[Federal Register Volume 79, Number 126 (Tuesday, July 1, 2014)]
[Proposed Rules]
[Pages 37447-37483]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-14859]



[[Page 37447]]

Vol. 79

Tuesday,

No. 126

July 1, 2014

Part IV





 Federal Communications Commission





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47 CFR Part 8





 Protecting and Promoting the Open Internet; Proposed Rule

Federal Register / Vol. 79, No. 126 / Tuesday, July 1, 2014 / 
Proposed Rules

[[Page 37448]]


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FEDERAL COMMUNICATIONS COMMISSION

47 CFR Part 8

[WC Docket No. 14-28, FCC 14-61]


Protecting and Promoting the Open Internet

AGENCY: Federal Communications Commission.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Communications Commission initiates a rulemaking 
seeking public comment on how best to protect and promote an open 
Internet following the D.C. Circuit Court of Appeals' remand of 
portions of the Commission's 2010 Open Internet Order, 76 FR 59192 
(Sept. 23, 2011). In this document, among other things, we propose 
enhancements to the transparency rule, adopting the text of the no-
blocking rule from the Open Internet Order with a revised rationale, 
and creating a separate screen that requires broadband providers to 
adhere to an enforceable legal standard of commercially reasonable 
practices. The proposed rules and the comment process that follows will 
help the Commission determine the right public policy to ensure that 
the Internet remains open.

DATES: Submit comments on or before July 15, 2014. Submit reply 
comments on or before September 10, 2014. Written comments on the 
Paperwork Reduction Act proposed information collection requirements 
must be submitted by the public, Office of Management and Budget (OMB), 
and other interested parties on or before September 2, 2014.

ADDRESSES: You may submit comments, identified by WC Docket No. 14-28, 
by any of the following methods:
    [ssquf] Federal Communications Commission's Web site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting 
comments.
    [ssquf] People with Disabilities: Contact the FCC to request 
reasonable accommodations (accessible format documents, sign language 
interpreters, CART, etc.) by email: FCC504@fcc.gov or phone: 202-418-
0530 or TTY: 202-418-0432.

FOR FURTHER INFORMATION CONTACT: Kristine Fargotstein, Competition 
Policy Division, Wireline Competition Bureau, at (202) 418-2774 or by 
email at Kristine.Fargotstein@fcc.gov. To submit Paperwork Reduction 
Act (PRA) comments, send an email to PRA@fcc.gov. For further 
information concerning the Paperwork Reduction Act information 
collection requirements contained in this document, contact Les Smith 
at (202) 418-0217.

SUPPLEMENTARY INFORMATION: Pursuant to Sec. Sec.  1.415 and 1.419 of 
the Commission's rules, 47 CFR 1.415, 1.419, interested parties may 
file comments and reply comments on or before the dates indicated on 
the first page of this document. Comments may be filed using the 
Commission's Electronic Comment Filing System (ECFS). See Electronic 
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
    [ssquf] Electronic Filers: Comments may be filed electronically 
using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.
    [ssquf] Paper Filers: Parties who choose to file by paper must file 
an original and one copy of each filing. If more than one docket or 
rulemaking number appears in the caption of this proceeding, filers 
must submit two additional copies for each additional docket or 
rulemaking number. Filings can be sent by hand or messenger delivery, 
by commercial overnight courier, or by first-class or overnight U.S. 
Postal Service mail. All filings must be addressed to the Commission's 
Secretary, Office of the Secretary, Federal Communications Commission.
    [ssquf] All hand-delivered or messenger-delivered paper filings for 
the Commission's Secretary must be delivered to FCC Headquarters at 445 
12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 
8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with 
rubber bands or fasteners. Any envelopes and boxes must be disposed of 
before entering the building.
    [ssquf] Commercial overnight mail (other than U.S. Postal Service 
Express Mail and Priority Mail) must be sent to 9300 East Hampton 
Drive, Capitol Heights, MD 20743.
    [ssquf] U.S. Postal Service first-class, Express, and Priority mail 
must be addressed to 445 12th Street SW., Washington DC 20554.
    [ssquf] People with Disabilities: To request materials in 
accessible formats for people with disabilities (Braille, large print, 
electronic files, audio format), send an email to fcc504@fcc.gov or 
call the Consumer & Governmental Affairs Bureau at 202-418-0530 
(voice), 202-418-0432 (tty).

Synopsis

    In this Notice of Proposed Rulemaking (NPRM), we address the D.C. 
Circuit Court of Appeals' remand of portions of the Commission's 2010 
Open Internet Order and seek comment on the right public policy to 
ensure that the Internet remains open.

I. Introduction

    1. The Internet is America's most important platform for economic 
growth, innovation, competition, free expression, and broadband 
investment and deployment. As a ``general purpose technology,'' the 
Internet has been, and remains to date, the preeminent 21st century 
engine for innovation and the economic and social benefits that follow. 
These benefits flow, in large part, from the open, end-to-end 
architecture of the Internet, which is characterized by low barriers to 
entry for developers of new content, applications, services, and 
devices and a consumer-demand-driven marketplace for their products. As 
the Commission explained in its 2010 Open Internet Order, the 
Internet's open architecture allows innovators and consumers at the 
edges of the network ``to create and determine the success or failure 
of content, applications, services and devices,'' without requiring 
permission from the broadband provider to reach end users. As an open 
platform, it fosters diversity and it enables people to build 
communities.
    2. We start with a fundamental question: What is the right public 
policy to ensure that the Internet remains open? This Notice of 
Proposed Rulemaking (NPRM), and the comment process that follows, will 
turn on this fundamental question.
    3. Today, there are no legally enforceable rules by which the 
Commission can stop broadband providers from limiting Internet 
openness. This NPRM begins the process of closing that gap, by 
proposing to reinstitute the no-blocking rule adopted in 2010 and 
creating a new rule that would bar commercially unreasonable actions 
from threatening Internet openness (as well as enhancing the 
transparency rule that is currently in effect).
    4. The goal of this proceeding is to find the best approach to 
protecting and promoting Internet openness. Per the blueprint offered 
by the D.C. Circuit in its decision in Verizon v. FCC, the Commission 
proposes to rely on Section 706 of the Telecommunications Act of 1996. 
At the same time, the Commission will seriously consider the use of 
Title II of the Communications Act as the basis for legal authority. 
This Notice seeks comment on the benefits of both Section 706 and Title 
II, including the benefits of one approach over the other. Under all 
available sources of legal authority (including also Title III for 
mobile services), the Commission seeks

[[Page 37449]]

comment on the best ways to define, prevent and punish the practices 
that threaten an open Internet. We emphasize in this Notice that the 
Commission recognizes that both Section 706 and Title II are viable 
solutions and seek comment on their potential use.
    5. It is important to always remember that the Internet is a 
collection of networks, not a single network. And that means that each 
broadband provider can either add to the benefits that the Internet 
delivers to Americans--by maintaining Internet openness and by 
extending the reach of broadband networks--or it can threaten those 
benefits--by restricting its customers from the Internet and preventing 
edge providers from reaching consumers over robust, fast and 
continuously improving networks. This is a real threat, not merely a 
hypothetical concern.
    6. In its 2010 Order, the Commission found that providers of 
broadband Internet access service had three types of incentives to 
limit Internet openness. First, broadband providers may have economic 
incentives to block or disadvantage a particular edge provider or class 
of edge providers. Second, broadband providers may have incentives to 
increase revenues by charging edge providers for access or prioritized 
access to the broadband provider's end users. In particular, excessive 
fees could reduce edge provider entry, suppress innovation, and depress 
consumer demand. Third, if providers could profitably charge edge 
providers they would have an incentive ``to degrade or decline to 
increase the quality of service they provide to non-prioritized 
traffic.''
    7. Those threats are even more important today because Americans 
and American businesses have become even more dependent on the 
Internet. For example, according to the Pew Research Internet Project, 
as of January 2014, 87 percent of Americans used the Internet, compared 
to 14 percent in 1995. And it is a critical route of commerce, 
supporting an e-commerce marketplace that now boasts U.S. revenues of 
$263.3 billion.
    8. Of particular concern are threats to American innovation. In 
``the end-to-end architecture, different economic actors can 
independently choose their innovation projects.'' Innovation is the 
chief driver of American economic growth, which means that all 
Americans lose if the opportunity to innovate is curbed. For example, 
an economic study originally released in February 2012 and updated in 
July 2013 reported that the app economy is responsible for roughly 
752,000 jobs in the United States, which is an increase from zero in 
2007 when the iPhone was introduced. But equally important are the jobs 
that could be--but might not be--created if edge innovation and 
investment were to be chilled by doubt that the Internet will remain 
open or, even worse, if openness were defeated.
    9. Although the Commission has emphasized for almost a decade the 
importance of legally enforceable standards, the United States Court of 
Appeals for the District of Columbia Circuit has twice invalidated the 
Commission's attempts, most recently in Verizon v. FCC, decided this 
January. It is in the absence of these protections for the open 
Internet that the Commission must act to ensure that new legally 
enforceable rules are put in place. That is a gap that must be closed 
as quickly as possible.
    10. The remainder of the NPRM proceeds as follows. First, we 
generally propose to retain the definitions and scope of the 2010 
rules. Second, we tentatively conclude that the Commission should 
enhance the transparency rule that was upheld by the D.C. Circuit so 
that the public and the Commission have the benefit of sunlight on 
broadband provider actions and to ensure that consumers and edge 
providers--indeed, the Internet community at large--have the 
information they need to understand the services they are receiving and 
to monitor practices that could undermine the open Internet. Third, we 
tentatively conclude that the Commission should adopt the text of the 
no-blocking rule from the Open Internet Order with a revised rationale, 
in order to ensure that all end users and edge providers can enjoy the 
use of robust, fast and dynamic Internet access. Fourth, and where 
conduct would otherwise be permissible under the no-blocking rule, we 
propose to create a separate screen that requires broadband providers 
to adhere to an enforceable legal standard of commercially reasonable 
practices, asking how harm can best be identified and prohibited and 
whether certain practices, like paid prioritization, should be barred 
altogether. Fifth, we propose a multi-faceted dispute resolution 
process to provide effective access for end users, edge providers, and 
broadband network providers alike and the creation of an ombudsperson 
to act as a watchdog to represent the interests of consumers, start-
ups, and small businesses. Sixth, and finally, we ask how either 
Section 706 or Title II (or other sources of legal authority such as 
Title III for mobile services) could be applied to ensure that the 
Internet remains open.

II. Background

    11. Today's NPRM rests upon over a decade of consistent action by 
the Commission to protect and promote the Internet as an open platform 
for innovation, competition, economic growth, and free expression. At 
the core of all of these Commission efforts has been a view endorsed by 
four Chairmen and a majority of the Commission's members in office 
during that time: That FCC oversight is essential to protect the 
openness that is critical to the Internet's success. In recognition of 
this, the Commission has demonstrated a steadfast commitment to 
safeguarding that openness.
    12. In 2004, former Chairman Michael Powell first articulated basic 
guiding principles for preserving Internet freedom in an address at 
Silicon Flatirons. Chairman Powell recognized that ``consumers' hunger 
for an ever-expanding array of high-value content, applications, and 
devices'' fueled investment in broadband networks as the ``impressive 
generators of economic growth, innovation, and empowerment.'' He 
explained that ``ensuring that consumers can obtain and use the 
content, applications and devices they want . . . is critical to 
unlocking the vast potential of the broadband Internet.''
    13. A year later, reinforcing Chairman Powell's guidance, the 
Commission unanimously approved the Internet Policy Statement setting 
forth four general Internet policy principles intended ``[t]o encourage 
broadband deployment and preserve and promote the open and 
interconnected nature of the Internet.'' Specifically, subject to 
``reasonable network management,'' the principles entitle consumers to 
(1) ``access the lawful Internet content of their choice;'' (2) ``run 
applications and use services of their choice, subject to the needs of 
law enforcement;'' (3) ``connect their choice of legal devices that do 
not harm the network;'' and (4) enjoy ``competition among network 
providers, application and service providers, and content providers.''
    14. The Commission incorporated these open Internet principles in a 
series of merger proceedings. In 2005, the Commission conditioned 
approval of the SBC/AT&T and Verizon/MCI mergers on the merged 
entities' compliance with the Internet Policy Statement. Although the 
Commission did not adopt any formal open Internet conditions on the 
Adelphia/Time Warner/Comcast transactions, the Commission made clear 
that its Internet

[[Page 37450]]

Policy Statement ``contains principles against which the conduct of 
Comcast [and] Time Warner . . . can be measured.'' So too, in 2006, the 
Commission accepted the AT&T and BellSouth commitment to ``maintain a 
neutral network and neutral routing in [the merged entity's] wireline 
broadband Internet access service,'' as a formal condition of the 
merger. Likewise, in the 2011 Comcast-NBCU merger, the Commission 
adopted the commitments of the merged entity to not ``prioritize 
affiliated Internet content over unaffiliated Internet content . . . 
[or] treat affiliated network traffic differently from unaffiliated 
network traffic'' as well as to comply with the Commission's open 
Internet rules, regardless of the effect of ``any judicial challenge'' 
affecting those rules.
    15. The Commission likewise incorporated openness principles for 
mobile services, adopting an open platform requirement for licensees in 
the Upper 700 MHz C Block in 2007. Specifically, the rules require 
Upper 700 MHz C-Block licensees to allow customers, device 
manufacturers, third-party application developers, and others to use or 
develop the devices and applications of their choice for Upper 700 MHz 
C-Block networks, provided those devices and applications 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). Further, the Commission prohibited Upper 
700 MHz C-Block licensees from disabling features or functionality in 
handsets where such action is not related to reasonable network 
management and protection, or compliance with applicable regulatory 
requirements.
    16. Also in 2007, the Commission unanimously adopted the Broadband 
Industry Practices Notice of Inquiry, explaining that vigilance and a 
willingness to act were necessary to keep the Internet open. The 
Broadband Industry Practices Notice specifically sought comment on 
whether the Internet Policy Statement should be amended or expanded.
    17. Meanwhile, the Commission applied open Internet principles in 
the context of particular enforcement proceedings. Just before the 
Commission adopted the Internet Policy Statement, the Enforcement 
Bureau had entered into a consent decree with Madison River 
Communications, a telephone company and provider of digital subscriber 
line (DSL) service, arising from complaints by Vonage that Madison 
River was blocking ports that were typically used by Vonage customers 
to make Voice over Internet Protocol (VoIP) telephone calls. The 
consent decree required Madison River to stop blocking VoIP ports and 
refrain from otherwise inhibiting customers from using the VoIP 
applications of their choice.
    18. In 2007, several parties filed complaints with the Commission 
alleging that Comcast was interfering with its customers' use of peer-
to-peer applications in violation of the Internet Policy Statement. 
Such applications allow users to share large files directly with one 
another without going through a central server, but also can consume 
significant amounts of bandwidth. In response, Comcast asserted that 
its conduct was a reasonable network management practice necessary to 
ease congestion. The Commission disagreed and, in a 2008 Order, 
concluded that the company's practice ``contravene[d] . . . federal 
policy'' by ``significantly imped[ing] consumers' ability to access the 
content and use the applications of their choice.'' As the Commission 
explained, Comcast's ``practice unduly squelch[ed] the dynamic benefits 
of an open and accessible Internet,'' harm that was further compounded 
by Comcast's failure to disclose its practice to its customers. In the 
Comcast Order, the Commission asserted ancillary jurisdiction under 
Title I of the Communications Act and concluded that it could resolve 
the dispute through adjudication rather than rulemaking.
    19. Comcast challenged that decision in the D.C. Circuit, arguing 
(among other things) that the Commission lacked authority to prohibit a 
broadband Internet service provider from engaging in discriminatory 
practices that violate the four principles the Commission announced in 
2005. On April 6, 2010, the D.C. Circuit granted Comcast's petition for 
review and vacated the Commission's enforcement decision. As to Section 
706 of the Telecommunications Act of 1996, the court noted that the 
agency had previously interpreted Section 706 as not constituting a 
grant of authority and held that the Commission was bound by that 
interpretation for purposes of the case.
    20. While the Comcast case was pending, the Commission issued a 
Notice of Proposed Rulemaking seeking 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.
    21. In December 2010, the Commission released the Open Internet 
Order, adopting three basic rules grounded in the Commission's prior 
decisions and broadly accepted Internet norms. First, the Order imposed 
a transparency rule, requiring both fixed and mobile providers to 
``publically disclose accurate information regarding the network 
management practices, performance, and commercial terms'' of their 
broadband Internet access service. The rule specified that such 
disclosures be ``sufficient for consumers to make informed choices 
regarding the use of such services and for content, application, 
service, and device providers to develop, market, and maintain Internet 
offerings.'' Second, the Order adopted anti-blocking requirements. The 
rule barred fixed providers from blocking ``lawful content, 
applications, services, or non-harmful devices subject to reasonable 
network management.'' It prohibited mobile providers from blocking 
``consumers from accessing lawful Web sites,'' as well as 
``applications that compete with the provider's voice or video 
telephony services,'' subject to ``reasonable network management.'' 
Third, the Order adopted an anti-discrimination rule for fixed 
providers, barring them from ``unreasonably discriminat[ing] in 
transmitting lawful network traffic,'' subject to ``reasonable network 
management.''
    22. Verizon challenged the Open Internet Order in the D.C. Circuit 
on several grounds. It argued that the Commission lacked statutory 
authority to adopt the rules, that the blocking and non-discrimination 
rules violated the Communications Act by imposing common carriage 
regulation on an information service, that the Order was arbitrary and 
capricious, and that the rules violated the First and Fifth Amendments 
to the U.S. Constitution.
    23. On January 14, 2014, the D.C. Circuit ruled on Verizon's 
challenge to the Open Internet Order. As discussed further below, the 
court upheld the Commission's reading that Sections 706(a) and (b) of 
the Telecommunications Act grant the Commission affirmative authority 
to encourage and accelerate the deployment of broadband capability to 
all Americans through, among other things, measures that promote 
competition in the local telecommunications market or remove barriers 
to infrastructure investment. The court further held that the 
Commission could utilize that Section 706 authority to regulate 
broadband Internet access service. It concluded that the Commission had 
adequately justified the adoption of open Internet rules by finding 
that such rules would preserve and facilitate the ``virtuous

[[Page 37451]]

circle'' of innovation, demand for Internet services, and deployment of 
broadband infrastructure and that, absent such rules, broadband 
providers would have the incentive and ability to inhibit that 
deployment. The court therefore rejected Verizon's challenge to the 
transparency rule. However, the court struck down the ``anti-blocking'' 
and ``anti-discrimination'' rules, explaining that the Commission had 
chosen an impermissible mechanism by which to implement its legitimate 
goals. Specifically, the court held that the Commission had imposed per 
se common carriage requirements on providers of Internet access 
services. Such treatment was impermissible because the Commission had 
classified fixed broadband Internet access service as an information 
service, not a telecommunications service, and had classified mobile 
broadband Internet access service as a private mobile service rather 
than a commercial mobile service. The court remanded the case to the 
Commission for further proceedings consistent with its opinion.
    24. Today, we respond directly to that remand and propose to adopt 
enforceable rules of the road, consistent with the court's opinion, to 
protect and promote the open Internet. As the above history 
demonstrates, our action builds on the foundation begun under Chairman 
Powell, continued under Chairmen Martin and Genachowski, and reinforced 
by a decade of Commission policy.

