Federal Register | Protecting and Promoting the Open Internet
Sun, 12 Apr 2015 14:58
DATES:FOR FURTHER INFORMATION CONTACT:SUPPLEMENTARY INFORMATION:SynopsisI. IntroductionII. Executive SummaryA. Strong Rules That Protect Consumers From Past and Future Tactics That Threaten the Open Internet1. Clear, Bright-Line Rules2. No Unreasonable Interference or Unreasonable Disadvantage to Consumers or Edge Providers3. Enhanced Transparency4. Scope of the Rules5. EnforcementB. Promoting Investment With a Modern Title IIC. Sustainable Open Internet RulesD. Broad ForbearanceIII. Report and Order on Remand: Protecting and Promoting the Open InternetA. History of Openness RegulationB. The Continuing Need for Open Internet Protections1. An Open Internet Promotes Innovation, Competition, Free Expression, and Infrastructure Deployment2. Broadband Providers Have the Incentive and Ability To Limit Opennessa. Economic Incentives and Abilityb. Technical Ability3. Mobile Broadband Services4. The Commission Must Act To Preserve Internet OpennessC. Strong Rules That Protect Consumers From Practices That Can Threaten the Open Internet1. Clear, Bright Line Rulesa. Preventing Blocking of Lawful Content, Applications, Services, and Non-Harmful Devicesb. Preventing Throttling of Lawful Content, Applications, Services, and Non-Harmful Devicesc. No Paid Prioritization2. No Unreasonable Interference or Unreasonable Disadvantage Standard for Internet Conducta. Factors To Guide Application of the Ruleb. Application to Mobilec. Rejection of the ''Commercially Reasonable'' Standardd. Sponsored Data and Usage Allowances3. Transparency Requirements To Protect and Promote Internet Opennessa. The Existing Transparency Ruleb. Enhancing the Transparency Rule(i) Enhancements to Content of Required Disclosures(ii) Enhancements to the Means of Disclosure(iii) Small Businesses(iv) Safe Harbor for Form of Disclosure to Consumersc. Enforcement and Relationship to the Existing Transparency Ruled. Role of Further Advisory GuidanceD. Scope of the Rules1. Broadband Internet Access Service2. Internet Traffic Exchange3. Non-BIAS Data Services4. Reasonable Network ManagementE. Enforcement of the Open Internet Rules1. Background2. Designing an Effective Enforcement Processa. Legal Certainty(i) Advisory Opinions(ii) Enforcement Advisoriesb. Flexibility(i) Means of Enforcement and General Enforcement Mechanisms(ii) Case-by-Case Analysis(iii) Fact-Finding Processesc. Effective Access To Dispute Resolution3. Complaint Processes and Forms of Dispute Resolutiona. Complaint Filing Proceduresb. Alternative Dispute Resolutionc. Multistakeholder Processes and Technical Advisory GroupsF. Legal Authority1. Section 706 Provides Affirmative Legal Authority for Our Open Internet Rules2. Authority for the Open Internet Rules Under Title II with Forbearance3. Title III Provides Additional Authority for Mobile Broadband Services4. Applying These Legal Authorities to Our Open Internet RulesG. Other Laws and Considerations1. Emergency Communications and Safety and Security Authorities2. Transfers of Unlawful Content and Unlawful Transfers of ContentIV. Declaratory Ruling: Classification of Broadband Internet Access ServicesA. History of Broadband Internet ClassificationB. Rationale for Revisiting the Commission's Classification of Broadband Internet Access ServicesC. Classification of Broadband Internet Access Service1. Scope2. The Market Today: Current Offerings of Broadband Internet Access Servicea. Broadband Internet Access Services at Time of Classificationb. The Growth of Consumer Demand and Market Supplyc. Marketing3. Broadband Internet Access Service Is a Telecommunications Servicea. Broadband Internet Access Service Involves Telecommunicationsb. Broadband Internet Access Service Is a ''Telecommunications Service''c. Broadband Internet Access Service Is Not an ''Information Service''d. Opponents' Remaining Challenges Are Insubstantial4. Mobile Broadband Internet Access Service Is Commercial Mobile Service5. The Reclassification of Broadband Internet Access Service Will Preserve Investment IncentivesD. Judicial Estoppel Does Not Apply HereE. State and Local Regulation of Broadband ServicesV. Order: Forbearance for Broadband Internet Access ServicesA. Forbearance FrameworkB. Maintaining the Customer Safeguards Critical to Protecting and Preserving the Open Internet1. Authority To Protect Consumers and Promote Competition: Sections 201 and 2022. EnforcementC. Forbearance Analysis Specific to Broadband Internet Access Service1. Provisions That Protect Customer Privacy, Advance Access for Persons With Disabilities, and Foster Network Deploymenta. Customer Privacy (Section 222)b. Disability Access Provisions (Sections 225, 255, 251(a)(2))c. Access to Poles, Ducts, Conduit and Rights-of-Way (section 224)d. Universal Service Provisions (sections 254, 214(e))2. Broad Forbearance From 27 Title II Provisions for Broadband Internet Access Servicea. Tariffing (Sections 203, 204)b. Enforcement-Related Provisions (Sections 205, 212)c. Information Collection and Reporting Provisions (Sections 211, 213, 215, 218 Through 220)d. Discontinuance, Transfer of Control, and Network Reliability Approval (Section 214)e. Interconnection and Market-Opening Provisions (Sections 251, 252, 256)f. Subscriber Changes (Section 258)g. Other Title II Provisionsh. Truth-in-Billing Rulesi. Roaming-Related Provisions and Regulationsj. Terminal Equipment Rules3. Other Provisions and RegulationsD. Potential Objections to Our General Approach to Forbearance for Broadband Internet Access ServiceVI. Constitutional ConsiderationsA. First Amendment1. Free Speech Rights2. Compelled DisclosureB. Fifth Amendment Takings1. Per Se Takings2. Regulatory TakingsVII. SeverabilityVIII. Procedural MattersA. Regulatory Flexibility AnalysisB. Paperwork Reduction Act of 1995 AnalysisC. Congressional Review ActD. Data Quality ActE. Accessible FormatsIX. Ordering ClausesX. Final Regulatory Flexibility AnalysisA. Need for, and Objectives of, the Proposed RulesB. Summary of Significant Issues Raised by Public Comments in Response to the IRFAC. Description and Estimate of the Number of Small Entities To Which the Rules Would Apply1. Total Small Entities2. Broadband Internet Access Service Providers3. Wireline Providers4. Wireless Providers'--Fixed and Mobile5. Satellite Service Providers6. Cable Service Providers7. Electric Power Generators, Transmitters, and DistributorsD. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small EntitiesE. Steps Taken To Minimize the Significant Economic Impact on Small Entities, and Significant Alternatives ConsideredF. Report to CongressList of Subjects in 47 CFR Parts 1, 8, and 20Final RulesPART 1'--PRACTICE AND PROCEDUREPART 8'--PROTECTING AND PROMOTING THE OPEN INTERNETPART 20'--COMMERCIAL MOBILE SERVICESThis rule is effective June 12, 2015.
The modified information collection requirements in paragraphs 164, 166, 167, 169, 173, 174, 179, 180, and 181 of this document are not applicable until approved by the Office of Management and Budget (OMB). The Federal Communications Commission will publish a separate document in the Federal Register announcing such approval and the relevant effective date(s).
Kristine Fargotstein, Competition Policy Division, Wireline Competition Bureau, at (202) 418-2774 or by email at Kristine.Fargotstein@fcc.gov.
This is a summary of the Commission's Report and Order on Remand, Declaratory Ruling, and Order (''Open Internet Order'' or ''Order'') in GN Docket No. 14-28, adopted on February 26, 2015 and released on March 12, 2015. The full text of this document can be viewed at the following Internet address: https://apps.fcc.gov/edocs_public/attachmatch/FCC-15-24A1.docx. The full text of this document is also available for public inspection during regular business hours in the FCC Reference Center, 445 12th Street SW., Room CY-A257, Washington, DC 20554. To request materials in accessible formats for people with disabilities (e.g. braille, large print, electronic files, audio format, etc.) or to request reasonable accommodations (e.g. accessible format documents, sign language interpreters, CART, etc.), send an email to firstname.lastname@example.org or call the Consumer & Governmental Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY).
In the Report and Order on Remand, Declaratory Ruling, and Order, we establish rules to protect and promote the open Internet, reclassify broadband Internet access service as a telecommunications service subject to Title II of the Communications Act, and forbear from the majority of Title II provisions.
1. The open Internet drives the American economy and serves, every day, as a critical tool for America's citizens to conduct commerce, communicate, educate, entertain, and engage in the world around them. The benefits of an open Internet are undisputed. But it must remain open: Open for commerce, innovation, and speech; open for consumers and for the innovation created by applications developers and content companies; and open for expansion and investment by America's broadband providers. For over a decade, the Commission has been committed to protecting and promoting an open Internet.
2. Four years ago, the Commission adopted open Internet rules to protect and promote the ''virtuous cycle'' that drives innovation and investment on the Internet'--both at the ''edges'' of the network, as well as in the network itself. In the years that those rules were in place, significant investment and groundbreaking innovation continued to define the broadband marketplace. For example, according to US Telecom, broadband providers invested $212 billion in the three years following adoption of the rules'--from 2011 to 2013'--more than in any three year period since 2002.
3. Likewise, innovation at the edge moves forward unabated. For example, 2010 was the first year that the majority of Netflix customers received their video content via online streaming rather than via DVDs in red envelopes. Today, Netflix sends the most peak downstream traffic in North America of any company. Other innovative service providers have experienced extraordinary growth'--Etsy reports that it has grown from $314 million in merchandise sales in 2010 to $1.35 billion in merchandise sales in 2013. And, just as importantly, new kinds of innovative businesses are busy being born. In the video space alone, in just the last sixth months, CBS and HBO have announced new plans for streaming their content free of cable subscriptions; DISH has launched a new package of channels that includes ESPN, and Sony is not far behind; and Discovery Communications founder John Hendricks has announced a new over-the-top service providing bandwidth-intensive programming. This year, Amazon took home two Golden Globes for its new series ''Transparent.''
4. The lesson of this period, and the overwhelming consensus on the record, is that carefully-tailored rules to protect Internet openness will allow investment and innovation to continue to flourish. Consistent with that experience and the record built in this proceeding, today we adopt carefully-tailored rules that would prevent specific practices we know are harmful to Internet openness'--blocking, throttling, and paid prioritization'--as well as a strong standard of conduct designed to prevent the deployment of new practices that would harm Internet openness. We also enhance our transparency rule to ensure that consumers are fully informed as to whether the services they purchase are delivering what they expect.
5. Carefully-tailored rules need a strong legal foundation to survive and thrive. Today, we provide that foundation by grounding our open Internet rules in multiple sources of legal authority'--including both section 706 of the Telecommunications Act and Title II of the Communications Act. Moreover, we concurrently exercise the Commission's forbearance authority to forbear from application of 27 provisions of Title II of the Communications Act, and over 700 Commission rules and regulations. This is a Title II tailored for the 21st century, and consistent with the ''light-touch'' regulatory framework that has facilitated the tremendous investment and innovation on the Internet. We expressly eschew the future use of prescriptive, industry-wide rate regulation. Under this approach, consumers can continue to enjoy unfettered access to the Internet over their fixed and mobile broadband connections, innovators can continue to enjoy the benefits of a platform that affords them unprecedented access to hundreds of millions of consumers across the country and around the world, and network operators can continue to reap the benefits of their investments.
6. Informed by the views of nearly 4 million commenters, our staff-led roundtables, numerous ex parte presentations, meetings with individual Commissioners and staff, and more, our decision today'--once and for all'--puts into place strong, sustainable rules, grounded in multiple sources of our legal authority, to ensure that Americans reap the economic, social, and civic benefits of an open Internet today and into the future.
7. The benefits of rules and policies protecting an open Internet date back over a decade and must continue. Just over a year ago, the D.C. Circuit in Verizon v. FCC struck down the Commission's 2010 conduct rules against blocking and unreasonable discrimination. But the Verizon court upheld the Commission's finding that Internet openness drives a ''virtuous cycle'' in which innovations at the edges of the network enhance consumer demand, leading to expanded investments in broadband infrastructure that, in turn, spark new innovations at the edge. The Verizon court further affirmed the Commission's conclusion that ''broadband providers represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.''
8. Threats to Internet openness remain today. The record reflects that broadband providers hold all the tools necessary to deceive consumers, degrade content, or disfavor the content that they don't like. The 2010 rules helped to deter such conduct while they were in effect. But, as Verizon frankly told the court at oral argument, but for the 2010 rules, it would be exploring agreements to charge certain content providers for priority service. Indeed, the wireless industry had a well-established record of trying to keep applications within a carrier-controlled ''walled garden'' in the early days of mobile applications. That specific practice ended when Internet Protocol (IP) created the opportunity to leap the wall. But the Commission has continued to hear concerns about other broadband provider practices involving blocking or degrading third-party applications.
9. Emerging Internet trends since 2010 give us more, not less, cause for concern about such threats. First, mobile broadband networks have massively expanded since 2010. They are faster, more broadly deployed, more widely used, and more technologically advanced. At the end of 2010, there were about 70,000 devices in the U.S. that had LTE wireless connections. Today, there are more than 127 million. We welcome this tremendous investment and innovation in the mobile marketplace. With carefully-tailored rules in place, that investment can continue to flourish and consumers can continue to enjoy unfettered access to the Internet over their mobile broadband connections. Indeed, mobile broadband is becoming an increasingly important pathway to the Internet independent of any fixed broadband connections consumers may have, given that mobile broadband is not a full substitute for fixed broadband connections. And consumers must be protected, for example from mobile commercial practices masquerading as ''reasonable network management.'' Second, and critically, the growth of online streaming video services has spurred further evolution of the Internet. Currently, video is the dominant form of traffic on the Internet. These video services directly confront the video businesses of the very companies that supply them broadband access to their customers.
10. The Commission, in its May Notice of Proposed Rulemaking, asked a fundamental question: ''What is the right public policy to ensure that the Internet remains open?'' It proposed to enhance the transparency rule, and follow the Verizon court's blueprint by relying on section 706 to adopt a no-blocking rule and a requirement that broadband providers engage in ''commercially reasonable'' practices. The Commission also asked about whether it should adopt other bright-line rules or different standards using other sources of Commission authority, including Title II. And if Title II were to apply, the Commission asked about how it should exercise its authority to forbear from Title II obligations. It asked whether mobile services should also be classified under Title II.
11. Three overarching objectives have guided us in answering these questions, based on the vast record before the Commission: America needs more broadband, better broadband, and open broadband networks. These goals are mutually reinforcing, not mutually exclusive. Without an open Internet, there would be less broadband investment and deployment. And, as discussed further below, all three are furthered through the open Internet rules and balanced regulatory framework we adopt today. (Consistent with the Verizon court's analysis, this Order need not conclude that any specific market power exists in the hands of one or more broadband providers in order to create and enforce these rules. Thus, these rules do not address, and are not designed to deal with, the acquisition or maintenance of market power or its abuse, real or potential. Moreover, it is worth noting that the Commission acts in a manner that is both complementary to the work of the antitrust agencies and supported by their application of antitrust laws. See generally47 U.S.C. 152(b) (''[N]othing in this Act . . . shall be construed to modify, impair, or supersede the applicability of any of the antitrust laws.''). Nothing in this Order in any way precludes the Antitrust Division of the Department of Justice or the Commission itself from fulfilling their respective responsibilities under section 7 of the Clayton Act (15 U.S.C. 18), or the Commission's public interest standard as it assesses prospective transactions.)
12. In enacting the Administrative Procedure Act (APA), Congress instructed expert agencies conducting rulemaking proceedings to ''give interested persons an opportunity to participate in the rule making through submission of written data, views, or arguments.'' It is public comment that cements an agency's expertise. As was explained in the seminal report that led to the enactment of the APA:
13. Congress could not have imagined when it enacted the APA almost seventy years ago that the day would come when nearly 4 million Americans would exercise their right to comment on a proposed rulemaking. But that is what has happened in this proceeding and it is a good thing. The Commission has listened and it has learned. Its expertise has been strengthened. Public input has ''improve[d] the quality of agency rulemaking by ensuring that agency regulations will be `tested by exposure to diverse public comment.' '' There is general consensus in the record on the need for the Commission to provide certainty with clear, enforceable rules. There is also general consensus on the need to have such rules. Today the Commission, informed by all of those views, makes a decision grounded in the record. The Commission has considered the arguments, data, and input provided by the commenters, even if not in agreement with the particulars of this Order; that public input has created a robust record, enabling the Commission to adopt new rules that are clear and sustainable.
A. Strong Rules That Protect Consumers From Past and Future Tactics That Threaten the Open Internet1. Clear, Bright-Line Rules14. Because the record overwhelmingly supports adopting rules and demonstrates that three specific practices invariably harm the open Internet'--Blocking, Throttling, and Paid Prioritization'--this Order bans each of them, applying the same rules to both fixed and mobile broadband Internet access service.
15. No Blocking. Consumers who subscribe to a retail broadband Internet access service must get what they have paid for'--access to all (lawful) destinations on the Internet. This essential and well-accepted principle has long been a tenet of Commission policy, stretching back to its landmark decision in Carterfone, which protected a customer's right to connect a telephone to the monopoly telephone network. Thus, this Order adopts a straightforward ban:
16. No Throttling. The 2010 open Internet rule against blocking contained an ancillary prohibition against the degradation of lawful content, applications, services, and devices, on the ground that such degradation would be tantamount to blocking. This Order creates a separate rule to guard against degradation targeted at specific uses of a customer's broadband connection:
17. The ban on throttling is necessary both to fulfill the reasonable expectations of a customer who signs up for a broadband service that promises access to all of the lawful Internet, and to avoid gamesmanship designed to avoid the no-blocking rule by, for example, rendering an application effectively, but not technically, unusable. It prohibits the degrading of Internet traffic based on source, destination, or content. (To be clear, the protections of the no-blocking and no-throttling rules apply to particular classes of applications, content and services as well as particular applications, content, and services.) It also specifically prohibits conduct that singles out content competing with a broadband provider's business model.
18. No Paid Prioritization. Paid prioritization occurs when a broadband provider accepts payment (monetary or otherwise) to manage its network in a way that benefits particular content, applications, services, or devices. To protect against ''fast lanes,'' this Order adopts a rule that establishes that:
19. The record demonstrates the need for strong action. The Verizon court itself noted that broadband networks have ''powerful incentives to accept fees from edge providers, either in return for excluding their competitors or for granting them prioritized access to end users.'' Mozilla, among many such commenters, explained that ''[p]rioritization . . . inherently creates fast and slow lanes.'' Although there are arguments that some forms of paid prioritization could be beneficial, the practical difficulty is this: The threat of harm is overwhelming, case-by-case enforcement can be cumbersome for individual consumers or edge providers, and there is no practical means to measure the extent to which edge innovation and investment would be chilled. And, given the dangers, there is no room for a blanket exception for instances where consumer permission is buried in a service plan'--the threats of consumer deception and confusion are simply too great.
2. No Unreasonable Interference or Unreasonable Disadvantage to Consumers or Edge Providers20. The key insight of the virtuous cycle is that broadband providers have both the incentive and the ability to act as gatekeepers standing between edge providers and consumers. As gatekeepers, they can block access altogether; they can target competitors, including competitors to their own video services; and they can extract unfair tolls. Such conduct would, as the Commission concluded in 2010, ''reduce the rate of innovation at the edge and, in turn, the likely rate of improvements to network infrastructure.'' In other words, when a broadband provider acts as a gatekeeper, it actually chokes consumer demand for the very broadband product it can supply.
21. The bright-line bans on blocking, throttling, and paid prioritization will go a long way to preserve the virtuous cycle. But not all the way. Gatekeeper power can be exercised through a variety of technical and economic means, and without a catch-all standard, it would be that, as Benjamin Franklin said, ''a little neglect may breed great mischief.'' Thus, the Order adopts the following standard:
22. This ''no unreasonable interference/disadvantage'' standard protects free expression, thus fulfilling the congressional policy that ''the Internet offer[s] a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity.'' And the standard will permit considerations of asserted benefits of innovation as well as threatened harm to end users and edge providers.
3. Enhanced Transparency23. The Commission's 2010 transparency rule, upheld by the Verizon court, remains in full effect:
24. Today's Order reaffirms the importance of ensuring transparency, so that consumers are fully informed about the Internet access they are purchasing and so that edge providers have the information they need to understand whether their services will work as advertised. To do that, the Order builds on the strong foundation established in 2010 and enhances the transparency rule for both end users and edge providers, including by adopting a requirement that broadband providers always must disclose promotional rates, all fees and/or surcharges, and all data caps or data allowances; adding packet loss as a measure of network performance that must be disclosed; and requiring specific notification to consumers that a ''network practice'' is likely to significantly affect their use of the service. Out of an abundance of caution and in response to a request by the American Cable Association, we also adopt a temporary exemption from these enhancements for small providers (defined for the purposes of the temporary exception as providers with 100,000 or fewer subscribers), and we direct our Consumer & Governmental Affairs Bureau to adopt an Order by December 15, 2015 concerning whether to make the exception permanent and, if so, the appropriate definition of ''small.'' Lastly, we create for all providers a ''safe harbor'' process for the format and nature of the required disclosure to consumers, which we believe will result in more effective presentation of consumer-focused information by broadband providers.
4. Scope of the Rules25. The open Internet rules described above apply to both fixed and mobile broadband Internet access service. Consistent with the 2010 Order, today's Order applies its rules to the consumer-facing service that broadband networks provide, which is known as ''broadband Internet access service'' (BIAS) (We note that our use of the term ''broadband'' in this Order includes but is not limited to services meeting the threshold for ''advanced telecommunications capability,'' as defined in section 706 of the Telecommunications Act of 1996, as amended. 47 U.S.C. 1302(b). Section 706 defines that term as ''high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology.'' 47 U.S.C. 1302(d)(1). The 2015 Broadband Progress Report specifically notes that ''advanced telecommunications capability,'' while sometimes referred to as ''broadband,'' differs from the Commission's use of the term ''broadband'' in other contexts. 2015 Broadband Progress Report at n.1 (rel. Feb. 4, 2015)) and is defined to be:
26. As in 2010, BIAS does not include enterprise services, virtual private network services, hosting, or data storage services. Further, we decline to apply the open Internet rules to premises operators to the extent they may be offering broadband Internet access service as we define it today.
27. In defining this service we make clear that we are responding to the Verizon court's conclusion that broadband providers ''furnish a service to edge providers'' (and that this service was being treated as common carriage per se). As discussed further below, we make clear that broadband Internet access service encompasses this service to edge providers. Broadband providers sell retail customers the ability to go anywhere (lawful) on the Internet. Their representation that they will transport and deliver traffic to and from all or substantially all Internet endpoints includes the promise to transmit traffic to and from those Internet endpoints back to the user.
28. Interconnection. BIAS involves the exchange of traffic between a broadband Internet access provider and connecting networks. The representation to retail customers that they will be able to reach ''all or substantially all Internet endpoints'' necessarily includes the promise to make the interconnection arrangements necessary to allow that access.
29. As discussed below, we find that broadband Internet access service is a ''telecommunications service'' and subject to sections 201, 202, and 208 (along with key enforcement provisions). As a result, commercial arrangements for the exchange of traffic with a broadband Internet access provider are within the scope of Title II, and the Commission will be available to hear disputes raised under sections 201 and 202 on a case-by-case basis: An appropriate vehicle for enforcement where disputes are primarily over commercial terms and that involve some very large corporations, including companies like transit providers and Content Delivery Networks (CDNs), that act on behalf of smaller edge providers.
30. But this Order does not apply the open Internet rules to interconnection. Three factors are critical in informing this approach to interconnection. First, the nature of Internet traffic, driven by massive consumption of video, has challenged traditional arrangements'--placing more emphasis on the use of CDNs or even direct connections between content providers (like Netflix or Google) and last-mile broadband providers. Second, it is clear that consumers have been subject to degradation resulting from commercial disagreements, perhaps most notably in a series of disputes between Netflix and large last-mile broadband providers. But, third, the causes of past disruption and'--just as importantly'--the potential for future degradation through interconnection disputes'--are reflected in very different narratives in the record.
31. While we have more than a decade's worth of experience with last-mile practices, we lack a similar depth of background in the Internet traffic exchange context. Thus, we find that the best approach is to watch, learn, and act as required, but not intervene now, especially not with prescriptive rules. This Order'--for the first time'--provides authority to consider claims involving interconnection, a process that is sure to bring greater understanding to the Commission.
32. Reasonable Network Management. As with the 2010 rules, this Order contains an exception for reasonable network management, which applies to all but the paid prioritization rule (which, by definition, is not a means of managing a network):
33. Recently, significant concern has arisen when mobile providers' have attempted to justify certain practices as reasonable network management practices, such as applying speed reductions to customers using ''unlimited data plans'' in ways that effectively force them to switch to price plans with less generous data allowances. For example, in the summer of 2014, Verizon announced a change to its ''unlimited'' data plan for LTE customers, which would have limited the speeds of LTE customers using grandfathered ''unlimited'' plans once they reached a certain level of usage each month. Verizon briefly described this change as within the scope of ''reasonable network management,'' before changing course and withdrawing the change.
34. With mobile broadband service now subject to the same rules as fixed broadband service, the Order expressly recognizes that evaluation of network management practices will take into account the additional challenges involved in the management of mobile networks, including the dynamic conditions under which they operate. It also recognizes the specific network management needs of other technologies, such as unlicensed Wi-Fi networks.
35. Non-Broadband Internet Access Service Data Services. The 2010 rules included an exception for ''specialized services.'' This Order likewise recognizes that some data services'--like facilities-based VoIP offerings, heart monitors, or energy consumption sensors'--may be offered by a broadband provider but do not provide access to the Internet generally. The term ''specialized services'' can be confusing because the critical point is not whether the services are ''specialized;'' it is that they are not broadband Internet access service. IP-services that do not travel over broadband Internet access service, like the facilities-based VoIP services used by many cable customers, are not within the scope of the open Internet rules, which protect access or use of broadband Internet access service. Nonetheless, these other non-broadband Internet access service data services could be provided in a manner that undermines the purpose of the open Internet rules and that will not be permitted. The Commission expressly reserves the authority to take action if a service is, in fact, providing the functional equivalent of broadband Internet access service or is being used to evade the open Internet rules. The Commission will vigilantly watch for such abuse, and its actions will be aided by the existing transparency requirement that non-broadband Internet access service data services be disclosed.
5. Enforcement36. The Commission may enforce the open Internet rules through investigation and the processing of complaints (both formal and informal). In addition, the Commission may provide guidance through the use of enforcement advisories and advisory opinions, and it will appoint an ombudsperson. In order to provide the Commission with additional understanding, particularly of technical issues, the Order delegates to the Enforcement Bureau the authority to request a written opinion from an outside technical organization or otherwise to obtain objective advice from industry standard-setting bodies or similar organizations.
B. Promoting Investment With a Modern Title II37. Today, our forbearance approach results in over 700 codified rules being inapplicable, a ''light-touch'' approach for the use of Title II. This includes no unbundling of last-mile facilities, no tariffing, no rate regulation, and no cost accounting rules, which results in a carefully tailored application of only those Title II provisions found to directly further the public interest in an open Internet and more, better, and open broadband. Nor will our actions result in the imposition of any new federal taxes or fees; the ability of states to impose fees on broadband is already limited by the congressional Internet tax moratorium.
38. This is Title II tailored for the 21st Century. Unlike the application of Title II to incumbent wireline companies in the 20th Century, a swath of utility-style provisions (including tariffing) will not be applied. Indeed, there will be fewer sections of Title II applied than have been applied to Commercial Mobile Radio Service (CMRS), where Congress expressly required the application of sections 201, 202, and 208, and permitted the Commission to forbear from others. In fact, Title II has never been applied in such a focused way.
39. History demonstrates that this careful approach to the use of Title II will not impede investment. First, mobile voice services have been regulated under a similar light-touch Title II approach since 1994'--and investment and usage boomed. For example, between 1993 and 2009 (while voice was the primary driver of mobile revenues), the mobile industry invested more than $271 billion in building out networks, during a time in which industry revenues increased by 1300 percent and subscribership grew over 1600 percent. Moreover, more recently, Verizon Wireless has invested tens of billions of dollars in deploying mobile wireless services since being subject to the 700 MHz C Block open access rules, which overlap in significant parts with the open Internet rules we adopt today. But that is not all. Today, key provisions of Title II apply to certain enterprise broadband services that AT&T has described as ''the epicenter of the broadband investment'' the Commission seeks to promote. Title II has been maintained by more than 1000 rural local exchange carriers that have chosen to offer their DSL and fiber broadband services as common carrier offerings. And, of course, wireline DSL was regulated as a common-carrier service until 2005'--including a period in the late '90s and the first five years of this century that saw the highest levels of wireline broadband infrastructure investment to date.
40. In any event, recent events have demonstrated that our rules will not disrupt capital markets or investment. Following recent discussions of the potential application of Title II to consumer broadband, investment analysts have issued reports concluding that Title II with appropriate forbearance is unlikely to alter broadband provider conduct or have any negative effect on their value or future profitability. Executives from large broadband providers have also repeatedly represented to investors that the prospect of regulatory action will not influence their investment strategies or long-term profitability; indeed, Sprint has gone so far to say that it ''does not believe that a light touch application of Title II, including appropriate forbearance, would harm the continued investment in, and deployment of, mobile broadband services.'' Finally, the recent AWS auction, conducted under the prospect of Title II regulation, generated bids (net of bidding credits) of more than $41 billion'--further demonstrating that robust investment is not inconsistent with a light-touch Title II regime.
C. Sustainable Open Internet Rules41. We ground our open Internet rules in multiple sources of legal authority'--including both section 706 and Title II of the Communications Act. The Verizon court upheld the Commission's use of section 706 as a substantive source of legal authority to adopt open Internet protections. But it held that, ''[g]iven the Commission's still-binding decision to classify broadband providers . . . as providers of `information services,' '' open Internet protections that regulated broadband providers as common carriers would violate the Act. Rejecting the Commission's argument that broadband providers only served retail consumers, the Verizon court went on to explain that ''broadband providers furnish a service to edge providers, thus undoubtedly functioning as edge providers' 'carriers,' '' and held that the 2010 no blocking and no unreasonable discrimination rules impermissibly ''obligated [broadband providers] to act as common carriers.''
42. The Verizon decision thus made clear that section 706 affords the Commission substantive authority, and that open Internet protections are within the scope of that authority. And this Order relies on section 706 for the open Internet rules. But, in light of Verizon, absent a classification of broadband providers as providing a ''telecommunications service,'' the Commission could only rely on section 706 to put in place open Internet protections that steered clear of regulating broadband providers as common carriers per se. Thus, in order to bring a decade of debate to a certain conclusion, we conclude that the best path is to rely on all available sources of legal authority'--while applying them with a light touch consistent with further investment and broadband deployment. Taking the Verizon decision's implicit invitation, we revisit the Commission's classification of the retail broadband Internet access service as an information service and clarify that this service encompasses the so-called ''edge service.''
43. Exercising our delegated authority to interpret ambiguous terms in the Communications Act, as confirmed by the Supreme Court in Brand X, today's Order concludes that the facts in the market today are very different from the facts that supported the Commission's 2002 decision to treat cable broadband as an information service and its subsequent application to fixed and mobile broadband services. Those prior decisions were based largely on a factual record compiled over a decade ago, during an earlier time when, for example, many consumers would use homepages supplied by their broadband provider. In fact, the Brand X Court explicitly acknowledged that the Commission had previously classified the transmission service, which broadband providers offer, as a telecommunications service and that the Commission could return to that classification if it provided an adequate justification. Moreover, a number of parties who, in this proceeding, now oppose our reclassification of broadband Internet access service, previously argued that cable broadband should be deemed a telecommunications service. As the record reflects, times and usage patterns have changed and it is clear that broadband providers are offering both consumers and edge providers straightforward transmission capabilities that the Communications Act defines as a ''telecommunications service.''
44. The Brand X decision made famous the metaphor of pizza delivery. Justice Scalia, in dissent, concluded that the Commission had exceeded its legal authority by classifying cable-modem service as an ''information service.'' To make his point, Justice Scalia described a pizzeria offering delivery services as well as selling pizzas and concluded that, similarly'--broadband providers were offering ''telecommunications services'' even if that service was not offered on a ''stand-alone basis.''
45. To take Justice Scalia's metaphor a step further, suppose that in 2014, the pizzeria owners discovered that other nearby restaurants did not deliver their food and thus concluded that the pizza-delivery drivers could generate more revenue by delivering from any neighborhood restaurant (including their own pizza some of the time). Consumers would clearly understand that they are being offered a delivery service.
46. Today, broadband providers are offering stand-alone transmission capacity and that conclusion is not changed even if, as Justice Scalia recognized, other products may be offered at the same time. The trajectory of technology in the decade since the Brand X decision has been towards greater and greater modularity. For example, consumers have considerable power to combine their mobile broadband connections with the device, operating systems, applications, Internet services, and content of their choice. Today, broadband Internet access service is fundamentally understood by customers as a transmission platform through which consumers can access third-party content, applications, and services of their choosing.
47. Based on this updated record, this Order concludes that the retail broadband Internet access service available today is best viewed as separately identifiable offers of (1) a broadband Internet access service that is a telecommunications service (including assorted functions and capabilities used for the management and control of that telecommunication service) and (2) various ''add-on'' applications, content, and services that generally are information services. This finding more than reasonably interprets the ambiguous terms in the Communications Act, best reflects the factual record in this proceeding, and will most effectively permit the implementation of sound policy consistent with statutory objectives, including the adoption of effective open Internet protections.
48. This Order also revisits the Commission's prior classification of mobile broadband Internet access service as a private mobile service, which cannot be subject to common carrier regulation, and finds that it is best viewed as a commercial mobile service or, in the alternative, the functional equivalent of commercial mobile service. Under the statutory definition, commercial mobile services must be ''interconnected with the public switched network (as such terms are defined by regulation by the Commission).'' Consistent with that delegation of authority to define these terms, and with the Commission's previous recognition that the public switched network will grow and change over time, this Order updates the definition of public switched network to reflect current technology, by including services that use public IP addresses. Under this revised definition, the Order concludes that mobile broadband Internet access service is interconnected with the public switched network. In the alternative, the Order concludes that mobile broadband Internet access service is the functional equivalent of commercial mobile service because, like commercial mobile service, it is a widely available, for profit mobile service that offers mobile subscribers the capability to send and receive communications, including voice, on their mobile device.
