United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued March 12, 2002 Decided July 16, 2002

No. 01-1085

United States Telecom Association,

Petitioner

v\.

Federal Communications Commission and

United States of America,

Respondents

State of Iowa, et al.,

Intervenors

On Petition for Review of an Order of the

Federal Communications Commission

William F. Maher Jr. argued the cause for petitioner. With him on the
briefs were Lawrence E. Sarjeant, Linda Kent, John W. Hunter, Julie E.
Rones, and Stephen Goodman.

James M. Carr, Counsel, Federal Communications Commission, argued the
cause for respondents. With him on the briefs were John A. Rogovin,
Deputy General Counsel, and John E. Ingle, Deputy Associate General
Counsel.

Michael D. Hays argued the cause for intervenors State of Iowa and Iowa
Telecommunications and Technology Commission. With him on the briefs
were J.G. Harrington and Kenneth D. Salomon.

Before: Ginsburg, Chief Judge, Rogers and Garland, Circuit Judges.

Opinion for the Court filed by Circuit Judge Garland.

Garland, Circuit Judge: The United States Telecom Association (USTA)
challenges a Federal Communications Commission (FCC) order finding that
the Iowa Communications Network (ICN) is a common carrier. The order
makes ICN eligible to receive federal subsidies for providing discounted
telecommunications services under the Telecommunications Act of 1996, 47
U.S.C. § 254(h)(1). We first consider whether USTA has standing to bring
this suit, and then whether the FCC reasonably classified ICN as a
common carrier. We answer both questions in the affirmative and uphold
the FCC\'s order.

I

ICN was established by the Iowa legislature to provide subsidized
high-speed telecommunications services throughout Iowa, especially in
areas inadequately covered by local exchange carriers. The governing
statute bars ICN from offering services to individuals and to most
private businesses. Iowa Code § 8D.11(2) (2001). Instead, ICN\'s
customers are \"public and private agencies.\" Under the statute,
\"public agency\" means: \"a state agency, an institution under the
control of the board of regents, the judicial branch \..., a school
corporation, a city library, a regional library \..., a county library
\...\[,\] a judicial district department of correctional services \...,
an agency of the federal government, or a United States post office
which receives a federal grant for pilot and demonstration projects.\"
Id. § 8D.2(5). A \"private agency\" is: \"an accredited nonpublic
school, a nonprofit institution of higher education eligible for tuition
grants, or a \[licensed\] hospital \... or a physician clinic \[for
specified services\].\" Id. § 8D.2(4).[^1]

Section 254(h)(1) of the Telecommunications Act of 1996 requires a
\"telecommunications carrier\" to provide services at discounted rates
to schools, libraries, and rural health care providers. 47 U.S.C. §
254(h)(1). Such a carrier is entitled to receive from the FCC, in an
amount equal to the aggregate discount it gives to those entities,
either a reimbursement or an offset against the carrier\'s obligation to
participate in or contribute to the universal service fund. Id. The Act
defines a \"telecommunications carrier\" as \"any provider of
telecommunications services,\" id. § 153(44), and defines
\"telecommunications service\" as \"the offering of telecommunications
for a fee directly to the public, or to such classes of users as to be
effectively available directly to the public, regardless of the
facilities used,\" id. § 153(46).

In 1998, ICN petitioned the FCC for a declaration that it qualifies as a
\"telecommunications carrier\" under the Act, and hence is eligible to
receive direct reimbursement for providing services at discounted rates.
In 1999, citing its decision in an earlier case, the Commission held
that the term \"telecommunications carrier\" includes only carriers that
offer telecommunications on a \"common carrier\" basis. Federal-State
Joint Bd. on Universal Serv., Declaratory Ruling, 14 F.C.C.R. 3040, 3040
(1999) \[hereinafter 1999 Declaratory Ruling\] (citing Federal-State
Joint Bd. on Universal Serv., Report & Order, 12 F.C.C.R. 8776, 9177-78
(1997)). To define \"common carrier,\" the FCC turned to the two-pronged
test it had previously applied under the Communications Act of 1934, 47
U.S.C. §§ 151 et seq., a test derived from the common law as interpreted
in this circuit\'s case law. Under that test, common carrier status
turns on:

