Application for an Extension of Time to File Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit

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INTHE SUPREME COURT OF THE UNITED STATES October Term 2016

UNITED STATES TELECOMASSOCIATION,AT&T INC., CTIA-THE WIRELESS ASSOCIATION, CENTURYLINK, NCTA - THE INTERNET & TELEVISION ASSOCIATION, AMERICAN CABLE ASSOCIATION, AL-\MO BRO,-\DBAND INC., D,-\NIEL BERNINGER, SCOTT BANISTER, CHARLES GIANCARLO, JEFF PULVER, AND TECHFREEDOM, Applicants,

FEDERAL COMMUNIC\TIONS COMMISSION, ET AL., Respondents.

Application for an Extension of Time To File Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit

APPLICATION TO THE HONORABLE CHIEF JUSTICE JOHN G. ROBERTS, JR. AS CIRCUIT JUSTICE

MIC8"-\EL K. KELLOGG PETER D. KEISLER KELLOGG, HANSEN, TODD, Counsel of Record FI GEL & FREDERICK, P.L.L.C. SIDLEY AUSTIN LLP 1615 M Street, N.W. 1501 K Street, N.W. Suite 400 Washington, D.C. 20005 Washington, D.C. 20036 (202) 736-8000 (202) 326-7900 ([email protected]) Counsel for Applicant Counsel for Applicant United States Telecom Association AT&T Inc.

(Additional Counsel Listed On Inside Page)

July 10, 2017 MIGUEL A. ESTRADA HELGI C. WALI

Applicants United States Telecom Association; AT&T Inc.; CTIA -The Wireless

Association®; CenturyLink; NCTA-The Internet & Television Association; and American Cable

Association participated in the proceedings before the Federal Communications Commission

("FCC") and were petitioners-intervenors in the court of appeals proceedings. Applicants Alamo

Broadband Inc. and Daniel Berninger participated in the proceedings before the FCC and were petitioners in the court of appeals proceedings. Applicants Scott Banister; Charles Giancarlo;Jeff

Pulver; and TechFreedom participated in the proceedings before the FCC and were intervenors in the court of appeals proceedings.

Respondents FCC and the United States of America were respondents in the court of appeals proceedings.

Respondent Wireless Internet Service Providers Association participated in the proceedings before the FCC and was a petitioner-intervenor in the court of appeals proceedings.

Respondents Full Service Network; Sage Telecommunications llC; Telescape

Communications, Inc.; and TruConnect Mobile participated in the proceedings before the FCC and were petitioners in the court of appeals proceedings.

Respondents Ad Hoc Telecommunications Users Committee; Akamai Technologies, Inc.;

Wendell Brown; CARI.net; Center for Democracy & Technology; Cogent Communications, Inc.;

ColorOfChange.org; COMPTEL; Credo Mobile, Inc.; Demand Progress; DISH Network

Corporation; Etsy, Inc.; Fight for the Future, Inc.; David Frankel; Free Press; Independent

Telephone & Telecommunications Alliance; I<:ickstarter, Inc.; Level 3 Communications, LLC;

Meetup, Inc.; National Association of Regulatory Utility Commissioners; National Association of

State Utility Consumer Advocates; Netflix, Inc.; New America's Open Technology Institute; Public

Knowledge; Tumblr, Inc.; Union Square Ventures, LLC; Vimeo, LLC; and Vonage Holdings Corporation participated in the proceedings before the FCC and were intervenors in the court of appeals proceedings.

11 STATEMENTS PURSUANT TO RULE 29.6

Pursuant to Supreme Court Rule 29 .6, applicants Alamo Broadband Inc., American Cable

Association, AT&T Inc., CenturyLink, CTIA-The Wireless Association®, NCTA-The Internet &

Television Association, TechFreedom, and United States Telecom Association state as follows:

Alamo Broadband Inc. has no parent corporation, and no publicly held company owns

10% or more of Alamo Broadband's stock. Alamo Broadband is principally engaged in the provision of communications services, including the provision of broadband Internet access service.

American Cable Association ("ACA") has no parent corporation, and no publicly held corporation owns 10% or more of its stock, pays 10% or more of its dues, or possesses or exercises

10% or more of the voting control of ACA.

As relevant to this litigation, ACA is a trade association of small and medium-sized cable companies, most of which provide broadband Internet access service. ACA is principally engaged in representing the interests of its members before Congress and regulatory agencies such as the

Federal Communications Commission.

AT&T Inc. is a publicly traded corporation that, through its wholly owned affiliates, is principally engaged in the business of providing communications services and products to the general public. AT&T has no parent company, and no publicly held company owns 10% or more of its stock.

CenturyLink. The Centu1yLink companies participating in this application are CenturyLink,

Inc. (a publicly traded company) and its wholly owned subsidiaries. CenturyLink, Inc. owns subsidiaries that provide broadband Internet access and other communications senrices (e.g., voice and video) to consumers and businesses. Among the subsidiaries owned by CenturyLink, Inc. are regulated incumbent local exchange carriers. CenturyLink's local exchange carriers provide local exchange telecommunications and other communications services in 37 States, including broadband

111 Internet access. Another subsidiary is CenturyLink Communications, LLC, which provides intrastate and interstate communications services, both domestically and internationally, including broadband Internet access. CenturyLink, Inc. has no parent corporation, and no publicly held corporation owns 10% or more of its stock.

CTIA - The Wireless Association® (formerly known as the Cellular Telecommunications

& Internet Association) is a Section 501 (c)(6) not-for-profit corporation organized under the laws of the District of Columbia and represents the wireless communications industry. Members of CTIA include service providers, manufacturers, wireless data and Internet companies, and other industry participants. CTIA has not issued any shares or debt securities to the public, and CTIA has no parent companies, subsidiaries, or affiliates that have issued any shares or debt securities to the public.

NCTA-The Internet & Television Association ("NCTA") is the principal trade association of the cable television industry in the United States.* Its members include owners and operators of cable television systems serving more than 80% of the nation's cable television customers, as well as more than 200 cable program networks. The cable industry is also a leading provider of residential broadband service to U.S. households. NCTA has no parent companies,· subsidiaries, or affiliates whose listing is required by Rule 29.6.

TechFreedom is a nonprofit, non-stock corporation organized under the laws of the

District of Columbia. TechFreedom has no parent corporation. It issues no stock.

United States Telecom Association ("USTelecom") is a non-profit association of service providers and suppliers for the telecom industry. Its members provide broadband services, including retail broadband Internet access and interconnection services, to millions of consumers

'Applicant NCTA was named the National Cable & Telecommunications Association when this litigation was filed, but has since changed its name to NCTA - The Internet & Television Association.

lV and businesses across the country. USTelecom has no parent corporation, and no publicly held corporation owns 10% or more of its stock.

V APPLICATION FOR EXTENSION OF TIME

Pursuant to this Court's Rules 13.5, 22, and 30.3, applicants United States Telecom

Association, AT&T Inc., CTIA - The Wireless Association®, CenturyLink, NCTA- The Internet &

Television Association, American Cable Association, Alamo Broadband Inc., Daniel Berninger, Scott

Banister, Charles Giancarlo,Jeff Pulver, and TechFreedom hereby request a 60-day extension of time, to and including September 28, 2017, within which to file petitions for a writ of certiorari in this case.

JUDGMENT FOR WHICH REVIEW IS SOUGHT

The judgment sought to be reviewed is the decision of the United States Court of Appeals for the District of Columbia Circuit in United States Telecom Association v. FCC, 825 F.3d 674 (D.C.

Cir. 2016) ("U.S. Telecom") (attached as Exhibit A).

JURISDICTION

The D.C. Circuit issued its decision on June 14, 2016. On May 1, 2017, the D.C. Circuit denied petitions for panel rehearing (unreported order attached as Exhibit B) and petitions for rehearing en bane, over the dissents of Judge Brown and Judge Kavanaugh (reported at 855 F.3d 381; attached as Exhibit C). Pursuant to this Court's Rules 13.1, 13.3, and 30.1, petitions for a writ of certiorari would be due for filing on July 30, 2017 (because July 30 falls on a Sunday, petitions would be considered timely filed on Monday, July 31 ). This application is made at least 10 days before that date. This Court's jurisdiction would be invoked under 28 U.S.C. § 1254(1).

REASONS JUSTIFYING AN EXTENSION OF TIME

Applicants respectfully request a 60-day extension of time, to and including September 28,

2017, within which to file petitions for a writ of certiorari seeking review of the decision of the

United States Court of Appeals for the D.C. Circuit in this case. 1. This case involves a challenge to an Order in which the Federal Communications

Commission departed from the "light-touch" regulatory approach it had followed for decades and began to regulate broadband Internet access service as a common-carrier service under Title II of the Communications Act of 1934, as amended by the Telecommunications Act of 1996. See Report and Order on Remand, Declaratory Ruling, and Order, Protecting and Promoting the Open Internet, 30

FCC Red 5601 (2015) ("Title II Ordef'). The Commission issued the Title II Order at the conclusion of a rulemaking proceeding in which it proposed to adopt rules to protect "Internet openness" without changing its longstanding classification of broadband Internet access service as an

"information service" that, under the statute, cannot be regulated as a common-carrier service. See 47

U.S.C. § 153(24), (51). The Commission changed course, however, after President Obama publicly urged the Commission to reclassify broadband Internet access service as a "telecommunications service" subject to common-carrier regulation under Title II to justify more extreme net neutrality rules. See Press Release, The White House, Office of the Press Secretary, Statement ry the President on

Net Neutrality (Nov. 10, 2014), https:/ / obamawhitehouse.archives.gov/the-press-office/2014/11/10/ statement-president-net-neutrality. As a result, the Title II Order reclassified all broadband Internet access service (fixed and mobile) as a telecommunications service, and it changed the classification of mobile broadband service from a "private mobile service" exempt from common-carrier regulation to a "commercial mobile service" subject to common-carrier regulation under 47 U.S.C.

§ 332. See U.S. Telecom, 825 F.3d at 690, 695-96 (discussing rulemaking and Title II Order).

2. Multiple broadband service providers and associations of providers, including applicants, challenged the Title II Order in the D.C. Circuit. See U.S. Telecom, 825 F.3d at 686-89 (list of parties and amici), 696 (panel opinion). They were joined by other companies, organizations, and individuals (including Members of Congress) that intervened to challenge the Title II Order or filed amictts briefs supporting the petitions for review. See id. The Commission defended the Title II Order,

2 and it was supported by other individuals, companies, and organizations that intervened or filed amicus briefs supporting the Order. See id.

3. In the decision below, a divided panel of the D.C. Circuit upheld the Title II Order over the partial dissent of Senior Judge Williams. Among other things, the panel held that this Court's decision in NCTA v. Brand X Internet Services, 545 U.S. 967 (2005), "established that the

Communications Act is ambiguous with respect to the proper classification of broadband," and that statutory ambiguity gives the Commission the power to regulate broadband service as either a telecommunications service or an information service. U.S. Telecom, 825 F.3d at 701-04. The panel also upheld the Commission's decision to adopt a new set of rules for determining when a mobile service is a "commercial mobile service" in order to avoid what it said was the "statutory contradiction" that would result if mobile broadband service were a telecommunications service subject to common-carrier regulation under Title II, but a private mobile service immune from common-carrier regulation under Title III. Id. at 713-24. Judge Williams would have vacated the

Title II Order on the ground that the Commission's "justification of its switch in classification of broadband ... fails for want of reasoned decisionmaking." Id. at 744 (Williams, J., concurring in part and dissenting in part). He argued that, "[t]o the extent that the Commission relied on changed factual circumstances, its assertions of change are weak at best and linked to the Commission's change of policy by only the barest of threads." Id. He further argued that the Commission failed to account for reliance interests "in violation of its obligation under F.C.C. v. Fox Television Stations, Inc.,

556 U.S. 502, 515 (2009)." Id. (parallel citations omitted).

4. Several challengers filed petitions for rehearing en bane in the D.C. Circuit, but the court denied the petitions over the dissents of Judge Brown and Judge Kavanaugh. Judge Brown argued that, because Congress "has declined to authorize 'net neutrality' legislation of any kind, let alone revisit its classification of Internet access as outside the realm of common carrier regulation,"

3 it was inappropriate to defer to the Commission's "expansive construction of the statute." U.S.

Telecom, 855 F.3d at 405. Judge Kavanaugh similarly argued that, although this Court has required

"clear congressional authorization for major agency rules of this kind," "Congress has never enacted net neutrality legislation or clearly authorized the FCC to impose common-carrier obligations on

Internet service providers." Id. at 417. Judge Kavanaugh also contended that the Title II Order violated the First Amendment, which "bars the Government from restricting the editorial discretion of Internet service providers, absent a showing [of] market power"-a showing "the FCC ha[d] not even tried to make." Id. at 418.

5. Applicants believe that the D.C. Circuit's decision warrants this Court's review because it exceeds the scope of the Commission's authority to regulate broadband Internet access service under the Communications Act, and because the Commission violated bedrock principles of administrative law. The Commission has effectively arrogated to itself plenary, unprecedented jurisdiction to heavily regulate the Internet, not only without any clear statutory mandate, but also in the face of numerous statutory provisions designed to keep the Internet light/y regulated. And it took this extraordinary act without providing a substantial justification for its policy reversal or accounting for the massive reliance interests deliberately engendered by its decades-long light-touch policy. The Commission's decision is of extraordinary importance to the national economy, to future investment and innovation in the technology sector, and to the limits of agency authority.

6. Applicants respectfully request a 60-day extension of time to prepare petitions for a writ of certiorari. The extension is warranted because the current Commission has initiated a rulemaking proceeding that has the potential to alter the relationship between the parties and the relief that the parties, intervenors, or amici may request from this Court. The Commission has proposed "to reinstate the information service classification of broadband Internet access service and return to the light-touch regulatory framework" that existed before the issuance of the Title II

4 Order. See Notice of Proposed Rulemaking, WC Docket No. 17-108, FCC 17-60, 24 (rel. May 23,

2017), https:/ / apps.fcc.gov / edocs_public/ attachmatch/FCC-17-60A 1_Rcd.pdf. The Commission has also proposed "to reinstate the determination that mobile broadband Internet access service is not a commercial mobile se1-vice." Id. The Commission has requested comments on these proposals and set a deadline ofJuly 17, 2017, for the submission of comments and August 16, 2017, for the submission of reply comments. Id.~ 124. Depending on how the Commission responds to the comments, the rulemaking has the potential to moot applicants' challenges to the Title II Order in whole or in part and to alter the relief that applicants may seek in their petitions.

7. In addition, an extension of time would allow undersigned counsel - a number of whom expect to file separate petitions - to coordinate among themselves. It would also allow coordination with other parties that challenged the Title II Order. Such coordination would be designed to avoid unnecessary duplication among the petitions.

8. In light of the foregoing, a 60-day extension of time would provide time for the

Commission to consider whether to retain or rescind the Title II Order in whole or in part, and for undersigned counsel to prepare petitions for a writ of certiorari.

CONCLUSION

For the foregoing reasons, applicants respectfully request that this Court grant them a 60-day extension of time, to and including September 28, 2017, within which to file petitions for a writ of certiorari.

s Dated: July 10, 2017 Respectfully submitted, D1r-/L \'I~\ MICI-L\EL K. KELLOGG P:EfrER D. KEISLER KELLOGG, HANSEN, TODD, Counsel if Record FI GEL & FREDERICK, P.L.L.C. SIDLEY AUSTIN LLP 1615 M Street, N.W. 1501 K Street, N.W. Suite 400 Washington, D.C. 20005 Washington, D.C. 20036 (202) 736-8000 (202) 326-7900 ([email protected]) Counsel for Applicant Counsel for Applicant United States Telecom Association AT&T Inc.

MIGUEL A. ESTR,\D"\ HELGI C. W"\LKER GIBSON, DUNN & CRUTCHERLLP GIBSON, DUNN & CRUTCHERLLP 1050 Connecticut Avenue, N.W. 1050 Connecticut Avenue, N.W. Washington, D.C. 20036 Washington, D.C. 20036 (202) 955-8500 (202) 887-3599 Counsel for Applicant Cotmsel for Applicant NCTA - The Internet & CTIA - The Wireless Association® Television Association DAVID H. SOLOMON JEFFREY A. LAMKEN WILKINSON BARKER Kn\UER, LLP MOLOL\MKEN LLP 1800 M Street, N.W., Suite SOON The Watergate, Suite 660 Washington, D.C. 20036 600 New Hampshire Avenue, N.W. (202) 783-4141 Washington, D.C. 20037 Counsel for Applicant (202) 556-2000 CenturyLink Counsel for Applicant American Cable Association C. BOYDEN GR,W ADAM R.F. GusT"\FSON RICHARD E. WILEY BOYDEN GR,\Y & ASSOCIATES, PLLC BENNETT L. Ross 801 17th Street, N.W., Suite 350 EVE KLINDER,\ REED Washington, D.C. 20006 WILEY REIN LLP (202) 955-0620 1776 K Street, N.W. Counsel for Applicants Washington, D.C. 20006 Scott Banister, Charles Giancarlo, (202) 719-7000 ]tiff Pulver, and TechFreedom Counsel for Applicants Alamo Broadband Inc. and Daniel Berninger

6 IN THE SUPREME COURT OF THE UNITED STATES

No.17A-___

UNITED STA.TES TELECOM AssOCL\TION, AT&T INC., CTIA-THE WIRELESS ASSOCL\TION, CENTURYLINK, NCTA- THE INTERNET & TELEVISION AssOCL-\.TION, AMERIC.\N CABLE AssocuTION, ALAMO BRO,\DBAND INC., DANIEL BERNINGER, SCOTT B,\NISTER, CHARLES GUN CARLO, JEFF PULVER, AND TECHFREEDOM, Applicants,

FEDERAL COMMUNIC\TIONS COMMISSION, ET ,\L., Respondents.

CERTIFICATE OF SERVICE

Pursuant to Rule 29.5 of the Rules of this Court, I certify that all parties required to be served have been served. On July 10, 2017, I caused a copy of an Application for an Extension of

Time To File Petition for a Writ of Certiorari to the United States Court of Appeals for the District of Columbia Circuit to be served by first-class mail, postage prepaid, and by electronic mail (as designated) on those on the attached list.

Peter D. Keisler Counsel if Record for Applicants SERVICE LIST

Colleen L. Boothby Christopher J. Wright Andrew M. Brown Scott Blake Harris Sara Crifasi Harris Wiltshire & Grannis LLP Levine, Blaszak, Block & Boothby, LLP 1919 M Street, N.W., 8th Floor 2001 L Street, N.W., 9th Floor Washington, D.C. 20036 Washington, D.C. 20036 (202) 730-1325 (202) 857-2550 ([email protected]) ([email protected]) ([email protected]) ([email protected]) Counsel for Respondent Akamai Technologies, Inc. ([email protected]) Counsel for Respondent Ad Hoc Telecommunications Users Committee

Lisa A. Hayes Deepak Gupta Center for Democracy & Technology Gupta Wessler PLLC 1401 K Street, N.W., Suite 200 1900 L Street, N.W. Washington, D. C. 20006 Washington, D.C. 20036 (202) 637-9800 (202) 888-17 41 ([email protected]) ([email protected]) Counsel for Respondent Center for Democrary & Counsel for Respondents ColorOJChange.org, Credo Technology Mobile, Inc., Demand Progress, and Fight for the Future, Inc.

Robert M. Cooper Pantelis Michalopoulos Scott E. Gant Markham C. Erickson Hershel A. Wancjer Stephanie A. Roy Boies, Schiller & Flexner LLP Steptoe & Johnson LLP 1401 NewYorkAvenue,N.W. 1330 Connecticut Avenue, N.W. Washington, D.C. 20005 Washington, D.C. 20036 (202) 237-2727 (202) 429-3000 ([email protected]) ([email protected]) ([email protected]) ([email protected]) (hwancj [email protected]) ([email protected]) Counsel for Respondent Cogent Communications, Inc. Counsel for Respondents COMPTEL, DISH Network Corp., Level 3 Communications, LLC, and Neif!ix, Inc.

Kevin Russell Matthew F. Wood Goldstein & Russell, P.C. Free Press 7475 Wisconsin Avenue, Suite 850 1025 Connecticut Avenue, N.W. Bethesda, MD 20814 Suite 1110 (301) 362-0636 Washington, D.C. 20036 ([email protected]) (202) 265-1490 Counsel for Respondents Free Press, Public Knowledge, ([email protected]) and New America's Open Technology Institute Counsel for Respondent Free Press Seth D. Greenstein Jeffrey B. Wall Robert S. Schwartz Acting Solicitor General Constantine Cannon LLP Office of the Solicitor General 1001 Pennsylvania Avenue, N.W. United States Department of Justice Suite 1300N 950 Pennsylvania Avenue, N.W. Washington, D.C. 20004 Room 5614 (202) 204-3500 Washington, D.C. 20530-0001 ([email protected]) (202) 514-2217 ([email protected]) ([email protected]) Counsel for Respondents Et.ry, Inc., Kickstarter, Inc., Counsel for Respondents Federal Communications Meetup, Inc., Tumblr, Inc., Union Square Ventures, Commission and United States efAmerica LLC, and Vimeo, LLC

Genevieve Morelli Michal Rosenn ITIA Kickstarter, PBC 1101 Vermont Avenue, N.W. 58 Kent Street Suite 501 Brooklyn, NY 11222 Washington, D.C. 20005 (347) 815-4501 (202) 898-1519 ([email protected]) ([email protected]) Counsel for Respondent Kickstarter, Inc. Counsel for Respondent Independent Telephone & Telecommunications Alliance

James Bradford Ramsay Robert J. Gastner Jennifer Murphy Michael A. Graziano National Association of Regulatory Utility Eckert Seamans Cherin & Mellott, LLC Commissioners 1717 Pennsylvania Avenue, N.W. 1101 Vermont Avenue, Suite 200 12th Floor Washington, D.C. 20005 Washington, D.C. 20006 (202) 898-2207 (202) 659-6600 [email protected]) ([email protected]) [email protected]) ([email protected]) Counsel for Respondent National Association ef Counsel for Respondents Full Service Network, Sage Regulatory Utili!J Commissioners Telecommunications LLC, Te/escape Communications, Inc., and TruConnect Mobile

David Pashman David C. Bergmann Meetup, Inc. Law Office of David C. Bergmann 632 Broadway, 10th Floor 3293 Noreen Drive New York, NY 10012 Columbus, OH 43221 (646) 442-6688 (614) 771-5979 ([email protected]) ([email protected]) Counsel for Respondent Meetttp, Inc. Counsel for Respondent National Association ef State Utili!J Consumer Advocates Harold Jay Feld Sarah J. Morris John Bergmayer Kevin S. Bankston Public Knowledge Open Technology Institute I New America 1818 N Street, N.W., Suite 410 740 15th Street, N.W., Suite 900 Washington, D.C. 20036 Washington, D.C. 20005 (202) 861-0020 (202) 986-2700 ([email protected]) ([email protected]) [email protected]) ([email protected]) Counsel far Respondent Public Knowledge Counsel far Respondent New America '.r Open Technology Institute

Michael A. Cheah Russell M. Blau Vimeo, LLC Joshua M. Bobeck 555 West 18th Street Morgan, Lewis & Bockius LLP New York, NY 10011 1111 Pennsylvania Avenue, N.W. (212) 314-7457 Washington, D. C. 20004 ([email protected]) (202) 739-3000 Counsel far Respondent Vimeo, UC ([email protected]) [email protected]) Counsel far Respondent Vonage Holdings Corp.

Stephen E. Coran Lerman Senter PLLC 2001 L Street, N.W., Suite 400 Washington, D.C. 20036 (202) 429-8970 ([email protected]) Counsel far Respondent Wireless Internet Service Providers Association

674 825 FEDERAL REPORTER, 3d SERIES

have known, she cannot survive summary to compliance with employment law. It judgment on this basis. thus reads as a senior manager’s reminder Morris next argues that a reasonable to her superior of the office’s general com- jury could infer that Higginbotham knew pliance obligations—not an admission that Morris had participated in the Title VII Morris wanted to meet with a counselor or process by asking to meet with an EEO was assisting another employee in obtain- counselor. In support, Morris contends ing such a meeting apart from her ordi- that she told Higginbotham in late 2007 nary job duties. No reasonable jury could she would ‘‘not [ ] stand for any [ ] more find that Morris’s reminder notified discrimination or retaliation.’’ Morris Decl. Higginbotham that Morris was personally ¶ 35. Higginbotham also testified that in involved in the complaint process. early 2008 she was aware that an OCR Because Morris has not introduced evi- employee had asked to meet with an EEO dence sufficient for a reasonable jury to counselor—a preliminary step in filing a Title VII complaint. And finally, also in infer that either Higginbotham or Spears early 2008, Morris told Higginbotham and knew of any protected activity, the district other officials ‘‘multiple times’’ that ‘‘the court properly granted summary judgment Agency was required to provide an EEO to EPA on Morris’s retaliation claim. counselor in a timely manner.’’ 4 Id. ¶ 37. Taken together, Morris contends, her IV statements informed Higginbotham that We affirm the district court’s orders dis- Morris was the employee requesting EEO missing Morris’s termination claims and counseling. granting summary judgment on her claim [30] Morris’s argument is too specula- that her suspension was retaliatory. We tive to defeat summary judgment. And an reverse the district court’s order granting employee cannot survive summary judg- summary judgment on Morris’s claim that ment if a jury can do no more than ‘‘specu- her suspension was motivated by racial late’’ that her employer knew of her pro- discrimination and remand for further protected activity. Talavera v. Shah, 638 F.3d ceedings consistent with this opinion. 303, 313 (D.C. Cir. 2011). Morris never asserts that she told Higginbotham the request was hers. Nor does Morris contend that EPA in general was aware of her , request, or that Higginbotham as a result could have known about it. Contra Hamil- ton, 666 F.3d at 1358. Instead, during this period, it was the Department of Energy— not EPA—that handled EEO counseling UNITED STATES TELECOM requests for employees in Morris’s office. ASSOCIATION, et al., Moreover, Morris’s statements would not Petitioners necessarily have put Higginbotham on no- v. tice. To the contrary, Morris’s comment that OCR was ‘‘required to provide an FEDERAL COMMUNICATIONS COM- EEO counselor in a timely manner’’ was MISSION and United States of hardly extraordinary in an office devoted America, Respondents

4. Although Morris was entitled to meet with partment of Energy, EPA had to provide an independent EEO counselor from the De- funds for the counseling. US TELECOM ASSOCIATION v. FCC 675 Cite as 825 F.3d 674 (D.C. Cir. 2016)

Independent Telephone & Tele- (6) any deficiency in FCC’s NPRM was communications Alliance, harmless with respect to redefinition of et al., Intervenors terms ‘‘public switched network’’ and No. 15-1063 ‘‘interconnected service’’; Consolidated with 15-1078, 15-1086, 15- (7) NPRM provided adequate notice of 1090, 15-1091, 15-1092, 15-1095, 15-1099, rules from which FCC later decided to 15-1117, 15-1128, 15-1151, 15-1164 forbear; United States Court of Appeals, (8) FCC reasonably decided to forbear District of Columbia Circuit. from applying mandatory network connection and facilities unbundling re- Argued December 4, 2015 quirements; Decided June 14, 2016 (9) NPRM provided adequate notice that Background: Broadband internet service FCC would issue general conduct rule; providers and industry associations peti- (10) general conduct rule was not imper- tioned for review of a Federal Communica- missibly vague, and thus did not vio- tions Commission (FCC) order, which late Due Process Clause; and sought to compel internet openness, com- (11) new rules did not force broadband monly known as ‘‘net neutrality,’’ by re- providers to transmit speech with classifying broadband service as telecom- which they might disagree, in viola- munications service subject to common tion of First Amendment. carrier regulation under Title II of the Communications Act, forbearing from ap- Petitions denied. plying certain Title II provisions to broad- Williams, Senior Circuit Judge, filed opin- band service, and promulgating rules to ion concurring in part and dissenting in ban blocking, throttling, and paid prioriti- part. zation. Holdings: The Court of Appeals, Tatel 1. Administrative Law and Procedure and Srinivasan, Circuit Judges, held that: 751 O (1) FCC acted reasonably by reclassifying When reviewing agency regulations, broadband service as telecommunica- the role of the Court of Appeals is limited tions service; to determining whether the agency acted (2) FCC’s notice of proposed rulemaking within the limits of Congress’s delegation (NPRM) was adequate with respect to of authority and whether its action is arbi- reclassification of broadband service as trary, capricious, an abuse of discretion, or telecommunications service; otherwise not in accordance with law. 5 (3) FCC provided valid reason for chang- U.S.C.A. § 706(2)(A). ing its policy and promulgating rule 2. Administrative Law and Procedure reclassifying broadband service as tele- 760 O communications service; When reviewing agency regulations, (4) NPRM provided adequate notice that the Court of Appeals does not inquire as to FCC would regulate interconnection whether the agency’s decision is wise as a arrangements; policy matter; indeed, the Court of Appeals (5) FCC reasonably reclassified mobile is forbidden from substituting its own broadband service as commercial mo- judgment for that of the agency. 5 bile service; U.S.C.A. § 706(2)(A). 676 825 FEDERAL REPORTER, 3d SERIES

3. Administrative Law and Procedure ment meaningfully. 5 U.S.C.A. § 701 et 781 seq. WhenO reviewing agency regulations, 7. Administrative Law and Procedure the Court of Appeals does not inquire 395 whether some or many economists would O disapprove of the agency’s approach, since Under the Administrative Procedure the Court of Appeals sits as a panel of Act (APA), an agency’s final rule need not generalist judges obliged to defer to a be the one proposed in the notice of pro- reasonable judgment by an agency acting posed rulemaking (NPRM), but it does pursuant to its delegated authority. 5 need to be a logical outgrowth of the U.S.C.A. § 706(2)(A). NPRM. 5 U.S.C.A. § 701 et seq. 4. Federal Courts 3391 8. Administrative Law and Procedure Court of AppealsO will resolve only le- 395 O gal questions presented and argued by the Under the Administrative Procedure parties, and it will not consider novel argu- Act (APA), agency’s notice of proposed ments a party could have made but did rulemaking (NPRM) satisfies the logical not. outgrowth test for the validity of the final 5. Telecommunications 1321 rule if it expressly asks for comments on a Consumers’ perceptionO of broadband particular issue or otherwise makes clear internet service as standalone offering, and that the agency is contemplating a particu- as constituting telecommunications service, lar change. 5 U.S.C.A. § 701 et seq. justified Federal Communications Com- 9. Telecommunications 1337 mission’s (FCC) reclassification of broad- O Federal Communications Commis- band internet service as telecommunica- sion’s (FCC) notice of proposed rulemak- tions service subject to common carrier ing (NPRM) satisfied logical outgrowth regulation under Title II of Communica- test for validity of its final rule that reclas- tions Act, where broadband providers of- sified broadband service as telecommuni- fered both access service, i.e., ability to cations service subject to common carrier transmit data, and add-on information ser- regulation under Title II of Communica- vices, consumers typically relied on broad- tions Act, where NPRM expressly asked band service to access third-party content, thus avoiding use of add-on services, and for comments on whether FCC should re- to transmit data of their choosing to de- classify broadband service under Title II. sired destinations, and broadband service’s 5 U.S.C.A. § 701 et seq.; Communications reliance on information services to trans- Act of 1934 § 3, 47 U.S.C.A. § 153(53). mit content to end users merely facilitated 10. Telecommunications 1337 O transmission so users could access third- Federal Communications Commis- party services. Communications Act of sion’s (FCC) notice of proposed rulemak- 1934 § 3, 47 U.S.C.A. § 153(53). ing (NPRM) provided meaningful opportu- 6. Administrative Law and Procedure nity to comment on FCC’s reliance on 395 consumer perception and application of UnderO the Administrative Procedure telecommunications management excep- Act (APA), an agency’s notice of proposed tion in promulgating rule that reclassified rulemaking (NPRM) must provide suffi- broadband service as telecommunications cient factual detail and rationale for the service subject to common carrier regula- rule to permit interested parties to com- tion under Title II of Communications US TELECOM ASSOCIATION v. FCC 677 Cite as 825 F.3d 674 (D.C. Cir. 2016)

Act; NPRM expressly stated that FCC whether the agency’s answer is based on a was considering reclassification of broad- permissible construction of the statute. band service, and Supreme Court prece- 14. Telecommunications 611 dent expressly permitted FCC’s reliance Whether a carrier providesO a telecom- on consumer perception and stated that munications service subject to common reclassification would require conclusion carrier regulation under Title II of the that telecommunications component of Communications Act depends on whether broadband service was functionally sepa- the carrier makes an ‘‘offering’’ of telecom- rate from information services component. munications, as determined by the Federal 5 U.S.C.A. § 701 et seq.; Communications Communications Commission (FCC). Act of 1934 § 3, 47 U.S.C.A. § 153(53). Communications Act of 1934 § 3, 47 11. Telecommunications 1338 U.S.C.A. § 153(53). Court of Appeals lackedO jurisdiction to 15. Telecommunications 1321 entertain broadband internet service pro- Broadband internet serviceO providers’ viders’ argument that, in promulgating argument that its service satisfied statuto- rule that reclassified broadband service as ry requirements for information service, telecommunications service subject to com- and thus could not fall within category of mon carrier regulation under Title II of telecommunications service, did not pro- Communications Act, Federal Communica- vide unambiguous answer to question as to tions Commission (FCC) violated Regula- whether providers made standalone offer- tory Flexibility Act by failing to conduct ing of telecommunications, which was cen- adequate final regulatory flexibility analy- tral issue in Federal Communications sis regarding effects of reclassification on Commission’s (FCC) new rule that reclas- small businesses, where FCC included sified broadband service as telecommuni- analysis with its order, but provider failed cations service subject to common carrier to file petition for reconsideration. 5 regulation under Title II of Communica- U.S.C.A. § 604(a); Communications Act of tions Act, where providers’ argument over- 1934 §§ 3, 405, 47 U.S.C.A. §§ 153(53), looked statutory definition of information 405(a). service, which was necessarily provided 12. Administrative Law and Procedure ‘‘via telecommunications.’’ Communica- 432 tions Act of 1934 § 3, 47 U.S.C.A. AtO Chevron step one, the court asks § 153(24), (53). whether Congress has directly spoken to 16. Telecommunications 1321 the precise question at issue, and where Definition of ‘‘interactiveO computer the intent of Congress is clear, that is the service’’ in statute enacted as part of Com- end of the matter because the courts, as munications Decency Act did not clearly well as the agency, are required to give indicate that information service included effect to the unambiguously expressed in- internet access service, and thus did not tent of Congress. provide unambiguous answer to question 13. Administrative Law and Procedure as to whether providers made standalone 432, 433 offering of telecommunications, which was UnderO Chevron, if the statute is silent central issue in Federal Communications or ambiguous as to the specific question at Commission’s (FCC) new rule that reclas- issue, the court proceeds to Chevron step sified broadband service as telecommuni- two, where the question for the court is cations service subject to common carrier 678 825 FEDERAL REPORTER, 3d SERIES

regulation under Title II of Communica- nent of broadband service, by facilitating tions Act, as it was unlikely that Congress accurate and efficient routing of informa- would attempt to settle regulatory status tion and by enabling more repaid retrieval of broadband internet access services in of information, respectively. Communica- such oblique and indirect manner, especial- tions Act of 1934 § 3, 47 U.S.C.A. ly when it could have done so when adopt- § 153(24), (53). ing Telecommunications Act. Communica- tions Act of 1934 §§ 3, 230, 47 U.S.C.A. 21. Telecommunications 618 O §§ 153(53), 230(b)(1), (f); Telecommunica- To qualify as adjunct-to-basic service, tions Act of 1996, 47 U.S.C.A. § 1 et seq. and thus to fall within Communications 17. Telecommunications 604 Act’s telecommunications management exception, a service must be basic in purpose By enacting TelecommunicationsO Act, Congress did not show any intent to freeze and use, in the sense that it facilitates use the Federal Communication Commission’s of the network, without altering the funda- (FCC) existing classifications of various mental character of the telecommunica- services. Telecommunications Act of 1996, tions service. Communications Act of 1934 47 U.S.C.A. § 1 et seq. § 3, 47 U.S.C.A. § 153(24). 18. Statutes 1241 22. Administrative Law and Procedure Courts doO not regard Congress’s at- 753, 763 O tention to a matter subsequently resolved Under the Administrative Procedure by an agency pursuant to statutory author- Act (APA), if an agency articulates a ra- ity as legislative history demonstrating a tional connection between the facts found congressional construction of the statute’s and the choice made, a reviewing court will meaning. uphold its decision. 5 U.S.C.A. 19. Statutes 1267 § 706(2)(A). O Congressional inaction or congression- 23. Administrative Law and Procedure al action short of enacting positive law is 434, 502 often entitled to no weight in answering O Administrative Procedure Act’s (APA) question as to whether an agency had statutory authority to promulgate its regula- requirement of reasoned decision-making tions. ordinarily demands that an agency acknowledge and explain the reasons for a 20. Telecommunications 1321 changed interpretation. 5 U.S.C.A. O Domain name service (DNS) and § 706(2)(A). caching service that broadband internet service relied upon qualified as adjunct-to- 24. Administrative Law and Procedure basic, and thus fell within Communications 416.1, 502 O Act’s telecommunications management ex- Under the Administrative Procedure ception, as found by Federal Communica- Act (APA), an agency may not depart from tions Commission (FCC) in promulgating a prior policy sub silentio or simply disre- new rule that reclassified broadband ser- gard rules that are still valid. 5 U.S.C.A. vice as telecommunications service subject § 706(2)(A). to common carrier regulation under Title II of Communications Act, where both 25. Administrative Law and Procedure DNS and caching service facilitated use of 502 O network without altering fundamental Under the Administrative Procedure character of telecommunications compo- Act (APA), although an agency must show US TELECOM ASSOCIATION v. FCC 679 Cite as 825 F.3d 674 (D.C. Cir. 2016)

that there are good reasons for a new 28. Administrative Law and Procedure policy, the agency is not required to dem- 760 O onstrate to the court’s satisfaction that the Agency’s predictive judgments about reasons for the new policy are better than areas that are within the agency’s field of the reasons for the old one. 5 U.S.C.A. discretion and expertise are entitled to § 706(2)(A). particularly deferential review by courts 26. Telecommunications 1321 under Administrative Procedure Act. 5 Federal CommunicationsO Commission U.S.C.A. § 706. (FCC) provided valid reason for changing 29. Federal Courts 3503 its policy and promulgating rule that re- O To adequately raise an argument in classified broadband service as telecom- appellate brief, it is not enough merely to munications service subject to common mention the argument in the most skeletal carrier regulation under Title II of Com- way, leaving the court to do counsel’s munications Act, where FCC explained work. that it did not believe it could adopt appropriate open internet, or ‘‘net neutrali- 30. Telecommunications 1318 O ty,’’ rules under Telecommunications Act Communications Act did not require without reclassifying broadband service, Federal Communications Commission since, in absence of reclassification, FCC (FCC) to make any finding of market pow- believed it could only put in place open er in order to establish good reason for internet protections that steered clear of changing its policy and promulgating rule regulating broadband providers as com- that reclassified broadband service as tele- mon carriers per se. 5 U.S.C.A. § 706; communications service subject to common Communications Act of 1934 § 3, 47 carrier regulation under Title II of Act, U.S.C.A. § 153(53); 47 U.S.C.A. § 1302. since Act merely stated that service quali- 27. Telecommunications 1321 fied as telecommunications service if it Federal CommunicationsO Commis- constituted offering of telecommunications sion’s (FCC) predictive judgment that re- for fee directly to public. Communications classifying broadband service as telecom- Act of 1934 § 3, 47 U.S.C.A. § 153(53). munications service subject to common 31. Administrative Law and Procedure carrier regulation under Title II of Com- 502 O munications Act would not have negative Administrative Procedure Act (APA) impact on broadband investment was with- requires an agency to provide a more sub- in FCC’s field of discretion and expertise, stantial justification when its new policy and thus court would not second guess rests upon factual findings that contradict that judgment on challenge to FCC rule those which underlay its prior policy, or making that reclassification, where FCC when its prior policy has engendered seri- found that internet traffic was expected to ous reliance interests that must be taken grow substantially, thus driving invest- into account. 5 U.S.C.A. § 701 et seq. ment, and that any harmful effects on broadband investment were far out- 32. Telecommunications 1318 O weighed by positive effects on innovation Pursuant to Administrative Procedure and investment in other areas that new Act (APA), Federal Communications Com- rule would promote. 5 U.S.C.A. § 706; mission (FCC) provided reasoned explana- Communications Act of 1934 §§ 3, 207, 47 tion for disregarding facts and circum- U.S.C.A. §§ 153(24), 207. stances that underlay or were engendered 680 825 FEDERAL REPORTER, 3d SERIES

by its prior policy, thus supporting its indifferently or if public interest required change of policy and promulgation of rule common carrier operation, where Act re- that reclassified broadband service as tele- quired broadband providers to be treated communications service subject to common as common carriers once they were found carrier regulation under Title II of Com- to offer telecommunications service. munications Act, where FCC cited ample Communications Act of 1934 § 3, 47 record evidence to support its view that U.S.C.A. § 153(51, 53). consumers perceived broadband service as 35. Telecommunications 1321 standalone offering, and that this standal- O one offering constituted telecommunica- Federal Communications Commis- tions service. 5 U.S.C.A. § 701 et seq.; sion’s (FCC) notice of proposed rulemak- Communications Act of 1934 § 3, 47 ing (NPRM) provided adequate notice that U.S.C.A. § 153(53). FCC would regulate interconnection arrangements, i.e., arrangements between 33. Telecommunications 1318 O broadband internet service providers and Pursuant to Administrative Procedure other networks to exchange traffic in order Act (APA), Federal Communications Com- to ensure that end users could access edge mission (FCC) expressly considered claims provider content anywhere on internet, un- of industry reliance on its prior policy be- der Title II of Communications Act as fore changing its policy and promulgating component of broadband service, where rule that reclassified broadband service as NPRM expressly asked whether FCC telecommunications service subject to com- should apply its new rules to interconnec- mon carrier regulation under Title II of tion arrangements and explained that pre- Communications Act, where FCC found vious policy applied only to broadband pro- that regulatory status of broadband ser- vider’s use of its own network and not to vice appeared to have, at most, indirect exchange of traffic between networks. 5 effect on broadband investment, explaining U.S.C.A. § 553(b)(3). that key drivers of investment were demand and competition, rather than form of 36. Telecommunications 1321 regulation, and noting that its prior policy Federal CommunicationsO Commis- was in place for only short period of time. sion’s (FCC) notice of proposed rulemak- 5 U.S.C.A. § 706(2)(A). ing (NPRM) provided adequate notice that 34. Telecommunications 1318, 1321 FCC would justify its regulation of inter- Prior to promulgatingO rule that re- connection arrangements, i.e., arrange- classified broadband service as telecom- ments between broadband internet service munications service subject to common providers and other networks to exchange carrier regulation under Title II of Com- traffic, under Title II of Communications munications Act, Federal Communications Act as component of broadband service on Commission (FCC) was not required to basis that interconnection arrangements determine that broadband internet service constituted component of offering telecom- providers were common carriers under munications to end users, where NPRM NARUC test, as promulgated in National expressly asked whether FCC should ex- Ass’n of Regulatory Utility Comm’rs v. pand its reach beyond broadband provid- FCC, 533 F.2d 601 and National Ass’n of er’s use of its own network in order to Regulatory Utility Comm’rs v. FCC, 525 prevent evasion of open internet, or ‘‘net F.2d 630, pursuant to which carriers neutrality,’’ rules, and thus NPRM focused should be regulated as common carriers if on threat that broadband providers could it would make capacity available to public block edge provider access to end users at US TELECOM ASSOCIATION v. FCC 681 Cite as 825 F.3d 674 (D.C. Cir. 2016)

earlier point in transmission pathway. 5 of ‘‘public switch network’’ to include both U.S.C.A. § 553(b)(3). users available by ten-digit phone number 37. Telecommunications 1034 and users reachable by internet protocol Mobile broadband wasO mobile service, (IP) address, as part of reclassifying mo- provided for profit, and available to sub- bile broadband service as commercial mo- stantial portion of public, as required to bile service subject to common carrier support finding of reasonableness with re- regulation under Communications Act; if spect to Federal Communications Commis- Congress had meant for phrase to carry sion’s (FCC) reclassification of mobile more restrictive meaning, it could have broadband service as commercial mobile used more limited term in Communica- service subject to common carrier regulations Act, as it did in another, later-enact- tion under Communications Act, rather ed statute, Congress expressly delegated than keeping prior classification as private authority to FCC to interpret statutory mobile service. 47 U.S.C.A. § 332(c), terms, and expansion of term reflected (d)(1, 2); 47 C.F.R. § 20.3. emergence and growth of relevant IP- 38. Telecommunications 1034 based networks and involved public net- O Mobile broadband was interconnected work, in that broadband network used IP service, and thus Federal Communications addresses to give each user unique identi- Commission (FCC) reasonably reclassified fier. 18 U.S.C.A. § 1039(h)(4); Communi- mobile broadband service as commercial cations Act of 1934 § 332, 47 U.S.C.A. mobile service subject to common carrier § 332(d)(1, 2). regulation under Communications Act, rather than keeping prior classification as 41. Telecommunications 1034 private mobile service, where advances in O technology since original classification, at Federal Communications Commission time when mobile broadband was nascent (FCC) reasonably found that mobile technology, had made mobile broadband broadband gave users capability to com- available to hundreds of millions of con- municate with all other users on public sumers, and, pursuant to its delegated au- switched network, and thus FCC permissi- thority, FCC had updated its definition of bly updated its definition of ‘‘interconnect- ‘‘public switch network’’ to include both ed service,’’ which was integral part of users available by ten-digit phone number FCC’s reclassification of mobile broadband and users reachable by internet protocol service as commercial mobile service sub- (IP) address. 47 U.S.C.A. § 332(d)(1, 2); ject to common carrier regulation under 47 C.F.R. § 20.3. Communications Act, where Congress del- 39. Administrative Law and Procedure egated express authority to define ‘‘inter- 432 connected service,’’ and FCC determined O Where Congress’s delegation to an that mobile broadband gave subscriber ca- agency of interpretative authority is ex- pability to communicate with telephone press, there is no need to rely on the users through voice over internet protocol Chevron doctrines presumptive delegation (VoIP), and that, even on calls between of authority to define ambiguous or impre- two mobile broadband users, mobile broad- cise terms. band generally worked in conjunction with 40. Telecommunications 1034 native or third-party applications. Com- Federal CommunicationsO Commission munications Act of 1934 § 332, 47 U.S.C.A. (FCC) permissibly updated its definition § 332(d)(1, 2); 47 C.F.R. § 20.3. 682 825 FEDERAL REPORTER, 3d SERIES

42. Administrative Law and Procedure 45. Telecommunications 623 O 764.1 Statute governing competition in pro- O Deficiency of an agency’s notice of vision of telecommunications services im- proposed rulemaking (NPRM) is harmless poses on the Federal Communications if the challengers had actual notice of the Commission (FCC) a mandatory obligation final rule, or if they cannot show prejudice to forbear from applying any regulation or in the form of arguments they would have any provisions of the Communications Act presented to the agency if given a chance. to a telecommunications service or carrier 5 U.S.C.A. §§ 553(b), 706. when it finds the statutory criteria are met. Communications Act of 1934 § 10, 43. Telecommunications 1055 O 47 U.S.C.A. § 160(a)(1)-(3). Any deficiency in Federal Communi- cations Commission’s (FCC) notice of pro- 46. Telecommunications 1321 O posed rulemaking (NPRM) was harmless Federal Communications Commission with respect to FCC’s redefinition of term (FCC) acted reasonably by declining to ‘‘public switched network’’ to include both apply regulations’ procedural requirements users available by ten-digit phone number to its decision to forbear from applying and users reachable by internet protocol regulation or provisions of Communica- (IP) address, as part of reclassifying motions Act to telecommunications services or bile broadband service as commercial mo- carriers, as part of actions to promote bile service subject to common carrier reg- open internet, or ‘‘net neutrality,’’ where ulation under Communications Act, where FCC was forbearing on its own motion, challengers’ own comments and letters ex- and nothing in regulations indicated that changed with FCC and with other chal- requirements applied to anything but peti- lengers indicated that challengers knew of tions for forbearance. 47 U.S.C.A. potential redefinition of ‘‘public switched § 160(c); 47 C.F.R. § 1.54. network.’’ 5 U.S.C.A. §§ 553(b), 706; 47. Administrative Law and Procedure Communications Act of 1934 § 332, 47 413 U.S.C.A. § 332(d). O Court of Appeals will review an agen- 44. Telecommunications 1055 cy’s interpretation of its own regulation O Any deficiency in Federal Communi- with substantial deference. cations Commission’s (FCC) notice of pro- 48. Administrative Law and Procedure posed rulemaking (NPRM) was harmless 413 with respect to FCC’s removal of word O Agency’s interpretation of its own reg- ‘‘all’’ from definition of term ‘‘interconnect- ulation will prevail unless it is plainly erro- ed service,’’ as part of reclassifying mobile neous or inconsistent with the plain terms broadband service as commercial mobile of the disputed regulation. service subject to common carrier regulation under Communications Act, where not 49. Telecommunications 1337 O only did FCC claim that removal of ‘‘all’’ Federal Communications Commis- was inconsequential to regulation, but also sion’s (FCC) notice of proposed rulemak- removal of ‘‘all’’ had no bearing on court’s ing (NPRM) provided adequate notice of decision to uphold FCC’s reclassification rules from which FCC later decided to decision. 5 U.S.C.A. §§ 553(b), 706; Com- forbear from applying to telecommunica- munications Act of 1934 § 332, 47 U.S.C.A. tions services or carriers, as part of actions § 332(d). to promote open internet, or ‘‘net neutrali- US TELECOM ASSOCIATION v. FCC 683 Cite as 825 F.3d 674 (D.C. Cir. 2016)

ty,’’ pursuant to Communications Act, 52. Telecommunications 1321 O where NPRM listed provisions from which Federal Communications Commission FCC likely would not forbear, which nec- (FCC) provided adequate support for its essarily indicated that FCC would consider decision to forbear from applying manda- forbearing other rules, and NPRM specifi- tory network connection and facilities un- cally sought further and updated comment bundling requirements as part of actions on prior course of action involving forbear- to promote open internet, or ‘‘net neutrali- ance with respect to several rules. 5 ty,’’ where FCC identified two bases for U.S.C.A. § 553(b)(3); Communications Act forbearance, first addressing commenters of 1934 § 10, 47 U.S.C.A. § 160(a)(1)-(3), who argued that ‘‘last-mile’’ unbundling re- (c). quirements would lead to depressed in- 50. Telecommunications 1321 vestment in European broadband market- O Public interest determination did not place by finding that requirement would need to be made for each regulation, provi- encourage further deployment by estab- sion of Communications Act, and market in lishing regulatory predictability, and sec- Federal Communications Commission’s ond by identifying numerous concerns (FCC) analysis as to whether it should about burdens of sudden expansion of reg- forbear from applying mandatory network ulatory requirements. Communications connection and facilities unbundling re- Act of 1934 §§ 10, 201, 47 U.S.C.A. quirements as part of actions to promote §§ 160(a)(1)-(3), (c), 201(a); 47 U.S.C.A. open internet, or ‘‘net neutrality,’’ where §§ 251, 252. statutory language regarding public interest determination merely contemplated 53. Telecommunications 644 O that FCC might sometimes forbear in sub- When evaluating a Federal Commu- set of markets, and it was silent about how nications Commission (FCC) decision to to determine when such partial relief was forbear from applying a regulation or a appropriate. 5 U.S.C.A. § 553(b)(3); Com- provision of the Communications Act to munications Act of 1934 § 10, 47 U.S.C.A. telecommunications services or carriers, § 160(a)(1); 47 U.S.C.A. § 251(a)(1), (b)(1). the Court of Appeals is guided by the tra- 51. Telecommunications 1321 ditional arbitrary and capricious standard, Commenters’ concernsO about Federal under which the agency must examine the Communications Commission’s (FCC) de- relevant data and articulate a satisfactory cision to forbear from applying mandatory explanation for its action, including a ra- network connection and facilities unbun- tional connection between the facts found dling requirements as part of actions to and the choice made. Communications promote open internet, or ‘‘net neutrality,’’ Act of 1934 § 10, 47 U.S.C.A. § 160(a)(1)- were adequately addressed, where FCC (3). had authority to regulate network connec- 54. Telecommunications 1321 tions, broadband service fell within FCC’s O jurisdiction as interstate service, and FCC Federal Communications Commis- had no obligation to determine legal status sion’s (FCC) authority extended to rules of each underlying hypothetical regulatory governing broadband internet providers’ obligation prior to undertaking forbear- treatment of internet traffic, which encom- ance analysis. Communications Act of passed anti-paid-prioritization rule FCC 1934 §§ 10, 201, 47 U.S.C.A. §§ 160(a)(1)- imposed as part of open internet, or ‘‘net (3), (c), 201(a); 47 U.S.C.A. § 251(a)(1), neutrality,’’ rules. 47 U.S.C.A. §§ 201(b), (b)(1), (i). 1302. 684 825 FEDERAL REPORTER, 3d SERIES

55. Constitutional Law 3905 that regulated parties should know what is Due Process ClauseO requires the in- required of them so they may act accord- validation of laws or regulations that are ingly, and second, precision and guidance impermissibly vague. U.S. Const. Amend. are necessary so that those enforcing the 5. law do not act in an arbitrary or discrimi- 56. Telecommunications 1337 natory way. U.S. Const. Amend. 5. O Federal Communications Commis- 59. Constitutional Law 3905 O sion’s (FCC) notice of proposed rulemak- Under the Due Process Clause, the ing (NPRM) provided adequate notice that degree of vagueness tolerable in a given FCC, as part of issuing open internet, or statutory provision varies based on the ‘‘net neutrality,’’ rules, would issue general nature of the enactment. U.S. Const. conduct rule forbidding broadband inter- Amend. 5. net providers from engaging unreasonably interfering with end users’ access to lawful 60. Constitutional Law 4260, 4426 O content or edge providers’ ability to make When a regulation applies to business lawful content, applications, services, or conduct and imposes only civil penalties, it devices available to end users, where will be found to satisfy the vagueness doc- NPRM specifically sought comment on trine of the Due Process Clause so long as whether it should adopt new rules and how it is sufficiently specific that a reasonably it could protect against harms to open prudent person, familiar with the condi- internet, and it described in significant tions the regulation is meant to address detail factors that would animate new stan- and the objectives the regulation is meant dard. 5 U.S.C.A. § 553(b)(3). to achieve, would have fair warning of 57. Constitutional Law 4370 what the regulation requires. U.S. Const. TelecommunicationsO 1321 Amend. 5. O Federal Communications Commis- 61. Constitutional Law 3905 O sion’s (FCC) general conduct rule, which Regulation is not impermissibly vague forbade broadband internet providers from under the Due Process Clause merely be- unreasonably interfering with end users’ cause it is marked by flexibility and rea- access to lawful content or edge providers’ sonable breadth, rather than meticulous ability to make lawful content, applications, specificity; fair notice in these circum- services, or devices available to end users, stances demands no more than a reason- was not impermissibly vague, and thus did able degree of certainty. U.S. Const. not violate Due Process Clause, where rule Amend. 5. regulated business conduct and imposed only civil penalties, it applied prospective- 62. Constitutional Law 4370 O ly, it gave sufficient notice to affected pro- Telecommunications 1321 O viders of prohibited conduct going forward, Federal Communications Commis- and it included seven factors that would sion’s (FCC) advisory-opinion procedure guide FCC in determining what constitut- accompanying general conduct rule that ed unreasonable interference, with descrip- forbade broadband internet providers from tion of how each factor would be interpret- engaging unreasonably interfering with ed and applied. U.S. Const. Amend. 5. end users’ access to lawful content or edge 58. Constitutional Law 3905 providers’ ability to make lawful content, Vagueness doctrine O of the Due Pro- applications, services, or devices available cess Clause addresses two concerns: first, to end users, cured rule of any lingering US TELECOM ASSOCIATION v. FCC 685 Cite as 825 F.3d 674 (D.C. Cir. 2016)

vagueness issues under Due Process to demonstrate an injury to support stand- Clause, where providers could obtain advi- ing. U.S. Const. Amend. 1. sory opinion concerning any proposed con- 68. Constitutional Law 855 duct that might implicate rules, and any O such opinion would be made publicly avail- Standing to challenge laws burdening able. U.S. Const. Amend. 5. expressive rights under the First Amend- ment requires only a credible statement by 63. Constitutional Law 877 O the plaintiff of intent to commit violative Broadband internet provider had acts and a conventional background expec- standing to bring pre-enforcement, First tation that the government will enforce the Amendment challenge to Federal Commu- law. U.S. Const. Amend. 1. nications Commission’s (FCC) new open internet, or ‘‘net neutrality,’’ rules, where 69. Constitutional Law 855 O new rules, which generally barred provid- Principle that standing to challenge ers from denying or downgrading end-user laws burdening expressive rights under access to content and from favoring certain the First Amendment requires only a content by speeding access to it, directly credible statement by the plaintiff of intent affected provider’s business by eliminating to commit violative acts and a conventional its discretion to manage internet traffic on background expectation that the govern- its network if it so chose to do so. U.S. ment will enforce the law applies with Const. Amend. 1. particular force on a challenge to an agen- 64. Federal Civil Procedure 103.2 cy rule, since the rule, unlike a statute, is In order to establish standing,O a plain- typically reviewable without waiting for tiff must demonstrate an injury in fact that enforcement. U.S. Const. Amend. 1. is fairly traceable to the defendant’s action 70. Administrative Law and Procedure and that can be redressed by a favorable 651 decision. O There is a strong presumption of judi- 65. Federal Civil Procedure 103.2 cial review under the Administrative Pro- Injury in fact needed O to establish cedure Act (APA). 5 U.S.C.A. § 706. standing requires an invasion of a legally 71. Constitutional Law 2150 protected interest which is (a) concrete O Telecommunications 1321 and particularized, and (b) actual or immi- O nent, not conjectural or hypothetical. Federal Communications Commis- sion’s (FCC) new open internet, or ‘‘net 66. Federal Civil Procedure 103.2, neutrality,’’ rules did not force broadband 103.3 O internet providers to transmit speech with When a person or company that is the which they might disagree, in violation of direct object of an action seeks to establish First Amendment, even though rules gen- standing for a petition for review, there is erally barred providers from denying or ordinarily little question that the action downgrading end-user access to content has caused it injury, and that a judgment and from favoring certain content by preventing the action will redress it. speeding access to it, where providers ex- 67. Constitutional Law 795 ercised little, if any, editorial control over Pre-enforcement review,O particularly content users accessed on internet and in the First Amendment context, does not allowed users substantially all content require the plaintiffs to allege that they available on internet, and order imposing will in fact violate the regulation in order new rules excluded providers who chose to 686 825 FEDERAL REPORTER, 3d SERIES

exercise editorial discretion. U.S. Const. On Petitions for Review of an Order of Amend. 1. the Federal Communications Commission 72. Telecommunications 1318 Peter D. Keisler argued the cause for In the communicationsO context, the petitioners United States Telecom Associa- basic characteristic of common carriage is tion, et al. With him on the joint briefs the requirement to hold oneself out to were Michael K. Kellogg, Scott H. Angstr- serve the public indiscriminately, which eich, Miguel A. Estrada, Theodore B. Ol- prevents common carriers from making son, Jonathan C. Bond, Stephen E. Coran, individualized decisions whether and on S. Jenell Trigg, Jeffrey A. Lamken, Wash- what terms to deal. ington, DC, David H. Solomon, Russell P. 73. Constitutional Law 1497 Hanser, Rick C. Chessen, Neal M. First Amendment O protections are Goldberg, Chicago, IL, Michael S. School- triggered only where particular conduct er, Matthew A. Brill, Matthew T. Murchi- possesses sufficient communicative ele- son, Jonathan Y. Ellis, Helgi C. Walker, ments, i.e., when an intent to convey a Michael R. Huston, Kathleen M. Sullivan, particularized message is present, and in James P. Young, C. Frederick Beckner the surrounding circumstances the likeli- III, Washington, DC, David L. Lawson, hood is great that the message would be Gary L. Phillips, Gadsden, AL, and Chris- understood by those who viewed it. U.S. topher M. Heimann. Dennis Corbett, Const. Amend. 1. Washington, DC, and Kellam M. Conover entered appearances. 74. Constitutional Law 1545 Absence of First AmendmentO con- Brett A. Shumate argued the cause for cerns in the context of communications petitioners Alamo Broadband Inc. and common carriers rests on the understand- Daniel Berninger. With him on the briefs ing that such entities, insofar as they are were Andrew G. McBride, Eve Klindera subject to equal access mandates, merely Reed, Richard E. Wiley, and Bennett L. facilitate the transmission of the speech of Ross, Washington, DC. others, rather than engage in speech in Earl W. Comstock argued the cause for their own right. U.S. Const. Amend. 1. petitioners Full Service Network, et al. With him on the briefs were Robert J. 75. Constitutional Law 2150, 2151 Gastner and Michael A. Graziano, Wash- Insofar as a broadbandO internet pro- ington, DC. vider might offer its own content, such as a news or weather website, separate from its Bryan N. Tramont and Craig E. Gil- internet access service, the provider would more, Washington, DC, were on the briefs receive the same First Amendment protec- for amicus curiae Mobile Future in support tions as other producers of internet con- of petitioners CTIA-The Wireless Associa- tent. U.S. Const. Amend. 1. tion and AT&T Inc. 76. Constitutional Law 2144, 2150 Bryan N. Tramont, was on the brief for Regardless of the scaleO of dissemina- amicus curiae Telecommunications Indus- tion, both broadband internet providers try Association in support of petitioners. and telephone network providers generally Russell P. Hanser, Washington, DC, en- serve as neutral platforms for speech tered an appearance. transmission, precluding First Amendment William S. Consovoy, Thomas R. McCar- protection for such providers. U.S. Const. thy and J. Michael Connolly, Arlington, Amend. 1. VA, were on the brief for amicus curiae US TELECOM ASSOCIATION v. FCC 687 Cite as 825 F.3d 674 (D.C. Cir. 2016)

Center for Boundless Innovation in sup- The Wireless Association, AT&T Inc., port of petitioners United States Telecom American Cable Association, CenturyLink, Association, National Cable & Telecommu- Wireless Internet Service Providers Asso- nications Association, CTIA-The Wireless ciation, Alamo Broadband Inc., and Daniel Association, American Cable Association, Berninger. Wireless Internet Service Providers Asso- John P. Elwood, Kate Comerford Todd, ciation, AT&T Inc., CenturyLink, Alamo and Steven P. Lehotsky, Washington, DC, Broadband Inc., and Daniel Berninger. were on the brief for amici curiae The Thomas R. McCarthy, William S. Conso- National Association of Manufacturers, et voy, and J. Michael Connolly, Arlington, al. in support of petitioners. VA, were on the brief for amici curiae Members of Congress in support of peti- Christopher S. Yoo was on the brief for tioners United States Telecom Association, amicus curiae Christopher S. Yoo in sup- National Cable & Telecommunications As- port of petitioners. sociation, CTIA-The Wireless Association, Cory L. Andrews was on the brief for American Cable Association, Wireless In- amici curiae Former FCC Commissioner ternet Service Providers Association, Harold Furchtgott-Roth and Washington AT&T Inc., CenturyLink, Alamo Broad- Legal Foundation in support of petitioners. band Inc., and Daniel Berninger. Richard A. Samp entered an appearance. R. Benjamin Sperry was on the brief for Hans Bader, Sam Kazman, Washington, amici curiae International Center for Law DC, and Russell D. Lukas, McLean, VA, & Economics and Administrative Law were on the brief for amicus curiae Com- Scholars in support of petitioners United petitive Enterprise Institute in support of States Telecom Association, National Ca- petitioners. ble & Telecommunications Association, CTIA–The Wireless Association, American Kim M. Keenan and David Honig were Cable Association, Wireless Internet Ser- on the brief for amicus curiae Multicultural vice Providers Association, AT&T Inc., Media, Telecom and Internet Council in CenturyLink, Alamo Broadband Inc., and support of petitioners. Daniel Berninger. Lawrence J. Spiwak was on the brief for David A. Balto, Washington, DC, was on amicus curiae Phoenix Center for Ad- the brief for amicus curiae Richard Ben- vanced Legal and Economic Public Policy nett in support of petitioners United Studies in support of petitioners. States Telecom Association, National Ca- William J. Kirsch was on the briefs for ble & Telecommunications Association, CTIA-The Wireless Association, AT&T amicus curiae William J. Kirsch in support Inc., American Cable Association, Centu- of petitioners. ryLink, Wireless Internet Service Provid- C. Boyden Gray, Washington, DC, Adam ers Association, Alamo Broadband Inc., J. White, Winder, GA, and Adam R.F. and Daniel Berninger. Gustafson were on the briefs for interve- David A. Balto, Washington, DC, was on nors TechFreedom, et al. in support of the brief for amici curiae Georgetown Cen- United States Telecom Association, Na- ter for Business and Public Policy and tional Cable & Telecommunications Associ- Thirteen Prominent Economists and Schol- ation, CTIA-The Wireless Association, ars in support of petitioners United States American Cable Association, Wireless In- Telecom Association, National Cable & ternet Service Providers Association, Telecommunications Association, CTIA- AT&T Inc., CenturyLink, Alamo Broad- 688 825 FEDERAL REPORTER, 3d SERIES band Inc., and Daniel Berninger. Bradley al. in support of respondents in case no. A. Benbrook, Sacramento, CA, entered an 15-1151. appearance. Christopher Jon Sprigman was on the Jonathan B. Sallet, General Counsel, brief for amici curiae Members of Con- Federal Communications Commission, and gress in support of respondents. Jacob M. Lewis, Associate General Coun- sel, argued the causes for respondents. Gregory A. Beck, North Canton, OH, With them on the brief were William J. was on the brief for First Amendment Baer, Assistant Attorney General, U.S. Scholars as amici curiae in support of re- Department of Justice, David I. Gelfand, spondents. Deputy Assistant Attorney General, Kris- Michael J. Burstein was on the brief for ten C. Limarzi, Robert J. Wiggers, Nicko- Professors of Administrative Law as amici lai G. Levin, Attorneys, David M. Gossett, curiae in support of respondents. Deputy General Counsel, Federal Commu- nications Commission, James M. Carr, Andrew Jay Schwartzman was on the Matthew J. Dunne, and Scott M. Noveck, brief for amicus curiae Tim Wu in support Counsel. Richard K. Welch, Counsel, Fed- of respondents. eral Communications Commission, entered Andrew Jay Schwartzman, Washington, an appearance. DC, was on the brief for amicus curiae Kevin Russell and Pantelis Michalopou- Open Internet Civil Rights Coalition in los, Washington, DC, argued the cause for support of respondents. intervenors, Cogent Communications, Inc., et al. in support of respondents. With them Joseph C. Gratz and Alexandra H. Moss, on the joint brief were Markham C. Erick- San Francisco, CA, were on the brief for son, Stephanie A. Roy, Andrew W. Guhr, amici curiae Automattic Inc., et al. in sup- Robert M. Cooper, Scott E. Gant, Hershel port of respondents. A. Wancjer, Christopher J. Wright, Scott Markham C. Erickson and Andrew W. Blake Harris, Russell M. Blau, Joshua M. Guhr, Washington, DC, were on the brief Bobeck, Washington, DC, Sarah J. Morris, for amicus curiae Internet Association in Kevin S. Bankston, San Francisco, CA, support of respondents. Seth D. Greenstein, Robert S. Schwartz, Marvin Ammori, Michael A. Cheah, Dee- J. Carl Cecere and David T. Goldberg pak Gupta, Erik Stallman, Matthew F. were on the brief for amici curiae Reed Wood, James Bradford Ramsay, Jennifer Hundt, et al. in support of respondents. Murphy, Harold Jay Feld, Washington, Anthony P. Schoenberg, San Francisco, DC, David Bergmann, and Colleen L. CA, and Deepak Gupta, Washington, DC, Boothby. Hamish Hume and Patrick J. were on the brief for amici curiae Engine Whittle, Washington, DC, entered appear- Advocacy, et al. in support of respondents. ances. Anthony R. Segall, Pasadena, CA, was Michael K. Kellogg, Scott H. Angstreich, on the brief for amici curiae Writers Guild Miguel A. Estrada, Theodore B. Olson, of America, et al. in support of respon- Jonathan C. Bond, Stephen E. Coran, S. dents. Jenell Trigg, Jeffrey A. Lamken, Matthew A. Brill, Matthew T. Murchison, Jonathan Allen Hammond, Jonesboro, GA, was on Y. Ellis, Helgi C. Walker, and Michael R. the brief for amici curiae The Broadband Huston, Washington, DC, were on the Institute of California and The Media Alli- joint brief for intervenors AT&T Inc., et ance in support of respondents. US TELECOM ASSOCIATION v. FCC 689 Cite as 825 F.3d 674 (D.C. Cir. 2016)

