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 Federal  Communications  Commission  FCC  05-  150 
 Before  the  Federal  Communications  Commission 
 Washington,  D.  C.  20554 
 In  the  Matters  of 
 Appropriate  Framework  for  Broadband  Access  to  the  Internet  over  Wireline  Facilities 


 Universal  Service  Obligations  of  Broadband  Providers 
 Review  of  Regulatory  Requirements  for  Incumbent  LEC  Broadband  Telecommunications 
 Services 
 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 
 Conditional  Petition  of  the  Verizon  Telephone  Companies  for  Forbearance  Under  47  U.  S.  C. 
   160(  c)  with  Regard  to  Broadband  Services  Provided  Via  Fiber  to  the  Premises;  Petition  of  the 
 Verizon  Telephone  Companies  for  Declaratory  Ruling  or,  Alternatively,  for  Interim  Waiver  with 
 Regard  to  Broadband  Services  Provided  Via  Fiber  to  the  Premises 


 Consumer  Protection  in  the  Broadband  Era 


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 CC  Docket  No.  02-  33 
 CC  Docket  No.  01-  337 
 CC  Docket  Nos.  95-  20,  98-  10 


 WC  Docket  No.  04-  242 
 WC  Docket  No.  05-  271 
 REPORT  AND  ORDER  AND 
 NOTICE  OF  PROPOSED  RULEMAKING 
 Adopted:  August  5,  2005  Released:  September  23,  2005 
 Comment  Date:  (90  Days  After  Federal  Register  Publication  of  this  Notice)  Reply  Comment  Date:  (135  Days  After  Federal  Register  Publication  of  this  Notice) 


 By  the  Commission:  Chairman  Martin  and  Commissioner  Abernathy  issuing  separate  statements;  Commissioners  Copps  and  Adelstein  concurring  and  issuing  separate  statements. 
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 TABLE  OF  CONTENTS  Paragraph 
 I.  INTRODUCTION.......................................................................................................................................  3  II.  EXECUTIVE  SUMMARY........................................................................................................................  6 
 III.  BACKGROUND  AND  SCOPE  ................................................................................................................  7  IV.  CLASSIFICATION  OF  WIRELINE  BROADBAND  INTERNET  ACCESS 
 SERVICE................................................................................................................................................  10  V.  REGULATION  OF  WIRELINE  BROADBAND  INTERNET  ACCESS 
 SERVICE  PROVIDERS.......................................................................................................................  13  A.  Computer  Inquiry  Regime................................................................................................................  14 
 1.  History  of  the  Computer  Inquiry............................................................................................  14  2.  Current  Computer  Inquiry  Requirements  ..............................................................................  15 
 a)  Computer  II  Requirements  .....................................................................................................  15  b)  Computer  III  Requirements....................................................................................................  17 
 c)  Current  Applicability  of  Computer  Inquiry  Rules  to  Wireline  Broadband  Internet  Access  Service  Providers  .......................................................................................................  19 
 B.  Elimination  of  the  Computer  Inquiry  Requirements  .......................................................................  20  1.  Broadband  Internet  Access  Service  Technology  ..................................................................  20 
 2.  Computer  Inquiry  Requirements  Are  No  Longer  Appropriate  ............................................  23  a)  The  Wireline  Broadband  Internet  Access  Services  Marketplace.........................................  27 
 b)  Technological  Innovation.......................................................................................................  35  c)  New  Services  ..........................................................................................................................  38 
 d)  Wireline  Broadband  Internet  Access  Service  Providers  Business  Incentives....................  40  e)  A  Change  of  Course  Is  Justified  ............................................................................................  42 
 C.  New  Regulatory  Framework  for  Wireline  Broadband  Internet  Access  Service  Providers  ...........  47  1.  Wireline  Broadband  Internet  Access  Service  Providers  May  Offer  Transmission 
 Service  on  a  Non-  Common  Carrier  Basis  or  a  Common  Carrier  Basis...............................  47  a)  Non-  Common  Carriage  Arrangements  .................................................................................  47 
 b)  Common  Carriage  Offerings..................................................................................................  48  c)  Other  Proposed  Alternative  Regulations  for  Wireline  Broadband  Internet  Access 
 Services  ...................................................................................................................................  52  2.  Current  Title  II  Unbundled  Wireline  Broadband  Internet  Access  Transmission 
 Services  Must  Remain  Available  During  a  One-  Year  Transition  Period  ............................  53  3.  Discontinuation  of  Service  .....................................................................................................  55 
 D.  Classification  of  Wireline  Broadband  Internet  Access  Transmission  Component........................  57  VI.  EFFECT  ON  EXISTING  OBLIGATIONS  ..........................................................................................  61 
 A.  Federal  Universal  Service  Contribution  Obligations  ......................................................................  63  B.  Law  Enforcement,  National  Security,  and  Emergency  Preparedness  ............................................  64 
 1.  CALEA  ...................................................................................................................................  64  2.  USA  PATRIOT  Act  ...............................................................................................................  65 
 3.  Emergency  Preparedness  and  Response................................................................................  65  4.  Network  Reliability  and  Interoperability...............................................................................  66 
 C.  Access  by  Persons  with  Disabilities.................................................................................................  67  D.  NANPA  Funding  ..............................................................................................................................  70 
 E.  Obligations  of  Incumbent  LECs  Under  Section  251.......................................................................  70  F.  Cost  Allocation..................................................................................................................................  72 
 1.  Relative  Costs  and  Benefits....................................................................................................  72  2.  Section  254(  k).........................................................................................................................  75 
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 VII.  ENFORCEMENT.....................................................................................................................................  77  VIII.  NOTICE  OF  PROPOSED  RULEMAKING  ........................................................................................  77 
 A.  CPNI  ..................................................................................................................................................  78  B.  Slamming...........................................................................................................................................  79 
 C.  Truth-  in-  Billing  .................................................................................................................................  80  D.  Network  Outage  Reporting...............................................................................................................  81 
 E.  Section  214  Discontinuance  .............................................................................................................  81  F.  Section  254(  g)  Rate  Averaging  Requirements  ................................................................................  82 
 G.  Federal  and  State  Involvement  .........................................................................................................  82  H.  Consumer  Options  for  Enforcement  ................................................................................................  83 
 IX.  PROCEDURAL  MATTERS...................................................................................................................  83  A.  Final  Paperwork  Reduction  Act  Analysis........................................................................................  83 
 B.  Regulatory  Flexibility  .......................................................................................................................  83  C.  Other  Procedural  Matters..................................................................................................................  83 
 1.  Ex  Parte  Presentations  ............................................................................................................  83  2.  Comment  Filing  Procedures...................................................................................................  84 
 3.  Accessible  Formats.................................................................................................................  85  X.  ORDERING  CLAUSES...........................................................................................................................  85 
 APPENDIX  A    LIST  OF  COMMENTERS  APPENDIX  B    REGULATORY  FLEXIBILITY  ANALYSES 


 I.  INTRODUCTION 
 1.  In  this  Order,  we  establish  a  new  regulatory  framework  for  broadband  Internet  access  services  offered  by  wireline  facilities-  based  providers.  Our  actions  today  are  essential  to  attaining  the  goals  set 


 forth  in  the  Wireline  Broadband  proceeding,  1  and  are  reinforced  by  and  consistent  with  the  Supreme  Courts  recent  opinion  in  NCTA  v.  Brand  X.  2  This  framework  establishes  a  minimal  regulatory 
 environment  for  wireline  broadband  Internet  access  services  to  benefit  American  consumers  and  promote  innovative  and  efficient  communications.  First,  this  Order  encourages  the  ubiquitous  availability  of 
 broadband  to  all  Americans  by,  among  other  things,  removing  outdated  regulations.  Those  regulations  were  created  over  the  past  three  decades  under  technological  and  market  conditions  that  differed  greatly 
 from  those  of  today.  Second,  the  framework  we  adopt  in  this  Order  furthers  the  goal  of  developing  a  consistent  regulatory  framework  across  platforms  by  regulating  like  services  in  a  similar  functional 
 manner,  after  a  transitional  period.  Finally,  the  actions  we  take  in  this  Order  allow  facilities-  based  wireline  broadband  Internet  access  service  providers  to  respond  to  changing  marketplace  demands 
 effectively  and  efficiently,  spurring  them  to  invest  in  and  deploy  innovative  broadband  capabilities  that  can  benefit  all  Americans,  consistent  with  the  Communications  Act  of  1934,  as  amended  (the 
 Communications  Act  or  Act). 


 1  Appropriate  Framework  for  Broadband  Access  to  the  Internet  over  Wireline  Facilities,  Universal  Service 
 Obligations  of  Broadband  Providers,  CC  Docket  No.  02-  33,  Notice  of  Proposed  Rulemaking,  17  FCC  Rcd  3019  (2002)  (Wireline  Broadband  NPRM). 


 2  National  Cable  &  Telecommunications  Assn  v.  Brand  X  Internet  Services,  125  S.  Ct.  2688  (2005)  (NCTA  v.  Brand 
 X),  affg  Inquiry  Concerning  High-  Speed  Access  to  the  Internet  Over  Cable  and  Other  Facilities,  Internet  Over  Cable  Declaratory  Ruling,  Appropriate  Regulatory  Treatment  for  Broadband  Access  to  the  Internet  Over  Cable 


 Facilities,  GN  Docket  No.  00-  185  &  CS  Docket  No.  02-  52,  Declaratory  Ruling  and  Notice  of  Proposed  Rulemaking,  17  FCC  Rcd  4798  (2002)  (Cable  Modem  Declaratory  Ruling  and  NPRM). 
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 2.  In  this  Order  we  reach  a  classification  determination  that  is  consistent  with  our  decision  in  the  Cable  Modem  proceeding,  as  affirmed  by  the  Supreme  Court.  Unlike  the  Cable  Modem  Declaratory 
 Ruling,  3  however,  which  addressed  a  service  and  its  transmission  component  that  had  not  previously  been  classified  under  the  Act  or  subjected  to  any  network  access  requirements,  because  facilities-  based 
 providers  of  wireline  broadband  Internet  access  service  are  subject  to  legacy  regulation,  4  we  must  consider  that  legacy  regulation  in  determining  the  appropriate  regulatory  framework  for  wireline 
 broadband  Internet  access  service  providers. 
 3.  Today,  we  decide  that  the  appropriate  framework  for  wireline  broadband  Internet  access  service,  including  its  transmission  component,  is  one  that  is  eligible  for  a  lighter  regulatory  touch.  5  In  the  past,  the 


 primary,  if  not  sole,  facilities-  based  platform  available  for  the  provision  of  information  services  to  consumers  was  an  incumbent  local  exchange  carriers  (incumbent  LECs)  telephone  network.  6  By 
 contrast,  the  record  before  us  demonstrates  that  the  broadband  Internet  access  market  today  is  characterized  by  several  emerging  platforms  and  providers,  both  intermodal  and  intramodal,  in  most  areas 
 of  the  country.  7  We  are  confident  that  the  regulatory  regime  we  adopt  in  this  Order  will  promote  the  availability  of  competitive  broadband  Internet  access  services  to  consumers,  via  multiple  platforms,  while 
 ensuring  adequate  incentives  are  in  place  to  encourage  the  deployment  and  innovation  of  broadband  platforms  consistent  with  our  obligations  and  mandates  under  the  Act.  8 


 3  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4799-  839,  paras.  1-  71. 
 4  As  the  Supreme  Court  recently  observed,  the  Commission  has  never  applied  its  legacy-  based  network  access 
 regime  to  information  services  provided  over  cable  facilities.  NCTA  v.  Brand  X,  slip  op.  at  30;  see  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4825,  para.  43. 


 5  Throughout  this  Order,  we  refer  to  the  transmission  underlying  wireline  broadband  Internet  access  service  as  the 
 transmission  component.  We  note  that  commenters  use  various  terms  to  refer  to  this  transmission  component.  See,  e.  g.,  AT&  T  Comments  at  17  (  standalone  broadband  transmission  services);  Covad  Comments  at  65-  66 


 (  telecommunications  component);  BellSouth  Reply  at  12  (same).  6 
 See  NCTA  v.  Brand  X,  slip  op.  at  30.  This  network  was  optimized  for  narrowband  voice  and  data  applications,  not  high-  speed  Internet  access  capabilities  that  were  not  yet  even  commercially  contemplated.  See  Wireline  Broadband 


 NPRM,  17  FCC  Rcd  at  3037,  para.  136.  7 
 E.  g.,  Alcatel  Comments  at  2-  3;  BellSouth  Comments  at  15-  18;  Qwest  Comments  at  26;  SBC  Comments  at  20-  24;  Verizon  Comments  at  15;  see  also  NCTA  v.  Brand  X,  slip  op.  at  2-  3.  We  refer  to  intramodal  competitors  as  those 


 competitive  providers,  such  as  Covad,  whose  services  are  either  delivered  partially  or  wholly  over  incumbent  LEC  facilities,  or  over  wireline  platforms  using  technology  identical  or  similar  to  those  which  incumbent  LECs  have 
 deployed.  Intermodal  competitors  are  providers  of  services  similar  to  those  provided  by  incumbent  LECs  that  rely  exclusively  on  technological  platforms  other  than  wireline  technologies.  As  we  discuss  in  part  V.  B.  1,  below, 
 intermodal  competitors  include,  for  example,  cable  modem  service  providers,  wireless  broadband  Internet  access  service  providers,  satellite  broadband  Internet  access  service  providers,  and  other  broadband  Internet  access  service 
 providers  such  as  broadband  over  power  line  providers.  Availability  of  Advanced  Telecommunications  Capability  in  the  United  States,  GN  Docket  No.  04-  54,  Fourth  Report  to  Congress,  FCC  04-  208,  at  18-  23,  45  (rel.  Sept.  9,  2004) 
 (Fourth  Section  706  Report)  (describing  wireless,  satellite,  and  power  line  platforms).  Twice  a  year,  the  Commission  releases  High-  Speed  Services  reports  that  summarize  the  results  of  its  Form  477  data  collection  under 
 which  all  facilities-  based  providers  of  high-  speed  telecommunications  capability  must  provide  information  regarding  their  operations.  See,  e.  g.,  Federal  Communications  Commission,  Wireline  Competition  Bureau,  Industry  Analysis 
 and  Technology  Division,  High-  Speed  Services  for  Internet  Access  as  of  December  31,  2004,  at  Table  3,  Chart  6  (rel.  July  7,  2005)  (High-  Speed  Services  July  2005  Report). 
 8  Specifically,  Congress  enacted  the  Telecommunications  Act  of  1996  (1996  Act)  for  the  express  purposes  of 
 promoting  competition,  reducing  regulation,  and  encouraging  the  rapid  deployment  of  new  telecommunications  (continued  .  .  .) 
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 4.  In  part  II,  below,  we  summarize  the  major  actions  we  take  in  this  Order.  In  part  III,  we  provide  important  background  information  and  define  the  scope  of  this  Order.  Then  in  part  IV,  we  classify 
 wireline  broadband  Internet  access  service  as  an  information  service  under  the  statute.  In  part  V,  we  develop  our  new  regulatory  framework  for  broadband  Internet  access  services  offered  by  wireline 
 facilities-  based  providers.  We  begin  this  part  by  describing  the  current  regulatory  framework  under  the  Computer  Inquiry  regime  9  and  the  technological  attributes  associated  with  broadband  Internet  access 
 services  that  are  relevant  to  our  decision-  making  process.  Next,  we  consider  the  appropriateness  of  maintaining  the  current  access  and  related  requirements  that  apply  to  facilities-  based  wireline  broadband 
 Internet  access  service  providers  under  the  Computer  Inquiry  rules.  We  conclude  that  continued  application  of  the  Computer  Inquiry  requirements  is  not  appropriate,  and  we  adopt  a  new  framework  for 
 wireline  broadband  Internet  access  service  providers.  We  then  determine  that,  given  this  new  framework,  the  transmission  component  of  wireline  broadband  Internet  access  is  not  a  telecommunications  service. 
 In  part  VI,  we  analyze  the  effect  of  our  classification  findings  on  universal  service,  national  security,  and  other  important  consumer  interests.  Finally,  consistent  with  our  objective  to  create  a  broadband 
 regulatory  regime  that  is  technology  and  competitively  neutral,  we  adopt  a  Notice  of  Proposed 


 (continued  from  previous  page)  technologies.  See  Preamble,  Telecommunications  Act  of  1996,  Pub.  L.  104-  104,  110  Stat.  56  (1996)  (Preamble  to 
 1996  Act).  In  section  706  of  the  1996  Act,  Congress  directed  the  Commission  to  encourage,  without  regard  to  transmission  media  or  technology,  the  deployment  of  advanced  telecommunications  capability  to  all  Americans  on  a 
 reasonable  and  timely  basis  through,  among  other  things,  removing  barriers  to  infrastructure  investment.  Section  706  is  reproduced  in  the  notes  to  section  157  of  the  Act.  See  47  U.  S.  C.    157  nt. 
 9  See  Amendment  of  Section  64.  702  of  the  Commissions  Rules  and  Regulations  (Computer  II),  77  FCC  2d  384 
 (1980)  (Computer  II  Final  Decision),  recon.,  84  FCC  2d  50  (1980)  (Computer  II  Reconsideration  Order),  further  recon.,  88  FCC  2d  512  (1981)  (Computer  II  Further  Reconsideration  Order),  affd  sub  nom.  Computer  and 


 Communications  Industry  Assn  v.  FCC,  693  F.  2d  198  (D.  C.  Cir.  1982)  (CCIA  v.  FCC),  cert.  denied,  461  U.  S.  938  (1983)  (collectively  referred  to  as  Computer  II);  Amendment  of  Section  64.  702  of  the  Commissions  Rules  and 
 Regulations,  CC  Docket  No.  85-  229,  Phase  I,  104  FCC  2d  958  (1986)  (Computer  III  Phase  I  Order),  recon.,  2  FCC  Rcd  3035  (1987)  (Computer  III  Phase  I  Reconsideration  Order),  further  recon.,  3  FCC  Rcd  1135  (1988)  (Computer 
 III  Phase  I  Further  Reconsideration  Order),  second  further  recon.,  4  FCC  Rcd  5927  (1989)  (Computer  III  Phase  I  Second  Further  Reconsideration  Order);  Phase  I  Order  and  Phase  I  Recon.  Order  vacated  sub  nom.  California  v. 
 FCC,  905  F.  2d  1217  (9  th  Cir.  1990)  (California  I);  CC  Docket  No.  85-  229,  Phase  II,  2  FCC  Rcd  3072  (1987)  (Computer  III  Phase  II  Order),  recon.,  3  FCC  Rcd  1150  (1988)  (Computer  III  Phase  II  Reconsideration  Order), 
 further  recon.,  4  FCC  Rcd  5927  (1989)  (Phase  II  Further  Reconsideration  Order);  Phase  II  Order  vacated,  California  I,  905  F.  2d  1217  (9  th  Cir.  1990);  Computer  III  Remand  Proceeding,  CC  Docket  No.  90-  368,  5  FCC  Rcd 
 7719  (1990)  (ONA  Remand  Order),  recon.,  7  FCC  Rcd  909  (1992),  pets.  for  review  denied  sub  nom.  California  v.  FCC,  4  F.  3d  1505  (9  th  Cir.  1993)  (California  II);  Computer  III  Remand  Proceedings:  Bell  Operating  Company 
 Safeguards  and  Tier  1  Local  Exchange  Company  Safeguards,  CC  Docket  No.  90-  623,  6  FCC  Rcd  7571  (1991)  (BOC  Safeguards  Order),  BOC  Safeguards  Order  vacated  in  part  and  remanded  sub  nom.  California  v.  FCC,  39 
 F.  3d  919  (9  th  Cir.  1994)  (California  III),  cert.  denied,  514  U.  S.  1050  (1995);  Computer  III  Further  Remand  Proceedings:  Bell  Operating  Company  Provision  of  Enhanced  Services,  CC  Docket  No.  95-  20,  Notice  of  Proposed 
 Rulemaking,  10  FCC  Rcd  8360  (1995)  (Computer  III  Further  Remand  Notice),  Further  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  6040  (1998)  (Computer  III  Further  Remand  Further  Notice);  Report  and  Order,  14  FCC 
 Rcd  4289  (1999)  (Computer  III  Further  Remand  Order),  recon.,  14  FCC  Rcd  21628  (1999)  (Computer  III  Further  Remand  Reconsideration  Order);  see  also  Further  Comment  Requested  to  Update  and  Refresh  Record  on  Computer 
 III  Requirements,  CC  Dockets  Nos.  95-  20  &  98-  10,  Public  Notice,  16  FCC  Rcd  5363  (2001)  (asking  whether,  under  the  open  network  architecture  (ONA)  framework,  information  service  providers  can  obtain  the  telecommunications 
 inputs,  including  digital  subscriber  line  (DSL)  service,  they  require)  (collectively  referred  to  as  Computer  III).  Together  with  Computer  I,  see  infra  note  49,  Computer  II  and  Computer  III  are  referred  to  as  the  Computer 
 Inquiries. 
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 9.  Wireline  broadband  Internet  access  service,  for  purposes  of  this  proceeding,  is  a  service  that  uses  existing  or  future  wireline  facilities  of  the  telephone  network  to  provide  subscribers  with  Internet  access 
 capabilities.  15  The  term  Internet  access  service  refers  to  a  service  that  always  and  necessarily  combines  computer  processing,  information  provision,  and  computer  interactivity  with  data  transport,  enabling  end 
 users  to  run  a  variety  of  applications  such  as  e-  mail,  and  access  web  pages  and  newsgroups.  16  Wireline  broadband  Internet  access  service,  like  cable  modem  service,  is  a  functionally  integrated,  finished  service 
 that  inextricably  intertwines  information-  processing  capabilities  with  data  transmission  such  that  the  consumer  always  uses  them  as  a  unitary  service.  17  For  example,  as  we  explained  in  the  Wireline 
 Broadband  NPRM,  where  wireline  broadband  Internet  access  service  enables  an  end  user  to  retrieve  files  from  the  World  Wide  Web,  the  end  user  has  the  capability  to  interact  with  information  stored  on  the 
 service  providers  facilities.  18  To  the  extent  a  provider  offers  end  users  a  capability  to  store  files  on  the  service  providers  computers  to  establish  home  pages,  the  consumer  is  utilizing  the  capability  for  .  .  . 
 storing  .  .  .  or  making  available  information.  19  In  short,  providers  of  wireline  broadband  Internet  access  service  offer  subscribers  the  ability  to  run  a  variety  of  applications  that  fit  under  the  characteristics  stated 
 in  the  information  service  definition.  20  These  characteristics  distinguish  wireline  broadband  Internet  access  service  from  other  wireline  broadband  services,  such  as  stand-  alone  ATM  service,  frame  relay, 


 15  We  stress  that  our  actions  in  this  Order  are  limited  to  wireline  broadband  Internet  access  service  and  its  underlying 
 broadband  transmission  component,  whether  that  component  is  provided  over  all  copper  loops,  hybrid  copper-  fiber  loops,  a  fiber-  to-  the-  curb  or  fiber-  to-  the-  premises  (FTTP)  network,  or  any  other  type  of  wireline  facilities,  and 


 whether  that  component  is  provided  using  circuit-  switched,  packet-  based,  or  any  other  technology.  See  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3020  n.  1  &  3026,  para.  12.  As  noted  in  the  Wireline  Broadband  NPRM,  some 
 service  providers  deploying  DSL  and  other  wireline  broadband  technologies  may  utilize  asynchronous  transfer  mode  (ATM)  or  frame  relay  transport  in  their  networks.  See  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3026  n.  19.  The 
 use  of  ATM  or  frame  relay  transport  in  this  context  neither  expands  nor  limits  the  scope  of  relief,  which  covers  all  wireline  broadband  Internet  access  services  as  discussed  further  below.  This  Order  does  not  implicate  the  current 
 rules  or  regulatory  framework  for  the  provision  of  access  to  narrowband  transmission  associated  with  dial-  up  Internet  access  services  or  other  narrowband  or  broadband  information  services  when  provided  by  facilities-  based 
 wireline  carriers.  See  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3025  n.  18.  For  purposes  of  this  proceeding,  we  define  the  line  between  broadband  and  narrowband  consistent  with  the  Commissions  definition  in  other  contexts 
 (i.  e.,  services  with  over  200  kbps  capability  in  at  least  one  direction).  See,  e.  g.,  Fourth  Section  706  Report,  at  8,  10;  Local  Telephone  Competition  and  Broadband  Reporting,  CC  Docket  No.  04-  141,  Report  and  Order,  19  FCC  Rcd 
 22340,  22342,  para.  3  (2004)  (Form  477  Data  Collection  Order);  Communications  Assistance  for  Law  Enforcement  Act  and  Broadband  Access  and  Services,  ET  Docket  No.  04-  295,  RM  10865,  Notice  of  Proposed  Rulemaking  and 
 Declaratory  Ruling,  19  FCC  Rcd  15676,  15692,  para.  35  (2004)  (CALEA  NPRM).  Although  this  definition  remains  in  effect  today,  the  Commission  has  indicated  that  it  may  examine  the  definition  and  modify  it  for  future  purposes. 
 See  Form  477  Data  Collection  Order,  19  FCC  Rcd  at  22347-  48,  para.  14.  16 
 See  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4821,  para.  36;  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3027  n.  27  (citing  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Report  to  Congress,  13 


 FCC  Rcd  11501,  11516-  17,  para.  33  (1998)  (Report  to  Congress)  (Internet  access  services  are  services  that  alter  the  format  of  information  through  computer  processing  applications  such  as  protocol  conversion  and  interaction  with 
 stored  data.));  see  also  47  U.  S.  C.    231(  e)(  4);  Reno  v.  American  Civil  Liberties  Union,  521  U.  S.  844,  851  (1997).  17 
 NCTA  v.  Brand  X,  slip  op.  at  6  (citing  Cable  Modem  Declaratory  Ruling,  19  FCC  Rcd  at  4823,  para.  38)  &  18-  19.  That  is,  the  transmission  component  of  wireline  broadband  Internet  access  service  is    part  and  parcel  of  [that 


 service]  and  is  integral  to  [that  services]  other  capabilities.  NCTA  v.  Brand  X,  slip  op.  at  26  (quoting  Cable  Modem  Declaratory  Ruling,  19  FCC  Rcd  at  4823,  para.  39). 
 18  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3031,  para.  21. 
 19  Id. 
 20  Id.  at  3030,  para.  20. 
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 gigabit  Ethernet  service,  and  other  high-  capacity  special  access  services,  that  carriers  and  end  users  have  traditionally  used  for  basic  transmission  purposes.  21  That  is,  these  services  lack  the  key  characteristics  of 
 wireline  broadband  Internet  access  service    they  do  not  inextricably  intertwine  transmission  with  information-  processing  capabilities.  22  Because  carriers  and  end  users  typically  use  these  services  for 
 basic  transmission  purposes,  these  services  are  telecommunications  services  under  the  statutory  definitions.  23  These  broadband  telecommunications  services  remain  subject  to  current  Title  II 
 requirements.  24 
 10.  In  the  Wireline  Broadband  NPRM,  the  Commission  tentatively  concluded  that  wireline  broadband  Internet  access  service  is  an  information  service  when  provided  over  an  entitys  own  facilities, 


 and  that  the  underlying  transmission  component  of  such  service  constituted  telecommunications  and  not  a  telecommunications  service  under  the  Act.  25  The  Commission  invited  comment  on  these  tentative 
 conclusions  and  its  prior  conclusion  that  an  entity  is  providing  a  telecommunications  service  to  the  extent  that  such  entity  provides  only  broadband  transmission  service  on  a  stand-  alone  basis,  without  a 
 broadband  Internet  Access  service.  26  Finally,  the  Commission  sought  comment  on  the  extent  to  which  any  actions  it  might  take  in  this  proceeding  would  affect  other  regulatory  obligations.  27 


 11.  In  addressing  the  issues  before  us,  we  draw  from  the  records  of  several  proceedings,  including  the  Wireline  Broadband  proceeding,  where  the  Commission  invited  comment  on  technological  and  market-related 
 issues  pertaining  to  wireline  broadband  Internet  access  services,  28  and  the  Incumbent  LEC  Broadband  proceeding,  where  the  Commission  invited  comment  on  technological  and  market-  related 
 issues  relating  to  our  tariffing  rules  for  incumbent  LECs  broadband  telecommunications  services.  29 
 21  See  Petition  of  the  Verizon  Telephone  Companies  for  Forbearance  under  47  U.  S.  C.    160(  c)  from  Title  II  and 
 Computer  Inquiry  Rules  with  Respect  to  Their  Broadband  Services,  WC  Docket  No.  04-  440,  at  11-  12  (filed  Dec.  20,  2004).  Similarly,  this  Order  does  not  disturb  incumbent  LECs  unbundled  network  element  (UNE)  obligations  or 


 competitive  carriers  rights  to  obtain  UNEs.  See  infra  Part  VI.  E.  22 
 NCTA  v.  Brand  X,  slip  op.  at  26.  23 
 See  47  U.  S.  C.    153(  43),  (46);  NCTA  v.  Brand  X,  slip  op.  at  26-  27.  24 
 We  note  that  the  Commission  is  currently  considering  changes  to  this  framework  in  a  number  of  related  proceedings.  See,  e.  g.,  Review  of  Regulatory  Requirements  for  Incumbent  LEC  Broadband  Telecommunications 


 Services,  CC.  Docket  No.  01-  337,  Notice  of  Proposed  Rulemaking,  16  FCC  Rcd  22745  (2001)  (Incumbent  LEC  Broadband  NPRM);  Computer  III  Further  Remand  Further  Notice,  13  FCC  Rcd  at  6046,  para.  6  (inviting  comment 
 on  whether  the  Commission  should  eliminate  the  ONA,  CEI,  and  other  Computer  III  requirements);  Special  Access  Rates  for  Price  Cap  Local  Exchange  Carriers;  AT&  T  Corp.  Petition  for  Rulemaking  to  Reform  of  Incumbent  Local 
 Exchange  Carrier  Rates  for  Interstate  Special  Access  Services,  WC  Docket  No.  05-  25,  RM-  10593,  Order  and  Notice  of  Proposed  Rulemaking,  FCC  05-  18  (rel.  Jan.  31,  2005)  (Special  Access  NPRM);  see  also  supra  note  15. 