III. Discussion

A. The Continuing Need for Open Internet Protections

1. An Open Internet Promotes Innovation, Competition, Free Expression, 
and Infrastructure Deployment
    25. In the Open Internet Order, the Commission reiterated the 
conclusion underlying its prior policies--that the Internet's openness 
promotes innovation, investment, competition, free expression and other 
national broadband goals. The Commission also found that the Internet's 
openness is critical to its ability to serve as a platform for speech 
and civic engagement and can help close the digital divide by 
facilitating the development of diverse content, applications, and 
services. Further, the Order found that the benefits of Internet 
openness--increased consumer choice, freedom of expression, and 
innovation--applied to end users accessing the Internet using mobile 
services as well as fixed services.
    26. In the Open Internet Order, the Commission specifically found 
that the Internet's openness enabled 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.'' For example, the Commission explained that 
innovative streaming video applications and independent sources of 
video content have spurred end-user demand, which, in turn, has led to 
network investments and increased broadband deployment. By contrast, 
the Commission reasoned, ``[r]estricting 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.'' As discussed further below, the Commission found 
that, despite the advantages of the virtuous circle, broadband 
providers have short-term incentives to limit openness, generating 
harms to edge providers and users, among others. Thus, the risk of 
broadband provider practices that may reward them in the short term but 
over the long run erode Internet openness threatens to slow or even 
break the virtuous circle--chilling entry and innovation by edge 
providers, impeding competition in many sectors, dampening consumer 
demand, and deterring broadband deployment--in ways that may be 
irreversible or very costly to undo. Also, innovation that does not 
occur due to lack of Internet openness may be hard to detect.
    27. The Open Internet Order acknowledged that there were tradeoffs 
to consider in adopting the 2010 rules. The Commission concluded, 
however, that any small costs of imposing the rules were outweighed by 
the positive effect on network investment from the preservation of the 
openness that drives the virtuous circle, as well as the increased 
certainty in continued openness under the rules.
    28. The D.C. Circuit held that ``the Commission [had] more than 
adequately supported and explained its conclusion that edge provider 
innovation leads to the expansion and improvement of broadband 
infrastructure.'' The court also found ``reasonable and grounded in 
substantial evidence'' the Commission's finding that Internet openness 
fosters the edge provider innovation that drives the virtuous circle.
    29. We believe that these findings, made by the Commission in 2010 
and upheld by the court, remain valid. If anything, the remarkable 
increases in investment and innovation seen in recent years--while the 
rules were in place--appear to have borne out much of the Commission's 
view. Both within the network and at its edges, investment and 
innovation have flourished while the open Internet rules were in force.
    30. According to a June 2013 report by the White House Office of 
Science and Technology Policy, for example, nearly $250 billion in 
private capital has been invested in U.S. wired and wireless broadband 
networks since 2009. USTelecom reports that broadband capital 
expenditures have risen steadily, from $64 billion in 2009 to $68 
billion in 2012. Wireline providers alone invested $25 billion in 2012. 
And venture capital financing of ``Internet-specific'' businesses has 
doubled in the past four years, from $3.5 billion in 2009 to $7.1 
billion in 2013. Annual investment in U.S. wireless networks grew more 
than 40 percent between 2009 and 2012, from $21 billion to $30 billion, 
and exceeds investment by the major oil and gas or auto companies.
    31. Whole new product markets have blossomed in recent years, and 
the market for applications has both diversified and exploded. A total 
of $8.33 billion has been raised since 2007 on mobile media ventures, a 
majority of the funds ($4.7 billion) to companies that provide software 
services, including mobile Web development, carrier-backend software, 
app development, and cloud-based services in the United States. In 
April 2010, Apple released the first version of the iPad, which 
launched the tablet market. The number of tablet users in the United 
States has increased from 9.7 million in 2010 to almost 70 million by 
the end of 2012, and is projected to grow to more than 160 million 
(approximately 50 percent of the U.S. population) by 2016. In 2013, 
over $1 billion in venture capital funding was invested in mobile media 
startups, and overall app use in 2013 posted 115 percent year-over-year 
growth. According to CTIA, in 2012 there were more than 20 independent 
non-carrier mobile application stores, offering over 3.5 million apps 
for 14 different operating systems. The Wall Street Journal reported in 
March 2013 that Apple and Google each offered about 700,000 apps, and 
that application sales were approaching $25 billion.
    32. Finally, we have seen tremendous growth in the online voice and 
video markets. The number of hours Americans spend watching video over 
the Internet has grown 70 percent since June 2010. Between 2010 and 
2013, revenues from online video services

[[Page 37452]]

grew 175 percent, from $1.86 billion to $5.12 billion. Real-time 
entertainment (that is, programming that is viewed as it is delivered, 
such as video streamed by Netflix and Hulu) grew from 42.7 percent of 
the downstream fixed access traffic at peak time (generally 8:00 p.m. 
to 10:00 p.m.) in 2010 to 67 percent of the downstream fixed access 
traffic at peak time by September 2013. VoIP usage has similarly 
continued to increase. The number of global over-the-top mobile VoIP 
subscribers increased by 550 percent in 2012.
    33. We have also, however, witnessed a growing digital divide that 
threatens to undo the work of the Commission's open Internet policies. 
As certain cities get connected with fiber or other technologies 
capable of providing broadband speeds of 25 Mbps up to 1 Gigabit, rural 
America and even some parts of urban America are falling farther and 
farther behind. Recent data suggest that a majority of Americans living 
in urban areas (64 percent) have access to at least 25 Mbps/10 Mbps 
service, while only a substantial minority of Americans residing in 
rural areas (only 21 percent) have access to that same 25 Mbps/10 Mbps 
service. We are similarly concerned as to whether advanced networks are 
being deployed to all Americans in urban areas, as the construction of 
new networks, especially competitive networks, is an outcome that must 
be encouraged.
    34. In light of developments in the Internet ecosystem since 2010, 
we wish to refresh the record on the importance of protecting and 
promoting an open Internet. We seek comment on the current role of the 
Internet's openness in facilitating innovation, economic growth, free 
expression, civic engagement, competition, and broadband investment and 
deployment. Particularly, we seek comment on the role the open Internet 
rules have had in investment in the broadband marketplace--networks and 
edge providers alike. We are similarly interested in understanding the 
role that the open Internet may play in the promotion of competition or 
in identifying barriers to infrastructure investment that an open 
Internet may eliminate or lessen. We also seek comment on the role that 
the open Internet has for public institutions, such as public and 
school libraries, research libraries, and colleges and universities.
    35. Additionally, we seek comment on the impact of the openness of 
the Internet on free expression and civic engagement. For example, the 
percentage of Americans who use the Internet reached 87 percent in 
2014--an increase of 8 percent from 2010, the year in which the Open 
Internet Order was adopted--marking ``explosive adoption'' that has had 
``wide-ranging impacts on everything from: the way people get, share 
and create news . . . the way they learn; the nature of their political 
activity; their interactions with government; the style and scope of 
their communications with friends and family; and the way they organize 
in communities.'' In light of the important role that the Internet now 
plays as a vehicle for communication of all sorts--both for consumers 
and content providers--how should we consider the potential impact on 
social and personal expression of an Internet whose openness was not 
protected? For example, would there be particular impacts on political 
speech, on the ability of consumers to use the Internet to express 
themselves, or on the Internet's role as a ``marketplace of ideas'' 
that serves the interests of democracy in general, serving even the 
interests of those Americans who listen even if they do not actively 
speak? Are there other ways in which we should understand free-
expression interests and whether they may be impaired by a lack of 
openness?
    36. At the same time, we are mindful of the possible tradeoffs the 
Commission recognized at the time it adopted the Open Internet Order. 
When it adopted the rules in 2010, the Commission's primary focus was 
on the market between broadband providers and their end-user 
subscribers. The record contained no evidence of U.S. broadband 
providers engaging in pay-for-priority arrangements, in which the 
broadband provider would agree with a third party to directly or 
indirectly prioritize some traffic over other traffic to reach the 
provider's subscribers. As such, the Commission found that such 
arrangements would be a ``significant departure from historical and 
current practice.''
    37. In the years since, this second side of the market--between 
broadband providers and edge providers or other third parties--has 
gotten increasing attention. In its arguments challenging the Order, 
Verizon expressed interest in pursuing commercial agreements with edge 
providers to govern the carriage of the edge providers' traffic. We 
also note that such arrangements between broadband and edge providers 
have begun to emerge. In January 2014, for example, AT&T launched a new 
sponsored data service, in which an edge provider enters an agreement 
with AT&T to sponsor and pay for data charges resulting from eligible 
uses of the sponsor's content by an AT&T mobile subscriber.
    38. We seek comment on the potential for, and development of, new 
business arrangements in the market between broadband providers and 
edge providers. What does the multi-sided market look like, and what 
are its effects on Internet openness? Do some types of broadband and 
edge provider arrangements (or aspects of such arrangements) raise 
greater concerns about Internet openness than others?
2. Broadband Providers Have the Incentive and Ability To Limit Openness
    39. The Open Internet Order found that broadband Internet providers 
had the incentives and ability to limit Internet openness, and that 
they had done so in the past. And the D.C. Circuit found that the 
Commission ``adequately supported and explained'' that absent open 
Internet rules, ``broadband providers represent a threat to Internet 
openness and could act in ways that would ultimately inhibit the speed 
and extent of future broadband deployment.'' As discussed further 
below, we seek to update the record to reflect marketplace, technical, 
and other changes since the 2010 Open Internet Order was adopted that 
may have either exacerbated or mitigated broadband providers' 
incentives and ability to limit Internet openness. We seek general 
comment on the Commission's approach to analyzing broadband providers' 
incentives and ability to engage in practices that would limit the open 
Internet, as well as more targeted comment as addressed below.
    40. As noted above, the Commission has pursued policies to 
safeguard Internet openness for over a decade. Thus, while the number 
of existing cases has been relatively few, we believe this to be 
primarily due to the fact that the Commission has had policies in place 
during the period in question that it has been ready to enforce. This 
is different from the experience under the European legal framework, 
which for the most part has not contained rules or policies prohibiting 
blocking and discriminatory practices like the Commission's open 
Internet regulatory policies. In the absence of such rules and 
policies, commenters note more instances of broadband providers 
engaging in some level of restriction in Europe than the Commission has 
witnessed in the United States under its open Internet policies. The 
European Parliament voted to adopt net neutrality rules in April 2014 
that will now be considered by the 28 European Union Member States in 
order to become binding regulation. To date, among European countries 
only the

[[Page 37453]]

Netherlands and Slovenia have net neutrality regulations. For example, 
a survey conducted by the Body of European Regulators for Electronic 
Communications (BEREC) shows that European Internet service providers 
reported engaging in specific restrictions such as traffic degradation 
as well as blocking and throttling when accessing ``specific 
applications (such as gaming, streaming, email or instant messaging 
service) and, to a much lesser extent, when [accessing] specific 
content and application providers.'' We seek comment on this analysis 
and ask whether there is some other explanation to account for this 
phenomenon.
    41. We also note that concerns related to the open Internet rules 
and norms have continued to occur. For example, in 2012, the Commission 
reached a $1.25 million settlement with Verizon for refusing to allow 
tethering apps on Verizon smartphones, based on openness requirements 
attached to Verizon's Upper 700 MHz C-Block license. In the same year, 
consumers also complained when AT&T refused to permit Apple's FaceTime 
iPhone and iPad application to use its mobile network, restricting its 
use to times when the end user was connected to Wi-Fi and thus to 
another broadband provider, although the Commission did not conclude 
whether such a practice violated our open Internet principles. We seek 
identification of, and comment on, actions taken by broadband 
providers--both domestically and internationally--since the adoption of 
the Open Internet Order that have threatened or could potentially 
threaten the Internet's openness. How should such incidents inform how 
we craft our rules on remand?
a. Economic Incentives and Ability
    42. In the Open Internet Order, the Commission found that providers 
of broadband Internet access service had multiple incentives to limit 
Internet openness. The Order concluded that the threat of broadband 
provider interference with Internet openness would be exacerbated by--
but did not depend on--such providers possessing market power over 
potential subscribers in their choice of broadband provider. However, 
the Commission found that most residential customers have only one or 
two options for wireline broadband Internet access service, increasing 
the risk of market power, and found the future of mobile Internet 
access service as a competing substitute remained unclear. Moreover, 
the Commission emphasized that customers may incur significant costs in 
switching from one provider to another, thus creating ``terminating 
monopolies'' for content providers needing high-speed broadband service 
to reach end users.
    43. The D.C. Circuit found that the Commission's assessment of 
broadband providers' incentives and economic ability to threaten 
Internet openness was not just supported by the record but also 
grounded in ``common sense and economic reality.'' It affirmed the 
Commission's conclusions that vertically integrated broadband providers 
have incentives to interfere with competitive services and that 
broadband providers generally have incentives to accept fees from edge 
providers. And the court cited with approval the Commission's 
conclusion that a broadband provider would be unlikely to fully account 
for the harms resulting from such practices. The court also upheld the 
agency's conclusion that such incentives could ``produce widespread 
interference with the Internet's openness in the absence of Commission 
action.'' Finally, the court agreed that the Commission need not engage 
in a market power analysis to justify its rules, explaining that 
broadband providers' ability to block or disadvantage edge providers 
depended on ``end users not being fully responsive to the imposition of 
such restrictions,'' not on ``the sort of market concentration that 
would enable them to impose substantial price increases on end users.''
    44. We seek to update the record underlying the Open Internet 
Order's conclusion that broadband providers have incentives and the 
economic ability to limit Internet openness in ways that threaten to 
weaken or break the virtuous circle. How have changes in the 
marketplace or technology since 2010 affected broadband providers 
incentives and economic ability to engage in such practices? To what 
extent do broadband providers today have economic incentives and 
mechanisms to block or disadvantage a particular edge provider or class 
of edge providers? To what extent do vertically integrated providers 
have particularized incentives to discriminate--on price, quality, or 
other bases--in favor of affiliated products? What are broadband 
providers' incentives to increase revenues by charging edge providers 
for access or prioritized access to the broadband provider's end users? 
Are there features of the Internet ecosystem that facilitate or impede 
a broadband provider's ability to internalize the harms caused by 
practices that limit openness? Are there justifications for charging 
fees to edge providers that were not present in 2010? We seek comment 
on these and other economic incentives and abilities that broadband 
providers may have to limit openness.
    45. We generally seek comment on what economic tools broadband 
providers utilize to manage traffic on their networks. Broadband 
providers may address traffic management through commercial terms and 
conditions on end users, such as pricing for different levels of 
throughput or through the use of ``data caps.'' To what extent and in 
what ways do broadband providers use such tools to manage traffic, such 
as by excluding certain content from such an end user data cap? Might 
these tools be used to exploit market power or reduce competition?
    46. In addition, we seek comment on end users' ability to switch 
providers if a particular broadband service does not meet their needs. 
What is the extent of switching costs, and how do switching costs 
affect the incentives and economic ability of providers to limit 
Internet openness? As discussed in the Open Internet Order and affirmed 
by the D.C. Circuit, both edge providers seeking access to end users 
and end users seeking access to edge providers are subject to the 
gatekeeper effect of a retail broadband provider. Absent multi-homing, 
an end user has only one option to reach a given edge provider's 
content. To reach any given end user, an edge provider must ensure that 
it or its broadband provider can reach the end user's broadband 
provider. Terms and conditions, price, or lack of other broadband 
providers, among other factors, can raise switching costs to the point 
where switching is inefficient, infeasible, or even impossible. We seek 
comment on these conclusions. To what extent do consumers face 
significant switching costs in choosing to change broadband access 
providers? Which services, if any, are most vulnerable to a broadband 
provider's market power because of the inability to effectively reach 
subscribers through other means? To the extent that such switching 
costs exist, to what extent, if any, are they exacerbated by additional 
factors, such as the difficulty consumers may have in effectively 
monitoring the extent to which edge providers have difficulty reaching 
them, the number of effective substitutes a consumer may have among 
broadband providers, or the impact of bundled pricing and switching 
costs attached to the purchase or use of bundled services, such as a 
combined offering of broadband access along with video services and 
voice telephony? Would all likely alternatives have similar incentives 
to limit openness, possibly for a different set of services? We also 
seek comment on an end user's ability to switch broadband providers in

[[Page 37454]]

response to specific broadband provider practice, for example a 
broadband provider's decision to charge an edge provider to reach the 
customer. Are switching costs relevant to an edge provider's 
interaction with a broadband provider and, if so, how? Finally, what 
are the implications when consumers have no ability to switch providers 
because there is only one provider offering service to the consumer's 
location?
    47. We also seek comment on the state of competition in broadband 
Internet access service, and its effect on providers' incentives to 
limit openness. We seek comment on the appropriate view of whether 
broadband services with substantially different technical 
characteristics are competitive substitutes. For example, how should we 
regard the ability of DSL service with speeds of, for example, 3 Mbps 
downstream and 768 kbps upstream to constrain conduct by a provider of 
high-speed broadband with speeds of, for example, 25 Mbps downstream 
and 3 Mbps upstream (or higher)? How should we regard the geography of 
broadband competition? From an end user's point of view, do national 
practices or market shares have any impact on edge providers, without 
regard to the definition of a geographic market?
    48. In the fixed broadband context, we have seen evidence of 
limited choice between broadband providers in many areas of the 
country. As the speed threshold increases to 6 Mbps downstream and 1.5 
Mbps upstream, the number of households that are located in census 
tracts with at least three providers that report serving customers at 
those higher speeds dips down to a mere 34 percent. In many areas of 
the country, with respect to fixed Internet access, consumers may have 
only limited options, i.e., one or two fixed providers available. We 
seek comment on the extent to which commercial practices differ in 
places where consumers have only one choice of a wireline broadband 
provider, two choices, or more than two choices. We therefore also seek 
comment as to whether increased spectrum availability and technological 
developments in the mobile broadband marketplace, e.g., growth in 4G/
LTE availability, would affect the market power of fixed broadband 
providers.
    49. We further seek general comment on our approach towards 
analyzing broadband provider incentives. Under the Commission's 
reading, which the court upheld, our Section 706 authority is not 
predicated on a finding of market power, specifically, that broadband 
providers need not be found to be ``benefiting from the sort of market 
concentration that would enable them to impose substantial price 
increases on end users.'' Nor do we believe that the open Internet 
concerns described above solely arise in markets where broadband 
providers possess market power over subscriber prices. We recognize, 
however, that the presence or absence of market power--over broadband 
subscriptions, over end users once they have chosen a broadband 
provider, and over content providers who wish to reach those end 
users--may inform an understanding of a broadband provider's behavior 
in the Internet marketplace and its incentives to engage in practices 
that limit Internet openness. Thus, we seek comment on whether the 
Commission should engage in a market power analysis with respect to 
broadband providers and, if so, how we should go about that analysis.
    50. We further seek comment on whether there are other economic 
theories that the Commission should consider to better understand and 
assess broadband providers' incentives to engage in practices that 
affect the Internet's openness. For example, do broadband providers 
have an incentive to extract rents from upstream services whose price 
significantly exceeds the marginal cost of delivering those services to 
an additional customer? Are there positive network effects from 
widespread adoption of broadband services by consumers that we should 
recognize? Do edge providers that incur significant sunk costs in the 
delivery of their output face ``lock-in'' problems if they become 
dependent on a particular pathway to their current or potential users? 
In the absence of open Internet protections, would those edge providers 
face uncertainty that would hamper their ability to attract capital? 
Does the trend towards the caching of content closer to end users 
either increase such lock-in problems or, separately, limit the number 
of pathways by which an edge provider's output can effectively reach 
current or potential end users? We seek comment on whether and how 
other theories and new evidence may supplement or supplant the original 
Open Internet Order analysis.
b. Technical Ability
    51. The Open Internet Order likewise found that broadband providers 
have the technical ability to limit Internet openness. As the Order 
explained, increasingly sophisticated network management tools enable 
providers to identify and differentiate the treatment of traffic on 
their own broadband Internet access service networks. We recognize that 
broadband providers also have the ability to impact traffic and 
congestion in ways that go beyond the management of traffic within 
their networks. In particular, we understand that broadband providers 
also manage traffic in the context of their relationships with other 
autonomous networks. For example, traffic and congestion may be 
affected by interconnection arrangements for the exchange of Internet 
traffic between two networks as well as CDN-type arrangements in which 
third parties place equipment in or adjacent to the providers' network. 
As discussed in Section III.B, the rules we propose today reflect the 
scope of the 2010 Open Internet Order, which applied to broadband 
provider conduct within its own network. The D.C. Circuit agreed, 
finding ``little dispute that broadband providers have the 
technological ability to distinguish between and discriminate against 
certain types of Internet traffic.'' We seek comment on this general 
conclusion and on how this ability to impose restrictions on edge 
providers and end users has increased or decreased with further 
developments in technology or business practices since the Open 
Internet Order. We also seek comment on provider abilities that were 
not identified in the Open Internet Order or elsewhere in this NPRM, 
including identifying the particular ability and its relevance to this 
proceeding. For example, one commenter has expressed concern about 
broadband providers offering prioritized service in a manner that may 
harm rural or minority end users. Is it technically feasible for a 
broadband provider to block or degrade based on the location or 
neighborhood of the end user? Is it likely that it would do so? If so, 
how should our rules address this concern?
    52. We seek comment on broadband providers' ability to limit 
Internet openness through management of traffic on their own networks 
and limitations imposed on their end users. Providers generally have 
the ability to manage traffic and congestion on their own networks and 
have developed a number of techniques to do so. For example, a provider 
can use technical methods like packet classification, admission control 
and resource reservation, rate control and traffic shaping, as well as 
packet dropping and packet scheduling to identify and manage traffic on 
its network. Such techniques may provide additional ability to 
discriminate in a way that is largely opaque to edge providers and end 
users. We note that other forms of discrimination in the Internet 
ecosystem may exist, but such conduct is beyond the scope of this

[[Page 37455]]

proceeding. We seek comment on the technical tools broadband providers 
can and do use to manage traffic on their networks.
    53. The Open Internet Order found that providers had in fact used 
their ability to limit openness, citing several instances where 
broadband providers had been subject to Commission enforcement 
proceedings for violating open Internet norms. In the Order, the 
Commission cited the Madison River case, the Comcast-BitTorrent case, 
as well as various mobile wireless Internet providers' refusal to allow 
customers to use competitive payment applications, competitive voice 
applications, and remote video applications. The Commission also noted 
other allegations of blocking or degrading peer-to-peer traffic, but 
did not determine whether those specific practices violated open 
Internet principles. The D.C. Circuit noted these examples along with 
the Commission's as persuasive justification for adopting open Internet 
rules.