Corynne McSherry and Arthur B. Spit- crimination requirements on broadband zer, Washington, DC, were on the brief for providers. In our second opinion, Verizon amici curiae Electronic Frontier Founda- v. FCC, 740 F.3d 623 (D.C. Cir. 2014), we tion, et al. in support of respondents. held that section 706 gives the Commis- Eric G. Null was on the brief for amicus sion authority to enact open internet curiae Consumer Union of the U.S., Inc. in rules. We nonetheless vacated the anti- support of respondents. blocking and anti-discrimination provisions Alexandra Sternburg and Henry because the Commission had chosen to Goldberg, Washington, DC, were on the classify broadband service as an informa- brief for amici curiae Computer & Com- tion service under the Communications munications Industry and Mozilla in sup- Act of 1934, which expressly prohibits the port of respondents. Commission from applying common carrier regulations to such services. The Com- Krista L. Cox was on the brief for amici mission then promulgated the order at is- curiae American Library Association, et al. sue in this case—the 2015 Open Internet in support of respondents. Order—in which it reclassified broadband Phillip R. Malone, Cambridge, MA, and service as a telecommunications service, Jeffrey T. Pearlman were on the brief for subject to common carrier regulation un- amici curiae Sascha Meinrath, Zephyr der Title II of the Communications Act. Teachout and 45,707 Users of the Internet The Commission also exercised its statu- in support of respondents. tory authority to forbear from applying Before: TATEL and SRINIVASAN, many of Title II’s provisions to broadband Circuit Judges, and WILLIAMS, Senior service and promulgated five rules to pro- Circuit Judge. mote internet openness. Three separate groups of petitioners, consisting primarily Opinion concurring in part and of broadband providers and their associa- dissenting in part filed by Senior Circuit tions, challenge the Order, arguing that Judge WILLIAMS. the Commission lacks statutory authority TATEL and SRINIVASAN, Circuit to reclassify broadband as a telecommuni- Judges: cations service, that even if the Commis- For the third time in seven years, we sion has such authority its decision was confront an effort by the Federal Commu- arbitrary and capricious, that the Com- nications Commission to compel internet mission impermissibly classified mobile openness—commonly known as net neu- broadband as a commercial mobile ser- trality—the principle that broadband pro- vice, that the Commission impermissibly viders must treat all internet traffic the forbore from certain provisions of Title II, same regardless of source. In our first and that some of the rules violate the decision, Comcast Corp. v. FCC, 600 F.3d First Amendment. For the reasons set 642 (D.C. Cir. 2010), we held that the forth in this opinion, we deny the peti- Commission had failed to cite any statuto- tions for review. ry authority that would justify its order compelling a broadband provider to ad- I. here to certain open internet practices. In Called ‘‘one of the most significant tech- response, relying on section 706 of the nological advancements of the 20th centu- Telecommunications Act of 1996, the ry,’’ Senate Committee on Commerce, Sci- Commission issued an order imposing ence and Transportation, Report on Online transparency, anti-blocking, and anti-dis- Personal Privacy Act, Sen. Rep. No. 107- 690 825 FEDERAL REPORTER, 3d SERIES

240, at 7 (2002), the internet has four have begun developing their own backbone major participants: end users, broadband networks, id. at 5688 ¶ 198. providers, backbone networks, and edge Proponents of internet openness ‘‘worry providers. Most end users connect to the about the relationship between broadband internet through a broadband provider, providers and edge providers.’’ Verizon, which delivers high-speed internet access 740 F.3d at 629. ‘‘They fear that broad- using technologies such as cable modem band providers might prevent their end- service, digital subscriber line (DSL) ser- user subscribers from accessing certain vice, and fiber optics. See In re Protecting edge providers altogether, or might de- and Promoting the Open Internet (‘‘2015 grade the quality of their end-user sub- Open Internet Order’’ or ‘‘the Order’’), 30 scribers’ access to certain edge providers, FCC Rcd. 5601, 5682–83 ¶ 188, 5751 ¶ 346. Broadband providers interconnect with either as a means of favoring their own backbone networks—‘‘long-haul fiber-optic competing content or services or to enable links and high-speed routers capable of them to collect fees from certain edge transmitting vast amounts of data.’’ Veri- providers.’’ Id. Thus, for example, ‘‘a zon, 740 F.3d at 628 (citing In re Verizon broadband provider like Comcast might Communications Inc. and MCI, Inc. Appli- limit its end-user subscribers’ ability to cations for Approval of Transfer of Con- access the New York Times website if it trol, 20 FCC Rcd. 18,433, 18,493 ¶ 110 wanted to spike traffic to its own news (2005)). Edge providers, like Netflix, Goo- website, or it might degrade the quality of gle, and Amazon, ‘‘provide content, ser- the connection to a search website like vices, and applications over the Internet.’’ Bing if a competitor like Google paid for Id. at 629 (citing In re Preserving the prioritized access.’’ Id. Open Internet (‘‘2010 Open Internet Or- Understanding the issues raised by the der’’), 25 FCC Rcd. 17,905, 17,910 ¶ 13 Commission’s current attempt to achieve (2010)). To bring this all together, when an internet openness requires familiarity with end user wishes to check last night’s base- its past efforts to do so, as well as with the ball scores on ESPN.com, his computer history of broadband regulation more gen- sends a signal to his broadband provider, erally. which in turn transmits it across the backbone to ESPN’s broadband provider, A. which transmits the signal to ESPN’s com- Much of the structure of the current puter. Having received the signal, ESPN’s computer breaks the scores into packets of regulatory scheme derives from rules the information which travel back across Commission established in its 1980 Com- ESPN’s broadband provider network to puter II Order. The Computer II rules the backbone and then across the end distinguished between ‘‘basic services’’ and user’s broadband provider network to the ‘‘enhanced services.’’ Basic services, such end user, who will then know that the Nats as telephone service, offered ‘‘pure trans- won 5 to 3. In recent years, some edge mission capability over a communications providers, such as Netflix and Google, path that is virtually transparent in terms have begun connecting directly to broad- of its interaction with customer supplied band providers’ networks, thus avoiding information.’’ In re Amendment of Section the need to interconnect with the back- 64.702 of the Commission’s Rules and Reg- bone, 2015 Open Internet Order, 30 FCC ulations (‘‘Computer II’’), 77 F.C.C. 2d 384, Rcd. at 5610 ¶ 30, and some broadband 420 ¶ 96 (1980). Enhanced services consist- providers, such as Comcast and AT&T, ed of ‘‘any offering over the telecommuni- US TELECOM ASSOCIATION v. FCC 691 Cite as 825 F.3d 674 (D.C. Cir. 2016)

cations network which is more than a basic [the Communications Act] only to the ex- transmission service,’’ for example, one in tent that it is engaged in providing tele- which ‘‘computer processing applications communications services.’’). By contrast, are used to act on the content, code, proto- an ‘‘information service,’’ the successor to col, and other aspects of the subscriber’s an enhanced service, is not subject to Title information,’’ such as voicemail. Id. at 420 II. The Telecommunications Act defines a ¶ 97. The rules subjected basic services, ‘‘telecommunications service’’ as ‘‘the offer- but not enhanced services, to common car- ing of telecommunications for a fee directly rier treatment under Title II of the Com- to the public, or to such classes of users as munications Act. Id. at 387 ¶¶ 5–7. Among to be effectively available directly to the other things, Title II requires that carriers public, regardless of the facilities used.’’ ‘‘furnish TTT communication service upon Id. § 153(53). It defines telecommunica- reasonable request,’’ 47 U.S.C. § 201(a), tions as ‘‘the transmission, between or engage in no ‘‘unjust or unreasonable dis- among points specified by the user, of crimination in charges, practices, classifica- information of the user’s choosing without tions, regulations, facilities, or services,’’ change in the form or content of the infor- id. § 202(a), and charge ‘‘just and reason- mation as sent and received.’’ Id. able’’ rates, id. § 201(b). § 153(50). An information service is an The Computer II rules also recognized a ‘‘offering of a capability for generating, third category of services, ‘‘adjunct-to-ba- acquiring, storing, transforming, process- sic’’ services: enhanced services, such as ing, retrieving, utilizing, or making avail- ‘‘speed dialing, call forwarding, [and] com- able information via telecommunications.’’ puter-provided directory assistance,’’ that Id. § 153(24). The appropriate regulatory facilitated use of a basic service. See In re treatment therefore turns on what services Implementation of the Non-Accounting a provider offers to the public: if it offers Safeguards (‘‘Non-Accounting Safeguards telecommunications, that service is subject Order’’), 11 FCC Rcd. 21,905, 21,958 ¶ 107 to Title II regulation. n. 245 (1996). Although adjunct-to-basic services fell within the definition of en- Tracking the Commission’s approach to hanced services, the Commission nonethe- adjunct-to-basic services, Congress also less treated them as basic because of their effectively created a third category for role in facilitating basic services. See Com- information services that facilitate use of puter II, 77 F.C.C. 2d at 421 ¶ 98 (explain- a telecommunications service. The ‘‘tele- ing that the Commission would not treat as communications management exception’’ an enhanced service those services used to exempts from information service treat- ‘‘facilitate [consumers’] use of traditional ment—and thus treats as a telecommuni- telephone services’’). cations service—‘‘any use [of an information service] for the management, control, Fifteen years later, Congress, borrowing or operation of a telecommunications sys- heavily from the Computer II framework, tem or the management of a telecommu- enacted the Telecommunications Act of 1996, which amended the Communications nications service.’’ Id. Act. The Telecommunications Act subjects The Commission first applied this statu- a ‘‘telecommunications service,’’ the succes- tory framework to broadband in 1998 sor to basic service, to common carrier when it classified a portion of DSL ser- regulation under Title II. 47 U.S.C. vice—broadband internet service furnished § 153(51) (‘‘A telecommunications carrier over telephone lines—as a telecommunica- shall be treated as a common carrier under tions service. See In re Deployment of 692 825 FEDERAL REPORTER, 3d SERIES

Wireline Services Offering Advanced Tele- utory interpretation established in Chev- communications Capability (‘‘Advanced ron U.S.A. Inc. v. Natural Resources De- Services Order’’), 13 FCC Rcd. 24,012, 24,- fense Council, Inc., 467 U.S. 837, 104 S.Ct. 014 ¶ 3, 24,029–30 ¶¶ 35–36 (1998). Accord- 2778, 81 L.Ed.2d 694 (1984), the Court ing to the Commission, the transmission explained that the key statutory term ‘‘of- component of DSL—the phone lines that fering’’ in the definition of ‘‘telecommunica- carried the information—was a telecommu- tions service’’ is ambiguous. Brand X, 545 nications service. Id. at 24,029–30 ¶¶ 35–36. U.S. at 989, 125 S.Ct. 2688. What a compa- The Commission classified the internet ac- ny offers, the Court reasoned, can refer to cess delivered via the phone lines, howev- either the ‘‘single, finished product’’ or the er, as a separate offering of an information product’s individual components. Id. at service. Id. at 24,030 ¶ 36. DSL providers 991, 125 S.Ct. 2688. According to the that supplied the phone lines and the inter- Court, resolving that question in the con- net access therefore offered both a tele- text of broadband service requires the communications service and an information Commission to determine whether the in- service. formation service and the telecommunica- Four years later, the Commission took a tions components ‘‘are functionally inte- different approach when it classified cable grated TTT or functionally separate.’’ Id. modem service—broadband service pro- That question ‘‘turns not on the language vided over cable lines—as solely an infor- of [the Communications Act], but on the mation service. In re Inquiry Concerning factual particulars of how Internet technol- High–Speed Access to the Internet over ogy works and how it is provided, ques- Cable and Other Facilities (‘‘Cable Broad- tions Chevron leaves to the Commission to band Order’’), 17 FCC Rcd. 4798, 4823 resolve in the first instance.’’ Id. Examin- ¶¶ 39–40 (2002). In its 2002 Cable Broad- ing the classification at Chevron’s second band Order, the Commission acknowl- step—reasonableness—the Court deferred edged that when providing the information to the Commission’s finding that ‘‘the high- service component of broadband—which, speed transmission used to provide [the according to the Commission, consisted of information service] is a functionally inte- several distinct applications, including grated component of that service,’’ id. at email and online newsgroups, id. at 4822– 998, 125 S.Ct. 2688, and upheld the order, 23 ¶ 38—cable broadband providers trans- id. at 1003, 125 S.Ct. 2688. Three Justices mit information and thus use telecommu- dissented, arguing that cable broadband nications. In the Commission’s view, how- providers offered telecommunications in ever, the transmission functioned as a the form of the ‘‘physical connection’’ be- component of a ‘‘single, integrated infor- tween their computers and end users’ com- mation service,’’ rather than as a standal- puters. See id. at 1009, 125 S.Ct. 2688 one offering. Id. at 4823 ¶ 38. The Com- (Scalia, J., dissenting). mission therefore classified them together Following Brand X, the Commission as an information service. Id. at 4822–23 classified other types of broadband service, ¶¶ 38–40. such as DSL and mobile broadband ser- The Supreme Court upheld the Commis- vice, as integrated offerings of information sion’s classification of cable modem service services without a standalone offering of in National Cable & Telecommunications telecommunications. See, e.g., In re Appro- Ass’n v. Brand X Internet Services, 545 priate Regulatory Treatment for Broad- U.S. 967, 986, 125 S.Ct. 2688, 162 L.Ed.2d band Access to the Internet over Wireless 820 (2005). Applying the principles of stat- Networks (‘‘2007 Wireless Order’’), 22 US TELECOM ASSOCIATION v. FCC 693 Cite as 825 F.3d 674 (D.C. Cir. 2016)

FCC Rcd. 5901, 5901–02 ¶ 1 (2007) (mobile necessary in the execution of its func- broadband); In re Appropriate Framework tions.’’); In re Formal Complaint of Free for Broadband Access to the Internet over Press and Public Knowledge Against Com- Wireline Facilities (‘‘2005 Wireline Broad- cast Corp. for Secretly Degrading Peer– band Order’’), 20 FCC Rcd. 14,853, 14,863– to–Peer Applications, 23 FCC Rcd. 13,028, 64 ¶ 14 (2005) (DSL). 13,034–41 ¶¶ 14–22 (2008). In Comcast, we vacated that order because the Commis- B. sion had failed to identify any grant of Although the Commission’s classification statutory authority to which the order was decisions spared broadband providers from reasonably ancillary. 600 F.3d at 644. Title II common carrier obligations, the Commission made clear that it would none- C. theless seek to preserve principles of inter- Following Comcast, the Commission is- net openness. In the 2005 Wireline Broad- sued a notice of inquiry, seeking comment band Order, which classified DSL as an on whether it should reclassify broadband integrated information service, the Com- as a telecommunications service. See In re mission announced that should it ‘‘see evi- Framework for Broadband Internet Ser- dence that providers of telecommunica- vice, 25 FCC Rcd. 7866, 7867 ¶ 2 (2010). tions for Internet access or IP-enabled Rather than reclassify broadband, howev- services are violating these principles,’’ it er, the Commission adopted the 2010 Open would ‘‘not hesitate to take action to ad- Internet Order. See 25 FCC Rcd. 17,905. dress that conduct.’’ 2005 Wireline Broad- In that order, the Commission promulgat- band Order, 20 FCC Rcd. at 14,904 ¶ 96. ed three rules: (1) a transparency rule, Simultaneously, the Commission issued a policy statement signaling its intention to which required broadband providers to ‘‘preserve and promote the open and inter- ‘‘disclose the network management prac- connected nature of the public Internet.’’ tices, performance characteristics, and In re Appropriate Framework for Broad- terms and conditions of their broadband band Access to the Internet over Wireline services’’; (2) an anti-blocking rule, which Facilities, 20 FCC Rcd. 14,986, 14,988 ¶ 4 prohibited broadband providers from (2005). ‘‘block[ing] lawful content, applications, services, or non-harmful devices’’; and (3) In 2007, the Commission found reason to act when Comcast customers accused the an anti-discrimination rule, which estab- company of interfering with their ability to lished that broadband providers ‘‘may not access certain applications. Comcast, 600 unreasonably discriminate in transmitting F.3d at 644. Because Comcast voluntarily lawful network traffic.’’ Id. at 17,906 ¶ 1. adopted new practices to address the cus- The transparency rule applied to both tomers’ concerns, the Commission ‘‘simply ‘‘fixed’’ broadband, the service a consumer ordered [Comcast] to make a set of disclo- uses on her laptop when she is at home, sures describing the details of its new and ‘‘mobile’’ broadband, the service a con- approach and the company’s progress to- sumer uses on her iPhone when she is ward implementing it.’’ Id. at 645. As au- riding the bus to work. Id. The anti-block- thority for that order, the Commission citing rule applied in full only to fixed broad- ed its section 4(i) ‘‘ancillary jurisdiction.’’ band, but the order prohibited mobile 47 U.S.C. § 154(i) (‘‘The Commission may broadband providers from ‘‘block[ing] law- perform any and all acts, make such rules ful websites, or block[ing] applications that and regulations, and issue such orders, not compete with their voice or video telepho- inconsistent with this chapter, as may be ny services.’’ Id. The anti-discrimination 694 825 FEDERAL REPORTER, 3d SERIES

rule applied only to fixed broadband. Id. plained its conclusion that, absent rules According to the Commission, mobile such as those set forth in the [2010 Open broadband warranted different treatment Internet Order], broadband providers rep- because, among other things, ‘‘the mobile resent[ed] a threat to Internet openness ecosystem is experiencing very rapid inno- and could act in ways that would ultimate- vation and change,’’ id. at 17,956 ¶ 94, and ly inhibit the speed and extent of future ‘‘most consumers have more choices for broadband deployment.’’ Id. at 645. For mobile broadband than for fixed,’’ id. at example, the Commission noted that 17,957 ¶ 95. In support of its rules, the ‘‘broadband providers like AT & T and Commission relied primarily on section 706 Time Warner have acknowledged that on- of the Telecommunications Act, which re- line video aggregators such as Netflix and quires that the Commission ‘‘encourage Hulu compete directly with their own core the deployment on a reasonable and timely video subscription service,’’ id. (internal basis of advanced telecommunications ca- quotation marks omitted), and that, even pability to all Americans,’’ 47 U.S.C. absent direct competition, ‘‘[b]roadband § 1302(a). 25 FCC Rcd. at 17,968–72 providers TTT have powerful incentives to ¶¶ 117–23. accept fees from edge providers, either in In Verizon, we upheld the Commission’s return for excluding their competitors or conclusion that section 706 provides it au- for granting them prioritized access to end thority to promulgate open internet rules. users,’’ id. at 645–46. Importantly, more- According to the Commission, such rules over, the Commission found that ‘‘broad- encourage broadband deployment because band providers have the technical TTT abil- they ‘‘preserve and facilitate the ‘virtuous ity to impose such restrictions,’’ noting circle’ of innovation that has driven the that there was ‘‘little dispute that broad- explosive growth of the Internet.’’ Verizon, band providers have the technological abil- 740 F.3d at 628. Under the Commission’s ity to distinguish between and discriminate ‘‘virtuous circle’’ theory, ‘‘Internet open- against certain types of Internet traffic.’’ ness TTT spurs investment and develop- Id. at 646. The Commission also ‘‘convinc- ment by edge providers, which leads to ingly detailed how broadband providers’ increased end-user demand for broadband [gatekeeper] position in the market gives access, which leads to increased invest- them the economic power to restrict edge- ment in broadband network infrastructure provider traffic and charge for the services and technologies, which in turns leads to they furnish edge providers.’’ Id. Although further innovation and development by the providers’ gatekeeper position would edge providers.’’ Id. at 634. Reviewing the have brought them little benefit if end record, we concluded that the Commis- users could have easily switched providers, sion’s ‘‘finding that Internet openness fos- ‘‘we [saw] no basis for questioning the ters TTT edge-provider innovation TTT was Commission’s conclusion that end users TTT reasonable and grounded in substan- [were] unlikely to react in this fashion.’’ Id. tial evidence’’ and that the Commission The Commission ‘‘detailed TTT thoroughly had ‘‘more than adequately supported and TTT the costs of switching,’’ and found that explained its conclusion that edge-provider ‘‘many end users may have no option to innovation leads to the expansion and im- switch, or at least face very limited op- provement of broadband infrastructure.’’ tions.’’ Id. at 647. Id. at 644. Finally, we explained that although We also determined that the Commis- some record evidence supported Verizon’s sion had ‘‘adequately supported and ex- insistence that the order would have a US TELECOM ASSOCIATION v. FCC 695 Cite as 825 F.3d 674 (D.C. Cir. 2016)

detrimental effect on broadband deploy- net openness.’’ In re Protecting and Pro- ment, other record evidence suggested the moting the Open Internet (‘‘NPRM’’), 29 opposite. Id. at 649. The case was thus one FCC Rcd. 5561, 5563 ¶ 4 (2014). After where ‘‘ ‘the available data do[ ] not settle receiving nearly four million comments, a regulatory issue and the agency must the Commission promulgated the order at then exercise its judgment in moving from issue in this case, the 2015 Open Internet the facts and probabilities on the record to Order. 30 FCC Rcd. at 5624 ¶ 74. a policy conclusion.’ ’’ Id. (alteration in The Order consists of three components. original) (quoting Motor Vehicle Manufac- turers Ass’n v. State Farm Mutual Auto- First, the Commission reclassified both mobile Insurance Co., 463 U.S. 29, 52, 103 fixed and mobile ‘‘broadband Internet ac- S.Ct. 2856, 77 L.Ed.2d 443 (1983)). The cess service’’ as telecommunications ser- Commission, we concluded, had ‘‘offered ‘a vices. Id. at 5743–44 ¶ 331. For purposes of rational connection between the facts the Order, the Commission defined ‘‘broad- found and the choice made.’ ’’ Id. (quoting band Internet access service’’ as ‘‘a mass- State Farm, 463 U.S. at 52, 103 S.Ct. market retail service by wire or radio that 2856). provides the capability to transmit data to We nonetheless vacated the anti-block- and receive data from all or substantially ing and anti-discrimination rules because all Internet endpoints, including any capa- they unlawfully subjected broadband pro- bilities that are incidental to and enable viders to per se common carrier treatment. the operation of the communications ser- Id. at 655, 658–59. As we explained, the vice, but excluding dial-up Internet access Communications Act provides that ‘‘[a] service.’’ Id. at 5745–46 ¶ 336 (footnote telecommunications carrier shall be treat- omitted). Because the Commission con- ed as a common carrier TTT only to the cluded that the telecommunications service extent that it is engaged in providing tele- offered to end users necessarily includes communications services.’’ Id. at 650 (quot- the arrangements that broadband providing 47 U.S.C. § 153(51)). The Commission, ers make with other networks to exchange however, had classified broadband not as a traffic—commonly referred to as ‘‘inter- telecommunications service, but rather as connection arrangements’’—the Commis- an information service, exempt from com- sion determined that Title II would apply mon carrier regulation. Id. Because the to those arrangements as well. Id. at 5686 anti-blocking and anti-discrimination rules ¶ 195. The Commission also reclassified required broadband providers to offer ser- mobile broadband service, which it had vice indiscriminately—the common law previously deemed a ‘‘private mobile ser- test for a per se common carrier obli- vice,’’ exempt from common carrier regula- gation—they ran afoul of the Communica- tion, as a ‘‘commercial mobile service,’’ tions Act. See id. at 651–52, 655, 658–59. subject to such regulation. Id. at 5778 We upheld the transparency rule, however, ¶ 388. because it imposed no per se common carrier obligations on broadband providers. In the Order’s second component, the Id. at 659. Commission carried out its statutory mandate to forbear ‘‘from applying any D. regulation or any provision’’ of the Com- A few months after our decision in Veri- munications Act if it determines that the zon, the Commission issued a notice of provision is unnecessary to ensure just proposed rulemaking to ‘‘find the best ap- and reasonable service or protect consum- proach to protecting and promoting Inter- ers and determines that forbearance is 696 825 FEDERAL REPORTER, 3d SERIES

‘‘consistent with the public interest.’’ 47 sustained in Verizon. Id. at 5669–82 U.S.C. § 160(a). Specifically, the Commis- ¶¶ 154–85. sion forbore from applying certain Title Several groups of petitioners now chal- II provisions to broadband service, includ- lenge the Order: US Telecom Association, ing section 251’s mandatory unbundling an association of service providers, along requirements. 2015 Open Internet Order, with several other providers and associa- 30 FCC Rcd. at 5804–05 ¶ 434, 5849–51 tions; Full Service Network, a service ¶ 513. provider, joined by other such providers; In the third portion of the Order, the and Alamo Broadband Inc., a service pro- Commission promulgated five open inter- vider, joined by an edge provider, Daniel net rules, which it applied to both fixed Berninger. TechFreedom, a think tank and mobile broadband service. The first devoted to technology issues, along with a three of the Commission’s rules, which it service provider and several individual in- called ‘‘bright-line rules,’’ ban blocking, vestors and entrepreneurs, has intervened throttling, and paid prioritization. Id. at on the side of petitioners US Telecom and 5647 ¶ 110. The anti-blocking and anti- Alamo. Cogent, a service provider, joined throttling rules prohibit broadband provid- by several edge providers, users, and or- ers from blocking ‘‘lawful content, applica- ganizations, has intervened on the side of tions, services, or non-harmful devices’’ or the Commission. throttling—degrading or impairing—ac- In part II, we address petitioners’ argu- cess to the same. Id. at 5648 ¶ 112, 5651 ments that the Commission has no statuto- ¶ 119. The anti-paid-prioritization rule bars ry authority to reclassify broadband as a broadband providers from ‘‘favor[ing] telecommunications service and that, even some traffic over other traffic TTT either if it possesses such authority, it acted arbi- (a) in exchange for consideration (mone- trarily and capriciously. In part III, we tary or otherwise) from a third party, or address challenges to the Commission’s (b) to benefit an affiliated entity.’’ Id. at regulation of interconnection arrange- 5653 ¶ 125. The fourth rule, known as the ments under Title II. In part IV, we con- ‘‘General Conduct Rule,’’ prohibits broad- sider arguments that the Commission band providers from ‘‘unreasonably inter- lacks statutory authority to classify mobile fer[ing] with or unreasonably disadvan- broadband service as a ‘‘commercial mobile tag[ing] (i) end users’ ability to select, service’’ and that, in any event, its decision access, and use broadband Internet access to do so was arbitrary and capricious. In service or the lawful Internet content, ap- part V, we assess the contention that the plications, services, or devices of their Commission impermissibly forbore from choice, or (ii) edge providers’ ability to certain provisions of Title II. In part VI, make lawful content, applications, services, we consider challenges to the open inter- or devices available to end users.’’ Id. at net rules. And finally, in part VII, we 5660 ¶ 136. The Commission set forth a evaluate the claim that some of the open nonexhaustive list of factors to guide its internet rules run afoul of the First application of the General Conduct Rule, Amendment. which we discuss at greater length below. See id. at 5661–64 ¶¶ 138–45. Finally, the [1–4] Before addressing these issues, Commission adopted an enhanced trans- we think it important to emphasize two parency rule, which builds upon the trans- fundamental principles governing our re- parency rule that it promulgated in its sponsibility as a reviewing court. First, our 2010 Open Internet Order and that we ‘‘role in reviewing agency regulations TTT US TELECOM ASSOCIATION v. FCC 697 Cite as 825 F.3d 674 (D.C. Cir. 2016) is a limited one.’’ Ass’n of American Rail- fore them.’’ Carducci v. Regan, 714 F.2d roads v. Interstate Commerce Commis- 171, 177 (D.C. Cir. 1983). Departing from sion, 978 F.2d 737, 740 (D.C. Cir. 1992). this rule would ‘‘deprive us in substantial Our job is to ensure that an agency has measure of that assistance of counsel acted ‘‘within the limits of [Congress’s] which the system assumes—a deficiency delegation’’ of authority, Chevron, 467 U.S. that we can perhaps supply by other at 865, 104 S.Ct. 2778, and that its action is means, but not without altering the charac- not ‘‘arbitrary, capricious, an abuse of dis- ter of our institution.’’ Id. With these two cretion, or otherwise not in accordance critical principles in mind, we turn to the with law,’’ 5 U.S.C. § 706(2)(A). Critically, first issue in this case—the Commission’s we do not ‘‘inquire as to whether the agen- reclassification of broadband as a ‘‘tele- cy’s decision is wise as a policy matter; communications service.’’ indeed, we are forbidden from substituting our judgment for that of the agency.’’ II. Ass’n of American Railroads, 978 F.2d at [5] In the Open Internet Order, the 740 (alteration and internal quotation Commission determined that broadband marks omitted). Nor do we inquire wheth- service satisfies the statutory definition of er ‘‘some or many economists would disap- a telecommunications service: ‘‘the offer- prove of the [agency’s] approach’’ because ing of telecommunications for a fee direct- ‘‘we do not sit as a panel of referees on a ly to the public.’’ 47 U.S.C. § 153(53). In professional economics journal, but as a accordance with Brand X, the Commission panel of generalist judges obliged to defer arrived at this conclusion by examining to a reasonable judgment by an agency consumer perception of what broadband acting pursuant to congressionally delegat- providers offer. 2015 Open Internet Order, ed authority.’’ City of Los Angeles v. U.S. 30 FCC Rcd. at 5750 ¶ 342. In Brand X, Department of Transportation, 165 F.3d the Supreme Court held that it was ‘‘con- 972, 978 (D.C. Cir. 1999). Second, we ‘‘sit sistent with the statute’s terms’’ for the to resolve only legal questions presented Commission to take into account ‘‘the end and argued by the parties.’’ In re Cheney, 334 F.3d 1096, 1108 (D.C. Cir. 2003), vacat- user’s perspective’’ in classifying a service ed and remanded on other grounds sub as ‘‘information’’ or ‘‘telecommunications.’’ nom. Cheney v. U.S. District Court for the 545 U.S. at 993, 125 S.Ct. 2688. Specifical- District of Columbia, 542 U.S. 367, 124 ly, the Court held that the Commission S.Ct. 2576, 159 L.Ed.2d 459 (2004); see had reasonably concluded that a provider also, e.g., United Parcel Service, Inc. v. supplies a telecommunications service Mitchell, 451 U.S. 56, 61 n.2, 101 S.Ct. when it makes a ‘‘ ‘stand-alone’ offering of 1559, 67 L.Ed.2d 732 (1981) (‘‘We decline telecommunications, i.e., an offered service to consider this argument since it was not that, from the user’s perspective, trans- raised by either of the parties here or mits messages unadulterated by computer below.’’). ‘‘It is not our duty’’ to consider processing.’’ Id. at 989, 125 S.Ct. 2688. In ‘‘novel arguments a [party] could have the Order, the Commission concluded that made but did not.’’ United States v. Lau- consumers perceive broadband service reys, 653 F.3d 27, 32 (D.C. Cir. 2011). ‘‘The both as a standalone offering and as pro- premise of our adversarial system is that viding telecommunications. See 2015 Open appellate courts do not sit as self-directed Internet Order, 30 FCC Rcd. at 5765 boards of legal inquiry and research, but ¶ 365. These conclusions about consumer essentially as arbiters of legal questions perception find extensive support in the presented and argued by the parties be- record and together justify the Commis- 698 825 FEDERAL REPORTER, 3d SERIES

sion’s decision to reclassify broadband as a as Facebook, Netflix, YouTube, Twitter, or telecommunications service. MLB.tv, or TTT to access any of thousands With respect to its first conclusion—that of websites.’’ Computer & Communications consumers perceive broadband as a stan- Industry Association Amicus Br. 7. As one dalone offering—the Commission ex- amicus succinctly explains, consumers to- plained that broadband providers offer two day ‘‘pay telecommunications providers for separate types of services: ‘‘a broadband access to the Internet, and access is exact- Internet access service,’’ id. at 5750 ¶ 341, ly what they get. For content, they turn to which provides ‘‘the ability to transmit [the] creative efforts TTT of others.’’ Auto- data to and from Internet endpoints,’’ id. mattic Amicus Br. 1. at 5755 ¶ 350; and ‘‘ ‘add-on’ applications, Indeed, given the tremendous impact content, and services that are generally third-party internet content has had on information services,’’ id. at 5750 ¶ 341, our society, it would be hard to deny its such as email and cloud-based storage pro- dominance in the broadband experience. grams, id. at 5773 ¶ 376. It found that Over the past two decades, this content from the consumer’s perspective, ‘‘broad- has transformed nearly every aspect of our band Internet access service is today suffi- lives, from profound actions like choosing a ciently independent of these information leader, building a career, and falling in services that it is a separate offering.’’ Id. love to more quotidian ones like hailing a at 5757–58 ¶ 356. cab and watching a movie. The same as- In support of its conclusion, the Com- suredly cannot be said for broadband pro- mission pointed to record evidence demon- viders’ own add-on applications. strating that consumers use broadband The Commission found, moreover, that principally to access third-party content, broadband consumers not only focus on not email and other add-on applications. the offering of transmission but often ‘‘As more American households have avoid using the broadband providers’ add- gained access to broadband Internet ac- on services altogether, choosing instead ‘‘to cess service,’’ the Commission explained, use their high-speed Internet connections ‘‘the market for Internet-based services to take advantage of competing services provided by parties other than broadband offered by third parties.’’ 2015 Open Inter- Internet access providers has flourished.’’ Id. at 5753 ¶ 347. Indeed, from 2003 to net Order, 30 FCC Rcd. at 5753 ¶ 347. For 2015, the number of websites increased instance, two third-party email services, from ‘‘approximately 36 million’’ to ‘‘an Gmail and Yahoo! Mail, were ‘‘among the estimated 900 million.’’ Id. By one esti- ten Internet sites most frequently visited mate, two edge providers, Netflix and You- during the week of January 17, 2015, with Tube, ‘‘account for 50 percent of peak In- approximately 400 million and 350 million ternet download traffic in North America.’’ visits respectively.’’ Id. at 5753 ¶ 348. Id. at 5754 ¶ 349. Some ‘‘even advise consumers specifically not to use a broadband provider-based That consumers focus on transmission to email address[ ] because a consumer can- the exclusion of add-on applications is hardly controversial. Even the most limit- not take that email address with them if he ed examination of contemporary broad- or she switches providers.’’ Id. band usage reveals that consumers rely on Amici Members of Congress in Support the service primarily to access third-party of Respondents provide many more exam- content. The ‘‘typical consumer’’ purchases ples of third-party content that consumers broadband to use ‘‘third-party apps such use in lieu of broadband provider content, US TELECOM ASSOCIATION v. FCC 699 Cite as 825 F.3d 674 (D.C. Cir. 2016)

examples that will be abundantly familiar sify tiers of service offerings and to distin- to most internet users. ‘‘[M]any consum- guish their offerings from those of compet- ers,’’ they note, ‘‘have spurned the applica- itors.’’ Id. tions TTT offered by their broadband Inter- net access service provider, in favor of Those advertisements, moreover, ‘‘link services and applications offered by third higher transmission speeds and service re- parties, such as TTT news and related con- liability with enhanced access to the Inter- tent on nytimes.com or washington- net at large—to any ‘points’ a user may post.com or Google News; home pages on wish to reach.’’ Id. at 5756 ¶ 352. For Microsoft’s MSN or Yahoo!’s ‘my.yahoo’; example, RCN brags that its service is video content on Netflix or YouTube or ‘‘ideal for watching Netflix,’’ and Verizon Hulu; streaming music on Spotify or Pan- touts its service as ‘‘work[ing] well for dora or Apple Music; and on-line shopping uploading and sharing videos on You- on Amazon.com or Target.com, as well as Tube.’’ Id. Based on the providers’ empha- many others in each category.’’ Members sis on how useful their services are for of Congress for Resp’ts Amicus Br. 22. accessing third-party content, the Commis- In support of its second conclusion—that sion found that end users view broadband from the user’s point of view, the standal- service as a mechanism to transmit data of one offering of broadband service provides their own choosing to their desired desti- telecommunications—the Commission ex- nation—i.e., as a telecommunications ser- plained that ‘‘[u]sers rely on broadband vice. Internet access service to transmit ‘information of the user’s choosing,’ ‘between or In concluding that broadband qualifies among points specified by the user,’ ’’ with- as a telecommunications service, the Com- out changing the form or content of that mission explained that although broadband information. 2015 Open Internet Order, 30 often relies on certain information services FCC Rcd. at 5761 ¶ 361 (quoting 47 U.S.C. to transmit content to end users, these § 153(50)); see also id. at 5762–63 ¶ 362. services ‘‘do not turn broadband Internet The Commission grounded that determina- access service into a functionally integrat- tion in record evidence that ‘‘broadband ed information service’’ because ‘‘they fall Internet access service is marketed today within the telecommunications system primarily as a conduit for the transmission management exception.’’ Id. at 5765 ¶ 365. of data across the Internet.’’ Id. at 5757 The Commission focused on two such ser- ¶ 354. Specifically, broadband providers vices. The first, DNS, routes end users focus their advertising on the speed of who input the name of a website to its transmission. For example, the Commis- numerical IP address, allowing users to sion quoted a Comcast ad offering ‘‘the reach the website without having to re- consistently fast speeds you need, even during peak hours’’; an RCN ad promising member its multidigit address. Id. at 5766 the ability ‘‘to upload and download in a ¶ 366. The second, caching, refers to the flash’’; and a Verizon ad claiming that process of storing copies of web content at ‘‘[w]hatever your life demands, there’s a network locations closer to users so that Verizon FiOS plan with the perfect up- they can access it more quickly. Id. at 5770 load/download speed for you.’’ Id. at 5755 ¶ 372. The Commission found that DNS ¶ 351 (alteration in original) (internal quo- and caching fit within the statute’s tele- tation marks omitted). The Commission communications management exception further observed that ‘‘fixed broadband because both services are ‘‘simply used to providers use transmission speeds to clas- facilitate the transmission of information 700 825 FEDERAL REPORTER, 3d SERIES

so that users can access other services.’’ FCC, 450 F.3d 528, 548 (D.C. Cir. 2006). Id. An NPRM satisfies the logical outgrowth Petitioners assert numerous challenges test if it ‘‘expressly ask[s] for comments on to the Commission’s decision to reclassify a particular issue or otherwise ma[kes] broadband. Finding that none has merit, clear that the agency [is] contemplating a we uphold the classification. Significantly, particular change.’’ CSX Transportation, although our colleague believes that the Inc. v. Surface Transportation Board, 584 Commission acted arbitrarily and capri- F.3d 1076, 1081 (D.C. Cir. 2009). ciously when it reclassified broadband, he [9] The Commission’s NPRM satisfied agrees that the Commission has statutory this standard. Although the NPRM did say authority to classify broadband as a tele- that the Commission was considering rely- communications service. Concurring & ing on section 706, it also ‘‘expressly asked Dissenting Op. at 748. for comments’’ on whether the Commission A. should reclassify broadband: ‘‘[w]e seek comment on whether the Commission Before addressing petitioners’ substan- should rely on its authority under Title II tive challenges to the Commission’s reclas- of the Communications Act, including TTT sification of broadband service, we must whether we should revisit the Commis- consider two procedural arguments, both sion’s classification of broadband Internet offered by US Telecom. access service as an information service First, US Telecom asserts that the Com- TTTT’’ NPRM, 29 FCC Rcd. at 5612 ¶ 148 mission violated section 553 of the Admin- (footnote omitted). istrative Procedure Act, which requires that an NPRM ‘‘include TTT either the [10] US Telecom’s second complaint— terms or substance of the proposed rule or that the NPRM failed to provide a mean- a description of the subjects and issues ingful opportunity to comment on the involved.’’ 5 U.S.C. § 553(b)(3). According Commission’s reliance on consumer per- to US Telecom, the Commission violated ception—is equally without merit. In this requirement because the NPRM pro- Brand X, the Supreme Court explained posed relying on section 706, not Title II; that classification under the Communica- never explained that the Commission tions Act turns on ‘‘what the consumer would justify reclassification based on con- perceives to be the TTT finished product.’’ sumer perception; and failed to signal that 545 U.S. at 990, 125 S.Ct. 2688. Given this, it would rely on the telecommunications and given that the NPRM expressly stated management exception. that the Commission was considering reclassifying broadband as a telecommunica- [6–8] Under the APA, an NPRM must ‘‘provide sufficient factual detail and ratio- tions service, interested parties could nale for the rule to permit interested par- ‘‘comment meaningfully’’ on the possibility ties to comment meaningfully.’’ Honeywell that the Commission would follow Brand X International, Inc. v. EPA, 372 F.3d 441, and look to consumer perception. 445 (D.C. Cir. 2004) (internal quotation Brand X also provides the answer to marks omitted). The final rule, however, US Telecom’s complaint about the tele- ‘‘need not be the one proposed in the communications management exception. In NPRM.’’ Agape Church, Inc. v. FCC, 738 Brand X, the Court made clear that to F.3d 397, 411 (D.C. Cir. 2013). Instead, it reclassify broadband as a telecommunica- ‘‘need only be a ‘logical outgrowth’ of its tions service, the Commission would need notice.’’ Covad Communications Co. v. to conclude that the telecommunications US TELECOM ASSOCIATION v. FCC 701 Cite as 825 F.3d 674 (D.C. Cir. 2016) component of broadband was ‘‘functionally tions service. Finally, they contend that separate’’ from the information services the Commission had to determine that component. Id. at 991, 125 S.Ct. 2688. broadband providers were common carri- Moreover, the dissent expressly noted that ers under this court’s NARUC test in or- the Commission could reach this conclu- der to reclassify. sion in part by determining that certain information services fit within the telecom- 1. munications management exception. [12, 13] In addressing petitioners’ first ‘‘[The] exception,’’ the dissent explained, argument, we follow the Supreme Court’s ‘‘would seem to apply to [DNS and cach- decision in Brand X and apply Chevron’s ing]. DNS, in particular, is scarcely more two-step analysis. Brand X, 545 U.S. at than routing information TTTT’’ Id. at 981, 125 S.Ct. 2688 (‘‘[W]e apply the Chev- 1012–13, 125 S.Ct. 2688 (Scalia, J., dissent- ron framework to the Commission’s inter- ing). As they could with consumer percep- pretation of the Communications Act.’’). At tion, therefore, interested parties could Chevron step one, we ask ‘‘whether Con- ‘‘comment meaningfully’’ on the Commis- gress has directly spoken to the precise sion’s use of the telecommunications man- question at issue.’’ Chevron, 467 U.S. at agement exception. 842, 104 S.Ct. 2778. Where ‘‘the intent of [11] US Telecom next argues that the Congress is clear, that is the end of the Commission violated the Regulatory Flexi- matter; for [we], as well as the agency, bility Act by failing to conduct an adequate must give effect to the unambiguously ex- Final Regulatory Flexibility Analysis re- pressed intent of Congress.’’ Id. at 842–43, garding the effects of reclassification on 104 S.Ct. 2778. But if ‘‘the statute is silent small businesses. See 5 U.S.C. § 604(a). or ambiguous with respect to the specific We lack jurisdiction to entertain this argu- issue,’’ we proceed to Chevron step two, ment. Under the Communications Act, for where ‘‘the question for the court is wheth- a party to challenge an order based ‘‘on er the agency’s answer is based on a per- questions of fact or law upon which the missible construction of the statute.’’ Id. at Commission TTT has been afforded no op- 843, 104 S.Ct. 2778. portunity to pass,’’ a party must ‘‘petition for reconsideration.’’ 47 U.S.C. § 405(a). [14] As part of its challenge to the Because the Commission included its Final Commission’s reclassification, US Telecom Regulatory Flexibility Analysis in the Or- argues that broadband is unambiguously der, US Telecom had to file a petition for an information service, which would bar reconsideration if it wished to object to the the Commission from classifying it as a analysis. US Telecom failed to do so. telecommunications service. The Commis- sion maintains, however, that Brand X es- B. tablished that the Communications Act is This brings us to petitioners’ substantive ambiguous with respect to the proper clas- challenges to reclassification. Specifically, sification of broadband. As the Commis- they argue that the Commission lacks stat- sion points out, the Court explained that utory authority to reclassify broadband as whether a carrier provides a ‘‘telecommu- a telecommunications service. They also nications service’’ depends on whether it argue that, even if it has such authority, makes an ‘‘offering’’ of telecommunica- the Commission failed to adequately ex- tions. Brand X, 545 U.S. at 989, 125 S.Ct. plain why it reclassified broadband from 2688; see also 47 U.S.C. § 153(53) (‘‘The an information service to a telecommunica- term ‘telecommunications service’ means 702 825 FEDERAL REPORTER, 3d SERIES the offering of telecommunications for a that broadband is unambiguously an infor- fee directly to the public TTTT’’ (emphasis mation service. None persuades us. First, added)). The term ‘‘offering,’’ the Court US Telecom contends that the statute’s held, is ambiguous. Brand X, 545 U.S. at text makes clear that broadband service 989, 125 S.Ct. 2688. ‘‘qualifies under each of the eight, indepen- Seeking to escape Brand X, US Telecom dent parts of the [information service] def- argues that the Court held only that the inition,’’ US Telecom Pet’rs’ Br. 30— Commission could classify as a telecommu- namely, that it ‘‘offer[s] TTT a capability nications service the ‘‘last mile’’ of trans- for generating, acquiring, storing, transmission, which US Telecom defines as the forming, processing, retrieving, utilizing, span between the end user’s computer and or making available information via tele- the broadband provider’s computer. Here, communications,’’ 47 U.S.C. § 153(24). Ac- however, the Commission classified ‘‘the cordingly, US Telecom argues, broadband entire broadband service from the end service ‘‘cannot fall within the mutually ex- user all the way to edge providers’’ as a clusive category of telecommunications telecommunications service. US Telecom service.’’ US Telecom Pet’rs’ Br. 30 (inter- Pet’rs’ Br. 44. According to US Telecom, nal quotation marks and footnote omitted). ‘‘[t]he ambiguity addressed in Brand X But this argument ignores that under the thus has no bearing here because the Or- statute’s definition of ‘‘information ser- der goes beyond the scope of whatever vice,’’ such services are provided ‘‘via tele- ambiguity [the statute] contains.’’ Id. (sec- communications.’’ 47 U.S.C. § 153(24). ond alteration in original) (internal quota- This, then, brings us back to the basic tion marks omitted). question: do broadband providers make a We have no need to resolve this dispute standalone offering of telecommunications? because, even if the Brand X decision was US Telecom’s argument fails to provide an only about the last mile, the Court focused unambiguous answer to that question. on the nature of the functions broadband providers offered to end users, not the [16] US Telecom next claims that 47 length of the transmission pathway, in U.S.C. § 230, enacted as part of the Com- holding that the ‘‘offering’’ was ambiguous. munications Decency Act of 1996, a portion As discussed earlier, the Commission of the Telecommunications Act, ‘‘confirms adopted that approach in the Order in that Congress understood Internet access concluding that the term was ambiguous to be an information service.’’ US Telecom as to the classification question presented Pet’rs’ Br. 33. Section 230(b) states that here: whether the ‘‘offering’’ of broadband ‘‘[i]t is the policy of the United States TTT internet access service can be considered a to promote the continued development of telecommunications service. In doing so, the Internet and other interactive comput- the Commission acted in accordance with er services and other interactive media.’’ the Court’s instruction in Brand X that the 47 U.S.C. § 230(b)(1). In turn, section proper classification of broadband turns 230(f) defines an ‘‘interactive computer ‘‘on the factual particulars of how Internet service’’ ‘‘[a]s used in this section’’ as ‘‘any technology works and how it is provided, information service, system, or access soft- questions Chevron leaves to the Commis- ware provider that provides or enables sion to resolve in the first instance.’’ 545 computer access by multiple users to a U.S. at 991, 125 S.Ct. 2688. computer server, including specifically a [15] US Telecom makes several argu- service or system that provides access to ments in support of its contrary position the Internet.’’ Id. § 230(f)(2). According to US TELECOM ASSOCIATION v. FCC 703 Cite as 825 F.3d 674 (D.C. Cir. 2016)

US Telecom, this definition of ‘‘interactive nology works and how it is provided, computer service’’ makes clear that an in- questions Chevron leaves to the Commis- formation service ‘‘includes an Internet ac- sion to resolve in the first instance.’’ 545 cess service.’’ US Telecom Pet’rs’ Br. 33. U.S. at 991, 125 S.Ct. 2688. As the Commission pointed out in the Or- der, however, it is ‘‘unlikely that Congress [18, 19] Amici Members of Congress in would attempt to settle the regulatory sta- Support of Petitioners advance an addi- tus of broadband Internet access services tional argument that post-Telecommunica- in such an oblique and indirect manner, tions Act legislative history ‘‘demonstrates especially given the opportunity to do so that Congress never delegated to the Com- when it adopted the Telecommunications mission’’ authority to regulate broadband Act of 1996.’’ 30 FCC Rcd. at 5777 ¶ 386; service as a telecommunications service. see Whitman v. American Trucking Members of Congress for Pet’rs Amicus Ass’ns, 531 U.S. 457, 468, 121 S.Ct. 903, Br. 4. In support, they point out that Con- 149 L.Ed.2d 1 (2001) (‘‘Congress TTT does gress has repeatedly tried and failed to not alter the fundamental details of a regu- enact open internet legislation, confirming, latory scheme in vague terms or ancillary in their view, that the Commission lacks provisions—it does not, one might say, authority to issue open internet rules. But hide elephants in mouseholes.’’). as the Supreme Court has made clear, [17] Finally, US Telecom argues that courts do not regard Congress’s ‘‘atten- ‘‘[t]he statutory context and history con- tion’’ to a matter subsequently resolved by firm the plain meaning of the statutory an agency pursuant to statutory authority text.’’ US Telecom Pet’rs’ Br. 33. Accord- as ‘‘legislative history demonstrating a ing to US Telecom, while the Computer congressional construction of the meaning II regime was in effect, the Commission of the statute.’’ American Trucking Ass’ns classified ‘‘gateway services allowing ac- v. Atchison, Topeka, & Santa Fe Railway cess to information stored by third par- Co., 387 U.S. 397, 416–17, 87 S.Ct. 1608, 18 ties’’ as enhanced services, and Congress L.Ed.2d 847 (1967). Following this ap- incorporated that classification into the proach, we have rejected attempts to use Communications Act when it enacted the legislative history to cabin an agency’s Telecommunications Act’s informa- statutory authority in the manner amici tion/telecommunications service dichoto- propose. For example, in Advanced Micro my. Id. at 33–35. ‘‘Those ‘gateways,’ ’’ US Devices v. Civil Aeronautics Board, peti- Telecom insists, ‘‘involved the same ‘func- tioners challenged the Civil Aeronautics tions and services associated with Inter- Board’s rules adopting a more deferential net access.’ ’’ Id. at 34 (quoting In re approach to the regulation of international Federal–State Joint Board on Universal Service, 13 FCC Rcd. 11,501 ¶ 75 (1998)). cargo rates. 742 F.2d 1520, 1527–28 (D.C. This argument suffers from a significant Cir. 1984). Petitioners asserted that the flaw: nothing in the Telecommunications Board had no authority to promulgate the Act suggests that Congress intended to rules because ‘‘Congress deliberately es- freeze in place the Commission’s existing chewed the course now advanced by the classifications of various services. Indeed, [Board],’’ id. at 1541, when it tried and such a reading of the Telecommunications failed to enact legislation that would have Act would conflict with the Supreme put ‘‘limits on the Board’s ratemaking Court’s holding in Brand X that classifi- functions regarding international cargo,’’ cation of broadband ‘‘turns TTT on the id. at 1523. Rejecting petitioners’ argu- factual particulars of how Internet tech- ment, we explained that ‘‘Congress’s fail- 704 825 FEDERAL REPORTER, 3d SERIES

ure to enact legislation TTT d[oes] not pre- Court observed, if the FDA did have au- clude analogous rulemaking.’’ Id. at 1542 thority to regulate the tobacco industry, (citing American Trucking Ass’ns, 387 given its statutory obligations and its fac- U.S. at 416–18, 87 S.Ct. 1608). In that case, tual findings regarding the harmful effects as here, the relevant question was whether of tobacco, the FDA would have had to ban the agency had statutory authority to pro- tobacco products, a result clearly contrary mulgate its regulations, and, as we ex- to congressional intent. See id. at 135–43, plained, ‘‘congressional inaction or con- 120 S.Ct. 1291. If Congress sought to ‘‘del- gressional action short of the enactment of egate a decision of such economic and po- positive law TTT is often entitled to no litical significance’’ to the agency, the weight’’ in answering that question. Id. at Court noted, it would have done so clearly. 1541. Amici also argue that Congress’s Id. at 160, 120 S.Ct. 1291. Relying on grants to the Commission of ‘‘narrow au- Brown & Williamson, TechFreedom urges thority over circumscribed aspects of the us to exercise ‘‘judicial skepticism of the Internet’’ indicate that the Commission [Commission’s] power grab.’’ TechFree- lacks ‘‘the authority it claims here.’’ Mem- dom Intervenor Br. 18. bers of Congress for Pet’rs Amicus Br. 9. TechFreedom ignores Brand X. As ex- None of the statutes amici cite, however, plained above, the Supreme Court express- have anything to do with the sort of com- ly recognized that Congress, by leaving a mon carrier regulations at issue here. statutory ambiguity, had delegated to the Full Service Network also urges us to Commission the power to regulate broad- resolve this case at Chevron step one, band service. By contrast, in Brown & though it takes the opposite position of US Williamson the Court held that Congress Telecom. According to Full Service Net- had ‘‘precluded’’ the FDA from regulating work, broadband is unambiguously a tele- cigarettes. communications service because it functions primarily as a transmission service. This brings us, then, to petitioners’ and That argument clearly fails in light of intervenors’ Chevron step two challenges. Brand X, which held that classification of First, US Telecom argues that the broadband as an information service was Commission’s classification is unreason- permissible. able because many broadband providers Brand X also requires that we reject offer information services, such as email, intervenor TechFreedom’s argument that alongside internet access. According to US the reclassification issue is controlled by Telecom, because broadband providers the Supreme Court’s decision in FDA v. still offer such services, consumers must Brown & Williamson Tobacco Corp., 529 perceive that those providers offer an in- U.S. 120, 120 S.Ct. 1291, 146 L.Ed.2d 121 formation service. For its part, the Com- (2000). In that case, the Court held that mission agreed that broadband providers ‘‘Congress ha[d] clearly precluded the offer email and other services, but simply FDA from asserting jurisdiction to regu- concluded that ‘‘broadband Internet access late tobacco products.’’ Id. at 126, 120 S.Ct. service is today sufficiently independent of 1291. The Court emphasized that the FDA these information services that it is a sep- had disclaimed any authority to regulate arate offering.’’ 2015 Open Internet Order, tobacco products for more than eighty 30 FCC Rcd. at 5758 ¶ 356. US Telecom years and that Congress had repeatedly nowhere challenges that conclusion, and legislated against this background. Id. at for good reason: the record contains ex- 143–59, 120 S.Ct. 1291. Furthermore, the tensive evidence that consumers perceive US TELECOM ASSOCIATION v. FCC 705 Cite as 825 F.3d 674 (D.C. Cir. 2016) a standalone offering of transmission, sep- (citing Non-Accounting Safeguards Order, arate from the offering of information ser- 11 FCC Rcd. at 21,958 ¶ 107). To qualify vices like email and cloud storage. See as an adjunct-to-basic service, a service supra at 698–99. had to be ‘‘ ‘basic in purpose and use’ in [20] US Telecom next contends that the sense that [it] facilitate[d] use of the the Commission’s reclassification of broad- network, and TTT [it] could ‘not alter the band was unreasonable because DNS and fundamental character of the [telecommu- caching do not fall within the Communica- nications service].’ ’’ Id. at 5767 ¶ 367 (last tions Act’s telecommunications manage- alteration in original) (quoting In re North ment exception. As noted above, that ex- American Telecommunications Ass’n, 101 ception excludes from the definition of an F.C.C. 2d 349, 359 ¶ 24, 360 ¶ 27 (1985)) information service ‘‘any [service] for the (some internal quotation marks omitted). management, control, or operation of a The Commission concluded that DNS and telecommunications system or the manage- caching satisfy this test because both ser- ment of a telecommunications service.’’ 47 vices facilitate use of the network without U.S.C. § 153(24). The Commission found altering the fundamental character of the that ‘‘[w]hen offered as part of a broad- telecommunications service. DNS does so band Internet access service, caching [and] by ‘‘allow[ing] more efficient use of the DNS [are] simply used to facilitate the telecommunications network by facilitating transmission of information so that users accurate and efficient routing from the end can access other services.’’ 2015 Open In- user to the receiving party.’’ Id. at 5768 ternet Order, 30 FCC Rcd. at 5770 ¶ 372. ¶ 368. Caching qualifies because it ‘‘en- Challenging this interpretation, US Tele- abl[es] the user to obtain more rapid re- com argues that DNS and caching fall trieval of information through the net- outside the exception because neither work.’’ Id. at 5770 ¶ 372 (internal quotation ‘‘manage[s] a telecommunications system marks omitted). US Telecom does not chal- or service,’’ US Telecom Pet’rs’ Br. 39, but lenge the applicability of the adjunct-to- are instead examples of the ‘‘many core basic standard, nor does it give us any information-service functions associated reason to believe that the Commission’s with Internet access,’’ id. at 37. US Tele- application of that standard was unreason- com claims that the Commission’s use of able. See GTE Service Corp. v. FCC, 224 the telecommunications management ex- F.3d 768, 772 (D.C. Cir. 2000) (‘‘[W]e will ception was also unreasonable because the defer to the [Commission’s] interpretation Commission ‘‘contends that the same func- of [the Communications Act] if it is reason- tions—DNS and caching—are used for able in light of the text, the structure, and telecommunications management when of- the purpose of [the Communications fered as part of Internet access, but are an Act].’’). information service when third-party con- As to US Telecom’s second point, the tent providers similarly offer them.’’ Id. at Commission justified treating third-party 40. We are unpersuaded. DNS and caching services differently on [21] First, the Commission explained the ground that when such services are that the Communications Act’s telecommu- ‘‘provided on a stand-alone basis by enti- nications management exception encom- ties other than the provider of Internet passes those services that would have access service[,] TTT there would be no qualified as ‘‘adjunct-to-basic’’ under the telecommunications service to which [the Computer II regime. 2015 Open Internet services are] adjunct.’’ 2015 Open Internet Order, 30 FCC Rcd. at 5766–67 ¶ 367 Order, 30 FCC Rcd. at 5769 ¶ 370 n. 1046. 706 825 FEDERAL REPORTER, 3d SERIES

Again, US Telecom has given us no basis ria are met. 47 U.S.C. § 160(a). Nothing in for questioning the reasonableness of this the Clean Air Act gave EPA any compara- conclusion. Once a carrier uses a service ble authority. Accordingly, the Commis- that would ordinarily be an information sion’s extensive forbearance does not sug- service—such as DNS or caching—to man- gest that the Order is unreasonable. age a telecommunications service, that service no longer qualifies as an information 2. service under the Communications Act. [22] We next consider US Telecom’s The same service, though, when uncon- argument that the Commission failed to nected to a telecommunications service, re- adequately explain why, having long classi- mains an information service. fied broadband as an information service, Intervenor TechFreedom makes one ad- it chose to reclassify it as a telecommuni- ditional Chevron step two argument. It cations service. Under the APA, we must contends that this case resembles Utility ‘‘determine whether the Commission’s ac- Air Regulatory Group v. EPA, in which tions were ‘arbitrary, capricious, an abuse the Supreme Court reviewed EPA regula- of discretion, or otherwise not in accor- tions applying certain statutory programs dance with law.’ ’’ Verizon, 740 F.3d at 635 governing air pollution to greenhouse gas- (quoting 5 U.S.C. § 706(2)(A)). As noted at es. ––– U.S. ––––, 134 S.Ct. 2427, 2437, 189 the outset of our opinion, ‘‘[o]ur role in this L.Ed.2d 372 (2014). EPA had ‘‘tailored’’ regard is a limited one, and we will not the programs to greenhouse gases by us- substitute our judgment for that of the ing different numerical thresholds for trig- agency.’’ EarthLink, Inc. v. FCC, 462 F.3d gering application of the programs than 1, 9 (D.C. Cir. 2006). Provided that the those listed in the statute because using Commission has ‘‘articulate[d] TTT a ‘ra- ‘‘the statutory thresholds would [have] tional connection between the facts found radically expand[ed] those programs.’’ Id. and the choice made,’ ’’ we will uphold its at 2437–38. Rejecting this approach, the decision. Verizon, 740 F.3d at 643–44 (al- Supreme Court held that because the stat- teration in original) (quoting State Farm, ute’s numerical thresholds were ‘‘unambig- 463 U.S. at 52, 103 S.Ct. 2856) (some inter- uous,’’ EPA had no ‘‘authority to ‘tailor’ nal quotation marks omitted); see also [them] to accommodate its greenhouse- FERC v. Electric Power Supply Ass’n, ––– gas-inclusive interpretation of the permit- U.S. ––––, 136 S.Ct. 760, 784, 193 L.Ed.2d ting triggers.’’ Id. at 2446. ‘‘[T]he need to 661 (2016) (‘‘Our important but limited role rewrite clear provisions of the statute,’’ the Court declared, ‘‘should have alerted EPA is to ensure that [the agency] engaged in that it had taken a wrong interpretive reasoned decisionmaking—that it weighed turn.’’ Id. According to TechFreedom, the competing views, selected [an approach] Commission’s need to extensively forbear with adequate support in the record, and from Title II similarly reveals the ‘‘inco- intelligibly explained the reasons for mak- herence’’ of its decision. TechFreedom In- ing that choice.’’). tervenor Br. 21. [23–25] As relevant here, ‘‘[t]he APA’s This case is nothing like Utility Air. Far requirement of reasoned decision-making from rewriting clear statutory language, ordinarily demands that an agency ac- the Commission followed an express statu- knowledge and explain the reasons for a tory mandate requiring it to ‘‘forbear from changed interpretation.’’ Verizon, 740 F.3d applying any regulation or any provision’’ at 636. ‘‘An agency may not, for example, of the Communications Act if certain crite- depart from a prior policy sub silentio or US TELECOM ASSOCIATION v. FCC 707 Cite as 825 F.3d 674 (D.C. Cir. 2016)

simply disregard rules that are still on the Commission, however, reached a different books.’’ FCC v. Fox Television Stations, conclusion with respect to reclassification’s Inc., 556 U.S. 502, 515, 129 S.Ct. 1800, 173 impact on broadband investment. It found L.Ed.2d 738 (2009). That said, although that ‘‘Internet traffic is expected to grow the agency ‘‘must show that there are good substantially in the coming years,’’ driving reasons for the new policy[,] TTT it need investment, 2015 Open Internet Order, 30 not demonstrate to a court’s satisfaction FCC Rcd. at 5792 ¶ 412; that Title II that the reasons for the new policy are regulation had not stifled investment when better than the reasons for the old one.’’ Id. applied in other circumstances, id. at [26] US Telecom contends that the 5793–94 ¶ 414; and that ‘‘major infrastruc- Commission lacked good reasons for re- ture providers have indicated that they will classifying broadband because ‘‘as Verizon in fact continue to invest under the [Title made clear, and as the [Commission] origi- II] framework,’’ id. at 5795 ¶ 416. In any nally recognized, it could have adopted event, the Commission found that the vir- appropriate Open Internet rules based tuous cycle—spurred by the open internet upon § 706 without reclassifying broad- rules—provides an ample counterweight, band.’’ US Telecom Pet’rs’ Br. 54 (internal in that any harmful effects on broadband citations omitted). But the Commission did investment ‘‘are far outweighed by positive not believe it could do so. Specifically, the effects on innovation and investment in Commission found it necessary to establish other areas of the ecosystem that [its] core three bright-line rules, the anti-blocking, broadband polices will promote.’’ Id. at anti-throttling, and anti-paid-prioritization 5791 ¶ 410. In reviewing these conclusions, rules, 2015 Open Internet Order, 30 FCC we ask not whether they ‘‘are correct or Rcd. at 5607 ¶ 14, all of which impose per are the ones that we would reach on our se common carrier obligations by requiring own, but only whether they are reason- broadband providers to offer indiscrimi- able.’’ EarthLink, 462 F.3d at 12 (internal nate service to edge providers, see Veri- quotation marks omitted). Moreover, ‘‘[a]n zon, 740 F.3d at 651–52. ‘‘[I]n light of agency’s predictive judgments about areas Verizon,’’ the Commission explained, ‘‘ab- that are within the agency’s field of discre- sent a classification of broadband provid- tion and expertise are entitled to particu- ers as providing a ‘telecommunications ser- larly deferential review, as long as they vice,’ the Commission could only rely on are reasonable.’’ Id. (internal quotation section 706 to put in place open Internet marks omitted). The Commission has satis- protections that steered clear of regulating fied this highly deferential standard. As to broadband providers as common carriers section 207, the Commission explained that per se.’’ 2015 Open Internet Order, 30 ‘‘[a]lthough [it] appreciate[d] carriers’ con- FCC Rcd. at 5614 ¶ 42. This, in our view, cerns that [its] reclassification decision represents a perfectly ‘‘good reason’’ for could create investment-chilling regulatory the Commission’s change in position. burdens and uncertainty, [it] believe[d] [27, 28] Raising an additional argu- that any effects are likely to be short term ment, US Telecom asserts that reclassifi- and will dissipate over time as the market- cation ‘‘will undermine’’ investment in place internalizes [the] Title II approach.’’ broadband. US Telecom Pet’rs’ Br. 54. The 2015 Open Internet Order, 30 FCC Rcd. at partial dissent agrees, pointing specifically 5791 ¶ 410. This too is precisely the kind of to 47 U.S.C. § 207, which subjects Title II ‘‘predictive judgment[ ] TTT within the common carriers to private complaints. agency’s field of discretion and expertise’’ Concurring & Dissenting Op. at 756. The that we do not second guess. 708 825 FEDERAL REPORTER, 3d SERIES

