Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20544 In the Matter of ) ) Framework for Broadband Internet ) GN Docket No. 10-127 Service ) ) Open Internet Rulemaking ) GN Docket No. 14-28 ) COMMENTS OF VERIZON AND VERIZON WIRELESS Of Counsel: William H. Johnson Michael E. Glover Roy E. Litland VERIZON 1320 North Courthouse Road 9th Floor Arlington, VA 22201 (703) 351-3060 Attorneys for Verizon and Verizon Wireless Russell P. Hanser Helgi C. Walker WILKINSON BARKER KNAUER, LLP Kellam M. Conover* 2300 N St., NW GIBSON DUNN & CRUTCHER LLP Suite 700 1050 Connecticut Ave., NW Washington, DC 20037 Washington, DC 20036 *Admitted only in California; practicing under the supervision of Principals of the Firm July 15, 2014 TABLE OF CONTENTS Page I. TODAY’S OPEN INTERNET BENEFITS CONSUMERS, EDGE PROVIDERS, AND BROADBAND PROVIDERS, AND A BALANCED APPROACH THAT PROTECTS CONSUMERS AND COMPETITION WHILE ENCOURAGING INNOVATION AND INVESTMENT WILL KEEP IT THAT WAY. ....................... 4 A. Verizon Strongly Supports an Open Internet and Has Strong Incentives to Promote Internet Openness. ................................................................................ 5 B. Internet Openness Is Best Promoted Through A Flexible Framework Rather than Prescriptive Rules....................................................................................... 10 II. FLEXIBILITY, INNOVATION, AND CONSUMER CHOICE SHOULD GUIDE THE COMMISSION’S APPROACH, WHETHER OR NOT IT DECIDES TO ADOPT FURTHER RULES. ......................................................................................... 16 A. Any Additional Transparency Requirements Must Be Reasonable and Limited to the Disclosing ISP’s Own Network. ................................................ 21 B. Any New No-Blocking Rule Should Ensure No Blocking of Content on the Customer’s Selected Tier of Service But Should Allow Flexibility for Additional Differentiated Services. ................................................................... 25 C. Any Commercial Reasonableness Standard Should Allow Flexibility for Pro- Consumer Innovation and Experimentation. ................................................... 29 D. Under the Proposed Commercial Reasonableness Rule, the Commission Could Address Particular Practices That Harm Consumers or Competition. ........................................................................................................ 36 III. ADDITIONAL REGULATION IS ESPECIALLY UNWARRANTED IN THE MOBILE BROADBAND MARKETPLACE, WHICH PRESENTS UNIQUE CIRCUMSTANCES AND IN WHICH AMERICA LEADS THE WORLD. .......... 38 A. Unique Features Distinguish Mobile Broadband Service from Fixed Broadband Service. ............................................................................................. 39 B. Mobile Wireless Broadband’s Unique Features Warrant a Particularly Light-Touch Regulatory Approach. .................................................................. 43 IV. BROADBAND RECLASSIFICATION WOULD BE A RADICAL AND RISKY STEP THAT WOULD JEOPARDIZE NATIONAL GOALS AND VIOLATE THE COMMUNICATIONS ACT. ......................................................................................... 46 V. THE COMMISSION SHOULD REFRAIN FROM IMPOSING ANY RULES ON INTERNET INTERCONNECTION ARRANGEMENTS, SPECIALIZED SERVICES, OR ENTERPRISE OFFERINGS. ........................................................... 69 A. There Is No Reason to Apply Open Internet Rules to Peering, Transit, and Other Internet Interconnection Arrangements................................................ 70 B. There Is No Reason to Apply Open Internet Rules to Specialized Services. 76 C. There Is No Reason to Apply Open Internet Rules to Enterprise Services. .. 77 VI. CONCLUSION ............................................................................................................... 78 Before the FEDERAL COMMUNICATIONS COMMISSION Washington, D.C. 20544 In the Matter of ) ) Framework for Broadband Internet ) GN Docket No. 10-127 Service ) ) Open Internet Rulemaking ) GN Docket No. 14-28 ) COMMENTS OF VERIZON AND VERIZON WIRELESS1 Maintaining an open, healthy and robust Internet is a paramount goal that benefits consumers, edge providers, broadband providers, and countless others. Nothing about the litigation that led to the remand of the Commission’s 2010 Open Internet Order, or the result of that dispute, should distract observers from the core point that Verizon supports and relies upon a robust and open Internet. Our customers demand it, and our business depends on it. We have committed to our customers our support for the open Internet, and our broadband Internet access services enable them to go where they want and do what they want online. We invest in world- class broadband networks, such as