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Regulation of broadband services

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Introduction Edit

Federal regulatory jurisdiction over broadband services generally is subject to the shared jurisdiction of the FCC, the FTC, and the DOJ. FCC jurisdiction comes chiefly from the Communications Act of 1934,[1] which established the FCC and provides for the regulation of “interstate and foreign commerce in communication by wire and radio.”[2] FTC jurisdiction over broadband services comes chiefly from its statutory mandate to prevent “unfair methods of competition” and “unfair or deceptive acts or practices in or affecting commerce” under the FTC’s enabling legislation, the FTC Act.[3]

The FTC’s authority to enforce the federal antitrust laws generally is shared with DOJ’s Antitrust Division.[4]

FTC Jurisdiction under the FTC Act Edit

The FTC Act gives the FTC broad authority with regard to both competition and consumer protection matters in most sectors of the economy.[5] Under the FTC Act, “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce,” are prohibited,[6] and the FTC has a general statutory mandate “to prevent persons, partnerships, or corporations,” from engaging in such prohibited methods, acts, and practices.[7]

At the same time, the FTC Act cabins this general grant of statutory authority with regard to certain activities. In particular, the FTC’s enforcement authority under the FTC Act does not reach “common carriers subject to the Communications Act of 1934,” as amended.[8] An entity is a common carrier, however, only with respect to services that it provides on a common carrier basis.[9] Because most broadband Internet access services are not provided on a common carrier basis, they are part of the larger economy subject to the FTC’s general competition and consumer protection authority with regard to methods, acts, or practices in or affecting commerce.

Exercising its statutory authority over competition matters, the FTC has, where appropriate, investigated and brought enforcement actions in matters involving access to content via broadband and other Internet access services. For example, the FTC challenged the proposed merger between America Online (“AOL”) and Time Warner, on the basis that the merger threatened to harm competition and injure consumers in several markets, including those for broadband Internet access and residential Internet transport services (i.e., “last mile” access).[10] The consent order resolving the agency challenge required the merged entity to open its cable system to competitor Internet service providers on a non-discriminatory basis, for all content.[11] The order also prevented the company from interfering with the content of non-affiliated ISPs or with the ability of non-affiliated providers of interactive TV services to access the AOL/Time Warner system.[12] Moreover, the order required the company, in areas where it provided cable broadband service, to offer AOL’s DSL service in the same manner and at the same retail pricing as in areas where it did not provide cable broadband service.[13]

The FTC has addressed Internet access and related issues in a number of other merger investigations as well.[14] For example, the FTC investigated the acquisition by Comcast and Time Warner of the cable assets of Adelphia Communications and, in a related matter, the exchange of various cable systems between Comcast and Time Warner. In the course of that investigation, the FTC examined, among other things, the likely effects of the transactions on access to and pricing of content. The investigation eventually was closed because a majority of the Commission concluded that the acquisitions were unlikely to foreclose competition or result in increased prices.[15]

In addition to such competition issues are various consumer protection issues that have been raised in the larger Internet access context. Over the past decade, the FTC has brought a variety of cases against Internet service providers that have engaged in allegedly deceptive marketing and billing practices.[16] For example, in 1997, the FTC separately sued America Online, CompuServe, and Prodigy, alleging that each company had offered “free” trial periods that resulted in unexpected charges to consumers.[17] One Prodigy advertisement, for example, touted a “Free Trial” and “FREE 1ST MONTH’S MEMBERSHIP” conspicuously, while a fine print statement at the bottom of the back panel of the advertisement stipulated: “Usage beyond the trial offer will result in extra fees, even during the first month.”[18] Other alleged misrepresentations included AOL’s failure to inform consumers that fifteen seconds of connect time was added to each online session (in addition to the practice of rounding chargeable portions of a minute up to the next whole minute),[19] as well as its misrepresentation that it would not debit customers’ bank accounts before receiving authorization.[20]

The settlement orders in these matters prohibited the companies from, among other things, misrepresenting the terms or conditions of any trial offer of online service.[21] Although all three matters involved dial-up, or narrowband, Internet access, the orders are not limited by their terms to narrowband services. In addition, the FTC has brought numerous cases involving the hijacking of consumers’ modems.[22]