[29] In a related argument, the partial uct’’). Nothing in Brand X suggests that dissent contends that the Commission an examination of market power or compe- lacked ‘‘good reasons’’ for reclassifying be- tition in the market is a prerequisite to cause its rules, particularly the General classifying broadband. True, as the partial Conduct Rule, will decrease future invest- dissent notes, the Supreme Court cited the ment in broadband by increasing regulato- Commission’s findings regarding the level ry uncertainty. Although US Telecom as- of competition in the market for cable serts in the introduction to its brief that broadband as further support for the agen- the rules ‘‘will undermine future invest- cy’s decision to classify cable broadband as ment by large and small broadband pro- an information service. See id. at 1001, 125 viders,’’ US Telecom Pet’rs’ Br. 4, it pro- S.Ct. 2688 (describing the Commission’s vides no further elaboration on this point conclusion that market conditions sup- and never challenges reclassification on ported taking a deregulatory approach to the ground that the rules will harm broad- cable broadband service). But citing the band investment. As we have said before, Commission’s economic findings as addi- ‘‘[i]t is not enough merely to mention a possible argument in the most skeletal tional support for its approach is a far cry way, leaving the court to do counsel’s from requiring the Commission to find work.’’ New York Rehabilitation Care market power. The partial dissent also Management, LLC v. NLRB, 506 F.3d cites several Commission decisions in sup- 1070, 1076 (D.C. Cir. 2007) (internal quota- port of the proposition that the Commis- tion marks omitted). Given that no party sion has ‘‘for nearly four decades made the adequately raised this argument, we de- presence or prospect of competition the cline to consider it. See In re Cheney, 334 touchstone for refusal to apply Title II.’’ F.3d at 1108 (Reviewing courts ‘‘sit to Concurring & Dissenting Op. at 749. All of resolve only legal questions presented and those cases, however, predate the 1996 argued by the parties.’’). Telecommunications Act, which established [30] Finally, the partial dissent dis- the statutory test that Brand X considered agrees with our conclusion that the Com- and that we apply here. mission had ‘‘good reasons’’ to reclassify [31] US Telecom raises a distinct arbi- because, according to the partial dissent, it trary and capricious argument. It contends failed to make ‘‘a finding of market power that the Commission needed to satisfy a or at least a consideration of competitive heightened standard for justifying its re- conditions.’’ Concurring & Dissenting Op. classification. As US Telecom points out, at 749. But nothing in the statute requires the Supreme Court has held that ‘‘the the Commission to make such a finding. Under the Act, a service qualifies as a APA requires an agency to provide more ‘‘telecommunications service’’ as long as it substantial justification when ‘its new poli- constitutes an ‘‘offering of telecommunica- cy rests upon factual findings that contra- tions for a fee directly to the public.’’ 47 dict those which underlay its prior policy; U.S.C. § 153(53). As explained above, su- or when its prior policy has engendered pra at 697, when interpreting this provi- serious reliance interests that must be tak- sion in Brand X, the Supreme Court held en into account.’ ’’ Perez v. Mortgage that classification of broadband turns on Bankers Ass’n, ––– U.S. ––––, 135 S.Ct. consumer perception, see 545 U.S. at 990, 1199, 1209, 191 L.Ed.2d 186 (2015) (quot- 125 S.Ct. 2688 (explaining that classifica- ing Fox Television, 556 U.S. at 515, 129 tion depends on what ‘‘the consumer per- S.Ct. 1800). ‘‘[I]t is not that further justifi- ceives to be the integrated finished prod- cation is demanded by the mere fact of US TELECOM ASSOCIATION v. FCC 709 Cite as 825 F.3d 674 (D.C. Cir. 2016)

policy change[,] but that a reasoned expla- is really anything new.’’ Id. at 745. But we nation is needed for disregarding facts and need not decide whether there ‘‘is really circumstances that underlay or were en- anything new’’ because, as the partial dis- gendered by the prior policy.’’ Fox Televi- sent acknowledges, id. the Commission sion, 556 U.S. at 515–16, 129 S.Ct. 1800. concluded that changed factual circum- Put another way, ‘‘[i]t would be arbitrary stances were not critical to its classifica- and capricious to ignore such matters.’’ Id. tion decision: ‘‘[E]ven assuming, arguendo, at 515, 129 S.Ct. 1800. that the facts regarding how [broadband [32] US Telecom believes that the service] is offered had not changed, in now Commission failed to satisfy the height- applying the Act’s definitions to these ened standard because it departed from facts, we find that the provision of [broad- factual findings it made regarding consum- band service] is best understood as a tele- er perception in its 2002 Cable Broadband communications service, as discussed Order without pointing to any changes in [herein] TTT and disavow our prior inter- how consumers actually view broadband. pretations to the extent they held other- According to US Telecom, even in 2002, wise.’’ 2015 Open Internet Order, 30 FCC when the Commission classified broadband Rcd. at 5761 ¶ 360 n. 993. as an information service, consumers used broadband primarily as a means to access [33] US Telecom next argues that the third-party content and broadband provid- Commission ‘‘could not rationally abandon ers marketed their services based on its prior policy without account[ing] for speed. As we have explained, however, al- reliance interests that its prior policy en- though in 2002 the Commission found that gendered.’’ US Telecom Pet’rs’ Br. 51 (al- consumers perceived an integrated offer- teration in original) (internal quotation ing of an information service, in the pres- marks omitted). The Commission, howev- ent order the Commission cited ample rec- er, did not fail to ‘‘account’’ for reliance ord evidence supporting its current view interests. Fox Television, 556 U.S. at 515, that consumers perceive a standalone of- 129 S.Ct. 1800. Quite to the contrary, it fering of transmission. See supra at 697– expressly considered the claims of reliance 99. It thus satisfied the APA’s requirement and found that ‘‘the regulatory status of that an agency provide a ‘‘reasoned expla- broadband Internet access service appears nation TTT for disregarding facts and cir- to have, at most, an indirect effect (along cumstances that underlay TTT the prior with many other factors) on investment.’’ policy.’’ Fox Television, 556 U.S. at 515– 2015 Open Internet Order, 30 FCC Rcd. at 16, 129 S.Ct. 1800. Nothing more is re- 5760 ¶ 360. The Commission explained that quired. ‘‘the key drivers of investment are demand Presenting an argument quite similar to and competition,’’ not the form of regula- US Telecom’s, the partial dissent asserts tion. Id. at 5792 ¶ 412. Additionally, the that the Commission needed to do more Commission noted that its past regulatory than justify its current factual findings treatment of broadband likely had a par- because, in this case, ‘‘the agency explicitly ticularly small effect on investment be- invoke[d] changed circumstances’’ as a ba- cause the regulatory status of broadband sis for reclassifying broadband. Concur- service was settled for only a short period ring & Dissenting Op. at 748. At least of time. Id. at 5760–61 ¶ 360. As the Com- when an agency relies on a change in mission pointed out, just five years after circumstances, the partial dissent reasons, Brand X upheld the Commission’s classifi- ‘‘Fox requires us to examine whether there cation of broadband as an information ser- 710 825 FEDERAL REPORTER, 3d SERIES

vice, the Commission asked in a notice of definitively settled until 2005 when the Su- inquiry whether it should reclassify broad- preme Court decided Brand X. Only five band as a telecommunications service. Id. years later, the Commission sought public at 5760 ¶ 360. comment on whether it should reverse The partial dissent finds the Commis- course and classify broadband as a tele- sion’s explanation insufficient and con- communications service. See In re Frame- cludes that it failed ‘‘to make a serious work for Broadband Internet Service, 25 assessment of [broadband providers’] reli- FCC Rcd. at 7867 ¶ 2. Given this shifting ance.’’ Concurring & Dissenting Op. at 748. regulatory treatment, it was not unreason- With regard to the Commission’s conclu- able for the Commission to conclude that sion that the regulatory status of broad- broadband’s particular classification was band had only an indirect effect on invest- less important to investors than increased ment, the partial dissent believes that this demand. Contrary to our colleague, ‘‘[w]e explanation is an ‘‘irrelevance’’ because see no reason to second guess these factual ‘‘[t]he proposition that ‘many other factors’ determinations, since the court properly affect investment is a truism’’ and thus the defers to policy determinations invoking explanation ‘‘tells us little about how the [agency’s] expertise in evaluating com- much’’ the prior classification ‘‘accounts for plex market conditions.’’ Gas Transmis- the current robust broadband infrastruc- sion Northwest Corp. v. FERC, 504 F.3d ture.’’ Id. at 746. But the Commission did 1318, 1322 (D.C. Cir. 2007) (internal quota- more than simply state that the regulatory tion marks and alteration omitted). classification of broadband was one of many relevant factors. It went on to explain why other factors, namely, increased 3. demand for broadband and increased com- [34] Finally, we consider US Telecom’s petition to provide it, were more signifi- argument that the Commission could not cant drivers of broadband investment. 2015 reclassify broadband without first deter- Open Internet Order, 30 FCC Rcd. at 5760 mining that broadband providers were ¶ 360 & n. 986; id. at 5792 ¶ 412. We also common carriers under this court’s disagree with the partial dissent’s asser- NARUC test. See National Ass’n of Regu- tion that the Commission ‘‘misread[ ] the latory Utility Commissioners v. FCC, 533 history of the classification of broadband’’ F.2d 601 (D.C. Cir. 1976); National Ass’n when it found that the unsettled regulato- of Regulatory Utility Commissioners v. ry treatment of broadband likely diminish- FCC, 525 F.2d 630 (D.C. Cir. 1976). Under ed the extent of investors’ reliance on the that test, ‘‘a carrier has to be regulated as prior classification. Concurring & Dissent- ing Op. at 747. As explained above, supra a common carrier if it will make capacity at 691–93, the Commission classified available to the public indifferently or if broadband for the first time in 1998, when the public interest requires common carri- it determined that the phone lines used in er operation.’’ Virgin Islands Telephone DSL service qualified as a telecommunica- Corp. v. FCC, 198 F.3d 921, 924 (D.C. Cir. tions service. See Advanced Services Or- 1999) (internal quotation marks omitted). der, 13 FCC Rcd. at 24,014 ¶ 3, 24,029–30 As the Commission points out, however, ¶¶ 35–36. Then, in 2002 the Commission this argument ignores that the Communi- classified cable broadband service as an cations Act ‘‘provides that ‘[a] telecommu- information service, see Cable Broadband nications carrier shall be treated as a com- Order, 17 FCC Rcd. at 4823 ¶¶ 39–40, a mon carrier TTT to the extent that it is classification that was challenged and not engaged in providing telecommunications US TELECOM ASSOCIATION v. FCC 711 Cite as 825 F.3d 674 (D.C. Cir. 2016)

services,’ ’’ Resp’ts’ Br. 79 (alteration and broadband providers do not ‘‘use terms of omission in original) (quoting 47 U.S.C. interconnection to disadvantage edge pro- § 153(51)), and that ‘‘[t]he Act thus author- viders’’ or ‘‘prevent[ ] consumers from izes—indeed, requires—broadband provid- reaching the services and applications of ers to be treated as common carriers once their choosing.’’ 2015 Open Internet Order, they are found to offer telecommunications 30 FCC Rcd. at 5694 ¶ 205. Several com- service,’’ id. The Communications Act in menters, the Commission pointed out, had turn defines a telecommunications service emphasized ‘‘the potential for anticompeti- as ‘‘the offering of telecommunications for tive behavior on the part of broadband a fee directly to the public,’’ 47 U.S.C. Internet access service providers that § 153(53), and the Commission found that serve as gatekeepers to the edge providers broadband providers satisfy this statutory TTT seeking to deliver Internet traffic to test: ‘‘[h]aving affirmatively determined the broadband providers’ end users.’’ Id. at that broadband Internet access service in- 5691 ¶ 200. volves ‘telecommunications,’ we also find TTT that broadband Internet access service As authority for regulating interconnec- providers offer broadband Internet access tion arrangements, the Commission relied service ‘directly to the public.’ ’’ 2015 Open on Title II. ‘‘Broadband Internet access Internet Order, 30 FCC Rcd. at 5763 service,’’ it explained, ‘‘involves the ex- ¶ 363. Other than challenging the Commis- change of traffic between a TTT broadband sion’s interpretation of the term ‘‘offer- provider and connecting networks,’’ since ing’’—an argument which we have already ‘‘[t]he representation to retail customers rejected, see supra section II.B.1—US that they will be able to reach ‘all or Telecom never questions the Commission’s substantially all Internet endpoints’ neces- application of the statute’s test for com- sarily includes the promise to make the mon carriage. Moreover, US Telecom cites interconnection arrangements necessary to no case, nor are we aware of one, holding allow that access.’’ Id. at 5693–94 ¶ 204. that when the Commission invokes the Because the ‘‘same data is flowing between statutory test for common carriage, it the end user and edge consumer,’’ the end must also apply the NARUC test. user necessarily experiences any discriminatory treatment of the edge provider, the III. Commission reasoned, making intercon- Having thus rejected petitioners’ argu- nection ‘‘simply derivative of’’ the service ments against reclassification, we turn to offered to end users. Id. at 5748–49 ¶ 339. US Telecom’s challenges to the Commis- As a result, the Commission concluded sion’s regulation of interconnection arrangements—arrangements that broad- that it could regulate interconnection ar- band providers make with other networks rangements under Title II as a component to exchange traffic in order to ensure that of broadband service. Id. at 5686 ¶ 195. It their end users can access edge provider refrained, however, from applying the content anywhere on the internet. Broad- General Conduct Rule or any of the band providers have such arrangements bright-line rules to interconnection ar- with backbone networks, as well as with rangements because, given that it ‘‘lack[ed] certain edge providers, such as Netflix, [a] background in practices addressing In- that connect directly to broadband provid- ternet traffic exchange,’’ it would be ‘‘pre- er networks. In the Order, the Commission mature to adopt prescriptive rules to ad- found that regulation of interconnection dress any problems that have arisen or arrangements was necessary to ensure may arise.’’ Id. at 5692–93 ¶ 202. Rather, it 712 825 FEDERAL REPORTER, 3d SERIES

explained that interconnection disputes scription of the subjects and issues in- would be evaluated on a case-by-case basis volved.’’ 5 U.S.C. § 553(b)(3). An NPRM under sections 201, 202, and 208 of the does so if it ‘‘provide[s] sufficient factual Communications Act. See id. at 5686–87 detail and rationale for the rule to permit ¶ 195. US Telecom presents two challenges interested parties to comment meaningful- to the Commission’s decision to regulate ly.’’ Honeywell International, Inc., 372 interconnection arrangements under Title F.3d at 445 (internal quotation marks II, one procedural and one substantive. We omitted). Again, the NPRM did just that. reject both. It asked whether the Commission should [35] Echoing its arguments with re- expand its reach beyond ‘‘a broadband spect to reclassification, US Telecom first provider’s use of its own network’’ in order claims that the NPRM provided inade- to ‘‘ensure that a broadband provider quate notice that the Commission would would not be able to evade our open Inter- regulate interconnection arrangements un- net rules by engaging in traffic exchange der Title II. As we noted above, an NPRM practices.’’ NPRM, 29 FCC Rcd. at 5582 satisfies APA notice obligations when it ¶ 59. By focusing on the threat that broad- ‘‘expressly ask[s] for comments on a par- band providers might block edge provider ticular issue or otherwise ma[kes] clear access to end users at an earlier point in that the agency [is] contemplating a partic- the transmission pathway, the NPRM al- ular change.’’ CSX Transportation, Inc., lowed interested parties to comment 584 F.3d at 1081. The NPRM did just that. meaningfully on the possibility that the It expressly asked whether the Commis- Commission would consider interconnec- sion should apply its new rules—rules tion arrangements to be part of the offer- which it had signaled might depend upon ing of telecommunications to end users. Title II reclassification, NPRM, 29 FCC Indeed, interested parties interpreted the Rcd. at 5612 ¶ 148—to interconnection ar- NPRM as presenting just that possibility. rangements. The NPRM explained that To take one example, COMPTEL ex- the 2010 Open Internet Order had applied plained in its comments that ‘‘as feared by only ‘‘to a broadband provider’s use of its the Commission in its [NPRM], a [broad- own network TTT but [had] not appl[ied] band] provider can simply evade the Com- TTT to the exchange of traffic between mission’s 2010 rules by moving its demand networks.’’ NPRM, 29 FCC Rcd. at 5582 for an access fee upstream to the entry ¶ 59. Although the Commission ‘‘tentative- point to the [broadband provider’s net- ly conclude[d] that [it] should maintain this work].’’ Letter from Markham C. Erick- approach, TTT [the NPRM sought] com- son, Counsel to COMPTEL, to Marlene H. ment on whether [the Commission] should Dortch, FCC, GN Dkt. Nos. 14-28 & 10- change [its] conclusion.’’ Id. 127, at 10 (Feb. 19, 2015). Because ‘‘[t]he [36] US Telecom insists that the interconnection point is simply a literal NPRM was nonetheless inadequate be- extension of the [broadband provider’s cause it nowhere suggested that the Com- network],’’ COMPTEL explained, ‘‘apply- mission might justify regulating intercon- ing the same open Internet rules to the nection arrangements under Title II on point of interconnection is a logical exten- the basis that they are a component of the sion of the 2010 Open Internet Order and offering of telecommunications to end clearly in line with the Commission’s TTT users. Under the APA, an NPRM provides proposal [in the NPRM].’’ Id. adequate notice as long as it reveals the US Telecom next argues that our deci- ‘‘substance of the proposed rule or a de- sion in Verizon prevents the Commission US TELECOM ASSOCIATION v. FCC 713 Cite as 825 F.3d 674 (D.C. Cir. 2016)

from regulating interconnection arrange- We address here a second set of provisions ments under Title II without first classify- that pertain to the treatment of mobile ing the arrangements as an offering of broadband as common carriage. telecommunications to edge providers and backbone networks. As US Telecom Those provisions, found in Title III of points out, Verizon recognized that broad- the Communications Act, segregate ‘‘mo- band, and thus interconnection arrange- bile services’’ into two, mutually exclusive ments, provides a service not only to end categories: ‘‘commercial mobile services’’ users but also to edge providers and back- and ‘‘private mobile services.’’ 47 U.S.C. bone networks, namely, the ability to § 332(c). Providers of commercial mobile reach the broadband provider’s users. services—mobile services that are, among Verizon, 740 F.3d at 653. According to US other things, available ‘‘to the public’’ or ‘‘a Telecom, Verizon therefore requires the substantial portion of the public’’—are sub- Commission to classify this service to ject to common carrier regulation. Id. edge providers and backbone networks as § 332(c)(1), (d)(1). Providers of private mo- a telecommunications service before it bile services, by contrast, ‘‘shall not TTT be regulates interconnection arrangements treated as [ ] common carrier[s].’’ Id. under Title II. § 332(c)(2). US Telecom misreads Verizon. Although Verizon does recognize that broadband In 2007, the Commission initially classi- providers’ delivery of broadband to end fied mobile broadband as a private mobile users also provides a service to edge pro- service. At the time, the Commission con- viders, id. it does not hold that the Com- sidered mobile broadband a ‘‘nascent’’ ser- mission must classify broadband as a tele- vice. 2007 Wireless Order, 22 FCC Rcd. at communications service in both directions 5922 ¶ 59. In the 2015 Order we now before it can regulate the interconnection review, the Commission found that, ‘‘[i]n arrangements under Title II. The problem sharp contrast to 2007,’’ the ‘‘mobile broad- in Verizon was not that the Commission band marketplace has evolved such that had misclassified the service between car- hundreds of millions of consumers now use riers and edge providers but that the Com- mobile broadband to access the Internet.’’ mission had failed to classify broadband 2015 Open Internet Order, 30 FCC Rcd. at service as a Title II service at all. The 5785 ¶ 398. The Commission thus conclud- Commission overcame this problem in the ed that ‘‘today’s mobile broadband Inter- Order by reclassifying broadband ser- net access service, with hundreds of mil- vice—and the interconnection arrange- lions of subscribers,’’ is not a ‘‘private’’ ments necessary to provide it—as a telecommunications service. mobile service ‘‘that offer[s] users access to a discrete and limited set of endpoints.’’ IV. Id. at 5788–89 ¶ 404. Rather, ‘‘[g]iven the We now turn to the Commission’s treat- universal access provided today and in the ment of mobile broadband service, i.e., foreseeable future by and to mobile broad- high-speed internet access for mobile de- band and its present and anticipated fu- vices such as smartphones and tablets. As ture penetration rates in the United explained above, the Commission permissi- States,’’ the Commission decided to ‘‘classi- bly found that mobile broadband—like all fy[ ] mobile broadband Internet access as a broadband—is a telecommunications ser- commercial mobile service’’ subject to com- vice subject to common carrier regulation mon carrier regulation. Id. at 5786 ¶ 399; under Title II of the Communications Act. see generally id. at 5778–88 ¶¶ 388–403. 714 825 FEDERAL REPORTER, 3d SERIES

Petitioners CTIA and AT&T (‘‘mobile public.’’ Id. § 332(d)(1). In those respects, petitioners’’) challenge the Order’s reclas- mobile broadband bears the hallmarks of a sification of mobile broadband as a com- commercial—and hence not a private—mo- mercial mobile service. In their view, mobile service. The sole remaining question is bile broadband is, and must be treated as, whether mobile broadband also ‘‘makes in- a private mobile service, and therefore terconnected service available.’’ Id. cannot be subject to common carrier regu- [38] The statute defines ‘‘interconnect- lation. We reject mobile petitioners’ argued service’’ as ‘‘service that is interconnect- ments and find that the Commission’s reed with the public switched network (as classification of mobile broadband as a such terms are defined by regulation by commercial mobile service is reasonable the Commission).’’ Id. § 332(d)(2). Until and supported by the record. the Order, the Commission in turn defined A. the ‘‘public switched network’’ as a set of telephone (cellular and landline) networks, In assessing whether the Commission with users’ ten-digit telephone numbers permissibly reclassified mobile broadband as a commercial rather than a private mo- making up the interconnected endpoints of bile service, we begin with an overview of the network. Specifically, ‘‘public switched the governing statutory and regulatory network’’ meant ‘‘[a]ny common carrier framework and of the Commission’s appli- switched network TTT that use[s] the cation of that framework to mobile broad- North American Numbering Plan in con- band. The statute defines ‘‘commercial mo- nection with the provision of switched ser- bile service’’ as ‘‘any mobile service TTT vices.’’ 47 C.F.R. § 20.3 (prior version ef- that is provided for profit and makes inter- fective through June 11, 2015). The ‘‘North connected service available (A) to the pub- American Numbering Plan’’ (NANP) is the lic or (B) to such classes of eligible users ten-digit telephone numbering plan used in as to be effectively available to a substan- the United States. See In re Implementa- tial portion of the public, as specified by tion of Sections 3(n) & 332 of the Commu- regulation by the Commission.’’ 47 U.S.C. nications Act (‘‘1994 Order’’), 9 FCC Rcd. § 332(d)(1). The statute then defines ‘‘pri- 1411, 1437 ¶ 60 n. 116 (1994). vate mobile service’’ strictly in the nega- In 1994, when the Commission initially tive, i.e., as ‘‘any mobile service TTT that is established that definition of ‘‘public not a commercial mobile service or the switched network,’’ cellular telephone (i.e., functional equivalent of a commercial mo- mobile voice) service was the major mobile bile service, as specified by regulation by service; mobile broadband did not yet ex- the Commission.’’ Id. § 332(d)(3). ist. Noting that the ‘‘purpose of the public [37] Because private mobile service is switched network is to allow the public to a residual category defined in relation to send or receive messages to or from any- commercial mobile service, the definition where in the nation,’’ the Commission ob- of commercial mobile service is the opera- served that the NANP fulfilled that pur- tive one for our purposes. There is no pose by providing users with ‘‘ubiquitous dispute that mobile broadband meets three access’’ to all other users. Id. at 1436–37 of the four parts of the statutory definition ¶¶ 59–60; see 2015 Open Internet Order, 30 of commercial mobile service. Mobile FCC Rcd. at 5779 ¶ 391. Because mobile broadband is a ‘‘mobile service’’; it ‘‘is pro- voice users could interconnect with the vided for profit’’; and it is available ‘‘to the public switched network as then defined public’’ or ‘‘a substantial portion of the (the network of ten-digit telephone num- US TELECOM ASSOCIATION v. FCC 715 Cite as 825 F.3d 674 (D.C. Cir. 2016)

bers), mobile voice was classified as a that the ‘‘hundreds of millions of consum- ‘‘commercial’’—as opposed to ‘‘private’’— ers’’ who already ‘‘use[d] mobile broad- ‘‘mobile service.’’ 1994 Order, 9 FCC Rcd. band’’ as of 2015 could ‘‘send or receive at 1454–55 ¶ 102. It therefore was subject communications to or from anywhere in to common carrier treatment. the nation, whether connected with other In 2007, the Commission first classified mobile broadband subscribers, fixed the then-emerging platform of mobile broadband subscribers, or the hundreds of broadband. The Commission determined millions of websites available to them over that mobile broadband users could not in- the Internet.’’ Id. Those significant devel- terconnect with the public switched net- opments, the Commission found, ‘‘demon- work—defined at the time as the telephone strate[ ] the ubiquity and wide scale use of network—because mobile broadband uses mobile broadband Internet access service IP addresses, not telephone numbers. See today.’’ Id. at 5786 ¶ 398. 2015 Open Internet Order, 30 FCC Rcd. at The upshot is that, just as mobile voice 5784 ¶ 397; 2007 Wireless Order, 22 FCC (i.e., cellular telephone) service in 1994 Rcd. at 5917–18 ¶ 45. Mobile broadband provided ‘‘ubiquitous access’’ for members thus was not considered an ‘‘interconnect- of the public to communicate with one ed service’’ (or, therefore, a commercial another ‘‘from anywhere in the nation,’’ mobile service), i.e., a ‘‘service that is in- mobile broadband by 2015 had come to terconnected with the public switched net- provide the same sort of ubiquitous access. work’’ as that term was then ‘‘defined by Id. at 5779–80 ¶ 391, 5785–86 ¶¶ 398–99. TTT the Commission.’’ 47 U.S.C. And the ubiquitous access characterizing § 332(d)(2). Presumably in light of mobile both mobile voice and mobile broadband broadband’s ‘‘nascent’’ status at the time, stands in marked contrast to ‘‘the private 2007 Wireless Order, 22 FCC Rcd. at 5922 mobile service[s] of 1994, such as a private ¶ 59, the Commission gave no evident con- taxi dispatch service, services that offered sideration to expanding its definition of the users access to a discrete and limited set ‘‘public switched network’’ so as to encom- of endpoints.’’ Id. at 5789 ¶ 404; see 1994 pass IP addresses in addition to telephone Order, 9 FCC Rcd. at 1414 ¶ 4. In recogni- numbers. tion of the similarity of mobile broadband In the 2015 Order, the Commission de- to mobile voice as a universal medium of termined that it should expand its defini- communication for the general public—and tion of the public switched network in that the dissimilarity of mobile broadband to fashion to ‘‘reflect[ ] the current network closed private networks such as those used landscape.’’ 30 FCC Rcd. at 5779 ¶ 391; see by taxi companies or local police and fire id. at 5786 ¶ 399. The Commission took departments—the Commission in 2015 note of ‘‘evidence of the extensive changes sought to reclassify ‘‘today’s broadly avail- that have occurred in the mobile market- able mobile broadband’’ service as a com- place.’’ Id. at 5785–86 ¶ 398. For instance, mercial mobile service like mobile voice, as of the end of 2014, nearly three-quar- rather than as a private mobile service like ters ‘‘of the entire U.S. age 13v popula- those employed by closed police or fire tion was communicating with smart department networks. 2015 Open Internet phones,’’ and ‘‘by 2019,’’ according to one Order, 30 FCC Rcd. at 5786 ¶ 399; see forecast, ‘‘North America will have nearly 1994 Order, 9 FCC Rcd. at 1414 ¶ 4. 90% of its installed base[ ] converted to Aligning mobile broadband with mobile smart devices and connections.’’ Id. at 5785 voice based on their affording similarly ¶ 398. In addition, the Commission noted ubiquitous access, moreover, was in keep- 716 825 FEDERAL REPORTER, 3d SERIES ing with Congress’s objective in establish- provided for profit and makes intercon- ing a defined category of ‘‘commercial mo- nected service available TTT to the public bile services’’ subject to common carrier or TTT a substantial portion of the public.’’ treatment: to ‘‘creat[e] regulatory symme- 47 U.S.C. § 332(d)(1). We find the Com- try among similar mobile services.’’ 1994 mission’s reclassification of mobile broad- Order, 9 FCC Rcd. at 1413 ¶ 2; see 2015 band as a commercial mobile service under Open Internet Order, 30 FCC Rcd. at 5786 that definition to be reasonable and sup- ¶ 399; H.R. Rep. No. 103-111 at 259 (May ported by record evidence demonstrating 25, 1993) (noting that amendments to sec- the ‘‘rapidly growing and virtually univer- tion 332 were intended to ensure ‘‘that sal use of mobile broadband service’’ to- services that provide equivalent mobile day. 2015 Open Internet Order, 30 FCC services are regulated in the same man- Rcd. at 5786 ¶ 399. In support of its reclas- ner’’). sification decision, the Commission relied In the interest of achieving that regula- on, and recounted in detail, evidence of the tory symmetry and bringing mobile broad- explosive growth of mobile broadband ser- band into alignment with mobile voice as a vice and its near universal use by the commercial mobile service, the Commis- public. See id. at 5635–38 ¶¶ 88–92, 5779 sion updated its definition of the ‘‘public ¶ 391, 5785–86 ¶¶ 398–99. In the face of switched network’’ to include both users that evidence, we see no basis for conclud- reachable by ten-digit phone numbers and ing that the Commission was required in users reachable by IP addresses. See 2015 2015 to continue classifying mobile broad- Open Internet Order, 30 FCC Rcd. at band as a ‘‘private’’ mobile service. 5779 ¶ 391. The newly expanded definition of ‘‘public switched network’’ thus covers B. ‘‘the network that includes any common carrier switched network TTT that use[s] Mobile petitioners offer two principal ar- the North American Numbering Plan, or guments in support of their position that public IP addresses, in connection with mobile broadband nonetheless must be the provision of switched services.’’ Id. treated as a private mobile service rather (emphasis added) (alteration in original); than a commercial mobile service. First, 47 C.F.R. § 20.3; see Bell Atlantic Tele- they argue that ‘‘public switched network’’ phone Cos. v. FCC, 206 F.3d 1, 4 (D.C. is a term of art confined to the public Cir. 2000) (‘‘[T]he internet is a ‘distributed switched telephone network. Second, they packet-switched network.’ ’’). And because contend that, even if the Commission can the public switched network now includes expand the definition of public switched IP addresses, the Commission found that network to encompass users with IP ad- mobile broadband qualifies as an ‘‘inter- dresses in addition to users with telephone connected service,’’ i.e., ‘‘service that is in- numbers, mobile broadband still fails to terconnected with the public switched net- qualify as an ‘‘interconnected service.’’ work’’ as redefined. 47 U.S.C. § 332(d)(2); We reject both arguments. In mobile see 2015 Open Internet Order, 30 FCC petitioners’ view, mobile broadband (or Rcd. at 5779–80 ¶ 391, 5786 ¶ 399. any non-telephone mobile service)—no According to the Commission, then, mo- matter how universal, widespread, and es- bile broadband meets all parts of the stat- sential a medium of communication for the utory definition of a ‘‘commercial mobile public it may become—must always be service’’ subject to common carrier regula- considered a ‘‘private mobile service’’ and tion: it is a ‘‘mobile service TTT that is can never be considered a ‘‘commercial US TELECOM ASSOCIATION v. FCC 717 Cite as 825 F.3d 674 (D.C. Cir. 2016)

mobile service.’’ Nothing in the statute tion of ‘‘commercial mobile service.’’ Any compels attributing to Congress such a such service must qualify as an ‘‘intercon- wooden, counterintuitive understanding of nected service,’’ defined in the statute as those categories. Rather, Congress ex- ‘‘service that is interconnected with the pressly delegated to the Commission the public switched network.’’ 47 U.S.C. authority to define—and hence necessarily § 332(d)(1)–(2). And Congress expressly to update and revise—those categories’ gave the Commission the authority to de- key definitional components, ‘‘public fine the public switched network, id. switched network’’ and ‘‘interconnected § 332(d)(2), which the Commission exer- service.’’ 47 U.S.C. § 332(d); see 2015 Open cised by revising its definition in the Or- Internet Order, 30 FCC Rcd. at 5783–84 der. As we have explained, the Commis- ¶ 396. sion, relying on the growing universality of [39] ‘‘In this sort of case, there is no mobile broadband as a medium of commu- need to rely on the presumptive delegation nication for the public, expanded the defi- to agencies of authority to define ambigu- nition of the public switched network so ous or imprecise terms we apply under the that it now uses IP addresses in addition Chevron doctrine, for the delegation of to telephone numbers in connection with interpretative authority is express.’’ Wom- the provision of switched services. en Involved in Farm Economics v. U.S. Mobile petitioners argue that Congress Department of Agriculture, 876 F.2d 994, intended ‘‘public switched network’’ to 1000–01 (D.C. Cir. 1989) (citation omitted); mean—forever—‘‘public switched tele- see Rush University Medical Center v. phone network,’’ and that the Commission Burwell, 763 F.3d 754, 760 (7th Cir. 2014); thus lacks authority to expand the defini- 2015 Open Internet Order, 30 FCC Rcd. at tion of the network to include endpoints 5783 ¶ 396 & n. 1145. We find the Commis- other than telephone numbers. We are un- sion’s exercise of that express definitional persuaded. Mobile petitioners’ interpreta- authority to be a reasoned and reasonable tion necessarily contemplates adding a interpretation of the statute. We therefore critical word (‘‘telephone’’) that Congress sustain the Commission’s reclassification of left out of the statute, an unpromising mobile broadband as a commercial mobile avenue for an argument about the meaning service against mobile petitioners’ chal- of the words Congress used. See, e.g., Adi- lenges. In light of that disposition, we need rondack Medical Center v. Sebelius, 740 not address the Commission’s alternative F.3d 692, 699–700 (D.C. Cir. 2014); Public finding that mobile broadband, even if not Citizen, Inc. v. Rubber Manufacturers a commercial mobile service, is still subject Ass’n, 533 F.3d 810, 816 (D.C. Cir. 2008). to common carrier treatment as the ‘‘func- If Congress meant for the phrase ‘‘public tional equivalent’’ of a commercial mobile switched network’’ to carry the more re- service. See 47 U.S.C. § 332(d)(3); 2015 strictive meaning attributed to it by mobile Open Internet Order, 30 FCC Rcd. at petitioners, Congress could (and presum- 5788–90 ¶¶ 404–08. ably would) have used the more limited— and more precise—term ‘‘public switched 1. telephone network.’’ Indeed, Congress [40] We first consider mobile petition- used that precise formulation in another, ers’ challenge to the Commission’s updated later-enacted statute. See 18 U.S.C. definition of ‘‘public switched network.’’ § 1039(h)(4). Here, though, Congress That term, as set out above, forms an elected to use the more general term ‘‘pub- integral component of the statutory defini- lic switched network,’’ which by its plain 718 825 FEDERAL REPORTER, 3d SERIES language can reach beyond telephone net- definitional authority to have come bur- works alone. See 2015 Open Internet Or- dened with an unstated intention to compel der, 30 FCC Rcd. at 5783 ¶ 396. the Commission to forever retain a defini- Not only did Congress decline to invoke tion confined to one specific type of ‘‘public the term ‘‘public switched telephone net- switched network,’’ i.e., the telephone network,’’ but it also gave the Commission work. express authority to define the broader We therefore reject mobile petitioners’ term it used instead. See 47 U.S.C. counter-textual argument that the statuto- § 332(d)(2). Mobile petitioners conceive of ry phrase ‘‘public switched network’’ must ‘‘public switched network’’ as a term of art be understood as if Congress had used referring only to a network using tele- the phrase ‘‘public switched telephone net- phone numbers. But if that were so, it is work.’’ Instead, the more general phrase far from clear why Congress would have ‘‘public switched network,’’ by its terms, invited the Commission to define the term, reaches any network that is both ‘‘public’’ rather than simply setting out its ostensi- and ‘‘switched.’’ Mobile petitioners do not bly fixed meaning in the statute. We in- dispute that a network using both IP ad- stead agree with the Commission that, in dresses and telephone numbers is ‘‘public’’ granting the Commission general defini- and ‘‘switched.’’ As the Commission ex- tional authority, Congress ‘‘expected the plained, its expansion of the network to notion [of the public switched network] to include the use of IP addresses involves a evolve and therefore charged the Commis- ‘‘switched’’ network in that it ‘‘reflects the sion with the continuing obligation to de- emergence and growth of packet switched fine it.’’ 2015 Open Internet Order, 30 Internet Protocol-based networks,’’ and it FCC Rcd. at 5783 ¶ 396. also involves a ‘‘public’’ network in that It is of no moment that Congress, in ‘‘today’s broadband Internet access net- another statute, used the term ‘‘public works use their own unique addressing switched network’’ in a context indicating identifier, IP addresses, to give users a an intention to refer to the telephone net- universally recognized format for sending work. See 47 U.S.C. § 1422(b)(1)(B)(ii) (re- and receiving messages across the coun- ferring to ‘‘the public Internet or the pub- try and worldwide.’’ 2015 Open Internet lic switched network’’). That statute, unlike Order, 30 FCC Rcd. at 5779–80 ¶ 391 section 332(d)(2), contains no grant of au- (emphasis added). The Commission thus thority to the Commission to define the permissibly considered a network using term. And it was enacted during the time telephone numbers and IP addresses to when the Commission’s prior, longstanding be a ‘‘public switched network.’’ regulatory definition of ‘‘public switched network’’ was in effect. Because the Com- 2. mission at the time had defined the ‘‘public switched network’’ by reference to the [41] Mobile petitioners next challenge telephone network, it is unsurprising that the Commission’s understanding of ‘‘inter- Congress would have assumed the term to connected service.’’ That term, too, is an have that meaning. But that assumption by integral part of the definition of commer- no means indicates that Congress meant to cial mobile service. A commercial mobile divest the Commission of the definitional service must ‘‘make[ ] interconnected ser- authority it had expressly granted the vice available TTT to the public or to TTT a Commission in section 332(d)(2). We do not substantial portion of the public.’’ 47 understand Congress’s express grant of U.S.C. § 332(d)(1). And ‘‘interconnected US TELECOM ASSOCIATION v. FCC 719 Cite as 825 F.3d 674 (D.C. Cir. 2016)

service’’ is ‘‘service that is interconnected issue for the Commission therefore con- with the public switched network.’’ Id. cerned communications from mobile broad- § 332(d)(2). As with the phrase ‘‘public band users to telephone users: whether switched network,’’ Congress gave the mobile broadband ‘‘gives subscribers the Commission express authority to define capability to communicate to’’ users via the term ‘‘interconnected service.’’ Id. telephone numbers. 47 C.F.R. § 20.3. The The Commission has defined ‘‘intercon- Commission concluded that it does. nected service’’ as a service ‘‘that gives Specifically, the Commission determined subscribers the capability to communicate that mobile broadband gives a subscriber to or receive communication from all other the capability to communicate with a tele- users on the public switched network.’’ 47 phone user through the use of Voice over C.F.R. § 20.3 (prior version effective Internet Protocol (VoIP) applications. See through June 11, 2015); see 2015 Open 2015 Open Internet Order, 30 FCC Rcd. at Internet Order, 30 FCC Rcd. at 5779 5786–87 ¶¶ 400–01. (Skype, FaceTime, and ¶ 390. (We note that, in the 2015 Order, Google Voice and Hangouts are popular the Commission excised the word ‘‘all’’ examples of VoIP applications.) VoIP tech- from that definition. But as we explain nology enables a mobile broadband user to below, the Commission considered that ad- send a voice call from her IP address to justment a purely conforming one with no the recipient’s telephone number. As a re- substantive effect; we use the prior lan- sult, a mobile broadband user with a VoIP guage to confirm that mobile broadband application on her tablet can call her would qualify as interconnected service regardless of the Commission’s adjustment.) friend’s home phone number even if the caller’s tablet lacks cellular voice access The question under the Commission’s (and thus has no assigned telephone num- definition of ‘‘interconnected service,’’ then, ber). When she dials her friend’s telephone is whether mobile broadband ‘‘gives sub- number, the VoIP service sends the call scribers the capability to communicate to from her tablet’s IP address over the mo- or receive communication from all other bile broadband network to connect to the users on the public switched network’’ as telephone network and, ultimately, to her redefined to encompass devices using both friend’s home phone. As such, mobile IP addresses and telephone numbers. 47 broadband, through VoIP, ‘‘gives subscrib- C.F.R. § 20.3 (prior version effective through June 11, 2015). The Commission ers the capability to communicate to’’ tele- reasonably found that mobile broadband phone users. 47 C.F.R. § 20.3. gives users that ‘‘capability.’’ See 2015 In 2007, when the Commission first con- Open Internet Order, 30 FCC Rcd. at sidered the proper classification of then- 5779–80 ¶¶ 390–91, 5785–86 ¶ 398, 5787 nascent mobile broadband, the Commis- ¶ 401. sion had a different understanding about As an initial matter, there is no dispute the relationship between mobile broadband about the ‘‘capability’’ of mobile broadband and VoIP. At that time, the Commission subscribers to ‘‘communicate to’’ other mo- considered VoIP applications to be a sepa- bile broadband users. As the Commission rate, non-integrated service, such that explained in the Order—and as is undis- VoIP’s ability to connect internet and tele- puted—‘‘mobile broadband TTT gives its phone users was not thought to render users the capability to send and receive mobile broadband an interconnected ser- communications from all other users of the vice. See 2007 Wireless Order, 22 FCC Internet.’’ Id. at 5785 ¶ 398. The remaining Rcd. at 5917–18 ¶ 45. But when the Com- 720 825 FEDERAL REPORTER, 3d SERIES mission revisited the issue nearly a decade ‘‘[i]ndependent ‘app stores’ that allow for later in the Order we now review, the seamless downloading and integration of Commission found that its ‘‘previous deter- standalone applications [e.g., VoIP applica- mination about the relationship between tions] into the customer’s handset did not mobile broadband Internet access and exist’’ in 2007. Id. VoIP applications in the context of section The Commission also noted that, today, 332 no longer accurately reflects the cur- mobile broadband is dramatically faster: rent technological landscape.’’ 2015 Open the average network connection speed ‘‘ex- Internet Order, 30 FCC Rcd. at 5787 ploded’’ in just three years, going from an ¶ 401. In particular, it concluded that VoIP average connection speed of 709 kilobytes applications now function as an integrated per second (kbps) in 2010 to an average aspect of mobile broadband, rather than as a functionally distinct, separate service. speed of 2,058 kbps for all devices and The Commission therefore found that mo- 9,942 kbps for smartphones by 2013. 2015 bile broadband ‘‘today, through the use of Open Internet Order, 30 FCC Rcd. at 5636 VoIP, TTT gives subscribers the capability ¶ 89 & n. 170. Partly as a result, access to to communicate with all NANP endpoints.’’ the internet and applications on one’s mo- Id. bile phone is no longer confined to a small number of functions. Rather, ‘‘there has In reaching that conclusion, the Com- been substantial growth’’ even since mission emphasized that ‘‘changes in the marketplace TTT highlight the convergence 2010—far more so since 2007—‘‘in the digi- between mobile voice and data networks tal app economy TTT and VoIP’’ in particu- that has occurred since the Commission lar. Id. at 5626 ¶ 76. first addressed the classification of mobile In addition, the Commission cited a let- broadband Internet access in 2007.’’ Id. ter which explained that, because VoIP The record before the Commission sub- applications (such as FaceTime on Apple stantially supports that understanding, as devices and Google Hangouts on Android well as the associated finding that the rela- devices) now come ‘‘bundled with the pri- tionship between VoIP applications and mary operating systems available in every mobile broadband today significantly dif- smartphone,’’ they are no longer ‘‘rare and fers from that of 2007. For instance, in clearly functionally distinct’’ as they were 2007, Apple’s iPhone—the only device at in 2007. Letter from Michael Calabrese, the time even ‘‘resembling a modern smart Open Technology Institute, et al., to Mar- phone’’—had just been released and was lene H. Dortch, FCC, at 6, GN Dkt. Nos. available through only one mobile carrier. 14-28 & 10-127 (Dec. 11, 2014) (‘‘OTI 12/11 Letter from Harold Feld, et al., Public Letter’’); see 2015 Open Internet Order, 30 Knowledge to Marlene H. Dortch, FCC, at FCC Rcd. at 5787 ¶ 401 n. 1168. Any 10, GN Dkt. Nos. 14-28 & 10-127 (Dec. 19, distinction between calls made with a de- 2014) (‘‘Public Knowledge 12/19 Letter’’). vice’s ‘‘native’’ dialing capacity and those Commenters drew the Commission’s atten- made through VoIP thus has become ‘‘in- tion to its recognition in 2007 that ‘‘mobile creasingly inapt.’’ OTI 12/11 Letter at 5; broadband available with a standard mo- see Public Knowledge 12/19 Letter at 10. bile phone of the time ‘enable[d] users to access a limited selection of websites’ and The Commission accordingly found that primarily offered extremely limited func- ‘‘[t]oday, mobile VoIP TTT is among the tionality such as email.’’ Id. (citing 2007 increasing number of ways in which users Wireless Order, 22 FCC Rcd. at 5906 ¶ 11 communicate indiscriminately between & n. 43). Because of those limitations, NANP and IP endpoints on the public US TELECOM ASSOCIATION v. FCC 721 Cite as 825 F.3d 674 (D.C. Cir. 2016) switched network.’’ 2015 Open Internet That is especially apparent in light of Order, 30 FCC Rcd. at 5787 ¶ 401; see the Commission’s regulatory definition of Resp’ts’ Br. 99 (relying on that finding). In ‘‘interconnected service.’’ The regulation light of those developments, the Commis- calls for assessing whether mobile broad- sion reasonably determined that mobile band ‘‘gives subscribers the capability to broadband today is interconnected with communicate to’’ telephone users. 47 the newly defined public switched network. C.F.R. § 20.3 (emphasis added). Mobile It ‘‘gives subscribers the capability to com- petitioners do not challenge the Commis- municate to TTT other users on the public sion’s understanding that a ‘‘capability to switched network,’’ whether the recipient communicate’’ suffices to establish an in- has an IP address, telephone number, or terconnected service, and we see no both. 47 C.F.R. § 20.3; see 2015 Open In- ground for rejecting the Commission’s con- ternet Order, 30 FCC Rcd. at 5779–80 clusion that mobile broadband gives sub- ¶ 391, 5785–87 ¶¶ 398–401. scribers the ‘‘capability to communicate to’’ In contending otherwise, mobile peti- telephone users through VoIP. And al- tioners argue that mobile broadband itself though the regulation also references ‘‘re- is not ‘‘interconnected with the public ceiv[ing] communications from’’ others in switched network,’’ 47 U.S.C. § 332(d)(2), the network, id., mobile petitioners also do because mobile broadband does not allow not challenge the Commission’s under- subscribers to interconnect with telephone standing that the capability either to ‘‘com- users unless subscribers take the step of municate to or receive communication using a VoIP application. Nothing in the from’’ is enough, id. (emphasis added). statute, however, compels the Commission Consequently, the capability of mobile to draw a talismanic (and elusive) distinc- broadband users ‘‘to communicate to’’ tele- tion between (i) mobile broadband alone phone users via VoIP suffices to render enabling a connection, and (ii) mobile the network—and, most importantly, its broadband enabling a connection through users—‘‘interconnected.’’ use of an adjunct application such as VoIP. To the contrary, the statute grants the Mobile petitioners note what they per- Commission express authority to define ceive to be a separate problem associated ‘‘interconnected service.’’ 47 U.S.C. with communications running in the re- § 332(d)(2). And the Commission permissi- verse direction (i.e., the capability of mo- bly exercised that authority to determine bile broadband users to ‘‘receive commu- that—in light of the increased availability, nications from’’ telephone users). That use, and technological and functional inte- ostensible problem pertains, not to mo- gration of VoIP applications—mobile bile broadband service, but instead to broadband should now be considered inter- mobile voice service. In particular, mobile connected with the telephone network. In- petitioners argue that, if the public deed, even for communications from one switched network can be defined to use mobile broadband user to another, mobile both IP addresses and telephone num- broadband generally works in conjunction bers, mobile voice service would no long- with a native or third-party application of er qualify as an ‘‘interconnected service’’ some sort (e.g., an email application such because telephone users cannot establish as Gmail or a messaging application such a connection to IP users. The result, mo- as WhatsApp) to facilitate transmission of bile petitioners submit, is that the one users’ messages. The conjunction of mobile network everyone agrees was intended to broadband and VoIP to enable IP-to-tele- qualify as a commercial mobile service— phone communications is no different. mobile voice—would necessarily become a 722 825 FEDERAL REPORTER, 3d SERIES

private mobile service. We are uncon- iPod touch, or Mac when your iPhone is on vinced. the same Wi-Fi network.’’); see also Re- As a starting point, the Commission’s ceive Google Voice calls with Hangouts, Order takes up the proper classification of https://support.google.com/hangouts/ mobile broadband, not mobile voice. The answer/6079064 (last visited June 14, 2016) Commission thus did not conduct a formal (describing how the ‘‘Google Voice’’ and assessment of whether mobile voice would ‘‘Hangouts’’ services allow mobile broad- qualify as an interconnected service under band users to receive calls from telephone the revised definition of public switched users); What is a Skype Number?, https:// network. But were the Commission to ad- support.skype.com/en/faq/FA331/what-is-a- dress that issue in a future proceeding, it skype-number (last visited June 14, 2016) presumably would note that, regardless of (describing how a ‘‘Skype Number’’ en- whether mobile voice users can ‘‘communi- ables mobile broadband users to receive cate to’’ mobile broadband users from their calls from telephone users). telephones, they can ‘‘receive communica- For those reasons, we reject mobile petition from’’ mobile broadband users tioners’ argument that the Commission’s through VoIP for the reasons already ex- classification of mobile broadband as an plained. 47 C.F.R. § 20.3. That capability ‘‘interconnected service’’ is impermissible would suffice to render mobile voice an because of its supposed implications for ‘‘interconnected service’’ under the Com- the classification of mobile voice. Rather, mission’s regulatory definition of that the Commission permissibly found that term. Id. mobile broadband now qualifies as inter- Moreover, insofar as the Commission connected because it gives subscribers the may be asked in the future to formally ability to communicate to all users of the address whether mobile voice qualifies as newly defined public switched network. In an interconnected service, the Commission the words of the Commission: ‘‘mobile could assess at that time whether there broadband Internet access service today, exists the ‘‘capability’’ of communications through the use of VoIP, messaging, and in the reverse direction, i.e., the capability similar applications, effectively gives sub- of mobile voice users to ‘‘communicate to’’ scribers the capability to communicate IP users from their telephones. Id. We with all NANP endpoints as well as with note that the Commission had information all users of the Internet.’’ 2015 Open Inter- before it in this proceeding indicating that net Order, 30 FCC Rcd. at 5787 ¶ 401. a mobile broadband (or other computer) user can employ a service enabling her to Finally, the finding that mobile broad- receive telephone calls to her IP address. band today ‘‘gives subscribers the capabili- See Public Knowledge 12/19 Letter at 11 ty to communicate with all NANP end- n.50 (describing a television commercial points,’’ id. (emphasis added), confirms the demonstrating Apple’s Continuity service, immateriality of the Commission’s removal which enables an iPhone 6 user with mo- of the word ‘‘all’’ from its regulatory defini- bile voice service to call an iPad user with tion of ‘‘interconnected service.’’ As men- mobile broadband service); Use Continuity tioned earlier, that regulation, until the to connect your iPhone, iPad, iPod touch, Order, defined interconnected service as a and Mac, https://support.apple.com/en-us/ service ‘‘that gives subscribers the capabil- HT204681 (last visited June 14, 2016) ity to communicate to or receive communi- (‘‘With Continuity, you can make and re- cation from all other users on the public ceive cellular phone calls from your iPad, switched network.’’ 47 C.F.R. § 20.3 (prior US TELECOM ASSOCIATION v. FCC 723 Cite as 825 F.3d 674 (D.C. Cir. 2016)

version effective through June 11, 2015) & n. 1175. (Specifically, the Commission (emphasis added). In the updated defini- notes that the removal of ‘‘all’’ was meant tion, the Commission left that language to reiterate a carve-out that has always unchanged except that it removed the existed in the regulation: another part of word ‘‘all.’’ See 47 C.F.R. § 20.3 (current the definition of ‘‘interconnected service’’ version effective June 12, 2015). Mobile establishes that a service qualifies as ‘‘in- petitioners attach great significance to the terconnected’’ even if it ‘‘restricts access in removal of ‘‘all,’’ assuming that the change certain limited ways,’’ such as a service enabled the Commission to find mobile that blocks access to 900 numbers. Id. broadband to be an ‘‘interconnected ser- (quoting 47 C.F.R. § 20.3); id. at 5787 vice’’ even though, according to mobile pe- ¶ 402 n. 1172.) titioners, broadband users have no capability to communicate with telephone users. In the end, then, the removal of ‘‘all’’ is By excising the word ‘‘all,’’ mobile petition- of no consequence to the Commission’s ers assert, the Commission could find that rationale for finding that mobile broad- mobile broadband is an interconnected ser- band constitutes an ‘‘interconnected service based on the ability of users to com- vice.’’ Mobile broadband, the Commission municate only with some in the network reasonably concluded, gives users the ca- (fellow broadband users) notwithstanding pability to communicate to all other users the lack of any capability to communicate in the newly defined public switched net- with others in the network (telephone work, whether users with an IP address, users). Absent the latter ability, mobile users with a telephone number, or users petitioners argue, mobile broadband can- with both. See id. at 5787 ¶ 401. Because not actually be considered ‘‘interconnect- mobile broadband thus can be considered ed’’ with the telephone network. an interconnected service, the Commission Mobile petitioners’ argument rests on a acted permissibly in reclassifying mobile mistaken understanding of the Commis- broadband as a commercial mobile service sion’s actions. The Commission did not subject to common carrier regulation, rest its finding that mobile broadband is rather than a private mobile service im- an ‘‘interconnected service’’ solely on an mune from such regulation. assumption that it would be enough for broadband subscribers to be able to com- 3. municate with some in the network (only Mobile petitioners also argue that the fellow IP users), even if there were no Commission has failed to ‘‘point to any capability at all to communicate with oth- change in the technology or functionality ers (telephone users). To the contrary, the Commission, as explained, found that mo- of mobile broadband’’ sufficient to justify bile broadband—through VoIP—‘‘gives reclassifying mobile broadband as a com- subscribers the ability to communicate mercial mobile service. US Telecom Pet’rs’ with all NANP endpoints as well as with Br. 68. This argument fares no better in all users of the Internet.’’ 2015 Open In- the mobile context than it did in the Title ternet Order, 30 FCC Rcd. at 5787 ¶ 401 II reclassification context. Even if the (emphasis added). Once we accept that Commission had not demonstrated finding, as we have, we need not consider changed factual circumstances—which, as petitioners’ argument challenging what the described above, we think it has—mobile Commission characterizes as merely a petitioners’ argument would fail because ‘‘conforming’’ change with no independent the Commission need only provide a ‘‘rea- substantive effect. See id. at 5787–88 ¶ 402 soned explanation’’ for departing from its 724 825 FEDERAL REPORTER, 3d SERIES

prior findings. See Fox Television, 556 gy they use to access the Internet.’’ 2015 U.S. at 515–16, 129 S.Ct. 1800 (‘‘[I]t is not Open Internet Order, 30 FCC Rcd. at 5638 that further justification is demanded by ¶ 92. When consumers use a mobile device the mere fact of policy change[,] but that a (such as a tablet or smartphone) to access reasoned explanation is needed for disre- the internet, they may establish a connec- garding facts and circumstances that un- tion either through mobile broadband or derlay TTT the prior policy.’’). It has done through a Wi-Fi connection at home, in the so here. office, or at an airport or coffee shop. Such Wi-Fi connections originate from a land- 4. line broadband connection, which is now a Finally, we agree with the Commission telecommunications service regulated as a that the need to avoid a statutory con- common carrier under Title II. If a contradiction in the treatment of mobile sumer loses her Wi-Fi connection for some broadband provides further support for reason while accessing the internet—in- its reclassification as a commercial mo- cluding, for instance, if she walks out the bile service. Each of the two statutory front door of her house, and thus out of schemes covering mobile broadband re- Wi-Fi range—her device could switch au- quires classifying a service in a particu- tomatically from a Wi-Fi connection to a lar way before it can be subject to com- mobile broadband connection. If mobile mon carrier treatment. Under Title II, broadband were classified as a private mo- broadband must be classified as a ‘‘tele- bile service, her ongoing session would no communications service.’’ Under Title III, longer be subject to common carrier treat- mobile broadband must be classified as a ment. In that sense, her mobile device ‘‘commercial mobile service.’’ Because the could be subject to entirely different regu- two classifications do not automatically latory rules depending on how it happens move in tandem, the Commission must to be connected to the internet at any make two distinct classification decisions. particular moment—which could change To avoid the contradictory result of clas- from one minute to the next, potentially sifying mobile broadband providers as common carriers under Title II while even without her awareness. rendering them immune from common The Commission’s decision to reclassify carrier treatment under Title III, the mobile broadband as a commercial mobile Commission, upon reclassifying broad- service prevents that counterintuitive out- band generally—including mobile—as a come by assuring consistent regulatory telecommunications service, reclassified treatment of fixed and mobile broadband. mobile broadband as a commercial mo- By contrast, if mobile broadband—despite bile service. See 2015 Open Internet Or- the public’s ‘‘rapidly growing and virtually der at 5788 ¶ 403. universal use’’ of the service today, id. at Avoiding that statutory contradiction not 5786 ¶ 399—must still be classified as a only assures consistent regulatory treat- ‘‘private’’ mobile service, broadband users ment of mobile broadband across Titles II may no longer experience ‘‘the same Inter- and III, but it also assures consistent reg- net openness protections no matter what ulatory treatment of mobile broadband and technology they use to access the Inter- fixed broadband, in furtherance of the net.’’ Id. at 5638 ¶ 92. Commission’s objective that ‘‘[b]roadband users should be able to expect that they C. will be entitled to the same Internet open- Mobile petitioners also challenge the ness protections no matter what technolo- sufficiency of the Commission’s notice, par- US TELECOM ASSOCIATION v. FCC 725 Cite as 825 F.3d 674 (D.C. Cir. 2016)

ticularly with respect to its redefinition of tion of public switched network was in the public switched network as well as its play. removal of the word ‘‘all’’ from the defini- In addition, over the course of several tion of interconnected service. As noted months before finalization and release of above, the APA requires that an NPRM the Order, mobile petitioners (and others) ‘‘include TTT either the terms or substance submitted multiple letters to the Commis- of the proposed rule or a description of the sion concerning the potential for redefining subjects and issues involved.’’ 5 U.S.C. the public switched network. See, e.g., Let- § 553(b). But the APA also requires us to ter from Henry G. Hultquist, AT&T, to take ‘‘due account’’ of ‘‘the rule of prejudi- Marlene H. Dortch, FCC, GN Dkt. Nos. cial error.’’ Id. § 706. 14-28 & 10-127 (Feb. 13, 2015) (‘‘AT&T [42] A deficiency of notice is harmless 2/13 Letter’’); Letter from Scott Berg- if the challengers had actual notice of the mann, CTIA, to Marlene H. Dortch, FCC, final rule, Small Refiner Lead Phase– at 13-18, GN Dkt. Nos. 14-28 & 10-127 Down Task Force v. EPA, 705 F.2d 506, (Feb. 10, 2015); Letter from Scott Berg- 549 (D.C. Cir. 1983), or if they cannot show mann, CTIA, to Marlene H. Dortch, FCC, prejudice in the form of arguments they GN Dkt. Nos. 14-28 & 10-127 (Jan. 14, would have presented to the agency if 2015) (‘‘CTIA 1/14 Letter’’); Letter from given a chance, Owner–Operator Indepen- Gary L. Phillips, AT&T, to Marlene H. dent Drivers Ass’n v. Federal Motor Car- Dortch, FCC, GN Dkt. Nos. 14-28 & 10- rier Safety Administration, 494 F.3d 188, 127 (Feb. 2, 2015); Letter from Scott Berg- 202 (D.C. Cir. 2007). Both circumstances mann, CTIA, to Marlene H. Dortch, FCC, are present here, and each independently GN Dkt. Nos. 14-28 & 10-127 (Dec. 22, supports our conclusion that any lack of 2014) (‘‘CTIA 12/22 Letter’’); Letter from notice was ultimately harmless. As such, Scott Bergmann, CTIA, to Marlene H. we need not decide whether the Commis- Dortch, FCC, GN Dkt. Nos. 14-28 & 10- sion gave adequate notice of its redefini- 127 (Oct. 17, 2014) (‘‘CTIA 10/17 Letter’’). tion of the public switched network in the We have previously charged petitioners NPRM. challenging an agency rule with actual no- [43] As mobile petitioners acknowl- tice based on letters like those submitted edge, Vonage raised the idea of redefining by mobile petitioners. See Sierra Club v. the public switched network in its com- Costle, 657 F.2d 298, 355 (D.C. Cir. 1981). ments, pointing out the Commission’s ‘‘au- But we have even more evidence of actual thority to interpret the key terms in th[e] notice here. Mobile petitioners note in definition [of commercial mobile service], their letters that, in meetings with the including ‘interconnected’ and ‘public Commission, they discussed the substance switched network.’ ’’ Vonage Holdings of their arguments here, including issues Corp. Comments at 43, GN Dkt. Nos. 14- surrounding the redefinition of public 28 & 10-127 (July 18, 2014). Mobile peti- switched network. See AT&T 2/13 Letter tioner CTIA responded to that point in its at 1 (noting a meeting with representatives reply comments, disputing Vonage’s un- from Commissioners O’Rielly’s and Pai’s derlying assumption that mobile broad- offices on February 11, 2015); CTIA 1/14 band users can connect with all telephone Letter at 1 (noting a meeting with repre- users, see CTIA Reply Comments at 45, sentatives from Commissioner Pai’s office GN Dkt. Nos. 14-28 & 10-127 (Sept. 15, on January 12, 2015); CTIA 12/22 Letter 2014), thereby recognizing that the defini- at 1 (noting a meeting with representatives 726 825 FEDERAL REPORTER, 3d SERIES from the Commission’s General Counsel’s Dortch, FCC, GN Dkt. Nos. 14-28 & 10- office and representatives from the Wire- 127 (Oct. 17, 2014). less Telecommunications Bureau on De- In those exchanges, mobile petitioners cember 18, 2014); CTIA 10/17 Letter at 1 raised and fiercely debated all of the same (noting a meeting with the Commission’s arguments they now raise before us, thus General Counsel and a representative from demonstrating not only the presence of the Wireline Competition Bureau on Octo- actual notice, but also the absence of new ber 15, 2014). Thus, even if the redefinition arguments they might present to the Com- of public switched network was a ‘‘novel mission on remand. Indeed, when asked at proposal’’ by Vonage during the comment oral argument, mobile petitioners could not period, it is clear from mobile petitioners’ list any new argument on the issue of the own letters that they had actual notice that redefinition of public switched network. the Commission was considering adoption See Oral Arg. Tr. 74–79, 84–87. of that proposal. See National Mining Ass’n v. Mine Safety & Health Adminis- [44] Mobile petitioners also allege that tration, 116 F.3d 520, 531–32 (D.C. Cir. the Commission gave inadequate notice of 1997). the removal of ‘‘all’’ from the definition of In addition, in those letters, letters from interconnected service. Any such failure, others supporting mobile petitioners’ however, was also harmless. As noted views, and responsive letters from groups above, not only does the Commission claim like New America’s Open Technology In- that the removal of ‘‘all’’ was inconsequen- stitute and Public Knowledge, mobile peti- tial to the regulation, but that adjustment tioners engaged in a detailed, substantive also has no bearing on our decision to back-and-forth about the precise issues uphold the Commission’s reclassification they challenge here. Reclassification of decision. We would uphold the Commis- mobile broadband and redefinition of the sion’s decision regardless of whether the public switched network were the focal Commission validly removed ‘‘all’’ from the points of that discussion, in which petition- definition of ‘‘interconnected service.’’ Mo- ers exchanged arguments about technolo- bile petitioners thus cannot show prejudice gy and policy with the groups supporting a from any lack of notice. See Steel Manu- broader definition of the public switched facturers Ass’n v. EPA, 27 F.3d 642, 649 network. See Letters from CTIA and (D.C. Cir. 1994) (explaining that inability AT&T, supra; Letter from Michael Cala- to comment on one rationale for rule was brese, Open Technology Institute, to Mar- harmless when agency had ‘‘adequate and lene H. Dortch, FCC, GN Dkt. Nos. 14-28 independent grounds’’ for rule). & 10-127 (Jan. 27, 2015); Letter from Ha- Mobile petitioners, for those reasons, fail rold Feld, Public Knowledge, to Marlene to show the prejudice required by the APA H. Dortch, FCC, GN Dkt. Nos. 14-28 & to succeed on their arguments of insuffi- 10-127 (Jan. 15, 2015); Letter from William cient notice. We therefore reject their H. Johnson, Verizon, to Marlene H. challenges. Dortch, FCC, GN Dkt. Nos. 14-28 & 10- 127 (Dec. 24, 2014); Public Knowledge V. 12/19 Letter; Letter from Michael E. Glo- ver, Verizon, to Marlene H. Dortch, FCC, [45] Having upheld the Commission’s GN Dkt. Nos. 14-28 & 10-127 (Oct. 29, reclassification of broadband services, both 2014); OTI 12/11 Letter; Letter from Wil- fixed and mobile, we consider next Full liam H. Johnson, Verizon, to Marlene H. Service Network’s challenges to the Com- US TELECOM ASSOCIATION v. FCC 727 Cite as 825 F.3d 674 (D.C. Cir. 2016)

mission’s decision to forbear from applying A. portions of the Communications Act to [46] Full Service Network first argues those services. Section 10 of the Communi- that the Commission should have followed cations Act provides that the Commission its regulatory requirements governing for- ‘‘shall forbear from applying any regula- bearance petitions even though it forbore tion or any provision’’ of the Communica- of its own accord. In the Order, the Com- tions Act to a telecommunications service mission rejected this contention, stating or carrier if three criteria are satisfied: (1) that ‘‘[b]ecause the Commission is forbear- ‘‘enforcement of such regulation or provi- ing on its own motion, it is not governed sion is not necessary to ensure that’’ the by its procedural rules insofar as they carrier’s practices ‘‘are just and reasonable apply, by their terms, to section 10(c) peti- and are not unjustly or unreasonably dis- tions for forbearance.’’ Id. at 5806 ¶ 438. criminatory,’’ 47 U.S.C. § 160(a)(1); (2) ‘‘enforcement of such regulation or provi- [47, 48] ‘‘[W]e review an agency’s in- sion is not necessary for the protection of terpretation of its own regulations with consumers,’’ id. § 160(a)(2); and (3) ‘‘for- ‘substantial deference.’ ’’ In re Sealed bearance from applying such provision or Case, 237 F.3d 657, 667 (D.C. Cir. 2001) regulation is consistent with the public in- (quoting Thomas Jefferson University v. terest,’’ id. § 160(a)(3). Under the third Shalala, 512 U.S. 504, 512, 114 S.Ct. 2381, criterion, ‘‘the Commission shall consider 129 L.Ed.2d 405 (1994)). The agency’s in- whether forbearance TTT will promote terpretation ‘‘will prevail unless it is ‘plain- competitive market conditions, including ly erroneous or inconsistent’ with the plain the extent to which such forbearance will terms of the disputed regulation.’’ Everett enhance competition among providers of v. United States, 158 F.3d 1364, 1367 (D.C. telecommunications services.’’ Id. § 160(b). Cir. 1998) (quoting Auer v. Robbins, 519 Thus, section 10 imposes a mandatory obli- U.S. 452, 461, 117 S.Ct. 905, 137 L.Ed.2d gation upon the Commission to forbear 79 (1997)). when it finds these conditions are met. The Commission’s interpretation of its Section 10(c) gives any carrier the right regulations easily satisfies this standard. to ‘‘submit a petition to the Commission By their own terms, the regulations apply requesting’’ forbearance. Id. § 160(c). In to ‘‘petitions for forbearance,’’ and no- regulations issued pursuant to section where say anything about what happens 10(c), the Commission requires ‘‘petitions when, as here, the Commission decides to for forbearance’’ to include a ‘‘[d]escription forbear without receiving a petition. See 47 of relief sought,’’ make a prima facie case C.F.R. § 1.54. To the extent this silence that the statutory criteria for forbearance renders the regulations ambiguous in the are satisfied, identify any related matters, circumstance before us, the Commission’s and provide any necessary evidence. 47 interpretation is hardly ‘‘plainly errone- C.F.R. § 1.54. ous.’’ Everett, 158 F.3d at 1367 (internal quotation marks omitted). In the Order, the Commission decided to forbear from numerous provisions of the [49] Full Service Network also con- Communications Act. 2015 Open Internet tends that the NPRM violated the APA’s Order, 30 FCC Rcd. at 5616 ¶ 51. Full notice requirement because it nowhere Service Network raises both procedural identified the rules from which the Com- and substantive challenges to the Commis- mission later decided to forbear. The sion’s forbearance decision. None succeeds. NPRM, however, listed the provisions 728 825 FEDERAL REPORTER, 3d SERIES from which the Commission likely would network connection and facilities unbun- not forbear, which by necessary implica- dling requirements contained in sections tion indicated that the Commission would 251 and 252. As relevant here, section 251 consider forbearing from all others. The requires telecommunications carriers ‘‘to NPRM did so by citing a 2010 notice of interconnect directly or indirectly’’ with inquiry, in which the Commission had other carriers and prohibits them from contemplated that, if it were to classify ‘‘impos[ing] unreasonable or discriminato- the Internet connectivity component of ry conditions or limitations on[ ] the resale broadband Internet access service, it of TTT telecommunications services.’’ 47 would forbear from applying all but a U.S.C. § 251(a)(1), (b)(1). ‘‘Incumbent local handful of core statutory provisions— exchange carrier[s],’’ meaning carriers who sections 201, 202, 208, and 254—to the ‘‘provided telephone exchange service’’ in a service. In addition, the Commission particular area as of the effective date of identified sections 222 and 255 as provi- the Telecommunications Act, must provide sions that could be excluded from for- nondiscriminatory access to their existing bearance, noting that they have attract- networks and unbundled access to network ed longstanding and broad support in elements in order to allow service-level the broadband context. competition through resale. Id. § 251(c), NPRM, 29 FCC Rcd. at 5616 ¶ 154 (foot- (h)(1). Section 252 sets standards for con- notes and internal quotation marks omit- tracts that implement section 251 obli- ted). The NPRM sought ‘‘further and up- gations. dated comment’’ on that course of action. Id. Thus, Full Service Network ‘‘should [50] Full Service Network first argues have anticipated that’’ the Commission that section 10(a)(3)’s public interest deter- would consider forbearing from all remain- mination ‘‘must be made for each regula- ing Title II provisions. Covad Communica- tion, provision and market TTT using the tions Co., 450 F.3d at 548. Indeed, Full definition and context of that provision in Service Network anticipated that the Com- the [Communications] Act.’’ Full Service mission would do just that. In its com- Network Pet’rs’ Br. 14–15 (emphasis omit- ments, Full Service Network argued that ted). Because section 251 ‘‘applies to ‘local the Commission should not forbear from exchange carriers,’ ’’ Full Service Network the provisions at issue here, thus demon- contends, ‘‘the geographic market, as the strating that it had no trouble ‘‘com- name implies and the definition in the ment[ing] meaningfully,’’ Honeywell Inter- [Communications] Act confirms, is local national, Inc., 372 F.3d at 445. See Letter and not national.’’ Id. at 15 (emphasis from Earl W. Comstock, Counsel for Full omitted) (quoting 47 U.S.C. § 251). Service Network and TruConnect, to Mar- Our decision in EarthLink, Inc. v. FCC, lene H. Dortch, FCC, GN Dkt. Nos. 14-28 & 10-127 (Feb. 20, 2015); Letter from Earl 462 F.3d 1, forecloses this argument. W. Comstock, Counsel for Full Service There, EarthLink made a similar argu- Network and TruConnect, to Marlene H. ment—that the inclusion of the phrase Dortch, FCC, GN Dkt. Nos. 14-28 & 10- ‘‘geographic markets’’ in section 10 meant 127, at 1 (Feb. 3, 2015). that the Commission could not ‘‘forbear on a nationwide basis’’ from separate unbun- B. dling requirements in section 271 ‘‘without Full Service Network contends that the considering more localized regions individ- Commission acted arbitrarily and capri- ually.’’ Id. at 8. Rejecting this argument, ciously in forbearing from the mandatory we focused on the language of section 10, US TELECOM ASSOCIATION v. FCC 729 Cite as 825 F.3d 674 (D.C. Cir. 2016)

and held that ‘‘[o]n its face, the statute bearance from the interconnection provi- imposes no particular mode of market sions under the section 251/252 frame- analysis or level of geographic rigor.’’ Id. work.’’ 2015 Open Internet Order, 30 FCC Rather, ‘‘the language simply contemplates Rcd. at 5849–50 ¶ 513 (footnote omitted). that the FCC might sometimes forbear in Specifically, Full Service Network attacks a subset of a carrier’s markets; it is silent the Commission’s determination that sec- about how to determine when such partial tion 201 gives it sufficient authority to relief is 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 commission’s section 10 analysis. mon carrier engaged in interstate or for- Full Service Network’s argument is also eign communication by wire or radio to inconsistent with our decision in Verizon furnish such communication service upon Telephone Cos. v. FCC, 570 F.3d 294 (D.C. reasonable request therefor’’ and, upon an Cir. 2009). There, Verizon sought forbear- order of the Commission, ‘‘to establish ance from section 251 in some of its tele- physical connections with other carriers, to phone-service markets. Id. at 299. The establish through routes and charges ap- Commission denied Verizon’s petition, plicable thereto and the divisions of such finding insufficient evidence of facilities- charges, and to establish and provide facil- based competition to render the provision’s ities and regulations for operating such application unnecessary to protect the in- through routes.’’ 47 U.S.C. § 201(a). ‘‘All terests of consumers under section 10(a)(2) charges, practices, classifications, and reg- and to satisfy section 10(a)(3)’s public-in- ulations for and in connection with such terest requirement. Id. Challenging that communication service, shall be just and decision, Verizon argued that the Commis- reasonable TTTT’’ Id. § 201(b). Section 251 sion’s forbearance decision was incompati- includes a savings provision that ‘‘[n]othing ble with the text of section 251 because in this section shall be construed to limit section 251 required the Commission to or otherwise affect the Commission’s au- find that lack of access would ‘‘ ‘impair the thority under section 201.’’ Id. § 251(i). ability of the telecommunications carrier Full Service Network first contends that seeking access to provide TTT service[ ],’ ’’ the Commission’s authority under section which the Commission had not done. Id. at 201 does not extend to physical co-location, 300 (omission and alteration in original) under which local exchange carriers must (quoting 47 U.S.C. § 251). We rejected this allow third-party providers to physically argument, explaining that ‘‘[t]he dispute locate cables on their property in further- before this court TTT concerns whether the ance of network connections. In support, statutory text of § 10—not § 251—contra- Full Service Network relies on our deci- dicts the FCC’s interpretation.’’ Id. We sion in Bell Atlantic Telephone Cos. v. found reasonable the Commission’s conclu- FCC, 24 F.3d 1441 (D.C. Cir. 1994), in sion that its section 10 analysis did not which we refused to uphold under section need to incorporate any statutory require- 201 a Commission rule requiring physical ment arising from section 251. Id. at 300– co-location. The rule, we reasoned, would 01. We do so again here. unnecessarily raise Takings Clause issues [51] Full Service Network next chal- because the Commission could use virtual lenges the Commission’s finding that ‘‘the co-location, where local exchange carriers availability of other protections adequately maintain equipment that third-party pro- addresses commenters’ concerns about for- viders can use, to implement section 201’s 730 825 FEDERAL REPORTER, 3d SERIES