49. By classifying broadband Internet access service under Title II of the Act, in our view the Commission addresses any limitations that past classification decisions placed on the ability to adopt strong open Internet rules, as interpreted by the D.C. Circuit in the Verizon case.
50. Having classified broadband Internet access service as a telecommunications service, we respond to the Verizon court's holding, supporting our open Internet rules under the Commission's Title II authority and removing any common carriage limitation on the exercise of our section 706 authority. For mobile broadband services, we also ground the open Internet rules in our Title III authority to protect the public interest through the management of spectrum licensing.
D. Broad Forbearance51. In finding that broadband Internet access service is subject to Title II, we simultaneously exercise the Commission's forbearance authority to forbear from 30 statutory provisions and render over 700 codified rules inapplicable, to establish a light-touch regulatory framework tailored to preserving those provisions that advance our goals of more, better, and open broadband. We thus forbear from the vast majority of rules adopted under Title II. We do not, however, forbear from sections 201, 202, and 208 (or from related enforcement provisions), (Specifically, we do not forbear from the enforcement authorities set forth in sections 206, 207, 208, 209, 216, and 217. To preserve existing CALEA obligations that already apply to broadband Internet access service, we also decline to forbear from section 229.) which are necessary to support adoption of our open Internet rules. We also grant extensive forbearance, minimizing the burdens on broadband providers while still adequately protecting the public.
52. In addition, we do not forbear from a limited number of sections necessary to ensure consumers are protected, promote competition, and advance universal access, all of which will foster network investment, thereby helping to promote broadband deployment.
53. Section 222: Protecting Consumer Privacy. Ensuring the privacy of customer information both directly protects consumers from harm and eliminates consumer concerns about using the Internet that could deter broadband deployment. Among other things, section 222 imposes a duty on every telecommunications carrier to take reasonable precautions to protect the confidentiality of its customers' proprietary information. We take this mandate seriously. For example, the Commission recently took enforcement action under section 222 (and section 201(b)) against two telecommunications companies that stored customers' personal information, including social security numbers, on unprotected, unencrypted Internet servers publicly accessible using a basic Internet search. This unacceptably exposed these consumers to the risk of identity theft and other harms.
54. As the Commission has recognized, ''[c]onsumers' privacy needs are no less important when consumers communicate over and use broadband Internet access than when they rely on [telephone] services.'' Thus, this Order finds that consumers concerned about the privacy of their personal information will be more reluctant to use the Internet, stifling Internet service competition and growth. Application of section 222's protections will help spur consumer demand for those Internet access services, in turn ''driving demand for broadband connections, and consequently encouraging more broadband investment and deployment,'' consistent with the goals of the 1996 Act.
55. Sections 225/255/251(a)(2): Ensuring Disabilities Access. We do not forbear from those provisions of Title II that ensure access to broadband Internet access service by individuals with disabilities. All Americans, including those with disabilities, must be able to reap the benefits of an open Internet, and ensuring access for these individuals will further the virtuous cycle of consumer demand, innovation, and deployment. This Order thus concludes that application of sections 225, 255, and 251(a)(2) is necessary to protect consumers and furthers the public interest, as explained in greater detail below.
56. Section 224: Ensuring Infrastructure Access. For broadband Internet access service, we do not forbear from section 224 and the Commission's associated procedural rules (to the extent they apply to telecommunications carriers and services and are, thus, within the Commission's forbearance authority). Section 224 of the Act governs the Commission's regulation of pole attachments. In particular, section 224(f)(1) requires utilities to provide cable system operators and telecommunications carriers the right of ''nondiscriminatory access to any pole, duct, conduit, or right-of-way owned or controlled'' by a utility. Access to poles and other infrastructure is crucial to the efficient deployment of communications networks including, and perhaps especially, new entrants.
57. Section 254: Promoting Universal Broadband. Section 254 promotes the deployment and availability of communications networks to all Americans, including rural and low-income Americans'--furthering our goals of more and better broadband. With the exception of section 254(d), (g), and (k) as discussed below, we therefore do not find the statutory test for forbearance from section 254 (and the related provision in section 214(e)) is met. We recognize that supporting broadband-capable networks is already a key component of Commission's current universal service policies. The Order concludes, however, that directly applying section 254 provides both more legal certainty for the Commission's prior decisions to offer universal service subsidies for deployment of broadband networks and adoption of broadband services and more flexibility going forward.
58. We partially forbear from section 254(d) and associated rules insofar as they would immediately require mandatory universal service contributions associated with broadband Internet access service.
59. Below, we first adopt three bright-line rules banning blocking, throttling, and paid prioritization, and make clear the no-unreasonable interference/disadvantage standard by which the Commission will evaluate other practices, according to their facts. These rules are grounded in multiple sources of statutory authority, including section 706 and Titles II and III of the Communications Act. Second, based on a current factual record, we reclassify broadband Internet access service as a telecommunications service under Title II. And, third, guided by our goals of more, better, and open broadband, we exercise our forbearance authority to put in place a ''light touch'' Title II regulatory framework that protects consumers and innovators, without deterring investment.
III. Report and Order on Remand: Protecting and Promoting the Open Internet Back to TopA. History of Openness Regulation60. These rules are the latest in a long line of actions by the Commission to ensure that American communications networks develop in ways that foster economic competition, technological innovation, and free expression. Ever since the landmark 1968 Carterfone decision, the Commission has recognized that communications networks are most vibrant, and best able to serve the public interest, when consumers are empowered to make their own decisions about how networks are to be accessed and utilized. Openness regulation aimed at safeguarding consumer choice has therefore been a hallmark of Commission policy for over forty years.
61. In Carterfone, the Commission confronted AT&T's practice of preventing consumers from attaching any equipment not supplied by AT&T to their home telephones, even if the attachment did not put the underlying network at risk. Finding AT&T's ''foreign attachment'' provisions unreasonable and unlawful, the Commission ruled that AT&T customers had the right to connect useful devices of their choosing to their home telephones, provided these devices did not adversely affect the telephone network.
62. Carterfone and subsequent regulatory actions by the Commission severed the market for customer premises equipment (CPE) from that for telephone service. In doing so, the Commission allowed new participants and new ideas into the market, setting the stage for a wave of innovation that produced technologies such as the answering machine, fax machine, and modem'--thereby removing a barrier to the development of the packet switched network that would eventually become the Internet.
63. Commitment to robust competition and open networks defined Commission policy at the outset of the digital revolution as well. In a series of influential decisions, known collectively as the Computer Inquiries, the Commission established a flexible regulatory framework to support development of the nascent information economy. The Computer Inquiries decisions separated the market for information services from the underlying network infrastructure, and imposed firm non-discrimination rules for network access. This system prevented network owners from engaging in anti-competitive behavior and spurred the development and adoption of new technologies.
64. The principles of open access, competition, and consumer choice embodied in Carterfone and the Computer Inquires have continued to guide Commission policy in the Internet era. As former Chairman Michael Powell noted in 2004, ''ensuring that consumers can obtain and use the content, applications and devices they want . . . is critical to unlocking the vast potential of the broadband Internet.'' In recognition of this fact, in 2005, the Commission unanimously approved the Internet Policy Statement, which laid out four guiding principles designed to encourage broadband deployment and ''preserve and promote the open and interconnected nature of the Internet.'' These principles sought to ensure that consumers had the right to access and use the lawful content, applications, and devices of their choice online, and to do so in an Internet ecosystem defined by competitive markets.
65. From 2005 to 2011, the principles embodied in the Internet Policy Statement were incorporated as conditions by the Commission into several merger orders and a key 700 MHz license, including the SBC/AT&T, Verizon/MCI, and Comcast/NBCU mergers and the Upper 700 MHz C block open platform requirements. Commission approval of these transactions was expressly conditioned on compliance with the Internet Policy Statement. During this time, open Internet principles were also applied to particular enforcement proceedings aimed at addressing anti-competitive behavior by service providers.
66. In June 2010, following a D.C. Circuit decision invalidating the Commission's exercise of ancillary authority to provide consumers basic protections in using broadband Internet services, the Commission initiated a Notice of Inquiry to ''seek comment on our legal framework for broadband Internet service.'' The Notice of Inquiry recognized that ''the current legal classification of broadband Internet service is based on a record that was gathered a decade ago.'' It sought comment on three separate alternative legal frameworks for classifying and regulating broadband Internet service: (1) As an information service, (2) as a telecommunications service ''to which all the requirements of Title II of the Communications Act would apply,'' and (3) solely as to the ''Internet connectivity service,'' as a telecommunications service with forbearance from most Title II obligations. The Notice of Inquiry sought comment on both wired and wireless broadband Internet services, ''as well as on other factual and legal issues specific to . . . wireless services that bear on their appropriate classification.''
67. In December 2010, the Commission adopted the Open Internet Order (76 FR 59192-01, Sept. 23, 2011), a codification of the policy principles contained in the Internet Policy Statement. The Open Internet Order was based on broadly accepted Internet norms and the Commission's long regulatory experience in preserving open and dynamic communications networks. The Order adopted three fundamental rules governing Internet service providers: (1) No blocking; (2) no unreasonable discrimination; and (3) transparency. The no-blocking rule and no-unreasonable discrimination rules prevented broadband service providers from deliberately interfering with consumers' access to lawful content, applications, and services, while the transparency rule promoted informed consumer choice by requiring disclosure by service providers of critical information relating to network management practices, performance, and terms of service.
68. The antidiscrimination rule contained in the Open Internet Order operated on a case-by-case basis, with the Commission evaluating the conduct of fixed broadband service providers based on a number of factors, including conformity with industry best practices, harm to competing services or end users, and impairment of free expression. This no unreasonable discrimination framework applied to commercial agreements between fixed broadband service providers and third parties to prioritize transmission of certain traffic to their subscribers. The Open Internet Order also specifically addressed paid prioritization arrangements. It did not entirely rule out the possibility of such agreements, but made clear that such ''pay for priority'' deals and the associated ''paid prioritization'' network practices were likely to be problematic in a number of respects. Paid prioritization ''represented a significant departure from historical and current practice'' that threatened ''great harm to innovation'' online, particularly in connection with the market for new services by edge providers. Paid priority agreements were also viewed as a threat to non-commercial end users, ''including individual bloggers, libraries, schools, advocacy organizations, and other speakers'' who would be less able to pay for priority service. Finally, paid prioritization was seen giving fixed broadband providers ''an incentive to limit the quality of service provided to non-prioritized traffic.'' As a result of these concerns, the Commission explicitly stated in the Open Internet Order that it was ''unlikely that pay for priority would satisfy the `no unreasonable discrimination' standard.''
69. In order to maintain flexibility, the Commission tailored the rules contained in the Open Internet Order to fit the technical and economic realities of the broadband ecosystem. To this end, the restrictions on blocking and discrimination were made subject to an exception for ''reasonable network management,'' allowing service providers the freedom to address legitimate needs such as avoiding network congestion and combating harmful or illegal content. Additionally, in order to account for then-perceived differences between the fixed and mobile broadband markets, the Open Internet Order exempted mobile service providers from the anti-discrimination rule, and only barred mobile providers from blocking ''consumers from accessing lawful Web sites'' or ''applications that compete with the provider's voice or video telephony services.'' Lastly, the Open Internet Order made clear that the rules did not prohibit broadband providers from offering specialized services such as VoIP; instead, the Commission announced that it would continue to monitor such arrangements to ensure that they did not pose a threat to Internet openness.
70. Verizon subsequently challenged the Open Internet Order in the U.S. Court of Appeals for the D.C. Circuit, arguing, among other things, that the Open Internet Order exceeded the Commission's regulatory authority and violated the Act. In January 2014, the D.C. Circuit upheld the Commission's determination that section 706 of the Telecommunications Act of 1996 granted the Commission authority to regulate broadband Internet service providers, and that the Commission had demonstrated a sound policy justification for the Open Internet Order. Specifically, the court sustained the Commission's findings that ''absent rules such as those set forth in the Open Internet Order, broadband providers represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.''
71. Despite upholding the Commission's authority and the basic rationale supporting the Open Internet Order, the court struck down the no-blocking and antidiscrimination rules as at odds with section 3(51) of the Communications Act, holding that it prohibits the Commission from exercising its section 706 authority to impose common carrier regulation on a service not classified as a ''telecommunications service,'' and section 332(c)(2), which prohibits common carrier treatment of ''private mobile services.'' The D.C. Circuit vacated the no-blocking and antidiscrimination rules because it found that they impermissibly regulated fixed broadband providers as common carriers, which conflicted with the Commission's prior classification of fixed broadband Internet access service as an ''information service'' rather than a telecommunications service. Likewise, the court found that the no-blocking rule as applied to mobile broadband conflicted with the Commission's earlier classification of mobile broadband service as a private mobile service rather than a ''commercial mobile service.'' The Verizon court held that the ''no unreasonable discrimination'' standard adopted in the Open Internet Order was insufficiently distinguishable from the ''nondiscrimination'' standard applicable to common carriers. Central to the court's rationale was its finding that, as formulated in the Open Internet Order, both rules improperly limited fixed broadband Internet access providers' ability to engage in ''individualized bargaining.''
72. Following the D.C. Circuit's ruling, on May 15, 2014 the Commission issued a Notice of Proposed Rulemaking (2014 Open Internet NPRM) to respond to the lack of conduct-based rules to protect and promote an open Internet following the D.C. Circuit's opinion in Verizon v. FCC. The Commission began the NPRM with a fundamental question: ''What is the right public policy to ensure that the Internet remains open?'' While the NPRM put forth various proposals, it sought broad comment on alternative paths to the right public policy solution'--including areas such as the proper scope of the rules; the best ways to define, prevent, and treat violations of practices that may threaten an open Internet (including paid prioritization); enhancements to the transparency rule; and the appropriate source of legal authority to support new open Internet rules.
73. The Commission took many steps to facilitate public engagement in response to the 2014 Open Internet NPRM'--including the establishment of a dedicated email address to receive comments, a mechanism for submitting large numbers of comments in bulk via a Comma Separated Values (CSV) file, and the release of the entire record of comments and reply comments as Open Data in a machine-readable format, so that researchers, journalists, and other parties could analyze and create visualizations of the record. In addition, Commission staff hosted a series of roundtables covering a variety of topics related to the open Internet proceeding, including events focused on different policy approaches to protecting the open Internet, mobile broadband, enforcement issues, technology, broadband economics, and the legal issues surrounding the Commission's proposals.
74. The public seized on these opportunities to comment, submitting an unprecedented 3.7 million comments by the close of the reply comment period on September 15, 2014, with more submissions arriving after that date. This record-setting level of public engagement reflects the vital nature of Internet openness and the importance of our getting the answer right in this proceeding. Quantitative analysis of the comment pool reveals a number of key insights. For example, by some estimates, nearly half of all comments received by the Commission were unique. While there has been some public dispute as to the percentage of comments taking one position or another, it is clear that the majority of comments support Commission action to protect the open Internet. Comments regarding the continuing need for open Internet rules, their legal basis, and their substance formed the core of the overall body of comments. In particular, support for the reclassification of broadband Internet access under Title II, opposition to fast lanes and paid prioritization, and unease regarding the market power of broadband Internet access service providers were themes frequently addressed by commenters. In offering this summary, we do not mean to overlook the diversity of views reflected in the impressively large record in this proceeding. Most of all, we are grateful to the public for using the power of the open Internet to guide us in determining how best to protect it.
B. The Continuing Need for Open Internet Protections75. In its remand of the Commission's Open Internet Order, the D.C. Circuit affirmed the underlying basis for the Commission's open Internet rules, holding that ''the Commission [had] more than adequately supported and explained its conclusion that edge provider innovation leads to the expansion and improvement of broadband infrastructure.'' The court also found ''reasonable and grounded in substantial evidence'' the Commission's finding that Internet openness fosters the edge provider innovation that drives the virtuous cycle. The record on remand continues to convince us that broadband providers'--including mobile broadband providers'--have the incentives and ability to engage in practices that pose a threat to Internet openness, and as such, rules to protect the open nature of the Internet remain necessary. Today we take steps to ensure that the substantial benefits of Internet openness continue to be realized.
1. An Open Internet Promotes Innovation, Competition, Free Expression, and Infrastructure Deployment76. In the 2014 Open Internet NPRM, we sought comment on and expressed our continued commitment to an important principle underlying the Commission's prior policies'--that the Internet's openness promotes innovation, investment, competition, free expression, and other national broadband goals. The record before us convinces us that these findings, made by the Commission in 2010 and upheld by the D.C. Circuit, remain valid. If anything, the remarkable increases in investment and innovation seen in recent years'--while the rules were in place'--bear out the Commission's view. For example, in addition to broadband infrastructure investment, there has been substantial growth in the digital app economy, video over broadband, and VoIP, as well as a rise in mobile e-commerce. Overall Internet adoption has also increased since 2010. Both within the network and at its edges, investment and innovation have flourished while the open Internet rules were in force.
77. The record before us also overwhelmingly supports the proposition that the Internet's openness is critical to its ability to serve as a platform for speech and civic engagement, and that it can help close the digital divide by facilitating the development of diverse content, applications, and services. The record also supports the proposition that the Internet's openness continues to enable a ''virtuous [cycle] of innovation in which new uses of the network'--including new content, applications, services, and devices'--lead to increased end-user demand for broadband, which drives network improvements, which in turn lead to further innovative network uses.'' End users experienced the benefits of Internet openness that stemmed from the Commission's 2010 open Internet rules'--increased consumer choice, freedom of expression, and innovation.
2. Broadband Providers Have the Incentive and Ability To Limit Openness78. Broadband providers function as gatekeepers for both their end user customers who access the Internet, and for various transit providers, CDNs, and edge providers attempting to reach the broadband provider's end-user subscribers. As discussed in more detail below, broadband providers (including mobile broadband providers) have the economic incentives and technical ability to engage in practices that pose a threat to Internet openness by harming other network providers, edge providers, and end users.
a. Economic Incentives and Ability79. In the 2014 Open Internet NPRM, we sought to update the record with information about new and continuing incentives for broadband providers to limit Internet openness. As explained in detail in the Open Internet Order, broadband providers not only have the incentive and ability to limit openness, but they had done so in the past. (As the Commission explained in the Open Internet Order, examples such as the Madison River case, the Comcast-Bit Torrent case, and various mobile wireless Internet providers restricting customers' use of competitive payment applications, competitive voice applications, and remote video applications, indicate that broadband providers have the technical ability to act on incentives to harm the open Internet. The D.C. Circuit also found that these examples buttressed the Commission's conclusion that broadband providers' incentives and ability to restrict Internet traffic could interfere with the Internet's openness.) The D.C. Circuit found that the Commission ''adequately supported and explained'' that, absent open Internet rules, ''broadband providers represent a threat to Internet openness and could act in ways that would ultimately inhibit the speed and extent of future broadband deployment.'' The record generated in this proceeding convinces us that the Commission's conclusion in the Open Internet Order'--that providers of broadband have a variety of strong incentives to limit Internet openness'--remains valid today.
80. Broadband providers' networks serve as platforms for Internet ecosystem participants to communicate, enabling broadband providers to impose barriers to end-user access to the Internet on one hand, and to edge provider access to broadband subscribers on the other. This applies to both fixed and mobile broadband providers. Although there is some disagreement among commenters, the record provides substantial evidence that broadband providers have significant bargaining power in negotiations with edge providers and intermediaries that depend on access to their networks because of their ability to control the flow of traffic into and on their networks. Another way to describe this significant bargaining power is in terms of a broadband provider's position as gatekeeper'--that is, regardless of the competition in the local market for broadband Internet access, once a consumer chooses a broadband provider, that provider has a monopoly on access to the subscriber. Many parties demonstrated that both mobile and fixed broadband providers are in a position to function as a gatekeeper with respect to edge providers. Once the broadband provider is the sole provider of access to an end user, this can influence that network's interactions with edge providers, end users, and others. As the Commission and the court have recognized, broadband providers are in a position to act as a ''gatekeeper'' between end users' access to edge providers' applications, services, and devices and reciprocally for edge providers' access to end users. Broadband providers can exploit this role by acting in ways that may harm the open Internet, such as preferring their own or affiliated content, demanding fees from edge providers, or placing technical barriers to reaching end users. Without multiple, substitutable paths to the consumer, and the ability to select the most cost-effective route, edge providers will be subject to the broadband provider's gatekeeper position. The D.C. Circuit noted that the Commission ''convincingly detailed'' broadband providers' market position, which gives them ''the economic power to restrict edge-provider traffic and charge for the services they furnish edge providers,'' and further stated that the Commission reasonably explained that ''this ability to act as a `gatekeeper' distinguishes broadband providers from other participants in the Internet marketplace who have no similar `control [over] access to the Internet for their subscribers and for anyone wishing to reach those subscribers.''' (We find, for example, that even though edge providers may possess bargaining power, they do not have the same ability as broadband providers to control the flow of traffic or block access to the Internet. With respect to mobile, the presence of some additional retail competition is not enough to alter our conclusion here.) The ability of broadband providers to exploit this gatekeeper role could be mitigated if consumers multi-homed (i.e., bought broadband service from multiple networks). However, multi-homing is not widely practiced and imposes significant additional costs on consumers. The gatekeeper role could also be mitigated if a consumer could easily switch broadband providers. But, as discussed further below, the evidence suggests otherwise.
81. The broadband provider's position as gatekeeper is strengthened by the high switching costs consumers face when seeking a new service. Among the costs that consumers may experience are: High upfront device installation fees; long-term contracts and early termination fees; the activation fee when changing service providers; and compatibility costs of owned equipment not working with the new service. Bundled pricing can also play a role, as ''single-product subscribers are four times more likely to churn than triple-play subscribers.'' These costs may limit consumers' willingness and ability to switch carriers, if such a choice is indeed available. Commenters also point to an information problem, whereby consumers are unsure about the causes of problems or limitations with their services'--for example, whether a slow speed on an application is caused by the broadband provider or the edge provider'--and as such consumers may not feel that switching providers will resolve their Internet access issues. Additionally, consumers on unlimited data plans may be confused by slowed data speeds because broadband providers have not adequately communicated contractually-imposed data management practices and usage thresholds. Switching costs are also a critical factor that negatively impacts mobile broadband consumers, in particular due to the informational uncertainties mentioned below, among other reasons. Ultimately, when consumers face this kind of friction in switching to meaningful competitive alternatives, it decreases broadband provider' responsiveness to consumer demands and limits the provider's incentives to improve their networks. Additionally, 45 percent of households have only a single provider option for 25 Mbps/3 Mbps broadband service, indicating that 45 percent of households do not have any choices to switch to at this critical level of service.
82. Broadband providers may seek to gain economic advantages by favoring their own or affiliated content over other third-party sources. Technological advances have given broadband providers the ability to block content in real time, which allows them to act on their financial incentives to do so in order to cut costs or prefer certain types of content. Data caps or allowances, which limit the amount and type of content users access online, can have a role in providing consumers options and differentiating services in the marketplace, but they also can negatively influence customer behavior and the development of new applications. Similarly, broadband providers have incentives to charge for prioritized access to end users or degrade the level of service provided to non-prioritized content. When bandwidth is limited during peak hours, its scarcity can cause reliability and quality concerns, which increases broadband providers' ability to charge for prioritization. Such practices could result in so-called ''tolls'' for edge providers seeking to reach a broadband provider's subscribers, leading to reduced innovation at the edge, as well as increased rates for end users, reducing consumer demand, and further disrupting the virtuous cycle. Commenters expressed considerable concern regarding the harmful effects of paid prioritization on Internet openness. Further, as discussed above, a broadband provider's incentive to favor affiliated content or the content of unaffiliated firms that pay for it to do so, to block or degrade traffic, to charge edge providers for access to end users, and to disadvantage non-prioritized transmission all increase when end users are less able to respond by switching to rival broadband providers.
83. In addition to the harms outlined above, broadband providers' behavior has the potential to cause a variety of other negative externalities that hurt the open nature of the Internet. Broadband providers have incentives to engage in practices that will provide them short term gains but will not adequately take into account the effects on the virtuous cycle. In the Open Internet Order, the Commission found that the unaccounted-for harms to innovation are negative externalities, and are likely to be particularly large because of the rapid pace of Internet innovation, and wide-ranging because of the role of the Internet as a general purpose technology. Further, the Commission noted that a broadband provider may hesitate to impose costs on its own subscribers, but it will typically not take into account the effect that reduced edge provider investment and innovation has on the attractiveness of the Internet to end users that rely on other broadband providers'--and will therefore ignore a significant fraction of the cost of forgone innovation. The record supports our view that these negative externality problems have not disappeared, and in some cases, may be more prevalent. In order to mitigate these negative results, the Commission needs to act to promote Internet openness.
84. A final point on this question of economic incentives and ability is worth noting. Broadband providers have the ability to act as gatekeepers even in the absence of ''the sort of market concentration that would enable them to impose substantial price increases on end users.'' We therefore need not consider whether market concentration gives broadband providers the ability to raise prices. The Commission came to this conclusion in the Open Internet Order, and we conclude the same here. As the Commission noted in the Open Internet Order, threats to Internet-enabled innovation, growth, and competition do not depend on broadband providers having market power with respect to their end users. In Verizon, the court agreed, explaining that ''broadband providers' ability to impose restrictions on edge providers simply depends on end users not being fully responsive to the imposition of such restrictions.'' (We note further that, of course, our reclassification of broadband Internet access service as a ''telecommunications service'' subject to Title II below likewise does not rely on such a test or any measure of market power. Indeed, our reclassification decision is based on whether BIAS meets the statutory definition of a ''telecommunications service,'' and not any additional economic circumstances.) As we have concluded in this section, this remains true today. (We note, however, that in areas where there are limited competitive alternatives, this may exacerbate other problems such as the ability to switch from one provider to another.)
b. Technical Ability85. As the Commission explained in the Open Internet Order, past instances of abuse indicate that broadband providers have the technical ability to act on incentives to harm the open Internet. Broadband providers have a variety of tools at their disposal that can be used to monitor and regulate the flow of traffic over their networks'--giving them the ability to discriminate should they choose to do so. Techniques used by broadband providers to identify and select traffic may include approaches based on packet payloads (using deep packet inspection), network or transport layer headers (e.g., port numbers or priority markings), or heuristics (e.g., the size, sequencing, and/or timing of packets). Using these techniques, broadband providers may apply network practices to traffic that has a particular source or destination, that is generated by a particular application or by an application that belongs to a particular class of applications, that uses a particular application- or transport-layer protocol, or that is classified for special treatment by the user, application, or application provider. Application-specific network practices depend on the broadband provider's ability to identify the traffic associated with particular uses of the network. Some of these application-specific practices may be reasonable network management, e.g., tailored network security practices. However, some of these techniques may also be abused. Deep packet inspection, for example, may be used in a manner that may harm the open Internet, e.g., to limit access to certain Internet applications, to engage in paid prioritization, and even to block certain content. Similarly, traffic control algorithms can be abused, e.g., to give certain packets favorable placement in queues or to send packets along less congested routes in a manner contrary to end user preferences. Use of these techniques may ultimately affect the quality of service that users receive, which could effectively force edge providers to enter into paid prioritization agreements to prevent poor quality of content to end users.
3. Mobile Broadband Services86. We have discussed above the incentives and ability of broadband providers to act in ways that limit Internet openness, regardless of the specific technology platform used by the provider. A significant subject of discussion in the record, however, concerned mobile broadband providers specifically, and we therefore believe it is appropriate to address here the incentive and ability that these providers have to limit Internet openness. As the Commission noted in the Open Internet Order,''[c]onsumer choice, freedom of expression, end-user control, competition, and the freedom to innovate without permission are as important when end users are accessing the Internet via mobile broadband as via fixed.'' The Commission noted that ''there have been instances of mobile providers blocking certain third-party applications, particularly applications that compete with the provider's own offerings . . . .'' However, the Commission also noted the nascency of the mobile broadband industry, citing the recent development of ''app'' stores, and what it characterized at the time as ''new business models for mobile broadband providers, including usage-based pricing.'' Furthermore, the Commission at that time found that ''[m]obile broadband speeds, capacity, and penetration [were] typically much lower than for fixed broadband'' and noted that carriers had only begun to offer 4G service.
87. Citing these factors, as well as greater consumer choice, ''meaningful recent moves toward openness in and on mobile broadband networks,'' and the operational constraints faced by mobile broadband providers, the Commission applied its open Internet rules to mobile broadband, but distinguished between fixed and mobile broadband in some regards: While it applied the same transparency rule to both fixed and mobile network providers, it adopted a different no-blocking standard for mobile broadband Internet access service, and excluded mobile broadband from the unreasonable discrimination rule. In the 2014 Open Internet NPRM, the Commission tentatively concluded that it should maintain the same approach going forward, but recognized that there have been significant changes since 2010 in the mobile marketplace. The Commission sought comment on whether those changes should lead it to revisit the treatment of mobile broadband services.
88. Today, we find that changes in the mobile broadband marketplace warrant a revised approach. We find that the mobile broadband marketplace has evolved, and continues to evolve, but is no longer in a nascent stage. As discussed below, mobile broadband networks are faster, more broadly deployed, more widely used, and more technologically advanced than they were in 2010. We conclude that it would benefit the millions of consumers who access the Internet on mobile devices to apply the same set of Internet openness protections to both fixed and mobile networks.
89. Network connection speed and data consumption have exploded. For 2010, Cisco reported an average mobile network connection speed of 709 kbps. Since that time there has been massive expansion of mobile broadband networks, providing vastly increased download speeds. For 2013, Cisco reported an average mobile connection speed of 2,058 kbps. This increase in speed is partially due to the deployment of faster network technologies. Currently, mobile broadband networks provide coverage and services using a variety of 3G and 4G technologies, including, most importantly, LTE. As a consequence of the growing deployment of next generation networks, there has been an increase of more than 200,000 percent in the number of LTE subscribers, from approximately 70,000 in 2010 to over 140 million in 2014. Concurrent with these substantial changes in mobile broadband deployment and download speeds, mobile data traffic has exploded, increasing from 388 billion MB in 2010 to 3.23 trillion MB in 2013. AT&T reports that its wireless data traffic has grown 100,000 percent between 2007 and 2014 and 20,000 percent over the past five years. T-Mobile states that ''data usage continues to expand exponentially, with year-to-year increases of roughly 120 percent.''
90. As consumers use smartphones and tablets more, they increasingly rely on mobile broadband as a pathway to the Internet. The Internet Association argues that mobile Internet access is essential, since many Americans ''are wholly reliant on mobile wireless for Internet access.'' In addition, evidence shows that consumers in certain demographic groups, including low income and rural consumers and communities of color, are more likely to rely on mobile as their only access to the Internet. Citing data from the Pew Research Center's Internet & American Life Project, OTI states that ''[t]he share of Americans relying exclusively on their smartphone[s] to access the Internet is far higher among Hispanics, Blacks, and adults aged 18-29, and households earning less than $30,000 a year.'' According to data from the National Health Interview Survey, 44 percent of households were ''wireless-only'' during January-June 2014, compared to 31.6 percent during January-June 2011. These data also show that 59.1 percent of adults living in poverty reside in wireless-only households, relative to 40.8 percent of higher income adults. Additionally, rural consumers and businesses often have access to fewer options for Internet service, meaning that these customers may have limited alternatives when faced with restrictions to Internet openness imposed by their mobile provider. Furthermore, just as consumer reliance on mobile broadband has grown, edge providers increasingly rely on mobile broadband to reach their customers. Microsoft states, for example, that, ''with `the pressure . . . only increasing to either go mobile or go home,' edge providers frequently introduce new edge services on mobile platforms first, and the success or failure of these edge providers' businesses often depends in large part on their mobile offerings.''
91. Furthermore, the technology underlying today's mobile broadband networks, as compared to those deployed in 2010, not only provides operators with a greater ability to manage their networks consistent with the rules we adopt today, but also gives those operators a greater ability to engage in conduct harmful to the virtuous cycle in the absence of open Internet rules. As discussed above, certain behaviors by broadband providers may impose negative externalities on the Internet ecosystem, resulting in less innovation from edge providers. We find that the same is true today for mobile wireless broadband providers, particularly as mobile broadband technology has become more widespread and mobile broadband services have become more integrated into the economy.
92. In view of the evidence showing the evolution of the mobile broadband marketplace, we conclude that it would best serve the public interest to revise our approach for mobile broadband services and apply the same openness requirements as those applied to providers of fixed broadband services. The Commission has long recognized that the Internet should remain open for consumers and innovators alike, regardless of the different technologies and services through which it may be accessed. Although the Commission found in 2010 that conditions at that time warranted a more limited application of open Internet rules to mobile broadband services, it nevertheless recognized the importance of freedom and openness for users of mobile broadband networks, finding that ''consumer choice, freedom of expression, end-user control, competition, and the freedom to innovate without permission are as important when end users are accessing the Internet via mobile broadband as via fixed.'' In contrast to the state of the mobile broadband marketplace when the Commission adopted the 2010 open Internet rules, the evidence in the record today shows how mobile broadband services have evolved to become essential, critical means of access to the Internet for millions of consumers every day. Because of this evolution and the widespread use of mobile broadband services, maintaining a regime under which fewer protections apply in a mobile environment risks creating a substantively different Internet experience for mobile broadband users as compared to fixed broadband users. Broadband users should be able to expect that they will be entitled to the same Internet openness protections no matter what technology they use to access the Internet. We agree with arguments made by a large number of commenters that applying a consistent set of requirements will help ensure that all consumers can benefit from full access to an open and robust Internet. We note that evidence in the record indicates that mobile broadband providers themselves have recognized the importance of open Internet practices for mobile broadband consumers.
93. Despite their support of open Internet principles, several of the nationwide mobile providers oppose broader openness requirements for mobile broadband, arguing that additional rules are unnecessary in the mobile broadband market. T-Mobile, for example, argues that ''robust retail competition in the mobile broadband market already constrains mobile provider behavior.'' Verizon comments that ''consumer choice and competition also have ensured a differentiated marketplace in which providers routinely develop innovative offerings designed to outcompete competitors' offerings.'' AT&T contends that additional rules are unnecessary as mobile broadband providers are already investing in the networks, innovating, reducing prices, and thriving. CTIA contends that ''the robust competitive conditions in the mobile broadband marketplace are a defining differentiator'' and that ''any new open Internet framework should account for the competitive mobile dynamic.''