B. Scope of the Rules

    54. The rules adopted in the Open Internet Order applied to 
``broadband Internet access service,'' which was defined 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 Order defined ``mass market'' to mean a service marketed and sold 
on a standardized basis to residential customers, small businesses, and 
other end-user customers such as schools and libraries, including 
services purchased with support of the E-rate program.
    55. The Verizon decision upheld the Commission's regulation of 
broadband Internet access service pursuant to Section 706 and did not 
disturb this aspect of the Open Internet Order. Thus, the definition of 
``broadband Internet access service'' remains a part of the 
Commission's regulations. We tentatively conclude that we should retain 
this definition without modification. We seek comment on that 
conclusion. The court in Verizon also stated that, apart from the 
service provided to end users, ``broadband providers furnish a service 
to edge providers, thus undoubtedly functioning as edge providers' 
`carriers.' '' We seek comment on whether this should be identified as 
a separate service and, if so, how we should define that service and 
what the regulatory consequences are, if any, of that definition.
    56. We also seek comment on the following issues that arise in 
connection with the scope of the application of the rules we propose 
today.
    57. Specifically Identified Services. The Open Internet Order 
excluded certain categories of services from the definition of 
broadband Internet access service, such as dial-up Internet access 
service and multichannel video programming, the latter of which the 
Commission understood not to meet the definition of ``provid[ing] the 
capability to transmit data to and receive data from all or 
substantially all Internet endpoints.'' We tentatively conclude that we 
would maintain this approach, but seek comment on whether we should 
change this conclusion.
    58. Enterprise Services. The Open Internet Order excluded 
enterprise service offerings, which are typically offered to larger 
organizations through customized or individually negotiated 
arrangements. Similarly, the Open Internet Order excluded virtual 
private network services, hosting, or data storage services. The 
Commission explained that such 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.'' 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. The Open Internet Order also established that the 
rules did not apply to: (1) Edge provider activities, such as the 
provision of content on the Internet; and (2) premise operators, 
entities like coffee shops or bookstores, which offer Internet access 
services to their patrons. We tentatively conclude that we would 
maintain this approach, but seek comment on whether we should change 
this conclusion.
    59. Internet Traffic Exchange. The Open Internet Order explained 
that its rules did not apply beyond ``the limits of a broadband 
provider's control over the transmission of data to or from its 
broadband customers.'' In other words, the Order applied to a broadband 
provider's use of its own network but did not apply the no-blocking or 
unreasonable discrimination rules to the exchange of traffic between 
networks, whether peering, paid peering, content delivery network (CDN) 
connection, or any other form of inter-network transmission of data, as 
well as provider-owned facilities that are dedicated solely to such 
interconnection. Thus, the Order noted that the rules were not intended 
``to affect existing arrangements for network interconnection, 
including existing paid peering arrangements.'' We tentatively conclude 
that we should maintain this approach, but seek comment on whether we 
should change our conclusion. Some commenters have suggested that we 
should expand the scope of the open Internet rules to cover issues 
related to traffic exchange. We seek comment on these suggestions. For 
example, how can we ensure that a broadband provider would not be able 
to evade our open Internet rules by engaging in traffic exchange 
practices that would be outside the scope of the rules as proposed?
    60. Specialized Services. In the Open Internet Order, the 
Commission recognized that broadband providers may offer ``specialized 
services'' over the same last-mile connections used to provide 
broadband service. The Commission stated that these services can 
benefit end users and spur investment, but also noted the potential for 
specialized services to jeopardize the open Internet. Due to these 
concerns, the Commission stated that it would monitor these services, 
but that its rules would ``not prevent broadband providers from 
offering specialized services such as facilities-based VoIP.'' We 
tentatively conclude that we should maintain this approach and continue 
to closely monitor the development of specialized services to ensure 
that broadband providers are not using them to bypass the open Internet 
rules or otherwise undermine a free and open Internet. We seek comment 
on this tentative conclusion. How can we ensure that the specialized 
services exception is not used to circumvent our open Internet rules? 
In addition, should specialized services be addressed within the scope 
of the ``commercially reasonable'' rule either as a safe harbor or 
among the factors for consideration? Should the Commission define 
``specialized services''? The Open Internet Order did not formally 
define ``specialized services,'' but described them as ``services that 
share capacity with broadband Internet access service over providers' 
last-mile facilities.'' By contrast, the net neutrality rules that the 
European Parliament voted to adopt in April 2014 included a specific 
definition for ``specialized services'' as ``an electronic 
communications service optimised for specific content, applications or 
services, or a combination thereof, provided over logically distinct 
capacity, relying on

[[Page 37456]]

strict admission control, offering functionality requiring enhanced 
quality from end to end, and that is not marketed or usable as a 
substitute for internet access service.''
    61. Reasonable Network Management. Although the Open Internet 
Order's definition of broadband Internet access service did not itself 
address reasonable network management, the concept was incorporated 
into each of the 2010 rules. Specifically, the transparency 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.'' The 2010 no-
blocking rule was made expressly subject to ``reasonable network 
management.'' And the unreasonable discrimination rule expressly 
provided for reasonable network management, which was defined as 
follows: ``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.'' The Commission 
further concluded that it would ``develop the scope of reasonable 
network management on a case-by-case basis.'' We tentatively conclude 
that we should continue the same approach. We seek comment on this 
conclusion as applied to an enhanced transparency rule, our re-adoption 
of the no-blocking rule, and the proposal to adopt a ``commercially 
reasonable'' standard. How can we ensure that the ability of providers 
to engage in reasonable network management is not used to circumvent 
the open Internet protections implemented by our proposed rules?
    62. Mobile Services. The Open Internet Order also adopted 
definitions for ``fixed'' and ``mobile'' Internet access service. It 
defined ``fixed broadband Internet access service'' to expressly 
include ``broadband Internet access service that serves end users 
primarily at fixed endpoints using stationary equipment, . . . fixed 
wireless services (including fixed unlicensed wireless services), and 
fixed satellite services.'' It defined ``mobile broadband Internet 
access service'' as ``a broadband Internet access service that serves 
end users primarily using mobile stations.'' The impact of this 
distinction varied by rule. The transparency rule applies equally to 
both fixed and mobile broadband Internet access service. The no-
blocking rule applied a different standard to mobile broadband Internet 
access services, and mobile Internet access service was excluded from 
the unreasonable discrimination rule. We tentatively conclude that we 
should maintain the same approach in today's NPRM. We seek comment on 
this approach, which is discussed in more detail in the context of each 
of the proposed rules below. We recognize that there have been 
significant changes since 2010 in the mobile marketplace, including how 
mobile providers manage their networks, the increased use of Wi-Fi, and 
the increased use of mobile devices and applications. We seek comment 
on whether and, if so, how these changes should lead us to revisit our 
treatment of mobile broadband service. Specifically, we seek comment 
below on whether the no-blocking rule should continue to distinguish 
between fixed and mobile broadband and whether, under the commercially 
reasonable rule, mobile networks should be subject to the same 
totality-of-the-circumstances test as fixed broadband. In addition, how 
should the definitions of ``fixed'' and ``mobile'' services be applied 
to a fixed broadband provider's commercially deployed Wi-Fi service 
that is made available to the provider's fixed broadband customers? How 
should such changes affect our treatment of reasonable network 
management for mobile providers? Similarly, how should we treat mobile 
services that are deployed and/or marketed as express substitutes for 
traditional telecommunications or broadband services? Finally, have 
there been changes in technology or the marketplace for the provision 
of satellite broadband Internet access service that should lead the 
Commission to reassess how its rules should apply to such services?

C. Transparency Requirements To Protect and Promote Internet Openness

1. The 2010 Transparency Rule
    63. In the Open Internet Order, the Commission concluded that 
effective disclosure of broadband providers' network management 
practices, performance, and commercial terms of service promotes 
competition, innovation, investment, end-user choice, and broadband 
adoption. To that end, the Commission adopted the following 
transparency 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 the use of such services and for 
content, application, service, and device providers to develop, 
market, and maintain Internet offerings.

    64. The Commission determined that the best approach to 
implementing the transparency rule was to allow broadband providers 
flexibility, while providing guidance concerning effective disclosure. 
The Commission stated that ``effective disclosures will likely 
include'' information concerning ``some or all'' of the following 
topics: (1) Network practices, including congestion management, 
application-specific behavior, device attachment rules, and security 
measures; (2) performance characteristics, including a general 
description of system performance (such as speed and latency) and the 
effects of specialized services on available capacity; and (3) 
commercial terms, including pricing, privacy policies, and redress 
options. In 2011, the Commission's Enforcement Bureau and Office of 
General Counsel issued advisory guidance to further clarify compliance 
with the transparency requirements regarding point-of-sale disclosures, 
service descriptions, security measures, and the extent of required 
disclosures, while noting that ``these particular methods of compliance 
are not required or exclusive; broadband providers may comply with the 
transparency rule in other ways.''
    65. The D.C. Circuit's decision in Verizon v. FCC upheld the 
transparency rule, which remains in full force, applicable to both 
fixed and mobile providers. In today's NPRM, we inquire as to ways that 
the transparency rule can be improved, taking into account changes in 
the nature of the provision of broadband services since 2010. We 
believe we have ample authority not only for our existing transparency 
rule, but also for the enhanced transparency rule we propose today, 
whether the Commission ultimately relies on Section 706, Title II, or 
another source of legal authority. We seek comment on whether and how--
if at all--the source of the Commission's legal authority relied upon 
to adopt other open Internet rules would affect the authority or 
authorities that provide the strongest basis for any improvements to 
the transparency rule or otherwise would inform how we define the goal 
of transparency in general.
2. Enhancing Transparency To Protect and Promote Internet Openness
    66. ``Sunlight,'' as Justice Brandeis has explained, ``is . . . the 
best of disinfectants.'' If designed correctly, disclosure policies are 
among the most effective and least intrusive regulatory measures at the 
Commission's disposal.

[[Page 37457]]

Applied here, the Commission continues to believe that access to 
accurate information about broadband provider practices encourages the 
competition, innovation, and high-quality services that drive consumer 
demand and broadband investment and deployment. The transparency rule 
thereby reflects the ``virtuous circle'' that, in the long term, unites 
the interests of end users, edge providers, and the broader Internet 
community. As the Commission explained in the Open Internet Order, 
disclosures under the rule: (1) Help end users make informed choices 
regarding the purchase and use of broadband services and increase end 
users' confidence in broadband providers' practices; (2) ensure that 
edge providers have access to broadband providers' network information 
necessary to develop innovative new applications and services; and (3) 
inform the Internet community and the Commission about broadband 
providers' practices and conduct that could impact Internet openness. 
In today's NPRM, we seek comment on the effectiveness of the existing 
transparency rule and on whether and, if so, how the rule should be 
enhanced to meet its goals with respect to end users, edge providers, 
the Internet community, and the Commission.
    67. Today, we seek general comment on how well the Commission's 
existing transparency rule is working. We are especially interested in 
comments that describe the current operation, benefits, and 
shortcomings of the existing rule, how broadband providers are 
complying with it, and how we should measure such compliance. We note 
that an informal review of broadband provider disclosures conducted by 
Commission staff found that the majority are providing some form of 
disclosure statements, but that many do not appear to provide all the 
information the rule was designed to disclose. We are also mindful that 
the additional rules we propose today to protect Internet openness 
consistent with the D.C. Circuit's decision may place even greater 
importance on the extent to which information about broadband 
providers' practices is disclosed to end users, edge providers, and the 
Commission. Taking all of that into account, we tentatively conclude 
that we should enhance the transparency rule to improve its 
effectiveness for end users, edge providers, the Internet community, 
and the Commission. We seek comment on this tentative conclusion and on 
what burdens or compliance issues may be associated with this approach, 
including for smaller providers.
    68. Tailored disclosures. In the Open Internet Order, the 
Commission stated that broadband providers may be able to satisfy the 
transparency rule through use of a single disclosure, and therefore did 
not require different types of disclosures to different parties such as 
individual end users, edge providers, the broader Internet community, 
and the Commission. We have concerns that a single disclosure may not 
provide the required disclosures in a manner that adequately satisfies 
the informational needs of all affected parties. For example, some 
recent research suggests that consumers have difficulty understanding 
commonly used terms associated with the provision of broadband 
services. Edge providers, however, may benefit from descriptions that 
are more technically detailed. We therefore tentatively conclude that 
it would be more effective to require broadband providers to more 
specifically tailor disclosures to the needs of these affected parties. 
We seek comment on this tentative conclusion, on the nature of the 
disclosures that should be tailored, and on what burdens or compliance 
issues, if any, may be associated with more targeted disclosures.
a. Transparency to End Users
    69. Since the Commission adopted the transparency rule, we have 
received hundreds of complaints from consumers suggesting that, under 
the rule, broadband providers may not be providing end user consumers 
the accurate information they need and have a right to receive. Our 
analysis of consumer complaints received since the transparency rule 
took effect shows a significant number of consumer complaints about 
provider speeds, charges, and other commercial practices that the rule 
was designed to disclose. In some cases, however, it is difficult to 
discern whether the consumer's frustration is with slow speeds or high 
prices generally, or instead with how the service as actually provided 
differs from what the provider has advertised. Of particular concern to 
many consumers is that the speed of their service falls short of the 
advertised speed. Many consumers complain that they have been charged 
amounts greater than advertised rates, including fees and charges 
beyond basic rates. We have also received a number of consumer 
complaints raising questions about the source of slow or congested 
services. Consumers have also reported surprise at broadband providers' 
statements about slowed or terminated service based on consumers' 
``excessive use.'' Other consumers report confusion about how data 
consumption is calculated for purposes of data caps.
    70. We seek comment on the extent to which the existing 
transparency rule is effectively informing end users. We are interested 
both in what information broadband providers are disclosing to end 
users and how that information is being disclosed. In addition, we seek 
comment on the incentives and ability of broadband providers to provide 
service at lower quality or higher prices than their subscribers 
expected when they enrolled, and on the incentives and ability of 
subscribers to choose other options if their broadband providers fail 
to live up to these expectations. If a subscriber is locked in to a 
particular provider, how can transparency rules bring the performance 
of that provider up to the subscriber's expectations?
    71. In light of the consumer complaints discussed above, we also 
consider enhancements to the existing rule with respect to the content, 
form, and method of broadband providers' disclosures to end users.
    72. Content and Form of Disclosure. We seek comment on whether 
there are ways to make the content and format of disclosures more 
accessible and understandable to end users. With respect to content, 
should the Commission require the disclosure of specific broadband 
provider network practices, performance characteristics (e.g., 
effective download speeds, upload speeds, latency, and packet loss), 
and/or terms and conditions of service to end users (e.g., data caps)? 
We are particularly interested in whether there are network practices, 
performance characteristics, or commercial terms relating to broadband 
service that are particularly essential but not easily discoverable by 
end users absent effective disclosure. With respect to format, both 
academic research and the Commission's experience with consumer issues 
have demonstrated that the manner in which providers display 
information to consumers can have as much impact on consumer decisions 
as the information itself. We therefore seek comment on best practices 
for displaying and formatting relevant disclosures for end users, 
including any potential costs and burdens to broadband providers. For 
example, the Open Internet Advisory Committee (OIAC) has proposed the 
use of a standardized label for Internet service that includes basic 
information such as performance speed (i.e., upload and download 
speed), price (i.e., monthly fee averaged over three years), and usage 
restrictions (i.e., any points at which the

[[Page 37458]]

applicable terms of service change, including data usage caps and any 
charges, speed reductions, or other penalties for exceeding a cap) that 
consumers can use to comparison shop for service. Are there lessons we 
can learn regarding effective disclosure practices from independent 
consumer research or disclosure in other approaches to standardized 
labels? Should the information be made available in a machine-readable 
format, such as XML, that might allow the Commission, industry 
associations, or other organizations to easily access and synthesize 
information for consumers?
    73. Network Practices. With respect to data caps, should we require 
disclosures that permit end users to identify application-specific 
usage or to distinguish which user or device contributed to which part 
of the total data usage? Should we require disclosure of any type of 
traffic exempted from any data caps, and how end users can find their 
current consumption levels? Should we require that disclosures explain 
any restrictions on tethering for mobile devices? Should the Commission 
expand its transparency efforts to include measurement of other aspects 
of service such as packet loss, packet corruption, latency, and jitter 
in addition to upstream and downstream speed? Should the Commission 
require the reporting of actual achieved results for each category? If 
providers offer different tiers of service to their end users, should 
providers be required to make disclosures by tier? What should be the 
required timing of any such disclosures? Is it important that network 
practices be disclosed in advance of their implementation?
    74. Method of Disclosure. The Transparency Compliance PN advised 
broadband providers that they can comply with the point-of-sale 
disclosure requirement by, for instance, ``directing prospective 
customers at the point of sale, orally and/or prominently in writing, 
to a web address at which the required disclosures are clearly posted 
and updated.'' We seek comment on whether that approach is adequate or 
whether the Commission should consider alternative approaches.
b. Transparency to Edge Providers
    75. As noted above, the Commission also adopted the transparency 
rule to ensure that broadband providers would disclose sufficient 
information to permit ``content, application, service, and device 
providers to develop, market, and maintain Internet offerings.'' Some 
commenters have suggested that current disclosures provide insufficient 
information for edge providers. We seek comment on how the existing 
transparency rule is working and how we can enhance its effectiveness 
with respect to edge providers. Should we view some categories of edge 
providers, such as start-up companies, as having distinct needs and, if 
so, what would be the implications for an enhanced transparency rule?
    76. We also seek comment on the extent to which the transparency 
rule does, or should, disclose useful information to providers who seek 
to exchange traffic with broadband provider networks. In other words, 
should we view transit, CDN, or other providers engaged in Internet 
traffic exchange as a class of persons whose interests are similar to 
those of edge providers who wish ``to develop, market, and maintain 
Internet offerings,'' perhaps because they may have such edge providers 
as their customers? For instance, many edge providers utilize the 
services of an intermediary CDN, such as Akamai, EdgeCast, Limelight, 
or Level 3, or cloud service providers such as Amazon, Microsoft, or 
RackSpace, which provide the servers upon which the applications run 
and also interconnect directly with broadband providers. Other edge 
providers bypass these networks and interconnect directly with 
broadband providers through peering arrangements. Some edge providers, 
such as Google or Amazon, may act both as content providers for their 
own services and as CDNs or cloud service providers for other services. 
We seek comment on whether these subgroups have distinguishable needs 
for information that could be provided through disclosure and, if so, 
what kind of information would be most useful.
c. Transparency to the Internet Community and the Commission
    77. The Common Interests of End Users, Edge Providers, and the 
Broader Internet Community. We seek comment on the extent to which the 
existing transparency rule fully reflects the ``virtuous circle'' that, 
in the long term, unites the interests of end users, edge providers, 
the broader Internet community, and the Commission. Are there ways to 
enhance the transparency rule to further facilitate the virtuous 
circle? What other disclosures might encourage and improve the 
deployment of broadband in the United States?
    78. We also seek comment--relevant to all stakeholders--on whether 
and, if so, how the Commission should enhance the existing transparency 
rule to ensure the effectiveness of, and compliance with, the other 
rules we propose in today's NPRM. For example, to ensure the 
effectiveness of the no-blocking rule proposed below, should the 
Commission mandate that broadband providers disclose--in a more 
rigorous and consistent way--the expected performance end users can 
expect from their broadband service? To improve information about 
broadband provider practices for end users, edge providers, and the 
broader Internet community, we tentatively conclude that broadband 
providers must disclose in a timely manner to consumers, edge 
providers, and the public (and, of course, the Commission) when they 
make changes to their network practices as well as any instances of 
blocking, throttling, and pay-for-priority arrangements, or the 
parameters of default or ``best effort'' service as distinct from any 
priority service.
    79. Measuring Broadband Performance. The Open Internet Order 
requires broadband providers to disclose accurate information regarding 
network performance for each broadband service they provide. The 
accuracy and availability of such network performance information is a 
common linchpin for end users, edge providers, and all stakeholders in 
the Internet community. As noted in the Order, the Commission launched 
a broadband performance measurement project called ``Measuring 
Broadband America'' (MBA) to accurately measure key performance 
metrics, including baseline connection speed and latency. To satisfy 
their obligations under the transparency rule, all of the 12 largest 
fixed broadband providers chose to participate in the measurement 
program. Last year the Commission expanded its MBA program to include 
mobile broadband by releasing a Mobile Broadband Speed Test App, an 
open-source, crowdsourcing program to assess mobile broadband network 
performance nationwide. The app measures mobile broadband and Wi-Fi 
network performance and delivers to consumers an in-depth view of key 
metrics related to their mobile broadband experience. We seek comment 
on the effectiveness of this approach for providing consumers with 
useful information regarding the performance of both fixed and mobile 
broadband networks. We seek comment on whether participation in MBA 
should continue to satisfy the requirement that actual speeds be 
disclosed. Are there areas of this program that can be improved to 
provide more useful information to consumers?
    80. More generally, are there more efficient or more comprehensive 
ways to