 25  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3032-  33,  paras.  24-  25. 
 26  Id.  at  3033,  para.  26  n.  60  (citations  omitted). 
 27  Id.  at  3043-  47,  paras.  54-  61,  &  3048-  52,  paras.  65-  74. 
 28  Id.  at  3040-  41,  paras.  43-  44;  see  id.  at  3043-  47,  paras.  54-  61,  &  3048-  52,  paras.  65-  74  (inviting  comment  on  what 
 effect  classifying  wireline  broadband  Internet  access  service  as  an  information  service  would  have  on  regulatory  obligations  other  than  those  under  the  Commissions  Computer  Inquiry  rules). 


 29  Incumbent  LEC  Broadband  NPRM,  16  FCC  Rcd  at  22748,  para.  7.  We  also  include  the  Computer  III  Remand 
 proceeding  to  the  extent  it  addresses  wireline  broadband  Internet  access  service  as  well  as  the  Verizon  Fiber-  to-  the-Premises  proceedings.  See,  e.  g.,  Computer  III  Further  Remand  Further  Notice,  13  FCC  Rcd  at  6040;  Conditional 


 Petition  of  the  Verizon  Telephone  Companies  for  Forbearance  Under  47  U.  S.  C.    160(  c)  with  Regard  to  Broadband  (continued  .  .  .) 
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 Consistent  with  the  scope  of  the  Wireline  Broadband  proceeding,  we  restrict  our  decisions  in  this  Order  to  only  wireline  broadband  Internet  access  services  and  those  wireline  broadband  technologies  that  have 
 been  utilized  for  such  Internet  access  services.  30 
 IV.  CLASSIFICATION  OF  WIRELINE  BROADBAND  INTERNET  ACCESS  SERVICE 
 12.  In  this  section,  we  affirm  our  tentative  conclusion  that  wireline  broadband  Internet  access  service  provided  over  a  providers  own  facilities  is  an  information  service.  31  This  classification  is 


 consistent  both  with  the  Commissions  classification  of  cable  modem  service,  as  affirmed  by  the  Supreme  Court  in  Brand  X,  and  with  the  Commissions  earlier  determination  in  its  Report  to  Congress  that  Internet 
 access  service  is  an  information  service.  32 


 (continued  from  previous  page)  Services  Provided  Via  Fiber  to  the  Premises,  WC  Docket  No.  04-  242  (filed  June  28,  2004)  (Verizon  Fiber-  to-  the-Premises 
 Forbearance  Petition);  Petition  of  the  Verizon  Telephone  Companies  for  Declaratory  Ruling  or,  Alternatively,  for  Interim  Waiver  with  Regard  to  Broadband  Services  Provided  Via  Fiber  to  the  Premises,  WC 
 Docket  No.  04-  242  (filed  June  28,  2004)  (Verizon  Fiber-  to-  the-  Premises  Declaratory  Ruling  and  Waiver  Petition).  For  clarity,  we  include  the  docket  number  in  references  to  documents  filed  in  proceedings  other  than  the  Wireline 
 Broadband  proceeding.  30 
 See  supra  note  15.  To  be  clear,  this  Order  does  not  address  classification  issues  of  broadband  Internet  access  services  provided  over  cable,  wireless  (satellite,  mobile,  or  fixed  wireless),  or  power  line  (electric  grid)  networks. 


 We  will  address,  where  appropriate,  any  regulatory  treatment  and  other  issues  associated  with  such  alternative  platforms  in  separate  proceedings  in  a  manner  not  inconsistent  with  the  analysis  and  conclusions  in  this  Order.  See, 
 e.  g.,  Amendment  of  Part  15  Regarding  New  Requirements  And  Measurement  Guidelines  For  Access  Broadband  Over  Power  Line  Systems,  Report  and  Order,  ET  Docket  No.  04-  37,  19  FCC  Rcd  21265  (2004);  Cable  Modem 
 Declaratory  Ruling,  17  FCC  Rcd  at  4839-  54,  paras.  72-  112  (notice  of  proposed  rulemaking);  see  also  infra  Part  VIII  (initiating  a  rulemaking  on  consumer  protection  in  the  broadband  era). 
 31  See  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3032-  33,  para.  24.  As  discussed  more  fully  below,  we  disagree 
 with  those  commenters  that  argue  that  wireline  broadband  Internet  access  service  necessarily  includes  both  an  information  service  and  a  telecommunications  service.  See,  e.  g.,  California  Commission  Comments  at  10-  14 


 (wireline  broadband  Internet  access  is  in  part  a  telecommunications  service);  Ohio  Commission  Comments  at  14-  15  (same);  Illinois  Commission  Comments  at  10  (distinct  telecommunications  service  and  information  service);  New 
 York  Commission  Comments  at  3-  4  (same);  Allegiance  Reply  at  28  (wireline  broadband  Internet  access  service  involves  both  information  service  and  telecommunications  service);  NRTA  Reply  at  2  (same).  Those  arguments  are 
 premised  on  an  assumption,  which  this  Order  fundamentally  alters,  that  the  carrier  continues  to  be  under  a  Commission-  imposed  compulsion  to  offer  the  transmission  underlying  that  service  as  a  telecommunications  service. 
 See,  e.  g.,  California  Commission  Comments  at  13-  14;  Illinois  Commission  Comments  at  9-  11;  New  York  Commission  Comments  at  4. 
 32  See  NCTA  v.  Brand  X,  slip  op.  at  13-  14;  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4820-  24,  paras.  34-  41; 
 Report  to  Congress,  13  FCC  Rcd  at  11511,  para.  21  (finding  that  Congress  intended  to  maintain  a  regime  in  which  information  service  providers  are  not  subject  to  regulation  as  common  carriers  merely  because  they  provide  their 


 services  via  telecommunications);  see  also  47  U.  S.  C.    231(  e)(  4)  (excluding  telecommunications  services  from  the  definition  of  Internet  access  service).  Although  the  Commission  has  not  been  entirely  consistent  on  this  point, 
 we  agree  for  the  wireline  broadband  Internet  access  described  in  this  Order  with  the  past  Commission  pronouncements  that  the  categories  of  information  service  and  telecommunications  service  are  mutually 
 exclusive.  Compare  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4823,  paras.  39-  40,  &  Report  to  Congress,  13  FCC  Rcd  at  11516-  26,  paras.  33-  48,  &  11530,  para.  59  with  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,  paras.  35-  37  (1998)  (Advanced  Services  Order  and  NPRM);  Deployment  of 
 Wireline  Services  Offering  Advanced  Telecommunications  Capability,  CC  Docket  No.  98-  147,  Order  on  Remand,  15  (continued  .  .  .) 
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 13.  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,  and  includes  electronic  publishing,  but  does  not  include  any  use  of  any  such  capability  for  the  management, 
 control,  or  operation  of  a  telecommunications  system  or  the  management  of  a  telecommunications  service.  33 


 The  Act  also  defines  telecommunications  service  as  the  offering  of  telecommunications  for  a  fee  directly  to  the  public,  or  to  such  classes  of  users  as  to  be  effectively  available  directly  to  the  public, 
 regardless  of  the  facilities  used  34  and  telecommunications  as  the  transmission,  between  or  among  points  specified  by  the  user,  of  information  of  the  users  choosing,  without  change  in  the  form  or  content 
 of  the  information  as  sent  and  received.  35 
 14.  Applying  the  definitions  of  information  service,  telecommunications,  and  telecommunications  service,  we  conclude  that  wireline  broadband  Internet  access  service  provided  over 


 a  providers  own  facilities  is  appropriately  classified  as  an  information  service  because  its  providers  offer  a  single,  integrated  service  (i.  e.,  Internet  access)  to  end  users.  36  That  is,  like  cable  modem  service  (which 
 is  usually  provided  over  the  providers  own  facilities),  wireline  broadband  Internet  access  service  combines  computer  processing,  information  provision,  and  computer  interactivity  with  data  transport, 
 enabling  end  users  to  run  a  variety  of  applications  (e.  g.,  e-  mail,  web  pages,  and  newsgroups).  37  These  applications  encompass  the  capability  for  generating,  acquiring,  storing,  transforming,  processing, 


 (continued  from  previous  page)  FCC  Rcd  385,  394-  95,  para.  21  (1999)  (Advanced  Services  Order  on  Remand);  Communications  Assistance  for  Law 
 Enforcement  Act,  CC  Docket  No.  97-  213,  Second  Report  and  Order,  15  FCC  Rcd  7105,  7120,  para.  27  (1999)  (CALEA  Second  Report  and  Order);  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  &  98-  183,  Report  and  Order,  16  FCC  Rcd  7418,  7447,  paras.  49-  50  (2001)  (CPE  Bundling  Order);  see  also  BellSouth  Reply  at  11;  Covad  Comments  at  66; 
 Qwest  Comments  at  8;  Verizon  Comments  at  8.  But  see  Allegiance  Comments  at  11-  12  (arguing  wireline  broadband  Internet  access  bundle[  s]  an  information  service  and  a  telecommunications  service). 
 33  47  U.  S.  C.    153(  20). 
 34  47  U.  S.  C.    153(  46). 
 35  47  U.  S.  C.    153(  43). 
 36  Indeed,  in  Brand  X,  quoting  from  the  Report  to  Congress,  the  Supreme  Court  stated  that,  from  an  end  users 
 perspective,  cable  modem  service  does  not  provide  a  transparent  ability  to  transmit  information.  See  NCTA  v.  Brand  X,  slip  op.  at  26-  29;  see  also  Report  to  Congress,  13  FCC  Rcd  at  11529,  para.  58  (stating  that  [  a]  n  offering  that 


 constitutes  a  single  service  from  the  end  users  standpoint  is  not  subject  to  common  carrier  regulation  simply  by  virtue  of  the  fact  that  it  involves  telecommunications  components). 
 37  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4822,  para.  38  (concluding  that  cable  modem  service  combines 
 the  transmission  of  data  with  computer  processing,  information  provision,  and  computer  interactivity,  enabling  end  users  to  run  a  variety  of  applications,  and  is  therefore  an  information  service);  see  also  Report  to  Congress,  13  FCC 


 Rcd  at  11536,  para.  73. 
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 retrieving,  utilizing,  or  making  available  information  via  telecommunications,  and  taken  together  constitute  an  information  service  as  defined  by  the  Act.  38 
 15.  The  capabilities  of  wireline  broadband  Internet  access  service  demonstrate  that  this  service,  like  cable  modem  service,  provides  end  users  more  than  pure  transmission,  between  or  among  points  selected 
 by  the  user,  of  information  of  the  users  choosing,  without  change  in  the  form  or  content  of  the  information  as  sent  and  received.  39  Because  wireline  broadband  Internet  access  service  inextricably 
 combines  the  offering  of  powerful  computer  capabilities  with  telecommunications,  we  conclude  that  it  falls  within  the  class  of  services  identified  in  the  Act  as  information  services.  40  The  information  service 
 classification  applies  regardless  of  whether  subscribers  use  all  of  the  functions  and  capabilities  provided  as  part  of  the  service  (e.  g.,  e-  mail  or  web-  hosting),  and  whether  every  wireline  broadband  Internet  access 
 service  provider  offers  each  function  and  capability  that  could  be  included  in  that  service.  41  Indeed,  as  with  cable  modem  service,  an  end  user  of  wireline  broadband  Internet  access  service  cannot  reach  a  third 
 partys  web  site  without  access  to  the  Domain  Naming  Service  (DNS)  capability  which  (among  other  things)  matches  the  Web  site  address  the  end  user  types  into  his  browser  (or  clicks  on  with  his  mouse) 
 with  the  IP  address  of  the  Web  pages  host  server.  42  The  end  user  therefore  receives  more  than  transparent  transmission  whenever  he  or  she  accesses  the  Internet. 


 16.  There  is  no  reason  to  classify  wireline  broadband  Internet  access  services  differently  depending  on  who  owns  the  transmission  facilities.  43  From  the  end  users  perspective,  an  information  service  is 
 being  offered  regardless  of  whether  a  wireline  broadband  Internet  access  service  provider  self-  provides  the  transmission  component  or  provides  the  service  over  transmission  facilities  that  it  does  not  own.  As 
 the  Commission  indicated  in  its  Report  to  Congress,  what  matters  is  the  finished  product  made  available  through  a  service  rather  than  the  facilities  used  to  provide  it.  44  The  end  user  of  wireline  broadband 
 Internet  access  service  receives  an  integrated  package  of  transmission  and  information  processing  capabilities  from  the  provider,  and  the  identity  of  the  owner  of  the  transmission  facilities  does  not  affect 


 38  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4823-  24,  para.  41.  In  contrast,  to  the  extent  a  service  does  not 
 provide  these  capabilities,  but  merely  provides  transmission  whether  narrowband  or  broadband,  it  would  not  be  an  information  service.  See  supra  para.  9  (explaining  the  difference  between  wireline  broadband  Internet  access 


 service  and  other  wireline  broadband  transmission  services).  39 
 47  U.  S.  C.    153(  43)  (defining  telecommunications);  cf.  NCTA  v.  Brand  X,  slip  op.  at  27  (finding  reasonable  the  Commissions  conclusion  that  an  end  user  of  cable  modem  service  is  equally  using  the  information  service 


 provided  by  the  cable  company  as  when  he  accesses  the  companys  own  Web  site,  its  e-  mail  service,  or  his  personal  Web  page);  see  also  supra  note  36. 
 40  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3027,  para.  13. 
 41  Cable  Modem  Declaratory  Ruling,  at  para.  38.  This  classification  appears  consistent  with  Congresss 
 understanding  of  the  nature  of  Internet  access  services.  Specifically,  in  section  230(  f)(  2)  of  the  Act,  Congress  defined  the  term  interactive  computer  service  to  mean  any  information  service,  .  .  .  including  specifically  a 


 service  or  system  that  provides  access  to  the  Internet  .  .  .  .  47  U.  S.  C.    230(  f)(  2)  (emphasis  added).  42 
 NCTA  v.  Brand  X,  slip  op.  at  27  (citation  omitted).  43 
 See  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3027-  28,  para.  14  (citing  Report  to  Congress,  13  FCC  Rcd  at  11534,  para.  69)  (concluding  that  non-  facilities-  based  ISPs  are  information  service  providers)). 


 44  Report  to  Congress,  13  FCC  Rcd  at  11530,  para.  59  (noting  Congresss  direction  that  the  classification  of  a 
 provider  should  not  depend  on  the  type  of  facilities  used  .  .  .  [but]  rather  on  the  nature  of  the  service  being  offered  to  customers);  see  also  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4821,  para.  35;  Wireline  Broadband 


 NPRM,  17  FCC  Rcd  at  3032-  33,  paras.  24-  25,  &  3052-  53,  para.  75. 
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 the  nature  of  the  service  to  the  end  user.  45  Thus,  in  addition  to  affirming  our  tentative  conclusion  above  that  wireline  broadband  Internet  access  service  provided  over  a  providers  own  facilities  is  an 
 information  service,  46  we  also  make  clear  that  wireline  broadband  Internet  access  service  is  an  information  service  when  the  provider  of  the  retail  service  does  not  provide  the  service  over  its  own 
 transmission  facilities. 
 17.  Not  only  is  the  classification  of  wireline  broadband  Internet  access  service  as  an  information  service  consistent  with  Brand  X,  but  this  classification,  in  our  view,  best  facilitates  the  goals  of  the  Act, 


 including  promoting  the  ubiquitous  availability  of  broadband  Internet  access  services  to  all  Americans.  Moreover,  by  classifying  both  wireline  broadband  Internet  access  service  and  cable  modem  service  as 
 information  services,  and  by  adopting  the  attached  NPRM,  we  move  closer  to  crafting  an  analytical  framework  that  is  consistent,  to  the  extent  possible,  across  multiple  platforms  that  support  competing 
 services.  47 
 V.  REGULATION  OF  WIRELINE  BROADBAND  INTERNET  ACCESS  SERVICE  PROVIDERS 


 18.  The  broadband  Internet  access  services  marketplace  is  vastly  different  from  the  marketplace  of  over  three  decades  ago  when  access  requirements  to  the  transmission  underlying  wireline-  based 
 information  services  were  first  developed  and  the  relative  cost/  benefit  analysis  rendered  a  different  result.  48  We  base  our  decision  to  eliminate  these  requirements  on  a  number  of  factors. 


 19.  First,  broadband  Internet  access  services  in  most  parts  of  the  country  are  offered  by  two  established  platform  providers,  which  continue  to  expand  rapidly,  and  by  several  existing  and  emerging 
 platforms  and  providers,  intermodal  and  intramodal  alike.  Second,  the  record  shows  that  the  existing  regulations  constrain  technological  advances  and  deter  broadband  infrastructure  investment  by  creating 
 disincentives  to  the  deployment  of  facilities  capable  of  providing  innovative  broadband  Internet  access  services.  Third,  fast-  paced  technological  changes  and  new  consumer  demands  are  causing  a  rapid 
 evolution  in  the  marketplace  for  these  services.  Wireline  broadband  carriers  are  constrained  in  their  ability  to  respond  to  these  changes  in  an  efficient,  effective,  or  timely  manner  as  a  result  of  the  limitations 
 imposed  by  these  regulations.  Fourth,  the  marketplace  should  create  incentives  for  facilities-  based  wireline  broadband  providers  to  make  broadband  transmission  available  on  a  wholesale  basis  without 
 these  requirements.  Finally,  the  directives  of  section  706  of  the  1996  Act  require  that  we  ensure  that  our  broadband  policies  promote  infrastructure  investment,  consistent  with  our  other  obligations  under  the  Act. 


 20.  To  provide  a  context  for  our  decisions,  we  briefly  describe  the  history  of  the  Computer  Inquiry  regime  and  summarize  its  purposes  and  basic  requirements.  We  explain  how  these  requirements  currently 
 apply  to  facilities-  based  wireline  broadband  Internet  access  providers,  and  why  these  rules  should  no  longer  apply.  Finally,  we  describe  how  our  new  framework  will  further  the  nations  broadband 
 objectives. 


 45  See,  e.  g.,  NCTA  v.  Brand  X,  slip  op.  at  24-  25  (recognizing  that  the  statutory  definitions  do  not  distinguish  between 
 facilities-  based  ISPs  and  other  ISPs);  see  also  Qwest  Comments  at  6-  8;  SBC  Comments  at  16-  18;  Verizon  Reply  at  6-  7. 


 46  See  supra  para.  12;  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3032-  33,  para.  24. 
 47  See  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3021-  23,  paras.  3-  7. 
 48  See  NCTA  v.  Brand  X,  slip  op.  at  30. 
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 A.  Computer  Inquiry  Regime 
 1.  History  of  the  Computer  Inquiry 
 21.  Wireline  broadband  Internet  access  services  provided  by  facilities-  based  carriers  are  currently  governed  by  rules  established  in  the  Commissions  Computer  Inquiry  proceedings.  The  Commission  first 
 examined  the  relationship  between  communications  and  computer  processing  in  Computer  I,  49  a  proceeding  that  began  almost  four  decades  ago  in  an  era  far  different  from  today  in  terms  of  the 
 technological,  marketplace,  and  regulatory  environment  for  telecommunications  carriers.  50  In  the  Notice  of  Inquiry  that  opened  that  proceeding,  the  Commission  explained  that  communications  common  carriers 
 were  rapidly  becoming  equipped  to  enter  into  the  data  processing  field.  51  For  example,  the  Commission  described  the  activities  of  Western  Union  in  establishing  computer  centers  in  key  cities  to  provide  a 
 variety  of  data  processing,  storage,  and  retrieval  services  to  the  public.  52  While  noting  that  the  Bell  System  had  not  yet  revealed  any  plan  to  provide  data  processing  services  similar  to  Western  Unions,  the 
 Commission  discussed  technological  steps  the  Bell  System  companies  were  taking  that  would  permit  them  to  do  so,  including  converting  all  central  offices  to  electronic  switching.  53  Recognizing  that 
 common  carriers  were  or  would  be  offering  services  that  were  competitive  with  those  sold  by  nonregulated  entities  (e.  g.,  computer  manufacturers),  and  that  such  entities  would  be  dependent  upon 
 common  carriers  for  reasonably  priced  communication  facilities  and  services,  the  Commission  sought  comment  on  the  circumstances  under  which  data  processing,  computer  information,  and  message 
 switching  services  were  or  should  be  subject  to  the  provisions  of  the  Communications  Act.  54 
 22.  In  Computer  I,  the  Commission  determined  that  the  data  processing  industry  was  competitive  55  and,  therefore,  the  Commission  should  not  assert  regulatory  authority  over  it.  56  In  refraining  from 


 49  See  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  NOI);  Regulatory  and  Policy  Problems  Presented  by  the  Interdependence  of  Computer  and  Communication  Services  and  Facilities,  Docket  No. 


 16979,  Final  Decision  and  Order,  28  FCC  2d  267  (1971)  (Computer  I  Final  Decision),  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). 
 50  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3038,  para.  38;  see  NCTA  v.  Brand  X,  slip  op.  at  30  (  Unlike  at  the 
 time  of  Computer  II,  substitute  forms  of  Internet  transmission  exist  today  .  .  .  .).  51 
 Computer  I  NOI,  7  FCC  2d  at  13-  14,  para.  10.  52 
 Id.  Western  Union  would  also  arrange  to  design,  procure,  and  install  all  hardware  necessary  for  a  fully  integrated  data  processing  and  communication  system  for  individual  customers,  in  addition  to  managing  such  a  system  for  the 


 customer.  Id.  53 
 Id.  at  14,  para.  11.  The  Commission  also  noted  that  there  was  evidence  of  a  trend  among  several  major  domestic  and  international  common  carriers: 


 to  program  their  computers  not  only  for  switching  services,  but  also  for  the  storage,  processing,  and  retrieval  of  various  types  of  business  and  management  data  of  entities  desiring  to  subscribe  therefor  in 
 lieu  of  such  industries  providing  this  service  to  themselves  on  an  in-  house  basis  or  contracting  with  computer  firms  for  the  service. 


 Id.  54 
 Id.  at  15-  16,  paras.  15,  18;  see  also  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3038,  para.  38.  55 
 The  Commission  defined  data  processing  at  that  time  as  use  of  a  computer  for  the  processing  of  information  as  distinguished  from  circuit  or  message-  switching.  E.  g.,  Regulatory  and  Policy  Problems  Presented  by  the 


 (continued  .  .  .) 
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 regulating  data  processing  services,  however,  the  Commission  distinguished  them  from  regulated  communications  services.  The  Commission  initially  determined  that  services  combining  both 
 communications  and  data  processing  functions  (i.  e.,  hybrid  services)  would  be  classified  on  a  case-  by-case  basis.  57  The  Commission  also  permitted  common  carriers  to  furnish  data  processing  services  through 
 a  maximum  separation  policy  to  keep  them  from  favoring  their  own  data  processing  activities  through  anticompetitive  activities.  58 


 2.  Current  Computer  Inquiry  Requirements 
 a)  Computer  II  Requirements 
 23.  Even  as  the  Computer  I  rules  were  being  implemented,  technological  developments  rendered  them  nearly  obsolete  as  it  became  harder  to  distinguish  communications  from  data  processing  or 
 computing.  59  To  respond  to  the  confluence  of  technology  in  the  offering  of  communications  and  data  processing  services  and  to  give  greater  regulatory  certainty  than  that  afforded  by  a  case-  by-  case  review 
 based  on  the  nature  of  the  processing  performed,  the  Commission  created  a  framework  in  Computer  II  that  defined  and  distinguished  between  basic  services  60  and  enhanced  services.  61  It  determined  that 


 (continued  from  previous  page)  Interdependence  of  Computer  and  Communications  Services  and  Facilities,  Tentative  Decision  of  the  Commission, 
 28  FCC  2d  291,  295,  para.  15  (1970)  (Computer  I  Tentative  Decision).  56 
 Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3038,  para.  38  (citing  Computer  I  Final  Decision,  28  FCC  2d  at  270  para.  11). 


 57  Computer  I  Final  Decision,  28  FCC  2d  at  276-  79. 
 58  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3038,  para.  38  (quoting  Computer  I  Final  Decision,  28  FCC  2d  at 
 270-  71,  para.  12).  Maximum  separation  required  a  separate  corporate  entity  with  separate  accounts,  officers,  personnel,  equipment,  and  facilities.  See  Computer  II  Final  Decision,  77  FCC  2d  at  391  n.  2  (noting  that,  in 


 addition,  these  rules  prohibited  the  carrier  from  promoting  the  data  processing  services  offered  by  the  separate  subsidiary). 
 59  CCIA  v.  FCC,  693  F.  2d  at  204.  Specifically,  the  phenomenon  of  distributed  processing  allowed  computers  and 
 terminals  to  perform  both  data  processing  and  communications  control  applications  within  the  network  and  at  the  customers  premises.  See  Computer  II  Final  Decision,  77  FCC  2d  at  391,  para.  19. 


 60  See  Computer  II  Final  Decision,  77  FCC  2d  at  415-  16,  para.  83.  Basic  service  is  the  offering  of  a  pure 
 transmission  capability  over  a  communications  path  that  is  virtually  transparent  in  terms  of  its  interaction  with  customer  supplied  information.  Id.  at  420,  para.  96. 


 61  Enhanced  service  combines  basic  service  with  computer  processing  applications  that  act  on  the  format,  content, 
 code,  protocol  or  similar  aspects  of  the  subscribers  transmitted  information,  or  provide  the  subscriber  additional,  different,  or  restructured  information,  or  involve  subscriber  interaction  with  stored  information.  Id.  at  387,  para.  5. 


