Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities, 60222-60234 [05-20830]
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C. Regulatory Flexibility Act
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I
List of Subjects in 41 CFR Parts 301–11
and 301–74
§ 301–11.18 What M&IE rate will I receive
if a meal(s) is furnished by the Government
or is included in the registration fee?
Government employees, Travel and
transportation expenses.
Dated: October 4, 2005.
Stephen A. Perry,
Administrator of General Services.
For the reasons set forth in the
preamble, under 5 U.S.C. 5701–5709,
GSA amends 41 CFR parts 301–11 and
301–74 as set forth below:
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PART 301–11—PER DIEM EXPENSES
1. The authority citation for 41 CFR
part 301–11 continues to read as
follows:
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Breakfast ......................................................................
Lunch ...........................................................................
Dinner ...........................................................................
Incidentals ....................................................................
3. The authority citation for 41 CFR
part 301–74 continues to read as
follows:
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Authority: 5 U.S.C. 5707.
§ 301–74.21 What is the applicable M&IE
rate when meals or light refreshments are
furnished by the Government or are
included in the registration fee?
4. Amend § 301–74.21 by revising the
section heading as set forth above and
removing from the introductory
paragraph of the response ‘‘at nominal
or no cost’’.
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[FR Doc. 05–20690 Filed 10–14–05; 8:45 am]
BILLING CODE 6820–14–S
FEDERAL COMMUNICATIONS
COMMISSION
47 CFR Parts 51, 63, 64
[CC Docket Nos. 02–33; 01–337; 95–20; 98–
10; WC Docket No. 04–242; FCC 05–150]
Appropriate Framework for Broadband
Access to the Internet Over Wireline
Facilities
Federal Communications
Commission.
ACTION: Final rule.
AGENCY:
SUMMARY: In this document, the Federal
Communications Commission
(Commission) establishes a regulatory
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Your M&IE rate must be adjusted for
a meal(s) furnished to you by the
Government (including meals furnished
under the authority of Part 304 of this
Title) by deducting the appropriate
amount shown in the chart in this
section for travel within CONUS and the
chart in Appendix B of this Chapter for
meal deductions for OCONUS and
foreign travel. The total amount of
deductions made will not cause you to
receive less than the amount allowed for
incidental expenses.
Authority: 5 U.S.C. 5707.
Total M&IE
PART 301–74—CONFERENCE
PLANNING
2. Revise section 301–11.18 to read as
follows:
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framework for facilities-based providers
of wireline broadband Internet access
service. Under this framework, the
Commission determines that facilitiesbased wireline broadband Internet
access service is an information service,
and that facilities-based providers of the
service are no longer required to
separate out the transmission
component (i.e., transmission in excess
of 200 kilobits per second (kbps) in at
least one direction) of wireline
broadband Internet access services as a
stand-alone telecommunications service
under Title II of the Communications
Act of 1934, as amended (Act), subject
to a one-year transition period, during
which providers must continue to
provide existing wireline broadband
Internet access transmission offerings,
on a grandfathered basis, to unaffiliated
information service providers (ISPs).
After the transition period, facilitiesbased wireline broadband Internet
access service providers are permitted to
offer broadband Internet access services
on a common carrier basis under Title
II or on a non-common carrier basis. In
addition, the Bell Operating Companies
(BOCs) are immediately relieved of all
requirements associated with the
Commission’s Computer Inquiry Orders
with respect to wireline broadband
Internet access services. The document
further concludes that the broadband
transmission component of wireline
broadband Internet access service is not
a telecommunication service under the
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Act. It also addresses other important
areas relating to the provision of
broadband Internet access services.
Overall, this new regulatory framework
encourages the ubiquitous availability of
broadband to all Americans by
removing outdated regulations,
developing consistent regulations across
broadband platforms, and encouraging
broadband investment and deployment.
DATES: Effective Date: This rule is
effective November 16, 2005.
ADDRESSES: Federal Communications
Commission, 445 12th Street, SW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT:
Jodie May or William Kehoe, AttorneyAdvisors, Competition Policy Division,
Wireline Competition Bureau, at (202)
418–1580.
SUPPLEMENTARY INFORMATION: This is a
summary of the Commission’s Report
and Order (Order) in CC Docket Nos.
02–33, 01–337, 95–20, 98–10; WC
Docket No. 04–242; FCC 05–150,
adopted August 5, 2005, and released
September 23, 2005. The complete text
of this document is available for
inspection and copying during normal
business hours in the FCC Reference
Information Center, Portals II, 445 12th
Street, SW., Room CY–A257,
Washington, DC 20554. This document
may also be purchased from the
Commission’s duplicating contractor,
Best Copy and Printing, Inc., 445 12th
Street, SW., Room CY–B402,
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Federal Register / Vol. 70, No. 199 / Monday, October 17, 2005 / Rules and Regulations
Washington, DC 20554, telephone (800)
378–3160 or (202) 863–2893, facsimile
(202) 863–2898, or via e-mail at
www.bcpiweb.com. It is also available
on the Commission’s Web site at https://
www.fcc.gov.
Synopsis of the First Report and Order
(Order)
1. Background. The Communications
Act does not address directly how
broadband Internet access service
should be classified or regulated. The
Act does, however, provide the
Commission express directives with
respect to encouraging broadband
deployment, generally, and promoting
and preserving a freely competitive
Internet market, specifically.
Consequently, the Commission initiated
a Notice of Proposed Rulemaking
(Wireline Broadband Notice) in 2002 (67
FR 9232, Feb. 28, 2002) to seek
comment on the appropriate regulatory
framework for wireline broadband
Internet access service.
2. Wireline broadband Internet access
service, for purposes of this proceeding,
is a service that uses existing or future
wireline facilities of the telephone
network to provide subscribers with
Internet access capabilities. The term
‘‘Internet access service’’ refers to a
service that always and necessarily
combines computer processing,
information provision, and computer
interactivity with data transport,
enabling end users to run a variety of
applications such as e-mail, and access
Web pages and newsgroups. Wireline
broadband Internet access service, like
cable modem service, is a functionally
integrated, finished service that
inextricably intertwines informationprocessing capabilities with data
transmission such that the consumer
always uses them as a unitary service.
The Commission ruled in 2002 that
cable modem service was an
information service under the Act (67
FR 18907, April 17, 2002). The U.S.
Supreme Court affirmed that ruling in
National Cable & Telecommunications
Ass’n v. Brand X Internet Services, 125
S. Ct. 2688 (2005) (Brand X).
3. As we explained in the Wireline
Broadband Notice, providers of wireline
broadband Internet access service offer
subscribers the ability to run a variety
of applications that fit under the
characteristics stated in the information
service definition under the Act. These
characteristics distinguish wireline
broadband Internet access service from
other wireline broadband services, such
as stand-alone ATM service, frame
relay, gigabit Ethernet service, and other
high-capacity special access services,
that carriers and end users have
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traditionally used for basic transmission
purposes. That is, these services lack the
key characteristics of wireline
broadband Internet access service—they
do not inextricably intertwine
transmission with informationprocessing capabilities. Because carriers
and end users typically use these
services for basic transmission
purposes, these services are
telecommunications services under the
statutory definitions. These broadband
telecommunications services remain
subject to current Title II requirements.
4. In the Wireline Broadband Notice,
the Commission tentatively concluded
that wireline broadband Internet access
service is an information service when
provided over an entity’s own facilities,
and that the underlying transmission
component of such service constituted
‘‘telecommunications’’ and not a
‘‘telecommunications service’’ under the
Act. The Commission invited comment
on these tentative conclusions and its
prior conclusion that ‘‘an entity is
providing a ‘telecommunications
service’ to the extent that such entity
provides only broadband transmission
service on a stand-alone basis, without
a broadband Internet Access service.’’
Finally, the Commission sought
comment on the extent to which any
actions it might take in this proceeding
would affect other regulatory
obligations.
5. In addressing the issues before us,
we draw from the records of several
proceedings, including the Wireline
Broadband Notice and the Notice of
Proposed Rulemaking in the Incumbent
LEC Broadband proceeding (67 FR 1945,
Jan. 15, 2002), in which the Commission
invited comment on technological and
market-related issues relating to our
tariffing rules for incumbent LECs’
broadband telecommunications
services. Consistent with the scope of
the Wireline Broadband Notice, we
restrict our decisions in this Order to
only wireline broadband Internet access
services and those wireline broadband
technologies that have been utilized for
such Internet access services.
6. Regulatory Classification of
Wireline Broadband Internet Access
Service: We affirm our tentative
conclusion ‘‘that wireline broadband
Internet access service provided over a
provider’s own facilities is an
information service.’’ This classification
is consistent both with the
Commission’s classification of cable
modem service, as affirmed by the
Supreme Court in Brand X, and with the
Commission’s earlier determination in
its Report to Congress (Federal-State
Joint Board on Universal Service, Report
to Congress, CC Docket No. 96–45, 13
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FCC Rcd 11501 (1998) (63 FR 43088,
August 12, 1998)) that Internet access
service is an information service.
Applying the definitions of
‘‘information service,’’
‘‘telecommunications,’’ and
‘‘telecommunications service’’ in the
Act, we conclude that wireline
broadband Internet access service
provided over a provider’s own facilities
is appropriately classified as an
information service because its
providers offer a single, integrated
service (i.e., Internet access) to end
users. That is, like cable modem service
(which is usually provided over the
provider’s own facilities), wireline
broadband Internet access service
combines computer processing,
information provision, and computer
interactivity with data transport,
enabling end users to run a variety of
applications (e.g., e-mail, Web pages,
and newsgroups). These applications
encompass the capability for
‘‘generating, acquiring, storing,
transforming, processing, retrieving,
utilizing, or making available
information via telecommunications,’’
and taken together constitute an
information service as defined by the
Act.
7. The capabilities of wireline
broadband Internet access service
demonstrate that this service, like cable
modem service, provides end users
more than pure transmission, ‘‘between
or among points selected by the user, of
information of the user’s choosing,
without change in the form or content
of the information as sent and
received.’’ Because wireline broadband
Internet access service inextricably
combines the offering of powerful
computer capabilities with
telecommunications, we conclude that
it falls within the class of services
identified in the Act as ‘‘information
services.’’ The information service
classification applies regardless of
whether subscribers use all of the
functions and capabilities provided as
part of the service (e.g., e-mail or Webhosting), and whether every wireline
broadband Internet access service
provider offers each function and
capability that could be included in that
service. Indeed, as with cable modem
service, an end user of wireline
broadband Internet access service
cannot reach a third party’s Web site
without access to the Domain Naming
Service (DNS) capability ‘‘which (among
other things) matches the Web site
address the end user types into his
browser (or ‘‘clicks’’ on with his mouse)
with the IP address of the Web page’s
host server.’’ The end user therefore
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receives more than transparent
transmission whenever he or she
accesses the Internet.
8. There is no reason to classify
wireline broadband Internet access
services differently depending on who
owns the transmission facilities. From
the end user’s perspective, an
information service is being offered
regardless of whether a wireline
broadband Internet access service
provider self-provides the transmission
component or provides the service over
transmission facilities that it does not
own. As the Commission indicated in
its Report to Congress, what matters is
the finished product made available
through a service rather than the
facilities used to provide it. The end
user of wireline broadband Internet
access service receives an integrated
package of transmission and
information processing capabilities from
the provider, and the identity of the
owner of the transmission facilities does
not affect the nature of the service to the
end user. Thus, in addition to affirming
our tentative conclusion above ‘‘that
wireline broadband Internet access
service provided over a provider’s own
facilities is an information service,’’ we
also make clear that wireline broadband
Internet access service is an information
service when the provider of the retail
service does not provide the service
over its own transmission facilities. Not
only is the classification of wireline
broadband Internet access service as an
information service consistent with
Brand X, but this classification, in our
view, best facilitates the goals of the
Act, including promoting the ubiquitous
availability of broadband Internet access
services to all Americans.
9. Regulation of Wireline Broadband
Internet Access Service Providers.
Wireline broadband Internet access
services provided by facilities-based
carriers are currently governed by rules
established in the Commission’s
Computer Inquiry proceedings. The
Commission created a framework in
Computer II (Amendment of Section
64.702 of the Commission’s Rules and
Regulations (Computer II), 77 FCC 2d
384 (1980)(77 FCC 2d 384 1980
(subsequent citations omitted)) that
defined and distinguished between
‘‘basic services’’ and ‘‘enhanced
services.’’ It determined that enhanced
services were not within the scope of its
Title II jurisdiction but rather were
within its ancillary jurisdiction under
Title I. Pursuant to its ancillary
jurisdiction, the Commission required
facilities-based common carriers to
provide the basic transmission services
underlying their enhanced services on a
nondiscriminatory basis pursuant to
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tariffs governed by Title II of the Act.
These carriers thus offered the
underlying basic service at the same
prices, terms, and conditions, to all
enhanced service providers, including
their own enhanced services operations.
10. The Commission subsequently
determined that the cost of decreased
efficiency and innovation imposed by
the structural safeguards of Computer II
outweighed their benefits. The
Commission therefore replaced
structural separation with a regime of
nonstructural safeguards in its
Computer III decisions (Amendment of
Section 64.702 of the Commission’s
Rules and Regulations, CC Docket No.
85–229, Phase I, 104 FCC 2d 958 (1986)
(51 FR 24350, July 3, 1986) (subsequent
citations omitted)). This framework
maintained the existing basic and
enhanced service categories and
adopted comparably efficient
interconnection (CEI) and open network
architecture (ONA) requirements as a
replacement for the Computer II
structural separation requirements for
AT&T and the BOCs. When Congress
enacted the 1996 Act, it created new
statutory terms (i.e., ‘‘information
service’’ and ‘‘telecommunications
service’’) that substantially incorporated
the dichotomy between basic and
enhanced services into the
Communications Act. As we noted
above, although the 1996 Act uses
‘‘information service’’ and
‘‘telecommunications service’’ instead
of ‘‘enhanced service’’ and ‘‘basic
service,’’ the Commission has
previously determined that Congress
intended the statutory categories to
parallel the categories the Commission
established in the Computer Inquiry
proceeding. More specifically, the
Commission found that all of the
services that the Commission has
previously considered to be enhanced
services are ‘‘information services.’’
11. The Computer II obligation that all
facilities-based wireline carriers that
own common carrier transmission
facilities and provide enhanced services
must acquire transmission capacity
pursuant to the same prices, terms, and
conditions reflected in their tariffs when
their own facilities are utilized has been
applied exclusively to traditional
wireline services and facilities to date.
By contrast, the Computer II obligations
do not apply to cable modem service
providers or to facilities-based enhanced
services providers other than traditional
wireline carriers. The Commission’s
structural separation, CEI, and ONA
rules apply only to the BOCs.
