Before the

**Federal Communications Commission**

**Washington, D.C. 20554**

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| In the Matter of                 | *  | CC Docket No. 02-33          |
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| Appropriate Framework for        | ** | CC Dockets Nos. 95-20, 98-10 |
| Broadband Access to the Internet |    |                              |
| over Wireline Facilities         | *  |                              |
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| Universal Service Obligations of | ** |                              |
| Broadband Providers              |    |                              |
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| Computer III Further Remand      | *) |                              |
| Proceedings: Bell Operating      | ** |                              |
| Company Provision of Enhanced    |    |                              |
| Services; 1998 Biennial          | *  |                              |
| Regulatory Review -- Review of   | *) |                              |
| Computer III and ONA Safeguards  | ** |                              |
| and Requirements                 |    |                              |
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**Notice of Proposed Rulemaking**

**Adopted: February 14, 2002 Released: February 15, 2002**

**Comments due: 45 days after publication in the Federal Register of
this Notice**

**Replies due: 75 days after publication in the Federal Register of this
Notice**

By the Commission: Chairman Powell and Commissioner Abernathy issuing
separate statements; Commissioner Copps concurring in part, dissenting
in part and issuing a statement; Commissioner Martin approving in part,
dissenting in part and issuing a statement

**TABLE OF CONTENTS**

Paragraph

I. INTRODUCTION AND BACKGROUND 1

A. Overview 1

B. Scope of this Proceeding 9

II\. APPLICATION OF STATUTORY CLASSIFICATIONS TO WIRELINE BROADBAND
INTERNET ACCESS SERVICES 17

III\. REGULATORY FRAMEWORK FOR WIRELINE BROADBAND INTERNET ACCESS
SERVICES 30

A. Background on the *Computer Inquiry* Regime 33

B. Appropriate Regulatory Framework 43

1\. Access Safeguards 43

2\. Other Obligations 54

3\. Impact on Federal and State Responsibilities 62

IV\. UNIVERSAL SERVICE OBLIGATIONS OF ALL PROVIDERS OF BROADBAND
INTERNET ACCESS 65

A. Commission's Existing Rules 69

B. Wireline Broadband Platform 75

C. Other Broadband Platforms 79

D. Growth of Broadband and Migration 81

E. Section 254(k) 83

V. PROCEDURAL MATTERS 84

VI\. ORDERING CLAUSES 109

# INTRODUCTION AND BACKGROUND

## Overview

1.  Through this proceeding, we launch a thorough examination of the
    appropriate legal and policy framework under the Communications Act
    of 1934, as amended, for broadband access to the Internet provided
    over domestic wireline facilities.[^1] The widespread deployment of
    broadband[^2] infrastructure has become the central communications
    policy objective of the day.[^3] It is widely believed that
    ubiquitous broadband deployment will bring valuable new services to
    consumers, stimulate economic activity, improve national
    productivity, and advance economic opportunity for the American
    public. The promise of broadband generally, and the proliferation of
    broadband Internet access services specifically, are fostering the
    creation, adoption and use of multimedia applications that can meet
    consumers' broad communications, entertainment, information, and
    commercial needs and desires. These factors demand that the
    Commission develop general principles and policy goals that form the
    foundation of our broadband policymaking.

2.  Before outlining these principles and goals, however, it is
    appropriate to note that the Commission's broadband policy will
    first and foremost be guided by, and grounded in, the Communications
    Act. Furthermore, as a policy matter, we recognize that the
    statutory objectives to promote competition and universal service
    have not changed.

3.  In this proceeding, we are guided by the following principles and
    policy goals: *First*, it is the Commission's primary policy goal to
    encourage the ubiquitous availability of broadband to all Americans.
    Indeed, Congress has explicitly charged the Commission to "encourage
    the deployment on a reasonable and timely basis" of broadband
    capabilities to "all Americans," and gave the Commission authority
    to "take immediate action to accelerate deployment of such
    capability by removing barriers to infrastructure investment," if
    necessary.[^4] In addition, Congress has expressly stated that it is
    the policy of United States to "promote the continued development of
    the Internet and other interactive computer services and other
    interactive media."[^5] These "congressional policies underlying the
    Telecommunications Act of 1996"[^6] serve as the basis of our
    policymaking to ensure consumers have access to infrastructures that
    provide broadband capabilities.

4.  *Second*, the Commission's regulatory framework will conceptualize
    broadband broadly to include any and all platforms capable of fusing
    communications power, computing power, high-bandwidth intensive
    content, and access to the Internet. As we have noted in the past,
    broadband is evolving across multiple electronic platforms as
    traditional wireless, cable, satellite and wireline providers have
    expended substantial investments in broadband capable
    infrastructures.[^7] We believe that by promoting the development
    and deployment of multiple platforms, competition in the provision
    of broadband capabilities can thrive, and thereby ensure that the
    needs and demands of the consuming public are met.[^8] To this end,
    the Commission will commit to preserving opportunities for broadband
    competition. In promoting this competition, however, the Commission
    must be cautious not to embed particular technologies. We recognize,
    as discussed below, that current networks and technologies that
    enable the end-user to engage in broadband capabilities are evolving
    and that the infrastructure of today may be insufficient to support
    the applications of tomorrow. Therefore, the Commission should avoid
    policies that have the unintended consequence of embracing too
    quickly any one technology or service.

5.  *Third*, broadband services should exist in a minimal regulatory
    environment that promotes investment and innovation in a competitive
    market. We recognize that substantial investment is required to
    build out the networks that will support future broadband
    capabilities and applications. Therefore, our policy and regulatory
    framework will work to foster investment and innovation in these
    networks by limiting regulatory uncertainty and unnecessary or
    unduly burdensome regulatory costs. In so doing, we will strive, as
    directed by Congress, to "preserve the vibrant and competitive free
    market that presently exists for the Internet and other interactive
    computer services, unfettered by Federal and State regulation."[^9]
    At the same time, however, the Commission must always be alert and
    ready to act against anticompetitive risks and discriminatory
    provisioning by dominant providers that result in consumer harm.

6.  *Fourth*, the Commission will strive to develop an analytical
    framework that is consistent, to the extent possible, across
    multiple platforms. Our regulatory framework will derive from the
    unique attributes of broadband Internet access. The Commission will
    avoid simply extending existing rules that were crafted to govern
    legacy services provided over legacy networks. Over many years,
    several distinct major networks have been deployed and optimized to
    provide very specific services. Legacy regulations were based on
    technical and market assumptions concerning these networks and the
    services they delivered.

7.  Service providers across platforms are now in the process of
    re-engineering these legacy networks to provide broadband Internet
    access. We recognize that because these legacy networks have
    historically been regulated differently, the migration to digital
    broadband systems may raise different questions for different
    platforms. We believe that the statute and our precedent suggest a
    functional approach, focusing on the nature of the service provided
    to consumers, rather than one that focuses on the technical
    attributes of the underlying architecture.[^10] For this reason, we
    expressly recognize that a consistent analytical framework may not
    lead to identical regulatory models across platforms. Indeed, legal,
    market, or technological distinctions may require different
    regulatory requirements between platforms, or between certain types
    of providers of one particular platform. At the same time, there are
    over-arching policy objectives that are similar regardless of
    platform and should be harmonized to the greatest extent possible.
    This will become increasingly more important, for as fiber is
    deployed closer to the home, the nature and character of different
    platforms may well become less distinguishable.

8.  The Commission has initiated three other proceedings that focus on
    the regulatory treatment of broadband. These proceedings, together
    with the policies discussed above, and this Notice, build the
    foundation for a comprehensive and consistent national broadband
    policy. First, near the end of 2000, the Commission launched the
    *Cable Modem NOI*.[^11] This considers, among other issues, the
    appropriate regulatory classification for cable modem service, which
    is used to provide high-speed Internet access.[^12] Second, in the
    *Incumbent LEC Broadband Notice*, we examine whether incumbent LECs
    that are dominant in the provision of traditional local exchange and
    exchange access service should also be considered dominant when they
    provide broadband telecommunications services.[^13] Third, in the
    *Triennial UNE Review Notice*, we address, among other things, the
    incumbent LECs' wholesale obligations under section 251 to make
    their facilities available as unbundled network elements to
    competitive LECs for the provision of broadband services.[^14] These
    latter two proceedings thus investigate how Title II regulation
    applies to broadband service provided as telecommunications services
    and whether facilities that can be used to provide broadband
    services should be subject to Title II unbundling obligations. By
    contrast, this Notice addresses the fundamental definitional and
    classification questions for wireline broadband Internet access
    services. Because the instant inquiry overlaps with the Commission's
    pending *Computer III Further Remand*, we incorporate the *Computer
    III Further Remand* proceeding by reference insofar as it relates to
    the BOCs' access obligations with respect to broadband
    services.[^15]

## Scope of this Proceeding

9.  In this fourth proceeding of our comprehensive broadband policy, we
    examine broadband Internet access services provided by entities that
    are using the traditional telephone platform to offer that service.
    This proceeding is the functional equivalent to the *Cable Modem
    NOI*, which considers broadband Internet access services provided
    over the cable plant. Consistent with the Act and the policy goals
    and principles outlined above, we launch this rulemaking to classify
    the provision of wireline broadband Internet access services, and to
    consider the regulatory implications of that classification.

10. The development of the Internet,[^16] the main driver behind the
    current proliferation of broadband Internet access services, has
    been astonishing. After a period of government stewardship that
    lasted from the 1960s to the early 1990s, the Internet entered a
    commercial phase characterized by more widespread network
    interconnection, an explosion of applications and access to a
    growing universe of websites utilizing common, interoperable
    protocols.[^17] Today, many of these websites have evolved into
    content-rich information portals that are matched to the broad
    commercial, educational or entertainment demands of Internet users.

11. As applications proliferated and demand for Internet access services
    grew, service providers augmented network capacity, first to offer
    dial-up narrowband Internet access and later to offer broadband
    Internet access services.[^18] Traditional telephone providers and
    new entrants made improvements to their networks that built upon and
    leveraged existing public switched telephone network
    infrastructure.[^19] Our most recent data show that this incremental
    network buildout enabled large increases in high-speed Internet
    access subscribership.[^20]

12. As demand for broadband Internet access services has grown,
    telephone companies have increased the speed and capacity of their
    networks by deploying fiber closer to the end user to support
    emerging high-bandwidth applications and to enhance network
    performance. The logical technological evolution of the network is
    the complete or near-complete replacement of copper lines with
    end-to-end fiber optic transmission facilities. Given the expense of
    deploying end-to-end fiber, however, facilities-based providers are
    engaged in incremental infrastructure investment that builds on
    existing technology. While fiber optic platforms can deliver speeds
    well in excess of existing xDSL technologies, in the residential
    market, the "last mile" to the customer is almost always bridged
    through existing technologies such as xDSL. Although providers have
    already deployed some next-generation optical technologies in the
    core of the network, they are only now making these technologies
    available at the edges of the network, closer to the end-user. We
    recognize that xDSL may be the prevailing technology of the day for
    the last mile, but ongoing advances in technology may someday
    replace it as fiber moves close to or into the home.[^21] Cable
    operators have likewise invested in upgrades in their systems that
    allow them to provide high-speed Internet access services and have
    also deployed fiber closer to the end user.[^22] In this proceeding,
    we focus on the efforts of the telephone industry and their
    provision of broadband Internet access services utilizing the
    traditional telephone infrastructure, and the outgrowths of that
    infrastructure.

13. The Commission has in the past faced similar situations involving
    the need to classify new services under existing regulatory and
    statutory frameworks. The classification of wireline broadband
    Internet access services, however, raises challenging legal,
    regulatory, and policy questions resulting from unique issues
    associated with these capabilities, including differing market and
    technical characteristics, and the fact that broadband technologies
    may ultimately replace legacy narrowband networks. Because wireline
    broadband Internet access services fuse communications power with
    powerful computer capabilities and content, these services appear to
    fall within the class of services that the Commission has
    traditionally identified as "information services," which blend
    communications with computer processing. Yet, broadband offerings
    may differ in form and scope from previous information services. The
    Commission has viewed information services such as voice mail,
    telemessaging, or credit card validation to be an incremental
    extension of the existing narrowband telecommunications network. It
    has described information services as using the "existing telephone
    network to deliver services that provide more than a basic
    transmission offering,"[^23] or as "enhancements that build upon
    basic services."[^24] Today, however, the capabilities made possible
    by broadband capable facilities enable the deployment of new,
    bandwidth-intensive, multimedia information services, which in turn
    drive the use and further deployment of broadband capable
    facilities.

14. We recognize that the legal and policy issues associated with
    classifying Internet access service as either a telecommunications
    service or an information service under the Act have been raised
    previously, but not fully resolved, in two Commission proceedings.
    Specifically, in 1998, the Commission addressed the status of
    information services in its *Report to Congress* on universal
    service.[^25] In that report, the Commission reaffirmed its
    understanding that "the categories of 'telecommunications service'
    and 'information service' in the 1996 Act are mutually
    exclusive."[^26] The Commission generally concluded that Internet
    access services[^27] are information services, not
    telecommunications services.[^28] The Commission recognized,
    however, that its analysis focused on ISPs as entities procuring
    inputs from telecommunications service providers. Thus, classifying
    Internet access as an information service in this context left open
    significant questions regarding the treatment of Internet (and
    information) service providers that own their own transmission
    facilities and that engage in data transport over those facilities
    to provide an information service.[^29] In addition, the Commission
    did not explicitly address the regulatory classification of wireline
    broadband Internet access services.

15. We again confronted the issue of how to address the regulatory
    treatment of Internet access service provided over a carrier's own
    transmission facilities in the recent *Missouri/Arkansas 271 Order*.
    [^30] Specifically, SBC argued in that proceeding that it provides
    three categories of DSL-related services: retail telecommunications
    services which it offers for resale at a discount, wholesale
    telecommunications services which it offers to unaffiliated ISPs,
    and retail information services. With respect to the latter two
    categories of services, SBC argued that it does not provide DSL
    telecommunications service at retail and thus, had no obligation to
    make these services available for resale pursuant to the section
    251(c)(4) discount. We concluded that neither the Act nor Commission
    precedent explicitly addressed the situation where an incumbent LEC
    does not offer DSL transport at retail, but instead offers only an
    Internet access service.[^31] We noted that how we would decide
    questions about the regulatory treatment of the DSL transmission
    facilities underlying SBC's Internet access service could have
    far-reaching implications for a wide range of issues that would be
    more appropriately handled in a separate proceeding.[^32]

16. This Notice seeks to answer many of the questions left unanswered in
    both the *Report to Congress* and the *Missouri/Arkansas 271 Order*.
    This Notice is divided into several parts. In section II, we address
    the appropriate classification of wireline broadband Internet access
    services. We tentatively conclude that wireline broadband Internet
    access services -- whether provided over a third party\'s facilities
    or self-provisioned facilities -- are information services subject
    to regulation under Title I of the Act, and we ask for comment on
    this tentative conclusion." As noted above, we have already sought
    comment on the regulatory classification for cable modem service,
    and this issue will be resolved in a separate proceeding.[^33] In
    section III, in furtherance of our guiding principles and policy
    goals discussed in section I.A., we address the appropriate
    regulatory framework for wireline broadband Internet access
    services. We seek comment on what regulations should apply in the
    future if these broadband offerings are found to be information
    services subject to Title I of the Act.[^34] Specifically, we
    examine implications of Title I classification for wireline
    broadband offerings for non-discriminatory access and other core
    communications policy objectives.[^35] In light of these objectives,
    we seek comment on whether to modify or eliminate existing access
    obligations on providers of self-provisioned wireline broadband
    Internet access services. We seek comment on how this regulatory
    classification may impact other obligations, such as those
    associated with public safety and welfare. In addition, we seek
    comment generally on the role of the states with respect to
    regulating wireline broadband Internet access services. Finally, in
    section IV, we seek comment broadly on whether facilities-based
    providers of broadband Internet access services provided over
    wireline and other platforms, including cable, wireless and
    satellite, should be required to contribute to universal
    service.[^36]

# APPLICATION OF STATUTORY CLASSIFICATIONS TO WIRELINE BROADBAND INTERNET ACCESS SERVICES

17. In this section, we examine the appropriate classification for
    wireline broadband Internet access service. As discussed more fully
    below, we tentatively conclude that, as a matter of statutory
    interpretation, the provision of wireline broadband Internet access
    service is an information service. Specifically, we tentatively
    conclude that when an entity provides wireline broadband Internet
    access service over its own transmission facilities, this service,
    too, is an information service under the Act. In addition, we
    tentatively conclude that the transmission component of retail
    wireline broadband Internet access service provided over an entity's
    own facilities is "telecommunications" and not a "telecommunications
    service." We seek comment on these tentative conclusions and ask
    additional questions with regard to the proper classification of
    wireline broadband Internet access service.

18. In classifying wireline broadband Internet access service, we look
    first and foremost to the text of the Act. In 1996, Congress created
    a definition of "information service" that is distinct from
    "telecommunications service."[^37] The Act defines "information
    service" as "the offering of a capability for generating, acquiring,
    storing, transforming, processing, retrieving, utilizing, or making
    available information via telecommunications."[^38] The Act 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 to the public, regardless of facilities
    used."[^39]

19. The Act defines "telecommunications" as "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."[^40] Under this definition, an entity
    *provides* telecommunications only when it both provides a
    transparent transmission path *and* it does not change the form or
    content of the information.[^41] If this offering is made directly
    to the public for a fee, it is deemed a "telecommunications
    service."[^42] On the other hand, "\[w\]hen an entity offers
    subscribers the 'capability for generating, acquiring, storing,
    transforming, processing, retrieving, utilizing or making available
    information *via telecommunications*,' it does not *provide*
    telecommunications, it is *using* telecommunications."[^43]

20. Applying this statutory framework, we tentatively conclude that
    providers of wireline broadband Internet access service offer more
    than a transparent transmission path to end-users and offer enhanced
    capabilities. Thus, we tentatively conclude that this service is
    properly classified as an "information service" under section 3 of
    the Act.[^44] We base this tentative conclusion on the fact that
    providers of wireline broadband Internet access provide subscribers
    with the ability to run a variety of applications that fit under the
    characteristics stated in the information service definition.

21. For example, in the case where a wireline broadband Internet access
    service allows end-users to retrieve files from the World Wide Web,
    an end-user must have the capability to interact with information
    stored on the facilities of the provider of the wireline broadband
    Internet access service. Furthermore, to the extent to which a
    provider offers end-users the capability to store files on service
    provider computers to establish "home pages" on the World Wide Web,
    the consumer is utilizing a "capability for ... storing ... or
    making available information" to others. It seems, from these
    factual situations, and others, that providers of wireline broadband
    Internet access services provide end-users with more than pure
    transmission, "between or among points selected by the user, of
    information of the user's choosing, without change in the form or
    content of the information service."[^45] Therefore, we tentatively
    conclude that Congress intended the definition of information
    service to include the capabilities provided by wireline broadband
    Internet access services. As mentioned above, we have interpreted
    the categories of information service and telecommunications service
    to be mutually exclusive.[^46] In defining "information service,"
    Congress recognized that a transmission component is embedded
    within, and not separate and distinct from, the information service.
    As such, we view wireline broadband Internet access service as not
    consisting of two separate services, but as a single integrated
    offering to the end-user. We seek comment on this tentative
    conclusion and the supporting statutory analysis. In particular, we
    ask parties to offer any factual evidence that would suggest a
    contrary application of the statute.

