[Federal Register Volume 74, Number 228 (Monday, November 30, 2009)]
[Proposed Rules]
[Pages 62638-62662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28062]



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Part II





Federal Communications Commission





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47 CFR Part 8



Preserving the Open Internet, Broadband Industry Practices; Proposed 
Rule

  Federal Register / Vol. 74, No. 228 / Monday, November 30, 2009 / 
Proposed Rules  

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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 8

[GN Docket No. 09-191; WC Docket No. 07-52; FCC 09-93]


Preserving the Open Internet, Broadband Industry Practices

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: In this Notice of Proposed Rulemaking (NPRM), the Commission 
considers adopting rules to preserve the open Internet. In this NPRM, 
the Commission proposes draft language to codify the four principles 
the Commission articulated in the Internet Policy Statement; a fifth 
principle that would require a broadband Internet access service 
provider to treat lawful content, applications, and services in a 
nondiscriminatory manner; and a sixth principle that would require a 
broadband Internet access service provider to disclose such information 
concerning network management and other practices as is reasonably 
required for users and content, application, and service providers to 
enjoy the protections specified in this rulemaking. The Commission also 
proposes draft language to make clear that the principles would be 
subject to reasonable network management and would not supersede any 
obligation a broadband Internet access service provider may have--or 
limit its ability--to deliver emergency communications or to address 
the needs of law enforcement, public safety, or national or homeland 
security authorities, consistent with applicable law. The draft rules 
would not prohibit broadband Internet access service providers from 
taking reasonable action to prevent the transfer of unlawful content, 
such as the unlawful distribution of copyrighted works. Nor would the 
draft rules be intended to prevent a provider of broadband Internet 
access service from complying with other laws. The NPRM seeks comment 
on a category of ``managed'' or ``specialized'' services, how to define 
such services, and what principles or rules, if any, should apply to 
them. The NPRM affirms that the six principles the Commission proposes 
to codify apply to all platforms for broadband Internet access, and 
seeks comment on how, in what time frames or phases, and to what extent 
the principles should apply to non-wireline forms of Internet access, 
including, but not limited to, terrestrial mobile wireless, unlicensed 
wireless, licensed fixed wireless, and satellite. The NPRM also seeks 
comment on the enforcement procedures that the Commission should use to 
ensure compliance with the proposed principles.

DATES: Comments are due on or before January 14, 2010 and reply 
comments are due on or before March 5, 2010. Written comments on the 
Paperwork Reduction Act proposed information collection requirements 
must be submitted by the public, Office of Management and Budget (OMB), 
and other interested parties on or before January 29, 2010.

ADDRESSES: You may submit comments, identified by GN Docket No. 09-191 
and WC Docket No. 07-52, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Federal Communications Commission's Web site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
     E-mail: [email protected]. and include the following words in 
the body of the message: ``get form.'' A sample form and directions 
will be sent in response. Include the docket number(s) in the subject 
line of the message.
     Blog Filers: In addition to the usual methods for filing 
electronic comments, the Commission is allowing comments, reply 
comments, and ex parte comments in this proceeding to be filed by 
posting comments on http://blog.openinternet.gov and on http://openinternet.ideascale.com.
     Mail: Secretary, Federal Communications Commission, 445 
12th Street, SW., Washington, DC 20554.
     Hand Delivery/Courier: 236 Massachusetts Avenue, NE., 
Suite 110, Washington, DC 20002.
     People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.

For detailed instructions for submitting comments and additional 
information on the rulemaking process, see the SUPPLEMENTARY 
INFORMATION section of this document. In addition to filing comments 
with the Secretary of the Commission, a copy of any comments on the 
Paperwork Reduction Act information collection requirements contained 
herein should be submitted to the Federal Communications Commission via 
e-mail to [email protected] and to Nicholas A. Fraser, Office of Management 
and Budget, via e-mail to [email protected] or via fax 
at 202-395-5167.

FOR FURTHER INFORMATION CONTACT: Claude Aiken, Competition Policy 
Division, Wireline Competition Bureau, at 202-418-1580 or 
[email protected], or John Spencer, Broadband Division, Wireless 
Telecommunications Bureau, at 202-418-2487 or [email protected]. For 
additional information concerning the Paperwork Reduction Act 
information collection requirements contained in this document, send an 
e-mail to [email protected] or contact Judith B. Herman at 202-418-0214, or 
via e-mail at [email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice 
of Proposed Rulemaking (NPRM) in GN Docket No. 09-191, WC Docket No. 
07-52, FCC 09-93 adopted on October 22, 2009. The complete text of this 
document is available on the Commission's Internet site at www.fcc.gov 
and for public inspection Monday through Thursday from 8 a.m. to 4:30 
p.m. and Friday from 8 a.m. to 11:30 a.m. in the Commission's Consumer 
and Governmental Affairs Bureau Reference Information Center, Room CY-
A257, 445 12th Street, SW., Washington, DC 20554. The full text of the 
NPRM may also be purchased from the Commission's duplicating 
contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street, 
SW., Washington, DC 20554, telephone 202-488-5300, facsimile 202-488-
5563, e-mail at [email protected], or via its Web site at http://www.bcpiweb.com.
    Pursuant to Sections 1.415 and 1.419 of the Commission's rules, 47 
CFR 1.415, 1.419, interested parties may file comments and reply 
comments on or before the dates indicated in the DATES section of this 
NPRM. Comments may be filed: (1) By using the Commission's Electronic 
Comment Filing System (ECFS), (2) by using the Federal Government's 
eRulemaking Portal, (3) by filing paper copies, or (4) by using the 
Commission's Ideascale and Openinternet.gov sites. See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
     Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/ 
or the Federal eRulemaking Portal: http://www.regulations.gov. Filers 
should follow the instructions provided on the Web site for submitting 
comments.
     ECFS filers must transmit one electronic copy of the 
comments for each docket referenced in the caption of this proceeding. 
In completing the

[[Page 62639]]

transmittal screen, filers should include their full name, U.S. Postal 
Service mailing address, and the applicable docket or rulemaking 
number.
     Parties may also submit an electronic comment by Internet 
e-mail. To get filing instructions, filers should send an e-mail to 
[email protected], and include the following words in the body of the 
message, ``get form.'' A sample form and directions will be sent in 
response.
     Paper Filers: Parties who choose to file by paper must 
file an original and four copies of each filing. If more than one 
docket or rulemaking number appears in the caption of this proceeding, 
filers must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail (although we continue to experience delays in 
receiving U.S. Postal Service mail). All filings must be addressed to 
the Commission's Secretary, Office of the Secretary, Federal 
Communications Commission.
     The Commission's contractor will receive hand-delivered or 
messenger-delivered paper filings for the Commission's Secretary at 236 
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing 
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be 
held together with rubber bands or fasteners. Any envelopes must be 
disposed of before entering the building.
     Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
     U.S. Postal Service first-class, Express, and Priority 
mail must be addressed to 445 12th Street, SW., Washington, DC 20554.
     Blog Filers: In addition to the usual methods for filing 
electronic comments, the Commission is allowing comments, reply 
comments, and ex parte comments in this proceeding to be filed by 
posting comments on http://blog.openinternet.gov and on http://openinternet.ideascale.com. Accordingly, persons wishing to examine the 
record in this proceeding should examine the record on ECFS, http://blog.openinternet.gov, and http://openinternet.ideascale.com. Although 
those posting comments on the blog may choose to provide identifying 
information or may comment anonymously, anonymous comments will not be 
part of the record in this proceeding and accordingly will not be 
relied on by the Commission in reaching its conclusions in this 
rulemaking. The Commission will not rely on anonymous postings in 
reaching conclusions in this matter because of the difficulty in 
verifying the accuracy of information in anonymous postings. Should 
posters provide identifying information, they should be aware that 
although such information will not be posted on the blog, it will be 
publicly available for inspection upon request.
    This document contains proposed information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. Public and agency comments on 
the proposed information collection requirements are due January 29, 
2010.
    Comments on the proposed information collection requirements should 
address: (a) Whether the proposed collection of information is 
necessary for the proper performance of the functions of the 
Commission, including whether the information shall have practical 
utility; (b) the accuracy of the Commission's burden estimates; (c) 
ways to enhance the quality, utility, and clarity of the information 
collected; and (d) ways to minimize the burden of the collection of 
information on the respondents, including the use of automated 
collection techniques or other forms of information technology. In 
addition, pursuant to the Small Business Paperwork Relief Act of 2002, 
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment 
on how we might further reduce the information collection burden for 
small business concerns with fewer than 25 employees.
    OMB Control Number: None.
    Title: Disclosure of Network Management Practices.
    Form Number: N/A.
    Type of Review: New Collection.
    Respondents: Business or other for-profit; not-for-profit 
institutions; and State, Local or Tribal governments.
    Number of Respondents and Responses: 1,674 respondents; 1,674 
responses.
    Estimated Time per Response: 327 hours.
    Frequency of Response: Third party disclosure; reporting on 
occasion.
    Obligation to Respond: Mandatory.
    Total Annual Burden: 546,840 hours.
    Total Annual Costs: $4,687,000.
    Privacy Act Impact Assessment: No impact.
    Nature and Extent of Confidentiality: The Commission does not 
expect to provide respondents with any assurance of confidentiality.
    Needs and Uses: The Federal Communications Commission proposes to 
require providers of broadband Internet access service to disclose such 
information concerning network management and other practices as is 
reasonably required for users and content, application, and service 
providers to enjoy the protections specified in its October 22, 2009 
Notice of Proposed Rulemaking (FCC 09-93).
    To request materials in accessible formats for people with 
disabilities (Braille, large print, electronic files, audio format) or 
to request reasonable accommodations for filing comments (accessible 
format documents, sign language interpreters, CART, etc.), send an e-
mail to [email protected] or call the Consumer & Governmental Affairs 
Bureau at 202-418-0530 (voice) or 202-418-0432 (TTY).

Synopsis of Notice of Proposed Rulemaking

    1. When the Telecommunications Act of 1996 was enacted, very few 
Americans had residential broadband Internet access service. Since the 
competition-based policies ushered in by the Telecommunications Act 
first took root through Commission implementation in the late 1990s, 
broadband Internet access service adoption has increased dramatically, 
with broadband in approximately thirty percent of American households 
in 2005 and sixty-three percent today. It is important to note that 
from 1996 to the adoption of the Commission's Internet Policy Statement 
in August of 2005, digital subscriber line (DSL) service offered by 
telecommunications carriers was regulated under Title II of the Act and 
experienced explosive growth. Since the Commission adopted the Internet 
Policy Statement over four years ago, our nation has seen even greater 
expansion of broadband Internet access service. In 2005, access to the 
Internet was split evenly between dial-up and broadband; now less than 
ten percent of Americans access the Internet with dial-up. Online 
retail spending increased 65 percent between 2005 and 2007. Today 
nearly a fifth of online adults access Internet video on a daily basis, 
compared with eight percent in 2006. Broadband Internet access has 
become a vital resource for, among other things, commerce, civic 
engagement, and communications and telecommuting options for people 
with

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disabilities, health care, and education. For purposes of this 
proceeding, we propose to define the Internet as the system of 
interconnected networks that use the Internet Protocol for 
communication with resources or endpoints (including computers, 
webservers, hosts, or other devices) that are reachable, directly or 
through a proxy, via a globally unique Internet address assigned by the 
Internet Assigned Numbers Authority. To be considered part of the 
``Internet'' for this proceeding, an Internet end point must be 
identified by a unique address assigned through the Internet Assigned 
Numbers Authority or its delegate registry, not an address created by a 
user for its internal purposes. We do not intend for this definition of 
the Internet to encompass private intranets generally inaccessible to 
users of the Internet. We seek comment on these proposals.
    2. The evolution in Internet usage, and associated developments in 
network technology, have respectively motivated and enabled network 
operators to differentiate price and service for end users and for 
providers of content, applications, and services. A significant debate 
has developed over how best to preserve the Internet's openness. We 
thus find it appropriate at this time to evaluate the need for 
oversight of broadband Internet access service providers' practices. 
Given the evolution of the Internet and the broadband marketplace, we 
believe that high-level rules specifying impermissible practices will 
best promote an Internet environment of widespread innovation and 
light-handed regulation.

A. The Need for Commission Action

    3. Despite our efforts to date, some conduct is occurring in the 
marketplace that warrants closer attention and could call for 
additional action by the Commission, including instances in which some 
Internet access service providers have been blocking or degrading 
Internet traffic, and doing so without disclosing those practices to 
users. We also believe it is important to provide greater clarity and 
certainty to Internet users; content, application, and service 
providers; and broadband Internet access service providers regarding 
the Commission's approach to safeguarding the open Internet. As 
discussed below, we seek comment on the reasons either for or against 
particular types of oversight by the Commission of broadband Internet 
access service providers' practices, including possible specific rules. 
In undertaking this examination, we seek to preserve the open, safe, 
and secure Internet and to promote and protect the legitimate business 
needs of broadband Internet access service providers and broader public 
interests such as innovation, investment, research and development, 
competition, consumer protection, speech, and democratic engagement. 
Thus, in the subsequent parts of this NPRM, we seek comment on how to 
tailor rules to achieve this balance.
1. Commission Goals
    4. The Communications Act, related statutes, and Commission 
precedent establish a number of interrelated goals that inform the 
Commission's approach to broadband Internet access service. For one, 
the Commission seeks to promote investment and innovation with respect 
to the Internet, as with other communications technologies. As the 
Commission has recognized, ``[t]he Internet has served as a critical 
platform for innovation for nearly two decades,'' and ``[h]istorically, 
`the innovation and explosive growth of the Internet [have been] 
directly linked to its particular architectural design.' ''
    5. Promoting competition for Internet access and Internet content, 
applications, and services is another key goal. In particular, Section 
230 of the Act states that ``[i]t is the policy of the United States * 
* * to preserve the vibrant and competitive free market that presently 
exists for the Internet and other interactive computer services.'' In 
adopting its Internet Policy Statement, the Commission recognized the 
importance of such competition not only ``among network providers,'' 
but also among ``application and service providers, and content 
providers.'' As the Commission has observed, ``[s]o far in the 
Internet's history,'' the basic standards underlying the operation of 
the Internet ``have created `the equivalent of perfect competition * * 
* among applications and content * * * with a minimum [of] interference 
by the network or platform owner.' ''
    6. The Act and Commission precedent likewise demonstrate the 
importance of protecting users' interests as a Commission goal. These 
interests are wide-ranging, including consumer protection in commercial 
contexts; the development of technological tools to empower users; and 
speech and democratic participation. As Congress has observed, ``[t]he 
rapidly developing array of Internet * * * services available to 
individual Americans represent an extraordinary advance in the 
availability of educational and informational resources to our 
citizens,'' and the Internet ``offer[s] a forum for a true diversity of 
political discourse, unique opportunities for cultural development, and 
myriad avenues for intellectual activity.''
    7. Other statutory objectives are relevant to our evaluation of 
broadband Internet access service providers' practices, including 
addressing the needs of law enforcement and public safety. Each of the 
goals described above informs our policy analyses, and we seek comment 
on how these and other relevant policy goals should affect our analysis 
of the Internet principles discussed below.
    8. As a general matter, we believe that our proposals should have 
broad application so that the protections that we propose are widely 
enjoyed. As such, we propose to define broadband Internet access 
service for the purpose of these rules as ``[a]ny communication service 
by wire or radio that provides broadband Internet access directly to 
the public, or to such classes of users as to be effectively available 
directly to the public.'' We do not intend that our proposals would 
apply to ``establishments that acquire broadband Internet access 
service from a facilities-based provider to enable their patrons or 
customers to access the Internet from their respective 
establishments.'' For example, we would not intend to include coffee 
shops, waiting rooms, or rest areas. Nor would we intend to include 
broadband Internet access service that is not intentionally offered for 
the benefit of others, such as service from personal Wi-Fi networks 
whose signal may be detectable outside the user's premises. We seek 
comment on this approach for defining the scope of entities covered by 
our proposals, including ways to make clear who is and is not subject 
to these rules.
2. Evolution of the Internet Marketplace and Technologies
    9. We also note that Internet technologies have changed markedly 
along with the evolution of the Internet marketplace. The Internet has 
traditionally relied on an end-to-end, open architecture, in which 
network operators use their ``best effort'' to deliver packets to their 
intended destinations without quality-of-service guarantees. This open 
architecture ``allowed all application developers to make their 
innovations available to all by placing a software program on a 
publicly available server,'' but the best-effort nature of early 
networks presented challenges for the deployment of applications 
requiring quality-of-service assurances.
    10. With the rapid growth of broadband applications and content, 
especially video, access providers may

