[Federal Register Volume 76, Number 185 (Friday, September 23, 2011)]
[Rules and Regulations]
[Pages 59192-59235]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-24259]



[[Page 59191]]

Vol. 76

Friday,

No. 185

September 23, 2011

Part II





Federal Communications Commission





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47 CFR Parts 0 and 8





Preserving the Open Internet; Final Rule

  Federal Register / Vol. 76 , No. 185 / Friday, September 23, 2011 / 
Rules and Regulations  

[[Page 59192]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Parts 0 and 8

[GN Docket No. 09-191; WC Docket No. 07-52; FCC 10-201]


Preserving the Open Internet

AGENCY: Federal Communications Commission.

ACTION: Final rule.

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SUMMARY: This Report and Order establishes protections for broadband 
service to preserve and reinforce Internet freedom and openness. The 
Commission adopts three basic protections that are grounded in broadly 
accepted Internet norms, as well as our own prior decisions. First, 
transparency: fixed and mobile broadband providers must disclose the 
network management practices, performance characteristics, and 
commercial terms of their broadband services. Second, no blocking: 
fixed broadband providers may not block lawful content, applications, 
services, or non-harmful devices; mobile broadband providers may not 
block lawful Web sites, or block applications that compete with their 
voice or video telephony services. Third, no unreasonable 
discrimination: fixed broadband providers may not unreasonably 
discriminate in transmitting lawful network traffic. These rules, 
applied with the complementary principle of reasonable network 
management, ensure that the freedom and openness that have enabled the 
Internet to flourish as an engine for creativity and commerce will 
continue. This framework thus provides greater certainty and 
predictability to consumers, innovators, investors, and broadband 
providers, as well as the flexibility providers need to effectively 
manage their networks. The framework promotes a virtuous circle of 
innovation and investment in which new uses of the network--including 
new content, applications, services, and devices--lead to increased 
end-user demand for broadband, which drives network improvements that 
in turn lead to further innovative network uses.

DATES: Effective Date: These rules are effective November 20, 2011.

FOR FURTHER INFORMATION CONTACT: Matt Warner, (202) 418-2419 or e-mail, 
[email protected].

SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report 
and Order (Order) in GN Docket No. 09-191, WC Docket No. 07-52, FCC 10-
201, adopted December 21, 2010 and released December 23, 2010. The 
complete text of this document is available on the Commission's Web 
site at http://www.fcc.gov. It is also available for inspection and 
copying during normal business hours in the FCC Reference Information 
Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 
20554. This document may also be purchased from the Commission's 
duplicating contractor, Best Copy and Printing, Inc., 445 12th Street, 
SW., Room CY-B402, Washington, DC 20554, telephone (800) 378-3160 or 
(202) 863-2893, facsimile (202) 863-2898, or via e-mail at http://www.bcpiweb.com.

Synopsis of the Order

I. Preserving the Free and Open Internet

    In this Order the Commission takes an important step to preserve 
the Internet as an open platform for innovation, investment, job 
creation, economic growth, competition, and free expression. To provide 
greater clarity and certainty regarding the continued freedom and 
openness of the Internet, we adopt three basic rules that are grounded 
in broadly accepted Internet norms, as well as our own prior decisions:
    i. Transparency. Fixed and mobile broadband providers must disclose 
the network management practices, performance characteristics, and 
terms and conditions of their broadband services;
    ii. No blocking. Fixed broadband providers may not block lawful 
content, applications, services, or non-harmful devices; mobile 
broadband providers may not block lawful Web sites, or block 
applications that compete with their voice or video telephony services; 
and
    iii. No unreasonable discrimination. Fixed broadband providers may 
not unreasonably discriminate in transmitting lawful network traffic.

We believe these rules, applied with the complementary principle of 
reasonable network management, will empower and protect consumers and 
innovators while helping ensure that the Internet continues to 
flourish, with robust private investment and rapid innovation at both 
the core and the edge of the network. This is consistent with the 
National Broadband Plan goal of broadband access that is ubiquitous and 
fast, promoting the global competitiveness of the United States.
    In late 2009, we launched a public process to determine whether and 
what actions might be necessary to preserve the characteristics that 
have allowed the Internet to grow into an indispensable platform 
supporting our nation's economy and civic life, and to foster continued 
investment in the physical networks that enable the Internet. Since 
then, more than 100,000 commenters have provided written input. 
Commission staff held several public workshops and convened a 
Technological Advisory Process with experts from industry, academia, 
and consumer advocacy groups to collect their views regarding key 
technical issues related to Internet openness.
    This process has made clear that the Internet has thrived because 
of its freedom and openness--the absence of any gatekeeper blocking 
lawful uses of the network or picking winners and losers online. 
Consumers and innovators do not have to seek permission before they use 
the Internet to launch new technologies, start businesses, connect with 
friends, or share their views. The Internet is a level playing field. 
Consumers can make their own choices about what applications and 
services to use and are free to decide what content they want to 
access, create, or share with others. This openness promotes 
competition. It also enables a self-reinforcing cycle of investment and 
innovation in which new uses of the network lead to increased adoption 
of broadband, which drives investment and improvements in the network 
itself, which in turn lead to further innovative uses of the network 
and further investment in content, applications, services, and devices. 
A core goal of this Order is to foster and accelerate this cycle of 
investment and innovation.
    The record and our economic analysis demonstrate, however, that the 
openness of the Internet cannot be taken for granted, and that it faces 
real threats. Indeed, we have seen broadband providers endanger the 
Internet's openness by blocking or degrading content and applications 
without disclosing their practices to end users and edge providers, 
notwithstanding the Commission's adoption of open Internet principles 
in 2005.\1\ In light of these considerations, as well as the limited 
choices most consumers have for broadband service, broadband

[[Page 59193]]

providers' financial interests in telephony and pay television services 
that may compete with online content and services, and the economic and 
civic benefits of maintaining an open and competitive platform for 
innovation and communication, the Commission has long recognized that 
certain basic standards for broadband provider conduct are necessary to 
ensure the Internet's continued openness. The record also establishes 
the widespread benefits of providing greater clarity in this area--
clarity that the Internet's openness will continue, that there is a 
forum and procedure for resolving alleged open Internet violations, and 
that broadband providers may reasonably manage their networks and 
innovate with respect to network technologies and business models. We 
expect the costs of compliance with our prophylactic rules to be small, 
as they incorporate longstanding openness principles that are generally 
in line with current practices and with norms endorsed by many 
broadband providers. Conversely, the harms of open Internet violations 
may be substantial, costly, and in some cases potentially irreversible.
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    \1\ In this Order we use ``broadband'' and ``broadband Internet 
access service'' interchangeably, and ``broadband provider'' and 
``broadband Internet access provider'' interchangeably. ``End user'' 
refers to any individual or entity that uses a broadband Internet 
access service; we sometimes use ``subscriber'' or ``consumer'' to 
refer to those end users that subscribe to a particular broadband 
Internet access service. We use ``edge provider'' to refer to 
content, application, service, and device providers, because they 
generally operate at the edge rather than the core of the network. 
These terms are not mutually exclusive.
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    The rules we proposed in the Open Internet NPRM and those we adopt 
in this Order follow directly from the Commission's bipartisan Internet 
Policy Statement, adopted unanimously in 2005 and made temporarily 
enforceable for certain broadband providers in 2005 and 2007; openness 
protections the Commission established in 2007 for users of certain 
wireless spectrum; and a notice of inquiry in 2007 that asked, among 
other things, whether the Commission should add a principle of 
nondiscrimination to the Internet Policy Statement. Our rules build 
upon these actions, first and foremost by requiring broadband providers 
to be transparent in their network management practices, so that end 
users can make informed choices and innovators can develop, market, and 
maintain Internet-based offerings. The rules also prevent certain forms 
of blocking and discrimination with respect to content, applications, 
services, and devices that depend on or connect to the Internet.
    An open, robust, and well-functioning Internet requires that 
broadband providers have the flexibility to reasonably manage their 
networks. Network management practices are reasonable if they are 
appropriate and tailored to achieving a legitimate network management 
purpose. Transparency and end-user control are touchstones of 
reasonableness.
    We recognize that broadband providers may offer other services over 
the same last-mile connections used to provide broadband service. These 
``specialized services'' can benefit end users and spur investment, but 
they may also present risks to the open Internet. We will closely 
monitor specialized services and their effects on broadband service to 
ensure, through all available mechanisms, that they supplement but do 
not supplant the open Internet.
    Mobile broadband is at an earlier stage in its development than 
fixed broadband and is evolving rapidly. For that and other reasons 
discussed below, we conclude that it is appropriate at this time to 
take measured steps in this area. Accordingly, we require mobile 
broadband providers to comply with the transparency rule, which 
includes enforceable disclosure obligations regarding device and 
application certification and approval processes; we prohibit providers 
from blocking lawful Web sites; and we prohibit providers from blocking 
applications that compete with providers' voice and video telephony 
services. We will closely monitor the development of the mobile 
broadband market and will adjust the framework we adopt in this Order 
as appropriate.
    These rules are within our jurisdiction over interstate and foreign 
communications by wire and radio. Further, they implement specific 
statutory mandates in the Communications Act (``Act'') and the 
Telecommunications Act of 1996 (``1996 Act''), including provisions 
that direct the Commission to promote Internet investment and to 
protect and promote voice, video, and audio communications services.
    The framework we adopt aims to ensure the Internet remains an open 
platform--one characterized by free markets and free speech--that 
enables consumer choice, end-user control, competition through low 
barriers to entry, and the freedom to innovate without permission. The 
framework does so by protecting openness through high-level rules, 
while maintaining broadband providers' and the Commission's flexibility 
to adapt to changes in the market and in technology as the Internet 
continues to evolve.

II. The Need for Open Internet Protections

    In the Open Internet NPRM (FCC 09-93 published at 74 FR 62638, 
November 30, 2009), we sought comment on the best means for preserving 
and promoting a free and open Internet. We noted the near-unanimous 
view that the Internet's openness and the transparency of its protocols 
have been critical to its unparalleled success. Citing evidence of 
broadband providers covertly blocking or degrading Internet traffic, 
and concern that broadband providers have the incentive and ability to 
expand those practices in the near future, we sought comment on 
prophylactic rules designed to preserve the Internet's prevailing norms 
of openness. Specifically, we sought comment on whether the Commission 
should codify the four principles stated in the Internet Policy 
Statement, plus proposed nondiscrimination and transparency rules, all 
subject to reasonable network management.\2\
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    \2\ The Open Internet NPRM recast the Internet Policy Statement 
principles as rules rather than consumer entitlements, but did not 
change the fact that protecting and empowering end users is a 
central purpose of open Internet protections.
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    Commenters agree that the open Internet is an important platform 
for innovation, investment, competition, and free expression, but 
disagree about whether there is a need for the Commission to take 
action to preserve its openness. Commenters who favor Commission action 
emphasize the risk of harmful conduct by broadband providers, and 
stress that failing to act could result in irreversible damage to the 
Internet. Those who favor inaction contend that the Internet generally 
is open today and is likely to remain so, and express concern that 
rules aimed at preventing harms may themselves impose significant 
costs. In this part, we assess these conflicting views. We conclude 
that the benefits of ensuring Internet openness through enforceable, 
high-level, prophylactic rules outweigh the costs. The harms that could 
result from threats to openness are significant and likely 
irreversible, while the costs of compliance with our rules should be 
small, in large part because the rules appear to be consistent with 
current industry practices. The rules are carefully calibrated to 
preserve the benefits of the open Internet and increase certainty for 
all Internet stakeholders, with minimal burden on broadband providers.

A. The Internet's Openness Promotes Innovation, Investment, 
Competition, Free Expression, and Other National Broadband Goals

    Like electricity and the computer, the Internet is a ``general 
purpose technology'' that enables new methods of production that have a 
major impact on the entire economy. The Internet's founders 
intentionally built a network that is open, in the sense that it has no 
gatekeepers limiting innovation and

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communication through the network.\3\ Accordingly, the Internet enables 
an end user to access the content and applications of her choice, 
without requiring permission from broadband providers. This 
architecture enables innovators to create and offer new applications 
and services without needing approval from any controlling entity, be 
it a network provider, equipment manufacturer, industry body, or 
government agency. End users benefit because the Internet's openness 
allows new technologies to be developed and distributed by a broad 
range of sources, not just by the companies that operate the network. 
For example, Sir Tim Berners-Lee was able to invent the World Wide Web 
nearly two decades after engineers developed the Internet's original 
protocols, without needing changes to those protocols or any approval 
from network operators. Startups and small businesses benefit because 
the Internet's openness enables anyone connected to the network to 
reach and do business with anyone else, allowing even the smallest and 
most remotely located businesses to access national and global markets, 
and contribute to the economy through e-commerce \4\ and online 
advertising.\5\ Because Internet openness enables widespread innovation 
and allows all end users and edge providers (rather than just the 
significantly smaller number of broadband providers) to create and 
determine the success or failure of content, applications, services, 
and devices, it maximizes commercial and non-commercial innovations 
that address key national challenges--including improvements in health 
care, education, and energy efficiency that benefit our economy and 
civic life.
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    \3\ The Internet's openness is supported by an ``end-to-end'' 
network architecture that was formulated and debated in standard-
setting organizations and foundational documents. See, e.g., WCB 
Letter 12/10/10, Attach. at 17-29, Vinton G. Cerf & Robert E. Kahn, 
A Protocol for Packet Network Interconnection, COM-22 IEEE 
Transactions of Commc'ns Tech. 637-48 (1974); WCB Letter 12/10/10, 
Attach. at 30-39, J.H. Saltzer et al., End to End Arguments in 
System Design, Second Int'l Conf. on Distributed Computing Systems, 
509-12 (1981); WCB Letter 12/10/10, Attach. at 49-55, B. Carpenter, 
Internet Engineering Task Force (``IETF''), Architectural Principles 
of the Internet, RFC 1958, 1-8 (June 1996), http://www.ietf.org/rfc/rfc1958.txt; Lawrence Roberts, Multiple Computer Networks and 
Intercomputer Communication, ACM Symposium on Operation System 
Principles (1967). Under the end-to-end principle, devices in the 
middle of the network are not optimized for the handling of any 
particular application, while devices at network endpoints perform 
the functions necessary to support networked applications and 
services. See generally WCB Letter 12/10/10, Attach. at 40-48, J. 
Kempf & R. Austein, IETF, The Rise of the Middle and the Future of 
End-to-End: Reflections on the Evolution of the Internet 
Architecture, RFC 3724, 1-14 (March 2004), ftp://ftp.rfc-editor.org/in-notes/rfc3724.txt.
    \4\ Business-to-consumer e-commerce was estimated to total $135 
billion in 2009. See WCB Letter 12/10/10, Attach. at 81-180, Robert 
D. Atkinson et al., The Internet Economy 25 Years After.com, Info. 
Tech. & Innovation Found., at 24 (March 2010), available at http://www.itif.org/files/2010-25-years.pdf.
    \5\ The advertising-supported Internet sustains about $300 
billion of U.S. GDP. See Google Comments at 7.
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    The Internet's openness is critical to these outcomes, because it 
enables a virtuous circle of innovation in which new uses of the 
network--including new content, applications, services, and devices--
lead to increased end-user demand for broadband, which drives network 
improvements, which in turn lead to further innovative network uses. 
Novel, improved, or lower-cost offerings introduced by content, 
application, service, and device providers spur end-user demand and 
encourage broadband providers to expand their networks and invest in 
new broadband technologies.\6\ Streaming video and e-commerce 
applications, for instance, have led to major network improvements such 
as fiber to the premises, VDSL, and DOCSIS 3.0. These network 
improvements generate new opportunities for edge providers, spurring 
them to innovate further.\7\ Each round of innovation increases the 
value of the Internet for broadband providers, edge providers, online 
businesses, and consumers. Continued operation of this virtuous circle, 
however, depends upon low barriers to innovation and entry by edge 
providers, which drive end-user demand. Restricting edge providers' 
ability to reach end users, and limiting end users' ability to choose 
which edge providers to patronize, would reduce the rate of innovation 
at the edge and, in turn, the likely rate of improvements to network 
infrastructure. Similarly, restricting the ability of broadband 
providers to put the network to innovative uses may reduce the rate of 
improvements to network infrastructure.
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    \6\ We note that broadband providers can also be edge providers.
    \7\ For example, the increasing availability of multimedia 
applications on the World Wide Web during the 1990s was one factor 
that helped create demand for residential broadband services. 
Internet service providers responded by adopting new network 
infrastructure, modem technologies, and network protocols, and 
marketed broadband to residential customers. See, e.g., WCB Letter 
12/13/10, Attach. at 250-72, Chetan Sharma, Managing Growth and 
Profits in the Yottabyte Era (2009), http://www.chetansharma.com/yottabyteera.htm (Yottabyte). By the late 1990s, a residential end 
user could download content at speeds not achievable even on the 
Internet backbone during the 1980s. See, e.g., WCB Letter 12/13/10, 
Attach. at 226-32, Susan Harris & Elise Gerich, The NSFNET Backbone 
Service: Chronicling the End of an Era, 10 ConneXions (April 1996), 
available at http://www.merit.edu/networkresearch/projecthistory/nsfnet/nsfnet_article.php. Higher speeds and broadband's ``always 
on'' capability, in turn, stimulated more innovation in 
applications, from gaming to video streaming, which in turn 
encouraged broadband providers to increase network speeds. WCB 
Letter 12/13/10, Attach. at 233-34, Link Hoewing, Twitter, Broadband 
and Innovation, PolicyBlog, Dec. 4, 2010, policyblog.verizon.com/BlogPost/626/TwitterBroadbandandInnovation.aspx.
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    Openness also is essential to the Internet's role as a platform for 
speech and civic engagement. An informed electorate is critical to the 
health of a functioning democracy, and 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.'' Due to the lack of gatekeeper 
control, the Internet has become a major source of news and 
information, which forms the basis for informed civic discourse. Many 
Americans now turn to the Internet to obtain news,\8\ and its openness 
makes it an unrivaled forum for free expression. Furthermore, local, 
State, and Federal government agencies are increasingly using the 
Internet to communicate with the public, including to provide 
information about and deliver essential services.
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    \8\ See WCB Letter 12/10/10, Attach. at 133-41, Pew Research 
Ctr. for People and the Press, Americans Spend More Time Following 
the News; Ideological News Sources: Who Watches and Why 17, 22 
(Sept. 12, 2010), people-press.org/report/652/ (stating that ``44% 
of Americans say they got news through one or more Internet or 
mobile digital source yesterday''); WCB Letter 12/10/10, Attach. at 
131-32, TVB Local Media Marketing Solutions, Local News: Local TV 
Stations are the Top Daily News Source, http://www.tvb.org/planning_buying/120562 (estimating that 61% of Americans get news 
from the Internet) (``TVB''). However, according to the Pew Project 
for Excellence in Journalism, the majority of news that people 
access online originates from legacy media. See Pew Project for 
Excellence in Journalism, The State of the News Media: An Annual 
Report on American Journalism (2010), http://www.stateofthemedia.org/2010/overview_key_findings.php (``Of news 
sites with half a million visitors a month (or the top 199 news 
sites once consulting, government and information data bases are 
removed), 67% are from legacy media, most of them (48%) 
newspapers.'').
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    Television and radio broadcasters now provide news and other 
information online via their own Web sites, online aggregation Web 
sites such as Hulu, and social networking platforms. Local broadcasters 
are experimenting with new approaches to delivering original content, 
for example by creating neighborhood-focused Web sites; delivering news 
clips via online video programming aggregators, including AOL and 
Google's YouTube; and offering news from citizen journalists. In 
addition, broadcast networks license their full-length entertainment 
programs for downloading or streaming to edge providers such as Netflix 
and Apple.

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Because these sites are becoming increasingly popular with the public, 
online distribution has a strategic value for broadcasters, and is 
likely to provide an increasingly important source of funding for 
broadcast news and entertainment programming.
    Unimpeded access to Internet distribution likewise has allowed new 
video content creators to create and disseminate programs without first 
securing distribution from broadcasters and multichannel video 
programming distributors (MVPDs) such as cable and satellite television 
companies. Online viewing of video programming content is growing 
rapidly.\9\
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    \9\ See Google Comments at 28; Motorola Comments at 5; MPAA 
Comments at 5-6; DISH Reply at 4-5; WCB Letter 12/10/10, Attach. at 
22-23, Online Video Goes Mainstream, eMarketer, Apr. 28, 2010, 
http://www.emarketer.com/Article.aspx?R=1007664 (estimating that 29% 
of Internet users younger than 25 say they watch all or most of 
their TV online, that as of April 2010 67% of U.S. Internet users 
watch online video each month, and that this figure will increase to 
77% by 2014); WCB Letter 12/10/10, Attach. at 20-21, Chris Nuttall, 
Web TVs bigger for manufacturers than 3D, Financial Times, Aug. 29, 
2010, http://www.ft.com/cms/s/2/0b34043a-9fe3-11df-8cc5-00144feabdc0.html (stating that 28 million Internet-enabled TV sets 
are expected to be sold in 2010, an increase of 125% from 2009); WCB 
Letter 12/13/10, Attach. at 291-92, Sandvine, News and Events: Press 
Releases, http://www.sandvine.com/news/pr_detail.asp?ID=288 
(estimating that Netflix represents more than 20% of peak downstream 
Internet traffic). Cisco expects online viewing to exert significant 
influence on future demand for broadband capacity, ranking as the 
top source of Internet traffic by the end of 2010 and accounting for 
91% of global Internet traffic by 2014. WCB Letter 12/10/10, Attach. 
at 40-42, Press Release, Cisco, Annual Cisco Visual Networking Index 
Forecast Projects Global IP Traffic To Increase More than Fourfold 
by 2014 (June 10, 2010), http://www.cisco.com/web/MT/news/10/news_100610.html.
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    In the Open Internet NPRM, the Commission sought comment on 
possible implications that the proposed rules 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.'' As we noted in the 
Open Internet NPRM, according to a 2009 study, broadband adoption 
varies significantly across demographic groups.\10\ We expect that open 
Internet protections will help close the digital divide by maintaining 
relatively low barriers to entry for underrepresented groups and 
allowing for the development of diverse content, applications, and 
services.\11\
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    \10\ See Pew Internet & Am. Life Project, Home Broadband 
Adoption (June 2009). Approximately 14 to 24 million Americans 
remain without broadband access capable of meeting the requirements 
set forth in Section 706 of the Telecommunications Act of 1996, as 
amended. Inquiry Concerning the Deployment of Advanced 
Telecommunications Capability to All Americans in a Reasonable and 
Timely Fashion, and Possible Steps to Accelerate Such Deployment 
Pursuant to Section 706 of the Telecommunications Act of 1996, as 
Amended by the Broadband Data Improvement Act et al., Sixth 
Broadband Deployment Report, 25 FCC Rcd 9556, 9557, para. 1 (2010) 
(Sixth Broadband Deployment Report).
    \11\ For example, Jonathan Moore founded Rowdy Orbit IPTV, an 
online platform featuring original programming for minority 
audiences, because he was frustrated by the lack of representation 
of people of color in traditional media. Dec. 15, 2009 Workshop Tr. 
at 39-40, video available at http://www.openinternet.gov/workshops/speech-democratic-engagement-and-the-open-internet.html. The 
Internet's openness--and the low costs of online entry--enables 
businesses like Rowdy Orbit to launch without having to gain 
approval from traditional media gatekeepers. Id. We will closely 
monitor the effects of the open Internet rules we adopt in this 
Order on the digital divide and on minority and disadvantaged 
consumers. See generally ColorOfChange Comments; Dec. 15, 2009 
Workshop Tr. at 52-60 (remarks of Ruth Livier, YLSE); 100 Black Men 
of America et al. Comments at 1-2; Free Press Comments at 134-36; 
Center for Media Justice et al. Comments at 7-9.
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    For all of these reasons, there is little dispute in this 
proceeding that the Internet should continue as an open platform. 
Accordingly, we consider below whether we can be confident that the 
openness of the Internet will be self-perpetuating, or whether there 
are threats to openness that the Commission can effectively mitigate.

B. Broadband Providers Have the Incentive and Ability to Limit Internet 
Openness

    For purposes of our analysis, we consider three types of Internet 
activities: providing broadband Internet access service; providing 
content, applications, services, and devices accessed over or connected 
to broadband Internet access service (``edge'' products and services); 
and subscribing to a broadband Internet access service that allows 
access to edge products and services. These activities are not mutually 
exclusive. For example, individuals who generate and share content such 
as personal blogs or Facebook pages are both end users and edge 
providers, and a single firm could both provide broadband Internet 
access service and be an edge provider, as with a broadband provider 
that offers online video content. Nevertheless, this basic taxonomy 
provides a useful model for evaluating the risk and magnitude of harms 
from loss of openness.
    The record in this proceeding reveals that broadband providers 
potentially face at least three types of incentives to reduce the 
current openness of the Internet. First, broadband providers may have 
economic incentives to block or otherwise disadvantage specific edge 
providers or classes of edge providers, for example by controlling the 
transmission of network traffic over a broadband connection, including 
the price and quality of access to end users. A broadband provider 
might use this power to benefit its own or affiliated offerings at the 
expense of unaffiliated offerings.
    Today, broadband providers have incentives to interfere with the 
operation of third-party Internet-based services that compete with the 
providers' revenue-generating telephony and/or pay-television services. 
This situation contrasts with the first decade of the public Internet, 
when dial-up was the primary form of consumer Internet access. 
Independent companies such as America Online, CompuServe, and Prodigy 
provided access to the Internet over telephone companies' phone lines. 
As broadband has replaced dial-up, however, telephone and cable 
companies have become the major providers of Internet access service. 
Online content, applications, and services available from edge 
providers over broadband increasingly offer actual or potential 
competitive alternatives to broadband providers' own voice and video 
services, which generate substantial profits. Interconnected Voice-
over-Internet-Protocol (VoIP) services, which include some over-the-top 
VoIP services,\12\ ``are increasingly being used as a substitute for 
traditional telephone service,'' \13\ and over-the-top

[[Page 59196]]

VoIP services represent a significant share of voice-calling minutes, 
especially for international calls. Online video is rapidly growing in 
popularity, and MVPDs have responded to this trend by enabling their 
video subscribers to use the Internet to view their programming on 
personal computers and other Internet-enabled devices. Online video 
aggregators such as Netflix, Hulu, YouTube, and iTunes that are 
unaffiliated with traditional MVPDs continue to proliferate and 
innovate, offering movies and television programs (including broadcast 
programming) on demand, and earning revenues from advertising and/or 
subscriptions. Several MVPDs have stated publicly that they view these 
services as a potential competitive threat to their core video 
subscription service. Thus, online edge services appear likely to 
continue gaining subscribers and market significance,\14\ which will 
put additional competitive pressure on broadband providers' own 
services. By interfering with the transmission of third parties' 
Internet-based services or raising the cost of online delivery for 
particular edge providers, telephone and cable companies can make those 
services less attractive to subscribers in comparison to their own 
offerings.
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    \12\ The Commission's rules define interconnected VoIP as ``a 
service that: (1) Enables real-time, two-way voice communications; 
(2) requires a broadband connection from the user's location; (3) 
requires Internet protocol-compatible customer premises equipment 
(CPE); and (4) permits users generally to receive calls that 
originate on the public switched telephone network and to terminate 
calls to the public switched telephone network.'' 47 CFR 9.3. Over-
the-top VoIP services require the end user to obtain broadband 
transmission from a third-party provider, and providers of over-the-
top VoIP can vary in terms of the extent to which they rely on their 
own facilities. See SBC Commc'ns Inc. and AT&T Corp. Applications 
for Approval of Transfer of Control, WC Docket No, 05-65, Memorandum 
Opinion and Order, 20 FCC Rcd 18290, 18337-38, para. 86 (2005).
    \13\ Tel. Number Requirements for IP-Enabled Servs. Providers, 
Report and Order, Declaratory Ruling, Order on Remand, and NPRM, 22 
FCC Rcd 19531, 19547, para. 28 (2007); see also Vonage Comments at 
3-4. In merger reviews and forbearance petitions, the Commission has 
found the record ``inconclusive regarding the extent to which 
various over-the-top VoIP services should be included in the 
relevant product market for [mass market] local services.'' See, 
e.g., Verizon Commc'ns Inc. and MCI, Inc. Application for Approval 
of Transfer of Control, Memorandum Opinion and Order, 20 FCC Rcd 
18433, 18480, para. 89 (2005); see also Petition of Qwest Corp. for 
Forbearance Pursuant to 47 U.S.C. sec. 160(c) in the Phoenix, 
Arizona Metropolitan Statistical Area, Memorandum Opinion and Order, 
25 FCC Rcd 8622, 8650, para. 54 (2010) (Qwest Phoenix Order). In 
contrast to those proceedings, we are not performing a market power 
analysis in this proceeding, so we need not and do not here 
determine with specificity whether, and to what extent, particular 
over-the-top VoIP services constrain particular practices and/or 
rates of services governed by Section 201. Cf. Qwest Phoenix Order, 
25 FCC Rcd at 8647-48, paras. 46-47 (discussing the general approach 
to product market definition); id. at 8651-52, paras. 55-56 
(discussing the need for evidence that one service constrains the 
price of another service to include them in the same product market 
for purposes of a market power analysis).
    \14\ See, e.g., WCB Letter 12/10/10, Attach. at 5763, Ryan 
Fleming, New Report Shows More People Dropping Cable TV for Web 
Broadcasts, Digital Trends, Apr. 16, 2010, available at http://www.digitaltrends.com/computing/new-report-shows-that-more-and-more-people-are-dropping-cable-tv-in-favor-of-web-broadcasts. Congress 
recently recognized these developments by expanding disabilities 
access requirements to include advanced communications services. See 
Twenty-First Century Communications and Video Accessibility Act, 
Public Law 111-260; see also 156 CONG. REC. 6005 (daily ed. July 26, 
2010) (remarks of Rep. Waxman) (this legislation before us * * * 
ensur[es] that Americans with disabilities can access the latest 
communications technology.); id. at 6004 (remarks of Rep. Markey) 
(``[T]he bill we are considering today significantly increases 
accessibility for Americans with disabilities to the indispensable 
telecommunications * * * tools of the 21st century.''); Letter from 
Rick Chessen, NCTA, to Marlene H. Dortch, Secretary, FCC, GN Docket 
No. 09-191 at 2 n.6 (filed Dec. 10, 2010).
---------------------------------------------------------------------------

    In addition, a broadband provider may act to benefit edge providers 
that have paid it to exclude rivals (for example, if one online video 
site were to contract with a broadband provider to deny a rival video 
site access to the broadband provider's subscribers). End users would 
be harmed by the inability to access desired content, and this conduct 
could lead to reduced innovation and fewer new services.\15\ Consistent 
with these concerns, delivery networks that are vertically integrated 
with content providers, including some MVPDs, have incentives to favor 
their own affiliated content.\16\ If broadband providers had 
historically favored their own affiliated businesses or those incumbent 
firms that paid for advantageous access to end users, some innovative 
edge providers that have today become major Internet businesses might 
not have been able to survive.
---------------------------------------------------------------------------

    \15\ See generally WCB Letter 12/10/10, Attach. at 23-27, Steven 
C. Salop & David Scheffman, Raising Rivals' Cost, 73 Am. Econ. Rev. 
267-71 (1983); WCB Letter 12/10/10, Attach. at 1-23, Steven C. Salop 
& Thomas Krattenmaker, Anticompetitive Exclusion: Raising Rivals' 
Costs to Achieve Power over Price, 96 Yale L.J. 214 (1986). See also 
Andrew I. Gavil et al., Antitrust Law in Perspective: Cases, 
Concepts and Problems in Competition Policy 1153-92 (2d ed. 2008) 
(describing how policies fostering competition spur innovation). To 
similar effect, a broadband provider may raise access fees to 
disfavored edge providers, reducing their ability to profit by 
raising their costs and limiting their ability to compete with 
favored edge providers.
    \16\ See Google Comments at 30-31; Netflix Comments at 7 n.10; 
Vonage Reply at 4; WCB Letter 12/10/10, Attach. at 28-78, Austan 
Goolsbee, Vertical Integration and the Market for Broadcast and 
Cable Television Programming, Paper for the Federal Communications 
Commission 31-32 (Sept. 5, 2007) (Goolsbee Study) (finding that 
MVPDs excluded networks that were rivals of affiliated channels for 
anticompetitive reasons). Cf. WCB Letter 12/10/10, Attach. at 85-87, 
David Waterman & Andrew Weiss, Vertical Integration in Cable 
Television 142-143 (1997) (MVPD exclusion of unaffiliated content 
during an earlier time period); see also H.R. Rep. 102-628 (2d 
Sess.) at 41 (1992) (``The Committee received testimony that 
vertically integrated companies reduce diversity in programming by 
threatening the viability of rival cable programming services.''). 
In addition to the examples of actual misconduct that we provide, 
the Goolsbee Study provides empirical evidence that cable providers 
have acted in the past on anticompetitive incentives to foreclose 
rivals, supporting our concern that these and other broadband 
providers would act on analogous incentives in the future. We thus 
disagree that we rely on ``speculative harms alone'' or have failed 
to adduce ``empirical evidence.'' Baker Statement at * 1, * 4 
(citing AT&T Reply Exh. 2 at 45 (J. Gregory Sidak & David J. Teece, 
Innovation Spillovers and the ``Dirt Road'' Fallacy: The 
Intellectual Bankruptcy of Banning Optional Transactions for 
Enhanced Delivery over the Internet, 6 J. Competition L. & Econ. 
521, 571-72 (2010)). To the contrary, the empirical evidence and the 
misconduct that we describe below validate the economic theories 
that inform our decision in this Order. Moreover, as we explain 
below, by comparison to the benefits of the prophylactic measures we 
adopt, the costs associated with these open Internet rules are 
likely small.
---------------------------------------------------------------------------

    Second, broadband providers may have incentives to increase 
revenues by charging edge providers, who already pay for their own 
connections to the Internet, for access or prioritized access to end 
users. Although broadband providers have not historically imposed such 
fees, they have argued they should be permitted to do so. A broadband 
provider could force edge providers to pay inefficiently high fees 
because that broadband provider is typically an edge provider's only 
option for reaching a particular end user.\17\ Thus broadband providers 
have the ability to act as gatekeepers.\18\
---------------------------------------------------------------------------

    \17\ Some end users can be reached through more than one 
broadband connection, sometimes via the same device (e.g., a 
smartphone that has Wi-Fi and cellular connectivity). Even so, the 
end user, not the edge provider, chooses which broadband provider 
the edge provider must rely on to reach the end user.
    \18\ Also known as a ``terminating monopolist.'' See, e.g., CCIA 
Comments at 7; Skype Comments at 10-11; Vonage Comments at 9-10; 
Google Reply at 8-14. A broadband provider can act as a gatekeeper 
even if some edge providers would have bargaining power in 
negotiations with broadband providers over access or prioritization 
fees.
---------------------------------------------------------------------------

    Broadband providers would be expected to set inefficiently high 
fees to edge providers because they receive the benefits of those fees 
but are unlikely to fully account for the detrimental impact on edge 
providers' ability and incentive to innovate and invest, including the 
possibility that some edge providers might exit or decline to enter the 
market. The unaccounted-for harms to innovation are negative 
externalities,\19\ and are likely to be particularly large because of 
the rapid pace of Internet innovation, and wide-ranging because of the 
role of the Internet as a general purpose technology. Moreover, fees 
for access or prioritized access could trigger an ``arms race'' within 
a given edge market segment. If one edge provider pays for access or 
prioritized access to end users, subscribers may tend to favor that 
provider's services, and competing edge providers may feel that they 
must respond by paying, too.
---------------------------------------------------------------------------