12. Elimination of the Computer
Inquiry Requirements. The Order
explains that the technology used to
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build networks, and the purposes for
which they are built, are fundamentally
changing. These changes are rapidly
breaking down the formerly rigid
barriers that separated one network from
another. There are numerous
technologies and network designs that
form, or potentially could form, part of
the broadband telecommunications
infrastructure of the 21st century. Cable
operators have deployed cable modem
technology. Mobile wireless providers
are increasingly offering high-speed
Internet access using technologies like
Evolution-Data Optimized (EV–DO)
technology. Satellite providers have
deployed both Ku-band and even more
advanced Ka-band technology that can
offer high-speed Internet access service
throughout the nation. Fixed wireless
operators are planning to use licensed
and unlicensed spectrum to deliver
broadband services, and are developing
new technologies that promise
ubiquitous service and greater
bandwidth. Other companies are
exploring the use of power lines and
cables placed in gas lines to provide
broadband services. The nation’s
wireline infrastructure also is changing
and is now using digital, packet-based
technology to deliver a wider range of
services. The Order further states that
network platforms therefore will be
multi-purpose in nature and more
application-based, rather than existing
for a single, unitary, technologically
specific purpose. More generally, the
erosion of barriers between various
networks and the limitations inherent in
those barriers will lead to greater
capacity for innovation to offer new
services and products. Both the
providers of network platforms and
those that utilize the platforms are in a
position to capitalize on these changes.
In addition, as with any evolving
technology, new products and providers
will continue to emerge to complement
existing market offerings and
participants; and these offerings will
grow over time as consumers demand
even more advanced services, with the
result that technological growth and
development continue on an upward
spiral.
13. We decline to continue to impose
any Computer Inquiry requirements on
facilities-based carriers in their
provision of wireline broadband
Internet access service. Consequently,
BOCs are immediately relieved of the
separate subsidiary, CEI, and ONA
obligations with respect to wireline
broadband Internet access services. In
addition, subject to a one-year transition
period for existing wireline broadband
transmission services, all wireline
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broadband Internet access service
providers are no longer subject to the
Computer II requirement to separate out
the underlying transmission from
wireline broadband Internet access
service and offer it on a common carrier
basis.
14. We agree with those commenters
that argue that the Computer Inquiry
obligations are inappropriate and
unnecessary for today’s wireline
broadband Internet access market. As
these parties observe, the Computer
Inquiry rules were developed before
separate and different broadband
technologies began to emerge and
compete for the same customers.
Further, these rules were adopted based
on assumptions associated with
narrowband services, single purpose
network platforms, and circuit-switched
technology. Notably, even commenters
that argue for a continued access
requirement generally acknowledge that
the current structural separation, CEI,
and ONA requirements are outmoded
and should be eliminated or replaced.
Indeed, the record provides little, if any,
support for retaining the structural
separation option of Computer II or for
conditioning BOC structural relief on
compliance with a detailed set of
regulatory requirements such as the CEI
or ONA requirements. Instead,
commenters arguing for continued
regulation of wireline broadband
Internet access service providers focus
primarily on the core nondiscriminatory
access obligation of Computer II, urging
that we, at a minimum, should retain a
common carrier transmission access
requirement in some form. In evaluating
these arguments, we are mindful that
one of the Commission’s most critical
functions is to adapt regulation to
changing technology and competitive
conditions to accomplish its mandates
under the Act.
15. In determining whether to
eliminate the Computer Inquiry
requirements (e.g., the separate
subsidiary, nondiscriminatory access to
transmission, CEI, and ONA obligations)
for facilities-based providers of wireline
broadband Internet access services, we
weigh the benefits of these requirements
against their costs in accordance with
our obligations under the Act. This
determination is informed not only by
our understanding of the current
broadband Internet access market, but
what our predictive judgment tells
about how that market is likely to
develop. It is critical to factor in these
future expectations because the
broadband market is evolving rapidly.
At the time the Computer Inquiry rules
were adopted, there was an implicit, if
not explicit, assumption that the
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incumbent LEC wireline platform would
remain the only network platform
available to enhanced services
providers. Regulated access to wireline
transmission thus was essential for a
competitive information services market
to flourish.
16. The characteristics of the
broadband market, as well as evidence
that facilities-based wireline carriers
have incentives to make, and indeed
already make, broadband transmission
capacity available to ISPs, absent
regulation, are factors that influence our
analysis in determining whether such
regulation is still necessary. Moreover,
this regulation can have a significant
impact on the ability of wireline
platform providers to develop and
deploy innovative broadband
capabilities that respond to market
demands. The record shows that the
additional costs of an access mandate
diminish a carrier’s incentive and
ability to invest in and deploy
broadband infrastructure investment.
We find this negative impact on
deployment and innovation particularly
troubling in view of Congress’ clear and
express policy goal of ensuring
broadband deployment, and its directive
that we remove barriers to that
deployment, if possible, consistent with
our other obligations under the Act. It
is precisely this negative impact on
broadband infrastructure that led the
Commission to eliminate other
broadband-related regulation over the
past two years. These factors, when
weighed against the benefits of
continuing these regulations, render a
different policy result than the judgment
reached at the time the Computer
Inquiry rules were adopted.
17. As outlined in the Wireline
Broadband Notice, we seek to adopt a
comprehensive policy that ensures,
consistent with the Act in general and
section 706 specifically, that broadband
Internet access services are available to
all Americans and that undue regulation
does not constrain incentives to invest
in and deploy the infrastructure needed
to deliver broadband Internet access
services. As part of this policy, we
believe that we should regulate like
services in a similar manner so that all
potential investors in broadband
network platforms, and not just a
particular group of investors, are able to
make market-based, rather than
regulatory-driven, investment and
deployment decisions.
18. Our decision in this Order is
consistent with the decision issued by
the Ninth Circuit Court of Appeals in
1994, California v. FCC, 39 F.3d 919
(9th Cir. 1994). In that decision, the
Ninth Circuit vacated part of the
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Commission’s Computer III ONA rules.
According to the court, the Commission
had failed to explain how its ‘‘diluted
version of ONA,’’ would prevent BOCs
from exploit[ing] their monopoly
control over the local networks. For the
reasons discussed herein, we determine
that the competitive pressures and
technological changes that have arisen
since 1990 have reduced the BOCs’
incentive and ability to discriminate
against unaffiliated ISPs in their
provision of broadband Internet access
service to the point that structural
separation for BOC broadband Internet
access service is no longer necessary.
Specifically, we believe that the analysis
in this Order that persuades us to
eliminate not only the structural
separation requirement, but all
Computer Inquiry obligations,
applicable to wireline broadband
Internet access service provides the
level of detail the Ninth Circuit found
lacking in the Commission’s prior
decision eliminating that requirement.
19. The Order also analyzes the
wireline broadband Internet access
services marketplace, technological
innovation, the opportunity for new
services offered by wireline broadband
Internet access service providers, the
fact that wireline broadband
transmission will remain available to
ISPs, and Congress’s objectives in
section 706 of the Act regarding
broadband deployment to determine
that we can eliminate a mandatory
common carrier broadband transmission
requirement, subject to the one year
transitional mechanism. We also find
that we need not retain the Computer
Inquiry regime, or any of its individual
requirements, to protect against
improper cross subsidization. The
Commission’s ratemaking methods and
those of our state counterparts have
changed considerably since the Ninth
Circuit addressed the need for structural
separation as a safeguard against crosssubsidization in 1994. We conclude that
changes have further reduced the
potential that the BOCs could increase
rates for tariffed telecommunications
services through cost shifting. Indeed,
unlike the situation before the Ninth
Circuit in 1994, the BOCs’ costs are no
longer used to determine the BOCs’
price cap rates. In view of this reduced
potential, we find that there is no need
to retain either the Computer II
structural separation requirement or the
Computer III nonstructural safeguards to
keep the BOCs from cross-subsidizing
their broadband Internet access service
operations with revenues from the
telecommunications services operations.
The benefits we anticipate from the
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elimination of these structural and
nonstructural safeguards, including the
increased infrastructure investment that
our new framework should generate,
outweigh any protection against crosssubsidization that those safeguards
provide.
20. New Regulatory Framework for
Wireline Broadband Internet Access
Service Providers. We adapt our
regulatory requirements, consistent with
the Act, to correct for restrictions on
wireline broadband Internet access
service providers’ ability to incorporate
advanced integrated technology into
their broadband offerings, impediments
to responding rapidly and efficiently to
changing broadband market demands
due to outdated existing rules, and
constraints on broadband innovation
and infrastructure investment. We
eliminate the Computer Inquiry
obligations as applied to facilities-based
providers of wireline broadband
Internet access service, and, in
particular, the obligation to offer the
transmission component of wireline
broadband Internet access service on a
stand-alone common carrier basis.
Facilities-based wireline broadband
Internet access service providers,
subject to a one-year transition period
which we also adopt, may choose to
offer the transmission component of
wireline broadband Internet access
services to both affiliated and
unaffiliated ISPs or others on a noncommon carrier basis or a common
carrier basis. We incorporate this
flexibility into our new framework to
account for the differing business issues
affecting different wireline broadband
Internet access service providers. For
example, associations of rural
incumbent LECs have indicated that
their members may choose to offer
broadband Internet access transmission
service on a common carrier basis.
Thus, unlike previous Commission
initiatives (e.g., the deregulation of
CPE), we are not eliminating carriers’
ability to offer wireline broadband
transmission on a Title II basis. Indeed,
as we discuss below, enabling carriers to
offer broadband Internet access
transmission in alternative ways
furthers our policy objectives and is
consistent with precedent.
21. Wireline Broadband Internet
Access Service Providers May Offer
Transmission Service on a NonCommon Carrier Basis or a Common
Carrier Basis. The record demonstrates
that allowing non-common carriage
arrangements for wireline broadband
transmission will best enable facilitiesbased wireline broadband Internet
access service providers, particularly
incumbent LECs, to embrace a market-
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based approach to their business
relationships with ISPs, providing the
flexibility and freedom to enter into
mutually beneficial commercial
arrangements with particular ISPs.
Facilities-based wireline carriers as well
as certain portions of the ISP
community and broadband equipment
manufacturers agree that market-based
commercial arrangements will better
serve the interests of ISPs, broadband
providers, and consumers.
22. Non-common carriage contracts
will permit ISPs to enter into various
types of compensation arrangements for
their wireline broadband Internet access
transmission needs that may better
accommodate their individual market
circumstances. For example, ISPs and
facilities-based carriers could
experiment with revenue-sharing
arrangements or other types of
compensation-based arrangements
keyed to the ISPs’ marketplace
performance, enabling the ISPs to avoid
a fixed monthly recurring charge (as is
typical with tariffed offerings) for their
transmission needs during start-up
periods. Non-common carriage also
enables parties to a contract to modify
their arrangement over time as their
respective needs and requirements
change without the inherent delay
associated with a tariffed offering that
must be made available to all ISPs.
Moreover, it encourages other types of
commercial arrangements with ISPs,
reflecting business models based on risk
sharing such as joint ventures or
partnership-type arrangements, where
each party brings their added value,
benefiting both the consumer (through
the ability to obtain a new innovative
service) and each party to the
commercial arrangement. Such
arrangements may also encourage
unaffiliated ISPs to develop innovative
applications and services that
differentiate them from other ISPs. The
ability to deliver such innovative
services over their platforms in order to
attract customers will likely motivate
wireline facilities-based broadband
transmission providers to negotiate
mutually beneficial arrangements that
enable the wireline facilities-based
broadband transmission provider to
share the financial rewards of bringing
the new Internet access applications or
services to consumers.
23. A number of parties have
indicated that some carriers may
nevertheless choose to offer the
transmission component of broadband
Internet access service as a common
carrier service absent the Computer
Inquiry requirements. Other parties have
indicated they would avail themselves
of the opportunity to offer certain types
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of broadband Internet access
transmission on a common carrier basis
and other types of broadband Internet
access transmission on a non-common
carrier basis. Our primary goal in this
proceeding is to facilitate broadband
deployment in the manner that best
promotes wireline broadband
investment and innovation, and
maximizes the incentives of all
providers to deploy broadband. We find
that we can best further this goal by
providing all wireline broadband
providers the flexibility to offer these
services in the manner that makes the
most sense as a business matter and best
enables them to respond to the needs of
consumers in their respective service
areas.
24. We therefore conclude that
providers of wireline broadband
Internet access service that offer that
transmission as a telecommunications
service after the effective date of this
Order may do so on a permissive
detariffing basis. Such providers thus
may, in lieu of filing tariffs with the
Commission setting forth the rates,
terms, and conditions under which they
will provide broadband Internet access
transmission service, include those
rates, terms, and conditions in generally
available offerings posted on their Web
sites. Each such provider electing not to
tariff the broadband Internet access
transmission that it offers as a
telecommunications service also must
make physical copies of its offering
reflecting the rates, terms and
conditions available for public
inspection at a minimum of one place
of business.
25. To enable facilities-based wireline
Internet access providers to maximize
their ability to deploy broadband
Internet access services and facilities in
competition with other platform
providers, under a regulatory framework
that provides all market participants
with the flexibility to determine how
best to structure their business
operations, facilities-based carriers are
able to choose whether to offer wireline
broadband Internet access transmission
as non-common carriage or common
carriage. In addition, to the extent they
choose to offer that transmission as
common carriage, they may do so either
under tariff or on a non-tariffed basis.
The Commission, on numerous
occasions, has determined that a
particular service can be offered on a
non-common carrier or common carrier
basis at the service provider’s option.
Similarly, here, we conclude that it is
appropriate to provide facilities-based
wireline broadband Internet access
service providers with freedom to
determine how to provide the
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broadband transmission capabilities of
such services.
26. In order to ensure that this flexible
approach is consistent with statutory
requirements, efficient, and
administrable, we specify that a
facilities-based wireline broadband
Internet access provider may not
simultaneously offer the same type of
broadband Internet access transmission
on both a common carrier and noncommon carrier basis. It may, however,
choose to make available one type of
broadband Internet access transmission
on a common carrier basis and another
type of such transmission on a noncommon carrier basis. Of course, any
transmission offering that a facilitiesbased wireline broadband Internet
access provider makes available on a
tariffed common carrier basis will be
subject to the terms contained in its
tariff and, consistent with Title II of the
Act, the provider may charge customers
for that service only at the rates
contained in the tariff.
27. Some commenters request that we
impose certain content-related
requirements on wireline broadband
Internet access service providers that
would prohibit them from blocking or
otherwise denying access to any lawful
Internet content, applications, or
services a consumer wishes to access.