[[Page 37459]]

measure network performance metrics, including for broadband providers 
not participating in MBA? For example, could the ability to measure and 
report network performance be included in the end user's own network 
modem or residential gateway? Do such functionalities currently exist, 
or are they in development? Are there academic or other external 
research organizations that could assist the Commission in collecting 
and analyzing information about traffic, congestion, and other features 
of the Internet? Should the Commission mandate the use of monitoring 
devices, like those used in MBA? How can performance metrics most 
accurately measure the actual download and upload speeds a consumer can 
expect to experience, rather than ``up to'' speeds or ``last-mile'' 
performance? Should the Commission look to an external advisory group 
to aid in the development and feasibility of performance metrics and 
measurement?
    81. Congestion. The Open Internet Order highlighted the value of 
providing end users with information about the sources of congestion 
that might impair the performance of edge-provider services. As the 
Open Internet Order explained, ``it is often difficult for end users to 
determine the causes of slow or poor performance of content, 
applications, services or devices.'' At the same time, the Commission 
recognized that ``congestion management may be a legitimate network 
management purpose.'' But the Commission also emphasized the importance 
of the disclosure to end users of ``descriptions of congestion 
management practices'' including ``indicators of congestion'' and ``the 
typical frequency of congestion.''
    82. Since the 2010 Open Internet Order, some have suggested that 
sources of congestion that impact end users may originate beyond the 
broadband provider's network or in the exchange of traffic between that 
network and others. An end user's inability to ascertain the source of 
congestion could lead to confusion, for example, to the filing of an 
unjustified complaint against a broadband provider (if the source of 
the congestion were elsewhere) or a mistaken decision by the end user 
to purchase additional bandwidth to improve performance (again, if the 
source of congestion were elsewhere). Edge providers and other 
stakeholders also have expressed a need for greater information about 
network congestion.
    83. In light of these concerns, we tentatively conclude that we 
should require that broadband providers disclose meaningful information 
regarding the source, location, timing, speed, packet loss, and 
duration of network congestion. We seek comment on this tentative 
conclusion, including on how to implement it in a practical manner that 
provides meaningful information to end users, edge providers, and other 
stakeholders without causing undue burden on broadband providers. For 
example, should the information to be disclosed be based upon a 
sampling taken at given points in time, and if so, what would be an 
appropriate interval for such sampling? We note that Cogent has made 
suggestions about enhancements to the transparency rule along these 
lines and proposing specific means of implementation, upon which we 
seek comment. In making the foregoing tentative conclusion and seeking 
comment on how to implement it, we emphasize that we are positing that 
the public would be served by additional information concerning the 
existence and duration of congestion, regardless of its cause, so that 
there is greater understanding of the impact of that congestion on the 
performance of a broadband provider's network, if any. We do not, 
however, propose to expand the scope of the open Internet rules in any 
fashion to regulate traffic exchange, though, as noted above, we ask 
for public input on this tentative conclusion.
d. Transparency for Mobile Broadband
    84. The Commission currently applies the same transparency 
requirement to both fixed and mobile providers, reasoning 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.'' We seek comment on how we should 
assess the effectiveness of the existing rule in the mobile broadband 
context. For example, most mobile broadband plan offerings have 
generally had lower data usage limits than those offered for fixed 
broadband services. Accordingly, do mobile broadband subscribers have 
an enhanced need to understand, monitor, and more flexibly adjust their 
mobile data usage needs than the fixed broadband users?
    85. We seek comment on whether and, if so, how enhancements to the 
transparency rule should apply to mobile broadband network providers. 
Would the enhanced transparency requirements described herein, or 
others, help meet the information needs of mobile broadband device and 
application developers as well as the needs of end users? How can we 
make sure that the disclosure requirements discussed above are 
appropriate and effective for mobile broadband in view of the many 
operational factors that may influence performance of mobile broadband 
networks, including the mobile access technology, the weather, the 
distance to the serving cell site, the number of users in a cell site, 
and device capability? Should the nature of disclosure to customers of 
wireless networks be different if the wireless service is provided by a 
network as an explicit substitute for copper-based, traditional 
service, including voice and DSL?
e. Burdens of Enhanced Transparency on Broadband Providers
    86. We seek comment on the extent to which adopting enhanced 
transparency requirements would create particular burdens in either the 
fixed or the mobile broadband environment and whether and how such 
burdens would affect the pace of innovation, investment, and growth. 
How can we achieve the public benefits of enhanced disclosure 
requirements without imposing unreasonable burdens on the broadband 
providers? Are there ways to minimize the costs and burdens associated 
with any enhanced disclosure requirements? Are there ways the 
Commission or industry associations could reduce any such burdens, for 
example through the use of a voluntary industry standardized glossary, 
or through the creation of a dashboard that permits easy comparison of 
the policies, procedures, and prices of various broadband providers 
throughout the country?
3. Compliance and Enforcement
    87. In the Open Internet Order, the Commission noted that a key 
objective of the transparency rule is to enable the Commission to 
collect information necessary to assess, report, and enforce the open 
Internet rules. As discussed further below, we seek comment on how the 
Commission can best design a process for enforcing the transparency 
rule that provides certainty, flexibility, and access for all affected 
parties. Should the Commission permit individuals to report possible 
noncompliance with our open Internet rules anonymously or take other 
steps to protect the identity of individuals who may be concerned about 
retaliation for raising concerns? We propose that the consequences of a 
failure to comply with our transparency rule should be significant and 
include monetary penalties. We seek comment on the most effective 
methods to ensure ongoing compliance with the transparency rule. How 
can we ensure that these disclosure requirements are as

[[Page 37460]]

effective and effectively enforced as disclosure requirements in other 
areas of the law, such as disclosures to the Securities and Exchange 
Commission? Should the Commission require broadband providers to 
certify that they are in compliance with the required disclosures, 
particularly if the current flexible approach is amended to require 
more specific disclosures? Should we also require broadband providers 
to submit reports containing descriptions of current disclosure 
practices? If so, should we modify our existing process for protecting 
the confidentiality of competitively sensitive information?
    88. We also seek comment on whether the Commission can better 
promote transparency through its own outreach and reporting mechanisms. 
Should the Commission establish and make public a list of those 
broadband providers that block or otherwise limit certain types of 
traffic? Should the Commission collect and publish information on pay-
for-priority arrangements? In what timeframe should the Commission 
require providers to report such changes in their traffic management 
policies to the Commission? We invite comment on the merits of these 
options, and any other suggestions commenters may deem relevant, to 
ensure full compliance with the transparency rule, including 
identification of any regulatory burdens this might entail for 
broadband providers.

D. Preventing Blocking of Lawful Content, Applications, Services, and 
Nonharmful Devices

    89. We believe that, as the Commission found in the Open Internet 
Order, ``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.'' The D.C. 
Circuit acknowledged the validity of this policy rationale for the no-
blocking rule adopted in the Open Internet Order, but vacated the rule 
because it found that the Commission had failed to provide a legal 
rationale under which the prohibition would not impermissibly subject 
broadband providers to common carriage regulation. To address the 
ongoing concerns with the harmful effects that blocking of Internet 
traffic would have on Internet openness, we propose to adopt the text 
of the no-blocking rule that the Commission adopted in 2010, with a 
clarification that it does not preclude broadband providers from 
negotiating individualized, differentiated arrangements with similarly 
situated edge providers (subject to the separate commercial 
reasonableness rule or its equivalent). So long as broadband providers 
do not degrade lawful content or service to below a minimum level of 
access, they would not run afoul of the proposed rule. We also seek 
comment below on how to define that minimum level of service. 
Alternatively, we seek comment on whether we should adopt a no-blocking 
rule that does not allow for priority agreements with edge providers 
and how we would do so consistent with sources of legal authority other 
than Section 706, including Title II. See infra Section III.F. For 
example, to the extent the Commission relies on Title II, would 
Sections 201(b) and 202(a) of the Act compel a different result than 
provision of a minimum level of service? See 47 U.S.C. 201(b) 
(prohibiting unjust or unreasonable ``charges, practices, [or] 
classifications''); 47 U.S.C. 202(a) (prohibiting ``unjust or 
unreasonable discrimination in charges, practices, classifications, 
regulations, facilities, or services'').
    90. It is important to understand the relationship between the 
proposed no-blocking and commercial reasonableness rules. Although the 
proposed no-blocking rule only establishes a minimum level of service, 
and thus allows room for individualized negotiations, the proposed 
commercial reasonableness rule separately applies to any and all 
conduct, including by asking whether paid prioritization can be barred 
outright and by asking whether to bar practices that harm competition, 
consumers, and the free exercise of speech.
1. The 2010 No-Blocking Rule
    91. 2010 Open Internet Order. In the Open Internet Order, the 
Commission adopted a no-blocking rule to preserve the openness that was 
and remains a core expectation of end users. The Open Internet Order 
noted that a no-blocking principle had been broadly accepted since its 
inclusion in the Commission's 2005 Internet Policy Statement, and the 
Internet Policy Statement itself reflected expectations and practices 
of how the Internet should and did work. A more limited variation of 
the rule applied to mobile broadband providers, due to the operational 
constraints that affect mobile broadband services, the rapidly evolving 
nature of the mobile broadband technologies, and the generally greater 
amount of consumer choice for mobile broadband services than for fixed.
    92. D.C. Circuit Opinion in Verizon v. FCC. The D.C. Circuit struck 
down the no-blocking rule after finding that the Commission had failed 
to provide a legal justification that would take the rule out of the 
realm of impermissible common carriage. The court stated that it was 
``somewhat less clear'' whether the no-blocking rule constituted per se 
common carriage regulation than whether the antidiscrimination rule 
did. Nonetheless, the court concluded that the no-blocking rule, at 
least as described in the Open Internet Order, required broadband 
providers to serve edge providers indiscriminately. The no-blocking 
rule thereby imposed per se common carriage rules and thus violated the 
Communications Act's prohibition on the imposition of common carrier 
obligations on providers of information services.
    93. The court intimated that the no-blocking rule could pass 
scrutiny, however, if broadband providers could engage in 
individualized bargaining while subject to the rule. The court reasoned 
that ``if the relevant service that broadband providers furnish is 
access to their subscribers generally, as opposed to access to their 
subscribers at the specific minimum speed necessary to satisfy the 
anti-blocking rules, then these rules, while perhaps establishing a 
lower limit on the forms that broadband providers' arrangements with 
edge providers could take, might nonetheless leave sufficient `room for 
individualized bargaining and discrimination in terms' so as not to run 
afoul of the statutory prohibitions of common carrier treatment.'' Such 
a practice would allow for individualized bargaining where providers 
would not be required ``to hold themselves out to serve all comers 
indiscriminately on the same or standardized terms.'' If the 
Commission's no-blocking rule allowed individualized bargaining above 
the minimum level of service necessary, then the rule might not create 
per se common carriage obligations. The court noted that although the 
Commission had asserted this interpretation of the rule at oral 
argument, the court could not consider it as a possible basis for 
upholding the rule because the Commission had not advanced this 
position in the Open Internet Order.
2. Proposal To Adopt a No-Blocking Rule
    94. We continue to believe that safeguarding consumers' ability to 
access and effectively use the lawful content, applications, services, 
and devices of their choice on the Internet is an essential component 
of protecting and promoting the open Internet. Therefore, we 
tentatively conclude that we should adopt the text of the rule that

[[Page 37461]]

the Commission adopted in the Open Internet Order, which provided:

    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. Consistent with 
the 2010 rule, the phrase ``content, applications, services'' in the 
proposed rule for fixed broadband service ``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.'' 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.

    95. We believe this to be the public policy that will best serve 
Internet openness. While maintaining this rule text, we propose to make 
clear that the no-blocking rule would allow individualized bargaining 
above a minimum level of access to a broadband provider's subscribers--
the revised rationale the court suggested would be permissible rather 
than per se common carriage--but, also consistent with the court's 
analysis, separately subject such practices to scrutiny under the 
commercially reasonable practices rule (or its equivalent). We believe 
that by preserving end users' ability to access the Internet content of 
their choice, reinstating a no-blocking rule would increase demand for 
broadband services and thus increase investment in broadband network 
infrastructure and technologies. We seek comment on the proposed no-
blocking rule and its potential effect on broadband investment and 
deployment, including whether and under what circumstances broadband 
providers have incentives to block content. We also seek comment on 
possible approaches other than adopting the text of the 2010 rule. 
Should we modify the text of the rule to explicitly address the minimum 
level of access required, as discussed below?
    96. Alternatively, we seek comment on whether we should adopt a no-
blocking rule that either itself prohibits broadband providers from 
entering into priority agreements with edge providers or acts in 
combination with a separate rule prohibiting such conduct. As discussed 
below, the record in this proceeding reflects numerous public concerns 
about the potential for priority agreements to harm an open Internet. 
How could we address such concerns in the context of the no-blocking 
rule? If the Commission were to proceed down this alternative path, how 
should the Commission define ``priority''? Are ``priority'' agreements 
broader than ``pay-for-priority,'' possibly including the exchange of 
consideration other than money? Are there other arrangements between 
broadband providers and edge providers that have the potential to harm 
Internet openness and should be addressed within the no-blocking rule? 
Commenters should address the legal bases and theories, including Title 
II, that the Commission could rely on for such a no-blocking rule, and 
how different sources of authority might lead to different formulations 
of the no-blocking rule.
3. Establishing the Minimum Level of Access Under the No-Blocking Rule
    97. As noted above, the D.C. Circuit suggested that the 
Commission's 2010 no-blocking rule could be interpreted as requiring 
broadband providers to ``furnish . . . access to their subscribers 
generally'' while ``establishing a lower limit on the forms that 
broadband providers' arrangements with edge providers could take''--and 
that under that interpretation the rule might not impose common carrier 
status on broadband providers. Consistent with the court's ruling, we 
tentatively conclude that the revived no-blocking rule should be 
interpreted as requiring broadband providers to furnish edge providers 
with a minimum level of access to their end-user subscribers. Such 
actions, permissible under the no-blocking rule, would, of course, be 
separately subject to the proposed commercially reasonable practices 
standard set out below. We tentatively conclude that our proposed no-
blocking rule would allow broadband providers sufficient flexibility to 
negotiate terms of service individually with edge providers, consistent 
with the court's view that we must permit providers to ``adapt . . . to 
individualized circumstances without having to hold themselves out to 
serve all comers indiscriminately on the same or standardized terms.'' 
In this regard, we view the operation of the no-blocking rule separate 
from any other impact on broadband providers that might arise from 
application of the legal standard, factors, and dispute resolution 
framework discussed below. We reiterate that, as discussed further 
below, under the proposed rules contained herein such individualized 
arrangements for priority treatment would be subject to scrutiny under 
the proposed commercial reasonableness rule and prohibited under that 
rule if they harm Internet openness. We seek comment on these tentative 
conclusions.
    98. Requiring this minimum level of access under the no-blocking 
rule will ensure that all users have access to an Internet experience 
that is sufficiently robust, fast, and effectively usable. This 
includes both end-user consumers and edge providers of all types and 
sizes, including those content providers who do not enter into specific 
arrangements with broadband providers. In short, our approach will 
enable consumers to access the content, services, and applications they 
demand and ensure that innovators and edge providers have the ability 
to offer new products and services. We seek comment on this analysis.
    99. Under the approach described by the D.C. Circuit, ``broadband 
providers [would] have no obligation to actually provide an edge 
provider with the minimum service necessary to satisfy the rules,'' 
because they could instead ``deliver all edge providers' traffic'' in a 
manner that exceeds that minimum, and they would then be free to 
``negotiate separate agreements with each individual edge provider'' 
and also to ``charge similarly-situated edge providers completely 
different prices for the same service.'' We note that a broadband 
provider's discretion in setting rates could be constrained to some 
degree by the commercially reasonable standard and dispute resolution 
framework discussed below, if adopted by the Commission. As we explain 
below, that proposed standard would not constitute per se common 
carriage. Are there alternative approaches that, consistent with the 
Verizon decision, would avoid per se common carriage? Are there forms 
of price discrimination that, even if appropriate under the no-blocking 
rule, should be separately subject to the commercial reasonableness 
rule or its equivalent?
    100. We also seek comment on how, consistent with this 
interpretation, we should define or clarify the minimum level of access 
required by the rule, or otherwise define what provider conduct would 
constitute ``blocking'' under the rule. In our view, a defined minimum 
level of access provides assurances both to end users, by helping them 
understand the potential uses of their service, and to edge providers. 
Such assurances should enhance consumer demand, which drives investment 
both in the network and at the edge.
    101. We also seek comment on how ``minimum level of access'' should 
be defined to provide the robust, fast, and effectively usable access 
discussed above. Should we define the minimum

[[Page 37462]]

level of access from the perspective of end users, edge providers, or 
both? Should the minimum level of access be dynamic, evolving over 
time, and if so, how can that flexibility be incorporated into the 
rule? In the following paragraphs, we describe in alphabetical order 
several possible options by which we may define a minimum level of 
access under the no-blocking rule. We seek comment on these options and 
on any approaches by which the Commission should define the minimum 
level of access. For each of these potential options, we seek comment 
on its advantages and disadvantages, on its legal sustainability under 
Verizon, and on how effective it would be at protecting the open 
Internet, including the ease or difficulty with which violations can be 
identified and remedied. We seek comment on how the Commission should 
implement, monitor compliance with, and enforce the rule, under each of 
the options described. For each option, we also seek comment on whether 
the minimum level of access should be reflected in providers' 
disclosures under an enhanced transparency rule. Under any of these 
options, we seek comment on how the minimum level of access should be 
measured. Should the Commission measure technical parameters, based on 
a sample, focusing on speed, packet loss, latency, or other factors? 
Where in the network should such measurement take place to ensure an 
accurate measure of the broadband provider's performance? Finally, we 
recognize that from time to time a provider may be unable to provide 
such a minimum level of access temporarily for a variety of reasons. 
Aside from complete outages (which are not the subject of this NPRM), 
we note that in some cases inadvertent action or circumstances outside 
a provider's control may cause a subset of traffic to be blocked. For 
example, if a connection with one of several peering partners is 
severed, some Internet traffic may seem unacceptably slow while other 
traffic appears normal. Alternatively, a provider engaged in reasonable 
network management (such as blocking the source of a distributed denial 
of service attack) may inadvertently block other traffic due to a 
transcription error. If steps are taken in a timely manner to correct 
such problems, we would not anticipate considering such action to 
violate a no-blocking rule. We seek comment on how the Commission 
should distinguish such temporary inadvertent failures from intentional 
or prolonged blocking, including whether the Commission should consider 
exempting incidents of blocking that last for less than a specified 
amount of time.
    102. Best Effort. One way to define a minimum level of access is as 
a requirement that broadband providers apply no less than a ``best 
effort'' standard to deliver traffic to end users. For any particular 
type of Internet traffic, best-effort delivery would represent the 
``typical'' level of service for that type of traffic--in effect, 
routing traffic according to the ``traditional'' architecture of the 
Internet. Broadband providers would be free to negotiate ``better than 
typical'' delivery with edge providers, and would be prohibited 
(subject to reasonable network management) from delivering ``worse than 
typical'' service in the form of degradation or outright blocking. We 
seek comment on this potential approach. Would ``best effort'' be 
measured against the technical capacity of a particular broadband 
provider's network capacity and characteristics?
    103. Minimum Quantitative Performance. Another way to define a 
minimum level of access is through specific technical parameters, such 
as a minimum speed. To the extent that commenters believe that the 
Commission should promulgate a rule that establishes specific technical 
parameters for the required minimum level of access, what should those 
parameters be? Should they identify specific speeds of service, or 
would it be preferable to identify specific problems that a minimum 
level of service would avoid (such as preventing latency and jitter for 
services that tolerate them poorly)? Would the Commission need to 
differentiate between different broadband access technologies? While 
this approach would provide greater certainty than other approaches, a 
specific technical definition of minimum access could become outdated 
as available broadband network technologies change and available 
broadband speeds improve. How frequently would we need to revisit a 
specific technical definition of minimum access to ensure that it keeps 
up with advances in broadband service?
    104. An Objective, Evolving ``Reasonable Person'' Standard. Another 
approach to defining a minimum level of access to broadband providers' 
end users is to think of it as the level that satisfies the reasonable 
expectations of a typical end user. We might think of this as a 
``reasonable person'' standard of access. For example, a typical end 
user may reasonably expect the ability to access streaming video from 
any provider, place and receive telephone calls using the VoIP service 
of the end user's choosing, and access any lawful web content. Under 
this approach, a broadband provider that satisfies these and other 
reasonable expectations would be in compliance with the no-blocking 
rule. One possible advantage of this approach to defining minimum 
access is flexibility: the absence of a specific technical definition 
means that the standard for compliance can evolve as the expectations 
in the marketplace change without further Commission action. On the 
other hand, this approach may create less certainty than other 
approaches might and could be more difficult to enforce. We seek 
comment generally on a ``reasonable person'' standard for defining 
minimum access, and in particular, how this standard could be crafted 
to be sufficiently objective and predictable to provide certainty to 
broadband providers and edge providers.
4. Application of the No-Blocking Rule to Mobile Broadband
    105. As noted above, the 2010 no-blocking rule applied differently 
to mobile broadband providers than to fixed, and today's NPRM would 
maintain that approach. The previous rule prohibited mobile broadband 
providers from blocking consumers from accessing lawful Web sites or 
blocking applications that compete with the provider's voice or video 
telephony services. We propose to adopt the same approach as in the 
2010 obligation, which would prohibit mobile broadband providers from 
blocking lawful web content as well as applications that compete with 
the mobile broadband providers' own voice or video telephony services, 
subject to reasonable network management. We seek comment on this 
proposal.
    106. In addition, we seek comment on whether it would serve the 
public interest to expand the rule's scope to include reasonable access 
to all applications that compete with the mobile broadband Internet 
access provider's other services, not just those that compete with 
voice or video telephony services, subject to reasonable network 
management practices. Should the application of the no-blocking rule to 
mobile broadband providers turn on whether mobile service was marketed 
to consumers as a substitute for a fixed telecommunications service 
previously offered by the provider or its affiliate? How would treating 
mobile broadband differently from fixed broadband affect consumers in 
different demographic groups, including those who rely solely on mobile 
broadband for Internet access? How should the Commission consider 
applying a no-blocking rule to