‘‘physical connection’’ requirement without termined that because it had found the raising constitutional issues. Id. at 1446. So section 10 criteria met as to section 251, it while Full Service Network is correct that had no reason to ‘‘resolve whether broad- Bell Atlantic imposes one limit on the band Internet access service could consti- Commission’s reach under section 201, that tute ‘telephone exchange service’ ’’ under case also demonstrates that the Commis- section 251. Id. at 5851 ¶ 513 n. 1575. sion retains authority to regulate network We approved the Commission’s jurisdic- connections under that section. tional approach in Core Communications, Next, Full Service Network argues that Inc. v. FCC, 592 F.3d 139, 144 (D.C. Cir. section 152(b), which ‘‘prevent[s] the Com- 2010). Although the petitioners in that case mission from taking intrastate action solely never challenged the general framework of because it further[s] an interstate goal,’’ the Commission’s ‘‘end-to-end analysis, TTT AT&T Corp. v. Iowa Utilities Board, 525 under which the classification of a commu- U.S. 366, 381, 119 S.Ct. 721, 142 L.Ed.2d nication as local or interstate turns on 835 (1999), prohibits the Commission from whether its origin and destination are in ‘‘us[ing] its interstate authority under [sec- the same state,’’ id. at 142, we recognized tion] 201 to regulate broadband Internet that access service that is an intrastate ‘tele- [d]ial-up internet traffic is special be- phone exchange service’ under the [Com- cause it involves interstate communica- munications] Act,’’ Full Service Network tions that are delivered through local Pet’rs’ Br. 17 (emphasis omitted) (quoting 47 U.S.C. § 153(54)). According to Full calls; it thus simultaneously implicates Service Network, the Commission erred the regimes of both § 201 and of by refusing to determine whether broad- §§ 251–252. Neither regime is a subset band service qualifies as a ‘‘telephone ex- of the other. They intersect, and dial-up change service’’ because that definition internet traffic falls within that intersec- would prevent the Commission from classi- tion. Given this overlap, § 251(i)’s specif- fying the internet as jurisdictionally inter- ic saving of the Commission’s authority state. under § 201 against any negative implications from § 251 renders the Commis- In the Order, the Commission ‘‘reaf- sion’s reading of the provisions at least firm[ed] [its] longstanding conclusion’’ that reasonable. broadband service falls within its jurisdiction as an interstate service. 2015 Open Id.; see also National Ass’n of Regulatory Internet Order, 30 FCC Rcd. at 5803 Utility Commissioners v. FCC, 746 F.2d ¶ 431; see Cable Broadband Order, 17 1492, 1501 (D.C. Cir. 1984) (‘‘[W]e have FCC Rcd. at 4832 ¶ 59; In re GTE Tele- concluded that the FCC has broad power phone Operating Cos. GTOC Tariff No. 1, to regulate physically intrastate facilities GTOC Transmittal No. 1148, 13 FCC Rcd. where they are used for interstate commu- 22,466, 22,474–83 ¶¶ 16–32 (1998). ‘‘The nication.’’). To be sure, Core Communica- Internet’s inherently global and open ar- tions concerned dial-up internet access, chitecture,’’ the Commission reasoned, but because broadband involves a similar ‘‘mak[es] end-to-end jurisdictional analysis mix of local facilities and interstate infor- extremely difficult—if not impossible— mation networks, we see no meaningful when the services at issue involve the In- distinction between the interpretation ap- ternet.’’ 2015 Open Internet Order, 30 proved in Core Communications and the FCC Rcd. at 5803 ¶ 431 (internal quotation one the Commission offered here. Nor do marks omitted). The Commission also de- we see any reason to obligate the Commis- US TELECOM ASSOCIATION v. FCC 731 Cite as 825 F.3d 674 (D.C. Cir. 2016) sion to determine the legal status of each In the Order, the Commission identified underlying ‘‘hypothetical regulatory obli- two bases for forbearing from sections 251 gation[ ]’’ that could result from any par- and 252. First, it considered evidence from ticular Communications Act provision prior commenters who argued that ‘‘last-mile to undertaking the section 10 forbearance unbundling requirements TTT led to de- analysis. AT & T Inc. v. FCC, 452 F.3d pressed investment in the European 830, 836–37 (D.C. Cir. 2006). broadband marketplace.’’ 2015 Open Inter- [52] Full Service Network’s final argu- net Order, 30 FCC Rcd. at 5796 ¶ 417. ment is not especially clear. It appears to Those commenters identified several stud- claim that the Commission provided inade- ies suggesting that mandatory unbundling quate support for its forbearance decision. had reduced investment in broadband in- Pointing out that in prior proceedings the frastructure in Europe relative to the Commission had found that mandatory un- United States. See Letter from Maggie bundling in the telephone context would McCready, Verizon, to Marlene H. Dortch, FCC, GN Dkt. Nos. 14-28 & 10-127 (Jan. promote competition and emphasizing that 26, 2015); Letter from Kathryn Zachem, Congress passed section 251 to foster com- Comcast, to Marlene H. Dortch, FCC, GN petition, Full Service Network argues that Dkt. Nos. 14-28 & 10-127, at 5–7 (Dec. 24, ‘‘[section 10] surely requires more to sup- 2014) (identifying Martin H. Thelle & Bru- port forbearance than an assertion by the no Basalisco, Copenhagen Economics, How FCC that ‘other authorities’ are adequate Europe Can Catch Up With the US: A and the public interest will be better Contrast of Two Contrary Broadband served by enhancing the agency’s discre- Models (2013)); Letter from Christopher S. tion.’’ Full Service Network Pet’rs’ Br. 20. Yoo to Marlene H. Dortch, FCC, GN Dkt. [53] In evaluating Full Service Net- Nos. 14-28, 10-127, 09-191 (June 10, 2014). work’s argument that the Commission The Commission reasoned that its decision failed to provide adequate justification for to forbear from section 251’s unbundling its forbearance decision, we are guided by requirement, in combination with regula- ‘‘the traditional ‘arbitrary and capricious’ tion under other provisions of Title II, standard,’’ Cellular Telecommunications would avoid similar problems and encour- & Internet Ass’n v. FCC, 330 F.3d 502, age further deployment because the 507–08 (D.C. Cir. 2003), under which ‘‘the scheme ‘‘establishes the regulatory pre- agency must examine the relevant data dictability needed by all sectors of the and articulate a satisfactory explanation Internet industry to facilitate prudent for its action including a rational connec- business planning, without imposing undue tion between the facts found and the burdens that might interfere with entre- choice made,’’ State Farm, 463 U.S. at 43, preneurial opportunities.’’ 2015 Open In- 103 S.Ct. 2856 (internal quotation marks ternet Order, 30 FCC Rcd. at 5796 ¶ 417. omitted). We have applied this standard to The Commission also identified ‘‘numer- section 10 forbearance decisions and have ous concerns about the burdens—or, at a ‘‘consistently deferred to [such decisions], minimum, regulatory uncertainty—that except in cases where the Commission de- would be fostered by a sudden, substantial viated without explanation from its past expansion of the actual or potential regula- decisions or did not discuss section 10’s tory requirements and obligations relative criteria at all.’’ Verizon v. FCC, 770 F.3d to the status quo from the near-term 961, 969 (D.C. Cir. 2014) (internal citations past,’’ in which many broadband providers omitted). were not subject to any aspect of Title II. 732 825 FEDERAL REPORTER, 3d SERIES

Id. at 5839 ¶ 495. In reaching this conclu- lieves that the Commission’s competition sion, the Commission drew from its experi- analysis was contrary to its own precedent. ence with the mobile voice industry, which Id. at 718. Notably, however, and despite ‘‘thrived under a market-based Title II the partial dissent’s assertion, see id. at regime’’ that included significant forbear- 715–16, Full Service Network has never ance, ‘‘demonstrating that robust invest- claimed that the Commission misapplied ment is not inconsistent with a light-touch any of the section 10(a) factors, failed to Title II regime.’’ Id. at 5799–800 ¶ 423. analyze competitive effect as required by Full Service Network argues that the section 10(b), or acted contrary to its for- Commission’s ‘‘prior predictions of ‘vibrant bearance precedent. Indeed, when pressed intermodal competition’ TTT ‘cannot be rec- at oral argument, Full Service Network onciled with marketplace realities.’ ’’ Full disclaimed any intent to make these argu- Service Network Pet’rs’ Reply Br. 10 ments. Oral Arg. Tr. 139–40. Full Service (quoting 2015 Open Internet Order, 30 FCC Rcd. at 5743 ¶ 330). As we noted Network’s argument regarding the Com- above, however, ‘‘[a]n agency’s predictive mission’s competition analysis was con- judgments about areas that are within the fined to its contention that section 251’s agency’s field of discretion and expertise focus on local competition required the are entitled to particularly deferential re- Commission to perform a local market view, as long as they are reasonable.’’ analysis as part of its forbearance inquiry. EarthLink, 462 F.3d at 12 (internal quota- As the partial dissent acknowledges, tion marks omitted). In this case, the Com- EarthLink ‘‘fully supports the Commis- mission’s predictive judgments about the sion’’ on that score. Concurring & Dissent- effect mandatory unbundling would have ing Op. at 778. According to the partial on broadband deployment were perfectly dissent, however, by citing section 10(b) in reasonable and supported by record evi- its brief, Full Service Network presented a dence. Multiple studies provided evidence broader challenge to the Commission’s that mandatory unbundling harmed invest- competition analysis. Id. at 715–16. But ment in Europe. Such evidence, combined Full Service Network cited section 10(b) with the Commission’s experience in using only once, and only in the context of its a ‘‘light touch’’ regulatory program for mo- argument that the Commission ‘‘must eval- bile voice, demonstrates ‘‘a rational con- uate each provision [under section 10] us- nection between the facts found and the ing the definition and context of that provi- choice made’’ to forbear from applying sections 251 and 252. State Farm, 463 U.S. at sion in the Act,’’ which, ‘‘[i]n the context of 43, 103 S.Ct. 2856 (internal quotation the local ‘connection link’ to the Internet marks omitted). The APA demands noth- that phone and cable company broadband ing more. service provides, TTT must be made on a local market-by-market basis.’’ Full Ser- The partial dissent agrees with much of this, but nonetheless believes that the vice Network Pet’rs’ Br. 15 (emphasis Commission acted arbitrarily and capri- omitted). We have addressed that argu- ciously by ‘‘attempt[ing] to have it both ment above, and Full Service Network ways’’ when it found a lack of competition makes no other section 10(b) argument. in its reclassification decision, but simulta- Because Full Service Network never pres- neously found adequate competition to jus- ents in its briefs the arguments made by tify forbearance. Concurring & Dissenting the partial dissent, those arguments lie Op. at 777. The partial dissent also be- outside the scope of our review. US TELECOM ASSOCIATION v. FCC 733 Cite as 825 F.3d 674 (D.C. Cir. 2016)

VI. mission ‘‘with affirmative authority to en- We turn next to petitioners’ challenges act measures encouraging the deployment to the particular rules adopted by the of broadband infrastructure’’ and that the Commission. As noted earlier, the Com- Commission had ‘‘reasonably interpreted mission promulgated five rules in the Or- section 706 to empower it to promulgate der: rules banning (i) blocking, (ii) throt- rules governing broadband providers’ tling, and (iii) paid prioritization, 2015 treatment of Internet traffic.’’ Id. at 628. Open Internet Order, 30 FCC Rcd. at 5647 In doing so, we also found that the Com- ¶ 110; (iv) a General Conduct Rule, id. at mission’s justification for those rules— 5660 ¶ 136; and (v) an enhanced transpar- ‘‘that they will preserve and facilitate the ency rule, id. at 5669–82 ¶¶ 154–85. Peti- ‘virtuous circle’ of innovation that has driv- tioners Alamo and Berninger (together, en the explosive growth of the Internet’’— Alamo) challenge the anti-paid-prioritiza- was reasonable and supported by substan- tion rule as beyond the Commission’s au- tial evidence. Id. We ultimately struck thority. US Telecom challenges the Gener- down the anti-blocking and anti-discrimi- al Conduct Rule as unconstitutionally nation rules on the ground that they vague. We reject both challenges. amounted to common carrier regulation without any accompanying determination A. that broadband providers should be regu- [54] In its challenge to the anti-paid- lated as common carriers. See id. at 655– prioritization rule, petitioner Alamo con- 58. But we upheld the Commission’s trans- tends that, even with reclassification of parency rule as a permissible and reason- broadband as a telecommunications ser- able exercise of its section 706 authority, vice, the Commission lacks authority to one that did not improperly impose com- promulgate such a rule under section mon carrier obligations on broadband pro- 201(b) of Title II and section 303(b) of viders. See id. at 659. Because our findings Title III. The Commission, however, with regard to the Commission’s 706 au- grounded the rules in ‘‘multiple, comple- thority were necessary to our decision to mentary sources of legal authority’’—not uphold the transparency rule, those find- only Titles II and III, but also section 706 ings cannot be dismissed as dicta. Semi- of the Telecommunications Act of 1996 nole Tribe of Florida v. Florida, 517 U.S. (now codified at 47 U.S.C. § 1302). Id. at 44, 67, 116 S.Ct. 1114, 134 L.Ed.2d 252 5720–21 ¶¶ 273–74. As to section 706, this (1996) (‘‘When an opinion issues for the court concluded in Verizon that it grants Court, it is not only the result but also the Commission independent rulemaking those portions of the opinion necessary to authority. 740 F.3d at 635–42. Alamo none- that result by which we are bound.’’). We theless argues that the Commission lacks note, moreover, that the separate opinion authority to promulgate rules under sec- concurring in part and dissenting in part tion 706. It rests that argument on a claim agreed with the court’s conclusion as to that this court’s contrary conclusion in the existence of rulemaking authority un- Verizon was dicta. der section 706 and made no suggestion Alamo misreads Verizon. Our decision in that the conclusion was mere dicta. See that case considered three rules from the Verizon, 740 F.3d at 659–68 (Silberman, J., 2010 Open Internet Order: an anti-block- concurring in part and dissenting in part). ing rule, an anti-discrimination rule, and a Alamo does not contend that the anti- transparency rule. See id. at 633. We de- paid-prioritization rule falls outside the termined that section 706 vests the Com- scope of the Commission’s rulemaking au- 734 825 FEDERAL REPORTER, 3d SERIES

thority under section 706 or is otherwise That brings us to our colleague’s sugges- an improper exercise of that authority (if, tion that the Order embodies a ‘‘central as we held in Verizon and reiterate here, paradox[ ]’’ in that the Commission relied that authority exists in the first place). on the Telecommunications Act to ‘‘in- Alamo argues only that Verizon was wrong crease regulation’’ even though the Act on the antecedent question of the Commis- was ‘‘intended to ‘reduce regulation.’ ’’ sion’s authority to promulgate rules under Concurring & Dissenting Op. at 770. We section 706 at all. Unfortunately for Alamo, are unmoved. The Act, by its terms, aimed Verizon established precedent on the exis- to ‘‘encourage the rapid deployment of new tence of the Commission’s rulemaking au- telecommunications technologies.’’ Tele- thority under section 706 and thus controls communications Act of 1996, Pub. L. 104– our decision here. Consequently, we reject 104, 110 Stat 56. If, as we reiterate here Alamo’s challenges to the Commission’s (and as the partial dissent agrees), section section 706 authority and to the anti-paid- 706 grants the Commission rulemaking au- prioritization rule. thority, it is unsurprising that the grant of rulemaking authority might occasion the Our colleague picks up where Alamo promulgation of additional regulation. And leaves off, arguing that, even if Verizon’s if, as is true here (and was true in Veri- conclusions about the existence of the zon), the new regulation is geared to pro- Commission’s section 706 authority were moting the effective deployment of new not mere dicta, Verizon’s conclusions about telecommunications technologies such as the scope of that authority (including the broadband, the regulation is entirely con- permissibility of the Commission’s reliance sistent with the Act’s objectives. on the ‘‘virtuous cycle’’ of innovation) were dicta. Concurring & Dissenting Op. at 769. B. Both sets of conclusions, however, were necessary to our upholding the transparen- [55] The Due Process Clause ‘‘requires cy rule. See Verizon, 740 F.3d at 639–40, the invalidation of laws [or regulations] 644–49. Consequently, as we held in Veri- that are impermissibly vague.’’ FCC v. Fox zon and reaffirm today, the Commission’s Television Stations, Inc., ––– U.S. ––––, section 706 authority extends to rules 132 S.Ct. 2307, 2317, 183 L.Ed.2d 234 ‘‘governing broadband providers’ treat- (2012). US Telecom argues that the Gener- ment of internet traffic’’—including the al Conduct Rule falls within that category. anti-paid-prioritization rule—in reliance on We disagree. the virtuous cycle theory. Verizon, 740 The General Conduct Rule forbids F.3d at 628; see 2015 Open Internet Order, broadband providers from engaging in 30 FCC Rcd. at 5625–34 ¶¶ 76–85; id. at conduct that ‘‘unreasonably interfere[s] 5623–24 ¶¶ 281–82. Even if there were any with or unreasonably disadvantage[s] (i) lingering uncertainty about the import of end users’ ability to select, access, and use our decision in Verizon, we fully adopt broadband Internet access service or the here our findings and analysis in Verizon lawful Internet content, applications, ser- concerning the existence and permissible vices, or devices of their choice, or (ii) edge scope of the Commission’s section 706 au- providers’ ability to make lawful content, thority, including our conclusion that the applications, services, or devices available Commission’s virtuous cycle theory pro- to end users.’’ 2015 Open Internet Order, vides reasonable grounds for the exercise 30 FCC Rcd. at 5660 ¶ 136. The Commis- of that authority. sion adopted the General Conduct Rule US TELECOM ASSOCIATION v. FCC 735 Cite as 825 F.3d 674 (D.C. Cir. 2016)

based on a determination that the three US Telecom contends that the NPRM bright-line rules—barring blocking, throt- was nonetheless inadequate because gen- tling, and paid prioritization—were, on eral notice of the possible adoption of a their own, insufficient ‘‘to protect the open new standard, without notice about the nature of the Internet.’’ Id. at 5659–60 rule’s content, is insufficient. But the ¶¶ 135–36. Because ‘‘there may exist other NPRM described in significant detail the current or future practices that cause the factors that would animate a new standard. type of harms [the] rules are intended to See, e.g., id. at 5605–06 ¶¶ 124–126; id. at address,’’ the Commission thought it ‘‘nec- 5607 ¶¶ 129–31; id. at 5608 ¶ 134. The essary’’ to establish a more general, no- factors that are to guide application of the unreasonable interference/disadvantage General Conduct Rule significantly resem- standard. Id. The standard is designed to ble those identified in the NPRM. See 2015 be flexible so as to address unforeseen Open Internet Order, 30 FCC Rcd. at practices and prevent circumvention of the 5661–64 ¶¶ 139–45. The Rule also adopted bright-line rules. The Commission will the ‘‘case-by-case,’’ ‘‘totality of the circum- evaluate conduct under the General Con- duct Rule on a case-by-case basis, taking stances’’ approach proposed in the NPRM. into account a ‘‘non-exhaustive’’ list of sev- 29 FCC Rcd. at 5604 ¶ 122. By making en factors. Id. at 5661 ¶ 138. clear that the Commission was considering establishment of a general standard and [56] Before examining the merits of providing indication of its content, the the vagueness challenge, we first address NPRM offered adequate notice under the US Telecom’s argument that the NPRM APA. provided inadequate notice that the Com- mission would issue a General Conduct [57] Moving to the substance of US Rule of this kind. Although the Commis- Telecom’s vagueness argument, we note sion did not ultimately adopt the ‘‘commer- initially that it comes to us as a facial cially reasonable’’ standard proposed in challenge. Traditionally, a petitioner could the NPRM, the Commission specifically succeed on such a claim ‘‘only if the enact- sought ‘‘comment on whether [it] should ment [wa]s impermissibly vague in all of adopt a different rule to govern broadband its applications.’’ Village of Hoffman Es- providers’ practices to protect and pro- tates v. Flipside, Hoffman Estates, Inc., mote Internet openness.’’ NPRM, 29 FCC 455 U.S. 489, 495, 102 S.Ct. 1186, 71 Rcd. at 5604 ¶ 121. The NPRM further L.Ed.2d 362 (1982). That high bar was asked: ‘‘How can the Commission ensure grounded in the understanding that a that the rule it adopts sufficiently protects ‘‘plaintiff who engages in some conduct against harms to the open Internet, includ- that is clearly proscribed cannot complain ing broadband providers’ incentives to disadvantage edge providers or classes of of the vagueness of the law as applied to edge providers in ways that would harm the conduct of others.’’ Holder v. Humani- Internet openness? Should the Commis- tarian Law Project, 561 U.S. 1, 18–19, 130 sion adopt a rule that prohibits unreason- S.Ct. 2705, 177 L.Ed.2d 355 (2010) (inter- able discrimination and, if so, what legal nal quotation marks omitted). More re- authority and theories should we rely upon cently, however, in Johnson v. United to do so?’’ Id. In light of those questions, States, ––– U.S. ––––, 135 S.Ct. 2551, 192 US Telecom was on notice that the Com- L.Ed.2d 569 (2015), the Supreme Court mission might adopt a different standard suggested some skepticism about that to effectuate its goal of protecting internet longstanding framework. Noting that past openness. ‘‘holdings squarely contradict the theory 736 825 FEDERAL REPORTER, 3d SERIES

that a vague provision is constitutional conditions the regulations are meant to merely because there is some conduct that address and the objectives the regulations clearly falls within the provision’s grasp,’’ are meant to achieve, would have fair the Court described the ‘‘supposed re- warning of what the regulations require.’’ quirement of vagueness in all applications’’ Freeman United Coal Mining Co. v. Fed- as a ‘‘tautology.’’ Id. at 2561. We need not eral Mine Safety & Health Review Com- decide the full implications of Johnson, mission, 108 F.3d 358, 362 (D.C. Cir. because we conclude that the General Con- 1997). duct Rule satisfies due process require- That standard is met here. The Commis- ments even if we do not apply Hoffman’s sion has articulated ‘‘the objectives the elevated bar for facial challenges. [General Conduct Rule is] meant to [58] Vagueness doctrine addresses two achieve,’’ id.: to serve as a complement to concerns: ‘‘first, that regulated parties the bright-line rules and advance the cen- should know what is required of them so tral goal of protecting consumers’ ability to they may act accordingly; second, preci- access internet content of their choosing. sion and guidance are necessary so that See 2015 Open Internet Order, 30 FCC those enforcing the law do not act in an Rcd. at 5659–60 ¶¶ 135–37. The Commis- arbitrary or discriminatory way.’’ Fox sion set forth seven factors that will guide Television, 132 S.Ct. at 2317. Petitioners the determination of what constitutes un- argue that the General Conduct Rule is reasonable interference with, or disadvan- unconstitutionally vague because it fails to taging of, end-user or edge-provider ac- provide regulated entities adequate notice cess: end-user control; competitive effects; of what is prohibited. We are unpersuaded. consumer protection; effect on innovation, Unlike the circumstances at issue in Fox investment, or broadband deployment; free Television, id. at 2317–18, the Commission expression; application agnosticism; and here did not seek retroactively to enforce a new policy against conduct predating the standard practices. See id. at 5661–64 policy’s adoption. The General Conduct ¶¶ 139–45. The Commission’s articulation Rule applies purely prospectively. We find of the Rule’s objectives and specification of that the Rule gives sufficient notice to the factors that will inform its application affected entities of the prohibited conduct ‘‘mark out the rough area of prohibited going forward. conduct,’’ which suffices to satisfy due process in this context. DiCola, 77 F.3d at 509 [59, 60] The degree of vagueness toler- (internal quotation marks omitted). able in a given statutory provision varies based on ‘‘the nature of the enactment.’’ Moreover, the Commission did not Hoffman Estates, 455 U.S. at 498, 102 merely set forth the factors; it also includ- S.Ct. 1186. Thus, ‘‘the Constitution is most ed a description of how each factor will be demanding of a criminal statute that limits interpreted and applied. For instance, First Amendment rights.’’ DiCola v. FDA, when analyzing the competitive effects of a 77 F.3d 504, 508 (D.C. Cir. 1996). The practice, the Commission instructs that it General Conduct Rule does not implicate will ‘‘review the extent of an entity’s verti- that form of review because it regulates cal integration as well as its relationships business conduct and imposes civil penal- with affiliated entities.’’ 2015 Open Inter- ties. In such circumstances, ‘‘regulations net Order, 30 FCC Rcd. at 5662 ¶ 140. The will be found to satisfy due process so long Commission defines a practice as applica- as they are sufficiently specific that a rea- tion-agnostic if it ‘‘does not differentiate in sonably prudent person, familiar with the treatment of traffic, or if it differentiates US TELECOM ASSOCIATION v. FCC 737 Cite as 825 F.3d 674 (D.C. Cir. 2016)

in treatment of traffic without reference to omitted). That concern is particularly the content, application, or device.’’ Id. at acute here, because of the speed with 5663 ¶ 144 n. 344. Many of the paragraphs which broadband technology continues to in that section of the Order also specifical- evolve. The dynamic market conditions and ly identify the kind of conduct that would rapid pace of technological development violate the Rule. The Commission explains, give rise to pronounced concerns about for example, that ‘‘unfair or deceptive bill- ready circumvention of particularized reg- ing practices, as well as practices that fail ulatory restrictions. The flexible approach to protect the confidentiality of end users’ adopted by the General Conduct Rule aims proprietary information, will be unlawful.’’ to address that concern in a field in which Id. at 5662 ¶ 141. It goes on to emphasize that the ‘‘rule is intended to include pro- ‘‘specific regulations cannot begin to cover tection against fraudulent practices such all of the infinite variety of conditions.’’ Id. as ‘cramming’ and ‘slamming.’ ’’ Id. And (alteration and internal quotation marks ‘‘[a]pplication-specific network practices,’’ omitted). including ‘‘those applied to traffic that has Any ambiguity in the General Conduct a particular source or destination, that is Rule is therefore a far cry from the kind generated by a particular application TTT, [or] that uses a particular application- or of vagueness this court considered proble- transport- layer protocol,’’ would trigger matic in Timpinaro v. SEC, 2 F.3d 453 concern as well. Id. at 5663 ¶ 144 n. 344. (D.C. Cir. 1993), on which US Telecom heavily relies. In that case, we found a [61] Given that ‘‘we can never expect multifactor SEC rule defining a profes- mathematical certainty from our lan- sional trading account to be unconstitu- guage,’’ those sorts of descriptions suffice to provide fair warning as to the type of tionally vague because ‘‘a trader would be conduct prohibited by the General Conduct hard pressed to know when he is in dan- Rule. Grayned v. City of Rockford, 408 ger of triggering an adverse reaction.’’ Id. U.S. 104, 110, 92 S.Ct. 2294, 33 L.Ed.2d at 460. We emphasized that ‘‘five of the 222 (1972). To be sure, as a multifactor seven factors TTT are subject to seemingly standard applied on a case-by-case basis, a open-ended interpretation,’’ and that the certain degree of uncertainty inheres in uncertainty is ‘‘all the greater when these the structure of the General Conduct Rule. mysteries are considered in combination, But a regulation is not impermissibly according to some undisclosed system of vague because it is ‘‘marked by flexibility relative weights.’’ Id. Unlike in Timpina- and reasonable breadth, rather than metic- ro, in which the factors were left unex- ulous specificity.’’ Id. (internal quotation plained, in this case, as noted, the Com- marks omitted). Fair notice in these cir- mission included a detailed paragraph cumstances demands ‘‘no more than a rea- clarifying and elaborating on each of the sonable degree of certainty.’’ Throckmor- factors. And because the provision at issue ton v. National Transportation Safety Board, 963 F.2d 441, 444 (D.C. Cir. 1992) in Timpinaro was a technical definition of (internal quotation marks omitted). We are a professional trading account, the context mindful, moreover, that ‘‘by requiring reg- of the regulation shed little additional light ulations to be too specific courts would be on its meaning. In contrast, the knowledge opening up large loopholes allowing con- that the General Conduct Rule was ex- duct which should be regulated to escape pressly adopted to complement the bright- regulation.’’ Freeman, 108 F.3d at 362 (al- line rules helps delineate the contours of terations and internal quotation marks the proscribed conduct here. 738 825 FEDERAL REPORTER, 3d SERIES

[62] Finally, the advisory-opinion pro- seeking to avoid inadvertent violations of cedure accompanying the General Conduct the Rule. Nonbinding opinions thus are Rule cures it of any potential lingering characteristic of advisory processes, in- constitutional deficiency. The Commission cluding the Department of Justice Anti- announced in the Order that it would allow trust Division’s business review letter pro- companies to obtain an advisory opinion cedure, which served as the model for the concerning any ‘‘proposed conduct that Commission’s process. See id. Expecting may implicate the rules,’’ in order to ‘‘en- the Bureau to issue final, irrevocable deci- able companies to seek guidance on the sions on the permissibility of proposed propriety of certain open Internet prac- conduct before seeing the actual effects of tices before implementing them.’’ 2015 that conduct could produce anomalous re- Open Internet Order, 30 FCC Rcd. at 5706 sults. ¶¶ 229–30. The opinions will be issued by the Enforcement Bureau and ‘‘will be pub- Our colleague also identifies certain per- licly available.’’ Id. at 5706–07 ¶¶ 229, 231. ceived deficiencies in the advisory-opinion As a result, although the Commission did process. Notably, however, the partial dis- not reach a definitive resolution during the sent makes no argument that the General rulemaking process as to the permissibility Conduct Rule is unconstitutionally vague. under the General Conduct Rule of prac- Rather, in arguing that the Commission’s tices such as zero-rating and usage caps, reclassification of broadband is arbitrary see id. at 5666–67 ¶ 151, companies that and capricious, the partial dissent criticizes seek to pursue those sorts of practices may the advisory-opinion process on the petition for an advisory opinion and there- grounds that the Bureau could choose to by avoid an inadvertent infraction. The refrain from offering answers and that the opportunity to obtain prospective guidance process will be slow. See Concurring & thus provides regulated entities with ‘‘re- Dissenting Op. at 755–56. Insofar as those lief from [remaining] uncertainty.’’ DiCola, criticisms may seem germane to petition- 77 F.3d at 509; see also Hoffman, 455 U.S. ers’ vagueness challenge, we find them at 498, 102 S.Ct. 1186. unpersuasive. Even if the Bureau’s discre- Petitioners argue that the advisory-opin- tion about whether to provide an answer ion process is insufficient because opinions could be problematic in the absence of any cannot be obtained for existing conduct, further guidance in the Rule as to the conduct subject to a pending inquiry, or kinds of conduct it prohibits, here, as ex- conduct that is a ‘‘mere possibilit[y].’’ 2015 plained, the Rule does provide such guid- Open Internet Order, 30 FCC Rcd. at 5707 ance. The advisory-opinion procedure sim- ¶ 232. But the fact that advisory opinions ply acts as an additional resource available cannot be used for present conduct or to companies in instances of particular un- conduct pending inquiry is integral to the certainty. Moreover, the partial dissent’s procedure’s purpose—to encourage provid- suppositions about the slowness of the pro- ers to ‘‘be proactive about compliance’’ and cess stem solely from the absence of firm obtain guidance on proposed actions before deadlines by which the Bureau must issue implementing them. Id. at 5706 ¶ 229. Peti- an opinion. There is no indication at this tioners also point out that the guidance point, however, that the Bureau will fail to provided in advisory opinions is not binding. See id. at 5708 ¶¶ 235. The Bureau’s offer timely guidance. ability to adjust its views after issuing an In the end, the advisory-opinion proce- advisory opinion, however, does not negate dure can be expected to provide valuable the procedure’s usefulness for companies (even if imperfect) guidance to providers US TELECOM ASSOCIATION v. FCC 739 Cite as 825 F.3d 674 (D.C. Cir. 2016) seeking to comply with the General Con- the action TTT at issue.’’ Lujan, 504 U.S. at duct Rule. The procedure thereby allevi- 561, 112 S.Ct. 2130. When a person or ates any remaining concerns about the company that is the direct object of an Rule’s allegedly unconstitutional vague- action petitions for review, ‘‘there is ordi- ness. For the reasons described, we uphold narily little question that the action TTT the Rule. has caused [it] injury, and that a judgment preventing TTT the action will redress it.’’ VII. Id. at 561–62, 112 S.Ct. 2130. Here, howev- We finally turn to Alamo and Berning- er, Alamo seeks pre-enforcement review of er’s First Amendment challenge to the the rules, which raises the question of open internet rules. Having upheld the whether it has demonstrated that the rules FCC’s reclassification of broadband ser- inflict a sufficiently concrete and actual vice as common carriage, we conclude that injury. We conclude that Alamo has made the First Amendment poses no bar to the the requisite showing. rules. [67–69] Pre-enforcement review, par- A. ticularly in the First Amendment context, [63] Before moving to the merits of the does not require plaintiffs to allege that challenge, we must address intervenor Co- they ‘‘will in fact’’ violate the regulation in gent’s argument that Alamo and Berninger order to demonstrate an injury. Susan B. lack standing to bring this claim. Because Anthony List v. Driehaus, ––– U.S. ––––, the rules directly affect Alamo’s business, 134 S.Ct. 2334, 2345, 189 L.Ed.2d 246 we conclude that Alamo has standing. (2014). Standing ‘‘to challenge laws burdening expressive rights requires only a [64, 65] In order to establish standing, credible statement by the plaintiff of intent a plaintiff must demonstrate an ‘‘injury in to commit violative acts and a conventional fact’’ that is ‘‘fairly traceable’’ to the defen- background expectation that the govern- dant’s action and that can be ‘‘redressed by a favorable decision.’’ Lujan v. Defend- ment will enforce the law.’’ Act Now to ers of Wildlife, 504 U.S. 555, 560–61, 112 Stop War & End Racism Coalition v. Dis- S.Ct. 2130, 119 L.Ed.2d 351 (1992) (altera- trict of Columbia, 589 F.3d 433, 435 (D.C. tions and internal quotation marks omit- Cir. 2009) (internal quotation marks omitted). The dispute here is primarily about ted). Because ‘‘an agency rule, unlike a the first prong, injury in fact. An injury in statute, is typically reviewable without fact requires ‘‘invasion of a legally protect- waiting for enforcement,’’ that principle ed interest which is (a) concrete and par- applies with particular force here. Cham- ticularized, and (b) actual or imminent, not ber of Commerce v. FEC, 69 F.3d 600, 604 conjectural or hypothetical.’’ Id. (citations (D.C. Cir. 1995). and internal quotation marks omitted). Alamo explains that the ‘‘Open Internet [66] Alamo uses fixed wireless technol- conduct rules eliminate Alamo’s discretion ogy to provide internet service to custom- to manage the Internet traffic on its net- ers outside San Antonio, Texas. See Alamo work.’’ Portman Decl. ¶ 5. That statement Br., Portman Decl. ¶ 2. The company indicates that, were it not for the rules, claims it ‘‘is injured by the Order because Alamo would explore alternative methods it is a provider of broadband Internet ac- of managing internet traffic—namely cess service that the FCC seeks to regu- blocking, throttling, or paid prioritization. late.’’ Id. ¶ 5 (italics omitted). As a broad- In the context of this challenge, the com- band provider, Alamo is itself ‘‘an object of pany’s ‘‘affidavit can only be understood to 740 825 FEDERAL REPORTER, 3d SERIES

mean that’’ if the rules were removed, it termination. Common carriers have long would seek to exercise its discretion and been subject to nondiscrimination and explore business practices prohibited by equal access obligations akin to those im- the rules. Ord v. District of Columbia, 587 posed by the rules without raising any F.3d 1136, 1143 (D.C. Cir. 2009). Alamo First Amendment question. Those obli- has thus adequately manifested its ‘‘inten- gations affect a common carrier’s neutral tion to engage in a course of conduct argu- transmission of others’ speech, not a carri- ably affected with a constitutional interest, er’s communication of its own message. but proscribed by [regulation].’’ Driehaus, Because the constitutionality of each of 134 S.Ct. at 2342 (internal quotation marks the rules ultimately rests on the same omitted). Its inability to follow through on analysis, we consider the rules together. that intention constitutes an injury in fact The rules generally bar broadband provid- for purposes of pre-enforcement review of ers from denying or downgrading end-user the rules. access to content and from favoring certain [70] That conclusion is fortified by the content by speeding access to it. In effect, ‘‘strong presumption of judicial review un- they require broadband providers to offer der the Administrative Procedure Act’’ and a standardized service that transmits data the understanding that ‘‘the courts’ willing- on a nondiscriminatory basis. Such a con- ness to permit pre-enforcement review is straint falls squarely within the bounds of at its peak when claims are rooted in the traditional common carriage regulation. First Amendment.’’ New York Republican [72] The ‘‘basic characteristic’’ of com- State Committee v. SEC, 799 F.3d 1126, mon carriage is the ‘‘requirement [to] 1135 (D.C. Cir. 2015) (internal quotation hold[ ] oneself out to serve the public indis- marks omitted). In order ‘‘to avoid the criminately.’’ Verizon, 740 F.3d at 651 (in- chilling effects that come from unnecessar- ternal quotation marks omitted). That re- ily expansive proscriptions on speech,’’ quirement prevents common carriers from ‘‘courts have shown special solicitude’’ to ‘‘mak[ing] individualized decisions, in par- such claims. Id. at 1135–36. ticular cases, whether and on what terms Because Alamo’s standing enables us to to deal.’’ FCC v. Midwest Video Corp., 440 consider the First Amendment arguments U.S. 689, 701, 99 S.Ct. 1435, 59 L.Ed.2d with respect to all three bright-line rules, 692 (1979) (internal quotation marks omit- we have no need to consider Berninger’s ted). In the communications context, com- standing. See Rumsfeld v. Forum for Aca- mon carriers ‘‘make[ ] a public offering to demic & Institutional Rights, Inc., 547 provide communications facilities whereby U.S. 47, 52 n. 2, 126 S.Ct. 1297, 164 all members of the public who choose to L.Ed.2d 156 (2006). employ such facilities may communicate or B. transmit intelligence of their own design and choosing.’’ Id. (alteration and internal [71] Alamo argues that the open inter- quotation marks omitted). That is precisely net rules violate the First Amendment by what the rules obligate broadband provid- forcing broadband providers to transmit ers to do. speech with which they might disagree. We are unpersuaded. We have concluded [73, 74] Equal access obligations of that the Commission’s reclassification of that kind have long been imposed on tele- broadband service as common carriage is a phone companies, railroads, and postal ser- permissible exercise of its Title II authori- vices, without raising any First Amend- ty, and Alamo does not challenge that de- ment issue. See Denver Area Educational US TELECOM ASSOCIATION v. FCC 741 Cite as 825 F.3d 674 (D.C. Cir. 2016)

Telecommunications Consortium, Inc. v. As the Commission found, that under- FCC, 518 U.S. 727, 739, 116 S.Ct. 2374, 135 standing fully applies to broadband provid- L.Ed.2d 888 (1996) (plurality opinion) (not- ers. In the Order, the Commission con- ing that the ‘‘speech interests’’ in leased cluded that broadband providers ‘‘exercise channels are ‘‘relatively weak because [the little control over the content which users companies] act less like editors, such as access on the Internet’’ and ‘‘allow Inter- newspapers or television broadcasters, net end users to access all or substantially than like common carriers, such as tele- all content on the Internet, without altera- phone companies’’); FCC v. League of tion, blocking, or editorial intervention,’’ Women Voters of California, 468 U.S. 364, thus ‘‘display[ing] no such intent to convey 378, 104 S.Ct. 3106, 82 L.Ed.2d 278 (1984) a message in their provision of broadband (‘‘Unlike common carriers, broadcasters Internet access services.’’ 2015 Open Inter- are entitled under the First Amendment to net Order, 30 FCC Rcd. at 5869 ¶ 549. In exercise the widest journalistic freedom turn, the Commission found, end users consistent with their public duties.’’ (alter- ‘‘expect that they can obtain access to all ation and internal quotation marks omit- content available on the Internet, without ted)); Columbia Broadcasting System, Inc. the editorial intervention of their broad- v. Democratic National Committee, 412 band provider.’’ Id. Because ‘‘the accessed U.S. 94, 106, 93 S.Ct. 2080, 36 L.Ed.2d 772 speech is not edited or controlled by the (1973) (noting that the Senate decided in passing the Communications Act ‘‘to elimi- broadband provider but is directed by the nate the common carrier obligation’’ for end user,’’ id. at 5869–70 ¶ 549, the Com- broadcasters because ‘‘it seemed unwise to mission concluded that broadband provid- put the broadcaster under the hampering ers act as ‘‘mere conduits for the messages control of being a common carrier and of others, not as agents exercising editorial compelled to accept anything and every- discretion subject to First Amendment thing that was offered him so long as the protections,’’ id. at 5870 ¶ 549. Petitioners price was paid’’ (quoting 67 Cong. Rec. provide us with no reason to question 12,502 (1926))). The Supreme Court has those findings. explained that the First Amendment [75] Because the rules impose on comes ‘‘into play’’ only where ‘‘particular broadband providers the kind of nondiscri- conduct possesses sufficient communicative mination and equal access obligations that elements,’’ Texas v. Johnson, 491 U.S. 397, courts have never considered to raise a 404, 109 S.Ct. 2533, 105 L.Ed.2d 342 (1989), that is, when an ‘‘intent to convey a First Amendment concern—i.e., the rules particularized message [is] present, and in require broadband providers to allow ‘‘all the surrounding circumstances the likeli- members of the public who choose to em- hood [is] great that the message would be ploy such facilities [to] communicate or understood by those who viewed it,’’ transmit intelligence of their own design Spence v. Washington, 418 U.S. 405, 410– and choosing,’’ Midwest Video, 440 U.S. at 11, 94 S.Ct. 2727, 41 L.Ed.2d 842 (1974). 701, 99 S.Ct. 1435 (internal quotation The absence of any First Amendment con- marks omitted)—they are permissible. Of cern in the context of common carriers course, insofar as a broadband provider rests on the understanding that such enti- might offer its own content—such as a ties, insofar as they are subject to equal news or weather site—separate from its access mandates, merely facilitate the internet access service, the provider would transmission of the speech of others rather receive the same protection under the than engage in speech in their own right. First Amendment as other producers of 742 825 FEDERAL REPORTER, 3d SERIES internet content. But the challenged rules To be sure, in certain situations, entities apply only to the provision of internet that serve as conduits for speech produced access as common carriage, as to which by others receive First Amendment pro- equal access and nondiscrimination man- tection. In those circumstances, however, dates present no First Amendment prob- the entities are not engaged in indiscrimi- lem. nate, neutral transmission of any and all Petitioners and their amici offer various users’ speech, as is characteristic of com- grounds for distinguishing broadband ser- mon carriage. For instance, both newspa- vice from other kinds of common carriage, pers and ‘‘cable television companies use a none of which we find persuasive. For portion of their available space to reprint instance, the rules do not automatically (or retransmit) the communications of oth- raise First Amendment concerns on the ers, while at the same time providing some ground that the material transmitted original content.’’ City of Los Angeles v. through broadband happens to be speech Preferred Communications, Inc., 476 U.S. 488, 494, 106 S.Ct. 2034, 90 L.Ed.2d 480 instead of physical goods. Telegraph and (1986) (internal quotation marks omitted). telephone networks similarly involve the Through both types of actions—creating transmission of speech. Yet the communi- ‘‘original programming’’ and choosing cative intent of the individual speakers ‘‘which stations or programs to include in who use such transmission networks does [their] repertoire’’—newspapers and cable not transform the networks themselves companies ‘‘seek[ ] to communicate mes- into speakers. See id. at 700–01, 99 S.Ct. sages on a wide variety of topics and in a 1435. wide variety of formats.’’ Id. [76] Likewise, the fact that internet In selecting which speech to transmit, speech has the capacity to reach a broader newspapers and cable companies engage audience does not meaningfully differenti- in editorial discretion. Newspapers have a ate broadband from telephone networks finite amount of space on their pages and for purposes of the First Amendment cannot ‘‘proceed to infinite expansion of claim presented here. Regardless of the TTT column space.’’ Miami Herald Pub- scale of potential dissemination, both kinds lishing Co. v. Tornillo, 418 U.S. 241, 257, of providers serve as neutral platforms for 94 S.Ct. 2831, 41 L.Ed.2d 730 (1974). Ac- speech transmission. And while the extent cordingly, they pick which articles and ed- of First Amendment protection can vary itorials to print, both with respect to orig- based on the content of the communica- inal content and material produced by tions—speech on ‘‘matters of public con- others. Those decisions ‘‘constitute the ex- cern,’’ such as political speech, lies at the ercise of editorial control and judgment.’’ core of the First Amendment, Snyder v. Id. at 258, 94 S.Ct. 2831. Similarly, cable Phelps, 562 U.S. 443, 451, 131 S.Ct. 1207, operators necessarily make decisions 179 L.Ed.2d 172 (2011) (internal quotation about which programming to make avail- marks omitted)—both telephones and the able to subscribers on a system’s channel internet can serve as a medium of trans- space. As with newspapers, the ‘‘editorial mission for all manner of speech, including discretion’’ a cable operator exercises in speech addressing both public and private choosing ‘‘which stations or programs to concerns. The constitutionality of common include in its repertoire’’ means that oper- carriage regulation of a particular trans- ators ‘‘engage in and transmit speech.’’ mission medium thus does not vary based Turner Broadcasting System, Inc. v. on the potential audience size. FCC, 512 U.S. 622, 636, 114 S.Ct. 2445, US TELECOM ASSOCIATION v. FCC 743 Cite as 825 F.3d 674 (D.C. Cir. 2016)

129 L.Ed.2d 497 (1994) (internal quotation speaker. But the Order itself excludes such marks omitted). The Supreme Court providers from the rules. The Order de- therefore applied intermediate First fines broadband internet access service as Amendment scrutiny to (but ultimately a ‘‘mass-market retail service’’—i.e., a ser- upheld) must-carry rules constraining the vice that is ‘‘marketed and sold on a stan- discretion of a cable company concerning dardized basis’’—that ‘‘provides the capa- which programming to carry on its chan- bility to transmit data to and receive data nel menu. See id. at 661–62, 114 S.Ct. from all or substantially all Internet end- 2445. points.’’ 2015 Open Internet Order, 30 In contrast to newspapers and cable FCC Rcd. at 5745–46 ¶ 336 & n. 879. That companies, the exercise of editorial discre- definition, by its terms, includes only those tion is entirely absent with respect to broadband providers that hold themselves broadband providers subject to the Order. out as neutral, indiscriminate conduits. Unlike with the printed page and cable Providers that may opt to exercise editori- technology, broadband providers face no al discretion—for instance, by offering ac- such constraints limiting the range of po- cess only to a limited segment of websites tential content they can make available to specifically catered to certain content— subscribers. Broadband providers thus are would not offer a standardized service that not required to make, nor have they tradi- can reach ‘‘substantially all’’ endpoints. tionally made, editorial decisions about The rules therefore would not apply to which speech to transmit. See 2015 Open such providers, as the FCC has affirmed. Internet Order, 30 FCC Rcd. at 5753 See FCC Br. 81, 146 n.53. ¶ 347, 5756 ¶ 352, 5869–70 ¶ 549. In that With standard broadband internet ac- regard, the role of broadband providers is cess, by contrast, there is no editorial limi- analogous to that of telephone companies: tation on users’ access to lawful internet they act as neutral, indiscriminate plat- content. As a result, when a subscriber forms for transmission of speech of any uses her broadband service to access inter- and all users. net content of her own choosing, she does Of course, broadband providers, like not understand the accessed content to telephone companies, can face capacity reflect her broadband provider’s editorial constraints from time to time. Not every judgment or viewpoint. If it were other- telephone call will be able to get through wise—if the accessed content were some- instantaneously at every moment, just as how imputed to the broadband provider— service to websites might be slowed at the provider would have First Amendment times because of significant network de- interests more centrally at stake. See Fo- mand. But those kinds of temporary capac- rum for Academic & Institutional Rights, ity constraints do not resemble the struc- 547 U.S. at 63–65, 126 S.Ct. 1297; Prune- tural limitations confronting newspapers Yard Shopping Center v. Robins, 447 U.S. and cable companies. The latter naturally 74, 86–88, 100 S.Ct. 2035, 64 L.Ed.2d 741 occasion the exercise of editorial discre- (1980). But nothing about affording indis- tion; the former do not. criminate access to internet content sug- If a broadband provider nonetheless gests that the broadband provider agrees were to choose to exercise editorial discre- with the content an end user happens to tion—for instance, by picking a limited set access. Because a broadband provider does of websites to carry and offering that ser- not—and is not understood by users to— vice as a curated internet experience—it ‘‘speak’’ when providing neutral access to might then qualify as a First Amendment internet content as common carriage, the 744 825 FEDERAL REPORTER, 3d SERIES

First Amendment poses no bar to the open but the two statutes do not justify the internet rules. rules the Commission has adopted. Application of Title II gives the Com- VIII. mission authority to apply § 201(b) of the For the foregoing reasons, we deny the Communications Act, 47 U.S.C. § 201(b). petitions for review. The Commission invokes a new interpreta- So ordered. tion of § 201 to sustain its ban on paid prioritization. But it has failed to offer a WILLIAMS, Senior Circuit Judge, reasonable basis for that interpretation. concurring in part and dissenting in part: Absent such a basis, the ban is not in I agree with much of the majority opin- accordance with law. 5 U.S.C. § 706(2)(A) ion but am constrained to dissent. In my & (C). view the Commission’s Order must be va- Application of Title II also removes an cated for three reasons: obstacle to most of the Commission’s reli- I. The Commission’s justification of its ance on § 706 of the Telecommunications switch in classification of broadband from Act of 1996, 47 U.S.C. § 1302, namely any a Title I information service to a Title II rules that have the effect of treating the telecommunications service fails for want subject firms as common carriers. See Ver- of reasoned decisionmaking. (a) Its assess- izon Communications Inc. v. Federal ment of broadband providers’ reliance on Communications Commission, 740 F.3d the now-abandoned classification disre- 623, 650 (D.C. Cir. 2014). But the limits of gards the record, in violation of its obli- § 706 itself render it inadequate to justify gation under F.C.C. v. Fox Television Sta- the ban on paid prioritization and kindred tions, Inc., 556 U.S. 502, 515, 129 S.Ct. rules. 1800, 173 L.Ed.2d 738 (2009). Further- I discuss § 201(b) and § 706 in subparts more, the Commission relied on explana- A and B of part II. tions contrary to the record before it and failed to consider issues critical to its con- III. The Commission’s decision to for- clusion. Motor Vehicles Mfrs. Ass’n v. bear from enforcing a wide array of Title State Farm Mut. Auto. Ins. Co., 463 U.S. II’s provisions is based on premises incon- 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 sistent with its reclassification of broad- (1983). (b) To the extent that the Commis- band. Its explicit refusal to take a stand on sion relied on changed factual circum- whether broadband providers (either as a stances, its assertions of change are weak group or in particular instances) may have at best and linked to the Commission’s market power manifests not only its doubt change of policy by only the barest of as to whether it could sustain any such threads. (c) To the extent that the Com- finding but also its pursuit of a ‘‘Now you mission justified the switch on the basis of see it, now you don’t’’ strategy. The Com- new policy perceptions, its explanation of mission invokes something very like mar- the policy is watery thin and self-contra- ket power to justify its broad imposition of dictory. regulatory burdens, but then finesses the II. The Commission has erected its issue of market power in justifying for- regulatory scheme on two statutory sec- bearance. tions that would be brought into play by Many of these issues are closely inter- reclassification (if reclassification were locked, making it hard to pursue a clear supported by reasoned decisionmaking), expository path. Most particularly, the US TELECOM ASSOCIATION v. FCC 745 Cite as 825 F.3d 674 (D.C. Cir. 2016) best place for examining the Commission’s with, the acquisition or maintenance of explanation of the jewel in its crown—its market power or its abuse, real or poten- ban on paid prioritization—is in discussion tial.’’ Order ¶ 11 n. 12. of its new interpretation of 47 U.S.C. § 201. But that explanation is important I for understanding the Commission’s failure I agree with the majority that the Com- to meet its obligations under Fox Televi- mission’s reclassification of broadband in- sion, above all the obligation to explain ternet as a telecommunications service why such a ban promotes the ‘‘virtuous may not run afoul of any statutory dictate cycle,’’ which (as the majority observes) is in the Telecommunications Act. But in the primary justification for reclassifica- changing its interpretation, the Commis- tion under Title II. Thus a discussion criti- sion failed to meet the modest require- cal to part I of this opinion is deferred to ments of Fox Television. part II. I ask the reader’s indulgence for any resulting confusion. Fox states that an agency switching policy must as always ‘‘show that there are * * * good reasons for the new policy.’’ 556 U.S. I should preface the discussion by ac- at 515, 129 S.Ct. 1800. But in special cir- knowledging that the Commission is under cumstances more is required. An ‘‘agency a handicap in regulating internet access need not always provide a more detailed under the Communications Act of 1934 as justification than what would suffice for a amended by the Telecommunications Act new policy created on a blank slate. [But of 1996. The first was designed for regulat- s]ometimes it must—when, for example, its ing the AT&T monopoly, the second for new policy rests upon factual findings that guiding the telecommunications industry contradict those which underlay its prior from that monopoly into a competitive fu- policy; or when its prior policy has engen- ture. The 1996 Act begins by describing dered serious reliance interests that must itself as: be taken into account.’’ Id. An Act [t]o promote competition and reduce regulation in order to secure low- Here the Commission justifies its deci- er prices and higher quality services for sion on two bases: changed facts and a new American telecommunications consum- policy judgment. To the extent it rests on ers and encourage the rapid deployment new facts, Fox requires us to examine of new telecommunications technologies. whether there is really anything new. Fox Telecommunications Act of 1996, Pub. L. also, of course, requires us to consider No. 104-104, 110 Stat. 56. Two central reliance interests, regardless of what the paradoxes of the Commission’s position Commission has said about them. Thus are (1) its use of an Act intended to ‘‘re- novel facts and reliance interests are plain- duce regulation’’ to instead increase regu- ly at issue. The Commission also argues lation, and (2) its coupling adoption of a that its policy change would be reasonable dramatically new policy whose rationality even if the facts had not changed. Order seems heavily dependent on the existing ¶ 360 n. 993 (‘‘[W]e clarify that, even as- state of competition in the broadband in- suming, arguendo, that the facts regarding dustry, under an Act intended to ‘‘promote how [broadband] is offered had not competition,’’ with a resolute refusal even changed, in now applying the Act’s defini- to address the state of competition. In the tions to these facts, we find that the provi- Commission’s words, ‘‘Thus, these rules do sion of [broadband] is best understood as a not address, and are not designed to deal telecommunications service, as discussed 746 825 FEDERAL REPORTER, 3d SERIES

[elsewhere] TTT and disavow our prior in- For its factual support, the Commission terpretations to the extent they held other- essentially lists several anecdotes about wise.’’). In sum then, at a minimum, we what happened to stock prices and what must inquire whether the Commission corporate executives said about investment gave reasonable attention to petitioners’ in response to Commission proposals for claims of reliance interests, how much the regulatory change. For example, the Order asserted factual change amounts to, and notes that, after the Commission proposed finally whether the Commission has met tougher rules, the stocks of telecommuni- the minimal burden of showing ‘‘that there cations companies outperformed the are good reasons for the new policy.’’ I broader market. Order ¶ 360. This might address them in that order. be interesting if the Commission had per- formed a sophisticated analysis trying to (a) Reliance. The Order deals with reli- hold other factors constant. In the absence ance interests summarily, noting, ‘‘As a of such an analysis, the evidence shows factual matter, the regulatory status of only that the threat of regulation was not broadband internet access service appears so onerous as to precipitate radical stock to have, at most, an indirect effect (along market losses. The Order also has a quota- with many other factors) on investment.’’ tion from the Time Warner Cable COO Order ¶ 360. The Commission’s support for saying, in response to an FCC announce- the conclusion is weak and its pronounce- ment of possible Title II classification (ac- ment superficial. companied by some vague Commission as- To the extent that the Commission’s surances), ‘‘So TTT yes, we will continue to judgment relies on the presence of ‘‘many invest.’’ Id. n. 986 (emphasis added by the other factors,’’ it relies on an irrelevance. Commission). Citation of this remark The proposition that ‘‘many other factors’’ would be an apt response to a strawman affect investment is a truism. In a complex argument that there would have been no economy there will be few phenomena that investment in broadband if the new rules are entirely driven by a single variable. had always applied, but not to the argu- Investment in broadband obviously re- ment that a significant portion of the cur- flects such matters as market saturation, rent investment was made in reliance on the cost of capital, obsolescence, technolog- the old regime. Further, it is reasonable to ical innovation, and a host of macroeco- expect that corporate executives—with nomic variables. Put more generally, the their incentives to enhance the firm’s ap- presence of causal factors X and Y doesn’t pearance as an attractive investment op- show the irrelevance of factor Z. The sig- portunity and thus to keep its cost of nificance of these factors tells us little capital down—would take the most favor- about how much the relatively permissive able view of a new policy consistent with regime that has hitherto applied accounts their obligations to investors not to paint for the current robust broadband infra- too rosy a picture. structure. At least in general terms, the A more important (and logically prior) Commission elsewhere seems to answer question is why this evidence matters at that the old regime accounts for much. In all. I take Fox’s position on reliance inter- an introductory paragraph it commends ests to be addressed to both fairness and ‘‘the ‘light-touch’ regulatory framework efficiency. If a regulatory switch will sig- that has facilitated the tremendous invest- nificantly undercut the productivity and ment and innovation on the Internet.’’ Or- value of past investments, made in reason- der ¶ 5. able reliance on the old regime, rudimenta- US TELECOM ASSOCIATION v. FCC 747 Cite as 825 F.3d 674 (D.C. Cir. 2016) ry fairness suggests that the agency component of DSL service as an informa- should take that into account in evaluating tion service as well. See Appropriate a possible switch. And a pattern of capri- Framework for Broadband Access to the cious change would undermine any agency Internet Over Wireline Facilities et al. purpose of encouraging future investment (the ‘‘Wireline Broadband Classification on the basis of new rules. But the effect of Order’’), 20 F.C.C. Rcd. 14853 (2005). The past policy on past investment is quite Commission continued to hold that view different from future levels of investment. until 2010, when in the 2010 Notice, Notice For example, the Environmental Protec- of Inquiry, Framework for Broadband In- tion Agency’s new regulations on coal-fired ternet Service, 25 F.C.C. Rcd. 7866 (2010), power plants very well might spur invest- it sought comment on reclassification ment in energy by making legacy coal- (though rejecting it in the ultimate 2010 fired plants less feasible to operate, thus Order). I’m puzzled at the Commission’s encouraging investment in renewable ener- implicit claim, Order ¶ 360, that judicial gy to replace them. But that tells us little uncertainly—dating back to the 9th Cir- about whether the prior regulations on cuit’s 2000 decision in AT&T Corp. v. City coal-fired plants and their alternatives, ad- of Portland, 216 F.3d 871 (9th Cir. 2000), justed in light of reasonably foreseeable reading the statute to compel classification change, had a material impact on prior as a telecommunications service—made it energy investments. unreasonable for firms investing in provi- The Commission also argues that ‘‘the sion of internet access to think that the regulatory history regarding the classifica- Commission would persist in its longheld tion of broadband Internet access service commitment. The Commission offered would not provide a reasonable basis for fierce resistance to the 9th Circuit deci- assuming that the service would receive sion, resistance that culminated in its suc- sustained treatment as an information ser- cess in Brand X. It seems odd, in this vice in any event.’’ Order ¶ 360. In short, context, to discount firms’ reliance on the the Commission says that reliance was not Commission’s own assiduously declared reasonable. The statement misreads the views. history of the classification of broadband. In March 2002, the Commission classified According to data that Commission itself cable broadband as an information service, uses, Order ¶ 2, broadband providers in- 1 see In the Matter of Inquiry Concerning vested $343 billion during the five years High–Speed Access to the Internet over after Brand X, from 2006 through 2010. Cable and Other Facilities (the ‘‘Cable Mo- This amounts to about $3,000 on average dem Declaratory Ruling’’), 17 F.C.C. Rcd. for every American household. U.S. Cen- 4798 (2002); soon after that Order was sus Bureau, Quickfacts, https://www. affirmed by the Supreme Court in Nation- census.gov/quickfacts/table/PST045215/00.2 al Cable & Telecommunications Ass’n v. For the Commission to ignore these sums Brand X Internet Service, 545 U.S. 967, as investment in reliance on its rules is to 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005), the say it will give reliance interests zero Commission reclassified the transmission weight.