94. Based upon the significant changes in mobile broadband since 2010 discussed above, including the increased use of mobile broadband and the greater ability of mobile broadband providers to engage in conduct harmful to the virtuous cycle, we are not persuaded that maintaining fewer open Internet protections for consumers of mobile broadband services would serve the public interest. Contrary to provider arguments that applying a broader set of openness requirements will stifle innovation and chill investment, we find that the rules we adopt today for all providers of services will promote innovation, investment, and competition. As we discuss above, an open Internet enables a virtuous cycle where new uses of the network drive consumer demand, which drives network improvements, which result in further innovative uses. We agree with commenters that ''mobile is a key component'' of the virtuous cycle. OTI comments that ''a variety of economic analyses suggest that the Internet's openness is a key driver of its value . . . . Other economic studies have found that non-neutral conditions in the broadband market might maximize profits for broadband providers but would ultimately minimize consumer welfare . . . . There is significant evidence that a vibrant and neutral online economy is critical for a healthy technology industry, which is a significant creator of jobs in the U.S.'' We find that these arguments apply to mobile broadband providers as well as to fixed, and apply even though there may be more competition among mobile broadband providers.
95. We note that the Commission's experience with applying open platform rules to Upper 700 MHz C Block licensees, including Verizon Wireless, has shown that openness principles can be applied to mobile services without inhibiting a mobile provider's ability to compete and be successful in the marketplace. We find that it is reasonable to conclude that, even with broader application of Internet openness requirements, mobile broadband providers will similarly continue to compete and develop innovative products and services. We also expect that the force of consumer demand that led mobile broadband providers to invest in their networks over the past four years will likely continue to drive substantial investments in mobile broadband networks under the open Internet regime we adopt today.
96. Although mobile providers generally argue that additional rules are not necessary to deter practices that would limit Internet openness, concerns related to the openness practices of mobile broadband providers have arisen. As we noted in the 2014 Open Internet NPRM, in 2012, the Commission reached a $1.25 million settlement with Verizon for restricting tethering apps on Verizon smartphones, based on openness requirements attached to Verizon's Upper 700 MHz C Block licenses. Also in 2012, consumers complained when they encountered problems accessing Apple's FaceTime application on AT&T's network. More recently, significant concern has arisen when mobile providers' have attempted to justify certain practices as reasonable network management practices, such as applying speed reductions to customers using ''unlimited data plans'' in ways that effectively force them to switch to price plans with less generous data allowances. As Consumers Union observes, many mobile broadband provider practices are non-transparent, because customers receive ''no warning or explanation of when their speeds will be slowed down.'' Other commenters such as OTI also cite mobile providers' blocking of the Google Wallet e-payment application. Although providers claimed that the blocking was justified based on security concerns, OTI notes that ''this carrier behavior raised anticompetitive concerns when AT&T, Verizon and T-Mobile later unveiled their own mobile payment application, a competitor to Google Wallet . . . .'' Microsoft also describes further potential for abuse based on its experience in other countries without open Internet protections, claiming, for example, that ''several broadband access providers around the world have interfered or degraded Skype traffic on their networks.'' A recent survey of European Internet users found that respondents reported experiencing problems with ''blocking of internet content.'' Mobile services notably accounted for a significant percentage of negative experiences reported in the survey. OTI argues that, even with competition, mobile providers have an interest in seeking rents from edge providers and ''in securing a competitive advantage for their own competing apps, content and services.'' We agree, and find that the rules we adopt today for mobile network providers will help guard against future incidents that have the potential to affect Internet openness and undermine a mobile broadband consumer's right to access a free and open Internet.
97. In addition, we agree with those commenters that argue that mobile broadband providers have the incentives and ability to engage in practices that would threaten the open nature of the Internet, in part due to consumer switching costs. Switching costs are a significant factor in enabling the ability of mobile broadband providers to act as gatekeepers. Microsoft states that ''for the large number of applications that are available only in the mobile context, mobile broadband access providers today can be an edge provider's only option for reaching a particular end user,'' and argues that, because of high switching costs, few mobile broadband consumers routinely switch providers. Therefore, Microsoft argues, ''even if there is more than one mobile broadband access provider in a specific market, there may not be effective competitive alternatives (for edge providers or consumers) and these mobile broadband access providers retain the ability to act in a manner that undermines the competitive neutrality of the online marketplace.''
98. The level of wireless churn, when viewed in conjunction with data on consumer satisfaction, is consistent with the existence of important switching costs for customers. Based on results from surveys, OTI and Consumers Union argue that switching costs have depressed mobile wireless churn rates, meaning that customers may remain with their service providers even when they are dissatisfied. Consumers Union cites a February 2015 Consumer Reports survey showing that ''27 percent of mobile broadband consumer[s] who are dissatisfied with their mobile broadband service provider are reluctant to switch carriers'' due to several factors. That many customers stay with their mobile wireless providers, despite expressing dissatisfaction with their current provider and despite the availability of alternate plans from other providers, suggests the presence of significant barriers to switching. Furthermore, this has been a period of market and spectrum consolidation, which has decreased the choices available to consumers in many parts of the country. For example, Vonage argues that ''recent mergers between AT&T and Leap, and T-Mobile and MetroPCS have reduced the ability of wireless end users to switch to competing providers in the event of potential discrimination against the edge services they may want to access.'' Choices may be particularly limited in rural areas, both because fewer service providers tend to operate in these regions and because consumers may encounter difficulties in porting their numbers from national to local service providers.
99. Switching costs may arise due to a number of factors that affect mobile consumers. For example, consumers may face costs due to informational uncertainty, particularly in the context of concerns over open Internet restrictions. The provision of wireless service involves the interaction between the wireless network operator, the various edge providers, the customer's handset or other equipment, and the conditions present in the specific location the customer wishes to use the service. In this environment, it can be very difficult for customers to ascertain the source of a service disruption, and hence whether switching wireless providers would solve the problem. Additionally, product differentiation can make it difficult for consumers to compare plans, which may also increase switching costs. Finally, customers may face a variety of hassle-related and financial switching costs. Disconnecting an existing service and activating a new one may involve early termination fees (ETFs), coordinating with multiple members of a family plan, billing set-up, transferring personal files, and porting phone numbers, each of which may create delays or difficulties for customers. As part of this process, some customers may need to replace their equipment, which may not be compatible with their new mobile service provider's network. OTI and Consumers Union argue that moving multiple members of a shared or family plan may be particularly expensive, since ''[n]ot only do groups face the cost of multiple ETFs, but frequently the contract termination dates become nonsynchronous due to the addition of new lines and individuals upgrading their devices at different points in time.'' Furthermore, OTI and Consumers Union argue that these costs affect an increasingly large proportion of consumers, since the penetration of shared plans has increased such that the majority of AT&T and Verizon Wireless customers now have shared plans.
100. AT&T, T-Mobile, and Verizon argue that the factors that led the Commission to adopt a more limited set of openness rules for mobile in 2010 remain valid today. They argue that mobile broadband networks should not be viewed as mature as mobile technologies continue to develop and evolve. They also contend that the extraordinary growth in use of mobile broadband services requires that providers have more flexibility to be able to handle the increased traffic and ensure quality of service for subscribers. T-Mobile, for example, asserts that ''while mobile networks are more robust and offer greater speeds and capacity than they did when the 2010 rules were enacted, they also face greater demands; their need for agile and dynamic network management tools has actually increased.''
101. We recognize that mobile service providers must take into account factors such as mobility and reliance on spectrum. As discussed more fully below in the context of each of the rules, however, we find that the requirements we adopt today are sufficiently tailored to provide carriers with the flexibility they need to accommodate these conditions. Moreover, as described further below, we conclude that retaining an exception to the no-blocking rule, the no-throttling rule, and the no-unreasonable interference/disadvantage standard we adopt today for reasonable network management will allow sufficient flexibility for mobile service providers.
4. The Commission Must Act To Preserve Internet Openness102. Given that broadband providers'--both fixed and mobile'--have both the incentives and ability to harm the open Internet, we again conclude that the relatively small incremental burdens imposed by our rules are outweighed by the benefits of preserving the open nature of the Internet, including the continued growth of the virtuous cycle of innovation, consumer demand, and investment. We note, for example, that the disclosure requirements adopted in this order are widely understood, have industry-based definitions, and are commonly used in commercial Service Level Agreements by many broadband providers. Open Internet rules benefit investors, innovators, and end users by providing more certainty to each regarding broadband providers' behavior, and helping to ensure the market is conducive to optimal use of the Internet. Open Internet rules are also critical for ensuring that people living and working in rural areas can take advantage of the substantial benefits that the open Internet has to offer. In minority communities where many individuals' only Internet connection may be through a mobile device, robust open Internet rules help make sure these communities are not negatively impacted by harmful broadband provider conduct. Such rules additionally provide essential safeguards to ensure that the Internet flourishes as a platform for education and research.
103. The Commission's historical open Internet policies and rules have blunted the incentives, discussed above, to engage in behavior harmful to the open Internet. Commenters who argue that rules are not necessary overlook the role that the Commission's rules and policies have played in fostering that result. Without rules in place to protect the open Internet, the overwhelming incentives broadband providers have to act in ways that are harmful to investment and innovation threaten both broadband networks and edge content. Paid prioritization agreements, for example, have the potential to distort the market by causing prices not to reflect efficient cost recovery and by altering consumer choices for content and edge providers. The record reflects the view that paid arrangements for priority treatment, such as broadband providers discriminating among content providers or prioritizing one provider's or its own content over others, likely damage the open Internet, harming competition and consumer choice. Additionally, blocking and throttling harm a consumer's right to access lawful content, applications, and services, and to use non-harmful devices.
C. Strong Rules That Protect Consumers From Practices That Can Threaten the Open Internet104. We are keenly aware that in the wake of the Verizon decision, there are no rules in place to prevent broadband providers from engaging in conduct harmful to Internet openness, such as blocking a consumer from accessing a requested Web site or degrading the performance of an innovative Internet application. (We acknowledge other laws address behavior similar to that which our rules are designed to prevent; however, as discussed below, we do not find existing laws sufficient to adequately protect consumers' access to the open Internet. For example, some parties have suggested that existing antitrust laws would address discriminatory conduct of an anticompetitive nature. We also note that certain ''no blocking'' obligations continue to apply to the use of Upper 700 MHz C Block licenses.) While many providers have indicated that, at this time, they do not intend to depart from the previous rules, an open Internet is too important to consumers and innovators to leave unprotected. Therefore, we today reinstate strong, enforceable open Internet rules. As in 2010, we believe that conduct-based rules targeting specific practices are necessary.
105. No-Blocking. First, we adopt a bright-line rule prohibiting broadband providers from blocking lawful content, applications, services, or non-harmful devices. This ''no-blocking'' principle has long been a cornerstone of the Commission's policies. While first applied in the Internet context as part of the Commission's Internet Policy Statement, the no-blocking concept dates back to the Commission's protection of end users' rights to attach lawful, non-harmful devices to communications networks.
106. No-Throttling. Second, we adopt a separate bright-line rule prohibiting broadband providers from impairing or degrading lawful Internet traffic on the basis of content, application, service, or use of non-harmful device. This conduct was prohibited under the commentary to the no-blocking rule adopted in the 2010 Open Internet Order. However, to emphasize the importance of this concept we delineate under a separate rule a ban on impairment or degradation, to prevent broadband providers from engaging in behavior other than blocking that negatively impacts consumers' use of content, applications, services, and devices.
107. No Paid Prioritization. Third, we respond to the deluge of public comment expressing deep concern about paid prioritization. Under the rule we adopt today, the Commission will ban all paid prioritization subject to a narrow waiver process.
108. No-Unreasonable Interference/Disadvantage Standard. In addition to these three bright-line rules, we also set forth a no-unreasonable interference/disadvantage standard, under which the Commission can prohibit practices that unreasonably interfere with the ability of consumers or edge providers to select, access, and use broadband Internet access service to reach one another, thus causing harm to the open Internet. This no-unreasonable interference/disadvantage standard will operate on a case-by-case basis and is designed to evaluate other current or future broadband Internet access provider policies or practices'--not covered by the bright-line rules'-- and prohibit those that harm the open Internet.
109. Transparency Requirements. We also adopt enhancements to the existing transparency rule to more effectively serve end-user consumers, edge providers of broadband products and services, and the Internet community. These enhanced transparency requirements are modest in nature, and we decline to adopt requirements proposed in the NPRM that raised concern for smaller broadband providers in particular, such as disclosures as to the source of congestion.
1. Clear, Bright Line Rules110. The record in this proceeding reveals that three practices in particular demonstrably harm the open Internet: Blocking, throttling, and paid prioritization. For the reasons described below, we find each of these practices is inherently unjust and unreasonable, in violation of section 201(b) of the Act, and that these practices threaten the virtuous cycle of innovation and investment that the Commission intends to protect under its obligation and authority to take steps to promote broadband deployment under section 706 of the 1996 Act. We accordingly adopt bright-line rules banning blocking, throttling, and paid prioritization by providers of both fixed and mobile broadband Internet access service.
a. Preventing Blocking of Lawful Content, Applications, Services, and Non-Harmful Devices111. We continue to find, for the same reasons the Commission found in the 2010 Open Internet Order and reiterated in the 2014 Open Internet NPRM, that ''the freedom to send and receive lawful content and to use and provide applications and services without fear of blocking is essential to the Internet's openness.'' Because of broadband providers' incentives to block competitors' content, the need to protect a consumer's right to access lawful content, applications, services, and to use non-harmful devices is as important today as it was when the Commission adopted the first no-blocking rule in 2010.
112. In the 2014 Open Internet NPRM, the Commission tentatively concluded that it should re-adopt the text of the vacated no-blocking rule. The record overwhelmingly supports the notion of a no-blocking principle and re-adopting the text of the original rule. (A broad cross-section of broadband providers, edge providers, public interest organizations, and individuals support this approach.) Further, we note that many broadband providers still voluntarily continue to abide by the 2010 no-blocking rule, even though they have not been legally required to do so by a rule of general applicability since the Verizon decision. After consideration of the record and guidance from the D.C. Circuit, we adopt the following no-blocking rule applicable to both fixed and mobile broadband providers of broadband Internet access service:
113. Similar to the 2010 no-blocking rule, the phrase ''content, applications, and services'' again refers to all traffic transmitted to or from end users of a broadband Internet access service, including traffic that may not fit clearly into any of these categories. Further, the no-blocking rule adopted today again applies to transmissions of lawful content and does not prevent or restrict a broadband provider from refusing to transmit unlawful material, such as child pornography or copyright-infringing materials. (Similar to the 2010 no-blocking rule, this obligation does not impose any independent legal obligation on broadband providers to be the arbiter of what is lawful.) Today's no-blocking rule also entitles end users to connect, access, and use any lawful device of their choice, provided that the device does not harm the network. The no-blocking rule prohibits network practices that block a specific application or service, or any particular class of applications or services, unless it is found to be reasonable network management. Finally, as with the 2010 no-blocking rule, today's no-blocking rule prohibits broadband providers from charging edge providers a fee to avoid having the edge providers' content, service, or application blocked from reaching the broadband provider's end-user customer. (We note that during oral argument in the Verizon case, Verizon told the court that ''in paragraph 64 of the Order the Agency also sets forth the no charging of edge providers rule as a corollary to the no blocking rule, and that's a large part of what is causing us our harm here.'' In response, Judge Silberman stated, ''if you were allowed to charge, which are you assuming you're allowed to charge because of the anti-common carrier point of view, if somebody refused to pay then just like in the dispute between C[B]S and Warner, Time Warner . . . you could refuse to carry.'' Verizon's counsel responded: ''[r]ight.'' Verizon Oral Arg. Tr. at 28.)
114. Rejection of the Minimum Level of Access Standard. The 2014 Open Internet NPRM proposed that the no-blocking rule would prohibit broadband providers from depriving edge providers of a minimum level of access to the broadband provider's subscribers and sought comment on how to define that minimum level of service. After consideration of the record, we reject the minimum level of access standard. Broadband providers, edge providers, public interest organizations, and other parties note the practical and technical difficulties associated with setting any such minimum level of access. For example, some parties note the uncertainty created by an indefinite standard. Other parties observe that in creating any such standard of service for no-blocking, the Commission risks jeopardizing innovation. We agree with these arguments and many others in the record expressing concern with the proposed minimum level of access standard.
115. The no-blocking rule we adopt today prohibits broadband providers from blocking access to lawful Internet content, applications, services, and non-harmful devices. We believe that this approach will allow broadband providers to honor their service commitments to their subscribers without relying upon the concept of a specified level of service to those subscribers or edge providers under the no-blocking rule. We further believe that the separate no-throttling rule discussed below provides appropriate protections against harmful conduct that degrades traffic but does not constitute outright blocking.
116. Application of the No-Blocking Rule to Mobile. In 2010, the Commission limited the no-blocking rule for mobile to lawful Web sites and applications that competed with a provider's voice or video telephony services, subject to reasonable network management. The 2014 Open Internet NPRM, citing ''the operational constraints that affect mobile broadband services, the rapidly evolving nature of the mobile broadband technologies, and the generally greater amount of consumer choice for mobile broadband services than for fixed,'' proposed to retain the 2010 no-blocking rule. The Commission sought comment on this proposal.
117. For the reasons set forth above, including consumer expectations, the Commission's experience with open Internet regulations in the 700 MHz C Block, and the advances in the mobile broadband industry since 2010, we conclude instead that the same no-blocking rule should apply to both fixed and mobile broadband Internet access services. Accordingly, as with fixed service, a consumer's mobile broadband provider cannot block a consumer from accessing lawful content, applications, services, or non-harmful devices, regardless of whether the content, applications, services, or devices (In evaluating the reasonable network management exception to the no-blocking rule, the Commission will drawing upon its experience with the no-blocking rule in the 700 MHz C Block.) compete with a provider's own offerings, subject to reasonable network management.
118. All national mobile broadband providers, among others, opposed the application of the broader no-blocking rule to mobile broadband, arguing, for example, that mobile broadband providers need the ability to block unwanted traffic and spam. They also argue that the particular challenges of managing a mobile broadband network, for example the unknown effects of apps, require additional flexibility to block traffic. As discussed below, we recognize that additional flexibility may be required in mobile network management practices, but find that the reasonable network management exception we adopt today allows sufficient flexibility: The blocking of harmful or unwanted traffic remains a legitimate network management purpose, and is permissible when pursued through reasonable network management practices.
b. Preventing Throttling of Lawful Content, Applications, Services, and Non-Harmful Devices119. In the 2014 Open Internet NPRM, the Commission proposed that degradation of lawful content or services below a specified level of service would violate a no-blocking rule. While certain broadband Internet access provider conduct may result in degradation of an end user's Internet experience that is tantamount to blocking, we believe that this conduct requires delineation in an explicit rule rather than through commentary as part of the no-blocking rule. Thus, we adopt a separate no-throttling rule applicable to both fixed and mobile providers of broadband Internet access service:
120. With the no-throttling rule, we ban conduct that is not outright blocking, but inhibits the delivery of particular content, applications, or services, or particular classes of content, applications, or services. Likewise, we prohibit conduct that impairs or degrades lawful traffic to a non-harmful device or class of devices. We interpret this prohibition to include, for example, any conduct by a broadband Internet access service provider that impairs, degrades, slows down, or renders effectively unusable particular content, services, applications, or devices, that is not reasonable network management. For purposes of this rule, the meaning of ''content, applications, and services'' has the same as the meaning given to this phrase in the no-blocking rule. Like the no-blocking rule, broadband providers may not impose a fee on edge providers to avoid having the edge providers' content, service, or application throttled. Further, transfers of unlawful content or unlawful transfers of content are not protected by the no-throttling rule. We will consider potential violations of the no-throttling rule under the enforcement provisions outlined below.
121. We find that a prohibition on throttling is as necessary as a rule prohibiting blocking. Without an equally strong no-throttling rule, parties note that the no-blocking rule will not be as effective because broadband providers might otherwise engage in conduct that harms the open Internet but falls short of outright blocking. For example, the record notes the existence of numerous practices that broadband providers can engage in to degrade an end user's experience.
122. Because our no-throttling rule addresses instances in which a broadband provider targets particular content, applications, services, or non-harmful devices, it does not address a practice of slowing down an end user's connection to the Internet based on a choice made by the end user. For instance, a broadband provider may offer a data plan in which a subscriber receives a set amount of data at one speed tier and any remaining data at a lower tier. If the Commission were concerned about the particulars of a data plan, it could review it under the no-unreasonable interference/disadvantage standard. In contrast, if a broadband provider degraded the delivery of a particular application (e.g., a disfavored VoIP service) or class of application (e.g., all VoIP applications), it would violate the bright-line no-throttling rule. We note that user-selected data plans with reduced speeds must comply with our transparency rule, such that the limitations of the plan are clearly and accurately communicated to the subscriber.
123. The no-throttling rule also addresses conduct that impairs or degrades content, applications, or services that might compete with a broadband provider's affiliated content. For example, if a broadband provider and an unaffiliated entity both offered over-the-top applications, the no-throttling rule would prohibit broadband providers from constraining bandwidth for the competing over-the-top offering to prevent it from reaching the broadband provider's end user in the same manner as the affiliated application.
124. As in the 2010 Open Internet Order, we continue to recognize that in order to optimize the end-user experience, broadband providers must be permitted to engage in reasonable network management practices. We emphasize, however, that to be eligible for consideration under the reasonable network management exception, a network management practice that would otherwise violate the no-throttling rule must be used reasonably and primarily for network management purposes, and not for business purposes. (While not within the definition of ''throttling'' for purposes of our no-throttling rule, the slowing of subscribers' content on an application agnostic basis, including as an element of subscribers' purchased service plans, will be evaluated under the transparency rule and the no-unreasonable interference/disadvantage standard.)
c. No Paid Prioritization125. In the 2014 Open Internet NPRM, the Commission sought comment on suggestions to impose a flat ban on paid prioritization services, including whether all paid prioritization practices, or some of them, could be treated as per se violations of the commercially-reasonable standard or any other standard based on any source of legal authority. For reasons explained below, we conclude that paid prioritization network practices harm consumers, competition, and innovation, as well as create disincentives to promote broadband deployment and, as such, adopt a bright-line rule against such practices. Accordingly, today we ban arrangements in which the broadband service provider accepts consideration (monetary or otherwise) from a third party to manage the network in a manner that benefits particular content, applications, services, or devices. We also ban arrangements where a provider manages its network in a manner that favors the content, applications, services or devices of an affiliated entity. (We consider arrangements of this kind to be paid prioritization, even when there is no exchange of payment or other consideration between the broadband Internet access service provider and the affiliated entity.) Any broadband provider that engages in such practices will be subject to enforcement action, including forfeitures and other penalties. (Other forms of traffic prioritization, including practices that serve a public safety purpose, may be acceptable under our rules as reasonable network management.) We adopt the following rule banning paid prioritization arrangements:
126. The paid prioritization ban we adopt today is based on the record that has developed in this proceeding. The record is rife with commenter concerns regarding preferential treatment arrangements, with many advocating a flat ban on paid prioritization. Commenters assert that permitting paid prioritization will result in the bifurcating of the Internet into a ''fast'' lane for those willing and able to pay and a ''slow'' lane for everyone else. As several commenters observe, allowing for the purchase of priority treatment can lead to degraded performance'--in the form of higher latency, increased risk of packet loss, or, in aggregate, lower bandwidth'--for traffic that is not covered by such an arrangement. Commenters further argue that paid prioritization will introduce artificial barriers to entry, distort the market, harm competition, harm consumers, discourage innovation, undermine public safety and universal service, and harm free expression. Vimeo, for instance, argues that paid prioritization ''would disadvantage user-generated video and independent filmmakers'' that lack the resources of major film studios to pay priority rates for dissemination of content. Engine Advocacy meanwhile asserts that ''[s]ome unfunded early startups may not be able to afford [to pay for priority treatment] (particularly if the product would be data-intensive) and will not start a company,'' resulting in ''reduce[d] entrepreneurship.'' Commenters assert that if paid prioritization became widespread, it would make reliance on consumers' ordinary, non-prioritized access to the Internet an increasingly unattractive and competitively nonviable option. The Commission's conclusion is supported by a well-established body of economic literature, (The access provided by the core network is an intermediate input into the myriad of final products produced by edge providers. While it is granted that for a firm selling final goods, price discrimination can be both profitable and enhance welfare, it has been argued that the reverse is also true when intermediate goods are considered.) including Commission staff working papers.
127. It is well-established that broadband providers have both the incentive and ability to engage in paid prioritization. In its Verizon opinion, the DC Circuit noted that providers ''have powerful incentives to accept fees from edge providers, either in return for excluding their competitors or for granting them prioritized access to end users.'' Indeed, at oral argument Verizon's counsel announced that ''but for [the 2010 Open Internet Order] rules we would be exploring [such] commercial arrangements.'' While we appreciate that several broadband providers have claimed that they do not engage in paid prioritization or that they have no plans to do so, (For example, we note that in Verizon's letter to Chairman Leahy, the company states ''[a]s we have said before, and affirm again here, Verizon has no plans to engage in paid prioritization of Internet traffic.'' Verizon Letter to Leahy at 1. However, in contrast to this statement, at oral argument in the Verizon case, counsel for Verizon explained that the company would pursue such arrangements if not for the 2010 Open Internet rules which prevented them.) such statements do not have the force of a legal rule that prevents them from doing so in the future. The future openness of the Internet should not turn on the decision of a particular company. We are concerned that if paid prioritization practices were to become widespread, the damage to Internet openness could be difficult to reverse. We agree that ''[u]nraveling a web of discriminatory deals after significant investments have been made, business plans have been built, and technologies have been deployed would be a complicated undertaking both logistically and politically.'' Further, documenting the harms could prove challenging, as it is impossible to identify small businesses and new applications that are stifled before they become commercially viable. Prioritizing some traffic over others based on payment or other consideration from an edge provider could fundamentally alter the Internet as a whole by creating artificial motivations and constraints on its use, damaging the web of relationships and interactions that define the value of the Internet for both end users and edge providers, and posing a risk of harm to consumers, competition, and innovation. Thus, because of the very real concerns about the chilling effects that preferential treatment arrangements could have on the virtuous cycle of innovation, consumer demand, and investment, we adopt a bright-line rule banning paid prioritization arrangements. (Some commenters argue that consumer disclosures about such practices are sufficient. However, the average consumer does not have the time or specialized knowledge to sort through the implications, and regardless, in many areas of the country, consumers simply do not have multiple, equivalent choices.)
128. In arguing against such a ban, ADTRAN asserts that it would ''cement the advantages enjoyed by the largest edge providers that presently obtain the functional equivalent of priority access by constructing their own extensive networks that interconnect directly with the ISPs.'' We reject this argument. CDT correctly observes that ''[e]stablished entities with substantial resources will always have a variety of advantages'' over less established ones, notwithstanding any rules we adopt. We do not seek to disrupt the legitimate benefits that may accrue to edge providers that have invested in enhancing the delivery of their services to end users. On the contrary, such investments may contribute to the virtuous cycle by stimulating further competition and innovation among edge providers, to the ultimate benefit of consumers. We also clarify that the ban on paid prioritization does not restrict the ability of a broadband provider and CDN to interconnect.
129. We find that a flat ban on paid prioritization has advantages over alternative approaches identified in the record. Prohibiting this practice outright will help to foster broadband network investment by setting clear boundaries of acceptable and unacceptable behavior. It will also protect consumers against a harmful practice that may be difficult to understand, even if disclosed. In addition, this approach relieves small edge providers, innovators, and consumers of the burden of detecting and challenging instances of harmful paid prioritization. Given the potential harms to the virtuous cycle, we believe it is more appropriate to impose an ex ante ban on such practices, while entertaining waiver requests under exceptional circumstances.
130. Under our longstanding waiver rule, the Commission may waive any rule ''in whole or in part, for good cause shown.'' General waiver of the Commission's rules is appropriate only if special circumstances warrant a deviation from the general rule, and such a deviation will serve the public interest. In some cases, however, the Commission adopts specific rules concerning the factors that will be used to examine a waiver or exemption request. We believe that such guidance is appropriate here to make clear the very limited circumstances in which the Commission would be willing to allow paid prioritization. Accordingly, we adopt a rule concerning waiver of the paid prioritization ban that establishes a balancing test, as follows:
131. In support of any waiver request, the applicant therefore must make two related showings. First, the applicant must demonstrate that the practice will have some significant public interest benefit, such as providing evidence that the practice furthers competition, innovation, consumer demand, or investment. Second, the applicant must demonstrate that the practice does not harm the nature of the open Internet, including, but not limited to, providing evidence that the practice:
Does not materially degrade or threaten to materially degrade the broadband Internet access service of the general public;does not hinder consumer choice;does not impair competition, innovation, consumer demand, or investment; anddoes not impede any forms of expressions, types of service, or points of view.132. An applicant seeking waiver relief under this rule faces a high bar. We anticipate granting such relief only in exceptional cases. (For instance, several commenters argue that paid prioritization arrangements could improve the provision of telemedicine services.)
2. No Unreasonable Interference or Unreasonable Disadvantage Standard for Internet Conduct133. In the 2014 Open Internet NPRM, the Commission tentatively concluded that it should adopt a rule requiring broadband providers to use ''commercially reasonable'' practices in the provision of broadband Internet access service, and sought comment on this approach. (The Commission also tentatively concluded that it should operate separately from the proposed no-blocking rule, i.e., conduct acceptable under the no-blocking rule would still be subject to independent examination under the ''commercially reasonable'' standard, and sought comment on this approach.) The Commission also sought comment on whether there were alternative legal standards that the Commission should consider, or whether it should adopt a rule that prohibits unreasonable discrimination and, if so, what legal authority and theories it should rely upon to do so. In addition, the Commission sought comment on how it can ensure that the rule it adopts sufficiently protects against harms to the open Internet, including broadband providers' incentives to disadvantage edge providers or classes of edge providers in ways that would harm Internet openness.
134. The Commission sought comment on what factors it should adopt to ensure commercially reasonable practices that will protect and promote Internet openness, and tentatively concluded that a review of the totality of the circumstances should be preserved to ensure that rules can be applied evenly and fairly in response to changing circumstances. The Commission also recognized that there have been significant changes in the mobile marketplace since 2010, and sought comment on whether and, if so, how these changes should affect the Commission's treatment of mobile services under the rules. (Specifically, the Commission sought comment on whether, under the commercially reasonable rule, mobile networks should be subject to the same totality-of-the circumstances test as fixed broadband, and whether the Commission should apply the commercially reasonable legal standard to mobile broadband.)
135. Preventing Unreasonable Interference or Unreasonable Disadvantage that Harms Consumers and Edge Providers. The three bright-line rules that we adopt today prohibit specific conduct that harms the open Internet. The open nature of the Internet has allowed new products and services to flourish and has broken down geographic barriers to communication, allowing information to flow freely. We believe the rules we adopt today will alleviate many of the concerns identified in the record regarding broadband provider practices that could upset these positive outcomes. However, while these three bright-line rules comprise a critical cornerstone in protecting and promoting the open Internet, we believe that there may exist other current or future practices that cause the type of harms our rules are intended to address. For that reason, we adopt a rule setting forth a no-unreasonable interference/disadvantage standard, under which the Commission can prohibit, on a case-by-case basis, practices that unreasonably interfere with or unreasonably disadvantage the ability of consumers to reach the Internet content, services, and applications of their choosing or of edge providers to access consumers using the Internet.
136. It is critical that access to a robust, open Internet remains a core feature of the communications landscape, but also that there remains leeway for experimentation with innovative offerings. Based on our findings that broadband providers have the incentive and ability to discriminate in their handling of network traffic in ways that can harm the virtuous cycle of innovation, increased end-user demand for broadband access, and increased investment in broadband network infrastructure and technologies, we conclude that a no-unreasonable interference/disadvantage standard to protect the open nature of the Internet is necessary. We adopt this standard to prohibit practices in the broadband Internet access provider's network that harm Internet openness, similar to the approach proposed by the Higher Education coalition and the Center for Democracy and Technology. Specifically, we require that:
137. This ''no-unreasonable interference/disadvantage'' standard will be applied to carefully balance the benefits of innovation against harm to end users and edge providers. It also protects free expression, thus fulfilling the congressional policy that the Internet ''offer[s] a forum for true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity.'' As the Commission found in 2010, and the Verizon court upheld, ''[r]estricting edge providers' ability to reach end users, and limiting end users' ability to choose which edge providers to patronize, would reduce the rate of innovation at the edge and, in turn, the likely rate of improvements to network infrastructure. Similarly, restricting the ability of broadband providers to put the network to innovative uses may reduce the rate of improvements to network infrastructure.'' Under the standard that we adopt today, the Commission can protect against harm to end users' or edge providers' ability to use broadband Internet access service to reach one another. Compared to the no unreasonable discrimination standard adopted by the Commission in 2010, the standard we adopt today is specifically designed to protect against harms to the open nature of the Internet. We note that the standard we adopt today represents our interpretation of sections 201 and 202 in the broadband Internet access context and, independently, our interpretation'--upheld by the Verizon court'--that rules to protect Internet openness promote broadband deployment via the virtuous cycle under section 706 of the 1996 Act.
a. Factors To Guide Application of the Rule138. We adopt our tentative conclusion to follow a case-by-case approach, considering the totality of the circumstances, when analyzing whether conduct satisfies the no-unreasonable interference/disadvantage standard to protect the open Internet. Below we discuss a non-exhaustive list of factors we will use to assess such practices. In adopting this standard, we enable flexibility in business arrangements and ensure that innovation in broadband and edge provider business models is not unduly curtailed. We are mindful that vague or unclear regulatory requirements could stymie rather than encourage innovation, and find that this approach combined with the factors set out below will provide sufficient certainty and guidance to consumers, broadband providers, and edge providers'--particularly smaller entities that might lack experience dealing with broadband providers'--while also allowing parties flexibility in developing new services. (We also note that this Order permits parties to seek advisory opinions regarding application of the Commission's open Internet rules. We view these processes as complementary methods by which parties can seek guidance as to how the open Internet rules apply to particular conduct.) We note that in addition to the following list, there may be other considerations relevant to determining whether a particular practice violates the no-unreasonable interference/disadvantage standard. This approach of adopting a rule of general conduct, followed by guidance as to how to apply it on a case-by-case basis, is not novel. The Commission took a similar approach in 2010 when it adopted the ''no unreasonable discrimination'' rule, which was followed by a discussion of four factors (end-user control, use-agnostic discrimination, standard practices, and transparency). Indeed, for this new rule, we are providing at least as much guidance, if not more, as we did in 2010 for the application of the no unreasonable discrimination rule.
139. End-User Control. A practice that allows end-user control and is consistent with promoting consumer choice is less likely to unreasonably interfere with or cause an unreasonable disadvantage affecting the end user's ability to use the Internet as he or she sees fit. The Commission has long recognized that enabling consumer choice is the best path toward ensuring competitive markets, economic growth, and technical innovation. It is therefore critical that consumers' decisions, rather than those of service providers, remain the driving force behind the development of the Internet. To this end, practices that favor end-user control and empower meaningful consumer choice are more likely to satisfy the no-unreasonable interference/disadvantage standard than those that do not. However, as was true in 2010, we are cognizant that user control and network control are not mutually exclusive, and that many practices will fall somewhere on a spectrum from more end-user-controlled to more broadband provider-controlled. Further, there may be practices controlled entirely by broadband providers that nonetheless satisfy the no-unreasonable interference/disadvantage standard. In all events, however, we emphasize that such practices should be fully transparent to the end user and effectively reflect end users' choices.