22. In the past, the Commission has referred to the transmission aspect
    of traditional information services provided by facilities-based
    common carriers variously as a "service," a "component," a
    "facility," and "capacity." In *Computer II*, which we describe in
    more detail in section III *infra*, the Commission stated, "because
    enhanced services are dependent upon the common carrier offering of
    basic services, a basic service is the building block upon which
    enhanced services are offered."[^47] The Commission, however, also
    recognized the "existence of a communications component" within
    enhanced services.[^48] Overall, the Commission defined "enhanced
    services" as "services offered over common carrier transmission
    facilities, which employ computer processing applications that act
    on the format, content, code, protocol or similar aspects of the
    subscriber's additional, different or restructured information; or
    involve subscriber interaction with stored information."[^49] In
    *Computer III*, also described in section III *infra*, the
    Commission referred to the "basic services and basic service
    functions that underlie the carrier's enhanced service offering" and
    required them to be "unbundled from other basic service offerings"
    and offered to competitive enhanced service providers.[^50] As we
    state below in our description of the *Computer II* and *Computer
    III* regulatory framework,[^51] the obligations deriving from those
    proceedings currently apply to the provision of wireline broadband
    Internet access services by facilities-based telephone companies.

23. In the *Frame Relay Order,* the Common Carrier Bureau stated that it
    would "treat\[\] frame relay service as a basic service \[because
    doing so\] provides competitive access to the underlying basic
    service of facilities-based carriers."[^52] The Bureau added that it
    would require AT&T to "unbundle the basic frame relay service,
    regardless of whether the \[AT&T's\] offering also provides a
    combined, enhanced protocol conversion and transport service for
    those customers who require it."[^53] While not addressing the
    classification of the transmission component directly, the
    Commission also recognized in the 1998 *Computer III Further Notice*
    that the 1996 Act established terminology and safeguards that could
    impact the *Computer III* regime, including for the provision of
    Internet access service.[^54] In the *Report to Congress* described
    above, the Commission stated that information services "necessarily
    require a transmission component in order for users to access
    information."[^55] The Commission has also more recently addressed a
    carrier's provision of xDSL as a transmission service to competitive
    Internet service providers.[^56]

24. We analyze whether wireline broadband Internet access service
    provided over the provider's own facilities is an information
    service, a telecommunications service, or both. As an initial
    matter, we tentatively conclude that nothing about the nature of
    wireline broadband Internet access services offered over a
    provider's own facilities changes the fact that the end-user service
    is an information service. Consistent with the statutory analysis
    described above, a provider of end-user wireline broadband Internet
    access service delivered over its own facilities provides the
    end-user the "capability for generating, acquiring, storing,
    transforming, processing, retrieving, utilizing, or making available
    information via telecommunications."[^57] We believe that the end
    user is receiving an integrated package of transmission and
    information processing capabilities from the provider. We believe
    that the fact that the provider owns the transmission does nothing
    to change the nature of the service to the end-user.[^58]
    Accordingly, we tentatively conclude that wireline broadband
    Internet access service provided over a provider's own facilities is
    an information service.

25. Additionally, we now tentatively conclude that, as a logical
    extension of our determination that the provision of wireline
    broadband Internet access service over a provider's own facilities
    is an information service, the transmission component of the
    end-user wireline Internet access service provided over those
    facilities is "telecommunications" and not a "telecommunications
    service." As stated above, an entity provides "telecommunications"
    (as opposed to merely using telecommunications) when it both
    provides a transparent transmission path and it does not change the
    form or content of the information. The provision of
    telecommunications rises to the level of a "telecommunications
    service" when it is offered "for a fee directly to the public."[^59]
    As stated above, we tentatively conclude that providers of wireline
    broadband Internet access service that provision the service over
    their own facilities do not offer "telecommunications for a fee
    directly to the public." Indeed, it seems as if a provider offering
    the service over its own facilities does not offer
    "telecommunications" to anyone, it merely uses telecommunications to
    provide end-users with wireline broadband Internet access services,
    which, for the reasons we discuss above, we believe is an
    information service. Therefore, we tentatively conclude that in the
    case where an entity combines transmission over its own facilities
    with its offering of wireline Internet access service, the
    classification of that input is telecommunications, and not a
    telecommunications service. We seek comment on these tentative
    conclusions and the statutory analysis underlying them.

26. We also seek comment on our prior conclusion that an entity is
    providing a "telecommunications service" to the extent that such
    entity provides only broadband transmission on a stand-alone basis,
    without a broadband Internet access service.[^60] Commenters should
    address what the appropriate statutory classification of broadband
    transmission should be when it is not coupled with the Internet
    access component.[^61] Commenters should also address whether the
    provision of wholesale xDSL transmission should be considered
    "telecommunications" or "telecommunications service" under the
    Act.[^62] If xDSL is being offered on a wholesale basis as an input
    to ISPs' information services, is it being offered "directly to the
    public"? In this regard, commenters should discuss how judicial and
    Commission definitions of common carriage might apply, and address
    whether ISPs -- as a class -- might be interpreted as the "public"
    under the statutory definition of "telecommunications service."[^63]
    Commenters should also discuss the circumstances under which owners
    of transmission facilities offer broadband transmission on a private
    carriage basis. Specifically, we seek comment on whether and how the
    Commission might regulate incumbent LEC provision of broadband to
    third-party ISPs as private carriage. Further, to the extent that a
    carrier continued to offer xDSL transmission under tariff, would
    *all* xDSL transmission services offered by that carrier be deemed
    "telecommunications services," or could certain xDSL services be
    concurrently offered through individually negotiated contracts as
    private carriage?[^64] Commenters should discuss both statutory and
    policy rationales in support of their suggested classification.

27. Although we tentatively conclude that wireline broadband Internet
    access service is an information service, we ask parties to comment
    on whether it should be classified as something other than an
    information service. For example, is there anything about the
    self-provision of this service that alters the function provided to
    the end user such that the service should be classified as a
    telecommunications service? Alternatively, should it be classified
    as two separate services, both an information service and a
    telecommunications service? Should it instead be classified as a new
    kind of hybrid communications service, neither an information
    service nor a telecommunications service?[^65]

28. As we indicated above, we are also considering concurrently with
    this proceeding in the *Incumbent LEC Broadband Notice* whether
    incumbent LECs that are dominant in the provision of local exchange
    and exchange access service should also be considered dominant when
    they provide broadband telecommunications services. In order to
    consider broadband issues in a consistent manner, we ask parties to
    comment on whether issues raised in that proceeding have an impact
    on the statutory classifications we are considering in this
    proceeding.

29. We also note that the 1996 Act uses and defines the term "advanced
    telecommunications capability" in section 706.[^66] To date, the
    Commission has utilized this term for purposes of collecting data to
    measure the deployment of advanced telecommunications. We seek
    comment on whether wireline broadband Internet access services
    should be classified as an "advanced telecommunications capability."
    We seek comment on the relevance, if any, that section 706 has to
    the issues raised in this proceeding.[^67]

# REGULATORY FRAMEWORK FOR WIRELINE BROADBAND INTERNET ACCESS SERVICES 

30. In determining the appropriate regulatory framework for wireline
    broadband Internet access service, we recognize that the relevant
    statutory classification is a first, albeit critical, step. Assuming
    that we adopt our tentative conclusion that wireline broadband
    Internet access services are information services under the Act, we
    must then determine what regulations, if any, should apply to the
    provision of these services. Above, we tentatively conclude that
    wireline broadband Internet access service is an "information
    service," and that the transmission aspect of that service is
    "telecommunications." One question that arises as we consider the
    regulatory implications of these tentative conclusions concerns what
    regulatory requirements, if any, should attach to the
    "telecommunications" input. We seek comment on this question. In
    particular, should any regulatory requirements imposed on the
    "telecommunications" input mirror those that generally apply to the
    provision of "telecommunications service" or "common carriage" under
    the Act? Or, should any such obligations follow some other model?
    Alternatively, in the event the Commission ultimately concludes that
    the transmission component of wireline broadband Internet access
    should be defined as "telecommunications service," what obligations
    should flow from that classification? Commenters should address with
    specificity their justifications for whichever regulatory
    obligations they advocate.

31. But our inquiry regarding what regulations, if any, should apply to
    the provision of wireline broadband Internet access services is not
    limited to examining the obligations that should attach to the
    transmission aspect of such services. In particular, we recognize
    that several years ago the Commission adopted a regulatory framework
    (referred to as the *Computer Inquiry*) that applied to the
    precursors of what the Act later defined as "information services"
    when those services are provided by facilities-based common
    carriers. As we will discuss, that framework was constructed to
    accomplish certain goals in a world in which the services at issue
    were more akin to voicemail and other narrowband applications,
    rather than to broadband Internet access. We ask below whether we
    should maintain the same framework for wireline broadband Internet
    access service given the technical and market characteristics of
    this service. We also ask what the implications would be for other
    regulatory requirements, including public safety and welfare, if we
    were to modify the access obligations.

32. We begin our inquiry by briefly summarizing the *Computer Inquiry*
    regime. In addition, we note that we undertake this proceeding in
    conjunction with the *Incumbent LEC Broadband Notice* in which we
    address whether we should modify the regulatory framework applied to
    broadband telecommunications services that are appropriately
    classified under Title II of the Act. As we describe below, we ask
    commenters to address how we can ensure that we undertake a
    consistent approach to broadband regulation in our pending
    proceedings, particularly as they address the potential implications
    of classification under either Title I or Title II of the Act.

## Background on the *Computer Inquiry* Regime

33. The history of the Act and its implementation by the Commission
    shows that both Congress and the Commission have repeatedly modified
    and amended the existing regulatory regime to accommodate new
    services and technologies. In 1934, Congress defined two categories
    of regulated entities and their corresponding services: common
    carriers regulated under Title II and users of the radio spectrum
    regulated under Title III. Services generally fit neatly into these
    different categories because each service had discrete physical
    plant and readily identifiable service characteristics. For example,
    broadcasting services clearly fit under Title III because they
    depended almost entirely on wireless transmission for their
    point-to-multipoint communications, while telephony clearly fit
    under Title II because it used physical wires to establish
    point-to-point communications.

34. Over time, however, providers offered new services that did not fit
    neatly into either category. For example, cable services used
    wireline infrastructure for point-to-multipoint communications.
    After the Commission decided that it would not treat cable services
    as Title II common carrier services, Congress created a separate
    legislative regime under Title VI of the Act. Information services
    were another example of newly developed services that did not fit
    neatly into the existing regulatory framework. The Commission
    defined what would later be defined as "information services" under
    the 1996 Act as a distinct class of services in its *Computer
    Inquiry* line of decisions.[^68] These decisions addressed the
    regulatory and policy issues raised by the convergence of computer
    processing with communications and, in particular, how to
    differentiate between these services when they are provided by the
    same entity. The decisions also sought to consider whether the
    Commission should apply certain access and interconnection
    requirements where traditional telephone companies also provide
    computer processing applications to ensure a competitive environment
    for the new computer services.

35. We note at the outset that the *Computer Inquiry* line of decisions
    was initiated at a time when very different legal, technological and
    market circumstances presented themselves to the Commission. First
    and foremost, the Telecommunications Act of 1996 introduced a
    mandate that the Commission promote competition, deregulation and
    innovation wherever possible in the communications market. The Act
    clearly evidences Congress' intent to involve as many potential
    providers as possible to bring consumers the benefits of newer,
    better and more cost-effective products and services. Moreover, the
    Act introduced for the first time a number of core statutory-based
    policy objectives associated with the development of the Internet
    and the deployment of advanced services.[^69]

36. Second, with respect to technology, the core assumption underlying
    the *Computer Inquiries* was that the telephone network is the
    primary, if not exclusive, means through which information service
    providers can obtain access to customers. This network was optimized
    primarily to carry voice traffic and narrowband data applications,
    such as voicemail. Yet now information service providers may access
    customers over a variety of network platforms, such as cable,
    wireless and satellite. Some of these platforms are broadband,
    rather than narrowband, and they carry traffic to and from
    companies, educational institutions, organizations and other users
    through a global interconnected packet-switched network called the
    Internet. This technology allows users to interact with media, with
    information and with each other in ways and at speeds that were
    scarcely considered when the *Computer Inquiry* was begun.

37. Third, the technological evolution that enabled other network
    platforms to be used to provide information service enabled cable,
    wireless and satellite providers to begin to compete with the
    telephone network. In the broadband arena, the competition between
    cable and telephone companies is particularly pronounced, with cable
    modem platforms enjoying an early lead in deployment. In the context
    of this competition, telephone companies and various Internet and
    technology companies have begun to advocate that the Commission take
    steps that, to the extent the Act allows, would reduce the
    regulatory burdens and regulatory uncertainties the telephone
    companies face, and thereby provide incentives for those companies
    to continue or accelerate their investments in critical broadband
    infrastructure.

38. It was prior to the development of these very different legal,
    technological and market circumstances that the Commission initiated
    its *Computer Inquiry* line of cases. In *Computer I*, the
    Commission addressed the questions of whether data processing
    services should be subject to regulation under Title II of the Act,
    and whether, and under what conditions, all common carriers should
    be permitted to compete in the market for data processing services.
    Finding that the computer data services industry "is one
    characterized by open competition and relatively free entry," the
    Commission concluded that it "should not, at this point, assert
    regulatory authority over data processing as such."[^70] Moreover,
    the Commission found that allowing common carriers to provide
    computer data services would likely benefit the public through "new
    and improved services and lower prices."[^71] Yet the Commission
    also recognized that common carriers might be able to "favor their
    own data processing activities by discriminatory services,
    cross-subsidization, improper pricing of common carrier services,
    and related anticompetitive practices and activities."[^72] Thus,
    the Commission required common carriers to furnish data processing
    services through a separate corporate entity that could not use
    regulated communications facilities to provide unregulated
    services.[^73] Finally, the Commission prohibited common carriers
    from discriminating in favor of their data processing
    affiliates.[^74]

39. In *Computer II*, the Commission created the regulatory categories
    of "basic" services and "enhanced" services in order to more clearly
    distinguish regulated common carrier services from unregulated
    computer-data services.[^75] It defined basic transmission service
    as limited to the Title II common carrier offering of transmission
    capacity for the movement of information.[^76] Enhanced services, on
    the other hand, were described as using computer processing
    applications to act on the content, code, protocol or other aspects
    of the subscriber's information.[^77] The Commission further found
    that it possessed jurisdiction over enhanced services under Title I,
    even as it re-affirmed and bolstered its justification for not
    imposing common carrier obligations on enhanced service providers.
    It declined to exercise that jurisdiction and regulate enhanced
    services, however, because it found that market to exhibit
    "effective competition."[^78] It reserved the right to exercise its
    Title I jurisdiction and to intervene should problems involving
    enhanced services arise.[^79]

40. In *Computer II*, while underscoring the continued need for
    safeguards, the Commission also recognized the costs to carriers
    associated with "maximum separation." The Commission acknowledged,
    in particular, the impact of such costs on smaller carriers, and the
    fact that small carriers with a limited network were unlikely to be
    able to "gain any significant competitive advantage by restricting
    the access of its competitors to a very limited network of
    underlying facilities."[^80] Based on these considerations, the
    Commission concluded that it should continue to impose full
    structural separation requirements only on those carriers having
    control over local exchange facilities and sufficient market power
    to engage in anticompetitive activity on a national scale, namely
    AT&T and GTE.[^81] The Commission required those carriers that own
    common carrier transmission facilities and provide enhanced
    services, but are not subject to the separate subsidiary
    requirement, to acquire the necessary basic services pursuant to
    tariff.[^82] The Commission also required these carriers to give
    competing enhanced service providers access to their facilities on
    the same rates, terms and conditions.[^83]

41. In *Computer III,* the Commission revisited the issue of the
    appropriate competitive safeguards for the provision of enhanced
    services by common carriers. Recognizing the costs associated with
    structural separation, the Commission adopted revised rules that
    allowed AT&T, the BOCs and GTE the option of moving from full
    structural separation to a system of non-structural safeguards,
    which it found would prevent discriminatory behavior while avoiding
    the costs and inefficiencies associated with the separate subsidiary
    requirements.[^84] The non-structural safeguards included Comparably
    Efficient Interconnection (CEI) and Open Network Architecture (ONA),
    as well as quality, installation and maintenance reporting
    requirements.[^85] The Commission initially applied the *Computer
    III* rules to both AT&T and the BOCs, and then later relieved AT&T
    of most of the requirements. In 1994, the Commission extended the
    ONA requirements to GTE.[^86]

42. In sum, as a result of the requirements in *Computer II* and
    *Computer III*, BOCs that provide information services are required
    to offer the transmission component of the information service
    separately pursuant to tariff, and must also acquire such
    transmission for their own information service offerings pursuant to
    their tariff. The Commission has also stated that non-dominant
    common carriers owning transmission facilities and providing
    enhanced services must unbundle their basic from enhanced services
    and offer transmission capacity to other enhanced service providers
    under the same tariffed terms and conditions under which they
    provide such services to their own enhanced service operations.[^87]

## Appropriate Regulatory Framework

### Access Safeguards

43. We seek comment on whether the *Computer Inquiry* requirements
    should be modified or eliminated, and whether such requirements are
    overly broad or under inclusive as applied to the nascent broadband
    market. Specifically, we seek comment on the necessity and
    usefulness of these requirements as applied to self-provisioned
    wireline broadband Internet access service and whether it may be
    appropriate to impose alternative requirements to better address the
    technology and market characteristics of these services.

44. Because the rules adopted in the *Computer Inquiries* were based on
    assumptions shaped largely by certain service and market
    characteristics prevalent at the time, we seek comment on whether
    those assumptions, and the resulting rules, should be modified in
    the context of wireline broadband Internet access to account for
    such changes. For example, we seek comment on what significance we
    should place on the extent to which broadband Internet access
    services can be or are provided over a variety of differentiated
    network platforms, such as cable, wireless, and satellite. We note
    the Commission's recent *Incumbent LEC Broadband Notice* is
    examining the competitive characteristics of the domestic broadband
    telecommunications services market and the appropriate regulatory
    framework that should apply to the incumbent LEC provision of these
    services.[^88] We seek comment on how findings in that proceeding,
    specifically those related to market definition and market power,
    could inform our decision here. For example, to the extent that the
    Commission finds that there is sufficient competition in the
    broadband telecommunications services market to warrant elimination
    or modification of some or all *Computer II* and *Computer III*
    requirements, but not enough competition to warrant complete
    deregulation, what should those alternative requirements be?

45. As noted above, in contrast to narrowband facilities, it appears
    that broadband facilities support an ever-increasing variety and
    number of services and applications. As a result, a provider's
    decision to invest in redundant transmission facilities may be based
    on fundamentally different assumptions than those a provider relied
    upon in the past. We seek comment on whether and how this difference
    in the nature of service should affect an entity's access
    obligations.

46. In particular, in connection with the *Computer II* unbundling
    requirements, we ask parties to comment on the need for these
    requirements for wireline broadband Internet access service. Is
    there a legal or policy justification for imposing these
    requirements on the provision of wireline broadband Internet access
    service? In addition, how should the Commission define the scope of
    their application? For example, should these *Computer II*
    unbundling requirements be designed to apply only to carriers that
    we conclude have market power in the provision of wireline broadband
    Internet access service?[^89] Or, should it be applied to neither
    dominant and nondominant facilities-based carriers providing such
    services? As we ask in greater detail below, what type of incentives
    would the Commission be creating if these requirements were imposed
    asymmetrically on different types of facilities-based carriers?

47. We similarly seek comment with respect to the application of the
    *Computer III* requirements to the BOCs' provision of broadband
    Internet access services. We note that the CEI and ONA requirements
    were specifically designed to address the technical characteristics
    of the BOCs' basic network facilities as they existed at the time
    the *Computer III* regime was developed over 15 years ago.[^90] The
    broadband capabilities that wireline providers use today or in the
    future to provide broadband Internet access services are, and will
    be, different from the analog services for which the *Computer
    II*/*III* regimes were designed, and we ask commenters to consider
    any relevant implications of these differences. We seek comment
    specifically on whether a modified version of the current *Computer
    III* framework should be imposed on the BOC provision of broadband
    Internet access services, such as xDSL-based Internet access.