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face capacity constraints. In many cases, either provisioning 
additional bandwidth or using sophisticated software techniques has 
been sufficient to support applications requiring reliable delivery or 
low latency, such as real-time voice and video. For example, Skype has 
more than 440 million registered users for its Internet-based real-time 
communications application, which runs over the best-effort Internet. 
As Internet infrastructure and the content, applications, and services 
delivered over the Internet have evolved, network equipment makers have 
also responded with new technologies, including more sophisticated 
routers that enable network operators to distinguish among different 
classes of traffic and offer different qualities of service to 
different traffic (service differentiation), which enables charging 
different prices for different traffic (price differentiation). For 
example, a broadband Internet access service provider can ensure that 
one class of traffic enjoys a greater share of capacity than another 
when there is contention for resources. A broadband Internet access 
service provider can also differentiate among different packet streams 
or classes of traffic by scheduling the transmission of certain packets 
waiting in a buffer ahead of others, determining by algorithm which 
packets in a buffer are dropped (i.e., discarded and not transmitted), 
blocking an entire packet stream by means of an admission control 
algorithm, transmitting data over more (or less) efficient routing, 
redirecting traffic to another site, or blocking traffic entirely. With 
``deep packet inspection,'' a broadband Internet access service 
provider can determine which packets to favor by examining ``in detail 
the content of [an] e-mail, or Web page, or downloaded file. It is 
possible to distinguish music files from text from pictures, or to 
search for key words within any text.'' A broadband Internet access 
service provider can also favor certain parties by providing access to 
information cached at the provider's facility, allowing consumers 
quicker access to Web sites using the caching services.
    11. Any of these techniques may be provided only to an Internet 
access service provider's own affiliates and partners. Or they may be 
turned into a service that Internet access service providers offer to 
content and application providers for a fee. Equipment manufacturers 
note that these new technologies allow Internet access service 
providers to maximize the revenue opportunities associated with their 
networks. For example, Sandvine, a technology vendor, claims to offer a 
``range of policy management options such as application-based and 
subscriber-based approaches, aggregate and per-subscriber shaping, 
prioritization, caching and content acceleration.'' Procera Networks 
advertises its PacketLogic technology as giving network providers the 
ability to ``monetize your network'' by monitoring user traffic on a 
real-time basis and using ``optimization that distinguishes between 
interactive and downloading traffic.'' And Cisco offers network 
providers the ability to ``identify[] services that might be riding an 
operator's network for free'' and ``extend quality of service 
guarantees to that third party for a share of the profits.''
    12. Four years ago, changes that were already taking place in the 
Internet marketplace and among network technologies led the Commission 
to adopt the Internet Policy Statement. Since then, the Internet 
marketplace and underlying technologies have continued to evolve, and 
we seek more detailed comment on the technological capabilities 
available today, as offered for sale and as actually deployed in 
providers' networks. We further seek comment on the effects of those 
technologies on the content, applications, and services being 
provided--or capable of being provided--over the Internet.
3. The Debate Regarding Oversight of Traffic Management Pricing and 
Practices
    13. The increasing capability of broadband Internet access service 
providers to offer differentiated services and prices for traffic 
flowing over their networks has spurred a debate about the public 
policy implications of using that capability. In particular, some 
parties have expressed concerns that, absent appropriate oversight, 
broadband Internet access service providers could make the Internet 
less useful for some users or applications by differentiating traffic 
based upon the user, the application provider, or the type of traffic. 
Other parties have suggested that ``the problems are all potential 
problems, not actual problems'' and that the ``fundamental inability to 
demonstrate any evidence of an actual market failure confirms what all 
the rhetoric in the world cannot obscure: `Net neutrality' is a 
solution in search of a problem.''
    14. In determining the Commission's proper role with respect to 
safeguarding the open Internet, we believe it is helpful to examine 
this debate and the arguments that have been made in favor of and 
against open Internet policies. The arguments in this area have largely 
revolved around four issues: (1) How best to promote investment and 
innovation; (2) the current and future adequacy of competition and 
market forces; (3) how best to promote speech and civic participation; 
and (4) the practical significance of network congestion to the other 
considerations. We summarize and seek evidence supporting or refuting a 
number of these key arguments.
a. Investment and Innovation
    15. The Commission has recognized that the historically open 
architecture of the Internet has facilitated entrepreneurs' entry into 
the market with new Internet services and promoted the Act's policies 
favoring ``a diversity of media voices'' and ``technological 
advancement.'' As discussed above, however, technologies now allow 
network operators to distinguish different classes of traffic, to offer 
different qualities of service, and to charge different prices to each 
class.
    16. In light of these developments, some parties have contended 
that safeguarding historic Internet traffic pricing and practices is 
needed to preserve the end-to-end architecture of the Internet, with 
intelligence and control at the edge of the network. These proponents 
of open Internet policies maintain that the end-to-end architecture is 
essential to give entrepreneurs confidence that they will be free to 
innovate on the Internet without first seeking permission from 
broadband Internet access service providers and, accordingly, is 
necessary to promote innovation and growth. Supporters argue that 
differentiation by Internet access service providers can be especially 
harmful to innovation by outsiders--individuals and entities 
unaffiliated with network owners--who have been responsible for some of 
the most important innovations in the history of the Internet. These 
outsiders, many of whom may have limited resources but can innovate on 
today's Internet with very low marginal costs, could choose not to 
innovate if faced with fees from Internet access service providers for 
equal access to end users. And the potential for such fees may deter 
outsiders from investing in long-term research and development that 
could benefit all of society.
    17. Some parties characterize the Internet as a ``general purpose 
technology,'' which ``does not create value through its existence 
alone'' but ``by enabling users to do the things they want or need to 
do.'' ``[T]he rate at which a general purpose technology

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affects economic growth depends on the rate of co-invention (i.e., the 
rate at which potential uses of the technology are identified and 
realized).'' In the case of the Internet, this means ``that identifying 
potential uses for the Internet and developing the corresponding 
applications is the prerequisite for realizing the enormous growth 
potential inherent in the Internet as a general-purpose technology. As 
a result, measures that reduce the amount of application-level 
innovation have the potential to significantly harm social welfare by 
significantly limiting economic growth.''
    18. Parties opposing further Commission action in this area raise 
several arguments in response. First, they contend that differentiation 
in pricing or quality of service may enable different types of 
innovation that might not be feasible with a network lacking such 
capabilities. Second, they assert that some traffic imposes greater 
burdens on the network than other traffic and that ``innovation could 
be even better for consumers if it could respond to price signals from 
platform providers,'' such as by ``tak[ing] into account potential 
congestion costs of bandwidth-intensive applications.'' Third, they 
often claim that charging content, application, and service providers 
may be necessary to recover the cost of the investment in their 
networks and to fund additional investment in research, development, 
and infrastructure. According to opponents, charging only end users 
instead would increase end-user prices, limit the number of users, and 
reduce revenue, discouraging network improvements.
    19. Opponents also cite economic theory that holds that benefits 
can arise from price and quality discrimination, at least in certain 
cases. For example, they argue that the ability of a provider to price 
discriminate not only will benefit the provider, but may also benefit 
the public as a whole (although not necessarily in all cases). Further, 
economists have recognized that the Internet is an example of a ``two-
sided market,'' in that broadband Internet access service providers 
offer service to both end-user customers and to content, application, 
and service providers simultaneously. Theoretical economic analyses 
suggest that price discrimination may be more beneficial in a two-sided 
market than in the standard one-sided market.
b. Competition and Market Forces
    20. Supporters of open Internet policies contend that market forces 
alone are unlikely to ensure that broadband Internet access service 
providers will discriminate in socially efficient ways and that, absent 
regulation, such discrimination is likely to change fundamentally the 
nature of the Internet, reduce competition, and hinder innovation and 
growth. Furthermore, some have noted that the justification for 
government oversight of key infrastructure has not always relied solely 
on lack of competition in the relevant market, and argue that the long-
standing doctrines of common carriage or bailment should inform 
policies for broadband Internet access service providers.
    21. Even where there is effective competition in the Internet 
access market, individual broadband Internet access service providers 
may charge inefficiently high prices to content, application, and 
service providers, even though it may be in the collective interest of 
all providers to charge a lower price or zero price in order to 
maximize innovation at the edge of the network and thereby increase the 
overall value of broadband Internet access. Investing in innovative 
Internet content, applications, and services is risky, and firms will 
not invest unless their expected revenues exceed their expected costs. 
If allowed to do so, broadband Internet access service providers may 
attempt to extract some of the profit earned by content, application, 
and service providers by charging them fees for providing access (or 
prioritized access) to the broadband Internet access service providers' 
subscribers. These fees will reduce the potential profit that a 
content, application, or service provider can expect to earn and hence 
reduce the provider's incentive to make future investments in the 
quantity or quality of its content, application, or service.
    22. If enough broadband Internet access service providers impose a 
fee, or if the fees are sufficiently high across a small number of 
broadband Internet access service providers with sufficient market 
share, then not only will content, application, and service providers' 
incentive to innovate be reduced, but the fees could drive some 
content, application, and service providers from the market. This would 
reduce the quantity and quality of Internet content, applications, and 
services, reducing the overall value of the Internet to end users and 
thereby reducing demand for broadband Internet access services. This 
dynamic raises a collective action problem: Although it might be in the 
collective interest of competing broadband Internet access service 
providers to refrain from charging access or prioritization fees to 
content, application, and service providers, it is in the interest of 
each individual access provider to charge a fee, and given multiple 
providers, it is unlikely that access providers could tacitly agree not 
to charge such fees. Furthermore, it is unlikely that competitive 
forces are sufficient to eliminate the incentive to charge a fee, 
particularly where the imposition of such a fee will not cause the 
access provider to lose many customers. Thus, allowing broadband 
Internet access service providers to impose access or prioritization 
fees may inefficiently reduce innovation and investment in content, 
applications, and services, generating a suboptimal economic outcome.
    23. Where effective competition is lacking (i.e., where broadband 
Internet access service providers have market power), it is more likely 
that price and quality discrimination will have socially adverse 
effects. Broadband Internet access service providers possessing market 
power may have an incentive to raise prices charged to content, 
application, and service providers and end users. Not only would that 
harm users overall, but it could reduce innovation at the edge of the 
network and cause some end users to decide not to subscribe to 
broadband Internet access service. Moreover, imposing a fee on content, 
application, and service providers could reduce total welfare more than 
imposing the same fee on the end users and no fee on the content, 
application, and service providers. In particular, such pricing may 
disproportionately affect ``socially produced'' content, i.e., content 
produced collaboratively by individuals without a direct financial 
incentive, such as Wikipedia.
    24. In addition, broadband Internet access service providers 
generally, and particularly broadband Internet access service providers 
with market power, may have the incentive and ability to reduce or fail 
to increase the transmission capacity available for standard best-
effort Internet access service, particularly relative to other services 
they offer, in order to increase the revenues obtained from content, 
application, and service providers or individual users who desire a 
higher quality of service. The result may be insufficient transmission 
capacity allocated to some content, application, or service providers 
and a misallocation of transmission capacity across quality-of-service 
classes.
    25. Where broadband Internet access service providers have market 
power and are vertically integrated or affiliated with content, 
application, or service

[[Page 62643]]

providers, additional concerns may arise. By providing a user's 
broadband connection to the Internet, a broadband Internet access 
service provider serves as a gatekeeper to the content, applications, 
and services offered on the Internet. Broadband Internet access service 
providers have an incentive to use this gatekeeper role to make it more 
difficult or expensive for end users to access services competing with 
those offered by the network operator or its affiliates. For example, a 
broadband Internet access service provider that is also a pay 
television provider could charge providers or end users more to 
transmit or receive video programming over the Internet in order to 
protect the broadband Internet access service provider's own pay 
television service. Alternatively, such a broadband Internet access 
service provider could seek to protect its pay television service by 
degrading the performance of video programming delivered over the 
Internet by third parties. The result may be higher prices or worse 
service for some content and applications and inefficiently low 
investment in some content and application markets.
    26. This analysis is further complicated by control that the 
broadband Internet access service provider has over the delivery of 
traffic to its subscribers. In particular, there are typically multiple 
paths for routing packets over the Internet. For those packets to reach 
the end users that subscribe to a particular broadband Internet access 
service, however, they ultimately must be transported on that broadband 
Internet access service provider's network. Thus, even if there is 
competition among broadband Internet access service providers, once an 
end-user customer has chosen to subscribe to a particular broadband 
Internet access service provider, this may give that broadband Internet 
access service provider the ability, at least in theory, to favor or 
disfavor any traffic destined for that subscriber. And as discussed 
throughout this section, there may be various circumstances when the 
broadband Internet access service provider would have the incentive to 
do so.
    27. Opponents have responded that the markets for broadband 
Internet access services are sufficiently competitive to allay these 
concerns. They further contend that, even if a broadband Internet 
access service provider possessed market power, it generally would have 
an incentive to discriminate only in a socially efficient manner. 
Finally, opponents argue that, even if broadband Internet access 
service providers occasionally discriminate in a socially inefficient 
manner, open Internet policies would impose greater costs and 
inefficiency than the absence of policies.
c. Speech and Civic Participation
    28. Congress has recognized that the Internet ``offer[s] a forum 
for a true diversity of political discourse, unique opportunities for 
cultural development, and myriad avenues for intellectual activity.'' 
Numerous judicial opinions have noted the Internet's potential for 
facilitating speech. The bipartisan Knight Commission recently reported 
that the Internet has brought about ``new forms of collaboration 
between full-time journalists and the general citizenry,'' opening the 
age of networked journalism. It also observed that ``[p]olitical 
leaders and many government agencies are staking out ambitious agendas 
for openness,'' and ``[t]he potential for using technology to create a 
more transparent and connected democracy has never seemed brighter.'' 
At the same time, however, broadband Internet access service providers 
today could block, slow, or redirect access to Web sites espousing 
public policy positions that the broadband Internet access service 
provider considers contrary to its interests, or controversial content 
to which the service provider wants to avoid any connection. Broadband 
Internet access service providers also have the ability to delete or 
hinder e-mail based on inspection of its contents. Because broadband 
Internet access service providers are not government actors, the First 
Amendment does not directly govern their actions.
    29. Proponents therefore argue that the Commission should take 
steps to preserve the Internet ``as a general purpose technology that 
supports wide open speech.'' Others have argued that ``the openness of 
networks [is] essential to meeting community information needs,'' and 
that the Internet could be conceived of as a ``new marketplace of 
ideas''--a ``core common infrastructure'' that ``giv[es] users the 
capacity to participate in building our common informational and 
cultural environment and the freedom to construct their personal 
information environment that is the greatest promise of networked 
communications.''
    30. Some proponents of oversight have thus argued that the 
Commission should apply a standard similar to strict scrutiny to 
content-based discrimination, to ensure that any discrimination be 
carefully tailored to serve the public interest, not merely a private 
interest. (As discussed below, we do not adopt this standard in the 
draft rules we propose.) Some parties further argue that broadband 
Internet access service providers should not be left to balance among 
competing public interests themselves, but rather that the Commission 
(or other government entity) must be the one to do so. In support of 
such oversight, proponents note that the government has undertaken a 
role in promoting communications technologies as a channel for speech 
and democratic content in other contexts, such as the cable ``must 
carry'' rules.
    31. Opponents respond that such policies are unnecessary. In 
particular, they claim that a ``firestorm of controversy * * * would 
erupt if a major network owner embarked on a systematic campaign of 
censorship on its network,'' thus mitigating the need for formal 
policies.
d. Congestion
    32. The existence of congestion in the network is a major 
motivating factor in the open Internet debate, and is central to 
arguments that differential pricing or service quality is necessary. 
Moreover, because the effects of delays or dropping of packets arising 
from congestion are not the same for all applications, broadband 
Internet access service providers and content, application, and service 
providers may have incentives to seek agreements for the prioritization 
of traffic or other quality of service guarantees. Permitting these 
activities without appropriate oversight could lead to a number of 
harms, undermining the public interest goals of the Act discussed 
above.
    33. Although network operators may seek to alleviate congestion by 
increasing capacity, such actions would involve costs--in some cases 
large costs--and revenue opportunities might not justify the required 
investment. As a result, we must balance the need for incentives for 
infrastructure investment with the need to ensure that network 
operators do not adopt congestion management measures that could 
undermine the usefulness of the Internet to the public as a whole. We 
seek further comment on these issues below.
4. Next Steps
    34. We summarized above a number of the key arguments in the 
ongoing open Internet debate. We recognize, however, that this summary 
may be incomplete. Thus, we seek comment on what other considerations 
should inform our analysis. We also seek qualitative or quantitative 
evidence and analysis that illuminates any of the above arguments, 
including specific examples. To what extent are particular

[[Page 62644]]

arguments independent of competitive conclusions regarding particular 
markets for broadband Internet access services? Even in effectively 
competitive markets for broadband Internet access service, what impact 
do switching costs and consumer lock-in effects have on broadband 
Internet access service providers' ability to act in ways that limit 
innovation in content, applications, and services and/or reduce overall 
welfare? To the extent that certain arguments do depend upon the 
particular competitive state of a market, how should the Commission 
define and evaluate such markets? What specific evidence is there 
regarding the competitive state of those markets? We also seek comment 
on whether and to what extent application of the generally applicable 
antitrust laws is sufficient to address the concerns we identify here. 
We further seek comment on the effect of our decision to promulgate or 
not promulgate rules on the availability of antitrust law to address 
anticompetitive conduct in the broadband Internet access service 
market, particularly in light of Verizon Communications Inc. v. Law 
Offices of Curtis V. Trinko, LLP and Credit Suisse Securities (USA) LLC 
v. Billing. We note that policymakers in a number of other countries 
are considering similar issues, and we seek comment on the analyses of 
these issues that have been raised in those contexts, as well.
    35. We also seek comment on possible implications that the draft 
rules we propose here might have on efforts to close the digital divide 
and encourage robust broadband adoption and participation in the 
Internet community by minorities and other socially and economically 
disadvantaged groups. According to a recent study, broadband adoption 
varies significantly across demographic groups, and African Americans, 
Hispanics, and lower-income Americans, among others, trail the national 
average in home broadband adoption. This disparity among broadband 
adoption rates is significant and impacts efforts to promote 
employment, education, healthcare, and consumer welfare. Minorities and 
other socially and economically disadvantaged groups may also face 
unique or particularly high barriers to innovation, communication, and 
civic participation on the Internet, and may be susceptible to 
discrimination. This may make open Internet protections particularly 
important for these groups. We invite comment on these and related 
issues.