[[Page 37463]]

facilities-based mobile providers versus resellers?
    107. We also seek comment on whether and how we should define a 
minimum level of access in the context of the proposed no-blocking rule 
for mobile broadband, or otherwise clarify what constitutes 
``blocking,'' and whether that definition should be different for 
mobile broadband than for fixed. For each of the approaches discussed 
above to define a ``minimum level of access,'' we seek comment on any 
particular benefits or difficulties that such approach would present.
    108. We recognize that there have been substantial mobile 
marketplace changes and developments since 2010, including the 
increased use of Wi-Fi technology, and seek comment on whether and how 
such changes should impact our no-blocking rule for mobile broadband. 
We seek comment on the extent to which we should take into account the 
increasing provision of Wi-Fi by broadband providers, and the growing 
use of Wi-Fi by end users for the off-load of wireless broadband, as we 
consider the application of the no-blocking rule to mobile broadband 
services.
5. Applicability of the No-Blocking Rule to Devices
    109. The 2010 no-blocking rule prohibited fixed broadband providers 
from blocking non-harmful end-user devices, and the rule we propose 
today would do the same. We seek comment on how this treatment of non-
harmful devices fits into the Verizon court's interpretation of the 
rule. Should the ability to attach non-harmful devices to broadband 
service be included among the reasonable end-user expectations listed 
above, or should we analyze non-harmful devices differently?

E. Codifying an Enforceable Rule To Protect the Open Internet That Is 
Not Common Carriage Per Se

    110. Separate and distinct from the no-blocking rule, we believe 
that establishing an enforceable legal standard for broadband provider 
practices is necessary to preserve Internet openness, protect 
consumers, and promote competition. While the D.C. Circuit vacated the 
Commission's rule prohibiting ``unreasonable discrimination'' by fixed 
broadband providers on the theory that it ``so limited broadband 
providers' control over edge providers' transmissions that [it] 
constitute[d] common carriage per se,'' the court underscored the 
validity of the ``commercially reasonable'' legal standard the 
Commission used in the data roaming context and the court upheld in 
Cellco.
    111. Today, we tentatively conclude that the Commission should 
adopt a revised rule that, consistent with the court's decision, may 
permit broadband providers to engage in individualized practices, while 
prohibiting those broadband provider practices that threaten to harm 
Internet openness. Our proposed approach contains three essential 
elements: (1) An enforceable legal standard of conduct barring 
broadband provider practices that threaten to undermine Internet 
openness, providing certainty to network providers, end users, and edge 
providers alike, (2) clearly established factors that give additional 
guidance on the kind of conduct that is likely to violate the 
enforceable legal standard, and (3) encouragement of individualized 
negotiation and, if necessary, a mechanism to allow the Commission to 
evaluate challenged practices on a case-by-case basis, thereby 
providing flexibility in assessing whether a particular practice 
comports with the legal standard. We seek comment below on the design 
and justification of this rule.
    112. Alternatively, we also seek comment on whether the Commission 
should adopt an alternative legal standard to govern broadband 
providers' practices. How can we ensure that our proposed rule 
sufficiently protects against harms to the open Internet? How would the 
rule we propose today change if the Commission were to rely on Title II 
(or other sources of legal authority) to adopt rules to protect and 
promote Internet openness? We seek comment on how the goal of the 
proposed rule--to prevent those broadband provider practices that limit 
Internet openness--could best be achieved.
1. The 2010 No Unreasonable Discrimination Rule
    113. 2010 Open Internet Order. The Commission adopted a no 
unreasonable discrimination rule to prevent fixed broadband providers 
from engaging in harmful conduct when transmitting lawful network 
traffic over a consumer's broadband Internet access service. The rule 
stated, ``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 
antidiscrimination rule prohibited fixed broadband providers from 
unreasonably discriminating against network traffic subject to 
reasonable network management. Unlike the transparency and no-blocking 
rules the Commission adopted in 2010, the no unreasonable 
discrimination rule did not apply to mobile broadband Internet access 
service providers.
    114. D.C. Circuit Opinion in Verizon v. FCC. The D.C. Circuit 
vacated the antidiscrimination rule because it found that the rule 
improperly relegated fixed broadband providers to common carrier 
status. This violated the statutory ban on common carrier treatment of 
information service providers because the Commission had classified 
broadband providers ``not as providers of `telecommunications services' 
but instead as providers of `information services.' '' The court 
disagreed with the Commission's interpretation to the contrary, finding 
that by compelling fixed broadband providers to serve all edge 
providers who provided content, services, and applications over the 
Internet without unreasonable discrimination, the rule compelled those 
providers to hold themselves out ``to serve the public 
indiscriminately''--thus treating them as common carriers.
    115. In making its determination, the court relied on its previous 
decision in Cellco, where it upheld the Commission's data roaming 
requirements against a common carrier challenge. The court suggested 
that had the Commission shown that the ``no unreasonable 
discrimination'' standard adopted in the Open Internet Order differed 
from the ``nondiscrimination'' standard applicable to common carriers, 
the rule might have withstood judicial review similar to the data 
roaming rule at issue in Cellco. This is because the rule in Cellco 
``expressly permit[ted] providers to adapt roaming agreements to 
`individualized circumstances without having to hold themselves out to 
serve all comers indiscriminately on the same or standardized terms.' 
'' The court went on to suggest that, unlike the data roaming rules at 
issue in Cellco, which listed specific factors to consider in a case-
by-case determination of whether a data roaming provider's conduct and 
offerings were commercially reasonable based on the totality of the 
circumstances, the Open Internet Order did not attempt to ``ensure that 
[the] reasonableness standard remains flexible.'' The D.C. Circuit 
suggested that a rule preventing certain types of conduct by broadband 
providers might be acceptable, given the manner in which the Commission 
has classified broadband providers, if the Commission articulated a 
discrete, flexible standard that prohibited

[[Page 37464]]

practices that could reasonably be understood to harm Internet 
openness, while allowing individualized broadband provider practices, 
akin to the ``commercially reasonable'' standard adopted by the 
Commission in the data roaming context.
2. Proposed Elements of an Enforceable Legal Rule
a. Prohibiting Only Commercially Unreasonable Practices
    116. Sound public policy requires that Internet openness be the 
touchstone of a new legal standard. Accordingly, we tentatively 
conclude that the Commission should adopt a rule requiring broadband 
providers to use ``commercially reasonable'' practices in the provision 
of broadband Internet access service. Our proposed approach is both 
more focused and more flexible than the vacated 2010 non-discrimination 
rule. It would prohibit as commercially unreasonable those broadband 
providers' practices that, based on the totality of the circumstances, 
threaten to harm Internet openness and all that it protects. At the 
same time, it could permit broadband providers to serve customers and 
carry traffic on an individually negotiated basis, ``without having to 
hold themselves out to serve all comers indiscriminately on the same or 
standardized terms,'' so long as such conduct is commercially 
reasonable. The D.C. Circuit explained that such an approach 
distinguished the data roaming rules at issue in Cellco from common 
carrier obligations. We seek general comment on this approach, and more 
targeted comment below.
    117. With respect to this approach in general, we tentatively 
conclude that it should operate separately from the no-blocking rule 
that we also propose to adopt. In other words, the presence or absence 
of the no-blocking rule would have no impact on the presence or absence 
of the ``commercially reasonable'' standard, and vice versa. This would 
mean that conduct acceptable under the no-blocking rule would still be 
subject to independent examination under the ``commercially 
reasonable'' standard. We seek comment on this approach.
    118. The core purpose of the legal standard that we wish to adopt, 
whether the ``commercially reasonable'' standard or another legal 
formulation, is to effectively employ the authority that the Verizon 
court held was within the Commission's power under Section 706. In 
essence, the court upheld the Commission's judgment that (1) Section 
706 grants substantive power to the Commission to take actions, 
including removing barriers to infrastructure investment and promoting 
competition in telecommunications markets, that will promote the 
deployment of broadband networks; (2) the Commission was within its 
authority to conclude that the ``virtuous circle'' can be adversely 
impacted by broadband network practices that, over the long term, 
depress end user demand, which then threatens broadband deployment; and 
(3) threats to the open Internet, such as limitations on users to 
access the content of their choice or speak their views freely, are 
therefore within the authority of the Commission to curb. In selecting 
a legal standard, the Commission not only wishes to avoid subjecting 
broadband networks to common carriage per se, it also wishes to choose 
a legal standard whose valid adoption renders unnecessary the 
adjudication of any question other than whether the adopted legal 
standard has been violated. This is the distinction between the 
authority to adopt a standard and its subsequent application. It is 
axiomatic that an as-applied challenge to a rule would invalidate an 
application of the rule, but the rule itself may otherwise remain 
broadly applicable. See Brockett v. Spokane Arcades, Inc., 472 U.S. 
491, 504 (1985). Thus, assuming the rule is facially sustained by a 
reviewing court, the Commission would not be required to re-litigate 
its underlying determination that adoption of the rule will promote 
deployment. 47 U.S.C. 1302(b). Because the commercially reasonable 
practices rule requires a determination that an entity did not act in a 
commercially reasonable manner, the inquiry is, then, not whether the 
Commission has authority to adopt the regulation, but whether the 
Commission may enforce the regulation in a particular set of 
circumstances. See Colo. Right to Life Comm., Inc. v. Coffman, 498 F.3d 
1137, 1146 (10th Cir. 2007) (holding that an as-applied challenge is 
limited to testing ``the application of [a regulation] to the facts of 
a plaintiff's concrete case''). For example, the D.C. Circuit 
determined that the Commission's data roaming rule--the legal standard 
adopted--was facially valid and within the Commission's authority, but 
that the application of that standard could still be subject to 
subsequent challenge. See Cellco, 700 F.3d at 548.
    119. Are there alternative legal standards, whether in analogous 
contexts or otherwise identified by commenters, that the Commission 
should consider? Is there an existing standard that would serve a 
similar purpose to what we propose here and that would prevent the 
harms to Internet openness? If so, how, and if not, what would any 
differences be? Could the Commission modify its approach to 
``reasonable network management'' in ways that would establish a more 
flexible legal standard that would not constitute common carriage per 
se? Commenters advocating alternative legal standards should explain 
why they are preferable, both in terms of the substantive requirements 
of the alternative standard (such as how they would address providers' 
conduct, offerings, and practices) and its implementation (such as 
whether and how it may permit individualized decision-making), and how 
they would protect an open Internet. And, as to the ``commercially 
reasonable'' standard or any other, we seek comment on whether there 
are sources of law or practice the Commission should rely upon in 
explaining the meaning and application of that standard.
    120. We also seek comment on how a rule requiring broadband 
providers to engage in commercially reasonable practices with respect 
to delivery of traffic to and from end users should apply in 
circumstances in which no individualized negotiation occurs between the 
edge provider and the broadband provider. To cite just a few of many 
possible examples, consider a start-up VoIP service, a politically 
oriented Web site with an audience of fewer than 100 unique visitors 
per day, a social networking application narrowly focused on a 
particular demographic, or peer-to-peer communications among 
individuals. Not all of those actors may seek to enter into a contract 
with a broadband provider; they may simply wish to reach its 
subscribers. We seek comment on the impact of this difference on the 
selection and/or application of the general legal standard.
    121. As an alternative to our proposed approach, we seek comment on 
whether the Commission should adopt a different rule to govern 
broadband providers' practices to protect and promote Internet 
openness. As mentioned above, a number of parties have expressed 
concerns about the effect of pay-for-priority agreements on Internet 
openness. How can the Commission ensure that the rule it adopts 
sufficiently protects against harms to the open Internet, including 
broadband providers' incentives to disadvantage edge providers or 
classes of edge providers in ways that would harm Internet openness? 
Should the Commission adopt a rule that prohibits unreasonable 
discrimination and, if so,

[[Page 37465]]

what legal authority and theories should we rely upon to do so? If the 
Commission ultimately adopts a Title II approach, how should the 
Commission define the rule in light of the requirements under Sections 
201 and 202 of the Act?
b. Factors To Guide Application of the General Legal Standard
    122. Similar to the Commission's approach in the data roaming 
context, we propose to identify factors the Commission can use to 
administer the proposed commercially reasonable practices standard. We 
recognize that there are significant differences between the open 
Internet and the data roaming contexts, including a broader range of 
open Internet practices at issue and a greater diversity of parties 
affected by such practices. Thus, while we look to our data roaming 
approach for guidance, we propose to develop factors specific to the 
open Internet context. These pre-defined factors would provide guidance 
to encourage commercially reasonable individualized practices and, if 
disputes arise, provide the basis for the Commission to evaluate 
whether, taking into account the totality of the circumstances on a 
case-by-case basis as discussed below, a particular practice satisfies 
the enforceable legal standard.
    123. We seek comment on this approach and what factors the 
Commission should adopt to ensure commercially reasonable practices 
that will protect and promote Internet openness. We discuss below 
several categories of factors, noting that there is considerable 
overlap between these categories, and that they are not mutually 
exclusive. As with the data roaming rule, we tentatively conclude that 
a review of the totality of the circumstances should be preserved 
through the creation of a ``catch all'' factor designed to ensure that 
rules can be applied evenly and fairly in response to changing 
circumstances and that all users have an Internet experience that 
affords them access to a minimum level of service sufficient to protect 
and promote an open Internet. Further, we seek comment on providers' 
experiences with the ``commercially reasonable'' practices standard in 
the data roaming context, and on how such experiences might inform our 
thinking as we develop the ``commercially reasonable'' practices 
standard for the open Internet.
    124. Impact on Present and Future Competition. The Commission has 
previously observed that unfair competitive advantages can jeopardize 
innovation on the edge and impair otherwise lawful delivery of products 
and services. For that reason, we seek comment on how we should 
construct factors in applying the commercially reasonable legal 
standard to assess the impact of broadband provider practices on 
present and future competition. We understand this competition inquiry 
to extend beyond an application of antitrust principles to include, for 
example, the predicted impact of practices on future competition.
    125. To what extent should such competition-oriented factors focus 
on market structure and the extent of competition in a given market? 
For example, should we consider factors that the Commission has used in 
case-by-case adjudications under Section 628(b) of the Act, which 
proscribes certain ``unfair methods of competition'' by cable operators 
and certain programming vendors? Are there other competition-oriented 
standards in other contexts (including those outside of 
telecommunications) that we should look to for guidance?
    126. We propose that the competitive factors should also examine 
the extent of an entity's vertical integration and/or its relationships 
with affiliated entities. For example, broadband providers sometimes 
offer an affiliated streaming video service over their broadband 
network in competition with many other third-party broadband and edge 
providers' services. How can we ensure that competition is not harmed 
in such situations? We note that the no-blocking rule as applied to 
mobile Internet access service specifically prohibits broadband 
providers from blocking ``applications that compete with the provider's 
voice or video telephony services.'' And the Commission looked to a 
similar restriction to address harms raised by the Comcast-NBCU 
transaction. In light of such concerns, we propose to adopt a 
rebuttable presumption that a broadband provider's exclusive (or 
effectively exclusive) arrangement prioritizing service to an affiliate 
would be commercially unreasonable. We seek comment on this proposal.
    127. More generally, we seek comment on the use of rebuttable 
presumptions as a tool to focus attention on the likely impacts of 
particular practices. What source or law, either within the 
Communications Act or in other statutes, would help us craft the 
creation and use of rebuttable presumptions? Are there particular 
rebuttable presumptions that should be used, for example, dealing with 
some or all forms of exclusive contracts, or particularized degradation 
of services?
    128. How can the Commission ensure that parties are acting in a 
commercially reasonable manner without foreclosing the creation of pro-
competitive opportunities through certain forms of price discrimination 
or exclusivity agreements? Should we develop factors modeled in part 
after those that the Commission uses in determining whether an 
exclusive contract between a vertically integrated cable operator and 
cable-programming vendor would serve the public interest? Should the 
Commission adopt a rebuttable presumption that broadband provider 
conduct that forecloses rivals (of the provider or its affiliates) from 
the competing marketplace is commercially unreasonable?
    129. Impact on Consumers. In addition to the competitive factors, 
the Commission proposes to adopt factors to examine the extent to which 
broadband providers' practices could harm consumers. In the Open 
Internet Order, the Commission looked to, among other things, the 
extent of transparency and end-user control in assessing whether a 
practice is unreasonably discriminatory. We believe these factors would 
likewise be relevant to assessing whether a practice is commercially 
reasonable. What continued role does the existing or enhanced 
transparency rule have in ensuring that consumers are receiving correct 
information from broadband providers and not being misled?
    130. We believe that consumers of broadband access service should 
have the ability to exercise meaningful choices. How can we factor 
consumer choice into our analysis of what is commercially reasonable? 
Should the Commission look for guidance to Section 628 of the Act, 
which makes it unlawful for cable operators and their affiliated 
satellite cable programming vendors to engage in ``unfair or deceptive 
acts or practices'' with certain purposes and effects?
    131. Impact on Speech and Civic Engagement. The open Internet 
serves as a critical platform for speech and civic engagement. As noted 
above, the ability of citizens and content providers to use this open 
platform to communicate with one another and express their views to a 
wide audience at very low costs drives further Internet use, consumer 
demand, and broadband investment and deployment. We therefore propose 
to adopt a factor or factors in applying the commercially reasonable 
standard that assess the impact of broadband provider practices on free 
exercise of speech and civic engagement.
    132. Technical Characteristics. We also propose to examine the 
relevant technical characteristics associated with broadband providers' 
practices. In the Data Roaming Order, 76 FR 26199 (June 6, 2011), for 
example, the Commission