48. We ask parties to identify the elements of the existing *Computer
    III* framework that they believe should be modified or eliminated,
    and address in a comprehensive manner the costs and benefits of
    those access requirements. For example, one alternative approach may
    be a policy that declines to impose certain *Computer III*
    requirements with respect to broadband Internet access services to
    the extent a BOC is achieving certain performance levels in the
    delivery of non-broadband services. Similarly, could requirements be
    imposed generally and then be removed on a state-by-state basis once
    a BOC has received section 271 authority from the Commission to
    provide long distance in that state and thereby demonstrated that it
    has opened its local exchange market to competition? Is it possible
    that once a certain amount of competition exists in the provisioning
    of key telecommunications functions, requirements like those of CEI
    and ONA may not be necessary to ensure that competing information
    service providers obtain the necessary inputs for delivery of their
    high-speed services? We seek comments on these potential
    alternatives and welcome the suggestion of others. To the extent the
    Commission adopts a modified *Computer III* regime, should we also
    adopt an analogous regime for the *Computer II* requirements? In
    addition, we ask parties to comment on how any requirements the
    Commission may modify or eliminate with respect to the provision of
    wireline broadband Internet access should affect the requirements
    for making available the underlying transmission path of
    "narrowband" services.

49. In responding to the questions raised in this part of the Notice, we
    ask parties to comment with specificity upon whether the various
    goals articulated in the *Computer II* and *Computer III* inquiries
    are equally valid today. Parties should explain the basis for their
    conclusions, and also explain what other goals should be taken into
    account, given the significant changes in the technological and
    competitive landscapes. Further, we seek comment on the analyses
    employed in the *Computer Inquiries*, including the factors the
    Commission relied upon in promulgating the *Computer II* and *III*
    regimes. Are those factors still relevant today? Should they be
    modified, or given less weight? Are there additional factors that
    should be taken into account today by the Commission as it considers
    whether to modify the *Computer II* and *III* regimes?

50. To the extent we decide that none of the existing *Computer
    II*/*III* nondiscriminatory access obligations should apply to
    carriers providing wireline broadband Internet access services, we
    seek comment on whether alternative access obligations should be
    applied. We note that ISPs currently purchase transmission services
    under tariff to provide their own information services. Commenters
    should address how entities have used means other than those
    provided through the *Computer II*/*III* access requirements to
    acquire the transmission necessary to provide their information
    service offerings, including reliance on negotiated contractual
    arrangements. In addition, we seek comment on how any proposed
    alternative regulatory or contractual access obligations might be
    priced in the context of a minimal regulatory Title I regime. For
    example, commenters should consider whether, under a new regulatory
    approach, self-provisioning wireline broadband providers should be
    required to do no more than make transmission available to
    competitors at market-based prices, or whether they should be
    required to make transmission available to competitors at
    commercially reasonable rates. Or, is some alternative set of
    pricing regulations preferable?

51. If a regulatory framework is necessary, parties should comment on
    how such a framework could reduce the regulatory burdens on wireline
    broadband providers while promoting the availability of broadband to
    both competitors and consumers. Such an approach might encourage
    market participants to deploy broadband networks more expeditiously
    and increase facilities-based competition. We seek comment on the
    benefits and costs, as well as concrete details of market-based
    approaches to broadband regulation,[^91] and encourage interested
    parties to offer other proposals designed to encourage the
    deployment of broadband. We also ask parties to comment on what the
    appropriate classification would be of any broadband transmission
    services required to be offered to independent ISPs.[^92] We also
    seek comment on the applicability of sections 201 and 202 to any
    such stand-alone broadband offerings, and how those sections should
    inform any determination we may make about the pricing of broadband
    transmission provided to third parties.

52. As referenced above, we ask parties to comment specifically on the
    incentives that the Commission would create were it to impose
    requirements other than the *Computer II*/*III* requirements on the
    provision of wireline broadband Internet access service. For
    example, were the Commission to modify or eliminate the requirements
    that the underlying transmission be made available to other ISPs on
    a nondiscriminatory basis, how would this affect the deployment of
    broadband? How would competing ISPs that do not own transmission
    facilities obtain the inputs they need to provide competing
    broadband Internet access services? Would the removal of all
    unbundling requirements motivate incumbent LECs, including BOCs, to
    only provide broadband transmission as part of integrated
    information services in order to restrict its availability, or would
    there be countervailing reasons why carriers would still choose to
    provide high-speed transmission to other entities on a stand-alone
    basis? Will these incentives be affected to the extent that these
    broadband Internet access services begin replacing traditional
    telecommunications services? Commenters arguing that removal of the
    requirements will lead to a significant reduction in the
    availability of high-speed transmission to non-facilities-based ISPs
    should address with specificity why this situation cannot be
    addressed through private, unregulated contractual arrangements or
    other marketplace solutions. Alternatively, if the Commission were
    to continue to impose unbundling requirements only on incumbent LECs
    or BOCs, how would this affect their incentive to continue deploying
    new and innovative broadband information services?

53. In addition, we invite parties to comment on whether any alternative
    framework could reduce regulatory costs by providing self-enforcing
    access obligations that can be structured in such a way that they
    can be implemented and used by all the parties in a timely manner.

### Other Obligations

54. We seek comment on the extent to which other obligations might be
    affected by classifying wireline broadband Internet-access services
    as information services. We ask questions about the relevance of
    three basic public protection obligations of telecommunications
    service providers -- (i) national security, (ii) network
    reliability, and (iii) consumer protection -- to wireline broadband
    Internet-access services. We also ask questions about how this
    classification may affect unbundling obligations pursuant to
    sections 251 and 252 of the Act.

55. We ask commenters to discuss how our tentative conclusion that
    wireline broadband Internet access service is an information service
    will affect the scope of the CALEA assistance capabilities that
    telecommunications carriers must offer to law enforcement
    authorities.[^93] Commenters should address what effect, if any, the
    USA PATRIOT Act of 2001 may have on an entity that provides
    information services.[^94] While section 222 of the USA PATRIOT Act
    states that "nothing in this Act shall impose any additional
    technical obligation or requirement on a provider of wire or
    electronic communication service or other person to furnish
    facilities or technical assistance,"[^95] commenters may wish to
    discuss how the expansion of surveillance authority to electronic
    communications under various provision of the USA PATRIOT Act might
    affect providers of wireline broadband Internet access service if
    these services were classified as information services.[^96] More
    generally, we ask for comment on how designating wireline broadband
    Internet access service as an information service may affect other
    national security or emergency preparedness obligations applicable
    to service providers and their networks.

56. Second, commenters should discuss what role, if any, the Commission
    or its designees should have in ensuring the network reliability and
    interoperability of wireline broadband Internet access services. For
    telecommunications service providers, the Commission has found that
    network reliability is of paramount importance in any number of
    settings[^97] and, in particular, has directed the Network
    Reliability and Interoperability Council (NRIC) to explore and
    recommend measures that would enhance network reliability and
    interconnectivity.[^98] Commenters should address the costs and
    benefits of authorizing NRIC to make technical interconnectivity and
    interoperability recommendations with respect to wireline broadband
    Internet access service.

57. Third, commenters should address how classification of wireline
    broadband Internet access as an information service would affect
    existing consumer protection requirements. For instance, section 214
    of the Communications Act limits the ability of a telecommunications
    carrier to unilaterally discontinue telecommunications service to
    customers.[^99] Commenters should address the extent to which it is
    appropriate or necessary to apply such a requirement to the
    provision of wireline broadband Internet access service if we
    classify such services as information services.

58. Consistent with the Communications Act,[^100] the Commission
    restricts how telecommunications carriers use, disclose, and access
    customer proprietary network information derived from the provision
    of a telecommunications service (CPNI).[^101] Section 258 prohibits
    telecommunications carriers from changing consumers' carriers
    without prior consent.[^102] The Commission has also adopted
    truth-in-billing principles and guidelines to ensure that telephone
    bills provide consumers with information they may use to protect
    themselves from fraud and make informed choices in the competitive
    telecommunications marketplace.[^103] How would classification of
    wireline broadband Internet access service as an information service
    affect the applicability of these requirements?

59. In addition, section 255 requires a provider of telecommunications
    service to ensure the service is accessible and usable by
    individuals with disabilities, if that is readily achievable.[^104]
    How would classification of wireline broadband Internet access
    service as an information service affect the applicability of such
    requirements? Similarly, section 201 contains obligations applicable
    to the furnishing of service and charges for "communication service"
    and section 202 makes it unlawful for a common carrier to
    unreasonably discriminate with regard to like "communications
    service."[^105] How would our classification affect these
    obligations? Commenters should refer to specific sections of the Act
    when they are addressing these issues.

60. Commenters should address whether these requirements are needed to
    protect the interests of consumers in the context of a minimally
    intrusive regulatory regime for wireline broadband Internet access
    service. As we have noted in the *Incumbent LEC Broadband Notice*,
    the present broadband services market differs from the historic
    market for the provision of analog voice services. We stated that,
    "\[i\]n particular, the one-wire world for customer access appears
    to no longer be the norm in broadband services markets as the result
    of the development of intermodal competition among multiple
    broadband platforms, including DSL, cable modem service, satellite
    broadband service and terrestrial and mobile wireless
    services."[^106] Accordingly, commenters should discuss whether
    there are adequate incentives absent additional regulation for
    providers of wireline broadband Internet access to protect
    consumers' varied interests.

61. Finally, we seek comment on the implications of our tentative
    conclusions that the provision of wireline broadband Internet access
    service over a provider's own facilities is an "information service"
    and that the transmission component of such service is
    "telecommunications" and not a "telecommunications service." In
    particular, we are interested in the implications of this analysis
    for incumbent LECs' obligations to provide access to network
    elements under sections 251 and 252.[^107] Because "network element"
    is defined as a "facility or equipment used in the provision of a
    telecommunications service,"[^108] how could an incumbent LEC
    provider of wireline broadband Internet access service over its own
    facilities be required to provide access to those facilities as
    "network elements" if those facilities are used by the incumbent LEC
    exclusively to provide information services? For example, what would
    be the implications for the Commission's line sharing and line
    splitting rules?[^109] If an incumbent LEC provider of wireline
    broadband Internet access service over its own facilities uses
    certain facilities to provide both information services and
    telecommunications services, to what extent would the LEC be
    required to provide access to such shared-use facilities as "network
    elements?" We seek comment on whether the Commission could compel
    the unbundling of network elements used in the provision of
    information services, pursuant to Title I or some other statutory
    authority. Does the Commission's Title I authority allow us to limit
    such obligations to certain types of providers, such as incumbent
    LECs, or would the Commission be required to adopt rules of general
    applicability under Title I? In addition, because section 251(c)(3)
    allows a requesting carrier to request access to network elements
    "for the provision of a telecommunications service," would a
    provider be prohibited from using network elements pursuant to
    section 251 to provide wireline broadband Internet access
    service?[^110]

### Impact on Federal and State Responsibilities

62. We seek comment generally on the role of the states with respect to
    wireline broadband Internet access services if the Commission were
    to find it to be appropriately classified as an information service
    under Title I of the Act. The Commission has previously found that
    when xDSL transmission is used to provide Internet access services,
    these services are interstate and, thus, subject to Commission
    jurisdiction.[^111] We seek comment on whether, and if so how,
    classification of wireline broadband Internet access service as an
    information service would affect the balance of responsibilities
    between the Commission and the states. We ask parties to comment on
    what they consider an appropriate role for the states in this area,
    taking into account both policy considerations and legal
    constraints, including any applicable limitations on delegations of
    authority to the states under Title I of the Act. Additionally,
    parties should comment on whether current state regulations, if any,
    should be preempted to any extent if the Commission were to find
    that wireline broadband Internet access service is appropriately
    classified under Title I of the Act. Parties should be specific in
    identifying such state regulations and in explaining how such
    regulations would interfere with the Commission's oversight under
    Title I. In addition, we note that the Ninth Circuit Court of
    Appeals affirmed the Commission's authority to preempt state
    regulation of jurisdictionally mixed enhanced services.[^112]
    Parties should address whether any such existing state laws are in
    fact subject to preemption under that decision.

63. Commenters should also address how the dual state-federal ratemaking
    framework might be affected by the regulatory classification of
    wireline broadband Internet access service as an information
    service. For instance, if wireline broadband Internet access service
    is an information service, how should joint and common costs of
    facilities used to provide both those services and
    telecommunications services be allocated under Part 64.901 of our
    rules? Should we modify our current cost allocation rules, and, if
    so, how?

64. Commenters should also address the implications for jurisdictional
    separations of the issues addressed in this proceeding.[^113] We
    specifically encourage state members of the Federal-State Joint
    Board on Separations (Separations Joint Board) to submit comments on
    the issues addressed above.[^114]

# UNIVERSAL SERVICE OBLIGATIONS OF ALL PROVIDERS OF BROADBAND INTERNET ACCESS

65. In this proceeding, the Commission will continue to pursue and
    protect the core objectives of universal service, as reflected in
    our statutory mandates and in many of our precedents.[^115] We
    recognize, however, that the manner in which we preserve and advance
    universal service will, of necessity, change as the market,
    technology and consumers needs and priorities change.

66. Universal service has historically been based on the assumption that
    consumers use the network for traditional voice-related services and
    that those voice services are provided over circuit-switched
    networks. As traditional services migrate to broadband platforms, we
    need to assess the implications for funding universal service and
    ask commenters to discuss how to sustain universal service in an
    evolving communications market. Any analysis must take into account
    the Commission's overarching objectives of preserving and advancing
    universal service, as directed by Congress. At the same time,
    however, we seek to avoid policies that may skew the marketplace or
    overburden new service providers, so that they can continue to
    innovate and have incentives to deploy broadband infrastructure. We
    seek to further these objectives by exploring the following
    fundamental question: in an evolving telecommunications marketplace,
    should facilities-based broadband Internet access providers be
    required to contribute to support universal service and, if so, on
    what legal basis? This Notice explores this question by seeking
    comment on what universal service contribution obligations such
    providers of broadband Internet access should have as the
    telecommunications market evolves, and how any such obligations can
    be administered in an equitable and non-discriminatory manner.

67. This fundamental question is intertwined with issues raised in our
    separate *Universal Service Contribution Methodology* proceeding,
    which explores possible ways to reform our current methodology for
    assessing universal service contributions, and in particular whether
    to modify our present requirement that carriers be assessed based on
    end-user telecommunications revenues.[^116] Among other possible
    reforms, the Commission is considering assessing contributions based
    upon connections to a public network.[^117] Although we seek comment
    in this proceeding on the ways in which reform of the current
    contribution methodology might alter our analysis of the fundamental
    question described above, we leave questions of whether to make such
    a reform to the separate *Contribution Methodology* proceeding.

68. As discussed in greater detail below, this Notice builds on the
    foundation established in the *Report to Congress* and seeks comment
    on how we can continue to meet the goals of universal service in a
    changing marketplace where competing providers are deploying
    broadband Internet access. [^118] We specifically encourage state
    members of the Federal-State Joint Board on Universal Service to
    submit comments on the issues addressed below.

## Commission's Existing Rules

69. Section 254 of the Act codified the Commission's historic commitment
    to advancing universal service by ensuring the affordability and
    availability of telecommunications services for all Americans.
    Specifically, section 254 of the Act directed the Commission to
    reform its universal service systems by making them explicit and
    workable in an increasingly competitive market. Section 254 also
    instructed the Commission to collect contributions for the explicit
    universal service support mechanisms from telecommunications
    carriers that provide interstate telecommunications services and, if
    in the public interest, other providers of interstate
    telecommunications. Based on this statutory language, the Commission
    determined that universal service would be funded through
    contributions based on the interstate end-user telecommunications
    revenues of telecommunications carriers and certain other providers
    of telecommunications.[^119]

70. Section 254(d) of the Act states "\[e\]very telecommunications
    carrier that provides interstate telecommunications services *shall*
    contribute" to universal service.[^120] As noted above, section 3 of
    the Act defines a telecommunications carrier as "any provider of
    telecommunications services...," and "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."[^121] In
    contrast, section 3 of the Act defines mere "telecommunications" as
    "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."[^122] In the
    *First Report and Order*, the Commission interpreted this statutory
    language as imposing a mandatory contribution requirement on all
    telecommunications carriers that provide interstate
    telecommunications services.[^123]

71. Although section 254 falls within Title II of the Act, which
    generally applies to telecommunications carriers, the Commission has
    interpreted its reach to extend beyond telecommunications carriers.
    Specifically, section 254(d) of the Act provides the Commission the
    permissive authority to require "\[a\]ny other provider of
    interstate telecommunications" to contribute to universal service if
    required by the public interest.[^124] In the *First Report and
    Order*, the Commission exercised its permissive authority over
    certain other providers of interstate telecommunications under
    section 254(d). The Commission required entities that provide
    interstate telecommunications to end-users for a fee and payphone
    aggregators to contribute to universal service. This category of
    providers would include entities that lease excess
    telecommunications capacity to end-users on a private contractual
    basis.[^125] The Commission concluded that these providers, like
    telecommunications carriers, "have built their businesses or part of
    their businesses on access to the \[public switched telephone
    network\], provide telecommunications in competition with common
    carriers, and their non-common carrier status results solely from
    the manner in which they have chosen to structure their
    operations."[^126] The Commission declined at that time to exercise
    its permissive authority over entities that provide
    telecommunications solely to meet their internal needs, because
    telecommunications "do not comprise the core of \[a
    self-provider's\] business."[^127] The Commission noted that private
    network operators that serve only their internal needs do not lease
    excess capacity to end-users and do not charge end-users for use of
    their network.[^128]

72. Under our existing rules and policies, telecommunications carriers
    providing telecommunications services, including broadband
    transmission services, are subject to contribution requirements. In
    particular, with respect to wireline telecommunications carriers,
    such carriers must contribute to the extent they provide broadband
    transmission services or other telecommunications services on a
    stand-alone basis to affiliated or unaffiliated Internet service
    providers (ISPs) or to end-users. Accordingly, those carriers must
    contribute based on the revenues associated with the
    telecommunications services. The Commission also has concluded that
    if a wireline telecommunications carrier offers wireline broadband
    Internet access to end-users for a single price, it must also
    contribute to universal service. In the *CPE/Enhanced Service
    Bundling Order*, the Commission addressed the question of "how to
    allocate revenues when telecommunications services and CPE/enhanced
    services are offered as a bundled package, for purposes of
    calculating a carrier's universal service contribution."[^129] The
    Commission concluded that, for universal service contribution
    purposes, the carrier may elect to report revenues from the bundle
    based on the unbundled telecommunications service or, if it cannot
    distinguish telecommunications service revenue from
    non-telecommunications service revenue, all revenues from the
    bundled offering.[^130] We seek comment on whether these
    requirements and their basis in our rules and precedents are
    appropriate and consistent with our tentative conclusions regarding
    the statutory classification of wireline broadband Internet access.

73. We emphasize that this proceeding does not change the mandatory
    obligations of telecommunications carriers that are currently
    required to contribute to universal service based on their provision
    of broadband services to affiliated or unaffiliated ISPs or
    end-users. To avoid any disruption to universal service funding
    during the pendency of this proceeding, we continue to require all
    such carriers to make universal service contributions in the same
    manner required today, pending the effective date of a final
    Commission decision regarding the status of wireline broadband
    Internet access. We find that the public interest is served by
    maintaining the status quo and ensuring that universal service
    contributions continue to be assessed and collected under current
    law without disruption.