For example, in Federal Trade Commission v. Verity International Ltd.,[23] the Commission alleged that the defendants orchestrated a scheme whereby consumers seeking online entertainment were disconnected from their regular ISPs and reconnected to a Madagascar phone number. The consumers were then charged between $3.99 and $7.78 per minute for the duration of each connection. In that case, AT&T and Sprint — which were not parties to the FTC enforcement action — had carried the calls connecting the consumers’ computers to the defendants’ servers. Consumers were billed at AT&T’s and Sprint’s filed rates for calls to Madagascar. The defendants therefore argued that the entertainment service in question was provided on a common carrier basis and thus outside the FTC’s jurisdiction. One defendant also claimed to be a common carrier itself and hence beyond FTC jurisdiction. Although both the District Court and the Court of Appeals rejected those arguments, the FTC had to expend substantial time and resources litigating the question of jurisdiction.[24]

As the Verity case demonstrates, enforcement difficulties posed by the common carrier exemption are not merely speculative. The FTC regards the common carrier exemption in the FTC Act as outmoded and, as it creates a jurisdictional gap, an obstacle to sound competition and consumer protection policy. As the FTC has explained before Congress, technological advances have blurred traditional boundaries between telecommunications, entertainment, and high technology.[25] For example, providers routinely include telecommunications services, such as telephone service, and non-telecommunications services, such as Internet access, in bundled offerings. As the telecommunications and Internet industries continue to converge, the common carrier exemption is likely to frustrate the FTC’s efforts to combat unfair or deceptive acts and practices and unfair methods of competition in these interconnected markets.

Finally, based on the above discussion of the FTC's jurisdiction over broadband services, three general points may be in order. First, as the investigations and enforcement actions described above suggest, the FTC has both authority and experience in the enforcement of competition and consumer protection law provisions pertinent to broadband Internet access. Second, the FTC Act provisions regarding “[u]nfair methods of competition in or affecting commerce, and unfair or deceptive acts or practices in or affecting commerce,” are general and flexible in nature, as demonstrated by judicial and administrative decisions across diverse markets.[26] Third, the FTC’s investigative and enforcement actions have been party- and market-specific; that is, neither the general body of antitrust and consumer protection law nor the FTC’s enforcement and policy record determines any particular broadband connectivity policy or commits the Commission to favoring any particular model of broadband deployment.

FCC Jurisdiction under the Communications Act Edit

As noted above, FCC jurisdiction over broadband services arises under the Communications Act.[27] Central to the broadband discussion is a distinction under that Act between “telecommunications services” and “information services.”[28] The former, but not the latter, are subject to substantial mandatory common carrier regulations under Title II of the Communications Act.[29] While not subject to the Title II common carrier regulations, information services are treated by the FCC as subject to its general, ancillary jurisdiction under Title I of the Communications Act.[30]

Under Title II, providers of telecommunications services are bound to, among other things, enable functional physical connections with competing carriers,[31] at “just and reasonable” rates,[32] which the FCC may prescribe,[33] and are prohibited from making “any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services . . . .”[34] There are, however, several important qualifications on these Title II common carrier requirements. First, the Communications Act expressly provides for regulatory flexibility to facilitate competition. In particular, with regard to telecommunications carriers or services, the FCC:

shall forebear from applying any regulation or any provision of this Act . . . if the Commission determines that — (1) enforcement . . . is not necessary to ensure that the charges, practices, classifications, or regulations . . . are just and reasonable and are not unjustly or unreasonably discriminatory; (2) enforcement . . . is not necessary for the protection of consumers; and (3) forbearance from applying such provision or regulation is consistent with the public interest.[35]

In addition, in determining such “public interest,” the FCC must “consider whether forbearance from enforcing the provision or regulation promotes competitive market conditions.”[36] Finally, the Communications Act expressly states that “[i]t shall be the policy of the United States to encourage the provision of new technologies and services to the public.”[37] As a consequence, any person “(other than the Commission) who opposes a new technology or service proposed to be permitted under this Act shall have the burden to demonstrate that such proposal is inconsistent with the public interest.”[38]