[[Page 37466]]

looked to the technical characteristics of the service at issue, 
including the technical feasibility of a requested service as well as 
the technical compatibility of providers' networks. We seek comment on 
how the Commission should consider such technical characteristics in 
assessing whether a broadband provider's practice is commercially 
reasonable. The application of the legal standard to satellite Internet 
access service presents one example. How should the Commission account 
for the technical differences between satellite and terrestrial 
broadband services when examining commercially reasonable behavior for 
satellite broadband providers?
    133. ``Good Faith'' Negotiation. The Commission has imposed good 
faith negotiation requirements in a variety of contexts. For example, 
the Commission explicitly requires television broadcasters and 
multichannel video programming distributors (MVPDs) to negotiate 
retransmission consent agreements in good faith. The Commission also 
mandated good faith negotiations for dealings between certain spectrum 
licensees. Would adopting a similar framework for evaluating 
negotiations between parties in the open Internet context serve the 
public interest, convenience, and necessity? How should such a ``good 
faith'' test be applied where parties do not seek to enter into 
contractual relationships with each other?
    134. Industry Practices. How, if at all, should the fact that 
conduct is an industry practice impact the application of the 
``commercially reasonable'' rule? What should be treated as an 
``industry practice''? For example, should that term be limited to 
express standards adopted by standards-setting organizations or similar 
entities? If so, should the make-up or processes used by such a 
standards-setting organization be considered? If not, how should the 
existence of an ``industry practice'' be effectively established for 
purposes of the application of the ``commercially reasonable'' rule, 
and how should the Commission best evaluate potential harms to 
competition arising from coordinated conduct in a market with a limited 
number of participants?
    135. Other Factors. We seek comment on any additional factors the 
Commission should consider in assessing whether a particular practice 
or set of practices by a broadband provider is commercially reasonable, 
given the importance of preventing harms to an open Internet. Are there 
other factors that the Commission adopted in the Data Roaming Order 
that we should incorporate here? How can the Commission best include a 
factor to capture special or extenuating circumstances to ensure that 
it can take into account the totality of the circumstances, 
particularly given the rapid evolution of the Internet marketplace and 
technology?
c. Case-by-Case Evaluations for Commercial Reasonableness
    136. As discussed, we tentatively conclude that we will adopt a 
case-by-case approach, considering the totality of the circumstances, 
when analyzing whether conduct satisfies the proposed commercially 
reasonable legal standard, or another legal standard ultimately 
adopted. We believe that, in conjunction with the factors listed above, 
this approach will provide the advantage of certainty and guidance to 
broadband providers and edge providers--particularly smaller entities 
that might lack experience dealing with broadband providers--while also 
allowing parties flexibility in their individualized dealings. We seek 
comment on whether there is another avenue or mechanism we should use 
when evaluating commercial reasonableness.
3. Potential Conduct That Is Per Se Commercially Unreasonable
    137. In Southwestern Cable, the Supreme Court concluded that a 
Commission requirement that cable systems carry local broadcast signals 
did not constitute common carriage even though the Commission's rule 
applied to all cable systems in defined circumstances. As the Supreme 
Court later noted, that holding ``was limited to remedying a specific 
perceived evil [that] did not amount to a duty to hold out facilities 
indifferently for public use.'' In Verizon, the D.C. Circuit likewise 
explained that the Southwestern Cable regulation ``imposed no 
obligation on cable operators to hold their facilities open to the 
public generally, but only to certain broadcasters if and when cable 
operators acted in ways that might harm those broadcasters.'' Thus, 
consistent with Supreme Court precedent and the Verizon decision, the 
Commission may be able to identify specific practices that do not 
satisfy the commercially reasonable legal standard. For example, we 
note that the data roaming rule upheld by the D.C. Circuit's Cellco 
decision states that ``[c]onduct that unreasonably restrains trade . . 
. is not commercially reasonable.'' Similarly, the Commission recently 
concluded that certain joint activities between certain television 
stations, which are not regulated as common carriers, in the 
negotiation of retransmission consent fees are a per se violation of 
the requirement of ``good faith'' negotiation. Are there any practices 
that, consistent with the Verizon court's reasoning, could be viewed as 
per se commercially unreasonable?
    138. Some have suggested that the Commission go even beyond the 
requirements of the Open Internet Order to impose flat bans on pay-for-
priority service. We seek comment on these suggestions, including 
whether all pay-for-priority practices, or some of them, could be 
treated as per se violations of the commercially reasonable standard or 
under any other standard based on any source of legal authority. We 
emphasize that Section 706 could not be used to reach some conduct 
under this judicially recognized approach to circumvent the principle 
that the proposed rules will not, in any circumstances, constitute 
common carriage per se. If the Commission were to ultimately rely on a 
source of authority other than Section 706 to adopt a legal standard 
for broadband provider practices, such as Title II, we seek comment on 
whether and, if so, how we should prohibit all, or some, pay-for-
priority arrangements, consistent with our authority, to protect and 
promote Internet openness.
4. Potential Safe Harbors
    139. Similar to the approach of identifying practices ex ante that 
would not satisfy the commercially reasonable legal standard, the 
Commission may be able to identify specific services that would be 
treated separately from the application of the commercially reasonable 
legal standard. We seek comment on this approach and how the services 
below should be considered under such an approach.
    140. Application to Mobile Broadband. The Commission chose not to 
apply its no unreasonable discrimination rule to mobile broadband 
providers in 2010 based on considerations including the rapidly 
evolving nature of mobile technologies, the increased amount of 
consumer choice in mobile broadband services, and operational 
constraints that put greater pressure on the concept of reasonable 
network management for mobile broadband services. We have tentatively 
concluded that we will continue that approach in the proposed rules. 
Alternatively, should the Commission account for different 
characteristics of mobile service as a factor in its application of the 
commercially reasonable standard, subject to mobile providers' 
reasonable network management? How would

[[Page 37467]]

maintaining our previous approach for mobile broadband affect end users 
across different demographic groups, including end users who rely 
solely on mobile broadband for Internet access?
    141. Non-exclusive, non-affiliated agreements. AT&T has suggested 
that the Commission exclude from its review of particular practices any 
agreement between a broadband provider and an edge provider if the 
agreement is not exclusive and if the edge provider is not an affiliate 
of the broadband provider. AT&T explains that subjecting broadband 
providers to case-by-case scrutiny in such cases ``would unnecessarily 
impede efficient and pro-consumer arms-length commercial dealings.'' We 
seek comment on whether this approach should be adopted to limit the 
scope of the commercially reasonable standard and whether it could be 
made consistent with the protections afforded by the rule.

F. Legal Authority

    142. In this NPRM, we propose to adopt rules to protect and promote 
the open Internet. For the reasons set forth below, we believe we have 
ample authority to do so. We propose that the Commission exercise its 
authority under Section 706, consistent with the D.C. Circuit's opinion 
in Verizon v. FCC, to adopt our proposed rules. We also seek comment on 
the nature and the extent of the Commission's authority to adopt open 
Internet rules relying on Title II, and other possible sources of 
authority, including Title III. Additionally, we seek comment on the 
Commission's authority under any of the legal theories discussed below 
to address any transition or implementation issues associated with any 
open Internet rules adopted in this proceeding, such as the effect on 
existing agreements.
1. Section 706
    143. We seek comment on our authority under Section 706. 47 U.S.C. 
1301 et seq. We interpret Sections 706(a) and (b) as independent and 
overlapping grants of authority that give the Commission the 
flexibility to encourage deployment of broadband Internet access 
service through a variety of regulatory methods, including removal of 
barriers to infrastructure investment and promoting competition in the 
telecommunications market, and, in the case of Section 706(b), giving 
the Commission the authority to act swiftly when it makes a negative 
finding of adequate deployment. The rules we propose today would be 
authorized by Sections 706(a) and (b) because they would ``encourage 
the deployment'' of advanced telecommunications capability by promoting 
competition in the telecommunications market and removing barriers to 
infrastructure investment. We also seek comment on the relevant 
differences between Sections 706(a) and (b) and how, if at all, those 
differences should impact our exercise of authority here. There are 
significant differences between the authorities granted in each 
provision. For example, while both Section 706(a) and (b) permit the 
Commission to enact measures that promote competition in the 
telecommunications market, Section 706(b) permits the Commission to act 
by promoting competition in the ``telecommunications market'' while 
Section 706(a) limits the Commission to promoting competition in the 
``local telecommunications market.'' Also, while Section 706(a) gives 
the Commission general authority to encourage the deployment of 
broadband regardless of findings under Section 706(b), Section 706(b) 
gives the Commission authority to take ``immediate action.''
    144. To the extent that we rely on our authority under Section 
706(b), we seek comment on how we should treat the existence of and the 
findings in the Commission's Broadband Progress Reports for the 
purposes of this proceeding. Could and should the Commission 
incorporate findings that satisfy Section 706(b) in this proceeding? 
Finally, we seek comment on the extent to which the disparity between 
metropolitan areas and rural deployment of broadband or within 
metropolitan areas should impact our conclusions as to whether advanced 
telecommunications capability is being reasonably and timely deployed.
    145. We also seek comment on how to construe the specific terms and 
definitions in Section 706. For example, ``advanced telecommunications 
capability'' is defined ``without regard to any transmission media or 
technology, 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.'' It is clear that broadband Internet access service is 
such ``advanced telecommunications capability,'' but we also seek 
comment on what other broadband-enabled services may fall within the 
definition of ``advanced telecommunications capability.'' Should the 
Commission interpret the term ``advanced telecommunications 
capability'' to require that certain practices accompany a broadband 
provider's deployment to ensure that end users receive ``high-speed, 
switched, broadband telecommunications capability that enables users to 
originate and receive high-quality voice, data, graphics, and video 
telecommunications?'' In addition, we note that Congress did not define 
``deployment.'' We believe Congress intended this term to be construed 
broadly, and thus, consistent with precedent, we have interpreted it to 
include the extension of networks as well as the extension of the 
capabilities and capacities of those networks.
    146. In Section 230(b) of the Communications Act, Congress also set 
forth statutory ``polic[ies] of the United States'': to ``promote the 
continued development of the Internet,'' to promote ``technologies 
which maximize user control over what information is received'' over 
the Internet, and to ``preserve the vibrant and competitive free market 
that presently exists for the Internet, unfettered by Federal or State 
regulation.'' We continue to believe the Commission's interpretation of 
Section 706 is bolstered by these congressional policies. We seek 
comment on how the Commission should read Section 230(b) in exercising 
its Section 706 authority.
    147. We also seek comment generally on how the court's decision in 
Verizon v. FCC should inform our exercise of legal authority. The D.C. 
Circuit upheld the Commission's interpretation of its authority under 
Section 706, concluding that the factual predicate that the Commission 
had laid justifying its regulations was reasonable and that such a 
factual predicate was reasonably linked to the Commission's exercise of 
authority. However, because the court determined that the Commission's 
no-blocking and anti-discrimination rules impermissibly regulated 
broadband providers as common carriers, the court vacated those rules, 
and remanded for further proceedings consistent with the opinion. We 
seek comment generally on how the court's Verizon decision should 
impact our exercise of authority here. Are there principles raised in 
Judge Silberman's separate opinion concurring in part and dissenting in 
part that are relevant to our exercise of authority as to the new rules 
proposed, or upon which we otherwise seek comment, here?
2. Title II
    148. We seek comment on whether the Commission should rely on its 
authority under Title II of the Communications Act, including both (1) 
whether we should revisit the Commission's classification of broadband 
Internet access service as an information service and (2) whether we 
should separately identify and classify

[[Page 37468]]

as a telecommunications service a service that ``broadband providers . 
. . furnish to edge providers.'' For either of these possibilities, we 
seek comment on whether and how the Commission should exercise its 
authority under Section 10 (or Section 332(c)(1) for mobile services) 
to forbear from specific obligations under the Act and Commission rules 
that would flow from the classification of a service as 
telecommunications service.
    149. Title II--Revisiting the Classification of Broadband Internet 
Access Service. In a series of decisions beginning in 2002, the 
Commission has classified broadband Internet access service offered 
over cable modem, DSL and other wireline facilities, wireless 
facilities, and power lines as an information service, which is not 
subject to Title II and cannot be regulated as common carrier service. 
In 2010, following the D.C. Circuit's Comcast decision, the Commission 
issued a Notice of Inquiry (2010 NOI) that, among other things, asked 
whether the Commission should revisit these decisions and classify a 
telecommunications component service of wired broadband Internet access 
service as a ``telecommunications service.'' Specifically, the 
Commission sought comment on whether to classify as a 
telecommunications service ``Internet connectivity,'' which it defined 
as ``the functions that `enable [end users] to transmit data 
communications to and from the rest of the Internet.''' The docket 
opened by the 2010 NOI remains open. To ensure that it remains current, 
we hereby direct the Wireline Competition Bureau to issue a public 
notice to refresh the record in that proceeding including the inquiries 
contained herein. The Commission also asked whether it should similarly 
alter its approach to wireless broadband Internet access service, 
noting that Section 332 requires that wireless services that meet the 
definition of ``commercial mobile service'' be regulated as common 
carriers under Title II. In response, the Commission received 
substantial comments on these issues. We now seek further and updated 
comment on whether the Commission should revisit its prior 
classification decisions and apply Title II to broadband Internet 
access service (or components thereof). How would such a 
reclassification approach serve our goal to protect and promote 
Internet openness? What would be the legal bases and theories for 
particular open Internet rules adopted pursuant to such an approach? 
Would reclassification and applying Title II for the purpose of 
protecting and promoting Internet openness impact the Commission's 
overall policy goals and, if so, how?
    150. What factors should the Commission keep in mind as it 
considers whether to revisit its prior decisions? Have there been 
changes to the broadband marketplace that should lead us to reconsider 
our prior classification decisions? To what extent is any 
telecommunications component of that service integrated with 
applications and other offerings, such that they are ``inextricably 
intertwined'' with the underlying connectivity service? Is broadband 
Internet access service (or any telecommunications component thereof) 
held out ``for a fee directly to the public, or to such classes of 
users as to be effectively available directly to the public?'' If not, 
should the Commission compel the offering of such functionality on a 
common carrier basis even if not offered as such? For mobile broadband 
Internet access service, does that service fit within the definition of 
``commercial mobile service''? We also note that on May 14, 2014, 
Representative Henry Waxman, Ranking Member of the Committee on Energy 
and Commerce of the U.S. House of Representatives, sent a letter to 
Chairman Wheeler proposing an approach to protecting the open Internet 
whereby the Commission would proceed under Section 706 but use Title II 
as a ``backstop authority.'' We seek comment on the viability of that 
approach.
    151. Title II--Classification of the Broadband Providers' Service 
to Edge Providers. Separate from the reclassification of ``broadband 
Internet access service,'' we seek comment on how the Commission should 
consider broadband providers' service to edge providers and whether 
that service (or some portion of it) is subject to Title II regulation. 
As mentioned above, in Verizon, the D.C. Circuit stated that 
``broadband providers furnish a service to edge providers, thus 
undoubtedly functioning as edge providers' `carriers.''' We understand 
such service to include the flow of Internet traffic on the broadband 
providers' own network, and not how it gets to the broadband providers' 
networks. The Commission in the Open Internet Order understood the 2010 
rules to regulate ``broadband Internet access service,'' which the 
Commission classified as an information service. That service, however, 
is by definition a ``mass-market retail service'' providing the 
capability to send and receive data from ``all Internet end points.'' 
Does the ``service'' contemplated by the court between broadband 
providers and edge providers fit that definition? We seek comment on 
whether and, if so how, the Commission should separately identify and 
classify a broadband service that is furnished by broadband providers' 
to edge providers in order to protect and promote Internet openness.
    152. Some have made proposals suggesting that the Commission could 
apply Title II to such services to achieve our open Internet 
objectives. For example, on May 5, 2014, Mozilla filed a petition 
requesting that the Commission (1) recognize remote delivery services 
in terminating access networks; (2) classify these services as 
``telecommunications services'' under Title II of the Act; and (3) 
forbear from any ``inapplicable or undesirable provisions of Title II'' 
for such services. Mozilla states that, unlike the end-user facing 
broadband services the Commission has classified as information 
services, the Commission has not classified the service that broadband 
Internet providers to remote endpoints, particularly to entities not in 
privity with the broadband provider. These services, Mozilla argues, 
can and should be classified as telecommunications services, subject to 
whatever Title II regulations the Commission deems appropriate. 
Similarly, academics from Columbia University have submitted an 
alternate proposal to classify Internet-facing services that a 
broadband provider offers. This theory would split broadband Internet 
access service into two components: first, the subscriber's ``request 
[for] data from a third-party provider; and second, the content 
provider's response to the subscriber.'' The proposal would classify 
the latter ``sender-side'' traffic, sent in response to a broadband 
provider's customer's request as a telecommunications service, subject 
to Title II. According to the proposal, this is a stand-alone offer of 
telecommunications--transmission between points specified by the end-
user. We seek comment on these proposals and other suggestions for how 
the Commission could identify and classify such services and apply 
Title II to achieve our goals of protecting and promoting Internet 
openness.
    153. Title II--Forbearance. If the Commission were to reclassify 
broadband Internet access service as described above or classify a 
separate broadband service provided to edge providers as a 
``telecommunications service,'' such a service would then be subject to 
all of the requirements of the Act and Commission rules that would flow 
from the classification of a service as a telecommunications service or 
common carrier service. Should the

[[Page 37469]]

Commission take such an approach, we seek comment on the extent to 
which forbearance from certain provisions of the Act or our rules would 
be justified in order to strike the right balance between minimizing 
the regulatory burden on providers and ensuring that the public 
interest is served. For mobile broadband services, we seek comment on 
whether and how the Commission should apply Section 332(c)(1) in 
addition to Section 10 forbearance.
    154. In the 2010 NOI, the Commission contemplated that, if it were 
to classify the Internet connectivity component of broadband Internet 
access service, it would forbear from applying all but a handful of 
core statutory provisions--Sections 201, 202, 208, and 254--to the 
service. In addition, the Commission identified Sections 222 and 255 as 
provisions that could be excluded from forbearance, noting that they 
have ``attracted longstanding and broad support in the broadband 
context.'' We received considerable comment in that proceeding and seek 
further and updated comment. Commenters should list and explain which 
provisions should be exempt from forbearance and which should receive 
it in order to protect and promote Internet openness. Commenters should 
also detail which services should receive forbearance, list the 
provisions from which they believe the Commission should forbear, and 
provide justification for the forbearance. Commenters should also 
define the relevant geographic and product markets in which the 
services or providers should receive forbearance.
    155. For mobile broadband services, we also seek comment on the 
extent to which forbearance should apply, if the Commission were to 
classify mobile broadband Internet access service as a CMRS service 
subject to Title II. The 2010 NOI also asked whether the Commission 
could and should apply Section 332(c)(1) as well as Section 10 in its 
forbearance analysis for mobile services. We received considerable 
comment in that proceeding and seek further and updated comment here.
3. Other Sources of Authority
    156. Title III. We further seek comment on the Commission's 
authority to adopt open Internet rules for mobile broadband services 
under Title III of the Communications Act. The Supreme Court has found 
that Title III endows the Commission with ``expansive powers'' and a 
``comprehensive mandate to `encourage the larger and more effective use 
of radio in the public interest.''' Section 303 of the Act, in 
particular, authorizes the Commission to exercise its authority as 
``the public interest, convenience, and necessity requires'' to 
``[p]rescribe the nature of the service to be rendered by each class of 
licensed stations and each station within any class,'' and to establish 
obligations, not inconsistent with law, as may be necessary to carry 
out the provisions of the Act. It further directs the Commission to 
``generally encourage the larger and more effective use of radio in the 
public interest.'' Likewise, Section 316 of the Act authorizes the 
Commission to adopt ``new conditions on existing licensees'' when 
taking 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.
    157. We find that these provisions provide authority for the 
Commission to adopt open Internet rules for mobile broadband service 
providers. Particularly, we find that it is within our authority to 
``prescribe the nature of the service to be rendered by each class of 
licensed stations and each station within any class,'' consistent with 
what the ``public interest, convenience, and necessity requires'' to 
apply open Internet rules to mobile broadband service providers. We 
seek comment on this interpretation of our Title III authority.
    158. Other Sources of Authority. We seek comment on other sources 
of authority that the Commission may utilize to underpin the adoption 
of these rules. For example, the Open Internet Order delineated a 
number of arguments for authority under a variety of statutory 
provisions. We also seek comment on the theory that the Commission may 
underpin open Internet rules by using its discretion to define the 
scope of common carriage. In addition, we seek comment on the 
Commission's authority to adopt rules under the World Trade 
Organization's Basic Agreement on Trade in Telecommunications. We seek 
comment on the efficacy of those, and other justifications for the 
rules we propose adopting here.
4. Constitutional Considerations
    159. Finally we seek comment on other legal limitations and 
barriers to adoption of the rules we propose today, including First 
Amendment and Due Process considerations. In the Open Internet Order, 
the Commission concluded that ``broadband providers typically are best 
described not as `speakers,' but rather as conduits for speech,'' and 
that the open Internet rules therefore did not implicate broadband 
providers' First Amendment rights. The Commission also found that even 
if the rules ``did implicate expressive activity, they would not 
violate the First Amendment'' because they would advance an important 
government interest--``ensur[ing] the public's access to a multiplicity 
of information sources and maximiz[ing] the Internet's potential to 
further the public interest''--without burdening ```substantially more 
speech than is necessary.''' We seek comment on these findings. We do 
not anticipate constitutional, statutory, or other legal barriers to 
adopting the rules we propose today, but we nonetheless seek comment on 
these matters. Are there modifications we could make to the proposals 
we make today that would avoid constitutional questions?

G. Other Laws and Considerations

    160. The Open Internet Order provided that the open Internet rules 
did not alter broadband providers' rights or obligations with respect 
to other laws or safety and security considerations. The Commission 
further established that the rules did not prohibit broadband providers 
from making reasonable efforts to address transfers of unlawful content 
and unlawful transfers of content. We tentatively conclude that this 
continues to be the correct approach in light of the rules proposed in 
today's NPRM. We therefore propose to retain these regulations without 
modification. We seek comment on this tentative conclusion.