While we agree that actively interfering
with consumer access to any lawful
Internet information, products, or
services would be inconsistent with the
statutory goals of encouraging
broadband deployment and preserving
and promoting the open and
interconnected nature of the public
Internet, we do not find sufficient
evidence in the record before us that
such interference by facilities-based
wireline broadband Internet access
service providers or others is currently
occurring. We therefore decline at this
time to adopt rules prohibiting such
interference. Instead, we find that the
better course is to articulate principles
recognizing the importance of consumer
choice and competition in regard to
accessing and using the Internet, and we
have adopted an Internet Policy
Statement (Appropriate Framework for
Broadband Access to the Internet over
Wireline Facilities, CC Docket No. 02–
33, Policy Statement, FCC 05–151
(released September 23, 2005)) that
outlines these principles. We intend to
incorporate these principles into our
ongoing policymaking activities. Should
we see evidence that providers of
telecommunications for Internet access
or IP-enabled services are violating
these principles, we will not hesitate to
take action to address that conduct.
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28. Current Title II Unbundled
Wireline Broadband Internet Access
Transmission Services Must Remain
Available During a One-Year Transition
Period. Although we determine above
that immediate relief for wireline
broadband Internet access transmission
providers is warranted, we are
nonetheless sensitive to the fact that the
Commission’s previous regulatory
regime for these services has created
reasonable reliance and expectation by
unaffiliated ISPs on the availability of
currently tariffed, broadband Internet
access transmission offerings. In
addition, we are concerned that a flashcut transition may unnecessarily disrupt
customers’ service due to a provider’s
inability to adapt its business practices
so quickly. We therefore adopt a oneyear transition period, which begins on
the effective date of this Order, in order
to give both ISPs and facilities-based
wireline broadband Internet access
transmission providers sufficient time to
adjust to our new framework. During the
transition, facilities-based wireline
broadband Internet access transmission
providers must continue to honor
existing transmission arrangements with
their current ISP or other customers, but
they are not required to offer such
arrangements to new customers or to
existing customers at new locations. If
these arrangements are provided
pursuant to tariffs currently on file with
the Commission, wireline broadband
Internet access transmission providers
may retain these tariffs during the oneyear period, or, alternatively, they may
cancel the tariffs pursuant to normal
tariff cancellation procedures provided
they honor existing wireline broadband
Internet access transmission
arrangements in another manner. To the
extent facilities-based wireline
broadband Internet access transmission
providers have entered into any other
common carrier transmission
arrangements with ISP customers that
are not subject to tariffing, these
arrangements must also be continued
during the one-year transition unless, of
course, they would otherwise expire
during the transition period pursuant to
their pre-existing terms. Upon the
effective date of this Order, facilitiesbased wireline broadband Internet
access providers, including the BOCs
and their affiliates, are no longer
required to continue taking the existing
common carrier transmission
arrangements that they provide to ISPs
as an input to their self-provided
wireline broadband Internet access
service. To the extent facilities-based
carriers offer new wireline broadband
Internet access transmission
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60227
arrangements after the effective date of
this Order or provide such service to
new customers, these arrangements may
be made available on a common carrier
basis or a non-common carrier basis as
set forth above.
29. This one-year period will allow
ISPs to continue operating under their
current arrangements while they
negotiate non-common carrier
agreements with providers of wireline
broadband Internet access transmission.
Based on the assurances made by
facilities-based wireline broadband
Internet access providers and their
stated desire to ensure that their
platform is competitive with other
broadband platforms, we strongly
encourage the parties to work together
to develop individual contracts that are
mutually beneficial to each party. In the
meantime, the ability to continue
operating under existing arrangements
for an additional one-year period during
new contract negotiations will avoid
unnecessary customer disruption. Such
a transition period is consistent with
previous decisions in which the
Commission modified the regulatory
framework for certain services subject to
a transition.
30. Discontinuation of Service.
Section 214(a) of the Act requires that,
prior to discontinuing any interstate or
foreign telecommunications service, a
telecommunications carrier obtain from
the Commission ‘‘a certification that
neither the present nor future public
convenience or necessity will be
adversely affected thereby.’’ The reasons
that persuade us not to require that the
transmission component of wireline
broadband Internet access service
continue to be offered as a
telecommunications service under Title
II also persuade us that discontinuance
of the provision of common carrier
broadband Internet access transmission
services to existing customers would not
adversely affect the present or future
public convenience or necessity.
Instead, competition from other
broadband Internet access service
providers and the wireline providers’
business incentives to attract ISP
customers should ensure the continued
availability of this transmission
component, under reasonable rates,
terms, and conditions. Accordingly, we
find that the circumstances here meet
our test for determining whether a
telecommunications service may be
discontinued under section 214(a).
31. Therefore, pursuant to our rule for
discontinuing domestic
telecommunications services, 47 CFR
63.71, we grant facilities-based, wireline
broadband Internet access transmission
providers blanket certification to
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discontinue providing existing
customers the common carrier
broadband Internet access transmission
services that are the subject of this
Order, subject to the following
conditions. First, to protect these
customers against abrupt termination of
service, we require that a carrier
discontinuing common carrier
broadband Internet access transmission
service shall provide affected customers
with advance notice of the
discontinuance. Specifically, the carrier
shall provide all affected customers
with its name and address, the date of
the planned discontinuance, the
geographic areas where service will be
discontinued, and a brief description of
the service to be discontinued. In
addition, on or after the date it provides
the advance notice to its customers and
at least 30 days prior to the date on
which service will be discontinued, the
carrier must file with the Commission
notice of its intent to discontinue
service. Carriers are not required to
make any showing in this notice and do
not need to obtain any additional
permission from the Commission to
cease service. Upon notification of
discontinuance, the Commission
reserves the right to take actions where
appropriate under the circumstances to
protect the public interest.
32. Classification of Wireline
Broadband Internet Access
Transmission Component. Above, we
affirm that wireline broadband Internet
access service is an information service,
and decline to continue the reflexive
application of the Computer Inquiry
regime to facilities-based providers of
such service. This is not, however, the
end of our inquiry. The Wireline
Broadband Notice also sought comment
on the legal classification of the
transmission component underlying
facilities-based wireline broadband
Internet access service. In contrast to the
classification of wireline broadband
Internet access service as an information
service, there is considerable
disagreement in the record as to the
appropriate classification of the
transmission component of such
Internet access service. The legal
classification of this transmission
component has certain regulatory
implications for its provider.
Specifically, if the transmission
component is a telecommunications
service under the Act, providers of that
service are subject to common carrier
regulation under Title II of the Act in
their provision of that service.
Conversely, if the transmission
component is not a telecommunications
service under the Act, providers of that
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component are not subject to Title II
requirements, except to the extent the
Commission imposes similar or
identical obligations pursuant to its
Title I ancillary jurisdiction.
33. We address two circumstances
under which the statutory classification
of the transmission component arises:
The provision of transmission as a
wholesale input to ISPs (including
affiliates) that provide wireline
broadband Internet access service to end
users, and the use of transmission as
part and parcel of a facilities-based
provider’s offering of wireline
broadband Internet access service using
its own transmission facilities to end
users. First, we address the wholesale
input. Nothing in the Communications
Act compels a facilities-based provider
to offer the transmission component of
wireline broadband Internet access
service as a telecommunications service
to anyone. Furthermore, consistent with
the NARUC precedent, National Ass’n
of Reg. Utils. Comm’rs v. FCC, 525 F.2d
630, 642 (DC Cir. 1976), cert. denied,
425 U.S. 992 (1976), the transmission
component of wireline broadband
Internet access service is a
telecommunications service only if one
of two conditions is met: the entity that
provides the transmission voluntarily
undertakes to provide it as a
telecommunications service; or the
Commission mandates, in the exercise
of our ancillary jurisdiction under Title
I, that it be offered as a
telecommunications service. As to the
first condition, we explain above that
carriers may choose to offer this type of
transmission as a common carrier
service if they wish. In that
circumstance, it is of course a
telecommunications service. Otherwise,
however, is it not, as we would not
expect an ‘‘indifferent holding out’’ but
a collection of individualized
arrangements. As to the second
condition, based on the record, we
decline to continue our reflexive
application of the Computer Inquiry
requirement, which compelled the
offering of a telecommunications service
to ISPs. Thus, we affirm that neither the
statute nor relevant precedent mandates
that broadband transmission be a
telecommunications service when
provided to an ISP, but the provider
may choose to offer it as such.
34. Second, we address the use of the
transmission component as part of a
facilities-based provider’s offering of
wireline broadband Internet access
service to end users using its own
transmission facilities. We conclude,
consistent with Brand X, that such a
transmission component is mere
‘‘telecommunications’’ and not a
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‘‘telecommunications service.’’ As
stated above, the Act in section 153(46)
defines telecommunications service as
‘‘the offering of telecommunications for
a fee directly to the public, or to such
classes of users as to be effectively
available directly to the public,
regardless of the facilities used.’’ Thus,
whether a telecommunications service
is being provided turns on what the
entity is ‘‘offering * * * to the public,’’
and customers’ understanding of that
service. End users subscribing to
wireline broadband Internet access
service expect to receive (and pay for)
a finished, functionally integrated
service that provides access to the
Internet. End users do not expect to
receive (or pay for) two distinct
services—both Internet access service
and a distinct transmission service, for
example. Thus, the transmission
capability is part and parcel of, and
integral to, the Internet access service
capabilities. Accordingly, we conclude
that wireline broadband Internet access
service does not include the provision
of a telecommunications service to the
end user irrespective of how the service
provider may decide to offer the
transmission component to other service
providers.
35. Effect on Existing Obligations. The
Wireline Broadband Notice sought
comment on what effect classifying
wireline broadband Internet access
service as an information service would
have on other regulatory obligations.
Title II obligations have never generally
applied to information services,
including Internet access services.
Instead, when the Commission has
deemed it necessary to impose
regulatory requirements on information
services, it has done so pursuant to its
Title I ancillary jurisdiction. Indeed, as
noted above, the Commission imposed
the Computer Inquiry obligations on
facilities-based common carriers
pursuant to its Title I ancillary
jurisdiction. Similarly, the Commission
has exercised its ancillary jurisdiction
under Title I to extend accessibility
obligations that mirror those under
section 255 to certain information
services, i.e., voicemail and interactive
menu service. The Commission’s
ancillary jurisdiction under Title I to
impose regulatory obligations on
broadband Internet access service
providers was recently recognized by
the Supreme Court in Brand X.
36. The Commission may exercise its
ancillary jurisdiction when Title I of the
Act gives the Commission subject matter
jurisdiction over the service to be
regulated and the assertion of
jurisdiction is ‘‘reasonably ancillary to
the effective performance of [its] various
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responsibilities.’’ United States v.
Southwestern Cable Co., 392 U.S. 157,
178 (1968). We recognize that both of
the predicates for ancillary jurisdiction
are likely satisfied for any consumer
protection, network reliability, or
national security obligation that we may
subsequently decide to impose on
wireline broadband Internet access
service providers.
37. First, we find that we have subject
matter jurisdiction over providers of
broadband Internet access services.
These services are unquestionably ‘‘wire
communication’’ as defined in section
3(52) because they transmit signals by
wire or cable, or they are ‘‘radio
communication’’ as defined in section
3(33) if they transmit signals by radio.
The Act gives the Commission subject
matter jurisdiction over ‘‘all interstate
and foreign communications by wire or
radio * * * and * * * all persons
engaged within the United States in
such communication’’ in section 2(a).
Second, with regard to consumer
protection obligations, we find that
regulations would be ‘‘reasonably
ancillary’’ to the Commission’s
responsibility to implement sections
222 (customer privacy), 255 (disability
access), and 258 (slamming and truthin-billing), among other provisions, of
the Act. Similarly, network reliability,
emergency preparedness, national
security, and law enforcement
requirements would each be reasonably
ancillary to the Commission’s obligation
under section 151 of the Act to make
available ‘‘a rapid, efficient, Nationwide, and world-wide wire and radio
communication service * * * for the
purpose of the national defense [and] for
the purpose of promoting safety of life
and property through the use of wire
and radio communication.’’
38. Federal Universal Service
Contribution Obligations. In section 254
of the Act, Congress codified our
Federal universal service programs to
ensure affordable telecommunications
services to all Americans, including
consumers living in high-cost areas, low
income consumers, eligible schools and
libraries, and rural health care
providers. In this section, we address
the universal service contribution
obligations of providers of wireline
broadband Internet access service.
Section 254(d) of the Act states that
‘‘[e]very telecommunications carrier that
provides interstate telecommunications
services shall contribute’’ to universal
service. In the Universal Service Order
(62 FR 32862, June 17, 1997), the
Commission interpreted the first
sentence of section 254(d) as imposing
a mandatory contribution requirement
on all telecommunications carriers that
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provide interstate telecommunications
services. We note that the Commission
also has permissive authority under
section 254(d) to require any provider of
interstate telecommunications to
contribute to the preservation and
advancement of universal service if the
public interest so requires. In the
Wireline Broadband Notice, the
Commission recognized that, under its
existing rules and policies,
telecommunications carriers providing
telecommunications services, including
broadband transmission services, are
subject to universal service contribution
requirements.
39. Congress required in section 254
of the Act that ‘‘[t]here should be
specific, predictable, and sufficient
Federal and State mechanisms to
preserve and advance universal
service.’’ Accordingly, we conclude that
facilities-based providers of wireline
broadband Internet access services must
continue to contribute to existing
universal service support mechanisms
based on the current level of reported
revenue for the transmission component
of their wireline broadband Internet
access services for a 270-day period
after the effective date of this Order or
until we adopt new contribution rules
in the Universal Service Contribution
Methodology proceeding (67 FR 79543,
Dec. 30, 2002), whichever occurs earlier.
That is, wireline broadband Internet
access providers must maintain their
current universal service contribution
levels attributable to the provision of
wireline broadband Internet access
service for this 270-day period. We take
this action, as a matter of policy, to
preserve existing levels of universal
service funding, and prevent a
precipitous drop in fund levels while
we consider reform of the system of
universal service in the Universal
Service Contribution Methodology
proceeding. We are committed to
ensuring that there continue to be
specific, predictable, and sufficient
Federal and State mechanisms to
preserve and advance universal service.
If we are unable to complete new
contribution rules within the 270-day
period of time, the Commission will
take whatever action is necessary to
preserve existing funding levels,
including extending the 270-day period
discussed above or expanding the
contribution base. We have ample
authority to take interim actions to
preserve the status quo.
40. Law Enforcement, National
Security, and Emergency Preparedness:
CALEA. The Communications
Assistance for Law Enforcement Act
(CALEA) requires telecommunications
carriers to ensure that ‘‘equipment,
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60229
facilities or services that provide a
customer or subscriber with the ability
to originate, terminate, or direct
[communications]’’ are capable of
providing authorized surveillance to
law enforcement agencies. In a separate
order also released on September 23,
2005, Communications Assistance for
Law Enforcement Act and Broadband
Access and Services, ET Docket No. 04–
295, First Report and Order and Further
Notice of proposed Rulemaking, FCC
05–153 (released September 23, 2005),
we conclude that providers of facilitiesbased broadband Internet access service,
regardless of platform, are subject to
CALEA. We therefore do not address
CALEA issues in this Order.