B. Our Authority To Prescribe Rules Implementing Federal Internet 
Policy

    36. Consistent with the Comcast Network Management Practices Order, 
we may exercise jurisdiction under the Act to regulate the network 
practices of facilities-based broadband Internet access service 
providers. We have ancillary jurisdiction over matters not directly 
addressed in the Act when the subject matter falls within the agency's 
general statutory grant of jurisdiction and the regulation is 
``reasonably ancillary to the effective performance of the Commission's 
various responsibilities.'' That test is met with respect to broadband 
Internet access service.
    37. As explained in the Comcast Network Management Practices Order, 
we believe that exercising ancillary authority over facilities-based 
Internet access will ``promote the objectives for which the Commission 
has been [specifically] assigned jurisdiction'' and ``further the 
achievement of * * * [legitimate] regulatory goals.'' The proposed 
rules we enunciate here will, we believe, advance the federal Internet 
policy set forth by Congress in section 230(b) as well as the broadband 
goals that section 706(a) of the Telecommunications Act of 1996 charges 
the Commission with achieving. Section 201(b), moreover, gives the 
Commission specific authority ``to prescribe such rules and regulations 
as may be necessary in the public interest to carry out the provisions 
of th[e] Act.''
    38. Voice and video services are increasingly delivered over the 
Internet, in actual or potential competition with voice and video 
offerings of companies that provide broadband Internet access. This 
growing interrelationship with voice and video services that the 
Commission has traditionally regulated pursuant to express statutory 
obligations and its general public interest mandate further supports 
the Commission's consideration of regulatory requirements for the 
provision of broadband Internet access service, and its ancillary 
jurisdiction to establish appropriate rules.
    39. With respect to Internet access via spectrum-based facilities, 
we have additional authority pursuant to Title III of the 
Communications Act. We have recognized previously that the spectrum 
allocation and licensing provisions of Title III and the Commission's 
rules continue to apply to wireless broadband Internet access services 
because these services use radio spectrum. We have relied upon Title 
III authority in the past to regulate services provided by wireless 
carriers.
    40. We invite comment on our view that we have jurisdiction over 
broadband Internet access service sufficient to adopt and enforce the 
proposed rules, or other rules that commenters propose.

C. Codifying the Existing Four Internet Principles

    41. We believe that the four Internet principles have performed 
effectively their role of explicating statutory federal Internet 
policy. At the time the Commission adopted the principles, it stated 
that they were not rules but that it would ``incorporate the above 
principles into its ongoing policymaking activities.'' Those ongoing 
activities included a broadband practices proceeding, two public field 
hearings, and an enforcement action. After four years of evaluating 
market developments, we now believe it is appropriate to codify the 
four principles. Codification will increase certainty regarding the 
Commission's approach to preserving the open Internet.
    42. We propose to codify the four principles at their current level 
of generality. Doing so will help establish clear requirements while 
giving us the flexibility to consider particular circumstances case by 
case. In that way, we will be able to generate over time a body of law 
that develops as technology and the marketplace evolve. As one 
commenter observed, ``given the extraordinarily rapid and wholly 
unpredictable evolution of services and applications, we see the need 
for policymaking principles centered on supporting innovation and 
protecting consumer interests in an agile, rather than prescriptive, 
way.''
    43. We also propose to codify the principles as obligations of 
broadband Internet access service providers, rather than as describing 
what ``consumers are entitled'' to do with their service, as the 
original Internet principles were phrased. We believe that codifying 
them as obligations of particular entities, rather than just as 
principles, would make clear precisely who must comply and in what way. 
Making these rules apply to particular entities will also provide 
certainty to all Internet participants as to what to expect and who 
bears responsibility for what types of actions.
    44. Finally, we affirm that these principles apply to all providers 
of Internet access service (other than via dial-up), regardless of the 
technology over which such service is delivered. We recognize that in 
other contexts, the term ``broadband'' may be used differently. We 
believe, however, that

[[Page 62645]]

defining broadband here to encompass all non-dial-up Internet access 
will ensure that our open Internet rules benefit as many users as 
possible and have broad application to protect the open Internet, 
however accessed. We seek comment on this approach to defining 
``broadband.'' We propose that these rules should not apply to dial-up 
Internet access service. Title II regulation applies to users' 
telephone connections to dial-up Internet access service providers, and 
the Commission's interpretation of those obligations appears to have 
resulted in a market for dial-up Internet access service providers that 
does not present the same concerns as the market for broadband Internet 
access. In addition, because of the lower speed of dial-up Internet 
access service, many of the Internet applications and services that may 
benefit from quality-of-service assurances and that raise the greatest 
concerns regarding discrimination are unavailable over dial-up Internet 
connections as a practical matter. We seek comment on our proposal. We 
note that our use of the term ``broadband Internet access service'' in 
the context of this NPRM does not prejudge how the Commission might 
define that term in other contexts.
    45. Specifically, we propose that all providers of broadband 
Internet access service must comply with the following four rules:
    1. Subject to reasonable network management, a provider of 
broadband Internet access service may not prevent any of its users from 
sending or receiving the lawful content of the user's choice over the 
Internet.
    2. Subject to reasonable network management, a provider of 
broadband Internet access service may not prevent any of its users from 
running the lawful applications or using the lawful services of the 
user's choice.
    3. Subject to reasonable network management, a provider of 
broadband Internet access service may not prevent any of its users from 
connecting to and using on its network the user's choice of lawful 
devices that do not harm the network.
    4. Subject to reasonable network management, a provider of 
broadband Internet access service may not deprive any of its users of 
the user's entitlement to competition among network providers, 
application providers, service providers, and content providers.
    46. We believe that applying these rules to all providers of 
broadband Internet access service would support the statutory and 
policy goals we articulated above. First, these rules would support our 
goals of protecting consumers and encouraging innovation and 
investment. Ensuring that users can send and receive content, run 
applications, and use services of their choice allows them to take 
advantage of the diverse results of past investment and innovation, 
which in turn encourages further innovation and investment, and 
research and development. Likewise, ensuring that users can connect the 
devices of their choice to the network would encourage investment and 
innovation in the device market, and permits customers to change 
Internet access service providers more easily, which in turn would 
encourage more innovation among providers to win their business.
    47. Second, these rules would support our goals of promoting 
competition. They would promote competition in the upstream markets for 
content, applications, and services by ensuring that users can take 
advantage of any offerings, not just those that are approved or 
selected by their Internet access service provider. These rules would 
also support our goals of promoting consumer protection, user 
empowerment, speech, and democratic participation.
    48. We now address each principle in turn. The first principle in 
the Internet Policy Statement, and the first rule we propose to codify 
here, ensures that users are in control of the content that they send 
and receive. Making sure that users can express themselves freely on 
the Internet and receive the content of their choice ensures that users 
are unconstrained by broadband Internet access service providers in 
their ability to participate in the marketplace of ideas. Indeed, to 
further this interest in encouraging freedom of expression, we propose 
that the first rule make explicit that users can both send the content 
of their choice and receive the content of their choice. While the 
Internet Policy Statement principle referred only to users' ``access'' 
to content, we believe that the ability of a user to produce or 
distribute content is just as important as the ability to receive it. 
Indeed, anyone who posts a comment on a blog is ``sending'' content.
    49. The second principle in the original Internet Policy Statement 
protects the ability of consumers to run applications and use services 
of their choice, subject to the needs of law enforcement. As explained 
below, we propose that all the principles be subject to the needs of 
law enforcement, as well as public safety, and national and homeland 
security, by proposing separate draft rules on these topics. As 
explained in more detail below, we intend to leave sufficient 
flexibility in all our rules to allow broadband Internet access service 
providers to address law enforcement, public safety, and national and 
homeland security needs. Furthermore, we have no intention of 
protecting unlawful activities in these rules. Therefore, for 
additional precision, we add the word ``lawful'' to the proposed second 
rule to make clear that nothing here requires broadband Internet access 
service providers to allow users to engage in unlawful activities. The 
addition of the word ``lawful'' also harmonizes the second proposed 
rule with the first and third.
    50. The third principle in the original Internet Policy Statement 
allows users to connect their choice of legal devices that do not harm 
the network. The proposed rule changes the word ``legal'' to ``lawful'' 
for harmony with the other proposed rules. We do not intend any 
difference in meaning by changing this particular word. In addition, 
the proposed rule would protect the ability of users to connect and use 
such devices. We add this clarification to avoid any overly narrow 
reading of the proposed rule, and as discussed below, seek comment on 
the application of this proposed rule to wireless networks.
    51. The fourth principle in the original Internet Policy Statement 
protects competition among network providers, application and service 
providers, and content providers. Here, we change the proposed wording 
of the last three types of providers--application, service, and 
content--to be consistent with other proposed rules. Again, no 
substantive difference is intended by that change.
    52. We propose not to adopt a specific definition of ``content, 
application, or service provider,'' because any user of the Internet 
can be such a provider. For example, anyone who creates a family Web 
site for sharing photographs could be reasonably classified as a 
``content provider.'' We believe that this broad interpretation of the 
phrase would reinforce the other principles and the overall goals of 
this rulemaking.
    53. As stated, we propose that all four principles would apply to 
all forms of broadband Internet access service, regardless over which 
technology platform they are provided. We explain below that all four 
principles would be subject to reasonable network management and the 
needs of law enforcement, public safety, and homeland and national 
security authorities. In addition, we seek comment on the implications 
of these principles for broadband Internet access over mobile wireless 
networks and how, and in what time frames or phases, and to what extent 
they can be fairly and appropriately implemented.

[[Page 62646]]

    54. At least one commenter in this proceeding has suggested that we 
should read the Internet Policy Statement as embodying obligations 
binding on content, applications, and service providers in addition to 
broadband Internet access service providers. Although the question of 
Internet openness at the Commission has traditionally focused on 
providers of broadband Internet access service, we seek comment on the 
pros and cons of phrasing one or more of the Internet openness 
principles as obligations of other entities, in addition to providers 
of broadband Internet access service.
    55. We also seek comment in general on our formulation of these 
proposed rules, including whether the fourth principle is appropriate 
for codification as a rule or whether the other rules we propose in 
this NPRM adequately achieve the fourth principle's purposes. We seek 
comment, including any applicable data and specific examples, on the 
likely costs and benefits of each of these proposed rules. We also seek 
comment on whether and how codifying these principles will promote free 
speech, civic participation, and democratic engagement. Will codifying 
these principles help preserve the Internet's status as ``a forum for a 
true diversity of political discourse'' and an open platform for 
publication of information?

D. Codifying a Principle of Nondiscrimination

    56. As discussed above, the ability of network operators to 
discriminate in price or service quality among different types of 
traffic or different providers or users may impose significant social 
costs, particularly if the discrimination is motivated by 
anticompetitive purposes. At the same time, we recognize that traffic 
on the Internet is increasing rapidly and that broadband Internet 
access service providers must be able to manage their networks and 
experiment with new technologies and business models in ways that 
benefit consumers. The key issue we face is distinguishing socially 
beneficial discrimination from socially harmful discrimination in a 
workable manner.
    57. Based on the record, we propose a general rule prohibiting a 
broadband Internet access service provider from discriminating against, 
or in favor of, any content, application, or service, subject to 
reasonable network management. More specifically we propose the 
following new rule:
    5. Subject to reasonable network management, a provider of 
broadband Internet access service must treat lawful content, 
applications, and services in a nondiscriminatory manner.
    58. We further propose that, as with the previous four rules, this 
rule should be subject to exceptions for the needs of law enforcement, 
public safety, national and homeland security authorities, as discussed 
at greater length below.
    59. We understand the term ``nondiscriminatory'' to mean that a 
broadband Internet access service provider may not charge a content, 
application, or service provider for enhanced or prioritized access to 
the subscribers of the broadband Internet access service provider. We 
propose that this rule would not prevent a broadband Internet access 
service provider from charging subscribers different prices for 
different services. We seek comment on each of these proposals. We also 
seek comment on whether the specific language of this draft rule best 
serves the public interest.
    60. In defining the scope of this proposed fifth rule, we propose 
to focus on that portion of the connection between a broadband Internet 
access service subscriber and the Internet for which the broadband 
Internet access service provider, as discussed above, may have the 
ability and the incentive to favor or disfavor traffic destined for its 
end-user customers. We seek comment on this proposal, and how best to 
define the portion of the network subject to the fifth rule.
    61. We believe that the proposed nondiscrimination rule, subject to 
reasonable network management and understood in the context of our 
proposal for a separate category of ``managed'' or ``specialized'' 
services (described below), may offer an appropriately light and 
flexible policy to preserve the open Internet. Our intent is to provide 
industry and consumers with clearer expectations, while accommodating 
the changing needs of Internet-related technologies and business 
practices. Greater predictability in this area will enable broadband 
providers to better plan for the future, relying on clear guidelines 
for what practices are consistent with federal Internet policy. First, 
as explained in detail below, reasonable network management would 
provide broadband Internet access service providers substantial 
flexibility to take reasonable measures to manage their networks, 
including but not limited to measures to address and mitigate the 
effects of congestion on their networks or to address quality-of-
service needs, and to provide a safe and secure Internet experience for 
their users. We also recognize that what is reasonable may be different 
for different providers depending on what technologies they use to 
provide broadband Internet access service (e.g., fiber optic networks 
differ in many important respects from 3G and 4G wireless broadband 
networks). We intend reasonable network management to be meaningful and 
flexible. Second, as explained below, we recognize that some services, 
such as some services provided to enterprise customers, IP-enabled 
``cable television'' delivery, facilities-based VoIP services, or a 
specialized telemedicine application, may be provided to end users over 
the same facilities as broadband Internet access service, but may not 
themselves be an Internet access service and instead may be classified 
as distinct managed or specialized services. These services may require 
enhanced quality of service to work well. As these may not be 
``broadband Internet access services,'' none of the principles we 
propose would necessarily or automatically apply to these services. In 
this context, with a flexible approach to reasonable network 
management, and understanding that managed or specialized services, to 
which the principles do not apply in part or full, may be offered over 
the same facilities as those used to provide broadband Internet access 
service, we believe that the proposed approach to nondiscrimination 
will promote the goals of an open Internet.
    62. We note that our proposed nondiscrimination and reasonable 
network management rule bears more resemblance to unqualified 
prohibitions on discrimination added to Title II in the 1996 
Telecommunications Act than it does to the general prohibition on 
``unjust or unreasonable discrimination'' by common carriers in section 
202(a) of the Act. We seek comment on whether an ``unjust or 
unreasonable discrimination'' standard would be preferable to the 
approach we propose. As explained above, rather than extending that 
common carrier standard to broadband Internet access services, we 
propose a general nondiscrimination rule subject to reasonable network 
management and specifically enumerated exceptions (including separate 
treatment of managed or specialized services). We believe that a 
bright-line rule against discrimination, subject to reasonable network 
management and enumerated exceptions, may better fit the unique 
characteristics of the Internet, which differs from other 
communications networks in that it was not initially designed to 
support just one application (like telephone and cable television