74. ISPs that own no telecommunications facilities and lease
    transmission, such as T1 lines, from telecommunications carriers to
    transmit their information services, do not contribute directly to
    universal service, but they make indirect contributions through
    charges paid to the underlying telecommunications carrier providing
    the leased telecommunications services.[^131] As discussed above,
    the Commission concluded in the *Report to Congress* that
    facilities-based ISPs that provide no stand-alone telecommunications
    services could be required to contribute to universal service under
    its permissive authority, but the Commission declined to exercise
    its permissive authority at that time. Given the anticipated growth
    of broadband Internet access, and the growth of broadband Internet
    access provided by ISPs, we believe it is now the appropriate
    occasion to investigate, among other things, the questions that
    remain unanswered by the *Report to Congress.* Specifically, we ask
    whether broadband Internet access providers that supply last-mile
    connectivity over their own facilities should be required to
    contribute to universal service based upon their self-provisioning
    of telecommunications.[^132]

## Wireline Broadband Platform

75. In this Notice, we tentatively conclude that wireline broadband
    Internet access should be classified as an "information service" and
    that the transmission aspect of that service is "telecommunications"
    when the same entity provides the telecommunications input.[^133]
    Accordingly, we must examine how the regulatory status of wireline
    broadband Internet access might impact the current system of
    assessments and contributions to universal service. We invite
    commenters to discuss how this tentative conclusion will impact
    contributions to universal service under our current revenues-based
    system. We also seek comment on whether the Commission's current
    treatment of such services as bundled offerings of
    telecommunications services and information services for universal
    service contribution purposes continues to be appropriate or should
    be modified in some fashion. We also seek comment on the impact on
    universal service implementation if we conclude instead that the
    transmission input is a telecommunications service, separate
    services (information service and telecommunications service), or a
    new hybrid communications service that is neither an information or
    telecommunications service.

76. In addition, we ask commenters whether and under what circumstances
    the public interest would require us to exercise our permissive
    authority over wireline broadband Internet access providers that
    utilize their own transmission facilities to provide a broadband
    Internet access service if such a service were an information
    service with a telecommunications input. Commenters should identify
    the factors that we should consider when deciding whether the public
    interest requires exercise of our permissive authority under section
    254(d) over wireline broadband Internet access providers.

77. Assuming the public interest supports exercise of our permissive
    authority, our contribution policies must also be equitable and
    nondiscriminatory. Therefore, we request that commenters describe
    the competitive impact of our contribution requirements in an
    evolving communications marketplace. We ask commenters generally to
    discuss whether either outcome, assessing or not assessing
    facilities-based wireline broadband Internet access providers, would
    be consistent with the requirement of section 254 that contributions
    be assessed on an equitable and nondiscriminatory basis. For
    example, should all facilities-based wireline broadband Internet
    access providers \-- both wireline telecommunications carriers and
    ISPs \-- be subject to the same contribution requirements?[^134] If
    wireline broadband Internet access providers that self-provision
    telecommunications inputs are required to contribute, would that be
    consistent with our goal suggested in our companion *Universal
    Service Contribution Methodology* proceeding of ensuring that
    relevant services are assessed only once for universal service
    purposes? Whenever possible, commenters should explain how we may
    minimize the incentives/distortions created solely by our
    contribution requirements.

78. If we choose to revisit our conclusion that wireline broadband
    Internet access should be viewed, for universal service contribution
    purposes, as a bundled offering of a telecommunications service and
    an information service, should we decline to exercise our permissive
    authority over facilities-based providers of wireline broadband
    Internet access or simply modify the basis on which such providers
    contribute to universal service? For example, should
    facilities-based wireline broadband Internet access providers
    contribute based on all of their wireline broadband Internet access
    revenues, some fraction of those revenues, or some other amount?
    Commenters advocating that such providers of wireline broadband
    Internet access should contribute to universal service should
    discuss how to allocate revenues separately associated with the
    telecommunications or telecommunications service input from revenues
    associated with Internet access. As noted above, in a separate
    proceeding, we are seeking comment on a proposal to assess universal
    service contributions based on connections, rather than revenue. If
    we were to adopt such a reform, how should it be implemented with
    respect to wireline broadband Internet access providers? In
    addition, how would we implement such a reform if the Commission
    were to adopt a connection-based assessment methodology?

## Other Broadband Platforms

79. Broadband Internet access services may also be provided over other
    platforms, *e.g.*, wireless, cable, and satellite. Those other
    platforms may be utilized to provide broadband Internet access
    services in direct competition with wireline broadband Internet
    access services. Thus, while this proceeding largely seeks comment
    on the classification and regulatory implications of wireline
    broadband Internet access, we also undertake a comprehensive review
    of the effects of the growth of broadband Internet access on
    universal service, regardless of platform. We therefore ask whether
    other facilities-based providers of broadband Internet access
    services may, as a legal matter, or should, as a policy matter, be
    required to contribute. For example, if other broadband Internet
    access services are determined in other proceedings to be
    information services with a telecommunications input, would the
    public interest require exercise of our permissive authority? We
    request that commenters identify factors that should be considered
    when deciding whether the public interest would be served by
    requiring other facilities-based providers of broadband Internet
    access to contribute. Commenters should discuss whether these
    factors differ from or are the same as those relevant for wireline
    broadband Internet access providers. We also seek comment on what
    contribution obligations, if any, should apply if other broadband
    Internet access services are classified as something other than
    information services with a telecommunications input. Finally, we
    seek comment on the implications for each commenter's analysis of a
    change in the assessment system from a revenue-based system to some
    other basis for assessment, such as a per-connection charge.

80. As the Commission stated in the *First Report and Order*,
    contribution policies should "reduce\[\] the possibility that
    carriers with universal service obligations will compete directly
    with carriers without such obligations." [^135] Accordingly,
    commenters should address the competitive impact across broadband
    platforms, if any, created by our contribution requirements. Based
    on our understanding of today's communications market, wireline
    broadband Internet access providers may compete directly with cable,
    wireless and satellite operators that provide broadband Internet
    access services for end-user customers. Therefore, we seek comment
    on whether all facilities-based broadband Internet access providers
    should be subject to the same contribution obligations. What are the
    advantages and disadvantages of such an approach? In particular, to
    what extent is such broad assessment of universal service
    contributions on facilities-based broadband Internet access
    providers necessary to ensure that universal service mechanisms will
    satisfy the objectives of section 254? In addition, if the
    Commission were to adopt a connection-based assessment methodology,
    commenters should address how such a reform would be implemented.

## Growth of Broadband and Migration

81. Because section 254 of the Act requires us to preserve and advance
    universal service to the extent possible, we must strive to
    understand changes in technology and the marketplace and anticipate
    their implications for universal service.[^136] We ask commenters to
    describe how the growth of broadband Internet access services will
    impact our current universal service system and our ability to
    support universal service. For example, if broadband Internet access
    service providers increasingly provide broadband Internet access
    services over their own facilities, will that result in lost
    contribution revenues, and if so, how much? We also seek comment on
    the implications of such developments if we were to move to a
    per-connection-based assessment. Commenters should discuss the
    impact, if any, on the expected growth of broadband Internet access
    services if contributions were assessed on a per-connection or some
    other non-revenue-based system.

82. Additionally, commenters should discuss whether they expect voice
    traffic to migrate to broadband Internet platforms.[^137] If so,
    commenters should address the potential impact of such migration on
    our ability to support universal service. Specifically, if voice
    traffic over broadband Internet platforms increases and traditional
    circuit-switched voice traffic decreases, how, if at all, will that
    impact our ability to support universal service in an equitable and
    non-discriminatory manner? Will migration lower or raise the cost of
    providing service? What, if any, will be the impact on the level of
    high-cost universal service support needed as voice traffic migrates
    from traditional circuit switched networks to broadband Internet
    platforms? For example, will costs of providing supported services
    in high-cost areas increase or decrease as migration occurs?

## Section 254(k)

83. Section 254(k) of the Act prohibits telecommunications carriers from
    using services that are not competitive to subsidize services that
    are subject to competition. We seek comment on how this provision
    should be implemented for wireline broadband Internet access.
    Section 254(k) also requires that services supported by universal
    service bear no more than a reasonable share of joint and common
    costs of the facilities used to provide these services. Because
    information services do not currently fall within the definition of
    services supported by universal service, deeming wireline broadband
    Internet access to be an information service would mean that the
    Commission would have to ensure that the costs of the network are
    properly allocated between regulated Title II services and Title I
    information services to comply with this statutory mandate. We seek
    comment on how we may ensure that services supported by universal
    service bear no more than a reasonable portion of the costs
    associated with facilities used to provide both supported services
    and unsupported Internet access. Specifically, we invite commenters
    to address the general sufficiency of our existing allocation rules
    and policies in a broadband environment and whether those rules
    should be modified in order to meet the requirements of section
    254(k).

# PROCEDURAL MATTERS

## Ex Parte Presentations

84. These matters shall be treated as a "permit-but-disclose" proceeding
    in accordance with the Commission's *ex parte* rules.[^138] Persons
    making oral *ex parte* presentations are reminded that memoranda
    summarizing the presentations must contain summaries of the
    substance of the presentations and not merely a listing of the
    subjects discussed. More than a one or two sentence description of
    the views and arguments presented in generally required.[^139] Other
    requirements pertaining to oral and written presentations are set
    forth in section 1.1206(b) of the Commission's rules.

## Comment Filing Procedures

85. Pursuant to sections 1.415 and 1.419 of the Commission's
    rules,[^140] interested parties may file comments within 45 days
    after publication of this NPRM in the Federal Register and may file
    reply comments within 75 days after publication of this NPRM in the
    Federal Register. All filings should refer to CC Docket No. 02-33.
    Comments may be filed using the Commission's Electronic Comment
    Filing System (ECFS) or by filing paper copies.[^141] Comments filed
    through ECFS can be sent as an electronic file via the Internet to
    http://www.fcc.gov/e‑file/ecfs.html\>. Generally, only one copy of
    an electronic submission must be filed. In completing the
    transmittal screen, commenters should include their full name,
    postal service mailing address, and the applicable docket numbers,
    which in this instance are CC Docket No. 02-33, CC Docket No. 95-20,
    and CC Docket No. 98-10. Parties may also submit an electronic
    comment by Internet e-mail. To get filing instructions for e-mail
    comments, commenters should send an e-mail to <ecfs@fcc.gov>, and
    should include the following words in the body of the message: "get
    form\<your e-mail address\>." A sample form and directions will be
    sent in reply.

86. Parties that choose to file by paper must file an original and four
    copies of each, and are hereby notified that effective December 18,
    2001, the Commission\'s contractor, Vistronix, Inc., will receive
    hand-delivered or messenger-delivered paper filings for the
    Commission\'s Secretary at a new location in downtown
    Washington, DC. The address is 236 Massachusetts Avenue, NE, Suite
    110, Washington, DC 20002. The filing hours at this location will be
    8:00 a.m. to 7:00 p.m. All hand deliveries must be held together
    with rubber bands or fasteners. Any envelopes must be disposed of
    before entering the building.

87. This facility is the only location where hand-delivered or
    messenger-delivered paper filings for the Commission\'s Secretary
    will be accepted. Accordingly, the Commission will no longer accept
    these filings at 9300 East Hampton Drive, Capitol Heights, MD 20743.
    In addition, this is a reminder that, effective October 18, 2001,
    the Commission discontinued receiving hand-delivered or
    messenger-delivered filings for the Secretary at its headquarters
    location at 445 12th Street, SW, Washington, DC 20554.

88. Other messenger-delivered documents, including documents sent by
    overnight mail (other than United States Postal Service (USPS)
    Express Mail and Priority Mail), must be addressed to 9300 East
    Hampton Drive, Capitol Heights, MD 20743. This location will be open
    8:00 a.m. to 5:30 p.m. The USPS first-class mail, Express Mail, and
    Priority Mail should continue to be addressed to the Commission\'s
    headquarters at 445 12th Street, SW, Washington, DC 20554. The USPS
    mail addressed to the Commission\'s headquarters actually goes to
    our Capitol Heights facility for screening prior to delivery at the
    Commission.

+----------------------------------+-----------------------------------+
| **If you are sending this type   | It should be addressed for        |
| of document or using this        | delivery to . . .                 |
| delivery\                        |                                   |
| method . . .**                   |                                   |
+----------------------------------+-----------------------------------+
| Hand-delivered or                | 236 Massachusetts                 |
| messenger-delivered paper        |                                   |
| filings for the Commission's     | Avenue, NE, Suite 110,            |
| Secretary                        |                                   |
|                                  | Washington, DC 20002 (8:00 to     |
|                                  | 7:00 p.m.)                        |
+----------------------------------+-----------------------------------+
| Other messenger-delivered        | 9300 East Hampton Drive,          |
| documents, including documents   |                                   |
| sent by overnight mail (other    | Capitol Heights, MD 20743         |
| than United States Postal        |                                   |
| Service Express Mail and         | (8:00 a.m. to 5:30 p.m.)          |
| Priority Mail)                   |                                   |
+----------------------------------+-----------------------------------+
| United States Postal Service     | 445 12^th^ Street, SW             |
| first-class mail, Express Mail,  |                                   |
| and Priority Mail                | Washington, DC 20554              |
+----------------------------------+-----------------------------------+

Parties who choose to file by paper should also submit their comments on
diskette. These diskettes should be submitted to Janice Myles, Policy &
Program Planning Division, Common Carrier Bureau, Federal Communications
Commission, at the filing window at 236 Massachusetts Avenue, NE, Suite
110, Washington, DC 20002. Such a submission should be on a 3.5 inch
diskette formatted in an IBM compatible format using Microsoft Word or
compatible software. The diskette should be accompanied by a cover
letter and should be submitted in "read only" mode. The diskette should
be clearly labeled with the commenter's name, proceeding (including the
docket numbers, in this case, CC Docket No. 02-33, CC Docket No. 95-20,
and CC Docket No. 98-10), type of pleading (comment or reply comment),
date of submission, and the name of the electronic file on the diskette.
The label should also include the following phrase: "Disk Copy \-- Not
an Original." Each diskette should contain only one party's pleading,
preferably in a single electronic file. In addition, commenters must
send diskette copies to the Commission's copy contractor, Qualex
International, Portals II, 445 12^th^ Street S.W., CY-B402, Washington,
D.C. 20554.

89. Regardless of whether parties choose to file electronically or by
    paper, parties should also file one copy of any documents filed in
    this docket with the Commission's copy contractor, Qualex
    International, Portals II, 445 12^th^ Street S.W., CY-B402,
    Washington, D.C. 20554 (telephone 202-863-2893; facsimile
    202-863-2898) or via e-mail at <qualexint@aol.com>.

90. Comments and reply comments must include a short and concise summary
    of the substantive arguments raised in the pleading. Comments and
    reply comments must also comply with section 1.48 and all other
    applicable sections of the Commission's rules.[^142] We direct all
    interested parties to include the name of the filing party and the
    date of the filing on each page of their comments and reply
    comments. All parties are encouraged to utilize a table of contents,
    regardless of the length of their submission. We also strongly
    encourage that parties track the organization set forth in the NPRM
    in order to facilitate our internal review process.

## Initial Regulatory Flexibility Analysis

91. As required by the Regulatory Flexibility Act of 1980, as amended
    (RFA),[^143] the Commission has prepared the present Initial
    Regulatory Flexibility Analysis (IRFA) of the possible significant
    economic impact on a substantial number of small entities by the
    policies and rules proposed in this Notice. Written public comments
    are requested on this IRFA. Comments must be identified as responses
    to the IRFA and must be filed by the deadlines for comments on the
    Notice provided above in Section V.B. The Commission will send a
    copy of the Notice, including this IRFA, to the Chief Counsel for
    Advocacy of the Small Business Administration.[^144] In addition,
    the Notice and IRFA (or summaries thereof) will be published in the
    Federal Register.[^145]

### Need for, and Objectives of, the Proposed Rules 

92. In this proceeding, we seek comment on the appropriate
    classification and regulatory framework for wireline broadband
    Internet access services. We tentatively conclude that wireline
    broadband Internet access services -- whether provided over a third
    party\'s facilities or self-provisioned facilities -- are
    information services subject to regulation under Title I of the Act,
    and we ask for comment on this tentative conclusion. As noted above,
    we have already sought comment on the regulatory classification for
    cable modem service, and this issue will be resolved in a separate
    proceeding. We also address the appropriate regulatory framework for
    wireline broadband Internet access services. We seek comment on what
    regulations should apply in the future if these broadband offerings
    are found to be information services subject to Title I of the Act.
    Specifically, we examine implications of Title I classification for
    wireline broadband offerings for non-discriminatory access and other
    core communications policy objectives. In light of these objectives,
    we seek comment on whether to modify or eliminate existing access
    obligations on providers of self-provisioned wireline broadband
    Internet access services. We seek comment on how this regulatory
    classification may impact other obligations, such as those
    associated with public safety and welfare. In addition, we seek
    comment generally on the role of the states with respect to
    regulating wireline broadband Internet access services. Finally, we
    seek comment broadly on whether facilities-based providers of
    broadband Internet access services provided over wireline and other
    platforms, including cable, wireless and satellite, should be
    required to contribute to universal service. For purposes of this
    Notice, we use the term "facilities-based" to refer to providers of
    broadband Internet access services that furnish their own last-mile
    connection, irrespective of the transmission medium, to the
    customer.

### Legal Basis

93. The legal basis for any action that may be taken pursuant to the
    Notice is contained in sections 4, 10, 201-202, 251, 252, 254, 271,
    303 and 403 of the Communications Act of 1934, as amended, 47 U.S.C.
    §§ 154, 201-202, 251, 252, 254, 271, 303, and 403, section 706 of
    the Telecommunications Act of 1996, and sections 1.1, 1.48, 1.411,
    1.412, 1.415, 1.419, and 1.1200-1.1216, of the Commission's rules,
    47 C.F.R. §§ 1.1, 1.48, 1.411, 1.412, 1.415, 1.419, and
    1.1200-1.1216.

### Description and Estimate of the Number of Small Entities to Which the Proposed Rules will Apply

94. The RFA directs agencies to provide a description of and, where
    feasible, an estimate of the number of small entities that will be
    affected by the proposed rules.[^146] The RFA generally defines the
    term "small entity" as having the same meaning as the terms "small
    business," "small organization," and "small governmental
    jurisdiction."[^147] In addition, the term "small business" has the
    same meaning as the term "small business concern" under the Small
    Business Act.[^148] A small business concern is one which: (1) is
    independently owned and operated; (2) is not dominant in its field
    of operation; and (3) satisfies any additional criteria established
    by the Small Business Administration (SBA).[^149] Consistent with
    SBA's Office of Advocacy's view, we have included small incumbent
    LECs in this present RFA analysis. We emphasize, however, that this
    RFA action has no effect on FCC analyses and determinations in
    other, non-RFA contexts.

95. *Total Number of Telephone Companies Affected.* The United States
    Bureau of the Census ("the Census Bureau") reports that, at the end
    of 1992, there were 3,497 firms engaged in providing telephone
    services, as defined therein, for at least one year.[^150] This
    number contains a variety of different categories of carriers,
    including local exchange carriers, interexchange carriers,
    competitive access providers, cellular carriers, mobile service
    carriers, operator service providers, pay telephone operators, PCS
    providers, covered SMR providers, and resellers. It seems certain
    that some of those 3,497 telephone service firms may not qualify as
    small entities or small incumbent LECs because they are not
    "independently owned and operated."[^151] For example, a PCS
    provider that is affiliated with an interexchange carrier having
    more than 1,500 employees would not meet the definition of a small
    business. It seems reasonable to conclude, therefore, that fewer
    than 3,497 telephone service firms are small entity telephone
    service firms or small incumbent LECs that may be affected by the
    decisions and rules adopted in this Order.

96. *Local Exchange Carriers, Interexchange Carriers, Competitive Access
    Providers, Operator Service Providers, Payphone Providers, and
    Resellers*. Neither the Commission nor SBA has developed a
    definition particular to small local exchange carriers (LECs),
    interexchange carriers (IXCs), competitive access providers (CAPs),
    operator service providers (OSPs), payphone providers or resellers.
    The closest applicable definition for these carrier-types under SBA
    rules is for telephone communications companies other than
    radiotelephone (wireless) companies.[^152] The most reliable source
    of information regarding the number of these carriers nationwide of
    which we are aware appears to be the data that we collect annually
    on the Form 499-A. According to our most recent data, there are
    1,335 incumbent LECs, 349 CAPs, 204 IXCs, 21 OSPs, 758 payphone
    providers and 541 resellers.[^153] Although it seems certain that
    some of these carriers are not independently owned and operated, or
    have more than 1,500 employees, we are unable at this time to
    estimate with greater precision the number of these carriers that
    would qualify as small business concerns under SBA\'s definition.
    Consequently, we estimate that there are fewer than 1,335 incumbent
    LECs, 349 CAPs, 204 IXCs, 21 OSPs, 758 payphone providers, and 541
    resellers that may be affected by the decisions and rules adopted in
    this Order.