1. Broadband Investment—Historical Broad- 2. This uses the average number of households band Provider Capex, United States Telecom between 2010 and 2014 (116 million), which Association, available at https://www. gives an average of $2,951 per household. ustelecom.org/broadband-industry-stats/ Between 2006 and 2010, there were fewer investment/historical-broadband-provider- households, so the average is likely above capex. $3,000 per household. 748 825 FEDERAL REPORTER, 3d SERIES

No one supposes that firms’ past invest- content, or an increase in competition to ment in reliance on a set of rules should offer high-speed service, would make ap- give them immunity to regulatory change. plication of Title II more appropriate as a But Fox requires an agency at least to policy matter now than it was at the time make a serious assessment of such reli- of the Declaratory Ruling at issue in ance. The Commission has failed to do so. Brand X. (b) Changed facts. The Commission I confess I do not understand the major- identifies two changes, neither of which ity’s view that the section of Fox on seems very radical or logically linked to changed circumstances, quoted above, is the new regime. First, it argues that con- not triggered so long as the agency’s cur- sumers now use broadband ‘‘to access rent view of the circumstances is sustaina- third party content, applications and ser- ble. Maj. Op. 709. Whatever the soundness vices.’’ Order ¶¶ 330, 346–47. But that is of such a view, it seems inapplicable nothing new. In the Order from well over a where, as here, the agency explicitly in- decade ago that Brand X affirmed, the vokes changed circumstances: ‘‘Changed Commission said that consumers ‘‘may ob- factual circumstances cause us to revise tain many functions from companies with our earlier classification of broadband In- whom the cable operator has not even a ternet access service.’’ Order ¶ 330. contractual relationship’’ instead of from (c) New reasoning. Perhaps recognizing their cable internet service provider. De- the frailty of its claims of changed facts, claratory Ruling and Notice of Proposed Rulemaking, 17 F.C.C. Rcd. 4798 ¶¶ 25, 38 the Commission tries to cover its bases by & n. 153 (2002) (‘‘Declaratory Ruling’’). switching to the alternative approach set forth in Fox, a straightforward disavowal Second, the Order points to the empha- of its prior interpretation of the 1996 Act sis that providers put on the ‘‘speed and and related policy views. See, e.g., Order reliability of transmission separately from ¶ 360 n. 993. and over’’ other features. Order ¶¶ 330, 351. Again, there is nothing new about The Commission justifies its reclassifica- these statements from broadband provid- tion almost entirely in terms of arguments ers, who have been advertising speed for that provision of such services as DNS and decades. See Dissenting Statement of caching, when provided by a broadband Commissioner Ajit Pai to Order (‘‘Pai Dis- provider, do not turn the overall service sent’’) at 357–58; Dissenting Statement of into an ‘‘information service.’’ Rather, Commissioner Michael O’Rielly to Order those functions in its view fit within at 391. As Justice Scalia put it in an undis- § 153(24)’s exception for telecommunica- puted segment of his Brand X dissent, tions systems management. Order ¶ 365– broadband providers (like pizzerias) ‘‘ad- 81. Thus, the Commission set for itself a vertise[ ] quick delivery’’ as an ‘‘advan- highly technical task of classification, con- tage[ ] over competitors.’’ 545 U.S. at 1007 cluding that broadband internet access n. 1, 125 S.Ct. 2688 (Scalia, J., dissenting). could fit within the literal terms of the At no point does the Commission seri- pertinent statutory sections. And it accom- ously try to quantify these alleged changes plished the task. That it could do so is in the role or speed of internet service hardly surprising in view of the broad providers. Even if there were changes in leeway provided by Brand X, which gave it degree in these aspects of the internet, the authority to reverse the policy judgment it Commission doesn’t explain why an in- had made in the decision there under re- crease in consumer access to third-party view, the Declaratory Ruling. US TELECOM ASSOCIATION v. FCC 749 Cite as 825 F.3d 674 (D.C. Cir. 2016)

But in doing so the Commission per- not of the definitions of ‘‘enhanced ser- formed Hamlet without the Prince—a vice’’ and ‘‘basic service,’’ but instead of finding of market power or at least a con- a choice by the Commission to regulate sideration of competitive conditions. The more stringently, in its discretion, cer- Declaratory Ruling sustained in Brand X tain entities that provided enhanced ser- invoked serious economic propositions as vice. the basis for its conclusion. For example, 545 U.S. at 996, 125 S.Ct. 2688. Thus the the Brand X majority noted that in reach- Court recognized the Commission’s prac- ing its initial classification decision the tice of regarding risks of ‘‘abuse [of] mo- Commission had concluded that ‘‘broad- nopoly power’’ as pivotal in Computer II. band services should exist in a minimal While the 1996 Act by no means conditions regulatory environment that promotes in- classification under Title II on a finding of vestment and innovation in a competitive market power, Brand X shows that the market.’’ Id. ¶ 5, quoted by Brand X, 545 Court recognized the relevance of market U.S. at 1001, 125 S.Ct. 2688 (internal quo- power to the Commission’s classification tation marks omitted). But the Commis- decisions. See Declaratory Ruling ¶ 47 sion has now discovered, for reasons still (resting the classification decision in part obscure, that a ‘‘minimal regulatory envi- on the desire to avoid ‘‘undermin[ing] the ronment,’’ far from promoting investment goal of the 1996 Act to open all telecommu- and innovation, retards them, so that the nications markets to competition’’). Commission must replace that environ- Of course the Court’s citation of these ment with a regime that is far from ‘‘mini- instances of Commission reliance on the mal.’’ economic and social values associated with And when parties claimed that the De- competition are just examples brought to claratory Ruling was inconsistent with the our attention by Brand X. In addressing Commission’s decision to subject facilities- activities on the periphery of highly mo- based enhanced services providers to an nopolized telephone service, the Commis- obligation to offer their wires on a com- sion has for nearly four decades made the mon-carrier basis to competing enhanced- presence or prospect of competition the services providers, In re Amendment of touchstone for refusal to apply Title II. Sections 64.702 of the Commission’s Rules The Computer II decision, for example, and Regulations (Third Computer Inqui- says of the Computer I decision, ‘‘A major ry), 104 F.C.C. 2d 958, 964 ¶ 4 (1986), the issue was whether communications com- Brand X Court responded by looking to mon carriers should be permitted to mar- the policy reasons that the Commission ket data processing services, and if so, itself had invoked, reasons grounded in what safeguards should be imposed to in- concern over monopoly. The Court said: sure that the carriers would not engage in In the Computer II rules, the Commis- anti-competitive or discriminatory prac- sion subjected facilities-based providers tices.’’ In re Amendment of Section 64.702 to common-carrier duties not because of of the Commission’s Rules and Regula- the nature of the ‘‘offering’’ made by tions (Second Computer Inquiry), 77 those carriers, but rather because of the F.C.C. 2d 384, 389-90 ¶ 15 (1980) (‘‘Com- concern that local telephone companies puter II’’). In the Computer II decision, it would abuse the monopoly power they is hard to go more than a page or so possessed by virtue of the ‘‘bottleneck’’ without encountering discussion of compe- local telephone facilities they owned. TTT tition. The decision concludes that, ‘‘In The differential treatment of facilities- view of all of the foregoing evidence of an based carriers was therefore a function effective competitive situation, we see no 750 825 FEDERAL REPORTER, 3d SERIES

need to assert regulatory authority over households having access to at least two data processing services.’’ Id. at 433, ¶ 127. fixed providers giving speeds greater than The competitiveness of the market was in 10 Mbps and 88% with at least two fixed large part what the inquiry was about. See providers giving access to service at 3 Jonathan E. Nuechterlein & Philip J. Mbps. In re Inquiry Concerning the De- Weiser, Digital Crossroads 190-91 (2d ed. ployment of Advanced Telecommunica- 2013) (explaining link of Computer II’s tions Capability to All Americans in a unbundling rules to FCC’s concern over Reasonable & Timely Fashion, & Possible monopoly). Steps to Accelerate Such Deployment Pur- Yet in the present Order the Commis- suant to Section 706 of the Telecommuni- sion contradicted its prior strategy and cations Act of 1996, as Amended by the explicitly declined to offer any market Broadband Data Improvement Act, 30 power analysis: ‘‘[T]hese rules do not ad- F.C.C. Rcd. 1375 ¶ 83 (2015) (‘‘2015 Broad- dress, and are not designed to deal with, band Report’’). Furthermore, 93% of the acquisition or maintenance of market Americans have access to three or more power or its abuse, real or potential.’’ Or- mobile broadband providers—access which der ¶ 11 n. 12. In fact, as we’ll see, many of at least at the margin must operate in the Commission’s policy arguments assert competition with suppliers of fixed broad- what sound like claims of market power, band. In re Implementation of Section but without going through any of the fact- 6002(b) of the Omnibus Budget Reconcilia- gathering or analysis needed to sustain tion Act of 1993: Annual Report and Anal- such claims. ysis of Competitive Market Conditions The Order made no finding on market with Respect to Mobile Wireless, Seven- power; in order to do so it would have to teenth Report, 29 F.C.C. Rcd. 15311 ¶ 51, answer a number of basic questions. Most Chart III.A.2 (2014). notably, as shown in Figure 1 below, there are a fairly large number of competitors in Figure 1: American Households’ Access most markets, with 74% of American to Fixed Broadband Providers US TELECOM ASSOCIATION v. FCC 751 Cite as 825 F.3d 674 (D.C. Cir. 2016)

Source: 2015 Broadband Report, Chart 2. This is like setting a standard for cars that The Commission emphasizes how few requires space for seven passengers. The people have access to 25 Mbps, but that data seem to suggest that many American criterion is not grounded in any economic families are unwilling to pay the extra to analysis. For example, Netflix—a service be sure that all members can have continu- that demands high speeds—recommends ous, simultaneous, separate access to high- only 5 Mbps for its high-definition quality speed connectivity (perhaps some of them service and 3 Mbps for its standard defini- read? engage in conversation?). The fact tion quality. Netflix, Internet Connection that the Commission strains so much to Speed Recommendations, https://help. justify its arbitrary criterion shows how netflix.com/en/node/306. A likely explana- out of line with reality such a criterion is. tion for why there has not been more The weakness of the Commission’s reason- rollout of higher speeds is that many peo- ing suggests that its main purpose in set- ple are reluctant to pay the extra price for ting the ‘‘standard’’ may simply be to make it. Indeed, the 2015 Broadband Report in- it appear that millions of Americans are at dicates that fewer than 30% of customers the mercy of only one supplier, or at best for whom 25 Mbps broadband is available two, for critically needed access to the actually order it. 2015 Broadband Report modern world. All without bothering to ¶ 41 (including Table 3 and Chart 1). conduct an economic analysis! That many markets feature few provid- Of course, if the Commission had as- ers offering service at 25 Mbps or above is sessed market power, it would have need- hardly surprising. In a competitive world ed to define the relevant market, to under- of rapidly improving technology, it’s unrea- stand the extent to which providers of sonable to expect that all firms will simul- different speeds and different services taneously launch the breakthrough ser- compete with each other. When defining vices everywhere, especially in a context in markets for purposes of assessing competi- which more than 70% of the potential cus- tion, the Department of Justice and Feder- tomers decline to use the latest, priciest al Trade Commission use the ‘‘small but service. significant and non-transitory increase in The Commission established the 25 price’’ (‘‘SSNIP’’) test. The test tries to Mbps standard in its 2015 Broadband Re- determine whether a market actor can port ¶ 45. Its explanations seem superficial benefit from a hypothetical increase in at best. For example, it relies on the mar- price, indicating market power. U.S. De- keting materials of broadband providers partment of Justice and the Federal Trade touting the availability and benefits of Commission, Horizontal Merger Guide- speeds at or greater than 25 Mbps. Id. lines 9 (2010) (‘‘Horizontal Merger Guide- ¶ 28. Perhaps the authors of the Order lines’’). But the Commission did not con- have never had the experience of a sales- duct such a test, and we cannot say how it person trying to sell something more ex- would come out. pensive than the buyer inquired about— Because broadband competition is geo- and, not coincidentally, more lucrative for graphically specific, simple market share the salesperson. The Commission also jus- data at a national level are of limited value. tifies the standard by arguing that 10 But firms that provide service to large Mbps would be insufficient to ‘‘participate numbers of consumers, albeit not every- in an online class, download files, and where, seem likely to rank as potential stream a movie at the same time’’ and to competitors quite broadly. With these lim- ‘‘[v]iew 2 [high-definition] videos.’’ Id. ¶ 39. its in mind, we can look at U.S. subscriber 752 825 FEDERAL REPORTER, 3d SERIES numbers for each of the firms in the mar- broadband across four leading providers. ket, Leichtman Research, About 645,000 Order ¶ 98 n. 211. Assuming that a single Add Broadband in the Third Quarter of person does not switch more than once in a 2015, http://www.leichtmanresearch.com/ year, that rate of churn means that 18.72% press/111715release.html, and construct a of customers switch providers each year, Herfindahl–Hirschman Index, which in suggesting quite robust competition. Inter- fact is 1,445 points. This level is in the estingly, the Commission is especially hard Department of Justice’s Range for ‘‘Un- on declines in churn rate, id., which in the concentrated Markets’’—that is, markets absence of increased concentration or where no firm has market power. Horizon- some new obstacle to switching might well tal Merger Guidelines at 18-19. I report suggest increased consumer satisfaction. below the data used to construct the index. To bolster its switching data claims, the In fact, this number is biased upward (and Commission points to documents in which thus biased toward finding market power), parties to the rulemaking make conclusory since the data for several smaller compa- assertions purportedly showing that 27 nies are grouped as if for only one, making percent of mobile broadband consumers do it seem as if there is more concentration not switch though ‘‘dissatisfied’’ with their than there in fact is. current carriers. Order ¶ 98. Without a Similarly, the Commission scoffs at what plausible measure of ‘‘dissatisfaction’’ it regards as low turnover in customers’ (none is offered), the number is meaning- use of mobile service providers, but the less. rate of turnover actually looks quite substantial. The Commission points to average Table 1: Fixed Broadband Subscribers monthly churn rates of 1.56% in mobile by Provider US TELECOM ASSOCIATION v. FCC 753 Cite as 825 F.3d 674 (D.C. Cir. 2016)

Source: Leichtman Research. frequent articles in the conventional press Even though never making any finding about fixed broadband customers’ ‘‘cutting on market power, the Commission seems the cord’’ in favor of complete reliance on almost always to speak of fixed and mobile mobile suggests it would be an interesting broadband separately. Of course to a de- inquiry. gree the statute requires this. But if the None of the above is intended to suggest Commission were the least bit serious that the Commission could not have made about the market dysfunction that might a sustainable finding that every firm in provide support for its actions, it would every relevant market has market power. consider competition between the two. The My aim is simply to make two points: (1) 754 825 FEDERAL REPORTER, 3d SERIES

that such a degree of market power cannot like transportation or is a platform in a be assumed, as the Commission itself two-sided market, i.e., a business aiming to seems to acknowledge in its disclaimer of ‘‘facilitate interactions between members interest in market power, Order ¶ 11 n. 12; of TTT two distinct customer groups,’’ and (2) that the Commission’s reliance on David S. Evans & Richard Schmalensee, consumers’ ‘‘high switching costs,’’ id. ¶ 81 The Industrial Organization of Markets (discussed below in part II), which is an with Two-Sided Platforms, 3 COMPETI- implicit assertion that the providers have TION POLICY INTERNATIONAL 151, market power, poses an empirical question 152 (2007), which in this case would be that is susceptible of resolution and is in edge providers and users. (Two-sided mar- tension with the Commission’s assertion kets are barely discussed at all, with the that it is not addressing ‘‘market power or only mentions of any sort in the Order at its abuse, real or potential.’’ ¶¶ 151 n. 363, 338 & n. 890, 339 n. 897.) In a move evidently aimed at circum- Although the Commission seems at one venting the whole market power issue (de- point to characterize broadband internet spite Title II’s origin as a program for access as a two-sided market, see id. ¶ 338, monopoly regulation), the Commission it nowhere develops any particular conse- rests on its ‘‘virtuous cycle’’ theory, to wit quences from that classification or taps the fact that ‘‘innovations at the edges of into the vast scholarly treatment of the the network enhance consumer demand, subject. The answer to the question may leading to expanded investments in broad- well shed light on the reasonableness of band infrastructure that, in turn, spark the regulations, but in view of the Commis- new innovations at the edge.’’ Order ¶ 7. sion’s non-reliance on the distinction we The Commission clearly expects the policy need not go there. adopted here to cause increases in broadband investment. I do not understand the Commission to claim that its new rules will have a direct I see no problem with the general idea. positive effect on investment in broadband. Indeed, it seems to me it captures an The positive effect is expected from the important truth about any sector of the way in which, in the Commission’s eyes, economy. Though the subsectors may com- the new rules encourage demand for and pete over rents, the prosperity of each supply of content, which it believes will subsector depends on the prosperity of the indirectly spur demand for and investment others—at least it does so unless some wholly disruptive technology replaces one in broadband access. of the subsectors. American wheat produc- The direct effect, of which the Commis- ers, American railroads, steamship lines, sion doesn’t really speak, seems unequivo- and wheat consumers around the globe cally negative, as petitioner United States participate in a virtuous cycle; medical de- Telecom Association (‘‘USTA’’) argues. vice inventors, hospitals, doctors, and pa- USTA Pet’rs’ Br. 4 (‘‘Individually and col- tients participate in a virtuous cycle. Inno- lectively, these rules will undermine future vation, to be sure, is especially robust in investment by large and small broadband the information technology and application providers, to the detriment of consum- sectors, but a mutual relationship between ers.’’); see also id. Besides imposing the subsectors pervades the economy. usual costs of regulatory compliance, the There is an economic classification issue Order increases uncertainty in policy, that the Commission does not really tack- which both reason and the most recent le: whether broadband internet access is rigorous econometric evidence suggest re- US TELECOM ASSOCIATION v. FCC 755 Cite as 825 F.3d 674 (D.C. Cir. 2016) duce investment. Scott R. Baker, Nicholas mitments of resources: the Bureau is free Bloom & Steven J. Davis, Measuring Eco- to change its mind at will, and as the nomic Policy Uncertainty, 131 QUARTERLY opinions will be issued only at the staff JOURNAL OF ECONOMICS (forthcoming 2016). level, the Commission reserves its freedom (Though the paper is focused on economy- to act contrary to the staff’s conclusions at wide policy uncertainty and effects, it is any time. Order ¶ 235. I do not understand hard to see why the linkage shown would this to mean that the Commission will seek not apply in an industry-specific setting.) penalties against parties acting in reliance In fact, the Order itself acknowledges that on an opinion while it is still in effect, but vague rules threaten to ‘‘stymie’’ innova- parties in receipt of a favorable opinion are tion, Order ¶ 138, but then proceeds to on notice that they may be forced to shut adopt vague rules. down a program the minute the Bureau Here, a major source of uncertainty is reverses itself or the Commission counter- the Internet Conduct Standard, which for- mands the Bureau. bids broadband providers to ‘‘unreasonably Besides affording rather fragile assur- interfere with or unreasonably disadvan- ance, the advisory process promises to be tage’’ consumer access to internet content. slow. ‘‘[S]taff will have the discretion to 47 C.F.R. § 8.11. All of these terms— ask parties requesting opinions, as well as ‘‘unreasonably,’’ ‘‘interfere,’’ and ‘‘disad- other parties that may have information vantage’’—are vague ones that increase relevant to the request or that may be uncertainty for regulated parties. Indeed, impacted by the proposed conduct, for ad- the FCC itself is uncertain what the policy ditional information.’’ Id. ¶ 233. Given means, as indicated by the FCC Chair- these possible information requests from man’s admission that even he ‘‘do[esn’t] various parties, including adverse ones, it really know’’ what conduct is proscribed. is unsurprising that the Commission is un- February 26, 2015 Press Conference, willing to give any timeliness commitment, available at http://goo.gl/oiPX2M (165:30- 166:54). The Commission does announce a explicitly ‘‘declin[ing] to establish any firm ‘‘nonexhaustive list’’ of seven factors to be deadlines to rule on [requests for advisory used in assessing providers’ practices, in- opinions] or issue response letters.’’ Id. cluding ‘‘end-user control,’’ ‘‘consumer pro- ¶ 234. tection,’’ ‘‘effect on innovation,’’ and ‘‘free The palliative effect of these procedures expression.’’ Order ¶¶ 138–45. But these may be considerable for the very large factors themselves are vague and unhelp- service providers. They are surely accus- ful at resolving the uncertainty. tomed to having their lawyers suit up, The Commission made an effort to palli- research all the angles, participate in pro- ate the negative effect of its ‘‘standards’’ ceedings after notice has been given to all by establishing a procedure for obtaining potentially adversely affected parties, and advisory opinions. Order ¶¶ 229–39. It del- receive, after an indefinite stretch, a green egated authority to issue such opinions to light or a red one. For the smaller fry, the its Enforcement Bureau, perhaps thereby internet service provider firms whose telegraphing its general mindset on how growth is likely to depend on innovative broadly it intends its prohibitions to be business models (precisely the sort that read. But the Bureau has complete discre- seem likely to run afoul of the Commis- tion on whether to provide an answer at sion’s broad prescriptions; see part II.B), all. Order ¶ 231. Further, any advice given the slow and costly advisory procedure will will not provide a basis for longterm com- provide only a mild antidote to those pre- 756 825 FEDERAL REPORTER, 3d SERIES scriptions’ negative effect. This of course supposition that these new rules (the spe- fits the general pattern of regulation’s be- cific and the general) will cure some mate- ing more burdensome for small firms than rial problem, will avert some threat that for large, as larger firms can spread regu- either is now burdening the internet or lation’s fixed costs over more units of out- could reasonably be expected to do so ab- put. See Nicole V. Crain & W. Mark Crain, sent the Commission’s intervention. Why, The Impact of Regulatory Costs on Small precisely, the observer wants to know, has Firms 7 (2010). And in evaluating the im- the Commission repudiated the policy pact on investment in broadband, which judgment it made in 2002, that ‘‘broadband the Commission assures us the Order will services should exist in a minimal regulato- stimulate, quality is surely relevant as well ry environment that promotes investment as quantity. and innovation in a competitive market’’? Further, given the breadth and vague- Declaratory Ruling ¶ 5. The answer evi- ness of the standards, many of the acts for dently turns on the Commission’s conclu- which firms are driven to seek advice will sion that broadband providers have in- likely be rather picayune. As head of the dulged (or will indulge) in behavior that Civil Aeronautics Board in its what proved threatens the internet’s ‘‘virtuous cycle.’’ to be its waning days, Alfred Kahn got a Indeed, the majority points to the need to call in the middle of the night from an reclassify broadband so that the Commis- airline trying to find out whether its appli- sion could promulgate the rules as the cation to transport sheep from Virginia to Commission’s ‘‘ ‘good reason’ for [its] England had been approved. ‘‘The matter change in position,’’ Maj. Op. 707, and was urgent, because the sheep were in indeed its only reason. But the record heat!’’ Susan E. Dudley, Alfred Kahn, contains multiple reasons for thinking that 1917-2010, Remembering the Father of the Commission’s new rules will retard Airline Deregulation, 34 REGULATION rather than enhance the ‘‘virtuous cycle,’’ 8, 10 (2011). The internet we know wasn’t and the Commission’s failure to answer built by firms requesting bureaucratic ap- those objections renders its decision arbi- proval for every move. trary and capricious. I now turn to those Furthermore, 47 U.S.C. § 207, which ap- arguments, first in the context of 47 U.S.C. plies to broadband providers once they are §§ 201, 202 (part II.A) and then in the subject to Title II, increases uncertainty context of § 706 of the 1996 Act (part yet more. Section 207 allows ‘‘[a]ny person II.B). claiming to be damaged by any common carrier TTT [to] either make complaint to II the Commission TTT, or TTT bring suit for the recovery of the damages for which Having reclassified broadband service such common carrier may be liable under under Title II, the Commission has relied the provisions of this chapter.’’ In other on two specific provisions to sustain its words, reclassification exposes broadband actions: § 201(b) of the Communications providers to the direct claims of supposed- Act, 47 U.S.C. § 201(b), and § 706 of the ly injured parties, further increasing un- Telecommunications Act of 1996, 47 U.S.C. certainty and risk. In short, the Order’s § 1302. The petitioners contend that nei- probable direct effect on investment in ther provides adequate support for the broadband seems unambiguously negative. Commission’s actions. Furthermore, as As to the hoped-for indirect effect, the just mentioned, the Commission’s argu- idea that it will be positive depends on the ments here bear directly on the reason- US TELECOM ASSOCIATION v. FCC 757 Cite as 825 F.3d 674 (D.C. Cir. 2016) ableness of the reclassification decision it- derstood to justify distinctions in rates. self. Alfred E. Kahn, The Economics of Regula- tion (1988), at 63 (different costs), 63-64 A (different elasticities of demand, as would Petitioners Alamo Broadband Inc. and be reflected in time sensitivity), 88-94 (con- Daniel Berninger (‘‘Alamo-Berninger’’) ar- gestion). The Alamo-Berninger brief cites gue that even if Title II could properly be the FCC chairman’s observation in Con- applied to broadband service, that Title gress, ‘‘There is nothing in Title II that gives the Commission no authority to pro- prohibits paid prioritization,’’ Hearing be- hibit reasonable rate distinctions. Alamo- fore the Subcommittee on Communications Berninger Br. 17-19. Berninger is a would- and Technology of the United States be edge provider working on new technolo- House of Representatives Committee on gy that he believes could provide much Energy and Commerce, and Technology of enhanced telephone service—but only if he the United States House Commission, Vid- could be assured that ‘‘latency, jitter, and eo at 44:56 (May 20, 2014), available at packet loss in the transmission of a com- http://go.usa.gov/3aUmY, but that need not munication will [not] threaten voice quality detain us. More important, general princi- and destroy the value proposition of a ples of public utility rate regulation have high-definition service.’’ Declaration of always allowed reasonable rate distinc- Daniel Berninger, October 13, 2015, at 2. tions, with many factors determining rea- He is ready to pay for the assurance of sonableness. Kahn, The Economics of Reg- high-quality service, and asserts that the ulation, at 63 (noting that, ‘‘from the very Commission’s ban on paid prioritization beginning, regulated companies have been will obstruct successful commercial devel- permitted to discriminate in the economic opment of his innovation. Berninger ap- sense, charging different rates for various pears to be exactly the sort of small, inno- services’’). But the ban adopted by the vative edge provider that the Commission Commission prohibits rate differentials for claims its Order is designed to assist. In priority handling regardless of factors that the words of Shel Silverstein’s children’s song, ‘‘Some kind of help is the kind of would render them reasonable under the help we all can do without.’’ above understandings. Although the Order provides for the possibility of waiver, it For our purposes, of course, the ques- cautions, ‘‘An applicant seeking waiver re- tion is whether, as the Alamo-Berninger lief under this rule faces a high bar. We brief argues, the section of the statute anticipate granting such relief only in ex- invoked by the Commission under Title II, ceptional cases.’’ Order ¶ 132. namely § 201(b), authorizes the ban, or, more precisely, whether the Commission Second, in a case discussing the terms has offered any reasonable interpretation ‘‘unjust’’ and ‘‘unreasonable’’ as used in of § 201(b) that would encompass the ban. § 201(b) and in its fraternal twin § 202(a), A number of points by way of back- we said that those words ‘‘open[ ] a rather ground: First, nothing in the Order sug- large area for the free play of agency gests that the paid prioritization ban al- discretion.’’ Orloff v. FCC, 352 F.3d 415, lows any exception for rate distinctions 420 (D.C. Cir. 2003); see also Global Cross- based on differing costs of transmission, ing Telecomms., Inc. v. Metrophones Tele- time-sensitivity of the material transmit- comms., Inc., 550 U.S. 45, 127 S.Ct. 1513, ted, or congestion levels at the time of 167 L.Ed.2d 422 (2007) (recognizing the transmission, all variables historically un- Commission’s broad authority to define 758 825 FEDERAL REPORTER, 3d SERIES

‘‘unreasonable practice[s]’’ under § 201(b)). and 202. Its principal discussions of the But ‘‘large’’ is not infinite. concept have occurred in the context of Third, in the order under review in Or- § 202(a), which bars ‘‘any unjust or unrea- loff the Commission focused on § 202 but sonable discrimination in charges, prac- mentioned § 201. We summarized it as ticesTTT,’’ etc. Section § 201(b), relied on holding that ‘‘if a practice is just and rea- by the Commission here, is very similar sonable under § 202, it must also be just but does not include the word ‘‘discrimina- and reasonable under § 201.’’ Orloff, 352 tion.’’ § 201(b) (‘‘All charges, practices, F.3d at 418 (citing Orloff v. Vodafone Air- classifications, and regulations for and in Touch Licenses LLC d/b/a Verizon Wire- connection with such communication ser- less, 17 F.C.C. Rcd. 8987, 8999 (2002) (‘‘De- vice, shall be just and reasonable, and any fendants TTT offer[ ] the same defenses to such charge, practice, classification, or reg- the section 201(b) claim as they do to the ulation that is unjust or unreasonable is declared to be unlawful TTTT’’) The Order’s section 202(a) claim. We reject Orloff’s sec- language explaining its view of § 201(b) tion 201(b) claim. As noted, section 201(b) doesn’t mention this difference, so evident- declares unlawful only ‘unjust or unreason- ly the Commission’s interpretation doesn’t able’ common-carrier practices. For the rely on it. reasons discussed [regarding section 202(a)], we find Defendants’ concessions The Commission’s decisions under § 202 practices to be reasonable.’’)). have plainly recognized the permissibility of reasonable rate differences. In In re Fourth, the Commission (at least for the Dev. of Operational, Tech. & Spectrum moment) allows ISPs to provide consum- Requirements for Meeting Fed., State & ers differing levels of service at differing Local Pub. Safety Agency Commc’n Re- prices. As it says in its brief, ‘‘The Order quirements Through the Year 2010, 15 does not regulate rates—for example, F.C.C. Rcd. 16720 (2000), for example, the broadband providers can (and some do) Commission issued an order declaring that reasonably charge consumers more for premium charges for prioritized emergen- faster service or more data.’’ Commission cy mobile services were not unjust and Br. 133. The statement is true (for now) unreasonable. In full accord with the usual vis-`a-vis rates to consumers. But the ban understanding of rate regulation, the Com- on paid prioritization obviously regulates mission said, ‘‘Section 202 TTT does not rates—the rates paid by edge providers; it prevent carriers from treating users differ- insists that the incremental rate for as- ently; it bars only unjust or unreasonable sured or enhanced quality of service must discrimination. Carriers may differentiate be zero. Although I cannot claim that the among users so long as there is a valid parties’ exposition of the technology is reason for doing so.’’ Id. at 16730–31 (em- clear to me, it seems evident that the phasis in original). It reasoned that, ‘‘in factors affecting quality of delivery to a emergency situations, non-[emergency] consumer include not only whatever ser- customers simply are not ‘similarly situat- vice characteristics go into promised (and ed’ with [emergency] personnel’’ because delivered) speed at the consumer end but ‘‘the ability of [the latter] to communicate also circumstances along the route. ‘‘Paid without delays during emergencies is es- peering’’ (discussed below) would be unin- sential.’’ Id. at 16731. Even when the Com- telligible if it were otherwise. mission engages in full-scale rate regula- With these background points in mind, I tion (which it purports to eschew in the turn to the Commission’s treatments of Order), it explicitly recognizes that reason- ‘‘unjust’’ and ‘‘unreasonable’’ under §§ 201 able price differentials are appropriate US TELECOM ASSOCIATION v. FCC 759 Cite as 825 F.3d 674 (D.C. Cir. 2016) where the services in question are unlike. § 201(b), which says nothing about dis- See, e.g., In re AT&T Communications crimination, rather than § 202(a), which Revisions to Tariff F.C.C. No. 12, 6 F.C.C. does. The only reason I can discern is that Rcd. 7039 ¶ 8 (1991). the Commission’s interpretation of § 202 Tellingly, in its prioritized emergency was more clearly established, and obvious- mobile services decision the Commission ly didn’t ban reasonable discriminations. did not see fit to discuss § 201 at all. The Accordingly, the Commission jumped over principle underlying the Commission’s un- to § 201(b), about which it had said rela- derstanding of § 202 was a broad one— tively little. that allowance of differential rates based In the passage where the Order claims on ‘‘valid reasons’’ advances the public in- support from § 201(b), the Commission ap- terest. Whatever explains the lack of any pears to acknowledge that it has never reference to § 201, the Commission’s rec- interpreted that section to support a ognition that differential rates were not sweeping ban on quality-of-service premi- inherently unjust or unreasonable under ums, but, speaking of its anti-discrimina- § 202 requires, as a minimum of coherent tion decisions (evidently under both reasoning, that it offer some explanation §§ 201(b) and 202(a)), it says that ‘‘none of why the same words in § 201 should pre- those precedents involved practices that clude such differentials. See Orloff v. Vo- the Commission has twice found threaten dafone AirTouch Licenses LLC d/b/a Veri- to create barriers to broadband develop- zon Wireless, 17 F.C.C. Rcd. 8987, 8999 ment that should be removed under sec- (finding reasonableness and justness under tion 706.’’ Order ¶ 292. This is an odd form § 202 to be sufficient for finding the same of statutory interpretation. Finessing any under § 201). Of course this is no more effort to fit the agency action within the than a recognition of the principle, prevail- statutory language, it only claims that the ing throughout the era of federal regula- banned practice threatens broadband de- tion of natural monopolies, that it is just ployment. Maybe the theory works, but it and reasonable that customers receiving can do so only by a sturdy showing of how extra speed or reliability should pay extra the banned conduct posed a ‘‘threat.’’ As for it. A classic and pervasive example is we’ll see, the Commission has made no the differential in natural gas transmission such showing, let alone a sturdy one. between firm and interruptible service. Indeed, I can find no indication—and See, e.g., Fort Pierce Utilities Auth. of the Commission presents none—that any City of Fort Pierce v. FERC, 730 F.2d 778, of the agencies regulating natural monopo- 785–86 (D.C. Cir. 1984). lies, such as the Interstate Commerce I note that the ban here is simply on Commission, Federal Energy Regulatory differences in rates, an issue normally ad- Commission, or Federal Communications dressed under statutory language barring Commission—has ever attempted to use discrimination. So it is at least anomalous its mandate to assure that rates are ‘‘just that the Commission here relies on and reasonable’’3 to invalidate a rate dis-

3. See, e.g., Interstate Commerce Act of 1887, such service is prohibited and declared to be 24 Stat. 379, § 1 (‘‘All charges made for any unlawful.’’); Federal Power Act, 16 U.S.C. service rendered or to be rendered in the § 824d (‘‘All rates and charges made, de- transportation of passengers or property as manded, or received by any public utility for aforesaid, or in connection therewith, or for or in connection with the transmission or sale the receiving, delivering, storage, or handling of electric energy subject to the jurisdiction of of such property, shall be reasonable and just; the Commission, and all rules and regulations and every unjust and unreasonable charge for 760 825 FEDERAL REPORTER, 3d SERIES tinction that was not unreasonably dis- serts that ‘‘[t]he Commission’s conclusion criminatory. To uproot over a century of [that allowance of paid prioritization would interpretation—and with so little explana- disadvantage certain types of edge provid- tion—is truly extraordinary. ers] is supported by a well-established In its interpretation of § 201 the Com- body of economic literature, including mission rests its claim of a ‘‘threat’’ to the Commission staff working papers.’’ Order ‘‘virtuous cycle’’ theory mentioned above: ¶ 126. This claim is, to put it simply, false. ‘‘innovations at the edges of the network The Commission points to four economics enhance consumer demand, leading to ex- articles, none of which supports the conclu- panded investments in broadband infra- sion that all distinctions in rates, even structure that, in turn, spark new innova- when based on differentials in service, will tions at the edge,’’ Order ¶ 7, and the cycle reduce the aggregate welfare afforded by 4 repeats on and on. a set of economic transactions. Indeed, the Commission plainly didn’t look at the The key question is what underlies the articles. None of them even addresses Commission’s idea that a ban on paid prio- price distinctions calibrated to variations in ritization will lead to more content, giving quality of service; rather they are devoted the cycle extra spin (or, equivalently, re- to the sort of price differences addressed ducing the drag caused by paid prioritiza- by the Robinson-Patman Act, 15 U.S.C. tion). Order ¶ 7. In what way will an § 13, targeting sellers who sell the same across-the-board ban on paid prioritization good of the same quality at different increase edge provider content (and thus prices. Three say that in some circum- consumer demand)? Or, putting it in terms stances rules against price differentials of a ‘‘threat,’’ how does paid prioritization can be beneficial (to repeat, the articles threaten the flourishing of the edge pro- speak of rules against differentials not re- vider community (and thus consumer de- lated to quality of service), not that they mand, and thus broadband deployment)? are beneficial.5 The fourth paper, still with- In fact, as we’ll see, the Commission’s in the sphere of non-quality-related price hypothesis that paid prioritization has del- distinctions, is still worse for the Commis- eterious effects seems not to rest on any sion, concluding that ‘‘a flat ban’’ on price evidence or analysis. Further, the Order discrimination (even assuming no differen- fails to address critiques and alternatives. tial in cost and quality, unlike the Commis- I look first to the support offered by the sion rule) ‘‘could have adverse welfare con- Commission for its claim. The Order as- sequences,’’ and that ‘‘the analysis does not

affecting or pertaining to such rates or Degree Price Discrimination in Input Markets: charges shall be just and reasonable, and any Output and Welfare, 90 AM. ECON. REV. 240, such rate or charge that is not just and rea- 240-246 (2000) (‘‘Third Degree Price Discrimi- sonable is hereby declared to be unlawful.’’) nation’’).

4. Michael L. Katz, Price Discrimination and 5. Katz, Price Discrimination, at 1454 (‘‘uni- Monopolistic Competition, 52 ECONOMETRICA form pricing is more efficient than price dis- 1453, 1453-71 (1984) (‘‘Price Discrimina- crimination when the number of uninformed tion’’); Michael L. Katz, Non-Uniform Pricing, consumers is small’’); Katz, Output and Wel- Output and Welfare under Monopoly, 50 REV. fare, at 37 (‘‘there may be scope for improving ECON. STUD. 37, 37-56 (1983) (‘‘Output and market performance through regulation’’ of Welfare’’); Michael L. Katz, The Welfare Ef- price discrimination); Yoshida, Third Degree fects of Third-Degree Price Discrimination in Price Discrimination, at 244 (‘‘[i]n general, we Intermediate Good Markets, 77 AM. ECON. REV. cannot expect’’ the condition required for reg- 154, 154-167 (1987); Yoshihiro Yoshida, Third ulation to improve welfare to be true). US TELECOM ASSOCIATION v. FCC 761 Cite as 825 F.3d 674 (D.C. Cir. 2016)

reveal whether there is any implementable Series, No. 18 (1986), is an interesting form of regulation that would be welfare- consideration of the possible welfare losses improving.’’ Katz, The Welfare Effects, at that may follow from pricing that collects a 165. high proportion of fixed costs from usage It is probably no coincidence that the fees. As with the Atkinson & Barnekov author of three of these articles, Michael paper, its connection to paid prioritization Katz, a former chief economist at the Com- is unclear, and the Commission’s opinion mission, filed a declaration in this proceed- writers have made no effort even to identi- ing opposing the type of regulation fy a connection, much less explain it. In adopted in the Order as overly broad, es- discussing a possible anti-discrimination pecially given that the behavior banned rule, the paper posits one under which a was at most responsible for only hypotheti- firm may adopt ‘‘any combination of two- cal harms. Protecting and Promoting Con- part tariffs, volume discounts, and so forth sumer Benefits Derived from the internet: but is required to offer the same set of Declaration of Michael L. Katz, July 15, prices to all customers.’’ Id. at 44. Al- 2014 (‘‘Katz Declaration’’), at 2-3. I will though it isn’t clear that the paper gives discuss his critique and the alternatives he an endorsement to such a rule, such an offers shortly. endorsement would not support the Com- The Order also points to two old Com- mission’s ban on quality-of-service based mission reports that it claims support its differentials. argument. Order ¶ 126 n. 297. They do not. I apologize for taking the reader One, Jay M. Atkinson & Christopher C. through this parade of irrelevancies. But it Barnekov, A Competitively Neutral Ap- is on these that the Commission has proach to Network Interconnection, OPP staked its claim to analytical support for Working Paper Series, No. 34, at 15 the idea that paid prioritization poses a (2000), deals with network interconnection serious risk to broadband deployment. pricing and advocates a ‘‘bill and keep’’ system (‘‘under which carriers split equally The Commission does point to episodes those costs that are solely incremental to supposedly supporting its view that paid interconnection, and recover all remaining prioritization constitutes a significant costs from their own customers,’’ accord- threat. Order ¶ 69, 79 n. 123. It is, how- ing to the report, id. at ii). Unlike the ever, merely pointing to a handful of epi- articles cited, it does address variations in sodes among the large number of trans- quality of service, but only to argue that actions conducted by many broadband the ability of one provider to lower its providers. Furthermore, neither in this quality doesn’t undermine the case for ‘‘bill Order nor in the 2010 Broadband Order, and keep’’ because the quality-lowering 25 F.C.C. Rcd. at 17915-26, ¶¶ 20–37, cit- provider will bear ‘‘the main impact itself.’’ ed by this Order as support, Order ¶ 79 Id. at 20. This is an interesting proposition, n. 123, does the Commission sift through but, assuming its truth, it doesn’t connect the evidence to show that any episode im- in any obvious way to a flat ban on paid paired the ability of the internet to max- prioritization; if the Commission knows a imize consumer satisfaction and the flour- way to make that connection, it hasn’t ishing of edge providers in the aggregate, revealed it. as opposed to harm to a particular edge The second, Gerald W. Brock, Telephone provider. Nor does it show whether, if Pricing to Promote Universal Service and there was harm, a far narrower rule Economic Freedom, OPP Working Paper would not have handled the problem. (For 762 825 FEDERAL REPORTER, 3d SERIES

example, if a broadband provider throt- as a group—or small innovative edge pro- tled an edge provider’s content at the viders as a subgroup. same time as the broadband provider pro- It gets worse. Having set forth the no- vided similar content, then—assuming no tion that paid prioritization poses a threat justification—grounds for action against to broadband deployment—so much so as such behavior could be discerned. Com- to justify jettisoning its historic interpreta- pare § 616(a)(3) of the Communications tion of §§ 201(b), 202(a), and resting that Act, 47 U.S.C. § 536(a)(3).) In his dissent notion on conclusory assertions of parties to the Order, Commissioner Pai, using and irrelevant scholarly material—the terms perhaps feistier than would suit a Commission then fails to respond to criti- court, summarized it as follows: cisms and alternatives proposed in the rec- The evidence of these continuing ord, in clear violation of the demands of threats? There is none; it’s all anecdote, State Farm, 463 U.S. at 43, 51, 103 S.Ct. hypothesis, and hysteria. A small ISP in 2856. North Carolina allegedly blocked VoIP I start with comments in the record calls a decade ago. Comcast capped Bit- explaining the problems that the ban on Torrent traffic to ease upload congestion paid prioritization could cause in the eight years ago. Apple introduced Face- broadband market. The comments suggest Time over Wi-Fi first, cellular networks that by effectively banning pricing struc- later. Examples this picayune and stale tures that could benefit some people sub- aren’t enough to tell a coherent story stantially, but impose minimal (and seem- about net neutrality. The bogeyman nev- ingly quite justifiable) costs on others, the er had it so easy. ban on paid prioritization could replace the Pai Dissent at 333. And Judge Silberman’s virtuous cycle with a vicious cycle, in which observations about the episodes mar- regulatory overreach reduces the number shalled to support the precursor order va- and quality of services available, reducing cated in Verizon seem as applicable today demand for broadband, and in turn reduc- as then: ing the content and services available ow- That the Commission was able to locate ing to the reduced number of users. In- only four potential examples of such con- vestment would suffer as the number of duct is, frankly, astonishing. In such a users declines (or fails to grow as it other- large industry where, as Verizon notes, wise would have). billions of connections are formed be- For example, the joint comment by the tween users and edge providers each International Center for Law & Economics year, one would think there should be and TechFreedom paints a picture in ample examples of just about any type which innovation and investment could be of conduct. substantially harmed by the ban on paid Verizon, 740 F.3d at 664–65 (Judge Silber- prioritization: man, dissenting from the decision’s dicta). With most current [internet service] The short of it is that the Commission pricing models, consumers have little in- has nowhere explained why price distinc- centive or ability (beyond the binary tions based on quality of service would choice between consuming or not contend to impede the flourishing of the inter- suming) to prioritize their use of data net, or, conversely, why the status quo based on their preferences. In other ante would not provide a maximum oppor- words, the marginal cost to consumers tunity for the flourishing of edge providers of consuming high-value, low-bit data US TELECOM ASSOCIATION v. FCC 763 Cite as 825 F.3d 674 (D.C. Cir. 2016)

(like VoIP [transmitting voice over the whom speed and other quality-of-service internet], for example) is the same as features are especially important. Thus the cost of consuming low-value, high-bit paid prioritization would yield finely tuned data (like backup services, for example), incentives for innovation exactly where it assuming neither use exceeds the user’s is needed to relieve network congestion. allotted throughput. And in both cases, These innovations could improve the expe- with all-you-can-eat pricing, consumers rience for users, driving demand and face a marginal cost of $0 (at least until therefore investment. The Order nowhere they reach a cap). The result is that responds to this contention. consumers will tend to over-consume lower-value data and under-consume At oral argument it was suggested that higher-value data, and, correspondingly, with paid prioritization the speed of the content developers will over-invest in high rollers comes at the expense of oth- the former and under-invest in the lat- ers. This is true and not true. Consider ter. The ultimate result—the predictable ways that the United States government consequence of mandated neutrality applies paid prioritization in two monopo- rules—is a net reduction in the overall lies that it runs, Amtrak and the U.S. value of content both available and con- Postal Service. Both offer especially fast sumed, and network under-investment. service at a premium. If the resources Comments of International Center for devoted to providing extra speed for the Law & Economics and TechFreedom at 17 premium passengers and mail were spread (July 17, 2014). evenly among all passengers and mail, the In other words, paid prioritization would now slower moving passengers and mail encourage ISP innovations such as provid- could travel a bit faster. But the revenues ing special speed for voice transmission available would be diminished for want of (for which timeliness and freedom from the premium charges, and in any event it latency and jitter—delays or variations in is hard to see how coach passengers or delay in delivery of packets—are very im- senders of ordinary mail are injured by the portant), at little or no cost to services availability of speedier, costlier service. where timeliness (especially timeliness Of course one can imagine priority pric- measured in milliseconds) is relatively un- ing that could harm consumers. The record important. Similarly, pricing for extra contains a declaration recognizing the pos- speed would incentivize edge providers to sibility and opposing the Commission’s so- innovate in technologies that enable their lution. It is by the author of three of the material to travel faster (or reduce latency very economics papers that the Commis- or jitter) even in the absence of improved ISP technology. To be sure, usage caps sion says support its position, Michael (which are permissible for now under the Katz, who was a chief economist of the Order) provide some incentive for edge Commission under President Clinton. providers to invest in innovations enabling Pointing to the risk of distorting competi- faster transit without extra Mbps and thus tion and harming customers through ban- enable their customers to enjoy more ser- ning pricing strategies and ‘‘full use of vice at less risk of exceeding the caps. But network management techniques,’’ Katz the usage caps are a blunt instrument, as urged disallowing conduct ‘‘only in re- their burden is felt by all consumers, sponse to specific instances of identified whereas the sort of pricing increment for- harm, rather than imposing sweeping pro- bidden by the Commission would be fo- hibitions that throw out the good with the cused (de facto) on the edge providers for bad.’’ Katz Declaration at 2-3. 764 825 FEDERAL REPORTER, 3d SERIES

Perhaps the Commission has answers to ception for ‘‘reasonable network manage- this. But despite going out of its way to ment’’ for rules other than the ban on paid rely on papers by Katz that were irrele- prioritization. Order ¶ 217.) vant, the Commission never deigned to Generalizing the point made by Profes- reflect on the concerns he expressed about sor Hurwitz: Unless there is capacity for harm to innovation and consumer welfare. all packets to go at the same speed and for Furthermore, in its single-minded focus that speed to be optimal for the packets on innovation at the ‘‘edge’’ (and only some for which speed is most important, there kinds of innovation at that), the Commis- must be either (1) prioritization or (2) iden- sion ignored arguments that the process of tical speed for all traffic. If all go at the providing broadband service is itself one same speed, then service is below optimal where innovation, not only in technology for the packets for which speed is impor- but in pricing strategies and business mod- tant. If there is unpaid prioritization, and els, can contribute to maximization of the it is made available to the senders of pack- internet’s value to all users. A comment of ets for which prioritization is important, Professor Justin Hurwitz makes the point: then (1) those senders get a free ride on Current research suggests that tradi- costs charged in part to other packet send- tional, best-effort, non-prioritized routers and (2) those senders have less incen- ing may yield substantially inefficient tive to improve their packets’ technological use of the network resource. It may well capacity to use less transmission capacity. turn out to be the case that efficient Allowance of paid prioritization eliminates routing of data like streaming video re- those two defects of unpaid prioritization. quires router-based prioritization. It may even turn out that efficient routing One prominent critic of the ban on paid of streaming video data is necessarily prioritization—Timothy Brennan, the harmful to other data—it may not be Commission’s chief economist at the time possible to implement a single network the Order was initially in production, who architecture that efficiently handles data has called the rules ‘‘an economics-free 6 with differentiated characteristics. If zone’’ —offered an alternative that ad- this is the case, then it may certainly be dressed these concerns. His argument ‘‘commercially reasonable’’ that stream- goes as follows. If some potential content ing video providers pay a premium for providers might refrain from entry for fear the efficient handling of their data, in that poor service might stifle advantageous order to compensate for the negative interactions with other sites (thus thwart- externalities that those uses impose ing the virtuous cycle), that fear could be upon other users and uses. assuaged by requiring that ISPs meet min- Comments of Justin (Gus) Hurwitz at 17 imum quality standards. Brennan writes (July 18, 2014). (Professor Hurwitz may that have been mistakenly operating on the a minimum quality standard does not belief that the Commission would allow for preclude above-minimum quality ser- ‘‘commercially reasonable’’ practices. The vices and pricing schemes that could Commission ultimately rejected a ban on improve incentives to improve broad- ‘‘commercially unreasonable’’ practices, band networks and facilitate innovation Order ¶ 150, but created no defense of in the development and marketing of commercial reasonableness for any of its audio and video content. Moreover, a bans. The Commission did create an ex- minimum quality standard should reduce

6. See http://www.wsj.com/articles/economics- free-obamanet-1454282427. US TELECOM ASSOCIATION v. FCC 765 Cite as 825 F.3d 674 (D.C. Cir. 2016)

the costs of and impediments to conges- And the Comments of Daniel Lyons tion management necessary under net (July 29, 2014), Net Neutrality and Non- neutrality. discrimination Norms in Telecommunica- Comments of International Center for tions, 1029 ARIZ. L. REV. 1029 (‘‘Lyons Law & Economics and TechFreedom at Comments’’) at 1070, cite Thomas W. Ha- 48; see also id. at 47. This is a proposal zlett & Joshua D. Wright, The Law and based on the notion that consumers value Economics of Network Neutrality, 45 the things prevented by the Order, but it IND. L. REV. 767, 798 (2012), for the offers an alternative that solves a (perhaps argument that there is much to be learned hypothetical) problem at which the Order from antitrust law, which treats vertical is aimed (relieving content providers of the arrangements on a rule-of-reason basis. To fear discussed above and thus ensuring the the argument that antitrust enforcement is virtuous cycle), without such significant costly, time-consuming and unpredictable, costs as those the commentators discussed. Hazlett and Wright acknowledge the point The Order offers no response. but argue that it has been responsible for Notice that the drag on innovation to some of the genuine triumphs in the tele- which these commentators allude has a communications industry, such as the clear adverse effect on the virtuous cycle break-up of AT&T. The Lyons submission invoked by the Commission. To be sure, as finds confirmation in the Department of a general matter investment at the edge Justice’s Ex Parte Submission in the 2010 provider and the ISP level will be mutually proceeding, arguing that ‘‘antitrust is up to reinforcing, but sound incentives for inno- the task of protecting consumers from ver- 7 vation at both levels will provide more tical contracts that threaten competition.’’ benefit enhancements to consumers per The silent treatment given to three of its dollar invested. former chief economists seems an apt sign I’ve already noted with bemusement the of the Commission’s thinking as it pursued Commission’s utter disregard of argu- its forced march through economic ration- ments by two of its former chief econo- ality. mists, Michael Katz and Tim Brennan, The Commission does invoke justifica- that were submitted into the record. Lest tions other than the ‘‘virtuous cycle’’ to the point be understated, I should also support its Order. For example, it asserts mention that the views of yet a third, that ‘‘[t]he record TTT overwhelmingly sup- Thomas W. Hazlett, also appear in several ports the proposition that the Internet’s submissions. CenturyLink points to Thom- openness is critical to its ability to serve as as W. Hazlett and Dennis L. Weisman, a platform for speech and civic engage- Market Power in U.S. Broadband Indus- ment,’’ for which it cites comments from tries, 38 REVIEW OF INDUSTRIAL ORGANIZA- three organizations. Order ¶ 77 & n. 118. TION 151 (2011), for the proposition that The Order makes no attempt, however, to there is no evidence that broadband pro- explain how these particular rules, and the viders are earning supra-normal rates of language of § 201, relate to these goals. A return. This may be another clue why the raw assertion that the internet’s openness Commission steers clear of any claim of promotes free speech, while in a general market power. sense surely true (at least on some as-

7. Lyons Comments at 1070 (quoting Thomas ic Issues in Broadband Competition: A Nation- W. Hazlett & Joshua D. Wright, The Law and al Broadband Plan for Our Future, Ex Parte Economics of Network Neutrality, 45 IND. L. Submission of the United States Department of REV. 767, 803 (2012)). See also In re Econom- Justice, 2010 WL 45550 (2010). 766 825 FEDERAL REPORTER, 3d SERIES

sumptions about the meaning of ‘‘open- nomic Issues in Broadband Competition: ness’’), is not enough reasoning to support A National Broadband Plan for Our Fu- a ban on paid prioritization. ture, Ex Parte Submission of the United Further, having eschewed any claim that States Department of Justice, 2010 WL it found the ISPs to possess market power, 45550 (2010). Order ¶ 11 n. 12 (‘‘[T]hese rules do not Second, even a valid finding of market address, and are not designed to deal with, power would not be much of a step to- the acquisition or maintenance of market wards validating a ban on paid prioritiza- power or its abuse, real or potential’’), the tion or linking it to § 201. Eight years Commission invokes a kind of ‘‘market- before the Order, the Federal Trade Com- power-lite.’’ The argument fundamentally mission ordered a staff study and publish- is that ISPs occupy a ‘‘gatekeeper’’ role ed the results. Broadband Connectivity and may use that role to block content Competition Policy, Federal Trade Com- whose flow might injure them: They might mission (2007), available at https://www. want to do this in order to prioritize their ftc.gov/sites/default/files/documents/ content over that of other content provid- reports/broadband-connectivity- ers (or perhaps other purposes inconsis- competition-policy/v070000report.pdf. As tent with efficient use of the net). And they with DOJ later, the report was non-com- might be able to do this because impedi- mittal on the issue of market power but ments to customers’ switching will enable reviewed (1) ISP incentives to discriminate them to restrict others’ content without and not to discriminate under conditions of incurring a penalty in the form of custom- market power, id. at 72-75, and (2) variet- er cancellations. Order ¶¶ 79–82. ies of paid prioritization, assessing their The Commission’s reliance on market- risks and benefits, id. at 83-97. Instead of power-lite is puzzling in a number of ways. a nuanced assessment building on the FTC First, the Commission’s primary fact—the staff paper (or for that matter contradict- existence of switching costs—begs the ing it), the Commission adopted a flat pro- question of why the Commission did not hibition, paying no attention to circum- look at other forms of evidence for market stances under which specific varieties of power. See Horizontal Merger Guidelines, paid prioritization would (again, assuming 11 (saying that ‘‘the costs and delays of market power) adversely or favorably af- switching products’’ are taken into account fect the value of the internet to all users. in implementing the hypothetical monopo- In the absence of such an evaluation, the list test). If the Commission relies on one Order’s scathing terms about paid prioriti- possible source of market power, one won- zation, used as a justification for the other- ders why it would not seek data that would wise unexplained switch in interpretation pull together the full range of sources, of § 201(b), fall flat. Order ¶ 292. including market concentration. It may be Finally, the Commission’s argument that that the Department of Justice’s submis- paid prioritization would be used largely sion in the Notice of Inquiry that ultimate- by ‘‘well-heeled incumbents,’’ Order ¶ 126 ly led to the Order, see In re A National n.286, not only is ungrounded factually (so Broadband Plan for Our Future, 24 far as appears) but contradicts the Com- F.C.C. Rcd. 4342 (2009), reviewing some of mission’s decision (and the reasoning be- the data but reaching no conclusion, led hind its decision) not to apply its paid the Commission to believe that a serious prioritization ban to types of paid prioriti- inquiry would come up empty. In re Eco- zation that use caching technology.8

8. Since I would conclude that the Commis- sion acted arbitrarily and capriciously in its US TELECOM ASSOCIATION v. FCC 767 Cite as 825 F.3d 674 (D.C. Cir. 2016)

Caching is the storage of frequently ac- shaping, prioritization, resource reserva- cessed data in a location closer to some tion, or other forms of preferential traffic users of the data. The provider of the management, either (a) in exchange for caching service (in some contexts called a consideration (monetary or otherwise) content delivery network) thus increases from a third party, or (b) to benefit an the speed at which the end user can access affiliated entity.’’ Order ¶ 18. If caching is the data. Order ¶ 372 & n. 1052. In effect, a form of preferential traffic manage- then, it prioritizes the content in question. ment—and I cannot see why it is not— It is provided sometimes by ISPs (some- then paid access to broadband providers’ times at the expense of edge providers) caching facilities violates the paid prioriti- and sometimes by third parties. Id. zation ban, or at any rate would do so but For example, Netflix has entered agree- for the Commission’s decision in ¶ 205 that ments with several large broadband pro- it will evaluate such arrangements on a viders to obtain direct access to their con- case-by-case basis rather than condemn tent delivery networks, i.e., cached storage them root-and-branch. on their networks. See Order ¶¶ 198–205, Curiously, although the Commission 200 n. 504 (noting that Netflix has entered seems to be absolutely confident in its into direct arrangements with Comcast, policy view on paid prioritization, it recog- Verizon, Time Warner Cable, and AT&T); nizes that it actually lacks experience with see also http://www.bloomberg.com/bw/ the subject. One objector argued that the articles/2014-02-24/netflixsdeal-with- Commission could not apply § 201(b) to comcast-isnt-about-net-neutrality-except- paid prioritization because ‘‘no broadband that-it-is. Contracts under which caching is providers have entered into such arrange- supplied by broadband providers or by ments or even have plans to do so.’’ Order third parties are often called paid peering ¶ 291 n. 748 (quoting NCTA Comments at arrangements. Regardless of the name, they involve expenses incurred directly or 29). Instead of contradicting the premise, indirectly by an edge provider, using a the Commission responded by noting that caching technology to store content closer at oral argument in Verizon a provider had to end users, so as to assure accelerated said that but for the Commission’s 2010 transmission of its content via a broadband rules it would be pursuing such arrange- provider. ments. Id. So all the claims about the harm threatened by paid prioritization are at Although the Commission acknowledges best projections. We saw earlier the irrele- that caching agreements raise many of the vance of the studies on which the Commis- same issues as other types of paid prioriti- sion relied to make those projections. As to zation, it expressly declines to adopt regu- caching, with which it has plenty of famil- lations governing them, opting instead to iarity, the Commission uses the temperate hear disputes related to such arrange- wait-and-see approach. See Order ¶ 203. ments under §§ 201 & 202 and to ‘‘continue to monitor’’ the situation. Order ¶ 205. The Commission never seriously tries to The Order defines paid prioritization as reconcile its hesitancy here with its claims ‘‘the management of a broadband provid- that harms arising from paid prioritization er’s network to directly or indirectly favor are so extreme as to call for an abandon- some traffic over other traffic, including ment of its longtime precedents interpret- through use of techniques such as traffic ing §§ 202(a) and 201(b). See Order ¶ 292.

reclassification decision regardless of whether management exception, 47 U.S.C. § 153(24), DNS and caching fit the telecommunications I will not address that. 768 825 FEDERAL REPORTER, 3d SERIES

The Commission does note that the dis- Reply Comments at 18 (September 15, putes over caching ‘‘are primarily between 2014)). The Commission never answers the sophisticated entities.’’ Order ¶ 205. But as first objection (except insofar as it is en- it never says how that affects matters, we tangled with the second). As to the second remain in the dark on the distinction. In- it says only that it does ‘‘not seek to deed, the size and sophistication of the disrupt the legitimate benefits that may entities involved might exacerbate con- accrue to edge providers that have invest- cerns that ISPs are likely to create a fast ed in enhancing the delivery of their ser- lane for large edge providers. vices to end users.’’ Order ¶ 128. That The Commission also notes that deep answer seems to confirm ADTRAN’s com- packet inspection—along with other simi- plaint: the Commission’s split policy will lar types of network traffic management ‘‘cement the advantages’’ secured by those that rely on packet characteristics—is the who invested in interconnecting networks. technical means underlying the paid priori- Oddly, the Commission supports the ban tization that it condemns. With that tech- on paid prioritization as tending to prevent nology, it says, an ISP can examine the ‘‘the bifurcat[ion] of the Internet into a content of packets of data as they go by ‘fast’ lane for those willing and able to pay and prioritize some over others. See Order and a ‘slow’ lane for everybody else,’’ and ¶ 85. If the Commission believes that this as protecting ‘‘ ‘user-generated video and technical factor plays a role in justifying independent filmmakers’ that lack the re- different treatment, it fails to explain why. sources of major film studios to pay priori- Insofar as it suggests that packet inspec- ty rates.’’ Order ¶ 126; see also id. n. 286 tion might be abused, id., it never explains (quoting a commenter’s concern over ad- why rules against such abuse would not fit vantages going to ‘‘well-heeled incum- its historic understanding of unreasonable bents’’). In short, then, the Commission is or unjust discrimination (and that of the against slow lanes and fast lanes, and historic price regulatory systems). against advantages for the established or The oddity of the Commission’s view is well-heeled—except when it isn’t. nicely captured in its treatment of a pro- The Commission’s favored treatment of competition argument submitted by AD- paid peering (wait-and-see) over paid prio- TRAN opposing the ban on paid prioritiza- ritization (banned) brings to mind the tion. ADTRAN argued that the ban (1) Commission’s practice of sheltering the would hobble competition by disabling historic AT&T monopoly from competition. some edge providers from securing the See Nuechterlein & Weiser, 11-12, 40. prioritization that others obtain via Con- Contrary to the conventional notion that tent Delivery Networks (‘‘CDNs’’) (the only regulatees enjoy the benefits of un- premise is that some edge providers, per- reasoned agency favor, the Order here haps because of relatively low volume, do suggests a different selection of beneficia- not have access to CDNs; the Commission ries: dominant edge providers such as Net- does not contest the premise), ADTRAN Comment at 7, J.A. 275, and (2) would flix and Google. See Order ¶ 197 n. 492. ‘‘cement the advantages enjoyed by the Another question posed by the Order largest edge providers that presently ob- but never answered is the Commission’s tain the functional equivalent of priority idea that if superior services are priced, access by constructing their own extensive their usage will track the size and re- networks that interconnect directly with sources of the firms using them. One the ISPs.’’ Order ¶ 128 (quoting ADTRAN would expect, instead, that firms would US TELECOM ASSOCIATION v. FCC 769 Cite as 825 F.3d 674 (D.C. Cir. 2016) pay extra for extra speed and quality to decision shows no sign that it has exam- the extent that those transit enhancements ined serious countervailing contentions, increased the value of goods and services that decision is arbitrary and capricious. to the end user. Firms do not ship medical Accordingly, its promulgation of the supplies by air rather than rail or truck rules under § 201 is, absent a better expla- because the firms are rich and powerful nation, not in accordance with law. 5 (though doubtless some are). They use air U.S.C. § 706(2)(A) & (C). freight where doing so enhances the effec- tiveness of their service enough to justify B the extra cost. This obvious point explains why Berninger is a petitioner here. Alamo-Berninger raise two objections to the Commission’s reliance on § 706 of the The Commission’s disparate treatment 1996 Act, 47 U.S.C. § 1302, as support for of two types of prioritization that appear its new rules, especially the bans on paid economically indistinguishable suggests ei- prioritization, blocking and throttling (i.e., ther that it is ambivalent about the ban the statutory theory offered by the Com- itself or that it has not considered the mission as an alternative to its reliance on economics of the various relevant classes § 201). First, Alamo-Berninger develop a of transactions. Or perhaps the Commis- comprehensive claim that § 706 grants the sion is drawn to its present stance because Commission no power to issue rules. Ala- it enables it to revel in populist rhetorical mo-Berninger Br. 9-16. On its face the flourishes without a serious risk of disrupt- argument seems quite compelling, see also ing the net. Pai Dissent, at 370–75, but I agree with Whatever the explanation, the Order the majority that the Verizon court’s rul- fails to offer a reasoned basis for its view ing on that issue was not mere dictum, but that paid prioritization is ‘‘unjust or unrea- was necessary to the court’s upholding of sonable’’ within the meaning of § 201, or a the transparency rules. Maj. Op. 733. reasoned explanation for why paid prioritization is problematic, or answers to com- Second, Alamo-Berninger raise, albeit in menters’ critiques and alternatives. I note rather conclusory form, the argument that that all these objections would be fully ‘‘the purpose of section 706 is to move applicable even as applied to ISPs with away from exactly the kind of common- market power. carrier duties imposed by this Order. Thus TTT the rules [adopted in the Order] frus- It is true that the Commission has asserted the conclusion that the supposed trate the purpose of the statute and are beneficent effect of its new rules on edge therefore unlawful.’’ Alamo-Berninger Br. providers as a class will (pursuant to its 15. virtuous cycle theory) enhance demand for On this issue, the passages of Verizon internet services and thus demand for giving § 706 a broad reading—‘‘virtually broadband access services. See Order unlimited power to regulate the Internet,’’ ¶ 410.9 The Commission’s predictions are as Judge Silberman observed in dissent, due considerable deference, but when its 740 F.3d at 662—and endorsing the Com-