    \19\ A broadband provider may hesitate to impose costs on its 
own subscribers, but it will typically not take into account the 
effect that reduced edge provider investment and innovation has on 
the attractiveness of the Internet to end users that rely on other 
broadband providers--and will therefore ignore a significant 
fraction of the cost of foregone innovation. See, e.g., OIC Comments 
at 20-24. If the total number of broadband subscribers shrinks, 
moreover, the social costs unaccounted for by the broadband provider 
could also include the lost ability of the remaining end users to 
connect with the subscribers that departed (foregone direct network 
effects) and a smaller potential audience for edge providers. See, 
e.g., id. at 23. Broadband providers are also unlikely to fully 
account for the open Internet's power to enhance civic discourse 
through news and information, or for its ability to enable 
innovations that help address key national challenges such as 
education, public safety, energy efficiency, and health care. See 
ARL et al. Comments at 3; Google Reply at 39; American Recovery and 
Reinvestment Act of 2009, Public Law 111-5, 123 Stat. 115 (2009).
---------------------------------------------------------------------------

    Fees for access or prioritization to end users could reduce the 
potential profit

[[Page 59197]]

that an edge provider would expect to earn from developing new 
offerings, and thereby reduce edge providers' incentives to invest and 
innovate.\20\ In the rapidly innovating edge sector, moreover, many new 
entrants are new or small ``garage entrepreneurs,'' not large and 
established firms. These emerging providers are particularly sensitive 
to barriers to innovation and entry, and may have difficulty obtaining 
financing if their offerings are subject to being blocked or 
disadvantaged by one or more of the major broadband providers. In 
addition, if edge providers need to negotiate access or prioritized 
access fees with broadband providers,\21\ the resulting transaction 
costs could further raise the costs of introducing new products and 
might chill entry and expansion.\22\
---------------------------------------------------------------------------

    \20\ See, e.g., ALA Comments at 3-4; ColorOfChange Comments at 
3; Free Press Comments at 69; Google Comments at 34; Netflix 
Comments at 4; OIC Comments at 29-30; DISH Reply at 10. Such fees 
could also reduce an edge provider's incentive to invest in existing 
offerings, assuming the fees would be expected to increase to the 
extent improvements increased usage of the edge provider's 
offerings.
    \21\ Negotiations impose direct expenses and delay. See Google 
Comments at 34. There may also be significant costs associated with 
the possibility that the negotiating parties would reach an impasse. 
See ALA Comments at 2 (``The cable TV industry offers a telling 
example of the `pay to play' environment where some cable companies 
do not offer their customers access to certain content because the 
company has not successfully negotiated financial compensation with 
the content provider.''). Edge providers may also bear costs arising 
from their need to monitor the extent to which they actually receive 
prioritized delivery.
    \22\ See, e.g., Google Comments at 34-35; Shane Greenstein 
Notice of Ex Parte, GN Docket No. 09-191, Transaction Cost, 
Transparency, and Innovation for the Internet at 19, available at 
http://www.openinternet.gov/workshops/innovation-investment-and-the-open-internet.html; van Schewick Jan. 19, 2010 Ex Parte Letter, 
Opening Statement at 7 (arguing that the low costs of innovation not 
only make many more applications worth pursuing, but also allow a 
large and diverse group of people to become innovators, which in 
turn increases the overall amount and quality of innovation). There 
are approximately 1,500 broadband providers in the United States. 
See Wireline Competition Bureau, FCC, Internet Access Services: 
Status as of December 31, 2009 at 7, tbl. 13 (Dec. 2010) (FCC 
Internet Status Report), available at http://www.fcc.gov/Daily_Releases/Daily_Business/2010/db1208/DOC-303405A1.pdf. The 
innovative process frequently generates a large number of attempts, 
only a few of which turn out to be highly successful. Given the 
likelihood of failure, and that financing is not always readily 
available to support research and development, the innovation 
process in many sectors of the Internet's edge is likely to be 
highly sensitive to the upfront costs of developing and introducing 
new products. PIC Comments at 50 (``[I]t is unlikely that new 
entrants will have the ability (both financially and with regard to 
information) to negotiate with every ISP that serves the markets 
that they are interested in.'').
---------------------------------------------------------------------------

    Some commenters argue that an end user's ability to switch 
broadband providers eliminates these problems. But many end users may 
have limited choice among broadband providers, as discussed below. 
Moreover, those that can switch broadband providers may not benefit 
from switching if rival broadband providers charge edge providers 
similarly for access and priority transmission and prioritize each edge 
provider's service similarly. Further, end users may not know whether 
charges or service levels their broadband provider is imposing on edge 
providers vary from those of alternative broadband providers, and even 
if they do have this information may find it costly to switch. For 
these reasons, a dissatisfied end user, observing that some edge 
provider services are subject to low transmission quality, might not 
switch broadband providers (though they may switch to a rival edge 
provider in the hope of improving quality).
    Some commenters contend that, in the absence of open Internet 
rules, broadband providers that earn substantial additional revenue by 
assessing access or prioritization charges on edge providers could 
avoid increasing or could reduce the rates they charge broadband 
subscribers, which might increase the number of subscribers to the 
broadband network. Although this scenario is possible,\23\ no broadband 
provider has stated in this proceeding that it actually would use any 
revenue from edge provider charges to offset subscriber charges. In 
addition, these commenters fail to account for the likely detrimental 
effects of access and prioritization charges on the virtuous circle of 
innovation described above. Less content and fewer innovative offerings 
make the Internet less attractive for end users than would otherwise be 
the case. Consequently, we are unable to conclude that the possibility 
of reduced subscriber charges outweighs the risks of harm described 
herein.\24\
---------------------------------------------------------------------------

    \23\  Economics literature recognizes that access charges could 
be harmful under some circumstances and beneficial under others. 
See, e.g., WCB Letter 12/10/10, Attach. at 1-62, E. Glen Weyl, A 
Price Theory of Multi-Sided Platforms, 100 Am. Econ. Rev. 1642, 
1642-72 (2010) (the effects of allowing broadband providers to 
charge terminating rates to content providers are ambiguous); see 
also WCB Letter 12/10/10, Attach. at 180-215, John Musacchio et al., 
A Two-Sided Market Analysis of Provider Investment Incentives with 
an Application to the Net-Neutrality Issue, 8 Rev. of Network Econ. 
22, 22-39 (2009) (noting that there are conditions under which ``a 
zero termination price is socially beneficial''). Moreover, the 
economic literature on two-sided markets is at an early stage of 
development. AT&T Comments, Exh. 3, Schwartz Decl. at 16; Jeffrey A. 
Eisenach (Eisenach) Reply at 11-12; cf., e.g., WCB Letter 12/10/10, 
Attach. at 156-79, Mark Armstrong, Competition in Two-Sided Markets, 
37 Rand J. of Econ. 668 (2006); WCB Letter 12/10/10, Attach. at 216-
302, Jean-Charles Rochet & Jean Tirole, Platform Competition in Two-
Sided Markets, 1 J. Eur. Econ. Ass'n 990 (2003).
    \24\ Indeed, demand for broadband Internet access service might 
decline even if subscriber fees fell, if the conduct of broadband 
providers discouraged demand by blocking end user access to 
preferred edge providers, slowing non-prioritized transmission, and 
breaking the virtuous circle of innovation.
---------------------------------------------------------------------------

    Third, if broadband providers can profitably charge edge providers 
for prioritized access to end users, they will have an incentive to 
degrade or decline to increase the quality of the service they provide 
to non-prioritized traffic. This would increase the gap in quality 
(such as latency in transmission) between prioritized access and non-
prioritized access, induce more edge providers to pay for prioritized 
access, and allow broadband providers to charge higher prices for 
prioritized access. Even more damaging, broadband providers might 
withhold or decline to expand capacity in order to ``squeeze'' non-
prioritized traffic, a strategy that would increase the likelihood of 
network congestion and confront edge providers with a choice between 
accepting low-quality transmission or paying fees for prioritized 
access to end users.
    Moreover, if broadband providers could block specific content, 
applications, services, or devices, end users and edge providers would 
lose the control they currently have over whether other end users and 
edge providers can communicate with them through the Internet. Content, 
application, service, and device providers (and their investors) could 
no longer assume that the market for their offerings included all U.S. 
end users. And broadband providers might choose to implement 
undocumented practices for traffic differentiation that undermine the 
ability of developers to create generally usable applications without 
having to design to particular broadband providers' unique practices or 
business arrangements.\25\
---------------------------------------------------------------------------

    \25\ See OIC Comments at 24; Free Press Comments at 45. The 
transparency and reasonable network management guidelines we adopt 
in this Order, in particular, should reduce the likelihood of such 
fragmentation of the Internet.
---------------------------------------------------------------------------

    All of the above concerns are exacerbated by broadband providers' 
ability to make fine-grained distinctions in their handling of network 
traffic as a result of increasingly sophisticated network management 
tools. Such tools may be used for beneficial purposes, but they also 
increase broadband providers' ability to act on incentives to engage in

[[Page 59198]]

network practices that would erode Internet openness.\26\
---------------------------------------------------------------------------

    \26\ See CCIA/CEA Comments at 4; Free Press Comments at 29-30, 
143-46; Google Comments at 32-34; Netflix Comments at 3; OIC 
Comments at 14, 79-82; DISH Reply at 8-9; IPI Reply at 9; Vonage 
Reply at 5. For examples of network management tools, see, for 
example, WCB Letter 12/10/10, Attach. at 1-8, Allot Service Gateway, 
Pushing the DPI Envelope: An Introduction, at 2 (June 2007), 
available at http://www.sysob.com/download/AllotServiceGateway.pdf 
(``Reduce the performance of applications with negative influence on 
revenues (e.g. competitive VoIP services).''); WCB Letter 12/13/10, 
Attach. at 289-90, Procera Networks, PLR, http://www.proceranetworks.com/customproperties/tag/Products-PLR.html; WCB 
Letter 12/13/10, Attach. at 283-88, Cisco, http//:www.cisco.com/en/US/prod/collateral/ps7045/ps6129/ps6133/ps6150/prod_brochure0900aecd8025258e.pdf (marketing the ability of equipment to 
identify VoIP, video, and other traffic types). Vendors market their 
offerings as enabling broadband providers to ``make only modest 
incremental infrastructure investments and to control operating 
costs.'' WCB Letter 12/13/10, Attach. at 283, Cisco.
---------------------------------------------------------------------------

    Although these threats to Internet-enabled innovation, growth, and 
competition do not depend upon broadband providers having market power 
with respect to end users,\27\ most would be exacerbated by such market 
power. A broadband provider's incentive to favor affiliated content or 
the content of unaffiliated firms that pay for it to do so, its 
incentive to block or degrade traffic or charge edge providers for 
access to end users, and its incentive to squeeze non-prioritized 
transmission will all be greater if end users are less able to respond 
by switching to rival broadband providers. The risk of market power is 
highest in markets with few competitors, and most residential end users 
today have only one or two choices for wireline broadband Internet 
access service. As of December 2009, nearly 70 percent of households 
lived in census tracts where only one or two wireline or fixed wireless 
firms provided advertised download speeds of at least 3 Mbps and upload 
speeds of at least 768 Kbps \28\--the closest observable benchmark to 
the minimum download speed of 4 Mbps and upload speed of 1 Mbps that 
the Commission has used to assess broadband deployment. About 20 
percent of households are in census tracts with only one provider 
advertising at least 3 Mbps down and 768 Kbps up. For Internet service 
with advertised download speeds of at least 10 Mbps down and upload 
speeds of at least 1.5 Mbps up, nearly 60 percent of households lived 
in census tracts served by only one wireline or fixed wireless 
broadband provider, while nearly 80 percent lived in census tracts 
served by no more than two wireline or fixed wireless broadband 
providers.
---------------------------------------------------------------------------

    \27\ Because broadband providers have the ability to act as 
gatekeepers even in the absence of market power with respect to end 
users, we need not conduct a market power analysis.
    \28\ See FCC Internet Status Report at 7, fig. 3(a). A broadband 
provider's presence in a census tract does not mean it offers 
service to all potential customers within that tract. And the data 
reflect subscriptions, not network capability.
---------------------------------------------------------------------------

    Including mobile broadband providers does not appreciably change 
these numbers.\29\ The roll-out of next generation mobile services is 
at an early stage, and the future of competition in residential 
broadband is unclear.\30\ The record does not enable us to make a 
predictive judgment that the future will be more competitive than the 
past. Although wireless providers are increasingly offering faster 
broadband services, we do not know, for example, how end users will 
value the trade-offs between the benefits of wireless service (e.g., 
mobility) and the benefits of fixed wireline service (e.g., higher 
download and upload speeds).\31\ We note that the two largest mobile 
broadband providers also offer wireline or fixed service; \32\ this 
could dampen their incentive to compete aggressively with wireline (or 
fixed) services.\33\
---------------------------------------------------------------------------

    \29\ In December 2009, nearly 60% of households lived in census 
tracts where no more than two broadband providers offered service 
with 3 Mbps down and 768 Kbps up, while no mobile broadband 
providers offered service with 10 Mbps down and 1.5 Mbps up. Id. at 
8, fig. 3(b). Mobile broadband providers generally have offered 
bandwidths lower than those available from fixed providers. See 
Yottabyte at 13-14.
    \30\ See National Broadband Plan at 40-42. A number of 
commenters discuss impediments to increased competition. See, e.g., 
Ad Hoc Comments at 9; Google Comments, at 18-22; IFTA Comments at 
10-11; see also WCB Letter 12/10/10, Attach. at 9-16, Thomas Monath 
et al., Economics of Fixed Broadband Network Strategies, 41 IEEE 
Comm. Mag. 132, 132-39 (Sept. 2003).
    \31\ See Ad Hoc Comments at 9; Google Comments at 21; Vonage 
Comments at 8; IPI Reply at 14; WCB Letter 12/10/10, Attach. at 56-
65, Vikram Chandrasekhar & Jeffrey G. Andrews, Femtocell Networks: A 
Survey, 46 IEEE Comm. Mag., Sept. 2008, 59, at 59-60 (explaining 
mobile spectrum alone cannot compete with wireless connections to 
fixed networks). We also do not know how offers by a single wireless 
broadband provider for both fixed and mobile broadband services will 
perform in the marketplace.
    \32\ See OIC Comments at 71-72. Large cable companies that 
provide fixed broadband also have substantial ownership interests in 
Clear, the 4G wireless venture in which Sprint has a majority 
ownership interest.
    \33\ OIC Comments at 71-72; Skype Comments at 10. In cellular 
telephony, multimarket conduct has been found to dampen competition. 
See WCB Letter 12/10/10, Attach. at 1-24, P.M. Parker and L.H. 
R[ouml]ller, Collusive conduct in duopolies: Multimarket contact and 
cross ownership in the mobile telephone industry, 28 Rand J. Of 
Econ. 304, 304-322 (Summer 1997); WCB Letter 12/10/10, Attach. at 
25-58, Meghan R. Busse, Multimarket contact and price coordination 
in the cellular telephone industry, 9 J. of Econ. & Mgmt. Strategy 
287, 287-320 (Fall 2000). Moreover, some fixed broadband providers 
also provide necessary inputs to some mobile providers' offerings, 
such as backhaul transport to wireline facilities.
---------------------------------------------------------------------------

    In addition, customers may incur significant costs in switching 
broadband providers \34\ because of early termination fees; \35\ the 
inconvenience of ordering, installation, and set-up, and associated 
deposits or fees; possible difficulty returning the earlier broadband 
provider's equipment and the cost of replacing incompatible customer-
owned equipment; the risk of temporarily losing service; the risk of 
problems learning how to use the new service; and the possible loss of 
a provider-specific e-mail address or Web site.
---------------------------------------------------------------------------

    \34\ ARL et al. Comments at 5; Google Comments at 21-22; Netflix 
Comments at 5; New Jersey Rate Counsel (NJRC) Comments at 17; OIC 
Comments at 40, 73; PIC Comments at 23; Skype Comments at 12; OIC 
Reply at 20-21; Paul Misener (Amazon.com) Comments at 2; see also 
WCB Letter 12/10/10, Attach. at 59-76, Patrick Xavier & Dimitri 
Ypsilanti, Switching Costs and Consumer Behavior: Implications for 
Telecommunications Regulation, 10(4) Info 2008, 13, 13-29 (2008). 
Churn is a function of many factors. See, e.g., WCB Letter 12/10/10, 
Attach. at 1-53, 97-153, AT&T Comments, WT Docket No. 10-133, at 51 
(Aug. 2, 2010). The evidence in the record, e.g., AT&T Comments at 
83, is not probative as to the extent of competition among broadband 
providers because it does not appropriately isolate a connection 
between churn levels and the extent of competition.
    \35\ Google Comments at 21-22. Of broadband end users with a 
choice of broadband providers, 32% said paying termination fees to 
their current provider was a major reason why they have not switched 
service. FCC, Broadband Decision: What Drives Consumers to Switch--
Or Stick With--Their Broadband Internet Provider 8 (Dec. 2010) (FCC 
Internet Survey), available at hraunfoss.fcc.gov/edocs_public/attachmatch/DOC-303264A1.pdf.
---------------------------------------------------------------------------

C. Broadband Providers Have Acted To Limit Openness

    These dangers to Internet openness are not speculative or merely 
theoretical. Conduct of this type has already come before the 
Commission in enforcement proceedings. As early as 2005, a broadband 
provider that was a subsidiary of a telephone company paid $15,000 to 
settle a Commission investigation into whether it had blocked Internet 
ports used for competitive VoIP applications. In 2008, the Commission 
found that Comcast disrupted certain peer-to-peer (P2P) uploads of its 
subscribers, without a reasonable network management justification and 
without disclosing its actions. Comparable practices have been observed 
in the provision of mobile broadband services. After entering into a 
contract with a company to handle online payment services, a mobile 
wireless provider allegedly blocked customers' attempts to use 
competing services to make purchases using their mobile phones. A 
nationwide mobile provider restricted the types of lawful applications 
that could be accessed over its 3G mobile wireless network.

[[Page 59199]]

    There have been additional allegations of blocking, slowing, or 
degrading P2P traffic. We do not determine in this Order whether any of 
these practices violated open Internet principles, but we note that 
they have raised concerns among edge providers and end users, 
particularly regarding lack of transparency. For example, in May 2008 a 
major cable broadband provider acknowledged that it had managed the 
traffic of P2P services. In July 2009, another cable broadband provider 
entered into a class action settlement agreement stating that it had 
``ceased P2P Network Management Practices,'' but allowing the provider 
to resume throttling P2P traffic.\36\ There is evidence that other 
broadband providers have engaged in similar degradation.\37\ In 
addition, broadband providers' terms of service commonly reserve to the 
provider sweeping rights to block, degrade, or favor traffic. For 
example, one major cable provider reserves the right to engage, 
``without limitation,'' in ``port blocking, * * * traffic 
prioritization and protocol filtering.'' Further, a major mobile 
broadband provider prohibits use of its wireless service for 
``downloading movies using peer-to-peer file sharing services'' and 
VoIP applications. And a cable modem manufacturer recently filed a 
formal complaint with the Commission alleging that a major broadband 
Internet access service provider has violated open Internet principles 
through overly restrictive device approval procedures.
---------------------------------------------------------------------------

    \36\ See RCN Settlement Agreement sec. 3.2. RCN denied any 
wrongdoing, but it acknowledges that in order to ease network 
congestion, it targeted specific P2P applications. See Letter from 
Jean L. Kiddo, RCN, to Marlene Dortch, Secretary, FCC, GN Docket No. 
09-191, WC Docket No. 07-52, at 2-5 (filed May 7, 2010).
    \37\ A 2008 study by the Max Planck Institute revealed 
significant blocking of BitTorrent applications in the United 
States. Comcast and Cox were both cited as examples of providers 
blocking traffic. See generally WCB Letter 12/10/10, Attach. at 75-
80, Marcel Dischinger et al., Max Planck Institute, Detecting 
BitTorrent Blocking (2008), available at broadband.mpi-sws.org/transparency/results/08_imc_blocking.pdf; see also WCB Letter 12/
13/10, Attach. at 235-39, Max Planck Institute for Software Systems, 
Glasnost: Results from Tests for BitTorrent Traffic Blocking, 
broadband.mpi-sws.org/transparency/results; WCB Letter 12/13/10, 
Attach. at 298-315, Christian Kreibich et al., Netalyzr: 
Illuminating Edge Network Neutrality, Security, and Performance 15 
(2010), available at http://www.icsi.berkeley.edu/pubs/techreports/TR-10-006.pdf.
---------------------------------------------------------------------------

    These practices have occurred notwithstanding the Commission's 
adoption of open Internet principles in the Internet Policy Statement; 
enforcement proceedings against Madison River Communications and 
Comcast for their interference with VoIP and P2P traffic, respectively; 
Commission orders that required certain broadband providers to adhere 
to open Internet obligations; longstanding norms of Internet openness; 
and statements by major broadband providers that they support and are 
abiding by open Internet principles.

D. The Benefits of Protecting the Internet's Openness Exceed the Costs

    Widespread interference with the Internet's openness would likely 
slow or even break the virtuous cycle of innovation that the Internet 
enables, and would likely cause harms that may be irreversible or very 
costly to undo. For example, edge providers could make investments in 
reliance upon exclusive preferential arrangements with broadband 
providers, and network management technologies may not be easy to 
change.\38\ If the next revolutionary technology or business is not 
developed because broadband provider practices chill entry and 
innovation by edge providers, the missed opportunity may be 
significant, and lost innovation, investment, and competition may be 
impossible to restore after the fact. Moreover, because of the 
Internet's role as a general purpose technology, erosion of Internet 
openness threatens to harm innovation, investment in the core and at 
the edge of the network, and competition in many sectors, with a 
disproportionate effect on small, entering, and non-commercial edge 
providers that drive much of the innovation on the Internet.\39\ 
Although harmful practices are not certain to become widespread, there 
are powerful reasons for immediate concern, as broadband providers have 
interfered with the open Internet in the past and have incentives and 
an increasing ability to do so in the future. Effective open Internet 
rules can prevent or reduce the risk of these harms, while helping to 
assure Americans unfettered access to diverse sources of news, 
information, and entertainment, as well as an array of technologies and 
devices that enhance health, education, and the environment.
---------------------------------------------------------------------------

    \38\ As one example, Comcast's transition to a protocol-agnostic 
network management practice took almost nine months to complete. See 
Letter from Kathryn A. Zachem, V.P., Regulatory Affairs, Comcast 
Corp., to Marlene Dortch, Secretary, FCC, WC Docket No. 07-52 at 2 
(filed July 10, 2008); Letter from Kathryn A. Zachem, V.P., 
Regulatory Affairs, Comcast Corp., to Marlene Dortch, Secretary, 
FCC, WC Docket No. 07-52 at Attach. B at 3, 9 (filed Sept. 19, 2008) 
(noting that the transition required ``lab tests, technical trials, 
customer feedback, vendor evaluations, and a third-party consulting 
analysis,'' as well as trials in five markets).
    \39\ See, e.g., ALA Comments at 2; IFTA Comments at 14. Even 
some who generally oppose open Internet rules agree that extracting 
access fees from entities that produce content or services without 
the anticipation of financial reward would have significant adverse 
effects. See WCB Letter 12/10/10, Attach. at 35-80, C. Scott 
Hemphill, Network Neutrality and the False Promise of Zero-Price 
Regulation, 25 Yale J. on Reg. 135, 161-62 (2008) (``[S]ocial 
production has distinctive features that make it unusually valuable, 
but also unusually vulnerable, to a particular form of exclusion. 
That mechanism of exclusion is not subject to the prohibitions of 
antitrust law, moreover, presenting a relatively stronger argument 
for regulation.''), cited in Prof. Tim Wu Comments at 9 n.22.
---------------------------------------------------------------------------

    By comparison to the benefits of these prophylactic measures, the 
costs associated with the open Internet rules adopted here are likely 
small. Broadband providers generally endorse openness norms--including 
the transparency and no blocking principles--as beneficial and in line 
with current and planned business practices (though they do not 
uniformly support rules making them enforceable).\40\ Even to the 
extent rules require some additional disclosure of broadband providers' 
practices, the costs of compliance should be modest. In addition, the 
high-level rules we adopt carefully balance preserving the open 
Internet against avoiding unduly burdensome regulation. Our rules 
against blocking and unreasonable discrimination are subject to 
reasonable network management, and our rules do not prevent broadband 
providers from offering specialized services such as facilities-based 
VoIP. In short, rules that reinforce the openness that has supported 
the growth of the Internet, and do not substantially change this highly 
successful status quo, should not entail significant compliance costs.
---------------------------------------------------------------------------

    \40\ We note that many broadband providers are, or soon will be, 
subject to open Internet requirements in connection with grants 
under the Broadband Technology Opportunities Program (BTOP). The 
American Recovery and Reinvestment Act of 2009 required that 
nondiscrimination and network interconnection obligations be 
``contractual conditions'' of all BTOP grants. Public Law 111-5, 
sec. 6001(j), 123 Stat. 115 (codified at 47 U.S.C. sec. 1305). These 
nondiscrimination and interconnection conditions require BTOP 
grantees, among other things, to adhere to the principles in the 
Internet Policy Statement; to display any network management 
policies in a prominent location on the service provider's Web site; 
and to offer interconnection where technically feasible.
---------------------------------------------------------------------------

    Some commenters contend that open Internet rules are likely to 
reduce investment in broadband deployment. We disagree. There is no 
evidence that prior open Internet obligations have discouraged 
investment; \41\ and

[[Page 59200]]

numerous commenters explain that, by preserving the virtuous circle of 
innovation, open Internet rules will increase incentives to invest in 
broadband infrastructure. Moreover, if permitted to deny access, or 
charge edge providers for prioritized access to end users, broadband 
providers may have incentives to allow congestion rather than invest in 
expanding network capacity. And as described in Part III, below, our 
rules allow broadband providers sufficient flexibility to address 
legitimate congestion concerns and other network management 
considerations. Nor is there any persuasive reason to believe that in 
the absence of open Internet rules broadband providers would lower 
charges to broadband end users, or otherwise change their practices in 
ways that benefit innovation, investment, competition, or end users.
---------------------------------------------------------------------------

    \41\ See, e.g., Free Press Comments at 4, 23-25; Google Comments 
at 38-39; XO Comments at 12. In making prior investment decisions, 
broadband providers could not have reasonably assumed that the 
Commission would abstain from regulating in this area, as the 
Commission's decisions classifying cable modem service and wireline 
broadband Internet access service as information services included 
notices of proposed rulemaking seeking comment on whether the 
Commission should adopt rules to protect consumers. See Appropriate 
Framework for Broadband Access to the Internet Over Wireline 
Facilities et al., Report and Order and NPRM, 20 FCC Rcd 14853, 
14929-35, paras. 146-59 (2005); Inquiry Concerning High-Speed Access 
to the Internet Over Cable & Other Facilities et al., Declaratory 
Ruling and NPRM, 17 FCC-- Rcd 4798, 4839-48, paras. 72-95 (2002) 
(seeking comment on whether the Commission should require cable 
operators to give unaffiliated ISPs access to broadband cable 
networks); see also AT&T Comments at 8 (``[T]he existing principles 
already address any blocking or degradation of traffic and thus 
eliminate any theoretical leverage providers may have to impose 
[unilateral `tolls'].'').
---------------------------------------------------------------------------

    The magnitude and character of the risks we identify make it 
appropriate to adopt prophylactic rules now to preserve the openness of 
the Internet, rather than waiting for substantial, pervasive, and 
potentially irreversible harms to occur before taking any action. The 
Supreme Court has recognized that even if the Commission cannot 
``predict with certainty'' the future course of a regulated market, it 
may ``plan in advance of foreseeable events, instead of waiting to 
react to them.'' Moreover, as the Commission found in another context, 
``[e]xclusive reliance on a series of individual complaints,'' without 
underlying rules, ``would prevent the Commission from obtaining a clear 
picture of the evolving structure of the entire market, and addressing 
competitive concerns as they arise. * * * Therefore, if the Commission 
exclusively relied on individual complaints, it would only become aware 
of specific * * * problems if and when the individual complainant's 
interests coincided with those of the interest of the overall `public.' 
''
    Finally, we note that there is currently significant uncertainty 
regarding the future enforcement of open Internet principles and what 
constitutes appropriate network management, particularly in the wake of 
the court of appeals' vacatur of the Comcast Network Management 
Practices Order. A number of commenters, including leading broadband 
providers, recognize the benefits of greater predictability regarding 
open Internet protections.\42\ Broadband providers benefit from 
increased certainty that they can reasonably manage their networks and 
innovate with respect to network technologies and business models. For 
those who communicate and innovate on the Internet, and for investors 
in edge technologies, there is great value in having confidence that 
the Internet will remain open, and that there will be a forum available 
to bring complaints about violations of open Internet standards.\43\ 
End users also stand to benefit from assurances that services on which 
they depend ``won't suddenly be pulled out from under them, held ransom 
to extra payments either from the sites or from them.'' Providing clear 
yet flexible rules of the road that enable the Internet to continue to 
flourish is the central goal of the action we take in this Order.\44\
---------------------------------------------------------------------------

    \42\ For example, AT&T has recognized that open Internet rules 
``would reduce regulatory uncertainty, and should encourage 
investment and innovation in next generation broadband services and 
technologies.'' See WCB Letter 12/10/10, Attach. at 94, AT&T 
Statement on Proposed FCC Rules to Preserve an Open Internet, AT&T 
Public Policy Blog, Dec. 1, 2010, attpublicpolicy.com/government-policy/att-statement-on-proposed-fcc-rules-to-preserve-an-open-internet. Similarly, Comcast acknowledged that our proposed rules 
would strike ``a workable balance between the needs of the 
marketplace and the certainty that carefully-crafted and limited 
rules can provide to ensure that Internet freedom and openness are 
preserved.'' See David L. Cohen, FCC Proposes Rules to Preserve an 
Open Internet, comcastvoices, Dec. 1, 2010, blog.comcast.com/2010/12/fcc-proposes-rules-to-preserve-an-open-internet.html; see also, 
e.g., Final Brief for Intervenors NCTA and NBC Universal, Inc. at 
11-13; 19-22, Comcast Corp. v. FCC, 600 F.3d 642 (DC Cir. 2010) (No. 
08-1291). In addition to broadband providers, an array of industry 
leaders, venture capitalists, and public interest groups have 
concluded that our rules will promote investment in the Internet 
ecosystem by removing regulatory uncertainty. See Free Press 
Comments at 10; Google Comments at 40; PIC Comments at 28; WCB 
Letter 12/10/10, Attach. at 91 (statement of CALinnovates.org), 96 
(statement of Larry Cohen, president of the Communications Workers 
of America), 98 (statement of Ron Conway, founder of SV Angel), 99 
(statement of Craig Newmark, founder of craigslist), 105 (statement 
of Dean Garfield, president and CEO of the Information Technology 
Industry Council), 111 (Dec. 8, 2010 letter from Jeremy Liew, 
Managing Director, Lightspeed Venture Partners to Julius 
Genachowski, FCC Chairman), 112 (Dec. 1, 2010 letter from Jed Katz, 
Managing Director, Javelin Venture Partners to Julius Genachowski, 
FCC Chairman), 127 (statement of Gary Shapiro, president and CEO of 
the Consumer Electronics Association), 128 (statement of Ram 
Shriram, founder of Sherpalo Ventures), 132 (statements of Rey 
Ramsey, President and CEO of TechNet, and John Chambers, Chairman 
and CEO of Cisco), 133 (statement of John Doerr, Kleiner Perkins 
Caufield & Byers); XO Reply at 6.
    \43\ For this reason, we are not persuaded that alternative 
approaches, such as rules that lack a formal enforcement mechanism, 
a transparency rule alone, or reliance entirely on technical 
advisory groups to resolve disputes, would adequately address the 
potential harms and be less burdensome than the rules we adopt here. 
See, e.g., Verizon Comments at 130-34. In particular, we reject the 
notion that Commission action is unnecessary because the Department 
of Justice and the Federal Trade Commission (FTC) ``are well 
equipped to cure any market ills.'' Id. at 9. Our statutory 
responsibilities are broader than preventing antitrust violations or 
unfair competition. See, e.g., News Corp. and DIRECTV Group, Inc., 
23 FCC Rcd 3265, 3277-78, paras. 23-25 (2008). We must, for example, 
promote deployment of advanced telecommunications capability, ensure 
that charges in connection with telecommunications services are just 
and reasonable, ensure the orderly development of local television 
broadcasting, and promote the public interest through spectrum 
licensing. See CDT Comments at 8-9; Comm'r Jon Liebowitz, FTC, 
Concurring Statement of Commissioner Jon Leibowitz Regarding the 
Staff Report: ``Broadband Connectivity Competition Policy'' (2007), 
available at http://www.ftc.gov/speeches/leibowitz/V070000statement.pdf (``[T]here is little agreement over whether 
antitrust, with its requirements for ex post case by case analysis, 
is capable of fully and in a timely fashion resolving many of the 
concerns that have animated the net neutrality debate.'').
    \44\ Contrary to the suggestion of some, neither the Department 
of Justice nor the FTC has concluded that the broadband market is 
competitive or that open Internet rules are unnecessary. See 
McDowell Statement at *4; Baker Statement at *3. In the submission 
in question, the Department observed that: (1) The wireline 
broadband market is highly concentrated, with most consumers served 
by at most two providers; (2) the prospects for additional wireline 
competition are dim due to the high fixed and sunk costs required to 
provide wireline broadband service; and (3) the extent to which 
mobile wireless offerings will compete with wireline offerings is 
unknown. See DOJ Ex Parte Jan. 4, 2010, GN Dkt. No. 09-51, at 8, 10, 
13-14. The Department specifically endorsed requiring greater 
transparency by broadband providers, id. at 25-27, and recognized 
that in concentrated markets, like the broadband market, it is 
appropriate for policymakers to limit ``business practices that 
thwart innovation.'' Id. at 11. Finally, although the Department 
cautioned that care must be taken to avoid stifling infrastructure 
investment, it expressed particular concern about price regulation, 
which we are not adopting. Id. at 28. In 2007, the FTC issued a 
staff report on broadband competition policy. See FTC, Broadband 
Connectivity Competition Policy (June 2007). Like the Department, 
the FTC staff did not conclude that the broadband market is 
competitive. To the contrary, the FTC staff made clear that it had 
not studied the state of competition in any specific markets. Id. at 
8, 105, 156. With regard to the merits of open Internet rules, the 
FTC staff report recited arguments pro and con, see, e.g., id. at 
82, 105, 147-54, and called for additional study, id. at 7, 9-10, 
157.
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III. Open Internet Rules

    To preserve the Internet's openness and broadband providers' 
ability to manage and expand their networks, we adopt high-level rules 
embodying four core principles: transparency, no blocking, no 
unreasonable discrimination, and reasonable network management. These 
rules are generally consistent with, and should not require

[[Page 59201]]

significant changes to, broadband providers' current practices, and are 
also consistent with the common understanding of broadband Internet 
access service as a service that enables one to go where one wants on 
the Internet and communicate with anyone else online.\45\
---------------------------------------------------------------------------

    \45\ The definition of ``broadband Internet access service'' 
proposed in the Open Internet NPRM encompassed any ``Internet 
Protocol data transmission between an end user and the Internet.'' 
Open Internet NPRM, 24 FCC Rcd at 13128, App. A. Some commenters 
argued that this definition would cover a variety of services that 
do not constitute broadband Internet access service as end users and 
broadband providers generally understand that term, but that merely 
offer data transmission between a discrete set of Internet endpoints 
(for example, virtual private networks, or videoconferencing 
services). See, e.g., AT&T Comments at 96-100; Communications 
Workers of America (CWA) Comments at 10-12; Sprint Reply at 16-17; 
see also CDT Comments at 49-50 (distinguishing managed (or 
specialized) services from broadband Internet access service by 
defining the former, in part, as data transmission ``between an end 
user and a limited group of parties or endpoints'') (emphasis 
added).
---------------------------------------------------------------------------

A. Scope of the Rules

    We find that open Internet rules should apply to ``broadband 
Internet access service,'' which we define as:

    A mass-market retail service by wire or radio that provides the 
capability to transmit data to and receive data from all or 
substantially all Internet endpoints, including any capabilities 
that are incidental to and enable the operation of the 
communications service, but excluding dial-up Internet access 
service. This term also encompasses any service that the Commission 
finds to be providing a functional equivalent of the service 
described in the previous sentence, or that is used to evade the 
protections set forth in this Part.