140. Competitive Effects. As the Commission has found previously, broadband providers have incentives to interfere with and disadvantage the operation of third-party Internet-based services that compete with the providers' own services. Practices that have anti-competitive effects in the market for applications, services, content, or devices would likely unreasonably interfere with or unreasonably disadvantage edge providers' ability to reach consumers in ways that would have a dampening effect on innovation, interrupting the virtuous cycle. As such, these anticompetitive practices are likely to harm consumers' and edge providers' ability to use broadband Internet access service to reach one another. Conversely, enhanced competition leads to greater options for consumers in services, applications, content, and devices, and as such, practices that would enhance competition would weigh in favor of promoting consumers' and edge providers' ability to use broadband Internet access service to reach one another. In examining the effect on competition of a given practice, we will also review the extent of an entity's vertical integration as well as its relationships with affiliated entities.
141. Consumer Protection. The no-unreasonable interference/disadvantage standard is intended to serve as a strong consumer protection standard. It prohibits broadband providers from employing any deceptive or unfair practice that will unreasonably interfere with or disadvantage end-user consumers' ability to select, access, or use broadband services, applications, or content, so long as the services are lawful, subject to the exception for reasonable network management. For example, unfair or deceptive billing practices, as well as practices that fail to protect the confidentiality of end users' proprietary information, will be unlawful if they unreasonably interfere with or disadvantage end-user consumers' ability to select, access, or use broadband services, applications, or content, so long as the services are lawful, subject to the exception for reasonable network management. While each individual case will be evaluated on its own merits, this rule is intended to include protection against fraudulent practices such as ''cramming'' and ''slamming'' that have long been viewed as unfair and disadvantageous to consumers.
142. Effect on Innovation, Investment, or Broadband Deployment. As the Verizon court recognized, Internet openness drives a ''virtuous cycle'' in which innovations at the edges of the network enhance consumer demand, leading to expanded investments in broadband infrastructure that, in turn, spark new innovations at the edge. As such, practices that stifle innovation, investment, or broadband deployment would likely unreasonably interfere with or unreasonably disadvantage end users' or edge providers' use of the Internet under the legal standard we set forth today.
143. Free Expression. As Congress has recognized, the Internet ''offer[s] a forum for a true diversity of political discourse, unique opportunities for cultural development, and myriad avenues for intellectual activity.'' Practices that threaten the use of the Internet as a platform for free expression would likely unreasonably interfere with or unreasonably disadvantage consumers' and edge providers' ability to use BIAS to communicate with each other, thereby causing harm to that ability. Further, such practices would dampen consumer demand for broadband services, disrupting the virtuous cycle, and harming end user and edge provider use of the Internet under the legal standard we set forth today. (We also note that the no-unreasonable interference/disadvantage standard does not unconstitutionally burden any of the First Amendment rights held by broadband providers because broadband providers are conduits, not speakers, with respect to broadband Internet access services.)
144. Application Agnostic. Application-agnostic (sometimes referred to as use-agnostic) practices likely do not cause an unreasonable interference or an unreasonable disadvantage to end users' or edge providers' ability to use BIAS to communicate with each other. (A network practice is application-agnostic if it does not differentiate in treatment of traffic, or if it differentiates in treatment of traffic without reference to the content, application, or device. A practice is application-specific if it is not application-agnostic. Application-specific network practices include, for example, those applied to traffic that has a particular source or destination, that is generated by a particular application or by an application that belongs to a particular class of applications, that uses a particular application- or transport-layer protocol, or that has particular characteristics (e.g., the size, sequencing, and/or timing of packets). We note, however, that there do exist circumstances where application-agnostic practices raise competitive concerns, and as such may violate our standard to protect the open Internet.) Application-agnostic practices do not interfere with end users' choices about which content, applications, services, or devices to use, nor do they distort competition and unreasonably disadvantage certain edge providers. As such, they likely would not cause harm by unreasonably interfering with or disadvantaging end users or edge providers' ability to communicate using BIAS.
145. Standard Practices. In evaluating whether a practice violates our no-unreasonable interference/disadvantage standard to protect Internet openness, we will consider whether a practice conforms to best practices and technical standards adopted by open, broadly representative, and independent Internet engineering, governance initiatives, or standards-setting organization. Consideration of input from technical advisory groups accounts for the important role these organizations have to play in developing communications policy. We make clear, however, that we are not delegating authority to interpret or implement our rules to outside bodies.
b. Application to Mobile146. As discussed earlier, because of changes that have occurred in the mobile marketplace since 2010, including the widespread deployment of 4G LTE networks and the significant increase in use of mobile broadband Internet access services, we find that it is appropriate to revise our approach for mobile broadband and apply the same openness protections to both fixed and mobile broadband Internet access services, including prohibiting mobile broadband providers from engaging in practices that harm Internet openness. We find that applying the no-unreasonable interference/disadvantage standard to mobile broadband services will help ensure that consumers using mobile broadband services are protected against provider practices that would unreasonably restrict their ability to access a free and open Internet.
147. AT&T, T-Mobile, and Verizon oppose application of a ''commercially reasonable practices'' rule to mobile broadband networks. They argue that competition in the mobile broadband market already ensures that service providers have no incentive to discriminate. CTIA argues that applying a commercial reasonableness standard would deter innovation and limit the ability of providers to differentiate themselves in the marketplace because providers would have to factor in the risk of complaints and investigations. Nokia argues that the Commission should ensure that its rules allow a range of service options. Free State recommends that if the Commission adopts a legally enforceable standard, it should establish a presumption that mobile network management practices benefit consumer welfare and that presumption could only be overcome ''by actual evidence of anticompetitive conduct.''
148. We find that even if the mobile market were sufficiently competitive, competition alone is not sufficient to deter mobile providers from taking actions that would limit Internet openness. As noted above, there have been incidents where mobile providers have acted in a manner inconsistent with open Internet principles and we find that there is a risk that providers will continue to have the incentive to take actions that would favor their own content or services. We also agree with commenters that mobile providers' need for flexibility to manage their network can be accommodated through the reasonable network management exception.
149. In addition, we find that applying the no-unreasonable interference/disadvantage standard to mobile broadband will not affect providers' ability to differentiate themselves in the marketplace. We have crafted the standard we adopt today to prohibit these practices that harm Internet openness while still permitting innovation and experimentation. Nothing in the standard restricts carriers from developing new services or implementing new business models.
c. Rejection of the ''Commercially Reasonable'' Standard150. Based on the record before us, we are persuaded that adopting a legal standard prohibiting commercially unreasonable practices is not the most effective or appropriate approach for protecting and promoting an open Internet. Internet openness involves many relationships that are not business-to-business and serves many purposes that are noncommercial. (In the data roaming context, two commercial entities deal directly with one another to negotiate a fee-for-service agreement, and there is a direct business relationship with contractual privity and a purely commercial purpose on both sides of the transaction. Open Internet protections, by contrast, apply to a context where there may be no direct negotiation and no direct agreement between key parties. Moreover, while broadband providers are commercial entities with commercial purposes, many of the parties seeking to route traffic to broadband subscribers are not.) Commenters also expressed concerns that the commercially reasonable standard would involve a multifactor framework that was not focused on the goals of this open Internet proceeding. In addition, some commenters expressed concern that the legal standard would require permission before innovation, thus creating higher barriers to entry and attendant transaction costs. Smaller edge providers expressed concern that they do not have the resources to fight against commercially unreasonable practices, which could result in an unfair playing field before the Commission. Still others argued that the standard would permit paid prioritization, which could disadvantage smaller entities and individuals. Given these concerns, we decline to adopt our proposed rule to prohibit practices that are not commercially reasonable. Instead, as discussed above, we adopt a governing standard that looks to whether consumers or edge providers face unreasonable interference or unreasonable disadvantages, and makes clear that the standard is not limited to whether a practice is agreeable to commercial parties.
d. Sponsored Data and Usage Allowances151. While our bright-line rule to treat paid prioritization arrangements as unlawful addresses technical prioritization, the record reflects mixed views about other practices, including usage allowances and sponsored data plans. Sponsored data plans (sometimes called zero-rating) enable broadband providers to exclude edge provider content from end users' usage allowances. On the one hand, evidence in the record suggests that these business models may in some instances provide benefits to consumers, with particular reference to their use in the provision of mobile services. Service providers contend that these business models increase choice and lower costs for consumers. Commenters also assert that sophisticated approaches to pricing also benefit edge providers by helping them distinguish themselves in the marketplace and tailor their services to consumer demands. Commenters assert that such sponsored data arrangements also support continued investment in broadband infrastructure and promote the virtuous cycle, and that there exist spillover benefits from sponsored data practices that should be considered. On the other hand, some commenters strongly oppose sponsored data plans, arguing that ''the power to exempt selective services from data caps seriously distorts competition, favors companies with the deepest pockets, and prevents consumers from exercising control over what they are able to access on the Internet,'' again with specific reference to mobile services. In addition, some commenters argue that sponsored data plans are a harmful form of discrimination. The record also reflects concerns that such arrangements may hamper innovation and monetize artificial scarcity.
152. We are mindful of the concerns raised in the record that sponsored data plans have the potential to distort competition by allowing service providers to pick and choose among content and application providers to feature on different service plans. At the same time, new service offerings, depending on how they are structured, could benefit consumers and competition. Accordingly, we will look at and assess such practices under the no-unreasonable interference/disadvantage standard, based on the facts of each individual case, and take action as necessary.
153. The record also reflects differing views over some broadband providers' practices with respect to usage allowances (also called ''data caps''). Usage allowances place limits on the volume of data downloaded by the end user during a fixed period. Once a cap has been reached, the speed at which the end user can access the Internet may be reduced to a slower speed, or the end user may be charged for excess data. Usage allowances may benefit consumers by offering them more choices over a greater range of service options, and, for mobile broadband networks, such plans are the industry norm today, in part reflecting the different capacity issues on mobile networks. Conversely, some commenters have expressed concern that such practices can potentially be used by broadband providers to disadvantage competing over-the-top providers. Given the unresolved debate concerning the benefits and drawbacks of data allowances and usage-based pricing plans, (Regarding usage-based pricing plans, there is similar disagreement over whether these practices are beneficial or harmful for promoting an open Internet.) we decline to make blanket findings about these practices and will address concerns under the no-unreasonable interference/disadvantage on a case-by-case basis.
3. Transparency Requirements To Protect and Promote Internet Openness154. In this section, we adopt enhancements to the existing transparency rule, which covers both content and format of disclosures by providers of broadband Internet access service. As the Commission has previously noted, disclosure requirements are among the least intrusive and most effective regulatory measures at its disposal. We find that the enhanced transparency requirements adopted in the present Order serve the same purposes as those required under the 2010 Open Internet Order: Providing critical information to serve end-user consumers, edge providers of broadband products and services, and the Internet community. The transparency rule, including the enhancements adopted today, also will aid the Commission in enforcing the other open Internet rules and in ensuring that no service provider can evade them through exploitation of narrowly-drawn exceptions for reasonable network management or through evasion of the scope of our rules.
155. In the 2014 Open Internet NPRM, we tentatively concluded that we should enhance the existing transparency rule for end users, edge providers, the Internet community, and the Commission to have the information they need to understand the services they receive and to monitor practices that could undermine the open Internet. The NPRM sought comment on a variety of possible enhancements, including whether to require tailored disclosures for specific constituencies (end users, edge providers, the Internet community); ways to make the content and format of disclosures more accessible and understandable to end users; specific changes to disclosures for network practices that would benefit edge providers; whether there are more effective or more comprehensive ways to measure network performance; whether to require providers to disclose meaningful information regarding source, location, speed, packet loss, and duration of congestion; and whether and how any enhancements should apply to mobile broadband providers in a manner different from their application to fixed broadband providers.
156. Based on the record compiled in response to those proposals, below we set forth targeted, incremental enhancements to the existing transparency rule. We first recap the existing transparency rule, which forms the baseline off of which we build today. Having established that baseline, we describe specific enhancements'--including refinements and expansions in the required disclosures of commercial terms, performance characteristics, and network practices; adoption of a requirement that broadband providers notify end users directly if their individual use of a network will trigger a network practice, based on their demand prior to a period of congestion, that is likely to have a significant impact on the use of the service. We then address a request to exempt small providers from enhancements to the transparency rule, discuss the relationship of the enhancements to the existing transparency rule, and note the role that we anticipate further guidance from Commission staff will continue to play in applying the transparency rule in practice. Lastly, we adopt a voluntary safe harbor (but not a requirement) for a standalone disclosure format that broadband providers may use in meeting the existing requirement to disclose information that meets the needs of end users.
a. The Existing Transparency Rule157. The D.C. Circuit in Verizon upheld the transparency rule, which remains in full force, applicable to both fixed and mobile providers. In enhancing this rule, we build off of the solid foundation established by the Open Internet Order. In that Order, the Commission concluded that effective disclosure of broadband providers' network management practices, performance, and commercial terms of service promotes competition, innovation, investment, end-user choice, and broadband adoption. As a result, the Commission adopted a transparency rule requiring both fixed and mobile providers to ''publicly disclose accurate information regarding the network management practices, performance, and commercial terms'' of their broadband Internet access service. The rule specifies that such disclosures be ''sufficient for consumers to make informed choices regarding the use of such services and for content, application, service, and device providers to develop, market, and maintain Internet offerings.''
158. The 2010 Open Internet Order went on to provide guidance on both the information to be disclosed and the method of disclosure. Within each category of required disclosure (network management practices, performance characteristics, and commercial terms), the Open Internet Order described the type of information to be disclosed. For example, under performance characteristics, the Commission specified, among other things, disclosure of ''expected and actual access speed and latency'' as well as the ''impact of specialized services.'' All disclosures were required to be made ''timely and prominently[,] in plain language accessible to current and prospective end users and edge providers, the Commission, and third parties who wish to monitor network management practices for potential violations of open Internet principles.''
159. In 2011 and 2014, Commission staff provided guidance on interpreting the transparency rule. For example, in addition to other points, the 2011 guidance issued by the Enforcement Bureau and Office of General Counsel (2011 Advisory Guidance) described the means by which fixed and mobile broadband providers should meet the requirement to disclose actual performance of the broadband Internet access services they offer and to disclose network management practices, performance, characteristics, and commercial terms ''at the point of sale.'' The 2011 Advisory Guidance also clarified the statement in the Open Internet Order that effective disclosures ''will likely include some or all of the'' information listed in paragraphs 56 and 98, but also that the list was ''not necessarily exhaustive, nor is it a safe harbor,'' and that ''there may be additional information, not included [in paragraphs 56 and 98], that should be disclosed for a particular broadband service to comply with the rule in light of relevant circumstances.'' Acknowledging the concern of some providers that ''they could be liable for failing to disclose additional types of information that they may not be aware are subject to disclosure,'' the 2011 Advisory Guidance stated that disclosure of the information described in those paragraphs ''will suffice for compliance with the transparency rule at this time.''
160. In an advisory issued in July 2014 (2014 Advisory Guidance), the Enforcement Bureau explained that the transparency rule ''prevents a broadband Internet access provider from making assertions about its service that contain errors, are inconsistent with the provider's disclosure statement, or are misleading or deceptive.'' Accurate disclosures ''ensure that consumers'--as well as the Commission and the public as a whole'--are informed about a broadband Internet access provider's network management practices, performance, and commercial terms.'' As the 2014 Advisory Guidance recognized, the transparency rule ''can achieve its purpose of sufficiently informing consumers only if advertisements and other public statements that broadband Internet access providers make about their services are accurate and consistent with any official disclosures that providers post on their Web sites or make available in stores or over the phone.'' Thus, ''a provider making an inaccurate assertion about its service performance in an advertisement, where the description is most likely to be seen by consumers, could not defend itself against a transparency rule violation by pointing to an `accurate' official disclosure in some other public place.'' Allowing such defenses would undermine the core purpose of the transparency rule.
161. Today, we build off of this baseline: The transparency rule requirements established in 2010, and interpreted by the 2011 and 2014 Advisory Guidance. We also take this opportunity to make two clarifications to the existing rule. First, all of the pieces of information described in paragraphs 56 and 98 of the Open Internet Order have been required as part of the current transparency rule, and we will continue to require the information as part of our enhanced rule. The only exception is the requirement to disclose ''typical frequency of congestion,'' which we no longer require since it is superseded by more precise disclosures already required by the rule, such as actual performance. Second, the requirement that all disclosures made by a broadband provider be accurate includes the need to maintain the accuracy of these disclosures. Thus, whenever there is a material change in a provider's disclosure of commercial terms, network practices, or performance characteristics, the provider has a duty to update the disclosure in a manner that is ''timely and prominently disclosed in plain language accessible to current and prospective end users and edge providers, the Commission, and third parties who wish to monitor network management practices for potential violations of open Internet principles.'' (We decline, however, to adopt a specific timeframe concerning the updating of disclosures following a material change (e.g., 24 hours).) For these purposes, a ''material'' change is any change that a reasonable consumer or edge provider would consider important to their decisions on their choice of provider, service, or application.
b. Enhancing the Transparency Rule162. We adopt the tentative conclusion in the 2014 Open Internet NPRM to enhance the existing transparency rule in certain respects. We conclude that enhancing the existing transparency rule as described below will better enable end-user consumers to make informed choices about broadband services by providing them with timely information tailored more specifically to their needs, and will similarly provide edge providers with the information necessary to develop new content, applications, services, and devices that promote the virtuous cycle of investment and innovation.
(i) Enhancements to Content of Required Disclosures163. As noted above, the existing transparency rule requires specific disclosures with respect to network practices, performance characteristics, and commercial terms. As we noted in the 2014 Open Internet NPRM, the Commission has continued to receive numerous complaints from consumers suggesting that broadband providers are not providing information that end users and edge providers need to receive. We noted that consumers continue to express concern that the speed of their service falls short of advertised speeds, that billed amounts are greater than advertised rates, and that consumers are unable to determine the source of slow or congested service. In addition, we noted that end users are often surprised that broadband providers slow or terminate service based on ''excessive use'' or based on other practices, and that consumers report confusion regarding data thresholds or caps. Further, the need for enhanced transparency is bolstered by the needs of certain user groups who rely on broadband as their primary avenue for communications, such as people with disabilities. These enhancements will also serve edge providers. The record supports our conclusions that more specific and detailed disclosures are necessary to ensure that edge providers can ''develop, market, and maintain Internet offerings.'' Such disclosures will also help the wider Internet community monitor provider practices to ensure compliance with our Open Internet rules and providers' own policies.
164. Commercial Terms. The existing transparency rule defines the required disclosure of ''commercial terms'' to include pricing, privacy policies, and redress options. While we do not take additional action concerning the requirement to disclose privacy policies and redress options, the record demonstrates need for specific required disclosures about price and related terms. In particular, we specify the disclosures of commercial terms for prices, other fees, and data caps and allowances as follows:
Price'--The full monthly service charge. Any promotional rates should be clearly noted as such, specify the duration of the promotional period, and note the full monthly service charge the consumer will incur after the expiration of the promotional period.Other Fees'--All additional one time and/or recurring fees and/or surcharges the consumer may incur either to initiate, maintain, or discontinue service, including the name, definition, and cost of each additional fee. (The Commission agrees that the magnitude of these fees bears on consumer decision-making when choosing or switching providers. As a result, the provision of explicit information regarding these fees by providers both promotes competition and assists in consumer decision making.) These may include modem rental fees, installation fees, service charges, and early termination fees, among others. Data Caps and Allowances'--Any data caps or allowances that are a part of the plan the consumer is purchasing, as well as the consequences of exceeding the cap or allowance (e.g., additional charges, loss of service for the remainder of the billing cycle).To be clear, these disclosures may have been required in certain circumstances under the existing transparency rule in order to provide information ''sufficient for consumers to make informed choices.'' Here, we now require that this information always be disclosed. In addition, per the current rule, disclosures of commercial terms shall also include the provider's privacy policies (''[f]or example, whether network management practices entail inspection of network traffic, and whether traffic information is stored, provided to third parties, or used by the carrier for non-network management purposes'') and redress options (''practices for resolving end-user and edge provider complaints and questions'').
165. Performance Characteristics. The existing transparency rule requires broadband providers to disclose accurate information regarding network performance for each broadband service they offer. This category includes a service description (''[a] general description of the service, including the service technology, expected and actual access speed and latency, and the suitability of the service for real-time applications'') and the impact of specialized services (''[i]f applicable, what specialized services, if any, are offered to end users, and whether and how any specialized services may affect the last-mile capacity available for, and the performance, or broadband Internet access service'').
166. With respect to network performance, we adopt the following enhancements:
The existing transparency rule requires disclosure of actual network performance. In adopting that requirement, the Commission mentioned speed and latency as two key measures. Today we include packet loss as a necessary part of the network performance disclosure.We expect that disclosures to consumers of actual network performance data should be reasonably related to the performance the consumer would likely experience in the geographic area in which the consumer is purchasing service.We also expect that network performance will be measured in terms of average performance over a reasonable period of time and during times of peak usage. (We recognize that parties have expressed concern about providing disclosures about network performance on a real-time basis. The enhancements to the transparency rule we adopt today do not include such a requirement. Given that the performance of mobile broadband networks is subject to a greater array of factors than fixed networks, we note that disclosure of a range of speeds may be more appropriate for mobile broadband consumers.)We clarify that, for mobile broadband providers, the obligation in the existing transparency rule to disclose network performance information for ''each broadband service'' refers to separate disclosures for services with each technology (e.g., 3G and 4G). Furthermore, with the exception of small providers, mobile broadband providers today can be expected to have access to reliable actual data on performance of their networks representative of the geographic area in which the consumer is purchasing service'--through their own or third-party testing'--that would be the source of the disclosure. (Per the 2011 Advisory Guidance, those mobile broadband providers that ''lack reasonable access'' to reliable information on their network performance metrics may disclose a ''Typical Speed Range (TSR)'' to meet the requirement to disclose actual performance. In any event, we expect that mobile broadband providers' disclosure of actual performance data will be based on accepted industry practices and principles of statistical validity.) Commission staff also continue to refine the mobile MBA program, which could at the appropriate time be declared a safe harbor for mobile broadband providers. (Participation in the Measuring Broadband America (MBA) program continues to be a safe harbor for fixed broadband providers in meeting the requirement to disclose actual network performance. The 2011 Advisory Guidance further stated that fixed providers that choose not to participate in MBA may measure and disclose performance of their broadband offerings using the MBA's methodology, internal testing, consumer speed data, or other data, including reliable, relevant data from third-party sources. Various software-based broadband performance tests are available as potential tools for end users and companies to estimate actual broadband performanceAs noted above, we anticipate that the measurement methodology used for the MBA project will continue to be refined, which in turn will enhance the effectiveness of network performance disclosures generally.)We decline to otherwise codify specific methodologies for measuring the ''actual performance'' required by the existing transparency rule. We find that, as in 2010, there is benefit in permitting measurement methodologies to evolve and improve over time, with further guidance from Bureaus and Offices'--like in 2011'--as to acceptable methodologies. (We expect that acceptable methodologies will be grounded in commonly accepted principles of scientific research, good engineering practices, and transparency.) We delegate authority to our Chief Technologist to lead this effort.
167. In addition, the existing rule concerning performance characteristics requires disclosure of the ''impact'' of specialized services, including ''what specialized services, if any, are offered to end users, and ''whether and how any specialized services may affect the last-mile capacity available for, and the performance of, broadband Internet access service.'' As discussed below, today we more properly refer to these services as ''non-BIAS data services.'' Given that the Commission will closely scrutinize offerings of non-BIAS data services and their impact on competition, we clarify that in addition to the requirements of the existing rule concerning what was formerly referred to as ''specialized services,'' disclosure of the impact of non-BIAS data services includes a description of whether the service relies on particular network practices and whether similar functionality is available to applications and services offered over broadband Internet access service.
168. The 2014 Open Internet NPRM tentatively concluded that we should require that broadband providers disclose meaningful information regarding the source, location, timing, speed, packet loss, and duration of network congestion. As discussed above, we continue to require disclosure of actual network speed and latency (as in 2010), and also require disclosure of packet loss. We decline at this time to require disclosure of the source, location, timing, or duration of network congestion, noting that congestion may originate beyond the broadband provider's network and the limitations of a broadband provider's knowledge of some of these performance characteristics. (Short-term congestion occurs whenever instantaneous demand exceeds capacity. Since demand often consists of the aggregation of a large number of users' traffic, it is technologically difficult to determine the sources of each component of the aggregate traffic) We also asked whether the Commission should expand its transparency efforts to include measurement of other aspects of service. We decline at this time to require disclosure of packet corruption or jitter, noting that commenters expressed concerns regarding the difficulty of defining metrics for such performance characteristics. (Furthermore, corrupted packets may be included in the packet loss performance characteristic.)
169. Network Practices. The existing transparency rule requires disclosure of network practices, including specific disclosures related to congestion management, application-specific behavior, device attachment rules, and security. (Additionally, ''mobile broadband providers should follow the guidance the Commission provided to licensees of the upper 700 MHz C Block spectrum regarding compliance with their disclosure obligations, particularly regarding disclosure to third-party application developers and device manufacturers of criteria and approval procedures (to the extent applicable). For example, these disclosures include, to the extent applicable, establishing a transparent and efficient approval process for third parties, as set forth in section 27.16(d).''2010 Open Internet Order (76 FR 59129-01, 59210, Sept. 23, 2011), 25 FCC Rcd at 17959, para. 98 As discussed above, this information remains part of the transparency rule, with the exception of the requirement to disclose the ''typical frequency of congestion.'') Today, in recognition of significant consumer concerns presented in the record, we further clarify that disclosure of network practices shall include practices that are applied to traffic associated with a particular user or user group, including any application-agnostic degradation of service to a particular end user. (For example, a broadband Internet access service provider may define user groups based on the service plan to which users are subscribed, the volume of data that users send or receive over a specified time period of time or under specific network conditions, or the location of users.) We also clarify that disclosures of user-based or application-based practices should include the purpose of the practice, which users or data plans may be affected, the triggers that activate the use of the practice, the types of traffic that are subject to the practice, and the practice's likely effects on end users' experiences. While some of these disclosures may have been required in certain circumstances under the existing transparency rule, here we clarify that this information should always be disclosed. These disclosures with respect to network practices are necessary: for the public and the Commission to know about the existence of network practices that may be evaluated under the rules, for users to understand when and how practices may affect them, and for edge providers to develop Internet offerings.
170. The 2014 Open Internet NPRM asked whether we should require disclosures that permit end users to identify application-specific usage or to distinguish which user or device contributed to which part of the total data usage. We decline at this time to require such disclosures, noting that collection of application-specific usage by a broadband provider may require use of deep packet inspection practices that may pose privacy concerns for consumers.
(ii) Enhancements to the Means of Disclosure171. The existing transparency rule requires, at a minimum, the prominent display of disclosures on a publicly available Web site and disclosure of relevant information at the point of sale. (Broadband providers must actually disclose information required for consumers to make an ''informed choice'' regarding the purchase or use of broadband services at the point of sale. It is not sufficient for broadband providers simply to provide a link to their disclosures.) We enhance the rule to require a mechanism for directly notifying end users if their individual use of a network will trigger a network practice, based on their demand prior to a period of congestion, that is likely to have a significant impact on the end user's use of the service. The purpose of such notification is to provide the affected end users with sufficient information and time to consider adjusting their usage to avoid application of the practice.
(iii) Small Businesses172. The record reflects the concerns of some commenters that enhanced transparency requirements will be particularly burdensome for smaller providers. ACA, for example, suggests that smaller providers be exempted from the provision of such disclosures. ACA states that its member companies are complying with the current transparency requirements, which ''strike the right balance between edge provider and consumer needs for pertinent information and the need to provide ISPs with some flexibility in how they disclose pertinent information.'' We believe that the transparency enhancements adopted today are modest in nature. For example, we have declined to require certain disclosures proposed in the 2014 Open Internet NPRM such as the source of congestion, packet corruption, and jitter in recognition of commenter concerns with the benefits and difficulty of making these particular disclosures. We also do not require ''real-time'' disclosures. These proposed disclosures appear to form the bulk of ACA's concerns. Nevertheless, we take seriously the concerns that ACA raises and those of smaller broadband providers generally.
173. Out of an abundance of caution, we grant a temporary exemption for these providers, with the potential for that exemption to become permanent. It is unclear, however, how best to delineate the boundaries of this exception. Clearly, it should include those providers likely to be most disproportionately affected by new disclosure requirements. ACA ''acknowledge[s] that Congress and the Commission have defined `small' in various ways.'' One metric to which ACA points is the approach that the Commission used in its 2013 Rural Call Completion Order, which excepted providers with 100,000 or fewer subscriber lines, aggregated across all affiliates, from certain recordkeeping, retention, and reporting rules. We adopt this definition for purposes of the temporary exemption that we adopt today. Accordingly, we hereby adopt a temporary exemption from the enhancements to the transparency rule for those providers of broadband Internet access service (whether fixed or mobile) with 100,000 or fewer broadband subscribers as per their most recent Form 477, aggregated over all the providers' affiliates.
174. Yet we believe that both the appropriateness of the exemption and the threshold require further deliberation. Accordingly, the exemption we adopt is only temporary. We delegate to the Consumer & Governmental Affairs Bureau (CGB) the authority to determine whether to maintain the exemption and, if so, the appropriate threshold for it. We direct CGB to seek comment on the question and to adopt an Order announcing whether it is maintaining an exemption and at what level by no later than December 15, 2015. Until such time, notwithstanding any approval received by the Office of Management & Budget for the enhancements adopted today, such enhancements will not apply to providers of broadband Internet access service with 100,000 or fewer subscribers.
175. To be clear, all providers of broadband Internet access service, including small providers, remain subject to the existing transparency rule adopted in 2010. The temporary exemption adopted today, and any permanent exemption adopted by CGB, applies only to the enhanced disclosures described above. As ACA states in its request for an exemption for small providers, ''[i]rrespective of which definition of small that is chosen by the Commission, exempt ISPs would still be required to comply with the transparency requirements contained in section 8.3 of the Commission's rules today.''
(iv) Safe Harbor for Form of Disclosure to Consumers176. The existing transparency rule requires disclosures sufficient both to enable ''consumers to make informed choices regarding use of [broadband] services''and''content, application, service, and device providers to develop, market, and maintain Internet offerings.'' As in 2010, a central purpose of the transparency rule remains to provide information useful to both constituencies. As we noted in the 2014 Open Internet NPRM, we are concerned that disclosures are not consistently provided in a manner that adequately satisfies the divergent informational needs of all affected parties. For example, disclosures at times are ill-defined; do not consistently measure service offerings, making comparisons difficult; or are not easily found on provider Web sites. In the 2014 Open Internet NPRM, we therefore proposed requiring separate disclosure statements to meet both the basic informational needs of consumers and the more technical needs of edge providers.
177. The record reflects concerns, however, as to a requirement to offer tailored disclosures. For example, ACA states that disclosures tailored to edge providers ''would require small ISPs, who manage their own networks and may only have a handful of network operators, engineers, and head end staff to make onerous expenditures of both personnel hours and financial resources.'' Bright House ''question[s] the feasibility of creating disclosures tailored to the varied and potentially unique needs of the hundreds of such providers, particularly with no reciprocal obligation.'' Similarly, Tech Freedom and the International Center for Law and Economics assert that ''requiring ISPs to tailor their disclosures to the various parties the ISPs deal with (i.e., consumers, edge providers, the Internet community, and the FCC) greatly increases the burden of complying with these disclosures, especially as such disclosures must be periodically updated to reflect changes to ISPs' network management practices.'' In light of these concerns, we decline to require separate disclosures at this time.
178. In declining to mandate separate disclosures, however, we do not intend to diminish the existing requirement for disclosure of information sufficient for both end users and edge providers. The Commission has not established that a single disclosure would always satisfy the rule; rather, it merely stated broadband providers ''may be able'' to satisfy the transparency rule through a single disclosure. We are especially concerned that in some cases a single disclosure statement may be too detailed and technical to meet the needs of consumers, rather than a separate consumer-focused disclosure. As noted in the 2014 Open Internet NPRM, both academic research and the Commission's experience with consumer issues have demonstrated that the manner in which providers display information to consumers can have as much impact on consumer decisions as the information itself. A stand-alone format has proven effective in conveying useful information in other contexts. We also note that the OIAC and OTI have proposed the use of a label to disclose the most important information to users of broadband service. In addition, the United Kingdom's largest Internet service providers agreed to produce a comparable table of traffic management information called a Key Facts Indicator.
179. Therefore, we are establishing a voluntary safe harbor for the format and nature of the required disclosure to consumers. To take advantage of the safe harbor, a broadband provider must provide a consumer-focused, standalone disclosure. We decline, however, to mandate the exact format for such disclosures at this time. (We note that although we have sought comment on what format would be most effective, the record is lacking on specific details as to how such a disclosure should be formatted.) Rather, we seek the advice of our Consumer Advisory Committee, which is composed of both industry and consumer interests, including those representing people with disabilities. (The Committee's purpose is to make recommendations to the Commission regarding consumer issues within Commission's jurisdiction and to facilitate the participation of consumers (including people with disabilities and underserved populations, such as Native Americans and persons living in rural areas) in proceedings before the Commission.) We find that the Committee's experience with consumer disclosure issues (For example, the Committee has studied the value of standardized disclosures and their contents.) makes it an ideal body to recommend a disclosure format that should be clear and easy to read'--similar to a nutrition label'--to allow consumers to easily compare the services of different providers. We believe the CAC is uniquely able to recommend a disclosure format that both anticipates and addresses provider compliance burdens while ensuring the utility of the disclosures for consumers.
180. We direct the CAC to formulate and submit to the Commission a proposed disclosure format, based on input from a broad range of stakeholders, within six months of the time that its new membership is reconstituted, but, in any event, no later than October 31, 2015. The disclosure format must be accessible to persons with disabilities. We expect that the CAC will consider whether to propose the same or different formats for fixed and mobile broadband providers. In addition, we expect that the CAC will consider whether and how a standard format for mobile broadband providers will allow providers to continue to differentiate their services competitively, as well as how mobile broadband providers can effectively disclose commercial terms to consumers regarding myriad plans in a manner that is not administratively burdensome. The Commission delegates authority to the Wireline Competition Bureau, Wireless Telecommunications Bureau, and Consumer & Governmental Affairs Bureau to issue a Public Notice announcing whether the proposed format or formats meet its expectations for the safe harbor for making consumer-facing disclosures. If the format or formats do not meet such expectations, the Bureaus may ask the CAC to consider changes and submit a revised proposal for the Bureaus' review within 90 days of the Bureaus' request.