 In  other  words,  an  enhanced  service  is  any  offering  over  the  telecommunications  network  which  is  more  than  a  basic  transmission  service.  Id.  at  420,  para.  97.  While  the  Commission  used  the  term  enhanced  service  in  its 
 Computer  Inquiry  decisions  and  the  Telecommunications  Act  of  1996  (1996  Act)  uses  the  term  information  service,  the  Commission  has  determined  that  Congress  intended  the  categories  of  telecommunications  service 
 and  information  service  to  parallel  the  definitions  of  basic  service  and  enhanced  service  developed  in  [the]  Computer  II  proceeding  .  .  .  .  NCTA  v.  Brand  X,  slip  op.  at  21;  Report  to  Congress,  13  FCC  Rcd  at  11511,  para.  21. 
 We  will  generally  use  the  term  information  service  in  this  Order  except  when  providing  historical  context  to  previous  Commission  actions. 
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 enhanced  services  were  not  within  the  scope  of  its  Title  II  jurisdiction  but  rather  were  within  its  ancillary  jurisdiction  under  Title  I.  62 
 24.  Pursuant  to  its  ancillary  jurisdiction,  the  Commission  required  facilities-  based  common  carriers  to  provide  the  basic  transmission  services  underlying  their  enhanced  services  on  a  nondiscriminatory  basis 
 pursuant  to  tariffs  governed  by  Title  II  of  the  Act.  63  These  carriers  thus  offered  the  underlying  basic  service  at  the  same  prices,  terms,  and  conditions,  to  all  enhanced  service  providers,  including  their  own 
 enhanced  services  operations.  64 
 25.  For  AT&  T,  which  at  the  time  owned  the  local  BOCs,  the  Commission  adopted  additional  measures.  In  particular,  it  determined  that  the  same  type  of  structural  separation  requirement  imposed  in 


 Computer  I  (i.  e.,  the  requirement  to  offer  enhanced  services  only  through  a  separate  corporate  entity)  was  necessary  to  protect  the  ratepayers  against  being  charged  rates  for  regulated  services  that  cross  subsidized 
 the  parent  corporations  competitive  enhanced  services  operations.  65  The  Commission  also  determined  that  structural  separation  was  necessary  to  protect  the  public  against  such  anticompetitive  activities  as 
 denial  of  access  and  predatory  pricing  by  these  monopoly  telephone  companies  exercising  significant  market  power  on  a  broad  geographic  basis.  66  It  concluded  that  other  facilities-  based  carriers  should  not 
 be  subject  to  this  maximum  separation  requirement.  67  In  addition,  in  its  Computer  II  Reconsideration 


 62  See,  e.  g.,  Computer  II  Final  Decision,  77  FCC  2d  at  435,  para.  132. 
 63  Id.  at  475,  para.  231;  see  id.  at  435,  para.  132  (discussing  jurisdictional  basis  for  the  Commissions  Computer  II 
 actions);  see  also  CCIA  v.  FCC,  693  F.  3d  at  211-  14  (affirming  the  Commissions  reliance  on  its  ancillary  jurisdiction  in  imposing  structural  safeguards  on  AT&  Ts  provision  of  enhanced  services);  NCTA  v.  Brand  X,  slip 


 op.  at  13  (describing  Computer  II  and  stating  that  the  Commission  remains  free  to  impose  special  regulatory  duties  on  facilities-  based  ISPs  under  its  Title  I  ancillary  jurisdiction). 
 64  See  CCIA  v.  FCC,  693  F.  2d  at  205;  see  also  Computer  II  Final  Decision,  77  FCC  2d  at  474-  75,  para.  231.  We 
 note  that  the  Computer  II  unbundling  of  basic  services  requirement  is  separate  and  distinct  from  the  obligation  created  in  section  251(  c)(  3)  of  the  Communications  Act,  requiring  incumbent  LECs  to  provide  access  to  UNEs.  47 


 U.  S.  C.    251(  c)(  3).  To  avoid  any  confusion  between  these  obligations,  where  possible,  we  use  alternative  phrases  to  describe  Computer  IIs  unbundling  requirement.  Moreover,  as  we  discuss  in  part  VI.  E,  below,  the  decisions 
 contained  in  this  Order  have  no  affect  on  section  251(  c)  obligations  of  incumbent  LECs,  including  UNE  availability  issues  as  reflected  in  our  Triennial  Review  proceeding.  47  U.  S.  C.    251(  c);  see  also,  e.  g.,  Triennial  Review  Order, 
 18  FCC  Rcd  at  17019-  21,  paras.  58-  60,  &  17067-  77,  paras.  135-  53.  65 
 Computer  II  Final  Decision,  77  FCC  2d  at  467-  68,  para.  216.  66 
 Id.,  77  FCC  2d  at  463,  para.  208,  &  468,  para.  220;  see  also  id.,  77  FCC  2d  at  486,  para.  261  (stating  that  the  Commission  essentially  retained  the  degree  of  separation  required  in  the  current  rules  [i.  e.,  Computer  Is 


 maximum  separation]).  Among  other  things,  Computer  IIs  structural  separation  requirements  include  separate  books  and  officers  as  well  as  the  use  of  separate  operating,  marketing,  installation  and  maintenance  personnel,  and 
 separate  computer  facilities  in  the  provision  of  enhanced  services.  Id.,  77  FCC  2d  at  486,  para.  261.  67 
 See  id.,  77  FCC  2d  at  435,  para.  132.  We  note  that  the  Commission  initially  imposed  the  separate  subsidiary  requirement  on  GTE,  but  on  reconsideration  of  the  Computer  II  Final  Decision,  the  Commission  decided  to  exempt 


 GTE  from  that  requirement.  Computer  II  Reconsideration  Order,  84  FCC  2d  at  72-  75,  paras.  64-  71.  Today,  this  Computer  II  requirement  applies  only  to  the  BOCs  although,  as  explained  in  Part  V.  A.  2.b,  below,  through  the 
 regime  established  in  Computer  III,  BOCs  may  also  provide  enhanced  services  through  their  telephone  operating  companies. 
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 Order,  the  Commission  approved  a  process  whereby  parties  could  request  waiver  relief  from  the  structural  separation  rules.  68 
 b)  Computer  III  Requirements 
 26.  Years  after  the  conclusion  of  the  Computer  II  proceeding,  69  the  Commission  determined  that  the  cost  of  decreased  efficiency  and  innovation  imposed  by  the  structural  safeguards  of  Computer  II 
 outweighed  their  benefits.  70  The  Commission  therefore  replaced  structural  separation  with  a  regime  of  nonstructural  safeguards  in  its  Computer  III  decisions.  This  framework  maintained  the  existing  basic  and 
 enhanced  service  categories  and  adopted  comparably  efficient  interconnection  (CEI)  and  ONA  requirements  as  a  replacement  for  the  Computer  II  structural  separation  requirements  for  AT&  T  and  the 
 BOCs.  71  The  CEI  standards  were  intended  to  be  an  interim  measure,  necessary  only  until  the  BOCs  had  Commission-  approved  ONA  plans  in  place.  72 


 27.  The  CEI  obligations  require  a  BOCs  enhanced  services  operations  to  take  under  tariff  the  basic  services  it  uses  in  offering  enhanced  services.  73  These  basic  services  must  be  available  to  other  enhanced 
 service  providers  and  users  under  the  same  tariffs  on  an  unbundled  and  functionally  equal  basis.  In  addition,  the  BOC  may  not  discriminate  in  favor  of  its  own  enhanced  services  operations  in  providing 
 CEI  and  must  file  reports  to  substantiate  that  nondiscrimination.  74  BOCs  also  must  post  service-  specific  CEI  plans  on  the  Internet  75  (i.  e.,  one  CEI  plan  per  service  or  group  of  services)  that  describe  and 


 68  Computer  II  Reconsideration  Order,  84  FCC  2d  at  58,  para.  21. 
 69  Between  the  release  of  the  Computer  II  Final  Decision  and  the  Computer  III  Phase  I  Order,  the  D.  C.  District 
 Court  approved  the  Modification  of  Final  Judgment  (MFJ),  which  required  AT&  T  to  divest  itself  of  the  BOCs  and  most  of  the  assets  held  by  the  BOCs.  See  United  States  v.  American  Tel.  &  Tel.  Co.,  552  F.  Supp.  131  (D.  D.  C. 


 1982),  affd  sub  nom.  Maryland  v.  United  States,  460  U.  S.  1001  (1983).  When  the  Computer  III  non-  structural  safeguards  were  initially  adopted,  they  applied  only  to  AT&  T  and  the  BOCs  as  they  were  the  only  carriers  subject  to 
 Computer  II  structural  separation  requirements.  See  supra  n.  67.  The  Commission  eliminated  most  of  these  requirements  for  AT&  T  when  it  declared  AT&  T  non-  dominant  in  1995.  See  infra  note  89. 
 70  See  Computer  III  Phase  I  Order,  104  FCC  2d  at  964,  para.  3. 
 71  Id.,  at  964,  para.  4.  The  Commission  also  adopted  rules  relating  to  customer  proprietary  network  information 
 (CPNI),  network  disclosure,  and  cost  allocation.  Id.  at  1077-  92,  paras.  241-  65  (network  disclosure  and  CPNI  obligations);  Separation  of  Costs  of  Regulated  Telephone  Service  from  Costs  of  Nonregulated  Activities,  CC  Docket 


 No.  86-  111,  Report  and  Order,  2  FCC  Rcd  1298  (1986)  (Joint  Cost  Order),  recon.  2  FCC  Rcd  6283,  further  recon.  3  FCC  Rcd  6701  (1988),  affd  sub  nom.  Southwestern  Bell  Corp.  v.  FCC,  896  F.  2d  1328  (D.  C.  Cir.  1990)  (cost 
 allocation  rules).  In  a  series  of  subsequent  orders,  the  Commission  eliminated  or  scaled  back  several  of  these  requirements.  See,  e.  g.,  Computer  III  Further  Remand  Order,  14  FCC  Rcd  at  4318-  23,  paras.  44-  53  (1999) 
 (relieving  carriers  of  their  Computer  Inquiry  network  information  disclosure  requirements  except  with  respect  to  the  customer  premises  equipment  (CPE)  disclosure  obligation  as  applied  to  incumbent  LECs). 
 72  Computer  III  Phase  I  Order,  104  FCC  2d  at  964,  para.  4. 
 73  Computer  III  Further  Remand  Order,  14  FCC  Rcd  at  4297-  98,  para.  13.  We  note  that  SBCs  advanced  services 
 affiliate  provides  basic  services  under  contracts  posted  on  the  Internet,  rather  than  under  tariffs,  but  these  services  are  nevertheless  made  generally  available  to  the  public.  See  Review  of  Regulatory  Requirements  for  Incumbent  LEC 


 Broadband  Telecommunications  Services,  17  FCC  Rcd  27000  (2003)  (SBC  Advanced  Services  Forbearance  Order).  74 
 Computer  III  Phase  I  Order,  104  FCC  2d  at  964,  para.  4.  75 
 Computer  III  Further  Remand  Order,  14  FCC  Rcd  at  4291,  para.  4;  Computer  III  Further  Remand  Reconsideration  Order,  14  FCC  Rcd  at  21629,  para.  6. 
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 demonstrate  how  a  BOC  is  providing  unaffiliated  enhanced  service  providers  with  equal  access  to  its  basic  services  by  its  compliance  with  nine  CEI  parameters.  76 
 28.  Unlike  CEI  plans,  ONA  plans  apply  to  enhanced  services  generally  and  impose  more  specific  and  comprehensive  unbundling  requirements  on  the  BOCs,  not  unlike  section  251s  unbundling  obligations. 
 Through  ONA,  BOCs  must  separate  key  components  of  their  basic  services  into  basic  service  elements,  and  make  those  components,  or  building  blocks,  available  to  unaffiliated  enhanced  service  providers  to 
 build  new  services  regardless  of  whether  the  BOCs  affiliated  enhanced  services  operations  use  these  unbundled  components.  77  In  refining  its  rules  for  filing  ONA  plans,  the  Commission  subsequently 
 categorized  the  BOCs  basic  service  elements  into  four  groups,  which  the  BOCs  are  required  to  make  available  to  information  services  providers.  78  In  a  subsequent  order,  the  Commission  also  determined  that 
 certain  operations  support  systems  (OSS)  capabilities    namely  service  order  entry  and  status;  trouble  reporting  and  status;  diagnostics,  monitoring,  testing,  and  network  reconfiguration;  and  traffic  data 
 collection    are  ONA  services  under  the  Commissions  ONA  rules.  79  Finally,  the  ONA  rules  contain 
 76  Computer  III  Further  Remand  Order,  14  FCC  Rcd  at  4291,  para.  4;  Computer  III  Further  Remand 
 Reconsideration  Order,  14  FCC  Rcd  at  21629,  para.  6;  see  Computer  III  Phase  I  Order,  104  FCC  2d  at  1039-  42,  paras.  155-  65.  These  nine  CEI  parameters  are:  (1)  the  interface  functionality  parameter  (the  BOC  must  make 


 available  standardized  hardware  and  software  interfaces  that  are  able  to  support  the  transmission,  switching,  and  signaling  functions  identical  to  those  used  in  the  BOCs  enhanced  service,  as  well  as  the  information  and  technical 
 specifications  associated  with  these  interfaces);  (2)  the  basic  service  unbundling  parameter  (the  BOC  must  separate  the  basic  service  functions  that  underlie  its  enhanced  service  offering  from  other  basic  service  offerings  and 
 must  assign  a  specific  rate  to  them  for  tariffing  purposes);  (3)  the  resale  parameter  (the  BOC  must  take  basic  services  used  in  its  enhanced  service  offerings  at  their  unbundled  tariffed  rates);  (4)  the  technical  characteristics 
 parameter  (the  BOC  must  provide  basic  services  with  technical  characteristics  that  are  equal  to  those  used  by  the  BOC  in  its  enhanced  service  offering);  (5)  the  installation,  maintenance  and  repair  parameter  (the  BOC  must  provide 
 the  same  installation,  maintenance,  and  repair  intervals  to  unaffiliated  enhanced  service  providers  as  it  does  to  its  own  enhanced  services  operations,  with  associated  reporting  requirements);  (6)  the  end-  user  access  parameter  (if  a 
 BOC  offers  its  end  users  the  ability  to  use  abbreviated  dialing  or  signaling  to  activate  or  access  the  BOCs  enhanced  offerings,  it  must  provide  the  same  capabilities  to  end  users  all  of  enhanced  services  that  use  the  BOCs  facilities); 
 (7)  the  CEI  availability  parameter  (the  BOCs  CEI  plan  must  be  available  and  fully  operational  the  day  that  the  BOC  posts  it  on  the  Internet,  and  the  BOC  must  give  enhanced  services  competitors  the  opportunity  to  test  the  CEI 
 facilities  and  services  for  their  enhanced  service  offerings);  (8)  the  transport  costs  minimization  parameter  (the  BOC  must  provide  competitors  with  interconnection  facilities  that  minimize  their  transport  costs);  and  (9)  the  recipients 
 of  CEI  parameter  (the  BOC  cannot  restrict  the  availability  of  a  CEI  offering  to  any  particular  class  of  customer  or  enhanced  service  competitor).  Computer  III  Further  Remand  Order,  14  FCC  Rcd  at  4297-  99,  para.  13. 
 77  Computer  III  Phase  I  Order,  104  FCC  2d  at  1064,  para.  214. 
 78  These  four  groups  are:  (1)  basic  serving  arrangements  (BSAs),  which  are  fundamental  tariffed  switching  and 
 transport  services  that  allow  the  ISP  to  communicate  with  its  customers  through  the  BOC  network,  see  Filing  and  Review  of  Open  Network  Architecture  Plans,  4  FCC  Rcd  1,  36,  para.  56  (1988)  (BOC  ONA  Order)  (noting  that 


 examples  of  BSAs  include  line-  side  and  trunk-  side  circuit-  switched  service  and  line-  side  and  trunk-  side  packet-switched  service);  (2)  basic  service  elements  (BSEs),  which  are  optional  unbundled  features  that  an  ISP  may  require 
 or  find  useful  in  configuring  an  enhanced  service,  see  id.,  4  FCC  Rcd  at  36,  para.  57  (providing  calling  number  identification  as  an  example  of  a  BSE);  (3)  complementary  network  services  (CSAs),  which  are  optional  unbundled 
 basic  service  features  that  an  end  user  may  obtain  from  a  carrier  in  order  to  access  or  receive  an  enhanced  service  such  as  call  waiting  and  call  forwarding,  see  id.  (stating  that  stutter  dial  tone  is  a  CNS);  and  (4)  ancillary  network 
 services  (ANSs),  which  are  non-  common  carrier  services  that  an  ISP  might  find  useful  such  as  billing  and  collection,  and  protocol  conversion,  see  id. 
 79  Filing  and  Review  of  Open  Network  Architecture  Plans,  5  FCC  Rcd  3084,  3087,  para.  26  (1990)  (BOC  ONA 
 Reconsideration  Order). 
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 certain  procedural  requirements  governing  the  amendment  of  ONA  plans.  These  procedures  allow  information  service  providers  to  request  and  receive  new  ONA  services  and  impose  various  annual,  semi- 
 annual,  and  quarterly  reporting  requirements.  80 
 29.  When  Congress  enacted  the  1996  Act,  it  created  new  statutory  terms  (i.  e.,  information  service  and  telecommunications  service)  that  substantially  incorporated  the  dichotomy  between  basic  and 


 enhanced  services  into  the  Communications  Act.  81  As  we  noted  above,  although  the  1996  Act  uses  information  service  and  telecommunications  service  instead  of  enhanced  service  and  basic 
 service,  the  Commission  has  previously  determined  that  Congress  intended  the  statutory  categories  to  parallel  the  categories  the  Commission  established  in  the  Computer  Inquiry  proceeding.  82  More 
 specifically,  the  Commission  found  that  all  of  the  services  that  the  Commission  has  previously  considered  to  be  enhanced  services  are  information  services.    83 


 c)  Current  Applicability  of  Computer  Inquiry  Rules  to  Wireline  Broadband  Internet  Access  Service  Providers 
 30.  As  noted  above,  the  Commissions  structural  separation,  CEI,  and  ONA  rules  apply  only  to  the  BOCs.  BOCs  demonstrate  their  compliance  with  the  CEI  parameters  through  plans  posted  on  their  web 
 sites,  and  changes  to  these  plans  may  be  made  without  Commission  approval.  84  All  BOCs  have  ONA 


 80  Computer  III  Phase  I  Order,  104  FCC  2d  at  1066,  para.  218.  In  1991,  the  Commission  determined  that  the 
 BOCs  ONA  plans  were  a  sufficient  enough  safeguard  against  discrimination  to  warrant  elimination  of  the  Computer  II  structural  separation  requirement  for  all  enhanced  services,  notwithstanding  their  failure  to  comply 


 fully  with  the  Computer  III  rules.  BOC  Safeguards  Order,  6  FCC  Rcd  at  7599-  7601,  paras.  62-  64.  In  this  same  order,  the  Commission  determined  that  its  cost  accounting  safeguards,  in  addition  to  adoption  of  price  cap  regulation 
 for  the  LECs,  was  a  sufficient  enough  safeguard  against  cross  subsidization  to  warrant  elimination  of  structural  separation.  Id.  at  7577-  88,  paras.  12-  41.  In  1994,  the  Ninth  Circuit  affirmed  the  cross  subsidization  determination 
 in  the  BOC  Safeguards  Order,  but  vacated  and  remanded  the  portion  addressing  ONA  plans  because  it  found  that  the  Commission  had  not  sufficiently  explained  its  conclusion  that  removing  structural  separation  requirements  was 
 in  the  public  interest,  given  that  the  ONA  requirements  the  Commission  implemented  after  Computer  III  did  not  require  fundamental  unbundling  of  the  BOCs  networks.  See  California  III,  39  F.  3d  at  927-  30  (citing  BOC 
 Safeguards  Order,  6  FCC  Rcd  at  7571).  In  1995,  the  Commission  clarified  that  the  Ninth  Circuits  partial  vacatur  of  the  BOC  Safeguards  Order  reinstated  the  CEI  plan  requirements  and  that  the  BOCs  were  still  required  to  comply 
 with  their  ONA  plans  pending  the  Commissions  review  of  the  ONA  regime.  Computer  III  Further  Remand  Notice,  10  FCC  Rcd  at  8369,  para.  11.  The  Commission  also  determined  that  the  BOCs  could  continue  to  offer  existing 
 enhanced  services  pursuant  to  the  ONA  plans  that  the  Commission  had  approved  prior  to  the  Ninth  Circuits  decision  in  California  III.  See  Computer  III  Further  Remand  Notice,  10  FCC  Rcd  at  8368-  69,  para.  10  (citing  Bell 
 Operating  Companies  Joint  Petition  for  Waiver  of  Computer  II  Rules,  Memorandum  Opinion  and  Order,  DA  95-  36  (Com.  Car.  Bur.  Jan.  11,  1995)  (Interim  Waiver  Order)). 
 81  47  U.  S.  C.  153(  20),  (46);  NCTA  v.  Brand  X,  slip  op.  at  21. 
 82  See  Report  to  Congress,  13  FCC  Rcd  at  11511,  para.  21;  see  also  NCTA  v.  Brand  X,  slip  op.  at  21-  23  (discussing 
 Report  to  Congress).  83 
 See  Petition  for  Declaratory  Ruling  that  pulver.  coms  Free  World  Dialup  is  Neither  Telecommunications  Nor  a  Telecommunications  Service,  WC  Docket  No.  03-  45,  Memorandum  Opinion  and  Order,  19  FCC  Rcd  3307,  3318 


 n.  64  (2004)  (Pulver.  com  Declaratory  Ruling);  Non-  Accounting  Safeguards  Order,  11  FCC  Rcd  at  21955,  para.  102  (1996). 
 84  See  Computer  III  Further  Remand  Order,  14  FCC  Rcd  at  4302,  paras.  19-  20.  We  note  that  these  carriers  are 
 required  to  notify  the  Commission  of  any  alteration  to  a  CEI  plan.  Id.  at  4302,  para.  20  (notice  to  the  Bureau  must  include  the  Internet  address  and  path  to  the  relevant  CEI  plan  or  amended  plan). 
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 plans  on  file  with  the  Commission.  85  A  BOC  that  seeks  to  offer  an  information  service  that  would  use  a  new  BSE,  or  a  new  configuration  of  BSEs,  must  amend  its  ONA  plan  at  least  90  days  before  it  proposes 
 to  offer  that  information  service  and  obtain  Commission  approval  of  the  amendments  prior  to  using  the  new  BSE  or  BSE  configuration  for  its  information  service.  86  Additionally,  a  BOC  must  consider  and 
 respond  to  an  enhanced  services  providers  request  for  a  new  BSE  within  120  days  of  receipt  of  that  request.  87  In  evaluating  this  request,  the  BOC  must  take  into  account  market  demand,  utility  to  enhanced 
 services  providers,  feasibility  of  offering  the  service  based  on  its  cost,  and  technical  feasibility.  88  Last,  as  mentioned  above,  BOCs  continue  to  be  subject  to  ONA  reporting  requirements.  89 


 31.  All  facilities-  based  wireline  carriers  that  own  common  carrier  transmission  facilities  and  provide  enhanced  services  must  acquire  transmission  capacity  pursuant  to  the  same  prices,  terms,  and  conditions 
 reflected  in  their  tariffs  when  their  own  facilities  are  utilized.  Other  offerors  of  enhanced  services  would  likewise  be  able  to  use  such  a  carriers  facilities  under  the  same  terms  and  conditions.  90  This  Computer 
 II  obligation,  however,  has  been  applied  exclusively  to  traditional  wireline  services  and  facilities  to  date.  91  By  contrast,  the  Computer  II  obligations  do  not  apply  to  cable  modem  service  providers  or  to  facilities-based 
 enhanced  services  providers  other  than  traditional  wireline  carriers.  92 
 B.  Elimination  of  the  Computer  Inquiry  Requirements 
 1.  Broadband  Internet  Access  Service  Technology 
 32.  In  this  section,  we  describe  the  technological  attributes  applicable  to  broadband  Internet  access  service  that  inform  our  decision-  making  in  this  Order.  The  technology  used  to  build  networks,  and  the 
 purposes  for  which  they  are  built,  are  fundamentally  changing.  These  changes  are  rapidly  breaking  down  the  formerly  rigid  barriers  that  separated  one  network  from  another. 


 85  See  Computer  III  Further  Remand  Notice,  10  FCC  Rcd  at  8366-  67,  para.  7  &  nn.  21,  22. 
 86  See  Computer  III  Further  Remand  Further  Notice,  13  FCC  Rcd  at  6086,  para.  81.  We  define  BSE  supra  at 
 paragraph  28  and  note  78.  87 
 See,  e.  g.,  Computer  III  Further  Remand  Further  Notice,  13  FCC  Rcd  at  6087,  paras.  83-  84.  88 
 Id.  89 
 AT&  T,  while  never  subject  to  annual  and  biannual  ONA  reporting  requirements,  currently  remains  subject  to  a  requirement  that  it  submit  annual  affidavits  affirming  that  it  has  followed  installation  procedures  in  its  modified 


 ONA  Plan  approved  by  the  Commission  in  1988.  This  requirement  was  never  formally  eliminated  when  AT&  T  was  relieved  of  its  other  ONA  and  Computer  III  requirements.  See  Computer  III  Further  Remand  Further  Notice,  13 
 FCC  Rcd  at  6040  n.  4.  90 
 See  Computer  II  Final  Decision,  77  FCC  2d  at  475,  para.  231.  91 
 Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4825,  paras.  43-  44;  see  also  CPE/  Enhanced  Services  Bundling  Order,  16  FCC  Rcd  at  7442,  para.  40  (stating  that  this  obligation  applies  to  non-  dominant  facilities-  based  carriers); 


 Independent  Data  Communications  Manufacturers  Association,  Inc.  Petition  for  Declaratory  Ruling  that  AT&  Ts  Interspan  Frame  Relay  Service  Is  a  Basic  Service;  and  American  Telephone  and  Telegraph  Company  Petition  for 
 Declaratory  Ruling  that  All  IXCs  Be  Subject  to  the  Commissions  Decision  on  the  IDCMA  Petition,  10  FCC  Rcd  13717  (Com.  Car.  Bur.  1995)  (Frame  Relay  Order). 
 92  NCTA  v.  Brand  X,  slip  op.  at  9-  14  (cable  modem  service);  see  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at 
 4825,  para.  43  (noting  that  the  Commission  has  only  applied  the  Computer  II  obligations  to  traditional  wireline  services  and  facilities). 
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 33.  There  are  numerous  technologies  and  network  designs  that  form,  or  potentially  could  form,  part  of  the  broadband  telecommunications  infrastructure  of  the  21st  century.  Cable  operators  have  deployed 
 cable  modem  technology.  93  Mobile  wireless  providers  are  increasingly  offering  high-  speed  Internet  access  using  technologies  like  Evolution-  Data  Optimized  (EV-  DO)  technology.  94  Satellite  providers  have 
 deployed  both  Ku-  band  and  even  more  advanced  Ka-  band  technology  that  can  offer  high-  speed  Internet  access  service  throughout  the  nation.  95  Fixed  wireless  operators  are  planning  to  use  licensed  and 
 unlicensed  spectrum  to  deliver  broadband  services,  and  are  developing  new  technologies  that  promise  ubiquitous  service  and  greater  bandwidth.  96  Other  companies  are  exploring  the  use  of  power  lines  and 
 cables  placed  in  gas  lines  to  provide  broadband  services.  97 
 34.  The  nations  wireline  infrastructure  also  is  changing.  As  the  Commission  suggested  in  the  Wireline  Broadband  NPRM,  wireline  technology  formerly  was  limited  to  using  circuit  switches  to  move 


 analog  voice  traffic  over  copper  transmission  facilities.  98  This  required  that  the  service  provider  establish  and  maintain  for  the  duration  of  each  call  a  physical  connection  (or  circuit)  between  the  calling  and  called 
 parties.  The  wireline  network  was  designed  and  built  to  transmit  reliably  and  efficiently  voice  phone  calls  between  end  users.  Technological  developments,  such  as  the  introduction  of  electro-  mechanical  and 
 electronic  stored-  program-  controlled  switches,  improved  voice  service  over  time  and  introduced  data  services.  However,  these  developments  did  not  fundamentally  change  the  capabilities  of  the  wireline 
 network.  It  remained  largely  a  single-  purpose  platform,  providing  plain  old  telephone  service  (POTS). 