97. *Small Local Exchange Carriers*: We have included small incumbent
    local exchange carriers[^154] in this present RFA analysis. A "small
    business" under the RFA is one that, *inter alia*, meets the
    pertinent small business size standard (*e.g*., a telephone
    communications business having 1,500 or fewer employees[^155]), and
    "is not dominant in its field of operation."[^156] The SBA's Office
    of Advocacy contends that, for RFA purposes, small incumbent local
    exchange carriers are not dominant in their field of operation
    because any such dominance is not "national" in scope.[^157] We have
    therefore included small incumbent local exchange carriers in this
    RFA analysis, although we emphasize that this RFA action has no
    effect on Commission analyses and determinations in other, non-RFA
    contexts.

98. *Internet Service Providers*: Under the new NAICS codes, SBA has
    developed a small business size standard for \"On-line Information
    Services,\" NAICS Code 514191.[^158] According to SBA regulations, a
    small business under this category is one having annual receipts of
    \$18 million or less.[^159] According to SBA\'s most recent data,
    there are a total of 2,829 firms with annual receipts of \$9,999,999
    or less, and an additional 111 firms with annual receipts of
    \$10,000,000 or more.[^160] Thus, the number of On-line Information
    Services firms that are small under the SBA\'s \$18 million size
    standard is between 2,829 and 2,940. Further, some of these Internet
    Service Providers (ISPs) might not be independently owned and
    operated. Consequently, we estimate that there are fewer than 2,940
    small entity ISPs that may be affected by the decisions and rules of
    the present action.

99. *Satellite Service Carriers*. The SBA has developed a definition for
    small businesses within the category of Satellite
    Telecommunications. Under that SBA definition, such a business is
    small if it has 1,500 or fewer employees.[^161] According to the
    Commission\'s most recent Telephone Trends Report data, 21 carriers
    reported that they were engaged in the provision of satellite
    services.[^162] Of these 21 carriers, 16 reported that they have
    1,500 or fewer employees and five reported that, alone or in
    combination with affiliates, they have more than 1,500
    employees.[^163] The Commission does not have data specifying the
    number of these carriers that are not independently owned and
    operated, and thus is unable at this time to estimate with greater
    precision the number of satellite service carriers that would
    qualify as small business concerns under the SBA\'s definition.
    Consequently, the Commission estimates that there are 21 or fewer
    satellite service carriers that may be affected by the rules.

100. *Wireless Service Providers*. The SBA has developed a definition
     for small businesses within the two separate categories of Cellular
     and Other Wireless Telecommunications or Paging. Under that SBA
     definition, such a business is small if it has 1,500 or fewer
     employees.[^164] According to the Commission\'s most recent
     Telephone Trends Report data, 1,495 companies reported that they
     were engaged in the provision of wireless service.[^165] Of these
     1,495 companies, 989 reported that they have 1,500 or fewer
     employees and 506 reported that, alone or in combination with
     affiliates, they have more than 1,500 employees. We do not have
     data specifying the number of these carriers that are not
     independently owned and operated, and thus are unable at this time
     to estimate with greater precision the number of wireless service
     providers that would qualify as small business concerns under the
     SBA\'s definition. Consequently, we estimate that there are 989 or
     fewer small wireless service providers that may be affected by the
     rules.

101. *Cable Systems*: The Commission has developed, with SBA\'s
     approval, its own definition of small cable system operators. Under
     the Commission\'s rules, a \"small cable company\" is one serving
     fewer than 400,000 subscribers nationwide.[^166] Based on our most
     recent information, we estimate that there were 1,439 cable
     operators that qualified as small cable companies at the end of
     1995.[^167] Since then, some of those companies may have grown to
     serve over 400,000 subscribers, and others may have been involved
     in transactions that caused them to be combined with other cable
     operators. Consequently, we estimate that there are fewer than
     1,439 small entity cable system operators that may be affected by
     the proposals.

102. The Communications Act also contains a definition of a small cable
     system operator, which is \"a cable operator that, directly or
     through an affiliate, serves in the aggregate fewer than 1% of all
     subscribers in the United States and is not affiliated with any
     entity or entities whose gross annual revenue in the aggregate
     exceeds \$250,000,000.\"[^168] The Commission has determined that
     there are 67,700,000 subscribers in the United States.[^169]
     Therefore, we found that an operator serving fewer than 677,000
     subscribers shall be deemed a small operator, if its annual
     revenues, when combined with the total annual revenues of all of
     its affiliates, do not exceed \$250 million in the aggregate.[^170]
     Based on available data, we find that the number of cable operators
     serving 677,000 subscribers or less totals approximately
     1,450.[^171] Although it seems certain that some of these cable
     system operators are affiliated with entities whose gross annual
     revenues exceed \$250,000,000, we are unable at this time to
     estimate with greater precision the number of cable system
     operators that would qualify as small cable operators under the
     definition in the Communications Act.

### Description of Projected Reporting, Recordkeeping and Other Compliance Requirements

103. Should the Commission decide that broadband Internet access
     services are information services with a telecommunications
     component and should the Commission decide to exercise its
     permissive contribution authority over certain facilities-based
     providers of such services, the associated rule changes potentially
     could modify the reporting and recordkeeping requirements of
     certain providers of interstate telecommunications regulated under
     the Communications Act. We could potentially impose contribution
     requirements on certain facilities-based providers of interstate
     telecommunications that are not currently required to contribute.
     Accordingly, such entities would be required to comply with the
     relevant universal service reporting requirements. Any such
     reporting requirements potentially could require the use of
     professional skills, including legal and accounting expertise.
     Without more data, we cannot accurately estimate the cost of
     compliance by small providers of interstate telecommunications. In
     this *Notice*, we do not seek comment on the actual reporting
     requirements of entities required to contribute to universal
     service. Rather, we seek comment on whether specific entities
     should be required to contribute. In the related *Contribution
     Methodology Further Notice*, however, we seek comment on the
     frequency with which carriers should submit reports to the
     Universal Service Administrative Company (USAC), the types of
     burdens carriers will face in periodically submitting reports to
     USAC, and whether the costs of such reporting are outweighed by the
     potential benefits of the possible reforms. Entities, especially
     small businesses, are encouraged to quantify the costs and benefits
     of the reporting requirement proposals in that proceeding.

### Steps Taken to Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered

104. The RFA requires an agency to describe any significant,
     specifically small business, alternatives that it has considered in
     reaching its proposed approach, which may include the following
     four alternatives (among others): (1) the establishment of
     differing compliance or reporting requirements or timetables that
     take into account the resources available to small entities; (2)
     the clarification, consolidation, or simplification of compliance
     or reporting requirements under the rule for small entities; (3)
     the use of performance, rather than design, standards; and (4) an
     exemption from coverage of the rule, or any part thereof, for small
     entities.[^172]

105. The overall objective of this proceeding is to establish an
     appropriate classification and regulatory framework for wireline
     broadband Internet access service. We tentatively conclude that
     wireline broadband Internet access services are information
     services under the Act. If we classify and regulate this service as
     an information service, providers of this service, including those
     providers that own transmission facilities, could be subject to
     minimal and/or reduced regulatory requirements. We believe that
     this would have a positive economic impact on small entities to the
     extent that it avoids placing restrictions on their operations. We
     also tentatively conclude that the transmission aspect of wireline
     broadband Internet access service is "telecommunications" under the
     Act as opposed to "telecommunications service." As part of the
     regulatory framework we are examining, we seek comment on what
     regulatory requirements, if any, should attach to this
     telecommunications input. We ask whether we should modify or
     eliminate the requirements in the *Computer Inquiry* framework for
     access to the telecommunications input. We also explore the
     implications for other regulatory requirements, including public
     safety and welfare, if we were to modify the access obligations.

106. We note that the *Computer Inquiry* requirements are only
     applicable to the BOCs, which are not small entities, but that
     ISPs, including small ISP entities, may obtain access to the BOCs'
     network to provide broadband Internet access service pursuant to
     these requirements. Indeed, we note in the *Notice* that ISPs
     currently purchase transmission services under tariff to provide
     their own information services. The *Notice* asks parties to
     comment on alternative ways in which ISPs could acquire
     transmission necessary to provide their information service
     offerings if we modify or eliminate the current access
     requirements. Specifically, we ask whether they can rely on
     negotiated contractual arrangements and how such arrangements could
     be priced. For purposes of this IRFA, we specifically seek comment
     from small entities on these issues, in particular, on the extent
     to which the use of alternative access arrangements could impact
     them economically. Similarly, we also specifically seek comment
     from all affected small entities regarding the incumbent LECs'
     obligations to provide access to network elements under sections
     251 and 252 of the Act if we determine that the provision of
     wireline broadband Internet access service over a provider's own
     facilities is an information service and that the transmission
     input is telecommunications and not a telecommunications service,
     including the extent to which these determinations would
     economically impact them. In addition, we generally ask small
     entities to comment on these and any other issues that could have
     an economic impact on them.

107. As discussed previously, this *Notice* does not seek comment on the
     reporting requirements or assessment methodology for contributors
     to universal service. However, the *Contribution Methodology
     Further Notice* seeks comment on how to streamline and reform both
     the manner in which the Commission assesses carrier contributions
     to the universal service fund and the manner in which carriers may
     recover those costs from their customers. Wherever possible, the
     *Contribution Methodology Further Notice* seeks comment on how to
     reduce the administrative burden and cost of compliance for small
     telecommunications service providers. If certain facilities-based
     providers of interstate telecommunications are required to
     contribute to universal service and are not currently contributing,
     such requirements will result in a financial impact. The impact to
     small entities, however, is mitigated by the Commission's *de
     minimis* contribution exemption.

### Federal Rules that May Duplicate, Overlap, or Conflict with the Proposed Rules

108. None.

# ORDERING CLAUSES

109. Accordingly, IT IS ORDERED that, pursuant to the authority
     contained in sections 2, 4(i)-4(j), 201, and 303(r) of the
     Communications Act of 1934, as amended, 47 U.S.C. §§ 152,
     154(i)-4(j), 201, 303(r), this Notice IS ADOPTED.

110. IT IS FURTHER ORDERED that the Commission's Consumer Information
     Bureau, Reference Information Center, SHALL SEND a copy of this
     Notice, including the Initial Regulatory Flexibility Analysis, to
     the Chief Counsel for Advocacy of the Small Business
     Administration.

     FEDERAL COMMUNICATIONS COMMISSION

     William F. Caton

Acting Secretary

SEPARATE STATEMENT OF

CHAIRMAN MICHAEL K. POWELL

*Re: Appropriate Framework for Broadband Access to the Internet Over
Wireline Facilities; Universal Service Obligations of Broadband
Providers*

I write separately to underscore the broad bases upon which I vigorously
support adoption of this *Notice.*

**Broadband Deployment is the Central Communications Policy Objective**

As we policymakers are all quick to acknowledge, broadband deployment is
the central communications policy objective in America. There is a clear
consensus forming around this view as evidenced by recent statements of
TechNet, the outstanding report by the National Academy of Science, the
Computer Systems Policy Project, and others.[^173] Many of these
commenters have been calling, in particular, for the Commission to
provide regulatory certainty and clarity in the provision of broadband
Internet access services by limiting unnecessary or unduly burdensome
regulatory costs on service providers.

It is now time for fewer words and more action. With today's decision,
among several others, we have stopped just talking about promoting
broadband and started acting.

**The Greatest Challenge in Promoting Broadband is Deciding How To
Stimulate The Enormous Investment Required To Turn The Promise of
Broadband Into Reality**

As we policymakers transform our words into action, we are faced with
the grim reality that the government likely will not, and probably
cannot, cover much of the hefty price tag associated with building out
one or more broadband networks that can eventually serve all Americans.
Thus, our greatest challenge in promoting broadband is deciding how best
to stimulate enormous private sector investment. In order to overcome
this challenge, we must:

-   Limit the Risk and Uncertainty of Regulation

    -   The FCC has stood back long enough, up until now making
        pronouncements in this area in piecemeal fashion. These
        decisions often lacked analysis of either the relevant statutory
        language or of the ways in which the 1996 Act requires or
        suggests that we diverge from requirements adopted before 1996.
        We must now clarify the regulatory classification and treatment
        of these new services, so companies---incumbents and competitors
        alike---know what to expect and can make prudent decisions to
        build and enter these new markets.

-   Lower the Cost of Infrastructure Investment

    -   Because the capital for infrastructure investment will have to
        come primarily from the private sector, the FCC must try to
        minimize the cost of bringing broadband services to the public
        by minimizing regulatory costs. These regulatory costs can be
        just as significant a barrier to deployment as the challenge of
        raising capital in the dark of a recession.

    -   Nearly every responsible group that has commented on broadband
        deployment has cited the need to remove regulatory barriers to
        deployment. More importantly, Congress squarely anticipated the
        need to do so, as revealed by section 706 of the Act. Section
        706 implores the Commission to encourage and accelerate
        deployment by "removing barriers to infrastructure investment. .
        ."

**For A National Commitment To Broadband Deployment To Bear Fruit, Many
Others Will Have To Take Action, As Well**

As is often the case under the legal and policy framework governing
regulation of communications and related industries, the FCC does not
hold all the tools necessary to promote broadband deployment in its
toolkit. There needs to be a clear and productive regulatory environment
at the state and federal level. For example, companies providing
wireline broadband Internet access will need fair access to rights of
way. I commend NARUC for pushing for a dialogue on this with local
municipalities. Broadband deployment will also require the nation's
governors to see this effort as a vital means of economic development.
And it will require content and application developers to deliver on the
technological promise that broadband capability makes possible.

# For Its Part, The FCC Will Act {#for-its-part-the-fcc-will-act .unnumbered}

We have put on the tracks the vehicles that will now allow us to answer
the heretofore unanswered questions. We will clarify and simplify the
regulatory framework for these promising services. In so doing, we will
do our part to contribute to the nation's collective effort to promote
broadband deployment. Yes, our decisions will have far-reaching
implications, but, as we are often reminded, so, too, will broadband
have far-reaching implication.

This is *not* the time for timidity. The Commission for too long has
cracked open the door, but frightened by the dark, slammed it shut
again. The market is crying out for a new regulatory passageway, and
consumers are frustrated as they continue their long wait for
policymakers' rhetoric and hoopla to shift into tangible actions that
bring into being this promising new chapter in the history of
communications and information.

The time now is for action. That is what this item represents, and what
we will do.

SEPARATE STATEMENT OF

COMMISSIONER KATHLEEN Q. ABERNATHY

Re: Appropriate Framework for Broadband Access to the Internet Over
Wireline Facilities; Universal Service Obligations of Broadband
Providers

The foregoing Notice tentatively concludes that wireline broadband
Internet access services --- whether provided over a third party's
facilities or self-provisioned facilities --- are information services
subject to regulation under Title I of the Act. I believe that the
analysis set forth in the Notice represents the most straightforward and
sensible interpretation of the relevant statutory provisions, as I
previously explained in the Section 271 proceeding that gave rise to
this Notice.[^174] I also believe that classifying incumbent LECs'
Internet-access services as information services will serve important
public policy goals by promoting a more flexible regulatory framework
for these offerings and enabling the Commission to develop a more
consistent regulatory approach across technological platforms.

As the Notice recognizes, classifying incumbent LECs' Internet-access
services as information services would raise important questions
regarding the applicability of existing retail and wholesale
regulations. On the retail side, since many Title II obligations are
premised on the provision of a telecommunications service, concluding
that Internet-access services include only a "telecommunications"
component --- rather than a distinct "telecommunications service" ---
might lead us to determine that such Title II duties do not apply or
apply only in part. While some might reflexively worry that the removal
of Title II regulation would harm consumers, it is important to
recognize that the vast majority of Internet access services purchased
today *already* are unregulated.[^175] All non-LEC broadband providers
(such as cable modem and satellite broadband providers) and non-LEC
narrowband ISPs (such as market leader America Online and the thousands
of other ISPs) provide service unconstrained by Title II. Moreover, it
appears that the robustly competitive market for ISP services gives
providers ample incentive to engage in consumer-friendly practices and
punishes providers that fail to do so. For example, major ISPs have
developed detailed policies for protecting customer privacy,
irrespective of government mandates. In any event, the Notice
appropriately seeks comment on the implications of an
information-service designation on Title II regulation, and I am
confident that, if market failures are identified, the Commission can
and will intervene to the extent necessary to protect consumers.

On the wholesale side, classifying incumbent LECs' Internet-access
services as information services should not have any automatic
consequences. Under our *Computer Inquiry* precedents, incumbent LECs
are required to make available to unaffiliated ISPs a broadband
telecommunications functionality on an unbundled and nondiscriminatory
basis. While the Notice seeks comment on whether those requirements
should be altered, or even eliminated, there should be no confusion as
to their current applicability. Moreover, my willingness to consider
changes to this regime --- which has existed largely without alteration
notwithstanding very significant competitive and technological
developments in recent years --- does not reflect any predisposition
toward any particular outcome.

I support inquiring about changes to our regime for several reasons, not
the least of which is that Congress directed the Commission to undertake
such inquiries bienially to ensure that our regulations remain
necessary.[^176] Even absent a statutory mandate, I would want to
examine the justifications for our current rules, because it is worth
exploring the possibility of developing a more streamlined, market-based
approach to wholesale regulation. But I am equally mindful of the fact
that our *Computer II/III* rules played a key role in fostering a
robustly competitive ISP market in which consumers can choose from a
wide range of providers. Thus, while I intend to examine the record with
an eye toward streamlining wholesale regulations where possible, I am
committed to preserving regulations to the extent necessary to safeguard
competition and consumer choice. Moreover, because the Commission cannot
adequately assess the need for regulatory intervention without taking
account of our analysis of market dominance in the recently released
*Incumbent LEC Broadband Services* proceeding[^177] *---* particularly
if we identify a distinct wholesale market in that rulemaking --- I will
closely review the record in both proceedings before reaching any
conclusions about the appropriate scope of wholesale regulation of the
broadband telecommunications functionality.

SEPARATE STATEMENT OF

COMMISSIONER MICHAEL J. COPPS,

DISSENTING IN PART, CONCURRING IN PART

*Re:* *Appropriate Framework for Broadband Access to the Internet over
Wireline Facilities; Universal Service Obligations of Broadband
Providers.*

I have generally not opposed asking questions as the Commission has
initiated several broad Notices of Proposed Rulemaking over the past few
months. But when the Commission proposes conclusions that strike me as
at odds with current statutory and regulatory requirements, and doesn't
analyze the full implications of its decision, I must dissent.

Of course we need to ask questions to make intelligent decisions. I
would therefore have been open to a balanced notice that recognized the
current statutory and regulatory structure and that sought to examine
our rules in light of technology evolution and the increasing
convergence of services, technologies, and markets. Our interpretations
of telecommunications, telecommunications services and information
services need to be looked at in the context of the times and the pace
of technological convergence. But before we commit ourselves, even
"tentatively," to specific and potentially drastic changes to our
precedent that carry with them enormous impacts in the market, we should
better understand the implications of our conclusions. We have not done
so here, and I fear we are out-driving the range of our headlights.

The majority frames this Notice as an exploration of the statutory
classification of telecommunications, telecommunications services, and
information services. But what we are really deciding is whether the
transmission component for broadband services, including for Internet
access, should be offered outside of the statutory framework that
applies to telecommunications carriers. This is an enormously
far-reaching decision and I, for one, am nowhere near ready to go there,
even tentatively.