181. Broadband providers that voluntarily adopt this format will be presumed to be in compliance with the requirement to make transparency disclosures in a format that meets the needs of consumers. Providers that choose instead to maintain their own format'--for example, a unitary disclosure intended both for consumers and edge providers'--will bear the burden, if challenged, of explaining how a single disclosure statement meets the needs of both consumers and edge providers. To be clear, use of the consumer disclosure format is a safe harbor with respect to the format of the required disclosure to consumers. A broadband provider meeting the safe harbor could still be found to be in violation of the rule, for example, if the content of that disclosure (e.g., prices) is misleading or inaccurate, or the provider makes misleading or inaccurate statements in another context, such as advertisements or other statements to consumers. Moreover, broadband providers using the safe harbor should continue to provide the more detailed disclosure statement for the benefit of edge providers.
c. Enforcement and Relationship to the Existing Transparency Rule182. Despite these enhancements to the existing transparency rule, we clarify that we are being specific in order to provide additional guidance. The transparency rule has always required broadband providers to disclose information ''sufficient for consumers to make informed choices'' (Even where a particular category of information discussed above was not specified in the 2010 Open Internet Order that does not mean that disclosure of that information has not consistently been required under the transparency rule. If such information is necessary for a consumer to make an ''informed choice'' regarding the purchase or use of broadband service, disclosure of that information is a fundamental requirement of the transparency rule.) and that test could, in particular circumstances, include the enhancements that we expressly adopt today. We also reiterate that under both the existing transparency rule and the enhancements adopted in this Order, all disclosures that broadband providers make about their network practices, performance, and commercial terms of broadband services must be accurate and not misleading.
183. In the 2014 Open Internet NPRM we also requested comment on how the Commission could best enforce the transparency rule. In particular, we noted that a key objective of the transparency rule is to enable the Commission to collect information necessary to access, report, and enforce the open Internet rules. For example, we sought comment on whether to require broadband providers to certify that they are in compliance with the required disclosures and/or submit reports containing descriptions of current disclosure practices, particularly if the existing flexible approach is amended to require more specific disclosures. Some commenters caution against measures that are unnecessary, susceptible to abuse, or burdensome. Others express support for stronger or more efficient enforcement mechanisms. At this time we decline to require certification by broadband providers. Should evidence be provided, however, that certification is necessary, we will revisit this issue at a later date.
184. We also remind providers that if their disclosure statements fail to meet the requirements established in 2010 and enhanced today, they may be subject to investigation and forfeiture. The Enforcement Bureau will closely scrutinize failure by providers to meet their obligations in fulfilling the transparency rule.
d. Role of Further Advisory Guidance185. The 2011 and 2014 Advisory Guidance documents illustrate the role of further guidance from Commission staff in interpreting and applying the general requirements of the transparency rule. We anticipate that as technology, the marketplace, and the needs of consumers, edge providers, and other stakeholders evolve, further such guidance may be appropriate concerning the transparency rule, including with respect to the enhancements adopted today. The most immediate example concerns ongoing improvements and evolutions in the methodologies for measuring broadband providers' actual performance, as discussed in further detail above. We also point out that broadband providers are able to seek advisory opinions from the Enforcement Bureau concerning any of the open Internet regulations, including the transparency rule.
D. Scope of the Rules186. The open Internet rules we adopt today apply to fixed and mobile broadband Internet access service. We make clear, however, that while the definition of broadband Internet access service encompasses arrangements for the exchange of Internet traffic, the open Internet rules we adopt today do not apply to that portion of the broadband Internet access service.
1. Broadband Internet Access Service187. As discussed below, we continue to define ''broadband Internet access service'' (BIAS) as:
188. ''Broadband Internet access service'' continues to include services provided over any technology platform, including but not limited to wire, terrestrial wireless (including fixed and mobile wireless services using licensed or unlicensed spectrum), and satellite. ''Broadband Internet access service'' encompasses all providers of broadband Internet access service, as we delineate them here, regardless of whether they lease or own the facilities used to provide the service. (The Commission has consistently determined that resellers of telecommunications services are telecommunications carriers, even if they do not own any facilities. We note that the rules apply not only to facilities-based providers of broadband service but also to resellers of that service. In applying these obligations to resellers, we recognize, as the Commission has in other contexts, that consumers will expect the protections and benefits afforded by providers' compliance with the rules, regardless of whether the consumer purchase service from a facilities-based provider or a reseller. We note that a reseller's obligation under the rules is independent from the obligation of the facilities-based provider that supplies the underlying service to the reseller, though the extent of compliance by the underlying facilities-based provider will be a factor in assessing compliance by the reseller.) ''Fixed'' broadband Internet access service refers to a broadband Internet access service that serves end users primarily at fixed endpoints using stationary equipment, such as the modem that connects an end user's home router, computer, or other Internet access device to the network. The term encompasses the delivery of fixed broadband over any medium, including various forms of wired broadband services (e.g., cable, DSL, fiber), fixed wireless broadband services (including fixed services using unlicensed spectrum), and fixed satellite broadband services. ''Mobile'' broadband Internet access service refers to a broadband Internet access service that serves end users primarily using mobile stations. It also includes services that use smartphones or mobile-network-enabled tablets as the primary endpoints for connection to the Internet, (We note that ''public safety services,'' as defined in section 337 of the Act, are excluded from the definition of mobile broadband Internet access service.) as well as mobile satellite broadband services. (We provide these definitions of ''fixed'' and ''mobile'' for illustrative purposes. In contrast to the Commission's 2010 Open Internet Order, here we are applying the same regulations to both fixed and mobile broadband Internet access services.)
189. We continue to define ''mass market'' as ''a service marketed and sold on a standardized basis to residential customers, small businesses, and other end-user customers such as schools and libraries.'' To be clear, ''mass market'' includes broadband Internet access services purchased with support of the E-rate and Rural Healthcare programs, as well as any broadband Internet access service offered using networks supported by the Connect America Fund (CAF). (In the 2010 Open Internet Order, the Commission found that ''mass market'' included broadband Internet access services purchased with support of the E-rate program. Since that time, the Commission has extended universal service support for broadband services through the Lifeline and Rural Health Care programs. Thus, for the same reasons the Commission defined mass market services to include BIAS purchased with the support of the E-rate program in 2010, we now find that mass market also includes BIAS purchased with the support of Lifeline and Rural Health Care programs.) To the extent that institutions of higher learning purchase mass market services, those institutions would be included within the scope of the schools and libraries portion of our definition. The term ''mass market'' does not include enterprise service offerings, which are typically offered to larger organizations through customized or individually-negotiated arrangements, or special access services.
190. We adopt our tentative conclusion in the 2014 Open Internet NPRM that broadband Internet access service does not include virtual private network (VPN) services, content delivery networks (CDNs), hosting or data storage services, or Internet backbone services (to the extent those services are separate from broadband Internet access service). The Commission has historically distinguished these services from ''mass market'' services and, as explained in the 2014 Open Internet NPRM, they ''do not provide the capability to receive data from all or substantially all Internet endpoints.'' We do not disturb that finding here. Likewise, when a user employs, for example, a wireless router or a Wi-Fi hotspot to create a personal Wi-Fi network that is not intentionally offered for the benefit of others, he or she is not providing a broadband Internet access service under our definition.
191. We again decline to apply the open Internet rules to premises operators'--such as coffee shops, bookstores, airlines, private end-user networks (e.g. libraries and universities), and other businesses that acquire broadband Internet access service from a broadband provider to enable patrons to access the Internet from their respective establishments'--to the extent they may be offering broadband Internet access service as we define it today. (While we decline to apply open Internet rules to premises operators to the extent they may offer broadband Internet access service, that decision does not affect other obligations that may apply to premises operators under the Act.) We find, as we did in 2010, that a premises operator that purchases BIAS is an end user and that these services ''are typically offered by the premise operator as an ancillary benefit to patrons.'' Further, applying the open Internet rules to the provision of broadband service by premises operators would have a dampening effect on these entities' ability and incentive to offer these services. As such, we do not apply the open Internet rules adopted today to premises operators. (We reiterate the guidance in the 2010 Open Internet Order that although not bound by our rules, we encourage premises operators to disclose relevant restrictions on broadband service they make available to their patrons.) The record evinces no significant disagreement with this analysis. (We note, however, that this exception does not affect other obligations that a premise operator may have independent of our open Internet rules.)
192. Our definition of broadband Internet access service includes services ''by wire or radio,'' which encompasses mobile broadband service. Thus, our definition of broadband Internet access service also extends to the same services provided by mobile providers. As discussed above, the record demonstrates the pressing need to apply open Internet rules to fixed and mobile broadband services alike, and changes in the mobile marketplace no longer counsel in favor of treating mobile differently under the rules. Thus, we apply the open Internet rules adopted today to both fixed and mobile networks. (Although we adopt the same rules for both fixed and mobile services, we recognize that with respect to the reasonable network management exception, the rule may apply differently to fixed and mobile broadband providers.)
193. As we discuss more fully below, broadband Internet access service encompasses the exchange of Internet traffic by an edge provider or an intermediary with the broadband provider's network. Below, we find that broadband Internet access service is a telecommunications service, subject to sections 201, 202, and 208 (along with key enforcement provisions). (We note that broadband Internet access services are also subject to sections 222, 224, 225, 254, and 255.) As a result, the Commission will be available to hear disputes regarding arrangements for the exchange of traffic with a broadband Internet access provider raised under sections 201 and 202 on a case-by-case basis: an appropriate vehicle for enforcement where disputes are primarily over commercial terms and that involve some very large corporations, including companies like transit providers and CDNs, that act on behalf of smaller edge providers. However, for reasons discussed more fully below, we exclude this portion of broadband Internet access service'--interconnection with a broadband Internet access service provider's network'--from application of our open Internet rules. We note that this exclusion also extends to interconnection with CDNs.
2. Internet Traffic Exchange194. In the 2010 Open Internet Order, the Commission applied its open Internet rules ''only as far as the limits of a broadband provider's control over the transmission of data to or from its broadband customers,'' and excluded the exchange of traffic between networks from the scope of the rules. In the 2014 Open Internet NPRM, the Commission tentatively concluded that it should maintain this approach, but explicitly sought comment on suggestions that the Commission should expand the scope of the open Internet rules to cover issues related to Internet traffic exchange. (As a general matter, Internet traffic exchange involves the exchange of IP traffic between networks. An Internet traffic exchange arrangement determines which networks exchange traffic and the destinations to which those networks will deliver that traffic. In aggregate, Internet traffic exchange arrangements allow an end user of the Internet to interact with other end users on other Internet networks, including content or services that make themselves available by having a public IP address, similar to how the global public switched telephone network consists of networks that route calls based on telephone numbers. When we adopted the 2014 Open Internet NPRM, the Chairman issued a separate, written statement suggesting that ''the question of interconnection (`peering') between the consumer's network provider and the various networks that deliver to that ISP . . . is a different matter that is better addressed separately.''2014 Open Internet NPRM, 29 FCC Rcd at 5647. While this statement reflected the Notice's tentative conclusion concerning Internet traffic exchange, it in no way detracts from the fact that the Notice also sought comment on ''whether we should change our conclusion,'' whether to adopt proposals to ''expand the scope of the open Internet rules to cover issues related to traffic exchange,'' and how to ''ensure that a broadband provider would not be able to evade our open Internet rules by engaging in traffic exchange practices that would be outside the scope of the rules as proposed.'')
195. As discussed below, we classify fixed and mobile broadband Internet access service as telecommunications services. The definition for broadband Internet access service includes the exchange of Internet traffic by an edge provider or an intermediary with the broadband provider's network. We note that anticompetitive and discriminatory practices in this portion of broadband Internet access service can have a deleterious effect on the open Internet, and therefore retain targeted authority to protect against such practices through sections 201, 202, and 208 of the Act (and related enforcement provisions), but will forbear from a majority of the other provisions of the Act. Thus, we conclude that, at this time, application of the no-unreasonable interference/disadvantage standard and the prohibitions on blocking, throttling, and paid prioritization to the Internet traffic exchange arrangements is not warranted.
196. Trends in Internet Traffic Exchange. Internet traffic exchange is typically based on commercial negotiations. Changes in consumer behavior, traffic volume, and traffic composition have resulted in new business models for interconnection. Since broadband Internet access service providers cannot, on their own, connect to every end point on the Internet in order to provide full Internet access to their customers, they historically paid third-party backbone service providers for transit. Backbone service providers interconnected upstream until traffic reached Tier 1 backbone service providers, which peered with each other and thereby provided their customer networks with access to the full Internet. In this hierarchical arrangement of networks, broadband Internet access providers negotiated with backbone service providers; broadband Internet access providers generally did not negotiate with edge providers to gain access to content. However, in recent years, new business models of Internet traffic exchange have emerged, premised on changes in traffic flows and in broadband Internet access provider networks. A number of factors drive these trends in Internet traffic exchange.
197. Critically, the growth of online streaming video services has sparked further evolution of the Internet. Content providers have come to rely on the services of commercial and private CDNs, which cache content close to end users, providing increased quality of service and avoiding transit costs. While CDNs rely on transit to feed the array of CDN cache servers, they deliver traffic to broadband Internet access service providers via transit service or by entering into peering arrangements, directly interconnecting with broadband Internet access service providers.
198. In addition, several large broadband Internet access service providers, such as AT&T, Comcast, Time Warner Cable, and Verizon, have built or purchased their own backbones, giving them the ability to directly interconnect with other networks and edge providers and thereby lowering and eliminating payments to third-party transit providers. These interconnection arrangements are ''peering,'' involving the exchange of traffic only between the two networks and their customers, rather than paid transit, which provides access to the full Internet over a single interconnection. Peering gives the participants greater control over their traffic and any issues arising with the traffic exchange are limited to those parties, and not other parties over other interconnection links. Historically, broadband Internet access service providers paid for transit and therefore had an incentive to agree to settlement-free peering with a CDN to reduce transit costs; however, where large broadband Internet access service providers have their own national backbones and have settlement-free peering with other backbones, they may no longer have an incentive to agree to settlement-free peering with CDNs in order to avoid transit costs. As shown below in Chart 1, the evolution from reliance on transit to peering arrangements also means an evolution from a traffic exchange arrangement that provides access to the full Internet to a traffic exchange arrangement that only provides for the exchange of traffic from a specific network provider and its customers.
199. Recent Disputes. Recently, Internet traffic exchange disputes have reportedly involved not de-peering, as was more frequently the case in the last decade, but rather degraded experiences caused by congested ports between providers. In addition, these disputes have evolved from conflicts that may last a few days, to disputes that have been sustained for well over a year, and have gone from disputes between backbone service networks, to disputes between providers of broadband Internet access service and transit service providers, CDNs, or edge providers. The typical dispute has involved, on one side, a large broadband provider, and on the other side, a commercial transit provider (such as Cogent or Level 3) and/or a large CDN. Multiple parties point out, however, that interconnection problems can harm more than just the parties in a dispute. When links are congested and capacity is not augmented, the networks'--and applications, large and small, running over the congested links into and out of those networks'--experience degraded quality of service due to reduced throughput, increased packet loss, increased delay, and increased jitter. At the end of the day, consumers bear the harm when they experience degraded access to the applications and services of their choosing due to a dispute between a large broadband provider and an interconnecting party. Parties also assert that these disputes raise concerns about public safety and network reliability. To address these growing concerns, a number of parties have called for extending the rules proposed in the 2014 Open Internet NPRM to Internet traffic exchange practices.
200. The record reflects competing narratives. Some edge and transit providers assert that large broadband Internet access service providers are creating artificial congestion by refusing to upgrade interconnection capacity at their network entrance points for settlement-free peers or CDNs, thus forcing edge providers and CDNs to agree to paid peering arrangements. These parties suggest that paid arrangements resulting from artificially congested interconnection ports at the broadband Internet access service provider network edge could create the same consumer harms as paid arrangements in the last-mile, and lead to paid prioritization, fast lanes, degradation of consumer connections, and ultimately, stifling of innovation by edge providers. Further, edge providers argue that they are covering the costs of carrying this traffic through the network, bringing it to the gateway of the Internet access service, unlike in the past where both parties covered their own costs to reach the Tier 1 backbones where traffic would then be exchanged on a settlement-free basis. Edge and transit providers argue that the costs of adding interconnection capacity or directly connecting with edge providers are de minimis. Further, they assert that traffic ratios ''are arbitrarily set and enforced and are not reflective of how [broadband providers] sell broadband connections and how consumers use them.'' Thus, these edge and transit providers assert that a focus on only the last-mile portion of the Internet traffic path will fail to adequately constrain the potential for anticompetitive behavior on the part of broadband Internet access service providers that serve as gatekeepers to the edge providers, transit providers, and CDNs seeking to deliver Internet traffic to the broadband providers' end users.
201. In contrast, large broadband Internet access service providers assert that edge providers such as Netflix are imposing a cost on broadband Internet access service providers who must constantly upgrade infrastructure to keep up with the demand. Large broadband Internet access service providers explain that when an edge provider sends extremely large volumes of traffic to a broadband Internet access service provider'--e.g., through a CDN or a third-party transit service provider'--the broadband provider must invest in additional interconnection capacity (e.g., new routers or ports on existing routers) and middle-mile transport capacity in order to accommodate that traffic, exclusive of ''last-mile'' costs from the broadband Internet access provider's central offices, head ends, or cell sites to end-user locations. Commenters assert that if the broadband Internet access service provider absorbs these interconnection and transport costs, all of the broadband provider's subscribers will see their bills rise. They argue that this is unfair to subscribers who do not use the services, like Netflix, that are driving the need for additional capacity. Broadband Internet access service providers explain that settlement-free peering fundamentally is a barter arrangement in which each side receives something of value. These parties contend that if the other party is only sending traffic, it is not contributing something of value to the broadband Internet access service provider.
202. Mechanism to Resolve Traffic Exchange Disputes. As discussed, Internet traffic exchange agreements have historically been and will continue to be commercially negotiated. We do not believe that it is appropriate or necessary to subject arrangements for Internet traffic exchange (which are subsumed within broadband Internet access service) to the rules we adopt today. We conclude that it would be premature to adopt prescriptive rules to address any problems that have arisen or may arise. (We decline to adopt these and similar types of proposals for the same reasons we decline to apply the open Internet rules to traffic exchange.) It is also premature to draw policy conclusions concerning new paid Internet traffic exchange arrangements between broadband Internet access service providers and edge providers, CDNs, or backbone services. (For instance, Akamai expresses concern that adoption of rules governing interconnection could be used as a justification by some broadband providers to refuse direct interconnection to CDNs and other content providers generally, on the theory that connecting with any CDN necessitates connecting with all CDNs, regardless of technical feasibility. We do not intend such a result by our decision today to assert authority over interconnection.) While the substantial experience the Commission has had over the last decade with ''last-mile'' conduct gives us the understanding necessary to craft specific rules based on assessments of potential harms, we lack that background in practices addressing Internet traffic exchange. For this reason, we adopt a case-by-case approach, which will provide the Commission with greater experience. Thus, we will continue to monitor traffic exchange and developments in this market.
203. At this time, we believe that a case-by-case approach is appropriate regarding Internet traffic exchange arrangements between broadband Internet access service providers and edge providers or intermediaries'--an area that historically has functioned without significant Commission oversight. (We note, however, that the Commission has looked at traffic exchange in the context of mergers and, sometimes imposed conditions on traffic exchange.) Given the constantly evolving market for Internet traffic exchange, we conclude that at this time it would be difficult to predict what new arrangements will arise to serve consumers' and edge providers' needs going forward, as usage patterns, content offerings, and capacity requirements continue to evolve. Thus, we will rely on the regulatory backstop prohibiting common carriers from engaging in unjust and unreasonable practices. Our ''light touch'' approach does not directly regulate interconnection practices. Of course, this regulatory backstop is not a substitute for robust competition. The Commission's regulatory and enforcement oversight, including over common carriers, is complementary to vigorous antitrust enforcement. Indeed, mobile voice services have long been subject to Title II's just and reasonable standard and both the Commission and the Antitrust Division of the Department of Justice have repeatedly reviewed mergers in the wireless industry. Thus, it will remain essential for the Commission, as well as the Department of Justice, to continue to carefully monitor, review, and where appropriate, take action against any anti-competitive mergers, acquisitions, agreements or conduct, including where broadband Internet access services are concerned.
204. Broadband Internet access service involves the exchange of traffic between a last-mile broadband provider and connecting networks. (We disagree with commenters who argue that arrangements for Internet traffic exchange are private carriage arrangements, and thus not subject to Title II. As we explain below in today's Declaratory Ruling, Internet traffic exchange is a component of broadband Internet access service, which meets the definition of ''telecommunications service.'') The representation to retail customers that they will be able to reach ''all or substantially all Internet endpoints'' necessarily includes the promise to make the interconnection arrangements necessary to allow that access. As a telecommunications service, broadband Internet access service implicitly includes an assertion that the broadband provider will make just and reasonable efforts to transmit and deliver its customers' traffic to and from ''all or substantially all Internet endpoints'' under sections 201 and 202 of the Act. In any event, BIAS provider practices with respect to such arrangements are plainly ''for and in connection with'' the BIAS service. Thus, disputes involving a provider of broadband Internet access service regarding Internet traffic exchange arrangements that interfere with the delivery of a broadband Internet access service end user's traffic are subject to our authority under Title II of the Act. (We note that the Commission has forborne from application of many of the requirements of Title II to broadband Internet access service.)
205. We conclude that our actions regarding Internet traffic exchange arrangements are reasonable based on the record before us, which demonstrates that broadband Internet access providers have the ability to use terms of interconnection to disadvantage edge providers and that consumers' ability to respond to unjust or unreasonable broadband provider practices are limited by switching costs. These findings are limited to the broadband Internet access services we address today. (We observe that should a complaint arise regarding BIAS provider Internet traffic exchange practices, practices by edge providers (and their intermediaries) would be considered as part of the Commission's evaluation as to whether BIAS provider practices were ''just and reasonable'' under the Act.) When Internet traffic exchange breaks down'--regardless of the cause'--it risks preventing consumers from reaching the services and applications of their choosing, disrupting the virtuous cycle. We recognize the importance of timely review in the midst of commercial disputes. The Commission will be available to hear disputes raised under sections 201 and 202 on a case-by-case basis. We believe this is an appropriate vehicle for enforcement where disputes are primarily between sophisticated entities over commercial terms and that include companies, like transit providers and CDNs, that act on behalf of smaller edge providers. We also observe that section 706 provides the Commission with an additional, complementary source of authority to ensure that Internet traffic exchange practices do not harm the open Internet. As explained above, we have decided not to adopt specific regulations that would detail the practices that would constitute circumvention of the open Internet regulations we adopt today. Instead, and in a manner similar to our treatment of non-BIAS services, we will continue to monitor Internet traffic exchange arrangements and have the authority to intervene to ensure that they are not harming or threatening to harm the open nature of the Internet.
206. The record also reflects a concern that our decision to adopt this regulatory backstop violates the Administrative Procedure Act. (Verizon claims that ''in light of the Commission's past statements on interconnection, to suddenly regulate [interconnection] agreements for the first time in a final rule in this proceeding would violate the notice and comment requirements of the Administrative Procedure Act'' and that even issuing a Further Notice of Proposed Rulemaking would not allow the Commission to impose Title II regulations on interconnection services. The dissenting statements likewise assert that the 2014 Open Internet NPRM did not provide notice of the possibility that the Commission would assert authority over interconnection.) We disagree. To be clear, consistent with the NPRM's proposal, we are not applying the open Internet rules we adopt today to Internet traffic exchange. Rather, certain regulatory consequences flow from the Commission's classification of BIAS, including the traffic exchange component, as falling within the ''telecommunications services'' definition in the Act. In all events, the 2014 Open Internet NPRM provided clear notice about the possibility of expanding the scope of the open Internet rules to cover issues related to traffic exchange. (Section 553 provides that ''[g]eneral notice of proposed rulemaking shall be published in the Federal Register,'' and that ''[a]fter notice required by this section, the agency shall give interested persons an opportunity to participate in the rule making'' through submission of comments. 5 U.S.C. 553(b), (c). The Commission published the NPRM in the Federal Register at 79 FR 37448, July 1, 2014. It also made clear that the Commission was considering whether to reclassify retail broadband services. In addition, the 2014 Open Internet NPRM asked: ''How can we ensure that a broadband provider would not be able to evade our open Internet rules by engaging in traffic exchange practices that would be outside the scope of the rules as proposed?'' As discussed above, our assertion of authority over Internet traffic exchange practices addresses that question by providing us with the necessary case-by-case enforcement tools to identify practices that may constitute such evasion and address them. Further, to the extent that any doubts remain about whether the 2014 Open Internet NPRM provided sufficient notice, the approach adopted today is also a logical outgrowth of the original proposal included in the 2014 Open Internet NPRM. The numerous submissions in the record at every stage of the proceeding seeking to influence the Commission in its decision to adopt policies regulating Internet traffic exchange illustrate that the Commission not only gave interested parties adequate notice of the possibility of a rule, but that parties considered Commission action on that proposal a real possibility.
3. Non-BIAS Data Services207. In the 2014 Open Internet NPRM, the Commission tentatively concluded that it should not apply its conduct-based rules to services offered by broadband providers that share capacity with broadband Internet access service over providers' last-mile facilities, while closely monitoring the development of these services to ensure that broadband providers are not circumventing the open Internet rules. After reviewing the record, we believe the best approach is to adopt this tentative conclusion to permit broadband providers to offer these types of services while continuing to closely monitor their development and use. While the 2010 Open Internet Order and the 2014 Open Internet NPRM used the term ''specialized services'' to refer to these types of services, the term ''non-BIAS data services'' is a more accurate description for this class of services. While the services discussed below are not broadband Internet access service, and thus the rules we adopt do not apply to these services, we emphasize that we will act decisively in the event that a broadband provider attempts to evade open Internet protections (e.g., by claiming that a service that is the equivalent of Internet access is a non-BIAS data service not subject to the rules we adopt today).
208. We provide the following examples of services and characteristics of those services that, at this time, likely fit within the category of services that are not subject to our conduct-based rules. As indicated in the 2010 Open Internet Order, some broadband providers' existing facilities-based VoIP and Internet Protocol-video offerings would be considered non-BIAS data services under our rules. Further, the 2010 Open Internet Order also noted that connectivity bundled with e-readers, heart monitors, or energy consumption sensors would also be considered other data services to the extent these services are provided by broadband providers over last-mile capacity shared with broadband Internet access service. Additional examples of non-BIAS data services may include limited-purpose devices such as automobile telematics, and services that provide schools with curriculum-approved applications and content.
209. These services may generally share the following characteristics identified by the Open Internet Advisory Committee. First, these services are not used to reach large parts of the Internet. Second, these services are not a generic platform'--but rather a specific ''application level'' service. And third, these services use some form of network management to isolate the capacity used by these services from that used by broadband Internet access services.
210. We note, however, that non-BIAS data services may still be subject to enforcement action. Similar to the Commission's approach in 2010, if the Commission determines that a particular service is ''providing a functional equivalent of broadband Internet access service, or . . . is [being] used to evade the protections set forth in these rules,'' we will take appropriate enforcement action. Further, if the Commission determines that these types of service offerings are undermining investment, innovation, competition, and end-user benefits, we will similarly take appropriate action. We are especially concerned that over-the-top services offered over the Internet are not impeded in their ability to compete with other data services. (Further, we anticipate that consumers of competing over-the-top services will not be disadvantaged in their ability to access 911 service.)
211. The record overwhelmingly supports our decision to continue treating non-BIAS data services differently than broadband Internet access service under the open Internet rules. This approach will continue to drive additional investment in broadband networks and provide end users with valued services without otherwise constraining innovation. Further, as noted by numerous commenters, since other data services were permitted in the 2010 Open Internet Order, we have seen little resulting evidence of broadband providers using these services to undermine the 2010 rules.
212. Nevertheless, non-BIAS data services still could be used to evade the open Internet rules. Due to these concerns, we will continue to monitor the market for non-BIAS data services to ensure that these services are not causing or threatening to cause harm to the open nature of the Internet. Since the 2010 Open Internet Order, broadband Internet access providers have been required to disclose the impact of non-BIAS data services on the performance of and the capacity available for broadband Internet access services. As discussed in detail above, we will continue to monitor the existence and effects of non-BIAS data services under the broadband providers' transparency obligations.
213. We disagree with commenters who argue that the Commission should adopt a more-detailed definition for non-BIAS data services to safeguard against any such circumvention of the rules. Several commenters provided definitions of what they believe should constitute non-BIAS data services. Others, however, expressed concerns that a formal definition of non-BIAS data services risks potentially limiting future innovation and investment, ultimately negatively impacting consumer welfare. We share these concerns and thus decline to further define what constitutes ''non-BIAS data services'' or adopt additional policies specific to such services at this time. Again, however, we will closely monitor the development and use of non-BIAS data services and have authority to intervene if these services are utilized in a manner that harms the open Internet.
4. Reasonable Network Management214. The 2014 Open Internet NPRM proposed to retain a reasonable network management exception to the conduct-based open Internet rules, following the approach adopted in the 2010 Open Internet Order that permitted exceptions for ''reasonable network management'' practices to the no-blocking and no unreasonable discrimination rules. The 2014 Open Internet NPRM also tentatively concluded that the Commission should retain the definition of reasonable network management adopted as part of the 2010 rules that ''[a] network management practice is reasonable if it is appropriate and tailored to achieving a legitimate network management purpose, taking into account the particular network architecture and technology of the broadband Internet access service.''
215. The record broadly supports maintaining an exception for reasonable network management. We agree that a network management exception to the no-blocking rule, the no-throttling rule, and the no-unreasonable interference/disadvantage standard is necessary for broadband providers to optimize overall network performance and maintain a consistent quality experience for consumers while carrying a variety of traffic over their networks. (As discussed above, the transparency rule does not include an exception for reasonable network management. We clarify, however, that the transparency rule ''does not require public disclosure of competitively sensitive information or information that would compromise network security or undermine the efficacy of reasonable network management practices.'') Therefore, the no-blocking rule, the no-throttling rule, and the no-unreasonable interference/disadvantage standard will be subject to reasonable network management for both fixed and mobile providers of broadband Internet access service. In addition to retaining the exception, we retain the definition of reasonable network management with slight modifications:
216. For a practice to even be considered under this exception, a broadband Internet access service provider must first show that the practice is primarily motivated by a technical network management justification rather than other business justifications. If a practice is primarily motivated by such an other justification, such as a practice that permits different levels of network access for similarly situated users based solely on the particular plan to which the user has subscribed, then that practice will not be considered under this exception. The term ''particular network architecture and technology'' refers to the differences across broadband access platforms of any kind, including cable, fiber, DSL, satellite, unlicensed Wi-Fi, fixed wireless, and mobile wireless.
217. As noted above, reasonable network management is an exception to the no-blocking rule, no-throttling rule, and no-unreasonable interference/disadvantage standard, but not to the rule against paid prioritization. (Paid prioritization would be evaluated under the standards set forth in section II.C.1.c supra) This is because unlike conduct implicating the no-blocking, no-throttling, or no-unreasonable interference/disadvantage standard, paid prioritization is not a network management practice because it does not primarily have a technical network management purpose. (For purposes of the open Internet rules, prioritization of affiliated content, applications, or services is also considered a form of paid prioritization.) When considering whether a practice violates the no-blocking rule, no-throttling rule, or no-unreasonable interference/disadvantage standard, the Commission may first evaluate whether a practice falls within the exception for reasonable network management.
218. Evaluating Network Management Practices. The 2014 Open Internet NPRM proposed that the Commission adopt the same approach for determining the scope of network management practices considered to be reasonable as adopted in the 2010 Open Internet Order. (The Commission decided to determine the scope of reasonable network management on a case-by-case basis in the Open Internet Order and we maintain those same factors today.) We recognize the need to ensure that the reasonable network management exception will not be used to circumvent the open Internet rules while still allowing broadband providers flexibility to experiment and innovate as they reasonably manage their networks. We therefore elect to maintain a case-by-case approach. The case-by-case review also allows sufficient flexibility to address mobile-specific management practices because, by the terms of our rule, a determination of whether a network management practice is reasonable takes into account the particular network architecture and technology. We also note that our transparency rule requires disclosures that provide an important mechanism for monitoring whether providers are inappropriately exploiting the exception for reasonable network management.
219. To provide greater clarity and further inform the Commission's case-by-case analysis, we offer the following guidance regarding legitimate network management purposes. We also note that, similar to the 2010 reasonable network management exception, broadband providers may request a declaratory ruling or an advisory opinion from the Commission before deploying a network management practice, but are not required to do so.
220. As with the network management exception in the 2010 Open Internet Order, broadband providers may implement network management practices that are primarily used for, and tailored to, ensuring network security and integrity, including by addressing traffic that is harmful to the network, such as traffic that constitutes a denial-of-service attack on specific network infrastructure elements. Likewise, broadband providers may also implement network management practices that are primarily used for, and tailored to, addressing traffic that is unwanted by end users. Further, we reiterate the guidance of the 2010 Open Internet Order that network management practices that alleviate congestion without regard to the source, destination, content, application, or service are also more likely to be considered reasonable network management practices in the context of this exception. (As in the no throttling rule and the no unreasonable interference or unreasonable disadvantage standard, we include classes of content, applications, services, or devices.) In evaluating congestion management practices, a subset of network management practices, we will also consider whether the practice is triggered only during times of congestion and whether it is based on a user's demand during the period of congestion.
221. We also recognize that some network management practices may have a legitimate network management purpose, but also may be exploited by a broadband provider. We maintain the guidance underlying the 2010 Open Internet Order' s case-by-case analysis that a network management practice is more likely to be found reasonable if it is transparent, and either allows the end user to control it or is application-agnostic.
222. As in 2010, we decline to adopt a more detailed definition of reasonable network management. For example, one proposal suggests that the Commission limit the circumstances in which network management techniques can be used so they would only be reasonable if they were used temporarily, for exceptional circumstances, and have a proportionate impact to solve a targeted problem. We acknowledge the advantages a more detailed definition of network management can have on long-term network investment and transparency, but at this point, there is not a need to place such proscriptive limits on broadband providers. (While some commenters note that there have not been any major technological changes in how broadband providers manage traffic since 2010, others indicate that broadband providers have acquired additional techniques that allow them to manage traffic in real-time.) Furthermore, a more detailed definition of reasonable network management risks quickly becoming outdated as technology evolves. Case-by-case analysis will allow the Commission to use the conduct-based rules adopted today to take action against practices that are known to harm consumers without interfering with broadband providers' beneficial network management practices. (Beneficial practices include protecting their Internet access services against malicious content or offering a service limited to offering ''family friendly'' materials to end users who desire only such content.)