41. USA PATRIOT Act. We find that
our actions in this Order will not affect
the government’s implementation or
enforcement of the Uniting and
Strengthening America by Providing
Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001
(USA PATRIOT Act). This Act amended
the Federal criminal code to authorize
the interception of wire and electronic
communications for the production of
evidence of terrorism offenses and
computer fraud, and modified only one
section of the Communications Act,
section 631 of Title VI. We conclude
that the scope of activities covered
under the definitions of wire
communications and electronic
communications is broad enough to
encompass wireline broadband Internet
access service regardless of the legal
classification of this service, or its
transmission component, under the
Communications Act. Only one party
submitted comments on the subject,
agreeing that the legal classification of
wireline broadband Internet access
service as an information service will
have no impact on the applicability of
the USA PATRIOT Act.
42. Emergency Preparedness and
Response. We find that our
classification of wireline broadband
Internet access service as an information
service, and the transmission input as
telecommunications (except to the
extent that the provider chooses to offer
that transmission on a common carrier
basis), will not affect the Commission’s
existing rules implementing the
National Security Emergency
Preparedness (NSEP)
Telecommunications Service Priority
(TSP) System. But, we will nonetheless
exercise our Title I authority, as
necessary, to give full effect to the
principles and purpose of the NSEP TSP
System. The NSEP TSP System is set
forth in appendix A to part 64 of the
rules and provides that the Commission
has ‘‘authority over the assignment and
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approval of priorities for provisioning
and restoration of common carrierprovided telecommunications services.’’
The facilities-based wireline broadband
Internet access service providers that are
the subject of our Order today are
telecommunications carriers with
respect to other services that they
provide. Therefore, we find that these
providers remain subject to the NSEP
TSP.
43. The Secretary of Defense
(Secretary), the only party to submit
comments on this issue, expressed
concern that the existing National
Communications System programs will
no longer apply to wireline broadband
Internet access service if it is classified
as an information service unless the
Commission exercises its ancillary
jurisdiction. As the Secretary
recognizes, NSEP communications are
currently provided by carriers subject to
Title II. Information service providers,
therefore, have not been subject to these
rules unless those providers are also
offering services as telecommunications
carriers. Since the actions we take in
this Order affect only wireline carriers
that provide the transmission
component of wireline broadband
Internet access service, we have no
reason to expect that those actions will
adversely affect emergency
preparedness efforts. These service
providers, for the most part, provide
their wireline broadband Internet access
services over the same facilities used to
provide other telecommunications
services and thus these facilities remain
subject to part 64 to the same extent as
they have before. Moreover, we do agree
with the Secretary’s conclusion that,
should the need arise, we do have the
authority to regulate NSEP under Title
I. We will closely monitor the
development of wireline broadband
Internet access service and its effect on
the NSEP TSP System and, if needed,
will expeditiously take all appropriate
actions to promote the viability of that
system.
44. Moreover, we state that our
decision to classify wireline broadband
Internet access service as an information
service, and the transmission input as
telecommunications (except when
offered on a common carrier basis), has
no effect whatsoever on our recently
adopted E911 rules for interconnected
VoIP providers (VOIP E911 Order, 70 FR
37273, June 29, 2005). In that Order, we
required providers of interconnected
VoIP to offer E911 service to their
subscribers. Although interconnected
VoIP is necessarily provided via
broadband, nothing in the VoIP E911
Order in any way turns on the statutory
classification of that broadband
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connection. Thus, we reaffirm that, after
today’s Order, interconnected VoIP
providers must comply with the VoIP
E911 Order regardless of how or by
whom the underlying broadband
connection is provided.
45. Network Reliability and
Interoperability. We reject arguments
that classifying wireline broadband
Internet access service as an
‘‘information service’’ and its
transmission component as
‘‘telecommunications’’ (except to the
extent that the provider chooses to offer
that transmission on a common carrier
basis) requires that we obtain additional
authorization from the Network
Reliability and Interoperability Council
(NRIC) at this time. NRIC, initially
established by the Commission in 1992
as the Network Reliability Council,
advises the Commission on
recommendations to ensure optimal
reliability and interoperability of the
nation’s communications networks.
Section 256 of the Act codifies the
Commission’s ability and obligation to
oversee network planning and set
standards to enable the Commission to
carry out the objectives of this section
as well as the Commission’s prior
practices in the area of network
reliability and interoperability through
the NRIC. NRIC VI, the latest chartered
council, significantly expanded its
membership to include the Internet
service industry and included among its
scope of activities numerous issues
relating to the Internet and broadband
deployment.
46. Contrary to what some
commenters suggest, we do not agree
that classifying wireline broadband
Internet access service as an information
service would deny us the ability to
oversee broadband interconnectivity.
Rather, we agree with the view that our
actions in this proceeding will not
constrain our ability to address network
reliability and interoperability issues. A
purpose of section 256 is ‘‘to ensure the
ability of users and information
providers to seamlessly and
transparently transmit and receive
information between and across
telecommunications networks.’’ This
provision affords the Commission
adequate authority to continue
overseeing broadband interconnectivity
and reliability issues, regardless of the
legal classification of wireline
broadband Internet access service.
Moreover, NRIC’s current charter directs
it to make recommendations to increase
the deployment and improve the
security, reliability, and interoperability
of ‘‘high-speed residential Internet
access service,’’ and we find that its
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activities in this regard are consistent
with section 256.
47. Access by Persons with
Disabilities. Section 255(c) of the Act
requires that ‘‘a provider of
telecommunications service shall ensure
that the service is accessible to and
usable by individuals with disabilities,
if readily achievable.’’ Like the other
Title II obligations discussed above,
section 255 expressly applies to
telecommunications services, not
information services. Although the
requirements contained in section 255
do not apply to information services, in
the past the Commission has exercised
its ancillary jurisdiction under Title I to
extend accessibility obligations that
mirror those under section 255 to two
critically important information
services, voicemail and interactive
menu service. This Order does not affect
voicemail or interactive menu service
providers’ obligations or other
telecommunications service providers’
obligations under section 255(c). We
will continue to exercise our Title I
authority, as necessary, to give full
effect to the accessibility policy
embodied in section 255.
48. In addition, section 225(b) directs
the Commission to ensure
‘‘telecommunications relay services’’
(TRS), a set of services that includes
both video relay service (VRS) and IP
relay, are available to individuals with
hearing or speech impairments. The
Commission has previously determined
that the statutory definition of TRS
includes both information services and
telecommunications services (65 FR
38432, June 21, 2000). Nothing in this
Order disturbs that earlier conclusion;
consequently, this Order will not affect
TRS requirements or the ability of TRS
users to access VRS or IP relay.
49. In addition, the Commission will
remain vigilant in monitoring the
development of wireline broadband
Internet access service and its effects on
the important policy goals of section
255. As noted above, we will exercise
our ancillary jurisdiction to ensure
achievement of important policy goals
of section 255 and also section 225 of
the Act.
50. Consistent with our decision
today to require facilities-based wireline
broadband Internet access service
providers to continue to contribute to
universal service support mechanisms
for an additional 270-day period, as a
matter of policy, we also require such
providers to report the revenue on the
Commission’s FCC Form 499–A
associated with the transmission
component of their wireline broadband
Internet access service as of the effective
date of this Order for an additional 270-
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day period for purposes of contributing
to the TRS fund for that same 270-day
period.
51. NANPA Funding. Pursuant to this
same interim authority, we require
facilities-based wireline broadband
Internet access service providers to
continue to contribute to the cost of
numbering administration through the
NANPA funding mechanism established
by the Commission pursuant to section
251(e) of the Act for the same 270-day
period. We take this action to ensure
that the funding for this critical function
does not immediately decrease while
the Commission examines what, if any
funding related obligations should
apply to facilities-based broadband
Internet access service providers.
Section 251(e)(2) requires that ‘‘[t]he
cost of establishing telecommunications
numbering administration arrangements
* * * be borne by all
telecommunications carriers on a
competitively neutral basis as
determined by the Commission.’’ In
carrying out this statutory directive, the
Commission adopted 47 CFR 52.17 of its
rules, which requires, among other
things, that all telecommunications
carriers contribute toward the costs of
numbering administration on the basis
of their end-user telecommunications
revenues for the prior calendar year.
52. Obligations of Incumbent LECs
Under Section 251. The Wireline
Broadband Notice sought comment on
the relationship between a competitive
LEC’s rights under section 251 and the
Commission’s tentative conclusion that
wireline broadband Internet access
service is an information service with a
telecommunications input. Several
competitive LECs, and one BOC, argue
that regardless of how the Commission
classifies wireline broadband Internet
access service, including its
transmission component, competitive
LECs should still be able to purchase
UNEs, including UNE loops to provide
stand-alone DSL telecommunications
service, pursuant to section 251(c)(3) of
the Act. We agree.
53. Section 251(c)(3) and the
Commission’s rules look at what use a
competitive LEC will make of a
particular network element when
obtaining that element pursuant to
section 251(c)(3); the use to which the
incumbent LEC puts the facility is not
dispositive. In this manner, even if an
incumbent LEC is only providing an
information service over a facility, we
look to see whether the requesting
carrier intends to provide a
telecommunications service over that
facility. Thus, competitive LECs will
continue to have the same access to
UNEs, including DS0s and DS1s, to
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which they are otherwise entitled under
our rules, regardless of the statutory
classification of service the incumbent
LECs provide over those facilities. So
long as a competitive LEC is offering an
‘‘eligible’’ telecommunications service
under (which is not exclusively long
distance or mobile wireless services) it
may obtain that element as a UNE. See,
e.g., 47 CFR 51.309(b), (d). Accordingly,
nothing in this Order changes a
requesting telecommunications carriers’
UNE rights under section 251 and our
implementing rules.
54. Cost Allocation. In this section,
we address cost allocation issues raised
by our decision to allow incumbent
LECs to enter into non-common carriage
arrangements with affiliated and
unaffiliated ISPs for the provision of
wireline broadband Internet access
transmission using facilities that are
also used for provision of regulated
telecommunications services.
Specifically, we address whether we
should require incumbent LECs subject
to our part 64 cost allocation rules to
classify that activity as a regulated
activity, as opposed to a nonregulated
activity, under our part 64 cost
allocation rules. We conclude that
incumbent LECs should classify this
non-common carrier activity as a
regulated activity under those rules and
that this accounting treatment is
consistent with section 254(k) of the
Act.
55. In this Order, we allow the noncommon carrier provision of wireline
broadband Internet access transmission
that we previously have treated as
regulated, interstate special access
service, but we do not preemptively
deregulate any service currently
regulated by any state. Therefore, as
specified in 47 CFR 32.23, the provision
of this transmission is to be classified as
a regulated activity under part 64 ‘‘until
such time as the Commission decides
otherwise.’’ We do not ‘‘decide
otherwise’’ at this time because we find
that the costs of changing the federal
accounting classification of the costs
underlying this transmission would
outweigh any potential benefits and that
section 254(k) of the Act does not
mandate such a change.
56. Because the costs of requiring that
incumbent LECs classify their noncommon carrier, broadband Internet
access transmission operations as
nonregulated activities under part 64
exceed the potential benefits, we
decline to require such a classification.
Classifying those operations as regulated
under part 32 means that any necessary
ratemaking adjustments, including any
reallocations of costs, will be addressed
in the ratemaking process in the
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60231
relevant regulatory jurisdiction. In our
case, that is the interstate jurisdiction.
Currently, some price cap carriers treat
broadband special access services as
price cap services, while others treat
these broadband services as services
excluded from price caps. Price cap
carriers that have tariffed these services
under price caps, and that choose to
replace these tariffed services with noncommon carriage arrangements, will
make the appropriate adjustments to the
actual price index (API) and price cap
index (PCI) for the special access basket.
The ordinary application of the price
cap rate formulas will ensure that other
special access rates remain consistent
with the price cap rules after
deregulation of broadband transmission
services. Carriers that have excluded
broadband transmission services from
price caps will not need to make these
adjustments.
57. Our ruling here with respect to the
accounting treatment of broadband
Internet access transmission provided
on a non-common carrier basis does not
change the accounting treatment that
applies to broadband Internet access
service provided to end users. That is,
and always has been, an information
service. An incumbent LEC that offers
this service must continue to account
for it as a nonregulated activity.
58. We note that our decision to treat
the non-common carrier provision of
broadband Internet access transmission
as a regulated activity under part 64 will
affect the results of computations of the
rate of return earned on interstate Title
II services. This is not a matter of
practical concern with respect to most
incumbent LECs regulated under the
CALLS plan (65 FR 38684, June 21,
2000) or price caps, because earnings
determinations are not used in
determining their price cap rates. In the
event that an earnings determination is
needed for some ratemaking purpose,
the affected carrier will have to propose
a way of removing the costs of any nonTitle II services from the computation.
Price cap carriers that have not taken
advantage of pricing flexibility, and
therefore are still able to take advantage
of low-end adjustments to their price
cap rates, will have to address this cost
allocation issue if and when they seek
a low-end adjustment.
59. Finally, all rate-of-return carriers
that have participated in this proceeding
have stated that they wish to continue
offering broadband transmission as a
Title II common carrier service. We have
provided them with this option. As
such, we do not, at this time, address
the treatment of private carriage
arrangements by rate-of-return carriers
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because the issue is entirely
hypothetical.
60. Section 254(k). Section 254(k) of
the Act states that a telecommunications
carrier ‘‘may not use services that are
not competitive to subsidize services
that are subject to competition.’’ That
section also requires the Commission to
establish, with respect to interstate
services, accounting and cost allocation
rules that ensure that ‘‘services included
in the definition of universal service
bear no more than a reasonable share of
the joint and common costs of facilities
used to provide those services.’’ By
continuing to treat the provision of
wireline broadband transmission as a
regulated activity under part 64, we do
not change the regulatory cost allocation
treatment and thus do not change their
status under section 254(k). Our actions
in this Order therefore do not create a
violation of section 254(k).
61. We find that section 254(k) of the
Act does not mandate allocation of
interstate loop costs to non-common
carrier broadband Internet access
transmission. Under the CALLS access
charge plan (65 FR 38684, June 21,
2000), the interstate loop costs of price
cap carriers are not assigned to the
different services that subscribers may
receive over the loop, but are recovered
directly from end users through the
subscriber line charge. The Commission
explicitly found that section 254(k) did
not prohibit this cost recovery
mechanism (65 FR 38684, June 21,
2000), and the Fifth Circuit upheld this
finding, Texas Office of Public Utility
Counsel v. FCC, 265 F.3d 313, 323–324
(5th Cir. 2001).