Our responsibility is to implement the statute as Congress intended.
Yet, in reaching its tentative conclusions, the majority fails to
analyze our previous determinations that reached a contrary
result.[^178] By doing so, some may assume the Commission has made up
its mind and proceed to basing their conduct on these tentative
conclusions.

Moreover, taken to its logical end, the majority's reading of the
statute appears to lead to the strange conclusion that Congress intended
to remove these services from the numerous competition, universal
service, and consumer protection provisions that Congress imposed on
common carriers providing telecommunications services. I'm not ready to
tell Congress that either -- not tentatively nor even conjecturally. For
example, the majority notes that incumbents must provide unbundled
elements to competitors for the purpose of providing a
telecommunications service. Does this mean that under the majority's
proposal competitors would not be able to obtain network elements to
provide broadband Internet access? Would the majority's conclusion
undermine access for the millions of Americans with disabilities, as
Congress required in section 255? Would carriers be excused from
Congress' privacy rules, thereby allowing carriers to sell and use
customer information with impunity? The list goes on and on. Would
slamming protections under section 258 be lost for these services? Would
the rate averaging and rate integration requirements that are so
important to rural consumers be threatened? These and numerous other
protections in the Act hinge on the provision of a telecommunications
service. Do we really need to go so far down the road with this notice
as the majority proposes? U-turns are almost always dangerous, and
tentative U-turns can sometimes be the most collision-inducing.

I don't pretend to have all of the answers to the troubling questions
raised by the Notice. Nor do I pretend to have all of the questions that
need to be asked. But I have enough of them to suggest that we're not
ready to go so far as this notice takes us.

I will concur in one section of this Notice, simply to ensure that the
universal service questions have sufficient support to be raised. The
Notice does seek comment on the impact of its decision on a critical
component of the public interest \-- how to preserve and advance
universal service as Congress directed. While I disagree with the
context in which the questions are raised, I would not want to see this
Notice go forward without raising questions that would not otherwise be
raised about the impact of the Commission's proposal and how we can
continue to meet the statutory goals of universal service. As the
Commission moves forward with all of the proceedings initiated in the
past months, we must be careful that our commitment to universal service
never wavers.

Moreover, as we address these questions, we need to work closely with
our state colleagues and the Joint Board in particular. It is time we
recognize fully that the states are partners in our efforts to advance
universal service.

Setting competition policy is the jurisdiction of Congress. I hope that
as we move forward, we will be focused on the Congressional directive to
promote competition. I fear that the Commission's tentative conclusions
today may be read by some as leading down a different road.

For the foregoing reasons, I dissent in part and concur in part.

**SEPARATE STATEMENT OF**

**COMMISSIONER KEVIN J . MARTIN,**

**APPROVING IN PART AND DISSENTING IN PART**

Re: Appropriate Framework for Broadband Access to the Internet over
Wireline Facilities; Universal Service Obligations of Broadband
Providers

I dissent from this item's discussion of universal service obligations
of providers of broadband Internet access. In particular, I object to
its determination that we will consider imposing what is essentially an
Internet access tax, extending universal service contribution
obligations to non-wireline broadband Internet access providers, such as
wireless, cable, and satellite providers.

Unlike wireline providers, these providers have not been required to
make universal service contributions on the basis of their broadband
services. This item finds that, because wireline broadband Internet
access providers may compete with these other kinds of providers, the
principle of competitive neutrality suggests that we should consider
extending the same universal service contribution obligations to them.
The item asks, among other things, whether non-wireline facilities-based
providers of broadband Internet services may, as a legal matter, or
should, as a policy matter, be required to contribute; whether all
facilities-based broadband Internet access providers should be subject
to the same contribution obligations; and whether the public interest
requires exercise of our permissive authority to extend universal
service obligations to non-wireline providers. In my view, we should not
undertake such an inquiry at this time.

Broadband deployment is vitally important to our nation, as new,
advanced services hold the promise of unprecedented business,
educational, and healthcare opportunities for all Americans. The
Commission thus recently affirmed that "the further deployment of
advanced services is one of the Commission's highest priorities."
*Inquiry Concerning the Deployment of Advanced Telecommunications
Capability to All Americans in a Reasonable and Timely Fashion*, Third
Report, FCC 02-33, 6 (Feb. 6, 2002) ("*706 Report*"). The Commission
further made clear that it is "actively engaged in removing barriers and
encouraging investment in advanced telecommunications." *Id*.

Placing additional financial burdens on broadband providers only creates
barriers to deployment. Such burdens raise costs and decrease demand for
broadband, constraining the flow of capital investment and chilling
innovation. Thus, I have repeatedly advocated that all levels government
should exercise self-restraint in placing financial burdens on
broadband. *See, e.g., 706 Report*,. Separate Statement of Commissioner
Kevin J. Martin; Kevin J. Martin, *Framework for Broadband Deployment:
Remarks at the National Summit on Broadband Deployment* (Oct. 26, 2001).

Currently, at every level, government too often sees broadband
deployment as a potential revenue stream. Telecommunications services
are subject to federal and state excise taxes -- the kind of taxes
traditionally reserved for decreasing demand for products such as
alcohol and tobacco. New entrants to the broadband market face federal,
state, and local rights-of-way management fees and franchise fees, which
are sometimes intended to generate revenue rather than recover
legitimate costs. All of these financial burdens discourage deployment
and should be minimized.

The Commission itself has recognized the potential harms from using
broadband as a revenue stream, devoting several pages of its recent 706
Report to considering the impact of local rights-of-way fees on
broadband deployment. *See id.* 166-168. And keeping the Internet free
of taxation has been a national policy for several years. Indeed,
Congress recently extended the moratorium on Internet taxation through
November 1, 2003.

In this time of protecting the Internet from taxation -- of "removing
barriers and encouraging investment" -- it is troubling to announce that
we will consider placing new taxes on broadband providers. While
announcing our consideration of the issue is not the same thing as
enacting the obligations themselves, the uncertainty created by the
announcement -- particularly for wireless, cable, and satellite
providers -- will make deployment only more difficult. Moreover, why
even consider the issue if we are ultimately not going to put such
obligations into effect? Only compelling reasons should justify such an
inquiry. And I do not believe there are compelling reasons at this time.

For example, there has been no finding that the current contribution
mechanism is insufficient to meet the needs of the universal service
fund. Even so, today we adopt, with my support, a further notice to
consider changing the universal service contribution mechanism in other
ways to ensure its continued viability. I also would have been open to
an inquiry on extending universal service obligations to Internet
telephony. It is thus unclear to me why the Commission feels it
necessary to bring broadband Internet access into the funding question
at this time.

In my view, the principle of competitive neutrality invoked here is not
a compelling reason either. While the call to "level the playing field"
has some appeal, we are limited by the Communications Act, which imposes
different regulatory regimes on different types of providers. In
addition, we must remember that we can level the field by working in
either direction. The Telecommunications Act of 1996's explicit goal is
to foster a deregulatory environment. The better way to address
disparities, then, is not to extend government imposed costs or
regulations to new providers, but to reduce and remove such costs and
regulations from their competitors.

Moreover, in this context, leveling the playing field is not a simple
matter of equalizing universal service contribution obligations.
Different kinds of providers have different advantages and burdens. For
example, cable providers have been required by some local franchising
authorities to pay franchise fees equal to five percent of their gross
revenues on their cable modem service, to adhere to franchise
obligations, and to obtain specific authorization to initiate cable
modem service. While wireline broadband Internet access providers are
also subject to fees and regulations -- some similar and some different
-- this item does not propose to avoid all such regulatory inequities.

For these reasons, I am troubled by this item's suggestion that
broadband providers previously not subject to universal service
obligations may now be required to contribute to universal service. The
danger here is that, as new technological innovations bring new
competitors to the market, we will continue to expand the pool of
contributors, whether or not we need additional contributors to keep the
fund sufficient. Even worse, by continuously expanding the pool of
contributors to encompass new entrants, we may discourage such entry.

I want to make clear that I am committed to ensuring that we maintain a
sufficient base of funds to support universal service. Indeed, I
strongly support the other item we adopt today concerning reforming the
universal service contribution methodology. I simply believe that,
without some indication that fund requirements necessitate an extension
of contribution obligations to additional broadband providers, we ought
to hesitate to cast a cloud of uncertainty over them. Thus, I would have
preferred to wait to initiate this inquiry, focusing at present on
promoting broadband deployment and making other changes to the universal
service contribution mechanism.

Finally, I wish to note an additional consequence of extending universal
service contribution obligations to wireless, cable, and satellite
Internet access providers. In my view, if we require these providers to
pay into the universal service fund, the public interest may weigh in
favor of allowing them to be recipients of the fund as well. Whatever
contribution obligations we impose on these providers may impact our
consideration of whether and how to change the definition of the
services supported by universal service.

[^1]: 47 U.S.C. § 151 *et seq*. As described more fully below, the
    classification inquiry we undertake herein is limited to domestic
    wireline broadband Internet access services, meaning over the
    existing and future infrastructure of the traditional telephone
    network. Unless otherwise specified, we will refer to these services
    as "wireline broadband Internet access services" throughout this
    Notice. Therefore, this proceeding does not address classification
    issues of broadband Internet access services provided over
    traditional or new cable, wireless, (satellite, mobile, or fixed
    wireless), power line (electric grid), or all-fiber networks that do
    not have any roots in traditional telephone networks. We recognize
    that the wireline platform over which these services are delivered
    is predominantly digital subscriber line (xDSL) presently, but we
    note that it could also include fiber or other wireline technologies
    in the future. We have already sought comment on the regulatory
    classification of cable modem service, and that issue will be
    resolved in a separate proceeding. *See Inquiry Concerning
    High-Speed Access to the Internet Over Cable and Other Facilities*,
    Notice of Inquiry, 15 FCC Rcd 19287 (2000) (*Cable Modem Notice*).

[^2]: The Commission has recognized that the terms "broadband" and
    "broadband services" are elusive concepts, as they have come to mean
    many different things to many different people. *See Inquiry
    Concerning the Deployment of Advanced Telecommunications Capability
    to All Americans in a Reasonable and Timely Fashion, and Possible
    Steps to Accelerate Such Deployment Pursuant to Section 706 of the
    Telecommunications Act of 1996*, Third Report, CC Docket 98-146, FCC
    No. 02-33 at para. 11 and n.23 (rel. Feb. 6, 2002) (*Third Section
    706 Report*); *accord* *Inquiry Concerning the Deployment of
    Advanced Telecommunications Capability to All Americans in a
    Reasonable and Timely Fashion, and Possible Steps to Accelerate Such
    Deployment Pursuant to Section 706 of the Telecommunications Act of
    1996*, Second Report, 15 FCC Rcd 20913, 20920, para. 11 (2000)
    (*Second Section 706 Report*). The Commission, therefore, has
    separately defined "advanced telecommunications capability and
    advanced services," for the purposes of section 706 Reports as
    having the capability to support both upstream and downstream speeds
    in excess of 200 Kbps in the last mile. *Third Section 706 Report,*
    FCC No. 02-33 at para. 9 (internal quotations omitted); *accord
    Second Section 706 Report*, 15 FCC Rcd at 20919-20, para. 10. The
    Commission has "denominate\[d\] as 'high-speed' those services with
    over 200 kbps capability in at least one direction." *Second Section
    706 Report*, 15 FCC Rcd at 20920; *accord Third Section 706 Report,*
    FCC No. 02-33 at para. 9.

[^3]: As noted by the Computer Science and Telecommunications Board of
    the National Research Council, the costs and benefits of "broadband
    are being discussed in communities, state and regional government
    entities, and in the Federal Communications Commission and Congress
    at the national level---as well as in trade associations, consumer
    advocacy and other public interest groups, and by civic
    organizations, telecommunications Internet policy scholarship
    forums, and groups concerned with international economic
    development." Committee on Broadband Last Mile Technology, National
    Research Council, *Broadband: Bringing Home the Bits*, 1-2
    (Prepublication Copy 2001) (*Bringing Home the Bits*).

[^4]: § 706(a) and (b) of the Telecommunications Act of 1996 (1996 Act),
    Pub. L. 104-104, Title VII, Feb. 8, 1996, 110 Stat. 153, reproduced
    in the notes under 47 U.S.C. § 157nt.

[^5]: 47 U.S.C. § 230(b)(1).

[^6]: *National Cable Telecommunications Ass'n v. Gulf Power Co.*, 122
    S. Ct. 782 (Jan. 16, 2002) (Thomas, J. concurring in part,
    dissenting in part) (noting that an "interpretation of the 1996
    amendments to the Act" that led to a conclusion that the Commission
    lacked the authority to regulate rates for pole attachments
    providing commingled cable television programming and high speed
    Internet access, "would be in substantial tension with" the policies
    annunciated in sections 157nt and 230(b)(1)).

[^7]: *Second Section 706 Report*, 15 FCC Rcd at 20924-20938, paras.
    23-59; *see also Bringing Home the Bits* at S-2 ("Following roughly
    a decade of development and experimentation, residential (and small
    business) broadband services have been available in selected markets
    for several years and more recently have become mass-market. Cable
    operators, incumbent local exchange carriers (ILECs), and
    competitive local exchange carriers offering data services (data
    CLECs) have been the largest players, complemented by overbuilders
    (using \[hybrid fiber-coaxial (HFC)\], wireless, or fiber) and
    satellite-based providers").

[^8]: The pursuit of multiple platform competition should also serve to
    further the congressionally stated goal "to encourage the
    development of technologies which maximize user control over what
    information is received by individuals, families, and schools who
    use the Internet and other interactive computer services." 47 U.S.C.
    § 230(b)(3); *see also, e.g., Bringing Home the Bits*, at S-7
    (arguing that "\[f\]acilities-based competition, and associated
    pressures to attract and retain customers, could help propel
    performance upgrades").

[^9]: 47 U.S.C. § 230(b)(2).

[^10]: This functional regulatory approach is embodied in the Act's
    classification of distinct service categories, such as "information
    services," "cable service," and "telecommunications services." *See*
    discussion *infra* Section II; *see also Federal-State Joint Board
    on Universal Service*, CC Docket No. 96-45, Report to Congress, 13
    FCC Rcd 11501, 11520, para. 39 (rel. Apr. 10, 1998) (*Report to
    Congress*).

[^11]: *Cable Modem Notice*, 15 FCC Rcd at 19287.

[^12]: *See id.* at 19293-98, paras. 15-24.

[^13]: *Review of Regulatory Requirements for Incumbent LEC Broadband
    Services; SBC Petition for Expedited Ruling That it is Non-Dominant
    in its Provision of Advanced Services and for Forbearance From
    Dominant Carrier Regulation of These Services*, CC Docket No.
    01-337, Notice of Proposed Rulemaking, FCC 01-360, 16 FCC Rcd 22745
    (rel. Dec. 20, 2001) (*Incumbent LEC Broadband Notice*).

[^14]: *Review of Section 251 Unbundling Obligations of Incumbent Local
    Exchange Carriers*, CC Docket No. 01-338; *Implementation of the
    Local Competition Provisions of the Telecommunications Act of 1996*,
    CC Docket No. 96-98; *Deployment of Wireline Services Offering
    Advanced Telecommunications Capability*, CC Docket No. 98-147,
    Notice of Proposed Rulemaking, FCC 01-361, 16 FCC Rcd 22781 (rel.
    Dec. 20, 2001) (*Triennial UNE Review Notice*).

[^15]: *Computer III Further Remand Proceedings: Bell Operating Company
    Provision of Enhanced Services; 1998 Biennial Regulatory Review --
    Review of Computer III and ONA Safeguards and Requirements,* CC
    Dockets Nos. 95-20; 98-10, Further Notice of Proposed Rulemaking, 13
    FCC Rcd 6040 (1998) (*Computer III Further Remand*); Report and
    Order, 14 FCC Rcd 4289 (1999) (addressing certain portion of the
    *Computer III Further Remand*) (*Computer III March 1999 Order*),
    *recon*., 14 FCC Rcd 21628 (1999); *see also Further Comment
    Requested to Update and Refresh Record on Computer III
    Requirements*, CC Dockets Nos. 95-20; 98-10, Public Notice, DA
    01-620 (rel. Mar. 7, 2001) (asking whether information service
    providers (ISPs) can obtain, under the open network architecture
    (ONA) framework, the telecommunications inputs they require from the
    bell operating companies (BOCs), including DSL service).

[^16]: Fundamentally, the Internet is a global, packet switched network
    that enables interconnection between networks using Internet
    Protocol (IP). The Supreme Court has described the Internet as "an
    international network of interconnected computers." *Reno v. ACLU*,
    521 U.S. 844, 849-50 (1997). The Internet traces its beginnings to a
    government-sponsored networking project known as the ARPANET. Begun
    as a Defense Department network, the military portion of Defense
    Advanced Research Project Agency network (ARPANET), was integrated
    into the Defense Data Network in the early 1980s and the civilian
    ARPANET was taken out of service in 1990. Around this time, the
    National Science Foundation's NSFNET, a transmission control
    protocol (TCP)/IP network, experienced increased usage and
    eventually eclipsed the ARPANET in terms of total users connected.
    *See* Kevin Werbach*, Digital Tornado: The Internet and
    Telecommunications Policy*, Office of Plans and Policy Working Paper
    Series 29, 15 (1997).

[^17]: The Supreme Court noted that:

    > \[a\]nyone with access to the Internet may take advantage of a
    > wide variety of communication and information retrieval methods,"
    > such as "electronic mail, automatic mailing list services ('mail
    > exploders,' sometimes referred to as 'listserves'), 'newsgroups,'
    > 'chat rooms,' and the 'World Wide Web.' All of these methods can
    > be used to transmit text; most can transmit sound, pictures, and
    > moving video images. Taken together, these tools constitute a
    > unique medium---known to its users as 'cyberspace'---located in no
    > particular geographic location but available to anyone, anywhere
    > in the world.

    *Reno v. ACLU*, 521 U.S. at 851.

[^18]: Dial-up or narrowband Internet access utilizes the same public
    switched telephone network (PSTN) infrastructure that telephone
    subscribers use to place traditional circuit-switched voice calls.
    In the mid- to late- 1990s, residential dial-up Internet access
    achieved throughput speeds generally between 14.4kbp and 53 kbps.
    *Id*. at 24. Today residential xDSL services are offered at a range
    of speeds from less than 500 kbps to 7 Mbps. *See generally Third
    Section 706 Report*, FCC No. 02-33 at paras. 79-88.

[^19]: With the addition of certain electronics to the telephone line,
    carriers can transform the copper loop that already provides voice
    service into a conduit for high-speed traffic. Generally speaking,
    xDSL networks connect end user modems to twisted copper loops which
    in turn, connect end user modems to Digital Subscriber Line Access
    Multiplexers (DSLAMs) located in telephone company central offices
    or remote terminals. DSLAMs synchronize end user addresses with
    telephone company equipment and also separate the voice frequency
    signals from the high-speed data traffic. Behind the DSLAM,
    telephone companies have typically deployed fiber optic connections
    and asynchronous transfer mode (ATM) switching equipment to carry
    requests for Internet content to and from end-users. In this manner,
    ATM "cells" envelope IP packets and transport the IP packets to
    their destination on the Internet where IP-based information is
    returned and again transported inside ATM cells. Like other
    broadband platforms, xDSL networks utilizing ATM transport also may
    provide for protocol processing, IP address number management,
    domain name resolution through domain name servers (DNS), network
    security and encryption and caching.

[^20]: In the past 18 months, high-speed Internet access services
    subscribership increased by 350 percent. As of June 2001, there were
    9.6 million high-speed lines in service. Subscription by residential
    and small business customers to xDSL services has increased from
    about 350,000 lines in December 1999 to 2.7 million in June 2001.
    *Third Section 706 Report,* FCC No. 02-33 at App. C, Table 1, 3.

[^21]: For example, SBC has announced the deployment of a Broadband
    Passive Optical Networking (BPON) architecture. *See*
    [www.sbc.com/data/BPON_Fact_Sheet.doc](http://www.sbc.com/data/BPON_Fact_Sheet.doc)
    (viewed Jan. 24, 2002).