Regulatory and Judicial Clarification Edit

As noted above, a series of regulatory and judicial decisions have helped to clarify both the distinction between information and telecommunications services and the status of broadband services as information services. That clarification is, to an extent, in tension with early regulatory and judicial attempts to grapple with the novel technologies that enabled the provision of Internet access. For example, in 1980, the FCC promulgated rules designed to address, among other things, the growing commerce in data-processing services available via telephone wires (the “Computer II Rules”).[39]

With reference to those rules, the FCC subsequently applied certain common carrier obligations, such as non-discrimination, to local telephone companies providing early DSL services.[40] Further, as recently as 2000, the Court of Appeals for the Ninth Circuit held that “the transmission of Internet service to subscribers over cable broadband facilities is a telecommunications service under the Communications Act.”[41]

Still, the FCC’s current view that broadband services are information services has its roots in earlier decisions by the FCC and the courts. The same Computer II Rules that grounded the early DSL determination distinguished between “basic” and “enhanced” services and did not subject the latter to Title II common carrier regulation.[42] In the following decade, the FCC recognized that ISPs provide not just “a physical connection [to the Internet], but also . . . the ability to translate raw Internet data into information [consumers] may both view on their personal computers and transmit to other computers connected to the Internet.”[43] Moreover, the 1998 Universal Service Report regarded “non-facilities-based” ISPs — those that do not own their own transmission facilities — solely as information service providers.[44] Indeed, even the Ninth Circuit opinion that held that ISPs offering cable broadband were offering telecommunications services recognized that, under the Communications Act and FCC implementing regulations, a significant portion of those services were information services.[45]

In 2000, the FCC issued a Notice of Inquiry to resolve, among other things, the application of the Communications Act’s information/telecommunications distinction to cable broadband ISPs.[46] In its subsequent declaratory ruling in 2002, the FCC concluded that broadband cable Internet access services were information services, not telecommunications services, and hence not subject to common carrier regulation under Title II.[47] In reaching that conclusion, the FCC emphasized the information coding, storage, and transformation processes that were central to such services, as it had in concluding that non-facilities-based services were information services in its Universal Service Report.[48] Moreover, the FCC concluded that there was no principled or statutory basis for treating facilities-based and non-facilities-based services differently, as both offered “a single, integrated service that enables the subscriber to utilize Internet access service . . . .”[49]

In response, several parties sought judicial review of the FCC’s determination in a dispute eventually heard by the Supreme Court, in National Cable & Telecommunications Association v. Brand X Internet Services (“Brand X”).[50] In Brand X, the Court upheld the FCC’s determination that cable broadband is an information service as a reasonable construction of the Communications Act, reversing a Ninth Circuit decision that had relied on City of Portland as precedent.[51]

In the wake of the Brand X decision, the FCC has continued to expand, platform by platform, upon the broadband policy defended in that case. In 2005, the FCC released the Appropriate Framework for Broadband Access to the Internet over Wireline Facilities (“Wireline Order”), in which it reclassified wireline broadband Internet access service by facilities-based carriers as an information service.[52] That reclassification pertains to both “wireline broadband Internet access service . . . [and] its transmission component,”[53] and is independent of the underlying technology employed.[54] The Wireline Order does, however, permit facilities-based wireline carriers to elect to provide broadband transmission service on a common carrier basis.[55]

In 2006, the FCC released an order in which it classified broadband over power line (BPL) Internet access services as information services.[56] Also in 2006, the FCC granted — by operation of law — Verizon’s petition for forbearance from Title II and Computer Inquiry Rules[57] with respect to its broadband services.[58] Verizon had asked for forbearance “from traditional common-carriage requirements for all broadband services,” seeking relief chiefly with regard to certain commercial broadband services not expressly addressed in the Wireline Order or other rulemaking.[59]

Most recently, the FCC clarified more generally the status of wireless services as information services, issuing in 2007 a declaratory ruling finding: (1) “that wireless broadband Internet access service is an information service”; (2) that while the underlying transmission component of such service is “telecommunications,” offering telecommunications transmission “as a part of a functionally integrated Internet access service is not ‘telecommunications service’ under section 3 of the Act”; and (3) “that mobile wireless broadband Internet access service is not a ‘commercial mobile service’ under section 332 of the Act.”[60]