62. The subscriber line charge is not
itself a ‘‘service included in the
definition of universal service.’’ The
interstate loop costs recovered through
the subscriber line charge represent the
costs of all jurisdictionally interstate
uses of the loop. Since 1998, those uses
have included both services supported
by universal service, such as access to
interexchange service, and broadband
special access services, which are not
supported by universal service. Costs
need not be reallocated at this time from
the subscriber line charge to noncommon carrier, broadband Internet
access transmission in order to prevent
imposition of an unreasonable level of
joint and common costs on services
included in the definition of universal
services. This is not, as State Consumer
Advocates claim, unreasonable. Rather,
it is a reasonable and rational cost
allocation approach. We can take
additional steps to address cost
allocation issues in the future if the
need arises.
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63. We observe that NARUC and the
State Consumer Advocates appear to
assume that any reallocation of loop
costs to broadband Internet access
transmission would be given effect in
the ratemaking process in such a way
that consumers who do not receive
wireline broadband Internet access
service over their loops would have
their tariffed rates reduced. This
ratemaking approach would likely
produce a relatively small per-line rate
reduction for the large number of
consumers who do not receive this
broadband service, while leaving a
larger per-line amount to be recovered
from the smaller number of consumers
who receive both narrowband and
broadband services over their loops.
This form of cost reallocation produces
anomalous results, and we do not adopt
it. It would cause a consumer who buys
the two services over the same loop to
pay much more for that facility than a
consumer who buys only narrowband
service, even though the cost of that
facility is fixed and does not vary in
proportion to usage. It would be
possible to devise a scheme in which
costs were reallocated only with respect
to those loops on which both services
are being provided, but this would seem
to produce only a shifting of charges
from one part of the customer’s bill to
another.
64. We note that the question whether
there should be any changes to the
jurisdictional allocation of loop costs in
light of use of the loop for broadband
services was referred to the FederalState Joint Board on Separations in
1999. Specifically, in the wake of the
Commission’s determination in its 1999
tariff investigation that GTE’s ADSL
service was an interstate special access
service subject to federal tariffing,
NARUC filed a petition for clarification
regarding the proper allocation under
part 36 of the Commission’s rules of
loop costs associated with DSL services,
GTE Telephone Operating Cos. GTOC
Tariff No. 1, GTOC Transmittal No.
1148, 17 FCC Rcd 27409 (1999). Noting
that issues associated with how to
allocate local loop plant between voice
and data services for purposes of
jurisdictional separations were beyond
the scope of the limited investigation in
the tariff proceeding, the Commission
stated that it would address these
important issues in conjunction with
the Joint Board, GTE Telephone
Operating Cos. GTOC Tariff No. 1,
GTOC Transmittal No. 1148, 17 FCC
Rcd at 27412, para. 9. This issue
remains pending. In any event,
separations is now subject to a five-year
freeze, and the Joint Board is working
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on the approach that should follow this
freeze; the issues we describe in this
Order already fall within this context.
After the Joint Board makes its
recommendation, we can reexamine the
question of how any additional costs
that might be assigned to the interstate
jurisdiction may be recovered by local
exchange carriers.
65. Enforcement. We intend to swiftly
and vigorously enforce the terms of this
Order. Significantly, through review of
consumer complaints and other relevant
information, we will monitor all
consumer-related problems arising in
this market and take appropriate
enforcement action where necessary.
Similarly, we will continue to monitor
the interconnection and interoperability
practices of all industry participants,
including facilities-based Internet access
providers, and reserve the ability to act
under our ancillary authority in the
event of a pattern of anti-competitive
conduct.
Final Paperwork Reduction Act
Analysis
66. This Report and Order does not
contain any information collection
subject to the Paperwork Reduction Act
of 1995 (PRA), Public Law 104–13. In
addition, therefore, it does not contain
any new or modified ‘‘information
collection burden for small business
concerns with fewer than 25
employees,’’ pursuant to the Small
Business Paperwork Relief Act of 2002,
Public Law 107–198, see 44 U.S.C.
3506(c)(4).
Final Regulatory Flexibility
Certification
67. As required by the Regulatory
Flexibility Act, see 5 U.S.C. 603, the
Commission has prepared a Final
Regulatory Flexibility Certification of
the possible significant economic
impact on small entities of the policies
and rules addressed in this Report and
Order.
68. The Regulatory Flexibility Act of
1980, as amended (RFA), requires that a
regulatory flexibility analysis be
prepared for notice-and-comment
rulemaking proceedings, unless the
agency certifies that ‘‘the rule will not,
if promulgated, have a significant
economic impact on a substantial
number of small entities.’’ 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
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independently owned and operated; (2)
is not dominant in its field of operation;
and (3) satisfies any additional criteria
established by the Small Business
Administration (SBA).
69. In the Wireline Broadband Notice,
the Commission sought comment
generally on the appropriate statutory
classification for wireline broadband
Internet access service provided over a
provider’s own facilities, and on what
regulatory requirements, if any, should
be imposed on the telecommunications
component of wireline broadband
Internet access service. Specifically, the
Commission sought comment on
whether the Computer Inquiry
requirements should be modified or
eliminated as applied to selfprovisioned wireline broadband Internet
access service, as well as how the
Commission’s tentative conclusion that
wireline broadband Internet access
service is an information service would
affect the CALEA assistance capabilities,
the USA PATRIOT Act, other national
security or emergency preparedness
obligations, network reliability and
interoperability, and existing consumer
protection requirements, such as § 214
of the Act, CPNI requirements under
section 222 of the Act, and requirements
for access to persons with disabilities
under section 255 of the Act. The
Commission also sought comment on
how to continue to meet the goals of
universal service under section 254 of
the Act in a marketplace where
competing providers are deploying
broadband Internet access, including
how the regulatory status of wireline
broadband Internet access could impact
the system of assessments and
contributions to universal service.
Finally, the Wireline Broadband Notice
also invited comment on the
relationship between the statutory
classification of wireline broadband
Internet access service and an
incumbent LEC’s obligation to provide
access to UNEs under sections 251 and
252.
70. The Order eliminates the
Computer Inquiry requirements on
facilities-based carriers in their
provision of wireline broadband
Internet access service. Consequently,
BOCs are immediately relieved of the
separate subsidiary, CEI, and ONA
obligations with respect to wireline
broadband Internet access services. In
addition, subject to a one-year transition
period for existing wireline broadband
transmission services, all wireline
broadband Internet access service
providers are no longer subject to the
Computer II requirement to separate out
the underlying transmission from
wireline broadband Internet access
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service and offer it on a common carrier
basis. We determine in this Order that
wireline broadband Internet access
service is an information service, as that
term is defined in the statute. To the
extent that the regulatory obligations
discussed above apply to the
transmission component of wireline
broadband Internet access service when
provided to ISPs or others on a standalone common carrier basis, these
obligations will continue to apply when
carriers offer broadband Internet access
service transmission on a common
carrier basis, both during the transition
and thereafter.
71. The rule changes adopted in this
Order apply, for the most part, only to
BOCs (Computer Inquiry separate
subsidiary, CEI, and ONA obligations
with respect to wireline broadband
Internet access services). In addition, all
facilities-based wireline broadband
Internet access service providers are no
longer subject to the Computer II
requirement to separate out the
underlying transmission. Neither the
Commission nor the SBA has developed
a small business size standard
specifically applicable to providers of
incumbent local exchange service and
interexchange services. The closest
applicable size standard under the SBA
rules is for Wired Telecommunications
Carriers. This provides that such a
carrier is a small entity if it employs no
more than 1,500 employees. None of the
four BOCs that would be affected by
amendment of these rules meets this
standard. To the extent that any other
wireline provider would be classified as
a small entity, it would not be
negatively affected by the regulatory
relief we grant in this Order.
72. Therefore, we certify that the
requirements of the Order will not have
a significant economic impact on a
substantial number of small entities. We
note that one party, TeleTruth, filed
comments in response to the IFRAs in
the Wireline Broadband Notice and
Incumbent LEC Broadband Notice
proceedings. TeleTruth argues that these
IRFAs are deficient because they fail to
assess the potential impact of the
actions proposed in those proceedings
on small ISPs and small competitive
LECs and that our implementation of
the RFA is otherwise deficient. These
arguments are identical to, and indeed
filed as part of the same pleading as,
arguments the Commission previously
has rejected. We therefore again reject
these arguments for the reasons stated in
our prior Orders responding to
TeleTruth’s comments.
73. The Commission will send a copy
of the Order, including a copy of this
Final Regulatory Flexibility
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60233
Certification, in a report to Congress
pursuant to the Congressional Review
Act. In addition, the Order and this final
certification will be sent to the Chief
Counsel for Advocacy of the SBA, and
a summary of the Order and final
certification will be published in the
Federal Register.
Ordering Clauses
74. Accordingly, It is ordered that,
pursuant to sections 1–4, 10, 201–205,
214, 222, 225, 251, 252, 254–256, 258,
303(r) of the Communications Act of
1934, as amended, 47 U.S.C. 151–154,
160, 201–205, 214, 222, 225, 251, 252,
254–256, 258, 303(r), and section 706 of
the Telecommunications Act of 1996, 47
U.S.C. 157 nt, the Report and Order and
Notice of Proposed Rulemaking are
adopted.
75. It is further ordered, pursuant to
sections 1–4, 10, 201–205, 214, 222,
225, 251, 252, 254–256, 258, 303(r) of
the Communications Act of 1934, as
amended, 47 U.S.C. 151–154, 160, 201–
205, 214, 222, 225, 251, 252, 254–256,
258, 303(r), and section 706 of the
Telecommunications Act of 1996, 47
U.S.C. 157 nt, that wireline broadband
Internet access transmission providers
are granted blanket certification to
discontinue the provision of common
carrier broadband Internet access
transmission services to existing
customers as set forth and subject to the
conditions stated in this Order.
76. It is further ordered, pursuant to
sections 1–4, 10, 201–205, 214, 222,
225, 251, 252, 254–256, 258, 303(r) of
the Communications Act of 1934, as
amended, 47 U.S.C. 151–154, 160, 201–
205, 214, 222, 225, 251, 252, 254–256,
258, 303(r), and section 706 of the
Telecommunications Act of 1996, 47
U.S.C. 157 nt, that the Conditional
Petition for Forbearance Under 47
U.S.C. 160(c) filed by the Verizon
Telephone Companies in WC Docket
No. 04–242 on June 28, 2004, is denied
as moot.
77. It is further ordered, pursuant to
sections 1–4, 10, 201–205, 214, 222,
225, 251, 252, 254–256, 258, 303(r) of
the Communications Act of 1934, as
amended, 47 U.S.C. 151–154, 160, 201–
205, 214, 222, 225, 251, 252, 254–256,
258, 303(r), and section 706 of the
Telecommunications Act of 1996, 47
U.S.C. 157 nt, that the Petition for
Declaratory Ruling or, Alternatively, for
Interim Waiver filed in WC Docket No.
04–242 by the Verizon Telephone
Companies on June 28, 2004, is
dismissed as moot.
78. It is further ordered, pursuant to
§§ 1.103(a) and 1.427(b) of the
Commission’s rules, 47 CFR 1.103(a),
1.427(b), that this Report and Order
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shall be effective 30 days after
publication of the Report and Order in
the Federal Register.
79. It is further ordered that the
Commission’s Consumer and
Governmental Affairs Bureau, Reference
Information Center, shall send a copy of
this Order, including the Final
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Regulatory Flexibility Certification, to
the Chief Counsel for Advocacy of the
Small Business Administration.
List of Subjects in 47 CFR Parts 51, 63,
64
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
[FR Doc. 05–20830 Filed 10–14–05; 8:45 am]
BILLING CODE 6712–01–U
Communications, Telephone,
Broadband Internet access services.
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Agencies
[Federal Register Volume 70, Number 199 (Monday, October 17, 2005)]
[Rules and Regulations]
[Pages 60222-60234]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-20830]
=======================================================================
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Parts 51, 63, 64
[CC Docket Nos. 02-33; 01-337; 95-20; 98-10; WC Docket No. 04-242; FCC
05-150]
Appropriate Framework for Broadband Access to the Internet Over
Wireline Facilities
AGENCY: Federal Communications Commission.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In this document, the Federal Communications Commission
(Commission) establishes a regulatory framework for facilities-based
providers of wireline broadband Internet access service. Under this
framework, the Commission determines that facilities-based wireline
broadband Internet access service is an information service, and that
facilities-based providers of the service are no longer required to
separate out the transmission component (i.e., transmission in excess
of 200 kilobits per second (kbps) in at least one direction) of
wireline broadband Internet access services as a stand-alone
telecommunications service under Title II of the Communications Act of
1934, as amended (Act), subject to a one-year transition period, during
which providers must continue to provide existing wireline broadband
Internet access transmission offerings, on a grandfathered basis, to
unaffiliated information service providers (ISPs). After the transition
period, facilities-based wireline broadband Internet access service
providers are permitted to offer broadband Internet access services on
a common carrier basis under Title II or on a non-common carrier basis.
In addition, the Bell Operating Companies (BOCs) are immediately
relieved of all requirements associated with the Commission's Computer
Inquiry Orders with respect to wireline broadband Internet access
services. The document further concludes that the broadband
transmission component of wireline broadband Internet access service is
not a telecommunication service under the Act. It also addresses other
important areas relating to the provision of broadband Internet access
services. Overall, this new regulatory framework encourages the
ubiquitous availability of broadband to all Americans by removing
outdated regulations, developing consistent regulations across
broadband platforms, and encouraging broadband investment and
deployment.
DATES: Effective Date: This rule is effective November 16, 2005.
ADDRESSES: Federal Communications Commission, 445 12th Street, SW.,
Washington, DC 20554.
FOR FURTHER INFORMATION CONTACT: Jodie May or William Kehoe, Attorney-
Advisors, Competition Policy Division, Wireline Competition Bureau, at
(202) 418-1580.
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Report
and Order (Order) in CC Docket Nos. 02-33, 01-337, 95-20, 98-10; WC
Docket No. 04-242; FCC 05-150, adopted August 5, 2005, and released
September 23, 2005. The complete text of this document is available for
inspection and copying during normal business hours in the FCC
Reference Information Center, Portals II, 445 12th Street, SW., Room
CY-A257, Washington, DC 20554. This document may also be purchased from
the Commission's duplicating contractor, Best Copy and Printing, Inc.,
445 12th Street, SW., Room CY-B402,
[[Page 60223]]
Washington, DC 20554, telephone (800) 378-3160 or (202) 863-2893,
facsimile (202) 863-2898, or via e-mail at www.bcpiweb.com. It is also
available on the Commission's Web site at https://www.fcc.gov.
Synopsis of the First Report and Order (Order)
1. Background. The Communications Act does not address directly how
broadband Internet access service should be classified or regulated.
The Act does, however, provide the Commission express directives with
respect to encouraging broadband deployment, generally, and promoting
and preserving a freely competitive Internet market, specifically.
Consequently, the Commission initiated a Notice of Proposed Rulemaking
(Wireline Broadband Notice) in 2002 (67 FR 9232, Feb. 28, 2002) to seek
comment on the appropriate regulatory framework for wireline broadband
Internet access service.