 93  Fourth  Section  706  Report,  at  14;  see  also  High-  Speed  Services  July  2005  Report,  at  2,  Table  1  (showing  cable 
 having  a  56.  4%  market  share  of  high-  speed  lines);  id.  at  Tables  2-  4.  94 
 Fourth  Section  706  Report,  at  20;  see  Applications  of  Nextel  Communications,  Inc.  &  Sprint  Corp.  for  Consent  to  Transfer  Control  of  Licenses  and  Authorizations,  WT  Docket  No.  05-  63,  Memorandum  Opinion  and  Order,  FCC 


 05-  148,  para.  8  (rel.  Aug  8,  2005)  (stating  that  Sprint  has  begun  to  roll  out  high-  speed  wireless  data  services  using  EV-  DO  technology). 
 95  Fourth  Section  706  Report,  at  23,  46;  see  also  High-  Speed  Services  July  2005  Report,  at  2,  Table  1  (showing  a 
 combined  satellite  and  wireless  market  share  of  1.5%  high-  speed  lines);  id.  at  Tables  2-  4;  Application  of  EchoStar  Communications  Corp.,  General  Motors  Corp.,  and  Hughes  Electronics  Corp.  (Transferors)  and  EchoStar 


 Communications  Corp.  (Transferee),  CS  Docket  No.  01-  348,  Hearing  Designation  Order,  17  FCC  Rcd  20559,  20643,  para.  225  (2002)  (EchoStar  Hearing  Designation  Order). 
 96  See,  e.  g.,  Fourth  Section  706  Report,  at  18-  22,  31-  32.  The  Commission  has  also  adopted  new  licensing  rules  to 
 respond  to  the  need  expressed  by  the  growing  number  of  wireless  Internet  service  providers  (WISPs)  offering  broadband  service  to  consumers,  particularly  in  rural  areas.  Wireless  Operations  in  the  3650-  3700  MHZ  Band,  ET 


 Docket  No.  04-  151;  Rules  for  Wireless  Broadband  Services  in  the  3650-  3700  MHZ,  ET  Docket  No.  05-  96;  Additional  Spectrum  for  Unlicensed  Devices  Below  900  MHZ  and  in  the  3  GHZ  Band,  ET  Docket  No.  02-  380; 
 Amendment  of  the  Commissions  Rules  with  Regard  to  the  3650-  3700  MHZ  Government  Transfer  Band,  ET  Docket  No.  98-  237,  Report  and  Order  and  Memorandum  Opinion  and  Order,  20  FCC  Rcd  6502,  6503-  04,  para.  2,  &  6506- 
 07,  para.  13  (2005)  (finding  that  a  growing  number  of  WISPs  are  providing  wireless  broadband  service  in  many  areas  where  few  alternatives  are  available). 
 97  Fourth  Section  706  Report,  at  22;  see  also  Carrier  Current  Systems,  including  Broadband  over  Power  Line 
 Systems,  Notice  of  Proposed  Rulemaking,  ET  Docket  No.  03-  104  (rel.  Feb.  23,  2005);  see  also  High-  Speed  Services  July  2005  Report,  at  2,  Table  1  (showing  combined  powerline  and  fiber  market  share  of  1.8  %  high-  speed  lines);  id. 


 at  Tables  2-  4.  While  the  Commission  does  not  report  individual  market  share  data  for  all  technologies,  power  line  high-  speed  line  market  share  appears  to  be  less  than  1%. 
 98  See  Wireline  Broadband  NPRM  17  FCC  Rcd  at  3037,  para.  36. 
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 35.  The  advent  of  digital  technology  and  mainframe  computers  began  a  fundamental  change  in  wireline  communications  that  is  still  ongoing.  These  advances  made  it  possible  to  encode  messages, 
 including  analog  voice,  in  a  digital  form  and  transmit  them  in  pieces  (i.  e.,  packets).  In  its  earliest  form,  packet  switching  technology  had  limited  uses,  such  as  providing  remote  access  to  mainframe  computers. 
 An  end  user  sitting  at  a  computer  terminal  would  send  a  message  to  a  message  concentrator  computer  located  near  the  end  users  computer  terminal.  This  computer  would  subdivide  and  reformat  the  message 
 into  short  bursts  of  digital  data  called  packets,  store  each  packet  until  a  transmission  path  became  available  on  the  network  for  that  packet,  and  then  forward  the  packet  to  a  message  concentrator 
 computer  at  the  messages  destination.  That  computer  would  reassemble  the  individual  packets,  which  may  have  transmitted  at  different  times  and  over  different  network  paths,  into  the  original  message  and 
 transmit  it  to  the  main  frame  computer,  which  would  process  and,  where  appropriate,  reply  to  the  end  users  message  using  essentially  the  same  processes.  99  Transmission  speeds,  of  course,  were  extremely 
 slow.  100 
 36.  Digital  technology  and  its  applications  have  come  a  long  way  since  the  introduction  of  packet  switching  during  the  early  1970s.  As  Intel  co-  founder  Gordon  Moore  foresaw,  the  capacity  of  integrated 


 circuits  has  roughly  doubled  every  two  years,  rising  from  about  2,500  transistors  per  circuit  during  the  early  1970s,  to  about  120,  000  transistors  per  circuit  in  the  early  1980s,  to  about  3,  000,000  transistors  per 
 integrated  circuit  in  the  early  1990s,  to  over  42,000,000  transistors  per  circuit  in  2003,  and  to  nearly  1,000,000,000  transistors  per  circuit  in  todays  most  advanced  computer  processors.  101  Wireline  providers 
 have  exploited  this  exponential  growth  in  computing  capacity  by  deploying  digital  switching  and  transmission  technology  of  ever-  growing  capacity  throughout  their  networks.  102  For  more  than  20  years, 
 this  deployment  focused  on  improving  transmission  speeds  between  central  offices  and  on  providing  limited  additional  functionalities  beyond  POTS,  such  as  voice  mail  using  the  computing  capability  of 
 digital  switches.  103  These  services  generally  were  provided  at  the  networks  edge  (i.  e.,  between  an  end  office  and  the  end  users  premises)  at  relatively  low  speeds.  104 


 37.  Packet-  based  technology  is  now  deployed  throughout  wireline  networks  and  is  used  in  many  circumstances,  including  increasingly  to  perform  the  switching  and  routing  functions  associated  with 
 POTS  and  the  processing  functions  that  permit  broadband  Internet  access  service.  Moreover,  advances  in  optical  transmission  have  allowed  wireline  providers  to  transmit  digital  signals  efficiently  and  reliably 
 over  high-  capacity  transmission  systems,  and  wireline  providers  have  introduced  such  media  into  their 


 99  See,  e.  g.,  Packet  Communications,  Inc.,  File  No.  P-  C-  8533,  Memorandum  Opinion,  Order  and  Certificate,  43  FCC 
 2d  922,  922,  para.  2  (1973).  100 
 See,  e.  g.,  American  Trucking  Assn  v.  American  Telephone  and  Telegraph  Co.,  Docket  No.  19746,  &  Regulatory  Policies  Concerning  Resale  and  Shared  Use  of  Common  Services  and  Facilities,  Docket  No.  20097,  Notice  of 


 Inquiry  and  Proposed  Rulemaking,  47  FCC  2d  644,  646,  para.  6  (1974)  (addressing  a  proposed  packet  switching  network  that  initially  was  to  provide  one  50  Kilobit  per  second  line  linking  each  of  a  selected  group  of  major 
 population  centers).  101 
 Intel  Research,  Silicon,  Moores  Law,  found  at  www.  intel.  com/  research/  silicon/  mooreslaw.  htm  (visited  July  6,  2005). 


 102  See  Computer  Science  and  Telecommunications  Board,  National  Research  Council,  Broadband,  Bringing  Home 
 the  Bits,  at  48  (2002).  103 
 Id.  104 
 Id. 
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 networks.  At  the  same  time,  personal  computers  have  become  pervasive  in  the  nations  businesses  and  homes,  as  has  a  wide  variety  of  arrangements  for  networking  these  computers.  105 
 38.  Reflecting  these  advances,  manufacturers  have  developed  powerful  platforms  that  integrate  traditionally  separate  computing  and  communications  functions.  106  While  DSL  technology  has  existed  for 
 many  years,  only  in  recent  years  have  carriers  widely  deployed  that  technology  to  transmit  data  at  high  speeds  over  copper  loops  and  to  use  these  same  copper  loops  for  the  simultaneous  provision  of  voice  and 
 data  services.  Wireline  providers  now  routinely  deploy  facilities  and  equipment,  such  as  ATM  switches,  digital  subscriber  line  access  multiplexers  (DSLAMs),  and  fiber  optics  in  the  local  loop,  that  have 
 continued  this  network  advancement. 
 39.  Wireline  networks  are  now  using  digital,  packet-  based  technology  to  deliver  a  wider  range  of  services.  Many  of  these  services  are  IP-  based,  which  allows  computers  with  differing  hardware 


 architectures  and  operating  systems  to  communicate  with  each  other.  Functions  can  be  dispersed  throughout  the  network  and  performed  at  multiple  points  within  the  network.  From  the  end  users 
 perspective,  the  platforms  that  connect  the  end  user  to  the  ISP  are  largely  interchangeable  and  functionally  the  same.  That  is,  each  platform  provides  the  user  with  the  ability  to  send  and  receive 
 information  at  very  high  speed,  and  to  access  the  applications  and  services  available  through  the  Internet.  Although  each  platform  relies  on  the  same  underlying  protocol,  because  of  that  protocols  inherent 
 flexibility,  this  reliance  fosters,  rather  than  prevents,  increased  service  differentiation  among  platform  providers  that  are  competing  for  customers. 


 40.  As  the  foregoing  illustrates,  the  technology  used  to  build  networks,  and  the  purposes  for  which  they  are  built,  are  fundamentally  changing,  and  will  likely  continue  to  do  so  for  the  foreseeable  future.  A 
 wide  variety  of  IP-  based  services  can  be  provided  regardless  of  the  nature  of  the  broadband  platform  used  to  connect  the  consumer  and  the  ISP.  Network  platforms  therefore  will  be  multi-  purpose  in  nature  and 
 more  application-  based,  rather  than  existing  for  a  single,  unitary,  technologically  specific  purpose.  More  generally,  the  erosion  of  barriers  between  various  networks  and  the  limitations  inherent  in  those  barriers 
 will  lead  to  greater  capacity  for  innovation  to  offer  new  services  and  products.  Both  the  providers  of  network  platforms  and  those  that  utilize  the  platforms  are  in  a  position  to  capitalize  on  these  changes.  In 
 addition,  as  with  any  evolving  technology,  new  products  and  providers  will  continue  to  emerge  to  complement  existing  market  offerings  and  participants;  and  these  offerings  will  grow  over  time  as 
 consumers  demand  even  more  advanced  services,  with  the  result  that  technological  growth  and  development  continue  on  an  upward  spiral. 


 2.  Computer  Inquiry  Requirements  Are  No  Longer  Appropriate 
 41.  We  decline  to  continue  to  impose  any  Computer  Inquiry  requirements  on  facilities-  based  carriers  in  their  provision  of  wireline  broadband  Internet  access  service.  107  Consequently,  BOCs  are  immediately 


 105  See  Fourth  Section  706  Report,  at  38  (stating  that,  as  of  June  2004,  71%  of  U.  S.  households  had  computers  in  the 
 home);  U.  S.  Dept.  of  Commerce,  National  Telecommunications  and  Information  Administration,  A  Nation  Online:  Entering  the  Broadband  Age,  Sept.  2004,  at  4-  7  (NTIA  Broadband  Report)  (reflecting  data  from  the  U.  S.  Census 


 Bureaus  survey  of  computer  and  Internet  use).  106 
 See  generally  Deployment  of  Wireline  Services  Offering  Advanced  Telecommunications  Capability,  CC  Docket  No.  98-  147,  Fourth  Report  and  Order,  16  FCC  Rcd  15435,  15452-  56,  paras.  32-  41  (2001)  (Collocation  Remand 


 Order),  aff'd  sub  nom.  Verizon  Telephone  Cos.  v.  FCC,  292  F.  3d  903  (D.  C.  Cir.  2002)  (Verizon  v.  FCC).  107 
 As  noted  above,  our  actions  in  this  Order  are  limited  to  the  transmission  component  of  wireline  broadband  Internet  access  service  only.  See  supra  n.  15;  see  also  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3025  n.  18. 
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 relieved  of  the  separate  subsidiary,  CEI,  and  ONA  obligations  with  respect  to  wireline  broadband  Internet  access  services.  In  addition,  subject  to  a  one-  year  transition  period  for  existing  wireline  broadband 
 transmission  services,  all  wireline  broadband  Internet  access  service  providers  are  no  longer  subject  to  the  Computer  II  requirement  to  separate  out  the  underlying  transmission  from  wireline  broadband  Internet 
 access  service  and  offer  it  on  a  common  carrier  basis.  108 
 42.  We  agree  with  those  commenters  that  argue  that  the  Computer  Inquiry  obligations  are  inappropriate  and  unnecessary  for  todays  wireline  broadband  Internet  access  market.  109  As  these  parties 


 observe,  the  Computer  Inquiry  rules  were  developed  before  separate  and  different  broadband  technologies  began  to  emerge  and  compete  for  the  same  customers.  110  Further,  these  rules  were  adopted  based  on 
 assumptions  associated  with  narrowband  services,  single  purpose  network  platforms,  and  circuit-  switched  technology.  111  Notably,  even  commenters  that  argue  for  a  continued  access  requirement  generally 
 acknowledge  that  the  current  structural  separation,  CEI,  and  ONA  requirements  are  outmoded  and  should  be  eliminated  or  replaced.  112  Indeed,  the  record  provides  little,  if  any,  support  for  retaining  the  structural 


 108  In  the  absence  of  an  express  statutory  requirement  that  a  particular  service  be  offered  on  a  common  carrier  basis, 
 the  Commission  and  the  courts  have  interpreted  whether  the  public  interest  requires  a  common  carrier  service  based  on  a  number  of  factors  related  to  the  service  at  issue.  See  National  Assn  of  Reg.  Utils.  Commrs  v.  FCC,  525  F.  2d 


 630,  642  (D.  C.  Cir.  1976),  cert.  denied,  425  U.  S.  992  (1976)  (NARUC  I);  AT&  T  Submarine  Systems,  Inc.  Application  for  a  License  to  Land  and  Operate  a  Digital  Submarine  Cable  System  Between  St.  Thomas  and  St.  Croix 
 in  the  U.  S.  Virgin  Islands,  File  No.  S-  C-  L-  94-  006,  Memorandum  Opinion  and  Order,  13  FCC  Rcd  21585,  21589,  para.  9  &  nn.  23-  24  (1998)  (AT&  T  SSI  Order),  affd  sub  nom.  Virgin  Islands  Telephone  Corp.  v.  FCC,  198  F.  3d  921 
 (D.  C.  Cir.  1999)  (Vitelco  v.  FCC);  Applications  of  Hughes  Communications,  Inc.,  et  al.  for  Modification  of  Domestic  Fixed  Satellite  Space  Station  Authorizations  to  Permit  Non  Common  Carrier  Transponder  Sales,  CC 
 Docket  No  82-  45,  Memorandum  Opinion,  Order  and  Authorization,  90  FCC  2d  1238,  1254-  55,  para.  39  (1982)  (Transponder  Sales  Order),  affd  sub  nom.  Wold  Communications,  Inc.  v.  FCC,  735  F.  2d  1465  (D.  C.  Cir  1984), 
 modified,  Applications  of  Martin  Marietta  Communications  Systems,  Inc.  For  Authority  to  Construct,  Launch  and  Operate  Space  Stations  in  the  Domestic  Fixed  Satellite  Service,  File  Nos.  952/  953-  DSS-  P/  LA-  84  954-  DSS-  P-  84,  60 
 R.  R.  2d  779  (1986).  109 
 See,  e.  g.,  Alcatel  Comments  at  2-  3;  SureWest  Comments  at  5-  6;  HTBC  Reply  at  3  (but  suggesting  a  minimally  regulated  environment  for  broadband  transmission);  Letter  from  Cronan  OConnell,  Vice  President-  Federal 


 Regulatory,  Qwest,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  (filed  May  23,  2003)  (Qwest  May  23,  2003  Ex  Parte  Letter);  Letter  from  Cronan  OConnell,  Vice  President-  Federal  Regulatory,  Qwest, 
 to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  (filed  Apr.  10,  2003)  (Qwest  Apr.  10,  2003  Ex  Parte  Letter);  Letter  from  Glenn  Reynolds,  Vice  President-  Federal  Regulatory,  BellSouth,  to  Marlene  H.  Dortch, 
 Secretary,  FCC,  CC  Docket  Nos.  02-  33  &  01-  337,  Attach.  (filed  Apr.  2,  2003)  (BellSouth  Apr.  2,  2003  Ex  Parte  Letter);  Letter  from  Jeffry  Brueggeman,  General  Attorney,  SBC,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket 
 No.  02-  33,  Attach.  (filed  Mar.  7,  2003)  (SBC  Mar.  7,  2003  Ex  Parte  Letter).  110 
 See,  e.  g.,  Alcatel  Comments  at  3;  BellSouth  Apr.  10,  2003  Ex  Parte  Letter,  Attach.  at  4;  SBC  Mar.  7,  2003  Ex  Parte  Letter,  Attach.  at  11;  Letter  from  Ann  D.  Berkowitz,  Project  Manager-  Federal  Affairs,  Verizon,  to  Marlene  H. 


 Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  4  (filed  Nov.  25,  2002)  (Verizon  Nov.  25,  2002  Ex  Parte  Letter). 
 111  See,  e.  g.,  SBC  Mar.  7,  2003  Ex  Parte  Letter  at  11;  Verizon  Nov.  25,  2002  Ex  Parte  Letter  at  4;  Letter  from  W. 
 Scott  Randolph,  Director-  Regulatory  Affairs,  Verizon,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  2  (filed  May  20,  2003)  (Verizon  May  20,  2003  Ex  Parte  Letter). 


 112  See,  e.  g.,  Letter  from  Donna  N.  Lampert  on  behalf  of  Earthlink,  MCI  and  AOL  Time  Warner,  to  Marlene  Dortch, 
 Secretary,  FCC,  CC  Docket  Nos.  02-  33,  95-  20,  &  98-  10,  Attach.  (filed  May  1,  2003)  (Earthlink  et  al.  Streamlining  Proposal)  (proposing  that  we  replace  the  nine  CEI  parameters  and  procedural  requirements,  and  the  ONA 


 unbundling  obligations,  reporting  requirements,  and  tariffing  requirements  with  streamlined  and  updated  regulations  for  BOC  broadband  access  services  reflecting  the  core  nondiscriminatory  access  to  transmission  principles  of 
 (continued  .  .  .) 
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 separation  option  of  Computer  II  or  for  conditioning  BOC  structural  relief  on  compliance  with  a  detailed  set  of  regulatory  requirements  such  as  the  CEI  or  ONA  requirements.  Instead,  commenters  arguing  for 
 continued  regulation  of  wireline  broadband  Internet  access  service  providers  focus  primarily  on  the  core  nondiscriminatory  access  obligation  of  Computer  II,  urging  that  we,  at  a  minimum,  should  retain  a 
 common  carrier  transmission  access  requirement  in  some  form.  113  In  evaluating  these  arguments,  we  are  mindful  that  one  of  the  Commissions  most  critical  functions  is  to  adapt  regulation  to  changing 
 technology  and  competitive  conditions  to  accomplish  its  mandates  under  the  Act.  114 
 43.  In  determining  whether  to  eliminate  the  Computer  Inquiry  requirements  (e.  g.,  the  separate  subsidiary,  nondiscriminatory  access  to  transmission,  CEI,  and  ONA  obligations)  for  facilities-  based 


 providers  of  wireline  broadband  Internet  access  services,  115  we  weigh  the  benefits  of  these  requirements  against  their  costs  in  accordance  with  our  obligations  under  the  Act.  This  determination  is  informed  not 
 only  by  our  understanding  of  the  current  broadband  Internet  access  market,  but  what  our  predictive  judgment  tells  about  how  that  market  is  likely  to  develop.  116  It  is  critical  to  factor  in  these  future 
 expectations  because  the  broadband  market  is  evolving  rapidly.  At  the  time  the  Computer  Inquiry  rules  were  adopted,  there  was  an  implicit,  if  not  explicit,  assumption  that  the  incumbent  LEC  wireline  platform 
 would  remain  the  only  network  platform  available  to  enhanced  services  providers.  117  Regulated  access  to  wireline  transmission  thus  was  essential  for  a  competitive  information  services  market  to  flourish. 


 44.  As  we  discuss  below,  the  characteristics  of  the  broadband  market,  as  well  as  evidence  that  facilities-  based  wireline  carriers  have  incentives  to  make,  and  indeed  already  make,  broadband 
 transmission  capacity  available  to  ISPs,  absent  regulation,  are  factors  that  influence  our  analysis  in  determining  whether  such  regulation  is  still  necessary.  118  Moreover,  this  regulation  can  have  a  significant 
 impact  on  the  ability  of  wireline  platform  providers  to  develop  and  deploy  innovative  broadband  capabilities  that  respond  to  market  demands.  The  record  shows  that  the  additional  costs  of  an  access 
 mandate  diminish  a  carriers  incentive  and  ability  to  invest  in  and  deploy  broadband  infrastructure 


 (continued  from  previous  page)  Computer  II;  Letter  from  Mark  Uncapher,  ITAA,  to  Marlene  Dortch,  Secretary,  FCC,  CC  Docket  Nos.  02-  33,  98-  10, 
 Attach.  at  6  (filed  Mar.  17,  2003)  (ITAA  Mar.  17,  2003  Ex  Parte  Letter)  (proposing  the  elimination  of  ineffective  CEI/  ONA  rules  but  retaining  the  nondiscriminatory  access  to  transmission  obligation  until  a  competitive  broadband 
 market  exists);  Letter  from  Todd  D.  Daubert,  Counsel  for  AISPA,  to  Marlene  Dortch,  Secretary,  FCC,  CC  Docket  Nos.  02-  33,  95-  20,  &  98-  10  (filed  May  28,  2003)  (AISPA  May  28,  2003  Ex  Parte  Letter)(  supporting  the  Earthlink 
 et  al.  Streamlining  Proposal  as  well  as  arguing  for  greater  protection  against  anticompetitive  pricing  behavior  and  improved  ability  to  monitor  BOC  compliance). 
 113  Id.;  see  also  infra  para.  97. 
 114  See,  e.  g.,  Wold  Communications  v.  FCC,  735  F.  2d  at  1476-  77  (discussing  the  Commissions  ability  to  modify 
 regulations).  115 
 As  discussed  above,  we  recognize  that  many  of  these  requirements  apply  only  to  the  BOCs.  116 
 Courts  have  recognized  that  the  Commissions  decisions  must  sometimes  rest  on  judgment  and  prediction  rather  than  pure  factual  determinations.  FCC  v.  WNCN  Listeners  Guild,  450  U.  S.  582,  594-  95  (1981)  (citations  and 


 internal  quotation  marks  omitted);  see  also  Wold  Communications,  735  F.  2d  at  1479.  117 
 See  NCTA  v.  Brand  X,  slip  op.  at  30  (recognizing  that  the  Commissions  Computer  II  unbundling  requirement  was  based  on  the  belief  that  the  telephone  network  was  the  primary,  if  not  exclusive,  means  through  which 


 information  service  providers  can  gain  access  to  their  customers)  (citations  and  internal  quotation  marks  omitted);  accord  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4825,  para.  44. 
 118  See  infra  paras.  74-  76  (explaining  these  business  incentives). 
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 investment.  119  We  find  this  negative  impact  on  deployment  and  innovation  particularly  troubling  in  view  of  Congress  clear  and  express  policy  goal  of  ensuring  broadband  deployment,  and  its  directive  that  we 
 remove  barriers  to  that  deployment,  if  possible,  consistent  with  our  other  obligations  under  the  Act.  It  is  precisely  this  negative  impact  on  broadband  infrastructure  that  led  the  Commission  to  eliminate  other 
 broadband-  related  regulation  over  the  past  two  years.  120  These  factors,  when  weighed  against  the  benefits  of  continuing  these  regulations,  render  a  different  policy  result  than  the  judgment  reached  at  the  time  the 
 Computer  Inquiry  rules  were  adopted.  121 
 45.  As  outlined  in  the  Wireline  Broadband  NPRM,  we  seek  to  adopt  a  comprehensive  policy  that  ensures,  consistent  with  the  Act  in  general  and  section  706  specifically,  that  broadband  Internet  access 


 services  are  available  to  all  Americans  and  that  undue  regulation  does  not  constrain  incentives  to  invest  in  and  deploy  the  infrastructure  needed  to  deliver  broadband  Internet  access  services.  As  part  of  this  policy, 
 we  believe  that  we  should  regulate  like  services  in  a  similar  manner  so  that  all  potential  investors  in  broadband  network  platforms,  and  not  just  a  particular  group  of  investors,  are  able  to  make  market-  based, 
 rather  than  regulatory-  driven,  investment  and  deployment  decisions. 
 46.  Finally,  we  note  that  our  decision  in  this  Order  is  consistent  with  the  decision  issued  by  the  Ninth  Circuit  Court  of  Appeals  in  1994.  As  discussed  above,  122  in  that  decision  the  Ninth  Circuit  vacated  part  of 


 the  Commissions  Computer  III  Order  on  Remand  concerning  implementation  of  the  ONA  rules.  123  According  to  the  court,  the  Commission  had  failed  to  explain  how  its  diluted  version  of  ONA,  set  forth 
 in  the  Order  on  Remand,  would  prevent  BOCs  from  exploit[  ing]  their  monopoly  control  over  the  local  networks  to  frustrate  regulators  attempts  to  prevent  anticompetitive  behavior.  124  For  the  reasons 
 discussed  herein,  we  determine  that  the  competitive  pressures  and  technological  changes  that  have  arisen  since  1990  have  reduced  the  BOCs  incentive  and  ability  to  discriminate  against  unaffiliated  ISPs  in  their 
 provision  of  broadband  Internet  access  service  to  the  point  that  structural  separation  for  BOC  broadband 
 119  See  infra  paras.  65-  73;  see  also  Catena  Comments  at  5-  6;  SureWest  Comments  at  14;  Verizon  Nov.  25,  2002  Ex 
 Parte  Letter  at  4;  Letter  from  W.  Scott  Randolph,  Director-  Federal  Affairs,  Verizon,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  1-  6  (filed  June  26,  2003)  (Verizon  June  26,  2003  Ex  Parte  Letter);  Letter 


 from  Lawrence  E.  Sarjeant,  Vice  President-  Law  and  General  Counsel,  USTA,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  2-  3  (filed  Apr.  2,  2003)  (USTA  Apr.  2,  2003  Ex  Parte  Letter). 
 120  See  Triennial  Review  Order,  18  FCC  Rcd  at  17141-  54,  paras.  272-  97  (stating  that  refraining  from  imposing 
 unbundling  obligations  on  incumbent  LEC  next-  generation  networks  will  stimulate  facilities-  based  deployment,  particularly  in  light  of  a  competitive  landscape  for  broadband  infrastructure).  In  reviewing  the  Commissions 


 impairment  analysis  for  UNEs  under  section  251  of  the  Act,  the  USTA  II  decision  endorsed  the  importance  of  considering  facilities-  based  competition  and  removing  barriers  to  infrastructure  investment.  USTA  II,  359  F.  3d  at 
 576,  579;  see  Multiple  Dwelling  Unit  Reconsideration  Order,  19  FCC  Rcd  at  15856,  para.  1  (finding  that  fiber  loops  deployed  at  least  to  the  minimum  point  of  entry  of  multiple  dwelling  units  that  are  predominantly  residential  should 
 be  treated  as  fiber-  to-  the-  home  loops  and  not  be  subject  to  section  251  unbundling  obligations);  Broadband  271  Forbearance  Order,  19  FCC  Rcd  at  21508,  para.  25;  Fiber  to  the  Curb  Reconsideration  Order,  19  FCC  Rcd  at 
 20293,  para.  1.  121 
 See  NCTA  v.  Brand  X,  slip  op.  at  29  (noting  that  the  Commission  is  free  within  the  limits  of  reasoned  interpretation  to  change  course  if  it  adequately  justifies  the  change). 