9. The Commission also makes several other Order ¶ 416 (on indications from a major claims about the impact of the Order on in- infrastructure provider that it would continue vestment. See Order ¶ 412 (on the expected investing under Title II). None of these ad- growth in Internet traffic driving investment); dresses the incremental effects of the specific Order ¶ 414 (claiming a lack of the impact of rules that the Commission adopted. Title II regulation in other circumstances); 770 825 FEDERAL REPORTER, 3d SERIES

mission’s applications of its ‘‘virtuous cy- There is an irony in the Commission’s cle’’ theory, were dicta, as Alamo-Berning- coupling of its decision to subject broader argue. Alamo-Berninger Br. 16. With band to Title II and its reliance on § 706. the narrow exception of the transparency As the Alamo-Berninger brief argues, rules, the Verizon court struck down the § 706 points away from the Commission’s rules at issue on the ground that they classification of broadband under Title II imposed common-carrier duties on the and its Order. Alamo-Berninger Br. 15. broadband carriers, impermissibly so in Title II is legacy legislation from the era of light of 47 U.S.C. §§ 153(51) (providing monopoly telephone service. It has no in- that a telecommunications carrier can be herent provision for evolution to a competi- treated ‘‘as a common carrier under this tive market. It fits cases where all hope (of [Act] only to the extent that it is engaged competitive markets) is lost. Section 706, in providing telecommunications services’’) by contrast, as part of the 1996 Act and by & 332(c)(2) (similar limitation as to persons its terms, seeks to facilitate a shift from engaged in providing ‘‘a private mobile regulated monopoly to competition. In- service’’). 740 F.3d at 650. The sole rules deed, the Telecommunications Act of 1996 not struck down were the transparency begins by describing itself as rules. Although Judge Silberman would [a]n Act [t]o promote competition and have upheld them on the basis of 47 U.S.C. reduce regulation in order to secure low- § 257, see 740 F.3d at 668 n. 9, they are er prices and higher quality services for equally sustainable as ancillary to a nar- American telecommunications consum- row reading of § 706, confining it, as ers and encourage the rapid deployment Judge Silberman would have, to remedy- of new telecommunications technologies. ing problems derived from market power. Telecommunications Act of 1996, Pub. L. See id. at 664–67. Of course, on no under- No. 104-104, 110 Stat. 56. Two central standing could Verizon provide direct sup- paradoxes of the majority’s position are port for the Commission’s ban on paid how an Act intended to ‘‘reduce regula- prioritization, as that was not before the tion’’ is used instead to increase regulation court. and how an Act intended to ‘‘promote com- Although the Alamo-Berninger argu- petition’’ is used at all in a context in which ment here is conclusory, the briefing that the Commission specifically forswears any led to the Verizon dicta was extensive, findings of a lack of competition. Brief for Appellant Verizon at 28, 31, Veri- On top of the generally deregulatory zon, 740 F.3d; Reply Brief for Appellant pattern of the 1996 Act, a reading of § 706 Verizon at 14, Verizon, 740 F.3d, so con- as a mandate for virtually unlimited regu- cern for the Commission’s opportunity to lation collides with the simultaneously en- reply is no basis for disregarding the issue. acted 47 U.S.C. § 230. That section is di- The Commission’s reliance on § 706 poses rected mainly at making sure that internet questions of both statutory interpretation service providers and others performing and arbitrary and capricious rulemaking. similar functions are not liable for offen- Further, paralleling the inadequacies in sive materials that users may encounter. the Commission’s reliance on § 201(b), the But it also broadly states that it ‘‘is the reasonableness of the regulations under policy of the United States TTT to preserve § 706 is important not only on its own but the vibrant and competitive free market also for its relevance to the reasonableness that presently exists for the Internet and of reclassification under Title II. other interactive computer services, unfet- US TELECOM ASSOCIATION v. FCC 771 Cite as 825 F.3d 674 (D.C. Cir. 2016)

tered by Federal or State regulation.’’ Id. com Association v. FCC, 988 F.2d 174, § 230(b)(2). The Commission’s use of 177–78 (D.C. Cir. 1993). Price cap regula- § 706 to impose a complex array of regulation, by contrast, looks to general trends in tion on all internet service provision seems the cost inputs for providers, typically a distinctly bad fit with that declared poli- building in (if trends support it) an as- cy. sumption of steadily improving efficiency. Furthermore, consider the specific Firms benefit from their innovation except measures that § 706 encourages: to the extent that their successes may The Commission and each State com- bring down average costs across the indus- mission with regulatory jurisdiction over try. Id.; for some details of application, see telecommunications services shall en- United States Telephone Association v. courage the deployment on a reasonable FCC, 188 F.3d 521 (D.C. Cir. 1999). So it is and timely basis of advanced telecommu- easy to see how a shift to price cap regula- nications capability to all Americans TTT tion might be a suitable transition move by utilizing, in a manner consistent with for a still uncompetitive industry. Allowing the public interest, convenience, and ne- the firms such benefits would invite ‘‘ad- cessity, price cap regulation, regulatory vance[s]’’ in telecommunications capability forbearance, measures that promote and would ‘‘remove barriers to infrastruc- competition in the local telecommunica- ture investment,’’ which § 706 posits as tions market, or other regulating meth- the goals of agency actions thereunder. ods that remove barriers to infrastructure investment. Section 706’s broad language points in the same direction as the two examples. It Section 706(a), 47 U.S.C. § 1302(a) (em- speaks of removing ‘‘barriers to infrastruc- phasis added). ture investment.’’ Writing in 1996, before The two steps expressly favored are the Commission developed its virtuous cy- both deregulatory. Forbearance is obvious; cle theory, the drafters most likely had in it presupposes statutory authority to im- mind the well-known barriers erected by pose some burden on the regulated firms, conventional natural monopoly regula- coupled with authority to relieve them tion—not only the bad incentive effects of from that burden—and encourages the cost-based rate regulation but also hurdles Commission to give relief. such as agency veto power over new entry Price cap regulation needs more expla- into markets. nation. It is normally seen as a device for at least softening the deadening effects of Section 706 also speaks of measures conventional cost-based rate regulation in ‘‘that promote competition.’’ But here the natural monopolies. Such regulation dulls Commission saddles the broadband indus- incentives by telling the regulated firm try with common-carrier obligation, which that if it makes some advance cutting its is normally seen as a substitute for compe- costs of service, the regulator will prompt- tition—as I mentioned earlier, for markets ly step in and snatch away any profits where all hope is lost. Where a shipper or above its normal allowed rate of return. Of passenger faces only one carrier, it makes course there will be a ‘‘regulatory lag’’ some sense to require that carrier to ac- between the innovation and the regulator’s cept all comers, subject to reasonable rules clutching hand, but the regulatory process of eligibility. This is true even for historic overall limits the incentive to innovate to a innkeeper duties, which seem to presup- fraction of what it would be under competi- pose a desperate traveler reaching an iso- tive conditions. See National Rural Tele- lated inn in the dead of night. 772 825 FEDERAL REPORTER, 3d SERIES

In part II.A I reviewed the distortions Co. of California v. United States, 337 likely to flow from the Commission’s ban U.S. 293, 306–07, 69 S.Ct. 1051, 93 L.Ed. on paid prioritization, but here, consider- 1371 (1949). Hovenkamp makes the exten- ing the Commission’s reliance on a statute sion explicitly, seeing such cases as exam- that seems the antithesis of common-carri- ples of ‘‘the procompetitive use of exclu- er legislation, we should consider the way sive dealing to facilitate market entry the common-carrier mandate may thwart where it might not otherwise occur at all.’’ competition and thus contradict the pur- Hovenkamp ¶ 1811a2, at 153. poses of § 706. The Commission’s common-carrier man- In ordinary markets a firm can enter date, however, especially as implemented the field (or expand its position) by pref- by the Order’s Internet Conduct Standard, erential cooperation with one or more ver- poses serious obstacles to comparable ef- tically related firms. Antitrust law clearly forts by ISPs. It prohibits internet provid- recognizes this avenue to enhanced comers from ‘‘unreasonably interfer[ing] with petition. See XI Herbert Hovenkamp, An- titrust Law: An Analysis of Antitrust or disadvantag[ing] TTT (1) end users’ abili- Principles and Their Application ty to select, access, and use TTT the lawful ¶ 1811a2 (2006). For example, in Sewell Internet content, applications, services, or Plastics v. Coca–Cola, 720 F.Supp. 1196 devices of their choice, or (2) edge provid- (W.D.N.C. 1989), aff’d per curiam, 1990-2 ers’ ability to make lawful content, applica- Trade Cases P 69165, 912 F.2d 463 (4th tions, services, or devices available to end Cir. 1990) (unpublished), the court consid- users,’’ Order ¶ 136, and is coupled with a ered under § 1 of the Sherman Act an ar- multi-factor test, Order ¶¶ 138–145. Al- rangement among Coca-Cola bottlers to though the Commission for the moment buy at least 80% of their plastic bottles purports to keep an open mind as to a from a new entrant—a joint venture of variant of such preferential arrangements the bottlers themselves. The object was to (‘‘structured data plans’’), Order ¶ 152, the circumvent the steadily rising prices Order at minimum casts a shadow over charged by plaintiff Sewall Plastics, the such arrangements. largest supplier of plastic bottles in the Of course the Commission is not an anti- country; the joint venturers saw the trust enforcement agency. But consider ex- agreement as necessary to assure a clusive deals of this sort in relation to its steady market for their bottle-making op- virtuous cycle theory. Special deals facili- eration and thus justify the investment, tating new entry among ISPs (or expan- which Sewall could readily have undercut sion of existing small firms) would enable by dropping its prices. The court found the agreement pro-competitive because it investment and growth in broadband, enabled the new entry, which in turn low- which the Commission says is its goal ered prices—just as ordinary economic (linked, of course, to the flourishing of understanding would predict. Speaking of edge providers). Yet the Commission says, requirements contracts but in terms that without analytical support, that the new seem to match other exclusive vertical ar- rules, generally requiring all broadband rangements in workably competitive mar- providers to follow a single business mod- kets more generally, the Supreme Court el, are just the ticket for broadband has said that they are ‘‘of particular ad- growth and investment. This seems anti- vantage to a newcomer to the field to thetical to § 706, not to mention the post- whom it is important to know what capital DARPA decades in which innovative indi- expenditures are justified.’’ Standard Oil viduals and firms spontaneously developed US TELECOM ASSOCIATION v. FCC 773 Cite as 825 F.3d 674 (D.C. Cir. 2016) the internet, creating new businesses and why alternatives offered in the rulemaking entirely new types of competition. This would not address the supposed problems model of spontaneous creation is, interest- with less collateral damage. ingly, the very model of the internet In short, the Commission has not taken sketched out in compelling terms by the the initial step of showing that its reading FCC’s current General Counsel before he of § 706 as a virtually limitless mandate to assumed that post. See Jonathan Sallet, make the internet ‘‘better’’ is a reasonable The Creation of Value: The Broadband reading to which we owe deference. Enter- Value Circle and Evolving Market Struc- gy Corp. v. Riverkeeper, Inc., 556 U.S. 208, tures (2011). 218 & n. 4, 129 S.Ct. 1498, 173 L.Ed.2d 369 In light of this textual analysis of § 706 (2009). Without such an interpretation, the and its relation to common carriage, and of Commission’s rules cannot be sustained Judge Silberman’s arguments in Verizon, under § 706, even without regard to the see especially 740 F.3d at 662, and consid- reasoning gaps that were a primary sub- ering the rules’ antithetical relation to the ject of part II.A. goals set forth in § 706, I believe that a threshold to application of § 706 is either III (1) a finding that the regulated firms pos- Full Service Network challenges the sess market power or (2) at least a regula- Commission’s decision to forbear from ap- tory history treating the firms as possess- plying a host of Title II’s provisions, most ing market power (classically as natural particularly 47 U.S.C. §§ 251-52, on the monopolies). Under this reading of § 706, ground (among others) that forbearance, in then, the Commission’s refusal to take a position on market power wholly undercuts the absence of a showing of competition its application of § 706. between local exchange carriers (see 47 U.S.C. §§ 153(32), 153(54)), is arbitrary, I must now consider the role of § 706 capricious, and contrary to law. I agree to even if we were to assume the view taken this extent: The Commission’s forbearance by the Verizon majority in dicta. Here all decision highlights the dodgy character of the problems I discussed as to paid priori- the Commission’s refusal, in choosing to tization in part II.A come into play, with reclassify broadband under Title II, to the record full of highly plausible argu- take any position on the question whether ments—never so much as acknowledged the affected firms have market power. The by the Commission—as to the distortions upshot is to leave the Commission in a that a ban on paid prioritization would state of hopeless self-contradiction. generate (especially if made relatively coherent by removing the Commission’s puz- In part II I noted that one reason for zling exception for caching and other paid the Commission’s evasion of the market- peering). The Order fails to give any rea- power question may well have been its soned support for the notion that the ban intuition that the question might (unlike its on paid prioritization (or the affiliated and handwaving about the virtuous cycle) be ancillary bans on blocking and throttling) susceptible of a clear answer and that that would spin the virtuous cycle along and answer would be fatal to its expansive thereby promote investment. It does not mission. The issue raised by Full Service respond to arguments that the ban on paid exposes another flaw in the Commission’s prioritization would result in increased net- non-decision. While a finding that the work congestion, less innovation, less in- broadband market was generally competi- vestment, and worse service, nor explain tive would, under Commission precedent, 774 825 FEDERAL REPORTER, 3d SERIES amply justify its forbearance decisions, on competition,’’ FSN Br. 15, and that here again the Commission refuses to take unbundling requirements were intended to that position. Doing so would obviously promote competition, id. at 20. Full Ser- undermine its decision to reclassify broad- vice dedicates a subsection to this argu- band under Title II. Strategic ambiguity ment in its brief, id. at 18-20, concluding best fits its policy dispositions. But strate- that Congress’s intent to promote competi- gic ambiguity on key propositions underly- tion, together with evidence of a lack of ing its regulatory choices is just a polite competition nationwide, means that ‘‘47 name for arbitrary and capricious decision- U.S.C. § 160 surely requires more to sup- making. port forbearance than an assertion by the * * * F.C.C. that ‘other authorities’ are ade- Full Service points out that in justifying quate and the public interest will be better application of Title II the Commission served by enhancing the agency’s discre- broadly repudiated its 2005 reliance on the tion.’’ Full Service pursued the same angle emergence of ‘‘competitive and potentially in oral argument, asserting that ‘‘you can’t competitive providers and offerings,’’ see say that waiving Section 251 is about any- Order ¶ 330 n. 864, saying instead that thing but competition, that’s the whole ‘‘the predictive judgments on which the purpose of that section.’’ Oral Arg. Tr. 142. Commission relied in the Cable Modem 47 U.S.C. § 251 requires local exchange Declaratory Ruling anticipating vibrant carriers to provide competitors with vari- intermodal competition for fixed broad- ous advantages, mostly notably ‘‘access to band cannot be reconciled with current network elements on an unbundled basis.’’ marketplace realities.’’ Order ¶ 330; in sup- 47 U.S.C. § 251(c)(3); cf. Order ¶ 417 (report of this reading of the Cable Modem ferring to such access as ‘‘last-mile unbun- Declaratory Ruling, the Order cites the dling’’). Full Service seeks such access to Wireline Broadband Classification Order, broadband providers’ facilities (governed 20 F.C.C. Rcd. 14853 ¶ 50 (2005). Order by the procedures set out in § 252 for ¶ 330 n. 864; FSN Br. 18. Besides invoking negotiating these agreements), asserting the Commission’s conclusory repudiation that such access is necessary to its ability of its former view, Full Service stresses to compete in local markets for broadband § 251’s pro-competitive purposes, points to internet. FSN Br. 13; see U.S. Telecom data accumulated by the Commission that Ass’n v. FCC, 359 F.3d 554, 561 (D.C. Cir. it contends show widespread lack of com- 2004) (‘‘The [1996 Act] sought to foster a petition among local distribution facilities, competitive market in telecommunications. and argues that the state of competition is To enable new firms to enter the field highly relevant to the Commission’s exer- despite the advantages of the incumbent cise of forbearance under 47 U.S.C. § 160, local exchange carriers (‘‘ILECS’’), the Act at least with respect to provisions aimed at gave the Federal Communications Com- stimulating competition. FSN Br. 15, 18- mission broad powers to require ILECs to 20; 47 U.S.C. § 160(b) (requiring Commis- sion to consider whether forbearance ‘‘will make ‘network elements’ available to other promote competitive market conditions’’); telecommunications carriers.’’). cf. Maj. Op. 732–33. Moreover, Full Ser- As we shall see, the Commission’s rea- vice specifically ties its argument to the soning in the Order resembles that of the statutory requirements, noting that, in 47 Environmental Protection Agency in Utili- U.S.C. § 160(b), ‘‘Congress directed that ty Air Regulatory Group v. EPA, ––– U.S. the FCC evaluate the effect of forbearance ––––, 134 S.Ct. 2427, 189 L.Ed.2d 372 US TELECOM ASSOCIATION v. FCC 775 Cite as 825 F.3d 674 (D.C. Cir. 2016)

(2014) (‘‘UARG’’). There the Agency inter- the forbearance is justified by competitive preted certain permitting requirements conditions, demonstrates its unwillingness under the Clean Air Act to apply to green- to apply the statutory scheme. Even if the house gases, but acknowledged that apply- Commission’s forbearance itself were rea- ing the thresholds that Congress specified sonable standing alone, that forbearance, in the relevant sections would regulate too paired with the reclassification decision, many firms and create unacceptable costs. was arbitrary and capricious. Or, to note The agency therefore relied on its power the reverse implication, the massive, insuf- to interpret ambiguous statutory terms to ficiently justified forbearance infects the ‘‘tailor’’ the requirements, increasing the decision to apply (or purport to apply) permitting thresholds from 100 or 250 tons Title II. The logical inconsistency is fatal to 100,000 tons (i.e., three orders of magni- to both. (The Commission offers no opposi- tude). Id. at 2444–45. The Court held that tion to USTA’s contention that reclassifica- the agency’s combined choice—construing tion and forbearance are intertwined and an ambiguous statutory provision to apply therefore stand or fall together. USTA while dramatically reducing its substantive Intervenor Br. 21.) application—was unreasonable. In so holding, it ‘‘reaffirm[ed] the core administra- While the statute explicitly envisions tive-law principle that an agency may not forbearance, it does so only under enu- rewrite clear statutory terms to suit its merated conditions. To forbear, the Com- own sense of how the statute should oper- mission must determine that enforcement ate.’’ Id. at 2446. of a provision is not necessary to ensure just, reasonable, and nondiscriminatory The Commission violates that core prin- charges and practices or to protect con- ciple here, where it seeks to apply Title II sumers, 47 U.S.C. § 160(a)(1)-(2), and that to broadband internet providers while forbearing from the vast majority of Title II’s forbearance ‘‘is consistent with the public statutory requirements. As did EPA in interest,’’ id. § 160(a)(3). In making these UARG, though perhaps with less candor, determinations, ‘‘the Commission shall the Commission recognizes that the statu- consider whether forbearance from en- tory provisions naturally flowing from re- forcing the provision or regulation will classification of broadband under Title II promote competitive market conditions, do not fit the issues posed by broadband including the extent to which such for- access service. ‘‘This is Title II tailored for bearance will enhance competition among the 21st Century. Unlike the application of providers of telecommunications services.’’ Title II to incumbent wireline companies in Id. § 160(b). These conditions are broadly the 20th Century, a swath of utility-style framed, but the emphasis on consumer provisions (including tariffing) will not be protection, competition, and reasonable, applied. TTT In fact, Title II has never nondiscriminatory rates is plainly intend- been applied in such a focused way.’’ Order ed to implement the 1996 Act’s policy goal ¶ 38. of promoting competition in a context that Although the 1996 Act requires the had historically been dominated by firms Commission to forbear from application of with market power, while assuring that any of the provisions of Title 47’s Chapter consumers are protected. 5 when the conditions of 47 U.S.C. The Commission relied in part on the § 160(a) are met, Pub. L. 104-104, Title IV, idea that enforcement of unbundling rules § 401 (Feb. 8, 1996), the Commission’s would unduly deter investment, specifically massive forbearance, without findings that that such enforcement would collide with 776 825 FEDERAL REPORTER, 3d SERIES

its ‘‘duty to encourage advanced services Services, Inc., 17 F.C.C. Rcd. 24319 ¶¶ 17– deployment.’’ Order ¶ 514. But, perhaps 18 (2002), the Commission granted for- recognizing that this concern would apply bearance to replace one set of rates with a universally to compulsory unbundling, the different set of rates based on forward- Commission also confronted claims that looking cost estimates that it believed bet- broadband providers often have local mar- ter reflected the petitioner’s operating ket power. But it responded to these costs; no finding of competition was neces- claims not with factual refutation but with sary to guide that replacement. In In re an assertion that ‘‘persuasive evidence of Petition for Forbearance from Application competition’’ is unnecessary as a predicate of the Communications Act of 1934, As to forbearance. Order ¶ 439. This assertion Amended, to Previously Authorized is in line with the Commission’s view that, Servs., 12 F.C.C. Rcd. 8408 (1997), the ‘‘although there is some amount of compe- Commission forbore from § 203(c), allow- tition for broadband Internet access ser- ing the petitioner to refund excess charges vice, it is limited in key respects.’’ Order to consumers. As the Commission pointed ¶ 444. The language is sufficiently vague to out in that brief order, forbearance served cover any state of competition between consumers and the public interest, since outright monopoly and perfect competition. consumers would receive the refund. Id. The Commission claimed that its current ¶ 10. forbearance matches its past practice, of- The Commission’s use of the third group fering a list of orders in which it forbore suggests that its opinion-writing staff was while giving competition little or no consid- asleep at the switch. The group comprises eration. Id. ¶ 439 n. 1305 (listing cases). three rulings, In re Implementation of But the cited orders do not vindicate the Sections 3(n) & 332 of the Communica- Commission. They fall into three groups: tions Act, 9 F.C.C. Rcd. 1411 (1994),10 In (1) orders forbearing from provisions not re Petition of Qwest Corp. for Forbearance directly involving economic issues at all, Pursuant to 47 U.S.C. § 160(c) in the such as reporting requirements, (2) orders Omaha Metro. Statistical Area, 20 F.C.C. of clear economic import but with no evi- Rcd. 19415 (2005), and In re Petition of dent relationship to competition, and (3) Qwest Corp. for Forbearance Pursuant to orders evidently related to competition 47 U.S.C. § 160(c) in the Phoenix, Arizona where the Commission analyzed competi- Metro. Statistical Area, 25 F.C.C. Rcd. tion intensely. 8622 (2010). Yet in each decision the Com- The first group is easily addressed. The mission conducted a detailed analysis of Commission’s grant of forbearance from the state of competition. See 9 F.C.C. Rcd. seemingly noneconomic requirements is ir- 1411 ¶¶ 135–54 (considering numbers of relevant to the arbitrariness of its forbear- competitors, falling price trends, etc., and ance from a provision aimed precisely at concluding that ‘‘all CMRS service provid- fostering competition. ers, other than cellular service licensees, The second set of orders posed economic currently lack market power,’’ id. at ¶ 137, concerns but no evident link to competi- and, after an extensive recounting of fac- tion. In In re Iowa Telecommunications tors, making a cautious finding that it

10. This order was later quashed by another 3(N) & 332 of the Communications Act, 10 order, In re Petition of Arizona Corp. Comm’n, F.C.C. Rcd. 7824 (1995). Unsurprisingly, that to Extend State Authority Over Rate and Entry order also contains a detailed market analy- Regulation of All Commercial Mobile Radio sis. See, e.g., id. at ¶¶ 42–68. Services & In re Implementation of Sections US TELECOM ASSOCIATION v. FCC 777 Cite as 825 F.3d 674 (D.C. Cir. 2016) could not find cellular ‘‘fully competitive,’’ ed unbundling on both investment and id. at ¶ 154); 20 F.C.C. Rcd. 19415 ¶¶ 28– competition. We concluded that this for- 38 (analyzing market shares, supply and bearance was not arbitrary and capricious demand elasticity, and firm cost, size and partly because the Commission had of- resources to assess competition); 25 F.C.C. fered ‘‘very strong record evidence’’ of ‘‘ro- Rcd. 8622 ¶¶ 41–91 (assessing whether in- bust intermodal competition from cable cumbent firm had market power by careful [broadband] providers,’’ who maintained a consideration of market definition, factors market share of about 60%. Id. at 582. affecting competition, assessment of the Both we and the Commission took for effects of SSNIPs). granted that findings of competition were I am in no position to assess the quality central to any such forbearance decision. of these analyses, but the entire batch of The Commission justified its forbearance decisions cited in Order ¶ 439 n. 1305 in terms of competition: ‘‘A primary bene- provides no support for the idea (indeed, fit of unbundling hybrid loops—that is, to undermines the idea) that the Commission spur competitive deployment of broadband has an established practice of neglecting services to the mass market—appears to market power in deciding whether to for- be obviated by the existence of a broad- bear from a provision such as § 251. (I band service competitor with a leading po- discuss below an interesting exception, the sition in the marketplace.’’ In re Review of order reviewed in EarthLink v. FCC, 462 the Section 251 Unbundling Obligations of F.3d 1 (D.C. Cir. 2006).) Incumbent Local Exch. Carriers, 18 Given the Commission’s assertions else- F.C.C. Rcd. 16978 ¶ 292 (2003). Now, when where that competition is limited, and its forbearing from unbundling requirements lack of economic analysis on either the far more broadly, the Commission asserts forbearance issue or the Title II classifica- that no findings of competition are neces- tion, the combined decisions to reclassify sary. Rather than justifying its change in and forbear—and to assume sufficient position, it denies having made any competition as well as a lack of it—are change. arbitrary and capricious. The Commission It is unnecessary, in concluding that acts like a bicyclist who rides now on the the Commission has failed to meet its sidewalk, now the street, as personal con- State Farm obligation to reconcile its re- venience dictates. classification and forbearance decisions, to The inaptness of the Order’s ¶ 439 n. resolve whether the Commission has ade- 1305 citations of its prior decisions is con- quately considered competition for pur- firmed by forbearance decisions that have poses of 47 U.S.C. § 160(b). See Order reached this court. In U.S. Telecom, 359 ¶¶ 501–02. The Commission’s difficulty, in F.3d at 578–83, for example, we considered its mentions of competition, lies in its at- the Commission’s decision to forbear from tempts to have it both ways. It asserts unbundling requirements for the high-fre- that there is too little competition to quency portion of copper and hybrid loops maintain the classification of broadband for broadband (but not from unbundling as an information service (remember, that requirements for the narrowband portion is the sole function of its discussion of of hybrid loops). In reviewing that forbear- switching costs), but (implicitly) that there ance decision, which was far narrower than is enough competition for broad forbear- the forbearance before us today, we gave ance to be appropriate. This sweet spot, detailed consideration to the Commission’s assuming the statute allows the Commis- analysis of the likely effects of more limit- sion to find it, is never defined. 778 825 FEDERAL REPORTER, 3d SERIES

In responding to Full Service’s narrow effects of market power by close agency claim—that the Commission was required supervision of firm conduct, but forbore to do a competition analysis market by from provisions aimed at constraining mar- market—the Commission relies on our de- ket power by compelling firms to share cision in EarthLink v. F.C.C., 462 F.3d 1, 8 their facilities, all with no effort to perform (D.C. Cir. 2006), where indeed we rejected a market power analysis. The Order’s com- a claim that forbearance from unbundling bined reclassification-forbearance decision under 47 U.S.C. § 271 required such an is arbitrary and capricious. analysis. On that narrow issue, EarthLink * * * fully supports the Commission. But there are considerable ironies in the The ultimate irony of the Commission’s Commission’s supporting its Order here by unreasoned patchwork is that, refusing to pointing to EarthLink and the order re- inquire into competitive conditions, it viewed there. The current Order manifests shunts broadband service onto the legal a double repudiation of the one under re- track suited to natural monopolies. Be- view in EarthLink: first, it now rejects its cause that track provides little economic former interpretation of § 706, and second, space for new firms seeking market entry it reflects the Commission’s complete or relatively small firms seeking expansion abandonment of its views on the force of through innovations in business models or intermodal competition. in technology, the Commission’s decision In the EarthLink order, the Commis- has a decent chance of bringing about the sion invoked § 706 for the proposition that conditions under which some (but by no relieving local distribution companies from means all) of its actions could be ground- regulation would encourage investment, ed—the prevalence of incurable monopoly. and thus would let competition bloom, suf- I would vacate the Order. ficiently to offset any loss to competition from refusing to order unbundling. Now, of course, the Commission invokes § 706 , for the idea that saddling such firms with regulation will encourage investment. And in the EarthLink order the Com- Laura SANDS, Petitioner mission relied on its now repudiated idea v. that intermodal competition would play a big role in assuring adequate competition. NATIONAL LABOR RELATIONS See 462 F.3d at 7, citing Petition for For- BOARD, Respondent bearance of the Verizon Telephone Compa- United Food and Commercial Workers nies Pursuant to 47 U.S.C. § 160(c), 19 International Union, Local 700, F.C.C. Rcd. 21,496 ¶¶ 21–23. Now, without Intervenor. undertaking the inconvenience of a market power analysis, the Commission has ren- No. 14-1185 dered its confidence in intermodal competi- United States Court of Appeals, tion ‘‘inoperative’’ (to borrow a phrase District of Columbia Circuit. from the Watergate proceedings) for purposes of reclassification, but (perhaps) not Argued February 18, 2016 for unbundling. Decided June 17, 2016 In sum, the Commission chose to regu- Background: After administrative law late under a Title designed to temper the judge (ALJ), 2008 WL 656235, found that

USCA Case #15-1063 Document #1673354 Filed: 05/01/2017 Page 1 of 1 United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT ______

No. 15-1063 September Term, 2016 FCC-15-24 Filed On: May 1, 2017 United States Telecom Association,

Petitioner

Federal Communications Commission and United States of America,

Respondents

------Independent Telephone & Telecommunications Alliance, et al., Intervenors ------Consolidated with 15-1078, 15-1086, 15-1090, 15-1091, 15-1092, 15-1095, 15-1099, 15-1117, 15-1128, 15-1151, 15-1164

BEFORE: Tatel and Srinivasan, Circuit Judges; Williams*, Senior Circuit Judge

O R D E R

Upon consideration of the petitions for panel rehearing filed on July 29, 2016, it is

ORDERED that the petitions be denied.

Per Curiam

FOR THE COURT: Mark J. Langer, Clerk

BY: /s/ Ken Meadows Deputy Clerk

* Senior Circuit Judge Williams would grant the petitions for panel rehearing.

US TELECOM ASSOCIATION v. FCC 381 Citeas855 F.3d 381 (D.C.Cn'.2017)

speculation does not account for bhe fact tors because of its exercise oi lnriarziLll that Anthem already has lower utilization monopsony power in the upst|ilzt.ii.r t.i,:ti'lici. rates than Cigna. So is it not likely thab where it negotiates rates wiih pnii'idel,s'i' Cigna customers wouid utilize health care If yes, then Anthem-Cigna. cr,rirccck:s l,ha.t more after the merger than they do now. the melger is unlaw{ul and siiou}cl. },rc cln- * :! :!: joined. If no, then the merger is iar.r'fiil uLicl The analysis of a merger's effects neces- should be able to go forward. I would sarily entails a predictive judgment. vacate the District Courtls judgment and Courts are often ili^equipped to rendel remand fol the District Court bo expedi- those predictive judgments in cases of this tiously resolve that fact-intensive question sort. But hele, ,,\'e have a far clearer pic- in the first instance. ture of what will unfold than we often do. I respectfully dissent. We know that Anthem-Cigna would be

able to negotiate lower provider rates; in- E o s KfY NUMEER SYSTEI'I deed, euen the Goaent'men,t a/J/nlits os T muclt. And we know that those savings wili be largely passed through to employers beeause that is the way the market and UNITED STATES TELECOM contracts are structuled. After all, the ASSOCIATION, whole point of the provider rates negotiat- Petitioner ed by insurers is to establish the prices 'v that the employers will pay. If ihe prices are lower, the employers will pay less. And FEDERAL COMMTTNICATIONS COM- we know, furthermore, that any cost sav- MISSION and United States of ings to employers likely would greatly ex- America, Reqpondents cbed any increase in fees paid by ernploy- Independent Telephone & Tele- ers. communications AJliance, On this record, this horizontal merger' et al., Intervenors therefore rvou-id not substantially lessen competition in the mzrke| for the sale of Nq. 15-1063 insurance selvices to large employerb. The Consolidated with 15-1078, 15-1086, 15- District Court ciearly erred in concluding 1090, 15-1091, 15-1092, 15-1095, 15-1099, otherwise, and I disagree with the majori- 15- rL17, L5-L728, 15-1151, 15-1164 ty opinion's affirmance of the District United States Coult of Appeals, Court's judgmeni. District of Columbia Circuit. The problem for this merger', if thele is Filecl: May 1,2077 one, is in its effects in the upstream market-namely, in its effects on hospitals and On Petitions for Rehearing En Banc doctors as a result of Alfhem-Cigna's enhanced negotiating power. Therefore, my Before: Garland r', Chief Judge; approach to this case r,vould require Dis- Henderson'F, Rogers, ?atel':'{', 3"orr'ii'r', trict Court resoiution of one remaining Griffith, Kavanaugh{' i";', Srinivasan'r''', question: Would Anthem-Cigna obtain low- Miiiett, Pillard':', and Williins, Circuit er provider rates from hospitals and doc- Judges. i'Chief Judge Gariand and Circuit Judges this matter Henderson and Pillarcl did not participate in 382 855 FEDERAI REPORTER, 3d StrRIES

ORDER particular contention pressed by one of our dissenting colleagues: that the FCC's 0r- Per Curiam der, and thus our panel decision sustaining The petitions for rehearing en banc, the it, departs from controlling Supreme Court responses thereto, and the brief of amici precedent in two distinct ways. First, our curtae were circulated to the full coult, colieague submits that Supreme Court de- and a vote rvas requested. Thereafter, a cisions require clear congressional authori- majority of the judges eligible Lo vote did zation for i:ules like the net neutrality rule, petitions. not voLe in favor of the Upon and the requisite clear statutory authority, consideration of the foregoing, it is he argues, is absent here. See infra aL 4IB- ORDERED that the petitions be denied. 26 (Kavznaugh, J., dissenting); accord infra aL 402-05 (Brown, J., dissenting). Sec- Srinivasan, Circuit Judge, joined by ond, our colleague contends that the rule Tatel, Circuit Judge, concuring in the conflicLs with Supreme Court decisions os- denial of r:ehearing en banc: tensibly arming internet service providers (ISPs) with a First Amendment shield In this case, a panel of ottr cout't upheid against net neutrality obligations. See in- the FCC's 2015 Open Internet Order, com- at 42U35 (Kavanaugh, J., dissenting). monly known as the net neutrality rule. fra The parties who unsuccessfully challenged Respectfully, both lines of argument are the Order before the panel have now filed misconceived. As to the first, the Supreme court petitions seel

':'* A statement by Circuit Judge Srinivasan, mens by Circuit Judge Brorvn and Circuit joined by Circuit Judge Tatel, concurring in Judge Kavanaugh, dissenting from the denial the deniai of the petitions, is aftached. of the petitions, are attached. ::r:r* Circllit Judges Brown and Kavanaugh wouid grant the petitions. Separate state- US TDLECOM ASSOCIATION v. FCC 383 Cite is 855 F.3d 381 (D.C. Clr. 2017)

Before taking up the merits of those bwo rules" doctrine). See infra at 402*03 issues, we first elnphasize the role in which (Brown, J., dissenting). we examine them. The wisdom of the net We have no need in this case to resolve neutrality ru1e was, ancl remains, a hotly the existence or precise c'ntours of the debated matLer. The FCC received the major rules (or major questions) doctrine views of some four million commenters described by our colieagues. Assuming the before adopting the rule, In re Protecting existence of the doctrine as they have ex- and Promoting the Open Internet, 30 F CC pounded it, and assuming further that ihe Rcd. 5601, 5604 1T 6 (2015) (Order), and the rule in this case qualifies as a major one so debate over the rule continues to this day, as to bring the doctrine into play, the with the agency now poised to consider question posed by the doctrine is whether replacing it. We have no involvement in the FCC has clear congressional authorjza- that ongoing debate. Our task is not to tion to issue the rrrie. Tiie answer is yes; assess the advisability of the rule as a Indeed, we knorv Congress vested the matter of policy. It is insteacl to assess the agency with authority to impose obli- perrnissibility of the ruie as a 'matter of gations like the ones instituted by the Or- law. Does the rule lie within the agency's del because the Suprerle Court has specif- statutory authority? And is it consistent icaUy told us so. with the First Amendment? The answer to The perLinent decision is National cable both questions, in our view, is yes. & Telecommunications Ass,n u. Brand, x Internet Sera'ices,545 U.S. 967, 125 S.Ct. I. 2688, 162 L.Ed.zd 820 (200b). That case, According to our dissenting colleague, like this one, addressed the proper regula- the F.CC's Order runs afoul of a doctrins tory classification under the Communica- he gleans fi.om certain Supreme Couri de- tions Act of broadband internet selice. cisions invalidating. an agency ruie as lfng lroncl X involved the provision of broadband internet access via cabie systems. At outside the .agency's congressionally delegated auihority. Our colleague. under- the time of the decision, cable broadband stancls those decisions to give rise to a was one of two types of broadband service "major rules" doctrine. That doctrine is available to customers, the other being said to embody the foliowing unclerstand- DSL (dig-itai subscriber line). See id,. at ing about the scope of agencies' clelegated 975,725 S'Ct' 2688' authority: while agencies are generally as-. The FCC had applied a different foim of sumed to possess autholiLy under Cltewon, regulatory treatment to cable broadband U.S.A,, Inc. u. Natural, Resources Defense service than to DSL service. The agency CounciL, Inc., 467 U.S. 837, 704 S.CL.2778, had classified DSL as a "telecommunica- 81 L.Ed.zd 694 (1984), to issue rules re- tions service" for put'poses of the Commu- solving statutory ambiguities, an agency nications Act, See id. at 975, 1000, 125 can issue a mujor lule-i.e., one of great S.Ct. 2688. That classification cairies sig- economic and political significance-only if nfficant statutory consequences. The Act it has clear congressional authorization to requiles treating telecommunications pro- do so. See infra at 418-19 (Kavanaugh, J., viders as common carliers presumptively dissenting). Oul other dissenting colleague subject to the substantial reguiatory obli- generally agrees with this line of argument gations attending that status. See id. at (although she calls the doctrine the "major' 975-76, 125 S.Ct. 2688. Common carriers, questions" doclrine rather l,han the "major for instance, generally rnust afford neutral, REPORTER, 3d SERIES 384 855 FEDERAL

repeatedly ern- nondiscriminatory access to their services, 125 S.Ct. 2688. The Court and must avoid unjust and unreasonable phasizeci the Commission's authority to use practices in that connection. See id' at 975' "its experL policy judgment to resoive ?6, 1000, 125 S.Ct.2688. these difficult questions." Id. at 1003, 125 2688. In that light, the p1'oper classi- Whereas the FCC had classified DSL S.Ct. fication of broadband senrice would tuln broadband as a telecommunications ser- palticulars of hout Intet'net vice, the agency had instead elected to "on the facl,aaT and how it is provided, classify cabie broadband as an "inforrna- technology works leaves to l,he Commis- tion service," the other of the two classifi- questions Chewon Id'. aL cations available to the agency under the sion to resolve in the fit-st instance'" statute. See id,. at 97Q, 125 S.Ct. 2688' 99L, r25 S.Ct. 2688. of an information serwice, in con- Providers Consequently, the Cowt helcl, the court telecommunications providers, trast with of appeals in Brand, X had "ert'ed in refu-s- not considered to be common carriers are ing to apply Cheuron Lo lhe Commission's the Act. As a result, providers of an under interpretation of the definition of 'telecom- information service are subject to less ex- munications serviee,"' and in declining to tensive regulatory obligations and over- defer to the agency's decision to treat ca- sight than are telecommunications provid- ble broadband as an information service. els. See id. at975-76, 125 S'Ct.2688' Id. at 984, 125 S.Ct. 2688 (quoting 47 whether the The issue in Brand' X was U.S.C. $ 153(46) (2000) (culrenUy codified the FCC Communications Act compelled aL 47 U.S.C. $ 153(53))). But deference ISPs as tele- to ciassify cable broadband equally would have been orn'ed, the Su- providers to regu= communications subject preme Cour,t made clear, if the FCC had calriers' The latory treatment as common reached the opposite resolution by classify- question no. Critical- Court answered that ing cable broadband providers as telecom- the Courb ly for our purposes, though, munications carliers. That is because Lhe decision--over and made clear ix its agpncy had oniy two regulatory classifica- the matter to the over-that the Act left tions avaiiable to it. To affirm the FCC's words, the agency's discretion. In other statutory discretion to select between treat broadband ISPs FCC could, elect to them was necessarily to countenance l,he (as it had done with as common carriers agency's h'eatment of cable bloadband as providers), but the agency did not DSL a telecommunications sen'ice. haae to do so. rvent as far as to The Court, to that end, explainecl that it Indeed, the Coult "leave[ untouchecl" Lhe had "no difficulty conciuding thaf' Cheuron affrrmatively ] belief l,hat the better' appliefd]" to the agency's decision to clas- cowt of appeals's not the one sify cable broadbancl as an information reading of the statute-albeit the agency- service rather than a telecommunications that had been adopted by providet's as service. Id'. aL 982, 125 S.Ct. 2688' The cailed for treating broadband IcL aL 985-86, statute's "silence" on the malter left the telecommtinications carriers. And the Court fully unCer- Cornmission "discretion to fill the conse- 125 S.Ct. 2688. quent statutory gap'" Id' at 997, 125 S'Ct' stood the significant regulatory implica- 2688. That meant the question "would be tions if Lhe agency wele instead to rnaice lesolved, first and foremost, by the agen- that choice: classification as a telecommu- cy!' Id,. at 982, 125 S.Ct' 2688 (internal nications service "woulcl requile applying quotation marks omitted); see id'. at 980-81, presumptively mandatory Title II [i.e., US TELECOIYI ASSOCIATION v. FCC 385 Cite as 855 F.3d 381 (D.C. Clr. 2017)

corrmon carrier] regulation to all ISPs." recognized the agencv's statuLory authori- Id. aL 995 n.2, I25 S.Ct. 2688. ly to institute "c0mmon-ca.rrier regulation The conculring and dissenLing opinions of ail ISPs," with some Justices even con- in Brond X reinforced the majority's rec- ciuding that the Act left the agency with ognition of the agency's statutory authori- no other choice. 545 U.S. at 1011, 125 S.Ct. ty to subject ISPs to regulation as common 2688 (Scalia, J., dissenting). In the Order carriels. Jr-rstice Breyer's concurring opin- under revie-a, the agency took up the ion concluded that the IrCC's decision to Brand X Court's invitaLion. It decided to classiff cable broadband as an information classi$r broadbancl ISPs as telecommunica- service fell "within the scope of its statuto- tions providers, enabling it to impose com- rily deiegated autholity-though perhaps mon carier obligations on ISPs such as just barely." Id. aL 1003, 125 S.Ct. 2688 the net neutrality r-ule in question here. (Breyer, J., concurring). If the FCC's elec- In light of Brand, X, our dissenting col- Lion not to impose common can'ier obli- league's reiiance on bhe "major rules" doc- gations on cable broadband ISPs "just trine cannot carry the day. Recall that the bzrely" fell within the agencyls discretion, doctrine ultimateiy embodies under- the opposite choice necessarily would have an standing about congressional auLhortza- fallen comfortably within the agency's con- tion: an agency, doctrine says, can gressionall5z delegated authority. the adopt a major rule only if it clearly pos- Justice Scalia's dissenting opinion, sesses congressional authorization to do so. joined by Justices Souter and Ginsburg, The majoi' question at, issue here, accord- wenf even ftu'ther;'According to Jusiice ing to our colleague, is whether the FCC Scalia, the statute permitted only one con- can subject broadbaird ISPs to common clusion: cable broadband ISPs '{are subject carrier obligations. See infra at 422'23 to'Title II regulation as common cartiers, (Kavanaugh, J., disseuting). If we assurne Iike their chief competitors le.g., DSLI who that the FCC's decision to tyeaL broadband provide Internet access through other ISPs as common carriers amounts to a technologies." Id,, at 1006, 125 S.Ct. 2688 major rrile, the question then is whether (Scalia, J., dissenting). The agency, in Jus- the agency clearly has authoi'it), under lhe tice Scalia's view, had no discretion to con- Act to make that choice. In Brand, X, the clude other"q'ise. And he expressly accept- Supreme Court, definitiveiy-and authori- ed tliat his reading of the Act would resr-rlt ta.tively, for our: pui'poses as an inferior in "common-carrier regulation of ail ISPs," court-ans"veled that question yes. a lesult he considered "not awowy." Icl. at 1011, 125 S.Ct. 2638. (He noted, though, It bears emphasis in tiris regard that, by that the agency possessed statutory au- the time of Brand X, two of the Supreme thorit5r 'r,o forbear foom applying the ftiil Court decisions citecl by the clissent as range of common carrier legulatoqr obli- exemplars of the major rules doctrine- gations, id, at 7011-12, 125 S.Ct. 2688, an MCI Telecomnzunications Corp. u. Anz. authority the F CC exercised when it fash- Tel.epltone & Telegraph Co.,512 U.S. 218, ioned the rule we now review, see Order 114 S.Ct. 2223,729 L.trd.zd 7BZ (7994), and 111T 434-532.) FDA u. Broum & Willianzson Tobacco The upshot of Brand X wjth regard to Cor?., 529 U.S. 720, 720 S.Ct. 1291, 146 the FCC's conglessionally delegated au- L.trd.zd 121 (2000)-had already been de- thority over broadband ISPs is unmistak- cided. Brown & Williarnson is particularly able and stlaightforwald. A1l nine Justices notable. Thele, the Supreme Court consid- 3d SERIES 386 855 FEDERAI REPORTER, eled the FDA's exercise of its general mles doctrine that the FCC iacked staLu- we now rulemaking authority under the Food, tory authority to issue the Order Drug, and Cosmetic Act to reguiate the review. use of tobacco products by children and Our dissenting colleague nonetheless adolescents. The Court, although applying contends LhaL Brancl X poses no obstacle principles of Chearon deference to the to invalidating the FCC's Order under the FDA's assertion of authority over tobacco major rules doctrine. His argument runs products, concluded that Congress did not as foliows. The question under the major "deiegate a decision of such economic and rules doctrine, he observes, is whether political significance to an agency in so Congress has "clearly authorized the FCC cryptic a fashion." Id,. zt 160, 120 S'Ct' to subject Internet serwice providers Lo the 1291. tange of burdensolne common-carriel legulations associated with telecommunica- Later, in Brand'X, the Court reached a tions servic es." Infra zl, 425 (Kavanaugh, different conclusion about the FCC's regu- J., clissenting). But, Lhe Brand X Coult, he laLory authorily over ISPs' The Court, then notes, found the statute "ambiguous again applyin g Ch,euron, this time conclud- about whether Internet service was an ined that Congress had authorized the agen- formation serwice or a telecommunications cy to decide whether to regulate ISPs as service." Id. at 425. In his view, "Brand comrlon carriers. As between the hvo pos- finding of ambiguity by definition sible classifications, "the Commission's Xs means that Congress has not ciearly au- choice of one of them is entitled to defer- tholized the FCC to issue the net neuti'ali- ence." Brand, X, 545 U.S. at 989, 125 S'Ot' ty rule." Id. at 426. 2688. That analysis rests on a false equiva- We note, further, that there is no mate- lence:. it incorrectly equates bwo distinct rial difference bebween the technolog"y con- spbcies of ambiguity. It is one thing lo ask siderecl in Brand' X and, the technolgSl at whether ''Internet service ts clearly a tele- issue here. The petitioning partigs have comrnunications service under the statute." contended throughout this case that Bran'd Id,. at 425.It is quite another thing bo ask X involved only something referred to as whether Congless has "clearly authorized the "last mile" of internet service' But the the FCC to classif,i Internet serwice as a panel straightforwardly (and unanimously) telecommunications service," which is the rejected their efforb to make anything of relevant question under our colleague's un- that supposed distinctio\: See U'S' TeLe- derstanding of the major rules doctrine. com Ass'n u. FCC,825 F.3d 674,702 (D'C' Id,. The formel question asks whethel the Cir. 2016); id. at 745 @illiams, J', concur- statute itself clearly classifies ISPs as tele- rir-rg in part and dissenting in part)' Our communications providers. The latter asks dissenting colieague likewise makes no ef- whether the stabute cleariy authorizes the fort to distinguish Brand X on such a a,gencu to classify ISPs as telecommunica- basis. Rather', both cases involve "the tions providers. FCC's authority to classify Internet ser- tire an- vice as a telecommunications setwice'" In- Our coiieague assumes that, if question is no, "that is fra at 425 (Kavanaugh, J., dissenting); bzf swer tn the formei' game for bhe net neuflality see infra 40445 (Brown, J., dissenting)' the end of the 'clearly 425. Not at all. A negative And Bruzd' { in recognizing the ru\e." Id'. at question hardiy dic- agency's authority to do so under the Act, answer to the former latter, more negates any argument under the major tates a negative answer to the US TIJLECOM ASSOCIATION V. FCC 387 . Clte as 855 F.3d 381 (D-C. Cir. 2017) salient, one. The statute itself might be In the end, the major ruJes doctrine, as ambigrious about whether ISPs are to be articulated by our colleague, affords no tteated as common carriers, but still be basis for invaiidating the net neutrality clear in authorizing tire agency to resolve rule. The Supreme Court decisions ostensi- the question. bly giving rise to that doctrine lie far aheld ft'om this case. They involve, per our col- Indeed, that dichotomy perfectly cap- league's description, "regulating cigarettes, tures Brand Xs holding. Justice Scalia, in banning physician-assisted suicide, eiimi- dissent, believed that the statute clear'Iy nating telecommunications rate-filing re- compelled treating ISPs as telecommunica- quirements, or regulating greenhouse gas tions providers. The majority disagreed, emitters." Id. aL 427. The Court's decision finding the statute ambiguous on the ques- in Brand, X, by contrast, involved the same tion. But the majolity found that the agen- statute (the Communications Act), the cy was empowered to resolve the ambigui- same agency (the F CC), the same factual Ly-i.e., to decide whether ISPs should be context (the provision of broadband inter- ciassified as telecommunications providers net access), and the same issue (whether presumptively subject to common carrier .broadband ISPs are telecommunications obligations. In short, whereas Brand X found statutory ambiguity on whether ploviders, and hence common catriers, under the Act). Brand, X unambiguously rec- ISPs are telecommunications providers, ognizes the agency's statutorily delegated the decision found no statutory ambiguity authority to decide that issue. on whether the FCC gets to answer that question" Does Brand,X, then, necessarily vaiidate the agency's decision to ciassify broadband So understood, Brand X dictates reject- providers ing our dissenting colleague's argument ISPs as telecommunications and subject them to common carriei' obli- based on the major rr-rles doctrine. It is to gations? No, does not. While Brand X thus perhaps unsurprising that none of the it recognizes FCO's statutory authority petitioning parties, no member of the origi- the to treat broadband ISPs as common carri- nal panel (including our colleague who dis- ers, the agency must carzy out its authori- sented in pa.it at the panel stage), and a reasonable and non-arbitrary way. neither of the dissenting Commissioners ty in The partial dissent from the panei's dispo- objected to the FCC's Order as infringing sition believed that the FCC's Order fell any such doctrine. @e note, though, LhaL z short on those grounds, aud the petitioning group of intervenors led by TechFreedom parbies have raised a host of challenges to makes such an argument.) The major nies agency's decisionmaking process and doctrine is said to promote separation-of- the panel majority concluded powers principles by assuring that Con- outcome. The otherwise and upheld the rule. gress has deiegated authority to an Execu- tive agency to decide a major matter of But while Brand X could not have set- poiicy. See infra at 41&-19 (I(avanaugh, J', tled the validity of a rule the FCC had yet dissenting). But in light of Bran'd' Xs rec- to promulgate, it did settle the agency's ognition of tire FCC's congressionally deie- authority to classify broadband ISPs as gated authority to decide whether to regu- telecommunications providers under the iate ISPs as common carriers, it would Communications Act. The major rules doc- disserve-not promote-the separation of f,rine, as conceptualized by our dissent'ing powers to deny the agency the authority colleague, is a heuristic for determiring conferred on it by Congless. whether a given rule falls vdihin an agen- FEDERAI REPORTER, 3d SERIES 388 855 objected to the agen- delegated authority' FCC Commissioners cy's congressionally on multiple says that a rule cy's acloption of the rule Once ttte Supreme Court poses to grounds, neither suggested the ruie does so-as Brand' X did with regard iny First Amendment issue' Similarly' the the FCC's authority to treat ISPs as com- principal parties challenging the Order in mon carriers-our inquiry is over' Insofar ihis .ourt, who collectively represent virtu- the FCC's Order jnvolves a major rule' as ally gvsr't broadband provider-including Brand X resolves the agency's statu- then, all of the major lSPs-bring no First tory autholitY to adoPt it' Amendment chalienge to the rule" The soie II, party to raise any claim under the First Amendment is Alamo Bloadband Inc'' colleague separately ar- Our dissenting as "a small broad- poses an which describes itself gues thaL the First Amendment band provider" seling some 1,000 custom- bar to the FOC's Order' The Independent ers in Texas, and which is joined in its submits, infringes the Order, he lTtt individual named Daniel Ber- rights of broadband ISPs' ciaim by an Amendment ninger. Pet'rs' Joint Proposed Briefing Specifically, he understands Supi'eme Fotmat & Sched. B; Alamo I3r' 3' Court precedent to tecognize a First of.an the argutnents present- Amendment entitlement on the parL Notwithstanding Berninger-and now aiso ISF lo bloch its subscribers from accessmg ed by Alamo and ISP's colleagre-the consensus certain internet content based on the our dissenting held the net neutrality rule own preferences' even if the ISP has view is con'ect: the First Amend- itself out as offering its customers an ln- raises no issue under to understanding why lies discriminate pathway to internet content ment. The key wnen' z broadband Provider of their own-not the ISP's-choosing' in perceivtng coverage' As the ISP, for instance' tatG witnin the luie's Undel that view, an are af- Order explains, broadband ISPs lhat could hold itseif out to consumers as subject to the rule "sell retail customers fording them neutral, indiscriminate access the ability to, go anlryvhere (larvful) on the to all'websites, but then, once they sub- 1n1s1nst'"-the/ "representf ] that t'hey materially degrade theil' ability to scribe, will transport and deliver traffic to ancl use Netflix for walching video-or even f,rom all or substantially all Internel end- prevenl their access Lo Netflix altogeth- points." Order 1' 27; see id' lln 15' 350' Lr-in an effort to steer customels to the They "display no '. ' intent to convey a competing video-streaming ser- ISP's own provision" of internet ac- an ISP, again having -".rug. in theil vice. Alternativeiy, be necessary "to its customers cess, 'ld. 11 549, as would heid itself out as affording into play"' to internet conLent' bring' the First Amendment an unfltltered concluit 404' 109 (or: Tenas u. Johnson,491 U'S' 397, could block them from accessing signif- s.ct. 2533, 105 L.trd.zd 342 (1989)' icantiy delay their ability to load) Lhe WaLL providers" Street Jou'nta\'s or the Netw Yorlc Ttmes's In particular, "[b]roadband that theil website because of a disagreement with subject to the rule 'lrepresent users to access the vieq's expressed 0n one or the other services allow lnternet end all content on the Inter- siLe. all or suLrstantially blocking, or edito- Arnendment right net, uith'out alteration, An ISP has no First (emphasis No rial i.nter"uention." Id. '11 549 to engage in those irinds of practices' Customers, "ir turn, expect that Sopt*" Court decision suggests other- added). they can obtain access to all content avail- wise. Indeed' although the two dissenting US TELECOM ASSOCIATION V. FCC 389 Citea855 F.3d 381 (D.C'Cir' 2017) fqom her ISP if it leneges on its able on the Internet, without tlt'e editoria'l away blocking her access to ittteruention of their broadbond prouider'" representation by Id. (emphasis added). Therefore, as the select content. See id.1l1l 80-82, 97-99. The that a subscriber panel decision held and the agency has agency further explained have no awareness of her ISP's confirmed, the net neutrality mle applies might well the first place: she only to "those broadband providers that plactices of that kind in have no reason to suppose that her holcl themselves out as neutral, indiscrimi- may access a particular application, nate conduits" to any internet content of a inability to the markedly slou'speeds she con- subscriber's own choosing. U''S' Te\ecom or that when attempting to use it, derives Ass'n,825 F'3ct at 743; see FCC OPP'n fi'onts ISP's choices rather than from Pets. Reh'g 28-29. from her some cleficiency in the application. See id'. F or a broadband ISP that holds itself li1t 81, 99. After all, if a subscriber encoun- to consumel's as a "neutral, indiscrimi- out ters frustratingly slow buffering of videos conduit"-i.e., as a pathway to "all nate when attempting to use Netflix, why would on the Internet' without alteration, content she naturally suspect the fault lies with or eclitorial inter-vention," Olciel' blocking, her ISP lather than in'ith Netflix itselfl It 549-Lhe rule reqniles l,he ISP to abide net neutrality rule applies to by its representation and houor its custom- While the hold themselves out as ers' ensuing erpectations. The ISP tliere- those ISPs that indiscriminate conduits to intelnet fore cannot block its subscriber-s' access to neutral, is also true: the rule certain websites based on its own prefer- content, the converse to an ISP holding itself out ences. Nor can 1t, engage in "throttling," does not apply other than a neu" which, while stopping short of outright as providing something pathway-i'e., an ISP blocking, degrades a user's expei'ience tral, indiscriminate to potential cus- with seiected content so as to render it making sufficientiy clear plovides a filtered service largely, even if not technically, "unusable'" tomers IhaI it of tleditorial Id,. n fi. Nol can an ISP cteabe "fast involving the ISP's exercise For instance, A1a- lanesl'favor{ng content providers who pay intervention." Id. n 549. provid- the ISP (or with whom it has a commercial mo Broadband, the lone broadband chal- affiliation), while relegating disfavored er that raises a First Amendment posits the example of an (i.e., nonpaying) proviclers to "slow lanes'" Ienge to the rule, provide access solely to Id". \11 tB, 126' Like blocking and throt- ISP wishing to Alamo Pet. tiing, paid prioritization practices of that "family friendly websites." long as it t'epre- variety are incompatible with a promise to Reh'g 5. Such an ISP,'as editorial inter- provide a netltlai, indiscriminate pathway sents itself as engaging in fali outside the to content of a customer's own choosing' vention of that kind, would rule. ,Sea U.S. Tekcon'L Ass'n,825 F'3d at The upshot of lhe FCC's Ordel there- 743; FCC Opp'n Pets. Reh'g 28-29; FCC fore is to "fulflll the reasonable expecta- Br. 146 n.53. The Order thus specifies that tions of a customel r,vho signs up for a an ISP remains "free to offer 'edited'ser- sen'ice that promises access to bloadband vices" without becoming subject to the all of the lalvful Internet" without editorial rule's requirements. Order 1T556. intervention. Id. 1l1T 77, 549' The FCC an ISP that offers found that, once a consumer subscribes to That would be true of by block- a particular broadband service in reliance subscribers a curated expet'ience a specified field on such a promise, she faces high switching websites ilnng beyond (e.g., family friendly websites)' ing costs constraining her ability to shift of content 390 855 FEDERAL REPORTER, 3d SERIES

Ib would also be true of an ISP that en- rather than indiscriminate internet ae- gages in other forms of editorial interven- cess-despite the potential effect on its tion, such as thlottling of certain applica- subscriber base-it could then bring itseif tions chosen by the ISP, or filt'ering of outside the rule. In that sense, the rule content into fast (and slow) lanes based on could be chatactertzed as "voluntary," 'itz- the ISP's commercial interests. An ISP fra at 429-30 n.B (Kavanaugh, J., dissent- ivould need to make adequately clear its ing), but in much the same way that just intention to provide "edited services" of about any regulation couid be considered that kind, id. Il 556, so as to avoid giving voluntary, insofal as a regulated entity consurnel's a mistaken impression that could aiways transform its business to they would enjoy indiscriminate "access to such an extent that it is no longer in the all content available on the Internet, with- line of business covered by the regulation. out the editorial intervention of their Here, it v'ould be no small matter for an broadband provider," id. II 549. It would ISP to decide to present itself to potential not be enough under the Ordel', for in- customers as providing a fundamentally stance, for "consumer permission" to be different product-an edited service-than "buried in a service plan-the Lhreats of the neutral, indiscriminate access general- consumer deception and confusion are sim- Iy prornised by ISPs and expected by con- ply too great." Id. 11 79; see id. II I29. sumers as standard service. No ISP has There is no need in this case to scruti- indicated in this court a desire to repre- nize Lhe exact manner in which a broad- sent itself to consumers as affording thern band provider could render the FCC's iess of a "go wherever you'd like to go" Order inapplicable by advertising to con- service and more of a "go where wa'db,ke sumers that it offers an edited serwice you to go'l service. Accordingly, Aiamo rather than an urfilteled pathway. No Broadband; the only ISP to raise a First party disputes that an ISP could do so. if Aanendment claim, makes no argument it wished, and no ISP has suggested an that it hoids itself out as offering filtered interest in doing so in this court. That access to web content, as opposed to offer may be for an undelstandable reason: a ing an indiscriminate pathway to any con- bi'oadband provider representing that it tent of its subscribers' own choosing. AIa- will filter its customet's' access to web mo nonetheless claims a Filst Amendment content based on its own priorities might entitlement to filler its subscribers' access have sei'ious concerns about its ability to to web content through blocking, throt- atLracL subscribers. Additionally, such a tling, and paid prioritization measures. provider, by ofl''ering filtered rather than Alamo contends, for instance, that a indiscriminate access, might fear relin- broadband provider has a First Amend- quishing statutoly pt'otections against ment right to provide faster access to its copp'ight iiability afforded to ISPs that own video-streaming service than to a act sh"ictly as conduits to internet con- competing product. Afamo Reh'g Pet. 9. If tent. See 17 U.S.C. $ 512; I?,ecorcl;i'ng In' so, an ISP could similarly afford fast-lane d,u,s. Ass'n of Am., Inc. u. Verizon Inter access (because paid to do so) to a parlicu- net Serus., Inc., 35I F.3d 1229, 1233, 1237 lar selvice that sells tickets to concert (D.C. Cir". 2003). events while degrading access to Ticket- In the event thaL an ISP nonetheless master,. even though a customer might lose were to choose to hold itseif out to con- out on preferred seats while waiting for sumers as offering them an edited service Ticketmaster to work. The same wouid be US TELECOM ASSOCIATION V. FCC 391 Cite as 855 F.3d 381 (D.C. Cir' 2017)

ti'ue of measut'es favoring (or disfavoling) The Supreme Court ultimately upheid speciflc ride-sharing applications (e'g', the must-carry obligations. In the process IJber), lravel websites (e.g., Expedia), or of doing so, however, the Court recognized aboutwhich vicleo-chat services (e.g., Skype), potential- f,hat a cable operator's choices its channels im- ly causing customers, respeetively, to wait programming to carry on protections. longer for rides, to miss oul, ou flight res- piicate the First Amendment's cable operator engages en ations at fales available for a iimited That is because z activity period, or to fail to connect with family or in protected Filst Amendment "exercisIes] editorial discretion friencls for face^to-face interactions' A-lter- when it or programs to include natively, the ISP could simplv blocir access over which stations Broad.,512 U.S. altogether rather than merely slow it in its repertoire." Tutner 636, 114 S.Ct. 2445 (internal quotation down. at marhs omitted). those situations, an ISP would In all of The same cannot be said of broadband offering its custom- have held itself out as providels subject to the FCC's Order. access to all internet con- ers unfiltered Whereas a cable operator draws the pro- prevent them from tent, but then would tections of the Filst Amendment when it otherwise impair bheir abili- accessing-or exercises editorial discretion about which disfavor:s' ty to use-selected content it programming to carry, an ISP falling with- does not glve an The First Amendrnent in the net neutrality rrrle leplesents that it present itself as affording ISP the light to gives subscribers indiscriminate access to pathway but then a neutral, indiscriminate internet content without any editorial in- FCC's Order conduct itself otherwise. The tervention. Cable operators, that is,' en- with requires ISPs to act in accordance gage in editorial discretion; ISPs subject their customers' legitimate expeclations' to the net neutrality rule represent that Nothing in the First Amendment stands in they do not. The very pt'actice bringing the way of establishing such a requirement cable operators within the fold of the First rule' in the foirn of the net neutrality Amendment's protections is inapplicable in providers subject to Contrary to our dissenting colleague's the case of broadband the net neuh'ality rule. argumeut, the Supreme Court's Tut*n'er Bt'oacl,c,asting decisions do not grant ISPs For that reason, our dissenting col- a Irirst Amendment shield against the net league gains little by emphasizing that the neutrality ruie's obligations. See infrrt' at' same cable operators recognized to have 427-28 (I(avanaugh, J., dissenting). Those Irirst A.rnendment' interests at stahe in decisions arose in a marhedly different Tur'ruer Broa'dcasting also serve as broad- context. They addlessed the vaiidity uuder band ISPs. See infra aL 428 (Kavanaugh, the Fit'st AmendmenL of statutory "must- J., dissenting). Our colleague thinks it en- carry" r'equirements calling fol' cable tele- tirely illogical to conclude that those enti- vision operators to "devote a poltion of ties receive tr'irst Amendment protection their channels to the transmission of local when transmitting television prograrnming broaclcast belevision staLions." Tu'rner under must-cany obiigations but not when the Broacl. Sys., Itt'c. u. FCC,512 U'S. 622,626, transmitting internet content under 630, 114 S.Ct. 2445, 729 L.Ed.zd 497 net neutrality rule. The distinction be- (199a); see Tuttzer Broa'd. S?s., Inc- a' comes entirely understandable, however' Ircc, 520 u.s. 180, 117 s.ct. 1774, r37 upon recognizing Lhzt cable operators ex- L.Ed.zd 369 (1997). ercise editorial discretion in the fot'mer uolldaJuoa asol Jo lsJrd Io "11 'lJnoa slql uI uoIl€zIJoJ luaupuaury s'ccd aqr aq o1 sar'iaa'red aLI ?€qit'' sBq-pu"qp€oJg 1t u*o" u3 sv QErel\J 1?ql pau4uiasp .j".rp-t .o-8ou1ot 'rno 'olduexa Surpnlaui-arnj nqr' o+ liarqns rourn'L OuI€ff ol s'rnpuoras€a slql o1fun4snc'pnor'g dSI ou pue '1ua1uo' 1u.l'"i* a1?ururrJcsrpur,l.e.qnoris€sa^lasiuoqlluaslodqgqzrllddeuraql-opdlluapu'asa^lasaiq"e s?-spu€?srapun fpro saqc{de alnr aql iffii -a"rcla.r Trql scls1 o1 "'oi*"oo pu€ '1ser1uoa'(q'a'rop1'n"ta*t'pdlqeurnsa'icI"t'o""to'{er'ru11e;qpual''ra'taltoq'sluaut.1u.1..o' lauJalul alllo-Iq? .uraql .,o.xn,.,o1a€J€rlJ B _n8.rt osoqJ plno/d daql suorFalo'rd luoupuourv 'o ue 'Bur-ra1 r1ao1q rtaql uaqr' esodur o, ,.,uno, ,tru.b, 31 slsal 6t't'z qans rraril 01 q+i^ srapi'rord pt'"qp*otq ron 1noq1r^ urro;121d l.qJ'-,r-'p*o*g s1q ur1'4 3u1 lrJ l"r.rolipo ,1e.r1nau Srqprogz rau)t1xJ1"i11 1";1tq ssaac€ olBurlurrrsrpur _1e pa*nosse Jo roqurnu ..rrrrr*c uoururoa ;";*" iun*o3tn lno sa^lasuroql ploq'1*'.11 paJoplsuoalouaJ€..451ponqp€oJqq1iA"".+""'"'aarr-SealioaSutluassrpJno('aln'r luarmc aql 'salu?d'ulo'*ltoq1 asnecaq l.red 1s"4uoc uI o3ro; o1 uolslcap s1I .^I Toddng ui uoilaafqo r{c1s ,{u rn aq rteur ?€qJ ;;,J..u'J. o1 '(Surluassrp ''1' 'q3neuer'eH) .rg sn'urv uor*laossv 1nri.1u1_rr5l*:i -",:,r:"* rtluo onora n't{uz oos 'suorlt8riqo '(111e'i1nau slql ul alnr aq1 .rroa"t'nt +eul L 1o- 6t rev stl1lJa1 lnoqe surocuot luaurpuaurv raqluau € sr auo ,";;;;";uoa in" *io*t"d Jp'nrru'p'n" t"Iu:dT:' pas!€r a^€q 'teur vrcN -1€qr) -Ior rno arzqs 1ou ,t'on d111t;r1nou lau .(Euquassrp-','r"q3neu€^€X) 88? l.Iro!.pip asoql rapun 41ru asoqJ aiq€In uo11aa[qo ]uauipuaurv ls4d ,62? n4tuz aag.r*"i1 ,t"ro1eunrn.rc.Il"o: elqec ]e "Ut'd f,11ua;redde s'ro1e'rado uo ,t'n"ntu'Jin"ro*ojto 1o"t* ol'*no'""cl aq? ?ualuor 'o p Ou'ltotyoo"Lg "LouJnJ }o 01 ,nozrury s? L{rns"ar31d1a4,reur l"lt11: ,.+ spuslsrap pue 'r4 "".i.ptnq1 u?I{1 'ral?aq -uloa posn dlapyl, f ia* "uoio* ,al3ooc " " "q"1,"011q,"*'*1-'-t]:]1 -1r,rtr1 '{ooqa'"d.n l* t,t:1"::iii::t"*l;T,i,;;.{itrffi"# aur's ;lH':"J 'sdnaurl JIoq? :llhfnn':'fi:'fiffi,l-"".-Hi"*Fuiluessip .rng 'a-reqli:i['1*[rit::"i lal lauu€qa ur srJo asu$a)irr an-Beagoa nrni uorsu'aia1 aql "q1 o1 5r4ruurtr8ord 'r{-ioaq1 ;';p"l:"I lsrld ' Furlealas'until ftinpt" ]uaurpuaurv s'rolerado alq'a 1€ql ,,JIos'r.roJrasn,'t1ou'rt'toaq1 ""on'"iJi'uopt'""t; palaalf'rd ui a3eFua 01 slunoul? l"qJ '6uz\sntyno*g nof ;t,, LI€ i'oog aqq pap€l1srad vrcN qr o1 rapr'ro'rd aql Surploq *"""';;; 'TilkT::;'* -cla.r aql -:y'+;: ou sasod ?uo*,puatuv rs4'{ ''*'Th i:3-':5rt-::i? qaft\ o? SSaJ'€ oJ€u D /r IIr!\o JIaqJ J0 ?uoluo' "iffi ,r*.n,,u,, Eripp''{i: -,urrresrpur r'ullr.lsnr g*,*U':il:'*1.ltl;.:i#:f?: pu"qp€orq nastrI sploq 'rapu'o"rd " "iH ;l;;;;;; sn zlt:?rll,cs .auo,P ar.zq.io) a,req daql Wq^ -]-11 ..";;;; 'TI'l'Ile (lort D 1r uor uu*t"opnpossvuols{n'€f€Jalqec (lou a^€q :o) aneq sdSI l€I]1vr 1ou 'pzns il'; *.o4 sirals u,,€ic luaurpneurv "|il,l ol ""n ruW::'#""T1;:tJi}#*?*alq€a Jo saoqs aql lo {rBI aql's'raqircsqns tt:t":: j,""T ditit"".";a'''srolzrado " oq1 .aur'ra1p.J dlaa'sae uo"rJ aq1 'nu14sylqoo"Lg "Lou Jualuoc lauralui ;;;;;;";. .{'td .8uruie4a; dq s1q31;r 1ua[ipuaur/ l;Ti;"rlcuIlsrp* t']"pn11n,1ry.r" tt""t"l;o:::]::l* alq€r aql 'paopu1 rraqt TS'I a^€q sdSI l"q? lou JJ,.#"u*'s.rolerado""^-t- ou sesl?.r lsrroJ luaupuaurv ?s.nd "t"+.jtltl11"nu .ral1"l aql ur uorlue^-ra1ul rmulas'lp lnq uorl"nlis J; T"':rfri:;*Ili;': -rpa ro """'*'dut t:;run;) -tto6oG aVUUOg'{ 998 SflI?{flS pt 'ugJUOagU US TELECOM ASSOCIATION V. FCC 393 Cite as 855 F.3d 381 (D.C. Clr. 2017)