\(1\) whether the carrier \"holds himself out to serve indifferently all
potential users\"; and (2) whether the carrier allows \"customers to
transmit intelligence of their own design and choosing.\"[^2]

The FCC ruled that ICN fails to satisfy the first prong because the
network does not hold itself out to serve all potential users, but
rather is limited by Iowa law to a select clientele. 1999 Declaratory
Ruling, 14 F.C.C.R. at 3050-51.[^3] The Commission did not reach the
second prong of the test.

In Iowa v. FCC, 218 F.3d 756 (D.C. Cir. 2000), this court granted
Iowa\'s petition for review and remanded the case to the Commission for
further consideration. We held that the FCC had failed to consider
Iowa\'s argument that ICN qualifies as a common carrier, even though its
user base is legally restricted, because it offers service to all users
that it is authorized by law to serve. See id. at 757. We pointed out
that two cases that had considered the meaning of \"common carrier\"
under the Communications Act of 1934\--FCC v. Midwest Video Corp., 440
U.S. 689 (1979), and National Ass\'n of Regulatory Util. Comm\'rs v.
FCC, 525 F.2d 630 (D.C. Cir. 1976) (\"NARUC I\")\--\"can be read as
approving the general rule that a carrier offering its services only to
a legally defined class of users may still be a common carrier if it
holds itself out indiscriminately to serve all within that class.\"
Iowa, 218 F.3d at 759. Although we made clear that we were \"not
suggesting that Midwest Video or NARUC \... require\[s\] a decision in
Iowa\'s favor,\" we held that \"the Commission\'s failure to address
Iowa\'s argument requires that we remand this matter for the
Commission\'s further consideration.\" Id.

On remand, the FCC reversed its 1999 ruling. The Commission held that
ICN is a common carrier, and hence a telecommunications carrier for
purposes of § 254(h)(1). In so holding, the Commission concluded that
\"a carrier offering its services only to a legally defined class of
users may still be a common carrier if it holds itself out
indiscriminately to serve all within that class.\" Federal-State Joint
Bd. on Universal Serv., Order on Remand, 16 F.C.C.R. 571, 573 (2000)
\[hereinafter 2000 Order\]. Finding that ICN does not discriminate among
entities within its legally defined user classes, the FCC held that ICN
passes the first prong of the common carrier test. See id. at 574-75. It
also found ICN to satisfy the second prong, because it \"allows
customers to transmit intelligence of their own design and choosing.\"
Id. at 575. The Commission therefore declared ICN \"eligible to receive
direct reimbursement for discounted telecommunications services provided
to schools and libraries.\" Id. at 577.

USTA petitions for review of the Commission\'s order, contending that
ICN fails both prongs of the common carrier test. We discuss those
contentions in Part III below. In Part II, we first consider whether
USTA has standing to bring this case.

II

USTA is a trade association representing local exchange carriers. Its
members provide voice, data, and video services over wireline and
wireless networks throughout the United States. Although the initial
briefs of the FCC and intervenor State of Iowa did not dispute USTA\'s
standing, we have an independent obligation to assure ourselves that the
petitioner has constitutional standing to bring this challenge to the
FCC\'s decision. See Steel Co. v. Citizens for a Better Env\'t, 523 U.S.
83, 94-95 (1998); Liquid Carbonic Indus. Corp. v. FERC, 29 F.3d 697, 701
(D.C. Cir. 1994). Accordingly, we directed the parties to submit
supplemental briefs on the issue, and, at oral argument, gave USTA a
further opportunity to submit affidavits in support of its position.
Thereafter, USTA submitted three affidavits, two from individual USTA
members and one from the association itself. We have reviewed those
affidavits and are satisfied that USTA has made the requisite showing.