 122  See  supra  note  80. 
 123  California  III,  39  F.  3d  at  933.  In  an  earlier  decision,  the  Ninth  Circuit  accepted  the  Commissions  assessment 
 that,  because  of  ONA,  which  required  fundamental  unbundling,  Computer  IIs  structural  separation  was  no  longer  required  to  prevent  access  discrimination.  Id.  at  927-  28  (citing  California  I,  905  F.  2d  at  1233). 


 124  Computer  III,  39  F.  3d  at  929. 
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 Internet  access  service  is  no  longer  necessary.  Specifically,  we  believe  that  the  analysis  in  this  Order  that  persuades  us  to  eliminate  not  only  the  structural  separation  requirement,  but  all  Computer  Inquiry 
 obligations,  applicable  to  wireline  broadband  Internet  access  service  provides  the  level  of  detail  the  Ninth  Circuit  found  lacking  in  the  Commissions  prior  decision  eliminating  that  requirement. 


 a)  The  Wireline  Broadband  Internet  Access  Services  Marketplace 
 47.  The  broadband  marketplace  before  us  today  is  an  emerging  and  rapidly  changing  marketplace  that  is  markedly  different  from  the  narrowband  marketplace  that  the  Commission  considered  in  adopting 
 the  Computer  Inquiry  rules.  125  Indeed,  the  Supreme  Court  recently  observed  that  the  Commissions  regulatory  treatment  of  wireline  broadband  Internet  access  service  is  based  on  history  rather  than  on  an 
 analysis  of  contemporaneous  market  conditions.  126  Unlike  narrowband  services  provided  over  traditional  circuit-  switched  networks,  broadband  Internet  access  services  have  never  been  restricted  to  a  single 
 network  platform  provided  by  the  incumbent  LECs.  127  This  is  in  stark  contrast  to  the  information  services  market  at  the  time  the  Computer  Inquiry  obligations  were  adopted,  when  only  a  single  platform  capable 
 of  delivering  such  services  was  contemplated  and  only  a  single  facilities-  based  provider  of  that  platform  was  available  to  deliver  them  to  any  particular  end  user.  As  a  consequence,  many  consumers  have  a 
 competitive  choice  for  broadband  Internet  access  services  today.  128 
 48.  As  an  initial  matter,  we  note  that  the  parties  marshal  sharply  contrasting  marketplace  analyses  in  support  of  the  positions  they  urge.  On  the  one  hand,  the  BOCs  argue,  with  regard  to  the  market  position 


 of  the  incumbent  LECs,  that  the  relevant  product  market  is  retail  broadband  Internet  access  service  and  the  relevant  geographic  market  is  regional  or  national.  129  These  parties  contend  that  because  cable 
 providers  currently  have  a  larger  share  of  the  retail  broadband  Internet  access  service  market  both  regionally  and  nationally,  incumbent  LECs  must  be  deemed  to  lack  market  power  in  this  market  and 
 therefore  deregulation  is  appropriate.  130 
 49.  In  contrast,  certain  competitive  LECs  and  ISPs  maintain  that  the  relevant  product  market,  for  purposes  of  determining  whether  to  deregulate,  should  be  the  wholesale  market  for  the  transmission 


 component  of  broadband  Internet  access  service.  131  As  discussed  above,  the  Computer  Inquiry  rules 


 125  See  High-  Speed  Services  July  2005  Report,  at  Table  3,  Chart  6  (showing  the  growth  of  high-  speed  lines  and  the 
 proportion  of  high-  speed  lines  by  technology  from  December  1999  to  December  2004).  126 
 See  NCTA  v.  Brand  X,  slip  op.  at  30.  127 
 Indeed,  cable  modem  service  encouraged  incumbent  LECs  deployment  of  DSL  service.  See  Fourth  Section  706  Report,  at  14-  16;  High-  Speed  Services  July  2005  Report,  at  2,  Table  3,  Chart  6;  Letter  from  Jonathan  Banks, 


 BellSouth,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  22  (filed  June  5,  2003)  (BellSouth  June  5,  2003  Ex  Parte  Letter)  (citing  independent  reports  and  studies  regarding  the  predominance  of  cable  modem  service 
 over  DSL  service).  128 
 BellSouth  June  5,  2003  Ex  Parte  Letter  at  13  (stating  that  the  competitive  nature  of  the  broadband  market,  including  new  entrants  using  new  technologies,  is  driving  broadband  providers  to  offer  faster  service  at  the  same  or 


 even  lower  retail  rates).  129 
 See,  e.  g.,  BellSouth  01-  337  Comments  at  30;  Qwest  01-  337  Comments  at  15-  23,  26-  29;  SBC  01-  337  Comments  at  19-  28,  34-  36. 


 130  See,  e.  g.,  Qwest  01-  337  Comments  at  36-  43;  Verizon  Comments  01-  337  at  17-  19;  BellSouth  Reply,  Harris  Decl. 
 at  4,  7-  11;  USTA  01-  337  Reply  at  5-  6;  Verizon  Reply  at  26-  31;  BellSouth  June  5,  2003  Ex  Parte  Letter  at  18-  21.  131 
 See,  e.  g.,  ITAA  01-  337  Comments  at  3-  5;  MCI  01-  337  Comments  at  6-  8;  AT&  T  Reply  at  12-  13. 
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 require  that  facilities-  based  carriers  that  provide  broadband  Internet  access  service  directly  or  through  an  affiliate  make  the  telecommunications  transmission  component  available  to  unaffiliated  ISPs  as  a 
 common  carrier  service.  132  These  parties  argue  that  the  incumbent  LECs  intermodal  competitors  generally  do  not  make  the  telecommunications  component  of  their  broadband  Internet  access  services 
 available  to  unaffiliated  ISPs.  133  Certain  competitive  LECs  and  ISPs  argue  that  it  would  be  inappropriate  to  deregulate  the  incumbent  LECs  given  the  lack  of  availability  of  the  telecommunications  component 
 from  providers  other  than  incumbent  LECs.  134  They  also  argue  that  even  if  we  treat  broadband  Internet  access  service  as  the  relevant  product,  then  for  the  relevant  geographic  market,  we  must  consider  each 
 local  market  as  a  separate  geographic  market  and  evaluate  the  choices  available  in  each.  135  They  contend  that  incumbent  LECs  either  are  the  single  provider  or  one  of  two  providers  in  virtually  all  of  these 
 relevant  geographic  markets.  136 
 50.  We  find  that  the  parties  competing  analyses,  though  useful,  fail  to  recognize  all  of  the  forces  that  influence  broadband  Internet  access  service  deployment  and  competition,  so  we  adopt  neither.  The 


 parties  arguments  are  premised  on  data  that  are  both  limited  and  static.  Most  importantly,  the  competing  analyses  fail  to  recognize  the  dynamic  nature  of  the  marketplace  forces.  137  We  fully  recognize  that  not  all 
 American  households  can  choose  between  cable  modem  and  DSL-  based  Internet  access  service  today.  But  a  wide  variety  of  competitive  and  potentially  competitive  providers  and  offerings  are  emerging  in  this 
 marketplace.  138  Cable  modem  and  DSL  providers  are  currently  the  market  leaders  for  broadband  Internet  access  service  and  have  established  rapidly  expanding  platforms.  There  are,  however,  other  existing  and 
 developing  platforms,  such  as  satellite  and  wireless,  and  even  broadband  over  power  line  in  certain  locations,  139  indicating  that  broadband  Internet  access  services  in  the  future  will  not  be  limited  to  cable 


 132  See  supra  Part  V.  A.  2. 
 133  See,  e.  g.,  ITAA  01-  337  Comments  at  13-  15;  MCI  01-  337  Comments  at  11-  19;  AT&  T  Reply  at  14-  15. 
 134  See,  e.  g.,  Arizona  Consumer  Council  et  al.  Comments  at  30-  31;  AT&  T  Comments,  Willig  Decl.  at  29-  39; 
 DirectTV  01-  337  Comments  at  5-  7;  ITAA  Comments  at  15-  18;  MCI  et  al.  Comments  at  32-  38;  McLeod  USA  Comments  at  2-  3. 


 135  See,  e.  g.,  CompTel  01-  337  Comments  at  15-  16;  GCI  Comments  at  15-  18;  Wisconsin  Commission  Comments  at 
 4;  MCI  01-  337  Comments  at  10.  136 
 See,  e.  g.,  MCI  et  al.  Comments  at  37;  Covad  Reply  at  11;  see  also  AT&  T  Reply  at  42-  50.  137 
 See  Broadband  271  Forbearance  Order,  19  FCC  Rcd  at  21505-  12,  paras.  21-  35  (where  the  Commission  concluded,  in  the  context  of  granting  the  four  BOCs  forbearance  relief  from  the  requirements  of  section  271  with 


 regard  to  broadband  elements  to  the  same  extent  that  unbundling  relief  was  granted  under  section  251,  that  there  is  competition  from  multiple  sources  and  technologies  in  the  rapidly  changing  broadband  market). 
 138  See  High-  Speed  Services  July  2005  Report,  at  2-  3;  Fourth  Section  706  Report,  at  14-  24,  45;  Broadband  271 
 Forbearance  Order,  19  FCC  Rcd  at  21505-  08,  paras.  22-  26.  139 
 Fourth  Section  706  Report,  at  22-  23.  The  Commission  noted  that  broadband  over  power  lines,  which  uses  existing  electric  power  lines  as  a  transmission  medium  to  provide  high-  speed  services,  made  its  debut  in  2003.  Id.  at 


 22.  CURRENT  Communications  Group  is  an  example  of  a  provider  that  offers  broadband  over  power  line  service  through  a  joint  venture  with  Cinergy  Corp.,  an  electric  utility  serving  Cincinnati,  Ohio,  and  has  announced  plans  to 
 expand  its  services.  See  CURRENT  Communications  Group  Announces  Strategic  Investments  to  Catalyze  Broadband  over  Power  Line  Deployments,  available  at  http://  www.  currentgroup.  com/  news/  releases/ 
 CURRENT%  20Funding%  207-  07-  05.  pdf  (visited  on  July  13,  2005);  supra  note  97  (noting  recent  reported  broadband  over  power  line  market  share  statistics). 
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 modem  and  DSL  service.  140  Changes  in  technology  are  spurring  innovation  in  the  use  of  networks.  As  discussed  below,  there  is  increasing  competition  at  the  retail  level  for  broadband  Internet  access  service  as 
 well  as  growing  competition  at  the  wholesale  level  for  network  access  provided  by  the  wireline  providers  intramodal  and  intermodal  competitors.  141  We  find  that  an  emerging  market,  like  the  one  for  broadband 
 Internet  access,  is  more  appropriately  analyzed  in  view  of  larger  trends  in  the  marketplace,  rather  than  exclusively  through  the  snapshot  data  that  may  quickly  and  predictably  be  rendered  obsolete  as  this 
 market  continues  to  evolve. 
 51.  At  the  outset,  we  note  that,  while  household  computer  penetration  is  growing,  only  54.6  percent  of  U.  S.  households  subscribe  to  either  broadband  or  narrowband  Internet  access 


 service.  142  We  also  note  that  roughly  20  percent  of  consumers  with  access  to  advanced  telecommunications  capability  subscribe  to  services  providing  that  capability.  143  Some  industry 
 analysts  predict  that  over  the  next  decade,  nearly  90  percent  of  all  Americans  will  go  on  line  from  home  via  broadband  networks  that  are  dramatically  faster  than  todays  broadband  networks.  144  We  recognize 
 that  cable  modem  service  is  the  most  widely  used  means  by  which  residential  and  small  business  obtain  broadband  service  today.  145  As  of  December  31,  2002,  facilities-  based  providers  were  providing 
 approximately  17.4  million  high-  speed  lines  to  American  consumers  and  small  businesses.  146  Among  these  customers,  65  percent  received  cable  modem  service,  while  approximately  32  percent  received  DSL 
 service  and  other  broadband  services  provided  by  incumbent  LECs  and  competitive  LECs.  147  As  of  December  31,  2004,  the  number  of  high-  speed  lines  had  more  than  doubled  with  facilities-  based  providers 
 providing  approximately  35  million  high-  speed  lines  to  American  consumers  and  small  businesses.  148 
 140  See,  e.  g.,  Fourth  Section  706  Report,  at  16-  23,  45  (describing  broadband  technologies  generally).  Based  on  the 
 Commissions  most  recent  broadband  data  report,  the  combined  market  share  of  high-  speed  lines  via  emerging  broadband  platforms  is  approximately  1.5%  (not  including  new  all  fiber  networks).  See  High-  Speed  Services  July 


 2005  Report,  at  Table  1.  141 
 See  infra  Part  V.  B.  2.d  (discussing  various  wholesale  arrangements  and  incentives  to  make  these  available);  Broadband  271  Forbearance  Order,  19  FCC  Rcd  at  21508-  09,  para.  26. 


 142  Federal  Communications  Commission,  Wireline  Comp.  Bur.,  Industry  Analysis  &  Technology  Div.,  Trends  in 
 Telephone  Service,  at  2-  10  (Apr.  2005)  (Trends  in  Telephone  Service  April  2005  Report)  (citing  NTIA  Broadband  Report). 


 143  Fourth  Section  706  Report,  at  10,  38  (describing  advanced  services  lines  as  having  transmission  speeds  of  more 
 than  200  kbps  capability  in  the  upstream  (customer-  to-  provider)  and  downstream  (provider-  to-  customer)  directions,  and  high-  speed  lines  as  those  having  a  transmission  speed  of  more  than  200  kbps  capability  in  at  least  one  direction). 


 The  Commissions  data  collection  program  requires  service  providers  to  identify  each  zip  code  in  which  a  provider  has  at  least  one  high-  speed  service  subscriber  (i.  e.,  a  subscriber  using  a  high-  speed  Internet  access  line).  As  of 
 December  31,  2004,  providers  reported  that  they  had  subscribers  to  high-  speed  services  in  95%  of  the  nations  zip  codes.  In  83%  of  the  nations  zip  codes,  more  than  one  provider  reported  having  subscribers.  The  Commission  has 
 stated  that  99%  of  the  countrys  population  lives  in  95%  of  the  zip  codes  where  a  provider  reports  having  at  least  one  high-  speed  service  subscriber.  High-  Speed  Services  July  2005  Report,  at  4. 


 144  PEW  Internet  &  American  Life,  The  Future  of  the  Internet,  at  41-  42  (Jan.  9,  2005). 
 145  See  High-  Speed  Services  July  2005  Report,  at  Table  3;  Triennial  Review  Order,  18  FCC  Rcd  at  17135,  para.  262 
 (citing  High-  Speed  Services  December  2002  Report,  at  Table  5).  146 
 High-  Speed  Services  June  2003  Report,  at  Table  3.  147 
 Id.  148 
 High-  Speed  Services  July  2005  Report,  at  Table  3. 
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 Among  these  customers,  approximately  60.3  percent  received  cable  modem  service,  while  approximately  37.2  percent  received  DSL  service  and  other  broadband  services  provided  by  incumbent  LECs  and 
 competitive  LECs.  149 
 52.  While  there  is  an  increasing  percentage  of  broadband  users  who  receive  DSL  service,  cable  retains  a  relatively  large  share  of  the  market.  This  reflects,  in  part,  cable  providers  substantial  efforts  to 


 upgrade  their  individual  networks  to  make  them  capable  of  providing  cable  modem  service,  among  other  services.  Today,  approximately  91  percent  of  the  nations  cable  systems  have  been  upgraded  to  include 
 the  two-  way  digital  capability  that  supports  cable  modem  service.  150  As  a  result,  the  cable  industry  reports  that  more  than  25  percent  of  cable  households  subscribe  to  cable  modem  service.  151 


 53.  Similarly,  many  incumbent  LECs  have  upgraded,  or  are  in  the  process  of  upgrading,  their  wireline  networks  to  provide  DSL  broadband  Internet  access.  In  2003,  parties  estimated  that 
 approximately  61  percent  of  the  nations  households  (66  million  households)  had  access  to  DSL  service,  although  only  6  percent  of  the  nations  households  subscribed  to  DSL-  based  Internet  access  services  (6.2 
 million  households).  152  As  of  December  31,  2004,  the  number  of  high-  speed  DSL  lines  in  service  had  increased  to  approximately  13  million  lines.  153  Further  wireline  network  upgrades,  including  the 
 deployment  of  hybrid  fiber/  copper  loops  and  fiber  to  the  home  (FTTH),  should  provide  additional  households  with  access  to  wireline  broadband  service.  154 


 149  Id.  at  Chart  6. 
 150  Fourth  Section  706  Report  at  14;  National  Cable  &  Telecommunications  Industry,  2004  Year-  End  Industry 
 Overview  at  9  (2004  Year-  End  Industry  Overview).  151 
 2004  Year-  End  Industry  Overview  at  9.  We  note  that  the  data  available  regarding  cable  modem  service  generally  does  not  distinguish  between  residential  and  small  business  subscribers. 


 152  See  Letter  from  Ann  D.  Berkowitz,  Project  Manager-  Federal  Affairs,  Verizon,  to  Marlene  H.  Dortch,  Secretary, 
 FCC,  CC  Docket  No.  02-  33,  Attach.  at  4  (filed  Apr.  30,  2003)  (Verizon  Apr.  30,  2003  Ex  Parte  Letter);  BellSouth  June  5,  2003  Ex  Parte  Letter  at  22;  see  also  High-  Speed  Services  June  2003  Report,  Table  5.  The  approximately  6.2 


 million  households  include  households  that  receive  DSL  service  from  competitive  LECs  as  well  as  households  that  receive  DSL  service  from  incumbent  LECs. 
 153  High-  Speed  Services  July  2005  Report,  at  Table  3. 
 154  Fourth  Section  706  Report,  at  16-  18  (describing  new  fiber  technologies).  A  hybrid  loop  is  a  local  loop  composed 
 of  both  fiber  optic  cable,  usually  in  the  feeder  plant,  and  copper  wire  or  cable,  usually  in  the  distribution  plant.  By  FTTH  loop,  we  mean  a  local  loop  consisting  entirely  of  fiber  optic  cable  (and  the  attached  electronics),  whether  lit 


 or  dark  fiber,  that  connects  a  customers  premises  with  a  wire  center  (i.  e.,  from  the  demarcation  point  at  the  customers  premises  to  the  central  office).  Triennial  Review  Order,  18  FCC  Rcd  at  17475-  17501,  Appendix  B 
 (adopting  section  51.  319  of  the  Commissions  rules).  The  deployment  of  hybrid  loops  allows  an  incumbent  LEC  to  deploy  DSLAMs  in  remote  terminals  and  thus  reduce  the  distance  between  a  DSLAM  and  an  end  users  premises  to 
 one  that  can  accommodate  DSL  service.  See,  e.  g.,  Collocation  Remand  Order,  16  FCC  Rcd  at  15460-  61,  para.  46  (recognizing  that  in  order  to  provide  DSL  service,  a  LEC  must  deploy  a  DSLAM  within  a  reasonable  distance  of  the 
 end  users  premises).  Incumbent  LECs  typically  require  a  distance  of  no  more  than  18,000  feet.  Id.  Some  competitive  LECs  will  provide  DSL  service  at  greater  distances.  See,  e.  g.,  Petition  of  Cavalier  Telephone  LLC 
 Pursuant  to  Section  252(  e)(  5)  of  the  Communications  Act  for  Preemption  of  the  Jurisdiction  of  the  Virginia  State  Corporation  Commission  Regarding  Interconnection  Disputes  with  Verizon  Virginia,  Inc.  and  for  Arbitration,  WC 
 Docket  No.  02-  359,  Memorandum  Opinion  and  Order,  18  FCC  Rcd  25887,  25929-  34,  paras.  72-  81  (2003). 
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 54.  Approximately  83.2  percent  of  DSL  subscribers  receive  broadband  service  from  the  BOCs,  with  another  12.5  percent  receiving  broadband  service  from  independent  incumbent  LECs.  155  Competitive 
 LECs  provide  the  remaining  DSL  subscribers  with  broadband  service  as  intramodal  competitors  of  the  incumbent  LECs.  156  Competitive  LECs  generally  provide  these  services  using  their  own  facilities  in 
 combination  with  UNEs  leased  from  incumbent  LECs  pursuant  to  section  251(  c)(  3)  of  the  Act.  157  Some  competitive  LECs,  however,  provide  DSL  services  using  their  own  facilities  exclusively.  158  Competitive 
 LECs  offer  consumers  broadband  Internet  access  directly  or  enter  into  service  arrangements  with  independent  ISPs  that  offer  competing  broadband  Internet  access  services.  159  Specifically,  competitive 
 LECs  currently  provide  wireline  broadband  Internet  access  service  to  approximately  597,000  end-  user  lines.  160 


 55.  In  sum,  while  cable  modem  and  DSL  clearly  have  exhibited  significant  growth  over  the  last  few  years,  market  penetration  for  these  two  technologies  still  is  far  below  the  size  of  the  potential  market.  The 
 20  percent  cumulative  penetration  rate  for  broadband  services  stands  in  marked  contrast  to  other,  more  mature  markets  the  Commission  has  examined  and  regulated  to  varying  degrees.  When  the  Commission 
 determined  that  AT&  T  was  no  longer  dominant  in  the  long  distance  service  market,  that  market  was  mature.  About  94  percent  of  American  households  had  telephone  voice  service,  and  the  vast  majority  of 
 the  telephones  provided  equal  access  to  long  distance  service.  161  More  generally,  telephone  voice  service  has  had  market  penetration  rates  ranging  from  91.4  percent  to  95.5  percent  of  all  American  households 
 over  the  past  20  plus  years.  162  When  compared  to  the  market  penetration  rate  for  telephone  voice  service,  which  typifies  a  long-  established,  mature  market  for  network-  based  services,  the  market  penetration  rate 


 155  High-  Speed  Services  July  2005  Report,  Table  5. 
 156  Id. 
 157  The  Commissions  Triennial  Review  Order  expressly  reaffirmed  the  competitive  LECs  right  to  obtain  unbundled 
 access  to  stand-  alone  copper  loops  in  order  to  provide  broadband  transmission  services.  See  Triennial  Review  Order,  18  FCC  Rcd  at  17128-  32,  paras.  248-  54.  In  addition,  we  reaffirmed  the  incumbent  LECs  obligation  to 


 provide  competitive  LECs  with  the  ability  to  line  split  (i.  e.,  where  one  competitive  LEC  provides  narrowband  voice  service  over  the  same  loop  that  a  second  competitive  LEC  uses  to  provide  DSL  service).  Id.  at  17130-  31,  paras. 
 251-  52.  In  that  order,  the  Commission  also  grandfathered  existing  line  sharing  customers  and  declined  to  reinstate  the  Commissions  vacated  line  sharing  rules.  The  Commission  instead  established  a  three-  year  transition  after 
 which  any  new  customer  must  be  served  through  a  line  splitting  arrangement,  through  use  of  the  stand-  alone  copper  loop,  or  through  an  arrangement  that  a  competitive  LEC  has  negotiated  with  the  incumbent  LEC  to  replace  line 
 sharing.  Line  sharing  allowed  a  competing  carrier  to  provide  DSL  service  over  the  high-  frequency  portion  of  the  same  loop  that  the  incumbent  LEC  uses  to  provide  voice  service.  Id.  at  17132-  41,  paras.  255-  69.  The  D.  C.  Circuit 
 expressly  upheld  the  Commissions  decision  not  to  require  line  sharing.  USTA  II,  359  F.  3d  at  585.  As  we  discuss  in  part  VI.  D,  below,  the  decisions  contained  in  this  Order  have  no  affect  on  competitive  LECs  ability  to  obtain  UNEs, 
 or  on  the  section  251(  c)  obligations  of  incumbent  LECs. 
 158  See  ALTS  01-  337  Comments  at  3  (stating  that  competitive  LECs  have  invested  over  $56  billion  to  construct  new 
 broadband  networks  since  the  passage  of  the  1996  Act).  159 
 See  Qwest  May  23,  2003  Ex  Parte  Letter,  Attach  at  4;  SBC  Mar.  7,  2003  Ex  Parte  Letter,  Attach.  at  12.  160 
 High-  Speed  Services  July  2005  Report,  at  Table  5.  161 
 Trends  in  Telephone  Service  April  2005  Report,  at  Table  16;  see  also  Motion  of  AT&  T  Corp.  to  be  Reclassified  as  a  Non-  Dominant  Carrier,  Order,  11  FCC  Rcd  3271  (1995). 


 162  Trends  in  Telephone  Service  April  2005  Report,  at  Table  1. 
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 for  broadband  Internet  access  services  indicates  that  this  emerging  market  has  the  potential  to  grow  significantly  in  the  years  ahead. 
 56.  Given  recent  trends,  the  market  penetration  of  cable  modem  and  DSL  broadband  Internet  access  services,  in  particular,  could  grow  dramatically  in  the  future.  163  We  expect  these  two  market  leaders  to 
 continue  to  compete  head-  to-  head  in  a  way  that  could  result  in  higher  customer  penetration  rates  for  one  or  both  services.  164  Cable  modem  service  and  DSL  broadband  Internet  access  services  currently  compete 
 directly  with  each  other  in  certain  areas,  are  marketed  against  each  other,  are  sold  almost  exclusively  to  residential  and  small  business  customers,  and  often  may  be  perceived  by  consumers  as  close  substitutes 
 for  each  other.  165  Continuous  change  and  development  are  likely  to  be  the  hallmark  of  the  marketplace  for  broadband  Internet  access  at  both  the  retail  and  wholesale  levels  over  the  next  several  years.  166 


 57.  We  expect  providers  of  both  platforms  will  continue  to  invest  and  extend  the  reach  of  their  services.  We  anticipate  that,  as  the  availability  of  cable  modem  and  DSL  broadband  Internet  access 
 services  grows  with  the  modernization  of  network  infrastructure  and  increased  service  deployment,  more  households  will  have  the  option  of  choosing  between  the  cable  and  DSL  broadband  options.  Increased 
 intermodal  and  intramodal  competition  will  continue  to  encourage  these  two  broadband  providers  to  deploy  broadband  Internet  access  services  throughout  their  respective  service  areas.  167  In  addition,  the 
 threat  of  competition  from  other  forms  of  broadband  Internet  access,  whether  satellite,  fixed  or  mobile  wireless,  or  a  yet-  to-  be-  realized  alternative,  will  further  stimulate  deployment  of  broadband  infrastructure, 
 including  more  advanced  infrastructure  such  as  fiber  to  the  home. 
 58.  These  emerging  broadband  platforms  exert  competitive  pressure  even  though  they  currently  have  relatively  few  subscribers  compared  with  cable  modem  service  and  DSL-  based  Internet  access  service.  168 


 163  See  Fourth  Section  706  Report,  at  13-  16  (describing  the  technology  and  pricing  that  is  driving  the  increasing 
 demand  for  cable  modem  and  DSL  services).  164 
 Broadband  271  Forbearance  Order,  19  FCC  Rcd  at  21505-  07,  para.  22  (stating  that  cable  providers  have  a  significant  role  in  encouraging  the  BOCs  to  provide  competitive  DSL  services). 