our all-fiber FiOS network and our 4G LTE wireless network, to keep pace with consumers’ demand and offer an ever-more-robust range of services. We also are actively engaged in many other parts of the Internet ecosystem, including through our Internet backbone networks, content delivery networks, over-the-top services, cloud-services, and other innovative services that rely on the open Internet and enable a better Internet experience. Each of these efforts depends on an open Internet and on the ability to reach 1 In addition to Verizon Wireless, the Verizon companies participating in this filing are the regulated, wholly owned subsidiaries of Verizon Communications Inc. (collectively, “Verizon”) 1 consumers over the networks, software platforms and services of other providers. Verizon’s various offerings create more choices for our end-user consumers and for those served by other broadband providers. In each of these areas, we face competition from a large and growing number of other providers, both traditional and non-traditional, while also increasingly partnering with a wide range of players to develop and offer new services and offerings to consumers. Broadband providers are responding to competition as one would expect and hope: By deploying more and better facilities, expanding the speeds and capacities of their service offerings, and offering consumers competitive prices. The light-touch approach pursued over the last two decades by policymakers of both parties has been central to these successes, and it continues to provide the foundation for innovation and investment that serves consumers well. For the reasons explained below, further regulation of broadband providers’ behavior is not needed at this time and would threaten the healthy dynamics fueling the growth and continued improvement of the Internet and the many services it enables. Competition and innovation are widespread throughout the Internet ecosystem, and ensure that the marketplace is responsive to consumer demand. Indeed, end users have accessed the Internet literally billons of times since the early 1990s, when Internet access service first became widely available, and yet proponents of regulation can only point to a few isolated and dated incidents of alleged problems. Existing legal protections, including the Commission’s transparency rule and generally applicable antitrust and consumer protection laws, as well as multi-stakeholder groups, already provide an effective backstop to prevent and address any future issues that could emerge. Should the Commission decide nevertheless to adopt rules it must strive to pursue a balanced approach that protects consumers and the open Internet while preserving the principles of flexibility, innovation, and consumer choice that have marked its approach until now. A 2 continued focus on transparency, supported by the Commission’s existing rule, is central to such an approach and should ensure that consumers have the information they need to understand their service options and to make informed choices. The benefits of transparency to competition on the Internet extend well beyond broadband providers’ services, as it is irrefutable that a wide range of Internet companies beyond broadband providers principally shape the consumer experience. The Commission has also proposed to reinstate a no-blocking rule. Verizon has been clear with our customers that we will not block their access to any content, applications, services or devices based on their source. Any new no-blocking rule should be consistent with that approach and ensure providers do not block any lawful Internet traffic within the customer’s chosen Internet access service. But, consistent with the D.C. Circuit’s decision, the Commission should allow flexibility for providers to negotiate differentiated arrangements or experiment with different service models if they see a customer benefit in doing so, even as customers can continue to go anywhere using their selected tier for Internet access service and edge providers can rely on that service to reach their customers without the need for negotiating with broadband providers for access to end-users. Similarly, a commercial reasonableness standard, if appropriately applied, could allow the flexibility for innovation that will benefit consumers while also providing a backstop that would permit the Commission to address problems or market failures that arise and that harm competition or consumers. Any commercial reasonableness standard should allow real flexibility for new approaches that may better serve consumers, even as they continue to receive traditional Internet services. 3 If the Commission proceeds with new regulations, it should limit such rules to fixed broadband Internet access services,