As a trade association, USTA has standing to sue on behalf of its
members if \"its members would otherwise have standing to sue in their
own right, the interests it seeks to protect are germane to the
organization\'s purpose, and neither the claim asserted nor the relief
requested requires the participation of individual members in the
lawsuit.\" Fund Democracy, LLC v. SEC, 278 F.3d 21, 25 (D.C. Cir. 2002)
(citing Friends of the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc.,
528 U.S. 167, 181 (2000)). There is no question that USTA satisfies the
latter two conditions; the only question is whether USTA members meet
the constitutional requirements for suit in their own right. Those
\"irreducible constitutional minimum\" requirements are:

\(1\) that the plaintiff have suffered an \"injury in fact\"\--an
invasion of a judicially cognizable interest which is (a) concrete and
particularized and (b) actual or imminent, not conjectural or
hypothetical; (2) that there be a causal connection between the injury
and the conduct complained of\--the injury must be fairly traceable to
the challenged action of the defendant, and not the result of the
independent action of some third party not before the court; and (3)
that it be likely, as opposed to merely speculative, that the injury
will be redressed by a favorable decision.

Bennett v. Spear, 520 U.S. 154, 167 (1997).

USTA contends that the FCC\'s order injures its members by making ICN
eligible for a subsidy that permits it to offer lower prices for the
same telecommunications services.[^4] We have repeatedly recognized that
parties \"suffer constitutional injury in fact when agencies \... allow
increased competition\" against them. Louisiana Energy & Power Auth. v.
FERC, 141 F.3d 364, 367 (D.C. Cir. 1998); see, e.g., Wabash Valley Power
Ass\'n v. FERC, 268 F.3d 1005, 1113 (D.C. Cir. 2001); MD Pharm., Inc. v.
Drug Enforcement Admin., 133 F.3d 8, 11 (D.C. Cir. 1998). And we have
likewise recognized that regulatory decisions that permit subsidization
of some participants in a market can have the requisite injurious impact
on those participants\' competitors. See Exxon Co., U.S.A. v. FERC, 182
F.3d 30, 43 (D.C. Cir. 1999); Liquid Carbonic, 29 F.3d at 701.

Nor is the injury to USTA\'s members \"conjectural or hypothetical.\"
The affidavit of one of USTA\'s members, an independent local exchange
carrier, avers that the member has tried to sell its services to a
school that currently takes similar services from ICN, but has been
unsuccessful because ICN\'s subsidy enables it to charge substantially
lower rates. Whipple Aff. pp 5-6. The affidavit of another USTA member
states that it lost a customer to ICN because the subsidy enabled ICN to
charge lower rates for similar services. Kilburg Aff. pp 5, 7. And an
affidavit from USTA, summarizing information it gathered from a survey
of its members, avers that other members have had like
experiences\--either losing business to ICN or being unable to compete
for new customers because of ICN\'s subsidy. Flerl Aff. pp 4-5.

These affidavits show that USTA\'s members are ready, willing, and able
to compete with ICN in providing telecommunications to schools and
libraries, and that ICN\'s subsidy prevents them from doing so on an
equal basis. That showing is sufficient to establish that the
association\'s members have suffered cognizable injury in fact. See
Dynatlantic Corp. v. Department of Defense, 115 F.3d 1012, 1016 (D.C.
Cir. 1997). And it is also sufficient to satisfy the remaining two
requirements of constitutional standing: The competitive injury suffered
by USTA\'s members is fairly traceable to the FCC\'s decision to render
ICN eligible for the subsidy, and that injury would likely be redressed
by a favorable decision of this court vacating the FCC\'s order. See
High Plains Wireless, L.P. v. FCC, 276 F.3d 599, 605 (D.C. Cir. 2002);
Exxon, 182 F.3d at 43; Liquid Carbonic, 29 F.3d at 701. We therefore
conclude that USTA has constitutional standing to seek judicial review
of the order on behalf of its members.

III

USTA contends that ICN cannot satisfy either prong of the common carrier
test, and that the FCC therefore erred in finding ICN eligible for
reimbursement from universal service funds. The association also argues
that the FCC\'s order is not entitled to a deferential standard of
review because it rests on an interpretation of this circuit\'s Iowa,
NARUC, and other decisions, rather than on an interpretation of a
statute. We disagree, and conclude that we must review the agency\'s
order with deference.