[^22]: The typical upgrade employs what is commonly known as an HFC
    architecture. In an HFC-upgraded system, fiber optic cables are
    deployed from a cable operator's headend (the origination point for
    signals in the cable) to neighborhood nodes. Located at the headend
    is a Cable Modem Termination System (CMTS), which manages the flow
    of data between cable subscribers and the Internet or other
    equipment.

[^23]: *See Computer III March 1999 Order*, 14 FCC Rcd at 4293, n.11
    (citations omitted).

[^24]: *Amendment of Section 64.702 of the Commission's Rules and
    Regulations,* CC Docket No. 20828, Final Decision, 77 FCC 2d 384,
    429, para. 117 (1980) (*Computer II*), *recon.,* 84 FCC 2d 50 (1980)
    (*Computer II Reconsideration Order*), *further recon.,* 88 FCC 2d
    512 (1981), *aff'd sub nom., Computer and Communications Indus.
    Ass'n v. FCC,* 693 F.2d 198 (D.C. Cir. 1982), *cert. denied,* 461
    U.S. 938 (1983).

[^25]: *See generally Report to Congress*, 13 FCC Rcd at 11501.

[^26]: *See id.* at 11520, para. 39 and 11530, para. 59 (reiterating
    that the categories of "telecommunications service" and "information
    service" are "mutually exclusive"); *see also Implementation of the
    Non-Accounting Safeguards of Sections 271 and 272 of the
    Communications Act of 1934, as Amended*, CC Docket No. 96-149, First
    Report and Order and Further Notice of Proposed Rulemaking, 11 FCC
    Rcd 21905, 21955-56, para. 102 (1996) (*Non-Accounting Safeguards
    Order*).

[^27]: The Commission has defined "Internet access services" as services
    that "alter the format of information through computer processing
    applications such as protocol conversion and interaction with stored
    data." *Report to Congress*, 13 FCC Rcd at 11516-17, para. 33
    (citations and internal quotations omitted); *see also* 47 C.F.R. §
    54.4 (defining "Internet access" for universal service regulation in
    Part 54).

[^28]: *Report to Congress*, 13 FCC Rcd at 11529-40, paras. 56-82.

[^29]: *Id.* at 11534, para. 69.

[^30]: *See Joint Application by SBC Communications Inc., Southwestern
    Bell Telephone Company, and Southwestern Bell Communications
    Services, Inc. d/b/a Southwestern Bell Long Distance Pursuant to
    Section 271 of the Telecommunications Act of 1996 to Provide
    In-Region, InterLATA Services in Arkansas and Missouri*, CC Docket
    No. 01-194, Memorandum Opinion and Order, 16 FCC Rcd 20719,
    20759-60, paras. 81-82 (2001) (*SBC MO/AR 271 Order*).

[^31]: *See id.* at 20758-60, paras. 80-82.

[^32]: *See id.* at 20759-60, para. 82 and n.256 (citing *Report to
    Congress*, 13 FCC Rcd at 11532-37, paras. 66-75).

[^33]: *Cable Modem Notice*, 15 FCC Rcd at 19293, para. 14.

[^34]: *See* discussion *infra* paras. 30 -- 61.

[^35]: These access questions are limited; we do not address access for
    cable. That issue is handled in the Cable Modem proceeding. *See
    Cable Modem Notice*, 15 FCC Rcd at 19295, 19298-19306, paras. 20,
    25-49.

[^36]: For purposes of this Notice, we use the term "facilities-based"
    to refer to providers of broadband Internet access services that
    furnish their own last-mile connection, irrespective of the
    transmission medium, to the customer.

[^37]: S*ee* discussion *supra* para. 14.

[^38]: 47 U.S.C. § 153(20). Congress further specified that the term
    "information service" includes "electronic publishing, but does not
    include any such capability for the management, control, or
    operation of a telecommunications system or the management of a
    telecommunications service." *Id.* The term "information service"
    follows from a distinction the Commission drew in the *First,
    Second,* and *Third Computer Inquiries* ("*Computer I,*" "*Computer
    II*," and "*Computer III*"). *See generally* *Regulatory and Policy
    Problems Presented by the Interdependence of Computer and
    Communication Services and Facilities,* Docket No. 16979, Notice of
    Inquiry, 7 FCC 2d 11 (1966) (*Computer I*); *Computer* II, 77 FCC 2d
    384; *Amendment of Section 64.702 of the Commission\'s Rules and
    Regulations* (*Computer III Phase I Order*), CC Docket No. 85-229,
    Report and Order, 104 FCC 2d 958 (1986). That distinction was
    between basic data transmission service on the one hand and, on the
    other, a combination of that transmission and computer-mediated
    offerings. That combination produces "enhanced" or information
    services. This distinction was incorporated into the Modification of
    Final Judgment, which governed the BOCs after the bell system
    break-up, and into the 1996 Act. *Federal-State Joint Board on
    Universal Service*, CC Docket No. 96-45, Report to Congress, 13 FCC
    Rcd 11501, 11536, para. 75 (1998) (*Universal Service Report*),
    *citing* *United States v. Western Electric Co*., 673 F. Supp. 525
    (D.D.C. 1987), *and* 714 F. Supp. 1 (D.D.C. 1988), *rev'd in part*,
    900 F.2d 283 (D.C. Cir. 1990).

[^39]: 47 U.S.C. § 153(46).

[^40]: *Id.* § 153(43).

[^41]: *Report to Congress*, 13 FCC Rcd at 11521, para. 41. Therefore,
    "an entity offering a simple, transparent transmission path, without
    the capability of providing enhanced functionality, *offers*
    'telecommunications.'" *Id*. at 11520, para. 39 (emphasis added).

[^42]: The Commission rejected the argument that "a service qualifies as
    a 'telecommunications service' whenever the service provider
    transports information over transmission facilities, without regard
    to whether the service provider is using information-processing
    capabilities to manipulate that information or provide new
    information." *Id.* at 11520-21, para. 40.

[^43]: *Id.* at 11521, para. 41 (emphasis added).

[^44]: This is consistent with the finding in the *Report to Congress*
    that "Internet access services are appropriately classed as
    information, rather than telecommunications, services." *Id.* at
    11536, para 73. The Commission noted that "Internet access providers
    do not offer a pure transmission path; they combine computer
    processing, information provision, and other computer-mediated
    offerings with data transport." *Id.*

[^45]: 47 U.S.C. § 153(43).

[^46]: *See* discussion *supra* note 38.

[^47]: *Computer II Order*, 77 FCC 2d at 475, para. 231.

[^48]: *Id.* at 435, para. 132.

[^49]: *Id.* at 420, para. 97; 47 C.F.R. § 64.702(a).

[^50]: *Computer III Phase I Order*, 104 FCC 2d at 1040, para. 158.

[^51]: *See* discussion *infra* paras. 33-42.

[^52]: *Indep. Data Communications Manuf. Ass'n, Inc. Petition for
    Declaratory Ruling and Am. Tel. and Tel. Co. Petition for
    Declaratory Ruling*, 10 FCC Rcd 13717, 13722, para. 35 (1995)
    (*Frame Relay Order*).

[^53]: *Id.* at 13722-23, para. 41 (citations omitted). The Bureau also
    referred to section 202 as being applicable to the basic
    transmission service used to provide enhanced services. *Id.* at
    13719, para. 13.

[^54]: *See Computer III Further Remand*, 13 FCC Rcd at 6045-46,
    6064-67, 6090-92, at paras. 5, 37-42 , 92-96 and n.232.

[^55]: *Report to Congress*, 13 FCC Rcd at 11529, para. 57.

[^56]: *Policy and Rules Concerning the Interstate, Interexchange
    Marketplace; Implementation of Section 254(g) of the Communications
    Act of 1934, as amended; 1998 Biennial Regulatory Review---Review of
    Customer Premises Equipment and Enhanced Services Unbundling Rules
    in the Interexchange, Exchange Access and Local Exchange Markets*,
    CC Docket Nos. 96-61 and 98-183, Report and Order, 16 FCC Rcd 7418,
    7445-46, para. 46 (2001) (*CPE/Enhanced Services Unbundling Order*).

[^57]: 47 U.S.C. § 153(20).

[^58]: As the Commission stated in the *Report to Congress*, "\[w\]hen
    the information service provider owns the underlying
    \[transmission\] facilities, it appears that it should be treated as
    providing the underlying telecommunications. *That conclusion,
    however, speaks only to the relationship between the facilities
    owner and the information service provider (in some cases the same
    entity); it does not affect the relationship between the information
    service provider and its subscribers.*" *Report to Congress*, 13 FCC
    Rcd at 11534, para. 69, n.138 (emphasis added).

[^59]: 47 U.S.C. § 153(43).

[^60]: *See Deployment of Wireline Services Offering Advanced
    Telecommunications Capability*, CC Docket No. 98-147, Memorandum
    Opinion and Order and Notice of Proposed Rulemaking, 13 FCC Rcd
    24012, 24029, para. 35 (1998) (finding that advanced services such
    as xDSL constitute telecommunications services when offered to the
    public directly or on a stand-alone basis).

[^61]: *See* Letter from William P. Barr, Verizon, to Michael K. Powell,
    Chairman, Federal Communications Commission (Jan. 9, 2002) (on file
    with Commission).

[^62]: The Commission has determined that xDSL transport services
    provided by incumbent LECs to ISPs generally will not be considered
    services provided "at retail," and are designed to be "an input
    component to the Internet Service Providers' retail high-speed
    Internet service." *Deployment of Wireline Services Offering
    Advanced Telecommunications Capability*, Second Report and Order, 14
    FCC Rcd 19237, 19244-45, paras. 15, 17 (1999).

[^63]: *See, e.g., State of Iowa v. FCC*, 218 F.3d 756 (D.C. Cir. 2000);
    *Federal-State Joint Board on Universal Service*, Order on Remand,
    CC Docket No. 96-45, 16 FCC Rcd 571 at paras. 8-13 (2001) ("legal
    restrictions on the class of authorized users are not necessarily
    relevant to \[common carrier status under *NARUC I*\] but
    availability of "indiscriminate service" among entities within each
    class of users is important); *see also* *Deployment of Wireline
    Services Offering Advanced Telecommunications Capability*, CC Docket
    No. 98-147, Second Report and Order*,* 14 FCC Rcd 19237, 19247 para.
    21 (1999) (AOL Bulk Services Order).

[^64]: Commenters, to the extent relevant, should discuss the standards
    for private carriage and common carriage that they deem appropriate
    for broadband transmission, whether using xDSL or other wireline
    technologies. *See, e.g*., *NARUC v. FCC*, 525 F.2d 630, 641, 644
    n.76 (D.C. Cir. 1976); *NARUC v. FCC*, 533 F.2d 601, 608-609 (D.C.
    Cir. 1976); *see also* *Frame Relay Order*, 10 FCC Rcd at 13723-24,
    paras. 50-52.

[^65]: *But see Report to Congress*, 13 FCC Rcd at 11529-30, paras.
    56-60 (concluding that hybrid services are information services).

[^66]: *See* 47 U.S.C. § 157nt.

[^67]: The notes to Section 157 of the Act define "advanced
    telecommunications capability" 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. § 157nt. This
    term is defined "without regard to any transmission media or
    technology." *Id.* In addition, we have defined "advanced
    telecommunications capability" as "having the capability of
    supporting, in both the provider-to-customer (downstream) and the
    customer-to-provider (upstream) directions, a speed (in technical
    terms, 'bandwidth') in excess of 200 kilobits per second (kbps) in
    the last mile" and "high-speed services" to mean those services and
    facilities capable of providing speeds equal to or higher than 200
    kbps in at least one direction. *Second Section 706 Report*, 15 FCC
    Rcd at 20919-20, paras. 10-11; *First Section 706 Report*, 14 FCC
    Rcd at 2406, para. 20. For an explanation of the rationale for these
    definitions, *see Second Section 706 Report*, 15 FCC Rcd at
    20919-21, paras. 10-12.

[^68]: *Regulatory and Policy Problems Presented by the Interdependence
    of Computer & Communications Services and Facilities*, 28 FCC 2d 267
    (1971), *aff'd in part sub nom.* *GTE Service Corp. v. FCC*, 474
    F.2d 724 (2d Cir. 1973), decision on remand, 40 FCC 2d 293 (1973)
    (*Computer I*); *Computer II*, 77 FCC 2d 384; *Computer III Phase I
    Order*, 104 FCC 2d 958, *recon*., 2 FCC Rcd 3035 (1987) (*Phase I
    Recon. Order*), *further recon.*, 3 FCC Rcd 1136 (1988) (*Phase I
    Further Recon. Order*); *second further recon*., 4 FCC Rcd 5927
    (1989) (*Phase I Second Further Recon*.), *Phase I Order and Phase I
    Recon. Orders, vacated, California v. FCC,* 905 F.2d 1217 (9^th^
    Cir. 1990) (*California I)*; Phase II, 2 FCC Rcd 3072 (1987) (*Phase
    II Order*), *recon.*, 3 FCC Rcd 1150 (1988) (*Phase II Recon.
    Order*), *further recon.*, 4 FCC Rcd 5927 (1989) (*Phase II Further
    Recon. Order*), *Phase II Order vacated*, *California I*, 905 F.2d
    1217 (9^th^ Cir. 1990); *Computer III Remand Proceedings*, 5 FCC Rcd
    7719 (1990) (*ONA Remand Order*), *recon.*, 7 FCC Rcd 909 (1992),
    *pets. for review denied, California v. FCC*, 4 F.3d 1505 (9^th^
    Cir. 1993) (*California II*); *Computer III Remand Proceedings; Bell
    Operating Company Safeguards and Tier I Local Exchange Company
    Safeguards,* 6 FCC Rcd 7571 (1991) (*BOC Safeguards Order*), *recon.
    dismissed in part*, Order, CC Docket Nos. 90-623 and 92-256, 11 FCC
    Rcd 12513 (1996); *BOC Safeguards Order vacated in part and
    remanded, California v. FCC*, 39 F.3d 919 (9^th^ Cir. 1994)
    (*California III*), *cert. denied*, 115 S.Ct. 1427 (1995); *Computer
    III Further Remand*, 13 FCC Rcd 6040, Report and Order, 14 FCC Rcd
    4289, *recon*., 14 FCC Rcd 21628 (1999).

[^69]: *See* 47 U.S.C. §§ 230(b)(1) and (2) (stating that the policy of
    the United States should be "to promote the continued development of
    the Internet and other interactive computer services and other
    interactive media" and "to preserve the vibrant and competitive free
    market that presently exists for the Internet and other interactive
    computer services, unfettered by Federal and State regulation");
    *id.* § 157nt (encouraging "the deployment on a reasonable and
    timely basis of advanced telecommunications capability to all
    Americans . . .")

[^70]: *Computer I,* 28 FCC 2d at 270, at para. 11.

[^71]: *Id.*

[^72]: *Id.* at 270-71, para. 12.

[^73]: *See Computer II*, 77 FCC 2d at 389-91, paras. 14-18.

[^74]: *Id.* at 392-93, paras. 21-22.

[^75]: *Id.* at 417-23, paras. 86-101.

[^76]: *Id.* at 419-20, paras. 93-96.

[^77]: *Id.* at 420-21, paras. 97; *see also* 47 C.F.R. § 64.702(a)
    (Enhanced services are "services, offered over common carrier
    transmission facilities used in interstate communications, which
    employ computer processing applications that act on the format,
    content, code, protocol or similar aspects of the subscriber's
    transmitted information; provide the subscriber additional,
    different, or restructured information; or involve subscriber
    interaction with stored information."). Examples of services that
    the Commission has treated as enhanced include voice mail, e-mail,
    store-and-forward services, interactive voice response, protocol
    processing, gateway and audiotext services. *See* *Bell Operating
    Companies Joint Petition for Waiver of Computer II Rules*, Order, 10
    FCC Rcd 13758, 13770-774, App. A (Com. Car. Bur. 1995).

[^78]: *Computer II* , 77 FCC 2d at 432-33, paras. 124-27.

[^79]: *Id.*

[^80]: *Id.* at 468, para. 219.

[^81]: *Id*. at 469-70, 473-74, paras. 223-24 and n.228.

[^82]: *Id.* at 474-75, para. 231.

[^83]: *Id.*

[^84]: *See Computer III Phase I Order*, 104 FCC 2d at 1011-13, paras.
    98-100.

[^85]: CEI is a nonstructural safeguard that requires that if a BOC
    offers enhanced service, it must offer network interconnection
    opportunities to competitive enhanced service providers that are
    comparably efficient to the interconnection that its own enhanced
    service operation enjoys. *See* *Computer III Phase I Order*, 104
    FCC2d at 1019, para. 112. Both the BOCs and AT&T were initially
    subject to CEI requirements. *Id*. at 1026-27, paras. 129-31. In
    subsequent orders, the Commission first modified, and then relieved,
    AT&T of the CEI requirements. *See Computer III March 1999 Order*,
    14 FCC Rcd at 4294-95, n.17-18 (and cases cited therein). The
    Commission has never imposed CEI requirements on GTE or any other
    independent LEC. ONA is the overall design of a carrier's basic
    network services to permit all users of the basic network, including
    the enhanced service operations of the carrier and its competitors,
    to interconnect to specific basic network functions and interfaces
    on an unbundled and equal access basis.

[^86]: *See* *Computer III Further Remand*, 13 FCC Rcd at 6043, n.5 (and
    citations therein).

[^87]: *See* *CPE/Enhanced Services Bundling Order*, 16 FCC Rcd at 7442,
    para. 40 (confirming access obligations for non-dominant carriers).

[^88]: *See also* *Incumbent LEC Broadband Notice*, FCC No. 01-360 at
    para. 1.

[^89]: As stated above, we are considering this question in the
    *Incumbent LEC Broadband Notice*. *See* discussion *supra* para. 44.

[^90]: *See* *Computer III Phase I Order*, 104 FCC 2d at 1011, para. 97.

[^91]: *See* Letter from Thomas J. Tauke, Senior Vice President, Verizon
    Communications, to Michael Powell, Chairman, Federal Communications
    Commission, at 4 (filed Nov. 6, 2001) (Verizon November 6, 2001 Ex
    Parte) (cited in *Triennial UNE Review Notice*, FCC 01-361 at para.
    23 and n.67).

[^92]: *See Deployment of Wireline Services Offering Advanced
    Telecommunications Capability*, 13 FCC Rcd at 24029, para. 35.

[^93]: *See generally, e.g., Communications Assistance for Law
    Enforcement Act*, Report and Order, CC Docket No. 97-213, 14 FCC Rcd
    16794, 16795-96, paras. 2-3 (1999).

[^94]: Uniting and Strengthening America by Providing Appropriate Tools
    Required to Intercept and Obstruct Terrorism Act of 2001, Pub. L.
    No. 107-56, 115 Stat. 272 (2001) (USA PATRIOT Act) (codified in
    scattered sections of 18 U.S.C., 47 U.S.C., 50 U.S.C.)

[^95]: *Id.* § 222.

[^96]: *Id.* §§ 201, 202, 206, 210, 211.

[^97]: *See, e.g., Telephone Number Portability*, First Memorandum
    Opinion and Order on Reconsideration, CC Docket No. 95-116, 12 FCC
    Rcd 7236, 7285, para. 83 (1997) (*Telephone Number Portability
    Reconsideration Order*) (subsequent history omitted) (finding
    network reliability of paramount importance in determining the
    implementation of telephone number portability requirements).

[^98]: *See generally* *2000 Biennial Regulatory Review -
    Telecommunications Service Quality Reporting Requirements*, Notice
    of Proposed Rulemaking, CC Docket No. 00-229, 15 FCC Rcd. 22113,
    22126, para. 40 (2000); *see also* 47 U.S.C. § 256 (directing the
    Commission to promote nondiscriminatory accessibility by users and
    vendors of communications products to public telecommunications
    networks through coordinated planning and improved interconnectivity
    and "to ensure the ability of users and information providers to
    seamlessly and transparently transmit and receive information
    between and across telecommunications networks").