[[Page 62647]]

networks), but rather to allow users at the edge of the network to 
decide toward which lawful uses to direct the network.
    63. If we were to prohibit ``unjust or unreasonable'' 
discrimination by broadband providers, we anticipate that the types of 
discrimination that would be considered ``just'' and ``reasonable'' 
would likely be reasonable network management or fall within one of the 
exceptions described below. We base that belief on our four years of 
experience under the Internet Policy Statement and our familiarity with 
the debate over open Internet principles, which began well before 2005. 
As we note below, we believe that a case-by-case approach to providing 
more detailed rulings in this area is inevitable and valuable. At the 
same time, where we can identify and describe ex ante exceptions to the 
general nondiscrimination rule, we believe it is helpful to do so. As 
explained below, moreover, we propose that the nondiscrimination rule 
would be subject to reasonable network management, which we believe 
would be sufficient to address concerns that a general prohibition on 
discrimination lacks necessary flexibility. To be sure, the contours of 
our proposed exceptions would be subject to development in future 
adjudications. We would not, however, have to establish the exceptions 
themselves through that process.
    64. We seek comment on these proposals. We seek comment generally 
on the costs and benefits of this proposed nondiscrimination rule, both 
in the near-term and long-term. In particular, would a rule prohibiting 
broadband Internet access service providers from charging content, 
application and service providers fees be likely to result in higher 
social welfare than would result in a market in which no constraints on 
such fees are imposed? What would the effects be on future innovation?
    65. We seek comment on the effects that prohibiting charges to 
content, application, and service providers for enhanced or prioritized 
service would have on broadband Internet access service users. In 
discussing these issues, we encourage parties to be specific in 
describing whether, when, and how broadband Internet access service 
providers charge content, application, and service providers for 
prioritization of traffic today, and any consequences they believe 
would arise from prohibiting broadband Internet access service 
providers from charging for prioritization.
    66. More generally, we seek comment on how the proposed 
nondiscrimination rule would affect broadband Internet access service 
providers' pricing and practices, including network deployment, and the 
current or planned offerings of particular Internet content, 
application, and service providers. Are there particular content, 
applications, or services whose quality and utility to end users 
depends on a broadband Internet access service provider's assuring a 
certain quality of service? For example, do services such as VoIP, 
video conferencing, IP video, or telemedicine applications depend on 
discrimination in how traffic is handled? To the extent that parties 
believe enhanced or guaranteed quality of service is required for 
certain content, applications, or services, they should identify 
specifically the content, applications, and services for which such 
practices are required and explain why it is required. What would the 
practical differences be between permitting operators to manage their 
networks to assure quality of service to particular types of traffic--
e.g., all VoIP traffic--and the offering of such management for a fee 
or other consideration? Would the proposed nondiscrimination rule 
discourage innovation in or development of certain types of content, 
applications, or services? Should these services be more properly 
understood as managed or specialized services rather than broadband 
Internet access services?
    67. Have we correctly identified the costs and benefits of the 
alternative approaches? Does subjecting the nondiscrimination rule to 
reasonable network management ensure that network operators can 
reasonably manage their networks consistent with the intent of 
preserving the free and open Internet? Does the separate regulatory 
category of managed or specialized services allow beneficial 
discrimination to serve the public? Conversely, are there any socially 
beneficial forms of discrimination that would not fall within the 
category of reasonable network management or the exceptions discussed 
below? If so, should we instead adopt a rule prohibiting only 
unreasonable discrimination? Would a rule prohibiting unreasonable 
discrimination permit socially beneficial discrimination that would be 
prohibited under a nondiscrimination rule? Would such a rule be 
inconsistent with the Internet's traditional operation or otherwise 
undermine the manifold benefits the open Internet has provided? Would a 
prohibition on unreasonable discrimination, standing alone, be less 
certain, harder to enforce, or both? Would it create greater incentives 
for broadband Internet access service providers to engage in socially 
harmful discrimination?
    68. More generally, we seek comment on the relationship between the 
proposed rules and the requirements of Title II of the Act. For 
example, should the standards for evaluating discrimination be based on 
the Commission's precedent under either section 202 or section 272 of 
the Act? Has ex post enforcement of similar prohibitions on 
discrimination and unreasonable discrimination proven adequate in other 
contexts?
    69. We also seek comment on whether our proposed nondiscrimination 
rule will promote free speech, civic participation, and democratic 
engagement. Would discrimination by access providers interfere with 
those goals? Conversely, would our proposed rule impose any burdens on 
access providers' speech that would be cognizable for purposes of the 
First Amendment, and if so, how? Would any burden on access providers' 
speech be outweighed by the speech-enabling benefits of an open 
Internet that provides a non-discriminatory platform for the robust 
interchange of ideas?
    70. Finally, we note that NTIA and RUS, in administering the BTOP 
and BIP broadband grant and loan programs, required applicants to 
agree, among other things, ``not [to] favor any lawful Internet 
applications and content over others.'' We seek comment on how BTOP and 
BIP applicants have proposed to comply with these requirements and how 
this might inform the Commission's definition of a nondiscrimination 
rule.

E. Codifying a Principle of Transparency

    71. In this part, we propose to codify a sixth principle of 
transparency. In general, we believe that sunlight is the best 
disinfectant and that transparency discourages inefficient and socially 
harmful market behavior. As we noted in our recent Consumer Information 
and Disclosure Notice of Inquiry (NOI), access to accurate information 
plays a vital role in maintaining a well-functioning marketplace that 
encourages competition, innovation, low prices, and high-quality 
services. The Consumer Information and Disclosure NOI, however, focuses 
on a broad array of consumer issues that cut across all communications 
service offerings, while here we seek comment on the specific issue, 
not raised in that NOI, of how broadband Internet access service 
providers should disclose relevant network management practices to

[[Page 62648]]

consumers as well as to content, application, and service providers and 
to government. As previously noted, recipients of BTOP and BIP grants 
are required to disclose network management practices on their Web 
sites. We propose a transparency principle to protect and empower 
consumers and to maximize the efficient operation of relevant markets 
by ensuring that all interested parties have access to necessary 
information about the traffic management practices of networks. At the 
same time, recognizing the potential burdens of such rules, we seek to 
design a transparency rule that is minimally intrusive. We seek comment 
below on how to balance these goals and reiterate our desire for 
comments that include data and specific examples.
    72. We believe that adopting a rule requiring transparency would 
benefit several constituencies. First, disclosure rules would enable 
broadband subscribers to understand and take advantage of the technical 
capabilities and limitations of the services they purchase. Second, 
disclosure would benefit content, application, and service providers 
and investors by increasing access to information needed to develop and 
market new Internet offerings. Third, disclosure would benefit policy 
makers and the Internet users who rely on them by providing an 
empirical foundation for evaluating the effectiveness and necessity of 
ongoing policies. As such, we propose codifying a sixth principle of 
transparency as follows:
    6. Subject to reasonable network management, a provider of 
broadband Internet access service must disclose such information 
concerning network management and other practices as is reasonably 
required for users and content, application, and service providers to 
enjoy the protections specified in this part.
    We propose that, as with the previous five rules, this rule should 
be subject to reasonable network management and the needs of law 
enforcement, public safety, and homeland and national security, as 
discussed at greater length below.
    73. We seek comment on the specific wording of this proposed rule. 
In particular, we seek comment on how we should interpret what 
information is ``reasonably required'' and whether there are some 
standard practices that should be excluded from such mandatory 
disclosure. We also seek comment on alternative proposed formulations 
of the rule, including whether the rule should require disclosure of 
information directly to the Commission.
    74. Disclosure to Users. In the Consumer Information and Disclosure 
NOI, we sought comment on a broad range of issues related to disclosure 
to consumers. In this NPRM, we seek comment more narrowly on the kind 
of required disclosures to users that would effectuate the Internet 
principles discussed herein. Specifically, we propose that broadband 
Internet access service providers should be required to disclose 
information to users concerning network management and other practices 
that may reasonably affect the ability of users to use the devices, 
send or receive the content, use the services, run the applications, 
and enjoy the competitive offerings of their choice.
    75. Commenters to the National Broadband Plan NOI have generally 
agreed that disclosure of network management practices is important for 
users. A large number of commentators on open Internet principles in 
our Broadband Industry Practices proceeding--both those in favor of a 
nondiscrimination principle and those opposed--likewise believe that 
broadband Internet access service providers should be required to 
disclose more information about their network management practices than 
they currently disclose. Disclosure of this information would correct 
information asymmetries and allow users to make informed purchasing and 
usage decisions.
    76. We have in the past found evidence of service providers 
concealing information that consumers would consider relevant in 
choosing a service provider or a particular service option. For 
example, in Madison River and Comcast, broadband Internet access 
service providers blocked specific applications desired by users 
without informing them. In a recent academic study, thousands of 
incidents were observed in which BitTorrent uploads were blocked in the 
United States during early 2008. Specifically, the study found that 
``BitTorrent uploads are being blocked for a significant number of 
hosts, mostly from ISPs in the USA and in Singapore.'' At that time, 
the U.S. Internet service providers whose customers experienced the 
most blocking had not publicly disclosed their network and congestion 
management practices, nor had most other providers. Of major broadband 
providers, only a handful appear to publicly disclose their network and 
congestion management practices.
    77. After the Commission issued the Comcast Network Management 
Practices Order, some providers voluntarily disclosed congestion 
management practices on their Web sites. Nevertheless, there may be 
other instances of unreported application blocking or other practices 
that limit consumers' ability to access content, applications, or 
services of their choice on the Internet. In the absence of disclosure 
rules, we have no way of knowing the full extent of these practices. 
Nor do users.
    78. We seek comment on what consumers need to know about network 
management practices to make informed purchasing decisions and to make 
informed use of the services they purchase. We believe that many 
consumers need information concerning actual (as opposed to advertised) 
transmission rates, capacity, and any network management practices that 
affect their quality of service. Commenters should address what types 
of network management practices could interfere with or restrict 
service and what types of disclosure would be appropriate. Should 
broadband Internet access service providers be required to disclose, 
for example, the times of day users are most likely to be affected by 
network congestion, or the steps providers might take to control or 
alleviate congestion? Disclosure of service information is vital to 
consumer choice both before and after a consumer decides to purchase a 
service. Thus, we seek comment on the types of information broadband 
Internet access service providers should be required to disclose to 
consumers before and after purchase.
    79. We also seek comment on how this information should be 
disclosed to users. Are there standard labeling formats that could be 
used to disclose network management practices to users? Are there 
technological tools available now, or current tools that could be 
easily adapted, to facilitate consumer comparisons of network 
management practices? We seek examples of disclosure, both within and 
outside the communications market, that are both useful for consumers 
and not unnecessarily burdensome. We note that some current disclosure 
practices appear too general to be useful to users. On the other hand, 
too much detail may be counter-productive if users ignore or find it 
difficult to understand those details. We seek comment on the 
appropriate balance. Similarly, we seek comment on how disclosure can 
be tailored not to unduly burden broadband Internet access service 
providers. We propose that providers should be able to publicly 
disclose their practices on their Web sites and promotional material. 
Are there other

[[Page 62649]]

consumer-friendly outlets for this information that broadband Internet 
access service providers can use without undue cost and effort?
    80. Disclosure to Content, Application, and Service Providers. 
Content, application, and service providers should have adequate 
information about network management practices to enable them to 
innovate and provide their products and services effectively to users. 
By reducing uncertainty, transparency should increase the ability and 
incentives of these providers to invest and innovate and engage in 
research and development. We seek comment on what information is 
currently available, what additional information should be made 
available, and how this information should be made available to 
content, application, and service providers. Are there current examples 
of disclosure to upstream entities by broadband Internet access service 
providers that could serve as a useful model for any disclosure 
requirements? Would the comparably efficient interconnection (CEI) and 
open network architecture (ONA) rules the Commission adopted in 
Computer III provide a useful guide in developing disclosure 
requirements in this context? Should broadband Internet access service 
providers make such disclosures available on their Web sites? Are there 
particular formats that would make the disclosures more accessible and 
useful for content, application, and service providers? We also seek 
comment on how such required disclosures can be tailored not to unduly 
burden broadband Internet access service providers.
    81. Disclosure to Government. The Commission should have access to 
the information it needs to enforce any rules adopted in this 
proceeding and to make informed policy decisions going forward. We seek 
comment on the frequency and content of any reports from broadband 
Internet access service providers that would make open Internet 
policies enforceable and/or provide a useful tool for policy making. 
Specifically, what should broadband Internet access service providers 
be required to disclose to the Commission, if anything? Network 
management practices disclosed to consumers both before and after they 
purchase broadband Internet access service? A list of the methods of 
disclosure? Should providers report the number and content of any 
consumer complaints about the adequacy of disclosure both pre- and 
post-sale? Should broadband Internet access service providers also 
report the same information for complaints filed by content, 
application, and service providers? How frequently should the 
Commission require such reports? Are there governmental agencies, other 
than this Commission, to which disclosures should be made, and if so, 
what information should be disclosed?
    82. General Issues. We seek comment on what events should trigger 
disclosure obligations, how these disclosures should be made and in 
what format, how often they should be made, and whether the disclosures 
should be uniform or tailored to specific purposes and audiences. 
Should broadband Internet access service providers be required to 
disclose any changes to their network management practices before or 
within a certain period of time after implementing those changes? Would 
current or past disclosure practices serve as good models for 
disclosure to consumers; content, application, and service providers; 
and the Commission?
    83. We do not anticipate that any disclosures required by the 
proposed transparency rule would implicate personally identifiable 
information or individuals' privacy interests or any proprietary 
network data. However, we seek comment on whether this assumption is 
correct. We further seek comment on any network security, online 
safety, and competition concerns that might be raised by the proposed 
transparency rule. If such concerns exist, how can we best address them 
in our rules? Should certain information be disclosed only to the 
Commission and not to the public, upon a showing of good cause that 
public disclosure would cause significant harms? We note that parties 
in other proceedings have raised public safety and competitive harm 
concerns about such reports. We also propose that any routine reports 
should not affect our ability or the ability of other government 
entities to gather any network management information necessary to 
comply with or enforce the law.
    84. We also seek comment on general arguments against disclosure 
requirements. Specifically, is network management information genuinely 
of use to users and/or content, application, and service providers? 
Would disclosure slow innovation in the network or slow or deter 
research in efficient network design? We also seek comment on whether 
transparency will encourage or enable users and/or content, 
application, and service providers to circumvent legitimate network 
management tools designed, for example, to manage congestion.
    85. Finally, we seek comment on legal limitations on the type of 
information broadband Internet access service providers may disclose. 
For example, we note there are several laws that prohibit disclosure by 
a broadband Internet access service provider to the end user of the 
provider's compliance with certain requests of law enforcement 
authorities. We seek comment on whether the proposed exception to the 
rules for the needs of law enforcement, discussed below, adequately 
addresses this issue.

F. Reasonable Network Management, Law Enforcement, Public Safety, and 
Homeland and National Security

    86. As stated above, our goals in this proceeding are to encourage 
investment and innovation, promote competition, and protect the rights 
of users, including promoting speech and democratic participation. 
While the six rules proposed above are derived from and designed to 
support these goals, there may be times when strict application of 
those rules would be in tension with these goals. For example, the 
general usefulness of the Internet could suffer if spam floods the 
inboxes of users, if viruses affect their computers, or if network 
congestion impairs their access to the Internet. Other critical 
governmental interests such as law enforcement, national security, and 
public safety may require that Internet access service providers 
discriminate with regard to particular traffic. For example, a failure 
to prioritize certain types of traffic in the case of an emergency 
could impair the efforts of first responders. Consequently, we must 
ensure that our framework provides a way to balance potentially 
competing interests while helping to ensure an open, safe, and secure 
Internet. We propose that all six proposed rules should be subject to 
(1) reasonable network management, (2) the needs of law enforcement, 
and (3) the needs of public safety and homeland and national security. 
The original second Internet principle, rather than all four, was 
subject to the needs of law enforcement. We believe it would be 
preferable to make clear that all principles are subject to the needs 
of law enforcement, as well as those of public safety and homeland and 
national security, and seek comment on that proposal.
    87. As with the six proposed rules, we propose to describe these 
concepts at a relatively general level and leave more detailed rulings 
to the adjudications of particular cases, as we did in the Comcast 
Network Management Practices Order. As in that order, the novelty of 
Internet access and traffic management questions, the complex