At bottom, the FCC\'s order rests not on judicial precedent but on its
interpretation of the term \"telecommunications carrier\" in the
Telecommunications Act of 1996. The Commission interprets the term as
the equivalent of \"common carrier\" under the Communications Act of
1934, a term which was itself previously defined by a two-pronged test
derived from the common law as construed by this circuit. USTA does not
dispute the FCC\'s decision to interpret \"telecommunications carrier\"
as \"common carrier,\" or its decision to define the latter through the
two-pronged test. Indeed, we have previously upheld the FCC\'s approach
as a reasonable construction of an ambiguous statutory term. See Iowa,
218 F.3d at 757 (citing Chevron, U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837 (1984)); Virgin Islands Tel. Corp. v. FCC,
198 F.3d 921, 922, 925-26 (D.C. Cir. 1999).

In deciding that ICN satisfies the requirements of the common carrier
test, the FCC further elaborated upon the meaning of \"common carrier,\"
and then applied its version of the two-pronged test to the facts of
ICN\'s situation. Where a statute is \"ambiguous with respect to \[a\]
specific issue,\" the only question for this court is whether the
agency\'s interpretation \"is based on a permissible construction of the
statute.\" Chevron, 467 U.S. at 843. We also defer to an agency\'s
reasonable interpretation of its own rules and precedents. See Global
Crossing Telecomms., Inc. v. FCC, 259 F.3d 740, 746 (D.C. Cir. 2001);
Cassell v. FCC, 154 F.3d 478, 484 (D.C. Cir. 1998). And we give
deference as well to an agency\'s application of its statutory and
administrative interpretations to specific circumstances\--asking only
whether such applications are \"arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law.\" 5 U.S.C. §
706(2)(A); see Global Crossing, 259 F.3d at 747; Cassell, 154 F.3d at
483 n.4; Huls America Inc. v. Browner, 83 F.3d 445, 452 (D.C. Cir.
1996). Finally, where an agency has adopted a judicial test as its own,
we likewise review its application of that test only to determine
whether it is unreasonable or arbitrary and capricious. See Independent
Petroleum Ass\'n of Am. v. Babbitt, 92 F.3d 1248, 1257-58 (D.C. Cir.
1996) (noting convergence of Chevron and arbitrary and capricious review
where agency adopts court decision as its rule).

In the following sections, we apply this deferential standard of review
to the two challenges that USTA levels against the FCC\'s order.

A

USTA\'s first contention is that, because Iowa law greatly restricts the
universe of the network\'s authorized users, ICN fails to satisfy the
first prong of the common carrier test: that the carrier hold itself out
to serve indifferently \"all potential users.\" 1999 Declaratory Ruling,
14 F.C.C.R. at 3050. USTA argues that, under our opinion in NARUC I, a
carrier cannot satisfy this prong unless it holds itself out to \"the
public.\" See NARUC I, 525 F.2d at 640. And ICN\'s \"class of legally
authorized users,\" USTA maintains, \"is not broad enough to be
considered a portion of \'the public.\' \" Pet\'r Br. at 11.

In response to this argument below, the FCC determined that \"legal
restrictions on eligibility to use a carrier\'s services do not
necessarily preclude common carrier status,\" and that this proposition
is consistent with NARUC I. 2000 Order, 16 F.C.C.R. at 573. We agree. As
we said in Iowa, our decision in NARUC I \"can be read as approving the
general rule that a carrier offering its services only to a legally
defined class of users may still be a common carrier if it holds itself
out indiscriminately to serve all within that class.\" Iowa, 218 F.3d at
759.