The term ``broadband Internet access service'' includes services 
provided over any technology platform, including but not limited to 
wire, terrestrial wireless (including fixed and mobile wireless 
services using licensed or unlicensed spectrum), and satellite.\46\
---------------------------------------------------------------------------

    \46\ In the Open Internet NPRM, we proposed separate definitions 
of the terms ``broadband Internet access,'' and ``broadband Internet 
access service.'' Open Internet NPRM, 24 FCC Rcd at 13128, App. A 
sec. 8.3. For purposes of these rules, we find it simpler to define 
just the service.
---------------------------------------------------------------------------

    ``Mass market'' means a service marketed and sold on a standardized 
basis to residential customers, small businesses, and other end-user 
customers such as schools and libraries. For purposes of this 
definition, ``mass market'' also includes broadband Internet access 
services purchased with the support of the E-rate program that may be 
customized or individually negotiated. The term does not include 
enterprise service offerings, which are typically offered to larger 
organizations through customized or individually negotiated 
arrangements.
    ``Broadband Internet access service'' encompasses services that 
``provide the capability to transmit data to and receive data from all 
or substantially all Internet endpoints.'' To ensure the efficacy of 
our rules in this dynamic market, we also treat as a ``broadband 
Internet access service'' any service the Commission finds to be 
providing a functional equivalent of the service described in the 
previous sentence, or that is used to evade the protections set forth 
in these rules.
    A key factor in determining whether a service is used to evade the 
scope of the rules is whether the service is used as a substitute for 
broadband Internet access service. For example, an Internet access 
service that provides access to a substantial subset of Internet 
endpoints based on end users preference to avoid certain content, 
applications, or services; Internet access services that allow some 
uses of the Internet (such as access to the World Wide Web) but not 
others (such as e-mail); or a ``Best of the Web'' Internet access 
service that provides access to 100 top Web sites could not be used to 
evade the open Internet rules applicable to ``broadband Internet access 
service.'' Moreover, a broadband provider may not evade these rules 
simply by blocking end users' access to some Internet endpoints. 
Broadband Internet access service likely does not include services 
offering connectivity to one or a small number of Internet endpoints 
for a particular device, e.g., connectivity bundled with e-readers, 
heart monitors, or energy consumption sensors, to the extent the 
service relates to the functionality of the device.\47\ Nor does 
broadband Internet access service include virtual private network 
services, content delivery network services, multichannel video 
programming services, hosting or data storage services, or Internet 
backbone services (if those services are separate from broadband 
Internet access service). These services typically are not mass market 
services and/or do not provide the capability to transmit data to and 
receive data from all or substantially all Internet endpoints.\48\
---------------------------------------------------------------------------

    \47\ To the extent these services are provided by broadband 
providers over last-mile capacity shared with broadband Internet 
access service, they would be specialized services.
    \48\ We also note that our rules apply only as far as the limits 
of a broadband provider's control over the transmission of data to 
or from its broadband customers.
---------------------------------------------------------------------------

    Although one purpose of our open Internet rules is to prevent 
blocking or unreasonable discrimination in transmitting online traffic 
for applications and services that compete with traditional voice and 
video services, we determine that open Internet rules applicable to 
fixed broadband providers should protect all types of Internet traffic, 
not just voice or video Internet traffic. This reflects, among other 
things, our view that it is generally preferable to neither require nor 
encourage broadband providers to examine Internet traffic in order to 
discern which traffic is subject to the rules. Even if we were to limit 
our rules to voice or video traffic, moreover, it is unlikely that 
broadband providers could reliably identify such traffic in all 
circumstances, particularly if the voice or video traffic originated 
from new services using uncommon protocols.\49\ Indeed, limiting our 
rules to voice and video traffic alone could spark a costly and 
wasteful cat-and-mouse game in which edge providers and end users 
seeking to obtain the protection of our rules could disguise their 
traffic as protected communications.\50\
---------------------------------------------------------------------------

    \49\ This is true notwithstanding the increasing sophistication 
of network management tools, described above in Part II.B. See 
Arthur Callado et al., A Survey on Internet Traffic Identification, 
11 IEEE Commnc'ns Surveys & Tutorials 37, 49 (2009).
    \50\ See IETF, Reflections on Internet Transparency, RFC 4924 at 
5 (Jul. 2007) (RFC 4924) (``In practice, filtering intended to block 
or restrict application usage is difficult to successfully implement 
without customer consent, since over time developers will tend to 
re-engineer filtered protocols so as to avoid the filters. Thus over 
time, filtering is likely to result in interoperability issues or 
unnecessary complexity. These costs come without the benefit of 
effective filtering. * * *''); IETF, Considerations on the Use of a 
Service Identifier in Packet Headers, RFC 3639 at 3 (Oct. 2003) (RFC 
3639) (``Attempts by intermediate systems to impose service-based 
controls on communications against the perceived interests of the 
end parties to the communication are often circumvented. Services 
may be tunneled within other services, proxied by a collaborating 
external host (e.g., an anonymous redirector), or simply run over an 
alternate port (e.g., port 8080 vs port 80 for HTTP).''). Cf. RFC 
3639 at 4 (``From this perspective of network and application 
utility, it is preferable that no action or activity be undertaken 
by any agency, carrier, service provider, or organization which 
would cause end-users and protocol designers to generally obscure 
service identification information from the IP packet header.''). 
Our rules are nationwide and do not vary by geographic area, 
notwithstanding potential variations across local markets for 
broadband Internet access service. Uniform national rules create a 
more predictable policy environment for broadband providers, many of 
which offer services in multiple geographic areas. See, e.g., Level 
3 Comments at 13; Charter Comments at iv. Edge providers will 
benefit from uniform treatment of their traffic in different 
localities and by different broadband providers. Broadband end users 
will also benefit from uniform rules, which protect them regardless 
of where they are located or which broadband provider they obtain 
service from.
---------------------------------------------------------------------------

    We recognize that there is one Internet (although it is comprised 
of a multitude of different networks), and that it should remain open 
and

[[Page 59202]]

interconnected regardless of the technologies and services end users 
rely on to access it. However, for reasons discussed in Part III.E 
below related to mobile broadband--including the fact that it is at an 
earlier stage and more rapidly evolving--we apply open Internet rules 
somewhat differently to mobile broadband than to fixed broadband at 
this time. We define ``fixed broadband Internet access service'' as a 
broadband Internet access service that serves end users primarily at 
fixed endpoints using stationary equipment, such as the modem that 
connects an end user's home router, computer, or other Internet access 
device to the network. This term encompasses fixed wireless broadband 
services (including services using unlicensed spectrum) and fixed 
satellite broadband services. We define ``mobile broadband Internet 
access service'' as a broadband Internet access service that serves end 
users primarily using mobile stations. Mobile broadband Internet access 
includes services that use smartphones as the primary endpoints for 
connection to the Internet.\51\ The discussion in this Part applies to 
both fixed and mobile broadband, unless specifically noted. Part III.E 
further discusses application of open Internet rules to mobile 
broadband.
---------------------------------------------------------------------------

    \51\ We note that Section 337(f)(1) of the Act excludes public 
safety services from the definition of mobile broadband Internet 
access service.
---------------------------------------------------------------------------

    For a number of reasons, these rules apply only to the provision of 
broadband Internet access service and not to edge provider activities, 
such as the provision of content or applications over the Internet. 
First, the Communications Act particularly directs us to prevent harms 
related to the utilization of networks and spectrum to provide 
communication by wire and radio. Second, these rules are an outgrowth 
of the Commission's Internet Policy Statement.\52\ The Statement was 
issued in 2005 when the Commission removed key regulatory protections 
from DSL service, and was intended to protect against the harms to the 
open Internet that might result from broadband providers' subsequent 
conduct. The Commission has always understood those principles to apply 
to broadband Internet access service only, as have most private-sector 
stakeholders.\53\ Thus, insofar as these rules translate existing 
Commission principles into codified rules, it is appropriate to limit 
the application of the rules to broadband Internet access service. 
Third, broadband providers control access to the Internet for their 
subscribers and for anyone wishing to reach those subscribers.\54\ They 
are therefore capable of blocking, degrading, or favoring any Internet 
traffic that flows to or from a particular subscriber.
---------------------------------------------------------------------------

    \52\ When the Commission adopted the Internet Policy Statement, 
it promised to incorporate the principles into ``ongoing 
policymaking activities.'' Internet Policy Statement, 20 FCC Rcd at 
14988, para. 5.
    \53\ See, e.g., Appropriate Framework for Broadband Access to 
the Internet over Wireline Facilities, Report and Order and Notice 
of Proposed Rulemaking, 20 FCC Rcd 14853, 14976 (2005) (Wireline 
Broadband Order) (separate statement of Chairman Martin); id. at 
14980 (Statement of Commissioner Copps, concurring); id. at 14983 
(Statement of Commissioner Adelstein, concurring); Verizon June 8, 
2009 Comments, GN Docket No. 09-51, at 86 (``These principles have 
helped to guide wireline providers' practices and to ensure that 
consumers' expectations for their public Internet access services 
are met.''). The Commission has conditioned wireline broadband 
provider merger approvals on the merged entity's compliance with 
these obligations. See, e.g., SBC Commc'ns Inc. and AT&T Corp. 
Applications for Approval of Transfer of Control, Memorandum Opinion 
and Order, 20 FCC Rcd 18290, 18392, para. 211 (2005).
    \54\ We thus find broadband providers distinguishable from other 
participants in the Internet marketplace. See, e.g., Verizon 
Comments at 36-39 (discussing a variety of other participants in the 
Internet ecosystem); Verizon Reply at 36-37 (same); NCTA Comments at 
47-49 (same); NCTA Reply at 22 (same).
---------------------------------------------------------------------------

    We also do not apply these rules to dial-up Internet access service 
because telephone service has historically provided the easy ability to 
switch among competing dial-up Internet access services. Moreover, the 
underlying dial-up Internet access service is subject to protections 
under Title II of the Communications Act. The Commission's 
interpretation of those protections has resulted in a market for dial-
up Internet access that does not present the same concerns as the 
market for broadband Internet access. No commenters suggested extending 
open Internet rules to dial-up Internet access service.
    Finally, we decline to apply our rules directly to coffee shops, 
bookstores, airlines, and other entities when they acquire Internet 
service from a broadband provider to enable their patrons to access the 
Internet from their establishments (we refer to these entities as 
``premise operators'').\55\ These services are typically offered by the 
premise operator as an ancillary benefit to patrons. However, to 
protect end users, we include within our rules broadband Internet 
access services provided to premise operators for purposes of making 
service available to their patrons.\56\ Although broadband providers 
that offer such services are subject to open Internet rules, we note 
that addressing traffic unwanted by a premise operator is a legitimate 
network management purpose.\57\
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    \55\ See Communications Assistance for Law Enforcement Act and 
Broadband Access and Services, First Report and Order and Further 
Notice of Proposed Rulemaking, 20 FCC Rcd 14989, 15006-07, para. 36, 
n.99 (2005) (CALEA Order). Consistent with the Commission's approach 
in the CALEA Order, ``[w]e note * * * that the provider of 
underlying [broadband service] facilities to such an establishment 
would be subject to [the rules].'' Id. at 15007, para. 36.
    \56\ We note that the premise operator that purchases the 
Internet service remains the end user for purposes of our rules, 
however. Moreover, although not bound by our rules, we encourage 
premise operators to disclose relevant restrictions on broadband 
service they make available to their patrons.
    \57\ We also do not include within the rules free access to 
individuals' wireless networks, even if those networks are 
intentionally made available to others. See Electronic Frontier 
Foundation (EFF) Comments at 25-28. No commenter argued that open 
Internet rules should apply to individual operators of wireless 
networks in these circumstances.
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B. Transparency

    Promoting competition throughout the Internet ecosystem is a 
central purpose of these rules. Effective disclosure of broadband 
providers' network management practices and the performance and 
commercial terms of their services promotes competition--as well as 
innovation, investment, end-user choice, and broadband adoption--in at 
least five ways. First, disclosure ensures that end users can make 
informed choices regarding the purchase and use of broadband service, 
which promotes a more competitive market for broadband services and can 
thereby reduce broadband providers' incentives and ability to violate 
open Internet principles.\58\ Second, and relatedly, as end users' 
confidence in broadband providers' practices increases, so too should 
end users' adoption of broadband services--leading in turn to 
additional investment in Internet infrastructure as contemplated by 
Section 706 of the 1996 Act and other provisions of the communications 
laws.\59\ Third,

[[Page 59203]]

disclosure supports innovation, investment, and competition by ensuring 
that startups and other edge providers have the technical information 
necessary to create and maintain online content, applications, 
services, and devices, and to assess the risks and benefits of 
embarking on new projects. Fourth, disclosure increases the likelihood 
that broadband providers will abide by open Internet principles, and 
that the Internet community will identify problematic conduct and 
suggest fixes.\60\ Transparency thereby increases the chances that 
harmful practices will not occur in the first place and that, if they 
do, they will be quickly remedied, whether privately or through 
Commission oversight. Fifth, disclosure will enable the Commission to 
collect information necessary to assess, report on, and enforce the 
other open Internet rules. For all of these reasons, most commenters 
agree that informing end users, edge providers, and the Commission 
about the network management practices, performance, and commercial 
terms of broadband Internet access service is a necessary and 
appropriate step to help preserve an open Internet.
---------------------------------------------------------------------------

    \58\ Broadband providers may have an incentive not to provide 
such information to end users, as doing so can lessen switching 
costs for end users. Third-party information sources such as 
Consumer Reports and the trade press do not routinely provide such 
information. See CDT Comments at 31; CWA Comments at 21; DISH 
Comments at 2; Google Comments at ii, 64-66; Level 3 Comments at 13; 
Sandoval Reply at 60. Economic literature in this area also confirms 
that policies requiring firms to disclose information generally 
benefit competition and consumers. See, e.g., Mark Armstrong, 
Interactions Between Competition and Consumer Policy, 4 Competition 
Policy Int'l 97 113-16 (Spring 2008), eprints.ucl.ac.uk/7634/1/7634.pdf.
    \59\ See PIC Reply at 16-18; Free Press Comments at 43-45; Ad 
Hoc Comments at ii; CDT Comments at 5-7; ALA Comments at 3; National 
Hispanic Media Coalition (NHMC) Comments at 8; National Broadband 
Plan at 168, 174 (lack of trust in Internet is significant factor 
preventing non-adopters from subscribing to broadband services); 47 
U.S.C. secs. 151, 230, 254, 1302. A recent FCC survey found that 
among non-broadband end users, 46% believed that the Internet is 
dangerous for kids, and 57% believed that it was too easy for 
personal information to be stolen online. John B. Horrigan, FCC 
Survey: Broadband Adoption & Use in America 17 (Mar. 2010), 
available at http://www.fcc.gov/DiversityFAC/032410/consumer-survey-horrigan.pdf.
    \60\ On a number of occasions, broadband providers have blocked 
lawful traffic without informing end users or edge providers. In 
addition to the Madison River and Comcast-BitTorrent incidents 
described above, broadband providers appear to have covertly blocked 
thousands of BitTorrent uploads in the United States throughout 
early 2008. See Marcel Dischinger et al.; Catherine Sandoval, 
Disclosure, Deception, and Deep-Packet Inspection, 78 Fordham L. 
Rev. 641, 666-84 (2009).
---------------------------------------------------------------------------

    The Open Internet NPRM sought comment on what end users and edge 
providers need to know about broadband service, how this information 
should be disclosed, when disclosure should occur, and where 
information should be available. The resulting record supports adoption 
of the following rule:

    A person engaged in the provision of broadband Internet access 
service shall publicly disclose accurate information regarding the 
network management practices, performance, and commercial terms of 
its broadband Internet access services sufficient for consumers to 
make informed choices regarding use of such services and for 
content, application, service, and device providers to develop, 
market, and maintain Internet offerings.\61\
---------------------------------------------------------------------------

    \61\ For purposes of these rules, ``consumer'' includes any 
subscriber to the broadband provider's broadband Internet access 
service, and ``person'' includes any ``individual, group of 
individuals, corporation, partnership, association, unit of 
government or legal entity, however organized,'' cf. 47 CFR 
54.8(a)(6). We also expect broadband providers to disclose 
information about the impact of ``specialized services,'' if any, on 
last-mile capacity available for, and the performance of, broadband 
Internet access service.

    The rule does not require public disclosure of competitively 
sensitive information or information that would compromise network 
security or undermine the efficacy of reasonable network management 
practices.\62\ For example, a broadband provider need not publicly 
disclose information regarding measures it employs to prevent spam 
practices at a level of detail that would enable a spammer to defeat 
those measures.
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    \62\ Commenters disagree on the risks of requiring disclosure of 
information regarding technical, proprietary, and security-related 
management practices. Compare, e.g., American Cable Association 
(ACA) Comments at 17; AFTRA et al. Comments at ii, 16; Cox Comments 
at 11; Fiber-to-the-Home Council (FTTH) Comments at 3, 27; Libove 
Comments at 4; Sprint Comments at 16; T-Mobile Comments at 39, with, 
e.g., Free Press Comments at 117-18; Free Press Reply at 17-19; 
Digital Education Coalition (DEC) Comments at 14; NJRC Comments at 
20-21. We may subsequently require disclosure of such information to 
the Commission; to the extent we do, we will ensure that such 
information is protected consistent with existing Commission 
procedures for treatment of confidential information.
---------------------------------------------------------------------------

    Despite broad agreement that broadband providers should disclose 
information sufficient to enable end users and edge providers to 
understand the capabilities of broadband services, commenters disagree 
about the appropriate level of detail required to achieve this goal. We 
believe that at this time the best approach is to allow flexibility in 
implementation of the transparency rule, while providing guidance 
regarding effective disclosure models. We expect that effective 
disclosures will likely include some or all of the following types of 
information, timely and prominently disclosed in plain language 
accessible to current and prospective end users and edge providers, the 
Commission, and third parties who wish to monitor network management 
practices for potential violations of open Internet principles: \63\
---------------------------------------------------------------------------

    \63\ In setting forth the following categories of information 
subject to the transparency principle, we assume that the broadband 
provider has chosen to offer its services on standardized terms, 
although providers of ``information services'' are not obligated to 
do so. If the provider tailors its terms of service to meet the 
requirements of an individual end user, those terms must at a 
minimum be disclosed to the end user in accordance with the 
transparency principle.
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Network Practices
     Congestion Management: If applicable, descriptions of 
congestion management practices; types of traffic subject to practices; 
purposes served by practices; practices' effects on end users' 
experience; criteria used in practices, such as indicators of 
congestion that trigger a practice, and the typical frequency of 
congestion; usage limits and the consequences of exceeding them; and 
references to engineering standards, where appropriate.\64\
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    \64\ We note that the description of congestion management 
practices provided by Comcast in the wake of the Comcast-BitTorrent 
incident likely satisfies the transparency rule with respect to 
congestion management practices. See Comcast, Network Management 
Update, http://www.comcast.net/terms/network/update; Comcast, 
Comcast Corporation Description of Planned Network Management 
Practices to be Deployed Following the Termination of Current 
Practices, downloads.comcast.net/docs/Attachment_B_Future_Practices.pdf.
---------------------------------------------------------------------------

     Application-Specific Behavior: If applicable, whether and 
why the provider blocks or rate-controls specific protocols or protocol 
ports, modifies protocol fields in ways not prescribed by the protocol 
standard, or otherwise inhibits or favors certain applications or 
classes of applications.
     Device Attachment Rules: If applicable, any restrictions 
on the types of devices and any approval procedures for devices to 
connect to the network. (For further discussion of required disclosures 
regarding device and application approval procedures for mobile 
broadband providers, see infra.)
     Security: If applicable, practices used to ensure end-user 
security or security of the network, including types of triggering 
conditions that cause a mechanism to be invoked (but excluding 
information that could reasonably be used to circumvent network 
security).
Performance Characteristics
     Service Description: A general description of the service, 
including the service technology, expected and actual access speed and 
latency, and the suitability of the service for real-time applications.
     Impact of Specialized Services: If applicable, what 
specialized services, if any, are offered to end users, and whether and 
how any specialized services may affect the last-mile capacity 
available for, and the performance of, broadband Internet access 
service.
Commercial Terms
     Pricing: For example, monthly prices, usage-based fees, 
and fees for early termination or additional network services.
     Privacy Policies: For example, whether network management 
practices entail inspection of network traffic, and

[[Page 59204]]

whether traffic information is stored, provided to third parties, or 
used by the carrier for non-network management purposes.
     Redress Options: Practices for resolving end-user and edge 
provider complaints and questions.

We emphasize that this list is not necessarily exhaustive, nor is it a 
safe harbor--there may be additional information, not included above, 
that should be disclosed for a particular broadband service to comply 
with the rule in light of relevant circumstances. Broadband providers 
should examine their network management practices and current 
disclosures to determine what additional information, if any, should be 
disclosed to comply with the rule.
    In the Open Internet NPRM, we proposed that broadband providers 
publicly disclose their practices on their Web sites and in promotional 
materials. Most commenters agree that a provider's Web site is a 
natural place for end users and edge providers to find disclosures, and 
several contend that a broadband provider's only obligation should be 
to post its practices on its Web site. Others assert that disclosures 
should also be displayed prominently at the point-of-sale, in bill 
inserts, and in the service contract. We agree that broadband providers 
must, at a minimum, prominently display or provide links to disclosures 
on a publicly available, easily accessible Web site that is available 
to current and prospective end users and edge providers as well as to 
the Commission, and must disclose relevant information at the point of 
sale. Current end users must be able to easily identify which 
disclosures apply to their service offering. Broadband providers' 
online disclosures shall be considered disclosed to the Commission for 
purposes of monitoring and enforcement. We may require additional 
disclosures directly to the Commission.
    We anticipate that broadband providers may be able to satisfy the 
transparency rule through a single disclosure, and therefore do not at 
this time require multiple disclosures targeted at different 
audiences.\65\ We also decline to adopt a specific format for 
disclosures, and instead require that disclosure be sufficiently clear 
and accessible to meet the requirements of the rule.\66\ We will, 
however, continue to monitor compliance with this rule, and may require 
adherence to a particular set of best practices in the future.\67\
---------------------------------------------------------------------------

    \65\ But we expect that broadband providers will make 
disclosures in a manner accessible by people with disabilities.
    \66\ Some commenters advocate for a standard disclosure format. 
See, e.g., Adam Candeub et al. Reply at 7; Level 3 Comments at 13; 
Sprint Comments at 17. Others support a plain language requirement. 
See, e.g., NATOA Comments at 7; NJRC Comments at 19; IFTA Comments 
at 16. Other commenters, however, argue against the imposition of a 
standard format as inflexible and difficult to implement. See, e.g., 
Cox Comments at 10; National Telecommunications Cooperative 
Association (NTCA) Comments at 9; Qwest Comments at 11. The approach 
we adopt is similar to the approach adopted in the Commission's 
Truth-in-Billing Proceeding, where we set out basic guidelines. 
Truth-in-Billing and Billing Format, First Report and Order and 
Further NPRM, 14 FCC Rcd 7492, 7495-96, paras. 3-5 (1999).
    \67\ We may address this issue as part of a separate, ongoing 
proceeding regarding transparency for communications services more 
generally. Consumer Information and Disclosure, Notice of Inquiry, 
FCC 09-68 (rel. Aug. 28, 2010). Relatedly, the Commission has begun 
an effort, in partnership with broadband providers, to measure the 
actual speed and performance of broadband service, and we expect 
that the data generated by this effort will inform Commission 
efforts regarding disclosure. See Comment Sought on Residential 
Fixed Broadband Services Testing and Measurement Solution, Pleading 
Cycle Established, Public Notice, 25 FCC Rcd 3836 (2010) (SamKnows 
project); Comment Sought on Measurement of Mobile Broadband Network 
Performance and Coverage, Public Notice, 25 FCC Rcd 7069 (2010) 
(same).
---------------------------------------------------------------------------

    Although some commenters assert that a disclosure rule will impose 
significant burdens on broadband providers, no commenter cites any 
particular source of increased costs, or attempts to estimate costs of 
compliance. For a number of reasons, we believe that the costs of the 
disclosure rule we adopt in this Order are outweighed by the benefits 
of empowering end users and edge providers to make informed choices and 
of facilitating the enforcement of the other open Internet rules. 
First, we require only that providers post disclosures on their Web 
sites and provide disclosure at the point of sale, not that they bear 
the cost of printing and distributing bill inserts or other paper 
documents to all existing customers.\68\ Second, although we may 
subsequently determine that it is appropriate to require that specific 
information be disclosed in particular ways, the transparency rule we 
adopt in this Order gives broadband providers some flexibility to 
determine what information to disclose and how to disclose it. We also 
expressly exclude from the rule competitively sensitive information, 
information that would compromise network security, and information 
that would undermine the efficacy of reasonable network management 
practices. Third, as discussed below, by setting the effective date of 
these rules as November 20, 2011, we give broadband providers adequate 
time to develop cost effective methods of compliance.
---------------------------------------------------------------------------

    \68\ In a separate proceeding, the Commission has determined 
that the costs of making disclosure materials available on a service 
provider's Web site are outweighed by the public benefits where the 
disclosure requirement applies only to entities already using the 
Internet for other purposes. See Standardized and Enhanced 
Disclosure Requirements for Television Broadcast Licensee Public 
Interest Obligations, Report and Order, 23 FCC Rcd 1274, 1277-78, 
paras. 7-10 (2008).
---------------------------------------------------------------------------

    A key purpose of the transparency rule is to enable third-party 
experts such as independent engineers and consumer watchdogs to monitor 
and evaluate network management practices, in order to surface concerns 
regarding potential open Internet violations. We also note the 
existence of free software tools that enable Internet end users and 
edge providers to monitor and detect blocking and discrimination by 
broadband providers.\69\ Although current tools cannot detect all 
instances of blocking or discrimination and cannot substitute for 
disclosure of network management policies, such tools may help 
supplement the transparency rule we adopt in this Order.\70\
---------------------------------------------------------------------------

    \69\ See Sandoval Comments at 4-5. For example, the Max Planck 
Institute analyzed data collected by the Glasnost tool from 
thousands of end user, and found that broadband providers were 
discriminating against application-specific traffic. See WCB Letter 
12/13/10, Attach. at 235-39, Max Planck Institute for Software 
Systems, Glasnost: Results from Tests for BitTorrent Traffic 
Blocking, broadband.mpi-sws.org/transparency/results. Netalyzr is a 
National Science Foundation-funded project that tests a wide range 
of network characteristics. See International Computer Science 
Institute, Netalyzer, netalyzr.icsi.berkeley.edu. Similar tools are 
being developed for mobile broadband services. See, e.g., WindRider, 
Mobile Network Neutrality Monitoring System, http://
www.cs.northwestern.edu/~ict992/mobile.htm.
    \70\ For an example of a public-private partnership that could 
encourage the development of new tools to assess network management 
practices, see FCC Open Internet Apps Challenge, http://www.openinternet.gov/challenge.
---------------------------------------------------------------------------

    Although transparency is essential for preserving Internet 
openness, we disagree with commenters that suggest it is alone 
sufficient to prevent open Internet violations. The record does not 
convince us that a transparency requirement by itself will adequately 
constrain problematic conduct, and we therefore adopt two additional 
rules, as discussed below.

C. No Blocking and No Unreasonable Discrimination

1. No Blocking
    The freedom to send and receive lawful content and to use and 
provide applications and services without fear of blocking is essential 
to the Internet's openness and to competition in adjacent markets such 
as voice communications and video and audio programming. Similarly, the 
ability to connect and use

[[Page 59205]]

any lawful devices that do not harm the network helps ensure that end 
users can enjoy the competition and innovation that result when device 
manufacturers can depend on networks' openness.\71\ Moreover, the no-
blocking principle has been broadly accepted since its inclusion in the 
Commission's Internet Policy Statement. Major broadband providers 
represent that they currently operate consistent with this principle 
and are committed to continuing to do so.\72\
---------------------------------------------------------------------------

    \71\ The Commission has long protected end users' rights to 
attach lawful devices that do not harm communications networks. See, 
e.g., Use of the Carterfone Device in Message Toll Telephone 
Service, 13 FCC 2d 420, 424 (1968); Amendment of Section 64.702 of 
the Commission's Rules and Regulations (Second Computer Inquiry), 
Final Decision, 77 FCC 2d 384, 388 (1980); see also Michael T. 
Hoeker, From Carterfone to the iPhone: Consumer Choice in the 
Wireless Telecommunications Marketplace, 17 CommLaw Conspectus 187, 
192 (2008); Kevin Werbach, The Federal Computer Commission, 84 N.C. 
L. Rev. 1, 21 (2005).
    \72\ As Qwest states, ``Qwest and virtually all major broadband 
providers have supported the FCC Internet Policy Principles and 
voluntarily abide by those principles as good policy.'' Qwest PN 
Comments at 2-3, 5; see also, e.g., Comcast Comments at 27; 
Clearwire Comments at 1; Margaret Boles, AT&T on Comcast v. FCC 
Decision, AT&T Pub. Pol'y Blog (Apr. 6, 2010), attpublicpolicy.com/broadband-policy/att-statement-on-comcast-v-fcc-decision.
---------------------------------------------------------------------------

    In the Open Internet NPRM, the Commission proposed codifying the 
original three Internet Policy Statement principles that addressed 
blocking of content, applications and services, and devices. After 
consideration of the record, we consolidate the proposed rules into a 
single rule for fixed broadband providers: \73\
---------------------------------------------------------------------------

    \73\ As described below, we adopt a tailored version of this 
rule for mobile broadband providers.

    A person engaged in the provision of fixed broadband Internet 
access service, insofar as such person is so engaged, shall not 
block lawful content, applications, services, or non-harmful 
---------------------------------------------------------------------------
devices, subject to reasonable network management.

    The phrase ``content, applications, services'' refers to all 
traffic transmitted to or from end users of a broadband Internet access 
service, including traffic that may not fit cleanly into any of these 
categories.\74\ The rule protects only transmissions of lawful content, 
and does not prevent or restrict a broadband provider from refusing to 
transmit unlawful material such as child pornography.\75\
---------------------------------------------------------------------------

    \74\ See William Lehr et al. Comments at 27 (``While the 
proposed rules of the FCC appear to make a clear distinction between 
applications and services on the one hand (rule 3) and content (rule 
1), we believe that there will be some activities that do not fit 
cleanly into these two categories''); PIC Comments at 39; RFC 4924 
at 5. For this reason the rule may prohibit the blocking of a port 
or particular protocol used by an application, without blocking the 
application completely, unless such practice is reasonable network 
management. See Distributed Computing Industry Ass'n (DCIA) Comments 
at 7 (discussing work-arounds by P2P companies facing port blocking 
or other practices); Sandvine Reply at 3; RFC 4924. The rule also is 
neutral with respect to where in the protocol stack or in the 
network blocking could occur.
    \75\ The ``no blocking'' rule does not impose any independent 
legal obligation on broadband Internet access service providers to 
be the arbiter of what is lawful. See, e.g., WISPA Comments at 12-
13.
---------------------------------------------------------------------------

    We also note that the rule entitles end users to both connect and 
use any lawful device of their choice, provided such device does not 
harm the network.\76\ A broadband provider may require that devices 
conform to widely accepted and publicly-available standards applicable 
to its services.\77\
---------------------------------------------------------------------------

    \76\ We note that MVPDs, pursuant to Section 629 and the 
Commission's implementing regulations, are already subject to 
similar requirements that give end users the right to attach devices 
to an MVPD system provided that the attached equipment does not 
cause electronic or physical harm or assist in the unauthorized 
receipt of service. See Implementation of Section 304 of the 
Telecommunications Act of 1996, Commercial Availability of 
Navigation Devices, Report and Order, 13 FCC Rcd 14775 (1998); 47 
U.S.C.. 549; 47 CFR 76.1201-03. Nothing in this Order is intended to 
alter those existing rules.
    \77\ For example, a DOCSIS-based broadband provider is not 
required to support a DSL modem. See ACA Comments at 13-14; see also 
Satellite Broadband Commenters Comments at 8-9 (noting that an 
antenna and associated modem must comply with equipment and protocol 
standards set by satellite companies, but that ``consumers can 
[then] attach * * * any personal computer or wireless router they 
wish'').
---------------------------------------------------------------------------

    We make clear that the no-blocking rule bars broadband providers 
from impairing or degrading particular content, applications, services, 
or non-harmful devices so as to render them effectively unusable 
(subject to reasonable network management).\78\ Such a prohibition is 
consistent with the observation of a number of commenters that 
degrading traffic can have the same effects as outright blocking, and 
that such an approach is consistent with the traditional interpretation 
of the Internet Policy Statement. The Commission has recognized that in 
some circumstances the distinction between blocking and degrading (such 
as by delaying) traffic is merely ``semantic.''
---------------------------------------------------------------------------

    \78\ We do not find it appropriate to interpret our rule to 
impose a blanket prohibition on degradation of traffic more 
generally. Congestion ordinarily results in degradation of traffic, 
and such an interpretation could effectively prohibit broadband 
providers from permitting congestion to occur on their networks. 
Although we expect broadband providers to continue to expand the 
capacity of their networks--and we believe our rules help ensure 
that they continue to have incentives to do so--we recognize that 
some network congestion may be unavoidable. See, e.g., AT&T Comments 
at 65; TWC Comments at 16-18; Internet Freedom Coalition Reply at 5.
---------------------------------------------------------------------------

    Some concerns have been expressed that broadband providers may seek 
to charge edge providers simply for delivering traffic to or carrying 
traffic from the broadband provider's end-user customers. To the extent 
that a content, application, or service provider could avoid being 
blocked only by paying a fee, charging such a fee would not be 
permissible under these rules.\79\
---------------------------------------------------------------------------

    \79\ We do not intend our rules to affect existing arrangements 
for network interconnection, including existing paid peering 
arrangements.
---------------------------------------------------------------------------

2. No Unreasonable Discrimination
    Based on our findings that fixed broadband providers have 
incentives and the ability to discriminate in their handling of network 
traffic in ways that can harm innovation, investment, competition, end 
users, and free expression, we adopt the following rule:

    A person engaged in the provision of fixed broadband Internet 
access service, insofar as such person is so engaged, shall not 
unreasonably discriminate in transmitting lawful network traffic 
over a consumer's broadband Internet access service. Reasonable 
network management shall not constitute unreasonable discrimination.