Thus, over the past few years, the FCC has essentially unified the regulatory status of cable, wireline, power line, and wireless broadband Internet access services as information services that are not subject to Title II common carrier requirements.[61] In doing so, the FCC has focused on the abstract functional properties of ISPs as they ranged across varying implementations or platforms. Underlying this unification has been a significant degree of deregulation across broadband technologies, in keeping with the statutory interest under the Communications Act in furthering competition and the development of new technologies.[62]

The FCC has nonetheless continued to demonstrate an interest in, and commitment to, broadband Internet access. Certain policy statements have sought to guide industry conduct to avoid both FCC enforcement actions and the “potentially destructive” impact of overbroad and premature regulation of an “emerging market.”[63] In 2004, then-FCC Chairman Michael Powell challenged the industry to preserve four “Internet Freedoms” to that end. They were:

  • (1) The “Freedom to Access Content . . . consumers should have access to their choice of legal content” (within “reasonable limits” imposed by legitimate network management needs);
  • (2) The “Freedom to Use Applications . . . consumers should be able to run the applications of their choice” (within service plan limits and provided the applications do not “harm the provider’s network”);
  • (3) The “Freedom to Attach Personal Devices . . . consumers should be permitted to attach any devices they choose to the connection in their homes” (within service plan limits, provided the devices do not “harm the provider’s network or enable theft of service”); and
  • (4) The “Freedom to Obtain Service Plan Information . . . consumers should receive meaningful information regarding their service plans” (so that “broadband consumers can easily obtain the information they need to make rational choices.”).[64]

With some modification, those four Internet Freedoms were incorporated into an FCC policy statement (“Broadband Policy Statement”), issued to accompany the Wireline Order in 2005.[65] Recast as FCC principles, they included:

  • (1) The ability of consumers to “access the lawful Internet content of their choice”;
  • (2) the ability of consumers to “run applications and use services of their choice, subject to the needs of law enforcement”;
  • (3) the ability of consumers to “connect their choice of legal devices that do not harm the network”; and
  • (4) the existence of “competition among network providers, application and service providers, and content providers.”[66]

In approving the AT&T/SBC and Verizon/MCI mergers in 2005, the FCC required the companies to adhere to connectivity principles set forth in its Broadband Policy Statement for a period of two years.[67] More recently, in approving the AT&T/BellSouth merger, the FCC required the combined company to agree not to provide or sell (for a period of thirty months following the merger closing date) “any service that privileges, degrades, or prioritizes any packet transmitted over AT&T/BellSouth’s wireline broadband Internet access services based on its source, ownership, or destination.”[68]

Most recently, the FCC announced an inquiry “to better understand the behavior of participants in the market for broadband services.”[69] Among other things, the FCC is seeking information regarding the following:

In addition, the FCC has asked for comments “on whether the [Broadband] Policy Statement should incorporate a new principle of nondiscrimination and, if so, how would ‘nondiscrimination’ be defined, and how would such a principle read.”[71]