In NARUC I, this court held that mobile radio operators known as
Specialized Mobile Radio Systems (SMRS) were not foreclosed from common
carrier status\--even though \"SMRS offer a service that may be of
practical use to only a fraction of the population,\" and even though an
FCC order \"limit\[ed\] possible subscribers to SMRS services to
eligibles\" under three specific sections of the FCC\'s regulations.
NARUC I, 525 F.2d at 642 (emphasis added). \"The key factor,\" we said,
\"is that the operator offer indiscriminate service to whatever public
its service may legally and practically be of use.\" Id. (emphasis
added).[^5] As the FCC noted, this passage from NARUC I \"directly
supports\" its conclusion in the instant case. 2000 Order, 16 F.C.C.R.
at 573.

USTA counters, however, that the list of authorized ICN users is so much
more restricted than was the list of SMRS eligibles that ICN\'s list
\"cannot be considered the public\" and ICN cannot qualify as a common
carrier. Pet\'r Br. at 11. We do not agree. Authorized ICN users include
state agencies, institutions under the control of the board of regents,
the judicial branch, schools, libraries, departments of correctional
services, federal agencies, certain post offices, certain non-profit
institutions of higher education, licensed hospitals, and physician
clinics (for some purposes). See Iowa Code § 8D.2(4)-(5). Together,
these amount to at least 500 dis-crete entities. See 2000 Order, 16
F.C.C.R. at 574. Moreover, the network\'s end-users are all those who
can access ICN at authorized facilities\--a group that includes
students, library patrons, and state and federal employees, and that
potentially extends to all Iowans. See Iowa Admin. Code § 751-7.5(8D).

Like the list of authorized ICN users, the list of eligible SMRS
subscribers in NARUC I was legally circumscribed. The FCC limited SMRS
subscribers to \"eligibles under Sections 89, 91 and 93 of the
Regulations.\" NARUC I, 525 F.3d at 642. Those included local
governments, police and fire departments, motor carriers, taxicab
companies, and other specified commercial and noncommercial entities in
need (primarily) of dispatch services. See id. at 634, 639, 642-43.[^6]
Although we do not have enough information to count the number of
eligible SMRS subscribers, the SMRS list is not any more readily
characterizable as \"the public\" than is the list of those eligible to
use ICN. See NARUC I, 525 F.2d at 634 (characterizing class of eligible
SMRS subscribers as \"a limited group of users\"). In any event, it is
certainly not arbitrary for the FCC to regard the two situations as
comparable.

USTA also argues that ICN cannot qualify as a common carrier because
Iowa bars the network\'s use for \"profit-making venture\[s\].\" Iowa
Admin. Code § 751-14.1(8D)(1)(a). NARUC I, however, does not impose a
for-profit requirement on common carriers. Instead, USTA points to
\"this Court\'s guidance in NARUC II,\" Pet\'r Br. at 15, an opinion
stating that price discrimination by cable system operators in favor of
noncommercial users did not necessarily preclude those operators from
common carrier status\--\"at least if not carried to the point of
excluding all commercial users.\" National Ass\'n of Regulatory Util.
Comm\'rs v. FCC, 533 F.2d 601, 609 (D.C. Cir. 1976) (\"NARUC II\").
USTA\'s argument rests solely on the quoted phrase, and puts more weight
on that phrase than either its words or the NARUC II opinion as a whole
can bear.

First, the quoted phrase concerned the operators\' voluntary decision to
engage in price discrimination; NARUC II was not a case in which either
discrimination or exclusion was mandated by law. Second, the phrase
served at most as dictum in the opinion, since NARUC II was also not a
case in which price discrimination effectively excluded all commercial
users. Finally, the portion of NARUC II cited by the petitioner is not
the opinion of \"this Court,\" but rather the opinion of Judge Wilkey
alone.[^7] Although we have subsequently approved some of the views
expressed by Judge Wilkey in NARUC II, see Southwestern Bell Tel. Co. v.
FCC, 19 F.3d 1475, 1480 (D.C. Cir. 1994), we have never held that a
carrier is barred from common carrier status unless it is authorized to
serve commercial users. Indeed, given NARUC I\'s declaration that the
key factor in determining common carriage is whether the carrier offers
\"indiscriminate service to whatever public its service may legally and
prac-tically be of use,\" 525 F.2d at 642 (emphasis added), we have no
warrant for concluding that the exclusion of commercial users from
ICN\'s network compels the Commission to disqualify it as a common
carrier.