    The rule strikes an appropriate balance between restricting harmful 
conduct and permitting beneficial forms of differential treatment. As 
the rule specifically provides, and as discussed below, discrimination 
by a broadband provider that constitutes ``reasonable network 
management'' is ``reasonable'' discrimination.\80\ We provide further 
guidance regarding distinguishing reasonable from unreasonable 
discrimination:
---------------------------------------------------------------------------

    \80\ We also make clear that open Internet protections coexist 
with other legal and regulatory frameworks. Except as otherwise 
described in this Order, we do not address the possible application 
of the no unreasonable discrimination rule to particular 
circumstances, despite the requests of certain commenters. See, 
e.g., AT&T Comments at 64-77, 108-12; PAETEC Comments at 13; see 
also AT&T Comments at 56 (arguing that some existing agreements 
could be at odds with limitations on pay for priority arrangements). 
Rather, we find it more appropriate to address the application of 
our rule in the context of an appropriate Commission proceeding with 
the benefit of a more comprehensive record.
---------------------------------------------------------------------------

    Transparency. Differential treatment of traffic is more likely to 
be reasonable the more transparent to the end user that treatment is. 
The Commission has previously found broadband provider practices to 
violate open Internet principles in part because they were not 
disclosed to end users. Transparency is particularly important with 
respect to the discriminatory treatment of traffic as it is often 
difficult for end users to determine the causes of slow or poor 
performance of content, applications, services, or devices.
    End-User Control. Maximizing end-user control is a policy goal 
Congress

[[Page 59206]]

recognized in Section 230(b) of the Communications Act, and end-user 
choice and control are touchstones in evaluating the reasonableness of 
discrimination.\81\ As one commenter observes, ``letting users choose 
how they want to use the network enables them to use the Internet in a 
way that creates more value for them (and for society) than if network 
providers made this choice,'' and ``is an important part of the 
mechanism that produces innovation under uncertainty.'' Thus, enabling 
end users to choose among different broadband offerings based on such 
factors as assured data rates and reliability, or to select quality-of-
service enhancements on their own connections for traffic of their 
choosing, would be unlikely to violate the no unreasonable 
discrimination rule, provided the broadband provider's offerings were 
fully disclosed and were not harmful to competition or end users.\82\ 
We recognize that there is not a binary distinction between end-user 
controlled and broadband-provider controlled practices, but rather a 
spectrum of practices ranging from more end-user controlled to more 
broadband provider-controlled.\83\ And we do not suggest that practices 
controlled entirely by broadband providers are by definition 
unreasonable.
---------------------------------------------------------------------------

    \81\ ``The rapidly developing array of Internet and other 
interactive computer services * * * offer[ ] users a great degree of 
control over the information that they receive, as well as the 
potential for even greater control in the future as technology 
develops.'' 47 U.S.C. 230(a)(1)-(2) (emphasis added).
    \82\ In these types of arrangements ``[t]he broadband provider 
does not get any particular leverage, because the ability to select 
which traffic gets priority lies with individual subscribers. 
Meanwhile, an entity providing content, applications, or services 
does not need to worry about striking up relationships with various 
broadband providers to obtain top treatment. All it needs to worry 
about is building relationships with users and explaining to those 
users whether and how they may want to select the particular 
content, application, or service for priority treatment.'' CDT 
Comments at 27; see also Amazon Comments at 2-3; SureWest Comments 
at 32-33.
    \83\ We note that default settings set by broadband providers 
would likely be considered more broadband provider-controlled than 
end-user controlled. See generally Jason Scott Johnston, Strategic 
Bargaining and the Economic Theory of Contract Default Rules, 100 
Yale L.J. 615 (1990); Daniel Kahneman et al., Anomalies: The 
Endowment Effect, Loss Aversion, and Status Quo Bias, 5 J. Econ. 
Persp. 193, 197-99 (1991).
---------------------------------------------------------------------------

    Some commenters suggest that open Internet protections would 
prohibit broadband providers from offering their subscribers different 
tiers of service or from charging their subscribers based on bandwidth 
consumed. We are, of course, always concerned about anti-consumer or 
anticompetitive practices, and we remain so here. However, prohibiting 
tiered or usage-based pricing and requiring all subscribers to pay the 
same amount for broadband service, regardless of the performance or 
usage of the service, would force lighter end users of the network to 
subsidize heavier end users. It would also foreclose practices that may 
appropriately align incentives to encourage efficient use of networks. 
The framework we adopt in this Order does not prevent broadband 
providers from asking subscribers who use the network less to pay less, 
and subscribers who use the network more to pay more.
    Use-Agnostic Discrimination. Differential treatment of traffic that 
does not discriminate among specific uses of the network or classes of 
uses is likely reasonable. For example, during periods of congestion a 
broadband provider could provide more bandwidth to subscribers that 
have used the network less over some preceding period of time than to 
heavier users. Use-agnostic discrimination (sometimes referred to as 
application-agnostic discrimination) is consistent with Internet 
openness because it does not interfere with end users' choices about 
which content, applications, services, or devices to use. Nor does it 
distort competition among edge providers.
    Standard Practices. The conformity or lack of conformity of a 
practice with best practices and technical standards adopted by open, 
broadly representative, and independent Internet engineering, 
governance initiatives, or standards-setting organizations is another 
factor to be considered in evaluating reasonableness. Recognizing the 
important role of such groups is consistent with Congress's intent that 
our rules in the Internet area should not ``fetter[ ]'' the free market 
with unnecessary regulation,\84\ and is consistent with broadband 
providers' historic reliance on such groups.\85\ We make clear, 
however, that we are not delegating authority to interpret or implement 
our rules to outside bodies.
---------------------------------------------------------------------------

    \84\ 47 U.S.C. 230(b)(2).
    \85\ Broadband providers' practices historically have relied on 
the efforts of such groups, which follow open processes conducive to 
broad participation. See, e.g., William Lehr et al. Comments at 24; 
Comcast Comments at 53-59; FTTH Comments at 12; Internet Society 
(ISOC) Comments at 1-2; OIC Comments at 50-52; Comcast Reply at 5-7. 
Moreover, Internet community governance groups develop and encourage 
widespread implementation of best practices, supporting an 
environment that facilitates innovation.
---------------------------------------------------------------------------

    In evaluating unreasonable discrimination, the types of practices 
we would be concerned about include, but are not limited to, 
discrimination that harms an actual or potential competitor to the 
broadband provider (such as by degrading VoIP applications or services 
when the broadband provider offers telephone service), that harms end 
users (such as by inhibiting end users from accessing the content, 
applications, services, or devices of their choice), or that impairs 
free expression (such as by slowing traffic from a particular blog 
because the broadband provider disagrees with the blogger's message).
    For a number of reasons, including those discussed above in Part 
II.B, a commercial arrangement between a broadband provider and a third 
party to directly or indirectly favor some traffic over other traffic 
in the broadband Internet access service connection to a subscriber of 
the broadband provider (i.e., ``pay for priority'') would raise 
significant cause for concern.\86\ First, pay for priority would 
represent a significant departure from historical and current practice. 
Since the beginning of the Internet, Internet access providers have 
typically not charged particular content or application providers fees 
to reach the providers' retail service end users or struck pay-for-
priority deals, and the record does not contain evidence that U.S. 
broadband providers currently engage in such arrangements. Second this 
departure from longstanding norms could cause great harm to innovation 
and investment in and on the Internet. As discussed above, pay-for-
priority arrangements could raise barriers to entry on the Internet by 
requiring fees from edge providers, as well as transaction costs 
arising from the need to reach agreements with one or more broadband 
providers to access a critical mass of potential end users. Fees 
imposed on edge providers may be excessive because few edge providers 
have the ability to bargain for lesser fees, and because no broadband 
provider internalizes the full costs of reduced innovation and the exit 
of edge providers from the market. Third, pay-for-priority arrangements 
may particularly harm non-commercial end users, including individual 
bloggers, libraries, schools, advocacy organizations, and other 
speakers, especially those who communicate through video or other 
content sensitive

[[Page 59207]]

to network congestion. Even open Internet skeptics acknowledge that pay 
for priority may disadvantage non-commercial uses of the network, which 
are typically less able to pay for priority, and for which the Internet 
is a uniquely important platform. Fourth, broadband providers that 
sought to offer pay-for-priority services would have an incentive to 
limit the quality of service provided to non-prioritized traffic. In 
light of each of these concerns, as a general matter, it is unlikely 
that pay for priority would satisfy the ``no unreasonable 
discrimination'' standard. The practice of a broadband Internet access 
service provider prioritizing its own content, applications, or 
services, or those of its affiliates, would raise the same significant 
concerns and would be subject to the same standards and considerations 
in evaluating reasonableness as third-party pay-for-priority 
arrangements.\87\
---------------------------------------------------------------------------

    \86\ The Open Internet NPRM proposed a flat ban on 
discrimination and interpreted that requirement to prohibit 
broadband providers from ``charg[ing] a content, application, or 
service provider for enhanced or prioritized access to the 
subscribers of the broadband Internet access service provider.'' 
Open Internet NPRM, 24 FCC Rcd at 13104-05, paras. 104, 106. In the 
context of a ``no unreasonable discrimination'' rule that leaves 
interpretation to a case-by-case process, we instead adopt the 
approach to pay for priority described in this paragraph.
    \87\ We reject arguments that our approach to pay-for-priority 
arrangements is inconsistent with allowing content-delivery networks 
(CDNs). See, e.g., Cisco Comments at 11-12; TWC Comments at 21-22, 
65, 89-90; AT&T Reply at 49-53; Bright House Reply at 9. CDN 
services are designed to reduce the capacity requirements and costs 
of the CDN's edge provider clients by hosting the content for those 
clients closer to end users. Unlike broadband providers, third-party 
CDN providers do not control the last-mile connection to the end 
user. And CDNs that do not deploy within an edge provider's network 
may still reach an end user via the user's broadband connection. See 
CDT Comments at 25 n.84; George Ou Comments (Preserving the Open and 
Competitive Bandwidth Market) at 3; see also Cisco Comments at 11; 
FTTH Comments at 23-24. Moreover, CDNs typically provide a benefit 
to the sender and recipient of traffic without causing harm to 
third-party traffic. Though we note disagreement regarding the 
impact of CDNs on other traffic, the record does not demonstrate 
that the use of CDNs has any material adverse effect on broadband 
end users' experience of traffic that is not delivered via a CDN. 
Compare Letter from S. Derek Turner, Free Press, to Chairman 
Genachowski et al., FCC, GN Docket No. 09-191, WC Docket No. 07-52, 
at 1-2 (filed July 29, 2010) with Letter from Richard Bennett, ITIF, 
to Chairman Genachowski et al., FCC, GN Docket No. 09-191, WC Docket 
No. 07-52, Attach. at 12 (filed Aug. 9, 2010). Indeed, the same 
benefits derived from using CDNs can be achieved if an edge 
provider's own servers happen to be located in close proximity to 
end users. Everything on the Internet that is accessible to an end 
user is not, and cannot be, in equal proximity from that end user. 
See John Staurulakis Inc. Comments at 5; Bret T. Swanson Reply at 4. 
Finally, CDN providers unaffiliated with broadband providers 
generally do not compete with edge providers and thus generally lack 
economic incentives (or the ability) to discriminate against edge 
providers. See Akamai Comments at 12; NASUCA Reply at 7; NCTA Reply 
at 25. We likewise reject proposals to limit our rules to actions 
taken at or below the ``network layer.'' See, e.g., Google Comments 
at 24-26; Vonage Reply at 2; CDT Reply at 18; Prof. Scott Jordan 
(Jordan) Comments at 3; see also Scott Jordan, A Layered Network 
Approach to Net Neutrality, Int'l J. of Commc'n 427, 432-33 (2007) 
(describing the OSI layers model and the actions of routers at and 
below the network layer) attached to Letter from Scott Jordan, 
Professor, University of California-Irvine, to Office of the 
Secretary, FCC, GN Docket No. 09-191, WC Docket No. 07-52 (filed 
Mar. 22, 2010). We are not persuaded that the proposed limitation is 
necessary or appropriate in this context.
---------------------------------------------------------------------------

    Because we agree with the diverse group of commenters who argue 
that any nondiscrimination rule should prohibit only unreasonable 
discrimination, we decline to adopt the more rigid nondiscrimination 
rule proposed in the Open Internet NPRM. A strict nondiscrimination 
rule would be in tension with our recognition that some forms of 
discrimination, including end-user controlled discrimination, can be 
beneficial. The rule we adopt provides broadband providers' sufficient 
flexibility to develop service offerings and pricing plans, and to 
effectively and reasonably manage their networks. We disagree with 
commenters who argue that a standard based on ``reasonableness'' or 
``unreasonableness'' is too vague to give broadband providers fair 
notice of what is expected of them. This is not so. ``Reasonableness'' 
is a well-established standard for regulatee conduct.\88\ As other 
commenters have pointed out, the term ``reasonable'' is ``both 
administrable and indispensable to the sound administration of the 
nation's telecommunications laws.''\89\
---------------------------------------------------------------------------

    \88\ As recently as 1995, Congress adopted the venerable 
``reasonableness'' standard when it recodified provisions of the 
Interstate Commerce Act. ICC Termination Act of 1995, Public Law 
104-88, sec. 106(a) (now codified at 49 U.S.C. 15501).
    \89\ AT&T Reply at 33-34 (``And no one has seriously suggested 
that Section 202 should itself be amended to remove the 
`unreasonable' qualifier on the ground that the qualifier is too 
`murky' or `complex.' Seventy-five years of experience have shown 
that qualifier to be both administrable and indispensable to the 
sound administration of the nation's telecommunications laws.''); 
see also Comcast Reply at 26 (``[T]he Commission should embrace the 
strong guidance against an overbroad rule and, instead, develop a 
standard based on `unreasonable and anticompetitive discrimination.' 
''); Sprint Reply at 23 (``The unreasonable discrimination standard 
contained in Section 202(a) of the Act contains the very flexibility 
the Commission needs to distinguish desirable from improper 
discrimination.''); Thomas v. Chicago Park District, 534 U.S. 316, 
324 (2002) (holding that denial of a permit ``when the intended use 
would present an unreasonable danger to the health and safety of 
park users or Park District employees'' is a standard that is 
``reasonably specific and objective, and do[es] not leave the 
decision `to the whim of the administrator' '') (citation omitted); 
Cameron v. Johnson, 390 U.S. 611, 615-16 (1968) (stating that 
``unreasonably'' ``is a widely used and well understood word, and 
clearly so when juxtaposed with `obstruct' and `interfere' '').
---------------------------------------------------------------------------

    We also reject the argument that only ``anticompetitive'' 
discrimination yielding ``substantial consumer harm'' should be 
prohibited by our rules. We are persuaded those proposed limiting terms 
are unduly narrow and could allow discriminatory conduct that is 
contrary to the public interest. The broad purposes of this rule--to 
encourage competition and remove impediments to infrastructure 
investment while protecting consumer choice, free expression, end-user 
control, and the ability to innovate without permission--cannot be 
achieved by preventing only those practices that are demonstrably 
anticompetitive or harmful to consumers. Rather, the rule rests on the 
general proposition that broadband providers should not pick winners 
and losers on the Internet--even for reasons that may be independent of 
providers' competitive interests or that may not immediately or 
demonstrably cause substantial consumer harm.\90\
---------------------------------------------------------------------------

    \90\ For example, slowing BitTorrent packets might only affect a 
few end users, but it would harm BitTorrent. More significantly, it 
would raise concerns among other end users and edge providers that 
their traffic could be slowed for any reason--or no reason at all--
which could in turn reduce incentives to innovate and invest, and 
change the fundamental nature of the Internet as an open platform.
---------------------------------------------------------------------------

    We disagree with commenters who argue that a rule against 
unreasonable discrimination violates Section 3(51) of the 
Communications Act for those broadband providers that are 
telecommunications carriers but do not provide their broadband Internet 
access service as a telecommunications service.\91\ Section 3(51) 
provides that a ``telecommunications carrier shall be treated as a 
common carrier under this Act only to the extent that it is engaged in 
providing telecommunications services.'' \92\ This limitation is not 
relevant to the Commission's actions here.\93\ The hallmark of common

[[Page 59208]]

carriage is an ``undertak[ing] to carry for all people indifferently.'' 
\94\ An entity ``will not be a common carrier where its practice is to 
make individualized decisions, in particular cases, whether and on what 
terms to deal'' with potential customers.\95\ The customers at issue 
here are the end users who subscribe to broadband Internet access 
services.\96\ With respect to those customers, a broadband provider may 
make individualized decisions. A broadband provider that chooses not to 
offer its broadband Internet access service on a common carriage basis 
can, for instance, decide on a case-by-case basis whether to serve a 
particular end user, what connection speed(s) to offer, and at what 
price. The open Internet rules become effective only after such a 
provider has voluntarily entered into a mutually satisfactory 
arrangement with the end user, which may be tailored to that user. Even 
then, as discussed above, the allowance for reasonable disparities 
permits customized service features such as those that enhance end user 
control over what Internet content is received. This flexibility to 
customize service arrangements for a particular customer is the 
hallmark of private carriage, which is the antithesis of common 
carriage.\97\
---------------------------------------------------------------------------

    \91\ See, e.g., AT&T Comments at 209-11; Verizon Comments at 93-
95; CTIA PN Reply at 20-21. We do not read the Supreme Court's 
decision in FCC v. Midwest Video Corp. as addressing rules like the 
rules we adopt in this Order. 440 U.S. 689 (1979). There, the Court 
held that obligations on cable providers to ``hold out dedicated 
channels on a first-come, nondiscriminatory basis * * * relegated 
cable systems, pro tanto, to common-carrier status.'' Id. at 700-01. 
None of the rules adopted in this Order requires a broadband 
provider to ``hold out'' any capacity for the exclusive use of third 
parties or make a public offering of its service.
    \92\ 47 U.S.C. 153(51). Section 332(c)(2) contains a restriction 
similar to that of sec. 3(51): ``A person engaged in the provision 
of a service that is a private mobile service shall not, insofar as 
such person is so engaged, be treated as a common carrier for any 
purpose under this Act.'' Id. sec. 332(c)(2). Because we are not 
imposing any common carrier obligations on any broadband provider, 
including providers of ``private mobile service'' as defined in 
Section 332(d)(3), our requirements do not violate the limitation in 
Section 332(c)(2).
    \93\ Courts have acknowledged that the Commission is entitled to 
deference in interpreting the definition of ``common carrier.'' See 
AT&T v. FCC, 572 F.2d 17, 24 (2d Cir. 1978) (citing Red Lion Broad. 
Co. v. FCC, 395 U.S. 367, 381 (1969)). In adopting the rule against 
unreasonable discrimination, we rely, in part, on our authority 
under section 706, which is not part of the Communications Act. 
Congress enacted section 706 as part of the Telecommunications Act 
of 1996 and more recently codified the provision in Chapter 12 of 
Title 47, at 47 U.S.C. 1302. The seven titles that comprise the 
Communications Act appear in Chapter 5 of Title 47. Consequently, 
even if the rule against unreasonable discrimination were 
interpreted to require common carriage in a particular case, that 
result would not run afoul of Section 3(51) because a network 
operator would be treated as a common carrier pursuant to Section 
706, not ``under'' the Communications Act.
    \94\ Nat'l Ass'n of Reg. Util. Comm'rs v. FCC, 525 F.2d 630, 641 
(DC Cir. 1976) (NARUC I) (quoting Semon v. Royal Indemnity Co., 279 
F.2d 737, 739 (5th Cir. 1960) and other cases); see also Verizon 
Comments at 93 (`` `[T]he primary sine qua non of common carrier 
status is a quasi-public character, which arises out of the 
undertaking `to carry for all people indifferently * * *.' '' 
(quoting Nat'l Ass'n of Reg. Util. Comm'rs v. FCC, 533 F.2d 601, 608 
(DC Cir. 1976) (NARUC II)). But see CTIA Reply at 57 (suggesting 
that nondiscrimination is the sine qua non of common carrier 
regulation referred to in NARUC II).
    \95\ NARUC I, 525 F.2d at 641 (citing Semon, 279 F.2d at 739-
40). Commenters assert that any obligation that is similar to an 
obligation that appears in Title II of the Act is a ``common 
carrier'' obligation. See, e.g., AT&T Comments at 210-11. We 
disagree. Just because an obligation appears within Title II does 
not mean that the imposition of that obligation or a similar one 
results in ``treating'' an entity as a common carrier. For the 
meaning of common carriage treatment, which is not defined in the 
Act, we look to caselaw as discussed in the text.
    \96\ Even if edge providers were considered ``customers'' of the 
broadband provider, the broadband provider would not be a common 
carrier with regard to the role it plays in transmitting edge 
providers' traffic. Our rules permit broadband providers to engage 
in reasonable network management and, under certain circumstances, 
block traffic and devices, engage in reasonable discrimination, and 
prioritize traffic at subscribers' request. Blocking or 
deprioritizing certain traffic is far from ``undertak[ing] to carry 
for all [edge providers] indifferently.'' See NARUC I, 525 F.2d at 
641.
    \97\ See Sw. Bell Tel. Co. v. FCC, 19 F.3d 1475, 1481 (DC Cir. 
1994) (``If the carrier chooses its clients on an individual basis 
and determines in each particular case whether and on what terms to 
serve and there is no specific regulatory compulsion to serve all 
indifferently, the entity is a private carrier for that particular 
service and the Commission is not at liberty to subject the entity 
to regulation as a common carrier.'') (internal quotation marks 
omitted). Although promoting competition throughout the Internet 
ecosystem is a central purpose of these rules, we decline to adopt 
as a rule the Internet Policy Statement principle regarding 
consumers' entitlement to competition. We agree with those 
commenters that argue that the principle is too vague to be reduced 
to a rule and that the proposed rule as stated failed to provide any 
meaningful guidance regarding what conduct is and is not 
permissible. See, e.g., Verizon Comments at 4, 53; TPPF Comments at 
7. A rule barring broadband providers from depriving end users of 
their entitlement to competition does not appear to be a viable 
method of promoting competition. We also do not wish to duplicate 
competitive analyses carried out by the Department of Justice, the 
FTC, or the Commission's merger review process.
---------------------------------------------------------------------------

D. Reasonable Network Management

    Since at least 2005, when the Commission adopted the Internet 
Policy Statement, we have recognized that a flourishing and open 
Internet requires robust, well-functioning broadband networks, and 
accordingly that open Internet protections require broadband providers 
to be able to reasonably manage their networks. The open Internet rules 
we adopt in this Order expressly provide for and define ``reasonable 
network management'' in order to provide greater clarity to broadband 
providers, network equipment providers, and Internet end users and edge 
providers regarding the types of network management practices that are 
consistent with open Internet protections.
    In the Open Internet NPRM, the Commission proposed that open 
Internet rules be subject to reasonable network management, consisting 
of ``reasonable practices employed by a provider of broadband Internet 
access service to: (1) Reduce or mitigate the effects of congestion on 
its network or to address quality-of-service concerns; (2) address 
traffic that is unwanted by users or harmful; (3) prevent the transfer 
of unlawful content; or (4) prevent the unlawful transfer of content.'' 
The proposed definition also stated that reasonable network management 
consists of ``other reasonable network management practices.''
    Upon reviewing the record, we conclude that the definition of 
reasonable network management should provide greater clarity regarding 
the standard used to gauge reasonableness, expressly account for 
technological differences among networks that may affect reasonable 
network management, and omit elements that do not relate directly to 
network management functions and are therefore better handled elsewhere 
in the rules--for example, measures to prevent the transfer of unlawful 
content. We therefore adopt the following definition of reasonable 
network management:

    A network management practice is reasonable if it is appropriate 
and tailored to achieving a legitimate network management purpose, 
taking into account the particular network architecture and 
technology of the broadband Internet access service.

Legitimate network management purposes include: ensuring network 
security and integrity, including by addressing traffic that is harmful 
to the network; addressing traffic that is unwanted by end users 
(including by premise operators), such as by providing services or 
capabilities consistent with an end user's choices regarding parental 
controls or security capabilities; and reducing or mitigating the 
effects of congestion on the network. The term ``particular network 
architecture and technology'' refers to the differences across access 
platforms such as cable, DSL, satellite, and fixed wireless.
    As proposed in the Open Internet NPRM, we will further develop the 
scope of reasonable network management on a case-by-case basis, as 
complaints about broadband providers' actual practices arise. The 
novelty of Internet access and traffic management questions, the 
complex 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.
    In taking this approach, we recognize the need to balance clarity 
with flexibility.\98\ We discuss below certain

[[Page 59209]]

principles and considerations that will inform the Commission's case-
by-case analysis. Further, although broadband providers are not 
required to seek permission from the Commission before deploying a 
network management practice, they or others are free to do so, for 
example by seeking a declaratory ruling.\99\
---------------------------------------------------------------------------

    \98\ Some parties contend that there will be uncertainty 
associated with open Internet rules, subject to reasonable network 
management, which will limit provider flexibility, stifle 
innovation, and slow providers' response time in managing their 
networks. See, e.g., ADTRAN Comments at 11-13; Barbara Esbin (Esbin) 
Comments at 7. For example, some parties express concern that that 
the definition proposed in the Open Internet NPRM provided 
insufficient guidance regarding what standard will be used to 
determine whether a given practice is ``reasonable.'' See, e.g., 
ADTRAN Comments at 13; AT&T Comments at 13; CDT Comments at 38; PIC 
Comments at 35-36, 39; Texas PUC Comments at 6-7; Verizon Reply at 
8, 75, 78. Others contend that although clarity is needed, the 
Commission should not list categories of activities considered 
reasonable. See, e.g., Free Press Comments at 82, 85-86. We seek to 
balance these interests through general rules designed to give 
providers sufficient flexibility to implement necessary network 
management practices, coupled with guidance regarding certain 
principles and considerations that will inform the Commission's 
case-by-case analysis.
    \99\ See 47 CFR 1.2 (providing for ``a declaratory ruling 
terminating a controversy or removing uncertainty'').
---------------------------------------------------------------------------

    We reject proposals to define reasonable network management 
practices more expansively or more narrowly than stated above. We agree 
with commenters that the Commission should not adopt the ``narrowly or 
carefully tailored'' standard discussed in the Comcast Network 
Management Practices Order.\100\ We find that this standard is 
unnecessarily restrictive and may overly constrain network engineering 
decisions. Moreover, the ``narrowly tailored'' language could be read 
to import strict scrutiny doctrine from constitutional law, which we 
are not persuaded would be helpful here. Broadband providers may employ 
network management practices that are appropriate and tailored to the 
network management purpose they seek to achieve, but they need not 
necessarily employ the most narrowly tailored practice theoretically 
available to them.
---------------------------------------------------------------------------

    \100\ See Comcast Network Management Practices Order, 23 FCC Rcd 
at 13055-56, para. 47 (stating that, to be considered ``reasonable'' 
a network management practice ``should further a critically 
important interest and be narrowly or carefully tailored to serve 
that interest''); see also AT&T Comments at 186-87 (arguing that the 
Comcast standard is too narrow); Level 3 Comments at 14; PAETEC 
Comments at 17-18. But see Free Press Comments at 91-92 (stating 
that the Commission should not retreat from the fundamental 
framework of the Comcast standard). A ``reasonableness'' standard 
also has the advantage of being administrable and familiar.
---------------------------------------------------------------------------

    We also acknowledge that reasonable network management practices 
may differ across platforms. For example, practices needed to manage 
congestion on a fixed satellite network may be inappropriate for a 
fiber-to-the-home network. We also recognize the unique network 
management challenges facing broadband providers that use unlicensed 
spectrum to deliver service to end users. Unlicensed spectrum is shared 
among multiple users and technologies and no single user can control or 
assure access to the spectrum. We believe the concept of reasonable 
network management is sufficiently flexible to afford such providers 
the latitude they need to effectively manage their networks.\101\
---------------------------------------------------------------------------

    \101\ See Appendix A, sec. 8.11. We recognize that the standards 
for fourth-generation (4G) wireless networks include the capability 
to prioritize particular types of traffic, and that other broadband 
Internet access services may incorporate similar features. Whether 
particular uses of these technologies constitute reasonable network 
management will depend on whether they are appropriate and tailored 
to achieving a legitimate network management purpose.
---------------------------------------------------------------------------

    The principles guiding case-by-case evaluations of network 
management practices are much the same as those that guide assessments 
of ``no unreasonable discrimination,'' and include transparency, end-
user control, and use- (or application-) agnostic treatment. We also 
offer guidance in the specific context of the legitimate network 
management purposes listed above.
    Network Security or Integrity and Traffic Unwanted by End Users. 
Broadband providers may implement reasonable practices to ensure 
network security and integrity, including by addressing traffic that is 
harmful to the network.\102\ Many commenters strongly support allowing 
broadband providers to implement such network management practices. 
Some commenters, however, express concern that providers might 
implement anticompetitive or otherwise problematic practices in the 
name of protecting network security. We make clear that, for the 
singling out of any specific application for blocking or degradation 
based on harm to the network to be a reasonable network management 
practice, a broadband provider should be prepared to provide a 
substantive explanation for concluding that the particular traffic is 
harmful to the network, such as traffic that constitutes a denial-of-
service attack on specific network infrastructure elements or exploits 
a particular security vulnerability.
---------------------------------------------------------------------------

    \102\ In the context of broadband Internet access service, 
techniques to ensure network security and integrity are designed to 
protect the access network and the Internet against actions by 
malicious or compromised end systems. Examples include spam, 
botnets, and distributed denial of service attacks. Unwanted traffic 
includes worms, malware, and viruses that exploit end-user system 
vulnerabilities; denial of service attacks; and spam. See IETF, 
Report from the IAB workshop on Unwanted Traffic March 9-10, 2006, 
RFC 4948, at 31 (Aug. 2007), available at http://www.rfc-editor.org/rfc/rfc4948.txt.
---------------------------------------------------------------------------

    Broadband providers also may implement reasonable practices to 
address traffic that a particular end user chooses not to receive. 
Thus, for example, a broadband provider could provide services or 
capabilities consistent with an end user's choices regarding parental 
controls, or allow end users to choose a service that provides access 
to the Internet but not to pornographic Web sites. Likewise, a 
broadband provider serving a premise operator could restrict traffic 
unwanted by that entity, though such restrictions should be disclosed. 
Our rule will not impose liability on a broadband provider where such 
liability is prohibited by Section 230(c)(2) of the Act.\103\
---------------------------------------------------------------------------

    \103\ See 47 U.S.C. 230(c)(2) (no provider of an interactive 
computer service shall be held liable on account of ``(A) any action 
voluntarily taken in good faith to restrict access to or 
availability of material that the provider or user considers to be 
obscene, lewd, lascivious, filthy, excessively violent, harassing, 
or otherwise objectionable, whether or not such material is 
constitutionally protected; or (B) any action taken to enable or 
make available to information content providers or others the 
technical means to restrict access to material described in 
[subparagraph (A)]'').
---------------------------------------------------------------------------

    We note that, in some cases, mechanisms that reduce or eliminate 
some forms of harmful or unwanted traffic may also interfere with 
legitimate network traffic. Such mechanisms must be appropriate and 
tailored to the threat; should be evaluated periodically as to their 
continued necessity; and should allow end users to opt-in or opt-out if 
possible.\104\ Disclosures of network management practices used to 
address network security or traffic a particular end user does not want 
to receive should clearly state the objective of the mechanism and, if 
applicable, how an end user can opt in or out of the practice.
---------------------------------------------------------------------------

    \104\ For example, a network provider might be able to assess a 
network endpoint's posture--see IETF, Network Endpoint Assessment 
(NEA): Overview and Requirements, RFC 5209 (Jun. 2008); Internet 
Engineering Task Force, PA-TNC: A Posture Attribute (PA) Protocol 
Compatible with Trusted Network Connect (TNC), RFC 5792 (Mar. 
2010)--and tailor port blocking accordingly. With the posture 
assessment, an end user might then opt out of the network management 
mechanism by upgrading the operating system or installing a suitable 
firewall.
---------------------------------------------------------------------------

    Network Congestion. Numerous commenters support permitting the use 
of reasonable network management practices to address the effects of 
congestion, and we agree that congestion management may be a legitimate 
network management purpose. For example, broadband providers may need 
to take reasonable steps to ensure that heavy users do not crowd out 
others. 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 
modem subscribers in a particular neighborhood are experiencing 
congestion, it may be reasonable for a broadband provider to 
temporarily limit

[[Page 59210]]

the bandwidth available to individual end users in that neighborhood 
who are using a substantially disproportionate amount of bandwidth.
    We emphasize that reasonable network management practices are not 
limited to the categories described here, and that broadband providers 
may take other reasonable steps to maintain the proper functioning of 
their networks, consistent with the definition of reasonable network 
management we adopt. As we stated in the Open Internet NPRM, ``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.'' Broadband providers should have 
flexibility to experiment, innovate, and reasonably manage their 
networks.