The leal siippery-slope concerns rull in F'or all of those reasons, broadband the rerrerse direction. Under our dissent- ISPs have no Filst Amendment entitle- ing colleague's approach, broadband ISPs ment to irolcl thernseives out as indiscrimi- $/oLlld have a trilst .Antendment entitle- nate conduits but then to act as something ment to block and throttle content based different. The net neutraliby ruie assures on their o\ m commercial preferences even that broadband ISPs lirre up lo their prom- if they had led customels to anticipate ise to consumers of affording them neuti'ai neutlal and indiscliminate access to all access to inter-net content of tliefu: own internet, content. There is no apparent rea- choosing. The rule, ir doing so, does not son bhe same conclusion would not also infringe the First Lmendment obtain in the case of telephone service, which, Iike broadband ser-vice, is classified Bror.r'n, Oilcuit Judge, disser-rting from rehearing en banc: as common calriage. the denial of An independent federai agency sits at Imagine if a teiephone provider held the intersection of Lhe road to the White out as an indiscriminate conduit for itself House and Coristitution Avenue. Two stat- phone comtnunications but wished to block ues that capture struggle between man irnpair access to select endpoints based or and horse flank the agency. The slatues the provider's own editorial prefer- on are called "Man Conh'oiling Trade," and telephone company might, for ences. A they clepict a man, the gover'runent, re- example, restrict access to certain num- stlaining a hoLse, tlie rnalketplace. Tliough on political affiliation or other bers based the statues lool< similar, they are not the The company would have an enti- criteria. same. On the Presidenl's road, the horse- do so under our coileague's tlement to the marlietplace-iool

$ 230(b)(2) (emphasis added). For nearly ney to become the F ederal Cyberspace u'hat the two decades, the federal government re- Commission. As that is exactly spected the Act's dereg'ulatoly poJicy' Court's Opinion does, I respectfully dissent Presidents enfolced it, Congresses did not from the denial of rehearing en banc.r alter it, and the Feideral Communications Commission ("FCC" or the "Commission") I. gave the Internet only a light-touch regu- The Act's Deregulatory Structure lation. When FCC reguiation went beyond a Iight touch, this Court intervened' See Congress passed the Telecommunica- Verizon u. FCC, ?40 F.3d 623, 629-30, 650- tions Act of 1996 lo amend the Communi- 59 (D.C. Cir.2014). However, the legulato- cations Act of 1934, and in doing so' pro- ry proposal now before the Court seeks to t6ct the innovaLion animating the Internet. end this longstanding consensus' See Telecommunications Act of 1996, Pub. ("An When the FCC followed the 'Verizon L. No. 104-104, 110 Stat. 56 (1996) and reduce "roadmap" to implement "net neuh'ality'' Act ltlo promote competition prices principles u'ithout heavy-handed regulation regulation in order to secure lower of Interrret access' the Obama administra- and higher quality serwices for Amer"ican tion intervened. Through covert and overt telecommunications consumers and en- new Lele- measllres, FCC was pressured into reject- courage the rapid deployment of ing this decadeslong, light-touch consen- communications technologies."). The Act and other interac- sus in favor of regulating the Internet like found that the "Internet flourished, to a pubiic utility. This sea change places the tive computer services have a mini- Commission in control of lnternet access' the benefit of all Amertcans, witlt' G. Nagesh & B. Mullins, Net Neutrality: ruum of gouernnzent regulation." 47 U.S.C. How White House Thwarted, FCC Chief, $ 230(aXa) (emphasis added). Accordingly, "un- War.r Sr. J. (Feb' 4,2075). Congress rnade keeping the Internet fettered" by "r'egulation" our national poli- Abandoning Congress's clear, delegula- cy. Id,. $ 230(bX2). Achieving this policy tory policy does more than subject Inter- required a commitment to deregulatorl net access to a regulatory framework fit toois and standards. The Act provided ex- for the horse and boggy. The tr'CC's statu- actly thab. tory rewrite relegates the Constitution's vital separation of powers framework Lo "a mere parchment deiineation of the bound- A. a hollow guarantee of liberLy' See aries;" Internet Access As An Informatiott' No. 73 (Hamilton), p' 447 THp Fpnsnrrltst Seruice (Clinton Rossiter ed., 1961). If we take the exPlained, the C onstitution's s tructulal restraints s erious- As the Supreme Cout prior prac- ly, we cannot wish the Commission bon i996 Act, incoiporated FCC's services," aoAage on its Presidentially-imposed jour- tice of distinguishing "basic

were filed in 1. The Judges concurring in today's denial of The motions to rehear this case rehearing note "[t]he IFCCI will soon consid- August of last year when rehearing would er adopling a Notice of Proposed Rulemaking certainly have been appropriate. Moreover, that u,ould repiace the existing rule with a regardless of any futr-rre FCC action, the markedly different one." Concurral at 382' broad implications of this Court's Panel Opin- For this reason, they consider en banc review ion remain; Supreme Court involvement may "particu-larly unwarranted at this point"' td' yet be warranted. Of course, en banc review is not now at issue' US TELECOM ASSOCIATION V. FCC 395 Cite as 855 F.3d 381 (D.C. Cir. 2017)

which are provided by "telecommunica- iess, "given the fast-moving, compel,itive dons services," and "enhanced services," market" in which fenhanced selices] were which are provided by "information ser- offered," the F CC clid not subject Lhem to' vices." See Na'tional Cabk & Telecommu- common carrier regrilation. /d. ttications Ass'n u. Brund X Internet Ser- Just so, when Congress exempted "in- uices, 545 U.S. 967, 975-77, 125 S'Ct. 2688' forrnation services" from common can'ier 162 L.trd.zd 820 (2005) ("Brand X'). regulation in 1996, it followed the FCe's "These hvo statutory classifications origi- Iongstanding course. See id. zL 992, 125 nated in the late 1970's, as the Commission S.Ct. 2688 ("Congress passed the defini- developed rules to regulate data-process- tions in the Communications Act against ing serwices offered over telephone wires." the background of this regulatory history, Id. at 976, 125 S.Ct. 2688. and we may assume that the parallel terms "Basic services," the analogue to the 'telecommunications service' and'informa- 1996 Act's "telecommunications services," tion service' substantially incorporated were defined as "a pure transmission capa- their meaning, as the Commission has bility over a comrnunications path that is held."). The statute says "interactive com- vir-tually transparent in terms of its inter- puter service" includes "any" provider of achon with customel supplied infonna- "information service," and "specifical\y a tion." Id. "[NJo com,puter processing or service or system that provides access to storage of the informatian"' 'u)a,s part of the Internet." See 47 U.S.C. $ 230(fX2) (emphasis "baszc sertic6," "othet' than the process- added). The Act also specifically ing or stolage needed to convert the mes- exclud,es "telecommunications selices" sage into electronic form and then back from the definition of "Internet access ser- g into the ordinary language for purposes of ice;' Id,. 231(e)(a). transmitting it over the network-such as Unsurprisingly, the Act's definition of a telephone or facsimiie." 1d. (emphasis "inforrnation service" fits broadband In- added). The FCC, and then Congress in ternet access like a glove. "fG]enerating, 1996, subjected these "basic services," acquiling, storing," or "making available these "telecommunications services," to information via telecommunications" is comrnon carrier regulation. 1d what users do on social media websites like Facebook. See id. 153(24). "[T]rans- "Enhanced selvices" are the analogue to 5 forming" "utilizing" "information via "ilforrnation selices" in the 1996 Act, and or telecommulications" what users on they are not subject to common cartier is do YouTube. See id. "[Alcquiring, storing," regulation. Id,. at 977,725 S.Ct. 2688. The and "retrie,.ing . . information via tele- Commission historically defined "enhanced . communications" is what users do with selices" to be those whele "computer email. See id,. The "off'ering of a capabili- processing applications [were] used to act ty" for engaging in all of these activities is on the content, code, protocol, and othel exactly what is provided by broadband In- aspects of the subscriber's information," ternet access. See id. like voicemail. See id. at 976-77,725 S.Ct, ,.r'ith 2688. The regulabory rub "enhanced B. service," as it is here with Internet access, is that it may be "offered via transmission Autltortf.g To Forbear Burdensome wires" that, themselves, may constitute a Regulatzons "basic" or "telecommunications service." Before the 1996 Acl, trCC sought to See id. at 977,125 S.Ct. 2688. Neverthe- dereguiate aspects of the telecommunica- 396 855 FEDERAL REPORTER, 3d SERIES tions inclustry on its own autholity. But, its $ 332(c)(2) (emphasis added). Section 332 assertions of inherent power to "forbear" specifies oni.y a commercial mobile serwice common carrter regulations engendeled (or a "functional equivalent") can be sub- judicial skepbicisrn. Sae, e'g., MCI TeLe- ject to common carriel regulation. Id. cornns. Corp. u. AT & T, 5I2 U.S. 218, $$ 332(cX1)(A), (cX2), (d)(3). "Private mo- 234, 774 S.CL.2223,129 L.Ed.zd 182 (1994) bile service," in contrast, is "any mobile ("iTlhe Commission's desire to 'increase service" that is not a comtnercial one, and competition' cannot provide [it] authority it may nol be regulated as a common to alter the well-established statutory filed carriei:. See i.d. $ 332(d)(3). Section 332 rzte requirements.... lSluch consider- defines "commercial mobile serice" as a ations address themselves to Congress, uot mobile service "provided fol profiL [that] to the courts"); AT & T u- FCC, 97B F.zd makes interconnected seiwice available [to 72'1,796 (D.C. Cir. 1992) ("We understand the publicl." 1d. $ 332(d)(1). The section fuliy why the Commission wants the flexi- then defines "interconnected service" as a bility to apply the tariff provisions of the "service that is intelcounected with the Communications Act. . . . But the statute, public switched netrvolir (as such terrns to as lye have interpreted it,. is not open are defined by legulation by the [FCC] )." the Commission's construction. The Com- /d. $ 332(d)(2). The FCC-until the Order mission will have to obtain congressional at issue here--.alwags defined "intercon- sanction for its desired policy course."). nected seryice" as "gir'[ing] subscribers gave Heeding these admonitions, Congr"ess the capabilitv Lo commuuicate . . . lwith] FCC statutoi'y authority to forbear com- all other users on tlie public switched Act. mon carrier regulations in the 1996 nebwol'k." See 47 C.F.R. $ 20.3 (1994) 1996, Pub. See Telecommunications Act of (emphasis added). "lTlhe public switched L. No. L04-704 S 401, 110 Stat. 56, 728 network" was, in turn, defined as tire (entitled Forbearance" (1996) "Regulatory "common cariier switched network into the Commu- and inserting this section that use[s] the North American Number- I). Logically, forbear- nications Act's Title ing Plan." Id. ln other words, "the public for lesseniag common catrter ance is a tool switched nehvork" is Lhe telephone net- regulation, not expanding it. wor'Lr. Though it is legisiative history, the The authority to forbear regulation is 1996 Act's Confei'ence Report buttresses limitecl to ceitain cifcumstances. F CC is this texbual r'eading. See H.R. Rep. No. only perrnitbed to forbear when it has 103-273, at, 495 (1993) (charzcLerizing the shown the common carriage provisiotr is House version of Section 3:32 as intercon- not needed: (1) to ensure just and reason- nection with 'ithe Public su,ttched tele- prices and practices; or (2) to protect able lthotza networli," even as both the Honse consumers. Forbearance must also be in and Senate vet'sions of Section 332 re- the pr-rblic interest. See 47 U.S.C. {i 160(a). ferred to "the public switched network") (emphasis added), reptin'ted in 1993 C. U.S.C.C.A.N. t0BB, 1184. Moreovet', M obile Broa'dband Cannot $ 332(dX2) refet's to one neLworl<: "the Be Common Carriage public switched uetworlt." In other wot'ds, The 1996 Act also ensured providers of the fact that another networh qan connect mobile broadband Internet access "shall to tlie lelephone netwoli< does nob make not . . . be treated as a common carrier that other netu'ork part of "the public for anA purpose." See 47 U.S.C. switched netl4'orl(." US TELECOM ASSOCIATION V. FCC 397 Cite as 855 F.3d 38r (D.C. Cir. 2017) II. This unpar:alleled success [in Internet accessl has emerged in the conbexl of FCC Practice Preserued, The Free policies that favor malhet forces over Market For Internet Access government regulation-promoting the is bizarce that the FCC ls now disput- IL gr owth of innovative, cost-effective, and the notion that Congress would "ating diverse quality serwices. It is this so"me to settie the regulatory status of tempt yro-com,petitiae mandate tlmt is at the Internet access services" with broadband heart, of the 1996 Act.... Simply put, 1996 Act. See Op. 410-11' Barely more the Congress has not required the !'CC to a year after the 1996 Act, Congress than prepare and submit a Repolt on Univer- charged the FCC with assessing "the defi- sai Service that alters this successfui information seruice' . . . [and] nitions of and historic policy. Moreoaer, wet'e the service"' in the Act, 'telecommunications FCC to reaerse its prior csnclusions and and "the application of those definitions to sudd,enly su,bject son'Le or all informa- rnixed or hybrid services including tion seruice proaiders to telephone regu- with respect to Internet access." See Icttion, it seriously would chill th,e Dep'ts of Commerce, Jristice' and State, growth and deuelopment of aduunced the Judiciary, and Related Agencies Ap- sc'iences to th,e detrtment'of o'ur.econovn- propriations Act, 1998, Pub. L. No' 105- ic and ed,ucational zueLl-being. 119, $ 623, 111 SLat. 2440, 2521 (1997). Some have argued Congress intended What is this but inquiring into "the regula- FCC's implementing regulatory status" of Iuternet access in the 1996 that the expanded reclassi$r certail Act and whether Congress was satisfied tions be to inforuation service ploviders, specifical- with its scheme? ly Internet Ser.vice Providers (ISPs), as The Commission's report, kno\am as the telecommunications carliers. Rath,er (Jtti,uet"sal Serui,ce Report, made several than expand regulation to new seruice conclusions confirming the te>'t, history, proaiders, a criticul goa| ofthe 1996 Act and'structule of the 1996 Act properly was to diminislt regulatoty bu'dens as classified Internet access service as "infor- cowryetition grew. Significantly, ihis goal mation serwice." ,Sae, e.g., tr'ederal-State has been the springboard for sound tele- Joint Board on Universal Service, Reporb communications poiicy ttu'oughout the to Congress, FCC 98-6'1, 13 FCC Rcd. globe, and underscores U,S. leadelship 11501, ii513-14 11 27, r753H0 llIl 74-82 ' in this area. The FCC sho'uld, not a.ct to (1998) (hereinafter Uniaersal Seruice Re- alter tlt is approanlt. pofi). In this leport, the FCC also en- dorsed the view of five Senatols sa)'rng Letter florn Senators John AshcrofL, Wen- "[n]othing in the 1996 Act or its legislative dell Ford, John I{erry, Spencer Abraham, and Ron Wyden to the Honorable Williarn history suggests I I Congress intended to alter the current classification of Internet E. Kennard, Chail'man, FCC (Received and other information services or to ex-- Mar. 23, 1998), http://apps.fcc.govlecfs/ pand traditional telephone regulation to documenVview?id:2038710001 (emphasis new and advanced services." Id. at 11520 added). l1ll 38-39. As tlie Senatols' view parallels The FCC heeded the Uniuersal Set-uice the conciusions leached within Lhe Uniuer' Report's conclusions in subsequent Ordels. sal Seruice Report, and their view is qilite In its Ad,uanced Seruices Order, the FCC prescient, lheir ietter is u'orth quoting at characterized the "last mile" of Digital length: Subscriber Line services (DSL serwices), REPORTER, 3d SERIES 398 855 FEDERAI dered an integrated "information sei'r or "broadband Internet service furnished it confirms, again, what is of rele- over telephone lines," as a "telecommuni- vice." This here: the fact that an "informatiol cations service'" See Vetizon, 740 F'3d at vance access, has "Lele- 630-3i (citing In re Depio;rment of Wire- service," like. Internet services" among its com- line Services Offering Advanced Telecom- communications not per se make it n munications Capabitity, 13 FCC Rcd' ponent parts does (1998) seruice'" The Cable 24012,24014 11 9,24029-301T1T 35-36 "belecommunications in Bran'd X' ("Ad,uonced, Seraices Ordet''))' But' the Broad,band, Order was at issue Ad,aanced' Seruices Ord'et" specified the last-mile transmzssiom between the end A. user and the Internet Seruice Provider is distinct from the "enhanced service" of Brand X is access itself. "The first serwice Internet In Brand' X, the Supreme Court left the serwice (e'g', the ' ' a telecommunications FCC's "inforrnation setwice" classification transmission path), ancl Lhe second service of cable-provided Internet access "unchal- is an information service, in Lhis case In- lenged." See 545 U.S- at 98?-BB, 125 S'Ct' ternet access." See Ad'uanced Seruices Or- 2688. Brand'X also acl

"the nature of the functious the end user'.ts Linuing the analogy, no member of the offered" was Internet access, an informa- Brand, X Court disputed that the pizzeria don serqice-rendering the classification malces pizza. FCC would confirm that proper. See id. at 9BB, 125 S.Ct. 2688 (em- nothing in Brand X rendered Internet ac- phasis added). The presumption here is, cess itself a "telecommunications service." under the 1996 Act, Internet access is See Appropriate Frameworh for Broad- information serrice. band Access to the Internet Over Wileline Brand, X cannot be read to render Facilities, et aL, FCC 05-150, 20 F CC Rcd. 11 (2005) ("Internet broadband Intelnet access a "telecommu- 14853, 14862 12 access nications service." As the Supreme Court serwice is an information seruice"). said, "the entire qz,rcstion lin Brond Xl is whether the products here are functionaily B. functionally separate." Id'. zt integlated or Recla,s siJt cation and Verizon 997, 725 S.Ct. 2688 (emphasis added). In The FCC repeatedly affirmed the Act's other r,vords, does the fact that cable mo- deregulatory approach toward mobile dem service clelivers the "information ser- broadband Internet access as well. In vice" of Internet access through z "tele- 2007, the Commission said "mobile wire- communications service" rencler the two less broadband Internet access service services one "offer" of "infonnation ser- does not within the definition of 'com- yrce?" Or, is there one "oIfer" of "telecotn- fit mercial mobile service"' because it is not munications serryice" in the tlansmission an "interconnected service"-it connects to and one "oifer" of "information serwice" in the Internet and not the teiephone net- the Internet access? To channei Justice Sae Appropriate Regulatory Treat- Scalia's BrancLX pizz;eria analogy, the work. ment for Broadband Access to the Inter- Brand, X majority found cable modem ser- IrCC 07-30, vice a single "offer" of "information ser- net'Over Wireless Networks, 22 FCC Rcd. 5901, 11 4I,59L7 (200T.2 vice," or a pizzeria's single "offer" of pizza 5916 The FCC reached the same conclusion in and pizza delivery. Justice Scalia, in con- 2017. See Reexamination of Roaming Obli- h'ast, thought cabie modem service con- gatibns of Commercial Mobile Radio Ser- tained "offers" of "teiecotnmunications" and "information" sentices, respectively, vice Providers and Other Providers of Mo- Data Services, FCC 11-52, 26 FCC or separate "offers" of "pizza delivery" and bile Rcd. 5411, 5431 11 41 (20i1). doing so, "pizza." lVo member of the Brand X CourL In Commission confirmed rnobiie bload- disputed that u,hat, occurred at the Inter- the band's as outside common carrier net Service Proviclers' computer-process- status ing facilities constituted an "information classffication. selice." See 545 U.S. at 997-1000, 725 This Court was equally consistent about S.Ct. 2688; see also id. at 1009-11, 125 the statris of mobile broadband Internet S.Ct. 2688 (Scalia, J., dissenting). Or, con- service. In Cellco Partnersltip u. FCC,700

2. Importantly, one of the t-easons the FCC band Internet access service . . . should not saw no sense in classifying mobile broad- be ... subject to ... common carrier obli- band as "commercial mobile service" is the gations . . . is most consistent with Congres- "internal contr:adiction rvithin. the statutolJ sional intent to maintain n regime in which scheme" doing so would create with thc information seruice providers are not subject status of Internet access as an inlormation t:o Title II regultttions as commoTx caniers.") service. See 22 FCC Rcd. at 5916 fl 4i (emphasis added). ("Concluding that mobile wireless broad- 3d SERIES 400 855 FEDERAI RDPORTER,

Rule- F.3d 534 (D.C. Cir. 2012), this Court said Veri.zotz)." See Notice of Proposed Rcd. 5561, Section 332 provides a "statutory exclusion making, FCC 14-61, 29 FCC Tom of mobile-internet providers from common 5647 (2014) (staternent of Chailman FCC-- carrier status." See id. at 544' When the Wheeler). No statement from the intervened, that tr'CC attempted to treat mobile broadband until after the President felt Iil

("Ordef') fl 396 (f'eb. 26, 2075). By 2020, or- slorn'ing Internet sen'ice cloum, id. according to the FCC Chairman, this could ll 119; blocking access to certain Internet amount to 50 biilion interconnected de- content; and on individualized negobiation vices. See, e.g.,Remarks of FCC Chairman of Internet access between content ou/ners Torn Wheeler, Iriternatioiral Instilute of and Internet Sen'ice Providers (called Communications Annual Conference (Oct. "paid prioritizztion"), id. Il 125. Some prac- 7, 2015), https ://apps.fcc. gory'e do cs-public/ tices are explicitly left fbr the FCC to attachmatch/DOC-335877A1.pdt'. This vast address in the future, like not charging power comes frorn tn'o different, buL relat- end custotners for the data used by cettain ed statutory reclassifications. tr'ilst, the applications or Internet services ("zero FCC reclassifies fixed broadband Internet rating"), and sponsored-data plans, id. access flotn an "information service" under 1l'1T 151-53. In short, the Order establishes Title I of the Act to a "telecommunications the F CC's long-term authoi'ity over Inter- service" un$er Title II. Second, the FCC net access. reclassifies rnobile broadband service as an The FCC's unireraicled assertion of pow- "interconnected service" with "the public er" has already 1ed sorre stnaller- Intelnet switched net\l'ol:k" under Title iII. Sei-vice Providers to "cut[ .l back on invesL- Both reclassifications ensurje what lhe ments lin broadband Internet accessl." Sea Conrt calls "consistent regulatory treat- Statement of F CC Commissioner Ajit Pai ment" of mobile and fixed broaclband In- On New Evidence That President Obama's ternet access. See Op. 724. By "consistent Plan To Regulate The Internet Harms regLrla{,ory treatment," the Court means Small Businesses And Rurai Broadband the FCC can treat Internet access iihe Deplo;.rnent (May 7, 2075), http://go.usa. monopolist i'ailroads and telephone ser- gov/3wAkn. I doubt they will be the last vices-as a common carrier subject to pub- Providers to lessen their investments in lic utility regulation. The innovation of Internet access, or to attempt navigating modern technoiogy now falls prey to the their business practices around F CC legu- regulatory labyrinth stnothering the old. lation. The Court's Opinion is bias6 about grafting public utility regulation on to an Subjecting all broadband Internet access innovative enterplise. See Op.734. But, Lhe to common carrier regulation iets F CC conceit of legulatory captnre is often fatal decide how to apply onerous lequiremenLs to growbh, leading t'egulation to faii at its on Internet access. This authority covers aims by operating on only a pretense all the ways in which Iuternel Ser"vice own of knowiedge. See F.A. Hayek, THn ltnr,o.i. Providers concluct anci run theil respective Coi.'cErr, THn Ennons 0F Socter,rsrv 76 businesses. The Order gives the FCC au- Bartley, ed. 1991) ("The curious thority to deterrnine, case-by-case, u'heth- flM.W. III economics is to to men er any activities "unreasonably interfere lask of demonstrate hou' little they really know about what with or unt'easonably disadvantage the they imagine tirey can design."). ability of consumers to reach the Internet content, selvices, and applications of theii Reclassifying broaclband Internet access choosing." Order 1T 135. FCC is empowered so as to subject it to commott calliei't'egu- to assess the "reasonableness" of all rates, Iation upends tire Act's core distiirction tet'ms, and practices of Internet Service bebween "information selice" and "tele- Pi'oviders. See, e.g., id. Ill 44t-52,512,522. communications selvice," and it rewrites The Order also includes an outright ban on the statutoly prohibition on treating mo- several practices, including: "throttling," bile broadband providers as common carri- 402 855 T'EDERAL REPORTER, 3d SERIES

ers. Distinguishing "enhanced selryice " and other members of the public for like Internet access, ft;; 4;;i. .;i;" years. . . . Regardless of how serious the subjected io pubiic utility regulation is not pr:oblem an administrative agency seeks to some triviai matter, nor is it resolved sim- address, . . . it may not exercise its author- ply by whether Congress authorized F CC ity in a mannel that is inconsistent with to have some degree of reguiatory authori- the adrninistrative structure that Congress ty over the Internet. Drawing this distinc- enacted into law."). The problem here is tion is "the essential characteristic" of the the Courl's analysis-it ignores the legal 1996 Act. Cf. MCI Telecomms. Corp., 512 consequences flowing from the "major U.S. at 231,174 S.Ct.2223. "What we have question" determination. here, in reality, is a fundamental revision As Chief Justice John Marshall recog- of the statute, changing it from a scheme nized long ago, of' common carrier regulation for telecom- there is a difference bebween "those imporbant munications services, to common carrier' subjects, which must be entirely regulated by legisla- regulation of information ser-vice when that the ture itself, from those less ser-vice merely has teiecommunicationS of inlerest, in which a general provision seryices among its component parts. Cf. 'id. may be made, and power g'iven "That may be a good idea, but it was not to those who are to act under such generai provisions the idea Congless enacted into law in to fill up the details." See Wayman u. Southard, 23 19[96]." See id,. at 232, 174 S.Ct. 222g. U.S. (10 Wheat.) (IB2S). Therein lies the problem. 1, .43, 6 L.Ed. 253 Accordingly, the deference courts afford to A. administrative agencies under Clreuron, U.S.A., Inc. u. Natural Resources Defense Tha M uj or Of Reclassificati,on Question, Cauncil, Inc., 467 U.S. 837, 704 S.Ct.2778, Requi:res Clear Congressional 81 L.Ed.2d 694 (1984) is "premised on the Authority theory that a statute's ambiguity consti- One might be tempted to say turning tutes an implicit delegation from Congress Internet access into a public utility is obvi- to the agency to fill in the slatutory gaps." ously a "major question" of deep economic FDA u. Broum & Wi,Iliomson Tobacco and political significance-any other con- Corp., 529 'U.S. I20, 159, 120 S.Ci. 1291, clusion wouid fail the sh'aight-face test. 146 L.Itd,.zd 721 (2000) (citing Clreworr,, But, the Cour-t exhibits no such qualms. 467 U.S. at 844, 104 S.Ct. 2778); see atso See Op. 70445. Of course, the Opinion La. Pub. Sew. Cornm'n u. FCC,4ZO U.S. does nob-and cannot-dispute the F CC's 355, 374, 106 S.Ct. 1890, 90 L.trd.2d 369 (198G) Order impiicates a "rrrajor question." In- (holding the FCC has "literaily . . . deed, the Court has already charactertzed no power to act . . . unless and unLil Con- "net neutrality" regulation as a "major gress donfers power upon it"). In other question," even without the distinct sali- words, the mere existence of "a statutory ence brought by implementing "net neu- ambiguity," see Op.704, "is not enough per trality" through reclassifying broadband se to warcant deference to the agency's Internet access. See Vetizon, 740 F.Sd at interpretation. The ambiguity must be ("Before 634 beginning our analysis, we such as to make it appear that . Congress thinir it important to emphasize that . . . either explicitly or implicitiy delegated au- the question of net neutrality implicates thority to cure that ambiguILy." Am. Bar serious policy questions, which have en- Ass n u. Fed. Trade CoTrltn'n,430 F.Sd 4SZ, gaged lawmakers, regulators, businesses, 469 (D.C. Cir. 2005); see a\so Broun & US TELECOM ASSOCIATION v. FCC 403 Cite as 855 F-3d 381 (D.C. Clr. 2017)

WilLiamson, 529 U.S. at 133, 120 S.Ct. matter of "such economic and political sig- 1291 (requiring an agency to bear in mind nificance" would not occur "in so cryptic a "the fundamental canon of statutory con- fashion"); Whitman u. Am. Truclcing struction that the words of a statute must Ass'n,531 U.S. 457, 468,121 S.Ct. 903, 149 be read in their context and with a view to L.trd.zd 1 (2001) ("Congress . . . does noL their place in the overali statutory alter the fundarnental details of a regulato- scheme"). ry scheme in vague tenris or ancillary An agencyts freedom to regulate on a provisions-it does not, one might say, matter via a statutory ambiguity therefore hide elephants in mouseholes."); MCI Tele- turns on what Congress authorized-and cowln'Ls. Cotp.,512 U..S. aL 23I, i1.1 S.Ct. that latter determination is "shaped, at 2223 ("It is highly unlikely that Congress Ieast in some measure, by the nature of would leave the cletermination of whether the question presented." See id. at I25, 720 an industry wilt be entirely, or even sub- S.Ct. 1291; see also Am. Bar Ass'n, 430 stantially, rate-regulated to agency discre- F.3d at 469. Is the agency regulating on a tion-and even more unlikely that it would "major question" of deep economic and achieve that through such a subtle device political significance, or is it regulating on as permission to 'modify' rate-filing re- an interstitial matter? If Congress is not quilements."). going to leave "those important subjects" to "itself," but instead authorize an agency The Court faiis to failly engage this to regulate on them, an implicit zathoriza- standard of review, both overrating the bion is insufficient. "We expect Congress to role of the statutory ambiguity here and speak clearly if it wishes to assign to an underrating the application of the clear" statement rule to major questions.s After agency decisions of vast economic and po- E- litical significance." UtiI. Air Regulatotg jumping right into Clzewon's hvo-step def- GroW u. EPA, U.S. 134 S.Ct. erence analysis, the Court's Opinion treats 2427, 2444, 189- L.Ed.2d-, 372 (2014) Brand X as the coup de grace for any (UARG ); King u. Burwell, U.S. r?equilement of ciear congressional authori- . 135 S.Ct. 2480, 24BB-89, L92- L.Ed.2d-, 483 zation. See Op. 701-05. Yes, Brand X did (2015) ("[H]ad Congress wished to assign uphold the FCC's determination that the that lextraordinary] question to an agency, "offering" of "telecommunications service" it surely would have done so expressly;" in Title II of the Communications Act is requiring the Court to interpret the stat- ambiguous. See 545 U.S. at 986, 989, 125 uLe de nouo for a clear statement of con- S.Ct. 2688. But this "staLutory ambiguity" gressional authorization); Brozun & Wil- does not allow the F CC to reclassify Liamson, 529 U.S. at 160, 120 S.Ct. 1291 broadband Internet access withoul, any (authorizing an agency to regulate on a serious judicial scrutiny. But see Op. 704.

3. Unfortunately, cavalier treatment o[ the trative agency seeks to address, . . . it may rrot clear statement requirement for major ques- exercise its authority in a manner that is tions is not unprecedented. When Verizon ad- inconsistent with fhe administrative structure mitted "net'neutraiity" impiicated a. major rhal Congress cnacicd into law.") with Brorun question, it quoted Brown & Williamson's & Williamson, 529 U.S. at 125, i20 S.Ct. (though, perhaps standard of review to avoid 1291. But then, Verizon dtd not apply the statement rule head on, Veri- facing the clear ciear statenent analysis, see 740 F.3d at 634, zon chose to qllote a case quoting Brown & conciuding instead that the case "is a lar cry" Williamson, not Broum & Williamson itself). frorn Brown IUilliamson, despite sup- Cornpare Vetizon, 740 F.3d at 634 ("Regard- & its porting quotation. less of how serious. the probiem an adminis- See id. at 638. 404 855 FEDtrRAL REPORTER, 3d SERIES

The mere fact Lhat a ,,statutoly ambigui_ to end users" was the focus of Brand, ty'' exists for some purposes X does not because the Suprerne Court did not chal_ mean it authorizes ,,enabl[ing] the agency to reach ienge the fact that users major questions-statutory . . . lg context ancl b::owse the World Wide Web,' is informar tlie overall scheme must be considered. tion service . Sae S4E U.S. at gBZ, 125 S.Ot. See, €.9., UAhG, IB4 S.Ct. at 244I 2688. In tesponse, the Court's Opinion re- ("[V]hiie Massachusetts rejected EpA,s soils to crying wolf-cjaiming a fuil read_ categorical contention thaf, greenhouse ing of Brand" Xwould 'freeze in place the gases aould, not be ,air pollutants' for any Cor:rmission's existing classifications of pLrrposes of the Act, did it not embrace various sel-vices," which neither Congress EPA's current, equally categorical position nor Brand, X inbended. Se,e Op. ZOS. But that greenhouse gases nrust be air poJlu- this misses the point. yes, Brand, X found tants for all purposes, regardle., ,,telecommunications o] th" the "offeling" of ser_ statutory context.',) (emphasis in original); vice" ambiguous. Ancl yes, Brand,X allows Whitman, 53i U.S. at 469 n.1, 121 S.Ct. F CC to assess the ',factual particuiar,s" of 903 ("None of the sections of the CAA in changed broadband technology. See E4S which the District of Columbia Circuit has U.S. at 99I, 725 S.Ct. 2688. But, nothing in found authority for the EpA to consider Brand X renders the stah.dory term iin_ costs shares g 109(bX1)'s prominence in formation senrice,' indistinguishable from the overall statutory scheme."). When the "teiecommunications seryice.,, Computer statutory context and backdrop against processing at ISP facilities remains an ,,en_ which Congress passed the 1996 are Act hanced serwice', exempt foom comrnon car_ considered, as they were in Brand X, the rier status under the statute. See 47 U.S.C. Supreme Court's decision r:einforces the $$ 230(0(2), 237(e)(4). need for FCC to show a textual assign_ By incorporating F CC,s distinclion ment of authoi.ity before be_ it can r"eclassifii tween "enhanced ,,basic broadband senrice', and ser_ Internet access as common ear- vice" into riage. the statutory scheme, and by placing Internet access on the ,,enhanced The Ord"er posits-and the Court's Opin_ service" side, Congress prohibited ihe ion approves-an untenable r.eading ,,offering,' of FCC {?om construing the of Brand X: the pizzena no longer offers "telecommunications selvice', to be the,,tn_ "pizza" or "pizza delivery,', it just offet"s forrnation serviie,, of Internet access. Sea "delivery." In othel words, because the Uniuersal, Set-uice Report Il ?,g (,?After "information sel-vice" of retrieving infor- careful consideration of the statutory lan_ mation from Internet u'ebsites includes guage and legislative history, we affu.m "telecommunications senrice," every aspect our prior findings that telecommunications of that "information selice,, is now just a seryice and information service in the 1gg6 "telecommunications set-vice.', See, e.g., Or Act are rnutuulll1 erclusiue.,,) (emphasis der .fl 795. The Court tries to wave off this added); see also Selahar a. [Jtzi,tec], States, problem by quicldy saying Brund, X ,,fo_ u.s. --, 133 S.Ct. 2720, 2724, 786 cused on the natur.e of the functions broad_ L.Ed.zd- 794 (Z0IB) (',lllf aword is obvious_ band provider-s offerecl to end users, not ly transplanted fr"om another legal source the length of the transmission pathway,' . . - it brings the old soit with it.,,); see also Op. 702. This is true, but it does nothing to Brown u, Gardner, S1B U.S. 115, 118, 115 support the Court's position. As the histo_ S.Ci. 552, 130 L.Ed.2d 462 (1gg4) (,,Ambi_ ry explained above leveals, ,,the nature of guity is a creature not of definitional possi_ the functions broadband providers offered biiities but of statutory conl,ext.'); cf. US TELECOM ASSOCIATION v. FCC 405 Citeas855 F.3d 381 (D.C. Cir. 2017)

Broum & Wi\Lio.mson,529 U.S. at 744,720 goes beyond the meaning 1"hat the statute S.Ct. 1291 ("In adopting each statute, Con- can bear, the Commission's . . . poiicy can gress has acted against the backdrop of be justffied only if it malies a less than FDA's consistent and repeated statements radical or fundamental change in lhe that it lacked authority under the FDCA Act. . . . The Commission's attempt to es- to regulate tobacco. . . ."). The issue bhere- tablish that no more than that is involved is not whether FCC can assess tech- fore, greatly understates the extent to which its nolog'ical changes to Internet access, or policy deviates from the lAct'sl lequire- whether F CC has discretion to reasonably ment[s], and greatly undervalues the irn- construe the "offer" of "telecommunica- portance of the requirementfs]." tions service" by considering that trans- [Act's] MCI Teleconwtl,s. Corp.,512 U.S. at 229, mission par| of the "information service" it 114 S.Ct. 2223; see also UARG, 134 transmits, or, considering the transmission S.Ct. ("Thus, itseif an "offer" of "telecommunications at 2442 an agency interpletation service" separate from the "information that is inconsistenft,l u'ith the clesign and service" it transmits. Ralher, the issue is structure of the statute as a whole . . . whether FCC can use this discretion to does not rnerit deference."). transgress congressional distinctions and Perhaps this explains r.vhy the Cor"u't's definitions-such as the distinction drawn Opinion foregoes a statutory analysis. On behryeen "Internet access sel'vice" and issue issue, "telecommunications ser-vices," see 47 after the CourL puts agency U.S.C. $ 231(eX4), or the definition of "in- ipse dixit where reasoned analysis should teractive computer seruices,". which be: "means any information service in- First, as to the 1996 Act's policy state- clu!,i.ng specificallg a seraice ot' systent ments, the Court simpiy parrots the Com- that proaides access to the Internet," id. mission's speculation that it is "unlihely $ 230(fX2) (emphasis added). Nothing, not [ ] Congress would atbempt to settle the regu- even Chetn'on deference, rnakes "a statutory ambiguity,'t' see Op.704, a tool to over- latoiy status of broadband Internet access ride congressional standards. serrzices in such an oblique and indilect manner, especially given the opportunity Congress has declined to authorize "net to do so when adopted the Telecommuni- neutrality" iegislation of any kind, let alone it cations 1996." 702-03. revisit its classffication of Internet access Act of See Op. But as outside the realm of common carrier the clear statement, r'ule requires reading regulation. The FCC's historic plactice, the statute, not nodding' along with the taken together with Congress's refusal to agency. Broadband hiternet access may be cede this authority, obligates us "to defer more sophisticated than Internet access not to the agency's expansive constr-uction from the 1990s, but this does not change of the statute, but to Congress'fs] consis- Lhe nature of broadband Internet access. tent judgmenL." See BrrnLm & Wi,lliamson, Cf. Brand" X, 5!5 U.S. at gg2, I25 S.Ct. 529 U.S. at 160, 120 S.Ct. 1291. 2688 ("In any event, we doubt thzL a statute that, for example, subjected offerols of B. 'deliverl/ service (such as Federal Exp.ess No CLea" Congress'ional Authority and United Parcel Service) to common- To Reclassifg carrier reguiation would unambiguously "Since an agency's interpretation of a require pizza-delivery companies Lo offer statute is not entitled to deference when it theii' deliver.y services on a common carri- 406 855 FEDERAI REPORTER, 3d SERIES

er basis ftool.").4 The Act's policy state- tion without reclassification. The Court ments ale fulfilled in specific statutory just ignores it. prorrisions, but the Court's Opinion ignores them. Tltird, the Court nonsensicaily permits mobile broadband's reclassification by em- Secotzd, the Court's Opinion makes min- bracing the Ordet's redefinition of "the cemeat of Vertzon and sends the Uniuer- public switched network." The CourL's sal Setuice Relsott silently into the nigfit. Opinion, like redefines iThe Orcler here claims the Uniuersal Ser- the Order, "the public switched networl<" uice Reporl was "not a binding Commis- to "encompass devices using bobh IP addresses and teie- sion order." Order 11 315. This is as inex- phone numbers." plicable as it is unexplained. The Ord,er See Op. ?19. Since mobile provides no principled reason why the broadband Internet access allows users to Uniaersal Seruice Report-a repolt of access Voice-over-Internet-Protocol ('VoIP") (such F CC Commissioners to Congress-should applications as Skype), the be dismissed, nor why the FCC's repeated Cout concludes mobile broadband "gives citation to tl're Uniuersal Seruice Report tn subscribers the capability to communicate prior Orders should be ignoi'ed. The Court, to telephone usels," See id. at 779. But the is siient on this issue,, and its assessment bachdrop against which Congress enacted of Verizon is revisionist history. It claims the 1996 Act confums the FCC neaer de- !'CC "dicl not believe" Verizon left it ivith fined "the public switched network" to any choice but to reclassify broadband In- mean anything other or beyond the tele- ternet access as a "teiecommunications phone nehvork, and certainly not public IP service" if it wished to impiement "net addresses.s Indeed, Congress itself distin- neutrality" principles. See Op.707. But as guished "the public switched network" and Verizon's upholding of FCC's transparen- the Internet. When Congress passed the cy rules, the statements from FCC Chair- Spectrum Act of 2012, It distinguished nran Wheeler, and Lhis Ord,ef s Notice of "connectivity'l 16 "the public fnte.net" Proposed Rulemaking together confirm, from "connectivity" to "the public switched this is false. The F CC identified a path to network." See 47 U.S.C. $ 1422(bxi). This implement some "net neutrality'' regula- subsequent, specific distinction can inform

4. Nor, incidentally, does the Act's exclusion and Order, 84 FCC 2d 689, 690 11 2 n.3 from "information service" those services (1981). This Court said the same in 1982. See that are "the managernent, control, or opera- Ad Hoc Telecomms. Users Comm. v. FCC,68O tion o[ a telecomnunications system or the F.2d 790,793 (D.C. Cir. 1982). This equation management of a telecommunications [pur- provided a key premise to the FCC's cell pose]" provide the Court or the Commission service policy iu 1992. See Amendment of any assistance. See 47 U.S.C. S 153(24). A Parl 22 of the Commission's Rules Relating to contrarJr conclusion would mean that Con- License Renewals in the Domestic Public Cel- gress in 1996 considered Internet access, and lular Radio Telecommunications Service, all its computer-processing firnctions, a "ba- FcC 91-400, 7 FCC Rcd. 719,720 n 9 0992). provided by the Beil sic service," able to be Indeed, the calls to expand "the public System companies. There is no evidence of switcl-red network" to inciude the "network of that in the Act, FCC's longstanding practice, networks," cited in the current Orfur, were or in Brand X. reiected by FCC in 1994. Contpare Implemen- 5, Time and again leading up to the Telecom- tation of Sections 3(n) and 332 of the Com- munications Act of 1996, tine FCC equated munications Act; Regulatory Treatment of "the public switched network" with the tele- Mobile Services, FCC 94-3 1, 9 FCC Rcd. phone network. This was the case in 198I. See 1411, 1433-34 1I 53, 1436-37 ll 59 (1994) wih Applications of Winter Park TeI. Co., Mem. Op. Order Il 3 96 n. I I 45. US TEI,ECOM ASSOCIATION V. FCC 407 Citeas855 F.3d 38r (D.C.Cir.2017) what "the public switched nebwork" tneant a service interconnected with "the pvbkc to Congress in 1996. See Brozun & Wil' switched network." liamson, 529 U.S. at 133, 120 S.Ct. 1291 Fom'th, the Court lets F CC get away ("[T]he meaning of one statute may be with satisfying lzone of the statutory re- affected by other Acts, particularly where quilements to forbear common carriage Congress has spohen subsequently and regulation. The judiciary should take care more specifically to the topic ab hand'"). to ensure the Commission rigorously ap- The Court has no basis to claim it is plies these standards in accordance with "counter-texLual" to equate "the public the 1996 Act's overall scheme. Even as switched network" with "the public folbearance is designed to further fi'eedom switched telephone network." See Op. 778 in the 1996 Act, g'iving an agency power to (emphasis omitted). Not even the Courl. eviscerate statutory requirernents is "as- can claim VoIP services make mobile tonishing even by administrative stan- broadband and the teiephone networir a dards.".,See Phillip Hamburger, Is AnuIuIs- single network. See id. at 779 ("[T]he VoIP rRArrvE Law UNr,ewrufl. 72I (2074). Under service sends the cali flom her tablet's IP our Constitution, "[t]here is no provision address oaer the mobile broadband net- . . . that authorizes the President [or any u;odc to connect to th'e telophone netzuodc executive agency] to enact, to amend, or to and, ultimately, to her friend's hrome repeal statutes." Clinton u. City of New phone.") (emphasis added). Nothing about York,524 U.S.417,438, 118 S.Ct.2091, 141 the increase of consumers accessing mobiie L.trd.2d 393 (1998).0 broadband Internet sen ice via smalt "[T]he power to enact statutes may phones, see id. at 779-20, the speed of only be exercised in accord vdth a single, Internet connection, id. at 720, or the finely wroug'ht and exhaustiveiy consid- "bundling" of VoIP applications with smart ered, procedure." Id,. at 439440, 118 S.Ct. phones, id. at 720*27, undermines the 2091. This power is intrinsically iegisla- FCC's 2007 distinction between Lhe trans- tive; it cannot be delegated away from the rruissi,on of VoIP traffi.c and the VoIP ser- legislature. When Congress has delegated uice to the end user. Mobiie broadband authority allowing the "suspension" or Internet access simply does not cor-rstitute "repeai" of statutory provisions, "Congress

6 Ihe FCC's rulemaking here inal' "talce [a] there is an argument that, though a nominally 'legislative' . . . forml ], but [it] [is] [an'] exer- independent agency, the FCC, as a general cise[ ] of-indeed under our constitutional matter, should be treatbd like an executive structure litl must be Lan) exercisef ] of-the agency because Congress never created a for- lexecutive Power."' See City of Arlington v. cause removai statute prohibiting "the Presi' FCC, U.S. 133 S.Ct. 1863, 1873 n.4, dent lfrom] super-vis[iug], direct[ing], and re- 185 L.Ed.zd- 941-, (2013) (emphasis in origi- mqv[ing] at will the" FCC Commissioners. See nal); FCC v. Fox TV Stations, Inc., 556 U.S. PHH Corp. v. Consumer Fin. Prot. Bureau,839 502,524-25,129 S.Ct. 1800, 173 L.F'd.2d738 F.3d i, 18 n.4 (D.C. Cir. 2016). "We need not (2009) ("in fJustice Stevens'] judgment, the tackle that question in this case," however, FCC is better viewed as an agent of Congress ld., because the r-ulemaking exercised here than as part of the Executive.... I'eaving facilitates a change in the execution and en- aside the unconstitutionality of a scheme giv- forcement of the Act-this must be executive ing the power lo etzforce latvs to agents of Power, see City of Arlington, 133 S.Ct. at 1873 Congress, it seems to us that Justice fStevens'i n:4; Fox TV Statiotts, 556 U.S. at 525, ),29 conclusion does not follow from his prem- S.Ct. iB00 ("The Administrative Procedure ise.") (ernphasis added); see also 47 U.SC. Act, after all, does not appiy to Congress and 5 151 (creating the FCC to "execute and en- its agencies," c-rnly to executive agency ac- force the provisions of this lActl"). Moreover, tion). 3d SERItrS 408 855 FEDERAI REPORTER,

also usecl fbrbeat'ance itself 'rnad,e the decision to suspend 01" re- l-CC's onl5r 25u..' It peal th,e particu\ar prouisions at issue to pervert the Act's requirements. upon th,e occulryence of pa'ticu\at" euents Lefi su.bsequent to enactment, and' it only C, the d,eterm,ination of wLt'atlt'er such euents occutred, up to the Presidetzt," or in t'his P eruersiotz O.f F orbeu"ance Autlzority case, the lrCC. See id' zt 445, 118 S'Ct' FCC's use of ihs forbearance authority 2091 (emphasis added)' In other words, confirms Lhis Ordet'is "an euotmous and only Congress may alter statutory stan- expansion [of its] regulaLo- dards-an agency or the President is left transformative rJ' authority rn'ithout clear congressional simply to make factual findings about ar.rthorizaLion" ancl, thus, "utireasonable." whether those legal standards shor-rld ap- (JAP'G,134 S.Ct. aL 2444 n'8. By the FCC piv. Chairman's own admission, the Act's com- Yet, as Judge Williams noted in his opin- mon carrier legulations do not contem- ion here, "the Commission's massive for- plate broadband Internet access. So, the bearance [came] without findings that the orcler cannot merely reclassif5' broadband forbearance is justified" under the stat- Internet access, it must also "modernize ute's conditions. ,Sae Concurring & Dis- Title II, tailoring it for the 21st centu-ry." senting Op. 775; see also id' at 775-78' Tom Wheeler, FCC Chaimzan Tom Both the FCC and bhe Court found reclas- Wheeler: This is How We WilLL Etlswe Net Tnternet, access as a "teiecommuni- Wlnnr (Feb. 4, 2015, 11:00 ""Jsifvino ^^'b ---- - Neutrali,ty, cations sel-vice," coupied with for"bearance, AM), https://wwiv.vdred.com/20l5l02lfcc- would be within FCC's power eaen uitlt'out chairman-wheeler-net-neuh'ality/. As the a change i't' th'e wrderlging factual cir- Chaii'man concecled, this required "taking for cumstances oJ' Intern'et a'ccess. See Order the legal construct that once was used pairing back to 1T 360 n.993; Op. 706. In other words, the phone companies and it AII Court concludes the F CC's forbearance modernize it." FCC Proposes T'r"e'atittg need not have anybhing to do wiLh factual Internet Traftic Equally, PBS Ncwslloun findings-the Commission is free to re- (PBS television broadcast Feb' 4, 2015, urrite statutoiry terms as it sees fit' Used in 6:35 PM), http :/Awwr,.pbs. orglnewshour/bb/ affic- this way, forbearance usurps the exclitsive- fcc-prop o s es-tre ating-all-intern et-tt iy-legislative function of lawmaking be- equally. cause, "[i]n both iega] and practical effect, The Ord'er achnowledges its tailoring of has amended [an] Act[ ] of Con- the IFCCI the Act's common carlier r"equirements so gress by repealing [or amending] a por- as to capture broadband Interuet access is tion." See ClinLotz, 524 U'S' at 438, 118 "extensive," "broad," "[a]t14licai," and "ex- see also UARG, 134 S'Ct' at S.Ct. 2091; pansive"-inciuclir-rg at least 30 Title iI "awzre of no principle of 2446 n.B (I am provisions and ?00 n-iles pl'omulg-ated un- administrative law that would allow an der them. See Order 1l1T 3?, 51, 438, 46I, rewrite such [ clear statutory agency to ] 493, 508, 572, 574. The Ot"der also sai's this shudder to contemplat'e term[s], anct [I] level of forbearance resuits in a moclern- such a principle w[il]] have the effect that izatton of TiLIe II "never" before conLem- on democratic gover-nance"). platecl. Sea id. 111T 3?, 38' The Coult's Opir- the natule of Troubling as the failure to follo'v the ion and Lhe Orcler disregard Act's requirements is, that is nob the forbearance US TELECOM ASSOCIATION V. FCC 409 Cite as 855 F.3d 381 (D.C. Cir'. 2017)

F orbearatrce permits the FCC to reduce doig. Now, rvhen the Commission's aim is common carriage regulation over telecom- Lo itza'ease regulatiorz, this Court is willing nrunications, not expand common czrriage bo bless the Commission using forbearance regulation by reclassifying an information without any satisfaction of the stabutory service and shaping common carriage reg- requirements, and at odds with the nature ulations around it. The F-CC has consis- of folbearance itself. understood this, invohing for"bear- tently UARG cited generally-applicable tenels ance toward one of "Congress's primarl' of adrninistlative law and the separation of aims in the 1996 Act:" "deregulate tele- powers-not some Clean Air Act novelty- communicalions markets to the extent when it said "[a]n agency has no poilrer to possible." See, e.g., Memorandum Op. & 'tailor'' legislation to bureaucratic policy Order, Petition of Qwest Corp. for For- goals by reu'r'iting unarnbiguous statutory bearance Pursuant to 4? U.S.C. $ 160(c) terms.'r 134 S.Ct. at 2445. The Court in the Omaha Metro. Statistical Atea, 20 blithely ignores its "sevele blow l,o lhe FCC Rcd. 19415, 192154 (2005); see also Constitution's separation of powers" by Petition of ACS of Anchorage, Inc. Pursu- leading the FCC's forbearance authority ant to Section 10 of bhe Commc'ns Act of to expand, rather than lessen, common 1934, as Amended, for Forbeat'ance from carriel regulation at the legisiature's ex- Sections 251(cX3) & 252(d)(1) in the An- pense. See id,. at 2446. The Court provides chorage Study Area, 22 F CC Rcd. 1958, no zlnswer to the problems of public ac- 1969 1T 16 (2001) (referring to the "deregulatory'aims" of FCC's statutory forbear- countability and individual iibei'ty with its ance authority). The Court. iro'"vever, mere assertion of forbearance being a makes an argument foreign to the 1996 "statutory m&nfl2f,e.'r Compare Op. 706 Act. The Opinion claims "the rapid deplo1' tuith Clinton, 524 U.S. at 457-52,118 S.Ct. (Kennedy, ment of new telecommunications technolo- 2091 J., concurring). If the FCC gies" "might occasion the pi'omuigation of is to possess statutory forbealance author- additional regulation." Op. 734. Congress, ity, it should conform to forbearance's stat- howevet, clearly did not consider the 1996 utory conditions and the overall statutory Act's goals-plomoting competition and scheme. Neither is the case here. The reclucing reguiation-in teusion with "Lhe F CC's abuse of forbearance amounts to rapid deployment of new telecoinmunica- rer,witing the 1996 Act in the bowels of the tions technologies." Rather, the Act's obvi- administrative state, wiren it should peti- ous reading is that more competition and tion Congress for these purporteclly-neces- lowel regulation would lead to increased sary changes. deployment of new telecomtnunications technologies. The ensuing history of Inter- ry. net innovation vindicated Congress's poli- P r e si detzti aL I nt etJbr aru c e cy choice. Understanding the expansion of common ca.t'rier regulation as an affilma- When all the statr"itory somersauits, re- tive good, as tl-re Cour"b seems to do, is visionist history, and judicial abdication foreign to lhe Act. are clone, we are still left with a linger:ing There is a sad ironY here. Both this question: WLr,y, on the verge of announcing Court and the Supreme Court adrnonished a new Open Intenzet Order in 2074 that the trCC for asserting forbearance author- both implemented "net neutrality" plinci- ity without congressional authorizabion ples ancl preservecl broadband Internct ac- when the Commission's aitn was deregula- cess as an "information service," would the 410 855 FEDERAL REPORTER, 3d SETTIDS

FCC instead reclassify broadband Internet The Plesident's statements "stunned of- access as a public utility? Simple. Presi- ficials at, the FCC;" "the statementfs] dent Obama pressured the FCC to do it. boxed in fthe FCC Chaii'man] by giving This Court once heid "an agency may not the FCC's two other Democratic commis- repudiate precedent simply to conform sioners cover to vote against anything fall- with a shifting political mood." Nat'I Black ing short of fthe President's] position.', G. Media CoaL. u. FCC,775 \-.2d 342,356 n.1? Nagesh & B. Nlullins, Nef Neutrality; (D.C. Cir. 1985). Alas, here we see the LIow White House Thzuarted FCC Ctcief, exception that ldils the rule. War,r, Sr. J. (Feb. 4,2075). Moreover', pres- The FCC reieased its Notice of pro- ident Obama's statenrents wet,e issued posed Rulemaking in May of 2074-where "outside of the window that the F-CIC had it was elezr Lhat broadband Internet would set for public comrrents," but the FCC not be reclassified for common carrier reg- accepted them anyrvay. See Kathryn A. ulation. Afterward, "au unusuai, secretive Watts, Controlling Presidential Control, effort" began "inside the Strite House" 114 Mrcn. L. Rav. 683, 74I (2016); see also with activists intei'ested in getting the TlLe Pa,th To A Free And Open Intenzet, FCC to change its position. See G. Nagesh https://www.whitehouse.gov/net-neutrzlity & B. Mullins, Net Neutrality: How White (identifying in a timeline that "ltlhe FCC's Ilouse Tltwa,rted, FCC Chief, Wer,i. Sr. J. comment period clame] to a close,, on Sep- (F eb. 4, 2015). !\4rite llouse staffer.s were tember 75, 2014, but "President Obama directed "not to discuss the process open- callfed] on the F CC to take up the strong- possible ly." Id. One can see why-the F CC is, est rules to pr"otect net neutrality" after all, supposed to be inclepenclent from on November 10,2074). Presidential controi. See, e.g., Humphrey's The President's efforts ,'essentiaiiy Etr'r D. United, Stutes,295 U.S. 602, 624- killed the compromise" of "net neutraiity" 26, 55 S.Ct. 869, ?9 L.Ecl. 1611 (1935). without reclassification. G. Nagesh & B. In addition to the White House's private Mullins, Net Neutra\itg: Hou White meetings, the President issued an online House Thwa'rted, FCC Ch.ief, War.l Sr. J. video (flom China, rn'ithout any irony) urg- (Feb. 4, 2015). The FCC Chailman ing the subjugation of broadband Internet promptly delayed release of the new Order access to common carcier reguiation. See to consider the President's position. See G. Nagesh & B. Mullins, Net Neutra|ity: FCC Cltairmsn Tom Wh,ee\er's Statement How Wtite House Thwarted FCC Chief, on President Barack Obama's Statement Warr, Sr. J. (Feb. 4, 2075); see also The Regarclitzg Op:en Internef (Nov. I0, Z0I4), Presid,ent's Message On Net Neutrality https l//apps.fcc. gov/edocs_public/ (Nov. 10, 2014), hLtps://www.whitehouse. attachmatch/DOC-330414A1.pdf. "On Feb- Bov/net-neutraliLy ("To put these protec- rualy 26, 2015, the IICC voted S-2 along tions in place, I am ashing the F CC to party lines to regulate broadband Internet reclassify Internet service under Title II of ser-vice as a public utility urder Tifle II of a law lrnown as the Telecommunications the Communications Act, thus voting for Act."). In the President's written state- net neutraiity rules aligned r,vith [presi- rnent, he said this reclassification shouid dent] Obama's own plan." Watts, Control- be facilitated by "at the same time forbear- Ltng Presidential Control, 114 Mics. L. ing frori rate regulation and other provi- Rnv. at 747. sions less lelevant to broadband seryices.f' There is a wide spectrum of agreement Id. that the President's intervention into the US TELECOM ASSOCIATION v. FCC 4II Citeas 855 F.3d 381 (D.C. Cir. 2017)