 165  Id.  at  21505-  07,  para.  22;  see  also  NTIA  Broadband  Report,  at  7  (explaining  generally  the  growth  in  market  share 
 for  cable  modem  and  DSL  service);  Robert  W.  Crandall,  J.  Gregory  Sidak,  &  Hal  J.  Singer,  The  Empirical  Case  Against  Asymmetric  Regulation  of  Broadband  Internet  Access,  17  Berkeley  Technology  L.  J.  953,  953-  87  (2002). 


 The  authors  develop  an  econometric  model  which  estimates  own  price  and  cross  price  elasticities  for  cable  modem  and  DSL.  Based  on  this  model,  the  authors  conclude  that  price  and  cross-  price  elasticities  are  high,  and  that  cable 
 modem  and  DSL  are  substitutes  when  both  are  available  to  the  mass  market  consumer.  Id.  at  957. 
 166  See,  e.  g.,  High-  Speed  Services  July  2005  Report,  at  Tables  1-  2,  Charts  1-  2  (showing  growth  of  various  broadband 


 technologies  over  the  past  five  years).  167 
 See  Fourth  Section  706  Report  at  14-  16  (describing  pricing  for  cable  modem  and  DSL  service).  Verizon  has  recently  decreased  its  prices,  both  retail  and  wholesale,  for  DSL  service, 


 http://  www22.  verizon.  com/  ForHomeDSL/  channels/  dsl/  forhomedsl.  asp?  ID=  Res  announcing  Verizons  limited  time  offer  of  $19.95  per  month  for  DSL  service  for  the  first  three  months  of  a  one-  year  commitment.  In  addition,  SBCs 
 retail  Internet  access  rates  are  now  set  at  an  introductory  rate  of  $14.95  per  month  for  a  one-  year  term.  SBC  Communications  Breaks  New  Ground  for  Consumers  with  Residential  DSL  for  $14.  95  When  Ordered  Online, 
 http://  www.  sbc.  com/  gen/  press-  room?  pid=  4800&  cdvn=  news&  newsarticleid=  21690  announcing  SBCs  13-  state  $14.95  price  decrease  for  its  DSL  Express  service.  BellSouth  has  also  lowered  its  retail  DSL  prices.  Dionne 
 Searcey,  BellSouth  Shaves  DSL  Prices,  Wall  St.  J.  (July  20,  2005)  (describing  BellSouths  permanent  DSL  price  cut  by  $10.  00  to  $32.95  per  month  for  customers  who  also  buy  its  basic  phone  service). 
 168  See,  e.  g.,  BellSouth  June  5,  2003  Ex  Parte  Letter  at  11-  12. 
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 Ku-  band  satellite  service  is  now  available  in  most  areas  of  the  United  States  and  is  most  attractive  in  areas  that  lack  access  to  cable  modem  and  DSL-  based  Internet  access  service,  largely  because  this  satellite 
 service  costs  more  than  those  alternatives.  169  Fixed  wireless  service  is  also  available  to  provide  high-speed  Internet  access  in  substantial  areas  of  the  nation.  170  By  the  end  of  2002,  satellite  and  fixed  wireless 
 providers  reported  about  257,000  high-  speed  Internet  access  service  residential  and  small  business  subscribers.  171  Today,  they  report  an  increased  subscriber  base  of  approximately  422,000  lines  in 
 service.  172 
 59.  At  the  same  time  as  cable  modem  and  DSL  broadband  Internet  access  services  are  increasing  market  penetration,  these  other  technology-  based  solutions  could  gain  market  share.  In  the  near  future, 


 satellite  and  fixed  wireless  will  likely  continue  to  serve,  at  the  very  least,  specialized  geographic  parts  of  the  market  not  served  by  DSL  or  cable  modems.  173  If  more  customers  adopt  satellite  and  fixed  wireless 
 solutions,  the  relative  prices  of  those  solutions  could  decline,  which  would  make  the  services  more  competitive  with  cable  modem  and  DSL  broadband  Internet  access  services.  It  is  unclear  in  the  current 
 developing  market  which  technology  or  technologies  will  serve  the  majority  of  customers  when  the  market  reaches  greater  maturity. 


 60.  We  recognize  that  the  attributes  of  the  available  broadband  platforms  vary,  particularly  as  to  price,  speed,  and  ubiquity.  We  expect  that  customers  will  weigh  these  attributes  for  each  platform  and 
 make  service-  related  decisions  based  on  their  specific  needs.  For  example,  a  customer  may  select  a  broadband  Internet  access  service  with  a  somewhat  slower  speed  than  that  associated  with  other  service 
 platforms  in  return  for  the  lower  price  of  the  selected  service. 
 61.  As  the  Internet  and  related  applications  mature  and  continue  to  evolve,  the  demand  for  broadband  Internet  access  services  will  likely  grow.  The  presence  of  more  content  available  through  the  Internet  and 


 the  enhanced  means  of  presenting  the  content,  together  with  growth  in  broadband-  related  applications,  such  as  streaming  video,  will  lead  more  subscribers  to  seek  broadband  Internet  access  service.  As  the 
 number  of  subscribers  grows,  so  does  the  opportunity  for  alternative  technologies  and  their  respective  providers.  As  any  provider  increases  its  market  share  or  upgrades  its  broadband  Internet  access  service, 
 other  providers  are  likely  to  mount  competitive  challenges,  which  likely  will  lead  to  wider  deployment  of  broadband  Internet  access  service,  more  choices,  and  better  terms.  174 


 62.  We  disagree  with  commenters  that  equate  the  ability  of  ISPs  to  obtain  wireline  broadband  transmission  services  on  a  Title  II  basis  with  the  ability  of  consumers  to  obtain  facilities-  based 
 competitive  broadband  Internet  access  services.  175  A  regulatory  regime  that  promotes  a  competitive  broadband  Internet  access  services  market  where  consumers  have  a  choice  of  multiple  providers  is  not 


 169  Fourth  Section  706  Report,  at  23.  Satellite  providers  are  in  the  process  of  increasing  by  a  large  multiple  the 
 amount  of  bandwidth  they  make  available  for  broadband,  with  several  launches  of  new  satellites  scheduled  during  the  near  future.  Id.  at  23,  46.  See  supra  note  95.  Satellite  currently  has  just  less  than  a  1%  broadband  market  share. 


 170  Fourth  Section  706  Report,  at  20-  22. 
 171  High-  Speed  Services  June  2003  Report,  at  Table  3. 
 172  High-  Speed  Services  July  2005  Report,  at  Table  3. 
 173  See  Fourth  Section  706  Report,  at  18-  23. 
 174  See  id.  at  44-  45  (describing  the  broadband  trends). 
 175  See,  e.  g.,  AOL  Comments  at  21-  23;  EarthLink  Comments  at  16-  27;  MCI  et  al.  Comments  at  24-  32;  Ad  Hoc 
 Reply  at  14-  18. 
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 necessarily  the  same  as  a  regulatory  regime  that  mandates  that  one  particular  type  of  broadband  Internet  access  service  transmission  technology,  and  one  alone,  is  available,  on  a  nondiscriminatory  basis,  to  any 
 entity  that  desires  to  become  an  ISP.  176  Vigorous  competition  between  different  platform  providers  already  exists  in  many  areas  and  is  spreading  to  additional  areas.  177  While  we  recognize  that  broadband 
 Internet  access  service  is  not  ubiquitously  available  today,  this  market  is  rapidly  changing  and  growing.  178  In  addition,  service  providers  tend  to  set  prices  on  a  national  or  regional  basis  regardless  of  whether  there 
 are  multiple  broadband  providers  serving  local  markets.  179 
 63.  It  is  difficult  to  make  a  meaningful  assessment  of  the  market  for  wholesale  access  to  the  transmission  component  of  broadband  Internet  access  service.  Although  we  recognize  that,  in  many 


 areas,  the  incumbent  LEC  is  currently  the  only  wholesale  provider  of  this  transmission  component,  this  observation,  on  its  own,  is  not  dispositive.  At  this  time,  facilities-  based  wireline  carriers  are  the  only 
 providers  of  broadband  Internet  access  services  that  are  compelled  by  regulation  to  make  such  an  offering  available.  As  stated  above,  this  compulsion  is  not  the  result  of  the  Commissions  analysis  of  broadband 
 Internet  access  services  specifically,  but  rather  is  the  product  of  the  application  of  legacy  rules  adopted  decades  ago.  180  Therefore,  we  cannot  state  unequivocally  that  incumbent  LECs  would  not  otherwise 
 provide  wholesale  access,  absent  this  compulsion.  In  fact,  the  record  shows  that  incumbent  LECs  would  and  indeed  already  do  provide  such  access,  albeit  through  arrangements  other  than  a  mandatory  tariff 
 regime  that  requires  a  standardized  general  offering.  181  In  addition,  this  regulatory  compulsion  of  facilities-  based  wireline  carriers  may  be  impeding  the  development  of  competitive  alternatives,  most 
 notably  through  entry  by  other  broadband  Internet  access  platform  providers.  Because  our  rules  require  a  particular  type  of  generalized  wholesale  offering,  they  may  reduce  incentives  for  ISPs  to  seek  alternative 
 arrangements  from  other  broadband  Internet  access  platform  providers  and  for  those  other  providers  to  offer  such  arrangements.  182 


 176  The  Commission  concluded  in  the  Broadband  271  Forbearance  Order  that  competition  from  multiple  sources 
 and  technologies  in  the  retail  broadband  market,  especially  from  cable  modem  providers,  will  encourage  the  BOCs  to  utilize  wholesale  customers  to  grow  their  share  of  the  broadband  markets  and  retain  their  business.  Broadband 


 271  Forbearance  Order,  19  FCC  Rcd  at  21508,  para.  26.  177 
 See  supra  Part  V.  B.  2.a;  Broadband  271  Forbearance  Order,  19  FCC  Rcd  at  21505-  10,  paras.  22-  29.  178 
 See  supra  Part  V.  B.  2.a.  179 
 See,  e.  g.,  supra  n.  167  (describing  the  BOCs  regionwide  DSL  pricing  offers).  180 
 See  NCTA  v.  Brand  X,  slip  op.  at  30.  181 
 For  example,  BellSouth  indicates  that  few  unaffiliated  ISPs  continue  to  take  its  tariffed  DSL  transport  service.  Instead,  many  ISP  competitors  have  entered  into  commercial  contracts  for  broadband  Internet  access  capability 


 because  it  meets  their  demands  better  than  the  Computer  Inquiry  tariffed  transmission-  only  component.  See  Letter  from  Glenn  T.  Reynolds,  Vice  President-  Federal  Regulatory,  BellSouth,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC 
 Docket  No.  02-  33,  Attach.  at  8  (filed  Apr.  25,  2005)  (BellSouth  Apr.  25,  2005  Ex  Parte  Letter)  (noting  that  only  one  percent  of  the  total  broadband  customers  in  BellSouths  nine-  state  region  obtain  service  from  ISPs  using  BellSouths 
 Computer  Inquiry-  required  tariffed  DSL  transmission  offering,  but  over  26%  of  the  customers  are  served  by  ISPs  using  BellSouths  contract  offering  (i.  e.,  its  regional  broadband  aggregation  network  (RBAN)  offering). 
 182  See,  e.  g.,  BellSouth  June  5,  2003  Ex  Parte  Letter  at  18  (  BellSouths  ability  to  negotiate  and  enter  into  such 
 tailored  agreements  [for  ISPs]  is  frustrated  immensely  by  the  existing  regulatory  burdens  of  having  to  offer  the  underlying  tariff  components  immediately  to  any  other  requesting  carrier  anywhere  in  BellSouths  region  at  tariffed 


 rates.). 
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 64.  Based  on  the  record  before  us,  we  expect  that  facilities-  based  wireline  carriers  will  have  business  reasons  to  continue  making  broadband  Internet  access  transmission  services  available  to  ISPs  without 
 regard  to  the  Computer  Inquiry  requirements.  183  The  record  makes  clear  that  such  carriers  have  a  business  interest  in  maximizing  the  traffic  on  their  networks,  as  this  enables  them  to  spread  fixed  costs  over  a 
 greater  number  of  revenue-  generating  customers.  184  For  their  part,  cable  operators,  which  have  never  been  required  to  make  Internet  access  transmission  available  to  third  parties  on  a  wholesale  basis,  185  have 
 business  incentives  similar  to  those  of  incumbent  LECs  to  make  such  transmission  available  to  ISPs,  and  are  continuing  to  do  so  pursuant  to  private  carriage  arrangements.  186  Given  the  Supreme  Courts  decision 
 that  cable  operators  can  offer  the  transmission  underlying  cable  modem  service  as  a  functionally  integrated  part  of  a  finished  information  service  without  becoming  subject  to  regulation  under  Title  II,  187 
 we  expect  that  these  wholesale  arrangements  will  continue  to  evolve.  We  believe  that  the  convergence  of  these  two  factors    increasing  competition  among  facilities-  based  broadband  providers  and  the  potential 
 for  competition  in  wholesale  network  access    will  sustain  and  increase  competitive  choice  among  broadband  providers  and  Internet  access  products. 


 b)  Technological  Innovation 
 65.  We  find  that  application  of  the  Computer  Inquiry  requirements  to  wireline  broadband  Internet  access  services,  and  any  alternative  requirements  that  would  guarantee  ISPs  access  to  the  transmission 
 component  of  that  service,  would  impede  the  development  and  deployment  of  innovative  wireline  broadband  Internet  access  technologies  and  services.  As  noted  above,  these  requirements  slow  innovation 
 because  vendors  do  not  create  new  technologies  with  the  Computer  Inquiry  requirements  in  mind.  188  Deployment  to  consumers  of  these  technologies  then,  at  best,  is  delayed  and,  in  many  cases,  may  be 
 avoided  altogether.  Broadband  Internet  access  services  are  also  not  developing  in  ways  that  neatly  fall  within  existing  regulatory  classifications  or  the  current  Computer  Inquiry  requirements  (i.  e.,  they  cannot 
 be  easily  separated  into  discrete  information  service  and  telecommunications  service  components).  189  As 
 183  See  infra  Part  V.  B.  2.d. 
 184  Letter  from  Jeffry  Brueggeman,  General  Attorney,  SBC,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No. 
 02-  33,  Attach.  at  8  (filed  July  31,  2003)  (SBC  July  31,  2003  Ex  Parte  Letter);  BellSouth  June  5,  2003  Ex  Parte  Letter  at  16-  18;  Broadband  271  Forbearance  Order,  19  FCC  Rcd  at  21508-  09,  para.  26. 


 185  NCTA  v.  Brand  X,  slip  op.  at  30;  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4823-  25,  paras.  39-  43. 
 186  See,  e.  g.,  Comcast  Corp.,  2004  Form  10-  K  Annual  Report  filed  with  the  Securities  and  Exchange  Commission,  at 
 7  (Feb.  23,  2005)  (stating  that  Comcast  and  a  number  of  cable  operators  have  reached  agreements  to  provide  unaffiliated  ISPs  access  to  their  cable  systems  in  the  absence  of  regulatory  requirements).  In  addition,  AOL  Time 


 Warner,  as  a  result  of  a  consent  decree  with  the  Federal  Trade  Commission,  provides  certain  independent  ISPs  with  access  to  its  network  of  over  12  million  subscribers.  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4828-  29, 
 para.  52  &  n.  196. 
 187  NCTA  v.  Brand  X,  slip  op.  at  6-  15. 
 188  See,  e.  g.,  Verizon  June  26,  2003  Ex  Parte  Letter  at  1-  3;  Letter  from  L.  Barbee  Ponder  IV,  Senior  Regulatory 
 Counsel-  D.  C.,  BellSouth,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  5  (filed  May  23,  2003)  (BellSouth  May  23,  2003  Ex  Parte  Letter)  (stating  that  next  generation  broadband  equipment  does  not  provide 


 demarcations  for  regulatory  purposes,  and  that  vendors  have  no  incentives  to  create  demarcations  because  only  four  entities  need  or  want  them). 
 189  See  Verizon  June  26,  2003  Ex  Parte  Letter  at  2  (noting  that  in  past  decades,  equipment  manufacturers  designed 
 central  office  equipment  based  on  the  needs  of  the  Bell  companies  and  that  [  t]  odays  manufacturers  have  broader  markets  and  are  designing  the  next  generation  of  equipment  for  a  broader  base  of  IP  network  providers). 
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 a  result,  unlike  cable  modem  providers  or  other  broadband  Internet  access  service  competitors,  wireline  carriers  must  make  either  of  two  less-  than-  optimal  choices  when  they  seek  to  deploy  advanced  network 
 equipment:  either  they  must  decide  not  to  use  all  the  equipments  capabilities,  thereby  reducing  their  operational  efficiency;  190  or  they  must  defer  deployment  while  the  manufacturer  re-  engineers  it  to 
 facilitate  compliance  with  the  Computer  Inquiry  rules,  thereby  creating  unnecessary  costs  and  service  delays.  191 


 66.  Wireline  commenters  argue  that  their  inability  to  integrate  more  efficient  equipment  into  wireline  networks  in  a  timely  and  efficient  manner  limits  their  ability  to  offer  innovative  broadband  Internet  access 
 services  to  customers.  192  They  also  contend  that  these  constraints  hinder  their  ability  to  respond  to  requests  for  new  or  modified  innovative  features  or  services.  193  For  example,  some  commenters  argue 
 that  manufacturers  have  little  incentive  to  design  next  generation  broadband  equipment  that  facilitates  compliance  with  the  Computer  Inquiry  obligations  as  the  majority  of  broadband  platform  providers 
 neither  need  nor  want  this  capability.  194  As  a  result,  these  carriers  maintain  that  they  are  faced  with  a  decision  either  to  forgo  the  use  of  more  efficient  or  innovative  equipment  or  to  incur  substantial  additional 
 costs  and  development  time  to  have  the  vendor  de-  integrate  the  more  efficient,  integrated  equipment  simply  to  comply  with  the  Computer  Inquiry  requirements.  195  These  increased  costs  and  delays  often 
 deter  a  carrier  from  deploying  new  broadband  technologies.  196 
 67.  Other  commenters  suggest  that  because  of  the  BOCs  size  and  influence,  they  are  well-  positioned  to  demand  that  vendors  meet  their  requirements  that  innovative  broadband  equipment  and  new 


 functionalities  comply  with  the  Computer  Inquiry  obligations.  197  Assuming  arguendo  that  this  is  true,  to 
 190  For  example,  SBC  explains  that,  in  order  to  comply  with  the  Computer  Inquiry  rules,  it  often  must  disable  or 
 turn  off  protocol  conversion  functionality  in  its  broadband  Internet  access  equipment.  See  SBC  July  31,  2003  Ex  Parte  Letter  at  12. 


 191  See  Verizon  June  26,  2003  Ex  Parte  Letter  at  3. 
 192  See,  e.  g.,  SBC  Mar.  7,  2003  Ex  Parte  Letter  at  8  (arguing  that  Computer  IIs  stand-  alone  telecommunications 
 service  requirement  [  r]  estricts  full  utilization  of  technology  integration  in  design  and  evolution  of  broadband  networks  and  in  developing  broadband  services,  and,  thus,  limits  SBCs  ability  to  offer  new  and  innovative 


 integrated  broadband  services  to  consumers);  see  also  Verizon  May  20,  2003  Ex  Parte  Letter,  Attach.  at  9;  Letter  from  Ann  D.  Berkowitz,  Project  Manager-  Federal  Affairs,  Verizon,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC 
 Docket  No.  02-  33,  Attach.  at  10  (filed  Mar.  17,  2003)  (Verizon  Mar.  17,  2003  Ex  Parte  Letter).  193 
 See,  e.  g.,  BellSouth  June  5,  2003  Ex  Parte  Letter  at  18.  Non-  carrier  commenters  have  also  argued  that  the  Computer  Inquiry  regime  is  inappropriate  for  todays  broadband  market.  See,  e.  g.,  Alcatel  Comments  at  8 


 (contending  that  the  Commission  should  seek  to  remove  some  of  the  network  unbundling  obligations  placed  on  incumbent  LECs);  HTBC  Reply  at  3-  8  (advocating  a  minimally  regulatory  environment  for  wireline  broadband 
 transmission  but  stating  the  Commission  should  require  incumbent  LECs  to  make  any  arrangements  with  their  affiliated  ISPs  available  to  unaffiliated  ISPs  in  a  nondiscriminatory  manner  at  least  for  the  next  two  years). 
 194  See,  e.  g.,  BellSouth  Apr.  25,  2005  Ex  Parte  Letter,  Attach.  at  8;  BellSouth  May  23,  2003  Ex  Parte  Letter,  Attach. 
 at  5;  see  also  Catena  Comments  at  6  (noting  that  several  telecommunications  equipment  manufacturers  have  halted  or  decreased  their  DSL  technology  activities  as  the  current  regulatory  environment  is  retarding  the  investment  in 


 new  technologies).  195 
 See,  e.  g.,  SBC  July  31,  2003  Ex  Parte  Letter  at  11-  12;  Verizon  June  26,  2003  Ex  Parte  Letter  at  3.  196 
 See,  e.  g.,  SBC  Comments  at  26;  Verizon  May  20,  2003  Ex  Parte  Letter,  Attach.  at  9-  13  (outlining  impediments  to  offering  VoIP  services). 


 197  See,  e.  g.,  Letter  from  Richard  S.  Whitt,  Director-  Federal  Advocacy,  MCI,  to  Marlene  H.  Dortch,  Secretary,  FCC, 
 CC  Docket  No.  02-  33,  Attach.  at  11  n.  13  (filed  Oct.  10,  2003)  (MCI  Oct.  10,  2003  Ex  Parte  Letter);  Letter  from  (continued  .  .  .) 
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 some  extent,  the  fact  that  BOCs  can  exert  some  influence  does  not  necessarily  make  the  Computer  Inquiry  obligations  or  a  less  onerous  broadband  Internet  access  transmission  obligation  desirable  public 
 policy,  nor  does  it  mean  that  the  resulting  equipment  is  as  efficient  or  innovative  as  it  could  otherwise  be.  The  issue  is  not  whether  the  BOCs  could  have  this  de-  integrated  equipment  produced,  rather  it  is 
 whether  the  production  of  this  equipment  would  yield  benefits  that  outweigh  the  obvious  technological  costs.  These  commenters  fail  to  recognize  that  manufacturers  develop  broadband  equipment  that  pushes 
 technology  in  the  direction  they  think  will  best  respond  to  future  consumer  demands  (which  is  currently  toward  equipment  that  integrates  information  service  and  transmission  capabilities  in  a  manner  that 
 allows  functions  to  be  performed  at  multiple  points  within  a  broadband  network  and  closer  to  the  end  user  than  ever  before).  198  Our  rules  should  not  force  technological  development  in  another,  less  efficient 
 direction. 
 68.  Some  carriers  argue  that  compliance  with  the  Computer  Inquiry  obligations  requires  costly  redundant  systems  and  duplicative  processes  that  result  in  operational  inefficiencies.  199  For  example, 


 BellSouth  states  that  it  incurs  significant  costs  solely  to  comply  with  those  obligations.  These  costs  are  incurred,  according  to  BellSouth,  because  it  must:  maintain  separate  customer  service  centers,  systems, 
 and  processes  for  its  telecommunications  service  and  broadband  Internet  access  service  operations;  200  dispatch  both  telecommunications  service  and  information  service  technicians  to  install  DSL  service  or 
 respond  to  customer-  reported  problems;  201  and  incur  additional  transport  costs  to  comply  with  the  Commissions  two-  mile  rule.  202  While  other  commenters  maintain  that  these  costs  do  not  warrant 
 elimination  of  the  Computer  Inquiry  requirements,  203  we  find  that  the  costs  on  the  record  are  sufficient  to  act  as  an  investment  disincentive.  As  explained  below,  consistent  with  our  obligations  under  section  706, 
 we  must  consider  this  impact  in  our  overall  analysis  of  the  costs  and  benefits  of  retaining  these  rules. 


 (continued  from  previous  page)  David  L.  Lawson,  Counsel  for  AT&  T,  Sidley  Austin  Brown  &  Wood  LLP,  to  Marlene  H.  Dortch,  Secretary,  FCC, 
 CC  Docket  No.  02-  33,  at  5-  6  (filed  Aug.  14,  2003).  198 
 See  supra  paras.  65-  66.  199 
 See,  e.  g.,  Verizon  June  26,  2003  Ex  Parte  Letter  at  1-  4;  BellSouth  Apr.  2,  2003  Ex  Parte  Letter,  Attach.  at  6-  9.  200 
 See,  e.  g.,  BellSouth  Apr.  2,  2003  Ex  Parte  Letter  at  8  (an  estimated  cost  of  $13.  5  million  per  year).  201 
 Id.  (costing  approximately  $6  million  per  year).  BellSouth  claims  that  it  incurs  these  costs  because  it  must  treat  its  broadband  Internet  access  service  customer  in  the  same  manner  as  it  would  treat  an  independent  ISPs  customer. 


 Thus,  for  example,  if  a  BellSouth  telephone  service  technician  discovers  a  problem  with  a  DSL  connection,  BellSouth  must  dispatch  a  different  technician  to  correct  that  problem  for  the  end-  user  consumer.  See  also  id.  at  9 
 (stating  that  it  incurs  approximately  $9.5  million  per  year  in  other  unnecessary  system  redundancy  costs).  202 
 Id.  at  11.  The  two-  mile  rule  requires  BOCs  to  charge  their  collocated  enhanced  service  operations  a  rate  for  distance-  sensitive  transmission  equal  to  a  rate  for  transmission  paid  by  non-  collocated  operations  at  a  two  mile 


 distance  from  the  [central  office].  See  Filing  and  Review  of  Open  Network  Architecture  Plans,  5  FCC  Rcd  3103,  3110,  para.  66  &  n.  111  (1990).  BellSouth  maintains  that  this  rule  is  administratively  costly  and  archaic  since  all 
 packet  traffic  is  aggregated  efficiently  at  the  central  office  and  because  ISPs  are  able  to  collocate  there  pursuant  to  the  expanded  interconnection  rules.  BellSouth  Apr.  2,  2003  Ex  Parte  Letter  at  11. 
 203  See,  e.  g.,  Letter  from  Mark  J.  OConnor,  Counsel  for  EarthLink,  Inc.,  Lampert  &  OConnor,  to  Marlene  H. 
 Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  3-  7  (filed  May  12,  2003)  (EarthLink  May  12,  2003  Ex  Parte  Letter);  see  also  Letter  from  Kenneth  R.  Boley,  Counsel  for  EarthLink,  Inc.,  Lampert  &  OConnor,  to  Marlene 


 H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  2-  3  (filed  Mar.  19,  2003)  (EarthLink  Mar.  19,  2003  Ex  Parte  Letter). 
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 69.  The  fact  that  carriers  incur  costs,  potentially  even  significant  costs,  to  comply  with  our  regulations  is  not,  alone,  a  basis  for  eliminating  such  regulations.  To  the  extent  such  costs  are  incurred  to 
 achieve  statutory  obligations  or  important  policy  objectives,  they  are  a  necessary  component  of  operating  in  a  regulated  industry.  204  But  when,  as  a  relative  matter,  the  regulations  costs  outweigh  their  benefits,  or 
 are  no  longer  necessary  to  achieve  the  desired  objectives,  we  must  evaluate  whether  our  obligations  and  objectives  can  be  met  in  a  manner  that  reduces  or  eliminates  such  costs.  This  becomes  even  more  critical 
 if  there  is  evidence  that  the  regulation  actually  impedes  or  frustrates  the  accomplishment  of  important  statutory  goals. 