223. We believe that the reasonable network management exception provides both fixed and mobile broadband providers sufficient flexibility to manage their networks. We recognize, consistent with the consensus in the record, that the additional challenges involved in mobile broadband network management mean that mobile broadband providers may have a greater need to apply network management practices, including mobile-specific network management practices, and to do so more often to balance supply and demand while accommodating mobility. As the Commission observed in 2010, mobile network management practices must address dynamic conditions that fixed, wired networks typically do not, such as the changing location of users as well as other factors affecting signal quality. The ability to address these dynamic conditions in mobile network management is especially important given capacity constraints many mobile broadband providers face. Moreover, notwithstanding any limitations on mobile network management practices necessary to protect the open Internet, we anticipate that mobile broadband providers will continue to be able to use a multitude of tools to manage their networks, including an increased number of network management tools available in 4G LTE networks.
224. We note in a similar vein that providers relying on unlicensed Wi-Fi networks have specific network management needs. For example, these providers can ''face spectrum constraints and congestion issues that can pose particular network-management challenges'' and also ''must accept and manage interference from other users in the unlicensed bands.'' Again, the Commission will take into account when and how network management measures are applied as well as the particular network architecture and technology of the broadband Internet access service in question, in determining if a network management practice is reasonable. For these reasons, we reject the argument that rules with exceptions only for reasonable network management practices would ''tie the hands of operators and make it more challenging to meet consumers' needs'' or that ''the mere threat of post hoc regulatory review . . . would disrupt and could chill optimal network management practices.'' In recognizing the unique challenges, network architecture, and network management of mobile broadband networks (and others, such as unlicensed Wi-Fi networks), we conclude that the reasonable network management exception addresses this concern and strikes an appropriate balance between the need for flexibility and ensuring the Commission has the tools necessary to maintain Internet openness.
E. Enforcement of the Open Internet Rules1. Background225. Timely and effective enforcement of the rules we adopt in this Order is crucial to preserving an open Internet, enhancing competition and innovation, and providing clear guidance to consumers and other stakeholders. As has been the case since we adopted our original open Internet rules in 2010, we anticipate that many disputes that will arise can and should be resolved by the parties without Commission involvement. We encourage parties to resolve disputes through informal discussions and private negotiations whenever possible. To the extent disputes are not resolved, the Commission will continue to provide backstop mechanisms to address them. We also will proactively monitor compliance and take strong enforcement action against parties who violate the open Internet rules.
226. In the 2010 Open Internet Order, the Commission established a two-tiered framework for enforcing open Internet rules. The Commission allowed parties to file informal complaints pursuant to section 1.41 of our rules and promulgated new procedures to govern formal complaints alleging violations of the open Internet rules. This framework was not affected by the D.C. Circuit's decision in Verizon. It therefore remains in effect and will apply to complaints regarding the rules we adopt in this Order. Informal complaints provide end users, edge providers, and others with a simple and efficient vehicle for bringing potential open Internet violations to the attention of the Commission. The formal complaint rules permit any person to file a complaint with the Commission alleging an open Internet rule violation and to participate in an adjudicatory proceeding to resolve the complaint. In addition to these mechanisms for resolving open Internet complaints, the Commission continuously monitors press reports and other public information, which may lead the Enforcement Bureau to initiate an investigation of potential open Internet rule violations.
227. In the 2014 Open Internet NPRM, the Commission sought comment on the efficiency and functionality of the complaint processes adopted in the 2010 Open Internet Order and on mechanisms we should consider to improve enforcement and dispute resolution. We tentatively concluded that our open Internet rules should include at least three fundamental elements: (1) Legal certainty, so that broadband providers, edge providers, and end users can plan their activities based on clear Commission guidance; (2) flexibility to consider the totality of the facts in an environment of dynamic innovation; and (3) effective access to dispute resolution. We affirm the importance of these principles below and discuss several enhancements to our existing open Internet complaint rules to advance them. In addition, we adopt changes to our complaint processes to ensure that they are accessible and user-friendly to consumers, small businesses, and other interested parties, as well as changes to ensure that that our review of complaints is inclusive and informed by groups with relevant technical or other expertise.
2. Designing an Effective Enforcement Processa. Legal Certainty228. We sought comment in the 2014 Open Internet NPRM on ways to design an effective enforcement process that provides legal certainty and predictability to the marketplace. In addition to our current complaint resolution framework, we requested input on what other forms of guidance would be helpful. We solicited feedback on whether the Commission should: (1) Establish an advisory opinion process, akin to ''business review letters'' issued by the Department of Justice (DOJ), and/or non-binding staff opinions, through which parties could ask the Commission for a statement of its current enforcement intentions with respect to certain practices under the new rules; and (2) publish enforcement advisories that provide additional insight into the application of the rules. Many commenters recognized the benefits of clear rules and greater predictability regarding open Internet protections.
(i) Advisory Opinions229. We conclude that use of advisory opinions similar to those issued by DOJ's Antitrust Division is in the public interest and would advance the Commission's goal of providing legal certainty. (We decline to adopt non-binding staff opinions in light of our decision to establish an advisory opinion process similar to the DOJ Antitrust Division's business review letter approach, as well as existing voluntary mediation processes to resolve open Internet disputes that are available through the Enforcement Bureau's Market Disputes and Resolutions Division.) Although the Commission historically has not used advisory opinions to promote compliance with our rules, we conclude that they have the potential to serve as useful tools to provide clarity, guidance, and predictability concerning the open Internet rules. (Parties also have the option to file a petition for declaratory ruling under section 1.2 of the Commission's rules, 47 CFR 1.2. In contrast to declaratory rulings, advisory opinions may only relate to prospective conduct, and the Enforcement Bureau will not seek comment on advisory opinions via public notice.) Advisory opinions will enable companies to seek guidance on the propriety of certain open Internet practices before implementing them, enabling them to be proactive about compliance and avoid enforcement actions later. The Commission may use advisory opinions to explain how it will evaluate certain types of behavior and the factors that will be considered in determining whether open Internet violations have occurred. Because these opinions will be publicly available, we believe that they will reduce the number of disputes by providing guidance to the industry.
230. In this Order, we adopt rules promulgating basic requirements for obtaining advisory opinions, as well as limitations on their issuance. Any entity that is subject to the Commission's jurisdiction may request an advisory opinion regarding its own proposed conduct that may implicate the rules we adopt in this Order, the rules that remain in effect from the 2010 Open Internet Order, or any other rules or policies related to the open Internet that may be adopted in the future.
231. Requests for advisory opinions may be filed via the Commission's Web site or with the Office of the Secretary and must be copied to the Commission staff specified in the rules. We delegate authority to issue advisory opinions to the Enforcement Bureau, which will coordinate with other Bureaus and Offices on the issuance of opinions. The Enforcement Bureau will have discretion to choose whether it will respond to the request. If the Bureau declines to respond to a request, it will inform the requesting party in writing. As a general matter, the Bureau will be more likely to respond to requests where the proposed conduct involves a substantial question of fact or law and there is no clear Commission or court precedent, or the subject matter of the request and consequent publication of Commission advice is of significant public interest. In addition, the Bureau will decline to respond to requests if the same conduct is the subject of a current government investigation or proceeding, including any ongoing litigation or open rulemaking.
232. Requests for advisory opinions must relate to prospective or proposed conduct that the requesting party intends to pursue. The Enforcement Bureau will not respond to hypothetical questions or inquiries about proposals that are mere possibilities. The Bureau also will not respond to requests for opinions that relate to ongoing or prior conduct, and the Bureau may initiate an enforcement investigation to determine whether such conduct violates the open Internet rules.
233. Requests for advisory opinions should include all material information sufficient for Commission staff to make a determination on the proposed conduct; however, staff will have discretion to ask parties requesting opinions, as well as other parties that may have information relevant to the request or that may be impacted by the proposed conduct, for additional information that the staff deems necessary to respond to the request. Because advisory opinions will rely on full and truthful disclosures by the requesting entities, requesters must certify that factual representations made to the Enforcement Bureau are truthful and accurate, and that they have not intentionally omitted any material information from the request. Advisory opinions will expressly state that they rely on the representations made by the requesting party, and that they are premised on the specific facts and representations in the request and any supplemental submissions.
234. Although the Enforcement Bureau will attempt to respond to requests for advisory opinions expeditiously, we decline to establish any firm deadlines to rule on them or issue response letters. The Commission appreciates that if the advisory opinion process is not timely, it will be less valuable to interested parties. However, response times will likely vary based on numerous factors, including the nature and complexity of the issues, the magnitude and sufficiency of the request and the supporting information, and the time it takes for the requester to respond to staff requests for additional information. An advisory opinion will provide the Enforcement Bureau's conclusion regarding whether or not the proposed conduct will comply with the open Internet rules. The Bureau will have discretion to indicate in an advisory opinion that it does not intend to take enforcement action based on the facts, representations, and warranties made by the requesting party. The requesting party may rely on the opinion only to the extent that the request fully and accurately contains all the material facts and representations necessary for the opinion and the situation conforms to the situation described in the request for opinion. The Enforcement Bureau will not bring an enforcement action against a requesting party with respect to any action taken in good faith reliance upon an advisory opinion if all of the relevant facts were fully, completely, and accurately presented to the Bureau, and where such action was promptly discontinued upon notification of rescission or revocation of the Commission's or the Bureau's approval.
235. Advisory opinions will be issued without prejudice to the Enforcement Bureau's ability to reconsider the questions involved, or to rescind or revoke the opinion. Similarly, because advisory opinions issued at the staff level are not formally approved by the full Commission, they will be issued without prejudice to the Commission's right to later rescind the findings in the opinion. Because advisory opinions will address proposed future conduct, they necessarily will not concern any case or controversy that is ripe for appeal.
236. The Enforcement Bureau will make advisory opinions available to the public. In order to provide meaningful guidance to other stakeholders, the Bureau will also publish the initial request for guidance and any associated materials. Thus, the rules that we adopt establish procedures for entities soliciting advisory opinions to request confidential treatment of certain information.
237. Many commenters support the use of advisory opinions as a means for the Commission to provide authoritative guidance to parties about the application of open Internet rules and the Commission's enforcement intentions. In addition, some commenters suggest that review letters and staff opinions should be voluntary. We agree that solicitation of advisory opinions should be purely voluntary, and that failure to seek such an opinion will not be used as evidence that an entity's practices are inconsistent with our rules.
238. The Wireless Internet Service Providers Association (WISPA) opposes the adoption of an advisory opinion process ''because it assumes an inherent uncertainty in the rules and creates a `mother may I' regime'--essentially creating a system where a broadband provider must ask the Commission for permission when making business decisions.'' According to WISPA, ''[t]his system would increase regulatory uncertainty and stifle broadband providers from innovating new technologies or business methods. It also would be expensive for a small provider to implement, requiring legal and professional expertise.''
239. We find that WISPA's concerns are misguided. Because requests for advisory opinions will be entirely voluntary, we disagree with the contention that their use would force broadband providers to seek permission before implementing new policies or technologies and thereby stifle innovation. In addition, we agree with other commenters that advisory opinions would provide more, not less, certainty regarding the legality of proposed business practices.
(ii) Enforcement Advisories240. We conclude that the periodic publication of enforcement advisories will advance the Commission's goal of promoting legal certainty regarding the open Internet rules. In the 2014 Open Internet NPRM, we inquired whether the Commission should issue guidance in the form of enforcement advisories that provide insight into the application of Commission rules. Enforcement advisories are a tool that the Commission has used in numerous contexts, including the current open Internet rules. We asked whether continued use of such advisories would be helpful where issues of potential general application come to the Commission's attention, and whether these advisories should be considered binding policy of the Commission or merely a recitation of staff views.
241. Numerous commenters maintain that the Commission should continue to use enforcement advisories to offer clarity, guidance, and predictability concerning the open Internet rules. We agree. Enforcement advisories do not create new policies, but rather are recitations and reminders of existing legal standards and the Commission's current enforcement intentions. (We disagree with the contention that public notice and comment should be a prerequisite for the Commission to issue an enforcement advisory. The Commission uses its rulemaking procedures when we are adopting rule changes that require notice and comment. Conversely, enforcement advisories are used to remind parties of existing legal standards.) We see no need to deviate from our current practice of issuing such advisories to periodically remind parties about legal standards regarding the open Internet rules.
b. Flexibility(i) Means of Enforcement and General Enforcement Mechanisms242. We will preserve the Commission's existing avenues for enforcement of open Internet rules'--self-initiated investigation by the Enforcement Bureau, informal complaints, and formal complaints. Commenters agree with the value of retaining these three main mechanisms for commencing enforcement of potential open Internet violations, as this combination ensures multiple entry points to the Commission's processes and gives both complainants and the Commission enforcement flexibility.
243. In addition, the Commission will continue to honor requests for informal complaints to remain anonymous, and will also continue to maintain flexible channels for reporting suspected violations, like confidential calls to the Enforcement Bureau. Although some commenters raise concerns about anonymous complaint filings, others stress the importance of having the option to request anonymity when filing an informal complaint. We note, however, that complainants who are not anonymous frequently have better success getting their concerns addressed because the service provider can then troubleshoot their specific concerns.
244. We also adopt our tentative conclusion in the 2014 Open Internet NPRM that enforcement of the transparency rule should proceed under the same dispute mechanisms that apply to other rules contained in this Order. We believe that providing both complainants and the Commission with flexibility to address violations of the transparency rule will continue to be important and that the best means to ensure compliance with both the transparency rule and the other rules we adopt today is to apply a uniform and consistent enforcement approach.
245. Finally, we conclude that violations of the open Internet rules will be subject to any and all penalties authorized under the Communications Act and rules, (Section 706 was enacted as part of the 1996 Telecommunications Act, and it is therefore subject to any and all penalties under the Act and our rules. See Verizon, 740 F.3d at 650 (''Congress expressly directed that the 1996 Act . . . be inserted into the Communications Act of 1934.'') (quoting AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366, 377 (1999)).) including but not limited to admonishments, citations, notices of violation, notices of apparent liability, monetary forfeitures and refunds, cease and desist orders, revocations, and referrals for criminal prosecution. Moreover, negotiated Consent Decrees can contain damages, restitution, compliance requirements, attorneys' fees, declaratory relief, and equitable remedies like injunctions, equitable rescissions, reformations, and specific performance.
(ii) Case-by-Case Analysis246. The 2014 Open Internet NPRM emphasized that the process for providing and promoting an open Internet must be flexible enough to accommodate the ongoing evolution of Internet technology. We therefore tentatively concluded that the Commission should continue to use a case-by-case approach, taking into account the totality of the circumstances, in considering alleged violations of the open Internet rules.
247. We affirm our proposal to continue to analyze open Internet complaints on a case-by-case basis. (We reject the suggestion that the Commission promulgate additional rules of conduct because it is unrealistic to expect that in this varied and rapidly evolving technological environment the agency will be able to anticipate the specific conduct that will give rise to future disputes.) We agree with commenters that flexible rules, administered through case-by-case analysis, will enable us to pursue meaningful enforcement, consider consumers' individual concerns, and account for rapidly changing technology.
(iii) Fact-Finding Processes248. In the 2014 Open Internet NPRM, we sought comment about how to most effectively structure a flexible fact finding process in analyzing open Internet complaints. We asked what level of evidence should be required in order to bring a claim. With regard to formal complaint proceedings, we also asked what showing should be required for the burden of production to shift from the party bringing the claim to the defendant, as well as whether parties could seek expedited treatment.
249. Informal Complaints. Our current rules permitting the filing of informal complaints include a simple and straightforward evidentiary standard. Under section 1.41 of our rules, ''[r]equests should set forth clearly and concisely the facts relied upon, the relief sought, the statutory and/or regulatory provisions (if any) pursuant to which the request is filed and under which relief is sought, and the interest of the person submitting the request.'' Although our rules do not establish any specific pleading requirements for informal complaints, parties filing them should attempt to provide the Commission with sufficient information and specific facts that, if proven true, would constitute a violation of the open Internet rules.
250. We find that our existing informal complaint rule offers an accessible and effective mechanism for parties'--including consumers and small businesses with limited resources'--to report possible noncompliance with our open Internet rules without being subject to burdensome evidentiary or pleading requirements. We conclude that there is no basis in the record for modifying the existing standard and decline to do so.
251. Formal Complaints. Our current open Internet formal complaint rules provide broad flexibility to adapt to the myriad potential factual situations that might arise. For example, as noted in the 2010 Open Internet Order, some cases can be resolved based on the pleadings if the complaint and answer contain sufficient factual material to decide the case. A simple case could thus be adjudicated in an efficient, streamlined manner. For more complex matters, the existing rules give the Commission discretion to require other procedures, including discovery, briefing, a status conference, oral argument, an evidentiary hearing, or referral to an administrative law judge (ALJ). Similarly, the rules provide the Commission discretion to grant temporary relief where appropriate.
252. In addition, our open Internet formal complaint process already contemplates burden shifting. (As we noted in the 2010 Open Internet Order, our current processes permit the Commission to shift the burden of production where appropriate.) Generally, complainants bear the burden of proof and must demonstrate by a preponderance of the evidence that an alleged violation has occurred. A complainant must plead with specificity the basis of its claim and provide facts and documentation, when possible, to establish a prima facie rule violation. Defendants must answer each claim with particularity and furnish facts, supported by documentation or affidavit, demonstrating that the challenged practice complies with our rules. Defendants do not have the option of merely pointing out that the complainant has failed to meet his or her burden; they must show that they are in compliance with the rules. The complainant then has an opportunity to respond to the defendant's submission. We retain our authority to shift the burden of production when, for example, the evidence necessary to assess the alleged unlawful practice is predominately in the possession of the broadband provider. If a complaining party believes the burden of production should shift, it should explain why in the complaint. Complainants also must clearly state the relief requested. We conclude that we should retain our existing open Internet procedural rules and that all formal complaints that relate to open Internet disputes, including Internet traffic exchange disputes, will be subject to those rules. Although comparable to the section 208 formal complaint rules, the open Internet rules are less burdensome on complainants, who in this context are likely to be consumers or small edge providers with limited resources. (The section 208 rules, for example, require complainants to submit information designations, proposed findings of fact and conclusions of law, and affidavits demonstrating the basis for complainant's belief for unsupported allegations and why complainant could not ascertain facts from any source. See, e.g.,47 CFR 1.721(a) (5), (6), (10). The open Internet formal complaint rules do not contain similar requirements.) Moreover, as described above, the open Internet procedural rules allow the Commission broader flexibility in tailoring proceedings to fit particular cases. (For example, under the open Internet rules, the Commission may order an evidentiary hearing before an administrative law judge (ALJ) or Commission staff. See47 CFR 8.14(e)(1), (g). The section 208 rules contain no such provision. In addition, unlike the section 208 rules, the open Internet rules do not contain numerical limits on discovery requests. Compare id. section 8.14(f) with id. section 1.729(a).)
253. Several commenters stress the need for speedy resolution of complaints, given the rapid pace of Internet commerce and the potential consumer harms and market chilling effects deriving from slow resolution. While we share these concerns, we decline to adopt fixed, short deadlines for resolving formal complaints but pledge to move expeditiously. As noted in the 2010 Open Internet Order, the Commission may shorten deadlines or otherwise revise procedures to expedite the adjudication of complaints. Additionally, the Commission will determine, on the basis of the evidence before it, whether temporary relief should be afforded any party pending final resolution of a complaint and, if so, the nature of any such temporary relief. (The Supreme Court has affirmed the Commission's authority to impose interim injunctive relief pursuant to section 4(i) of the Act.) As noted above, some open Internet cases may be straightforward and suitable for decision in a 60 to 90 day timeframe. Other cases may be more factually and technologically complex, requiring more time for the parties to pursue discovery and build an adequate record, and sufficient time for the Commission to make a reasoned decision. Therefore, we find that the existing process'--allowing parties to request expedited treatment'--best fits the needs of potential open Internet formal complaints.
c. Effective Access To Dispute Resolution254. In this section, we adopt the proposal from the 2014 Open Internet NPRM to establish an ombudsperson to assist consumers, businesses, and organizations with open Internet complaints and questions by ensuring these parties have effective access to the Commission's processes that protect their interests. The record filed supports our conclusion that these parties would benefit from having an ombudsperson as a point of contact within the Commission for questions and complaints.
255. Comments in support of the establishment of an ombudsperson clearly demonstrate the range of groups a dedicated ombudsperson can serve. For example, the American Association of People with Disabilities expressed particular interest in the potential of the ombudsperson to monitor concerns regarding accessibility and the open Internet. In addition, the comments of Higher Education Libraries asked that libraries be amongst the groups served by the ombudsperson and those of the Alaska Rural Coalition expressed interest in the ombudsperson also being accessible to small carriers with concerns. In contrast, some commenters expressed concerns about the creation of a dedicated ombudsperson. However, as described below, the ombudsperson will work as a point of contact and a source of assistance as needed, not as an advocate or as an officer who must be approached for approval, addressing many of these concerns.
256. The Open Internet Ombudsperson will serve as a point of contact to provide assistance to individuals and organizations with questions or complaints regarding the open Internet to ensure that small and often unrepresented groups reach the appropriate bureaus and offices to address specific issues of concern. For example, the ombudsperson will be able to provide initial assistance with the Commission's dispute resolution procedures by directing such parties to the appropriate templates for formal and informal complaints. We expect the ombudsperson will assist interested parties in less direct but equally important ways. These could include conducting trend analysis of open Internet complaints and, more broadly, market conditions, that could be summarized in reports to the Commission regarding how the market is functioning for various stakeholders. The ombudsperson may investigate and bring attention to open Internet concerns, and refer matters to the Enforcement Bureau for potential further investigation. The ombudsperson will be housed in the Consumer & Governmental Affairs Bureau, which will remain the initial informal complaint intake point, and will coordinate with other bureaus and offices, as appropriate, to facilitate review of inquiries and complaints regarding broadband services.
3. Complaint Processes and Forms of Dispute Resolutiona. Complaint Filing Procedures257. In the 2014 Open Internet NPRM, we sought comment on how open Internet complaints should be received, processed, and enforced. We asked if there were ways to improve access to our existing informal and formal complaint processes, especially for consumers, small businesses, and other entities with limited resources and knowledge of how our complaint processes work. We also asked whether the current enforcement and dispute resolution tools at the Commission's disposal are sufficient for resolving violations of open Internet rules.
258. Informal Complaints. First, we will implement processes to make it easier to lodge informal open Internet complaints, including a new, more intuitive online complaint interface. The Commission recently launched a new Consumer Help Center, which provides a user-friendly, streamlined means to access educational materials on consumer issues and to file complaints. Consumers who seek to file an open Internet complaint should visit the Consumer Help Center portal and click the Internet icon for the materials or the online intake system for complaints. The complaint intake system is designed to guide the consumer efficiently through the questions that need to be answered in order to file a complaint. The Consumer Help Center will make available aggregate data about complaints received, including those pertaining to open Internet issues. Some data is currently available, with additional and more granular data to be provided over time. We believe these efforts will improve access to the Commission's open Internet complaint processes.
259. Formal Complaints. With respect to formal complaints, we amend the Commission's Part 8 open Internet rules to require electronic filing of all pleadings in open Internet formal complaint proceedings. Currently, parties to such proceedings must file hard copies of pleadings with the Office of the Secretary. This process is time-consuming for the parties and makes it difficult for the public to track case developments. Although members of the public may obtain copies of the pleadings from the Commission's Reference Information Center, there is no way to search for or view pleadings electronically. Today's actions modernize and reform these existing procedures. (The rule changes described in this section do not apply to open Internet informal complaints. Consumers will continue to have the ability to file informal complaints electronically with the Consumer & Governmental Affairs Bureau. The form for filing an informal complaint is available at https://consumercomplaints.fcc.gov/hc/en-us.)
260. In 2011, the Commission released a Report and Order revising part 1 and part 0 of its rules. One aspect of the Part 1 Order was a requirement that docketing and electronic filing begin to be utilized in proceedings involving ''[n]ewly filed section 208 formal common carrier complaints and newly filed section 224 pole attachment complaints before the Enforcement Bureau.'' On November 12, 2014, the Commission released an Order that amended its procedural rules governing formal complaints under section 208 and pole attachment complaints under section 224 to require electronic filing. We established within ECFS a ''Submit a Non-Docketed Filing'' module where all such complaints must be filed because staff must review a complaint for conformance with the Commission's rules before the matter can receive its own unique ECFS proceeding number.
261. We now extend those rule changes to open Internet formal complaints. (We hereby amend the caption for the ECFS docket to ''section 208 and 224 and Open Internet Complaint Inbox, Restricted Proceedings.'' We also amend rule 8.16, which governs confidentiality of proprietary information, to conform to the changes we made regarding confidentiality in the section 208 and section 224 complaint rules. See infraAppendix (detailing revisions to 47 CFR 8.16).) When filing such a complaint, as of the effective date of this Order, the complainant will be required to select ''Open Internet Complaint: Restricted Proceeding'' from the ''Submit a Non-Docketed Filing'' module in ECFS. The filing must include the complaint, as well as all attachments to the complaint. (All electronic filings must be machine-readable, and files containing text must be formatted to allow electronic searching and/or copying (e.g., in Microsoft Word or PDF format). Non-text filings (e.g., Microsoft Excel) must be submitted in native format. Be certain that filings submitted in .pdf or comparable format are not locked or password-protected. If those restrictions are present (e.g., a document is locked), the ECFS system may reject the filing, and a party will need to resubmit its document within the filing deadline. The Commission will consider granting waivers to this electronic filing requirement only in exceptional circumstances.) When using ECFS to initiate new proceedings, a complainant no longer will have to file its complaint with the Office of the Secretary unless the complaint includes confidential information.
262. Enforcement Bureau staff will review new open Internet formal complaints for conformance with procedural rules (including fee payment). As of the effective date of this Order, complainants no longer will submit a hard copy of the complaint with the fee payment as described in rule 1.1106. Instead, complainants must first transmit the complaint filing fee to the designated payment center and then file the complaint electronically using ECFS. (Complainants may transmit the complaint filing fee via check, wire transfer, or electronically using the Commission's Fee Filer System (Fee Filer).)
263. Assuming a complaint satisfies this initial procedural review, Enforcement Bureau staff then will assign an EB file number to the complaint (EB Identification Number), give the complaint its own case-specific ECFS proceeding number, and enter both the EB Identification Number and ECFS proceeding number into ECFS. At that time, Enforcement Bureau staff will post a Notice of Complaint Letter in the case-specific ECFS proceeding and transmit the letter (and the complaint) via email to the defendant. On the other hand, if a filed complaint does not comply with the Commission's procedural rules, Enforcement Bureau staff will serve a rejection letter on the complainant and post the rejection letter and related correspondence in ECFS. Importantly, the rejection letter will not preclude the complainant from curing the procedural infirmities and refiling the complaint.
264. As of the effective date of this Order, all pleadings, attachments, exhibits, and other documents in open Internet formal complaint proceedings must be filed using ECFS, both in cases where the complaint was initially filed in ECFS and in pending cases filed under the old rules. With respect to complaints filed prior to the effective date of this Order, Enforcement Bureau staff will assign an individual ECFS proceeding number to each existing proceeding and notify existing parties by email of this new ECFS number. This ECFS proceeding number will be in addition to the previously-assigned number. The first step in using ECFS is to input the individual case's ECFS proceeding number or EB Identification Number. The new rules allow parties to serve post-complaint submissions on opposing parties via email without following up by regular U.S. mail. Parties must provide hard copies of submissions to staff in the Market Disputes Resolution Division of the Enforcement Bureau upon request.
265. Consistent with existing Commission electronic filing guidelines, any party asserting that materials filed in an open Internet formal complaint proceeding are proprietary must file with the Commission, using ECFS, a public version of the materials with any proprietary information redacted. The party also must file with the Secretary's Office an unredacted hard copy version that contains the proprietary information and clearly marks each page, or portion thereof, using bolded brackets, highlighting, or other distinct markings that identify the sections of the filing for which a proprietary designation is claimed. (Filers must ensure that proprietary information has been properly redacted and thus is not viewable. If a filer inadvertently discloses proprietary information, the Commission will not be responsible for that disclosure.) Each page of the redacted and unredacted versions must be clearly identified as the ''Public Version'' or the ''Confidential Version,'' respectively. Both versions must be served on the same day.
b. Alternative Dispute Resolution266. The Commission sought comment on various modes of alternative dispute resolution for resolving open Internet disputes. Currently, parties with disputes before the Commission are free to voluntarily engage in mediation, which is offered by the Market Disputes Resolution Division (MDRD) at no charge to the parties. This process has worked well and has led to the effective resolution of numerous complaints. We will take steps to improve awareness of this approach. In the 2014 Open Internet NPRM, we asked whether other approaches, such as arbitration, should be considered, in order to ensure access to dispute resolution by smaller edge providers and other entities without resources to engage in the Commission's formal complaint process.
267. We decline to adopt arbitration procedures or to mandate arbitration for parties to open Internet complaint proceedings. Under the rules adopted today, parties are still free to engage in mediation and outside arbitration to settle their open Internet disputes, but alternative dispute resolution will not be required. (As a general matter, the Commission lacks the ability to subdelegate its authority over these disputes to a private entity, like a third-party arbitrator, see U.S. Telecom Ass'n v. FCC, 359 F.3d 554, 566 (D.C. Cir. 2004) (''[W]hile federal agency officials may subdelegate their decision-making authority to subordinates absent evidence of contrary congressional intent, they may not subdelegate to outside entities-private or sovereign-absent affirmative evidence of authority to do so''), and ''may not require any person to consent to arbitration as a condition of entering into a contract or obtaining a benefit.'' As noted in the 2014 Open Internet NPRM, however, mandatory third-party arbitration may be allowed so long as it is subject to de novo review by the Commission.) Commenters generally do not favor arbitration in this context and recommend that the Commission not adopt it as the default method for resolving complaints. Commenters suggest that mandatory arbitration, in particular, may more frequently benefit the party with more resources and more understanding of dispute procedure, and therefore should not be adopted. We agree with these concerns and conclude that adoption of arbitration rules is not necessary or appropriate in this context.
c. Multistakeholder Processes and Technical Advisory Groups268. In the 2014 Open Internet NPRM, the Commission sought comment on whether enforcement of open Internet rules'--including resolution of open Internet disputes'--could be supported by multistakeholder processes that enable the development of independent standards to guide the Commission in compliance determinations. The Commission also asked whether it should incorporate the expertise of technical advisory groups into these determinations.
269. We conclude that incorporating groups with technical expertise into our consideration of formal complaints has the potential to inform the Commission's judgment and improve our understanding of complex and rapidly evolving technical issues. By requiring electronic filing of all pleadings in open Internet formal complaint proceedings, we will enable interested parties to more easily track developments in the proceedings and participate as appropriate. Although formal complaint proceedings are generally restricted for purposes of the Commission's ex parte rules, interested parties may seek permission to file an amicus brief. The Commission ''consider[s] on a case-by-case basis motions by non-parties wishing to submit amicus-type filings addressing the legal issues raised in [a] proceeding,'' and grants such requests when warranted. (If a party to the proceeding is a member of or is otherwise represented by an entity that requests leave to file an amicus brief, the entity must disclose that affiliation in its request.) Thus, for example, the Commission granted a motion for leave to file an amicus brief in a section 224 pole attachment complaint proceeding ''in light of the broad policy issues at stake.
270. To further advance the values underlying multistakeholder processes'--inclusivity, transparency, and expertise'--we also amend our Part 8 formal complaint rules by delegating authority to the Enforcement Bureau, in its discretion, to request a written opinion from an outside technical organization. As reviewing courts have established, ''[a] federal agency may turn to an outside entity for advice and policy recommendations, provided the agency makes the final decisions itself.''
271. In this instance, given the potential complexity of the issues in open Internet formal complaint proceedings, it may be particularly useful to obtain objective advice from industry standard-setting bodies or other similar organizations. Providing Commission staff with this flexibility also will enable more informed determinations of technical Internet issues that reflect current industry standards and permit staff to keep pace with rapidly changing technology. (Whenever possible, the Enforcement Bureau should request advisory opinions from expert organizations whose members do not include any of the parties to the proceeding. If no such organization exists, the Enforcement Bureau may refer issues to an expert organization with instructions that representatives of the parties to the complaint proceeding may not participate in the organization's consideration of the issues referred or the drafting of its advisory opinion.) Expert organizations will not be required to respond to requests from the Enforcement Bureau for opinions; however, any organization that elects to do so must provide the opinion within 30 days of the request'--unless otherwise specified by the staff'--in order to facilitate timely dispute resolution. We find that this approach will allow for the inclusivity the multistakeholder process offers, while also providing the predictability and legal certainty of the Commission's formal dispute resolution process.
272. For informal complaints and investigations, the Enforcement Bureau's efforts will continue to be informed by resolutions of formal complaints, and will also continue to be informed by the standards developed by existing multistakeholder, industry, and consumer groups. The Enforcement Bureau will also work with interested parties on an informal basis to identify ways to promote compliance with the open Internet rules.
F. Legal Authority273. We ground the open Internet rules we adopt today in multiple sources of legal authority'--section 706, Title II, and Title III of the Communications Act. We marshal all of these sources of authority toward a common statutorily-supported goal: To protect and promote Internet openness as platform for competition, free expression and innovation; a driver of economic growth; and an engine of the virtuous cycle of broadband deployment.
274. We therefore invoke multiple, complementary sources of legal authority. As a number of parties point out, our authority under section 706 is not mutually exclusive with our authority under Titles II and III of the Act. Rather, we read our statute to provide several, alternative sources of authority that work in concert toward common ends. As described below, under section 706, the Commission has the authority to adopt these open Internet rules to encourage and accelerate the deployment of broadband to all Americans. In the Declaratory Ruling and Order below, we find, based on the current factual record, that BIAS is a telecommunications service subject to Title II and exercise our forbearance authority to establish a ''light-touch'' regulatory regime, which includes the application of sections 201 and 202. This finding both removes the common carrier limitation from the exercise of our affirmative section 706 authority and also allows us to exercise authority directly under sections 201 and 202 of the Communications Act in adopting today's rules. Finally, these rules are also supported by our Title III authority to protect the public interest through spectrum licensing. In this section, we discuss the basis and scope of each of these sources of authority and then explain their application to the open Internet rules we adopt today.