E. Mobile Broadband

    There is one Internet, which should remain open for consumers and 
innovators alike, although it may be accessed through different 
technologies and services. The record demonstrates the importance of 
freedom and openness for mobile broadband networks, and the rationales 
for adopting high-level open Internet rules, discussed above, are for 
the most part as applicable to mobile broadband as they are to fixed 
broadband. Consumer choice, freedom of expression, end-user control, 
competition, and the freedom to innovate without permission are as 
important when end users are accessing the Internet via mobile 
broadband as via fixed. And there have been instances of mobile 
providers blocking certain third-party applications, particularly 
applications that compete with the provider's own offerings; relatedly, 
concerns have been raised about inadequate transparency regarding 
network management practices. We also note that some mobile broadband 
providers affirmatively state they do not oppose the application of 
openness rules to mobile broadband.
    However, as explained in the Open Internet NPRM and subsequent 
Public Notice, mobile broadband presents special considerations that 
suggest differences in how and when open Internet protections should 
apply. Mobile broadband is an earlier-stage platform than fixed 
broadband, and it is rapidly evolving. For most of the history of the 
Internet, access has been predominantly through fixed platforms--first 
dial-up, then cable modem and DSL services. As of a few years ago, most 
consumers used their mobile phones primarily to make phone calls and 
send text messages, and most mobile providers offered Internet access 
only via ``walled gardens'' or stripped down Web sites. Today, however, 
mobile broadband is an important Internet access platform that is 
helping drive broadband adoption, and data usage is growing rapidly. 
The mobile ecosystem is experiencing very rapid innovation and change, 
including an expanding array of smartphones, aircard modems, and other 
devices that enable Internet access; the emergence and rapid growth of 
dedicated-purpose mobile devices like e-readers; the development of 
mobile application (``app'') stores and hundreds of thousands of mobile 
apps; and the evolution of new business models for mobile broadband 
providers, including usage-based pricing.
    Moreover, most consumers have more choices for mobile broadband 
than for fixed (particularly fixed wireline) broadband.\105\ Mobile 
broadband speeds, capacity, and penetration are typically much lower 
than for fixed broadband, though some providers have begun offering 4G 
service that will enable offerings with higher speeds and capacity and 
lower latency than previous generations of mobile service.\106\ In 
addition, existing mobile networks present operational constraints that 
fixed broadband networks do not typically encounter. This puts greater 
pressure on the concept of ``reasonable network management'' for mobile 
providers, and creates additional challenges in applying a broader set 
of rules to mobile at this time. Further, we recognize that there have 
been meaningful recent moves toward openness in and on mobile broadband 
networks, including the introduction of third-party devices and 
applications on a number of mobile broadband networks, and more open 
mobile devices. In addition, we anticipate soon seeing the effects on 
the market of the openness conditions we imposed on mobile providers 
that operate on upper 700 MHz C Block (``C Block'') spectrum,\107\ 
which includes Verizon Wireless, one of the largest mobile wireless 
carriers in the U.S.
---------------------------------------------------------------------------

    \105\ Compare National Broadband Plan at 37 (Exh. 4-A) with 39-
40 (Exh. 4-E). However, in many areas of the country, particularly 
in rural areas, there are fewer options for mobile broadband. See 
Fourteenth Wireless Competition Report at para. 355, tbl. 39 & chart 
48. This may result in some consumers having fewer options for 
mobile broadband than for fixed.
    \106\ Some fixed broadband providers contend that current mobile 
broadband offerings directly compete with their offerings. See 
Letter from Michael D. Saperstein, Jr., Director of Regulatory 
Affairs, Frontier Communications, to Marlene Dortch, Secretary, FCC, 
GN Docket No. 09-191 (filed Dec. 15, 2010) (discussing entry of 
wireless service into the broadband market and its effect on 
wireline broadband subscribership) and Attach. at 1 (citing reports 
that LTE is ``a very practical and encouraging substitution for DSL, 
particularly when you look at rural markets''); Letter from Malena 
F. Barzilai, Federal Government Affairs, Windstream Communications, 
Inc., to Marlene Dortch, Secretary, FCC, GN Docket No. 09-191 (filed 
Dec. 15, 2010). As part of our ongoing monitoring, we will track 
such competition and any impact these rules may have on it.
    \107\ The first network using spectrum subject to these rules 
has recently started offering service. See Press Release, Verizon 
Wireless, Blazingly Fast: Verizon Wireless Launches The World's 
Largest 4G LTE Wireless Network On Sunday, Dec. 5 (Dec. 5, 2010), 
available at news.vzw.com/news/2010/12/pr2010-12-03.html. 
Specifically, licensees subject to the rule must provide an open 
platform for third-party applications and devices. See 700 MHz 
Second Report and Order, 22 FCC Rcd 15289; 47 CFR 27.16. The rules 
we adopt in this Order are independent of those open platform 
requirements. We expect our observations of how the 700 MHz open 
platform rules affect the mobile broadband sector to inform our 
ongoing analysis of the application of openness rules to mobile 
broadband generally. 700 MHz Second Report and Order, 22 FCC Rcd at 
15364-65, 15374, paras. 205, 229. A number of commenters support the 
Commission's waiting to determine whether to apply openness rules to 
mobile wireless until the effects of the C Block openness 
requirement can be observed. See, e.g., AT&T PN Reply, at 32-37; 
Cricket PN Reply at 11. We also note that some providers tout 
openness as a competitive advantage. See, e.g., Clearwire Comments 
at 7; Verizon Reply at 47-52.
---------------------------------------------------------------------------

    In light of these considerations, we conclude it is appropriate to 
take measured steps at this time to protect the openness of the 
Internet when accessed through mobile broadband. We apply certain of 
the open Internet rules, requiring compliance with the transparency 
rule and a basic no-blocking rule.\108\
---------------------------------------------------------------------------

    \108\ We note that section 332(a) requires us, ``[i]n taking 
actions to manage the spectrum to be made available for use by the 
private mobile service,'' to consider various factors, including 
whether our actions will ``improve the efficiency of spectrum use 
and reduce the regulatory burden,'' and ``encourage competition.'' 
47 U.S.C. 332(a)(2), (3). To the extent section 332(a) applies to 
our actions in this Order, we note that we have considered these 
factors.
---------------------------------------------------------------------------

1. Application of Openness Principles to Mobile Broadband
a. Transparency
    The wide array of commenters who support a disclosure requirement 
generally agree that all broadband providers, including mobile 
broadband providers, should be required to disclose their network 
management practices. Although some mobile broadband providers argue 
that the dynamic nature of mobile network management makes meaningful 
disclosure difficult, we conclude that end users need a clear 
understanding of network management practices, performance, and 
commercial terms, regardless of the broadband platform they use to 
access the Internet. Although a number of mobile broadband

[[Page 59211]]

providers have adopted voluntary codes of conduct regarding disclosure, 
we believe that a uniform rule applicable to all mobile broadband 
providers will best preserve Internet openness by ensuring that end 
users have sufficient information to make informed choices regarding 
use of the network; and that content, application, service, and device 
providers have the information needed to develop, market, and maintain 
Internet offerings. The transparency rule will also aid the Commission 
in monitoring the evolution of mobile broadband and adjusting, as 
appropriate, the framework adopted in this Order.
    Therefore, as stated above, we require mobile broadband providers 
to follow the same transparency rule applicable to fixed broadband 
providers. Further, although we do not require mobile broadband 
providers to allow third-party devices or all third-party applications 
on their networks, we nonetheless require mobile broadband providers to 
disclose their third-party device and application certification 
procedures, if any; to clearly explain their criteria for any 
restrictions on use of their network; and to expeditiously inform 
device and application providers of any decisions to deny access to the 
network or of a failure to approve their particular devices or 
applications. With respect to the types of disclosures required to 
satisfy the rule, we direct mobile broadband providers to the 
discussion in Part III.B, above. Additionally, mobile broadband 
providers should follow the guidance the Commission provided to 
licensees of the upper 700 MHz C Block spectrum regarding compliance 
with their disclosure obligations, particularly regarding disclosure to 
third-party application developers and device manufacturers of criteria 
and approval procedures (to the extent applicable).\109\ For example, 
these disclosures include, to the extent applicable, establishing a 
transparent and efficient approval process for third parties, as set 
forth in Section 27.16(d).\110\
---------------------------------------------------------------------------

    \109\ 700 MHz Second Report and Order, 22 FCC Rcd at 15371-72, 
para. 224 (``[A] C Block licensee must publish [for example, by 
posting on the provider's Web site] standards no later than the time 
at which it makes such standards available to any preferred vendors 
(i.e., vendors with whom the provider has a relationship to design 
products for the provider's network). We also require the C Block 
licensee to provide to potential customers notice of the customers' 
rights to request the attachment of a device or application to the 
licensee's network, and notice of the licensee's process for 
customers to make such requests, including the relevant network 
criteria.'').
    \110\ See 47 CFR 27.16(d) (``Access requests. (1) Licensees 
shall establish and publish clear and reasonable procedures for 
parties to seek approval to use devices or applications on the 
licensees' networks. A licensee must also provide to potential 
customers notice of the customers' rights to request the attachment 
of a device or application to the licensee's network, and notice of 
the licensee's process for customers to make such requests, 
including the relevant network criteria. (2) If a licensee 
determines that a request for access would violate its technical 
standards or regulatory requirements, the licensee shall 
expeditiously provide a written response to the requester specifying 
the basis for denying access and providing an opportunity for the 
requester to modify its request to satisfy the licensee's 
concerns.'').
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b. No Blocking
    We adopt a no blocking rule that guarantees end users' access to 
the Web and protects against mobile broadband providers' blocking 
applications that compete with their other primary service offering--
voice and video telephony--while ensuring that mobile broadband 
providers can engage in reasonable network management:

    A person engaged in the provision of mobile broadband Internet 
access service, insofar as such person is so engaged, shall not 
block consumers from accessing lawful Web sites, subject to 
reasonable network management; nor shall such person block 
applications that compete with the provider's voice or video 
telephony services, subject to reasonable network management.

We understand a ``provider's voice or video telephony services'' to 
include a voice or video telephony service provided by any entity in 
which the provider has an attributable interest.\111\ We emphasize that 
the rule protects any and all applications that compete with a mobile 
broadband provider's voice or video telephony services. Further, 
degrading a particular Web site or an application that competes with 
the provider's voice or video telephony services so as to render the 
Web site or application effectively unusable would be considered 
tantamount to blocking (subject to reasonable network management).
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    \111\ For the purposes of these rules, an attributable interest 
includes equity ownership interest in or de facto control of, or by, 
the entity that provides the voice or video telephony service. An 
attributable interest also includes any exclusive arrangement for 
such voice or video telephony service, including de facto exclusive 
arrangements.
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    End users expect to be able to access any lawful Web site through 
their broadband service, whether fixed or mobile. Web browsing 
continues to generate the largest amount of mobile data traffic, and 
applications and services are increasingly being provisioned and used 
entirely through the Web, without requiring a standalone application to 
be downloaded to a device. Given that the mobile Web is well-developed 
relative to other mobile applications and services, and enjoys similar 
expectations of openness that characterize Web use through fixed 
broadband, we find it appropriate to act here. We also recognize that 
accessing a Web site typically does not present the same network 
management issues that downloading and running an app on a device may 
present. At this time, a prohibition on blocking access to lawful Web 
sites (including any related traffic transmitted or received by any 
plug-in, scripting language, or other browser extension) appropriately 
balances protection for the ability of end users to access content, 
applications, and services through the Web and assurance that mobile 
broadband providers can effectively manage their mobile broadband 
networks.
    Situations have arisen in which mobile wireless providers have 
blocked third-party applications that arguably compete with their 
telephony offerings.\112\ This type of blocking confirms that mobile 
broadband providers may have strong incentives to limit Internet 
openness when confronted with third-party applications that compete 
with their telephony services. Some commenters express concern that 
wireless providers could favor their own applications over the 
applications of unaffiliated developers, under the guise of reasonable 
network management. A number of commenters assert that blocking or 
hindering the delivery of services that compete with those offered by 
the mobile broadband provider, such as over-the-top VoIP, should be 
prohibited. According to Skype, for example, there is ``a consensus 
that at a minimum, a `no blocking' rule should apply to voice and video 
applications that compete with broadband network operators' own service 
offerings.'' Clearwire argues that the Commission should restrict only 
practices that appear to have an element of anticompetitive intent. 
Although some commenters support a broader no-blocking rule, we believe 
that a targeted prophylactic rule is appropriate at this

[[Page 59212]]

time,\113\ and necessary to deter this type of behavior in the future.
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    \112\  See, e.g., Letter from James W. Cicconi, AT&T Services, 
Inc., to Ruth Milkman, Chief, Wireless Telecommunications Bureau, 
FCC, RM-11361, RM-11497 at 6-8 (filed Aug. 21, 2009); DISH PN Reply 
at 7 (``VoIP operators such as Skype have faced significant 
difficulty in gaining access across wireless Internet 
connections.''). Mobile providers blocking VoIP services is an issue 
not only in the United States, but worldwide. In Europe, the Body of 
European Regulators for Electronic Communications reported, among 
other issues, a number of cases of blocking or charging extra for 
VoIP services by certain European mobile operators. See European 
Commission, Information Society and Media Directorate-General Report 
on the Public Consultation on ``The Open Internet and Net Neutrality 
in Europe'' 2, (Nov. 9, 2010), ec.europa.eu/information--society/
policy/ecomm/library/public--consult/net--neutrality/index--en.htm.
    \113\ See Letter from Jonathan Spalter, Chairman, Mobile Future, 
to Marlene H. Dortch, Secretary, FCC, GN Docket Nos. 09-191 & 10-
127, at 3 n.16 (filed Dec. 13, 2010) (supporting tailored 
prohibition on blocking applications), citing AT&T Comments at 65; 
T-Mobile Comments, Declaration of Grant Castle at 4. The no blocking 
rule that we adopt for mobile broadband involves distinct treatment 
of applications that compete with the provider's voice and video 
telephony services, whereas we have adopted a broader traffic-based 
approach for fixed broadband. We acknowledge that this rule for 
mobile broadband may lead in some limited measure to the traffic-
identification difficulties discussed with respect to fixed 
broadband. We find, however, that the reasons for taking our 
cautious approach to mobile broadband outweigh this concern, 
particularly in light of our intent to monitor developments 
involving mobile broadband, including this and other aspects of the 
practical implementation of our rules.
---------------------------------------------------------------------------

    The prohibition on blocking applications that compete with a 
broadband provider's voice or video telephony services does not apply 
to a broadband provider's operation of application stores or their 
functional equivalent. In operating app stores, broadband providers 
compete directly with other types of entities, including device 
manufacturers and operating system developers,\114\ and we do not 
intend to limit mobile broadband providers' flexibility to curate their 
app stores similar to app store operators that are not subject to these 
rules.
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    \114\ For example, app stores are operated by manufacturers and 
operating system developers such as Nokia, Apple, RIM, Google, 
Microsoft, and third parties such as GetJar. See also AT&T PN 
Comments at 63-66 (emphasizing the competitiveness of the market for 
mobile apps, including the variety of sources from which consumers 
may obtain applications); T-Mobile PN Comments at 21 (``The 
competitive wireless marketplace will continue to discipline app 
store owners * * * that exclude third-party apps from their app 
stores entirely, eliminating the need for Commission action.''). We 
note, however, that for a few devices, such as Apple's iPhone, there 
may be fewer options for accessing and distributing apps.
---------------------------------------------------------------------------

    As indicated in Part III.D above, the reasonable network management 
definition takes into account the particular network architecture and 
technology of the broadband Internet access service. Thus, in 
determining whether a network management practice is reasonable, the 
Commission will consider technical, operational, and other differences 
between wireless and other broadband Internet access platforms, 
including differences relating to efficient use of spectrum. We 
anticipate that conditions in mobile broadband networks may necessitate 
network management practices that would not be necessary in most fixed 
networks, but conclude that our definition of reasonable network 
management is flexible enough to accommodate such differences.
2. Ongoing Monitoring
    Although some commenters support applying the no unreasonable 
discrimination rule to mobile broadband,\115\ for the reasons discussed 
above, we decline to do so, preferring at this time to put in place 
basic openness protections and monitor the development of the mobile 
broadband marketplace. We emphasize that our decision to proceed 
incrementally with respect to mobile broadband at this time should not 
suggest that we implicitly approve of any provider behavior that runs 
counter to general open Internet principles. Beyond those practices 
expressly prohibited by our rules, other conduct by mobile broadband 
providers, particularly conduct that would violate our rules for fixed 
broadband, may not necessarily be consistent with Internet openness and 
the public interest.
---------------------------------------------------------------------------

    \115\ See, e.g, Free Press Comments at 125-26; OIC Comments at 
36-39. See also, e.g., Leap Comments at 17-22; Sprint Reply at 24-
26. A number of commenters suggest that openness rules should be 
applied identically to all broadband platforms. See, e.g., 
CenturyLink Comments at 22-23; Comcast Comments at 32; DISH Network 
PN Comments at 17; NCTA PN Comments at 11; Qwest PN Comments at 12-
19; SureWest PN Comments at 18-20; TWC PN Comments at 33-35; Vonage 
PN Comments at 10-18; Windstream PN Comments at 6-19.
---------------------------------------------------------------------------

    We are taking measured steps to protect openness for mobile 
broadband at this time in part because we want to better understand how 
the mobile broadband market is developing before determining whether 
adjustments to this framework are necessary. To that end, we will 
closely monitor developments in the mobile broadband market, with a 
particular focus on the following issues: (1) The effects of these 
rules, the C Block conditions, and market developments related to the 
openness of the Internet as accessed through mobile broadband; (2) any 
conduct by mobile broadband providers that harms innovation, 
investment, competition, end users, free expression or the achievement 
of national broadband goals; (3) the extent to which differences 
between fixed and mobile rules affect fixed and mobile broadband 
markets, including competition among fixed and mobile broadband 
providers; and (4) the extent to which differences between fixed and 
mobile rules affect end users for whom mobile broadband is their only 
or primary Internet access platform.\116\ We will investigate and 
evaluate concerns as they arise. We also will adjust our rules as 
appropriate. To aid the Commission in these tasks, we will create an 
Open Internet Advisory Committee, as discussed below, with a mandate 
that includes monitoring and regularly reporting on the state of 
Internet openness for mobile broadband.
---------------------------------------------------------------------------

    \116\ We note that mobile broadband is the only or primary 
broadband Internet access platform used by many Americans.
---------------------------------------------------------------------------

    Further, we reaffirm our commitment to enforcing the open platform 
requirements applicable to upper 700 MHz C Block licensees. The first 
networks using this spectrum are now becoming operational.

F. Other Laws and Considerations

    Open Internet rules are not intended to expand or contract 
broadband providers' rights or obligations with respect to other laws 
or safety and security considerations, including the needs of emergency 
communications and law enforcement, public safety, and national 
security authorities. Similarly, open Internet rules protect only 
lawful content, and are not intended to inhibit efforts by broadband 
providers to address unlawful transfers of content. For example, there 
should be no doubt that broadband providers can prioritize 
communications from emergency responders, or block transfers of child 
pornography. To make clear that open Internet protections can and must 
coexist with these other legal frameworks, we adopt the following 
clarifying provisions:

    Nothing in this part supersedes any obligation or authorization 
a provider of broadband Internet access service may have to address 
the needs of emergency communications or law enforcement, public 
safety, or national security authorities, consistent with or as 
permitted by applicable law, or limits the provider's ability to do 
so.
    Nothing in this part prohibits reasonable efforts by a provider 
of broadband Internet access service to address copyright 
infringement or other unlawful activity.
1. Emergency Communications and Safety and Security Authorities
    Commenters are broadly supportive of our proposal to state that 
open Internet rules do not supersede any obligation a broadband 
provider may have--or limit its ability--to address the needs of 
emergency communications or law enforcement, public safety, or homeland 
or national security authorities (together, ``safety and security 
authorities''). Broadband providers have obligations under statutes 
such as the Communications Assistance for Law Enforcement Act, the 
Foreign Intelligence Surveillance Act, and the Electronic 
Communications Privacy Act that could in some circumstances intersect 
with open Internet protections, and most commenters recognize the 
benefits of clarifying that these obligations are not inconsistent with 
open Internet rules. Likewise, in connection with an emergency, there

[[Page 59213]]

may be Federal, state, Tribal, and local public safety entities; 
homeland security personnel; and other authorities that need guaranteed 
or prioritized access to the Internet in order to coordinate disaster 
relief and other emergency response efforts, or for other emergency 
communications. In the Open Internet NPRM we proposed to address the 
needs of law enforcement in one rule and the needs of emergency 
communications and public safety, national, and homeland security 
authorities in a separate rule. We are persuaded by the record that 
these rules should be combined, as the interests at issue are 
substantially similar.\117\ We also agree that the rule should focus on 
the needs of ``law enforcement * * * authorities'' rather than the 
needs of ``law enforcement.'' The purpose of the safety and security 
provision is first to ensure that open Internet rules do not restrict 
broadband providers in addressing the needs of law enforcement 
authorities, and second to ensure that broadband providers do not use 
the safety and security provision without the imprimatur of a law 
enforcement authority, as a loophole to the rules. As such, application 
of the safety and security rule should be tied to invocation by 
relevant authorities rather than to a broadband provider's independent 
notion of law enforcement.
---------------------------------------------------------------------------

    \117\ See PIC Comments at 42-44. We intend the term ``national 
security authorities'' to include homeland security authorities.
---------------------------------------------------------------------------

    Some commenters urge us to limit the scope of the safety and 
security rule, or argue that it is unnecessary because other statutes 
give broadband providers the ability and responsibility to assist law 
enforcement. Several commenters urge the Commission to revise its 
proposal to clarify that broadband providers may not take any voluntary 
steps that would be inconsistent with open Internet principles, beyond 
those steps required by law. They argue, for example, that a broad 
exception for voluntary efforts could swallow open Internet rules by 
allowing broadband providers to cloak discriminatory practices under 
the guise of protecting safety and security.\118\
---------------------------------------------------------------------------

    \118\ See EFF Comments at 20-22. EFF would require a pre-
deployment waiver from the Commission if the needs of law 
enforcement would require broadband providers to act inconsistently 
with open Internet rules. Id. at 22.
---------------------------------------------------------------------------

    We agree with commenters that the safety and security rule should 
be tailored to avoid the possibility of broadband providers using their 
discretion to mask improper practices. But it would be a mistake to 
limit the rule to situations in which broadband providers have an 
obligation to assist safety and security personnel. For example, such a 
limitation would prevent broadband providers from implementing the 
Cellular Priority Access Service (also known as the Wireless Priority 
Service (WPS)), which allows for but does not legally require the 
prioritization of public safety communications on wireless networks. We 
do not think it necessary or advisable to provide for pre-deployment 
review by the Commission, particularly because time may be of the 
essence in meeting safety and security needs.\119\
---------------------------------------------------------------------------

    \119\ The National Emergency Number Association (NENA) would 
encourage or require network managers to provide public safety users 
with advance notice of changes in network management that could 
affect emergency services. See NENA Comments at 5-6. Although we do 
not adopt such a requirement, we encourage broadband providers to be 
mindful of the potential impact on emergency services when 
implementing network management policies, and to coordinate major 
changes with providers of emergency services when appropriate.
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2. Transfers of Unlawful Content and Unlawful Transfers of Content
    In the NPRM, we proposed to treat as reasonable network management 
``reasonable practices to * * * prevent the transfer of unlawful 
content; or * * * prevent the unlawful transfer of content.'' For 
reasons explained above we decline to include these practices within 
the scope of ``reasonable network management.'' However, we conclude 
that a clear statement that open Internet rules do not prohibit 
broadband providers from making reasonable efforts to address the 
transfer of unlawful content or unlawful transfers of content is 
helpful to ensure that open Internet rules are not used as a shield to 
enable unlawful activity or to deter prompt action against such 
activity. For example, open Internet rules should not be invoked to 
protect copyright infringement, which has adverse consequences for the 
economy, nor should they protect child pornography. We emphasize that 
open Internet rules do not alter copyright laws and are not intended to 
prohibit or discourage voluntary practices undertaken to address or 
mitigate the occurrence of copyright infringement.\120\
---------------------------------------------------------------------------

    \120\ See, e.g., Stanford University--DMCA Complaint Resolution 
Center; User Generated Content Principles, http://www.ugcprinciples.com (cited in Letter from Linda Kinney, MPAA, to 
Marlene H. Dortch, Secretary, FCC, GN Docket Nos. 09-191, 10-137, WC 
Docket No. 07-52 at 1 (filed Nov. 29, 2010)). Open Internet rules 
are not intended to affect the legal status of cooperative efforts 
by broadband Internet access service providers and other service 
providers that are designed to curtail infringement in response to 
information provided by rights holders in a manner that is timely, 
effective, and accommodates the legitimate interests of providers, 
rights holders, and end users.
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G. Specialized Services

    In the Open Internet NPRM, the Commission recognized that broadband 
providers offer services that share capacity with broadband Internet 
access service over providers' last-mile facilities, and may develop 
and offer other such services in the future. These ``specialized 
services,'' such as some broadband providers' existing facilities-based 
VoIP and Internet Protocol-video offerings, differ from broadband 
Internet access service and may drive additional private investment in 
broadband networks and provide end users valued services, supplementing 
the benefits of the open Internet. At the same time, specialized 
services may raise concerns regarding bypassing open Internet 
protections, supplanting the open Internet, and enabling 
anticompetitive conduct. For example, open Internet protections may be 
weakened if broadband providers offer specialized services that are 
substantially similar to, but do not meet the definition of, broadband 
Internet access service, and if consumer protections do not apply to 
such services. In addition, broadband providers may constrict or fail 
to continue expanding network capacity allocated to broadband Internet 
access service to provide more capacity for specialized services. If 
this occurs, and particularly to the extent specialized services grow 
as substitutes for the delivery of content, applications, and services 
over broadband Internet access service, the Internet may wither as an 
open platform for competition, innovation, and free expression. These 
concerns may be exacerbated by consumers' limited choices for broadband 
providers, which may leave some end users unable to effectively 
exercise their preferences for broadband Internet access service (or 
content, applications, or services available through broadband Internet 
access service) over specialized services.
    We agree with the many commenters who advocate that the Commission 
exercise its authority to closely monitor and proceed incrementally 
with respect to specialized services, rather than adopting policies 
specific to such services at this time. We will carefully observe 
market developments to verify that specialized services promote 
investment, innovation, competition, and end-user benefits without 
undermining or threatening the open Internet.\121\ We note also that 
our rules

[[Page 59214]]

define broadband Internet access service to encompass ``any service 
that the Commission finds to be providing a functional equivalent of 
[broadband Internet access service], or that is used to evade the 
protections set forth in these rules.'' \122\
---------------------------------------------------------------------------

    \121\ Our decision not to adopt rules regarding specialized 
services at this time involves an issue distinct from the regulatory 
classification of services such as VoIP and IPTV under the 
Communications Act, a subject we do not address in this Order. 
Likewise, the Commission's actions here do not affect any existing 
obligation to provide interconnection, unbundled network elements, 
or special access or other wholesale access under Sections 201, 251, 
256, and 271 of the Act. 47 U.S.C. 201, 251, 256, 271.
    \122\ Some commenters, including Internet engineering experts 
and analysts, emphasize the importance of distinguishing between the 
open Internet and specialized services and state that ``this 
distinction must continue as a most appropriate and constructive 
basis for pursuing your policy goals.'' Various Advocates for the 
Open Internet PN Reply at 3; see also id. at 2.
---------------------------------------------------------------------------

    We will closely monitor the robustness and affordability of 
broadband Internet access services, with a particular focus on any 
signs that specialized services are in any way retarding the growth of 
or constricting capacity available for broadband Internet access 
service. We fully expect that broadband providers will increase 
capacity offered for broadband Internet access service if they expand 
network capacity to accommodate specialized services. We would be 
concerned if capacity for broadband Internet access service did not 
keep pace. We also expect broadband providers to disclose information 
about specialized services' impact, if any, on last-mile capacity 
available for, and the performance of, broadband Internet access 
service. We may consider additional disclosure requirements in this 
area in our related proceeding regarding consumer transparency and 
disclosure. We would also be concerned by any marketing, advertising, 
or other messaging by broadband providers suggesting that one or more 
specialized services, taken alone or together, and not provided in 
accordance with our open Internet rules, is ``Internet'' service or a 
substitute for broadband Internet access service. Finally, we will 
monitor the potential for anticompetitive or otherwise harmful effects 
from specialized services, including from any arrangements a broadband 
provider may seek to enter into with third parties to offer such 
services. The Open Internet Advisory Committee will aid us in 
monitoring these issues.

IV. The Commission's Authority To Adopt Open Internet Rules

    Congress created the Commission ``[f]or the purpose of regulating 
interstate and foreign commerce in communication by wire and radio so 
as to make available, so far as possible, to all people of the United 
States * * * a rapid, efficient, Nation-wide, and world-wide wire and 
radio communication service with adequate facilities at reasonable 
charges, for the purpose of the national defense, [and] for the purpose 
of promoting safety of life and property through the use of wire and 
radio communication.'' Section 2 of the Communications Act grants the 
Commission jurisdiction over ``all interstate and foreign communication 
by wire or radio.'' As the Supreme Court explained in the radio 
context, Congress charged the Commission with ``regulating a field of 
enterprise the dominant characteristic of which was the rapid pace of 
its unfolding'' and therefore intended to give the Commission 
sufficiently ``broad'' authority to address new issues that arise with 
respect to ``fluid and dynamic'' communications technologies.\123\ 
Broadband Internet access services are clearly within the Commission's 
subject matter jurisdiction and historically have been supervised by 
the Commission. Furthermore, as explained below, our adoption of basic 
rules of the road for broadband providers implements specific statutory 
mandates in the Communications Act and the Telecommunications Act of 
1996.
---------------------------------------------------------------------------

    \123\ Nat'l Broad. Co., Inc. v. United States, 319 U.S. 190, 
219-20 (1943) (Congress did not ``attempt[] an itemized catalogue of 
the specific manifestations of the general problems'' that it 
entrusted to the Commission); see also FCC v. Pottsville Broad. Co., 
309 U.S. 134, 137, 138 (1940) (the Commission's statutory 
responsibilities and authority amount to ``a unified and 
comprehensive regulatory system'' for the communications industry 
that allows a single agency to ``maintain, through appropriate 
administrative control, a grip on the dynamic aspects'' of that 
ever-changing industry).
---------------------------------------------------------------------------

    Congress has demonstrated its awareness of the importance of the 
Internet and advanced services to modern interstate communications. In 
Section 230 of the Act, for example, Congress announced ``the policy of 
the United States'' concerning the Internet, which includes 
``promot[ing] the continued development of the Internet'' and 
``encourag[ing] the development of technologies which maximize user 
control over what information is received by individuals, families, and 
schools who use the Internet,'' while also ``preserv[ing] the vibrant 
and competitive free market that presently exists for the Internet and 
other interactive computer services'' and avoiding unnecessary 
regulation. Other statements of congressional policy further confirm 
the Commission's statutory authority. In Section 254 of the Act, for 
example, Congress charged the Commission with designing a Federal 
universal program that has as one of several objectives making 
``[a]ccess to advanced telecommunications and information services'' 
available ``in all regions of the Nation,'' and particularly to 
schools, libraries, and health care providers. To the same end, in 
Section 706 of the 1996 Act, Congress instructed the Commission to 
``encourage the deployment on a reasonable and timely basis of advanced 
telecommunications capability to all Americans (including, in 
particular, elementary and secondary schools and classrooms)'' and, if 
it finds that advanced telecommunications capability is not being 
deployed to all Americans ``on a reasonable and timely basis,'' to 
``take immediate action to accelerate deployment of such capability.'' 
This mandate provides the Commission both ``authority'' and 
``discretion'' ``to settle on the best regulatory or deregulatory 
approach to broadband.'' As the legislative history of the 1996 Act 
confirms, Congress believed that the laws it drafted would compel the 
Commission to protect and promote the Internet, while allowing the 
agency sufficient flexibility to decide how to do so.\124\ As explained 
in detail below, Congress did not limit its instructions to the 
Commission to one Section of the communications laws. Rather, it 
expressed its instructions in multiple Sections which, viewed as a 
whole, provide broad authority to promote competition, investment, 
transparency, and an open Internet through the rules we adopt in this 
Order.
---------------------------------------------------------------------------

    \124\ S. Rep. No. 104-23, at 51 (1995) (``The goal is to 
accelerate deployment of an advanced capability that will enable 
subscribers in all parts of the United States to send and receive 
information in all its forms--voice, data, graphics, and video--over 
a high-speed switched, interactive, broadband, transmission 
capability.'').
---------------------------------------------------------------------------

A. Section 706 of the 1996 Act Provides Authority for the Open Internet 
Rules

    As noted, Section 706 of the 1996 Act directs the Commission (along 
with state commissions) to take actions that encourage the deployment 
of ``advanced telecommunications capability.'' ``[A]dvanced 
telecommunications capability,'' as defined in the statute, includes 
broadband Internet access.\125\

[[Page 59215]]

Under Section 706(a), the Commission must encourage the deployment of 
such capability by ``utilizing, in a manner consistent with the public 
interest, convenience, and necessity,'' various tools including 
``measures that promote competition in the local telecommunications 
market, or other regulating methods that remove barriers to 
infrastructure investment.'' For the reasons stated in Parts II.A, II.D 
and III.B, above, our open Internet rules will have precisely that 
effect.
---------------------------------------------------------------------------

    \125\ 47 U.S.C. 1302(d)(1) (defining ``advanced 
telecommunications capability'' as ``high-speed, switched, broadband 
telecommunications capability that enables users to originate and 
receive high-quality voice, data, graphics, and video 
telecommunications using any technology''). See National Broadband 
Plan for our Future, Notice of Inquiry, 24 FCC Rcd 4342, 4309, App. 
para. 13 (2009) (``advanced telecommunications capability'' includes 
broadband Internet access); Inquiry Concerning the Deployment of 
Advanced Telecomms. Capability to All Americans in a Reasonable and 
Timely Fashion, 14 FCC Rcd 2398, 2400, para. 1 (Section 706 
addresses ``the deployment of broadband capability''), 2406 para. 20 
(same). Even when broadband Internet access is provided as an 
``information service'' rather than a ``telecommunications 
service,'' see Nat'l Cable & Telecomm. Ass'n v. Brand X Internet 
Servs., 545 U.S. 967, 977-78 (2005), it involves 
``telecommunications.'' 47 U.S.C. 153(24). Given Section 706's 
explicit focus on deployment of broadband access to voice, data, and 
video communications, it is not important that the statute does not 
use the exact phrase ``Internet network management.''
---------------------------------------------------------------------------

    In Comcast, the DC Circuit identified Section 706(a) as a provision 
that ``at least arguably * * * delegate[s] regulatory authority to the 
Commission,'' and in fact ``contain[s] a direct mandate--the Commission 
`shall encourage.' '' \126\ The court, however, regarded the Commission 
as ``bound by'' a prior order that, in the court of appeals' 
understanding, had held that Section 706(a) is not a grant of 
authority. In the Advanced Services Order, to which the court referred, 
the Commission held that Section 706(a) did not permit it to encourage 
advanced services deployment through the mechanism of forbearance 
without complying with the specific requirements for forbearance set 
forth in Section 10 of the Communications Act. The issue presented in 
the 1998 proceeding was whether the Commission could rely on the broad 
terms of Section 706(a) to trump those specific requirements. In the 
Advanced Services Order, the Commission ruled that it could not do so, 
noting that it would be ``unreasonable'' to conclude that Congress 
intended Section 706(a) to ``allow the Commission to eviscerate 
[specified] forbearance exclusions after having expressly singled out 
[those exclusions] for different treatment in Section 10.'' The 
Commission accordingly concluded that Section 706(a) did not give it 
independent authority--in other words, authority over and above what it 
otherwise possessed \127\--to forbear from applying other provisions of 
the Act. The Commission's holding thus honored the interpretive canon 
that ``[a] specific provision * * * controls one[ ] of more general 
application.''
---------------------------------------------------------------------------

    \126\ See Comcast, 600 F.3d at 658; see also 47 U.S.C. 1302(a) 
(``The Commission * * * shall encourage the deployment on a 
reasonable and timely basis of advanced telecommunications 
capability to all Americans * * * by utilizing * * * price cap 
regulation, regulatory forbearance, measures that promote 
competition in the local telecommunications market, or other 
regulating methods that remove barriers to infrastructure 
investment.''). Because Section 706 contains a ``direct mandate,'' 
we reject the argument pressed by some commenters (see, e.g., AT&T 
Comments at 217-18; Verizon Comments at 100-01; Qwest Comments at 
58-59; Letter from Rick Chessen, Senior Vice President, Law and 
Regulatory Policy, NCTA, to Marlene H. Dortch, Secretary, FCC, GN 
Docket Nos. 09-191 & 10-127, WC Docket No. 07-52, at 7 (filed Dec. 
10, 2010) (NCTA Dec. 10, 2010 Ex Parte Letter)) that Section 706 
confers no substantive authority.
    \127\ Consistent with longstanding Supreme Court precedent, we 
have understood this authority to include our ancillary jurisdiction 
to further congressional policy. See, e.g., Amendment of Section 
64.702 of the Commission's Rules and Regulations (Second Computer 
Inquiry), Final Decision, 77 FCC 2d 384, 474 (1980), aff'd, Computer 
& Commc'ns Indus. Ass'n. v. FCC, 693 F.2d 198, 211-14 (DC Cir. 1982) 
(CCIA).
---------------------------------------------------------------------------

    While disavowing a reading of Section 706(a) that would allow the 
agency to trump specific mandates of the Communications Act, the 
Commission nonetheless affirmed in the Advanced Services Order that 
Section 706(a) ``gives this Commission an affirmative obligation to 
encourage the deployment of advanced services'' using its existing 
rulemaking, forbearance and adjudicatory powers, and stressed that 
``this obligation has substance.'' The Advanced Services Order is, 
therefore, consistent with our present understanding that Section 
706(a) authorizes the Commission (along with state commissions) to take 
actions, within their subject matter jurisdiction and not inconsistent 
with other provisions of law, that encourage the deployment of advanced 
telecommunications capability by any of the means listed in the 
provision.\128\
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    \128\ To the extent the Advanced Services Order can be construed 
as having read Section 706(a) differently, we reject that reading of 
the statute for the reasons discussed in the text.
---------------------------------------------------------------------------