H. Enforcement and Dispute Resolution

1. Background
    161. The Open Internet Order allowed parties to file informal 
complaints pursuant to Section 1.41 of the Commission's rules and 
promulgated a set of formal complaint rules. The formal complaint rules 
give the Commission flexibility to shift the burden of proof or 
production where appropriate and to structure and streamline the 
process to the extent possible. Due to the technical nature of 
potential disputes, however, the Open Internet Order stressed the 
importance of direct negotiations and consultation with independent 
technical bodies in hope that parties would be able to resolve disputes 
before availing themselves of the complaint processes. Thus, the policy 
of the Commission has been to encourage the filing of informal, rather 
than formal, complaints, and thus it was not surprising that the 
Commission did not receive any formal complaints following the adoption 
of the Open Internet Order. As noted above, the Commission has received 
many informal complaints from

[[Page 37470]]

consumers alleging violations of the Open Internet Order. In addition, 
the Commission takes notice of public commentary and events, which may 
lead the Enforcement Bureau to initiate its own investigation. We seek 
comment on the efficiency and functionality of the complaint processes 
adopted in, and used pursuant to, the Open Internet Order.
2. Designing an Effective Enforcement Process
    162. The Verizon decision and our earlier data roaming rules 
provide a blueprint for the creation of a dispute resolution process to 
govern the rules we propose today to protect and promote the open 
Internet. Of course, there are significant potential differences 
between the data roaming and open Internet environments. For example, 
in Cellco, the D.C. Circuit considered a circumstance in which an 
identified party, a wireless carrier, would desire to enter into a 
business arrangement with another identified party, another wireless 
carrier. The rule at issue was designed to create circumstances that 
both incented individualized bargaining and, in specific circumstances, 
curbed the limits of such negotiation where necessary to serve the 
public interest. A similar circumstance could arise in the open 
Internet context, if for example, an app developer wished to enter into 
a contractual arrangement with a broadband provider. But it is just as 
possible that the entity that feels aggrieved by an alleged violation 
of an open Internet rule does not seek a direct contractual 
relationship with a broadband provider. That could arise, for example, 
if a Web site is blocked or if an edge provider feels that it is being 
harmed by differential treatment afforded by a broadband provider to 
its own affiliate. For this reason, the dispute resolution mechanism 
adopted by the Commission to enforce our proposed open Internet rules 
should be designed to operate between parties that do not necessarily 
desire to enter into a binding agreement.
    163. We tentatively conclude that an effective institutional design 
for the rules proposed in today's NPRM must include at least three 
elements. First, there must be a mechanism to provide legal certainty, 
so that broadband providers, end users and edge providers alike can 
better plan their activities in light of clear Commission guidance. 
Second, there must be flexibility to consider the totality of the facts 
in an environment of dynamic innovation. Third, there must be effective 
access to dispute resolutions by end users and edge providers alike. We 
seek comment on these elements. Are there others that should be 
considered? Should any be eliminated? What forms of dispute resolution 
would be the best strategy to implement ``data-driven decision-
making''?
    164. We believe we have ample legal authority to design an 
effective enforcement and dispute resolution process, whether the 
Commission ultimately relies on Section 706, Title II, or another 
source of legal authority. We seek comment on whether and how, if at 
all, the source of the Commission's legal authority would affect our 
dispute resolution and enforcement proposals.
a. Legal Certainty
    165. The Commission has a responsibility to provide certainty, 
guidance, and predictability to the marketplace as we protect and 
promote the open Internet. The most important form of guidance is, of 
course, the adoption by the Commission of a particular legal standard 
in the forthcoming rulemaking. As with the ``commercially reasonable'' 
standard employed in our data roaming rule, the purpose of such a legal 
standard is allow broadband providers, end users, and edge providers to 
measure broadband-provider conduct against a known rule of law, both 
prospectively and retroactively. Under the existing rules, formal 
complaints would also result in Commission orders that would both 
decide a specific complaint and provide useful guidance on the 
application of our proposed open Internet rules--particularly in those 
cases where the adjudicated set of facts is representative of a larger 
industry practice. What other forms of guidance would be helpful? For 
example, is there value in establishing a business-review-letter 
approach similar to that of the Antitrust Division of the Department of 
Justice, whereby entities concerned about certain practices under the 
new rules may ask the Commission for a statement of its current 
enforcement intentions with respect to that conduct and by which the 
Commission would publish both the request for review and its response? 
If adopted, would it make sense to have such a prospective review 
process be administered jointly by the Enforcement Bureau and the 
Office of General Counsel, or should such prospective reviews be 
considered by the full Commission? Should such guidance be binding or 
non-binding? How might petitions for declaratory ruling be helpful?
    166. Non-Binding Staff Opinions. Are there other mechanisms by 
which the Commission can provide guidance before broadband providers 
initiate practices that are within the scope of the open Internet 
rules? For example, the Commission could designate certain staff to 
offer parties non-binding views on the likelihood that a particular 
practice by a broadband provider is commercially reasonable or 
commercially unreasonable (assuming that were the applicable legal 
standard ultimately adopted). The Commission has some experience with 
this non-binding, advisory approach to interpretation of its rules. 
While this type of informal guidance from staff is not binding, it may 
provide parties with helpful information as they consider whether and 
how to resolve a dispute privately and outside of the complaint 
process. Should we establish a similar process for helping parties 
anticipate issues or resolve disputes that might arise under our 
proposed open Internet rules? If so, should the non-binding guidance be 
made public in any way, or should it provide a confidential basis for 
early consultation? We emphasize that these sorts of non-binding 
processes would always be in addition to, and not in lieu of, the right 
of parties to seek binding determinations from the Commission through 
the formal or informal complaint process, declaratory rulings, or other 
mechanisms we adopt to resolve disputes and allegations of violations 
of our open Internet rules.
    167. Enforcement Advisories. Another type of guidance can come in 
the form of enforcement advisories. For example, the Enforcement Bureau 
and the Office of General Counsel issued an enforcement advisory in 
2011, providing additional insight into the application of the 
transparency rule. Is it helpful to have these bureaus issue such 
advisories periodically where issues of potential general application 
come to, or are brought to, their attention? Should such enforcement 
advisories be considered binding policy of the Commission, or merely a 
recitation of staff views?
b. Flexibility
    168. Our process for promoting and protecting Internet openness 
through the rules we propose today must be flexible enough to account 
for the totality of circumstances, including Internet evolution and 
innovation from all sources over time. In the Open Internet Order, the 
Commission stated that it would make certain determinations on a case-
by-case basis. The Commission also stated in the Data Roaming Order 
that it would determine whether the terms and conditions of a proffered 
data roaming arrangement were commercially reasonable on a

[[Page 37471]]

case-by-case basis, taking into consideration the totality of the 
circumstances. Based on the Commission's precedent in using this 
decision-making process, we tentatively conclude that we will adopt a 
similar case-by-case analysis and consider the totality of the 
circumstances to consider alleged violations of our proposed open 
Internet rules. Such an approach would, for example, allow the 
Commission to consider any sources of innovation when analyzing whether 
conduct meets the legal standard ultimately adopted by the Commission. 
Moreover, this approach helps to ensure that, as new circumstances 
exist, the Commission and interested parties will be advantaged by a 
culture of learning that, drawing on the strengths of common-law 
reasoning, reflects the experiences of the present, as well as the 
logic of the past. We seek comment on whether the combination of a 
certain legal standard and a case-by-case approach provides the best 
means of both providing guidance and cabining administrative 
discretion, while ensuring that a system of dispute resolution is both 
focused on facts and founded on the strengths of common-law reasoning.
    169. Fact Finding Processes. In implementing either an informal or 
formal complaint process, how should the Commission structure its fact-
finding processes? What level of evidence should be required in order 
to bring a claim? Are there other circumstances where initial pleading 
standards or burdens of production should be either higher or lower? In 
general, what is the showing required for the burden of production 
shift from the party bringing the claim to the other party in a 
dispute? Should interim relief be available? Should the process permit 
parties to seek expedited treatment of claims and, if so, under what 
circumstances?
c. Effective Access To Dispute Resolution
    170. To be effective in protecting and promoting Internet openness, 
the process for enforcing the rules we propose today must be accessible 
to a diverse array of affected parties. As noted above, the Open 
Internet Order contemplated informal and formal complaints but did not 
include any alternative mechanisms for either providing guidance 
beforehand or resolution in the wake of a challenge to an existing 
practice. But, as also noted above, the rules proposed in today's NPRM 
will operate in an environment in which a complaining party may not 
have sought, or may not even want, to enter into a contractual 
arrangement with a broadband provider. Moreover, the ability of edge 
providers to effectively access a dispute resolution is important to 
the administrative effectiveness of any legal regime that the 
Commission might adopt. To what extent should the structure of edge 
provider market segments impact the kind of regime that the Commission 
adopts? For example, although 17 broadband access providers accounted 
for about 93 percent of U.S. retail subscribers in 2013, near the end 
of that year there were almost 900 app developers that each served more 
than one million active users globally. And app developers as a group 
may be quite a bit smaller than broadband providers; one estimate in 
2013 calculated that 65 percent of app developers garner less than 
$35,000 per year. Moreover, individuals are themselves quite capable of 
serving as edge providers, for example aspiring musicians who upload 
videos to sites such as YouTube.
    171. How can a dispute resolution system be best structured to 
account for individuals and small businesses that may not have the same 
legal resources and effective access to the Commission as broadband 
providers? We propose to create an ombudsperson whose duty will be to 
act as a watchdog to protect and promote the interests of edge 
providers, especially smaller entities. Should initial pleading or 
procedural requirements be adopted that make access to Commission 
processes by individuals or small businesses less cumbersome?
3. Complaint Processes, Enforcement, and Additional Forms of Dispute 
Resolution
    172. Complaint Processes. We tentatively conclude that the same 
three means by which the Commission focused on potential open Internet 
violations after the adoption of the Open Internet Order, namely self-
initiated investigation, informal complaints, and formal complaints, 
should be used as well to enforce any new open Internet rules. We seek 
comment on this tentative conclusion. Are there ways we can improve our 
informal complaint process to make it easier to access and more 
effective, especially for consumers and small businesses with limited 
resources? For example, should the Commission create a separate Open 
Internet complaint category for consumers filing informal complaints 
under the open Internet rules? Should the Commission permit individuals 
to report possible noncompliance with our Open Internet rules 
anonymously or take other steps to protect the identity of individuals 
who may be concerned about retaliation for raising concerns?
    173. Enforcement. We tentatively conclude that enforcement of the 
transparency rule and any enhanced transparency rule that is adopted in 
this proceeding should proceed under the same dispute mechanisms that 
will apply to the proposed no-blocking rule and the legal standard for 
provider practices ultimately adopted by the Commission. We also 
tentatively conclude that violations of the rules would be subject to 
forfeiture penalties, as appropriate, under the Act. We seek comment on 
these tentative conclusions.
    174. Additional Forms of Dispute Resolution--Alternative Dispute 
Resolution. In addition to the Commission processes noted above to 
provide guidance, flexibility, and access, we seek comment on whether 
additional dispute resolutions should be adopted. Should we adopt 
measures to require or encourage disputes over the legality of 
broadband provider practices to be resolved through alternative dispute 
resolution processes, such as arbitration? Would such an approach be 
sufficiently accessible to smaller edge providers, or would a different 
dispute resolution process be more appropriate? Are there any legal 
considerations, limitations, or concerns that the Commission should 
consider with adopting an alternative dispute resolution procedure, 
including arbitration or mediation by a third party? For example, under 
the Alternative Dispute Resolution Act, an agency ``may not require any 
person to consent to arbitration as a condition of entering into a 
contract or obtaining a benefit.'' 5 U.S.C. 575(a)(3). We note, 
however, that this restriction does not prevent the Commission from 
requiring parties to submit to third-party arbitration so long as the 
arbitration is subject to de novo review by the Commission. We note 
that under our informal dispute resolution procedures, Commission staff 
can mediate disputes if parties voluntarily request such a process. 
During such mediations, for instance, the staff may ask parties to 
submit their best offers to facilitate negotiations. We also can adopt 
specific rules to determine appropriate remedies and rapid resolution 
of formal complaints, including a requirement that parties provide 
their best and final offers to help Commission staff determine an 
appropriate remedy if a violation of the rule is found. We seek comment 
on the benefits and costs of such an approach in this context.
    175. Additional Forms of Dispute Resolution--Multistakeholder

[[Page 37472]]

Processes. We also seek comment on whether a multistakeholder approach 
to the enforcement of our proposed open Internet rules would work in 
this context, in whole or in part. For example, should the Commission 
provide an initial forum for discussion and thereafter encourage 
stakeholders, should they so choose, to independently develop standards 
that they consider to meet the governing legal standards? Such 
standards might then be shared with the Commission for consideration, 
or the stakeholders might publicize their proposed standards and 
encourage industry to use them as best practices. If the Commission 
employed a model similar to that of NTIA's multistakeholder privacy 
process, are there lessons we can learn from that experience? How can a 
multistakeholder process best further the goals of providing guidance, 
flexibility, and access?
    176. Additional Forms of Dispute Resolution--Technical Advisory 
Groups. We also seek comment on whether and how the Commission should 
incorporate the expertise of technical advisory groups into a new open 
Internet framework in a manner that could serve the goals of providing 
guidance, flexibility and access. For example, should we invite the 
Open Internet Advisory Committee (OIAC), the Broadband Internet 
Technical Advisory Group (BITAG), the Internet Engineering Task Force 
(IETF), or the North American Network Operators Group (NANOG) to 
recommend to the Commission or public more generally industry best 
practices or other codes of conduct that would either serve as 
presumptive safe harbors and/or help determine whether a broadband 
provider is in compliance with our open Internet rules? Or, rather than 
asking industry groups and other interested parties to play a role ex 
ante, should the Commission instead ask them generally, or specific 
groups in particular, to weigh in on specific disputes once they are 
brought to the Commission's attention? We seek comment generally on how 
the inclusion of advisory groups might strengthen the open Internet 
framework and reduce the burdens of compliance. Similarly, we seek 
comment on the potential value of allowing providers to opt into 
voluntary codes of conduct or other suggested best practices that may 
serve as presumptive safe harbors.

IV. Procedural Matters

A. Paperwork Reduction Act Analysis

    177. This document contains proposed new information collection 
requirements. The Commission, as part of its continuing effort to 
reduce paperwork burdens, invites the general public and the Office of 
Management and Budget (OMB) to comment on the information collection 
requirements contained in this document, as required by the Paperwork 
Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the 
Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 
U.S.C. 3506(c)(4), we seek specific comment on how we might further 
reduce the information collection burden for small business concerns 
with fewer than 25 employees.

B. Initial Regulatory Flexibility Analysis

    178. As required by the Regulatory Flexibility Act of 1980 (RFA), 
the Commission has prepared an Initial Regulatory Flexibility Analysis 
(IRFA) for this NPRM, of the possible significant economic impact on 
small entities of the policies and rules addressed in this document. 
The IRFA is set forth in Appendix B. Written public comments are 
requested on this IRFA. Comments must be identified as responses to the 
IRFA and must be filed by the deadlines for comments on the NPRM 
indicated on the first page of this document. The Commission's Consumer 
and Governmental Affairs Bureau, Reference Information Center, will 
send a copy of this NPRM, including the IRFA, to the Chief Counsel for 
Advocacy of the Small Business Administration (SBA).

C. Ex Parte Rules

    179. This proceeding shall be treated as a ``permit-but-disclose'' 
proceeding in accordance with the Commission's ex parte rules. Persons 
making ex parte presentations must file a copy of any written 
presentation or a memorandum summarizing any oral presentation within 
two business days after the presentation (unless a different deadline 
applicable to the Sunshine period applies). Persons making oral ex 
parte presentations are reminded that memoranda summarizing the 
presentation must (1) list all persons attending or otherwise 
participating in the meeting at which the ex parte presentation was 
made, and (2) summarize all data presented and arguments made during 
the presentation. If the presentation consisted in whole or in part of 
the presentation of data or arguments already reflected in the 
presenter's written comments, memoranda or other filings in the 
proceeding, the presenter may provide citations to such data or 
arguments in his or her prior comments, memoranda, or other filings 
(specifying the relevant page and/or paragraph numbers where such data 
or arguments can be found) in lieu of summarizing them in the 
memorandum. Documents shown or given to Commission staff during ex 
parte meetings are deemed to be written ex parte presentations and must 
be filed consistent with rule 1.1206(b). In proceedings governed by 
rule 1.49(f) or for which the Commission has made available a method of 
electronic filing, written ex parte presentations and memoranda 
summarizing oral ex parte presentations, and all attachments thereto, 
must be filed through the electronic comment filing system available 
for that proceeding, and must be filed in their native format (e.g., 
.doc, .xml, .ppt, searchable .pdf). Participants in this proceeding 
should familiarize themselves with the Commission's ex parte rules.

D. Contact Person

    180. For further information about this rulemaking proceeding, 
please contact Kristine Fargotstein, Competition Policy Division, 
Wireline Competition Bureau, at (202) 418-2774.

V. Ordering Clauses

    181. Accordingly, it is ordered, pursuant to Sections 1, 2, 4(i)-
(j), 303 and 316 of the Communications Act of 1934, as amended, and 
Section 706 of the Telecommunications Act of 1996, as amended, 47 
U.S.C. 151, 152, 154(i)-(j), 303, 316, 1302, that this Notice of 
Proposed Rulemaking is adopted.
    182. It is further ordered that the Commission's Consumer and 
Governmental Affairs Bureau, Reference Information Center, shall send a 
copy of this Notice of Proposed Rulemaking, including the Initial 
Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of 
the Small Business Administration.

Initial Regulatory Flexibility Analysis

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

[[Page 37473]]

In addition, the NPRM and IRFA (or summaries thereof) will be published 
in the Federal Register.

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

    2. With this NPRM, the Commission is directly responding to the 
remand by the U.S. Court of Appeals for the D.C. Circuit in Verizon v. 
FCC of portions of the Commission's 2010 Open Internet Order and 
proposing enforceable rules to protect and promote the open Internet. 
The NPRM seeks comment on a variety of issues relating to the 
Commission's stated objective of protecting and promoting an open 
Internet. The Internet's openness promotes innovation, investment, 
competition, free expression and other national broadband goals. It is 
also critical to the Internet's ability to serve as a platform for 
speech and civic engagement and can help close the digital divide by 
facilitating the development of diverse content, applications, and 
services. The Commission has specifically found that the Internet's 
openness 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.'' However, as the Commission has previously found, broadband 
providers have both the incentive and ability to limit Internet 
openness. As discussed in the NPRM, the Commission is seeking comment 
on proposed open Internet rules that will protect against the harms 
identified in the 2010 Open Internet Order, while fostering all sources 
of innovation on the collection of networks known as the Internet. The 
NPRM asks for comment in a variety of specific areas and sets forth 
proposals in the following six key areas: scope of the proposed rules, 
enhancement of the existing transparency rule, a no-blocking rule, an 
enforceable rule designed to protect the open Internet that is not per 
se common carriage, the best source of legal authority for protection 
of Internet openness and an enforcement and dispute resolution process.
    3. First, the NPRM proposes to retain the same definitions and 
scope as the 2010 rules. The NPRM seeks comment, however, on whether 
the Commission should change the scope of the proposed rules as applied 
to the following: specifically identified services, enterprise 
services, Internet traffic exchange, specialized services, and mobile 
services. The NPRM also proposes to interpret ``reasonable network 
management'' under the same framework adopted in the 2010 Open Internet 
Order and seeks comment on developing the scope of ``reasonable network 
management'' on a case-by-case basis under the proposed rules.
    4. Second, the NPRM proposes enhancements to the Commission's 
existing transparency rule, which was upheld by the D.C. Circuit. The 
NPRM seeks comment on whether disclosures of broadband providers' 
network management practices, performance, and terms and conditions 
that are specifically tailored to the needs of affected parties would 
better ensure that consumers, edge providers, and the Internet 
community at large have the information they need to understand the 
services they are receiving and to monitor practices that could 
undermine the open Internet than the existing rule. The NPRM seeks 
comment on the burdens of enhanced transparency on broadband providers 
and specifically asks if there are ways to minimize these potential 
costs and burdens.
    5. Third, the NPRM proposes adopting the text of the no-blocking 
rule from the 2010 Open Internet Order, with a revised rationale, in 
order to ensure that all end users and edge providers can enjoy the use 
of robust, fast and dynamic Internet access. To address the ongoing 
concerns with the harmful effects that blocking of Internet traffic 
would have on Internet openness and to competition in adjacent markets, 
the NPRM seeks comment on a draft no-blocking rule that would allow 
individualized bargaining above a minimum level of access to a 
broadband provider's subscribers, which the D.C. Circuit suggested 
would be permissible and take the rule out of the realm of common 
carriage regulation. The NPRM proposes a variety of ways to establish a 
minimum level of access under the proposed no-blocking rule and seeks 
comment on those interpretations. Alternatively, the NPRM seeks comment 
on whether the Commission should adopt a no-blocking rule that either 
itself prohibits broadband providers from entering into priority 
agreements with edge providers or acts in combination with a separate 
rule prohibiting such conduct. Additionally, consistent with the 2010 
Open Internet Order, the NPRM proposes to apply the proposed no-
blocking rule differently to mobile broadband providers than to fixed 
broadband providers and seeks comment on that approach.
    6. Fourth, where conduct would otherwise be permissible under the 
no-blocking rule, the NPRM proposes a separate rule that requires 
broadband providers to adhere to an enforceable legal standard of 
commercially reasonable practices. The NPRM tentatively concludes that 
the Commission should adopt a revised rule that, consistent with the 
court's decision, may permit broadband providers to engage in 
individualized practices, while prohibiting those broadband provider 
practices that threaten to harm Internet openness. The Commission's 
proposed approach contains three essential elements: (1) An enforceable 
legal standard of conduct barring broadband provider practices that 
threaten to undermine Internet openness, providing certainty to network 
providers, end users, and edge providers alike, (2) clearly established 
factors that give additional guidance on the kind of conduct that is 
likely to violate the enforceable legal standard, and (3) encouragement 
of individualized negotiation and, if necessary, a mechanism to allow 
the Commission to evaluate challenged practices on a case-by-case 
basis, thereby providing flexibility in assessing whether a particular 
practice comports with the legal standard. The NPRM proposes that the 
concept of reasonable network management would be treated separately 
from the application of the commercially reasonable practices legal 
standard and seeks comment on this approach. The NPRM asks how harm can 
best be identified and prohibited and whether certain practices, like 
paid prioritization, should be barred altogether. The NPRM also seeks 
comment on whether the Commission should consider current technical 
characteristics, industry practices, and the impact on consumers, among 
other factors, when evaluating commercially reasonable practices.
    7. Fifth, the NPRM proposes to rely on Section 706 of the 
Telecommunications Act of 1996 as the source of authority for the 
proposed rules. It seeks comment, however, on the best source of 
authority for protecting Internet openness, whether Section 706, Title 
II of the Communications Act of 1934, as amended, and/or other sources 
of legal authority such as Title III of the Communications Act for 
wireless services. With respect to the prospect of proceeding under 
Title II, the NPRM seeks comment on whether and how the Commission 
should exercise its authority under Section 10 of the Act--or Section 
332(c)(1) for mobile services--to forbear from specific Title II 
obligations that would flow from the classification of a service as 
telecommunications service.