1. Section 706 Provides Affirmative Legal Authority for Our Open Internet Rules275. Section 706 affords the Commission affirmative legal authority to adopt all of today's open Internet rules. Section 706(a) directs the Commission to take actions that ''shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.'' To do so, the Commission may utilize ''in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.'' Section 706(b), in turn, directs that the Commission ''shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market,'' if it finds after inquiry that advanced telecommunications capability is not being deployed to all Americans in a reasonable and timely fashion. ''Advanced telecommunications capability'' is defined as ''high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology.'' Sections 706(a) and (b) each provide an express, affirmative grant of authority to the Commission and the rules we adopt today fall well within their scope.
276. Section 706(a) and (b) Are Express Grants of Authority. In Verizon, the D.C. Circuit squarely upheld as reasonable the Commission's reading of section 706(a) as an affirmative grant of authority. (Verizon, 740 F.3d at 637 (''The question, then, is this: Does the Commission's current understanding of section 706(a) as a grant of regulatory authority represent a reasonable interpretation of an ambiguous statute? We believe it does.'') A few commenters argue that the court incorrectly concluded that section 706(a) and (b) are express grants of authority. For the reasons discussed in the text, by the Commission in the 2010 Open Internet Order, and the court in Verizon and In re FCC, we disagree.) Finding that provision ambiguous, the court upheld the Commission's interpretation as consistent with the statutory text, (As the Verizon court explained, for example, ''section 706(a)'s reference to state commissions does not foreclose such a reading'' of section 706(a) as an express grant of authority. Id. at 638. Nor, as one of the dissents suggests, (see Pai Dissent at 55), is the statute's reference to ''[s]tate commission'' rendered meaningless by the Commission's reaffirmation that BIAS is an interstate service for regulatory purposes. The Commission's interpretation does not preclude all state commission action in this area, just that which is inconsistent with the federal regulatory regime we adopt today.) legislative history, and the Commission's lengthy history of regulating Internet access.
277. Separately addressing section 706(b), the D.C. Circuit held, citing similar reasons, that the ''Commission has reasonably interpreted section 706(b) to empower it to take steps to accelerate broadband deployment if and when it determines that such deployment is not ''reasonable and timely.'' The 10th Circuit, in upholding the Commission's reform of our universal service and inter-carrier compensation regulatory regime, likewise concluded that the Commission reasonably construed section 706(b) as an additional source of authority for those regulations.
278. In January, the Commission adopted the 2015 Broadband Progress Report, which determined that advanced telecommunications capability is not being deployed in a reasonable and timely manner to all Americans. That determination triggered our authority under section 706(b) to take immediate action, including the adoption of today's open Internet rules, to accelerate broadband deployment to all Americans.
279. We interpret sections 706(a) and 706(b) as independent, complementary sources of affirmative Commission authority for today's rules. Our interpretation of section 706(a) as a grant of express authority is in no way dependent upon our findings in the section 706(b) inquiry. Thus, even if the Commission's inquiry were to have resulted in a positive conclusion such that our section 706(b) authority were not triggered this would not eliminate the Commission's authority to take actions to encourage broadband deployment under section 706(a). (The Commission takes such measures precisely to achieve section 706(b)'s goal of accelerating deployment. That they may succeed in achieving that goal so as to contribute to a positive section 706(b) finding does not subsequently render them unnecessary or unauthorized without any further Commission process. Even if that were not the case, independent section 706(a) authority would remain. We mention, however, two legal requirements that appear relevant. First, section 408 of the Act mandates that ''all'' FCC orders (other than orders for the payment of money) ''shall continue in force for the period of time specified in the Order or until the Commission or a court of competent jurisdiction issues a superseding Order.'' 47 U.S.C. 408. Second, the Commission has a ''continuing obligation to practice reasoned decisionmaking'' that includes revisiting prior decisions to the extent warranted. Aeronautical Radio v. FCC, 928 F.2d 428 (D.C. Cir. 1991). We are aware of no reason why these requirements would not apply in this context.)
280. We reject arguments that we lack rulemaking authority to implement section 706 of the 1996 Act. In Verizon, the D.C. Circuit suggested that section 706 was part of the Communications Act of 1934. Under such a reading, the Commission would have all its standard rulemaking authority under sections 4(i), 201(b) and 303(r) to adopt rules implementing that provision. (47 U.S.C. 154(i) (''The Commission may . . . make such rules and regulations . . . not inconsistent with this chapter, as may be necessary in the execution of its functions.''); 47 U.S.C. 201(b) (''The Commission may prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.''); 47 U.S.C. 303(r) (''Except as otherwise provided in this chapter, the Commission from time to time, as public convenience, interest, or necessity requires, shall . . . [m]ake such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry out the provisions of this chapter''). Even if this were not the case, by its terms our section 4(i) rulemaking authority is not limited just to the adoption of rules pursuant to substantive jurisdiction under the Communications Act, and the Verizon court cited as reasonable the Commission's view that Congress, in placing upon the Commission the obligation to carry out the purposes of section 706, ''necessarily invested the Commission with the statutory authority to carry out those acts.''
281. The Open Internet Rules Fall Well Within the Scope of Our section 706 Authority. In Verizon, the D.C. Circuit agreed with the Commission that while authority under section 706 may be broad, it is not unbounded. Both the Commission and the court have articulated its limits. First, section 706 regulations must be within the scope of the Commission's subject matter jurisdiction over ''interstate and foreign communications by wire and radio.'' (Some have read this to require that regulations under section 706 must be ancillary to existing Commission authority in Title II, III or VI of the Act. We disagree. To be sure, with the Commission's exercise of both section 706 and ancillary authority, regulations must be within the Commission's subject matter jurisdiction. Indeed, this is the first prong of the test for ancillary jurisdiction. American Library Ass'n v. FCC, 406 F.3d 689, 703-04 (D.C. Cir. 2005). But we do not read the Verizon decision as applying the second prong'--which requires that the regulation be sufficiently linked to another provision of the Act'--to our exercise of section 706 authority. Section 706 ''does not limit the Commission to using other regulatory authority already at its disposal, but instead grants it the power necessary to fulfill the statute's mandate.''See Verizon, 740 F.3d at 641 (citing 2010 Open Internet Order, 25 FCC Rcd at 17972, para. 123)) And second, any such regulations must be designed to achieve the purpose of section 706(a)'--to ''encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.''
282. In Verizon, the court firmly concluded that the Commission's 2010 Open Internet Order regulations fell within the scope of section 706. It explained that the rules ''not only apply directly to broadband providers, the precise entities to which section 706 authority to encourage broadband deployment presumably extends, but also seek to promote the very goal that Congress explicitly sought to promote.'' Further, the court credited ''the Commission's prediction that the Open Internet Order regulations will encourage broadband deployment.'' The same is true of the open Internet rules we adopt today. Our regulations again only apply to last-mile providers of broadband services'--services that are not only within our subject matter jurisdiction, but also expressly within the terms of section 706. (In response to parties expressing concerns that section 706 could be read to impose regulations on edge providers or others in the Internet ecosystem, we emphasize that today's rules apply only to last-mile broadband providers. We reject calls from other commenters to exercise our section 706 authority to adopt open Internet regulations for edge providers. Today's rules are specifically designed to address broadband providers' incentives and ability to erect barriers that harm the virtuous cycle. We see no basis for applying these rules to any other providers.) And, again, each of our rules is designed to remove barriers in order to achieve the express purposes of section 706. We also find that our rules will provide additional benefits by promoting competition in telecommunications markets, for example, by fostering competitive provision of VoIP and video services and informing consumers' choices.
2. Authority for the Open Internet Rules Under Title II with Forbearance283. In light of our Declaratory Ruling below, the rules we adopt today are also supported by our legal authority under Title II to regulate telecommunications services. For the reasons set forth below, we have found that BIAS is a telecommunications service and, for mobile broadband, commercial mobile services or its functional equivalent. While we forbear from applying many of the Title II regulations to this service, we have applied sections 201, 202, and 208 (along with related enforcement authorities). These provisions provide an alternative source of legal authority for today's rules.
284. Section 201(a) places a duty on common carriers to furnish communications services subject to Title II ''upon reasonable request'' and ''establish physical connections with other carriers'' where the Commission finds it to be in the public interest. Section 201(b) provides that ''[a]ll charges, practices, classifications, and regulations for and in connection with such communication service, shall be just and reasonable, and any such charge, practice, classification, or regulation that is unjust or unreasonable is declared to be unlawful.'' It also gives the Commission the authority to ''prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.'' Section 202(a) makes it ''unlawful for any common carrier to make any unjust or unreasonable discrimination in charges, practices, classifications, regulations, facilities, or services for or in connection with like communication service, directly or indirectly, by any means or device, or to make or give any undue or unreasonable preference or advantage to any particular person, class of persons, or locality, or to subject any particular person, class of persons, or locality to any undue or unreasonable prejudice or disadvantage.'' As described below, these provisions provide additional independent authority for the rules we adopt today.
3. Title III Provides Additional Authority for Mobile Broadband Services285. With respect to mobile broadband Internet access services, today's open Internet rules are further supported by our authority under Title III of the Act to protect the public interest through spectrum licensing. While this authority is not unbounded, we exercise it here in reliance upon particular Title III delegations of authority.
286. Section 303(b) directs the Commission, consistent with the public interest, to ''[p]rescribe the nature of the service to be rendered by each class of licensed stations and each station within any class.'' Today's conduct regulations do precisely this. They lay down rules about ''the nature of the service to be rendered'' by licensed entities providing mobile broadband Internet access service, making clear that this service may not be offered in ways that harm the virtuous cycle. Today's rules specify the form this service must take for those who seek licenses to offer it. In providing such licensed service, broadband providers must adhere to the rules we adopt today.
287. This authority is bolstered by at least two additional provisions. First, as the D.C. Circuit has explained, section 303(r) supplements the Commission's ability to carry out its mandates via rulemaking. Second, section 316 authorizes the Commission to adopt new conditions on existing licenses if it determines that such action ''will promote the public interest, convenience, and necessity.'' (The Commission also has ample authority to impose conditions to serve the public interest in awarding licenses in the first instance. See47 U.S.C. 309(a); 307(a).) Nor do today's rules work any fundamental change to those licenses. Rather we understand our rules to be largely consistent with the current operation of the Internet and the current practices of mobile broadband service providers.
4. Applying These Legal Authorities to Our Open Internet Rules288. Bright line rules. Applying these statutory sources of authority, we have ample legal bases on which to adopt the three bright-line rules against blocking, throttling, and paid prioritization. To begin, we have found that broadband providers have the incentive and ability to engage in such practices'--which disrupt the unity of interests between end users and edge providers and thus threaten the virtuous cycle of broadband deployment. As the D.C. Circuit found with respect to the 2010 conduct rules, such broadband provider practices fall squarely within our section 706 authority. The court struck down the 2010 conduct rules after finding that the Commission failed to provide a legal justification that would take the rules out of the realm of impermissibly mandating common carriage, but did not find anything impermissible about the need for such rules to protect the virtuous cycle. Given our classification of broadband Internet access service as a telecommunications service, the court's rationale for vacating our 2010 conduct rules no longer applies and, for the reasons discussed above, we have legal justification to support our bright-line rules under section 706.
289. Our bright-line rules are also well grounded in our Title II authority. In Title II contexts, the Commission has made clear that blocking traffic generally is unjust and unreasonable under section 201. The Commission has likewise found it unjust and unreasonable for a carrier to refuse to allow non-harmful devices to attach to the network. And with respect to throttling, Commission precedent has likewise held that ''no carriers . . . may block, choke, reduce or restrict traffic in any way.'' We see no basis for departing from such precedents in the case of broadband Internet access services. As discussed above, the record here demonstrates that blocking and throttling broadband Internet access services harm consumers and edge providers, threaten the virtuous cycle, and deter broadband deployment. Consistent with our prior Title II precedents, we conclude that blocking and throttling of broadband Internet access services is an unjust and unreasonable practice under section 201(b).
290. Some parties have suggested that the Commission cannot adopt a rule banning paid prioritization under Title II. We disagree and conclude that paid prioritization is an unjust and unreasonable practice under section 201(b). The unjust and unreasonable standards in sections 201 and 202 afford the Commission significant discretion to distinguish acceptable behavior from behavior that violates the Act. Indeed, the very terms ''unjust'' and ''unreasonable'' are broad, inviting the Commission to undertake the kind of line-drawing that is necessary to differentiate just and reasonable behavior on the one hand from unjust and unreasonable behavior on the other. (As the D.C. Circuit has stated, for example, ''the generality of these terms . . . opens a rather large area for the free play of agency discretion, limited of course by the familiar `arbitrary' and `capricious' standard in the Administrative Procedure Act.''Bell Atlantic Tel. Co. v. FCC, 79 F.3d 1195, 1202 (D.C. Cir. 1996). Stated differently, because both sections ''set out broad standards of conduct,'' it is up to the ''Commission [to] give the standards meaning by defining practices that run afoul of carriers' obligation, either by rulemaking or by case-by-case adjudication.'')
291. Acting within this discretion, the Commission has exercised its authority, both through adjudication and rulemaking, under section 201(b) to ban unjust and unreasonable carrier practices as unlawful under the Act. (The Commission need not proceed through adjudication in announcing a broad ban on a particular practice. Indeed, the text of section 201(b) itself gives the Commission authority to ''prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.'' 47 U.S.C. 201(b).) Although the particular circumstances have varied, in reviewing these precedents, we find that the Commission generally takes this step where necessary to protect competition and consumers against carrier practices for which there was either no cognizable justification for the action or where the public interest in banning the practice outweighed any countervailing policy concerns. Based on the record here, we find that paid prioritization presents just such a case, threatening harms to consumers, competition, innovation, and deployment that outweigh any possible countervailing justification of public interest benefit. Our interpretation and application of section 201(b) in this case to ban paid prioritization is further bolstered by the directive in section 706 to take actions that will further broadband deployment.
292. Several commenters argue that we cannot ban paid prioritization under section 202(a), pointing to Commission precedents allowing carriers to engage in discrimination so long as it is reasonable. As discussed above, however, we adopt this rule pursuant to sections 201(b) and 706, not 202(a). And nothing about section 202(a) prevents us from doing so. We recognize that the Commission has historically interpreted section 202(a) to allow carriers to engage in reasonable discrimination, including by charging some customers more for better, faster, or more service. But those precedents stand for the proposition that such discrimination is permitted, not that it must be allowed in all cases. (To be sure, section 202(a) prohibits ''unreasonable discrimination'' for ''like'' communications services. But this provision does not, on its face, deprive the Commission of the authority to take actions under other provisions of the Act against discrimination that may not constitute ''unreasonable discrimination'' under section 202(a).) None of those cases of discrimination presented the kinds of harms demonstrated in the record here'--harms that form the basis of our decision to ban the practice as unjust and unreasonable under section 201(b), not 202(a). Furthermore, none of those precedents involved practices that the Commission has twice found threaten to create barriers to broadband deployment that should be removed under section 706. In light of our discretion in interpreting and applying sections 201 and 202 and insofar as section 706(a) is ''a `fail-safe' that `ensures' the Commission's ability to promote advanced services,'' we decline to interpret section 202(a) as preventing the Commission from exercising its authority under sections 201(b) and 706 to ban paid prioritization practices that harm Internet openness and deployment. (To the extent our prior precedents suggest otherwise, for the reasons discussed in the text, we disavow such an interpretation as applied to the open Internet context.)
293. With respect to mobile broadband Internet access services, our bright-line rules are also grounded in the Commission's Title III authority to ensure that spectrum licensees are providing service in a manner consistent with the public interest.
294. No-Unreasonable Interference/Disadvantage Standard. As with our bright-line rules, the no-unreasonable interference/disadvantage standard we adopt today is supported by our section 706 authority. Beyond the practices addressed by our bright-line rules, we recognize that broadband providers may implement unknown practices or engage in new types of practices in the future that could threaten harm by unreasonably interfering with the ability of end users and edge providers to use broadband Internet access services to reach one another. Such unreasonable interference creates a barrier that impedes the virtuous cycle, threatening the open nature of the Internet to the detriment of consumers, competition, and deployment. For conduct outside the three bright-line rules, we adopt the no-unreasonable interference/disadvantage standard to ensure that broadband providers do not engage in practices that threaten the open nature of the Internet in other or novel ways. This standard is tailored to the open Internet harms we wish to prevent, including harms to consumers, competition, innovation, and free expression'--all of which could impair the virtuous cycle and thus deter broadband deployment, undermining the goals of section 706.
295. The no-unreasonable interference/disadvantage standard is also supported by section 201 and 202 of the Act, which require broadband providers to engage in practices that are just and reasonable, and not unreasonably discriminatory. The prohibition on no-unreasonable interference/disadvantage represents our interpretation of these 201 and 202 obligations in the open Internet context'--an interpretation that is informed by section 706's goals of promoting broadband deployment. (Given the generality of the terms in sections 201 and 202, the Commission has significant discretion when interpreting how those sections apply to the different services subject to Title II.) In other words, for BIAS, we will evaluate whether a practice is unjust, unreasonable, or unreasonably discriminatory using this no-unreasonable interference/disadvantage standard. We note, however, that this rule'--on its own'--does not constitute common carriage per se. (Not all requirements which apply to common carriers need impose common carriage per se. See Verizon, 740 F.3d at 652 (citing Cellco, 700 F.3d at 547 (''[C]ommon carriage is not all or nothing'--there is a gray area in which although a given regulation might be applied to common carriers, the obligations imposed are not common carriage per se. It is in this realm'--the space between per se common carriage and per se private carriage'--that the Commission's determination that a regulation does or does not confer common carrier status warrants deference.'')); Id. at 653 (citing NARUC v. FCC, 533 F.2d 601, 608 (D.C. Cir. 1976) (NARUC II) (''Since it is clearly possible for a given entity to carry on many types of activities, it is at least logical to conclude that one may be a common carrier with regard to some activities but not others.'')).) The no-unreasonable interference/disadvantage standard, standing alone, contains no obligation to provide broadband service to any consumer or edge provider and would not, in its isolated application, necessarily preclude individualized negotiations so long as they do not otherwise unreasonably interfere with the ability of end users and edge providers to use broadband Internet access services to reach one another. Rather, particular practices or arrangements that are not barred by our rules against blocking, throttling, and paid prioritization will be evaluated based on the facts and circumstances they present using a series of factors specifically designed to protect the virtuous cycle of innovation and deployment. Thus, this is a rule tied to particular harms. Broadband providers, having chosen to provide BIAS, may not do so in a way that harms the virtuous cycle.
296. For mobile broadband providers, the no-unreasonable interference/disadvantage standard finds additional support in the Commission's Title III authority as discussed above. The Commission has authority to ensure that broadband providers, having obtained a spectrum license to provide mobile broadband service, must provide that service in a manner consistent with the public interest. (The Commission has broad authority to prescribe the nature of services to be rendered by licensed stations, consistent with the public interest. 47 U.S.C. 303(b); Cellco Partnership v. FCC, 700 F.3d 534, 542 (D.C. Cir. 2012) (''Although Title III does not `confer an unlimited power,' the Supreme Court has emphasized that it does endow the Commission with `expansive powers' and a `comprehensive mandate to `encourage the larger and more effective use of radio in the public interest.' '') (internal citations omitted) (quoting NBC v. United States, 319 U.S. 190, 216, 219 (1943)).) This standard provides guidance on how the Commission will evaluate particular broadband practices, not otherwise barred by our bright-line rules, to ensure that they are consistent with the public interest.
297. Transparency Rule. The D.C. Circuit severed and upheld the Commission's 2010 transparency rule in Verizon. While the majority did not expressly opine on the legal authority for the Commission's prior transparency rule, we feel confident that like the 2010 transparency rule, the enhanced transparency rule we adopt today falls well within multiple, independent sources of the Commission's authority. Beginning with section 706, the transparency rule ensures that consumers have sufficient information to make informed choices thereby facilitating competition in the local telecommunications market (to the extent competitive choices are available). (To encourage deployment of ''advanced telecommunications capability,'' section 706(a) authorizes the Commission to engage in measures that ''promote competition in the local telecommunications market.'' 47 U.S.C. 1302(a). And section 706(b) references ''promoting competition in the telecommunications market'' as among the immediate actions that Commission shall take to accelerate deployment of ''advanced telecommunications capability'' upon a determination that it is not being reasonably and timely deployed. 47 U.S.C. 1302(b). We interpret these references to the ''telecommunications market'' to include the market for ''advanced telecommunications capability.'' In any event, having classified broadband Internet access services as ''telecommunications services,'' the Commission actions to promote competition among broadband Internet access services clearly promote competition in the ''telecommunications market.'') Furthermore, these disclosures remove potential information barriers by ensuring that edge providers have the necessary information to develop innovative products and services that rely on the broadband networks to reach consumers, a crucial arc of the virtuous cycle of broadband deployment. Our transparency rule is also supported by Title II. The Commission has relied on section 201(b) in related billing contexts to ensure that carriers convey accurate and sufficient information about the services they provide to consumers. We do so here as well. (For the reasons discussed above, we likewise rely on Title III to ensure that spectrum licensees provide mobile broadband Internet access service consistent with the public interest.)
298. Enforcement. We also make clear that we have ample authority to enforce the rules we adopt today. Our rules today carry out the provisions of the Communications Act and are thus are covered by our Title IV and V authorities to investigate and enforce violations of these rules. With specific respect to section 706, as noted above, in Verizon, the D.C. Circuit suggested that section 706 was part of the Communications Act of 1934. Under such a reading, rules adopted pursuant to section 706 fall within our Title IV and V authorities. But even if this were not the case, we believe it reasonable to interpret section 706 itself as a grant of authority to investigate and enforce our rules. (Moreover, as discussed above, to the extent that section 706 was not viewed as part of the Communications Act, we have authority under section 4(i) of the Communications Act to adopt rules implementing section 706. Thus, even then the Commission's rules, insofar as they are based on our substantive jurisdiction under section 706, nonetheless would be issued under the Communications Act.) Our enforcement authority was not explicitly discussed in either the 2010 Open Internet Order or the Verizon case. As noted above, the court did cite as reasonable, however, the Commission's view that Congress, in placing upon the Commission the obligation to carry out the purposes of section 706, ''necessarily invested the Commission with the statutory authority to carry out those acts.'' We believe it likewise reasonable to conclude that, having provided the Commission with affirmative legal authority to take regulatory measures to further section 706's goals, Congress invested the Commission with the authority to enforce those measures as needed to ensure those goals are achieved. Indeed, some have suggested that the Commission could take enforcement action pursuant to section 706 itself, without adopting rules.
G. Other Laws and Considerations299. In the 2014 Open Internet NPRM, the Commission tentatively concluded that it should retain provisions which make clear that the open Internet rules do not alter broadband providers' rights or obligations with respect to other laws, safety and security considerations, or the ability of broadband providers to make reasonable efforts to address transfers of unlawful content and unlawful transfers of content. We affirm this tentative conclusion and reiterate today that our rules are not intended to expand or contract broadband providers' rights or obligations with respect to other laws or safety and security considerations'--including the needs of emergency communications and law enforcement, public safety, and national security authorities. Similarly, open Internet rules protect only lawful content, and are not intended to inhibit efforts by broadband providers to address unlawful transfers of content or transfers of unlawful content.
1. Emergency Communications and Safety and Security Authorities300. In the 2010 Open Internet Order we adopted a rule that acknowledges the ability of broadband providers to serve the needs of law enforcement and the needs of emergency communications and public safety, national, and homeland security authorities. This rule remains in effect today. To make clear that open Internet protections coexist with other legal frameworks governing the needs of safety and security authorities, we retain this rule, which reads as follows:
301. In retaining this rule, we reiterate that the purpose of the safety and security provision is first to ensure that open Internet rules do not restrict broadband providers in addressing the needs of law enforcement authorities, and second to ensure that broadband providers do not use the safety and security provision without the imprimatur of a law enforcement authority, as a loophole to the rules. Application of the safety and security rule should be tied to invocation by relevant authorities rather than to a broadband provider's independent notion of the needs of law enforcement.
302. The record is generally supportive of our proposal to reiterate that open Internet rules do not supersede any obligation a broadband provider may have'--or limit its ability'--to address the needs of emergency communications or law enforcement, public safety, or homeland or national security authorities (together, ''safety and security authorities''). Broadband providers have obligations under statutes such as the Communications Assistance for Law Enforcement Act, the Foreign Intelligence Surveillance Act, and the Electronic Communications Privacy Act that could in some circumstances intersect with open Internet protections. Likewise, in connection with an emergency, there may be federal, state, tribal, and local public safety entities, homeland security personnel, and other authorities that need guaranteed or prioritized access to the Internet in order to coordinate disaster relief and other emergency response efforts, or for other emergency communications. Most commenters recognize the benefits of clarifying that these obligations are not inconsistent with open Internet rules.
303. Some commenters have proposed revisions to the existing rule which would expand its application to public utilities and other critical infrastructure operators. Because we make sufficient accommodation for these concerns elsewhere, we choose not to modify this provision to include critical infrastructure.
2. Transfers of Unlawful Content and Unlawful Transfers of Content304. In the NPRM, we tentatively concluded that we should retain the definition of reasonable network management we previously adopted, which does not include preventing transfer of unlawful content or the unlawful transfer of content as a reasonable practice. We affirm this tentative conclusion and re-state that open Internet rules do not prohibit broadband providers from making reasonable efforts to address the transfer of unlawful content or unlawful transfers of content to ensure that open Internet rules are not used as a shield to enable unlawful activity or to deter prompt action against such activity. For example, the no-blocking rule should not be invoked to protect copyright infringement, which has adverse consequences for the economy, nor should it protect child pornography. We reiterate that our rules do not alter the copyright laws and are not intended to prohibit or discourage voluntary practices undertaken to address or mitigate the occurrence of copyright infringement. After consideration of the record, we retain this rule, which is applicable to both fixed and mobile broadband providers engaged in broadband Internet access service and reads as follows:
305. Some commenters contend that this rule promotes the widespread use of intrusive packet inspection technologies by broadband providers to filter objectionable content and that such monitoring poses a threat to customers' privacy rights. Certainly, many broadband providers have the technical tools to conduct deep packet inspection of unencrypted traffic on their networks, and consumer privacy is a paramount concern in the Internet age. Nevertheless, we believe that broadband monitoring concerns are adequately addressed by the rules we adopt today, so we decline to alter this provision. This rule is limited to protecting ''reasonable efforts . . . to address copyright infringement or other unlawful activity.'' We retain the discretion to evaluate the reasonableness of broadband providers' practices under this rule on a case-by-case basis. Consumers also have many tools at their disposal to protect their privacy against deep packet inspection'--including SSL encryption, virtual private networks, and routing methods like TOR. Further, the complaint processes we adopt today add to these technical methods and advance consumer interests in this area.
IV. Declaratory Ruling: Classification of Broadband Internet Access Services Back to Top306. The Verizon court upheld the Commission's use of section 706 as a substantive source of legal authority to adopt open Internet protections. But it held that, ''[g]iven the Commission's still-binding decision to classify broadband providers . . . as providers of `information services,' '' open Internet protections that regulated broadband providers as common carriers would violate the Act. Rejecting the Commission's argument that broadband providers only served retail consumers, the Verizon court went on to explain that ''broadband providers furnish a service to edge providers, thus undoubtedly functioning as edge providers' `carriers,' '' and held that the 2010 no-blocking and no-unreasonable discrimination rules impermissibly ''obligated [broadband providers] to act as common carriers.''
307. The Verizon decision thus made clear that section 706 affords the Commission with substantive authority and that open Internet protections are within the scope of that authority. And this Order relies on section 706 for the open Internet rules. But, in light of Verizon, absent a classification of broadband providers as providing a ''telecommunications service,'' the Commission may only rely on section 706 to put in place open Internet protections that steer clear of what the court described as common carriage per se regulation.
308. Taking the Verizon decision's implicit invitation, we revisit the Commission's classification of the retail broadband Internet access service as an information service (The Commission has previously classified cable modem Internet access service, wireline broadband Internet access service, and Broadband over Power Line (BPL)-enabled Internet access service as information services. The Commission has referred to these services as ''wired'' broadband Internet access services. The Commission has also previously classified ''wireless'' broadband Internet access, which it defined as a service that ''uses spectrum, wireless facilities and wireless technologies to provide subscribers with high-speed (broadband) Internet access capabilities, . . . whether offered using mobile, portable, or fixed technologies,'' as information services) and clarify that this service encompasses the so-called ''edge service.'' Based on the updated record, we conclude that retail broadband Internet access service is best understood today as an offering of a ''telecommunications service.'' (As discussed in greater detail below, our classification decision arises from our reconsideration of past interpretations and applications of the Act. We thus conclude that the classification decisions in this Order appropriately apply only on a prospective basis. See, e.g., Verizon v. FCC, 269 F.3d 1098 (D.C. Cir. 2001) (''In a case in which there is a substitution of new law for old law that was reasonably clear, a decision to deny retroactive effect is uncontroversial.'') (internal quotations omitted).)
309. Below we discuss the history of the classification of broadband Internet access service, describe our rationale for revisiting that classification, and provide a detailed explanation of our reclassification of broadband Internet access service.
A. History of Broadband Internet Classification310. Congress created the Commission ''[f]or the purpose of regulating interstate and foreign commerce in communication by wire and radio so as to make available, so far as possible, to all people of the United States . . . a rapid, efficient, Nation-wide, and world-wide wire and radio communication service with adequate facilities at reasonable charges, for the purpose of the national defense, [and] for the purpose of promoting safety of life and property through the use of wire and radio communication.'' section 2 of the Communications Act grants the Commission jurisdiction over ''all interstate and foreign communication by wire or radio.'' As the Supreme Court explained in the radio context, Congress charged the Commission with ''regulating a field of enterprise the dominant characteristic of which was the rapid pace of its unfolding'' and therefore intended to give the Commission sufficiently ''broad'' authority to address new issues that arise with respect to ''fluid and dynamic'' communications technologies. (National Broadcasting Co., Inc. v. United States, 319 U.S. 190, 219 (1943). The Court added that ''[i]n the context of the developing problems to which it was directed, the Act gave the Commission . . . expansive powers . . . [and] a comprehensive mandate.'') No one disputes that Internet access services are within the Commission's subject-matter jurisdiction and historically have been supervised by the Commission.
311. The Computer Inquiries. In 1966, the Commission initiated its Computer Inquiries''to ascertain whether the services and facilities offered by common carriers are compatible with the present and anticipated communications requirements of computer users.'' In the decision known as Computer I, the Commission required ''maximum separation'' between large carriers that offered data transmission services subject to common carrier requirements and their affiliates that sold data processing services. Refining this approach, in Computer II and Computer III the Commission required telephone companies that provided ''enhanced services'' over their own transmission facilities to separate out and offer on a common carrier basis the transmission component underlying their enhanced services.
312. Commenters disagree about the significance of the Computer Inquiries. We believe the Computer Inquiries are relevant in at least two important respects. First, in Computer II the Commission distinguished ''basic'' from ''enhanced'' services, a distinction that Congress embraced when it adopted the Telecommunications Act of 1996. Basic services offered on a common carrier basis were subject to Title II; enhanced services were not. When Congress enacted the definitions of ''telecommunications service'' and ''information service'' in the Telecommunications Act of 1996, it substantially incorporated the ''basic'' and ''enhanced'' service classifications. Because the statutory definitions substantially incorporated the Commission's terminology under the Computer Inquiries, Commission decisions regarding the distinction between basic and enhanced services'--in particular, decisions regarding features that are ''adjunct to basic'' services'--are relevant in this proceeding. (The Commission's definition of ''adjunct to basic'' services has been instrumental in determining which functions fall within the ''telecommunications systems management'' exception to the ''information service'' definition.)
313. Second, the Computer Inquiries disprove the claim that the Commission has never before mandatorily applied Title II to the transmission component of Internet access service. (As discussed below, a large number of rural local exchange carriers (LECs) have also chosen to offer broadband transmission service as a telecommunications service subject to the provisions of Title II.) From 1980 to 2005, facilities-based telephone companies were obligated to offer the transmission component of their enhanced service offerings'--including broadband Internet access service offered via digital subscriber line (DSL)'--to unaffiliated enhanced service providers on nondiscriminatory terms and conditions pursuant to tariffs or contracts governed by Title II. There is no disputing that until 2005, Title II applied to the transmission component of DSL service.
314. Prior Classification Decisions. Several commenters, as well as the dissenting statements, claim that an unbroken line of Commission and court precedent, dating back to the Stevens Report in 1998, supports the classification of Internet access service as an information service, and that this classification is effectively etched in stone. These commenters ignore not only the Supreme Court but our precedent demonstrating that the relevant statutory definitions are ambiguous, and that classifying broadband Internet access service as a telecommunications service is a permissible interpretation of the Act. Indeed, several of the most vocal opponents of reclassification previously argued that the Commission not only may, but should, classify the transmission component of broadband Internet access service as a telecommunications service. (Contemporaneously, Verizon and the United States Telecom Association argued in the Gulf Power litigation before the Supreme Court that cable modem service includes a telecommunications service.)
315. To begin with, these commenters misconstrue the scope of the Stevens Report, which was a report to Congress concerning the implementation of universal service mandates, and not a binding Commission Order classifying Internet access services. Moreover, when the Commission issued that report, in 1998, broadband Internet access service was at ''an early stage of deployment to residential customers'' and constituted a tiny fraction of all Internet connections. Virtually all households with Internet connections used traditional telephone service to dial-up their Internet Service Provider (ISP), which was typically a separate entity from their telephone company. In the Stevens Report, the Commission stated that Internet access service as it was then typically being provided was an ''information service.'' The Stevens Report reserved judgment on whether entities that provided Internet access over their own network facilities were offering a separate telecommunications service. The Commission further noted that ''the question may not always be straightforward whether, on the one hand, an entity is providing a single information service with communications and computing components, or, on the other hand, is providing two distinct services, one of which is a telecommunications service.'' A few months after sending the Stevens Report to Congress, the Commission concluded that ''[a]n end-user may utilize a telecommunications service together with an information service, as in the case of Internet access.'' In a follow-up order, the Commission affirmed its conclusion that ''xDSL-based advanced services constitute telecommunications services as defined by section 3(46) of the Act.'' (The definition of telecommunications service is now in section 3(53) of the Act, 47 U.S.C. 153(53). The Advanced Services Remand Order was vacated in part by the D.C. Circuit in WorldCom v. FCC, 246 F.3d 690 (D.C. Cir. 2001). Specifically, the D.C. Circuit vacated the remand of the Commission's classification of DSL-based advanced services as ''telephone exchange service'' or ''exchange access.'' ''Telephone exchange service'' and ''exchange access'' are relevant in determining whether a provider is a ''local exchange carrier.'' It has no bearing on the classification of a particular service offering as a telecommunications or information service under the Act. As such, the further history of the Advanced Services Remand Order is inapposite to the Commission's discussion of telecommunications and information services in that Order.)