    In directing the Commission to ``encourage the deployment on a 
reasonable and timely basis of advanced telecommunications capability 
to all Americans * * * by utilizing * * * price cap regulation, 
regulatory forbearance, measures that promote competition in the local 
telecommunications market, or other regulating methods that remove 
barriers to infrastructure investment,'' Congress necessarily invested 
the Commission with the statutory authority to carry out those acts. 
Indeed, the relevant Senate Report explained that the provisions of 
Section 706 are ``intended to ensure that one of the primary objectives 
of the [1996 Act]--to accelerate deployment of advanced 
telecommunications capability--is achieved,'' and stressed that these 
provisions are ``a necessary fail-safe'' to guarantee that Congress's 
objective is reached. It would be odd indeed to characterize Section 
706(a) as a ``fail-safe'' that ``ensures'' the Commission's ability to 
promote advanced services if it conferred no actual authority. Here, 
under our reading, Section 706(a) authorizes the Commission to address 
practices, such as blocking VoIP communications, degrading or raising 
the cost of online video, or denying end users material information 
about their broadband service, that have the potential to stifle 
overall investment in Internet infrastructure and limit competition in 
telecommunications markets.
    This reading of Section 706(a) obviates the concern of some 
commenters that our jurisdiction under the provision could be 
``limitless'' or ``unbounded.'' To the contrary, our Section 706(a) 
authority is limited in three critical respects. First, our mandate 
under Section 706(a) must be read consistently with Sections 1 and 2 of 
the Act, which define the Commission's subject matter jurisdiction over 
``interstate and foreign commerce in communication by wire and radio.'' 
\129\ As a result, our authority under Section 706(a) does not, in our 
view, extend beyond our subject matter jurisdiction under the 
Communications Act. Second, the Commission's actions

[[Page 59216]]

under Section 706(a) must ``encourage the deployment on a reasonable 
and timely basis of advanced telecommunications capability to all 
Americans.'' Third, the activity undertaken to encourage such 
deployment must ``utilize[e], in a manner consistent with the public 
interest, convenience, and necessity,'' one (or more) of various 
specified methods. These include: ``price cap regulation, regulatory 
forbearance, measures that promote competition in the local 
telecommunications market, or other regulating methods that remove 
barriers to infrastructure investment.'' Actions that do not fall 
within those categories are not authorized by Section 706(a). Thus, as 
the DC Circuit has noted, while the statutory authority granted by 
Section 706(a) is broad, it is ``not unfettered.'' \130\
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    \129\ 47 U.S.C. 151, 152. The Commission historically has 
recognized that services carrying Internet traffic are 
jurisdictionally mixed, but generally subject to Federal regulation. 
See, e.g., Nat'l Ass'n of Regulatory Util. Comm'rs Petition for 
Clarification or Declaratory Ruling that No FCC Order or Rule Limits 
State Authority to Collect Broadband Data, Memorandum Opinion and 
Order, 25 FCC Rcd 5051, 5054, paras. 8-9 & n. 24 (2010). Where, as 
here, ``it is not possible to separate the interstate and intrastate 
aspects of the service,'' the Commission may preempt state 
regulation where ``Federal regulation is necessary to further a 
valid Federal regulatory objective, i.e., state regulation would 
conflict with Federal regulatory policies.'' Minn. Pub. Utils. 
Comm'n v. FCC, 483 F.3d 570, 578 (8th Cir. 2007); see also La. Pub. 
Serv. Comm'n v. FCC, 476 U.S. 355, 375 n. 4 (1986). Except to the 
extent a state requirement conflicts on its face with a Commission 
decision herein, the Commission will evaluate preemption in light of 
the fact-specific nature of the relevant inquiry, on a case-by-case 
basis. We recognize, for example, that states play a vital role in 
protecting end users from fraud, enforcing fair business practices, 
and responding to consumer inquiries and complaints. See, e.g., 
Vonage Order, 19 FCC Rcd at 22404-05, para. 1. We have no intention 
of impairing states' or local governments' ability to carry out 
these duties unless we find that specific measures conflict with 
Federal law or policy. In determining whether state or local 
regulations frustrate Federal policies, we will, among other things, 
be guided by the overarching congressional policies described in 
Section 230 of the Act and Section 706 of the 1996 Act. 47 U.S.C. 
230, 1302.
    \130\ Ad Hoc Telecomms. Users Comm., 572 F.3d at 906-07 (``The 
general and generous phrasing of sec. 706 means that the FCC 
possesses significant albeit not unfettered, authority and 
discretion to settle on the best regulatory or deregulatory approach 
to broadband.'').
---------------------------------------------------------------------------

    Section 706(a) accordingly provides the Commission a specific 
delegation of legislative authority to promote the deployment of 
advanced services, including by means of the open Internet rules 
adopted in this Order. Our understanding of Section 706(a) is, 
moreover, harmonious with other statutory provisions that confer a 
broad mandate on the Commission. Section 706(a)'s directive to 
``encourage the deployment [of advanced telecommunications capability] 
on a reasonable and timely basis'' using the methods specified in the 
statute is, for example, no broader than other provisions of the 
Commission's authorizing statutes that command the agency to ensure 
``just'' and ``reasonable'' rates and practices, or to regulate 
services in the ``public interest.'' Indeed, our authority under 
Section 706(a) is generally consistent with--albeit narrower than--the 
understanding of ancillary jurisdiction under which this Commission 
operated for decades before the Comcast decision.\131\ The similarities 
between the two in fact explain why the Commission has not heretofore 
had occasion to describe Section 706(a) in this way: In the particular 
proceedings prior to Comcast, setting out the understanding of Section 
706(a) that we articulate in this Order would not meaningfully have 
increased the authority that we understood the Commission already to 
possess.\132\
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    \131\ In Comcast, the court stated that `` `[t]he Commission * * 
* may exercise ancillary jurisdiction only when two conditions are 
satisfied: (1) The Commission's general jurisdictional grant under 
Title I [of the Communications Act] covers the regulated subject and 
(2) the regulations are reasonably ancillary to the Commission's 
effective performance of its statutorily mandated responsibilities.' 
'' 600 F.3d at 646 (quoting Am. Library Ass'n v. FCC, 406 F.3d 689, 
691-92 (DC Cir. 2005)) (alterations in original). The court further 
ruled that the second prong of this test requires the Commission to 
rely on specific delegations of statutory authority. 600 F.3d at 
644, 654.
    \132\ Ignoring that Section 706(a) expressly contemplates the 
use of ``regulating methods'' such as price regulation, some 
commenters read prior Commission orders as suggesting that Section 
706 authorizes only deregulatory actions. See AT&T Comments at 216 
(citing Petition for Declaratory Ruling that pulver.com's Free World 
Dialup is Neither Telecomm. Nor A Telecomms. Serv., Memorandum 
Opinion and Order, 19 FCC Rcd 3307, 3319, para. 19 n. 69 (2004) 
(Pulver Order)); Esbin Comments at 52 (citing Inquiry Concerning 
High-Speed Access to the Internet Over Cable and Other Facilities et 
al., Declaratory Ruling and Notice of Proposed Rulemaking, 17 FCC 
Rcd 4798, 4801, 4826, 4840, paras. 4, 47, 73, (2002) (Cable Modem 
Declaratory Ruling) and Appropriate Framework for Broadband Access 
to the Internet Over Wireline Facilities et al., Report and Order 
and Notice of Proposed Rulemaking, 20 FCC Rcd 14853, 14894 para. 77 
(2005) (Wireline Broadband Report and Order)). They are mistaken. 
The Pulver Order stated only that Section 706 did not contemplate 
the application of ``economic and entry/exit regulation inherent in 
Title II'' to information service Internet applications. Pulver 
Order, 19 FCC Rcd at 3379, para. 19 n. 69 (emphasis added). The open 
Internet rules that we adopt in this Order do not regulate Internet 
applications, much less impose Title II (i.e., common carrier) 
regulation on such applications. Moreover, at the same time the 
Commission determined in the Cable Modem Declaratory Ruling and the 
Wireline Broadband Report and Order that cable modem service and 
wireline broadband services (such as DSL) could be provided as 
information services not subject to Title II, it proposed new 
regulations under other sources of authority including Section 706. 
See Cable Modem Declaratory Ruling, 17 FCC Rcd at 4840, para. 73; 
Wireline Broadband Report and Order, 20 FCC Rcd at 14929-30, 14987, 
para. 146. On the same day the Commission adopted the Wireline 
Broadband Report and Order, it also adopted the Internet Policy 
Statement, which rested in part on Section 706. 20 FCC Rcd 14986, 
para. 2 (2005). Our prior orders therefore do not construe Section 
706 as exclusively deregulatory. And to the extent that any prior 
order does suggest such a construction, we now reject it. See Ad Hoc 
Telecomms. Users Comm., 572 F.3d at 908 (Section 706 ``direct[s] the 
FCC to make the major policy decisions and to select the mix of 
regulatory and deregulatory tools the Commission deems most 
appropriate in the public interest to facilitate broadband 
deployment and competition'') (emphasis added).
---------------------------------------------------------------------------

    Section 706(b) of the 1996 Act provides additional authority to 
take actions such as enforcing open Internet principles. It directs the 
Commission to undertake annual inquiries concerning the availability of 
advanced telecommunications capability to all Americans and requires 
that, if the Commission finds that such capability is not being 
deployed in a reasonable and timely fashion, it ``shall take immediate 
action to accelerate deployment of such capability by removing barriers 
to infrastructure investment and by promoting competition in the 
telecommunications market.'' In July 2010, the Commission ``conclude[d] 
that broadband deployment to all Americans is not reasonable and 
timely'' and noted that ``[a]s a consequence of that conclusion,'' 
Section 706(b) was triggered. Section 706(b) therefore provides express 
authority for the pro-investment, pro-competition rules we adopt in 
this Order.

B. Authority To Promote Competition and Investment in, and Protect End 
Users of, Voice, Video, and Audio Services

    The Commission also has authority under the Communications Act to 
adopt the open Internet rules in order to promote competition and 
investment in voice, video, and audio services. Furthermore, for the 
reasons stated in Part II, above, even if statutory provisions related 
to voice, video, and audio communications were the only sources of 
authority for the open Internet rules (which is not the case), it would 
not be sound policy to attempt to implement rules concerning only 
voice, video, or audio transmissions over the Internet.\133\
---------------------------------------------------------------------------

    \133\ Many broadband providers offer their service on a common 
carriage basis under Title II of the Act. See Framework for 
Broadband Internet Serv., Notice of Inquiry, 25 FCC Rcd 7866, 7875, 
para. 21 (2010). With respect to these providers, the rules we adopt 
in this Order are additionally supported on that basis. With the 
possible exception of transparency requirements, however, the open 
Internet rules are unlikely to create substantial new duties for 
these providers in practice.
---------------------------------------------------------------------------

1. The Commission Has Authority To Adopt Open Internet Rules To Further 
Its Responsibilities Under Title II of the Act
    Section 201 of the Act delegates to the Commission ``express and 
expansive authority'' to ensure that the ``charges [and] practices * * 
* in connection with'' telecommunications services are ``just and 
reasonable.'' As described in Part II.B, interconnected VoIP services, 
which include some over-the-top VoIP services, ``are increasingly being 
used as a substitute for traditional telephone service.''\134\ Over-
the-top services therefore do, or will, contribute to the marketplace 
discipline of voice telecommunications services regulated under Section 
201.\135\ Furthermore,

[[Page 59217]]

companies that provide both voice communications and broadband Internet 
access services (for example, telephone companies that are broadband 
providers) have the incentive and ability to block, degrade, or 
otherwise disadvantage the services of their online voice competitors. 
Because the Commission may enlist market forces to fulfill its Section 
201 responsibilities, we possess authority to prevent these 
anticompetitive practices through open Internet rules.\136\
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    \134\ Tel. No. Requirements for IP-Enabled Servs. Providers, 
Report and Order, Declaratory Ruling, Order on Remand, and NPRM, 22 
FCC Rcd 19531, 19547, para. 28 (2007). By definition, interconnected 
VoIP services allow calls to and from traditional phone networks.
    \135\ See NCTA Dec. 10, 2010 Ex Parte Letter (arguing that the 
Commission could exercise authority ancillary to several provisions 
of Title II of the Act, including Sections 201 and 202, ``to ensure 
that common carrier services continue to be offered on just and 
reasonable terms and conditions'' and to ``facilitate consumer 
access to broadband-based alternatives to common carrier services 
such as Voice over Internet Protocol''); Vonage Comments at 11-12 
(``The Commission's proposed regulations would help preserve the 
competitive balance between providers electing to operate under 
Title II and those operating under Title I.''); Google Comments at 
45-46 (``The widespread use of VoIP and related services as cheaper 
and more feature-rich alternatives to Title II services has 
significant effects on traditional telephone providers' practices 
and pricing, as well [as] on network interconnection between Title 
II and IP networks that consumers use to reach each other, going to 
the heart of the Commission's Title II responsibilities.'') 
(footnotes and citations omitted); Letter from Devendra T. Kumar, 
Counsel to Skype Communications S.A.R.L., to Marlene H. Dortch, 
Secretary, FCC, GN Docket No. 09-191, WC Docket No. 07-52 (filed 
Nov. 30, 2010) (arguing that the Commission has authority ancillary 
to Section 201 to protect international VoIP calling); XO Comments 
at 20 (noting the impact of, inter alia, VoIP on the Commission's 
``traditional framework'' for regulating voice services under Title 
II); Letter from Alan Inouye et al., on behalf of ALA, ARL and 
EDUCAUSE, to Chairman Julius Genachowski et al., GN Docket No. 09-
191, WC Docket No. 07-52 at 4-5 (filed Dec. 13, 2010) (citing 
examples of how libraries and higher education institutions are 
using broadband services, including VoIP, to replace traditional 
common carrier services). In previous orders, the Commission has 
embraced the use of VoIP to avoid or constrain high international 
calling rates. See Universal Serv. Contribution Methodology et al., 
Report and Order and Notice of Proposed Rulemaking, 21 FCC Rcd 7518, 
7546, para. 55 & n.187 (2006) (``[I]nterconnected VoIP service is 
often marketed as an economical way to make interstate and 
international calls, as a lower-cost substitute for wireline toll 
service.''), rev'd in part sub nom. Vonage Holdings Corp. v. FCC, 
489 F.3d 1232 (DC Cir. 2007); Reporting Requirements for U.S. 
Providers of Int'l Telecomms. Servs., Notice of Proposed Rulemaking, 
19 FCC Rcd 6460, 6470, para. 22 (2004) (``Improvements in the 
packet-switched transmission technology underlying the Internet now 
allow providers of VoIP to offer international voice transmission of 
reasonable quality at a price lower than current IMTS rates.'') 
(footnote omitted); Int'l Settlements Policy Reform, Notice of 
Proposed Rulemaking, 17 FCC Rcd 19954, 19964, para. 13 (2002) 
(``This ability to engage in least-cost routing, as well as 
alternative, non-traditional services such as IP Telephony or Voice-
Over-IP, in conjunction with the benchmarks policy have created a 
market dynamic that is pressuring international settlement rates 
downward.''). In addition, NCTA has explained that, ``[b]y enabling 
consumers to make informed choices regarding broadband Internet 
access service,'' the Commission could conclude that transparency 
requirements ``would help promote the competitiveness of VoIP and 
other broadband-based communications services'' and ``thereby 
facilitate the operation of market forces to discipline the charges 
and other practices of common carriers, in fulfillment of the 
Commission's obligations under Sections 201 and 202'' of the Act. 
NCTA Dec. 10, 2010 Ex Parte Letter at 2-3.
    \136\ We reject the argument asserted by some commenters (see, 
e.g., AT&T Comments at 218-19; Verizon Comments at 98-99) that the 
various grants of rulemaking authority in the Act, including the 
express grant of rulemaking authority in Section 201(b) itself, do 
not authorize the promulgation of rules pursuant to Section 201(b). 
See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366, 378 (1999) (``We 
think that the grant in sec. 201(b) means what it says: The FCC has 
rulemaking authority to carry out the `provisions of this Act.' '').
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    Section 251(a)(1) of the Act imposes a duty on all 
telecommunications carriers ``to interconnect directly or indirectly 
with the facilities of other telecommunications carriers.'' Many over-
the-top VoIP services allow end users to receive calls from and/or 
place calls to traditional phone networks operated by 
telecommunications carriers. The Commission has not determined whether 
any such VoIP providers are telecommunications carriers. To the extent 
that VoIP services are information services (rather than 
telecommunications services), any blocking or degrading of a call from 
a traditional telephone customer to a customer of a VoIP provider, or 
vice-versa, would deny the traditional telephone customer the intended 
benefits of telecommunications interconnection under Section 251(a)(1). 
Over-the-top VoIP customers account for a growing share of telephone 
usage. If calls to and from these VoIP customers were not delivered 
efficiently and reliably by broadband providers, all users of the 
public switched telephone network would be limited in their ability to 
communicate, and Congress's goal of ``efficient, Nation-wide, and 
world-wide'' communications across interconnected networks would be 
frustrated. To the extent that VoIP services are telecommunications 
services, a broadband provider's interference with traffic exchanged 
between a provider of VoIP telecommunications services and another 
telecommunications carrier would interfere with interconnection between 
two telecommunications carriers under Section 251(a)(1).\137\
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    \137\ See also 47 U.S.C. 256(b)(1) (directing the Commission to 
``establish procedures for * * * oversight of coordinated network 
planning by telecommunications carriers and other providers of 
telecommunications service for the effective and efficient 
interconnection of public telecommunications networks used to 
provide telecommunications service''); Comcast, 600 F.3d at 659 
(acknowledging Section 256's objective, while adding that Section 
256 does not `` `expand[ ] * * * any authority that the Commission' 
otherwise has under law'') (quoting 47 U.S.C. 256(c)).
---------------------------------------------------------------------------

2. The Commission Has Authority To Adopt Open Internet Rules To Further 
Its Responsibilities Under Titles III and VI of the Act
    ``The Commission has been charged with broad responsibilities for 
the orderly development of an appropriate system of local television 
broadcasting,'' \138\ which arise from the Commission's more general 
public interest obligation to ``ensure the larger and more effective 
use of radio.'' \139\ Similarly, the Commission has broad jurisdiction 
to oversee MVPD services, including direct-broadcast satellite 
(DBS).\140\ Consistent with these mandates, our jurisdiction over video 
and audio services under Titles III and VI of the Communications Act 
provides additional authority for open Internet rules.
---------------------------------------------------------------------------

    \138\ See United States v. Sw. Cable Co., 392 U.S. 157, 177 
(1968); see also id. at 174 (``[T]hese obligations require for their 
satisfaction the creation of a system of local broadcasting 
stations, such that `all communities of appreciable size (will) have 
at least one television station as an outlet for local self-
expression.' ''); 47 U.S.C. 307(b) (Commission shall ``make such 
distribution of licenses, * * * among the several States and 
communities as to provide a fair, efficient, and equitable 
distribution of radio service to each of the same''), 303(f) & (h) 
(authorizing the Commission to allocate broadcasting zones or areas 
and to promulgate regulations ``as it may deem necessary'' to 
prevent interference among stations) (cited in Sw. Cable, 392 U.S. 
at 173-74).
    \139\ Nat'l Broad. Co., 319 U.S. at 216 (public interest to be 
served is the ``larger and more effective use of radio'') (citation 
and internal quotation marks omitted).
    \140\ See 47 U.S.C. 303(v); see also N.Y. State Comm'n on Cable 
Television v. FCC, 749 F.2d 804, 807-12 (DC Cir. 1984) (upholding 
the Commission's exercise of ancillary authority over satellite 
master antenna television service); 47 U.S.C. 548 (discussed below).
---------------------------------------------------------------------------

    First, such rules are necessary to the effective performance of our 
Title III responsibilities to ensure the ``orderly development * * * of 
local television broadcasting'' \141\ and the ``more effective use of 
radio.'' \142\ As discussed in Parts II.A and II.B, Internet video 
distribution is increasingly important to all video programming 
services, including local television broadcast service. Radio stations 
also are providing audio and video content on the Internet. At the same 
time,

[[Page 59218]]

broadband providers--many of which are also MVPDs--have the incentive 
and ability to engage in self-interested practices that may include 
blocking or degrading the quality of online programming content, 
including broadcast content, or charging unreasonable additional fees 
for faster delivery of such content. Absent the rules we adopt in this 
Order, such practices jeopardize broadcasters' ability to offer news 
(including local news) and other programming over the Internet, and, in 
turn, threaten to impair their ability to offer high-quality broadcast 
content.\143\
---------------------------------------------------------------------------

    \141\ Sw. Cable, 392 U.S. at 177; see 47 U.S.C. 303(f) & (h) 
(establishing Commission's authority to allocate broadcasting zones 
or areas and to promulgate regulations ``as it may deem necessary'' 
to prevent interference among stations) (cited in Sw. Cable, 392 
U.S. at 173-74).
    \142\ Nat'l Broad. Co., 319 U.S. at 216; see also 47 U.S.C. 
303(g) (establishing Commission's duty to ``generally encourage the 
larger and more effective use of radio in the public interest''), 
307(b) (``[T]he Commission shall make such distribution of licenses 
* * * among the several States and communities as to provide a fair, 
efficient, and equitable distribution of radio service to each of 
the same.'').
    \143\ NCTA has noted that ``[t]he Commission could decide that, 
based on the growing importance of broadcast programming distributed 
over broadband networks to both television viewers and the business 
of broadcasting itself, ensuring that broadcast video content made 
available over broadband networks is not subject to unreasonable 
discrimination or anticompetitive treatment is necessary to preserve 
and strengthen the system of local broadcasting.'' NCTA Dec. 10, 
2010 Ex Parte Letter at 3; see also id. (``Facilitating the 
availability of broadcast content on the Internet may also help to 
foster more efficient and intensive use of spectrum, thereby 
supporting the Commission's duty in Section 303(g) to `generally 
encourage the larger and more effective use of radio in the public 
interest.' '') (quoting 47 U.S.C. 303(g)).
---------------------------------------------------------------------------

    The Commission likewise has authority under Title VI of the Act to 
adopt open Internet rules that protect competition in the provision of 
MVPD services. A cable or telephone company's interference with the 
online transmission of programming by DBS operators or stand-alone 
online video programming aggregators that may function as competitive 
alternatives to traditional MVPDs \144\ would frustrate Congress's 
stated goals in enacting Section 628 of the Act, which include 
promoting ``competition and diversity in the multichannel video 
programming market''; ``increase[ing] the availability of satellite 
cable programming and satellite broadcast programming to persons in 
rural and other areas not currently able to receive such programming''; 
and ``spur[ring] the development of communications technologies.'' 
\145\
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    \144\ The issue whether online-only video programming 
aggregators are themselves MVPDs under the Communications Act and 
our regulations has been raised in pending program access complaint 
proceedings. See, e.g., VDC Corp. v. Turner Network Sales, Inc., 
Program Access Complaint (Jan. 18, 2007); Sky Angel U.S., LLC v. 
Discovery Commc'ns LLC, Program Access Complaint (Mar. 24, 2010). 
Nothing in this Order should be read to state or imply any 
determination on this issue.
    \145\ 47 U.S.C. sec. 548(a). The Act defines ``video 
programming'' as ``programming provided by, or generally considered 
comparable to programming provided by, a television broadcast 
station.'' 47 U.S.C. sec. 522(20). Although the Commission stated 
nearly a decade ago that video `` `streamed' over the Internet'' had 
``not yet achieved television quality'' and therefore did not 
constitute ``video programming'' at that time, see Cable Modem 
Declaratory Ruling, 17 FCC Rcd at 4834, para. 63 n.236, intervening 
improvements in streaming technology and broadband availability 
enable such programming to be ``comparable to programming provided 
by * * * a television broadcast station,'' 47 U.S.C. sec. 522(20). 
This finding is consistent with our prediction more than five years 
ago that ``[a]s video compression technology improves, data transfer 
rates increase, and media adapters that link TV to a broadband 
connection become more widely used, * * * video over the Internet 
will proliferate and improve in quality.'' Ann. Assessment of the 
Status of Competition in the Mkt. for the Delivery of Video 
Programming, Notice of Inquiry, 19 FCC Rcd 10909, 10932, para. 74 
(2004) (citation omitted).
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    When Congress enacted Section 628 in 1992, it was specifically 
concerned about the incentive and ability of cable operators to use 
their control of video programming to impede competition from the then-
nascent DBS industry.\146\ Since that time, the Internet has opened a 
new competitive arena in which MVPDs that offer broadband service have 
the opportunity and incentive to impede DBS providers and other 
competing MVPDs--and the statute reaches this analogous arena as well. 
Section 628(b) prohibits cable operators from engaging in ``unfair or 
deceptive acts or practices the purpose or effect of which is to 
prevent or hinder significantly the ability of an MVPD to deliver 
satellite cable programming or satellite broadcast programming to 
consumers.'' An ``unfair method of competition or unfair act or 
practice'' under Section 628(b) includes acts that can be 
anticompetitive.\147\ Thus, Section 628(b) proscribes practices by 
cable operators that (i) can impede competition, and (ii) have the 
purpose or effect of preventing or significantly hindering other MVPDs 
from providing consumers their satellite-delivered programming (i.e., 
programming transmitted to MVPDs via satellite for retransmission to 
subscribers).\148\ Section 628(c)(1), in turn, directs the Commission 
to adopt rules proscribing unfair practices by cable operators and 
their affiliated satellite cable programming vendors. Section 628(j) 
provides that telephone companies offering video programming services 
are subject to the same rules as cable operators.
---------------------------------------------------------------------------

    \146\ See Cable Act of 1992, Public Law 102-385, sec. 2(a)(5), 
106 Stat. 1460, 1461 (``Vertically integrated program suppliers * * 
* have the incentive and ability to favor their affiliated cable 
operators over nonaffiliated cable operators and programming 
distributors using other technologies.''); H.R. Rep. No. 102-862, at 
93 (1992) (Conf. Rep.), reprinted in 1992 U.S.C.C.A.N. 1231, 1275 
(``In adopting rules under this section, the conferees expect the 
Commission to address and resolve the problems of unreasonable cable 
industry practices, including restricting the availability of 
programming and charging discriminatory prices to non-cable 
technologies.''); S. Rep. No. 102-92, at 26 (1991), reprinted in 
1992 U.S.C.C.A.N. 1133, 1159 (``[C]able programmers may simply 
refuse to sell to potential competitors. Small cable operators, 
satellite dish owners, and wireless cable operators complain that 
they are denied access to, or charged more for, programming than 
large, vertically integrated cable operators.'').
    \147\ Review of the Commission's Program Access Rules and 
Examination of Programming Tying Arrangements, First Report and 
Order, 25 FCC Rcd 746, 779, para. 48 & n. 190 (2010) (citing 
Exclusive Contracts for Provision of Video Serv. in Multiple 
Dwelling Units and Other Real Estate Devs., Report and Order and 
Further Notice of Proposed Rulemaking, 22 FCC Rcd 20235, 20255, 
para. 43, aff'd, NCTA, 567 F.3d 659); see also NTCA, 567 F.3d at 
664-65 (referring to ``unfair dealing'' and ``anticompetitive 
practices'').
    \148\ See 47 U.S.C. 548(b); NCTA, 567 F.3d at 664. In NCTA, the 
court held that the Commission reasonably concluded that the ``broad 
and sweeping terms'' of Section 628(b) authorized it to ban 
exclusive agreements between cable operators and building owners 
that prevented other MVPDs from providing their programming to 
residents of those buildings. The court observed that ``the words 
Congress chose [in Section 628(b)] focus not on practices that 
prevent MVPDs from obtaining satellite cable or satellite broadcast 
programming, but on practices that prevent them from `providing' 
that programming `to subscribers or consumers.' '' NCTA, 567 F.3d at 
664 (emphasis in original).
---------------------------------------------------------------------------

    The open Internet rules directly further our mandate under Section 
628. Cable operators, telephone companies, and DBS operators alike are 
seeking to keep and win customers by expanding their MVPD offerings to 
include online access to their programming.\149\ For example, in 
providing its MVPD service, DISH (one of the nation's two DBS 
providers) relies significantly on online dissemination of programming, 
including video-on-demand and other programming, that competes with 
similar offerings by cable operators.\150\

[[Page 59219]]

As DISH explains, ``[a]s more and more video consumption moves online, 
the competitive viability of stand-alone MVPDs depends on their ability 
to offer an online video experience of the same quality as the online 
video offerings of integrated broadband providers.'' The open Internet 
rules will prevent practices by cable operators and telephone 
companies, in their role as broadband providers, that have the purpose 
or effect of significantly hindering (or altogether preventing) 
delivery of video programming protected under Section 628(b).\151\ The 
Commission therefore is authorized to adopt open Internet rules under 
Section 628(b), (c)(1), and (j).\152\
---------------------------------------------------------------------------

    \149\ DISH Reply at 4-5 (``Pay-TV services continue to evolve at 
a rapid pace and providers increasingly are integrating their vast 
offerings of linear channels with online content,'' while 
``consumers are adopting online video services as a complement to 
traditional, linear pay-TV services'' and ``specifically desire 
Internet video as a complement to * * * [MVPDs'] traditional TV 
offerings.'') (footnotes and citations omitted). We find 
unpersuasive the contention that this Order fails to ``grapple with 
the implications of the market forces that are driving MVPDs * * * 
to add Internet connectivity to their multichannel video 
offerings.'' McDowell Statement at *24 (footnote omitted). Our 
analysis takes account of these developments, which are discussed at 
length in Part II.A, above.
    \150\ Id. at 5-8 & n. 20 (discussing ``DishOnline service,'' 
which ``allows DISH to offer over 3,000 movies and TV shows through 
its `DishOnline' Internet video service,'' and noting that ``the 
success of DishOnline is critically dependent on broadband access 
provided and controlled by DISH's competitors in the MVPD market''); 
DISH PN Comments at 2-3; DISH Network, Watch Live TV Online OR 
Recorded Programs with DishOnline, http://www.dish-systems.com/products/dish_online.php (`` `DISHOnline.com integrates DISH 
Network's expansive TV programming lineup with the vast amount of 
online video content, adding another dimension to our `pay once, 
take your TV everywhere' product platform.' ''). Much of the regular 
subscription programming that DISH offers online is satellite-
delivered programming. See DISH Network, Watch Live TV Online OR 
Recorded Programs with DishOnline, http://www.dish-systems.com/products/dish_online.php (noting that customers can watch content 
from cable programmers such as the Discovery Channel and MTV). Thus, 
we reject NCTA's argument that ``[t]here is no basis for asserting 
that any cable operator or common carrier's practices with respect 
to Internet-delivered video could * * * `prevent or significantly 
hinder' an MVPD from providing satellite cable programming.'' NCTA 
Dec. 10, 2010 Ex Parte Letter at 5.
    \151\ Notwithstanding suggestions to the contrary, the 
Commission is not required to wait until anticompetitive harms are 
realized before acting. Rather, the Commission may exercise its 
ancillary jurisdiction to ``plan in advance of foreseeable events, 
instead of waiting to react to them.'' Sw. Cable, 392 U.S. at 176-77 
(citation and internal quotation marks omitted); see also Star 
Wireless, LLC v. FCC, 522 F.3d at 475.
    \152\ See Open Internet NRPM, 24 FCC Rcd at 13099, para. 85 
(discussing role of the Internet in fostering video programming 
competition and the Commission's authority to regulate video 
services).
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    Similarly, open Internet rules enable us to carry out our 
responsibilities under Section 616(a) of the Act, which confers 
additional express statutory authority to combat discriminatory network 
management practices by broadband providers. Section 616(a) directs the 
Commission to adopt regulations governing program carriage agreements 
``and related practices'' between cable operators or other MVPDs and 
video programming vendors.\153\ The program carriage regulations must 
include provisions that prevent MVPDs from ``unreasonably restrain[ing] 
the ability of an unaffiliated video programming vendor to compete 
fairly by discriminating in video programming distribution,'' on the 
basis of a vendor's affiliation or lack of affiliation with the MVPD, 
in the selection, terms, or conditions of carriage of the vendor's 
programming.\154\ MVPD practices that discriminatorily impede competing 
video programming vendors' online delivery of programming to consumers 
affect the vendors' ability to ``compete fairly'' for viewers, just as 
surely as MVPDs' discriminatory selection of video programming for 
carriage on cable systems has this effect. We find that discriminatory 
practices by MVPDs in their capacity as broadband providers, such as 
blocking or charging fees for termination of online video programming 
to end users, are ``related'' to program carriage agreements and within 
our mandate to adopt regulations under Section 616(a).\155\
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    \153\ An MVPD is ``a person such as, but not limited to, a cable 
operator, a multichannel multipoint distribution service, a direct 
broadcast satellite service, or a television receive-only satellite 
program distributor, who makes available for purchase, by 
subscribers or customers, multiple channels of video programming.'' 
47 U.S.C. 522(13). A ``video programming vendor'' is any ``person 
engaged in the production, creation, or wholesale distribution of 
video programming for sale.'' 47 U.S.C. 536(b). A number of video 
programming vendors make their programming available online. See, 
e.g., Hulu.com, http://www.hulu.com/about; Biography Channel, http://www.biography.com; Hallmark Channel, http://www.hallmarkchannel.com.
    \154\ 47 U.S.C. 536(a)(1)-(3); see also 47 CFR 76.1301 
(implementing regulations to address practices specified in Section 
616(a)(1)-(3)).
    \155\ The Act does not define ``related practices'' as that 
phrase is used in Section 616(a). Because the term is neither 
explicitly defined in the statute nor susceptible of only one 
meaning, we construe it, consistent with dictionary definitions, to 
cover practices that are ``akin'' or ``connected'' to those 
specifically identified in Section 616(a)(1)-(3). See Black's Law 
Dictionary 1158 (5th ed. 1979); Webster's Third New Int'l Dictionary 
1916 (1993). The argument that Section 616(a) has no application to 
Internet access service overlooks that the statute expressly covers 
these ``related practices.''
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C. Authority To Protect the Public Interest Through Spectrum Licensing

    Open Internet rules for wireless services are further supported by 
our authority, under Title III of the Communications Act, to protect 
the public interest through spectrum licensing. Congress has entrusted 
the Commission with ``maintain[ing] the control of the United States 
over all the channels of radio transmission.'' Licensees hold 
Commission-granted authorizations to use that spectrum subject to 
conditions the Commission imposes on that use.\156\ In considering 
whether to grant a license to use spectrum, therefore, the Commission 
must ``determine * * * whether the public interest, convenience, and 
necessity will be served by the granting of such application.'' \157\ 
Likewise, when identifying classes of licenses to be awarded by auction 
and the characteristics of those licenses, the Commission ``shall 
include safeguards to protect the public interest'' and must seek to 
promote a number of goals, including ``the development and rapid 
deployment of new technologies, products, and services.'' Even after 
licenses are awarded, the Commission may change the license terms ``if 
in the judgment of the Commission such action will promote the public 
interest, convenience, and necessity.'' The Commission may exercise 
this authority on a license-by-license basis or through a rulemaking, 
even if the affected licenses were awarded at auction.
---------------------------------------------------------------------------

    \156\ 47 U.S.C. 304, 316(a)(1). We thus disagree with commenters 
who suggest in general that there is nothing in Title III to support 
the imposition of open Internet rules. See, e.g., EFF Comments at 6 
n. 13.
    \157\ 47 U.S.C. 309(a); see also 47 U.S.C. 307(a) (``The 
Commission, if public convenience, interest, or necessity will be 
served thereby, subject to the limitations of this [Act], shall 
grant to any applicant therefor a station license provided for by 
this [Act].'').
---------------------------------------------------------------------------