USTA further purports to discern significant inconsistencies between the
FCC\'s order and the Supreme Court\'s decision in FCC v. Midwest Video
Corp., 440 U.S. 689 (1979). Succeeding on that argument, however, is an
uphill struggle in light of our statement in Iowa that Midwest Video,
like NARUC I, \"can be read as approving the general rule that a carrier
offering its services only to a legally defined class of users may still
be a common carrier.\" 218 F.3d at 759. Nonetheless, USTA contends that
Midwest Video supports its claim that ICN fails the first prong of the
common carrier test because ICN\'s class of authorized users both is too
small and excludes profit-making ventures.

Midwest Video, however, said nothing about either of these issues.
Indeed, to the extent the case is relevant at all, it is by implication
only and in that respect supports the FCC. In Midwest Video, the Supreme
Court considered FCC regulations requiring cable television systems to
allocate channels for educational, government, public, and leased access
users. The regulations mandated that the public and leased access
channels be open to all users, but that the educational channel be
dedicated to \"local educational authorities\" and the government
channel be dedicated to \"local government.\" 47 C.F.R. § 76.254(a)(2),
(3) (1977). The Supreme Court held that the access rules effectively
\"relegated cable systems, pro tanto, to common-carrier status\"\--an
action the Court held to be be-yond the authority of the Commission. 440
U.S. at 700-01; see id. at 708-09.

On its face, Midwest Video is substantially more helpful to the FCC than
to USTA. As we noted in Iowa, the Midwest Video Court found that the
FCC\'s regulations had effectively transformed the cable systems into
common carriers, notwithstanding that \"use of the educational and
government access channels was limited respectively to \'local
educational authorities\' and the \'local government\' \" and that a
\"private organization could not air an educational program on the
educational access channel because it would not come within the class of
users authorized by law.\" 218 F.3d at 758. Thus, like the Iowa Code,
the FCC regulations at issue in Midwest Video narrowly defined the class
of authorized users for each channel and barred profit-making
enterprises from using the government and educational channels.
Undaunted by these similarities, USTA contends that the Supreme Court
did not analyze the regulations on a channel-by-channel basis, but
instead considered them as a unit that included not only the nonprofit
channels but also the public and leased access channels that were
available to the general public. Nothing in the Midwest Video opinion,
however, suggests that the Court relied on the existence of the public
channels to reach its conclusion about common carriage. Instead, the
Court focused on the fact that the regulations required the cable
systems to offer use of the allocated channels to all who qualified for
them on a nondiscriminatory basis, and deprived the systems of the power
to select individual users or to control the programming of those who
qualified. See Midwest Video, 440 U.S. at 699-702. Accordingly, nothing
in Midwest Video supports USTA\'s claim that the list of ICN users is
too narrowly delineated for the network to qualify as a common carrier.

Finally, USTA argues that to affirm the FCC\'s decision here would be to
accept that a carrier may be designated as \"common\" even if it has
only a single authorized user. That is hardly the case, and it is
certainly not this case. Regardless of whether the FCC could label a
single-user network as a common carrier without being arbitrary and
capricious, the Commission\'s determination that ICN\--with its far
broader customer base\--qualifies as a common carrier constitutes a
reasonable application of the test the Commission has adopted to define
that term.

B

USTA\'s second contention is that ICN cannot satisfy the second prong of
the common carrier test because it does not allow customers to
\"transmit intelligence of their own design and choosing.\" 1999
Declaratory Ruling, 14 F.C.C.R. at 3050. This prong of the test is
intended to confine common carrier status to operators that do not
regulate the content of their customers\' communications. Although USTA
concedes that \"ICN does not specify the individual words or messages
sent over the network,\" Pet\'r Br. at 17, it argues that Iowa
nonetheless restricts users\' communications because its regulations
require them to adopt policies acknowledging that: (1) \"\[t\]he use of
the network must be consistent with the written mission of the
authorized user,\" and (2) \"\[t\]he network \... cannot be used for a
profit-making venture.\" Iowa Admin. Code § 751-14.1(8D)(1)(b), (a).