 70.  At  the  time  the  Computer  Inquiry  rules  were  adopted  (and  even  thereafter  as  they  were  being  revised  and  refined  to  better  balance  costs  and  benefits),  the  public  benefits  with  respect  to  narrowband 
 network-  based  services  justified  the  costs.  For  example,  it  was  much  clearer  at  that  time  that  because  computer  processing  occurred  at  the  networks  edge  or  outside  the  network,  the  major  innovation  would 
 occur  there  too.  The  Computer  Inquiry  rules  themselves  reflect  a  fairly  static  picture  of  network  development,  and  an  assumption  that  a  line  could  be  drawn  between  the  network  functions  and  computer 
 processing  without  impeding  technological  innovation.  Today,  this  line  is  even  more  blurred  than  it  was  when  the  Commission  adopted  its  Computer  II  Final  Decision.  Innovation  can  occur  at  all  network 
 points  and  at  all  network  layers  as  well  as  in  non-  network  applications  and  equipment.  Continued  application  of  the  Computer  Inquiry  rules,  however,  would  prevent  much  of  this  innovation  from 
 occurring.  205  This  by-  product  of  our  current  regulations  is  a  persuasive  factor  for  their  removal. 
 c)  New  Services 
 71.  One  of  the  primary  purposes  of  this  technological  innovation  would  be  to  let  wireline  broadband  Internet  access  services  providers,  like  their  competitors,  produce  new  or  improved  services  in  response  to 
 consumer  demands.  206  Several  parties  argue  that  the  Computer  Inquiry  requirements  prevent  them  from  altering  business  priorities  in  response  to  changing  market  demands,  impede  their  ability  to  take 
 advantage  of  business  opportunities  due  to  time  to  market  issues,  and  provide  competitors  with  advance  notice  of  innovative  service  enhancements,  thus  eliminating  any  potential  wireline  broadband  competitive 
 advantage  vis-  -  vis  cable  modem  or  other  platform  providers.  207  For  example,  Qwest  points  to  the  inherent  regulatory  delay  that  occurs  through  the  network  change  disclosure  process,  the  web  posting 
 requirements,  and  tariffing  requirements,  which  a  BOC  must  comply  with  before  making  any  change  to  its  network  that  enhances  or  upgrades  its  Internet  access  services.  208  Verizon  contends  that  before  it  can 
 decide  whether  it  will  provide  an  ISP  customer  with  a  requested  new  Internet  access  service  capability,  it 


 204  See,  e.  g.,  IP-  Enabled  Services,  WC  Docket  No.  04-  36;  E911  Requirements  for  IP-  Enabled  Service  Providers, 
 WC  Docket  No.  05-  196,  First  Report  and  Order  and  Notice  of  Proposed  Rulemaking,  FCC  05-  116,  at  paras.  3-  5,  36-53  (rel.  June  3,  2005)  (VoIP  E911  Order),  petitions  for  review  pending  sub  nom.  Nuvio  Corp.  v.  FCC,  D.  C.  Cir.  No. 


 05-  1248  (and  consolidated  cases)  (filed  July  11,  2005).  205 
 See,  e.  g.,  Catena  Comments  at  5-  6;  Verizon  June  26,  2003  Ex  Parte  Letter  at  3-  6;  BellSouth  Apr.  2,  2003  Ex  Parte  Letter,  Attach.  at  5. 


 206  See  Wold  Communications,  735  F.  2d  at  1475  (citing  Western  Union  Telegraph  v.  FCC,  674  F.  2d  160  (2d  Cir. 
 1982)  (  newly  unleashed  market  forces  constitute  a  reasonable  regulatory  tool).  Where  technology  is  fast-  moving  and  arcane,  the  D.  C.  Circuit  gave  the  Commission  particular  deference  in  determining  whether  the  treatment  of  a 


 service  as  non-  common  carrier  would  bring  sufficient  public  interest  benefits.  Id.  at  1468.  207 
 See,  e.  g.,  Qwest  Apr.  10,  2003  Ex  Parte  Letter,  Attach.  at  11.  208 
 Id. 
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 must  analyze  each  function  of  the  proposed  capability  to  determine  its  classification  under  the  Computer  Inquiry  regime  209  and  then  determine  the  associated  requirements  for  compliance.  210  Verizon  states  that 
 this  compliance  review  often  involves  complex  and  lengthy  new  system  development  or  modification  to  accommodate  the  Computer  Inquiry  access  obligations  without  any  knowledge  or  assurance  that  other 
 ISPs  will  even  want  such  access.  As  a  result,  Verizon  states  that  it  frequently  must  deny  requests  for  new  Internet  access  service  capabilities  because  the  process  to  accommodate  them  under  existing  Computer 
 Inquiry  regulations  is  prohibitively  expensive.  211  We  find  that  these  costs,  inefficiencies,  and  delays  are  significant  and  substantially  impede  network  development.  We  therefore  disagree  with  commenters  that 
 claim  that  the  record  contains  no  evidence  that  costs,  inefficiencies,  and  investment  delays  have  occurred  that  would  justify  the  elimination  of  the  Computer  Inquiry  requirements.  212 


 72.  Based  on  the  record  before  us,  we  conclude  that  eliminating  the  Computer  Inquiry  rules  at  this  time  will  make  it  more  likely  that  wireline  network  operators  will  take  more  risks  in  investing  in  and 
 deploying  new  technologies  than  they  are  willing  and  able  to  take  under  the  existing  regime.  213  Tailored  private  contractual  agreements,  in  general,  provide  service  providers  more  flexibility  in  developing  a  new 
 technology  and  more  incentives  to  do  so.  214  As  the  Commission  found  in  the  Transponder  Sales  Order,  a  service  provider  is  more  likely  to  invest  in  technologies  if  the  service  provider  is  able  to  obtain  assurances 
 through  private  contracts  that  the  technologies  will  be  used.  215  Private  commercial  contracts  likewise  provide  assurances  to  potential  customers  that  capacity  will  be  available.  216  Indeed,  a  number  of  carrier 
 commenters  indicate  that  their  preferred  means  of  offering  wireline  broadband  transmission  service  is  through  customized  arrangements  tailored  to  the  particular  needs  of  requesting  ISP  customers.  217  They 
 show,  in  particular,  that  through  the  ability  to  engage  in  these  types  of  non-  common  carrier  arrangements 


 209  See  supra  n.  78  (describing  the  four  basic  service  elements). 
 210  See,  e.  g.,  Verizon  June  26,  2003  Ex  Parte  Letter  at  4;  Verizon  May  20,  2003  Ex  Parte  Letter,  Attach.  at  11-  13. 
 211  See,  e.  g.,  Verizon  June  26,  2003  Ex  Parte  Letter  at  4-  6;  Verizon  May  20,  2003  Ex  Parte  Letter,  Attach.  at  11-  13; 
 see  also  Letter  from  L.  Barbee  Ponder  IV,  Senior  Regulatory  Counsel-  D.  C.,  BellSouth,  to  Marlene  H.  Dortch,  Secretary,  FCC,  WC  Docket  No.  02-  33,  at  1-  9  (filed  July  10,  2003)  (BellSouth  July  10,  2003  Ex  Parte  Letter); 


 BellSouth  Apr.  25,  2005  Ex  Parte  Letter,  Attach.  at  7-  10.  212 
 See,  e.  g.,  AT&  T  Comments  at  62-  72;  GCI  Comments  at  23-  27;  Ohio  ISP  Assoc.  et  al.  Comments  at  56-  58;  MCI  et  al.  Comments  at  39-  42;  AT&  T  Reply  at  35-  42;  AT&  T  Mar.  14,  2003  Ex  Parte  Letter  at  15;  see  also  Covad 


 Comments  at  32-  36.  213 
 See,  e.  g.,  Verizon  June  26,  2003  Ex  Parte  Letter  at  4,  6.  214 
 See,  e.  g.,  Transponder  Sales  Order,  90  FCC  2d  at  1250-  52,  paras.  31-  34;  see  also  infra  at  paras.  87-  88  (discussing  the  benefits  of  non-  common  carriage  contracts). 


 215  Transponder  Sales  Order,  90  FCC  2d  at  1250-  52,  paras.  31-  34  (noting  typical  long  lead  time  between  inception 
 of  a  technology  and  its  deployment).  216 
 See  id.  217 
 See  NARUC  I,  525  F.  2d  at  643  (the  inquiry  is  whether  there  is  reason  to  believe  that  the  service  provider  will,  in  fact,  serve  the  public  indifferently  even  absent  a  regulatory  compulsion  to  do  so).  Consequently,  we  disagree  with 


 EarthLink,  which  argues  that  the  Commissions  determination  as  to  whether  this  service  must  be  a  common  carrier  service  begins  and  ends  with  the  recognition  that  incumbent  LECs  provide  wholesale  DSL  transmission  to  ISPs  on  a 
 tariffed  (i.  e.,  indifferent)  basis.  EarthLink  Apr.  29,  2003  Ex  Parte  Letter  at  9-  11. 
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 (rather  than  cookie-  cutter  common  carrier  offerings  available  indiscriminately  to  all  ISPs),  they  will  be  able  to  develop  more  technologically  innovative  broadband  offerings  to  meet  consumer  needs.  218 
 73.  As  discussed  above,  some  commenters  argue  that  the  transmission  component  of  wireline  broadband  Internet  access  service  must  continue  to  be  regulated  as  a  common  carrier  service  because 
 wireline  carriers  currently  offer  these  transmission  services  on  such  a  basis.  219  In  doing  so,  however,  these  parties  fail  to  recognize  that  a  Commission  determination  regarding  the  regulatory  status  of  a 
 service  depends  on,  among  other  things,  what  practice  and  experience  indicate  the  likely  character  of  the  service  offering  would  be,  assuming  the  carrier  could  decide  how  it  would  offer  the  service.  220  Merely 
 because  facilities-  based  wireline  carriers  offer  some  common  carrier  services  does  not  mean  that  all  their  services  must  be  similarly  offered.  221  The  Commission,  upheld  by  the  courts,  has  provided  carriers  the 
 flexibility  to  offer  services  that  were  previously  regulated  under  Title  II  on  a  common  carrier  or  non-common  carrier  basis.  222 


 d)  Wireline  Broadband  Internet  Access  Service  Providers  Business  Incentives 
 74.  Given  the  nature  and  history  of  the  broadband  Internet  access  services  industry,  we  expect  that  wireline  broadband  transmission  will  remain  available  to  ISPs  and  others  without  any  Computer  Inquiry 
 requirements.  Incumbent  LECs  have  represented  that  they  not  only  intend  to  make  broadband  Internet 
 218  See,  e.  g.,  SBC  July  31,  2003  Ex  Parte  Letter  at  4-  15;  Verizon  June  26,  2003  Ex  Parte  Letter  at  4,  6;  BellSouth 
 June  5,  2003  Ex  Parte  Letter  at  12  (noting  that  BellSouth  negotiated  a  private  agreement  with  an  independent  ISP  because  BellSouths  tariffed  unbundled  broadband  transmission  offering  was  cumbersome,  inefficient  and  not 


 competitive);  Qwest  May  23,  2003  Ex  Parte  Letter,  Attach.  at  17-  18.  219 
 See  infra  Part  V.  D.  220 
 See  Vitelco  v.  FCC,  198  F.  3d  at  924  (citing  NARUC  I,  525  F.  2d  at  642,  for  the  proposition  that  the  second  prong  of  the  NARUC  I  test  examines  whether  there  are  reasons  implicit  in  the  nature  of  the  offering  to  expect  an  indifferent 


 holding  out  to  the  eligible  user  public);  see  also  NARUC  I,  525  F.  2d  at  643-  44  (noting  that  the  inquiry  into  whether  specialized  mobile  radio  service  (SMRS)  providers  will  hold  themselves  out  indifferently  absent  a  regulatory 
 compulsion  to  do  so  is  highly  speculative  because  no  operating  SMRS  providers  were  then  in  existence);  see  also  BellSouth  June  5,  2003  Ex  Parte  Letter  at  21  (asserting  that  the  previous  regulatory  compulsion  cannot  be  used  as  a 
 basis  for  claiming  that  carriers  have  chosen  to  provide  broadband  transmission  on  a  common  carrier  basis).  221 
 47  U.  S.  C.    153(  10)  (defining  common  carrier);  see,  e.  g.,  Southwestern  Bell,  19  F.  3d  at  1482  (quoting  NARUC  v.  FCC,  533  F.  2d  601,  608  (D.  C.  Cir.  1976)  (NARUC  II)  ([  I]  t  is  at  least  logical  to  conclude  that  one  can  be  a  common 


 carrier  with  regard  to  some  activities  but  not  others)).  222 
 See,  e.  g.,  Vitelco  v.  FCC,  198  F.  3d  at  925-  30  (affirming  the  Commissions  grant  of  a  submarine  cable  operators  application  for  cable  landing  rights  as  a  non-  common  carrier);  Computer  and  Communications  Industry  Assn  v. 


 FCC,  693  F.  2d  at  207-  14  (The  court  stated:  In  designing  the  Communications  Act,  Congress  sought  to  endow  the  Commission  with  sufficiently  elastic  powers  such  that  it  could  readily  accommodate  dynamic  new  developments  in 
 the  field  of  communications.  Congress  thus  hoped  to  avoid  the  necessity  of  repetitive  legislation.  In  Computer  II  the  Commission  took  full  advantage  of  its  broad  powers  to  serve  the  public  interest  by  accommodating  a  new 
 development  in  the  communications  industry,  the  confluence  of  communications  and  data  processing.  Because  the  Commissions  judgment  on  how  the  public  interest  is  best  served  is  entitled  to  substantial  judicial  deference,  the 
 Commissions  choice  of  regulatory  tools  in  Computer  II  must  be  upheld  unless  arbitrary  or  capricious.  Our  review  of  the  Commissions  decision  convinces  us  that  the  Commission  acted  reasonably  in  defining  its  jurisdiction  over 
 enhanced  services  and  CPE.  We  therefore  uphold  the  Computer  II  scheme.)  (internal  quotation  marks  omitted);  Wold  Communications,  735  F.  2d  at  1473-  79  (affirming  the  decision  in  the  Transponder  Sales  Order  to  allow  sales 
 of  satellite  transponder  service  on  a  non-  common  carrier  basis);  see  also  infra  note  280. 
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 access  transmission  offerings  available  to  unaffiliated  ISPs  in  a  manner  that  meets  ISPs  needs,  but  that  they  have  business  incentives  to  do  so.  223  For  example,  Qwest  offers  a  tariffed  wireline  broadband  DSL 
 service  that  enables  hundreds  of  independent  ISPs  to  serve  end-  user  customers  over  Qwests  broadband  facilities.  224  Regardless  of  the  outcome  of  this  proceeding,  Qwest  has  stated  it  will  continue  to  make 
 available  a  DSL  offering  that  will  enable  consumers  to  reach  unaffiliated  ISPs  because  consumers  demand  the  choice,  and  meeting  that  demand  makes  its  product  more  attractive.  225  SBC  previously 
 entered  into  a  memorandum  of  understanding  with  a  trade  association  representing  nearly  300  members  of  the  Internet  industry,  including  many  independent  ISPs,  committing  to  negotiate  private  commercial 
 arrangements  with  unaffiliated  ISPs  for  broadband  Internet  access.  226  Verizon  has  similarly  indicated  its  intent  to  enter  into  commercially  reasonable  contracts  with  unaffiliated  ISPs  for  broadband  transmission 
 services  because  it  is  in  its  best  interest  to  do  so.  227  Finally,  BellSouth  has  also  evidenced  a  willingness,  desire,  and  incentive  to  deal  with  unaffiliated  ISPs  absent  a  Commission  requirement  that  compels  them 
 to  do  so.  228  For  example,  BellSouth  has  indicated  that  it  will  benefit  financially  from  providing  DSL  transmission  to  independent  ISPs,  as  it  has  an  economic  incentive  to  spread  the  costs  of  its  network  over 
 as  much  traffic  and  as  many  customers  as  possible  regardless  of  whether  such  customers  are  wholesale  or  retail.  229 


 75.  We  finds  these  incentives  significant,  and  therefore  disagree  with  the  contention  of  some  commenters  that  a  mandatory  common  carrier  broadband  transmission  requirement  is  essential  for 
 independent  ISPs  to  obtain  wireline  broadband  transmission  that  meets  their  needs  at  reasonable  prices.  230  Based  on  the  record  before  us,  we  expect  that  business  incentives  will  compel  wireline  broadband  carriers 
 to  offer  broadband  transmission  on  a  commercially  reasonable  basis  to  independent  ISPs  and  will 
 223  See  SBC  July  31,  2003  Ex  Parte  Letter  at  8  (  SBC  will  continue  to  enter  into  ISP  broadband  access  arrangements 
 as  a  way  of  increasing  subscriber  growth  and  utilization  of  its  broadband  network  regardless  of  any  regulatory  compulsion  to  do  so.).  Indeed,  carriers  voluntarily  have  entered  into  certain  non-  common  carrier  agreements 


 already.  E.  g.,  Letter  from  Edward  Shakin,  Vice  President  and  Associate  General  Counsel,  Verizon,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  1-  2  (filed  July  29,  2004)  (Verizon  July  29,  2004  Ex  Parte  Letter) 
 (describing  Verizons  Fios  services,  which  are  high-  speed  Internet  services  provided  over  Verizons  fiber  networks);  BellSouth  June  5,  2003  Ex  Parte  Letter  at  12-  13  (describing  BellSouths  negotiated  RBAN  service  arrangement 
 with  EarthLink).  224 
 See,  e.  g.,  Qwest  Apr.  10,  2003  Ex  Parte  Letter,  Attach.  at  2  (noting  Qwests  DSL+  access  offering  to  400  ISPs);  Qwest  May  23,  2003  Ex  Parte  Letter,  Attach.  at  5  (describing  this  service). 


 225  Qwest  Apr.  10,  2003  Ex  Parte  Letter,  Attach.  at  2,  10. 
 226  See  Letter  from  Donald  E.  Cain,  Vice  President-  Federal  Regulatory,  SBC,  &  David  P.  McClure,  USIIA,  to 
 Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  1-  2  &  Attach.  at  2  (filed  May  3,  2002)  (SBC  and  USIIA  May  3,  2002  Ex  Parte  Letter)  (describing  memorandum  of  understanding  dated  May  2,  2002).  This 


 memorandum  of  understanding  has  no  expiration  date.  See  id.,  Attach.  at  1-  2.  227 
 See,  e.  g.,  Verizon  Comments  at  31  (explaining  that  the  significant  costs  to  upgrade  its  network  can  be  recovered  through  use  of  its  network  by  other  broadband  providers.) 


 228  See,  e.  g.,  BellSouth  June  5,  2003  Ex  Parte  Letter  at  16-  18. 
 229  See  id. 
 230  See,  e.  g.,  Big  Planet  Comments  at  16-  17;  EarthLink  Comments  at  19-  20;  ITAA  Comments  at  12-  18;  Ohio  ISP 
 Assoc.  et  al.  Comments  at  39-  41;  Earthlink  et  al.  Streamlining  Proposal  at  6-  7;  Letter  from  Maura  J.  Colleton,  The  BroadNet  Alliance,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  Nos.  02-  33,  98-  10,  &  95-  20,  Attach.  at  26-  29 


 (  The  Significant  Role  of  Online  Service  Providers  in  the  Development  and  Success  of  the  Information  Age)  (filed  July  1,  2002)  (BroadNet  Alliance  July  1,  2002  Ex  Parte  Letter). 
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 motivate  wireline  carriers  to  negotiate  mutually  acceptable  rates,  terms,  and  conditions  with  unaffiliated  ISPs.  We  strongly  encourage  the  parties  to  work  together  to  develop  individual  contracts  that  are 
 mutually  beneficial  to  each  party. 
 76.  We  also  expect  that  the  rapid  growth  and  development  of  innovative  broadband  service  offerings,  including  IP  telephony,  among  the  different  broadband  Internet  access  platform  providers,  particularly 


 cable  modem,  will  provide  significant  incentives  to  facilities-  based  wireline  carriers  to  increase  subscriber  usage  of  wireline-  based  Internet  access  services  vis-  -  vis  cable  modem  and  other  platform  providers  of 
 broadband  Internet  access  services.  231  That  is,  to  the  extent  that  IP  telephony  services  provided  via  other  broadband  platforms  erode  revenues  that  the  BOCs  and  other  incumbent  LECs  derive  from  traditional 
 voice  services,  these  carriers  will  have  incentives  to  mitigate  this  potential  revenue  loss  by  retaining  customers  on  the  wireline  broadband  platform  to  the  maximum  extent  possible.  232  Providing  wholesale 
 wireline  broadband  transmission  to  independent  ISPs,  whether  through  partnering,  stand-  alone  transmission  agreements,  or  other  types  of  commercial  service  arrangements,  would  ensure  that  the 
 facilities-  based  carrier  derives  some  financial  benefit  from  that  customer. 
 e)  A  Change  of  Course  Is  Justified 
 77.  As  we  have  noted  above,  the  Act  does  not  address  directly  how  wireline  broadband  Internet  access  service  should  be  classified  or  regulated.  233  Through  section  706,  however,  it  does  provide  the 
 Commission  with  a  specific  mandate  to  encourage  broadband  deployment,  generally,  and  to  promote  and  preserve  a  freely  competitive  Internet  market,  specifically.  234  Indeed,  Congress  mandated  that  the 
 Commission  encourage  broadband  capability  without  regard  to  any  transmission  media  or  technology  and  remove  barriers  to  infrastructure  investment.  235 


 78.  Because  our  decision  necessarily  relies,  in  part,  on  our  predictive  judgment  regarding  a  rapidly  changing,  dynamic  industry,  we  do  not  pretend  that  there  is  a  single,  clear-  cut  answer.  236  As  with  the 
 Commissions  previous  decisions  to  adopt  and  then  modify  the  Computer  Inquiry  requirements,  the  decision  that  we  must  make  today    whether  or  not  to  retain  the  Computer  Inquiry  requirements  in  some 
 form    at  its  core  involves  an  assessment  of  the  relative  costs  and  benefits  of  the  various  alternatives.  In  making  this  assessment,  we  must  consider  the  broadband  objectives  Congress  established  in  section 
 706.  237  Those  objectives  make  clear  that  the  Commission  must  encourage  the  deployment  of  advanced 


 231  See,  e.  g.,  Verizon  June  26,  2003  Ex  Parte  Letter  at  3  (noting  that  VoIP  is  an  example  of  a  new  and  emerging 
 service  that  incumbent  LECs  will  need  to  provide  to  be  competitive  with  cable  and  other  broadband  providers).  232 
 See  BellSouth  June  5,  2003  Ex  Parte  Letter  at  11-  13.  233 
 See  supra  para.  8.  234 
 See  supra  paras.  3,  8.  235 
 See  47  U.  S.  C.    157  nt.  236 
 See  Wold  Communications,  735  F.  2d  at  1475  (noting  that  the  public  interest  is  served  if  the  Commissions  powers  remain  sufficiently  elastic  to  address  dynamic  developments  in  the  communications  field,  especially  when 


 Congress  had  taken  no  specific  action  geared  to  the  industry);  compare  Transponder  Sales  Order,  90  FCC  2d  at  1248-  49,  para.  28  (  The  Communications  Act  was  adopted  long  before  the  advent  of  communications  satellites,  and 
 therefore  it  nowhere  mandates  that  domestic  satellite  operators  be  regulated  as  common  carriers.).  237 
 See  47  U.  S.  C.    157  nt  (  706  of  the  Act).  In  the  Fourth  Section  706  Report,  the  Commission  concluded,  as  it  did  in  the  previous  three  section  706  reports,  that  the  overall  goal  of  section  706  is  being  met,  and  that  advanced 


 telecommunications  capability  is  being  deployed  to  all  Americans  in  a  reasonable  and  timely  fashion.  In  this  Fourth  (continued  .  .  .) 
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 telecommunications  capability  to  all  Americans  by  removing  barriers  to  infrastructure  investment.  The  D.  C.  Circuit  recently  upheld  a  similar  Commission  balancing  approach  that  considered  section  706s 
 goals  of  swift,  ubiquitous  broadband  deployment  in  adopting  unbundling  rules  for  mass  market  next  generation  broadband-  capable  loops  pursuant  to  section  251(  c)(  3)  of  the  Act.  238  Therefore,  in  assessing 
 the  alternative  regulatory  frameworks  for  wireline  broadband  Internet  access  services,  we  must  ensure  that  the  balance  struck  provides  adequate  incentives  for  infrastructure  investment. 


 79.  The  following  factors  guide  us  toward  replacing  the  Computer  Inquiry  obligations  for  wireline  broadband  Internet  access  service  providers  with  a  less  regulatory  framework:  the  increasing  integration 
 of  innovative  broadband  technology  into  the  existing  wireline  platform;  the  growth  and  development  of  entirely  new  broadband  platforms;  the  flexibility  to  respond  more  rapidly  and  effectively  to  new 
 consumer  demands;  and  our  expectation  of  the  availability  of  alternative  competitive  broadband  transmission  to  the  currently  required  wireline  broadband  common  carrier  offerings.  We  believe  our 
 actions  today  will  enhance  each  of  these  factors.  Fostering  the  ubiquitous  availability  of  broadband  Internet  access  to  all  Americans  across  multiple  competitive  broadband  platforms  is  best  accomplished  by 
 recalibrating  regulation  where  it  is  appropriate  to  do  so.  239  Fulfilling  our  statutory  obligations  and  policy  objectives  to  maximize  the  acceleration  of  all  types  of  broadband  infrastructure  deployment  no  longer 
 requires  a  Commission-  mandated  wholesale  wireline  broadband  Internet  access  transmission  market.  240  Requiring  a  single  type  of  broadband  platform  provider  (i.  e.,  wireline)  to  make  available  its  transmission 
 on  a  common  carriage  basis  is  neither  necessary  nor  desirable  to  ensure  that  the  statutory  objectives  are  met.  241  Indeed,  as  the  evidence  demonstrates,  continuing  this  requirement  would  contravene  these 
 objectives.  Importantly,  this  does  not  mean  that  we  sacrifice  competitive  ISP  choice  for  greater  deployment  of  broadband  facilities.  Rather,  as  we  have  explained  above,  our  reasoned  judgment  tells  us 
 that  sufficient  marketplace  incentives  are  in  place  to  encourage  arrangements  with  innovative  ISPs.  Indeed,  the  incentives  are  growing  as  cable  modem  and  wireline  providers  compete  head-  to-  head  with 


 (continued  from  previous  page)  Report,  the  Commission  stated  that  to  continue  the  further  growth  of  broadband  Internet  access  services,  we  will 
 need  to  apply  [  m]  inimal  regulation  of  advanced  telecommunications  networks  and  services.  Fourth  Section  706  Report,  at  9. 
 238  USTA  II,  359  F.  3d  at  578-  85;  see  Triennial  Review  Order,  18  FCC  Rcd  at  17121,  para.  234.  Considering  these 
 706  objectives,  the  Commission  imposed  only  limited  unbundling  obligations  on  incumbent  LECs  mass  market  next-  generation  broadband  loop  architectures,  yet  ensured  that  access  to  unbundled  narrowband  facilities  was 


 available  where  appropriate.  Id.  at  17141-  54,  paras.  272-  97.  239 
 See  Wold  Communications,  735  F.  2d  at  1475  (citing  FCC  v.  WNCN  Listeners  Guild,  450  U.  S.  at  595  (Congress  gave  the  Commission  sweeping  authority  over  rapidly  unfolding  enterprises);  CCIA  v.  FCC,  693  F.  2d  at  212; 


 NARUC  I,  525  F.  2d  at  645;  &  Philadelphia  Television  Broadcasting  Co.  v.  FCC,  359  F.  2d  282  (D.  C.  Cir.  1966))  (public  interest  touchstone  permits  Commission  to  substitute  marketplace  for  direct  Commission  regulation);  see 
 also  NCTA  v.  Brand  X,  slip  op.  at  30  (affirming  the  Commissions  fresh  analysis  of  regulations  in  the  wake  of  changed  market  conditions). 
 240  Our  statutory  obligations  and  policy  objectives  guide  us  in  the  direction  that  maximizes  the  acceleration  of  all 
 types  of  broadband  infrastructure  deployment.  Indeed,  Congress  specifically  directed  the  Commission  to  encourage  broadband  capability  without  regard  to  any  transmission  media  or  technology.  See  47  U.  S.  C.    157  nt. 