    The Commission previously has required wireless licensees to comply 
with open Internet principles, as appropriate in the particular 
situation before it. In 2007, when it modified the service rules for 
the 700 MHz band, the Commission took ``a measured step to encourage 
additional innovation and consumer choice at this critical stage in the 
evolution of wireless broadband services.'' Specifically, the 
Commission required C block licensees ``to allow customers, device 
manufacturers, third-party application developers, and others to use or 
develop the devices and applications of their choosing in C Block 
networks, so long as they meet all applicable regulatory requirements 
and comply with reasonable conditions related to management of the 
wireless network (i.e., do not cause harm to the network).'' The open 
Internet conditions we adopt in this Order likewise are necessary to 
advance the public interest in innovation and investment.\158\
---------------------------------------------------------------------------

    \158\ In addition, the use of mobile VoIP applications is likely 
to constrain prices for CMRS voice services, similar to what we 
described earlier with regard to VoIP and traditional phone 
services.
---------------------------------------------------------------------------

    AT&T contends that the Commission cannot apply ``neutrality'' 
regulations to wireless broadband services outside the upper 700 MHz C 
Block spectrum because any such regulations ``would unlawfully rescind 
critical rulings in the Commission's 700 MHz Second Report and Order on 
which providers relied in making multi-billion dollar investments,'' 
\159\ and that adopting these regulations more broadly to all mobile 
providers would violate the Administrative Procedure Act. We disagree. 
As explained above, the Commission retains the statutory authority to 
impose new requirements on existing licenses beyond those that were in 
place at the time of grant, whether the licenses were assigned by

[[Page 59220]]

auction or by other means.\160\ In this case, parties were made well 
aware that the agency might extend openness requirements beyond the C 
Block, diminishing any reliance interest they might assert.\161\ To the 
extent that AT&T argues that application of openness principles reduced 
auction bids on the C Block spectrum, we find that the reasons for the 
price differences between the C Block and other 700 MHz spectrum blocks 
are far more complex. A number of factors, including unique auction 
dynamics and significant differences between the C Block spectrum and 
other blocks of 700 MHz spectrum contributed to these price 
differences. In balancing the public interest factors we are required 
to consider, we have determined that adopting a targeted set of rules 
that apply to all mobile broadband providers is necessary at this time.
---------------------------------------------------------------------------

    \159\ AT&T PN Reply at 32. AT&T asserts that winners of non-C-
Block licenses paid a premium for licenses not subject to the open 
platform requirements that applied to the upper 700 MHz C Block 
licenses. Id. at 33-34.
    \160\ The Commission may act by rulemaking to modify or impose 
rules applicable to all licensees or licensees in a particular 
class; in order to modify specific licenses held by particular 
licensees, however, the Commission generally is required to follow 
the modification procedure set forth in 47 U.S.C. 316. See Comm. for 
Effective Cellular Rules v. FCC, 53 F.3d 1309, 1319-20 (DC Cir. 
1995).
    \161\ See generally 700 MHz Second Report and Order, 22 FCC Rcd 
at 15358-65. In the 700 MHz Second Report and Order, the Commission 
stated that its decision to limit open-platform requirements to the 
C Block was based on the record before it ``at this time,'' id. at 
15361, and noted that openness issues in the wireless industry were 
being considered more broadly in other proceedings. Id. at 15363. 
The public notice setting procedures for the 2008 auction advised 
bidders that the rules governing auctioned licenses would be subject 
to ``pending and future proceedings'' before the Commission. See 
Auction of 700 MHz Band Licenses Scheduled for January 24, 2008, 
Public Notice, 22 FCC Rcd 18141, 18156, para. 42 (2007).
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D. Authority To Collect Information To Enable the Commission To Perform 
Its Reporting Obligations to Congress

    Additional sections of the Communications Act provide authority for 
our transparency requirement in particular. Section 4(k) provides for 
an annual report to Congress that ``shall contain * * * such 
information and data collected by the Commission as may be considered 
of value in the determination of questions connected with the 
regulation of interstate * * * wire and radio communication'' and 
provide ``recommendations to Congress as to additional legislation 
which the Commission deems necessary or desirable.'' \162\ The 
Commission has previously relied on Section 4(k), among other 
provisions, as a basis for its authority to gather information.\163\ 
The Comcast court, moreover, ``readily accept[ed]'' that ``certain 
assertions of Commission authority could be `reasonably ancillary' to 
the Commission's statutory responsibility to issue a report to 
Congress. For example, the Commission might impose disclosure 
requirements on regulated entities in order to gather data needed for 
such a report.'' \164\ We adopt such disclosure requirements here.
---------------------------------------------------------------------------

    \162\ 47 U.S.C. 154(k). In a similar vein, Section 257 of the 
Act directs the Commission to report to Congress every three years 
on ``market entry barriers'' that the Commission recommends be 
eliminated, including ``barriers for entrepreneurs and other small 
businesses in the provision and ownership of telecommunications 
services and information services.'' 47 U.S.C. 257(a) & (c); see 
also Comcast, 600 F.3d at 659; NCTA Dec. 10, 2010 Ex Parte Letter at 
3 (``[S]ection 257's reporting mandate provides a basis for the 
Commission to require providers of broadband Internet access service 
to disclose the terms and conditions of service in order to assess 
whether such terms hamper small business entry and, if so, whether 
any legislation may be required to address the problem.'') (footnote 
omitted).
    \163\ See, e.g., New Part 4 of the Commission's Rules Concerning 
Disruptions to Commc'ns, Report and Order and Further Notice of 
Proposed Rulemaking, 19 FCC Rcd 16830, 16837, paras. 1, 12 (2004) 
(extending Commission's reporting requirements for communications 
disruptions to certain providers of non-wireline communications, in 
part based on Section 4(k)); DTV Consumer Educ. Initiative, Report & 
Order, 23 FCC Rcd 4134, 4147, paras. 1, 2, 28 (2008) (requiring 
various entities, including broadcasters, to submit quarterly 
reports to the Commission detailing their consumer education efforts 
related to the DTV transition, in part based on section 4(k)); 
Review of the Commission's Broad. Cable and Equal Emp't Opportunity 
Rules and Policies, Second Report and Order and Third Notice of 
Proposed Rulemaking, 17 FCC Rcd 24018, 24077, paras. 5, 195 (2002) 
(promulgating recordkeeping and reporting requirements for broadcast 
licensees and other regulated entities to show compliance with equal 
opportunities hiring rules, in part based on section 4(k)).
    \164\ 600 F.3d at 659. All, or nearly all, providers of 
broadband Internet access service are regulated by the Commission 
insofar as they operate under certificates to provide common 
carriage service, or under licenses to use radio spectrum.
---------------------------------------------------------------------------

    Finally, the Commission has broad authority under Section 218 of 
the Act to obtain ``full and complete information'' from common 
carriers and their affiliates. To the extent broadband providers are 
affiliated with communications common carriers, Section 218 allows the 
Commission to require the provision of information such as that covered 
by the transparency rule we adopt in this Order.\165\ We believe that 
these disclosure requirements will assist us in carrying out our 
reporting obligations to Congress.
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    \165\ Cf. US West, Inc. v. FCC, 778 F.2d 23, 26-27 (DC Cir. 
1985) (acknowledging Commission's authority under Section 218 to 
impose reporting requirements on holding companies that owned local 
telephone companies).
---------------------------------------------------------------------------

E. Constitutional Issues

    Some commenters contend that open Internet rules violate the First 
Amendment and amount to an unconstitutional taking under the Fifth 
Amendment. We examine these constitutional arguments below, and find 
them unfounded.
1. First Amendment
    Several broadband providers argue that open Internet rules are 
inconsistent with the free speech guarantee of the First Amendment. 
These commenters generally contend that because broadband providers 
distribute their own and third-party content to customers, they are 
speakers entitled to First Amendment protections. Therefore, they 
argue, rules that prevent broadband providers from favoring the 
transmission of some content over other content violate their free 
speech rights. Other commenters contend that none of the proposed rules 
implicate the First Amendment, because providing broadband service is 
conduct that is not correctly understood as speech.
    In arguing that broadband service is protected by the First 
Amendment, AT&T compares its provision of broadband service to the 
operation of a cable television system, and points out that the Supreme 
Court has determined that cable programmers and cable operators engage 
in speech protected by the First Amendment. The analogy is inapt. When 
the Supreme Court held in Turner I that cable operators were protected 
by the First Amendment, the critical factor that made cable operators 
``speakers'' was their production of programming and their exercise of 
``editorial discretion over which programs and stations to include'' 
(and thus which to exclude).
    Unlike cable television operators, broadband providers typically 
are best described not as ``speakers,'' but rather as conduits for 
speech. The broadband Internet access service at issue here does not 
involve an exercise of editorial discretion that is comparable to cable 
companies' choice of which stations or programs to include in their 
service. In this proceeding broadband providers have not, for instance, 
shown that they market their services as benefiting from an editorial 
presence.\166\ To the contrary, Internet end users expect that they can 
obtain access to all or substantially all content that is available on 
the Internet, without the editorial

[[Page 59221]]

intervention of their broadband provider.\167\
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    \166\ See, e.g., AT&T, AT&T U-verse, http://www.att-services.net/att-u-verse.html (AT&T U-verse: ``Customers can get the 
information they want, when they want it''); Verizon, FiOS Internet, 
http://www22.verizon.com/Residential/FiOSInternet/Overview.htm and 
Verizon, High Speed Internet, http://www22.verizon.com/Residential/HighSpeedInternet (Verizon FiOS and High Speed Internet: ``Internet, 
plus all the free extras'').
    \167\ See Verizon Comments at 117 (``[B]roadband providers today 
provide traditional Internet access services that offer subscribers 
access to all lawful content and have strong economic incentives to 
continue to do so.'') (emphasis added).
---------------------------------------------------------------------------

    Consistent with that understanding, broadband providers maintain 
that they qualify for statutory immunity from liability for copyright 
violations or the distribution of offensive material precisely because 
they lack control over what end users transmit and receive.\168\ In 
addition, when defending themselves against subpoenas in litigation 
involving alleged copyright violations, broadband providers typically 
take the position that they are simply conduits of information provided 
by others.\169\
---------------------------------------------------------------------------

    \168\ See 17 U.S.C. 512(a) (a ``service provider shall not be 
liable * * * for infringement of copyright by reason of the 
provider's transmitting, routing, or providing connections for'' 
material distributed by others on its network); 47 U.S.C. 230(c)(1) 
(``[N]o provider or user of an interactive computer service shall be 
treated as the publisher or speaker of any information provided by 
another information content provider''); see also Recording Indus. 
Ass'n of Am., Inc. v. Verizon Internet Servs., Inc., 351 F.3d 1229, 
1234 (DC Cir. 2003) (discussing in context of subpoena issued to 
Verizon under the Digital Millennium Copyright Act Section 512(a)'s 
``four safe harbors, each of which immunizes ISPs from liability 
from copyright infringement''), cert. denied, 543 U.S. 924 (2004). 
For example ``Verizon.net, the home page for Verizon Internet 
customers, contains a notice explicitly claiming copyright over the 
contents of the page. In contrast, the terms of service of Verizon 
Internet access explicitly disclaim any affiliation with content 
transmitted over the network.'' PK Reply at 22.
    \169\ See, e.g., Charter Commc'ns, Inc., Subpoena Enforcement 
Matter, 393 F.3d 771, 777 (8th Cir. 2005) (subpoenas served on 
Charter were not authorized because ``Charter's function'' as a 
broadband provider ``was limited to acting as a conduit for the 
allegedly copyright protected material'' at issue); Verizon Internet 
Servs., 351 F.3d at 1237 (accepting Verizon's argument that Federal 
copyright law ``does not authorize the issuance of a subpoena to an 
ISP acting as a mere conduit for the transmission of information 
sent by others'').
---------------------------------------------------------------------------

    To be sure, broadband providers engage in network management 
practices designed to protect their Internet services against spam and 
malicious content, but that practice bears little resemblance to an 
editor's choosing which programs, among a range of programs, to 
carry.\170\ Furthermore, this Order does not limit broadband providers' 
ability to modify their own Web pages, or transmit any lawful message 
that they wish, just like any other speaker. Broadband providers are 
also free under this Order to offer a wide range of ``edited'' 
services. If, for example, a broadband provider wanted to offer a 
service limited to ``family friendly'' materials to end users who 
desire only such content, it could do so under the rules we promulgate 
in this Order.
---------------------------------------------------------------------------

    \170\ We recognize that in two cases, Federal district courts 
have concluded that the provision of broadband service is ``speech'' 
protected by the First Amendment. In Itasca, the district court 
reasoned that broadband providers were analogous to cable and 
satellite television companies, which are protected by the First 
Amendment. Ill. Bell Tel. Co. v. Vill. of Itasca, 503 F. Supp. 2d 
928, 947-49 (N.D. Ill. 2007). And in Broward County, the district 
court determined that the transmission function provided by 
broadband service could not be separated from the content of the 
speech being transmitted. Comcast Cablevision of Broward Cnty., Inc. 
v. Broward Cnty., 124 F. Supp. 2d 685, 691-92 (S.D. Fla. 2000). For 
the reasons stated, we disagree with the reasoning of those 
decisions.
---------------------------------------------------------------------------

    AT&T and NCTA argue that open Internet rules interfere with the 
speech rights of content and application providers to the extent they 
are prevented from paying broadband providers for higher quality 
service. Purchasing a higher quality of termination service for one's 
own Internet traffic, though, is not speech--just as providing the 
underlying transmission service is not. Telephone common carriers, for 
instance, transmit users' speech for hire, but no court has ever 
suggested that regulation of common carriage arrangements triggers 
First Amendment scrutiny.
    Even if open Internet rules did implicate expressive activity, they 
would not violate the First Amendment. Because the rules are based on 
the characteristics of broadband Internet access service, independent 
of content or viewpoint, they would be subject to intermediate First 
Amendment scrutiny.\171\ The regulations in this Order are triggered by 
a broadband provider offering broadband Internet access, not by the 
message of any provider. Indeed, the point of open Internet rules is to 
protect traffic regardless of its content. Verizon's argument that such 
regulation is presumptively suspect because it makes speaker-based 
distinctions likewise lacks merit: Our action is based on the 
transmission service provided by broadband providers rather than on 
what providers have to say. In any event, speaker-based distinctions 
are permissible so long as they are ```justified by some special 
characteristic of' the particular medium being regulated''--here the 
ability of broadband providers to favor or disfavor Internet traffic to 
the detriment of innovation, investment, competition, public discourse, 
and end users.
---------------------------------------------------------------------------

    \171\ See Turner I, 512 U.S. at 642. Regulations generally are 
content neutral if justified without reference to content or 
viewpoint. Id. at 643; BellSouth Corp. v. FCC, 144 F.3d 58, 69 (DC 
Cir. 1998); Time Warner Entm't Co., L.P. v. FCC, 93 F.3d 957, 966-67 
(DC Cir. 1996).
---------------------------------------------------------------------------

    Under intermediate scrutiny, a content-neutral regulation will be 
sustained if ``it furthers an important or substantial government 
interest * * * unrelated to the suppression of free expression,'' and 
if ``the means chosen'' to achieve that interest ``do not burden 
substantially more speech than is necessary.'' The government interests 
underlying this Order--preserving an open Internet to encourage 
competition and remove impediments to infrastructure investment while 
enabling consumer choice, end-user control, free expression, and the 
freedom to innovate without permission--ensure the public's access to a 
multiplicity of information sources and maximize the Internet's 
potential to further the public interest. As a result, these interests 
satisfy the intermediate-scrutiny standard.\172\ Indeed, the interest 
in keeping the Internet open to a wide range of information sources is 
an important free speech interest in its own right. As Turner I 
affirmed, ``assuring that the public has access to a multiplicity of 
information sources is a governmental purpose of the highest order, for 
it promotes values central to the First Amendment.'' \173\ This Order 
protects the speech interests of all Internet speakers.
---------------------------------------------------------------------------

    \172\ These interests are consistent with the Communications 
Act's charge to the Commission to make available a ``rapid and 
efficient'' national communications infrastructure, 47 U.S.C. 151; 
to promote, consistent with a ``vibrant and competitive free 
market,'' ``the continued development of the Internet and other 
interactive computer services''; and to ``encourage the development 
of technologies which maximize user control over what information is 
received,'' 47 U.S.C. 230(b)(1)-(3). Indeed, AT&T concedes that 
``[t]here is little doubt that preservation of an open and free 
Internet is an `important or substantial government interest.' '' 
AT&T Comments at 237 (quoting Turner I, 512 U.S. at 662).
    \173\ 512 U.S. at 663. The Turner I Court continued: ``Indeed, 
it has long been a basic tenet of national communications policy 
that the widest possible dissemination of information from diverse 
and antagonistic sources is essential to the welfare of the 
public.'' Id. (internal quotation marks omitted). See also FCC v. 
Nat'l Citizens Comm. for Broad., 436 U.S. 775, 795 (1978) (NCCB) 
(quoting Associated Press v. United States, 326 U.S. 1, 20 (1945)).
---------------------------------------------------------------------------

    Time Warner and Verizon contend that the government lacks important 
or substantial interests because the harms from prohibited practices 
supposedly are speculative. This ignores actual instances of harmful 
practices by broadband providers, as discussed in Part II.B. In any 
event, the Commission is not required to stay its hand until 
substantial harms already have occurred. On the contrary, the 
Commission's predictive judgments as to the development of a problem 
and likely injury to the public interest are entitled to great 
deference.
    In sum, the rules we adopt are narrowly tailored to advance the 
important government interests at stake.

[[Page 59222]]

The rules apply only to that portion of the end user's link to the 
Internet over which the end user's broadband provider has control. They 
forbid only those actions that could unfairly impede the public's use 
of this important resource. Broadband providers are left with ample 
opportunities to transmit their own content, to maintain their own Web 
sites, and to engage in reasonable network management. In addition, 
they can offer edited services to their end users. The rules are 
narrowly tailored because they address the problem at hand, and go no 
farther.\174\
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    \174\ AT&T contends (AT&T Comments at 219-20) that our rules 
would conflict with prohibitions contained in Section 326 of the Act 
against ``censorship'' of ``radio communications'' or interference 
with ``the right of free speech by means of radio communication.'' 
47 U.S.C. 326. For the same reasons that our rules do not violate 
the First Amendment, they do not violate Section 326's statutory 
prohibition.
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2. Fifth Amendment Takings
    Contrary to the claims of some broadband providers, open Internet 
rules pose no issue under the Fifth Amendment's Takings Clause. Our 
rules do not compel new services or limit broadband providers' 
flexibility in setting prices for their broadband Internet access 
services, but simply require transparency and prevent broadband 
providers--when they voluntarily carry Internet traffic--from blocking 
or unreasonably discriminating in their treatment of that traffic. 
Moreover, this Order involves setting policies for communications 
networks, an activity that has been one of this Commission's central 
duties since it was established in 1934.
    Absent compelled permanent physical occupations of property,\175\ 
takings analysis involves ``essentially ad hoc, factual inquiries'' 
regarding such factors as the degree of interference with ``investment-
backed expectations,'' the ``economic impact of the regulation'' and 
``the character of the government action.'' In this regard, takings law 
makes clear that property owners cannot, as a general matter, expect 
that existing legal requirements regarding their property will remain 
entirely unchanged. As discussed in Part II, the history of broadband 
Internet access services offers no basis for reasonable reliance on a 
policy regime in which providers are free to conceal or discriminate 
without limit, and the rules we adopt in this Order should not impose 
substantial new costs on broadband providers.\176\ Accordingly, our 
Order does not raise constitutional concerns under regulatory takings 
analysis.
---------------------------------------------------------------------------

    \175\ Verizon contends that ``[t]o the extent the proposed rules 
would prohibit the owner of a broadband network from setting the 
terms on which other providers can occupy its property, the rule 
would give those providers the equivalent of a permanent easement on 
the network--a form of physical occupation.'' Verizon Comments at 
119 (citing Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 
419, 430 (1982)). Not so. Such transmissions are neither 
``occupations'' nor ``permanent.'' See Loretto, 458 U.S. at 435 
n.12; see also Cablevision Sys. Corp. v. FCC, 570 F.3d 83, 98 (2d 
Cir. 2009) (upholding Commission's finding that a must-carry 
obligation did not constitute a physical occupation because ``the 
transmission of WRNN's signal does not involve a physical occupation 
of Cablevision's equipment or property''). In addition, to the 
extent broadband providers voluntarily allow any customer to 
transmit or receive information, the imposition of reasonable non-
discrimination requirements would not be a taking under Loretto. See 
Hilton Washington Corp. v. District of Columbia, 777 F.2d 47 (DC 
Cir. 1985); Yee v. City of Escondido, 503 U.S. 519, 531 (1992).
    \176\ This history likewise refutes the assertion that prior 
Commission decisions ``engendered serious reliance interests'' that 
would be unsettled by our adoption of open Internet rules. Baker 
Statement at *11 n.41 (citation and internal quotation marks 
omitted).
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V. Enforcement

    Prompt and effective enforcement of the rules adopted in this Order 
is crucial to preserving an open Internet and providing clear guidance 
to stakeholders. We anticipate that many of the disputes that will 
arise regarding alleged open Internet violations--particularly those 
centered on engineering-focused questions--will be resolvable by the 
parties without Commission involvement. We thus encourage parties to 
endeavor to resolve disputes through direct negotiation focused on 
relevant technical issues, and to consult with independent technical 
bodies. Many commenters endorse this approach.\177\
---------------------------------------------------------------------------

    \177\ See, e.g., Bright House Networks Comments at 10; CCIA 
Comments at 2, 34; Google-Verizon Joint Comments at 4 (``A robust 
role for technical and industry groups should be encouraged to 
address any challenges or problems that may arise and to help guide 
the practices of all players. * * *''); WISPA Comments at 14-16; 
DISH Network Reply at 24-26; Qwest Reply at 32.
---------------------------------------------------------------------------

    Should issues develop that are not resolved through private 
processes, the Commission will provide backstop mechanisms to address 
such disputes.\178\ In the Open Internet NPRM, the Commission proposed 
to enforce open Internet rules through case-by-case adjudication, a 
proposal that met with almost universal support among commenters. The 
Commission also sought comment on whether it should adopt complaint 
procedures specifically governing alleged violations of open Internet 
rules, and whether any of the Commission's existing rules provide a 
suitable model.
---------------------------------------------------------------------------

    \178\ Providers and other parties may also seek guidance from 
the Commission on questions about the application of the open 
Internet rules in particular contexts, for instance by requesting a 
declaratory ruling. See 47 CFR 1.2.
---------------------------------------------------------------------------

A. Informal Complaints

    Many commenters urge the Commission to adopt informal complaint 
procedures that equip end users and edge providers with a simple and 
cost-effective option for calling attention to open Internet rule 
violations. We agree that end users, edge providers, and others should 
have an efficient vehicle to bring potential open Internet violations 
to the Commission, and indeed, such a vehicle is already available. 
Parties may submit complaints to the Commission pursuant to Section 
1.41 of the Commission's rules. Unlike formal complaints, no filing fee 
is required. We recommend that end users and edge providers submit any 
complaints through the Commission's Web site, at http://esupport.fcc.gov/complaints.htm. The Consumer and Governmental Affairs 
Bureau will also make available resources explaining these rules and 
facilitating the filing of informal complaints. Although individual 
informal complaints will not typically result in written Commission 
orders, the Enforcement Bureau will examine trends or patterns in 
complaints to identify potential targets for investigation and 
enforcement action.\179\
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    \179\ As with our other complaint rules, the availability of 
complaint procedures does not bar the Commission from initiating 
separate and independent enforcement proceedings for potential 
violations. See 47 CFR 0.111(a)(16).
---------------------------------------------------------------------------

B. Formal Complaints

    Many commenters propose that the Commission adopt formal complaint 
procedures to address open Internet disputes. We agree that such 
procedures should be available in the event an open Internet dispute 
cannot be resolved through other means. Formal complaint processes 
permit anyone--including individual end users and edge providers--to 
file a claim alleging that another party has violated a statute or 
rule, and asking the Commission to rule on the dispute. A number of 
commenters suggest that existing Commission procedural rules could 
readily be utilized to govern open Internet complaints.
    We conclude that adopting a set of procedures based on our Part 76 
cable access complaint rules will best suit the needs of open Internet 
disputes that may arise.\180\ Although similar to the

[[Page 59223]]

complaint rules under Section 208, we find that the part 76 rules are 
more streamlined and thus preferable.\181\
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    \180\ The Commission is authorized to resolve formal 
complaints--and adopt procedural rules governing the process--
pursuant to Sections 4(i) and 4(j) of the Act. 47 U.S.C.. 154(i), 
154(j). In addition, Section 403 of the Act enables the Commission 
to initiate inquiries and enforce orders on its own motion. 47 
U.S.C. 403. Inherent in such authority is the ability to resolve 
disputes concerning violations of the open Internet rules.
    \181\ The Part 76 rules were promulgated to address complaints 
against cable systems. See 1998 Biennial Regulatory Review--Part 
76--Cable Television Service Pleading and Complaint Rules, Report 
and Order, 14 FCC Rcd 418, 420, para. 6 (1999) (``1998 Biennial 
Review''). For example, a local television station may bring a 
complaint, pursuant to the Part 76 rules, claiming that it was 
wrongfully denied carriage on a cable system. See 47 CFR 76.61. Some 
complaints alleging open Internet violations may be analogous, such 
as those brought by a content or application provider claiming that 
broadband providers--many of which are cable companies--are 
unlawfully blocking or degrading access to end users.
---------------------------------------------------------------------------

    Under the rules we adopt in this Order, any person may file a 
formal complaint. Before filing a complaint, a complainant must first 
notify the defendant in writing that it intends to file a complaint 
with the Commission for violation of rules adopted in this Order.\182\ 
After the complaint has been filed, the defendant must submit an 
answer, and the complainant may submit a reply. In some cases, the 
facts might be uncontested, and the proceeding can be completed based 
on the pleadings. In other cases, a thorough analysis of the challenged 
conduct might require further factual development and briefing.\183\ 
Based on the record developed, Commission staff (or the Commission 
itself) will issue an order determining the lawfulness of the 
challenged practice.
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    \182\ As with other formal complaint procedures, a filing fee 
will be required. See 47 CFR 1.1106.
    \183\ The rules give the Commission discretion to order other 
procedures as appropriate, including briefing, status conferences, 
oral argument, evidentiary hearings, discovery, or referral to an 
administrative law judge. See 47 CFR 8.14(e) through (g).
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    As in other contexts, complainants in open Internet proceedings 
will ultimately bear the burden of proof to demonstrate by a 
preponderance of the evidence that an alleged violation of the rules 
has occurred. A number of commenters propose, however, that once a 
complainant makes a prima facie showing that an open Internet rule has 
been violated, the burden should shift to the broadband provider to 
demonstrate that the challenged practice is reasonable. This approach 
is appropriate in the context of certain open Internet complaints, when 
the evidence necessary to apply the open Internet rules is 
predominantly in the possession of the broadband provider. Accordingly, 
we require a complainant alleging a violation of the open Internet 
rules to plead fully and with specificity the basis of its claims and 
to provide facts, supported when possible by documentation or 
affidavit, sufficient to establish a prima facie case of an open 
Internet violation. In turn, the broadband provider must answer each 
claim with particularity and furnish facts, supported by documentation 
or affidavit, demonstrating the reasonableness of the challenged 
practice. At that point, the complainant will have the opportunity to 
demonstrate that the practice is not reasonable. Should experience 
reveal the need to adjust the burden of proof in open Internet 
disputes, we will do so as appropriate.
    Several commenters urge the Commission to adopt timelines for the 
complaint process. We recognize the need to resolve alleged violations 
swiftly, and accordingly will allow requests for expedited treatment of 
open Internet complaints under the Enforcement Bureau's Accelerated 
Docket procedures.\184\
---------------------------------------------------------------------------

    \184\ See 47 CFR 1.730. Furthermore, for good cause, pursuant to 
47 CFR 1.3, the Commission may shorten the deadlines or otherwise 
revise the procedures herein to expedite the adjudication of 
complaints.
---------------------------------------------------------------------------

    In resolving formal complaints, the Commission will draw on 
resources from across the agency--including engineering, economic, and 
legal experts--to resolve open Internet complaints in a timely manner. 
In addition, we will take into account standards and best practices 
adopted by relevant standard-setting organizations, and such 
organizations and outside advisory groups also may provide valuable 
technical assistance in resolving disputes. Further, in order to 
facilitate prompt decision-making, when possible we will resolve open 
Internet formal complaints at the bureau level, rather than the 
Commission level.\185\
---------------------------------------------------------------------------

    \185\ The rules adopted in this Order explicitly authorize the 
Enforcement Bureau to resolve complaints alleging open Internet 
violations.
---------------------------------------------------------------------------

C. FCC Initiated Actions

    As noted above, in addition to ruling on complaints, the Commission 
has the authority to initiate enforcement actions on its own motion. 
For instance, Section 403 of the Act permits the Commission to initiate 
an inquiry concerning any question arising under the Act, and Section 
503(b) authorizes us to issue citations and impose forfeiture penalties 
for violations of our rules. Should the Commission find that a 
broadband Internet provider is engaging in activity that violates the 
open Internet rules, we will take appropriate enforcement action, 
including the issuance of forfeitures.

VI. Effective Date, Open Internet Advisory Committee, and Commission 
Review

    Some of the rules adopted in this Order contain new information 
collection requirements subject to the Paperwork Reduction Act (PRA). 
Our rules addressing transparency are among those requiring PRA 
approval. The disclosure rule is essential to the proper functioning of 
our open Internet framework, and we therefore make all the rules we 
adopt in this Order effective November 20, 2011.
    To assist the Commission in monitoring the state of Internet 
openness and the effects of our rules, we intend to create an Open 
Internet Advisory Committee. The Committee, to be created in 
consultation with the General Services Administration pursuant to the 
Federal Advisory Committee Act, will be an inclusive and transparent 
body that will hold public meetings. It will be comprised of a balanced 
group including consumer advocates; Internet engineering experts; 
content, application, and service providers; network equipment and end-
user-device manufacturers and suppliers; investors; broadband service 
providers; and other parties the Commission may deem appropriate. The 
Committee will aid the Commission in tracking developments with respect 
to the freedom and openness of the Internet, in particular with respect 
to issues discussed in this Order, including technical standards and 
issues relating to mobile broadband and specialized services. The 
Committee will report to the Commission and make recommendations it 
deems appropriate concerning our open Internet framework.
    In light of the pace of change of technologies and the market for 
broadband Internet access service, and to evaluate the efficacy of the 
framework adopted in this Order for preserving Internet openness, the 
Commission will review all of the rules in this Order no later than two 
years from their effective date, and will adjust its open Internet 
framework as appropriate.

VII. Procedural Matters

A. Final Regulatory Flexibility Analysis

    As required by the Regulatory Flexibility Act of 1980, as amended 
(RFA), an Initial Regulatory Flexibility Analysis (IRFA) was included 
in the Open Internet NPRM in GN Docket No. 09-191 and WC Docket No. 07-
52. The Commission sought written public

[[Page 59224]]

comment on the proposals in these dockets, including comment on the 
IRFA. This Final Regulatory Flexibility Analysis (FRFA) conforms to the 
RFA.
Need for, and Objectives of, the Rules
    In this Order the Commission takes an important step to preserve 
the Internet as an open platform for innovation, investment, job 
creation, economic growth, competition, and free expression. To provide 
greater clarity and certainty regarding the continued freedom and 
openness of the Internet, we adopt three basic rules that are grounded 
in broadly accepted Internet norms, as well as our own prior decisions:
    i. Transparency. Fixed and mobile broadband providers must disclose 
the network management practices, performance characteristics, and 
terms and conditions of their broadband services;
    ii. No blocking. Fixed broadband providers may not block lawful 
content, applications, services, or non-harmful devices; mobile 
broadband providers may not block lawful Web sites, or block 
applications that compete with their voice or video telephony services; 
and
    iii. No unreasonable discrimination. Fixed broadband providers may 
not unreasonably discriminate in transmitting lawful network traffic.