References Edit

  1. 47 U.S.C. §§151 et seq. Significant amendments to the Communications Act of 1934, 48 Stat. 1064 (1934), were imposed by the Telecommunications Act of 1996. See Pub. L. No. 104-104, 110 Stat. 56 (1996). Although broad in scope, the Telecommunications Act of 1996 did not replace the Communications Act, but amended it.
  2. 47 U.S.C. §151.
  3. 15 U.S.C. §§ 41 et seq. Although the FTC Act is central to the FTC’s jurisdiction over broadband Internet access, and competition and consumer protection issues generally, it is not the only statutory basis of FTC authority pertinent to the larger Internet debate. With regard to competition concerns, the FTC is also charged under, for example, the Clayton Act (15 U.S.C. §§12-27); the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (15 U.S.C. §18a) (amending the Clayton Act); and the International Antitrust Enforcement Assistance Act of 1994 (15 U.S.C. §§ 46, 57b-1, 1311, 1312, 6201, 6201 note, 6202-12).
  4. The FTC and DOJ share antitrust authority with regard to most areas of the economy. The two antitrust agencies have long-standing arrangements, first established in 1948, that allow them to avoid inconsistent or duplicative efforts.
  5. The FTC’s authority is defined broadly to deal with “methods . . . acts or practices in or affecting commerce.” 15 U.S.C. §45(a)(2). But for certain limited market sectors that are expressly excluded from the FTC’s enforcement authority, and for the areas in which FTC jurisdiction over various market sectors is shared, the FTC’s authority ranges broadly over “commerce,” without restriction to particular segments of the economy. See id. (FTC authority generally; express exclusion for, e.g., common carriers).
  6. 15 U.S.C. §45(a)(1). In 1994, Congress defined an “unfair” act or practice over which the FTC has authority as one that “causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.” Id. §45(n).
  7. Id. §45(a)(2).
  8. Id.
  9. 47 U.S.C. §153(44) (provider of telecommunications services deemed a common carrier under the Communications Act “only to the extent that it is engaged in providing telecommunications services”).
  10. America Online, Inc. & Time Warner, Inc., FTC Dkt. No. C-3989 (Dec. 17, 2000) (complaint).[1]
  11. Id. (Apr. 17, 2001) (consent order)[2]
  12. Id.
  13. Id.
  14. See, e.g., Cablevision Systems Corp., 125 F.T.C. 813 (1998) (consent order); Summit Communications Group, 120 F.T.C. 846 (1995) (consent order).
  15. See Statement of Chairman Majoras, Commissioner Kovacic, and Commissioner Rosch Concerning the Closing of the Investigation into Transactions Involving Comcast, Time Warner Cable, and Adelphia Communications (Jan. 31, 2006) (FTC File No. 051-0151); see also Statement of Commissioners Jon Leibowitz and Pamela Jones Harbour (Concurring in Part, Dissenting in Part), Time Warner/Comcast/Adelphia (Jan. 31, 2006) (FTC File No. 051-0151). Both statements are available here.[3]
  16. See, e.g., America Online, Inc. & CompuServe Interactive Servs., Inc., FTC Dkt. No. C-4105 (Jan. 28, 2004) (consent order)[4]; Juno Online Servs., Inc., FTC Dkt. No. C-4016 (June 25, 2001) (consent order)[5].
  17. See America Online, Inc., FTC Dkt. No. C-3787 (Mar. 16, 1998) (consent order)[6]; CompuServe, Inc., 125 F.T.C. 451 (1998) (consent order); Prodigy, Inc., 125 F.T.C. 430 (1998) (consent order).
  18. Prodigy, 125 F.T.C. at 430 exhibit A (complaint). Similar complaints were lodged against America Online and CompuServe.
  19. For example, “an online session of 2 minutes and 46 seconds, with the 15 second supplement, totals 3 minutes and 1 second and is billed as 4 minutes.” America Online, FTC Dkt. No. C-3787 at 4, Exhibit E (complaint).
  20. See id. at 5-6, Exhibit F.
  21. See also Federal Trade Commission v. Cyberspace.com, No. C00-1806L, 2002 U.S. Dist. LEXIS 25565 (W.D. Wash. July 10, 2002), aff’d, 453 F.3d 1196 (9th Cir. 2006).
  22. A list of FTC enforcement actions involving the [[Internet and online services generally, and modem hijacking allegations in particular, can be found here. These actions include the following: FTC v. Sheinkin, No. 2-00-3636-18 (D.S.C. 2001); FTC v. RJB Telcom, Inc., No. CV 00-2017 PHX SRB (D. Ariz. 2000); FTC v. Ty Anderson, No. C 00-1843P (W.D. Wash. 2000); FTC v. Audiotex Connection, Inc., No. CV-97-0726 (DRH) (E.D.N.Y. 1997).
  23. 335 F. Supp. 2d 479 (S.D.N.Y. 2004), aff’d in part, rev’d in part, 443 F.3d 48 (2d Cir. 2006), cert. denied, 127 S. Ct. 1868 (2007).