[[Page 62650]]

nature of the Internet, and a general policy of restraint in setting 
policy for Internet access service providers weigh in favor of a case-
by-case approach. We contemplate that individual adjudications will 
principally involve resolution of complaints about broadband Internet 
access service providers' specific practices. Providers would not be 
required to seek a declaratory ruling from the Commission before a 
practice is actually deployed, but they or others would be free to do 
so. Accordingly, we propose to lay out a few examples of proper and 
improper application of the concepts here but to reserve definition of 
the precise contours of these concepts for future adjudications. This 
course should allow us to proceed cautiously with respect to these 
emerging issues and to do so with sensitivity to the fast-changing 
nature of the Internet and its continued growth. We discuss each of 
these concepts in turn.
1. Reasonable Network Management
    88. Here we discuss the proposed definition of reasonable network 
management:
    Reasonable network management consists of: (a) Reasonable practices 
employed by a provider of broadband Internet access service to (i) 
reduce or mitigate the effects of congestion on its network or to 
address quality-of-service concerns; (ii) address traffic that is 
unwanted by users or harmful; (iii) prevent the transfer of unlawful 
content; or (iv) prevent the unlawful transfer of content; and (b) 
other reasonable network management practices.
    89. There appear to be several types of situations that could 
justify a broadband Internet access service provider's acting 
inconsistently with the six open Internet principles described above. 
First, if a broadband Internet access service provider's network is or 
appears likely to become congested to such a degree that an individual 
user's Internet access is noticeably affected, the broadband Internet 
access service provider may be justified in taking reasonable steps to 
reduce or mitigate the adverse effects of that congestion or to address 
quality-of-service concerns. Second, it may be reasonable for a 
provider to take measures to counter traffic that is harmful or 
unwanted by users. Third, if particular content or a particular 
transfer of content is prohibited by law, the provider may be justified 
in not carrying that traffic. Finally, there may be other situations in 
which network management practices do not fall into one of these 
categories but may nevertheless be reasonable. We address each of these 
categories in turn.
    90. First, we propose that a broadband Internet access service 
provider may take reasonable steps to reduce or mitigate the adverse 
effects of congestion on its network or to address quality-of-service 
concerns. What constitutes congestion, and what measures are reasonable 
to address it, may vary depending on the technology platform for a 
particular broadband Internet access service. For example, if cable 
Internet subscribers in a particular neighborhood are experiencing 
congestion, it may be reasonable for an Internet service provider to 
temporarily limit the bandwidth available to individual users in that 
neighborhood who are using a substantially disproportionate amount of 
bandwidth until the period of congestion has passed. Alternatively, a 
broadband Internet service provider might seek to manage congestion by 
limiting usage or charging subscribers based on their usage rather than 
a flat monthly fee. Some have suggested it would be beneficial for a 
broadband provider to protect the quality of service for those 
applications for which quality of service is important by implementing 
a network management practice of prioritizing classes of latency-
sensitive traffic over classes of latency-insensitive traffic (such as 
prioritizing all VoIP, gaming, and streaming media traffic). Others 
have suggested that such a practice would be difficult to implement in 
a competitively fair manner and could undermine the benefits of a 
nondiscrimination rule, including keeping barriers to innovation low. 
We seek comment on whether these and other potential approaches to 
addressing congestion would be reasonable. On the other hand, we 
believe that it would likely not be reasonable network management to 
block or degrade VoIP traffic but not other services that similarly 
affect bandwidth usage and have similar quality-of-service 
requirements. Nor would we consider the singling out of any particular 
content (i.e., viewpoint) for blocking or deprioritization to be 
reasonable, in the absence of evidence that such traffic or content was 
harmful. We recognize that in a past adjudication, the Commission 
proposed that for a network management practice to be considered 
``reasonable,'' it ``should further a critically important interest and 
be narrowly or carefully tailored to serve that interest.'' We believe 
that this standard is unnecessarily restrictive in the context of a 
rule that generally prohibits discrimination subject to a flexible 
category of reasonable network management. We seek comment on our 
proposal not to adopt the standard articulated in the Comcast Network 
Management Practices Order in this rulemaking.
    91. Second, we propose that broadband Internet access service 
providers may address harmful traffic or traffic unwanted by users as a 
reasonable network management practice. For example, blocking spam 
appears to be a reasonable network management practice, as does 
blocking malware or malicious traffic originating from malware, as well 
as any traffic that a particular user has requested be blocked (e.g., 
blocking pornography for a particular user who has asked the broadband 
Internet access service provider to do so).
    92. Third, we propose that broadband Internet access service 
providers would not violate the principles in taking reasonable steps 
to address unlawful conduct on the Internet. Specifically, we propose 
that broadband Internet access service providers may reasonably prevent 
the transfer of content that is unlawful. For example, as the 
possession of child pornography is unlawful, consistent with applicable 
law, it appears reasonable for a broadband Internet access service 
provider to refuse to transmit child pornography. Moreover, it is 
important to emphasize that open Internet principles apply only to 
lawful transfers of content. They do not, for example, apply to 
activities such as the unlawful distribution of copyrighted works, 
which has adverse consequences on the economy and the overall broadband 
ecosystem. In order for network openness obligations and appropriate 
enforcement of copyright laws to co-exist, it appears reasonable for a 
broadband Internet access service provider to refuse to transmit 
copyrighted material if the transfer of that material would violate 
applicable laws. Such a rule would be consistent with the Comcast 
Network Management Practices Order, in which the Commission stated that 
``providers, consistent with federal policy, may block * * * 
transmissions that violate copyright law.''
    93. Finally, we propose that broadband Internet access service 
providers may take other reasonable steps to maintain the proper 
functioning of their networks. We include this catch-all for two 
reasons. First, we do not presume to know now everything that providers 
may need to do to provide robust, safe, and secure Internet access to 
their subscribers, much less everything they may need to do as 
technologies and usage patterns change in the future. Second, we 
believe that

[[Page 62651]]

additional flexibility to engage in reasonable network management 
provides network operators with an important tool to experiment and 
innovate as user needs change.
    94. We seek comment on the specific wording of the proposed 
definition of reasonable network management. We seek comment on how to 
evaluate whether particular network management practices fall into one 
or more of these categories and on who should bear the burden of proof 
on that issue. We ask parties to identify other laws that would require 
or permit broadband Internet access service providers to act in a 
manner inconsistent with the six rules. We seek comment on whether 
certain network management techniques are considered best practices in 
the network engineering community or are consistent with industry 
standards and cooperative agreements. We note that in section IV.H we 
seek comment on how to consider reasonable network management practices 
in the context of broadband Internet access over mobile wireless 
networks. We also note that standards bodies such as the Internet 
Engineering Task Force (IETF) have played a significant role in 
developing network management protocols, and we seek comment on whether 
the IETF, other standards bodies, or other third parties could help 
define more precisely what practices are reasonable or, specifically in 
the context of copyright protection, how it could be determined whether 
the transfer of particular content is unlawful. We ask that parties 
support their comments with data and specific examples where possible.
2. Law Enforcement
    95. Federal law has long recognized the importance of permitting 
law enforcement access to communications networks in certain 
circumstances. The Communications Assistance for Law Enforcement Act, 
for example, requires broadband Internet access service providers to 
assist law enforcement in intercepting, tracking, and identifying 
communications made over their networks. The Foreign Intelligence 
Surveillance Act authorizes law enforcement collecting foreign 
intelligence or working to thwart a threat to national security to 
wiretap communications over the Internet and prohibits an Internet 
access service provider from disclosing the existence of the wiretap to 
its subscriber. And the Electronic Communications Privacy Act creates a 
framework for law enforcement to work with Internet access service 
providers and others for the purpose of investigating and monitoring 
information stored on or transiting the Internet while balancing the 
privacy interests of affected parties. We believe that a broadband 
Internet access service provider may comply with these laws and 
otherwise meet the needs of law enforcement without violating the rules 
we propose today. For example, we do not believe that nondisclosure of 
a wiretap to a surveillance target would violate a carrier's 
transparency obligations as proposed here.
    96. Accordingly, we propose the following new rule:
    Nothing in this part supersedes any obligation a provider of 
broadband Internet access service may have--or limits its ability--to 
address the needs of law enforcement, consistent with applicable law.
    97. We seek comment on our conclusions and on the specific wording 
of this proposed rule. We also seek comment on instances in which 
broadband Internet access service providers have or may in the future 
need to facilitate the needs of law enforcement, including in ways 
that, in the absence of the exception proposed in this section, might 
conflict with the rules we propose today. In particular, we seek 
specific examples and data regarding these issues.
3. Public Safety and Homeland and National Security
    98. In connection with a local, regional, or national emergency, 
federal, state, tribal, and local public safety entities; homeland 
security personnel; and other appropriate governmental agencies may 
need guaranteed access to reliable communications over the Internet in 
order to coordinate disaster relief and other response efforts, or for 
other emergency communications. Guaranteeing quality of service for 
these purposes may be critically important to our national security and 
safety. For example, during a public health emergency, increased 
absenteeism and utilization of teleworking would likely increase the 
number of users seeking to access the Internet from numerous discrete 
points (e.g., residences). The performance of essential functions could 
be impeded by unmanaged network congestion resulting from this change 
in usage patterns.
    99. Accordingly, we propose the following new rule:
    Nothing in this part supersedes any obligation a provider of 
broadband Internet access service may have--or limits its ability--to 
deliver emergency communications, or to address the needs of public 
safety or national or homeland security authorities, consistent with 
applicable law.
    100. We seek comment on our conclusions and on the specific wording 
of this proposed rule. We also seek comment on instances in which 
broadband Internet access service providers have or may in the future 
need to facilitate the needs of public safety or national or homeland 
security, including in ways that, in the absence of the exception 
proposed in this section, might conflict with the rules we propose 
today. We reiterate our desire for specific examples and data regarding 
these issues.

G. Managed or Specialized Services

    101. As rapid innovation in Internet-related services continues, we 
recognize that there are and will continue to be Internet-Protocol-
based offerings (including voice and subscription video services, and 
certain business services provided to enterprise customers), often 
provided over the same networks used for broadband Internet access 
service, that have not been classified by the Commission. We use the 
term ``managed'' or ``specialized'' services to describe these types of 
offerings. The existence of these services may provide consumer 
benefits, including greater competition among voice and subscription 
video providers, and may lead to increased deployment of broadband 
networks.
    102. We recognize that these managed or specialized services may 
differ from broadband Internet access services in ways that recommend a 
different policy approach, and it may be inappropriate to apply the 
rules proposed here to managed or specialized services. However, we are 
sensitive to any risk that the growth of managed or specialized 
services might supplant or otherwise negatively affect the open 
Internet. In this section, we seek comment on whether and, if so, how 
the Commission should address managed or specialized IP-based services 
in order to allow providers to develop new and innovative technologies 
and business models and to otherwise further the goals of innovation, 
investment, competition, and consumer choice, while safeguarding the 
open Internet.
    103. We begin by seeking comment on what functions such managed or 
specialized services might fulfill. For example, AT&T offers its U-
verse multi-channel, Internet-Protocol-based video service through the 
same network as its fiber-based broadband Internet access offering, and 
the record in our National Broadband Plan proceeding includes 
discussion of potential future offerings such as specialized 
telemedicine, smart grid, or eLearning applications that may require or 
benefit from enhanced quality

[[Page 62652]]

of service rather than traditional best-effort Internet delivery. What 
other managed or specialized services are currently being offered or 
may be offered in the near future? What specific content, applications, 
or services may require enhanced quality-of-service offerings, and why? 
What kinds of special or enhanced treatment are required? Are or will 
managed or specialized services be provided over the same network and 
to the same users who subscribe to broadband Internet access service? 
We encourage commenters to be as specific as possible about the current 
or likely future identity of such offerings; their technical 
characteristics, including whether they traverse more than one service 
provider's network; the technical characteristics of any enhanced 
quality of service offering that might be required for such content, 
application, or service; and sales and marketing arrangements for such 
content, application, or service, as well as for any enhanced quality 
of service offering (e.g., are or would such offerings be sold or 
marketed as part of other services or as a distinct service, whether 
bundled or stand-alone?).
    104. More generally, how should we define the category of managed 
or specialized services? How are managed or specialized services 
different from broadband Internet access service as defined in this 
NPRM, and what are their essential distinguishing characteristics? Is 
allocation of available bandwidth for managed or specialized services 
versus broadband Internet access services a critical factor in 
analyzing such issues?
    105. In addition, we seek comment on what policies should apply to 
managed or specialized services, if any, in light of the Commission's 
statutory mandate and the goals of this rulemaking process. Should the 
Commission classify these services for policymaking purposes, and if 
so, how? If rules are appropriate in this area, what should those rules 
state? Should any of the rules proposed here for broadband Internet 
access service apply to managed or specialized services?
    106. Finally, we seek comment on what impact managed or specialized 
services might have on the open Internet and the advancement of the 
goals of this rulemaking process, and how the Commission should address 
any such impacts. Will managed or specialized services increase or 
reduce investment in broadband network deployment and upgrades? Will 
network providers provide sufficient capacity for robust broadband 
Internet access service on shared networks used for managed or 
specialized services? Again, we encourage commenters to be as specific 
and fact-based as possible in addressing these issues.

H. Applicability of Principles to Different Broadband Technology 
Platforms

    107. As our choices for accessing the Internet continue to 
increase, and as users connect to the Internet through different 
technologies, the principles we propose today seek to safeguard its 
openness for all users. We affirm that the six principles that we 
propose to codify today would apply to all platforms for broadband 
Internet access. Nevertheless, we acknowledge that technological, 
market structure, consumer usage, and historical regulatory differences 
between different Internet access platforms may justify differences in 
how we apply the Internet openness principles to advance the goals of 
innovation, investment, research and development, competition, and 
consumer choice. While there has been considerable discussion and 
factual development regarding openness issues in the wireline context, 
other Internet access platforms present additional important issues 
related to openness that merit focused attention. In this section, we 
seek comment on the application of the principles to different access 
platforms, including how, in what time frames or phases, and to what 
extent the principles should apply to non-wireline forms of Internet 
access, including, but not limited to, terrestrial mobile wireless, 
unlicensed wireless, licensed fixed wireless, and satellite.
    108. Since the adoption of the Internet Policy Statement in 2005, 
alternative platforms for accessing the Internet have flourished, 
unleashing tremendous innovation and investment. In particular, 
wireless broadband Internet access has emerged as a technology that, 
from a consumer's perspective, now supports many of the same functions 
as DSL and cable modem service. For example, a consumer's laptop can be 
connected to the Internet through wireless or landline technologies. As 
noted above, the AT&T-BellSouth neutrality commitment extended to fixed 
WiMAX service. Wireless Internet access is provided through a variety 
of methods and technologies and is faster in most cases than dial up.
    109. Because of the rapid growth and increasing use of mobile 
wireless as a platform for broadband Internet access, we will examine 
in greater detail in the following parts the application of the 
principles to mobile broadband Internet access. We note as a threshold 
matter that wireless providers may offer a range of services--including 
traditional voice, short message service (SMS), and media messaging 
service (MMS)--that are not broadband Internet access services and thus 
are not included in the scope of the draft rules discussed above.
    110. The manner in which the principles apply to mobile Internet 
access raises challenging questions, particularly with respect to the 
attachment of devices to the network and discrimination with regard to 
access to content, applications, and services, subject to reasonable 
network management. The difficulty of the questions is in part due to 
the way in which devices, applications, and content are provided today 
in the mobile wireless context. Moreover, we note that mobile wireless 
networks are not as far along in the process of transitioning to IP-
based traffic as wireline networks. We seek to analyze fully the 
implications of these principles for mobile network architectures and 
practices as well as how, in what time frames or phases, and to what 
extent they can be fairly and appropriately implemented. We undertake 
this analysis with a focus on promoting innovation, investment, 
research and development, competition, and consumer choice, in order to 
support a thriving Internet and robust mobile wireless broadband 
networks.
1. Emergence of Mobile Internet Access
    111. Mobile wireless is now a key platform enabling consumers to 
access communications services. Since 2004, the number of mobile 
telephone subscribers has exceeded the number of landlines. More 
recently, mobile wireless has emerged as an important method of 
Internet access. The first 3G networks went into service in 2003, and 
today tens of millions of Americans access the Internet through mobile 
handheld devices or through personal computers or other devices 
equipped with wireless Internet capability. In the past four years, the 
number of mobile devices capable of high-speed Internet access grew 
from approximately 400,000 to more than 59 million by the end of June 
2008. 3G networks have enabled speeds comparable to some fixed access 
networks, offering a robust Internet experience. And in the future, 
with new 3.5G and 4G networks, some consumers may use mobile wireless 
devices for all of their Internet access services. Simultaneously, new 
devices have emerged to take advantage of faster 3G network speeds. 
Many of today's smartphones (e.g., Blackberry, iPhone, Palm Pre, and 
phones based on the Android or Windows Mobile platforms) are 
essentially handheld computers