[^99]: 47 U.S.C. § 214(a); 47 C.F.R. § 63.71. While a domestic carrier
    must apply to discontinue service, these applications are routinely
    granted and, in many cases, automatically granted on the
    thirty-first day after public notice of the application is released.
    *See* 47 C.F.R. § 63.71(c). Even in cases where a domestic carrier
    is dominant with respect to the service being provided, the
    Commission authorizes proposed discontinuance of service unless it
    is shown that customers or other end users would be unable to
    receive service or a reasonable substitute from another carrier, or
    that the public convenience and necessity is otherwise adversely
    affected. *See* 47 C.F.R. § 63.71(a)(5); *see also, e.g., Comments
    Invited on TSI Telecommunication Services Inc. Application To
    Discontinue Domestic Telecommunications Services*, NSD File No.
    W-P-D-542, Pubic Notice, DA-01-2792, 2001 WL 1524470 (F.C.C.) (rel.
    Nov. 30, 2001).

[^100]: 47 U.S.C. § 222(a); *see also* 47 U.S.C. § 222(c)(1) ("Except as
    required by law or with the approval of the customer, a
    telecommunications carrier that receives or obtains customer
    proprietary network information by virtue of its provision of a
    telecommunications service shall only use, disclose, or permit
    access to individually identifiable customer proprietary network
    information in its provision of (A) the telecommunication service
    from which such information is derived, or (B) services necessary
    to, or used in, the provision of such telecommunications service,
    including the publishing of directories.").

[^101]: 47 C.F.R. §§ 64.2001-2009; *US West v. FCC*, 182 F.3d 1224 (10th
    Cir. 1999) (vacating portions of first CPNI order; finding that
    opt-in rule for customer-specific CPNI violated First Amendment),
    *cert. denied*, 530 U.S. 1213 (2000); *Implementation of the
    Telecommunications Act of 1996: Telecommunications Carriers\' Use of
    Customer Proprietary Network Information and Other Customer
    Information: Implementation of the Non-Accounting Safeguards of
    Sections 271 and 272 of the Communications Act of 1934, as Amended*,
    CC Docket Nos. 96-115, 96-149, Clarification Order and Second
    Further Notice of Proposed Rulemaking, 16 FCC Rcd 16506, 16510,
    para. 7 and n.23 (rel. Sept. 7, 2001) (*CPNI Clarification Order*)
    (finding that the Commission\'s CPNI rules remain in effect
    following *US West* with the exception of Section 64.2007(c)). CPNI
    is information derived from the telecommunications carriers'
    provision of telecommunications services and includes information
    concerning where, when, and to whom a customer places a call, as
    well as the types of service offerings to which the customer
    subscribes and the extent to which the service is used. *See
    Implementation of the Telecommunications Act of 1996:
    Telecommunications Carriers\' Use of Customer Proprietary Network
    Information and Other Customer Information and Implementation of the
    Non-Accounting Safeguards of Sections 271 and 272 of the
    Communications Act of 1934, as Amended,* CC Docket Nos. 96-115,
    96-149, Order and Further Notice of Proposed Rulemaking, 13 FCC Rcd
    8061, 8064, para. 2 (1998) (*CPNI Order*).

[^102]: 47 U.S.C. § 258; 47 C.F.R. § 64.1100 *et* *seq*. The passage of
    section 258 of the Telecommunications Act of 1996 significantly
    expanded the Commission's existing authority to deter and punish
    slamming, which is the unauthorized change of a consumer's
    presubscribed telecommunications carrier. *See, e.g., Implementation
    of the Subscriber Carrier Selection Changes Provisions of the
    Telecommunications Act of 1996; Policies and Rules Concerning
    Unauthorized Changes of Consumers' Long Distance Carriers*, CC
    Docket No. 94-129, Second Report and Order and Further Notice of
    Proposed Rule Making, 14 FCC Rcd 1508 (1998) (*Section 258 Order),
    stayed in part, MCI WorldCom v. FCC*, No. 99-1125 (D.C. Cir. May 18,
    1999); First Order on Reconsideration, 15 FCC Rcd 8158 (2000); *stay
    lifted, MCI WorldCom v. FCC*, No. 99-1125 (D.C. Cir. June 27, 2000);
    Third Report and Order and Second Order on Reconsideration, 15 FCC
    Rcd 15996 (2000), Errata, DA No. 00-2163 (rel. Sept. 25, 2000),
    Erratum, DA No. 00-2192 (rel. Oct. 4, 2000), Order, FCC 01-67 (rel.
    Feb. 22, 2001); First Report and Order in CC Docket No. 00-257 and
    Fourth Report and Order in CC Docket No. 94-129, 16 FCC Rcd 11218
    (2001); *reconsiderations pending*.

[^103]: 47 C.F.R. § 64.2400 *et seq.*; *see also Truth-in-Billing and
    Billing Format*, CC Docket No. 98-170, First Report and Order and
    Further Notice of Proposed Rulemaking, 14 FCC Rcd 7492 (1999),
    *reconsideration granted in part*, Order on Reconsideration, 15 FCC
    Rcd 6023 (2000); Errata, 15 FCC Rcd 16544 (Com. Carr. Bur. 2000).

[^104]: 47 U.S.C. § 255.

[^105]: 47 U.S.C. §§ 201, 202.

[^106]: *Incumbent LEC Broadband Notice,* FCC 01-360 at para. 5.

[^107]: 47 U.S.C. §§ 251, 252.

[^108]: 47 U.S.C. § 153(29).

[^109]: *See* 47 C.F.R. § 51.319(h) (requiring incumbent LECs to provide
    non-discriminatory access to the high frequency portion of the loop
    in accordance with Commission rules); *see also Deployment of
    Wireline Services Offering Advanced Telecommunications Capability
    and Implementation of the Local Competition Provisions of the
    Telecommunications Act of 1996*, Third Report and Order in CC Docket
    No. 98-147 and Fourth Report and Order in CC Docket No. 96-98, 14
    FCC Rcd 20912 (1999) (*Line Sharing Order*) (adding the high
    frequency portion of the loop to the list of elements that must be
    unbundled on a national basis) (subsequent history omitted).

[^110]: We note that in the *Local Competition First Report and Order*
    the Commission concluded that information service providers that do
    not also provide telecommunications services, and therefore are not
    telecommunications carriers within the meaning of the Act, may not
    interconnect under section 251. *See Implementation of the Local
    Competition Provisions of the Telecommunications Act of 1996*, CC
    Docket No. 96-98, First Report and Order, 11 FCC Rcd 15499, 15990,
    para. 995 (1996).

[^111]: *See GTE Telephone Operating Cos., GTOC Tariff No. 1, GTE
    Transmittal No. 1148,* CC Docket No. 98-79, Memorandum Opinion and
    Order, 13 FCC Rcd 22466 (1998).

[^112]: *California v. FCC*, 39 F.3d 919, 931-33 (9^th^ Cir. 1994)
    (subsequent history omitted).

[^113]: Jurisdictional separations is the process by which incumbent
    LECs separate their regulated costs between the federal and state
    jurisdictions. Neither ISPs, nor competitive LECs are subject to
    separations.

[^114]: Pursuant to section 410(c) of the Act, the Commission will refer
    any issues regarding jurisdictional separations to the Separations
    Joint Board. 47 U.S.C. § 410(c).

[^115]: Universal service historically consisted of high-cost loop
    support, which provides support to eligible carriers serving
    high-cost areas, and Lifeline/LinkUp, which provides support to
    low-income consumers for telephone service and installation. Section
    254 of the Act also directed the Commission to create the schools
    and libraries program and the rural health care program, which both
    provide support to schools, libraries, and rural health care
    providers, respectively, for telecommunications services and
    Internet access. All of these mechanisms are referred to
    collectively as "universal service."

[^116]: *Federal-State Joint Board on Universal Service*, CC Docket Nos.
    96-45, 98-171, 90-571, 92-237, 99-200, 95-116, Notice of Proposed
    Rulemaking, FCC 01-145 (rel. May 8, 2001) (*Universal Service
    Contribution Methodology*).

[^117]: *FCC Takes Next Step To Reform Universal Service Fund
    Contribution System*, CC Dockets Nos. 96-45, 98-171, 90-571, 92-237,
    99-200, 95-116, News Release, FCC 02-43 (rel. Feb. 14, 2002)
    (Contribution Methodology Further Notice).

[^118]: As noted above, the regulatory classification of different
    broadband services will be resolved through this and other
    proceedings. For example, this proceeding deals with wireline
    broadband Internet access while the *Cable Modem Notice* proceeding
    deals with broadband Internet access provided over cable facilities.

[^119]: *Federal-State Joint Board on Universal Service*, CC Docket No.
    96-45, Report and Order, 12 FCC Rcd 8776, 8797, para. 39-40 (1997)
    (*First Report and Order*) (subsequent history omitted).

[^120]: 47 U.S.C. § 254(d) (emphasis added).

[^121]: 47 U.S.C. §§ 153(44), (46).

[^122]: 47 U.S.C. § 153(43).

[^123]: *First Report and Order*, 12 FCC Rcd at 9173, para. 777; *see
    also* 47 C.F.R. § 54.706.

[^124]: 47 U.S.C. §254(d).

[^125]: *First Report and Order*, 12 FCC Rcd 9183-9184, para. 794-797;
    *see also* 47 C.F.R. §54.706.

[^126]: *First Report and Order*, 12 FCC Rcd 9183-9184, para. 796.

[^127]: *Id.* at para. 799.

[^128]: *Id.*

[^129]: *See CPE/Enhanced Services Bundling Order*, 16 FCC Rcd at
    7446-7447, para. 48. In the order, the Commission acknowledged that
    carriers may bundle xDSL services "with CPE and enhanced services."
    *Id.* at 7427, para. 17.

[^130]: *Id.* at 7446-48, paras. 48-51. As such, the Commission
    implicitly assumed that the carrier would be subject to the
    Commission's mandatory contribution authority by virtue of the
    existence of a telecommunications service.

[^131]: *See Report to Congress*, 13 FCC Rcd at 11541, para. 81.

[^132]: We note that the *Report to Congress* did not distinguish
    between broadband and narrowband facilities-based ISPs. We clarify
    that this Notice seeks answers to questions raised in the *Report to
    Congress* regarding broadband facilities-based ISPs.

[^133]: *See* discussion, *supra*, paras. 24-25*.*

[^134]: As discussed above, ISPs leasing broadband capabilities
    currently indirectly pay universal service contributions through
    charges passed onto them by underlying telecommunications carriers,
    while ISPs that self-provide the telecommunications do not
    contribute to universal service.

[^135]: *First Report and Order*, 12 FCC Rcd at 9183-9184, para. 795.

[^136]: 47 U.S.C. § 254(b).

[^137]: We note that the Joint Board is currently seeking comment on
    whether telecommunications services should be added or removed from
    the list of core universal service services. We do not address in
    this proceeding whether voice services provided over broadband IP
    platforms are eligible for support. *See Federal-State Joint Board
    on Universal Service Seeks Comment on Review of the Definition of
    Universal Service*, CC Docket 96-45, Public Notice (rel. Aug. 21,
    2001)

[^138]: 47 C.F.R. §§ 1.1200-1.1216.

[^139]: *See* 47 C.F.R. § 1.1206(b)(2).

[^140]: 47 C.F.R. §§ 1.415, 1.419.

[^141]: *See* Electronic Filing of Documents in Rulemaking Proceedings,
    63 Fed. Reg. 24121 (1998).

[^142]: *See* 47 C.F.R. § 1.48.

[^143]: *See* 5 U.S.C. § 603. The RFA, *see* 5 U.S.C. § 601 *et. seq.*,
    has been amended by the Small Business Regulatory Enforcement
    Fairness Act of 1996 (SBREFA), Pub. L. No. 104-121, 110 Stat. 857
    (1996).

[^144]: *See* 5 U.S.C. § 603(a).

[^145]: *See* *id.*

[^146]: 5 U.S.C. §§ 603(b)(3), 604(a)(3).

[^147]: 5 U.S.C. § 601(6).

[^148]: 5 U.S.C. § 601(3) (incorporating by reference the definition of
    "small business concern" in the Small Business Act, 15 U.S.C.
    § 632). Pursuant to 5 U.S.C. § 601(3), the statutory definition of a
    small business applies "unless an agency, after consultation with
    the Office of Advocacy of the Small Business Administration and
    after opportunity for public comment, establishes one or more
    definitions of such terms which are appropriate to the activities of
    the agency and publishes such definitions(s) in the Federal
    Register."

[^149]: 5 U.S.C. § 632.

[^150]: United States Department of Commerce, Bureau of the Census, 1992
    Census of Transportation, Communications, and Utilities:
    Establishment and Firm Size, at Firm Size 1‑123 (1995) ("1992
    Census").

[^151]: 15 U.S.C. § 632(a)(1).

[^152]: 13 C.F.R. § 121.210, North American Industry Classification
    System (NAICS) Codes 513310, 513330, 513340.

[^153]: *See* FCC, Common Carrier Bureau, Industry Analysis Division,
    *Trends in Telephone Service*, Table 16.3 (Dec. 2000) (*Telephone
    Trends Report*). The total for resellers includes both toll
    resellers and local resellers. The category for CAPs also includes
    competitive local exchange carriers (CLECs) (total of 129 for both).

[^154]: *See* 47 U.S.C. § 251(h) (defining "incumbent local exchange
    carrier").

[^155]: See 13 CFR § 121.201, NAICS code 513310.

[^156]: 15 U.S.C. § 632.

[^157]: Letter *from* Jere W. Glover, Chief Counsel for Advocacy, SBA,
    *to* William E. Kennard, Chairman, FCC (May 27, 1999). The Small
    Business Act contains a definition of "small business concern,"
    which the RFA incorporates into its own definition of "small
    business." *See* 15 U.S.C. § 632(a) (Small Business Act); 5 U.S.C. §
    601(3) (RFA). SBA regulations interpret "small business concern" to
    include the concept of dominance on a national basis. 13 C.F.R. §
    121.102(b).

[^158]: 13 C.F.R. § 121.201, NAICS Code 514191.

[^159]: *Id*.

[^160]: 1997 Census Report, Establishment and Firm Size, U.S. Census
    Bureau, U.S. Department of Commerce, Economics and Statistics
    Administration, Document EC97S51S-SZ,
    h[ttp://www.gov/prod/ec97/97s51-sz.pdf,](ttp://www.gov/prod/ec97/97s51-sz.pdf,)
    at 24.

[^161]: 13 C.F.R. § 121.201, NAICS Code 513340.

[^162]: *Telephone Trends Report*, Table 5.3.

[^163]: *Id.*.

[^164]: 13 C.F.R. § 121.201, NAICS Code 513322.

[^165]: *Telephone Trends Report*, Table 5.3.

[^166]: 47 C.F.R. § 67.901(3). The Commission developed this definition
    based on its determination that a small cable system operator is one
    with annual revenues of \$100 million or less. *Implementation of
    Sections of the 1992 Cable Act: Rate Regulation*, Sixth Report and
    Order and Eleventh Order on Reconsideration, 10 FCC Rcd 6393 (1995).

[^167]: Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^168]: 47 U.S.C. § 543(m)(2).

[^169]: FCC Announces New Subscriber Count for the Definition of Small
    Cable Operator, Public Notice, DA 01-158 (January 24, 2001).

[^170]: 47 C.F.R. § 76.901(f).

[^171]: Paul Kagan Associates, Inc., Cable TV Investor, Feb. 29, 1996
    (based on figures for Dec. 30, 1995).

[^172]: 5 U.S.C. § 603(c).

[^173]: *See, e.g.*, Computer Science and Telecommunications Board,
    National Research Council, *Broadband: Bringing Home the Bits* at
    24-25, 167-177; Computer Systems Policy Project, *Building the
    Foundation of the Networked World*; TechNet, *A National Imperative:
    Universal Availability of Broadband by 2010*: Letter from Matthew J.
    Flanigan, President, Telecommunications Industry Association, to the
    Honorable George W. Bush, President of the United States of America,
    Oct. 4, 2001.

[^174]: *See* Separate Statement of Commissioner Kathleen Q. Abernathy,
    *Joint Application by SBC Communications, Inc., Southwestern Bell
    Telephone Company and Southwestern Bell Communications Services,
    Inc. d/b/a Southwestern Bell Long Distance Pursuant to Section 271
    of the Telecommunications Act of 1996 To Provide In-Region,
    InterLATA Services in Arkansas and Missouri*, CC Docket No. 01-194,
    FCC 01-338 (rel. Nov. 16, 2001) ("*SBC MO/AR Order*").

[^175]: In addition, even absent an ultimate finding in this docket that
    incumbent LECs' Internet access services are information services,
    it is by no means clear that such services would be subject to
    retail regulation under Title II. In some contexts, the Commission
    has appeared to conclude that incumbent LECs' Internet access
    services include a distinct telecommunications service. *See, e.g.*,
    *Policy and Rules Concerning the Interstate, Interexchange
    Marketplace; Implementation of Section 254(g) of the Communications
    Act of 1934, as Amended; 1998 Biennial Regulatory Review --- Review
    of Customer Premises Equipment and Enhanced Services Unbundling
    Rules in the Interexchange, Exchange Access, and Local Exchange
    Markets*, Report and Order, 16 FCC Rcd 7418 (2001) ("*CPE Unbundling
    Order*") (assuming that the provision of bundled services includes a
    separate telecommunications service and therefore requires
    contribution to federal universal service mechanisms). In other
    contexts, however, the Commission has appeared to take the contrary
    view that the identification of an information service signifies
    that the provider *uses* --- but does not separately *provide* to
    end users --- telecommunications. *See Federal-State Joint Board on
    Universal Service*, CC Docket No. 96-45, Report to Congress, 13 FCC
    Rcd 11501 (1998); *see also* *SBC MO/AR Order*, ¶¶ 81-82 (concluding
    that Commission precedent has not squarely resolved the appropriate
    statutory classification of ILECs' Internet access services).

[^176]: *See* 47 U.S.C. § 161 (mandating biennial review of Commission
    regulations); *see also id.* § 160 (directing the Commission to
    forbear from enforcing unnecessary regulations or statutory
    provisions). The Commission examined and modified the *Computer
    II/III* obligations in its 1998 Biennial Review. *See Computer III
    Further Remand Proceedings: Bell Operating Company Provision of
    Enhanced Services; 1998 Biennial Review --- Review of Computer III
    and ONA Safeguards and Requirements*, CC Docket Nos. 95-20, 98-10,
    Report and Order, 14 FCC Rcd 4289 (1999), *recon.*, 14 FCC Rcd 21628
    (1999); *see also* *Further Comment Requested To Update and Refresh
    Record on Computer III Requirements*, Public Notice, CC Docket Nos.
    95-20, 98-10 (rel. Mar. 7, 2001).

[^177]: *Review of Regulatory Requirements for Incumbent LEC Broadband
    Services; SBC Petition for Expedited Ruling That It Is Non-Dominant
    in Its Provision of Advanced Services and for Forbearance from
    Dominant Carrier Regulation of These Services*, CC Docket No.
    01-337, Notice of Proposed Rulemaking, FCC 01-360 (rel. Dec. 20,
    2001).

[^178]: *See, e.g.*, *Policy and Rules Concerning the Interstate,
    Interexchange Market,* 16 FCC Rcd 7418 (2001); *Deployment of
    Wireline Services Offering Advanced Telecommunications Capability,*
    13 FCC Rcd 24012 (1998); *Amendment of Section 64.702 of the
    Commission's Rules and Regulations (Computer III),* 104 FCC 2d 958
    (1986); *Amendment of Section 64.702 of the Commission's Rules and
    Regulations (Computer II),* 77 FCC2d 384 (1980); *see also
    Independent Data Communications Manufacturers Association, Inc.,* 10
    FCC Rcd 13717 (1995).