  24. In response to a request from the district court, the FCC filed an amicus brief in support of the FTC’s jurisdiction in this matter. See Verity, 443 F.3d at 56, 61.
  25. See FTC Jurisdiction over Broadband Internet Access Services: Hearing Before the S. Comm. on the Judiciary, 109th Cong. 9-11 (2006) (statement of William E. Kovacic, FTC Comm’r).[7]
  26. Congress has deliberately left these phrases undefined so that the parameters of the FTC’s powers and the scope of its administrative and judicial functions could be responsive to a wide variety of business practices.” ABA Section of Antitrust Law, Antitrust Law Developments 643 & n.4 (6th ed. 2007) (citing Federal Trade Comm’n v. Sperry & Hutchinson Co., 405 U.S. 233, 239-44 (1972) (full-text); Federal Trade Comm’n v. R.F. Keppel & Bro., 291 U.S. 304, 310-12 (1934)) ([291 U.S. 304 full-text]).
  27. 47 U.S.C. §§151 et seq.
  28. Under the Communications Act, an “information service . . . means the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications . . . .” 47 U.S.C. §153(20). In contrast, “‘telecommunications service’ means the offering of telecommunications for a fee directly to the public . . . regardless of the facilities used,” id. § 153(46), and “‘telecommunications’ means the transmission, between or among points specified by the user, of information of the user’s choosing, without change in the form or content of the information as sent and received.” Id. §153(43). In brief, to act simply as a transmitter or transducer of information is to provide a telecommunications service, whereas to act as a transformer of information is to provide an information service.
  29. The Communications Act is divided into seven Titles. See generally 47 U.S.C. §§ 151 et seq. Under Title I are “General Provisions,” including, for example, the purposes of the Act, definitions, the establishment of the FCC, and the structure and operations of the FCC. Under Title II are the “Common carriers” provisions, including, among others, common carrier regulations and “Universal Service” requirements. Under Title III are “Provisions Relating to Radio.” Under Title IV are “Procedural and Administrative Provisions.” Under Title V are “Penal Provisions.” Under Title VI are provisions relating to “Cable Communications.” Finally, miscellaneous additional provisions are included under Title VII.
  30. See, e.g., In re Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities, 20 FCC Rcd 14853, 14914 (2005) (report and order and notice of proposed rulemaking) (“We recognize that . . . the predicates for ancillary jurisdiction are likely satisfied for any consumer protection, network reliability, or national security obligation that we may subsequently decide to impose on wireline broadband Internet access service providers.”). Although the scope of the FCC’s ancillary jurisdiction over broadband services has not been defined by the courts, it should be noted that the Supreme Court, in dicta, has recognized the application of the FCC’s ancillary jurisdiction over information service providers. See' Nat’l Cable & Telecomms. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 976 (2005).
  31. 47 U.S.C. § 201(a).
  32. Id. § 201(b).
  33. Id. §205.
  34. Id. §202.
  35. Id. §160(a).
  36. Id. §160(b).
  37. Id. §157(a).
  38. Id. §160(b).
  39. See In re Amendment of Section 64.702 of the Comm’n’s Rules & Regulations (Second Computer Inquiry), 77 F.C.C.2d 384, 417-23 (1980) [hereinafter Computer II Rules].
  40. In a 1998 order, the FCC found, among other things, that incumbent local exchange carriers are subject to various interconnection obligations under Title II of the Communications Act. See In re Deployment of Wireline Servs. Offering Advanced Telecomms. Capability, 13 FCC Rcd 24011 (1998) (memorandum opinion and order and notice of proposed rulemaking). The FCC noted that, although DSL and other advanced services could “also be deployed using other technologies over satellite, cable, and wireless systems, [it would] limit the discussion here to wireline services, because none of the petitioners raise issues about these other technologies.” Id. at 24016 n.11. See also GTE Operating Cos. Tariff No. 1, 13 FCC Rcd 22466 (1998).
  41. AT&T Corp. v. City of Portland, 216 F.3d 871, 880 (9th Cir. 2000).
  42. See Computer II Rules, 77 F.C.C.2d at 428-32.
  43. In re Federal-State Joint Bd. on Universal Serv., 13 FCC Rcd 11501, 11531 (1998).
  44. See id. at 11530.
  45. See AT&T, 216 F.3d at 877-78.