We believe these rules, applied with the complementary principle of 
reasonable network management, will empower and protect consumers and 
innovators while helping ensure that the Internet continues to 
flourish, with robust private investment and rapid innovation at both 
the core and the edge of the network. This is consistent with the 
National Broadband Plan goal of broadband access that is ubiquitous and 
fast, promoting the global competitiveness of the United States.
    In late 2009, we launched a public process to determine whether and 
what actions might be necessary to preserve the characteristics that 
have allowed the Internet to grow into an indispensable platform 
supporting our nation's economy and civic life, and to foster continued 
investment in the physical networks that enable the Internet. Since 
then, more than 100,000 commenters have provided written input. 
Commission staff held several public workshops and convened a 
Technological Advisory Process with experts from industry, academia, 
and consumer advocacy groups to collect their views regarding key 
technical issues related to Internet openness.
    This process has made clear that the Internet has thrived because 
of its freedom and openness--the absence of any gatekeeper blocking 
lawful uses of the network or picking winners and losers online. 
Consumers and innovators do not have to seek permission before they use 
the Internet to launch new technologies, start businesses, connect with 
friends, or share their views. The Internet is a level playing field. 
Consumers can make their own choices about what applications and 
services to use and are free to decide what content they want to 
access, create, or share with others. This openness promotes 
competition. It also enables a self-reinforcing cycle of investment and 
innovation in which new uses of the network lead to increased adoption 
of broadband, which drives investment and improvements in the network 
itself, which in turn lead to further innovative uses of the network 
and further investment in content, applications, services, and devices. 
A core goal of this Order is to foster and accelerate this cycle of 
investment and innovation.
    The record and our economic analysis demonstrate, however, that the 
openness of the Internet cannot be taken for granted, and that it faces 
real threats. Indeed, we have seen broadband providers endanger the 
Internet's openness by blocking or degrading content and applications 
without disclosing their practices to end users and edge providers, 
notwithstanding the Commission's adoption of open Internet principles 
in 2005. In light of these considerations, as well as the limited 
choices most consumers have for broadband service, broadband providers' 
financial interests in telephony and pay television services that may 
compete with online content and services, and the economic and civic 
benefits of maintaining an open and competitive platform for innovation 
and communication, the Commission has long recognized that certain 
basic standards for broadband provider conduct are necessary to ensure 
the Internet's continued openness. The record also establishes the 
widespread benefits of providing greater clarity in this area--clarity 
that the Internet's openness will continue; that there is a forum and 
procedure for resolving alleged open Internet violations; and that 
broadband providers may reasonably manage their networks and innovate 
with respect to network technologies and business models. We expect the 
costs of compliance with our prophylactic rules to be small, as they 
incorporate longstanding openness principles that are generally in line 
with current practices and with norms endorsed by many broadband 
providers. Conversely, the harms of open Internet violations may be 
substantial, costly, and in some cases potentially irreversible.
    The rules we proposed in the Open Internet NPRM and those we adopt 
in this Order follow directly from the Commission's bipartisan Internet 
Policy Statement, adopted unanimously in 2005 and made temporarily 
enforceable for certain providers in 2005 and 2006; openness 
protections the Commission established in 2007 for users of certain 
wireless spectrum; and a notice of inquiry in 2007 that asked, among 
other things, whether the Commission should add a principle of 
nondiscrimination to the Internet Policy Statement. Our rules build 
upon these actions, first and foremost by requiring broadband providers 
to be transparent in their network management practices, so that end 
users can make informed choices and innovators can develop, market, and 
maintain Internet-based offerings. The rules also prevent certain forms 
of blocking and discrimination with respect to content, applications, 
services, and devices that depend on or connect to the Internet.
    An open, robust, and well-functioning Internet requires that 
broadband providers have the flexibility to reasonably manage their 
networks. Network management practices are reasonable if they are 
appropriate and tailored to achieving a legitimate network management 
purpose. Transparency and end-user control are touchstones of 
reasonableness.
    We recognize that broadband providers may offer other services over 
the same last-mile connections used to provide broadband service. These 
``specialized services'' can benefit end users and spur investment, but 
they may also present risks to the open Internet. We will closely 
monitor specialized services and their effects on broadband service to 
ensure, through all available mechanisms, that they supplement but do 
not supplant the open Internet.
    Mobile broadband is at an earlier stage in its development than 
fixed broadband and is evolving rapidly. For that and other reasons 
discussed below, we conclude that it is appropriate at this time to 
take measured steps in this area. Accordingly, we require mobile 
providers to comply with the transparency rule, which includes 
enforceable disclosure obligations regarding device and application 
certification and approval processes; we prohibit providers from 
blocking lawful Web sites; and we prohibit providers from blocking 
applications that compete with providers' voice and video telephony 
services. We will closely

[[Page 59225]]

monitor the development of the mobile broadband market and will adjust 
the framework we adopt in this Order as appropriate.
    These rules are within our jurisdiction over interstate and foreign 
communications by wire and radio. Further, they implement specific 
statutory mandates in the Communications Act (``Act'') and the 
Telecommunications Act of 1996 (``1996 Act''), including provisions 
that direct the Commission to promote Internet investment and to 
protect and promote voice, video, and audio communications services.
    The framework we adopt in this Order aims to ensure the Internet 
remains an open platform--one characterized by free markets and free 
speech--that enables consumer choice, end-user control, competition 
through low barriers to entry, and the freedom to innovate without 
permission. The framework does so by protecting openness through high-
level rules, while maintaining broadband providers' and the 
Commission's flexibility to adapt to changes in the market and in 
technology as the Internet continues to evolve.
Summary of the Significant Issues Raised by the Public Comments in 
Response to the IRFA and Summary of the Assessment of the Agency of 
Such Issues
    A few commenters discussed the IRFA from the Open Internet NPRM. 
The Center for Regulatory Effectiveness (CRE) argued that the Open 
Internet NPRM's IRFA was defective because it ineffectively followed 5 
U.S.C. secs. 603(a) (``Such analysis shall describe the impact of the 
proposed rule on small entities.'') and 603(c) (``Each initial 
regulatory flexibility analysis shall also contain a description of any 
significant alternatives to the proposed rule which accomplish the 
stated objectives of applicable statutes and which minimize any 
significant economic impact of the proposed rule on small entities.''). 
CRE does not provide any case law to support its interpretation that 
the Commission is in violation of these aspects of the statute, nor 
does CRE attempt to argue that SBEs have actually or theoretically been 
harmed. Rather, CRE is concerned that by not following its reading of 
these parts of the law, the Commission is being hypocritical by not 
being transparent enough. CRE recommends that the Commission publish a 
revised IRFA for public comment. We disagree: we believe that the IRFA 
was adequate and that the opportunity for SBEs to comment in a publicly 
accessible docket should remove any potential harm to openness that CRE 
is concerned with, as well as any harms to SBEs that could occur by not 
following CRE's interpretation of the law.
    The Smithville Telephone Company (Smithville) notes that many ILECs 
have vastly fewer employees than the 1500 or less that is required to 
be recognized as a small business under the SBA. For instance, 
Smithville states that it has seven employees. Smithville also observes 
that some other small ILECs in Mississippi have staffs of 8, 4, 2, 3, 
and 21. Smithville argues that companies of this size do not have the 
resources to fully analyze issues and participate in Commission 
proceedings. Smithville would like the Commission to use the data that 
it regularly receives from carriers to set a carrier size where 
exemptions from proposed rules and less complex reporting requirements 
can be set. In the present case, however, we determine that this is not 
necessary. We expect the costs of compliance with these rules to be 
small, as the high-level rules incorporate longstanding openness 
principles that appear to be generally in line with most broadband 
providers' current practices. We note that Smithville does not cite any 
particular source of increased costs, or attempt to estimate costs of 
compliance. Nonetheless, the Commission attempts to ease any burden 
that the transparency rule may cause by only requiring disclosure on a 
Web site and at the point of sale, making the transparency rule 
flexible. In addition, by setting the effective date of these rules as 
November 20, 2011, the Order gives broadband providers adequate time to 
develop cost-effective methods of compliance. Finally, to the extent 
that the transparency rule imposes a new obligation on small 
businesses, we find that the flexibility built into the rule addresses 
any compliance concerns.
    The American Cable Association (ACA) notes that the Commission has 
an obligation to ``include in the FRFA a comprehensive discussion of 
the economic impact its actions will have on small cable operators.'' 
The ACA cites its other comments, which ask the Commission to clarify 
that the codified principles would not obligate broadband service 
providers to (1) ``employ specific network management practices,'' (2) 
``impose affirmative obligations dealing with unlawful content or the 
unlawful transfer of content,'' (3) ``accommodate lawful devices that 
are not supported by a broadband provider's network,'' and (4) 
``provide information regarding a company's network management 
practices through any reporting, recordkeeping, or means other than 
through a company's Web site or Web page.'' Addressing ACA's arguments 
with regard to cable operators, and fixed broadband providers in 
particular, (1), the Commission is not requiring specific network 
management practices. The Commission only requires that any network 
management be reasonable; the Commission does not require that any 
specific practice be employed. Regarding (2), the rules do not impose 
affirmative obligations dealing with unlawful content or the unlawful 
transfer of content. We state that the ``no blocking'' rule does not 
prevent or restrict a broadband provider from refusing to transmit 
material such as child pornography. In response to (3), the Order 
clarifies that the ``no blocking'' rule protects only devices that do 
not harm the network and only requires fixed broadband service 
providers to allow devices that conform to publicly available industry 
standards applicable to the providers' services. Directly addressing 
ACA's concern, the Order notes that a DOCSIS-based provider is not 
required to support a DSL modem. In response to (4), the disclosure 
requirement in this Order does not require additional forms of 
disclosure, other than, at a minimum, requiring broadband providers to 
prominently display or provide links to disclosures on a publicly 
available, easily accessible Web site that is available to current and 
prospective end users and edge providers as well as to the Commission, 
and disclosing relevant information at the point of sale.
Description and Estimate of the Number of Small Entities to Which the 
Rules Apply
    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
    Our action may, over time, affect small entities that are not 
easily categorized at present. We therefore

[[Page 59226]]

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
    Internet Service Providers. The 2007 Economic Census places these 
firms, whose services might include voice over Internet Protocol 
(VoIP), in either of two categories, depending on whether the service 
is provided over the provider's own telecommunications facilities 
(e.g., cable and DSL ISPs), or over client-supplied telecommunications 
connections (e.g., dial-up ISPs). The former are within the category of 
Wired Telecommunications Carriers, which has an SBA small business size 
standard of 1,500 or fewer employees. These are also labeled 
``broadband.'' The latter are within the category of All Other 
Telecommunications, which has a size standard of annual receipts of $25 
million or less. These are labeled non-broadband. The most current 
Economic Census data for all such firms are 2007 data, which are 
detailed specifically for ISPs within the categories above. For the 
first category, the data show that 396 firms operated for the entire 
year, of which 159 had nine or fewer employees. For the second 
category, the data show that 1,682 firms operated for the entire year. 
Of those, 1,675 had annual receipts below $25 million per year, and an 
additional two had receipts of between $25 million and $ 49,999,999. 
Consequently, we estimate that the majority of ISP firms are small 
entities.
    The ISP industry has changed since 2007. The 2007 data cited above 
may therefore include entities that no longer provide Internet access 
service and may exclude entities that now provide such service. To 
ensure that this FRFA describes the universe of small entities that our 
action might affect, we discuss in turn several different types of 
entities that might be providing Internet access service.
3. Wireline Providers
    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.
    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 action.
    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.
    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 action.
    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, 33 carriers have reported that 
they are engaged in the provision of operator services. Of these, an 
estimated 31 have 1,500 or fewer employees and 2 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--Fixed and Mobile
    For reasons discussed above in the text of the Order, the 
Commission has distinguished wireless fixed broadband Internet access 
service from wireless mobile broadband Internet access service. 
Specifically, the Commission decided that fixed broadband Internet 
access service providers, whether wireline or wireless, must disclose 
their network management practices and the performance characteristics 
and commercial terms of their broadband services; may not block lawful 
content, applications, services or non-harmful

[[Page 59227]]

devices; and may not unreasonably discriminate in transmitting lawful 
network traffic. Also for the reasons discussed above, the Commission 
decided that wireless mobile broadband Internet access service 
providers must disclose their network management practices and 
performance characteristics and commercial terms of their broadband 
service and may not block lawful Web sites or block applications that 
compete with their voice or video telephony service. Thus, to the 
extent the wireless services listed below are used by wireless firms 
for fixed and mobile broadband Internet access services, the actions in 
this Order 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.
    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 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.
    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.
    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.
    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, 413 carriers reported that they were engaged in wireless 
telephony. Of these, an estimated 261 have 1,500 or fewer employees and 
152 have more than 1,500 employees. Therefore, more than half of these 
entities can be considered small.
    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.
    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.
    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

[[Page 59228]]

on January 10, 2002 and closed on January 17, 2002 and included 23 BEA 
licenses. One bidder claiming small business status won five licenses.
    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.
    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. 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.
    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'' 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.
    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.
    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.
    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.
    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 fewer than 10 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.
    AWS Services (1710-1755 MHz and 2110-2155 MHz bands (AWS-1); 1915-

[[Page 59229]]

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.
    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 April 2010, more than 1270 licenses have been 
granted and more than 7433 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.
    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 31,428 
common carrier fixed licensees and 79,732 private operational-fixed 
licensees and broadcast auxiliary radio licensees in the microwave 
services. There are approximately 120 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.
    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. In 2009, the Commission 
conducted Auction 86, the sale of 78 licenses in the BRS areas. The 
Commission offered three levels of bidding credits: (i) A bidder with 
attributed average annual gross revenues that exceed $15 million and do 
not exceed $40 million for the preceding three years (small business) 
will receive a 15 percent discount on its winning bid; (ii) a bidder 
with attributed average annual gross revenues that exceed $3 million 
and do not exceed $15 million for the preceding three years (very small 
business) will receive a 25 percent discount on its winning bid; and 
(iii) a bidder with attributed average annual gross revenues that do 
not exceed $3 million for the preceding three years (entrepreneur) will 
receive a 35 percent discount on its winning bid. Auction 86 concluded 
in 2009 with the sale of 61 licenses. Of the ten winning bidders, two 
bidders that claimed small business status won 4 licenses; one bidder 
that claimed very small business status won three licenses; and two 
bidders that claimed entrepreneur status won six licenses.
    In addition, the SBA's Cable Television Distribution Services small 
business size standard is applicable to EBS. There are presently 2,032 
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 1,932 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

[[Page 59230]]

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
    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.
    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.
    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
    Because Section 706 requires us to monitor the deployment of 
broadband 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.
    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.
    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.
    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
    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

[[Page 59231]]

estimate that 1,644 or fewer firms may be considered small under the 
SBA small business size standard.
Description of Projected Reporting, Recordkeeping, and Other Compliance 
Requirements for Small Entities
    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 Order requires that 
broadband providers must, at a minimum, prominently display or provide 
links to disclosures on a publicly available, easily accessible Web 
site that is available to current and prospective end users and edge 
providers as well as to the Commission, and at the point of sale. 
Providers should ensure that all Web site disclosures are accessible by 
persons with disabilities. We do not require additional forms of 
disclosure. Broadband providers' disclosures to the public include 
disclosure to the Commission; that is, the Commission will monitor 
public disclosures and may require additional disclosures directly to 
the Commission. We anticipate that broadband providers may be able to 
satisfy the transparency rule through a single disclosure, and 
therefore do not require multiple disclosures targeted at different 
audiences. This affects all classes of small entities mentioned in 
Appendix B, part C, and requires professional skills of entering 
information onto a Web page and an understanding of the entities' 
network practices, both of which are easily managed by staff of these 
types of small entities.
Steps Taken To Minimize the Significant Economic Impact on Small 
Entities, and Significant Alternatives Considered
    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.
    The rules adopted in this Order are generally consistent with 
current industry practices, so the costs of compliance should be small. 
Although some commenters assert that a disclosure rule will impose 
significant burdens on broadband providers, no commenter cites any 
particular source of increased costs, or attempts to estimate costs of 
compliance. For a number of reasons, we believe that the costs of the 
disclosure rule we adopt in this Order are outweighed by the benefits 
of empowering end users to make informed choices and of facilitating 
the enforcement of the other open Internet rules. First, we require 
only that providers post disclosures on their Web sites and at the 
point of sale, not that they bear the cost of printing and distributing 
bill inserts or other paper documents to all existing customers. 
Second, although we may subsequently determine that it is appropriate 
to require that specific information be disclosed in particular ways, 
the transparency rule we adopt in this Order gives broadband providers 
flexibility to determine what information to disclose and how to 
disclose it. We also expressly exclude from the rule competitively 
sensitive information, information that would compromise network 
security, and information that would undermine the efficacy of 
reasonable network management practices. Third, by setting the 
effective date of these rules as November 20, 2011, we give broadband 
providers adequate time to develop cost effective methods of 
compliance. Thus, the rule gives broadband providers--including small 
entities--sufficient time and flexibility to implement the rules in a 
cost-effective manner. Finally, these rules provide certainty and 
clarity that are beneficial both to broadband providers and to their 
customers.
Report to Congress
    The Commission has sent a copy of the Order, including this FRFA, 
in a report to Congress and the Government Accountability Office 
pursuant to the Congressional Review Act. In addition, the Commission 
will send a copy of the Order, including this FRFA, to the Chief 
Counsel for Advocacy of the SBA.

B. Paperwork Reduction Act of 1995 Analysis

    This document contains new information collection requirements 
subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-
13.

C. Congressional Review Act

    The Commission has sent a copy of this Report and Order to Congress 
and the Government Accountability Office pursuant to the Congressional 
Review Act, see 5 U.S.C. 801(a)(1)(A).

D. Data Quality Act

    The Commission certifies that it has complied with the Office of 
Management and Budget Final Information Quality Bulletin for Peer 
Review, 70 FR 2664, January 14 (2005), and the Data Quality Act, Public 
Law 106-554 (2001), codified at 44 U.S.C. 3516 note, with regard to its 
reliance on influential scientific information in the Report and Order 
in GN Docket No. 09-191 and WC Docket No. 07-52.

E. Accessible Formats

    To request materials in accessible formats for people with 
disabilities (braille, large print, electronic files, audio format), 
send an e-mail to [email protected] or call the Consumer & Governmental 
Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty). Contact the 
FCC to request reasonable accommodations for filing comments 
(accessible format documents, sign language interpreters, CARTS, etc.) 
by e-mail: [email protected]; phone: (202) 418-0530 (voice), (202) 418-
0432 (TTY).

VIII. Ordering Clauses

    Accordingly, it is ordered that, pursuant to Sections 1, 2, 3, 4, 
201, 218, 230, 251, 254, 256, 257, 301, 303, 304, 307, 309, 316, 332, 
403, 503, 602, 616, and 628, of the Communications Act of 1934, as 
amended, and Section 706 of the Telecommunications Act of 1996, as 
amended, 47 U.S.C. secs. 151, 152, 153, 154, 201, 218, 230, 251, 254, 
256, 257, 301, 303, 304, 307, 309, 316, 332, 403, 503, 522, 536, 548, 
1302, this Report and Order is adopted.
    It is further ordered that Part 0 of the Commission's rules is 
amended as set forth in Appendix B.
    It is further ordered that Part 8 of the Commission's Rules, 47 CFR 
Part 8, is added as set forth in Appendix A and B.
    It is further ordered that this Report and Order shall become 
effective November 20, 2011.
    It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Report and Order, including the Final Regulatory 
Flexibility Analysis, to the Chief Counsel for Advocacy of the Small 
Business Administration.

List of Subjects

47 CFR Part 0

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

[[Page 59232]]

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 discussed in the preamble, the Federal 
Communications Commission amends 47 CFR part 0 to read as follows:

PART 0--COMMISSION ORGANIZATION

0
1. The authority citation for part 0 continues to read as follows:

    Authority: Sec. 5, 48 Stat. 1068, as amended; 47 U.S.C. 155, 
225, unless otherwise noted.


0
2. Section 0.111 is amended by adding paragraph (a)(24) to read as 
follows:


Sec.  0.111  Functions of the Bureau.

    (a) * * *
    (24) Resolve complaints alleging violations of the open Internet 
rules.
* * * * *

0
3. Add part 8 to read as follows:

PART 8--PRESERVING THE OPEN INTERNET

Sec.
8.1 Purpose.
8.3 Transparency.
8.5 No Blocking.
8.7 No Unreasonable Discrimination.
8.9 Other Laws and Considerations.
8.11 Definitions.
8.12 Formal Complaints.
8.13 General pleading requirements.
8.14 General formal complaint procedures.
8.15 Status conference.
8.16 Confidentiality of proprietary information.
8.17 Review.


    Authority: 47 U.S.C. secs. 151, 152, 153, 154, 201, 218, 230, 
251, 254, 256, 257, 301, 303, 304, 307, 309, 316, 332, 403, 503, 
522, 536, 548, 1302.


Sec.  8.1  Purpose.

    The purpose of this part is to preserve the Internet as an open 
platform enabling consumer choice, freedom of expression, end-user 
control, competition, and the freedom to innovate without permission.


Sec.  8.3  Transparency.

    A person engaged in the provision of broadband Internet access 
service shall publicly disclose accurate information regarding the 
network management practices, performance, and commercial terms of its 
broadband Internet access services sufficient for consumers to make 
informed choices regarding use of such services and for content, 
application, service, and device providers to develop, market, and 
maintain Internet offerings.


Sec.  8.5  No Blocking.

    (a) A person engaged in the provision of fixed broadband Internet 
access service, insofar as such person is so engaged, shall not block 
lawful content, applications, services, or non-harmful devices, subject 
to reasonable network management.
    (b) A person engaged in the provision of mobile broadband Internet 
access service, insofar as such person is so engaged, shall not block 
consumers from accessing lawful Web sites, subject to reasonable 
network management; nor shall such person block applications that 
compete with the provider's voice or video telephony services, subject 
to reasonable network management.


Sec.  8.7  No Unreasonable Discrimination.

    A person engaged in the provision of fixed broadband Internet 
access service, insofar as such person is so engaged, shall not 
unreasonably discriminate in transmitting lawful network traffic over a 
consumer's broadband Internet access service. Reasonable network 
management shall not constitute unreasonable discrimination.


Sec.  8.9  Other Laws and Considerations.

    (a) Nothing in this part supersedes any obligation or authorization 
a provider of broadband Internet access service may have to address the 
needs of emergency communications or law enforcement, public safety, or 
national security authorities, consistent with or as permitted by 
applicable law, or limits the provider's ability to do so.
    (b) Nothing in this part prohibits reasonable efforts by a provider 
of broadband Internet access service to address copyright infringement 
or other unlawful activity.


Sec.  8.11  Definitions.

    (a) Broadband Internet access service. A mass-market retail service 
by wire or radio that provides the capability to transmit data to and 
receive data from all or substantially all Internet endpoints, 
including any capabilities that are incidental to and enable the 
operation of the communications service, but excluding dial-up Internet 
access service. This term also encompasses any service that the 
Commission finds to be providing a functional equivalent of the service 
described in the previous sentence, or that is used to evade the 
protections set forth in this part.
    (b) Fixed broadband Internet access service. A broadband Internet 
access service that serves end users primarily at fixed endpoints using 
stationary equipment. Fixed broadband Internet access service includes 
fixed wireless services (including fixed unlicensed wireless services), 
and fixed satellite services.
    (c) Mobile broadband Internet access service. A broadband Internet 
access service that serves end users primarily using mobile stations.
    (d) Reasonable network management. A network management practice is 
reasonable if it is appropriate and tailored to achieving a legitimate 
network management purpose, taking into account the particular network 
architecture and technology of the broadband Internet access service.


Sec.  8.12  Formal Complaints.

    Any person may file a formal complaint alleging a violation of the 
rules in this part.


Sec.  8.13  General pleading requirements.

    (a) General pleading requirements. All written submissions, both 
substantive and procedural, must conform to the following standards:
    (1) A pleading must be clear, concise, and explicit. All matters 
concerning a claim, defense or requested remedy should be pleaded fully 
and with specificity.
    (2) Pleadings must contain facts that, if true, are sufficient to 
warrant a grant of the relief requested.
    (3) Facts must be supported by relevant documentation or affidavit.
    (4) The original of all pleadings and submissions by any party 
shall be signed by that party, or by the party's attorney. Complaints 
must be signed by the complainant. The signing party shall state his or 
her address and telephone number and the date on which the document was 
signed. Copies should be conformed to the original. Each submission 
must contain a written verification that the signatory has read the 
submission and to the best of his or her knowledge, information and 
belief formed after reasonable inquiry, it is well grounded in fact and 
is warranted by existing law or a good faith argument for the 
extension, modification or reversal of existing law; and that it is not 
interposed for any improper purpose. If any pleading or other 
submission is signed in violation of this provision, the Commission 
shall upon motion or upon its own initiative impose appropriate 
sanctions.
    (5) Legal arguments must be supported by appropriate judicial, 
Commission, or statutory authority.

[[Page 59233]]

Opposing authorities must be distinguished. Copies must be provided of 
all non-Commission authorities relied upon which are not routinely 
available in national reporting systems, such as unpublished decisions 
or slip opinions of courts or administrative agencies.
    (6) Parties are responsible for the continuing accuracy and 
completeness of all information and supporting authority furnished in a 
pending complaint proceeding. Information submitted, as well as 
relevant legal authorities, must be current and updated as necessary 
and in a timely manner at any time before a decision is rendered on the 
merits of the complaint.
    (7) Parties seeking expedited resolution of their complaint may 
request acceptance on the Enforcement Bureau's Accelerated Docket 
pursuant to the procedures at Sec.  1.730 of this chapter.
    (b) Copies to be Filed. The complainant shall file an original copy 
of the complaint, accompanied by the correct fee, in accordance with 
part 1, subpart G (see Sec.  1.1106 of this chapter) and, on the same 
day:
    (1) File three copies of the complaint with the Office of the 
Commission Secretary;
    (2) Serve two copies on the Market Disputes Resolution Division, 
Enforcement Bureau;
    (3) Serve the complaint by hand delivery on either the named 
defendant or one of the named defendant's registered agents for service 
of process, if available, on the same date that the complaint is filed 
with the Commission.
    (c) Prefiling notice required. Any person intending to file a 
complaint under this section must first notify the potential defendant 
in writing that it intends to file a complaint with the Commission 
based on actions alleged to violate one or more of the provisions 
contained in this part. The notice must be sufficiently detailed so 
that its recipient(s) can determine the specific nature of the 
potential complaint. The potential complainant must allow a minimum of 
ten (10) days for the potential defendant(s) to respond before filing a 
complaint with the Commission.
    (d) Frivolous pleadings. It shall be unlawful for any party to file 
a frivolous pleading with the Commission. Any violation of this 
paragraph shall constitute an abuse of process subject to appropriate 
sanctions.


Sec.  8.14  General formal complaint procedures.

    (a) Complaints. In addition to the general pleading requirements, 
complaints must adhere to the following requirements:
    (1) Certificate of service. Complaints shall be accompanied by a 
certificate of service on any defendant.
    (2) Statement of relief requested--(i) The complaint shall state 
the relief requested. It shall state fully and precisely all pertinent 
facts and considerations relied on to demonstrate the need for the 
relief requested and to support a determination that a grant of such 
relief would serve the public interest.
    (ii) The complaint shall set forth all steps taken by the parties 
to resolve the problem.
    (iii) A complaint may, on request of the filing party, be dismissed 
without prejudice as a matter of right prior to the adoption date of 
any final action taken by the Commission with respect to the petition 
or complaint. A request for the return of an initiating document will 
be regarded as a request for dismissal.
    (3) Failure to prosecute. Failure to prosecute a complaint, or 
failure to respond to official correspondence or request for additional 
information, will be cause for dismissal. Such dismissal will be 
without prejudice if it occurs prior to the adoption date of any final 
action taken by the Commission with respect to the initiating pleading.
    (b) Answers to complaints. Unless otherwise directed by the 
Commission, any party who is served with a complaint shall file an 
answer in accordance with the following requirements:
    (1) The answer shall be filed within 20 days of service of the 
complaint.
    (2) The answer shall advise the parties and the Commission fully 
and completely of the nature of any and all defenses, and shall respond 
specifically to all material allegations of the complaint. Collateral 
or immaterial issues shall be avoided in answers and every effort 
should be made to narrow the issues. Any party against whom a complaint 
is filed failing to file and serve an answer within the time and in the 
manner prescribed by these rules may be deemed in default and an order 
may be entered against defendant in accordance with the allegations 
contained in the complaint.
    (3) Facts must be supported by relevant documentation or affidavit.
    (4) The answer shall admit or deny the averments on which the 
adverse party relies. If the defendant is without knowledge or 
information sufficient to form a belief as to the truth of an averment, 
the defendant shall so state and this has the effect of a denial. When 
a defendant intends in good faith to deny only part of an averment, the 
answer shall specify so much of it as is true and shall deny only the 
remainder, and state in detail the basis of that denial.
    (5) Averments in a complaint are deemed to be admitted when not 
denied in the answer.
    (c) Reply. In addition to the general pleading requirements, 
replies must adhere to the following requirements:
    (1) The complainant may file a reply to a responsive pleading that 
shall be served on the defendant and shall also contain a detailed full 
showing, supported by affidavit, of any additional facts or 
considerations relied on. Unless expressly permitted by the Commission, 
replies shall not contain new matters.
    (2) Failure to reply will not be deemed an admission of any 
allegations contained in the responsive pleading, except with respect 
to any affirmative defense set forth therein.
    (3) Unless otherwise directed by the Commission, replies must be 
filed within ten (10) days after submission of the responsive pleading.
    (d) Motions. Except as provided in this section, or upon a showing 
of extraordinary circumstances, additional motions or pleadings by any 
party will not be accepted.
    (e) Additional procedures and written submissions. (1) The 
Commission may specify other procedures, such as oral argument or 
evidentiary hearing directed to particular aspects, as it deems 
appropriate. In the event that an evidentiary hearing is required, the 
Commission will determine, on the basis of the pleadings and such other 
procedures as it may specify, whether temporary relief should be 
afforded any party pending the hearing and the nature of any such 
temporary relief.
    (2) The Commission may require the parties to submit any additional 
information it deems appropriate for a full, fair, and expeditious 
resolution of the proceeding, including copies of all contracts and 
documents reflecting arrangements and understandings alleged to violate 
the requirements set forth in the Communications Act and in this part, 
as well as affidavits and exhibits.
    (3) The Commission may, in its discretion, require the parties to 
file briefs summarizing the facts and issues presented in the pleadings 
and other record evidence.
    (i) These briefs shall contain the findings of fact and conclusions 
of law which that party is urging the Commission to adopt, with 
specific citations to the record, and supported by relevant authority 
and analysis.
    (ii) The schedule for filing any briefs shall be at the discretion 
of the Commission. Unless ordered otherwise

[[Page 59234]]

by the Commission, such briefs shall not exceed fifty (50) pages.
    (iii) Reply briefs may be submitted at the discretion of the 
Commission. Unless ordered otherwise by the Commission, reply briefs 
shall not exceed thirty (30) pages.
    (f) Discovery. (1) The Commission may in its discretion order 
discovery limited to the issues specified by the Commission. Such 
discovery may include answers to written interrogatories, depositions, 
document production, or requests for admissions.
    (2) The Commission may in its discretion direct the parties to 
submit discovery proposals, together with a memorandum in support of 
the discovery requested. Such discovery requests may include answers to 
written interrogatories, admissions, document production, or 
depositions. The Commission may hold a status conference with the 
parties, pursuant to Sec.  8.15, to determine the scope of discovery, 
or direct the parties regarding the scope of discovery. If the 
Commission determines that extensive discovery is required or that 
depositions are warranted, the Commission may advise the parties that 
the proceeding will be referred to an administrative law judge in 
accordance with paragraph (g) of this section.
    (g) Referral to administrative law judge. (1) After reviewing the 
pleadings, and at any stage of the proceeding thereafter, the 
Commission may, in its discretion, designate any proceeding or discrete 
issues arising out of any proceeding for an adjudicatory hearing before 
an administrative law judge.
    (2) Before designation for hearing, the Commission shall notify, 
either orally or in writing, the parties to the proceeding of its 
intent to so designate, and the parties shall be given a period of ten 
(10) days to elect to resolve the dispute through alternative dispute 
resolution procedures, or to proceed with an adjudicatory hearing. Such 
election shall be submitted in writing to the Commission.
    (3) Unless otherwise directed by the Commission, or upon motion by 
the Enforcement Bureau Chief, the Enforcement Bureau Chief shall not be 
deemed to be a party to a proceeding designated for a hearing before an 
administrative law judge pursuant to this paragraph (g).
    (h) Commission ruling. The Commission (or the Enforcement Bureau on 
delegated authority), after consideration of the pleadings, shall issue 
an order ruling on the complaint.


Sec.  8.15  Status conference.

    (a) In any proceeding subject to the part 8 rules, the Commission 
may in its discretion direct the attorneys and/or the parties to appear 
for a conference to consider:
    (1) Simplification or narrowing of the issues;
    (2) The necessity for or desirability of amendments to the 
pleadings, additional pleadings, or other evidentiary submissions;
    (3) Obtaining admissions of fact or stipulations between the 
parties as to any or all of the matters in controversy;
    (4) Settlement of the matters in controversy by agreement of the 
parties;
    (5) The necessity for and extent of discovery, including objections 
to interrogatories or requests for written documents;
    (6) The need and schedule for filing briefs, and the date for any 
further conferences; and
    (7) Such other matters that may aid in the disposition of the 
proceeding.
    (b) Any party may request that a conference be held at any time 
after an initiating document has been filed.
    (c) Conferences will be scheduled by the Commission at such time 
and place as it may designate, to be conducted in person or by 
telephone conference call.
    (d) The failure of any attorney or party, following advance notice 
with an opportunity to be present, to appear at a scheduled conference 
will be deemed a waiver and will not preclude the Commission from 
conferring with those parties or counsel present.
    (e) During a status conference, the Commission may issue oral 
rulings pertaining to a variety of matters relevant to the conduct of 
the proceeding including, inter alia, procedural matters, discovery, 
and the submission of briefs or other evidentiary materials. These 
rulings will be promptly memorialized in writing and served on the 
parties. When such rulings require a party to take affirmative action, 
such action will be required within ten (10) days from the date of the 
written memorialization unless otherwise directed by the Commission.


Sec.  8.16  Confidentiality of proprietary information.

    (a) Any materials filed in the course of a proceeding under this 
part may be designated as proprietary by that party if the party 
believes in good faith that the materials fall within an exemption to 
disclosure contained in the Freedom of Information Act (FOIA), 5 U.S.C. 
552(b). Any party asserting confidentiality for such materials shall so 
indicate by clearly marking each page, or portion thereof, for which a 
proprietary designation is claimed. If a proprietary designation is 
challenged, the party claiming confidentiality will have the burden of 
demonstrating, by a preponderance of the evidence, that the material 
designated as proprietary falls under the standards for nondisclosure 
enunciated in FOIA.
    (b) Submissions containing information claimed to be proprietary 
under this section shall be submitted to the Commission in confidence 
pursuant to the requirements of Sec.  0.459 of this chapter and clearly 
marked ``Not for Public Inspection.'' An edited version removing all 
proprietary data shall be filed with the Commission for inclusion in 
the public file within five (5) days from the date the unedited reply 
is submitted, and shall be served on the opposing parties.
    (c) Except as provided in paragraph (d) of this section, materials 
marked as proprietary may be disclosed solely to the following persons, 
only for use in the proceeding, and only to the extent necessary to 
assist in the prosecution or defense of the case:
    (1) Counsel of record representing the parties in the proceeding 
and any support personnel employed by such attorneys;
    (2) Officers or employees of the parties in the proceeding who are 
named by another party as being directly involved in the proceeding;
    (3) Consultants or expert witnesses retained by the parties;
    (4) The Commission and its staff; and
    (5) Court reporters and stenographers in accordance with the terms 
and conditions of this section.
    (d) The Commission will entertain, subject to a proper showing, a 
party's request to further restrict access to proprietary information 
as specified by the party. The other parties will have an opportunity 
to respond to such requests.
    (e) The persons designated in paragraphs (c) and (d) of this 
section shall not disclose information designated as proprietary to any 
person who is not authorized under this section to receive such 
information, and shall not use the information in any activity or 
function other than the prosecution or defense of the case before the 
Commission. Each individual who is provided access to the information 
by the opposing party shall sign a notarized statement affirmatively 
stating, or shall certify under penalty of perjury, that the individual 
has personally reviewed the Commission's rules and understands the 
limitations they impose on the signing party.
    (f) No copies of materials marked proprietary may be made except 
copies

[[Page 59235]]

to be used by persons designated in paragraphs (c) and (d) of this 
section. Each party shall maintain a log recording the number of copies 
made of all proprietary material and the persons to whom the copies 
have been provided.
    (g) Upon termination of the complaint proceeding, including all 
appeals and petitions, all originals and reproductions of any 
proprietary materials, along with the log recording persons who 
received copies of such materials, shall be provided to the producing 
party. In addition, upon final termination of the proceeding, any notes 
or other work product derived in whole or in part from the proprietary 
materials of an opposing or third party shall be destroyed.


Sec.  8.17  Review.

    (a) Interlocutory review. (1) Except as provided below, no party 
may seek review of interlocutory rulings until a decision on the merits 
has been issued by the Commission's staff, including an administrative 
law judge.
    (2) Rulings listed in this paragraph are reviewable as a matter of 
right. An application for review of such ruling may not be deferred and 
raised as an exception to a decision on the merits.
    (i) If the staff's ruling denies or terminates the right of any 
person to participate as a party to the proceeding, such person, as a 
matter of right, may file an application for review of that ruling.
    (ii) If the staff's ruling requires production of documents or 
other written evidence, over objection based on a claim of privilege, 
the ruling on the claim of privilege is reviewable as a matter of 
right.
    (iii) If the staff's ruling denies a motion to disqualify a staff 
person from participating in the proceeding, the ruling is reviewable 
as a matter of right.
    (b) Petitions for reconsideration. Petitions for reconsideration of 
interlocutory actions by the Commission's staff or by an administrative 
law judge will not be entertained. Petitions for reconsideration of a 
decision on the merits made by the Commission's staff should be filed 
in accordance with Sec. Sec.  1.104 through 1.106 of this chapter.
    (c) Application for review. (1) Any party to a part 8 proceeding 
aggrieved by any decision on the merits issued by the staff pursuant to 
delegated authority may file an application for review by the 
Commission in accordance with Sec.  1.115 of this chapter.
    (2) Any party to a part 8 proceeding aggrieved by any decision on 
the merits by an administrative law judge may file an appeal of the 
decision directly with the Commission, in accordance with Sec. Sec.  
1.276(a) and 1.277(a) through (c) of this chapter.

[FR Doc. 2011-24259 Filed 9-22-11; 8:45 am]
BILLING CODE 6712-01-P