[[Page 62653]]

with fully featured Web browsers and the ability to run thousands of 
applications, many of which utilize the Internet, and more and more 
Americans are using these devices. Similarly, wireless modems are 
increasingly allowing laptops, netbooks, and desktop computers to 
connect to the Internet.
    112. In evaluating the highly dynamic landscape for mobile wireless 
broadband Internet access, we recognize that there are technological, 
structural, consumer usage, and historical differences between mobile 
wireless and wireline/cable networks. In order to facilitate connection 
and quality of communications over these radio links, wireless networks 
employ technical controls over factors such as the frequency, time, and 
power of the phones' signals. The customer device communicates with the 
network using a specified technical interface. Moreover, cellular 
wireless networks are shared networks (as are some types of wireline 
networks), with limited resources typically shared among multiple 
users. Wireless networks must deal with particularly dynamic changes in 
the communications path due to radio interference and propagation 
effects such as signal loss with increasing distance of the wireless 
phone from the base stations, fading, multipath, and shadowing.
    113. The mobile wireless industry structure has evolved differently 
as well. As part of the effort to promote widespread use of mobile 
wireless, service providers package devices with services, often 
subsidizing these devices, and in the process, they may work directly 
with handset manufacturers to develop the design of their end-user 
devices. Mobile broadband customers generally purchase their devices 
directly from the wireless provider, often at a significant discount 
pursuant to a long-term service contract. Moreover, as mobile broadband 
service has developed, it has been integrated with end-user devices 
that are used to deliver traditional voice service.
2. Background of Wireless Open Platforms
    114. In 2007, the Commission adopted a rule that required certain 
licensees to provide an open platform on their networks for devices and 
applications. Specifically, the open platform rule requires that Upper 
700 MHz C-Block licensees must allow customers, device manufacturers, 
third-party application developers, and others to use or develop the 
devices and applications of their choice, so long as they meet all 
applicable regulatory requirements and do not cause harm to the 
network. The Commission also prohibited all handset locking for Upper 
700 MHz C-Block licensees.
    115. In addition, some service and equipment providers have opened 
their networks to certain third-party devices and/or applications. For 
example, in 2008, T-Mobile with Google unveiled the G1, the first 
Android device using Android's free, open-source mobile operating 
system platform, and since that time, T-Mobile has offered additional 
Android devices. Verizon Wireless established its Open Development 
Program, to allow its customers to use the devices and applications of 
their choice on its network. Clearwire launched its CLEAR 4G WiMAX 
Innovation Network in Silicon Valley, a 4G WiMAX ``sandbox'' for 
application developers to use to develop wireless Internet 
applications. With the development of more advanced smartphone devices 
(such as the iPhone and the Palm Pre) over more robust wireless 
networks, many new and innovative applications have also been 
developed, which are typically offered to consumers through 
applications stores. These stores are often operated by wireless 
handset manufacturers and operating system developers, including Apple, 
Palm, and Research in Motion (for BlackBerry), and others are in 
development.
3. Application of the Internet Principles to Wireless
a. Connection to the Network and Device Attachment
    116. In the wireless Internet context, different devices may 
interconnect to the network in different ways. Smartphones have built-
in radio capability, and typically may connect to the network following 
a registration procedure (e.g., entering an authorization code) or by 
inserting a preregistered chip (e.g., a subscriber identity module 
(SIM) card). Some laptop and netbook computers now have pre-installed 
radios and attach to the network in a manner similar to smartphones. 
Many laptops and other devices do not have built-in radios, but have a 
slot or port whereby a modem can be easily connected. Wireless 
interconnection is complicated by the fact that different operators 
utilize different network standards, which require devices to have a 
compatible ``air interface'' in order to operate. Further, as explained 
above, consumers typically purchase their wireless devices directly 
from their wireless providers (or their agents), and providers often 
restrict consumers from attaching certain third-party devices to their 
networks.
    117. In the residential landline context, broadband providers 
typically provide a modem that attaches to the network, but allow users 
freely to interconnect devices locally to the modem through an Ethernet 
or WiFi connection. An analogous practice in the wireless context is 
known as ``tethering,'' whereby a wireless handset or device can be 
used as a modem to connect with other devices such as a laptop computer 
by wire or radio (e.g., WiFi or Bluetooth). Similarly, some providers 
have begun to introduce ``personal hotspot'' devices (e.g., the MiFi) 
that combine a 3G modem with a WiFi hub that can serve multiple 
devices. Tethering is not universally permitted by providers.
    118. Unlicensed wireless devices can generally attach to a local-
area or personal-area network without requiring the network owner 
(typically a consumer) to test for whether the device is non-harmful, 
since this would be impractical. Typically this is accomplished by 
using industry standard interfaces such as a WiFi connection. We note 
that private sector certification programs have been established to 
ensure compatibility with the standards. For example, in order to 
advertise a product as WiFi compliant the device must undergo third-
party testing in accordance with a program established by the WiFi 
Alliance.
    119. In this context, we ask how, in what time frames or phases, 
and to what extent the ``any device'' rule should apply to mobile 
wireless broadband Internet access. In particular, we seek concrete 
data and specific examples that will inform our consideration of the 
issue. Should we require a mobile broadband Internet access service 
provider to allow users to attach any device with a compatible air 
interface directly to its network? If so, what procedures may providers 
use to prevent harm to the network? Who should ensure that devices are 
non-harmful: the providers themselves, third-party organizations, 
industry associations/laboratories, or the Commission? Should we allow 
providers to satisfy the device-attachment principle by providing 
wireless modems or SIM cards that could be easily inserted into end-
user devices?
    120. Should we require providers to allow ``tethering'' as a form 
of device interconnection? If we required wireless providers to permit 
tethering, what impact would that have on wireless network congestion, 
and what reasonable network management

[[Page 62654]]

measures should providers be allowed to take to ensure that their 
networks can support tethering? Alternatively, should a tethering 
requirement be sufficient to satisfy the ``any device'' requirement in 
the wireless context?
    121. In the interest of ensuring that the application of the ``any 
device'' rule is fair and appropriate, we also seek comment on 
realistic and reasonable time frames or phases for applying this rule 
to mobile wireless broadband Internet access services.
    122. We note that the ``any device'' rule proposed in this NPRM 
would differ from the rules that the Commission adopted for Upper 700 
MHz C Block licensees in several respects. For example, the rule 
proposed in this NPRM would not necessarily prohibit the practice of 
``handset locking'' (i.e., preventing a subscriber from transferring a 
handset to another provider's network during the time the contract with 
the subscriber is in place), which was explicitly prohibited in the 
rules applicable to the Upper 700 MHz C Block licensees. Further, the 
``any device'' rule proposed in this NPRM, as well as the ``any 
application'' rule proposed herein, would require a provider of 
broadband Internet access service to allow users to connect to the 
provider's network their choice of lawful devices that do not harm the 
network and to run the lawful applications of the users' choice. In 
contrast, the rules the Commission adopted for Upper 700 MHz C Block 
licensees, which have been in effect since 2007, require licensees 
offering any service on Upper 700 MHz C Block spectrum, without 
limitation to broadband internet access service, to allow use of the 
devices and applications of the user's choice on the licensee's C Block 
network.
    123. In addition, we note that rural wireless carriers have raised 
an additional issue that relates to devices, asking the Commission to 
address exclusive handset arrangements between wireless service 
providers and device manufacturers. We do not view the open Internet 
rules proposed here as directly related to handset exclusivity, and we 
do not intend to address that issue in this proceeding, but rather will 
consider it separately.
b. Application of Nondiscrimination With Respect to Access to Content, 
Applications, and Services, Subject to Reasonable Network Management
    124. Application of a nondiscrimination principle raises important 
questions in wireless, given the provision of voice, SMS/MMS, and 
Internet service through a single device, typically sold by the same 
network operator. We seek comment on how, in what time frames or 
phases, and to what extent the prohibition on discrimination, subject 
to reasonable network management, should be administered for wireless 
services, including specific examples and data regarding practices. 
Would it be desirable to treat different devices and networks 
differently? Should the principle apply in the same way to an iPhone 
connected to a 3G network and to a laptop connected to a modem that is 
connected to a wireless mesh network? How should this principle apply 
in the context of 4G networks capable of supporting voice, video, and 
data services on a converged platform architecture? We also seek 
comment on time frames or phases that would facilitate fair and 
appropriate application of the nondiscrimination principle to mobile 
wireless broadband Internet access services.
    125. With respect to the identification of reasonable network 
management practices for mobile broadband, we note that each provider 
has a finite amount of spectrum available to it. The users in a cell 
share the spectrum at any given time and the demands on capacity can 
vary widely depending on such factors as the number of users within 
that cell at any given time and the applications they are using. 
Moreover, while all networks must be designed to deal with various 
factors that can affect performance, wireless networks must be designed 
to deal with wide variations in signal levels across the service area 
as well as interference from other devices. In order to maximize 
utility to all users in a given cell sector, certain basic technical 
``rules of the road'' are critical. What implications do these 
technical characteristics have for practices that might be considered 
reasonable network management in the wireless context? Further, for a 
given application, wireless networks are more sensitive to user 
behavior than wireline networks, so capacity management is a constant 
concern of wireless engineers. Bandwidth-intensive Internet services 
already create challenges for wireless networks, and these challenges 
are likely to increase, although the effects may be ameliorated by new 
technology, investment, innovation in business models, and/or 
additional spectrum. On the other hand, for the most bandwidth-
intensive service today--streaming video--many wireless users view 
video content on smaller screens, which requires less bandwidth than 
typical video services consumed over a wireline Internet connection.
    126. In what way do these wireless characteristics affect what 
kinds of network management practices are or are not reasonable? Are 
there particular wireless network management practices that should be 
identified by the Commission as reasonable? For example, are there any 
circumstances in which it could be reasonable for a wireless network to 
block video applications because they consume too much capacity? What 
about third-party VoIP applications or peer-to-peer applications?
    127. We further seek comment on what access to applications means 
in the mobile wireless context. Does the quality of a user's experience 
with an application vary depending on whether the application is 
downloaded onto the user's device or whether it is accessed in the 
cloud using the device's Web browser?

I. Enforcement

    128. In this NPRM, we propose to codify six principles that will 
govern the conduct of broadband Internet access service providers, and 
to enforce those rules on a case-by-case basis through adjudication. 
The Commission has authority to enforce its rules. Section 503(b) of 
the Act authorizes the Commission to issue citations and impose 
forfeiture penalties for violations of the Commission's rules. The 
Commission may initiate an enforcement action on its own motion or in 
response to a complaint filed by an outside party. We note that in the 
Adelphia/Time Warner/Comcast Order, the Commission invited parties to 
file complaints if evidence arose that Comcast was willfully blocking 
or degrading access to Internet content. And in the Comcast Network 
Management Practices Order, we addressed a complaint concerning alleged 
blocking or degrading of Internet content.
    129. We seek comment on whether the Commission should adopt 
procedural rules specifically governing complaints involving alleged 
violations of any Internet principles we codify in our regulations. 
Should the Commission adopt formal complaint procedures for alleged 
violations of its open Internet rules? If so, what process should 
govern such complaints? Would any of the Commission's existing rules, 
such as the rules governing formal complaints under section 208 of the 
Act or the rules governing complaints related to cable service, provide 
a suitable model in developing new procedural rules for open Internet 
complaints? Should the procedural rules differ depending on 
characteristics of the defendant (e.g.,

[[Page 62655]]

common carrier, cable provider)? Are there statutory limits on the 
scope of relief that the Commission may award in a formal complaint 
proceeding involving a violation of any open Internet rules? For 
example, may the Commission award damages to a complainant? If so, 
under what circumstances? What other issues concerning enforcement 
should the Commission consider? We invite comment.

J. Technical Advisory Process

    130. We recognize that our decisions in this rulemaking must 
reflect a thorough understanding of current technology and future 
technological trends. To ensure that we have this understanding, the 
Chief of the Commission's Office of Engineering & Technology will 
create an inclusive, open, and transparent process for obtaining the 
best technical advice and information from a broad range of engineers.

Initial Regulatory Flexibility Analysis

    1. As required by the Regulatory Flexibility Act of 1980, as 
amended (RFA), the Commission has prepared this Initial Regulatory 
Flexibility Analysis (IRFA) of the possible significant economic impact 
on a substantial number of small entities from the policies and rules 
proposed in this Notice of Proposed Rulemaking (NPRM). The Commission 
requests written public comment on this IRFA. Comments must be 
identified as responses to the IRFA and must be filed by the deadlines 
for comments on the NPRM provided on the first page of the NPRM. The 
Commission will send a copy of the NPRM, including this IRFA, to the 
Chief Counsel for Advocacy of the Small Business Administration (SBA). 
In addition, the NPRM and IRFA (or summaries thereof) will be published 
in the Federal Register.

A. Need for, and Objectives of, the Proposed Rules

    2. Today's Internet is shaped by a legacy of openness and 
transparency that has been critical to its success as an engine for 
creativity, innovation, and economic growth. The NPRM seeks comment on 
a number of issues relating to preserving this openness and 
transparency. In the NPRM the Commission proposes draft language to 
codify the four principles the Commission articulated in the Internet 
Policy Statement that providers must allow consumers to:
    access the lawful Internet content of their choice[;] * * * run 
applications and use services of their choice, subject to the needs of 
law enforcement[;] * * * connect their choice of legal devices that do 
not harm the network[; and] * * * [benefit from] competition among 
network providers, application and service providers, and content 
providers.
    3. The Commission also proposes draft language to codify a fifth 
principle that would require a broadband Internet access service 
provider to treat lawful content, applications, and services in a 
nondiscriminatory manner and draft language to codify a sixth principle 
that would require a broadband Internet access service provider to 
disclose such information concerning network management and other 
practices as is reasonably required for users and content, application, 
and service providers to enjoy the protections specified in this 
rulemaking.
    4. The NPRM proposes draft language to make clear that the 
principles would be subject to reasonable network management and would 
not supersede any obligation a broadband Internet access service 
provider may have--or limit its ability--to deliver emergency 
communications or to address the needs of law enforcement, public 
safety, or national or homeland security authorities, consistent with 
applicable law. The draft rules do not prohibit broadband Internet 
access service providers from taking reasonable action to prevent the 
transfer of unlawful content, such as the unlawful distribution of 
copyrighted works. Nor are the draft rules intended to prevent a 
provider of broadband Internet access service from complying with other 
laws.
    5. The NPRM seeks comment on defining a category of managed or 
specialized services, how to define such services, and what principles 
or rules, if any, should apply to them. The NPRM also seeks comment on 
how, to what extent, and when the principles should apply to wireless 
broadband Internet access service, whether such access is obtained via 
terrestrial mobile wireless, unlicensed wireless, licensed fixed 
wireless, or satellite. Finally, the NPRM seeks comment on the 
enforcement procedures that the Commission should use to ensure 
compliance with the proposed principles.

B. Legal Basis

    6. The legal basis for any action that may be taken pursuant to the 
NPRM is contained in sections 1, 2, 4(i)-(j), 201(b), 230, 257, 303(r), 
and 503 of the Communications Act of 1934, as amended, and section 706 
of the Telecommunications Act of 1996, as amended, 47 U.S.C. 151, 152, 
154(i)-(j), 201(b), 230, 257, 303(r), 503, 1302.

C. Description and Estimate of the Number of Small Entities to Which 
the Rules Would Apply

    7. The RFA directs agencies to provide a description of, and, where 
feasible, an estimate of, the number of small entities that may be 
affected by the rules adopted herein. The RFA generally defines the 
term ``small entity'' as having the same meaning as the terms ``small 
business,'' ``small organization,'' and ``small governmental 
jurisdiction.'' In addition, the term ``small business'' has the same 
meaning as the term ``small business concern'' under the Small Business 
Act. A ``small business concern'' is one which: (1) Is independently 
owned and operated; (2) is not dominant in its field of operation; and 
(3) satisfies any additional criteria established by the Small Business 
Administration (SBA).
1. Total Small Entities
    8. Our proposed action, if implemented, may, over time, affect 
small entities that are not easily categorized at present. We therefore 
describe here, at the outset, three comprehensive, statutory small 
entity size standards. First, nationwide, there are a total of 
approximately 27.2 million small businesses, according to the SBA. In 
addition, a ``small organization'' is generally ``any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.'' Nationwide, as of 2002, there were 
approximately 1.6 million small organizations. Finally, the term 
``small governmental jurisdiction'' is defined generally as 
``governments of cities, towns, townships, villages, school districts, 
or special districts, with a population of less than fifty thousand.'' 
Census Bureau data for 2002 indicate that there were 87,525 local 
governmental jurisdictions in the United States. We estimate that, of 
this total, 84,377 entities were ``small governmental jurisdictions.'' 
Thus, we estimate that most governmental jurisdictions are small.
2. Internet Access Service Providers
    9. The actions proposed in the NPRM would apply to broadband 
Internet access service providers. In 2007, the SBA recognized two new 
small businesses, economic census categories. They are (1) Internet 
Publishing and Broadcasting and Web Search Portals and (2) All Other 
Information Services. However, census data do not yet exist that may be 
used to calculate the number of small entities that fit these 
definitions. Therefore, we will use the prior definition of Internet 
Service

[[Page 62656]]

