lifeline service over their own facilities),31 it has done so only where the record included no allegations of competitive harm. By contrast, where (as here) parties have asserted that Title II is necessary to forestall competitive harm, the Commission has insisted on a more granular analysis that would be much harder to satisfy as applied to all broadband providers on a nationwide basis.32 Moreover, there would be no assurance that a grant of forbearance would not be rescinded by a later Commission. While some parties have suggested that the reliance interests that would be engendered by a grant of forbearance would make it difficult to “undo” that grant down the road,33 that same principle applies to the Commission’s longstanding classification of broadband Internet access as an information service, and if the Commission could reverse that vital precedent—which not only has engendered strong reliance interests but was expressly intended to induce substantial investments by broadband providers34—then there is no reason to believe that a grant of forbearance would be more dependable and enduring.

With respect to the legal merits of the various reclassification theories in the record, we reiterated that, as the Commission has repeatedly found, broadband providers offer an “integrated, end- to-end” information service that combines broadband transmission and information-processing in a manner that entails “transmit[ting] data communications to and from the rest of the Internet.”35 Accordingly, the notion that the Commission has not classified transmissions of edge provider content from interconnection points to broadband subscribers, as suggested by Mozilla, is simply wrong, as that functionality is part and parcel of broadband Internet access. In any event, Mozilla’s assertion that such transmission may be compelled to be provided at no charge cannot be squared with the statutory requirement that a telecommunications service be offered to the public “for a fee.”36 We noted that Mozilla cannot satisfy the “fee” requirement by bootstrapping from the charges paid by end users for broadband Internet access, as that retail service is concededly distinct from the one Mozilla says should

31 See Lifeline and Link Up Reform and Modernization, Report and Order and Further Notice of Proposed Rulemaking, 27 FCC Rcd 6656 ¶ 368 (2012). 32 See Petition of Qwest Corporation for Forbearance Pursuant to 47 U.S.C. § 160(c) in the Phoenix, Arizona Metropolitan Statistical Area, Memorandum Opinion and Order, 25 FCC Rcd 8622, ¶¶ 41-45 (2010); see also Petition of USTelecom for Forbearance Under 47 U.S.C. § 160(c) from Enforcement of Certain Legacy Telecommunications Regulations, Memorandum Opinion and Order and Report and Order and Further Notice of Proposed Rulemaking and Second Further Notice of Proposed Rulemaking, 28 FCC Rcd 7628 ¶¶ 20-23 (2013) (applying Qwest standard to deny USTelecom’s request for forbearance from certain rules directly promoting competition, and noting that, while forbearance from those requirements might be possible in the future for “specific locations, or for particular services, given the competitive circumstances,” USTelecom had “not demonstrated that market conditions warrant the broad forbearance it requests”). 33 See FCC v. Fox Television Stations, Inc., 556 U.S. 502, 515 (2009) (explaining that the Commission must provide additional justification for reversing a prior policy when that policy has “engendered serious reliance interests” or its new policy “rests upon factual findings that contradict those which underlay its prior policy”). 34 See, e.g., Inquiry Concerning High-Speed Access to the Internet over Cable and Other Facilities, Declaratory Ruling and Notice of Proposed Rulemaking, 17 FC Rcd 4789 ¶ 5 (2002) (“[B]roadband services should exist in a minimal regulatory environment that promotes investment and innovation in a competitive market.”) 35 Id. ¶ 17. 36 47 U.S.C. § 153(53). Ms. Marlene H. Dortch November 4, 2014 Page 8 be “deemed” provided to edge providers. Nor is there merit to the proposition that edge providers pay a “fee” to broadband providers by supplying valuable content to them (as distinct from the value conferred on the subscriber who accesses the relevant content). Not only is any such amorphous value incapable of constituting a “fee” under the statute, as that term’s plain meaning requires tangible consideration, but it would be impossible to show that all edge-provider content necessarily confers value on ISPs, particularly where that content may be unwanted by or even repugnant to many of the ISP’s subscribers.37

For all the foregoing reasons, we urged the Commission to adhere to the proposal in the NPRM to ground new open Internet rules in Section 706, rather than Title II. Please direct any questions regarding this matter to the undersigned.

Respectfully submitted,

/s/ Kathryn A. Zachem Senior Vice President, Regulatory and State Legislative Affairs Comcast cc: Jonathan Sallet Stephanie Weiner Claude Aiken Julie Veach Matthew DelNero

37 Cf. Comcast Cable Communications, LLC v. FCC, 717 F.3d 982, 986 (D.C. Cir. 2013) (questioning, in the context of applying the Commission’s program carriage rules, whether the availability of third-party content on a distribution platform necessarily confers any net benefit on the platform provider).