F CC's deliberations was, with respect to cl,entia| Control, 114 MrcH. L. Rrv. at 779 broadband's reclassification, outcome de- ("Pai is ciearly correct that President Oba- terminative. This spectrum includes a for- ma played a l

by political considerations or the presence download/regulating-the-internet-how-bh e- of Presidential power." Sierra CLub u. Cos- whibe-house-bowled-over-fcc-independence tle, 657 F.zd 298, 408 (D.C. Cir. 19Bi). ("The documents reviewed by the Commit- And, as we have held, "the need for dis- tee make clear that Chairman Wheeler closing er purte conversations in some set- regularly communicated with presidential tings do[es] not requile Lhat courts know advisors. None of the communications re- the details of every White House con- viewed b)' the Committee wele submilted l,ae.t...." See id. at 407. The FCC, howev- to the FCC's formal record in the form of er, has its own rules regarding er parte er pafie notices although Lhe lOpen Inter- contacts, and the White House would be net) Ord,er was clearly discussed."). The awlre of 1,hem. Whiie House had reason to know of il,s The Ord,et's Notice of Proposed RuIe- obligations under the FCC's en parte making refen ed to and detailed some of rules. ,See, e.9., Memorandum fi'om Deputy the F CC's ex par-te requirements. See No- Assistant Attorney Gen. John O. McGinnis tice of Proposed Rulemaking 5624-25 to the Deputy Counsel to President 11 181 (citing, inter alia, FCC's erc par"te George H. W. Bush, 15 Op. O.L.C. 1, 1 rules, at 47 C.F.R. $$ 1.1200 et seq.). FCC (Jan. 14, 1991) (assessing the propriety of Chai-i'man Wheeler said the Commission er parte communications bebween White would "itrcorporate the President's submis- House officials and the FCC, concluding sion into the record of the Open Internet Lhat "com,mntnications by tlze White House Proceeding," FCC Clzai,rtnon Tom Wheel- must be clisclosed in the FCC rulemahing er's Statement on Presidenl Barank Oba- record if theg are of substanLiaL signifi- ma's Statement Regarding Open Interrtet cance and, clear\y intend,ed to affict the (N ov. 1 0, 2014), https;//apps.fcc. gov/edo cs- ultimate d,ecis'ion") (emphasis added). In publtcl aLtach m atch,/D O C -3 3 04 1 4A1. p df. short, the Order and its admilistlative But, neither the Chairman's statement nor record leave us with many questions about the Order explain why the President was the involvernent of the President and his allowed to make his submission afier the staff-questions made significant by us comment per{od expired. See Watts, Con- knowing enough to know that the Presi- trolling Presidential Control;114 Mtcn. L. denfs involvement was outcome determi- Rnv. at 741. Nor does the Comn-rission native. ever explain why further public comment was not solicited aftel the President inter- Perhaps the involved parties thought the vened-clespite the Chairman stating he Plesident's public advocacy of "nel, neu- welcomed further comment. The Ardet's IrallLy" through reclassifying broadband record does not establish whether the Internet access provided sufficient ac- communications betrveen White House countability; excusing the White House staffers and the FCC satisfied the Com- from following the F CC's lules. Perhaps mission's regulations on en patte communi- the FCC paid no mind to the malLer be- cations (or why these communications cause of Lhe many filed comments endols- were exempt from these rr-rles). See Maior ing some form of "net neutrality" i'egula- ity Staff Report, Committee on Hotneiand tion during the comment period. Whatever Security and Governmental Affairs (Ron the thinking, this course "effectively creat- Johnson, Chairman), Regulating The In- ed two very different proceedings: First tenzet: . How 'I'he White House Boutlecl there was the FCC's convenlional notice- Ouer FCC Ind.ependence, *25 (Feb. 29, and-comment ploceeding replete with iLs 2016) hLLpl/www.hsgac.senate.gov/ forunalizecl procedur"es and deadlines re- US TELECONI ASSOCIATION V. FCC 413 Cite as 855 F.3d 38I (D.C. Cir. 2017) garding the submission of comments and 35 (qtroting Free Enterpnse Fund, 567 en parte contacts, NexL emerged a differ- U.S. at 497,I30 S.Ct. 3138). 'Ihe Constitu- ent, more real-world proceeding," the one tion's structulal features are, themselrzes, where the President provided outcome-de- legai procedures designed to safeguard lib- terminative influence. See WaLts, Control- erty by pleserwing public accoi-rntability ting Presidenti'al Control, 114 Mlcs. L' against the curreut moment's political pri- to shape Rnv. at ?41. This "ieav[es] the notice-and- orities. A President may attempt agency's deliberations so as to vindicate cornrnent proceeding and the political pro- an of ceeding disconnected from one another the Constitution's structural allocal,ion po\ rer; eusuring the exercise of execntive and mak[es] the notice-and-comment pro- consistent the publicl) access look like no more than a smokes- Power is with countabie executive. See, e.9., Costle, 657 creen." See id'. Rules ar"e only for Ameri- F.2d at 405 ("The executive por /er under cans who lacir friends in high piaces- our Constitution, after all, is not shared[;] To be clear, I am not suggesting the ib rests exclusively with the President. . . . has no legitimate means of inter- President [T]he Founders chose to rish the potentiai rulemak- jecting himself into an agency's for tyranny inherent in placing power in suggesting that the ing process. Nor am I one person, in order lo gain the advan- bring an independent President should not tages of accountability fixed on a single actions within the Exec- agency's executive source."). But iJ the m'eans by which the Enter. Fund. a. utive Branch. See Free President seeks to shape the agency's de- Bd-, 56I Pub. Co. Accounting Ouersight liberations transgress legal procedures de- rJ.s. 477,499, 130 s.ct. 3138, r77 T'.Ed.zd signed to ensule public accountability- ("One have a government ?06 (2010) can like notice-and-commenb requilements and being ruled by func- that functions without rules regat:ding er: pan-te communicabions- benefits tionaries, and a government that he undermines the accountability lationale ruled by ex- from expertise without being for confining executive Power to the Pt'esi- to perts. Our Constitution was adopted dent. Cf. Eiena Kagau, Presidential Ad- enable the people to govern themselves, rruinistration, II4 Hanv. L. Rnv. 2245,2332 growbh through their elected leaders. The (2001) (characterizing "the degree to which of the Executive Branch, which now wields the public cau undelstand the sources and vast power and touches almost evel'y as- levels of buleaucratic actiotit' as a "funda- pect of claily life, heightens the concern mental precondition of accottutabiiity in that it may slip flom the Executive's con- administration"). Acting' tr.ith concei'n for trol, and thus from that of the people."). pubLic accourtability seens especially sa- Rather, my assertion follows from the na- lient when thc Plesiclent "anrl his Wlrite ture of executive Power. Ifouse staff' seek to exert influence over Executive Branch authority over the ex- the dilection of an ostensibly-inclependent ecution and enforcement of existing law is, agency. Cf. Costle,657 F.2d, at 405-06 ("In in palt, meant to ensure our: government's the particular case of EPA, Plesidential republican fotm-_thet'eby remaining pub- authority is clear siuce it has nevet' been liciy accountable. Some Presidents, in the considered an 'independent agency,' but name of shaping an agency's direction, always part of the Executive Bratrch."). "might accept a novel practice that vioiat'es Perchance something else explains the ArLicle If," but "'the separation of powers White House's conduct here than attetnpt- does not depend on the views of individual ing to confine 1,he exercise of executive Presidents PHH CorP', 839 F.3d at' Power to the President. But, rather than 4t4 855 FEDERAL REPORTER, 3d SERIES 'S.Ct. acknowiedge the double standard the 863, 96 L.Ed. 1153 (1952); United, President's involvement created between States u. Mid,west OiL Co., 236 U.S. 459, the American People and their Chief Exec- 505, 35 S.Ct. 309, 59 L.trd. 673 (1915) utive, the FCC opted for the silent treat- ("The Constitution does not confer upon ment. This Court has no such luxury' [the President] any power to enact iaws or "[S]ome might think that judges should to suspend or repeal such as the Congress simpty defer to the elected branches' de- enacts."). The iawmaking power belongs sign of the administrative state. But that exclusively to Congress, not to agencies. hands-off attitude would flout a iong, long See City of Ar\inoton, 733 S.Ct. at 1873 line of Supreme Court precedent'" PLIH n.4. When the President pe{,itions Con- Corp.,839 F.3d at 35. Unfortunateiy, un- g::ess to change the law, however, he, nec- der this Court's Opinion, the American essarily, need not advocate a position People wiil never linow quite how the gov- "faithful" to existing Lzw. See U.S. Coxsr. elnment came to regulate their Internet Art.'II, $ 3, cl. 2 (authorizing the Presi- access so pervasively. dent to "recommend such measures as. he shall judge necessary and expedienti'). B. To be sure, the creation of agency rules Not "FuitJ6u1" Reclassi,ficati,on Is A can muddle these distinct aspects of execu- Of Enisting Law Erecution tive Power. "BecaLlse most regulatory stat- The questions of substance regarding utes have multiple goals and are not writ- the President's involvement here go to the ten with crystal clarity, the agency often cole , of our Constitution's separalion of has considerable interpretational leeway executive and Iegislative Power. before it steps over the statutory line, and The natur:e of executive Power differs the President may attempt to push the depending upon whether the Presiclent is agency as close lo that line as possible." erecuting law, or seeking a chatrye in ex- Thomas O. McGarity, Presidential Cuntrol isting law. ,In the former context, the of Regulatory Agen,cy D ecisionmaking, 36 President is required to "faithfully" exe- AM. U.L. Rnv. 443, 454 (1987). Ow Consti- cute the law. See U.S. Const. AI't. II, $ 3, tution ensures tliat the line remains, how- cl. 5;7 see a\so Robert G. Natelson, Zfue ever- Cf. Tsr Fnnnnar,lsr No. 73 (Hamil- Ortginat Meanht'g of the Constitution's ton), p. 447 (Cl:rrton Rossiter ed., 1961) "Erecutiue Vesting Clatu'se," 31 Wsrm. L. (adhering to the sepalation of powers Rov. 1, 74 & n.59 (2009) (discussing Arficie avoids "the legislative and executive pow- II's Take Care Clause as a "power-confer- ers . . . com[ing] to be blended in the same ring" text historically "reminiscent" of hands"). "An activist President with con- "t'oya\ instructions" to act as an agent)' trol over the rulemaking process could use "In the fl"amework of our Constitution, the his power to press agencies beyond staLn- President's power to see that the laws are tory limits that he was unable to persuade faithfully executed refutes the idea that he Congress to remove. Such a President is to be a lawmaker." Youngstown Sheet & wouid be guilty of unfaithful execution of Tube Co. u. Sautyer,343 U.S. 579, 587, 72 the laws." McGarity, Presidential Control

7. The President's obligation under the Take with laws regulating the executive branch." Care Clar,rse does not extend to Iaws the Presi- See Brett M. Kavanaugh, Our Anchor for 225 dent considers unconstitutional, nor does it Years and Counting: The Enduring Signift- prohibit prosecutorial discretion. Bu1, othcr- cance of lhe Prccise Tcxt of the Constilution, (2014). urise,. "the Executive has to follow and comply 89 Norna Detue L. Rev. 1907, l91l US TELECOM ASSOCIATION v. FCC 415 Cile tr 855 F.3d 381 (D.C. Cir. 2017) .

of Regulatory Agencg Decisiontnalcing, 36 ty to seek changes in the law from the AM. U.L. Rev. at 455. A "related problem" Iegislature, and his constitutionai obLi- "occurs when members of the President's gation, to faithfully execute the law passec) staff attempt to implement theil own poLi- by Congress when interacting with the cy agendas in the name of the President." agency charged with executing the law. See the outcome-determinal.ive id. Given The President's obligation to "faitMully" natule of the President's involvement on execute existing law limiLs the realm of the reclassification of broadband Internet reasonable construcLions he can provide to access-and the claritl, with which Con- those charged with enforcing edsting iaw. gress.set forth its deregulatory policv and For example, during the "Quasi War" with standards in the 1996 Act-the question of F'rance, Congress passed a statube permit- how the President upheld his Tal

8. That the military is under Lhe President's agency is of no moment here. The issue here command and the FCC is an independent is not the.scope of the Presidenl's authority to 3d SERIES 416 855 FEDI'RAL REPORTER,

place go. See, e'9., ia. classification at odds with both the "gener- Congress was the to (Frankfurter, J., cott- aI clause[s]" of the 1996 Acfs deregulatory at 603, 72 S.Ct. 863 years before policy and the statute's more specific defi- curring) (explaining that, firte nitions of "interactive computer service," President Trumanls steel seizure, "Con- "infortnation service," "Internet access gress said to the Presiclent, 'Yor'r may not sen/ice," "interconnected senrice," and seize. Please report to us and ask fbr "the public switched network'" No doubt seizure power if you thinh it is needed in a the President thought reclassifying broad- specific situation."'). Nothing about our band Internet access bettel captured the Constitutioir's deliberatii'e legislative on-the-ground realities of Internet access' structure is meant to facilitate a one-way But, as tn Brtwem4 Congress "prescribed ratchet in the President's favor' See id. at, (FlanMulteL, J., concur:- [ ] the manner in which this law shall be 604, 72 S.Ct. 863 carried into execution," and the Pi'esident ring) ("The neecl for new legislation does is limited to urging the execution of exist' not enact it. Nor does it l:epeal or amend pnnnRat,lsr ing law with legal constructiQns lhat faith- existing iaw."); 1'gB No' 73 fully execute what Congress enacted' See (Hamilton) p. 442 (Clinton Rosseiter ed', the id,. at 177_78. As Justice Jackson famously 1961) ('it may perhaps be said that put it, "[w]hen the President tahes meas- power of preventing bacl lar.vs includes that ures incompatible with the expressed ot' of preventing good ones.... But Uris ob- implied will of Congress, his power is at its jection 'will have iittle u'eight with those lowest ebb." Youngstown,343 U'S' aL 637, who can proper'ly estimate the mischiefs of 72 S.Ct.863 (Jackson, J., concun'ing)' that inconstancy and mutability in the consider every inslitu- The President's intervention did not re- iaws. . . . They will . . things in the sult from a "failure of Congress to legis- tion calculated to . heep liappen to be at late" on the issue of Internet access regu- same state in which tliey more iihely to do lation, but because he desiied "a different any giveil peliod as muqh the Constitu- and inconsistent way of his own" l'espect- good than ltartn."). Nor does ing that regulation. Sea id. al639,72 S'Ct' tion give the Presiclent an "I'm-frustrated- Bicamelal- 863 (Jackson, J., concurring). The fact that with-democracy" exception to allo'urilg him to pebi- Congress iras, up until now, decided not to ism and Presenttnent; for a revise its 1996 Act with legislation amena- tion the F-CC, ra.ther thau Congress, ble to President Obama's view of Internet change in existing 7aw. Sae NLRB u. Noel' regulation does not mean Congress has Cantting, U.S. 134 S'Ct. 2550, (2074) ("It go "failed" to act. Congress "acted" with re- 256?, 1Bg L.trd.zd- 538-, should political opposition spect to the classification of Internet ac- without saying . . . that 'not qualify as an cess service in 1996-if Plesident Obama in the Senate u.ould allorving the Presi- thought a leclassification was needed, then unusuai circtttnstance"

v. JolutsorL, enforce the law (i.e., the extent to which the judicial direction. See lVlississippi 437 President can "direct" the FCC to act) Rath- 71 U.S. (a wall.) 47s, 499, tB L.Ed' er, the issue here is the nature of the authority (1866). I do not dispute that the Court cannot the President exercises when seeking to issue an order directing ihe President's "exer- change the enforcement of exist\ng law- En- cise of judgment" in la'ar enforcement. See ld. forcement.authoritl' cannot be conflated with What is within this Court's dctermination, the President's seParate and distinct ability to howcver, is u'hetltel the Order at isstte faith- petition for changes in existing law itself' fuily executes existing law. It does not, and it Nevertheless, as explained above, that is what does not because of the construction set forth the President attempted. It is no answer [o by the Plcsiderr.t. say the President's action is not subjcct to US TELECOM ASSOCIATION v. l'CC 4t7 Cite as 855 F.3d 381 (D.C. Cir. 2017) dent to disregard constitutional limita- content they transmit to consumels. The tions). rule wili affect every Internel, serwice pro- every Internet provider, and "With all its d-efects, delays and incon- vider, content veniences, men have discovered no tech- every Inter"net consumer. The economic and political signfficance of the rr.le is vast. nique for long plesen.ing free government except that the Executive be under the The net neutralitl' r'uie is uniaurful and law, and that the lau, be made by parlia- must be vacated, however', for two altema- mentary deiiberations. . . . [I]t is the dLrty tive and independent reasons. of tne Court to be last, not firsl, to give First, Congless did not clearly author- fthese institutions] up." Yozr'ngstoum, 343 ize the FCC to issue the net neuh'ality U.S. at 655, '/2 S.Ct. 863 (Jackson, J., rule. Congr"ess has debated net neutrality concuning). This issue deset-ved much for many years, but Congress has never more scrutiny than bhe silence given to it enacted net neutrality legislation or clear- by this Court. Iy authorized the FCC to impose common- carrier obiigations on Internet service V. providers. The lack of clear congressional This Order shou's signs of a government authorization matters. Iir a selies of im- having gr:owlt be5t6n6 the consent of the portant cases over the iast 25 years, the govelned: the coliapsing rcspect fol Bi- Supreme Court has required clean' con- cameralism and Presentment; the adminis- gressional authorization for major agency trative state shoehorning majgr quesLions rules of this kind. The Court, speaking into iong-extant statutory provisions vrith- through Justice Scalia, recentiy sutrrna- out congressional authorization; a prefer- rized the major rules doctrine in this way: ence fol rent-seeking over' libelLy. This "We expect Congress to speak clearly if it Court had an opporLunit;r to see the wis- wishes to assign to an agency decisions of dom of the "Man Controlling Trade" stat- vast 'economic and political significance."' ue on Constitution Avenue, but we are no Utility Air Regulatory Group a. EPA, iong'er on the Constitution's path. Hopeful- u.s. .134 S.Ct. 2427, 2444, -i8g ly, there is a clearer view of the road bach L.Ed.Z,d'-, 372 (2014) (quoting FDA u. to a government of limited, enumerated Broum & Wi\Liamson Tobacco Corp.,529 power frorn One Irirst Street in our Capi- u.s. 120, 160, 120 S.Ct. 1291, 746 L.Ed.2d tal City. In that hope, I respectfuily dis- 727 (2000)). The major rules doctrine sent frorn the Conrt's denial of rehearing helps pi'eserve the separation of powei's en ban,c. and operates as a vital check cln expansive and aggressive assertions of executive au- Kavanaugh, Circuit Judge, dissenting thority. foom the denial of rehearing en banc: Here, because Congress never passed The FCC's 2015 net ueutralit;, ntle is net neutralit)' l.*t.trtton, the FCC r:elied one of the most consequential regulations on the 1934 Communications Act, as ever issued by any executive or indepen- ameirded in 1996, as its source of authority dent agency in the histo4r of the United for the net neutrality rule. But that Act States. The rule transforms the Inten'ret does not supply c\ear congressional au- by imposing common-cal'rier obligations on thorization for the FCC to impose com- Internet service providei's and thereby mon-carrier regulation on Internet selice prohibiting Internet service pt'oviders proviclers, Therefore, under the Supleme from exercising editorial control over the Court's precedents applyrng lhe major 418 855 FEDERAL RI'PORTER, 3d SERIES rules doctrine, the net neutt'ality rule is job is to apply Supreme Court precedent unlawfui. as it stands net Second and in the alterllative, the F or those two alteruative and indepen- neutrality rule violates the First Arnend- dent leasons, the tr'CC's net neutrality the ment to i.he U.S. Constitution. Undel regulation is unlawf'ul and must be vacat- landmark decisions in Suprerne Court's ed. I respectfully disagree with the panel System, Inc. u' l;'CC, Turner Broo'dcusting majority's contrary decision and, given the 622,774 S.Ct.2445, 129 L.Ed.2d 512 U.S. exceptional importance of the issue, re- (1994), and Turner Broa'd'casting Sys- 497 spectfully dissent from the denial of re- tem, Inc. u. FCC,520 U.S. 180, 117 S.Ct. hearing en banc.1 II74, I37 L.trd.2d 369 (1997), lhe Filst Amendment bars the Govel"nment from re- sh'icting the editoriai discretion of Internet I service providers, absent a showing that ati The FCC's net neutrality rule is a major Internet service provider possesses marl

1. I also agrce with much of Judge Williams for en banc revier,v now. Unless and until the panel dissent and with much of Part III A and FCC does so, however, the panel opinion r.r.ill Part III.B of Judge Brorvn's dissent from de- remain the law of the Circuit. If the panel nial of rehearing en banc. wele to withdraw its opinion or if the opinion The concurrence in the denial of rehearing gets vacated as moot, then the need for en en banc suggests that the FCC rnay withdraw banc review would go away as weil. But nbt the net neutrality rule, mitigating any need until then, in my judgment. US TELECOM ASSOCIATION v. Ii'CC 4r9 Citem855 F.3d 381 (D.C.Cir.20I7)

Under the ConstituLion's separation of rule is unlawful. This major ruies doc- powers, Congress makes the laws, and the trine (usually called the major questions Executive implements and enforces the doctrine) is grounded in two overlapping laws. The Executive Branch does not pos- and reinforcing presumptions: (i) a sepa- sess a general, free-standing authority to ration of powers-based presumption issue binding iegal rules. The Executive against the delegation of major- lawmal<- may issue rules only pulsuant to and con- ing authority from Congress to the Ex- sistent with a grant of authority from Con- ecutive Branch, see IndustrtaL Union gress (or z grant of authority directly from DeTsartment, AFL-UO u. Atnerican Pe- the Constitution). See Youngstown' Slteet & tt"oleum Institute, 448 U.S. 607, 645-46, Tube Co. u. Sawyer,343 U.S. 579, 585, 72 100 s.cr. 2844, 65 L.Ed.2d 10i0 (1980) s.ct. 863, 96 L.Ed. 1153 (1952). (opinion of' Stevens, J.), and (ii) a pre- When the Judiciary exercises its Article sumption that Congress intends to make III authority to determine w'hether an major policy decisions itself, not leave agency's rule is consistent with a govern- those decisions to agencies. ing statute, two competing canons of statu- In short; whiie the Chearon doctrine al- tory interpretation come into play. Iozrss an agency to rely on statutory ambi- First, for ordinary agency rules, the Su- guity to issue ordinory ru\es, the major preme Court applies what is known as rules doctrine 7:reuenfs an agency fi'om Chetn'on deference to authoritative agency relying on statutory ambiguity to issue interpretations of statutes. If the statute is majorrules. clear, the agency must follow the statute. Justice Breyer appears to have been the But if the statute is ambiguous, tire agency first to describe a dichotomy bebween ordi- has discretion bo adopt its own preferred nary and major rules and to articulate the interpretation, so long as that interpreta- major rules doctrine as a distinct principle tion is at ieast reasonable. See Cheuron, of statutory interpretation. In an article [I.S.A, Inc. a. Na'hna| Resotn'ces Defense written more than 30 years ago, he ex- Council, Inc., 467 U.S. 837, 842-45, 1-04 plained the principle this way: When de- s.ct. 2778, 81 L.Ed.2d 694 (1984). The termining "the extent to which Congress theory of Ch.euron is that a statutory ambi- intended that courts should clefer to the grlly or gap reflects Congress's implicit agency's view of the proper interpreta- delegation of authority for the agency to tion," courts shouid take into account the make policy and issue rules within the Iegislative reality that Congress may grant reasonable range of the statutory ambigui- the Executive Branch the authority to re- ty or gap. solve various "interst itial matters," but Second, in a nan'ow class of cases in- Congress itseif is "more likeiy to have volving major agency rules of great focused upon, and answered, major ques- economic and political significance, the tions." Stephen Breyer, Judicial, Reuiew of Supreme Court has articulated a coun- Questions of Law and Policy,38 Admin. tervailing canon that constrains the trx- L. Rev. 363, 370 (1986). Citing Justice ecutive and helps to maintain tlte Con- Breyer"s 1986 article, the Supleme Court stitution's separation of powers. F or an later explained that, ix "extraordinary agency to issue a major rule, Congress cases," Congress could not have "intended musL clearly authorize the agency to do to delegate a decision of such economic so. If a statute only a'mbi'gznus|y sap- and polibicai significance to an agency in so plies authority for the major rule, the cryptic a fashion." fDA u. Bt'oum & WiL- 420 855 FEDERAL REPORTER, 3d SERIES lia,mson T'oba,cco Cory.,529 U.S' I20, 759, industry generally, or cigareLtes spe- 160, r20 s.ct. r29r, 146 L.trd.zd r2l cifically. The Court thus invalidated (2000). the rule, stating that ib was "confident that Congress could not have intended In keeping with the principle articulated to delegate a decision of such economic by Justice Breyer, the Supreme Court has and political significance to an agency repeatedly rejected agency attempts to in so cryptic a fashion." Id. at 160, 120 rnajor regulatory action vitliout clear take s.ct. 129i. congression al authornation. Consider the o Gonzales a. Oregon,546 U.S. 243,126 following cxamples: s.ct. 904, 163 L.Ed.zd 748 (2006). The o Corp. u. MCI Tel,econtmunications Controlled Substances Act gave the Amertcan Teleplt'one & Telegraplt Co-, AttorneS' General authority to de-reg- r29 5r2 U.S. Z1B, 174 S.Ct. 2223, ister physicians, thus preventing them L.Ed.2d 182 (1994). The Communica- from writing prescriptions for certain tions Act of 1934 gave the FCC au- drugs, if the Attorney General con- thority to "modify'' r'ate-filing require- cluded that de-registration was in the ments. The FCC issued a rule that "public interest." The Attorney Gener- completely exempted certain teiephone al issued an interpretive rule declaring companies foom rate-filing requile- that physisisns could not prescribe ments. The Court struck down the controlled substances for assisted sui-, rule, holding that the FCC's authority cides. It would have been a major step to mod'ify statutory requirements did for the Attorney General to proscribe not permit the agencY to eliminate physician-assisted suicide in this way. those requirements. It would have Yet'there was no clear statutory au- been a major steP for the FCC to thority for the Attorney General to do eliminate those requirements. Yet so. The Court therefore rejected the there was no clear statutory authority ruie, stating thzl it '\vouid be anoma- fbr ttre FCC to do so. The Court ex- lous for Congless to have so painstak- plained that it was "highly uniikely ingly described the Attorney General's that Congress would leave the deter- iimited authority to deregister a single mination of whether an industry will physician or scheclule a single di'ug, be entirely, or even substantially,tate' but to have given him, just by implica- regulated to agency discretion." Id'. af' tion, authority to declare an entire 237,174 s.ct.2223. class of activity outside the course of o FDA u. Broum & Wzlliamsott Tobacco professional practice." Id. at 262, 126 Cotp., 529 U.S. 120, 120 S'Ct. 1291, S.Ct. 904 (intelnal quotation marks 146 L.F,d.Zd I27 (2000). The Food, omitted). "The idea that Congt'ess Drttg, and Cosmetic Act gave the tr'DA gave the Attorney Genelai such broad broad and general authority to regu- and unusual authority thlough an im- late "drugs" and "devices." The F DA plicit delegation in the CSA's reg'istra- atternpbed to use this general authori- tion provision is not sustainable." 1d' ty to regulate the tobacco industry, zt 267, 126 S.Ct. 904. including cigarettes. Regulating ciga- c Utilitll Air Regulatory Crr"oztTt a. EPA, rettes would l-rave been a major eco- u.s. --, 134 S.Ct. 2427, lB9 nomic and political action. Yet there -L.Ed.zd 372 (2014). Various parts of was no clear statutory authorizat'ion the Clean Ail Act gave the trnviron- for the FDA to regulate the tobacco mental Protection Agency authority to US TELECOM ASSOCIATION v. FCC 421 Clte as 855 F.3d 381 (D.C. Cir. 2017)

regtlaLe "zny air poilutant." It rvas not clearly if it wishes to assign to an clear whethel greenhouse gases were agency decisions of vast 'economic and air poliutants for ali Clean Air Act politicai significance."' Id. at 2444 programs. The EPA nonetheless pro- (quoting Bro'utn & Williamson, 529 mulgated a rr-iie subjecting millions of U.S. at 159, 160, 120 S.Ct. 7297) (c1La- previously unregulated emitters of tion omittcd).2 greenhouse gases to burdensome per- The lesson fi'om those cases is apparent. mitting regulations under the Clean If an agency rvants to exercise expansive Air Act's Pievention of Significant De- regulatory authority over some major so- terioration and Title V permitting pro- cial or economic activity-regulating ciga- grams. It would have been a major' rettes, banning physician-assisted suicide, - step for trPA to regulate the green- eliminating telecommunications rate-filing house gas emissions of so many large requirements, or reguiating greenhouse and smali facilities. But there was no gas emitters, fol example-an am,biguous clear statutory authorization for the grant of statutory authority is not enough. EPA to do so. As a result, the Su. Congress must clearlpl aaLhot'ize an agency preme Court vacated the relevant parL to tahe such a major regulatory action.s of the rule, st4ting: 'Tfhen an agency Consistent with the Supreme Courb case clairns Lo discover in a long-extant law-, Ieading schoiars on statutory interpre- statute an unheralded power to regu- tation have recogn2ed the significance of late'a significant portion of the Ameri- the major rules docLrine. Plofessbr Esk- can economy,' we typically greet its ridge has explained the doctrine this way: announcement with a measure of skep- The "Suplerne Court has carved out a ticism. We expect Congress to speah potentially important exception to delega-

2. For completeness, two other cases warrant the Federai Government. Id. at 24BB-89. That mention. First, in Massachusetts v. EPA, .549 case is somewhat different lrom the prototypi- u.s. 497, 127 S.Ct. 1438, 167 L.F,d.2d 248 cal major rules cases because the agency il (2007), the Court concludcd that the Clean that parlicular. rule was l'lot seeking to regu- Air Act's provision for the regulation of new late or de-rcgulate (as opposed to tax or subsi- motor vehicles clearly authorized EPA to reg- dize) some major private activily. Rathcr, the ulate the greenholse gas emissions of those case concerned the scope of government sub- vehicles, once EPA made a finding that green- sidies under the health care statute. The case house gases may endanger the public health. therefore seems to stand for the distinct prop- See id. at 528-29, 127 S.Ct. 1438. So even osition that Chevron deference may not apply though such a rule would presumably be a when an agency interprets a major govern- major rule, the statute clearly authorized it, ment benefits or appropriations provision of a according to the Court. In UARG, by contrasl, statute. the Court ioncluded that the Clean Air Act's Prevention of Significant Deterioration and 3 This Court. has also employed the major Title V permitting programs did not clearly rules doctrine. See, e.g., Distt'ict of Columbia authorize EPA to regulate emitters of green- v. Deputtnrcni of Lahor, 819 F.3d 444, 446 (D.C. (rejecting house gases under those programs. Cir'. 20i6) the Deparrment of Labor's interpretation of the Davis-Bacon Act, Second, in King v. Burwell, U.S. which regulates pubiic worhs, to apply to 135 S.Ct. 2480, 192 L.Ed.zd 483- (2015),-, rhe construction of privately funded, o,*,ned, and Court applied a form of the major rules doc- operated buildings); Loving v. 1RS, 742 F.3d trine and stated that Chevron deference did 1013, l02l (D.C. Cir'. 2014) (rejecting the notiapply to the major question of whether Internal Revenue Service's interpretation of a the Affordable Care Act authorized .govern- tax statute to zruthorize new regulation of ment subsidies to individuals who.obtained hundreds of thousands of tax-return prepar- health insurance on exchanges established by ers). FEDERAL REPORTER, 3d SERIES 422 855 put function. As one congressional official the major question's ccLnon' Even if tion, it to them: "Major policy questions' ma;or' has delegated an agency general Co.,gr"., questions, major poiitical ques- or adjudicatory power' judges economic ,.rteilri.ittg preemption questions are all the Congress does not deiegate tions, presume that don't intend to leave them amend major so- same. Drafters ils authotity to settle or quotation unresolved." Id'. aL 1004 (internal cial and economic policy deeisions'" Wtt'- A marks and altetaLions omitted)'a tt^t X. Esrnrocr Jn', Iurrnpnnrixc La'w' AND THE major rules doctrine consti- PntunR ow How ro Rael Srerutns In short, the reason" principie of statutory bo*.r,rurrorq 2BB (2016)' The "key tutes an important a lower for the doctrine, Professor Eskridge has interpretation in agency cases' 'A^s "is the strong presumption of .o*t, *u must follow the major mles doc- by the "*OU;"a,.oirlntnu for major policies un-less and trine as it has been articulated and until Congress has deliberated about Supreme Courb. poli- enacted a change ii-r those majol cies.... Because a major policy change B should be rnade by the most democraticaliy In order for the FCC to issue a major I' Section 7 accountabie process-Article rule, Congress must provide ciear authori- of continuity is con- two legislation-this kind zaLion. We therefore must address Id' at 289' slstent with democratic values '" questions in this case: (1) Is the net neu- (2) so' has hr their landmarh study of Congress's trality rule a major nile? If ' the FCC to statutory dl'afting practices' Professors Congress clearly authorized that Gluck aud Bressman likewise stated issue the net neutralitY rule? "the major questions doctrine is a depar- of ture from Ch'eu"on's simple presumption 1 that doctrine delegation. In particular' - The tr'CC's net neutrality lule is a major presumpti on of nondelegation Coult's supports- a rule for purposes of the Supreme ambiguity over that in ine face of statutory major ruies doctrine' Indeed, I believe or questions of ma- -ujo, policy questions-ot proposition is indisPutabie' economic significance'" :ot Oofni.uf Court has described major Schultz Bressman' The Supreme Abbe R. Gluci< & Lisa and politi- th'e In' rules as those of "vast 'economic StatuLory Interpretat;ton from tlARG,134 S'Ct' at2444 Empincal Stud'g' of Congres' cal significance."' ,mn-Ai (qr-roting Broum & Williamson, S2g U'S' at Drafting, Delegation' and th'e Can- sional S.Ct' 1291)' The Court has not 65 Stan' L' Rev' 901' 1003 tOO, iZO o,ns, Part -i, a bright-line test that distin- empirical study concluded articulated (20i3). Their mles from ordinary mles' doctrine reflects con- guishes major that the major rules the Court's with the in- L u gunural matter, however, gressional intent and accords are cases indicate that a number of factors Ih"-ur"n, reality of how legislators and relevant, including: the amount of money .or,gt"rrional staff approach the legisiative and appiied the belierre that preme Court has articulate

involved for regulated and affected parties, consumers and fi'om fully responding to the overall impact on the economy, the their custorners' preferences. The mle number of people affectecl, and the degree therefore wrests controi of the Intelnet of congressional and public attention to the from the peopie and privale Internet, ser- issue. See UARG, 134 S.Ct. at 2443-44 vice providers and gives control to the (regulation would impose massive compl! Government. The rule wili affecL every ance costs on miilions of previously unueg- Internet sen ice provider, every Internet ulated emitters); Gotzzales a. Oregon, 546 content provider, and every Internet con- U.S. at 267,12,6 S.Ct. 904 (physician-assist- sumer. The financial impact of the tule-in ed suicide is an important issue subject to terms of the portion of the economy affect- ,,earnest and profound debate across the , ed, as well as the impact on investment in country"); Brown & lYitliamsoi, 52g TJ.S. infrastruclure, content, and .business-is at 726-27, 133, 143-61, 720 S.Ct. 72gI staggering. Not surprisingly, consumel in- (FDA's asserted authority wouid give it terest gToups and industry groups alike expansive power over tobacco industry, l"l" mobilized extraordinary resources to which was previously unreguiated under influence the outcome of the policv discus- the relevant statute); MCI, 512 U.S. at stons' 230, 2gI, 114 S.Ct. 2223 (rate-filing re- Mor:eover, Congress and Lhe public have quirements are "utterly centrai" and of paid close attention to the issue. Congress "enormous importance" to the statutory has been studying and debating net neu- scheme). The Court's concern about an trality regulation for years. It has consid- agency's issuance of a seemingly major ered (but never passed) a variety of biils rule is heightened, moreover, when an relating to net neutrality and the imposi- agency relies on a long,extant statute to tion of common-carrier reguiations on In- support the agency's bold new assertion of ternet serwice providers. See,' e.9., H.R- regulatory authority. See U.ARG,134 S.Ct. 5252,709th Cong. 12006); H'R. 5273, 109th at2444. Cong. (2006); H.R. 5477, 109th Cong. €006); s-' 2360' 109th cong" (2006); S' To be sure, cletermining whethet' a rule - 2686' 109th cong' (2006); s' 2917' 109th constitutes a rnaior rule spmetimes has bit or a "r(now it when y'u see it" quaritf f,H:rj?g:?;r?; ?j;ril1tJrr!,"fr.-:'!l{)', So there inevitably will be ciose cases anr debates afthe' margins abour wherher I li;Jl,:S:?r:ifflit*;'A?#i'l ??t3.; qualifies undel rule as major. But any 112th Cong. (20I2);H.R. 2666, 114th Cong. conceivable test for what mahes a rul^ major, rhe net neutraiity rule quaiine. u*^i iitif';flT"t'fif#l;'::ifi::Hllliffi- major rule. ple, when the issue was before the FCC, The net neutrality nile is a major rule the agency received some 4 million com- because it imposes common-carrier regula- ments on the proposed rule, apparently tion on Internet ser-vice providers. (A com- the largest number' (by far) of comments mon carrier generally must cairS' alltraffic that the FCC has ever received abouL a on an equal basis without unreasonable proposed rule. Indeed, even Plesident discrimination as to price and carriage.) In , Obama publicly weighed in on the net neu- so doing, the net neutrality rule fundamen- traiity issue, an unusual presidential action tally transforms the Internet by prohibit- when an independent agency is considering Internet service providers from choosing a proposed rule. See Statement on ing the content they want to transmit to Internet Neutrality, 2014 D^q:lv Cow. 424 855 FEDI'RAI, REPORTER, 3d StrRIES

(Recall Pnss. Doc 841 (Nov. 10,2014)- The Prest- tion of information services. that a clent's iutervention only underscores the common carrier generall5' must carry all enorrnous significance of the net neutrality traffic on an equal basis without unleason issue. able discrimination as to price and carriage.) The statute was oi'igfually designed In addition, as in othel cases where the to regulate telephone sei-vice providers as Supreme CourL has held that the major coml)lon carriers. rules doctrine applied, the FCC is relying here on a long-extant statute-namely, the By the time of the 1996 amendments to as amended Communications Act of 1934, ., the Act, the Internet had come into being. in 1996. In UARG, the Supreme Court The 1996 amendments i'eflected that devei- wrote the following: "When an agency opment. Among other things, the amend- claims to discover in a long-extant statute ments articulated a generai philosophl' 61 an unheralded power to regulate 'a signffi- limited regulation of the Inbernet. "It is cant portion of the Amer:ican economy,' we the policS' of the United States," Congress typically greet its announcement with a stated, "to presewe the vibrant and corrr- measure of shepticism' We expect Con- petitive free marhet tltat presently exists gress to speak cleariy if it wishes to assign for the Internet and othei' interactive com- to an agency decisions of vast 'economic puter services, unfetlered b;' F ederal or ancl politicai significance:"' 134 S.Ct. at State regulation." 47 U.S.C. $ 230(b)' 2444 (quo+"ing Brourn & Wi\Liom'son, 529 heeping with the express statutory u's' at 159' 160' 120 s'ct' 729r) (cit'ation In philosophy of light regulation of the Inter- ornitted). The Court in UARG might as until 20L5 regulated Intelnet weil have been speaking about the net iret, the FCC cable systens as an neutrality rule. That UARG language is service plovided over information sewice, the lighter regulatory directly on point here. rnodel. The 1934 Act (as amended in 1996) The net neutraliLy rule is a major rule perrnits such light legulation of the Inter'- any plausible concepLion of the ma- under net. What that Act does not clea'l;' clo is jor rules doctrine. As Judge Brown rightly treat Internet service as a telecomtnunica- states, "any other conclusion would faii the tions sen'ice and thereby authorize Lhe test." Brown Dissent at' 402' straight-face FCC to regulate Internet sen'ice proviri- Act 2 ers as common caruiers. At most, the is ambiguous about whether Internet ser- Because the net neutrality irrle is a ma- vice is an informatiou service or a telecom- jor rule, the next question is whether Con- munications serrlice. gress cleurl,t1 zuLhonzed the l-CC to issue the net neutlality rule and impose com- Since 1996, Congress has not passed a sei:- mon-carrier regulations on Intelnet , statute clearly classiflting Internet sert'ice vice ploviders. The answer is no. as a telecommunications service or other- Congress enacbed the Comtnunications wise giving the trCC authorit;r to rmpose Act in 1934 and amended it, in 1996' The corrmon-carrier regttiations on Intei'net statute sets up different reguiatory sen'ice providers. That inaction has not schemes fot"'telecommunications sel-vices" been' the result of inattention. On Lhe has anci "infortnation ser-vices." To simplifii for contrary, as noted above, Congress present purposes, the statute authorizes been studying and debating the neL neu- heavy common-carrier reg'ulation of tele- tlality issue for years. Ald Congless has to communications services but light reguia- considered a variety of bilis relating US TELECOM ASSOCIATION V. FCC 425 Cite as 855 F.3d 381 (D.C' Cir. 2017) net neutrality and the imposition of com- Internet Seruices,545 U.S. 967. 125 S.Ct. mon-carrier regulations ou lnter"net ser- 2688, 162 L.Ed.zd 820 (2005). In Brand X, vice providers. But none of those bills has the F CC had classified Internet service passed. ovel cable lines as an information ser-vice In 2015, notwithstanding the Iack of and, consistent with that classification, im- clear congressional authorization, the posed only light leguiation on Internet FCC decided to unilaterally plow for-ward ser-vice providels. Various pelitioners sued ancl issue its net neutralitv lule. The rule to try to force the FCC to classify Internet classified Iuternet service as a telecom- serwice as a telecommunications service munications service and imposed ouerous and to impose common-carrier regulation common-carrier regulations on Internet on Internet service providers. The Su- service providers. By doing so, the FCC's preme Court stated that the statute was 2015 net neutrality rule upended the ambiguous about wirether Internet sen ice agency's traditional light-touch regulatory was an inforrnation service or a teiecotn- approach to the Internet. munications service. The Court applied deference and upheld the FCO's The probiem foi' the FCC is that Con- Cheurotz clecision to ciassify Internet serwice as an gless has nob clearly authorized the F CC information sen ice and to subject Internet to classify Inlernet service as a telecom- service providers to only light regulation. munications service and impose colnmon- carrier obligations on Inl,ernet serwice pro- Here, the F CC argues that, under viders. Indeed, not even the FCC clairns Brand X, the agency has authority to clas- that Internet service is clewly a telecom- si$r Internet sewice as a telecommuniea- munications service under the statute. On tions service because the statute is ambig- the contrary, the FCC concedes that "the uous. The FCC is badly mistaken. Brand Communications Act did not clearly re- Xs finding of statutory ambiguity cannot solve the question of how broadband be the source of the FCC's authority to should be classified." FCC Opposition Br' classify Internet service as a telecommuni- 9. Therefore, by the FCC's ourn admission, cations service. Rather', under the majol Congress has not clearly authorized the rr-rles doctrine, Brand Xs finding of statu- FCC to subject Internet ser-vice providers tory ambiguity is a bar to the FCC's au- to the lange of burdensolne common-carri- thority to classify Internet service as a er regulatiot-is associated \ rith telecommu- telecommnnieations service. nications services. Importantiy, the Brazd, X Court did not llndel the major iules doctrine, that is have to-and did nol-consider whether the end of the gatne for tl-re net neutrality classifying Internet service as a telecom- r.ule: Congress must clearly authorize an mnnications sen'ice and imposing common- agency to issue a major rule. And Con- calrier regulatiori on the Internet would be gress has not done so here, as even the consistent with the major lules doctrine. trCC admils. In other words, Bt'uzd X nowhere ad- To avoid that conclusion, the FCC relies dressed the question presented in this almost exclusively on the Supreme Colrrt's case: irarnely, i,vhebher Congress has clear- 2005 decision in Nation,al Cable & Tele- Iy aulhorized common-can'ier regulation of comm;unications Association u. Brand X Internet service providers.s Therefot'e, we

5. One night wonder whether it was a major "information services" regulation on Intcrnet step for the trCC to irrrpose even light-touch ser-vice providers. The ansrver is no; indeed, 426 855 FEDERAL REPORTER, 3d SERIES must consicler that question in the first ant to statutoly authority and tnay not instance. And that is where Brand' Xs exceed that authoritv. For major rules, finrling of statutory ambigLrity actually tor- moreover, the agency must have clear con- pedoes the tr'CO's current argument' gr.essional atthonzation. The net neutraiir Brand, Xs finding of arnbiguity by defini- ty rule is a major rule. But Congress has tion means that Congress has not ciearly nol clearlg authorized the FCC to issue authorized the FCC to issue Lhe net neu- that rule. Under the Supreure Court's ma- trality rule. And that means that the net jor mles doctrine, the net neutrality rule is neutrality rule is uniawftll under the major therefore unlawful and must be vacated.? rules doctrine.. ::: * :r II The FCC adopted the net neutrality rule The net neutrality rule is unlawful for an because the agency believed the rule to be alternative and independent reason' The wise poiicy and because Congless would rule violates the First Amendment, as that not pass it. The net neutrality rule might Amendrnent has been interpreted by the be wise policy. But even assuming that the Supreme Court. Absent a demonstration net neutrality nrle is wise policy, cong:res- that an Intelnet service provider possesses sional inactiou does not license the Execu- market po\,ver ir-r a relevant geogt'aphic tive Branch to tahe mabters into its own market-a demonstration that the FCC hancls. F ar from lL. See Hantian u' Rums- concedes it did not make here-irnposing fetcl, 548 U.S. 55?, 636, 126 S.Ct. 2749, \65 common-carrier regulations on Internet L.Ed.zd 723 (2006) (Breygr, J., concurring) service providers violates the First (gravely serious poiicy probiem is nonethe- Amendment. less not a "blanh checli" for the Executive probiem); Yout'r'gs- Branch to address the A taunt, Sheet & Tzrhe Co.,343 U.S. 579,72 question the S,Ct. 863' 96 L.trd. 1153 (Jachson' J', con- The thresholcl is whether curing). Under our system of separation First Amendment applies to Internet ser- of powers, an agency may act only pur:su- vice ploviders when they exercise editorial

to both questions is apparently no Internet ser-vice provider raised questions. But the answer that, the such a claim in Brand X The FCC's light- no. I see no statutory language in "clearly classifies ISPs touch regulation did not entail coumon-carri- concurrence's words, "clearly er regulation and was not sonrc major new as teiecommunications providers" or ISPs as tele- regulatory step of vast economic and political authorizes the agency to classify did significance. The rule at issue tn Brand X communications providers." Id- Nor either those two therefore was arr ordinary rule, not a major Brand X, as I read it, say of ruie. As a result, tl.re C'hevron doctrine applied, t hings. not thc major rttles doctrinc. 7 If the major rules doctrine meant only that far as 6. The concurrence in the denial of rchearing Cheuron did not apply, but did not go so authorization en banc articulates what it describes as "two to require clear congressional distinct species of ambiguiry." Concurrence for a major ruie, we would then simply deter-- at 386. The concurrence distinguishes (i) mine the better reading of this statute without It is u,hether the statute itself clearly classifies In- a thumb on the scale in either direction. ternet selvice providers as telecommunica- not necessary to delve deeply into that hypo- of tions providers and (ii) whether the statute thetical inquiry here, but the better reading .infor- clearly authorizes the agency to classily Inter- this stahrte is that Internet service is an ex- net service providers as telecommunications mation serwice, as Judge Brown has providers. I agrce that those are two distinct plained. See Bror,i'n Dissent at395-96' US TELECOM ASSOCIATION V. FCC 427 Ctte as 855 F.3d 381 (D.C. Cir. 2017)

discretion and choose what content Lo car- The Supreme Court's landmark deci- ry and not to carty. The answer is yes. sions in Turner Broctd,casting System, Inc. u. FCC,512 U.S. 622, 774 S.Ct.2445,I29 Constitution affords Article I of the L.Ed.2d 497 (1994), and Tut'ner Broad- substantial power to regulate in- Congress casting Sgstem, Inc. a. FCC,520 U.S. 180, But the First Amend- terstate commerce. 11? S.Ct. 7\74, 737 L.trd,zd 369 (1997) ment demands that the Government em- (T u,rner B r o a.d"c asti,ng 11), established th at regime" for the ploy a more "laissez-faire those foundational First Amendment prin- and other editors and speakers in press ciples apply to editors and speahers in the marketplace. Colum- the communications modern communications marketplace in System, Inc. a. Demo- bia Broadcasting much the same way that the principles Co'mmittee, 4I2 U.S. 94, cratic National apply to the newspapers, magazines, pam- 93 S.Ct. 2080, 36 L.trd.zd 772 (1973) 161, phleteers, publishers, booksLores, and (Douglas, J., concurring in judgment). newsstands traditionally protected by the Ratified in 1791, the First Amendment First Amendment. provides that "Congress shall mahe no law The I'Qtr-rler Broadcasting cases ad- . . . abridging the freedom of speech, or of dlessed "must-carry" regulation of cable the press." U.S. Coxst. amend. I. The operators. The reievant statute required First Amendtnent protects an independent cable operators to carry certain local and media and an independent communications public television stations. Proponents of rnarketplace against tal

by exercising editorial discretion over erators. But Internet serwice providers and which stations or programs to include in cable oper:ators perform the same kinds of its repertoile,' cable progl'ammers and op- functions in their respective networks. Just erators 'seek to communicate messages on like cable opelatols, Internet service pro- a wicie variety of topics and in a wide viders deliver content to consumers. Inter- variety of formabs."l Id. (alLetation omit- net service providers may not necessarily ted) (quoting Los Ange\es u. Prefewed generate much content of their own, but Comntunications, [nc.,476 Lr.S. 4BB, 494, they may decide what content they will 106 S.Ct. 2034,90 L.Ed.2d 480 (1986)); sea transmit, just as cable operators decide also Arka'tzsas Educational Teleui'siotz what content they will transmit. Deciding Commission u. Irorbes,523 U.S. 666, 674, whether and how Lo transmit ESPN and 118 S.Ct. 1633, 140 L.Ed.zd 875 (1998) deciding whether and how to transmit ("Although, programming decisions often trSPN.com are not meaningfully different involve the compilation of the speech of for First Amendment purposes. parties, the decisions nonetheless third Indeed, some of the same entities that acts."). constitute communicative provide cable teievision service-eolloqui- The Court's ultimate conclusion on that ally known as cable companies-provide threshold F irst Amendment point was not Internet access over the very same wires. obvious beforehand. One could have imag- If those entities receive First Arhendment ined the Court saylng that cable operatols protection when they transmit television merely operate the transraission pipes and stations and networks, they Htewise re- are not traditional editors. One could have ceive Filst Amendment protection when imagined the Coult comparing cable oper- they transmit Internet content. It would ators to electricity providers, trucking be entirely illogical to conclude othervise. companies, and railroads-all entities sub- In short, Internet ser-vice providers enjoy ject to tladitional econornic regulation. But First Amendment protection of their that was not the anal5'dical path chart'ed by rights to speak and exercise editorial dis- the Turner Broa.d,casting Court. Instead, cretion, just as cable operators do. the Court analogized the cable operators FCC advances two primary argn- to the pubiishers, pamphleteers, and booh- The merrts in its effort to distinguish Tu'ner store owners traditionally protected by the Broadcu,sting and demonsh'ate that there F irst Amenclment. As Turner Brou'dcast- no reai Filsl Amendrnent issue here. ing concluded, the First Amendment's ba- is sic principles "do not vary when a new and First, the F CC argues (ancl the panel different medium for comrnunication ap- agreed) thaL Turner Bros.d'casti'tt'g does pearsl'-although there of cou-l'se can be not apply in this case because many Inter- some differences in how the ultimate F irst net service providet's do not actually exer- Amendment analysis plays out depending cise editoriai discretion to favor some con: on the natule of (and competition in) a tent over others. Many Internet selice parLicular communications marhet. Broum, providels simply allow access to all Inter- u. Entertuinment M erchants Association, net content providers on an equal basis. 564 U.S: 786, 790, 131 S.Ct. 2729, 180 tr'or that reasonr the FCC contends that it L.Ed.zd ?08 (2011) (internai quotation may prevent Internet service providers marh omitted). from exercising their editorial discreLion or Het'e, of course, we deal with Internet speech rights to favor some content or ser-vice providet's, not cable teievision op- disfavor other contenL. US TELECOM ASSOCIATION v. FCC 429 Clte as 855 F.3d 381 (D.C. Cir. 2017)

I find that argument mystifying- The net content. But even under the FCC's FCC's "use it or lose it" theory of First description of the rule, an Internet ser-vice Amendment rights finds no supporL in the provider that chooses to carry most or all Constitution or precedent. The FCC's the- content still is not allowed Lo fauor some ory is circular, in essence saying: "They content over othei' content whel it comes have no tr'it'st Amendment rights because to price, speed, and availability. That half- they have not been regularly exercising baked regulatory approach is just as for- any First Amendment rights and therefole eign to the trirst Amendment. If a book- they have no First Amendment rights." It store (or Arnazon) decides to carry z|L may be true that some, many, or even bool

8, The concurrence in the denial of rehearing ing various net neutraliLy requirements on an cn banc seems to suggcst that thc nct ncutral- Internet sen,ice pr-ovider that "provides the iLy rule is voluntary. According to the concur- capability" to access "all or substantially all" rence, Internet service providers may comply content on th(3 Internet) (italics omitrecl). It with the net neutrality rule if they want to would be strange irrdeed if all of the conrro- comply, choose not comply but can to if they versy were over a "rule" that is in fact entire- do not want to comply. To the concurring ly voluntary and merell' proscribes false ad- judges, net neutrality merely means "if you vertising. ln any evcnt, J tend 1o doubt that say it, do it." Concurrence at 21. If that lnternet scr-vicc plovidcls can now sinLply dcscription were really true, the net neutrality say that they will choose nor to comply with any rule would be a simple prohibition against aspects of the net neutraliLy nrle false advertising. But that does not appear to and be done with it. But if that is what the concurrence be an accurate description of the rule. See means to Protecting and Promoting the Open Internet, say, that rvould of course avoid any 30 FCC Rcd. 5601, 5682 It 187 (2015) (impos- First Amendment problem: To state the obvi- 430 855 FEDERAI- REPORTER, 3d SERIES

Second, the FCC suggests that Turner tification for infi"inging on that right. See, Broadcasting may not apply in the same e.9., Ri\ey u. National lrederation, of the way in the Internet context because the Blittd of Nortlt Carolinq Inc., 487 U.S. Internet service providers do not face the 781, 796-97, 108 S.Ct. 2667, 707 L.Ed.zd same kind of scarcity-of-space problem 669 (1988); Pacific Gas & Electric Co. a. lhaL a cable operabor, for example, might Pub\ic Utihties Commission of California, face. In other words, the F CC argues that 475 U.S. 1, 16, 106 S.Ct. 903, 89 L.Ed.2d 1 cable operators have fixed "space" and can (1986) (plurality opinion); Mia.mi Herald carry only a limited number of channels; Publisldng Co. u. Torrui\l,o, 418 U.S. 241, therefore, forced-carriage lequirements 256-58, 94 S.Ct. 2831, 4r L.Ed.2d 730 would necessarily restrict First Amend- (1974). That foundational principle pachs at ment rights by depriving cabie operators least as much punch when you have room of tlreir abiiity to carcy some desired con- on youl' piatform to carry a lot of speakers tent. By contrast, for the Internet, forced- as it does when you have room on your carriage requirements do not necessarily platform to can'y only a few speakers. providers of their deprive Internet service In short, the Supreme Court's Turn,et' con- ability to carry any of their desired Broadcasting decisions mean that Internet tent. There is space for everyone. service providers possess a First Amend- That argument, too, malres little sense ment rig'ht to exercise their editorial dis- as a matter of basic tr'it'st Amendment law. cretion over what content to carry and how First Amendment protection does not go Lo carry it. To be sure, the Tut*ner Broad,- away sirnply beeattse you have a large casting decisions have sparked great con- communications platform. A iarge booh- troversy because they have constrained stole has the same rig'ht to exelcise edito- the Goverrrment's ability to regulate the rial discretion as a small bookstore. Sup- communications marketplace. See, e.g., Su- pose Amazon has capacity to sell every san Crawford, First Amendment Common booir currentl5r in nubrt.ation and therefore Sense, I27 Har:r. L. Rev. 2343,2345 (2014); does not face the scarcity of space that a Stuart Minor Benjamin, Transmitting, Ed- bool

ous, a supposed "rule" that actuaiiy imposes followed would not raise a First Amendment no mandates or prohibitions and need not be issue. US TELECOM ASSOCIATION v. FCC 431 Citc as 855 F.3d 381 (D.C. Cir. 2017)

under bhose decisions, the F'irst Amend- Does the FCC's net, neutrality rule satis- ment does not allow the FCC to {,reat fy intermediate scrutiny? The answer is Internet, service providers as mere pipeline no. operatoi's rathel than as First Arnend- In the abstract, the intennediate scruti- ment-protected editors and speakers.c ny test is somewhat question-begging (as is the strict scrutiny Lest, for that matter). The test almost necessarily calls for corn- B mon-law-like decisions articulating and In light of the l"ut-ner Broad,casting de- recognizing exceptions and qualifications cisions, Internet service providers have to constitutional rights. In this particular tr'irst Amendment rights. Of course, under context, however, the Supreme Court has the Suprbme Court's case law, Filst already applied the intermediate scrutiny Amendment rights are not always abso- test in a wzy that provides relatively clear lute: The Government rnay sometimes in- guidance foi' Iower courts. fringe on First Amendment rights if the Applying intermecliate sclutiny, Lhe Tur- Government shows a suificient justification ner Broa..d,casting Court held that content- for doing so. neutral restrictions 0n a communications service provider's speech and ed.itolial Broadcastitzg establishes that, to Tu-ner rig'hts rray be justified if bhe service pro- impose content-neutral legulations on In- vider possesses "bottleneck monopoly pow- ternet serwice providers, the Government er'" in the relevant geographic market. Id. must satisfy the intermediate scrutiny test. at 661, 114 S.Ct. 24,45; see aLso id,. at 666- To satisfy the intermediate scrutiny test, 6'/, II4 S.Ct. 2445; Tut'ner Broadcasting the Government's regulation must promote II, 520 U.S. 180,.117 S.Ct. 1174 (controlling a "substdntiai governmental interest," be opinion of Kennedy, J.).10 But absent a "unrelatecl to the suppression of free ex- demonstration of a company's market pour pression," and impose a restriction on er in the lelevant geographic market, bhe First Amendment lights that "is uo greal- Government may not ilterfere with a cable er than is essential to the fi;rtherance of operator's or an Internet selvice provider's that interesL." Tur"rler Broadcasting, 512 First Amendment right to exercise editori- U.S. at 662,I74 S.CL.2445 (intei'nal quota- al discretion over the content it carries. tion mark omitted) (quoting Un,ited States See Comcast Cable Comnzztnications, LLC a. O'Btien, 391 U.S. 367, 377, BB S.Ct. u. IICC, ?1? F.3d 982, 993 (D.C. Cir. 2013) 7673,20 L.trd.zd 672 (1968)). (Kavanaugh, J., concurring); Cableuision

9. The concurrence in the denial of rehearing have little interest in advocating lor the First en banc notes that the cable trade association Amendrnent rights of Internet ser-vice provid- NCTA has not raised a First Amendment ar- ers and video programming distributors. That gument- But other Internet senrice providers presumably explains NCTA's current silence have raised the First Amendment argument in on the First Amendment issue. this and other forums. And NCTA itself has obli- previously argr-red that net neutraliry 10. In Turner Brottdcasling 11, Justice l(enne- gations violate the See, e-g., First Amendnent. dy's opinion for four justices was controlling National Cable & Telecommunications Asso- because it represented the "position taken by ciation, Comment Letter on Preser-ving the those Members who concurred in the judg- Open Internet 49-64 (Jat 14, 2010). More- rleentf on the narrowest grounds." Marks v. over, the concurrence's point reflects a mis- ] United States, 430 U.S. 1 193, understanding of who NCTA now is. NCTA BB, 97 S.Ct. 990, (1977). represents content providers as well as cable s1 L.Ed.2d 260 operators. And content providers obviously A9' 855 FI'DERAI REPORTER, 3d SERIDS '+O lJ Rather than addressing any problem of Systems Corp' u. lrCC,597 F'3d 1306, 1323 power, the net neuh'alily rttle in- (D.C. Cir. 2010) (Kavanaugh, J', disseut- rnarket private Intelnet service pro- itg)' steacl cotnpels viclels to supply all open platfoln, fol all At the time of the Tutner Broadcasting would-be Internet speahers, and theleby decisions, cable operators exercised mo- cliversify and inct'ease the tlutnber of nopoly power in the loca] cable television voices available on the h-rternet' 'lhe I'Lrle markets. That monopoly power afforded forcibly reduces the relative voices of some cable operators the ability to unfairly dis- Internet service and content'providers and advantage certain broadcast stations and enhances the relatii'e voices of o'bher Inter'- netrvorks. In the absence of a competitive net content Pi'oviders. places malket, a broadcast station had few But except in rare circumstances, the to to turn when a cable operator declined First Arnendment does not.allow the Gov- intervention' cartry lt. Without Government ernment to regulate the content choices of cer- cable operators could have disfavored prival,e eclitors just so that the Got'ern- some tain broadcasters and indeed forced ment may enhance certain voices and alter altogether' broadcasters out of the market the content available to the citizent'y' As ' That would diminish the content available the Supreme Court stated in Buclc'Ley u' con- to cohsumers. The Supreme Court Valeo, in one of the most important sen- market- ciuded that the cable operators' tences in F irst Amendment history: The justified Gov- distorting monopoly power "concept that govelnrtent may restrict the cable ernment intewention. Because of the speech of some elements of our society in operators' monopoly power' the Court ulti- order to enhance the relative voice of oth- mately upheld the must-carry sbaLtfte' See ers is wholl)' foreign to the First Amend- Tut*ner Broud'cast;tng II, 520 U'S' at 196- ment." 424IJ.S. I, 48-49,96 S.Ct' 612, 46 of 208, 1I7 S.Ct. 11?4 (controlling opinion L.trcl.zd 659 (19?6). The Coui't in Tut'n'er Kennedy, J.). Broad,casti;n'g re-affirmed that Buclcleg principle, as have many other Supretne The probiem for the FCC in this case is Court cases betbre and since' See, e'g', that here, unlike itt Tut-ner Broa'dcast'ing' Arizona ?ree Ettterptise Club's Fleedom the FCC has not shown that Internet ser- CLub PAC u. Bei,ntzeLt, 564 U.S' 72I,'141, vice provid"r.'por.ur. market power in a 131 S.Cr. 2806, lB0 L.Ed.2d 664 (2077); relevant geographic markel' Indeed, the Citizens Uniteil, u. IrItrC,55B U.S. 310, 350, trCC freely acknowledges that it has not 130 s,cr. 876, 1?5 L.trd,2d ?53 (2010); even tried to clemonstrate marhet power' Meyet- a. G'rant,486 U.S. 4L4, 42'6 n'7, 108 The F-CC's Order states that "these rules S.Ct. 1886, 100 L.trci.zd 425 (1988); Itirst do not addless, and are not desig'r-red to Nationa| Bat'r,k of Bostotz u. Bellotf'i, 4?'5 cleal with, the acquisition or maintenance u.s. ?65, 790-92,98 s.ct. 1407,55 L.Ed'zd of market power or its abuse, real or po- 707 (19?B). tential." Protecting and Promoting the with that beclroch Bt'rckley Open Internet, 30 FCC Rcd' 5601' 5606 Consistent principle, Turner llroadcustin'g dicl not fl 1l n.12 (2015).11 on the lact that rhe cable opcrators Because the FCC has not tried to show relied 11. "bottlenech monopoly pou'er'" 512 market power, I need not determine exactly -U.S.possessed 114 S.Ct 2445; see also id' at what a market power showing rvould entail in ut 661 , this context wiih respect to marltet share and 666-67 , 1 14 S.Ct. 2445. the like. In Tumer Broadcasting' the Court US TELECOM ASSOCIATION v. FCC 433 Citc as 855 F.3d 381 (D-C. Cir. 2017)

allow the Government to satisfo interme- suppression of free expression; and if the diate scrutiny merely by asserting an in- incidental restriction on allegecl First terest in diversifyjng or increasing the Amendment ft'eedorns is no gteater than is number of speakers available on cable essentia| to the furtirerance of that inter- systems. After all, if tlrat interest sufficed est.") (emphasis adcled) (internal quotatiol to uphold musl-carry reguiation wiLhout a marl

12. At a minimutrt, T-unter Brondcastittg re- T-urner Broddcasting seems to require even quires the Government to shor.r, market power more from the Government. The Governnent in order to satisly intermediate scrutiny. But apparentll, must also shor.r' that thc mar.ket 434 855 FEDERAL RtrPORTER, 3d SERIES

~~~~er the F CC could make such a marl~~~~

power wouid actually be used to disadvantage sion of the First Amendment. They have ad- certain content providers, thereby diminish- vanced extremely thoughtftrl argumcnts. Sea, ing the diversity and amount o[ content avail- e.9., Cess R. SuNsrerx, DnuocMcy ,rNo rHe Pnoe- able. See Turner Broadcasting, 512 U.S. at LEM oF FnpE Speecn (1993); Robelt Post & 664-68, 114 S.Ct. 2445; Ttnner Broadcasting Amanda Shanor, Adam Smith's First Amend- II, 520 U.S. at 196-213, 117 S.Ct. 1174 (con- ment, l2B Harv. L. Rcv. F. 165 (2015). But trolling opinion of Kennedy, J.). the traditional laissez-faire model still reflects the basic tenor of the Supreme Court's First 13. Some defenders of net neutralily raise a Amendment jurisprudence. Indeed, that ap- siippery slope argument: If the First Amend- proach to the First Amendment seems to have ment really bars Lhe net ireutrality rule, then grou,n only stronger in recent decades. See, the First Arnendment would also bar Govern- e.g., Brotn,564 U.S. 786, 131 S.Ct.2729, IB0 ment regulation of telephone companies that L.Ed.2d 708; Soruell v. IMS l{ealth hrc., 564 connect person-to-persou ca]ls. Ttrat scarl'- u.s. 552, i3i s.cr. 2653, rBO L.Ed.zd 544 sounding hypothetical is unpersuasive, hor,v- (2011); United States y. Stevens, 559 U.S. 460, ever, because the telephone company is not 130 S.Cr. rs77, 176 L.F,d.2d 435 (2010); Citi- engaged in carrying or making rrass commu- zens united,55B U.S. 310, 130 S.Ct..876, 175 nications in those circumstances: "Mass-me- L.Ed.2d 753; Thompson t). l4/estem States dia speech implicates a broader range of fr-ee Medical Center,535 U.S. 357, 1,22 S.Ct, 1497, speech values that include interests o[ audi- 152 L.Ed.2d 563 (2002); Lorillard Tobacco Co. well as speak- ' ences and intermediaries, as v. Reilly, 533 U.S. 525, l2l S.Ct. 2404, 150 ers." Yoo, Free Speeclt, TB Geo. Wash. L. Rev. L.Ed.2d 532 (2001); Greater Neut Orleans at 701. The transmission o[ person-to-per-son Broadcasting Association, Inc. !. United communications does not implicate the same States, 527 U.S. 173, 119 S.Cr. 1923, 144 editorial discretion issues. So that slipper-y L.Ed.Zd 161 (1999): 44 Liquormart, Inc. v. slopc argument is not a persuasivc rcason to Rhode Island, 517 U.S. 484, 116 S.Ct. i495, fear, or refrain from recognizing, Internet ser- 134 L.Ed.2d 711 (1996); Rubin v. Coors Bretv- vice providers' Fir-st Amendment rights. ing Co.,514 U.S. 476, 115 S.Ct. 1585, 131 L.Ed.2d 532 (1995). As a lower court, we of 14. Over the years, many highly respected aca- course must take the Supleme Court's juris- demic commentators have questioncd that vi- prudence as we find il. US TELITCOM ASSOCIATION v. FCC 4,15 Cite as 855 F.3d 38t (D.C. Cir. 2017)

the Government may impose open-access apart ft'om the rule's invalidir;-,' ri,ucli;i't:ire or similar carriage obligations. In other major rules doctrine discusseci ir: il:l'L i oj words, if private lnternet service providers this opinion. possess market power, then Turner Broad,casting already gives the Govern- ment toois to confront that problem. In the hierarchical court systern established by Article III, a lower court must Therefore, it is impor:tant to be crystai carefully follow Supreme Court precedent. clear about one key point: The Supreme If we faiihfully apply current Supreme Court's First Amendment plecedents ol- Court doctrine here, then this becomes a low Lhe Government to impose net neutral- failly straightfoiward case. First, Supleme it5' oSlitrttons on Internet serwice provid- Court precedent requires clear congres- ers that possess marhet pov/er. In that sional auLhorization for an agenc/s major respect, Tu.ner Broadcasting reached a rule- See Utility Air Regu,Iatory Group u. middie ground. The Supreme Court did EPA, 734 S.Ct. 2427,2444 (2014). The net not go as far a.s some wanted in terms of neutrality rule is a major rule. But Con- protecting cable operators' editorial discre- gress has not ciearly authorized the FCC tion even when the cabie operators have to issue the net neutrality rule. The rule is market power. Some argued that a cable therefore r-inlawfui. Supreme operator shouid receive the same First Second, Court precedent establishes that Internet Amendment protections as a newspaper, sewice providers have a First Amendment whose editorial discretion isproLected euetz i'ight to exercise editorial discretion over if the newspryer has market power. See whether and how carcy Internet con- Torni,llo,41B U.S. 241, 94 S.Ct. 2831. But to tenL. See Turzrer Broad,casting Systerru, the Court rn Tul ner Broadcasting did not Inc. u. FCC, 5I2 U.S. 622, 7I4 S.Ct.2445, adopt that absolutist principle for cabie 129 L.Ed.zd 497 (1994). The operators. Government may interfere with that right only if it Therefole, absent showing market a of shows that an Internet serrrice provider power, Government heep its the must has market power in a relevant geographic hands decisions off the editoriai of Inter- market. But the FCC has not shown (or net service providers. Absent a showing'of even attempted to show) marl