Providers (ISPs) in order to estimate numbers of potentially-affected 
small business entities.
    10. The 2007 Economic Census places these providers, which includes 
voice over Internet protocol (VoIP) providers, in the category of All 
Other Telecommunications. The SBA small business size standard for such 
firms is: those having annual average receipts of $25 million or less. 
The most current Census Bureau data on such entities, however, are the 
2002 data for the previous census category called Internet Service 
Providers. The 2002 data show that there were 2,529 such firms that 
operated for the entire year. Of those, 2,437 firms had annual receipts 
of under $10 million and an additional 47 firms had receipts of between 
$10 million and $24,999,999. Consequently, we estimate that the 
majority of ISP firms are small entities that may be affected by our 
action.
    11. The ISP industry has changed dramatically since 2002. The 2002 
data cited above therefore may include entities that no longer provide 
Internet access service and may exclude entities that now provide 
broadband Internet access service. To ensure that this IRFA describes 
the universe of small entities that the proposals in the NPRM may 
affect, we discuss in turn several different types of entities that may 
be providing broadband Internet access service. We note that, although 
we have no specific information on the number of small entities that 
provide broadband Internet access service over unlicensed spectrum, we 
include these entities in our Initial Regulatory Flexibility Analysis.
3. Wireline Providers
    12. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the 
Commission nor the SBA has developed a small business size standard 
specifically for incumbent local exchange services. The appropriate 
size standard under SBA rules is for the category Wired 
Telecommunications Carriers. Under that size standard, such a business 
is small if it has 1,500 or fewer employees. According to Commission 
data, 1,311 carriers have reported that they are engaged in the 
provision of incumbent local exchange services. Of these 1,311 
carriers, an estimated 1,024 have 1,500 or fewer employees and 287 have 
more than 1,500 employees. Consequently, the Commission estimates that 
most providers of incumbent local exchange service are small businesses 
that may be affected by our proposed action.
    13. Competitive Local Exchange Carriers (Competitive LECs), 
Competitive Access Providers (CAPs), Shared-Tenant Service Providers, 
and Other Local Service Providers. Neither the Commission nor the SBA 
has developed a small business size standard specifically for these 
service providers. The appropriate size standard under SBA rules is for 
the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 1005 carriers have reported that they are 
engaged in the provision of either competitive access provider services 
or competitive local exchange carrier services. Of these 1005 carriers, 
an estimated 918 have 1,500 or fewer employees and 87 have more than 
1,500 employees. In addition, 16 carriers have reported that they are 
``Shared-Tenant Service Providers,'' and all 16 are estimated to have 
1,500 or fewer employees. In addition, 89 carriers have reported that 
they are ``Other Local Service Providers.'' Of the 89, all have 1,500 
or fewer employees. Consequently, the Commission estimates that most 
providers of competitive local exchange service, competitive access 
providers, Shared-Tenant Service Providers, and other local service 
providers are small entities that may be affected by our proposed 
action.
    14. We have included small incumbent LECs in this present RFA 
analysis. As noted above, a ``small business'' under the RFA is one 
that, inter alia, meets the pertinent small business size standard 
(e.g., a telephone communications business having 1,500 or fewer 
employees), and ``is not dominant in its field of operation.'' The 
SBA's Office of Advocacy contends that, for RFA purposes, small 
incumbent LECs are not dominant in their field of operation because any 
such dominance is not ``national'' in scope. We have therefore included 
small incumbent LECs in this RFA analysis, although we emphasize that 
this RFA action has no effect on Commission analyses and determinations 
in other, non-RFA contexts.
    15. Interexchange Carriers. Neither the Commission nor the SBA has 
developed a small business size standard specifically for providers of 
interexchange services. The appropriate size standard under SBA rules 
is for the category Wired Telecommunications Carriers. Under that size 
standard, such a business is small if it has 1,500 or fewer employees. 
According to Commission data, 300 carriers have reported that they are 
engaged in the provision of interexchange service. Of these, an 
estimated 268 have 1,500 or fewer employees and 32 have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
IXCs are small entities that may be affected by our proposed action.
    16. Operator Service Providers (OSPs). Neither the Commission nor 
the SBA has developed a small business size standard specifically for 
operator service providers. The appropriate size standard under SBA 
rules is for the category Wired Telecommunications Carriers. Under that 
size standard, such a business is small if it has 1,500 or fewer 
employees. According to Commission data, 28 carriers have reported that 
they are engaged in the provision of operator services. Of these, an 
estimated 27 have 1,500 or fewer employees and one has more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
OSPs are small entities that may be affected by our proposed action.
4. Wireless Providers
    17. The broadband Internet access service provider category covered 
by this NPRM may cover multiple wireless firms and categories of 
regulated wireless services. Thus, to the extent the wireless services 
listed below are used by wireless firms for broadband Internet access 
services, the proposed actions may have an impact on those small 
businesses as set forth above and further below. In addition, for those 
services subject to auctions, we note that, as a general matter, the 
number of winning bidders that claim to qualify as small businesses at 
the close of an auction does not necessarily represent the number of 
small businesses currently in service. Also, the Commission does not 
generally track subsequent business size unless, in the context of 
assignments and transfers or reportable eligibility events, unjust 
enrichment issues are implicated.
    18. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to that time, such firms were 
within the now-superseded categories of ``Paging'' and ``Cellular and 
Other Wireless Telecommunications.'' Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), preliminary data for 
2007 show that there were 11,927 firms operating that year. While the 
Census Bureau has not released data on the establishments broken down 
by number of employees, we note that the Census Bureau lists total 
employment for all

[[Page 62657]]

firms in that sector at 281,262. Since all firms with fewer than 1,500 
employees are considered small, given the total employment in the 
sector, we estimate that the vast majority of wireless firms are small.
    19. Wireless Communications Services. This service can be used for 
fixed, mobile, radiolocation, and digital audio broadcasting satellite 
uses. The Commission defined ``small business'' for the wireless 
communications services (WCS) auction as an entity with average gross 
revenues of $40 million for each of the three preceding years, and a 
``very small business'' as an entity with average gross revenues of $15 
million for each of the three preceding years. The SBA has approved 
these definitions. The Commission auctioned geographic area licenses in 
the WCS service. In the auction, which commenced on April 15, 1997 and 
closed on April 25, 1997, seven bidders won 31 licenses that qualified 
as very small business entities, and one bidder won one license that 
qualified as a small business entity.
    20. 1670-1675 MHz Services. This service can be used for fixed and 
mobile uses, except aeronautical mobile. An auction for one license in 
the 1670-1675 MHz band commenced on April 30, 2003 and closed the same 
day. One license was awarded. The winning bidder was not a small 
entity.
    21. Wireless Telephony. Wireless telephony includes cellular, 
personal communications services, and specialized mobile radio 
telephony carriers. As noted, the SBA has developed a small business 
size standard for Wireless Telecommunications Carriers (except 
Satellite). Under the SBA small business size standard, a business is 
small if it has 1,500 or fewer employees. According to Trends in 
Telephone Service data, 434 carriers reported that they were engaged in 
wireless telephony. Of these, an estimated 222 have 1,500 or fewer 
employees and 212 have more than 1,500 employees. Therefore, 
approximately half of these entities can be considered small.
    22. Broadband Personal Communications Service. The broadband 
personal communications services (PCS) spectrum is divided into six 
frequency blocks designated A through F, and the Commission has held 
auctions for each block. The Commission initially defined a ``small 
business'' for C- and F-Block licenses as an entity that has average 
gross revenues of $40 million or less in the three previous calendar 
years. For F-Block licenses, an additional small business size standard 
for ``very small business'' was added and is defined as an entity that, 
together with its affiliates, has average gross revenues of not more 
than $15 million for the preceding three calendar years. These small 
business size standards, in the context of broadband PCS auctions, have 
been approved by the SBA. No small businesses within the SBA-approved 
small business size standards bid successfully for licenses in Blocks A 
and B. There were 90 winning bidders that claimed small business status 
in the first two C-Block auctions. A total of 93 bidders that claimed 
small business status won approximately 40 percent of the 1,479 
licenses in the first auction for the D, E, and F Blocks. On April 15, 
1999, the Commission completed the reauction of 347 C-, D-, E-, and F-
Block licenses in Auction No. 22. Of the 57 winning bidders in that 
auction, 48 claimed small business status and won 277 licenses.
    23. On January 26, 2001, the Commission completed the auction of 
422 C- and F-Block Broadband PCS licenses in Auction No. 35. Of the 35 
winning bidders in that auction, 29 claimed small business status. 
Subsequent events concerning Auction 35, including judicial and agency 
determinations, resulted in a total of 163 C- and F-Block licenses 
being available for grant. On February 15, 2005, the Commission 
completed an auction of 242 C-, D-, E-, and F-Block licenses in Auction 
No. 58. Of the 24 winning bidders in that auction, 16 claimed small 
business status and won 156 licenses. On May 21, 2007, the Commission 
completed an auction of 33 licenses in the A, C, and F Blocks in 
Auction No. 71. Of the 12 winning bidders in that auction, five claimed 
small business status and won 18 licenses. On August 20, 2008, the 
Commission completed the auction of 20 C-, D-, E-, and F-Block 
Broadband PCS licenses in Auction No. 78. Of the eight winning bidders 
for Broadband PCS licenses in that auction, six claimed small business 
status and won 14 licenses.
    24. Specialized Mobile Radio Licenses. The Commission awards 
``small entity'' bidding credits in auctions for Specialized Mobile 
Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz bands 
to firms that had revenues of no more than $15 million in each of the 
three previous calendar years. The Commission awards ``very small 
entity'' bidding credits to firms that had revenues of no more than $3 
million in each of the three previous calendar years. The SBA has 
approved these small business size standards for the 900 MHz Service. 
The Commission has held auctions for geographic area licenses in the 
800 MHz and 900 MHz bands. The 900 MHz SMR auction began on December 5, 
1995, and closed on April 15, 1996. Sixty bidders claiming that they 
qualified as small businesses under the $15 million size standard won 
263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR 
auction for the upper 200 channels began on October 28, 1997, and was 
completed on December 8, 1997. Ten bidders claiming that they qualified 
as small businesses under the $15 million size standard won 38 
geographic area licenses for the upper 200 channels in the 800 MHz SMR 
band. A second auction for the 800 MHz band was held on January 10, 
2002 and closed on January 17, 2002 and included 23 BEA licenses. One 
bidder claiming small business status won five licenses.
    25. The auction of the 1,053 800 MHz SMR geographic area licenses 
for the General Category channels began on August 16, 2000, and was 
completed on September 1, 2000. Eleven bidders won 108 geographic area 
licenses for the General Category channels in the 800 MHz SMR band and 
qualified as small businesses under the $15 million size standard. In 
an auction completed on December 5, 2000, a total of 2,800 Economic 
Area licenses in the lower 80 channels of the 800 MHz SMR service were 
awarded. Of the 22 winning bidders, 19 claimed small business status 
and won 129 licenses. Thus, combining all four auctions, 41 winning 
bidders for geographic licenses in the 800 MHz SMR band claimed status 
as small businesses.
    26. In addition, there are numerous incumbent site-by-site SMR 
licenses and licensees with extended implementation authorizations in 
the 800 and 900 MHz bands. We do not know how many firms provide 800 
MHz or 900 MHz geographic area SMR service pursuant to extended 
implementation authorizations, nor how many of these providers have 
annual revenues of no more than $15 million. One firm has over $15 
million in revenues. In addition, we do not know how many of these 
firms have 1,500 or fewer employees, which is the SBA-determined size 
standard. We assume, for purposes of this analysis, that all of the 
remaining extended implementation authorizations are held by small 
entities, as defined by the SBA.
    27. Lower 700 MHz Band Licenses. The Commission previously adopted 
criteria for defining three groups of small businesses for purposes of 
determining their eligibility for special provisions such as bidding 
credits. The Commission defined a ``small business''

[[Page 62658]]

as an entity that, together with its affiliates and controlling 
principals, has average gross revenues not exceeding $40 million for 
the preceding three years. A ``very small business'' is defined as an 
entity that, together with its affiliates and controlling principals, 
has average gross revenues that are not more than $15 million for the 
preceding three years. Additionally, the lower 700 MHz Service had a 
third category of small business status for Metropolitan/Rural Service 
Area (MSA/RSA) licenses--``entrepreneur''--which is defined as an 
entity that, together with its affiliates and controlling principals, 
has average gross revenues that are not more than $3 million for the 
preceding three years. The SBA approved these small size standards. An 
auction of 740 licenses (one license in each of the 734 MSAs/RSAs and 
one license in each of the six Economic Area Groupings (EAGs)) 
commenced on August 27, 2002, and closed on September 18, 2002. Of the 
740 licenses available for auction, 484 licenses were won by 102 
winning bidders. Seventy-two of the winning bidders claimed small 
business, very small business or entrepreneur status and won a total of 
329 licenses. A second auction commenced on May 28, 2003, closed on 
June 13, 2003, and included 256 licenses: 5 EAG licenses and 476 
Cellular Market Area licenses. Seventeen winning bidders claimed small 
or very small business status and won 60 licenses, and nine winning 
bidders claimed entrepreneur status and won 154 licenses. On July 26, 
2005, the Commission completed an auction of 5 licenses in the Lower 
700 MHz band (Auction No. 60). There were three winning bidders for 
five licenses. All three winning bidders claimed small business status.
    28. In 2007, the Commission reexamined its rules governing the 700 
MHz band in the 700 MHz Second Report and Order. An auction of 700 MHz 
licenses commenced January 24, 2008 and closed on March 18, 2008, which 
included 176 Economic Area licenses in the A Block, 734 Cellular Market 
Area licenses in the B Block, and 176 EA licenses in the E Block. 
Twenty winning bidders, claiming small business status (those with 
attributable average annual gross revenues that exceed $15 million and 
do not exceed $40 million for the preceding three years) won 49 
licenses. Thirty-three winning bidders claiming very small business 
status (those with attributable average annual gross revenues that do 
not exceed $15 million for the preceding three years) won 325 licenses.
    29. Upper 700 MHz Band Licenses. In the 700 MHz Second Report and 
Order, the Commission revised its rules regarding Upper 700 MHz 
licenses. On January 24, 2008, the Commission commenced Auction 73 in 
which several licenses in the Upper 700 MHz band were available for 
licensing: 12 Regional Economic Area Grouping licenses in the C Block, 
and one nationwide license in the D Block. The auction concluded on 
March 18, 2008, with 3 winning bidders claiming very small business 
status (those with attributable average annual gross revenues that do 
not exceed $15 million for the preceding three years) and winning five 
licenses.
    30. 700 MHz Guard Band Licensees. In 2000, in the 700 MHz Guard 
Band Order, the Commission adopted size standards for ``small 
businesses'' and ``very small businesses'' for purposes of determining 
their eligibility for special provisions such as bidding credits and 
installment payments. A small business in this service is an entity 
that, together with its affiliates and controlling principals, has 
average gross revenues not exceeding $40 million for the preceding 
three years. Additionally, a very small business is an entity that, 
together with its affiliates and controlling principals, has average 
gross revenues that are not more than $15 million for the preceding 
three years. SBA approval of these definitions is not required. An 
auction of 52 Major Economic Area licenses commenced on September 6, 
2000, and closed on September 21, 2000. Of the 104 licenses auctioned, 
96 licenses were sold to nine bidders. Five of these bidders were small 
businesses that won a total of 26 licenses. A second auction of 700 MHz 
Guard Band licenses commenced on February 13, 2001, and closed on 
February 21, 2001. All eight of the licenses auctioned were sold to 
three bidders. One of these bidders was a small business that won a 
total of two licenses.
    31. Air-Ground Radiotelephone Service. The Commission has 
previously used the SBA's small business size standard applicable to 
Wireless Telecommunications Carriers (except Satellite), i.e., an 
entity employing no more than 1,500 persons. There are approximately 
100 licensees in the Air-Ground Radiotelephone Service, and under that 
definition, we estimate that almost all of them qualify as small 
entities under the SBA definition. For purposes of assigning Air-Ground 
Radiotelephone Service licenses through competitive bidding, the 
Commission has defined ``small business'' as an entity that, together 
with controlling interests and affiliates, has average annual gross 
revenues for the preceding three years not exceeding $40 million. A 
``very small business'' is defined as an entity that, together with 
controlling interests and affiliates, has average annual gross revenues 
for the preceding three years not exceeding $15 million. These 
definitions were approved by the SBA. In May 2006, the Commission 
completed an auction of nationwide commercial Air-Ground Radiotelephone 
Service licenses in the 800 MHz band (Auction No. 65). On June 2, 2006, 
the auction closed with two winning bidders winning two Air-Ground 
Radiotelephone Services licenses. Neither of the winning bidders 
claimed small business status.
    32. AWS Services (1710-1755 MHz and 2110-2155 MHz bands (AWS-1); 
1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz and 2175-2180 MHz bands 
(AWS-2); 2155-2175 MHz band (AWS-3)). For the AWS-1 bands, the 
Commission has defined a ``small business'' as an entity with average 
annual gross revenues for the preceding three years not exceeding $40 
million, and a ``very small business'' as an entity with average annual 
gross revenues for the preceding three years not exceeding $15 million. 
For AWS-2 and AWS-3, although we do not know for certain which entities 
are likely to apply for these frequencies, we note that the AWS-1 bands 
are comparable to those used for cellular service and personal 
communications service. The Commission has not yet adopted size 
standards for the AWS-2 or AWS-3 bands but proposes to treat both AWS-2 
and AWS-3 similarly to broadband PCS service and AWS-1 service due to 
the comparable capital requirements and other factors, such as issues 
involved in relocating incumbents and developing markets, technologies, 
and services.
    33. 3650-3700 MHz band. In March 2005, the Commission released a 
Report and Order and Memorandum Opinion and Order that provides for 
nationwide, non-exclusive licensing of terrestrial operations, 
utilizing contention-based technologies, in the 3650 MHz band (i.e., 
3650-3700 MHz). As of September 2009, more than 1,080 licenses have 
been granted and more than 4,870 sites have been registered. The 
Commission has not developed a definition of small entities applicable 
to 3650-3700 MHz band nationwide, non-exclusive licensees. However, we 
estimate that the majority of these licensees are Internet Access 
Service Providers (ISPs) and that most of those licensees are small 
businesses.