[[Page 37474]]

    8. Sixth, the NPRM proposes a multi-faceted dispute resolution 
process to provide effective access for end users, edge providers, and 
broadband network providers alike and the creation of an ombudsperson 
to act as a watchdog to represent the interests of consumers, start-ups 
and small businesses. The NPRM seeks comment on the level of 
flexibility needed for such approaches and, specifically, how the 
Commission can ensure that the process is accessible by end users and 
edge providers, including small entities. The NPRM also proposes that 
should the Commission ultimately adopt one of the proposed dispute 
mechanisms, then enforcement of the existing transparency rule and any 
enhancements to that rule would proceed under the same manner as 
enforcement of the Commission's other proposed open Internet rules if 
adopted.

B. Legal Basis

    9. The legal basis for any action that may be taken pursuant to the 
NPRM is contained in Sections 1, 2, 4(i)-(j), 303, and 316, of the 
Communications Act of 1934, as amended, and Section 706 of the 
Telecommunications Act of 1996, as amended, 47 U.S.C. 151, 152, 154(i)-
(j), 303, 316, 1302.

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

    10. 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 proposed rules, if adopted. 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 SBA.
1. Total Small Entities
    11. Our proposed action, if implemented, may, over time, affect 
small entities that are not easily categorized at present. We therefore 
describe here, at the outset, three comprehensive, statutory small 
entity size standards. First, nationwide, there are a total of 
approximately 28.2 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 2007, there were 
approximately 1,621,315 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 2007 indicate that there were 89,476 local governmental 
jurisdictions in the United States. We estimate that, of this total, as 
many as 88,761 entities may qualify as ``small governmental 
jurisdictions.'' Thus, we estimate that most governmental jurisdictions 
are small.
2. Internet Access Service Providers
    12. The actions proposed in the NPRM would apply to broadband 
Internet access service providers. The 2011 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 Wired Telecommunications Carriers are 2011 
data, and the most current Economic Census data for All Other 
Telecommunications are 2007 data, which are detailed specifically for 
ISPs within the categories above. For the first category, the data show 
that 3,372 firms operated for the entire year, of which 2,037 had nine 
or fewer employees. For the second category, the data show that 1,274 
firms operated for the entire year. Of those, 1,252 had annual receipts 
below $25 million per year. Consequently, we estimate that the majority 
of ISP firms are small entities.
    13. The ISP industry has changed since these definitions were 
introduced in 2007. The 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 IRFA 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. We note that, although we have no specific 
information on the number of small entities that provide broadband 
Internet access service over unlicensed spectrum, we include these 
entities in our Initial Regulatory Flexibility Analysis.
3. Wireline Providers
    14. 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, 1,307 carriers reported that they were incumbent local exchange 
service providers. Of these 1,307 carriers, an estimated 1,006 have 
1,500 or fewer employees and 301 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.
    15. 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, 1,442 carriers reported that they were 
engaged in the provision of either competitive local exchange services 
or competitive access provider services. Of these 1,442 carriers, an 
estimated 1,256 have 1,500 or fewer employees and 186 have more than 
1,500 employees. In addition, 17 carriers have reported that they are 
Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 
or fewer employees. In addition, 72 carriers have reported that they 
are Other Local Service Providers. Of the 72, seventy have 1,500 or 
fewer employees and two have more than 1,500 employees. Consequently, 
the Commission estimates that most providers of competitive local 
exchange service, competitive access providers, Shared-Tenant Service 
Providers, and other local service providers are small entities that 
may be affected by our proposed action.

[[Page 37475]]

    16. 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.
    17. 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, 359 carriers have reported that they are 
engaged in the provision of interexchange service. Of these, an 
estimated 317 have 1,500 or fewer employees and 42 have more than 1,500 
employees. Consequently, the Commission estimates that the majority of 
IXCs are small entities that may be affected by our proposed action.
    18. 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 two have 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
    19. The broadband Internet access service provider category covered 
by this NPRM may cover multiple wireless firms and categories of 
regulated wireless services. Thus, to the extent the wireless services 
listed below are used by wireless firms for broadband Internet access 
services, the proposed actions may have an impact on those small 
businesses as set forth above and further below. In addition, for those 
services subject to auctions, we note that, as a general matter, the 
number of winning bidders that claim to qualify as small businesses at 
the close of an auction does not necessarily represent the number of 
small businesses currently in service. Also, the Commission does not 
generally track subsequent business size unless, in the context of 
assignments and transfers or reportable eligibility events, unjust 
enrichment issues are implicated.
    20. Wireless Telecommunications Carriers (except Satellite). Since 
2007, the Census Bureau has placed wireless firms within this new, 
broad, economic census category. Prior to 2007, 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), data for 2011 show that there were 784 
firms operating that year. Of these 784 firms, an estimated 749 have 
500 or fewer employees and 35 have more than 500 employees. 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.
    21. 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 1997. In the auction, 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.
    22. 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 was conducted in 2003. One license was awarded. 
The winning bidder was not a small entity.
    23. 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 Commission 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, a little less than one third of these 
entities can be considered small.
    24. 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.
    25. 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

[[Page 37476]]

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.
    26. Specialized Mobile Radio Licenses. The Commission awards 
``small entity'' bidding credits in auctions for Specialized Mobile 
Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz bands 
to firms that had revenues of no more than $15 million in each of the 
three previous calendar years. The Commission awards ``very small 
entity'' bidding credits to firms that had revenues of no more than $3 
million in each of the three previous calendar years. The SBA has 
approved these small business size standards for the 900 MHz Service. 
The Commission has held auctions for geographic area licenses in the 
800 MHz and 900 MHz bands. The 900 MHz SMR auction began on December 5, 
1995, and closed on April 15, 1996. Sixty bidders claiming that they 
qualified as small businesses under the $15 million size standard won 
263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR 
auction for the upper 200 channels began on October 28, 1997, and was 
completed on December 8, 1997. Ten bidders claiming that they qualified 
as small businesses under the $15 million size standard won 38 
geographic area licenses for the upper 200 channels in the 800 MHz SMR 
band. A second auction for the 800 MHz band was held on January 10, 
2002 and closed on January 17, 2002 and included 23 BEA licenses. One 
bidder claiming small business status won five licenses.
    27. 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.
    28. In addition, there are numerous incumbent site-by-site SMR 
licenses and licensees with extended implementation authorizations in 
the 800 and 900 MHz bands. We do not know how many firms provide 800 
MHz or 900 MHz geographic area SMR service pursuant to extended 
implementation authorizations, nor how many of these providers have 
annual revenues of no more than $15 million. One firm has over $15 
million in revenues. In addition, we do not know how many of these 
firms have 1,500 or fewer employees, which is the SBA-determined size 
standard. We assume, for purposes of this analysis, that all of the 
remaining extended implementation authorizations are held by small 
entities, as defined by the SBA.
    29. 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.
    30. In 2007, the Commission reexamined its rules governing the 700 
MHz band in the 700 MHz Second Report and Order, 72 FR 48814 (Aug. 24, 
2007). 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.
    31. 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.
    32. 700 MHz Guard Band Licensees. In 2000, in the 700 MHz Guard 
Band Order, 65 FR 17594 (Mar. 4, 2000), 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

[[Page 37477]]

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.
    33. Air-Ground Radiotelephone Service. The Commission has 
previously used the SBA's small business size standard applicable to 
Wireless Telecommunications Carriers (except Satellite), i.e., an 
entity employing no more than 1,500 persons. There are approximately 
100 licensees in the Air-Ground Radiotelephone Service, and under that 
definition, we estimate that almost all of them qualify as small 
entities under the SBA definition. For purposes of assigning Air-Ground 
Radiotelephone Service licenses through competitive bidding, the 
Commission has defined ``small business'' as an entity that, together 
with controlling interests and affiliates, has average annual gross 
revenues for the preceding three years not exceeding $40 million. A 
``very small business'' is defined as an entity that, together with 
controlling interests and affiliates, has average annual gross revenues 
for the preceding three years not exceeding $15 million. These 
definitions were approved by the SBA. In May 2006, the Commission 
completed an auction of nationwide commercial Air-Ground Radiotelephone 
Service licenses in the 800 MHz band (Auction No. 65). On June 2, 2006, 
the auction closed with two winning bidders winning two Air-Ground 
Radiotelephone Services licenses. Neither of the winning bidders 
claimed small business status.
    34. AWS Services (1710-1755 MHz and 2110-2155 MHz bands (AWS-1); 
1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz and 2175-2180 MHz bands 
(AWS-2); 2155-2175 MHz band (AWS-3)). For the AWS-1 bands, the 
Commission has defined a ``small business'' as an entity with average 
annual gross revenues for the preceding three years not exceeding $40 
million, and a ``very small business'' as an entity with average annual 
gross revenues for the preceding three years not exceeding $15 million. 
For AWS-2 and AWS-3, although we do not know for certain which entities 
are likely to apply for these frequencies, we note that the AWS-1 bands 
are comparable to those used for cellular service and personal 
communications service. The Commission has not yet adopted size 
standards for the AWS-2 or AWS-3 bands but proposes to treat both AWS-2 
and AWS-3 similarly to broadband PCS service and AWS-1 service due to 
the comparable capital requirements and other factors, such as issues 
involved in relocating incumbents and developing markets, technologies, 
and services.
    35. 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.
    36. Fixed Microwave Services. Microwave services include common 
carrier, private-operational fixed, and broadcast auxiliary radio 
services. They also include the Local Multipoint Distribution Service 
(LMDS), the Digital Electronic Message Service (DEMS), and the 24 GHz 
Service, where licensees can choose between common carrier and non-
common carrier status. At present, there are approximately 36,708 
common carrier fixed licensees and 59,291 private operational-fixed 
licensees and broadcast auxiliary radio licensees in the microwave 
services. There are approximately 135 LMDS licensees, three DEMS 
licensees, and three 24 GHz licensees. The Commission has not yet 
defined a small business with respect to microwave services. For 
purposes of the IRFA, we will use the SBA's definition applicable to 
Wireless Telecommunications Carriers (except satellite)--i.e., an 
entity with no more than 1,500 persons. Under the present and prior 
categories, the SBA has deemed a wireless business to be small if it 
has 1,500 or fewer employees. For the category of Wireless 
Telecommunications Carriers (except Satellite), data for 2011 show that 
there were 784 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 245,875. 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.
    37. 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.
    38. 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) received 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) received a 25 percent 
discount on its winning bid; and (iii) a bidder with attributed average 
annual gross

[[Page 37478]]

revenues that do not exceed $3 million for the preceding three years 
(entrepreneur) received 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.
    39. In addition, the SBA's Cable Television Distribution Services 
small business size standard is applicable to EBS. There are presently 
2,436 EBS licensees. All but 100 of these licenses are held by 
educational institutions. Educational institutions are included in this 
analysis as small entities. Thus, we estimate that at least 2,336 
licensees are small businesses. Since 2007, Cable Television 
Distribution Services have been defined within the broad economic 
census category of Wired Telecommunications Carriers; that category is 
defined as follows: ``This industry comprises establishments primarily 
engaged in operating and/or providing access to transmission facilities 
and infrastructure that they own and/or lease for the transmission of 
voice, data, text, sound, and video using wired telecommunications 
networks. Transmission facilities may be based on a single technology 
or a combination of technologies.'' The SBA has developed a small 
business size standard for this category, which is: all such firms 
having 1,500 or fewer employees. To gauge small business prevalence for 
these cable services we must, however, use the most current census data 
that are based on the previous category of Cable and Other Program 
Distribution and its associated size standard; that size standard was: 
all such firms having $13.5 million or less in annual receipts. 
According to Census Bureau data for 2007, there were a total of 996 
firms in this category that operated for the entire year. Of this 
total, 948 firms had annual receipts of under $10 million, and 48 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
    40. Satellite Telecommunications Providers. Two economic census 
categories address the satellite industry. The first category has a 
small business size standard of $30 million or less in average annual 
receipts, under SBA rules. The second has a size standard of $30 
million or less in annual receipts.
    41. 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 2007 
show that there were a total of 570 firms that operated for the entire 
year. Of this total, 530 firms had annual receipts of under $30 
million, and 40 firms had receipts of over $30 million. Consequently, 
we estimate that the majority of Satellite Telecommunications firms are 
small entities that might be affected by our action.
    42. The second category of 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 2007 show that there were a total of 
1,274 firms that operated for the entire year. Of this total, 1,252 had 
annual receipts below $25 million per year. 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
    43. Because Section 706 requires us to monitor the deployment of 
broadband using any technology, 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.
    44. 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 2007, there were a total of 2,048 firms in this category that 
operated for the entire year. Of this total, 1,393 firms had annual 
receipts of under $10 million, and 655 firms had receipts of $10 
million or more. Thus, the majority of these firms can be considered 
small.
    45. 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 
shows that there were 1,141 cable companies at the end of June 2012. Of 
this total, all but ten cable operators nationwide 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. Current 
Commission records show 4,945 cable systems nationwide. Of this total, 
4,380 cable systems have less than 20,000 subscribers, and 565 systems 
have 20,000 or more subscribers, based on the same records. Thus, under 
this standard, we estimate that most cable systems are small entities.
    46. 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. Based on 
available data, we find that all but ten incumbent cable operators are 
small entities 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

[[Page 37479]]

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
    47. 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 2011, there were 2,419 
firms in this category that operated for the entire year. Census data 
do not track electric output and we have not determined how many of 
these firms fit the SBA size standard for small, with no more than 4 
million megawatt hours of electric output. Consequently, we estimate 
that 2,419 or fewer firms may be considered small under the SBA small 
business size standard.

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

    48. As indicated above, the NPRM seeks comment on possible 
enhancements to the Commission's existing transparency rule that may 
impose additional reporting, recordkeeping, or other compliance 
requirements on some small entities. While the NPRM tentatively 
concludes that the Commission should enhance the transparency rule to 
improve its effectiveness for end users, edge providers, the Internet 
community, and the Commission, the NPRM does not propose specific 
revisions to the existing transparency rule. As described above, the 
NPRM also seeks comment on a dispute resolution process that would, if 
adopted, potentially require small entities to respond to complaints or 
otherwise participate in dispute resolution procedures. One feature of 
the enforcement mechanism as discussed in the NPRM, includes a proposal 
to establish the role of an ombudsperson who would act as a watchdog to 
represent the interests of start-ups and other small entities in 
addition to consumers.

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

    49. 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. We expect to consider all of these factors when we have 
received substantive comment from the public and potentially affected 
entities.
    50. The Commission expects to consider the economic impact on small 
entities, as identified in comments filed in response to the NPRM and 
this IRFA, in reaching its final conclusions and taking action in this 
proceeding.
    51. We note, though, that the potential enhancements to the 
transparency rule, the proposed mechanism for individualized decision-
making under the proposed enforceable legal standard of commercially 
reasonable practices, and various aspects of the proposed dispute 
resolution process all contemplate a certain amount of flexibility that 
may be helpful to small entities. For example, the Commission seeks 
comment on whether there are ways the Commission or industry 
associations could reduce burdens on broadband providers in complying 
with the proposed enhanced transparency rule through the use of a 
voluntary industry standardized glossary, or through the creation of a 
dashboard that permits easy comparison of the policies, procedures, and 
prices of various broadband providers throughout the country. We seek 
comment here on the effect the various proposals described in the NPRM, 
and summarized above, will have on small entities, and on what effect 
alternative rules would have on those entities. How can the Commission 
achieve its goal of protecting and promoting an open Internet while 
also imposing minimal burdens on small entities? What specific steps 
could the Commission take in this regard?

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

    52. None

List of Subjects in 47 CFR Part 8

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

Federal Communications Commission.
Marlene H. Dortch,
Secretary.

Proposed Rules

    For the reasons discussed in the preamble, the Federal 
Communications Commission proposes to revise part 8 of Title 47 of the 
Code of Federal Regulations as follows:

PART 8--PROTECTING AND PROMOTING THE OPEN INTERNET

Sec.
8.1 Purpose.
8.3 Transparency.
8.5 No blocking.
8.7 No commercially unreasonable practices.
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. 151, 152, 154(i)-(j), 303, 316, 1302.


Sec.  8.1  Purpose.

    The purpose of this part is to protect and promote the Internet as 
an open platform enabling consumer choice, freedom of expression, end-
user control, competition, and the freedom to innovate without 
permission, and thereby to encourage the deployment of advanced 
telecommunications capability and remove barriers to infrastructure 
investment.


Sec.  8.3  Transparency.

    (a) 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, in a manner tailored
    (1) For end users to make informed choices regarding use of such 
services,

[[Page 37480]]

    (2) For edge providers to develop, market, and maintain Internet 
offerings, and
    (3) For the Commission and members of the public to understand how 
such person complies with the requirements described in Sec. Sec.  8.5 
and 8.7.
    (b) In making the disclosures required by this section, a person 
engaged in the provision of broadband Internet access service shall 
include meaningful information regarding the source, timing, speed, 
packet loss, and duration of congestion.
    (c) In making the disclosures required by this section, a person 
engaged in the provision of broadband Internet access service shall 
publicly disclose in a timely manner to end users, edge providers, and 
the Commission when they make changes to their network practices as 
well as any instances of blocking, throttling, and pay-for-priority 
arrangements, or the parameters of default or ``best effort'' service 
as distinct from any priority service.


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 commercially unreasonable practices.

    A person engaged in the provision of fixed broadband Internet 
access service, insofar as such person is so engaged, shall not engage 
in commercially unreasonable practices. Reasonable network management 
shall not constitute a commercially unreasonable practice.


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) Block. The failure of a broadband Internet access service to 
provide an edge provider with a minimum level of access that is 
sufficiently robust, fast, and dynamic for effective use by end users 
and edge providers.
    (b) 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.
    (c) Edge provider. Any individual or entity that provides any 
content, application, or service over the Internet, and any individual 
or entity that provides a device used for accessing any content, 
application, or service over the Internet.
    (d) End user. Any individual or entity that uses a broadband 
Internet access service.
    (e) 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.
    (f) Mobile broadband Internet access service. A broadband Internet 
access service that serves end users primarily using mobile stations.
    (g) 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. 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 1.1106) and, on the same day:
    (1) File three copies of the complaint with the Office of the 
Commission Secretary;

[[Page 37481]]

    (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 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 of this part, 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

[[Page 37482]]

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 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.

[[Page 37483]]

    (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. 2014-14859 Filed 6-30-14; 8:45 am]
BILLING CODE 6712-01-P