316. The courts addressed the statutory classification of broadband Internet access service in June 2000, when the United States Court of Appeals for the Ninth Circuit held in AT&T Corp. v. City of Portland that cable modem service is a telecommunications service to the extent that the cable operator ''provides its subscribers Internet transmission over its cable broadband facility,'' and an information service to the extent the operator acts as a ''conventional'' ISP. The Ninth Circuit's decision thus put cable companies' broadband transmission service on a regulatory par with DSL transmission service. (In 2001, SBC Communications and BellSouth acknowledged the significance of the Computer Inquiries, the Advanced Services Order, and the Ninth Circuit's decision in City of Portland:''The Commission currently views the DSL-enabled transmission path underlying incumbent LEC broadband Internet services as a `telecommunications service' under the Act. As the Ninth Circuit recognized, the exact same logic applies to cable broadband: `to the extent that [a cable ISP] provides its subscribers Internet transmission over its cable broadband facility, it is providing a telecommunications service as defined in the Communications Act.' '')
317. Three months later, the Commission issued the Cable Modem Notice of Inquiry, which sought comment on whether cable modem service should be treated as a telecommunications service under Title II or an information service subject to Title I. In response, the Bell Operating Companies (BOCs) unanimously argued that the Commission lawfully could determine that cable modem service includes a telecommunications service. Verizon and Qwest argued that the transmission component of cable modem service is a telecommunications service. SBC Communications and BellSouth (both now part of AT&T) argued that the Commission should classify cable modem service as an integrated information service subject to Title I, but acknowledged that the Commission could lawfully find that cable modem service includes both a telecommunications service and an information service. Verizon, SBC, and BellSouth also agreed that the Commission could adopt a ''middle ground'' legal framework by finding that cable modem service is, in part, a telecommunications service, but grant relief from pricing and tariffing obligations by either declaring all providers of broadband Internet access service to be nondominant or by forbearing from enforcing those obligations. (Cable operators generally argued that the Commission should classify cable modem service as either a cable service or an information service, but not as a telecommunications service.)
318. In March 2002, the Commission exercised its authority to interpret ambiguous language in the Act and addressed the classification of cable modem service in the Cable Modem Declaratory Ruling. The Commission stated that ''[t]he Communications Act does not clearly indicate how cable modem service should be classified or regulated.'' Based on a factual record that had been compiled at that time, the Commission described cable modem service as ''typically includ[ing] many and sometimes all of the functions made available through dial-up Internet access service, including content, email accounts, access to news groups, the ability to create a personal Web page, and the ability to retrieve information from the Internet.'' The Commission noted that cable modem providers often consolidated these functions ''so that subscribers usually do not need to contract separately with another Internet access provider to obtain discrete services or applications.'' (The Commission defined cable modem service as ''a service that uses cable system facilities to provide residential subscribers with high-speed Internet access, as well as many applications or functions that can be used with high-speed Internet access.'')
319. The Commission identified a portion of cable modem service as ''Internet connectivity,'' which it described as establishing a physical connection to the Internet and operating or interconnecting with the Internet backbone, and sometimes including protocol conversion, Internet Protocol (IP) address number assignment, DNS, network security, caching, network monitoring, capacity engineering and management, fault management, and troubleshooting. The Ruling also noted that ''[n]etwork monitoring, capacity engineering and management, fault management, and troubleshooting are Internet access service functions that . . . serve to provide a steady and accurate flow of information between the cable system to which the subscriber is connected and the Internet.'' The Commission distinguished these functions from ''Internet applications provided through cable modem services,'' including ''email, access to online newsgroups, and creating or obtaining and aggregating content,'' ''home pages,'' and ''the ability to create a personal Web page.''
320. The Commission found that cable modem service was ''an offering . . . which combines the transmission of data with computer processing, information provision, and computer interactivity, enabling end users to run a variety of applications.'' The Commission further concluded that, ''as it [was] currently offered,'' cable modem service as a whole met the statutory definition of ''information service'' because its components were best viewed as a ''single, integrated service that enables the subscriber to utilize Internet access service,'' with a telecommunications component that was ''not . . . separable from the data processing capabilities of the service.'' Significantly, the Commission did not address whether DNS or any other features of cable modem service fell within the telecommunications systems management exception to the definition of ''information service'' as there was no reason to do so. The Cable Modem Declaratory Ruling also included a notice of proposed rulemaking seeking comment on, among other things, whether the Commission should require cable operators to give unaffiliated broadband Internet access service providers access to cable broadband networks.
321. In October 2003, the United States Court of Appeals for the Ninth Circuit vacated the Commission's finding that cable modem service is an integrated information service. The court concluded that it was bound by the prior decision in City of Portland that ''the transmission element of cable broadband service constitutes telecommunications service under the terms of the Communications Act.''
322. In 2005, the Supreme Court reversed the Ninth Circuit's decision and upheld the Cable Modem Declaratory Ruling in Brand X. The Court held that the word ''offering'' in the Communications Act's definitions of ''telecommunications service'' and ''information service'' is ambiguous, and that the Commission's finding that cable modem service is a functionally integrated information service was a permissible, though perhaps not the best, interpretation of the Act.
323. Following Brand X, the Commission issued the Wireline Broadband Classification Order, which applied the ''information services'' classification at issue in the Cable Modem Declaratory Ruling to facilities-based wireline broadband Internet access services as well and eliminated the resulting regulatory asymmetry between cable companies and telephone companies offering wired Internet access service via DSL and other facilities. The Wireline Broadband Classification Order based this decision on a finding that ''providers of wireline broadband Internet access service offer subscribers the ability to run a variety of applications'' that fit the definition of information services, including those that enable access to email and the ability to establish home pages. The Commission therefore concluded that ''[w]ireline 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 also eliminated the Computer Inquiry requirements for wireline Internet access service. In 2006, the Commission issued the BPL-Enabled Broadband Order, which extended the information service classification to Internet access service provided over power lines.
324. Subsequently, in 2007 the Commission released the Wireless Broadband Classification Order, which determined that wireless broadband Internet access service was likewise an information service under the Communications Act. The Wireless Broadband Classification Order also found that although ''the transmission component of wireless broadband Internet access service is `telecommunications' . . . the offering of the telecommunications transmission component as part of a functionally integrated Internet access service offering is not `telecommunications service' under section 3 of the [Communications] Act.''
325. The Wireless Broadband Classification Order also considered the application of section 332 of Title III to wireless broadband Internet access service and concluded that ''mobile wireless broadband Internet access service does not meet the definition of `commercial mobile service' within the meaning of section 332 of the Act as implemented by the Commission's CMRS rules because such broadband service is not an `interconnected service,' as defined in the Act and the Commission's rules.''
326. In 2010, the D.C. Circuit rejected the Commission's attempt to enforce open Internet principles based on the Commission's Title I ancillary authority in Comcast v. FCC. Following Comcast, the Commission issued a Notice of Inquiry (Broadband Classification NOI) that sought comment on the appropriate approach to broadband policy in light of the D.C. Circuit's decision. Shortly thereafter, the Commission released the 2010 Open Internet Order. The 2010 Order was based in part on a revised understanding of the Commission's Title I authority'--as well as a variety of other statutory provisions including section 706'--and was again challenged before the D.C. Circuit in Verizon v. FCC. Although the Verizon court accepted the Commission's reinterpretation of section 706 as an independent grant of legislative authority over broadband services, the court nonetheless vacated the no-blocking and antidiscrimination provisions of the Order as imposing de facto common carrier status on providers of broadband Internet access service in violation of the Commission's classification of those services as information services. (The Court also found that that authority did not allow the Commission to subject information services or providers of private mobile services to treatment as common carriers.)
327. In response to the Verizon decision, the Commission released a Notice of Proposed Rulemaking (NPRM) seeking public input on the ''best approach to protecting and promoting Internet openness.'' Among other things, the 2014 Open Internet NPRM asked for discussion of the proper legal authority on which to base open Internet rules. The Commission proposed to rely on section 706 of the Telecommunications Act of 1996, but at the same time stated that it would ''seriously consider the use of Title II of the Communications Act as the basis for legal authority.'' The NPRM sought comment on the benefits of both section 706 and Title II, and emphasized its recognition that ''both section 706 and Title II are viable solutions.''
B. Rationale for Revisiting the Commission's Classification of Broadband Internet Access Services328. We now find it appropriate to revisit the classification of broadband Internet access service as an information service. The Commission has steadily and consistently worked to protect the open Internet for the last decade, starting with the adoption of the Internet Policy Statement up through its recent 2014 Open Internet NPRM following the D.C. Circuit's Verizon decision. Although the Verizon court accepted the Commission's interpretation of section 706 as an independent grant of authority over broadband services, it nonetheless vacated the no-blocking and antidiscrimination provisions of the Open Internet Order. As the Verizon decision explained, to the extent that conduct-based rules remove broadband service providers' ability to enter into individualized negotiations with edge providers, they impose per se common carrier status on broadband Internet access service providers, and therefore conflict with the Commission's prior designation of broadband Internet access services as information services. Thus, absent a finding that broadband providers were providing a ''telecommunications service,'' the D.C. Circuit's Verizon decision defined the bounds of the Commission's authority to adopt open Internet protections to those that do not amount to common carriage.
329. The Brand X Court emphasized that the Commission has an obligation to consider the wisdom of its classification decision on a continuing basis. An agency's evaluation of its prior determinations naturally includes consideration of the law affecting its ability to carry out statutory policy objectives. As discussed above, the record in the Open Internet proceeding demonstrates that broadband providers continue to have the incentives and ability to engage in practices that pose a threat to Internet openness, and as such, rules to protect the open nature of the Internet remain necessary. To protect the open Internet, and to end legal uncertainty, we must use multiple sources of legal authority to protect and promote Internet openness, to ensure that the Internet continues to grow as a platform for competition, free expression, and innovation; a driver of economic growth; and an engine of the virtuous cycle of broadband deployment, innovation, and consumer demand. Thus, we now find it appropriate to examine how broadband Internet access services are provided today.
330. Changed factual circumstances cause us to revise our earlier classification of broadband Internet access service based on the voluminous record developed in response to the 2014 Open Internet NPRM. In the 2002 Cable Modem Declaratory Ruling, the Commission observed that ''the cable modem service business is still nascent, and the shape of broadband deployment is not yet clear. Business relationships among cable operators and their service offerings are evolving.'' However, despite the rapidly changing market for broadband Internet access services, the Commission's decisions classifying broadband Internet access service are based largely on a factual record compiled over a decade ago, during this early evolutionary period. The premises underlying that decision have changed. As the record demonstrates and we discuss in more detail below, we are unable to maintain our prior finding that broadband providers are offering a service in which transmission capabilities are ''inextricably intertwined'' with various proprietary applications and services. Rather, it is more reasonable to assert that the ''indispensable function'' of broadband Internet access service is ''the connection link that in turn enables access to the essentially unlimited range of Internet-based services.'' This is evident, as discussed below, from: (1) Consumer conduct, which shows that subscribers today rely heavily on third-party services, such as email and social networking sites, even when such services are included as add-ons in the broadband Internet access provider's service; (2) broadband providers' marketing and pricing strategies, which emphasize speed and reliability of transmission separately from and over the extra features of the service packages they offer; and (3) the technical characteristics of broadband Internet access service. We also note that the predictive judgments on which the Commission relied in the Cable Modem Declaratory Ruling anticipating vibrant intermodal competition for fixed broadband cannot be reconciled with current marketplace realities.
C. Classification of Broadband Internet Access Service331. In this section, we reconsider the Commission's prior decisions that classified wired and wireless broadband Internet access service as information services, and conclude that broadband Internet access service is a telecommunications service subject to our regulatory authority under Title II of the Communications Act regardless of the technological platform over which the service is offered. (A ''telecommunications service'' is ''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.'' 47 U.S.C. 153(53). ''Telecommunications'' is ''the transmission, between or among points specified by the user, of information of the user's choosing, without change in the form or content of the information as sent and received.''Id. 153(50).) We both revise our prior classifications of wired broadband Internet access service and wireless broadband Internet access service, and classify broadband Internet access service provided over other technology platforms. In doing so, we exercise the well-established power of federal agencies to interpret ambiguous provisions in the statutes they administer. The Supreme Court summed up this principle in Brand X:
332. The Court's application of this Chevron test in Brand X makes clear our delegated authority to revisit our prior interpretation of ambiguous statutory terms and reclassify broadband Internet access service as a telecommunications service. The Court upheld the Commission's prior information services classification because ''the statute fails unambiguously to classify the telecommunications component of cable modem service as a distinct offering. This leaves federal telecommunications policy in this technical and complex area to be set by the Commission. . . .'' Where a term in the Act ''admit[s] of two or more reasonable ordinary usages, the Commission's choice of one of them is entitled to deference.'' The Court concluded, given the ''technical, complex, and dynamic'' questions that the Commission resolved in the Cable Modem Declaratory Ruling,''[t]he Commission is in a far better position to address these questions than we are.''
333. Furthermore, reading the Brand X majority, concurring, and dissenting opinions together, it is apparent that most, and perhaps all, of the nine Justices believed that it would have been at least permissible under the Act to have classified the transmission service included with wired Internet access service as a telecommunications service. Justice Thomas, writing for the majority, noted that ''our conclusion that it is reasonable to read the Communications Act to classify cable modem service solely as an `information service' leaves untouched Portland's holding that the Commission's interpretation is not the best reading of the statute.'' Justice Breyer concurred with Justice Thomas, stating that he ''believe[d] that the Federal Communications Commission's decision f[e]ll[ ] within the scope of its statutorily delegated authority,'' although ''perhaps just barely.'' And in dissent, Justice Scalia, joined by Justices Souter and Ginsburg, found that the Commission had adopted ''an implausible reading of the statute'' and that ''the telecommunications component of cable-modem service retains such ample independent identity'' that it could only reasonably be classified as a separate telecommunications service.
334. It is also well settled that we may reconsider, on reasonable grounds, the Commission's earlier application of the ambiguous statutory definitions of ''telecommunications service'' and ''information service.'' Indeed, in Brand X, the Supreme Court, in the specific context of classifying cable modem service, instructed the Commission to reexamine its application of the Communications Act to this service ''on a continuing basis'':
335. More recently, in FCC v. Fox Television Stations, Inc., the Supreme Court emphasized that, although an agency must acknowledge that it is changing course when it adopts a new construction of an ambiguous statutory provision, ''it need not demonstrate to a court's satisfaction that the reasons for the new policy are better than the reasons for the old one. . . .'' Rather, it is sufficient that ''the new policy is permissible under the statute, that there are good reasons for it, and that the agency believes it to be better, which the conscious change of course adequately indicates.'' We discuss in detail below why our conclusion that broadband Internet access service is a telecommunications service is well within our authority. Having determined that Congress gave the Commission authority to determine the appropriate classification of broadband Internet access service'--and having provided sufficient justification of changed factual circumstances to warrant a reexamination of the Commission's prior classification'--we find, upon interpreting the relevant statutory terms, that broadband Internet access service, as offered today, includes ''telecommunications,'' and falls within the definition of a ''telecommunications service.''
1. Scope336. As discussed below, we conclude that broadband Internet access service is a telecommunications service. We define ''broadband Internet access service'' as a mass-market (By mass market, we mean services marketed and sold on a standardized basis to residential customers, small businesses, and other end-user customers such as schools and libraries. ''Schools'' would include institutions of higher education to the extent that they purchase these standardized retail services. See Higher Education and Libraries Comments at 11 (noting that institutions of higher education are not ''residential customers'' or ''small businesses'' and uncertainty about whether institutions of higher education (and their libraries) are included in the term ''schools'' because the term is sometimes interpreted as applying only to K through 12 schools). For purposes of this definition, ''mass market'' also includes broadband Internet access service purchased with the support of the E-rate, and Rural Healthcare programs, as well as any broadband Internet access service offered using networks supported by the Connect America Fund (CAF), but does not include enterprise service offerings or special access services, which are typically offered to larger organizations through customized or individually negotiated arrangements.) retail service by wire or radio that provides the capability to transmit data to and receive data from all or substantially all Internet endpoints, including any capabilities that are incidental to and enable the operation of the communications service, but excluding dial-up Internet access service. (As explained above, see supra note, our use of the term ''broadband'' in this Order includes but is not limited to services meeting the threshold for ''advanced telecommunications capability.'') This term also encompasses any service that the Commission finds to be providing a functional equivalent of the service described in the previous sentence. (The Verizon decision upheld the Commission's regulation of broadband Internet access service pursuant to section 706 and the definition of ''broadband Internet access service'' has remained part of the Commission's regulations since adopted in 2010. Certain parties have raised issues in the record regarding the regulatory status of mobile messaging services, e.g., SMS/MMS. We note that the rules we adopt today prohibit broadband providers from, for example, blocking messaging services that are delivered over a broadband Internet access service. We decline to further address here arguments regarding the status of messaging within our regulatory framework, but instead plan to address these issues in the context of the pending proceeding considering a petition to clarify the regulatory status of text messaging services.)
337. The term ''broadband Internet access service'' includes services provided over any technology platform, including but not limited to wire, terrestrial wireless (including fixed and mobile wireless services using licensed or unlicensed spectrum), and satellite. (In classifying wireless broadband Internet access as an information service, the Commission excluded broadband provided via satellite from classification. Thus, our action here expressly classifies the service for the first time. We observe that while our classification includes broadband Internet access services provided using capacity over fixed or mobile satellite or submarine cable landing facilities, our classification of these services as telecommunications services or CMRS does not require changes to the authorizations for satellite earth stations, satellite space stations, or submarine cable landing facilities.) For purposes of our discussion, we divide the various forms of broadband Internet access service into the two categories of ''fixed'' and ''mobile,'' rather than between ''wired'' and ''wireless'' service. With these two categories of services'--fixed and mobile'--we intend to cover the entire universe of Internet access services at issue in the Commission's prior broadband classification decisions as well as all other broadband Internet access services offered over other technology platforms that were not addressed by prior classification orders. We also make clear that our classification finding applies to all providers of broadband Internet access service, as we delineate them here, regardless of whether they lease or own the facilities used to provide the service. (The Commission has consistently determined that resellers of telecommunications services are telecommunications carriers, even if they do not own any facilities. Further, as the Supreme Court observed in Brand X,''the relevant definitions do not distinguish facilities-based and non-facilities-based carriers.'') ''Fixed'' broadband Internet access service refers to a broadband Internet access service that serves end users primarily at fixed endpoints using stationary equipment, such as the modem that connects an end user's home router, computer, or other Internet access device to the network. The term encompasses the delivery of fixed broadband over any medium, including various forms of wired broadband services (e.g., cable, DSL, fiber), fixed wireless broadband services (including fixed services using unlicensed spectrum), and fixed satellite broadband services. ''Mobile'' broadband Internet access service refers to a broadband Internet access service that serves end users primarily using mobile stations. Mobile broadband Internet access includes, among other things, services that use smartphones or mobile-network-enabled tablets as the primary endpoints for connection to the Internet. (We note that section 337(f)(1) of the Act excludes public safety services from the definition of mobile broadband Internet access service. 47 U.S.C. 337(f)(1).) The term also encompasses mobile satellite broadband services.
338. In the Verizon opinion, the D.C. Circuit concluded that, in addition to the retail service provided to consumers, ''broadband providers furnish a service to edge providers, thus undoubtedly functioning as edge providers `carriers.' '' It was because the court concluded that the Commission had treated this distinct service as common carriage, that it ''remand[ed] the case to the Commission for further proceedings consistent with this opinion.'' We conclude now that the failure of the Commission's analysis was a failure to explain that the ''service to edge providers'' is subsumed within the promise made to the retail customer of the BIAS service. For the reasons we review herein, the reclassification of BIAS necessarily resolves the edge-provider question as well. In other words, the Commission agrees that a two-sided market exists and that the beneficiaries of the non-consumer side either are or potentially could be all edge providers. Because our reclassification decision treats BIAS as a Title II service, Title II applies, as well, to the second side of the market, which is always a part of, and subsidiary to, the BIAS service. The Verizon court implicitly followed that analysis when it treated the classification of the retail end user service as controlling with respect to its analysis of the edge service; its conclusion that an edge service could be not be treated as common carriage turned entirely on its understanding that the provision of retail broadband Internet access services had been classified as ''information services.'' The reclassification of BIAS as a Title II service thus addresses the court's conclusion that ''the Commission would violate the Communications Act were it to regulate broadband providers as common carriers.''
339. Many commenters, while holding vastly different views on our reclassification of BIAS, are united in the view we need not reach the regulatory classification of the service that the Verizon court identified as being furnished to the edge. (We thus decline to adopt proposals identifying and classifying a separate service provided to edge providers that were presented in the record, and on which we sought comment, including those by Mozilla, the Center for Democracy and Technology, and Professors Wu and Narechania. We believe that our actions here adequately address the concerns raised by these proposals, consistent with both law and fact.) We agree. Our reclassification of the broadband Internet access service means that we can regulate, consistent with the Communications Act, broadband providers to the extent they are ''engaged'' in providing the broadband Internet access service. As discussed above, a broadband Internet access service provider's representation to its end-user customer that it will transport and deliver traffic to and from all or substantially all Internet endpoints necessarily includes the promise to transmit traffic to and from those Internet end points back to the user. Thus, the so-called ''edge service'' is secondary, and in support of, the promise made to the end user, and broadband provider practices with respect to edge providers'--including terms and conditions for the transfer and delivery of traffic to (and from) the BIAS subscriber'--impact the broadband provider's provision of the Title II broadband Internet access service. (This is not a novel arrangement. Under traditional contract principles, Party A (a broadband provider) can contract with Party B (a consumer) to provide services to Party C (an edge provider). That the service is being provided to Party C does not, in any way, conflict with the legal conclusion that the terms and conditions under which that service is being provided are governed by the agreement'--and here the regulatory framework'-- between Parties A and B. Most content that flows across the broadband provider's ''last-mile'' network to the retail consumer does not involve a direct agreement between Parties B and C but, as the Verizon court observed, an edge provider, like Amazon, could enter into an agreement with a broadband provider, like Comcast.) For example, where an edge provider attempts to purchase favorable treatment for its traffic (such as through zero rating), that treatment would be experienced by the BIAS subscriber (such as through an exemption of the edge-provider's data from a usage limit) and the impact on the BIAS subscriber, if any, would be assessed under Title II. That is, the legal question before the Commission turns on whether the provision of that service to the edge provider would be inconsistent with the provision of the retail service under Title II. That is because the same data is flowing between end user and edge consumer. (This conclusion does not contradict the economic view that a broadband provider is operating in a two-sided market. See, e.g.,supra note. A newspaper looks the same whether viewed by an advertiser or a subscriber, even though their economic relationship with the newspaper publisher is different. Here the operation of the broadband Internet access service is so intertwined with the edge service so as to compel the conclusion that the BIAS reclassification controls any service that is being provided to an edge provider.) In other words, to the extent that it is necessary to examine a separate edge service, that service is simply derivative of BIAS, constitutes the same traffic, and, in any event, fits comfortably within the command that practices provided ''in connection with'' a Title II service that must themselves be just and reasonable.
340. Broadband Internet access service does not include virtual private network (VPN) services, content delivery networks (CDNs), hosting or data storage services, or Internet backbone services. The Commission has historically distinguished these services from ''mass market'' services and, as explained in the 2014 Open Internet NPRM, they ''do not provide the capability to transmit data to and receive data from all or substantially all Internet endpoints.'' (In classifying broadband Internet access service as a telecommunications service today, the Commission does not, and need not, reach the question of whether and how these services are classified under the Communications Act.) We do not disturb that finding here. Finally, we observe that to the extent that coffee shops, bookstores, airlines, private end-user networks such as libraries and universities, and other businesses acquire broadband Internet access service from a broadband provider to enable patrons to access the Internet from their respective establishments, provision of such service by the premise operator would not itself be considered a broadband Internet access service unless it was offered to patrons as a retail mass market service, as we define it here. Likewise, when a user employs, for example, a wireless router or a Wi-Fi hotspot to create a personal Wi-Fi network that is not intentionally offered for the benefit of others, he or she is not offering a broadband Internet access service, under our definition, because the user is not marketing and selling such service to residential customers, small business, and other end-user customers such as schools and libraries.
2. The Market Today: Current Offerings of Broadband Internet Access Service341. We begin our analysis by examining how broadband Internet access service was and currently is offered. In the 2002 Cable Modem Declaratory Ruling, the Commission observed that ''the cable modem service business is still nascent, and the shape of broadband deployment is not yet clear. Business relationships among cable operators and their service offerings are evolving.'' Despite the rapidly changing market for broadband Internet access services, the Commission's decisions classifying broadband Internet access service are based largely on a factual record compiled over a decade ago, during this early evolutionary period. The record in this proceeding leads us to the conclusion that providers today market and offer consumers separate services that are best characterized as (1) a broadband Internet access service that is a telecommunications service; and (2) ''add-on'' applications, content, and services that are generally information services.
342. In the past, the Commission has identified a number of ways to determine what broadband providers ''offer'' consumers. In the Cable Modem Declaratory Ruling, for example, the Commission concluded that ''the classification of cable modem service turns on the nature of the functions that the end user is offered.'' In the Wireline Broadband Classification Order, the Commission noted that ''whether a telecommunications service is being provided turns on what the entity is `offering . . . to the public,' and customers' understanding of that service.'' In the Wireless Broadband Classification Order, the Commission stated that ''[a]s with both cable and wireline Internet access, [the] definition appropriately focuses on the end user's experience, factoring in both the functional characteristics and speed of transmission associated with the service.'' Similarly, in Brand X, both the majority and dissenting opinions examined how consumers perceive and use cable modem service, technical characteristics of the services and how it is provided, and analogies to other services.
a. Broadband Internet Access Services at Time of Classification343. ''Wired'' Broadband Services. The Commission's Cable Modem Declaratory Ruling described cable modem service as ''typically includ[ing] many and sometimes all of the functions made available through dial-up Internet access service, including content, email accounts, access to news groups, the ability to create a personal Web page, and the ability to retrieve information from the Internet, including access to the World Wide Web.'' The Commission also identified functions provided with cable modem service that it called ''Internet connectivity functions.'' (Earlier, in its 2001 AOL/Time Warner merger order describing the emerging high speed Internet access services offered through cable modems, the Commission found that ''Internet access services consist principally of connectivity to the Internet provided to end users.'') These included establishing a physical connection to the Internet and interconnecting with the Internet backbone, protocol conversion, Internet Protocol address number assignment, domain name resolution through DNS, network security, caching, network monitoring, capacity engineering and management, fault management, and troubleshooting. In addition, the Commission noted that ''[n]etwork monitoring, capacity engineering and management, fault management, and troubleshooting are Internet access service functions that . . . . serve to provide a steady and accurate flow of information between the cable system to which the subscriber is connected and the Internet.'' The Ruling noted that ''[c]omplementing the Internet access functions are Internet applications provided through cable modem service. These applications include traditional ISP services such as email, access to online newsgroups, and creating or obtaining and aggregating content. The cable modem service provider will also typically offer subscribers a `first screen' or `home page' and the ability to create a personal Web page.'' The Commission explained that ''[e]-mail, newsgroups, the ability for the user to create a Web page that is accessible by other Internet users, and DNS are applications that are commonly associated with Internet access service,'' and that ''[t]aken together, they constitute an information service.'' In the Wireline Broadband Classification Order, the Commission found that 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.''
344. The Commission's subsequent wired broadband classification decisions did not describe wired broadband Internet access services with any greater detail.
345. Wireless Broadband Services. In 2007, the Commission described wireless broadband Internet access service as a service ''that uses spectrum, wireless facilities and wireless technologies to provide subscribers with high-speed (broadband) Internet access capabilities.'' The Commission noted that ''many of the mobile telephone carriers that provide mobile wireless broadband service for mobile handsets offer a range of IP-based multimedia content and services'--including ring tones, music, games, video clips and video streaming'--that are specially designed to work with the small screens and limited keypads of mobile handsets. This content is typically sold through a carrier-branded, carrier-controlled portal.''
b. The Growth of Consumer Demand and Market Supply346. The record in this proceeding reveals that, since we collected information to address the classification of cable modem service over a decade ago, the market for both fixed and mobile broadband Internet access service has changed dramatically. Between December 2000 and December 2013, the number of residential Internet connections with speeds over 200 kbps in at least one direction increased from 5.2 million to 87.6 million. In 2000, only 5 percent of American households had a fixed Internet access connection with speeds of over 200 kbps in at least one direction, as compared to approximately 72 percent of American households with this same connection today. Indeed, as of December 2013, 60 percent of households have a fixed Internet connection with minimum speeds of at least 3 Mbps/768 kbps. Moreover, between December 2009 and December 2013, the number of mobile handsets with a residential data plan with a speed of at least 200 kbps in one direction increased from 43.7 million to 159.2 million, a 265 percent increase. (In addition, the mobile residential figures may overstate residential handsets because mobile filers report the number of ''consumer'' handsets that are not billed to a corporate, non-corporate business, government, or institutional customer account, and thus could include handsets for which the subscriber is reimbursed by their employee.) By November 2014, 73.6 percent of the entire U.S. age 13+ population was communicating with smart phones, a figure which has continued to rise rapidly over the past several years. Cisco forecasts that by 2019, North America will have nearly 90 percent of its installed base converted to smart devices and connections, and smart traffic will grow to 97 percent of the total global mobile traffic. In 2013, the United States and Canada were home to almost 260 million mobile subscriptions for smartphones, mobile PCs, tablets, and mobile routers. In 2014, that number was expected to increase by 20 percent, to 300 million subscriptions; by 2020, to 450 million, or a population penetration rate of almost 124 percent. In addition, the explosion in the deployment of Wi-Fi technology in the past few years has resulted in consumers increasingly using that technology to access third party content, applications, and services on the Internet, in connection with either a fixed broadband service or a mobile broadband service.
347. This widespread penetration of broadband Internet access service has led to the development of third-party services and devices and has increased the modular way consumers have come to use them. As more American households have gained access to broadband Internet access service, the market for Internet-based services provided by parties other than broadband Internet access providers has flourished. Consumers' appetite for third-party services has also received a boost from the shift from dial-up to broadband, as a high-speed connection makes the Internet much more useful to consumers. (For example, early studies showed that broadband users are far more likely than dial-up users to go online to seek out news, look for travel information, share computer files with others, create content, and download games and videos.) The impact of broadband on consumers' demand for third-party services is evident in the explosive growth of online content and application providers. In early 2003, a year after the Cable Modem Declaratory Ruling, there were approximately 36 million Web sites. Today there are an estimated 900 million. When the Commission assessed the cable modem service market in the Cable Modem Declaratory Ruling, the service at issue was offered with various online applications, including email, newsgroups, and the ability to create a Web page. The Commission observed that subscribers to cable modem services ''usually d[id] not need to contract separately'' for ''discrete services or applications'' such as email. Today, broadband service providers still provide various Internet applications, including email, online storage, and customized homepages, in addition to newer services such as music streaming and instant messaging. But consumers are very likely to use their high-speed Internet connections to take advantage of competing services offered by third parties.
348. For example, companies such as Google and Yahoo! offer popular alternatives to the email services provided to subscribers as part of broadband Internet access service packages. According to Experian, Gmail and Yahoo! Mail were among the ten Internet sites most frequently visited during the week of January 17, 2015, with approximately 400 million and 350 million visits respectively. Some parties even advise consumers specifically not to use a broadband provider-based email address; because a consumer cannot take that email address with them if he or she switches providers, some assert that using a broadband provider-provided email address results in a disincentive to switch to a competitive provider due to the attendant difficulties in changing an email address. Third-party alternatives are also widely available for other services that may be provided along with broadband Internet access service. (DNS, caching, and other services that enable the efficient transmission of data over broadband connections are considered in section IV.C.3. below.) For example, firms such as Apple, Dropbox, and Carbonite provide ''cloud-based'' storage; services like Go Daddy provide Web site hosting; users rely on companies such as WordPress and Tumblr to provide blog hosting; and firms such as Netvibes and Yahoo! provide personalized homepages. GigaNews and Google provide access to newsgroups, while many broadband providers have themselves ceased offering this service entirely.
349. More generally, both fixed and mobile consumers today largely use their broadband Internet access connections to access content and services that are unaffiliated with their broadband Internet access service provider. In this regard, perhaps the most significant trend is the growing popularity of third-party video streaming services. By one estimate, Netflix and YouTube alone account for 50 percent of peak Internet download traffic in North America. Other sites among the most popular in the United States include the search engines Google and Yahoo!; social networking sites Facebook and LinkedIn; e-commerce sites Amazon, eBay and Craigslist; the user-generated reference site Wikipedia; a diverse array of user-generated media sites including Reddit, Twitter, and Pinterest; and news sources such as nytimes.com and CNN.com. Overall, broadband providers themselves operate very few of the Web sites that broadband Internet access services are most commonly used to access.
350. Thus, as a practical matter, broadband Internet access service is useful to consumers today primarily as a conduit for reaching modular content, applications, and services that are provided by unaffiliated third parties. As the Center for Democracy & Technology puts it, ''[t]he service that broadband providers offer to the public is widely understood today, by both the providers and their customers, as the ability to connect to anywhere on the Internet'--to any of the millions of Internet endpoints'--for whatever purposes the user may choose.'' (CDT contrasts the current state of affairs with an earlier time ''when Internet access service providers sought to differentiate themselves by offering `walled gardens' of proprietary content and users looked to their access provider to serve as a kind of curator of the chaos of the Internet.'') Indeed, the ability to transmit data to and from Internet endpoints has become the ''one indispensable function'' that broadband Internet access service uniquely provides.
c. Marketing351. That broadband Internet access services today are primarily offerings of Internet connectivity and transmission capability is further evident by how these services are marketed and priced. Commenters cite numerous examples of advertisements that emphasize transmission speed as the predominant feature that characterizes broadband Internet access service offerings. For example, Comcast advertises that its XFINITY Internet service offers ''the consistently fast speeds you need, even during peak hours,'' and RCN markets its high-speed Internet service as providing the ability ''to upload and download in a flash.'' Verizon claims that ''[w]hatever your life demands, there's a Verizon FiOS plan with the perfect upload/download speed for you,'' while the name of Verizon's DSL-based service is simply ''High Speed Internet.'' Furthermore, fixed broadband providers use transmission speeds to classify tiers of service offerings and to distinguish their offerings from those of competitors. AT&T U-Verse, for instance, offers four ''Internet Package[s]'' at different price points, differentiated in terms of the ''Downstream Speeds'' they provide. Verizon meanwhile asserts that ''the 100% fibe