  46. In re Inquiry Concerning High-Speed Access to the Internet Over Cable & Other Facilities, 15 FCC Rcd 19287 (2000) (notice of inquiry). As noted above, this notice of inquiry had been expressly limited in its application to broadband services provided by local telephone companies over wireline. Prior to 2000, the FCC had not ruled on the application of common carrier obligations to broadband services provided via cable. It sought, in this notice of inquiry, “to instill a measure of regulatory stability in the market,” and to resolve a split in the Circuit courts regarding the regulatory status of “cable modem” broadband services. See id. at 19288 & n.3 (comparing AT&T, 216 F.3d 871 with Gulf Power Co. v. FCC, 208 F.3d 1263 (11th Cir. 2000)).
  47. In re Inquiry Concerning High-Speed Access to the Internet Over Cable & Other Facilities, 17 FCC Rcd 4798, 4821-22 (2002) (declaratory ruling and notice of proposed rulemaking).
  48. Id. at 4820-23.
  49. Id. at 4823.
  50. 545 U.S. 967 (2005).
  51. Id. at 973-74. It should be noted that Brand X is fundamentally a Chevron decision. That is, the Court did not examine the question of the status of cable broadband services as an abstract or de novo issue of statutory construction. Rather, the Court held that the FCC’s ruling was — because based on reasonable policy grounds — a permissible resolution of ambiguous statutory language in the Telecommunications Act of 1996, given the FCC’s authority under the Communications Act, the Administrative Procedures Act, and standards of agency deference the Court had articulated in Chevron v. NRDC. See id. at 973 (citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984) and 5 U.S.C. §§551 et seq.).
  52. In re Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, 20 FCC Rcd 14853 (2005) (report and order and notice of proposed rulemaking).
  53. Id. at 14856.
  54. Id. at 14860 n.15 (“We stress that our actions in this Order are limited to wireline broadband Internet access service and its underlying broadband transmission component, whether that component is provided over all copper loops, hybrid copper-fiber loops, a fiber-to-the-curb or fiber-to-the-premises (FTTP) network, or any other type of wireline facilities, and whether that component is provided using circuit-switched, packet-based, or any other technology.”).
  55. Id.
  56. In re United Power Line Council’s Petition for Declaratory Ruling Regarding the Classification of Broadband Over Power Line Internet Access Serv. as an Info. Serv., 21 FCC Rcd 13281 (2006) (memorandum opinion and order).
  57. See In re Regulatory & Policy Problems Presented by the Interdependence of Computer & Comm. Servs. & Facilities, 28 F.C.C.2d 267 (1971) (final decision and order) (“Computer I”); In re Amendment of Section 64.702 of the Comm’n’s Rules & Regulations (Second Computer Inquiry), 77 F.C.C.2d 384 (1980) (final decision) (“Computer II”); In re Computer III Further Remand Proceedings: Bell Operating Co. Provision of Enhanced Servs., 14 FCC Rcd 4289 (1999) (report and order). Collectively, these matters are known as the “Computer Inquiry Rules.”
  58. See Press Release, FCC, Verizon Telephone Companies’ Petition for Forbearance from Title II and Computer Inquiry Rules with Respect to Their Broadband Services Is Granted by Operation of Law (Mar. 20, 2006)[8] (explaining that a forbearance petition will be deemed granted if the FCC does not deny the petition within one year of receipt, unless one-year period is extended by the FCC). Although the FCC did not explicitly grant such relief, “the effect given to the petition by operation of law grants Verizon’s further broadband relief, continuing our policy to encourage new investment.” In re Petition of the Verizon Tel. Cos. for Forbearance under 47 U.S.C. §160(c) from Title II & Computer Inquiry Rules with Respect to Their Broadband Servs., WC Docket 04-440 (2006), 2006 FCC LEXIS 1333 (Chairman Martin & Comm’r Tate, concurring).
  59. Such services included: (1) packet-switched services capable of 200 Kbps in each direction and (2) certain optical networking, hubbing, and transmission services. See In re Petition of the Verizon Tel. Cos. for Forbearance under 47 U.S.C. §160(c) from Title II & Computer Inquiry Rules with Respect to Their Broadband Servs., WC Docket 04-440 (Feb. 7, 2006) (ex parte letter from Verizon Tel. Cos.)[9]
  60. In re Appropriate Regulatory Treatment for Broadband Access to the Internet Over Wireless Networks, 22 FCC Rcd 5901, 5901-02 (2007) (declaratory ruling).