The FCC rejected this argument in its order, concluding that these
restrictions are \"intended to acknowledge the statutorily-prescribed
customer base, rather than to limit the \'intelligence\' \[customers\]
may transmit over the network.\" 2000 Order, 16 F.C.C.R. at 575. \"The
effect of this limitation,\" the FCC continued, is merely \"to restrict
the use of the ICN to the primary purpose for which the network
exists.\" Id. at 575-76. The Commission accepted ICN\'s representations
that it does not police the content that a user transmits, and instead
places the responsibility on the user to determine whether its use of
the network is consistent with its written mission statement. See id. at
576. The FCC further noted that \"ICN states, and no party disputes,
that it has never denied or cut off service on the basis of an
acceptable use issue.\" Id. (internal quotation marks omitted).

These considerations persuade us that the FCC reasonably concluded that
ICN meets the second prong of the common carrier test. As we held in
Part III.A, Iowa\'s limitation of ICN\'s services to specified
categories of eligible users is consistent with the network\'s status as
a common carrier. A requirement that users adhere to the missions that
make them statutorily eligible is therefore also consistent, as it
represents nothing more than a method of enforcing that limitation.
Indeed, in NARUC I we held that SMRS\' common carrier status was not
precluded by the fact that the governing regulations \"require that SMRS
applicants certify that they will not provide service to ineligibles.\"
525 F.2d at 642. Similarly, the requirement that users adopt policies
stating that ICN \"cannot be used for a profit-making venture\"
represents nothing more than an acknowledgment that use of the network
is limited to nonprofits, a limitation that we also upheld in Part
III.A. Moreover, beyond the implicit condition that a user\'s mission be
one that qualifies for network eligibility, ICN places no limits on the
scope of a user\'s written mission statement and no restrictions on a
user\'s ability to change its mission statement.

USTA once again turns to Midwest Video for support in its attack on the
FCC\'s order, but again that case offers only further support for the
Commission\'s decision. USTA points out that, when the Supreme Court
ruled that the cable access regulations imposed common carrier
obligations on cable operators, it stated that \"\[o\]perators are
prohibited from determining or influencing the content of access
programming\"\--a prohibition USTA claims is breached by the Iowa
regulations recounted above. Midwest Video, 440 U.S. at 702. But the
Court\'s statement was made in a context that demonstrates that it did
not regard the restriction of users to their authorized missions as the
kind of content control that precludes common carrier status. As we have
already noted, under the regulations at issue in Midwest Video, \"use of
the educational and government access channels was limited respectively
to \'local educational authorities\' and the \'local government,\' \"
and a \"private organization could not air an educational program on the
educational access channel because it would not come within the class of
users authorized by law.\" Iowa, 218 F.3d at 758. Moreover, Midwest
Video\'s more complete description of the prohibition on content control
in that case makes it plain that the Court did not regard the exclusion
of commercial content as inconsistent with common carriage: \"System
operators,\" the Court said, \"are specifically enjoined from exercising
any control over the content of access programming except that they must
adopt rules proscribing the transmission on most access channels of \...
commercial matter.\" 440 U.S. at 693 (emphasis added).

In sum, we find that the FCC reasonably concluded that ICN does permit
its customers to \"transmit intelligence of their own design and
choosing.\" As the FCC held, the regulations highlighted by USTA do not
control the content of communications, but rather merely \"acknowledge
the statutorily-prescribed customer base.\" 2000 Order, 16 F.C.C.R. at
575.

IV

In ruling that ICN is a \"telecommunications carrier\" eligible for
subsidies under § 254(h)(1), the FCC reasonably interpreted the language
of its governing statute, and reasonably construed and applied the test
it had previously adopted to give meaning to that language. Accordingly,
USTA\'s petition for review is

Denied.