2. Wireline broadband Internet access service, for purposes of this
proceeding, is a service that uses existing or future wireline
facilities of the telephone network to provide subscribers with
Internet access capabilities. The term ``Internet access service''
refers to a service that always and necessarily combines computer
processing, information provision, and computer interactivity with data
transport, enabling end users to run a variety of applications such as
e-mail, and access Web pages and newsgroups. Wireline broadband
Internet access service, like cable modem service, is a functionally
integrated, finished service that inextricably intertwines information-
processing capabilities with data transmission such that the consumer
always uses them as a unitary service. The Commission ruled in 2002
that cable modem service was an information service under the Act (67
FR 18907, April 17, 2002). The U.S. Supreme Court affirmed that ruling
in National Cable & Telecommunications Ass'n v. Brand X Internet
Services, 125 S. Ct. 2688 (2005) (Brand X).
3. As we explained in the Wireline Broadband Notice, providers of
wireline broadband Internet access service offer subscribers the
ability to run a variety of applications that fit under the
characteristics stated in the information service definition under the
Act. These characteristics distinguish wireline broadband Internet
access service from other wireline broadband services, such as stand-
alone ATM service, frame relay, gigabit Ethernet service, and other
high-capacity special access services, that carriers and end users have
traditionally used for basic transmission purposes. That is, these
services lack the key characteristics of wireline broadband Internet
access service--they do not inextricably intertwine transmission with
information-processing capabilities. Because carriers and end users
typically use these services for basic transmission purposes, these
services are telecommunications services under the statutory
definitions. These broadband telecommunications services remain subject
to current Title II requirements.
4. In the Wireline Broadband Notice, the Commission tentatively
concluded that wireline broadband Internet access service is an
information service when provided over an entity's own facilities, and
that the underlying transmission component of such service constituted
``telecommunications'' and not a ``telecommunications service'' under
the Act. The Commission invited comment on these tentative conclusions
and its prior conclusion that ``an entity is providing a
`telecommunications service' to the extent that such entity provides
only broadband transmission service on a stand-alone basis, without a
broadband Internet Access service.'' Finally, the Commission sought
comment on the extent to which any actions it might take in this
proceeding would affect other regulatory obligations.
5. In addressing the issues before us, we draw from the records of
several proceedings, including the Wireline Broadband Notice and the
Notice of Proposed Rulemaking in the Incumbent LEC Broadband proceeding
(67 FR 1945, Jan. 15, 2002), in which the Commission invited comment on
technological and market-related issues relating to our tariffing rules
for incumbent LECs' broadband telecommunications services. Consistent
with the scope of the Wireline Broadband Notice, we restrict our
decisions in this Order to only wireline broadband Internet access
services and those wireline broadband technologies that have been
utilized for such Internet access services.
6. Regulatory Classification of Wireline Broadband Internet Access
Service: We affirm our tentative conclusion ``that wireline broadband
Internet access service provided over a provider's own facilities is an
information service.'' This classification is consistent both with the
Commission's classification of cable modem service, as affirmed by the
Supreme Court in Brand X, and with the Commission's earlier
determination in its Report to Congress (Federal-State Joint Board on
Universal Service, Report to Congress, CC Docket No. 96-45, 13 FCC Rcd
11501 (1998) (63 FR 43088, August 12, 1998)) that Internet access
service is an information service. Applying the definitions of
``information service,'' ``telecommunications,'' and
``telecommunications service'' in the Act, we conclude that wireline
broadband Internet access service provided over a provider's own
facilities is appropriately classified as an information service
because its providers offer a single, integrated service (i.e.,
Internet access) to end users. That is, like cable modem service (which
is usually provided over the provider's own facilities), wireline
broadband Internet access service combines computer processing,
information provision, and computer interactivity with data transport,
enabling end users to run a variety of applications (e.g., e-mail, Web
pages, and newsgroups). These applications encompass the capability for
``generating, acquiring, storing, transforming, processing, retrieving,
utilizing, or making available information via telecommunications,''
and taken together constitute an information service as defined by the
Act.
7. The capabilities of wireline broadband Internet access service
demonstrate that this service, like cable modem service, provides end
users more than pure transmission, ``between or among points selected
by the user, of information of the user's choosing, without change in
the form or content of the information as sent and received.'' Because
wireline broadband Internet access service inextricably combines the
offering of powerful computer capabilities with telecommunications, we
conclude that it falls within the class of services identified in the
Act as ``information services.'' The information service classification
applies regardless of whether subscribers use all of the functions and
capabilities provided as part of the service (e.g., e-mail or Web-
hosting), and whether every wireline broadband Internet access service
provider offers each function and capability that could be included in
that service. Indeed, as with cable modem service, an end user of
wireline broadband Internet access service cannot reach a third party's
Web site without access to the Domain Naming Service (DNS) capability
``which (among other things) matches the Web site address the end user
types into his browser (or ``clicks'' on with his mouse) with the IP
address of the Web page's host server.'' The end user therefore
[[Page 60224]]
receives more than transparent transmission whenever he or she accesses
the Internet.
8. There is no reason to classify wireline broadband Internet
access services differently depending on who owns the transmission
facilities. From the end user's perspective, an information service is
being offered regardless of whether a wireline broadband Internet
access service provider self-provides the transmission component or
provides the service over transmission facilities that it does not own.
As the Commission indicated in its Report to Congress, what matters is
the finished product made available through a service rather than the
facilities used to provide it. The end user of wireline broadband
Internet access service receives an integrated package of transmission
and information processing capabilities from the provider, and the
identity of the owner of the transmission facilities does not affect
the nature of the service to the end user. Thus, in addition to
affirming our tentative conclusion above ``that wireline broadband
Internet access service provided over a provider's own facilities is an
information service,'' we also make clear that wireline broadband
Internet access service is an information service when the provider of
the retail service does not provide the service over its own
transmission facilities. Not only is the classification of wireline
broadband Internet access service as an information service consistent
with Brand X, but this classification, in our view, best facilitates
the goals of the Act, including promoting the ubiquitous availability
of broadband Internet access services to all Americans.
9. Regulation of Wireline Broadband Internet Access Service
Providers. Wireline broadband Internet access services provided by
facilities-based carriers are currently governed by rules established
in the Commission's Computer Inquiry proceedings. The Commission
created a framework in Computer II (Amendment of Section 64.702 of the
Commission's Rules and Regulations (Computer II), 77 FCC 2d 384
(1980)(77 FCC 2d 384 1980 (subsequent citations omitted)) that defined
and distinguished between ``basic services'' and ``enhanced services.''
It determined that enhanced services were not within the scope of its
Title II jurisdiction but rather were within its ancillary jurisdiction
under Title I. Pursuant to its ancillary jurisdiction, the Commission
required facilities-based common carriers to provide the basic
transmission services underlying their enhanced services on a
nondiscriminatory basis pursuant to tariffs governed by Title II of the
Act. These carriers thus offered the underlying basic service at the
same prices, terms, and conditions, to all enhanced service providers,
including their own enhanced services operations.
10. The Commission subsequently determined that the cost of
decreased efficiency and innovation imposed by the structural
safeguards of Computer II outweighed their benefits. The Commission
therefore replaced structural separation with a regime of nonstructural
safeguards in its Computer III decisions (Amendment of Section 64.702
of the Commission's Rules and Regulations, CC Docket No. 85-229, Phase
I, 104 FCC 2d 958 (1986) (51 FR 24350, July 3, 1986) (subsequent
citations omitted)). This framework maintained the existing basic and
enhanced service categories and adopted comparably efficient
interconnection (CEI) and open network architecture (ONA) requirements
as a replacement for the Computer II structural separation requirements
for AT&T and the BOCs. When Congress enacted the 1996 Act, it created
new statutory terms (i.e., ``information service'' and
``telecommunications service'') that substantially incorporated the
dichotomy between basic and enhanced services into the Communications
Act. As we noted above, although the 1996 Act uses ``information
service'' and ``telecommunications service'' instead of ``enhanced
service'' and ``basic service,'' the Commission has previously
determined that Congress intended the statutory categories to parallel
the categories the Commission established in the Computer Inquiry
proceeding. More specifically, the Commission found that all of the
services that the Commission has previously considered to be enhanced
services are ``information services.''
11. The Computer II obligation that all facilities-based wireline
carriers that own common carrier transmission facilities and provide
enhanced services must acquire transmission capacity pursuant to the
same prices, terms, and conditions reflected in their tariffs when
their own facilities are utilized has been applied exclusively to
traditional wireline services and facilities to date. By contrast, the
Computer II obligations do not apply to cable modem service providers
or to facilities-based enhanced services providers other than
traditional wireline carriers. The Commission's structural separation,
CEI, and ONA rules apply only to the BOCs.
12. Elimination of the Computer Inquiry Requirements. The Order
explains that the technology used to build networks, and the purposes
for which they are built, are fundamentally changing. These changes are
rapidly breaking down the formerly rigid barriers that separated one
network from another. There are numerous technologies and network
designs that form, or potentially could form, part of the broadband
telecommunications infrastructure of the 21st century. Cable operators
have deployed cable modem technology. Mobile wireless providers are
increasingly offering high-speed Internet access using technologies
like Evolution-Data Optimized (EV-DO) technology. Satellite providers
have deployed both Ku-band and even more advanced Ka-band technology
that can offer high-speed Internet access service throughout the
nation. Fixed wireless operators are planning to use licensed and
unlicensed spectrum to deliver broadband services, and are developing
new technologies that promise ubiquitous service and greater bandwidth.
Other companies are exploring the use of power lines and cables placed
in gas lines to provide broadband services. The nation's wireline
infrastructure also is changing and is now using digital, packet-based
technology to deliver a wider range of services. The Order further
states that network platforms therefore will be multi-purpose in nature
and more application-based, rather than existing for a single, unitary,
technologically specific purpose. More generally, the erosion of
barriers between various networks and the limitations inherent in those
barriers will lead to greater capacity for innovation to offer new
services and products. Both the providers of network platforms and
those that utilize the platforms are in a position to capitalize on
these changes. In addition, as with any evolving technology, new
products and providers will continue to emerge to complement existing
market offerings and participants; and these offerings will grow over
time as consumers demand even more advanced services, with the result
that technological growth and development continue on an upward spiral.
13. We decline to continue to impose any Computer Inquiry
requirements on facilities-based carriers in their provision of
wireline broadband Internet access service. Consequently, BOCs are
immediately relieved of the separate subsidiary, CEI, and ONA
obligations with respect to wireline broadband Internet access
services. In addition, subject to a one-year transition period for
existing wireline broadband transmission services, all wireline
[[Page 60225]]
broadband Internet access service providers are no longer subject to
the Computer II requirement to separate out the underlying transmission
from wireline broadband Internet access service and offer it on a
common carrier basis.
14. We agree with those commenters that argue that the Computer
Inquiry obligations are inappropriate and unnecessary for today's
wireline broadband Internet access market. As these parties observe,
the Computer Inquiry rules were developed before separate and different
broadband technologies began to emerge and compete for the same
customers. Further, these rules were adopted based on assumptions
associated with narrowband services, single purpose network platforms,
and circuit-switched technology. Notably, even commenters that argue
for a continued access requirement generally acknowledge that the
current structural separation, CEI, and ONA requirements are outmoded
and should be eliminated or replaced. Indeed, the record provides
little, if any, support for retaining the structural separation option
of Computer II or for conditioning BOC structural relief on compliance
with a detailed set of regulatory requirements such as the CEI or ONA
requirements. Instead, commenters arguing for continued regulation of
wireline broadband Internet access service providers focus primarily on
the core nondiscriminatory access obligation of Computer II, urging
that we, at a minimum, should retain a common carrier transmission
access requirement in some form. In evaluating these arguments, we are
mindful that one of the Commission's most critical functions is to
adapt regulation to changing technology and competitive conditions to
accomplish its mandates under the Act.
15. In determining whether to eliminate the Computer Inquiry
requirements (e.g., the separate subsidiary, nondiscriminatory access
to transmission, CEI, and ONA obligations) for facilities-based
providers of wireline broadband Internet access services, we weigh the
benefits of these requirements against their costs in accordance with
our obligations under the Act. This determination is informed not only
by our understanding of the current broadband Internet access market,
but what our predictive judgment tells about how that market is likely
to develop. It is critical to factor in these future expectations
because the broadband market is evolving rapidly. At the time the
Computer Inquiry rules were adopted, there was an implicit, if not
explicit, assumption that the incumbent LEC wireline platform would
remain the only network platform available to enhanced services
providers. Regulated access to wireline transmission thus was essential
for a competitive information services market to flourish.
16. The characteristics of the broadband market, as well as
evidence that facilities-based wireline carriers have incentives to
make, and indeed already make, broadband transmission capacity
available to ISPs, absent regulation, are factors that influence our
analysis in determining whether such regulation is still necessary.
Moreover, this regulation can have a significant impact on the ability
of wireline platform providers to develop and deploy innovative
broadband capabilities that respond to market demands. The record shows
that the additional costs of an access mandate diminish a carrier's
incentive and ability to invest in and deploy broadband infrastructure
investment. We find this negative impact on deployment and innovation
particularly troubling in view of Congress' clear and express policy
goal of ensuring broadband deployment, and its directive that we remove
barriers to that deployment, if possible, consistent with our other
obligations under the Act. It is precisely this negative impact on
broadband infrastructure that led the Commission to eliminate other
broadband-related regulation over the past two years. These factors,
when weighed against the benefits of continuing these regulations,
render a different policy result than the judgment reached at the time
the Computer Inquiry rules were adopted.
17. As outlined in the Wireline Broadband Notice, we seek to adopt
a comprehensive policy that ensures, consistent with the Act in general
and section 706 specifically, that broadband Internet access services
are available to all Americans and that undue regulation does not
constrain incentives to invest in and deploy the infrastructure needed
to deliver broadband Internet access services. As part of this policy,
we believe that we should regulate like services in a similar manner so
that all potential investors in broadband network platforms, and not
just a particular group of investors, are able to make market-based,
rather than regulatory-driven, investment and deployment decisions.
18. Our decision in this Order is consistent with the decision
issued by the Ninth Circuit Court of Appeals in 1994, California v.
FCC, 39 F.3d 919 (9th Cir. 1994). In that decision, the Ninth Circuit
vacated part of the Commission's Computer III ONA rules. According to
the court, the Commission had failed to explain how its ``diluted
version of ONA,'' would prevent BOCs from exploit[ing] their monopoly
control over the local networks. For the reasons discussed herein, we
determine that the competitive pressures and technological changes that
have arisen since 1990 have reduced the BOCs' incentive and ability to
discriminate against unaffiliated ISPs in their provision of broadband
Internet access service to the point that structural separation for BOC
broadband Internet access service is no longer necessary. Specifically,
we believe that the analysis in this Order that persuades us to
eliminate not only the structural separation requirement, but all
Computer Inquiry obligations, applicable to wireline broadband Internet
access service provides the level of detail the Ninth Circuit found
lacking in the Commission's prior decision eliminating that
requirement.