  61. See id. (“This approach is consistent with the framework that the Commission established for cable modem Internet access service, wireline broadband Internet access service, and broadband over power line (BPL) — enabled Internet access service and it establishes a minimal regulatory environment for wireless broadband Internet access service that promotes our goal of ubiquitous availability of broadband to all Americans.”) (citations omitted).
  62. See, e.g., Assessing the Communications Marketplace: A View from the FCC: Hearing Before the S. Comm. on Commerce, Sci., & Transp., 110th Cong. 2 (2007) (statement of Kevin J. Martin, Chairman, FCC)[10] (“In 2005, the Commission created a deregulatory environment that fueled private sector investment. . . . Broadband deployment has been our top priority at the Commission, and we have begun to see some success as a result of our efforts.”). See In re Implementation of the Commercial Spectrum Enhancement Act & Modernization of the Comm’n’s Competitive Bidding Rules & Procedures, 20 FCC Rcd 11268 (2005) (declaratory ruling and notice of proposed rulemaking) (implementing Enhance 911 Services Act, Pub. L. No. 108-494, 118 Stat. 3986, Title II (2004)).
  63. Michael K. Powell, Chairman, FCC, Keynote Address at the Silicon Flatirons Symposium: Preserving Internet Freedom: Guiding Principles for the Industry (Feb. 8, 2004)[11].
  64. Id. (italics included in published version of address).
  65. See In re Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, 20 FCC Rcd 14986 (2005) (policy statement).
  66. Id. Also in 2005 — prior to issuance of the Wireline Order — the FCC took enforcement action against allegedly discriminatory behavior by an ISP. In re Madison River Communs., LLC, 20 FCC Rcd 4295, 4297 (2005). The resulting consent decree in that matter required a small North Carolina ISP to “not block ports used for VoIP applications or otherwise prevent customers from using VoIP applications.” Id. Because the FCC used its Title II authority in this case, under which it can regulate common carrier services, this case may not be precedent for future enforcement authority over such services now characterized as information services and regulated under the FCC’s Title I ancillary jurisdiction.
  67. See In re SBC Communs. Inc. & AT&T Corp. Applications for Approval of Transfer of Control, 20 FCC Rcd 18290 (2005) (memorandum opinion and order) (especially appendix F); In re Verizon Communs. Inc. & MCI Inc. Applications for Approval of Transfer of Control, 20 FCC Rcd 18433 (2005) (memorandum opinion and order) (especially appendix G). The DOJ also examined the proposed mergers and successfully sought, under the Tunney Act, the divestiture of certain assets as conditions to such mergers. See United States v. SBC Communs., Inc., Civ. Action Nos. 05-2102 (EGS) & 05-2103 (EGS), 2007 WL 1020746 (D.D.C. Mar. 29, 2007). In particular, the merging parties were required to divest themselves of long-term interests in certain local private line, or special access, facilities. Id. at *5 (noting that “[a]part from the difference in geographic scope due to the identities of the parties, the proposed final judgments are practically identical and require the same type of divestitures.”).
  68. In re AT&T Inc. & BellSouth Corp. Application for Transfer of Control, 22 FCC Rcd 5662 (2006) (memorandum opinion and order). Two FCC Commissioners issued a concurring statement expressing their view that “[t]he conditions regarding net-neutrality have very little to do with the merger at hand and very well may cause greater problems than the speculative problems they seek to address.” Id. at 5826 (Chairman Martin & Comm’r Tate, concurring). The DOJ also reviewed the AT&T/BellSouth merger, examining, among other things, the merged firm’s ability or incentive to favor its own Internet content over that of its rivals. See Press Release, DOJ, Statement by Assistant Attorney General Thomas O. Barnett Regarding the Closing of the Investigation of AT&T’s Acquisition of BellSouth 3 (Oct. 11, 2006)[12]. The DOJ concluded its investigation last October, finding that “the merger would neither significantly increase concentration in markets for the provision of broadband services to end users nor increase Internet backbone market shares significantly.” Id.
  69. Press Release, FCC, FCC Launches Inquiry into Broadband Market Practices (Mar. 22, 2007)[13].
  70. Id.
  71. Id.

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