[^1]: Iowa law divides \"public and private agencies\" into two further
    subcategories: \"certifying users,\" which are higher education
    institutions, area education agencies, and certain post offices; and
    \"preauthorized users,\" which are all other public and private
    agencies. Certifying users must obtain specific legislative
    authorization to connect to the network unless they certified their
    intention to connect by July 1, 1994, and must take all of their
    telecommunications services from ICN unless they obtain a statutory
    waiver. Preauthorized users may choose whether to connect to ICN and
    which services to take from it. See id. § 8D.9; Iowa Admin. Code §
    751-7.1(8D) (2001). ICN will serve any qualifying user that requests
    service. See Iowa v. FCC, 218 F.3d 756, 757-58 (D.C. Cir. 2000).

[^2]: 1999 Declaratory Ruling, 14 F.C.C.R. at 3050 (quoting Southwestern
    Bell Tel. Co. v. FCC, 19 F.3d 1475, 1480 (D.C. Cir. 1994), and
    citing National Ass\'n of Regulatory Util. Comm\'rs v. FCC, 525 F.2d
    630, 640-41 (D.C. Cir. 1976) (\"NARUC I\"), and National Ass\'n of
    Regulatory Util. Comm\'rs v. FCC, 533 F.2d 601, 608-09 (D.C. Cir.
    1976) (\"NARUC II\")); see Federal-State Joint Bd. on Universal
    Serv., Order on Remand, 16 F.C.C.R. 571, 573, 576 (2000) (noting
    common-law origins of test).

[^3]: The FCC also held that ICN further fails the first prong because
    it does not hold itself out to serve even that select group
    \"indifferently,\" but instead treats each of the subcategories of
    ICN users according to different terms fixed by the legislature.
    1999 Declaratory Ruling, 14 F.C.C.R. at 3051; see supra note 1
    (describing subcategories). In light of the FCC\'s subsequent
    characterization of this holding on appeal, we concluded in Iowa v.
    FCC, 218 F.3d 756 (D.C. Cir. 2000), that it was not an independent
    basis for denying ICN common carrier status. Rather, it was
    equivalent to the FCC\'s holding that offering \"service only to the
    class of users authorized by law to receive it is inconsistent with
    being a common carrier.\" Id. at 760. On remand, the FCC reversed
    itself and found \"persuasive ICN\'s position that while its
    enabling statute may discriminate among various classes of users, it
    does not allow ICN to discriminate among entities within each class
    of users.\" Federal-State Joint Bd. on Universal Serv., Order on
    Remand, 16 F.C.C.R. 571, 574 (2000). The FCC thus held that ICN does
    treat its authorized users \"indifferently,\" id. at 575, and USTA
    has not appealed that ruling.

[^4]: USTA also maintains that its members suffer injury because, if ICN
    is improperly reimbursed for providing discounted
    telecommunications, insufficient universal service funds will be
    left to reimburse USTA members. Because we find that USTA\'s
    \"competitive injury\" theory satisfies the requirements of
    standing, we do not address this alternative theory.

[^5]: In NARUC I, we eventually upheld the FCC\'s determination that it
    could treat SMRS as non-common carriers because there was no
    evidence that they would indifferently serve all eligible customers.
    See id. at 643-44.

[^6]: Parts 89, 91, and 93 of the FCC\'s regulations listed specific
    types of eligible subscribers for three categories of private radio
    service: \"Public Safety,\" \"Industrial,\" and \"Land
    Transportation.\" See, e.g., 47 C.F.R. § 89.251 (1975) (local
    government); id. § 89.301 (police); id. §§ 89.501-89.519 (special
    emergency users); id. § 89.551 (state guards); id. § 91.301
    (petroleum radio service); id. § 91.351 (forest products radio
    service); id. § 93.251 (motor carriers); id. § 93.351 (railroads);
    id. § 93.506 (contract road service vehicles); id. § 98.401
    (taxicabs).

[^7]: See NARUC II, 533 F.3d at 621 (Lumbard, J., concurring) (deeming
    it \"unnecessary to reach\" common carriage question); id. at 634
    (Skelly Wright, J., dissenting) (accepting only \"arguendo\" that
    cable operators were common carriers).