19. The Order also analyzes the wireline broadband Internet access
services marketplace, technological innovation, the opportunity for new
services offered by wireline broadband Internet access service
providers, the fact that wireline broadband transmission will remain
available to ISPs, and Congress's objectives in section 706 of the Act
regarding broadband deployment to determine that we can eliminate a
mandatory common carrier broadband transmission requirement, subject to
the one year transitional mechanism. We also find that we need not
retain the Computer Inquiry regime, or any of its individual
requirements, to protect against improper cross subsidization. The
Commission's ratemaking methods and those of our state counterparts
have changed considerably since the Ninth Circuit addressed the need
for structural separation as a safeguard against cross-subsidization in
1994. We conclude that changes have further reduced the potential that
the BOCs could increase rates for tariffed telecommunications services
through cost shifting. Indeed, unlike the situation before the Ninth
Circuit in 1994, the BOCs' costs are no longer used to determine the
BOCs' price cap rates. In view of this reduced potential, we find that
there is no need to retain either the Computer II structural separation
requirement or the Computer III nonstructural safeguards to keep the
BOCs from cross-subsidizing their broadband Internet access service
operations with revenues from the telecommunications services
operations. The benefits we anticipate from the
[[Page 60226]]
elimination of these structural and nonstructural safeguards, including
the increased infrastructure investment that our new framework should
generate, outweigh any protection against cross-subsidization that
those safeguards provide.
20. New Regulatory Framework for Wireline Broadband Internet Access
Service Providers. We adapt our regulatory requirements, consistent
with the Act, to correct for restrictions on wireline broadband
Internet access service providers' ability to incorporate advanced
integrated technology into their broadband offerings, impediments to
responding rapidly and efficiently to changing broadband market demands
due to outdated existing rules, and constraints on broadband innovation
and infrastructure investment. We eliminate the Computer Inquiry
obligations as applied to facilities-based providers of wireline
broadband Internet access service, and, in particular, the obligation
to offer the transmission component of wireline broadband Internet
access service on a stand-alone common carrier basis. Facilities-based
wireline broadband Internet access service providers, subject to a one-
year transition period which we also adopt, may choose to offer the
transmission component of wireline broadband Internet access services
to both affiliated and unaffiliated ISPs or others on a non-common
carrier basis or a common carrier basis. We incorporate this
flexibility into our new framework to account for the differing
business issues affecting different wireline broadband Internet access
service providers. For example, associations of rural incumbent LECs
have indicated that their members may choose to offer broadband
Internet access transmission service on a common carrier basis. Thus,
unlike previous Commission initiatives (e.g., the deregulation of CPE),
we are not eliminating carriers' ability to offer wireline broadband
transmission on a Title II basis. Indeed, as we discuss below, enabling
carriers to offer broadband Internet access transmission in alternative
ways furthers our policy objectives and is consistent with precedent.
21. Wireline Broadband Internet Access Service Providers May Offer
Transmission Service on a Non-Common Carrier Basis or a Common Carrier
Basis. The record demonstrates that allowing non-common carriage
arrangements for wireline broadband transmission will best enable
facilities-based wireline broadband Internet access service providers,
particularly incumbent LECs, to embrace a market-based approach to
their business relationships with ISPs, providing the flexibility and
freedom to enter into mutually beneficial commercial arrangements with
particular ISPs. Facilities-based wireline carriers as well as certain
portions of the ISP community and broadband equipment manufacturers
agree that market-based commercial arrangements will better serve the
interests of ISPs, broadband providers, and consumers.
22. Non-common carriage contracts will permit ISPs to enter into
various types of compensation arrangements for their wireline broadband
Internet access transmission needs that may better accommodate their
individual market circumstances. For example, ISPs and facilities-based
carriers could experiment with revenue-sharing arrangements or other
types of compensation-based arrangements keyed to the ISPs' marketplace
performance, enabling the ISPs to avoid a fixed monthly recurring
charge (as is typical with tariffed offerings) for their transmission
needs during start-up periods. Non-common carriage also enables parties
to a contract to modify their arrangement over time as their respective
needs and requirements change without the inherent delay associated
with a tariffed offering that must be made available to all ISPs.
Moreover, it encourages other types of commercial arrangements with
ISPs, reflecting business models based on risk sharing such as joint
ventures or partnership-type arrangements, where each party brings
their added value, benefiting both the consumer (through the ability to
obtain a new innovative service) and each party to the commercial
arrangement. Such arrangements may also encourage unaffiliated ISPs to
develop innovative applications and services that differentiate them
from other ISPs. The ability to deliver such innovative services over
their platforms in order to attract customers will likely motivate
wireline facilities-based broadband transmission providers to negotiate
mutually beneficial arrangements that enable the wireline facilities-
based broadband transmission provider to share the financial rewards of
bringing the new Internet access applications or services to consumers.
23. A number of parties have indicated that some carriers may
nevertheless choose to offer the transmission component of broadband
Internet access service as a common carrier service absent the Computer
Inquiry requirements. Other parties have indicated they would avail
themselves of the opportunity to offer certain types of broadband
Internet access transmission on a common carrier basis and other types
of broadband Internet access transmission on a non-common carrier
basis. Our primary goal in this proceeding is to facilitate broadband
deployment in the manner that best promotes wireline broadband
investment and innovation, and maximizes the incentives of all
providers to deploy broadband. We find that we can best further this
goal by providing all wireline broadband providers the flexibility to
offer these services in the manner that makes the most sense as a
business matter and best enables them to respond to the needs of
consumers in their respective service areas.
24. We therefore conclude that providers of wireline broadband
Internet access service that offer that transmission as a
telecommunications service after the effective date of this Order may
do so on a permissive detariffing basis. Such providers thus may, in
lieu of filing tariffs with the Commission setting forth the rates,
terms, and conditions under which they will provide broadband Internet
access transmission service, include those rates, terms, and conditions
in generally available offerings posted on their Web sites. Each such
provider electing not to tariff the broadband Internet access
transmission that it offers as a telecommunications service also must
make physical copies of its offering reflecting the rates, terms and
conditions available for public inspection at a minimum of one place of
business.
25. To enable facilities-based wireline Internet access providers
to maximize their ability to deploy broadband Internet access services
and facilities in competition with other platform providers, under a
regulatory framework that provides all market participants with the
flexibility to determine how best to structure their business
operations, facilities-based carriers are able to choose whether to
offer wireline broadband Internet access transmission as non-common
carriage or common carriage. In addition, to the extent they choose to
offer that transmission as common carriage, they may do so either under
tariff or on a non-tariffed basis. The Commission, on numerous
occasions, has determined that a particular service can be offered on a
non-common carrier or common carrier basis at the service provider's
option. Similarly, here, we conclude that it is appropriate to provide
facilities-based wireline broadband Internet access service providers
with freedom to determine how to provide the
[[Page 60227]]
broadband transmission capabilities of such services.
26. In order to ensure that this flexible approach is consistent
with statutory requirements, efficient, and administrable, we specify
that a facilities-based wireline broadband Internet access provider may
not simultaneously offer the same type of broadband Internet access
transmission on both a common carrier and non-common carrier basis. It
may, however, choose to make available one type of broadband Internet
access transmission on a common carrier basis and another type of such
transmission on a non-common carrier basis. Of course, any transmission
offering that a facilities-based wireline broadband Internet access
provider makes available on a tariffed common carrier basis will be
subject to the terms contained in its tariff and, consistent with Title
II of the Act, the provider may charge customers for that service only
at the rates contained in the tariff.
27. Some commenters request that we impose certain content-related
requirements on wireline broadband Internet access service providers
that would prohibit them from blocking or otherwise denying access to
any lawful Internet content, applications, or services a consumer
wishes to access. While we agree that actively interfering with
consumer access to any lawful Internet information, products, or
services would be inconsistent with the statutory goals of encouraging
broadband deployment and preserving and promoting the open and
interconnected nature of the public Internet, we do not find sufficient
evidence in the record before us that such interference by facilities-
based wireline broadband Internet access service providers or others is
currently occurring. We therefore decline at this time to adopt rules
prohibiting such interference. Instead, we find that the better course
is to articulate principles recognizing the importance of consumer
choice and competition in regard to accessing and using the Internet,
and we have adopted an Internet Policy Statement (Appropriate Framework
for Broadband Access to the Internet over Wireline Facilities, CC
Docket No. 02-33, Policy Statement, FCC 05-151 (released September 23,
2005)) that outlines these principles. We intend to incorporate these
principles into our ongoing policymaking activities. Should we see
evidence that providers of telecommunications for Internet access or
IP-enabled services are violating these principles, we will not
hesitate to take action to address that conduct.
28. Current Title II Unbundled Wireline Broadband Internet Access
Transmission Services Must Remain Available During a One-Year
Transition Period. Although we determine above that immediate relief
for wireline broadband Internet access transmission providers is
warranted, we are nonetheless sensitive to the fact that the
Commission's previous regulatory regime for these services has created
reasonable reliance and expectation by unaffiliated ISPs on the
availability of currently tariffed, broadband Internet access
transmission offerings. In addition, we are concerned that a flash-cut
transition may unnecessarily disrupt customers' service due to a
provider's inability to adapt its business practices so quickly. We
therefore adopt a one-year transition period, which begins on the
effective date of this Order, in order to give both ISPs and
facilities-based wireline broadband Internet access transmission
providers sufficient time to adjust to our new framework. During the
transition, facilities-based wireline broadband Internet access
transmission providers must continue to honor existing transmission
arrangements with their current ISP or other customers, but they are
not required to offer such arrangements to new customers or to existing
customers at new locations. If these arrangements are provided pursuant
to tariffs currently on file with the Commission, wireline broadband
Internet access transmission providers may retain these tariffs during
the one-year period, or, alternatively, they may cancel the tariffs
pursuant to normal tariff cancellation procedures provided they honor
existing wireline broadband Internet access transmission arrangements
in another manner. To the extent facilities-based wireline broadband
Internet access transmission providers have entered into any other
common carrier transmission arrangements with ISP customers that are
not subject to tariffing, these arrangements must also be continued
during the one-year transition unless, of course, they would otherwise
expire during the transition period pursuant to their pre-existing
terms. Upon the effective date of this Order, facilities-based wireline
broadband Internet access providers, including the BOCs and their
affiliates, are no longer required to continue taking the existing
common carrier transmission arrangements that they provide to ISPs as
an input to their self-provided wireline broadband Internet access
service. To the extent facilities-based carriers offer new wireline
broadband Internet access transmission arrangements after the effective
date of this Order or provide such service to new customers, these
arrangements may be made available on a common carrier basis or a non-
common carrier basis as set forth above.
29. This one-year period will allow ISPs to continue operating
under their current arrangements while they negotiate non-common
carrier agreements with providers of wireline broadband Internet access
transmission. Based on the assurances made by facilities-based wireline
broadband Internet access providers and their stated desire to ensure
that their platform is competitive with other broadband platforms, we
strongly encourage the parties to work together to develop individual
contracts that are mutually beneficial to each party. In the meantime,
the ability to continue operating under existing arrangements for an
additional one-year period during new contract negotiations will avoid
unnecessary customer disruption. Such a transition period is consistent
with previous decisions in which the Commission modified the regulatory
framework for certain services subject to a transition.
30. Discontinuation of Service. Section 214(a) of the Act requires
that, prior to discontinuing any interstate or foreign
telecommunications service, a telecommunications carrier obtain from
the Commission ``a certification that neither the present nor future
public convenience or necessity will be adversely affected thereby.''
The reasons that persuade us not to require that the transmission
component of wireline broadband Internet access service continue to be
offered as a telecommunications service under Title II also persuade us
that discontinuance of the provision of common carrier broadband
Internet access transmission services to existing customers would not
adversely affect the present or future public convenience or necessity.
Instead, competition from other broadband Internet access service
providers and the wireline providers' business incentives to attract
ISP customers should ensure the continued availability of this
transmission component, under reasonable rates, terms, and conditions.
Accordingly, we find that the circumstances here meet our test for
determining whether a telecommunications service may be discontinued
under section 214(a).
31. Therefore, pursuant to our rule for discontinuing domestic
telecommunications services, 47 CFR 63.71, we grant facilities-based,
wireline broadband Internet access transmission providers blanket
certification to
[[Page 60228]]
discontinue providing existing customers the common carrier broadband
Internet access transmission services that are the subject of this
Order, subject to the following conditions. First, to protect these
customers against abrupt termination of service, we require that a
carrier discontinuing common carrier broadband Internet access
transmission service shall provide affected customers with advance
notice of the discontinuance. Specifically, the carrier shall provide
all affected customers with its name and address, the date of the
planned discontinuance, the geographic areas where service will be
discontinued, and a brief description of the service to be
discontinued. In addition, on or after the date it provides the advance
notice to its customers and at least 30 days prior to the date on which
service will be discontinued, the carrier must file with the Commission
notice of its intent to discontinue service. Carriers are not required
to make any showing in this notice and do not need to obtain any
additional permission from the Commission to cease service. Upon
notification of discontinuance, the Commission reserves the right to
take actions where appropriate under the circumstances to protect the
public interest.
32. Classification of Wireline Broadband Internet Access
Transmission Component. Above, we affirm that wireline broadband
Internet access service is an information service, and decline to
continue the reflexive application of the Computer Inquiry regime to
facilities-based providers of such service. This is not, however, the
end of our inquiry. The Wireline Broadband Notice also sought comment
on the legal classification of the transmission component underlying
facilities-based wireline broadband Internet access service. In
contrast to the classification of wireline broadband Internet access
service as an information service, there is considerable disagreement
in the record as to the appropriate classification of the transmission
component of such Internet access service. The legal classification of
this transmission component has certain regulatory implications for its
provider. Specifically, if the transmission component is a
telecommunications service under the Act, providers of that service are
subject to common carrier regulation under Title II of the Act in their
provision of that service. Conversely, if the transmission component is
not a telecommunications service under the Act, providers of that
component are not subject to Title II requirements, except to the
extent the Commission imposes similar or identical obligations pursuant
to its Title I ancillary jurisdiction.