[[Page 62659]]

    34. Fixed Microwave Services. Microwave services include common 
carrier, private-operational fixed, and broadcast auxiliary radio 
services. They also include the Local Multipoint Distribution Service 
(LMDS), the Digital Electronic Message Service (DEMS), and the 24 GHz 
Service, where licensees can choose between common carrier and non-
common carrier status. At present, there are approximately 36,708 
common carrier fixed licensees and 59,291 private operational-fixed 
licensees and broadcast auxiliary radio licensees in the microwave 
services. There are approximately 135 LMDS licensees, three DEMS 
licensees, and three 24 GHz licensees. The Commission has not yet 
defined a small business with respect to microwave services. For 
purposes of the IRFA, we will use the SBA's definition applicable to 
Wireless Telecommunications Carriers (except satellite)--i.e., an 
entity with no more than 1,500 persons. Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), preliminary data for 
2007 show that there were 11,927 firms operating that year. While the 
Census Bureau has not released data on the establishments broken down 
by number of employees, we note that the Census Bureau lists total 
employment for all firms in that sector at 281,262. Since all firms 
with fewer than 1,500 employees are considered small, given the total 
employment in the sector, we estimate that the vast majority of firms 
using microwave services are small. We note that the number of firms 
does not necessarily track the number of licensees. We estimate that 
virtually all of the Fixed Microwave licensees (excluding broadcast 
auxiliary licensees) would qualify as small entities under the SBA 
definition.
    35. Broadband Radio Service and Educational Broadband Service. 
Broadband Radio Service systems, previously referred to as Multipoint 
Distribution Service (MDS) and Multichannel Multipoint Distribution 
Service (MMDS) systems, and ``wireless cable,'' transmit video 
programming to subscribers and provide two-way high speed data 
operations using the microwave frequencies of the Broadband Radio 
Service (BRS) and Educational Broadband Service (EBS) (previously 
referred to as the Instructional Television Fixed Service (ITFS)). In 
connection with the 1996 BRS auction, the Commission established a 
small business size standard as an entity that had annual average gross 
revenues of no more than $40 million in the previous three calendar 
years. The BRS auctions resulted in 67 successful bidders obtaining 
licensing opportunities for 493 Basic Trading Areas (BTAs). Of the 67 
auction winners, 61 met the definition of a small business. BRS also 
includes licensees of stations authorized prior to the auction. At this 
time, we estimate that of the 61 small business BRS auction winners, 48 
remain small business licensees. In addition to the 48 small businesses 
that hold BTA authorizations, there are approximately 392 incumbent BRS 
licensees that are considered small entities. After adding the number 
of small business auction licensees to the number of incumbent 
licensees not already counted, we find that there are currently 
approximately 440 BRS licensees that are defined as small businesses 
under either the SBA or the Commission's rules.
    36. In addition, the SBA's Cable Television Distribution Services 
small business size standard is applicable to EBS. There are presently 
2,436 EBS licensees. All but 100 of these licenses are held by 
educational institutions. Educational institutions are included in this 
analysis as small entities. Thus, we estimate that at least 2,336 
licensees are small businesses. Since 2007, Cable Television 
Distribution Services have been defined within the broad economic 
census category of Wired Telecommunications Carriers; that category is 
defined as follows: ``This industry comprises establishments primarily 
engaged in operating and/or providing access to transmission facilities 
and infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies.'' The SBA has developed a small 
business size standard for this category, which is: All such firms 
having 1,500 or fewer employees. To gauge small business prevalence for 
these cable services we must, however, use the most current census data 
that are based on the previous category of Cable and Other Program 
Distribution and its associated size standard; that size standard was: 
All such firms having $13.5 million or less in annual receipts. 
According to Census Bureau data for 2002, there were a total of 1,191 
firms in this previous category that operated for the entire year. Of 
this total, 1,087 firms had annual receipts of under $10 million, and 
43 firms had receipts of $10 million or more but less than $25 million. 
Thus, the majority of these firms can be considered small.
5. Satellite Service Providers
    37. Satellite Telecommunications Providers. Two economic census 
categories address the satellite industry. The first category has a 
small business size standard of $15 million or less in average annual 
receipts, under SBA rules. The second has a size standard of $25 
million or less in annual receipts. The most current Census Bureau data 
in this context, however, are from the (last) economic census of 2002, 
and we will use those figures to gauge the prevalence of small 
businesses in these categories.
    38. The category of Satellite Telecommunications ``comprises 
establishments primarily engaged in providing telecommunications 
services to other establishments in the telecommunications and 
broadcasting industries by forwarding and receiving communications 
signals via a system of satellites or reselling satellite 
telecommunications.'' For this category, Census Bureau data for 2002 
show that there were a total of 371 firms that operated for the entire 
year. Of this total, 307 firms had annual receipts of under $10 
million, and 26 firms had receipts of $10 million to $24,999,999. 
Consequently, we estimate that the majority of Satellite 
Telecommunications firms are small entities that might be affected by 
our action.
    39. The second category of All Other Telecommunications comprises, 
inter alia, ``establishments primarily engaged in providing specialized 
telecommunications services, such as satellite tracking, communications 
telemetry, and radar station operation. This industry also includes 
establishments primarily engaged in providing satellite terminal 
stations and associated facilities connected with one or more 
terrestrial systems and capable of transmitting telecommunications to, 
and receiving telecommunications from, satellite systems.'' For this 
category, Census Bureau data for 2002 show that there were a total of 
332 firms that operated for the entire year. Of this total, 303 firms 
had annual receipts of under $10 million and 15 firms had annual 
receipts of $10 million to $24,999,999. Consequently, we estimate that 
the majority of All Other Telecommunications firms are small entities 
that might be affected by our action.
6. Cable Service Providers
    40. Because section 706 requires us to monitor the deployment of 
broadband

[[Page 62660]]

regardless of technology or transmission media employed, we anticipate 
that some broadband service providers may not provide telephone 
service. Accordingly, we describe below other types of firms that may 
provide broadband services, including cable companies, MDS providers, 
and utilities, among others.
    41. Cable and Other Program Distributors. Since 2007, these 
services have been defined within the broad economic census category of 
Wired Telecommunications Carriers; that category is defined as follows: 
``This industry comprises establishments primarily engaged in operating 
and/or providing access to transmission facilities and infrastructure 
that they own and/or lease for the transmission of voice, data, text, 
sound, and video using wired telecommunications networks. Transmission 
facilities may be based on a single technology or a combination of 
technologies.'' The SBA has developed a small business size standard 
for this category, which is: All such firms having 1,500 or fewer 
employees. To gauge small business prevalence for these cable services 
we must, however, use current census data that are based on the 
previous category of Cable and Other Program Distribution and its 
associated size standard; that size standard was: All such firms having 
$13.5 million or less in annual receipts. According to Census Bureau 
data for 2002, there were a total of 1,191 firms in this previous 
category that operated for the entire year. Of this total, 1,087 firms 
had annual receipts of under $10 million, and 43 firms had receipts of 
$10 million or more but less than $25 million. Thus, the majority of 
these firms can be considered small.
    42. Cable Companies and Systems. The Commission has also developed 
its own small business size standards, for the purpose of cable rate 
regulation. Under the Commission's rules, a ``small cable company'' is 
one serving 400,000 or fewer subscribers, nationwide. Industry data 
indicate that, of 1,076 cable operators nationwide, all but eleven are 
small under this size standard. In addition, under the Commission's 
rules, a ``small system'' is a cable system serving 15,000 or fewer 
subscribers. Industry data indicate that, of 7,208 systems nationwide, 
6,139 systems have under 10,000 subscribers, and an additional 379 
systems have 10,000-19,999 subscribers. Thus, under this second size 
standard, most cable systems are small.
    43. Cable System Operators. The Communications Act of 1934, as 
amended, also contains a size standard for small cable system 
operators, which is ``a cable operator that, directly or through an 
affiliate, serves in the aggregate fewer than 1 percent of all 
subscribers in the United States and is not affiliated with any entity 
or entities whose gross annual revenues in the aggregate exceed 
$250,000,000.'' The Commission has determined that an operator serving 
fewer than 677,000 subscribers shall be deemed a small operator, if its 
annual revenues, when combined with the total annual revenues of all 
its affiliates, do not exceed $250 million in the aggregate. Industry 
data indicate that, of 1,076 cable operators nationwide, all but ten 
are small under this size standard. We note that the Commission neither 
requests nor collects information on whether cable system operators are 
affiliated with entities whose gross annual revenues exceed $250 
million, and therefore we are unable to estimate more accurately the 
number of cable system operators that would qualify as small under this 
size standard.
7. Electric Power Generators, Transmitters, and Distributors
    44. Electric Power Generators, Transmitters, and Distributors. The 
Census Bureau defines an industry group comprised of ``establishments, 
primarily engaged in generating, transmitting, and/or distributing 
electric power. Establishments in this industry group may perform one 
or more of the following activities: (1) Operate generation facilities 
that produce electric energy; (2) operate transmission systems that 
convey the electricity from the generation facility to the distribution 
system; and (3) operate distribution systems that convey electric power 
received from the generation facility or the transmission system to the 
final consumer.'' The SBA has developed a small business size standard 
for firms in this category: ``A firm is small if, including its 
affiliates, it is primarily engaged in the generation, transmission, 
and/or distribution of electric energy for sale and its total electric 
output for the preceding fiscal year did not exceed 4 million megawatt 
hours.'' According to Census Bureau data for 2002, there were 1,644 
firms in this category that operated for the entire year. Census data 
do not track electric output and we have not determined how many of 
these firms fit the SBA size standard for small, with no more than 4 
million megawatt hours of electric output. Consequently, we estimate 
that 1,644 or fewer firms may be considered small under the SBA small 
business size standard.

D. Description of Projected Reporting, Recordkeeping, and Other 
Compliance Requirements for Small Entities

    45. As indicated above, the Internet's legacy of openness and 
transparency has been critical to its success as an engine for 
creativity, innovation, and economic development. To help preserve this 
fundamental character of the Internet, the NPRM proposes a transparency 
principle that may impose a reporting, recordkeeping, or other 
compliance burden on some small entities. We do not attempt here to 
provide an estimate in terms of potential burden hours. Rather, we 
anticipate that commenters will provide the Commission with reliable 
information on any costs and burdens on small entities.

E. Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered

    46. The RFA requires an agency to describe any significant 
alternatives that it has considered in reaching its proposed approach, 
which may include (among others) the following four alternatives: (1) 
The establishment of differing compliance or reporting requirements or 
timetables that take into account the resources available to small 
entities; (2) the clarification, consolidation, or simplification of 
compliance or reporting requirements under the rule for small entities; 
(3) the use of performance, rather than design, standards; and (4) an 
exemption from coverage of the rule, or any part thereof, for small 
entities. While we have yet to describe any significant alternatives, 
we expect to consider all of these factors when we have received 
substantive comment from the public and potentially affected entities.
    47. The open and transparent Internet has been a launching pad for 
innumerable creative and entrepreneurial ventures and enabled 
businesses small and large, wherever located, to reach customers around 
the globe. As discussed above, the NPRM seeks comment on a variety of 
issues relating to preserving this openness and transparency, including 
the codification of the four existing Internet principles, the 
codification of additional nondiscrimination and transparency 
principles, and how, to what extent, and when the principles should 
apply to wireless Internet access service providers. In issuing this 
NPRM, the Commission is attempting to preserve the historically open 
architecture that has enabled the Internet to become a platform for 
commerce and innovation that it equally accessible to the new

[[Page 62661]]

entrant and the more established enterprise, without imposing 
unnecessary burdens on ISPs, including those that are small entities. 
We anticipate that the record will suggest alternative ways in which 
the Commission could increase the overall benefits for, and lessen the 
overall burdens on, small entities.

F. Federal Rules That May Duplicate, Overlap, or Conflict With the 
Proposed Rules

    48. None.

Procedural Matters

    Ex Parte Presentations. The rulemaking this NPRM initiates shall be 
treated as a ``permit-but-disclose'' proceeding in accordance with the 
Commission's ex parte rules. Persons making oral ex parte presentations 
are reminded that memoranda summarizing the presentations must contain 
summaries of the substance of the presentations and not merely a 
listing of the subjects discussed. More than a one- or two-sentence 
description of the views and arguments presented generally is required. 
Other requirements pertaining to oral and written presentations are set 
forth in section 1.1206(b) of the Commission's rules.
    Parties should send a copy of their filings to the Competition 
Policy Division, Wireline Competition Bureau, Federal Communications 
Commission, Room 5-C140, 445 12th Street, SW., Washington, DC 20554, or 
by e-mail to [email protected]. Parties shall also serve one copy with 
the Commission's copy contractor, Best Copy and Printing, Inc. (BCPI), 
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554, 
202-488-5300, or via e-mail to [email protected].

Paperwork Reduction Act

    This document contains proposed new information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995. In addition, pursuant to the Small Business 
Paperwork Relief Act of 2002, we seek specific comment on how we might 
``further reduce the information collection burden for small business 
concerns with fewer than 25 employees.''

Ordering Clauses

    Accordingly, it is ordered that, pursuant to sections 1, 2, 4(i)-
(j), 201(b), 230, 257, 303(r), and 503 of the Communications Act of 
1934, as amended, and section 706 of the Telecommunications Act of 
1996, as amended, 47 U.S.C. 151, 152, 154(i)-(j), 201(b), 230, 257, 
303(r), 503, 1302, this NPRM of Proposed Rulemaking is adopted it is 
further ordered that the Commission's Consumer and Governmental Affairs 
Bureau, Reference Information Center, SHALL SEND a copy of this NPRM, 
including the Initial Regulatory Flexibility Analysis, to the Chief 
Counsel for Advocacy of the Small Business Administration.

List of Subjects in 47 CFR Part 8

    Cable television, Communications, Common carriers, Communications 
common carriers, Radio, Satellites, Telecommunications, Telephone.

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

    For the reasons stated in the preamble, the Federal Communications 
Commission proposes to add Part 8 of Title 47 of the Code of Federal 
Regulations as set forth below:

PART 8--PRESERVING THE OPEN INTERNET

Sec.
8.1 Purpose and scope.
8.3 Definitions.
8.5 Content.
8.7 Applications and services.
8.9 Devices.
8.11 Competitive options.
8.13 Nondiscrimination.
8.15 Transparency.
8.17 Reasonable network management
8.19 Law enforcement.
8.21 Public safety and homeland and national security.
8.23 Other laws.

    Authority:  47 U.S.C. 151, 152, 154(i)-(j), 201(b), 230, 257, 
303(r), 503, 1302.


Sec.  8.1  Purpose and scope.

    The purpose of these rules is to preserve the open Internet. These 
rules apply to broadband Internet access service providers only to the 
extent they are providing broadband Internet access services.


Sec.  8.3  Definitions.

    Internet. The system of interconnected networks that use the 
Internet Protocol for communication with resources or endpoints 
reachable, directly or through a proxy, via a globally unique Internet 
address assigned by the Internet Assigned Numbers Authority.
    Broadband Internet access. Internet Protocol data transmission 
between an end user and the Internet. For purposes of this definition, 
dial-up access requiring an end user to initiate a call across the 
public switched telephone network to establish a connection shall not 
constitute broadband Internet access.
    Broadband Internet access service. Any communication service by 
wire or radio that provides broadband Internet access directly to the 
public, or to such classes of users as to be effectively available 
directly to the public.
    Reasonable network management. Reasonable network management 
consists of:
    (1) Reasonable practices employed by a provider of broadband 
Internet access service to:
    (i) Reduce or mitigate the effects of congestion on its network or 
to address quality-of-service concerns;
    (ii) Address traffic that is unwanted by users or harmful;
    (iii) Prevent the transfer of unlawful content; or
    (iv) Prevent the unlawful transfer of content; and
    (2) Other reasonable network management practices.


Sec.  8.5  Content.

    Subject to reasonable network management, a provider of broadband 
Internet access service may not prevent any of its users from sending 
or receiving the lawful content of the user's choice over the Internet.


Sec.  8.7  Applications and services.

    Subject to reasonable network management, a provider of broadband 
Internet access service may not prevent any of its users from running 
the lawful applications or using the lawful services of the user's 
choice.


Sec.  8.9  Devices.

    Subject to reasonable network management, a provider of broadband 
Internet access service may not prevent any of its users from 
connecting to and using on its network the user's choice of lawful 
devices that do not harm the network.


Sec.  8.11  Competitive options.

    Subject to reasonable network management, a provider of broadband 
Internet access service may not deprive any of its users of the user's 
entitlement to competition among network providers, application 
providers, service providers, and content providers.


Sec.  8.13  Nondiscrimination.

    Subject to reasonable network management, a provider of broadband 
Internet access service must treat lawful content, applications, and 
services in a nondiscriminatory manner.

[[Page 62662]]

Sec.  8.15  Transparency.

    Subject to reasonable network management, a provider of broadband 
Internet access service must disclose such information concerning 
network management and other practices as is reasonably required for 
users and content, application, and service providers to enjoy the 
protections specified in this part.


Sec.  8.19  Law enforcement.

    Nothing in this part supersedes any obligation a provider of 
broadband Internet access service may have--or limits its ability--to 
address the needs of law enforcement, consistent with applicable law.


Sec.  8.21  Public safety and homeland and national security.

    Nothing in this part supersedes any obligation a provider of 
broadband Internet access service may have--or limits its ability--to 
deliver emergency communications or to address the needs of public 
safety or national or homeland security authorities, consistent with 
applicable law.


Sec.  8.23  Other laws.

    Nothing in this part is intended to prevent a provider of broadband 
Internet access service from complying with other laws.

[FR Doc. E9-28062 Filed 11-27-09; 8:45 am]
BILLING CODE 6712-01-P