33. We address two circumstances under which the statutory
classification of the transmission component arises: The provision of
transmission as a wholesale input to ISPs (including affiliates) that
provide wireline broadband Internet access service to end users, and
the use of transmission as part and parcel of a facilities-based
provider's offering of wireline broadband Internet access service using
its own transmission facilities to end users. First, we address the
wholesale input. Nothing in the Communications Act compels a
facilities-based provider to offer the transmission component of
wireline broadband Internet access service as a telecommunications
service to anyone. Furthermore, consistent with the NARUC precedent,
National Ass'n of Reg. Utils. Comm'rs v. FCC, 525 F.2d 630, 642 (DC
Cir. 1976), cert. denied, 425 U.S. 992 (1976), the transmission
component of wireline broadband Internet access service is a
telecommunications service only if one of two conditions is met: the
entity that provides the transmission voluntarily undertakes to provide
it as a telecommunications service; or the Commission mandates, in the
exercise of our ancillary jurisdiction under Title I, that it be
offered as a telecommunications service. As to the first condition, we
explain above that carriers may choose to offer this type of
transmission as a common carrier service if they wish. In that
circumstance, it is of course a telecommunications service. Otherwise,
however, is it not, as we would not expect an ``indifferent holding
out'' but a collection of individualized arrangements. As to the second
condition, based on the record, we decline to continue our reflexive
application of the Computer Inquiry requirement, which compelled the
offering of a telecommunications service to ISPs. Thus, we affirm that
neither the statute nor relevant precedent mandates that broadband
transmission be a telecommunications service when provided to an ISP,
but the provider may choose to offer it as such.
34. Second, we address the use of the transmission component as
part of a facilities-based provider's offering of wireline broadband
Internet access service to end users using its own transmission
facilities. We conclude, consistent with Brand X, that such a
transmission component is mere ``telecommunications'' and not a
``telecommunications service.'' As stated above, the Act in section
153(46) defines telecommunications service as ``the offering of
telecommunications for a fee directly to the public, or to such classes
of users as to be effectively available directly to the public,
regardless of the facilities used.'' Thus, whether a telecommunications
service is being provided turns on what the entity is ``offering * * *
to the public,'' and customers' understanding of that service. End
users subscribing to wireline broadband Internet access service expect
to receive (and pay for) a finished, functionally integrated service
that provides access to the Internet. End users do not expect to
receive (or pay for) two distinct services--both Internet access
service and a distinct transmission service, for example. Thus, the
transmission capability is part and parcel of, and integral to, the
Internet access service capabilities. Accordingly, we conclude that
wireline broadband Internet access service does not include the
provision of a telecommunications service to the end user irrespective
of how the service provider may decide to offer the transmission
component to other service providers.
35. Effect on Existing Obligations. The Wireline Broadband Notice
sought comment on what effect classifying wireline broadband Internet
access service as an information service would have on other regulatory
obligations. Title II obligations have never generally applied to
information services, including Internet access services. Instead, when
the Commission has deemed it necessary to impose regulatory
requirements on information services, it has done so pursuant to its
Title I ancillary jurisdiction. Indeed, as noted above, the Commission
imposed the Computer Inquiry obligations on facilities-based common
carriers pursuant to its Title I ancillary jurisdiction. Similarly, the
Commission has exercised its ancillary jurisdiction under Title I to
extend accessibility obligations that mirror those under section 255 to
certain information services, i.e., voicemail and interactive menu
service. The Commission's ancillary jurisdiction under Title I to
impose regulatory obligations on broadband Internet access service
providers was recently recognized by the Supreme Court in Brand X.
36. The Commission may exercise its ancillary jurisdiction when
Title I of the Act gives the Commission subject matter jurisdiction
over the service to be regulated and the assertion of jurisdiction is
``reasonably ancillary to the effective performance of [its] various
[[Page 60229]]
responsibilities.'' United States v. Southwestern Cable Co., 392 U.S.
157, 178 (1968). We recognize that both of the predicates for ancillary
jurisdiction are likely satisfied for any consumer protection, network
reliability, or national security obligation that we may subsequently
decide to impose on wireline broadband Internet access service
providers.
37. First, we find that we have subject matter jurisdiction over
providers of broadband Internet access services. These services are
unquestionably ``wire communication'' as defined in section 3(52)
because they transmit signals by wire or cable, or they are ``radio
communication'' as defined in section 3(33) if they transmit signals by
radio. The Act gives the Commission subject matter jurisdiction over
``all interstate and foreign communications by wire or radio * * * and
* * * all persons engaged within the United States in such
communication'' in section 2(a). Second, with regard to consumer
protection obligations, we find that regulations would be ``reasonably
ancillary'' to the Commission's responsibility to implement sections
222 (customer privacy), 255 (disability access), and 258 (slamming and
truth-in-billing), among other provisions, of the Act. Similarly,
network reliability, emergency preparedness, national security, and law
enforcement requirements would each be reasonably ancillary to the
Commission's obligation under section 151 of the Act to make available
``a rapid, efficient, Nation-wide, and world-wide wire and radio
communication service * * * for the purpose of the national defense
[and] for the purpose of promoting safety of life and property through
the use of wire and radio communication.''
38. Federal Universal Service Contribution Obligations. In section
254 of the Act, Congress codified our Federal universal service
programs to ensure affordable telecommunications services to all
Americans, including consumers living in high-cost areas, low income
consumers, eligible schools and libraries, and rural health care
providers. In this section, we address the universal service
contribution obligations of providers of wireline broadband Internet
access service. Section 254(d) of the Act states that ``[e]very
telecommunications carrier that provides interstate telecommunications
services shall contribute'' to universal service. In the Universal
Service Order (62 FR 32862, June 17, 1997), the Commission interpreted
the first sentence of section 254(d) as imposing a mandatory
contribution requirement on all telecommunications carriers that
provide interstate telecommunications services. We note that the
Commission also has permissive authority under section 254(d) to
require any provider of interstate telecommunications to contribute to
the preservation and advancement of universal service if the public
interest so requires. In the Wireline Broadband Notice, the Commission
recognized that, under its existing rules and policies,
telecommunications carriers providing telecommunications services,
including broadband transmission services, are subject to universal
service contribution requirements.
39. Congress required in section 254 of the Act that ``[t]here
should be specific, predictable, and sufficient Federal and State
mechanisms to preserve and advance universal service.'' Accordingly, we
conclude that facilities-based providers of wireline broadband Internet
access services must continue to contribute to existing universal
service support mechanisms based on the current level of reported
revenue for the transmission component of their wireline broadband
Internet access services for a 270-day period after the effective date
of this Order or until we adopt new contribution rules in the Universal
Service Contribution Methodology proceeding (67 FR 79543, Dec. 30,
2002), whichever occurs earlier. That is, wireline broadband Internet
access providers must maintain their current universal service
contribution levels attributable to the provision of wireline broadband
Internet access service for this 270-day period. We take this action,
as a matter of policy, to preserve existing levels of universal service
funding, and prevent a precipitous drop in fund levels while we
consider reform of the system of universal service in the Universal
Service Contribution Methodology proceeding. We are committed to
ensuring that there continue to be specific, predictable, and
sufficient Federal and State mechanisms to preserve and advance
universal service. If we are unable to complete new contribution rules
within the 270-day period of time, the Commission will take whatever
action is necessary to preserve existing funding levels, including
extending the 270-day period discussed above or expanding the
contribution base. We have ample authority to take interim actions to
preserve the status quo.
40. Law Enforcement, National Security, and Emergency Preparedness:
CALEA. The Communications Assistance for Law Enforcement Act (CALEA)
requires telecommunications carriers to ensure that ``equipment,
facilities or services that provide a customer or subscriber with the
ability to originate, terminate, or direct [communications]'' are
capable of providing authorized surveillance to law enforcement
agencies. In a separate order also released on September 23, 2005,
Communications Assistance for Law Enforcement Act and Broadband Access
and Services, ET Docket No. 04-295, First Report and Order and Further
Notice of proposed Rulemaking, FCC 05-153 (released September 23,
2005), we conclude that providers of facilities-based broadband
Internet access service, regardless of platform, are subject to CALEA.
We therefore do not address CALEA issues in this Order.
41. USA PATRIOT Act. We find that our actions in this Order will
not affect the government's implementation or enforcement of the
Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT
Act). This Act amended the Federal criminal code to authorize the
interception of wire and electronic communications for the production
of evidence of terrorism offenses and computer fraud, and modified only
one section of the Communications Act, section 631 of Title VI. We
conclude that the scope of activities covered under the definitions of
wire communications and electronic communications is broad enough to
encompass wireline broadband Internet access service regardless of the
legal classification of this service, or its transmission component,
under the Communications Act. Only one party submitted comments on the
subject, agreeing that the legal classification of wireline broadband
Internet access service as an information service will have no impact
on the applicability of the USA PATRIOT Act.
42. Emergency Preparedness and Response. We find that our
classification of wireline broadband Internet access service as an
information service, and the transmission input as telecommunications
(except to the extent that the provider chooses to offer that
transmission on a common carrier basis), will not affect the
Commission's existing rules implementing the National Security
Emergency Preparedness (NSEP) Telecommunications Service Priority (TSP)
System. But, we will nonetheless exercise our Title I authority, as
necessary, to give full effect to the principles and purpose of the
NSEP TSP System. The NSEP TSP System is set forth in appendix A to part
64 of the rules and provides that the Commission has ``authority over
the assignment and
[[Page 60230]]
approval of priorities for provisioning and restoration of common
carrier-provided telecommunications services.'' The facilities-based
wireline broadband Internet access service providers that are the
subject of our Order today are telecommunications carriers with respect
to other services that they provide. Therefore, we find that these
providers remain subject to the NSEP TSP.
43. The Secretary of Defense (Secretary), the only party to submit
comments on this issue, expressed concern that the existing National
Communications System programs will no longer apply to wireline
broadband Internet access service if it is classified as an information
service unless the Commission exercises its ancillary jurisdiction. As
the Secretary recognizes, NSEP communications are currently provided by
carriers subject to Title II. Information service providers, therefore,
have not been subject to these rules unless those providers are also
offering services as telecommunications carriers. Since the actions we
take in this Order affect only wireline carriers that provide the
transmission component of wireline broadband Internet access service,
we have no reason to expect that those actions will adversely affect
emergency preparedness efforts. These service providers, for the most
part, provide their wireline broadband Internet access services over
the same facilities used to provide other telecommunications services
and thus these facilities remain subject to part 64 to the same extent
as they have before. Moreover, we do agree with the Secretary's
conclusion that, should the need arise, we do have the authority to
regulate NSEP under Title I. We will closely monitor the development of
wireline broadband Internet access service and its effect on the NSEP
TSP System and, if needed, will expeditiously take all appropriate
actions to promote the viability of that system.
44. Moreover, we state that our decision to classify wireline
broadband Internet access service as an information service, and the
transmission input as telecommunications (except when offered on a
common carrier basis), has no effect whatsoever on our recently adopted
E911 rules for interconnected VoIP providers (VOIP E911 Order, 70 FR
37273, June 29, 2005). In that Order, we required providers of
interconnected VoIP to offer E911 service to their subscribers.
Although interconnected VoIP is necessarily provided via broadband,
nothing in the VoIP E911 Order in any way turns on the statutory
classification of that broadband connection. Thus, we reaffirm that,
after today's Order, interconnected VoIP providers must comply with the
VoIP E911 Order regardless of how or by whom the underlying broadband
connection is provided.
45. Network Reliability and Interoperability. We reject arguments
that classifying wireline broadband Internet access service as an
``information service'' and its transmission component as
``telecommunications'' (except to the extent that the provider chooses
to offer that transmission on a common carrier basis) requires that we
obtain additional authorization from the Network Reliability and
Interoperability Council (NRIC) at this time. NRIC, initially
established by the Commission in 1992 as the Network Reliability
Council, advises the Commission on recommendations to ensure optimal
reliability and interoperability of the nation's communications
networks. Section 256 of the Act codifies the Commission's ability and
obligation to oversee network planning and set standards to enable the
Commission to carry out the objectives of this section as well as the
Commission's prior practices in the area of network reliability and
interoperability through the NRIC. NRIC VI, the latest chartered
council, significantly expanded its membership to include the Internet
service industry and included among its scope of activities numerous
issues relating to the Internet and broadband deployment.
46. Contrary to what some commenters suggest, we do not agree that
classifying wireline broadband Internet access service as an
information service would deny us the ability to oversee broadband
interconnectivity. Rather, we agree with the view that our actions in
this proceeding will not constrain our ability to address network
reliability and interoperability issues. A purpose of section 256 is
``to ensure the ability of users and information providers to
seamlessly and transparently transmit and receive information between
and across telecommunications networks.'' This provision affords the
Commission adequate authority to continue overseeing broadband
interconnectivity and reliability issues, regardless of the legal
classification of wireline broadband Internet access service. Moreover,
NRIC's current charter directs it to make recommendations to increase
the deployment and improve the security, reliability, and
interoperability of ``high-speed residential Internet access service,''
and we find that its activities in this regard are consistent with
section 256.
47. Access by Persons with Disabilities. Section 255(c) of the Act
requires that ``a provider of telecommunications service shall ensure
that the service is accessible to and usable by individuals with
disabilities, if readily achievable.'' Like the other Title II
obligations discussed above, section 255 expressly applies to
telecommunications services, not information services. Although the
requirements contained in section 255 do not apply to information
services, in the past the Commission has exercised its ancillary
jurisdiction under Title I to extend accessibility obligations that
mirror those under section 255 to two critically important information
services, voicemail and interactive menu service. This Order does not
affect voicemail or interactive menu service providers' obligations or
other telecommunications service providers' obligations under section
255(c). We will continue to exercise our Title I authority, as
necessary, to give full effect to the accessibility policy embodied in
section 255.
48. In addition, section 225(b) directs the Commission to ensure
``telecommunications relay services'' (TRS), a set of services that
includes both video relay service (VRS) and IP relay, are available to
individuals with hearing or speech impairments. The Commission has
previously determined that the statutory definition of TRS includes
both information services and telecommunications services (65 FR 38432,
June 21, 2000). Nothing in this Order disturbs that earlier conclusion;
consequently, this Order will not affect TRS requirements or the
ability of TRS users to access VRS or IP relay.
49. In addition, the Commission will remain vigilant in monitoring
the development of wireline broadband Internet access service and its
effects on the important policy goals of section 255. As noted above,
we will exercise our ancillary jurisdiction to ensure achievement of
important policy goals of section 255 and also section 225 of the Act.
50. Consistent with our decision today to require facilities-based
wireline broadband Internet access service providers to continue to
contribute to universal service support mechanisms for an additional
270-day period, as a matter of policy, we also require such providers
to report the revenue on the Commission's FCC Form 499-A associated
with the transmission component of their wireline broadband Internet
access service as of the effective date of this Order for an additional
270-
[[Page 60231]]
day period for purposes of contributing to the TRS fund for that same
270-day period.
51. NANPA Funding. Pursuant to this same interim authority, we
require facilities-based wireline broadband Internet access service
providers to continue to contribute to the cost of numbering
administration through the NANPA funding mechanism established by the
Commission pursuant to section 251(e) of the Act for the same 270-day
period. We take this action to ensure that the funding for this
critical function does not immediately decrease while the Commission
examines what, if any funding related obligations should apply to
facilities-based broadband Internet access service providers. Section
251(e)(2) r