 241  See,  e.  g.,  Wold  Communications,  735  F.  2d  at  1468  (citing  FCC  v.  WNCN  Listeners  Guild,  450  U.  S.  at  595 
 (giving  the  Commission  particular  deference  with  respect  to  policy  judgments  and  predictions  of  the  direction  in  which  the  public  interest  lies  in  a  fast-  moving  field  of  technology)).  Continued  Computer  Inquiry  obligations 


 could  have  a  chilling  impact  not  only  on  the  continued  deployment  of  wireline  broadband  infrastructure,  but  on  other  new  and  innovative  technologies. 
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 one  another  and  other  platform  providers  such  that  wireline  platform  providers  will  find  it  necessary  and  desirable  to  negotiate  arrangements  with  unaffiliated  ISPs  for  access  to  their  broadband  networks  in  order 
 to  grow  the  base  of  users  of  their  broadband  infrastructures. 
 80.  Weighing  all  of  these  factors,  we  conclude  that  the  elimination  of  our  Computer  Inquiry  requirements  for  wireline  broadband  Internet  access  service  providers,  subject  to  the  transitional 


 mechanism  described  below,  best  facilitates  the  accomplishment  of  our  broadband  goals  and  objectives  in  light  of  the  rapidly  changing  market  conditions  for  broadband  Internet  access  services.  242  We  expect  this 
 new  framework  to  enable  consumers  to  reap  the  benefits  of  advanced  wireline  broadband  Internet  access  services  that  incorporate  the  latest  technologically  advanced  integrated  equipment,  on  a  more  widely 
 available  and  more  timely  basis  than  if  we  maintained  the  existing  regime. 
 81.  In  taking  this  action,  we  note  that  some  commenters  argue  that  we  must  undertake  a  forbearance  analysis  pursuant  to  section  10  of  the  Act  before  we  can  remove  our  Computer  Inquiry  requirements.  243 


 We  do  not  agree.  The  Commission  is  free  to  modify  its  own  rules  at  any  time  to  take  into  account  changed  circumstances.  244  The  Computer  Inquiry  requirements  are  not  mandated  by  statute  but,  rather, 
 were  adopted  prior  to  the  1996  Act  in  the  exercise  of  the  Commissions  policy  judgment.  Indeed,  the  Supreme  Court  affirmed  the  Commissions  determination  that  the  1996  Act  did  not  unambiguously 
 freeze[]  in  time  the  Computer  II  treatment  of  facilities  based  information  service  providers.  245  As  such,  in  our  discretion,  subject  to  reasoned  explanation,  we  are  free  to  alter  the  policy  judgment  reflected  in 
 those  requirements  based  on  our  assessment  of  their  relevant  costs  and  benefits  in  light  of  changed  technological  and  market  conditions.  246 


 82.  We  also  find  that  we  need  not  retain  the  Computer  Inquiry  regime,  or  any  of  its  individual  requirements,  to  protect  against  improper  cross-  subsidization.  When  the  Commission  developed  the 
 Computer  Inquiry  rules,  wireline  carriers,  including  the  BOCs,  typically  charged  rates  developed  under  rate  base,  cost-  of-  service  regulation.  The  Commission  was  concerned  that  allowing  wireline  carriers  to 
 provide  enhanced  services  would  increase  the  rates  captive  ratepayers  would  have  to  pay  for  common  carrier  telecommunications  services,  as  the  carriers  would  have  every  incentive  to  include  the  costs  of 
 their  enhanced  services  operations  in  their  cost-  of-  service  calculations  for  those  services.  The  Commission  therefore  developed  safeguards  (e.  g.,  structural  separation  in  Computer  II  and  non-  structural 
 accounting  safeguards  in  connection  with  Computer  III)  designed  to  reduce  the  potential  for  improper 


 242  See  NCTA  v.  Brand  X,  slip  op.  at  30  (noting  the  changed  market  conditions,  i.  e.,  the  existence  of  substitute 
 forms  of  Internet  transmission).  243 
 47  U.  S.  C.    160;  Letter  from  Florence  Grasso,  Covad,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-33,  Attach.  at  5  (filed  Oct.  21,  2002).  This  situation  is  different  than  what  the  court  examined  in  Association  of 


 Communications  Enterprises  v.  FCC,  235  F.  3d  662  (D.  C.  Cir.  2001)  (ASCENT  v.  FCC),  where  the  court  held  that  the  Commission  could  not  relieve  an  entity  of  section  251  obligations  without  conducting  a  section  10  analysis. 
 244  NCTA  v.  Brand  X,  slip  op.  at  9  (citing  Chevron  U.  S.  A.  Inc.  v.  Natural  Resources  Defense  Council,  Inc.,  467  U.  S. 
 837,  863-  64  (1984),  for  the  propositions  that  an  agency  interpretation    is  not  instantly  carved  in  stone  but  rather  the    agency  must  consider  varying  interpretations  and  the  wisdom  of  its  policy  on  a  continuing  basis). 


 245  NCTA  v.  Brand  X,  slip  op.  at  24  (affirming  that  the  Commissions  Computer  II  rules  were  not  a  function  of 
 statutory  definitions,  but  instead  of  a  choice  by  the  Commission  to  regulate  more  stringently,  in  its  discretion,  certain  entities  that  provided  enhanced  services). 


 246  See  NCTA  v.  Brand  X,  slip  op.  at  15  (  Nothing  in  the  Communications  Act  or  the  Administrative  Procedure  Act 
 makes  unlawful  the  Commissions  use  of  its  expert  policy  judgment  to  resolve  these  difficult  questions.). 
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 cross-  subsidization.  247  In  1994,  the  Ninth  Circuit  affirmed  the  Commissions  judgment  that  the  non-structural  accounting  safeguards  had  eliminated  any  need  to  retain  structural  separation  as  a  safeguard 
 against  cross-  subsidization.  248  The  court  stated,  in  particular,  that  price  cap  regulation  had  left  the  BOCs  with  little  incentive  to  shift  costs  from  their  enhanced  services  operations  to  tariffed 
 telecommunications  services  because  they  were  not  able  to  increase  regulated  rates  to  recapture  those  costs.  249 


 83.  The  Commissions  ratemaking  methods  and  those  of  our  state  counterparts  have  changed  considerably  since  the  Ninth  Circuit  addressed  the  need  for  structural  separation  as  a  safeguard  against 
 cross-  subsidization  in  1994.  250  We  conclude  that  changes  have  further  reduced  the  potential  that  the  BOCs  could  increase  rates  for  tariffed  telecommunications  services  through  cost  shifting.  Indeed,  unlike 
 the  situation  before  the  Ninth  Circuit  in  1994,  the  BOCs  costs  are  no  longer  used  to  determine  the  BOCs  price  cap  rates.  251  In  view  of  this  reduced  potential,  we  find  that  there  is  no  need  to  retain  either  the 
 Computer  II  structural  separation  requirement  or  the  Computer  III  nonstructural  safeguards  to  keep  the  BOCs  from  cross-  subsidizing  their  broadband  Internet  access  service  operations  with  revenues  from  the 
 telecommunications  services  operations.  The  benefits  we  anticipate  from  the  elimination  of  these  structural  and  nonstructural  safeguards,  including  the  increased  infrastructure  investment  that  our  new 
 framework  should  generate,  outweigh  any  protection  against  cross-  subsidization  that  those  safeguards  provide. 


 84.  Based  on  the  record  before  us,  it  is  not  necessary  to  make  a  finding  of  market  non-  dominance  as  to  the  incumbent  LECs  in  the  provision  of  broadband  Internet  access  transmission,  as  some  parties  have 
 asked  us  to  do,  before  we  may  eliminate  the  Computer  Inquiry  obligations.  We  decline  to  do  so.  252  Nor 


 247  See,  e.  g.,  Computer  II  Final  Decision,  77  FCC  2d  at  462,  para.  205  (structural  separation);  Joint  Cost  Order,  2 
 FCC  Rcd  at  1310-  34,  paras.  94-  289  (non-  structural  accounting  safeguards).  248 
 California  III,  39  F.  3d  at  926-  27;  see  also  supra  n.  80.  249 
 California  III,  39  F.  3d  at  926.  250 
 See,  e.  g.,  Multi-  Association  Group  (MAG)  Plan  for  Regulation  of  Interstate  Services  of  Non-  Price  CAP  Incumbent  Local  Exchange  Carriers  and  Interexchange  Carriers,  CC  Docket  No.  00-  256,  Report  and  Order  and 


 Second  Further  Notice  of  Proposed  Rulemaking,  19  FCC  Rcd  4122,  4153-  55,  paras.  70-  72  (2004)  (MAG  Order)  (tracing  evolution  of  our  ratemaking  from  cost-  of-  service  ratemaking  through  price  caps  with  sharing  to  the  current 
 Coalition  for  Affordable  Local  and  Long  Distance  Service  (CALLS)  regime);  Letter  from  Richard  T.  Ellis,  Director-Federal  Regulatory  Advocacy,  Verizon,  to  Marlene  H.  Dortch,  Secretary,  FCC,  at  3  (filed  Jan.  6,  2004)  (Verizon 
 Jan.  6,  2004  Ex  Parte  Letter)  (pointing  out  that,  in  most  states,  cost  allocation  results  do  not  affect  rates  for  local  telephone  services). 
 251  The  price  cap  plan  in  place  in  1994  contained  two  mechanisms    sharing  (which  required  a  price  cap  carrier  to 
 return  to  ratepayers  a  portion  of  earnings  above  a  specified  level)  and  low-  end  adjustments  (which  provided  for  increases  in  the  price  cap  indices  upon  a  showing  that  a  price  cap  carrier  had  earned  returns  below  a  specified  level 


 in  a  given  year    whose  operation  would  have  enabled  a  BOC  to  profit  from  shifting  costs  to  tariffed  interstate  services.  In  1997,  the  Commission  eliminated  the  sharing  mechanism.  See  Price  Cap  Performance  Review  for 
 Local  Exchange  Carriers,  CC  Docket  No.  94-  1,  Fourth  Report  and  Order,  CC  Docket  No.  96-  262,  Second  Report  and  Order,  12  FCC  Rcd  16642,  16700-  03,  paras.  148-  55  (1997),  affd  in  part  &  revd  in  part  sub  nom.  USTA  v. 
 FCC,  188  F.  3d  521  (D.  C.  Cir.  1999).  In  addition,  each  of  BOCs  has  foregone  its  opportunity  to  seek  low-  end  adjustments  as  a  condition  of  using  our  pricing  flexibility  rules  to  price  access  services.  See  generally  MAG  Order, 
 19  FCC  Rcd  at  4154,  para.  72.  252 
 A  determination  to  compel  the  provision  of  a  service  by  regulation  is  not  equivalent  to  a  finding  that  the  provider  of  the  service  is  dominant  in  the  market  for  that  service.  Each  issue  is  the  subject  of  a  distinct  inquiry.  Therefore,  it 


 (continued  .  .  .) 
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 do  we  think  it  necessary  or  appropriate  to  make  findings  about  dominance  or  non-  dominance  with  respect  to  the  retail  market  for  broadband  Internet  access.  253  The  Commission  developed  its  distinction  between 
 dominant  carriers,  which  possess  individual  market  power,  and  non-  dominant  carriers,  which  lack  individual  market  power,  to  enable  it  to  develop  a  regulatory  environment  appropriate  for  a 
 telecommunications  industry  that  was  in  the  early  stages  of  evolving  from  one  where  service  was  provided  largely  on  a  monopoly  basis  to  one  where  a  degree  of  competition  [existed]  for  the  provision  of 
 some  communications  services.  254  As  discussed  above,  255  this  market  environment  differs  markedly  from  the  dynamic  and  evolving  broadband  Internet  access  marketplace  before  us  today  where  the  current 
 market  leaders,  cable  operators  and  wireline  carriers,  face  competition  not  only  from  each  other  but  also  from  other  emerging  broadband  Internet  access  service  providers.  This  rapidly  changing  market  does  not 
 lend  itself  to  the  conclusions  about  market  dominance  the  Commission  typically  makes  to  determine  the  degree  of  regulation  to  be  applied  to  well-  established,  relatively  stable  telecommunications  service 
 markets.  256  On  the  contrary,  any  finding  about  dominance  or  non-  dominance  in  this  emerging  broadband  Internet  access  service  market  would  be  premature. 


 85.  In  addition,  our  long-  standing  Computer  Inquiry  regulations,  which  apply  only  to  wireline  facilities-  based  carriers,  have  required  wireline  carriers  to  provide  wholesale  transmission  for  Internet 
 access,  whether  broadband  or  narrowband,  since  the  genesis  of  the  Internet.  This  mandated  participation  by  these  providers  has  affected  the  wholesale  market  for  broadband  Internet  access  transmission. 
 Applying  a  traditional  market  dominance  analysis  to  a  situation  where  the  facilities-  based  wireline  carriers  have  been  required  to  provide  service  on  specified  terms  and  conditions  while  the  market  was  still 
 relatively  undefined  (and  remains  dynamic  and  evolving  even  today)  would  lead  to  a  result  that  would  be  misleading  and  could  be  self-  fulfilling.  Therefore,  we  believe  that  a  conclusive  finding  about  dominance 
 or  non-  dominance  of  these  carriers  in  this  context  is  ill-  suited  and  inappropriate.  Instead,  for  an  emerging  market  that  cannot  be  characterized  with  certainty  at  this  particular  point  in  time,  and  will  likely  be 
 subjected  to  rapid  technological  and  competitive  developments,  we  find  that  the  public  interest  is  best  served  if  we  permit  competitive  marketplace  conditions  to  guide  the  evolution  of  broadband  Internet 
 access  service.  257 


 (continued  from  previous  page)  is  not  necessary  that  we  affirmatively  find  incumbent  LECs  to  be  non-  dominant  as  a  prerequisite  to  taking  the  steps 
 set  forth  in  this  Order.  253 
 Were  we  to  do  so,  however,  given  the  relative  market  share  of  cable  modem  service  providers  vis-  -  vis  wireline  broadband  Internet  access  service  providers,  we  find  it  highly  unlikely  that  wireline  broadband  Internet  access 


 service  providers  would  be  found  to  be  dominant.  254 
 Policies  and  Rules  Concerning  Rates  for  Competitive  Common  Carrier  Services  and  Facilities  Authorizations  Therefor,  CC  Docket  No.  79-  252,  Notice  of  Inquiry  and  Proposed  Rulemaking,  77  FCC  2d  308,  309  (1979) 


 (Competitive  Carrier  NOI  and  NPRM).  Dominant  carriers  under  Title  II  are  subject  to  a  broad  range  of  regulatory  requirements  that  are  generally  intended  to  protect  consumers  from  unjust  and  unreasonable  rates,  terms,  and 
 conditions,  and  unreasonable  discrimination  in  the  provision  of  regulated  services.  In  contrast,  non-  dominant  carriers  now  are  subject  to  significantly  reduced  regulation. 
 255  See  supra  Part  V.  B.  2.a. 
 256  The  analysis  we  conduct  in  this  Order  is  different  from  the  impairment  analysis  we  relied  upon  in  the  Triennial 
 Review  Order,  which  also  considered  generally  the  potential  market  power  of  the  incumbent  LEC.  257 
 See,  e.  g.,  CompTel  01-  337  Comments  at  3  (maintaining  that  [  t]  he  broadband  market  is  in  a  state  of  flux,  and  any  market  delineations  that  may  tentatively  exist  today  could  be  changed  or  eliminated  tomorrow). 
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 C.  New  Regulatory  Framework  for  Wireline  Broadband  Internet  Access  Service  Providers 
 86.  We  adapt  our  regulatory  requirements,  consistent  with  the  Act,  to  correct  for  restrictions  on  wireline  broadband  Internet  access  service  providers  ability  to  incorporate  advanced  integrated 


 technology  into  their  broadband  offerings,  impediments  to  responding  rapidly  and  efficiently  to  changing  broadband  market  demands  due  to  outdated  existing  rules,  258  and  constraints  on  broadband  innovation  and 
 infrastructure  investment.  259  We  eliminate  the  Computer  Inquiry  obligations  as  applied  to  facilities-  based  providers  of  wireline  broadband  Internet  access  service,  and,  in  particular,  the  obligation  to  offer  the 
 transmission  component  of  wireline  broadband  Internet  access  service  on  a  stand-  alone  common  carrier  basis.  Facilities-  based  wireline  broadband  Internet  access  service  providers,  subject  to  a  one-  year 
 transition  period  which  we  also  adopt,  may  choose  to  offer  the  transmission  component  of  wireline  broadband  Internet  access  services  to  both  affiliated  and  unaffiliated  ISPs  or  others  on  a  non-  common 
 carrier  basis  or  a  common  carrier  basis.  260  We  incorporate  this  flexibility  into  our  new  framework  to  account  for  the  differing  business  issues  affecting  different  wireline  broadband  Internet  access  service 
 providers.  For  example,  associations  of  rural  incumbent  LECs  have  indicated  that  their  members  may  choose  to  offer  broadband  Internet  access  transmission  service  on  a  common  carrier  basis.  261  Thus,  unlike 
 previous  Commission  initiatives  (e.  g.,  the  deregulation  of  CPE),  262  we  are  not  eliminating  carriers  ability  to  offer  wireline  broadband  transmission  on  a  Title  II  basis.  Indeed,  as  we  discuss  below,  enabling 
 carriers  to  offer  broadband  Internet  access  transmission  in  alternative  ways  furthers  our  policy  objectives  and  is  consistent  with  precedent. 


 1.  Wireline  Broadband  Internet  Access  Service  Providers  May  Offer  Transmission  Service  on  a  Non-  Common  Carrier  Basis  or  a  Common  Carrier  Basis 
 a)  Non-  Common  Carriage  Arrangements 
 87.  The  record  demonstrates  that  allowing  non-  common  carriage  arrangements  for  wireline  broadband  transmission  will  best  enable  facilities-  based  wireline  broadband  Internet  access  service 
 providers,  particularly  incumbent  LECs,  to  embrace  a  market-  based  approach  to  their  business  relationships  with  ISPs,  providing  the  flexibility  and  freedom  to  enter  into  mutually  beneficial 
 commercial  arrangements  with  particular  ISPs.  263  Facilities-  based  wireline  carriers  as  well  as  certain 
 258  See  supra  Part  V.  B.  2.b  (discussing  the  current  constraints  on  innovative  integrated  broadband  offerings) 
 259  E.  g.,  SBC  Comments  at  25  (  Not  only  do  the  existing  requirements  limit  the  way  wireline  broadband  providers 
 may  design  and  engineer  their  facilities,  they  also  constrain  the  way  such  providers  structure  their  relationships  with  ISPs);  see,  e.  g.,  BellSouth  Comments  at  19-  20;  Verizon  Comments  at  18-  21;  SBC  Reply  at  22-  23;  USTA  Apr.  2, 


 2003  Ex  Parte  Letter  at  3.  260 
 As  discussed  in  paragraphs  98-  99  below,  existing  common  carrier  wireline  broadband  Internet  access  transmission  service  offerings  provided  to  current  ISP  and  other  customers  must  continue  to  be  made  available  to 


 those  customers  during  the  one-  year  transition  period.  261 
 See,  e.  g.,  Letter  from  L.  Marie  Guillory,  NTCA,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  1  (filed  Mar.  7,  2003)  (NTCA  Mar.  7,  2003  Ex  Parte  Letter). 


 262  See  Computer  II  Final  Decision,  77  FCC  2d  at  438-  47,  paras.  140-  60  (explaining  that  CPE  must  be  de-  tariffed 
 because  it  is  a  commodity  severable  from  the  provision  of  transmission  services  and  because  the  offering  of  CPE  in  conjunction  with  regulated  services  has  a  direct  effect  on  rates  charged  for  the  services). 


 263  See,  e.  g.,  BellSouth  Apr.  2,  2003  Ex  Parte  Letter,  Attach.  at  3  (stating  that  contract  carriage  increases  the  ability 
 of  customers  to  negotiate  service  arrangements  that  best  address  their  particular  needs);  SBC  Mar.  7,  2003  Ex  Parte  Letter  at  9,  13;  see  also  supra  n.  222. 
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 portions  of  the  ISP  community  and  broadband  equipment  manufacturers  agree  that  market-  based  commercial  arrangements  will  better  serve  the  interests  of  ISPs,  broadband  providers,  and  consumers.  264 
 88.  Non-  common  carriage  contracts  will  permit  ISPs  to  enter  into  various  types  of  compensation  arrangements  for  their  wireline  broadband  Internet  access  transmission  needs  that  may  better 
 accommodate  their  individual  market  circumstances.  265  For  example,  ISPs  and  facilities-  based  carriers  could  experiment  with  revenue-  sharing  arrangements  or  other  types  of  compensation-  based  arrangements 
 keyed  to  the  ISPs  marketplace  performance,  enabling  the  ISPs  to  avoid  a  fixed  monthly  recurring  charge  (as  is  typical  with  tariffed  offerings)  for  their  transmission  needs  during  start-  up  periods.  266  Non-  common 
 carriage  also  enables  parties  to  a  contract  to  modify  their  arrangement  over  time  as  their  respective  needs  and  requirements  change  without  the  inherent  delay  associated  with  a  tariffed  offering  that  must  be  made 
 available  to  all  ISPs.  267  Moreover,  it  encourages  other  types  of  commercial  arrangements  with  ISPs,  reflecting  business  models  based  on  risk  sharing  such  as  joint  ventures  or  partnership-  type  arrangements, 
 where  each  party  brings  their  added  value,  benefiting  both  the  consumer  (through  the  ability  to  obtain  a  new  innovative  service)  and  each  party  to  the  commercial  arrangement.  268  Such  arrangements  may  also 
 encourage  unaffiliated  ISPs  to  develop  innovative  applications  and  services  that  differentiate  them  from  other  ISPs.  The  ability  to  deliver  such  innovative  services  over  their  platforms  in  order  to  attract 
 customers  will  likely  motivate  wireline  facilities-  based  broadband  transmission  providers  to  negotiate  mutually  beneficial  arrangements  that  enable  the  wireline  facilities-  based  broadband  transmission 
 provider  to  share  the  financial  rewards  of  bringing  the  new  Internet  access  applications  or  services  to  consumers. 


 b)  Common  Carriage  Offerings 
 89.  A  number  of  parties  have  indicated  that  some  carriers  may  nevertheless  choose  to  offer  the  transmission  component  of  broadband  Internet  access  service  as  a  common  carrier  service  absent  the 
 Computer  Inquiry  requirements.  269  Other  parties  have  indicated  they  would  avail  themselves  of  the 


 264  See,  e.  g.,  Alcatel  Comments  at  10;  SBC  Reply  (attaching  memorandum  of  understanding  between  SBC  and 
 USIIA,  dated  May  2,  2002);  see  also  BellSouth  Comments  at  20-  22;  HTBC  Reply  at  6-  7.  265 
 For  example,  certain  unaffiliated  ISP  niche-  market  providers  develop  service  applications  tailored  to  particular  customer  market  segments  (e.  g.,  health  care  providers,  the  real  estate  industry,  and  corporate  telecommuters) 


 providing  features  such  as  enhanced  security  that  can  only  occur  on  the  ISP  side  of  the  Internet.  We  expect  that  non-  common  carrier  arrangements  will  encourage  the  development  of  greater  niche-  market  services  as  ISPs 
 negotiate  customized  arrangements  that  pair  their  specialized  niche  offerings  with  the  BOCs  transmission  capabilities. 
 266  See,  e.  g.,  Verizon  May  20,  2003  Ex  Parte  Letter,  Attach.  at  17;  Verizon  Nov.  25,  2002  Ex  Parte  Letter,  Attach.  at 
 5.  267 
 Verizon  May  20,  2003  Ex  Parte  Letter,  Attach.  at  17;  see  also  BellSouth  Apr.  2,  2003  Ex  Parte  Letter,  Attach.  at  3. 


 268  See,  e.  g.,  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  4828-  29,  paras  52-  53  (discussing  various  types  of  non-common 
 carriage  arrangements  between  cable  modem  broadband  providers  and  unaffiliated  ISPs);  see  also  Verizon  June  26,  2003  Ex  Parte  Letter  at  4. 


 269  See,  e.  g.,  Letter  from  Richard  A.  Askoff,  Executive  Director,  Regulatory  and  Government  Relations,  NECA,  Dan 
 Mitchell,  Vice  President,  Legal  and  Industry,  NTCA,  Stuart  Polikoff,  Director  of  Government  Relations,  OPASTCO,  David  W.  Zesiger,  Executive  Director,  ITTA,  James  W.  Olson,  Vice  President,  Law  &  General 


 Counsel,  USTA,  &  Derrick  Owens,  Director  of  Government  Affairs,  Western  Telecommunications  Alliance,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  1-  2  (filed  July  22,  2005)  (NECA  July  22, 
 (continued  .  .  .) 
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 opportunity  to  offer  certain  types  of  broadband  Internet  access  transmission  on  a  common  carrier  basis  and  other  types  of  broadband  Internet  access  transmission  on  a  non-  common  carrier  basis.  270  Our  primary 
 goal  in  this  proceeding  is  to  facilitate  broadband  deployment  in  the  manner  that  best  promotes  wireline  broadband  investment  and  innovation,  and  maximizes  the  incentives  of  all  providers  to  deploy  broadband. 
 We  find  that  we  can  best  further  this  goal  by  providing  all  wireline  broadband  providers  the  flexibility  to  offer  these  services  in  the  manner  that  makes  the  most  sense  as  a  business  matter  and  best  enables  them  to 
 respond  to  the  needs  of  consumers  in  their  respective  service  areas. 
 90.  We  therefore  conclude  that  providers  of  wireline  broadband  Internet  access  service  that  offer  that  transmission  as  a  telecommunications  service  after  the  effective  date  of  this  Order  may  do  so  on  a 


 permissive  detariffing  basis.  271  Such  providers  thus  may,  in  lieu  of  filing  tariffs  with  the  Commission  setting  forth  the  rates,  terms,  and  conditions  under  which  they  will  provide  broadband  Internet  access 
 transmission  service,  include  those  rates,  terms,  and  conditions  in  generally  available  offerings  posted  on  their  websites.  272  Each  such  provider  electing  not  to  tariff  the  broadband  Internet  access  transmission  that 
 it  offers  as  a  telecommunications  service  also  must  make  physical  copies  of  its  offering  reflecting  the  rates,  terms  and  conditions  available  for  public  inspection  at  a  minimum  of  one  place  of  business. 


 91.  While  we  do  not  believe  that  we  need  to  perform  a  forbearance  analysis  under  section  10  of  the  Act  to  allow  permissive  detariffing,  273  we  find  that  each  of  the  three  forbearance  criteria  is  nonetheless 
 met.  Specifically,  the  reasons  that  persuade  us  not  to  require  that  the  transmission  component  of  wireline  broadband  Internet  access  service  be  offered  as  a  telecommunications  service  under  Title  II  also  persuade 


 (continued  from  previous  page)  2005  Ex  Parte  Letter);  NTCA  Mar.  7,  2003  Ex  Parte  Letter  at  2.  These  associations,  which  represent  rural 
 incumbent  LECs,  indicate  that  their  members  may  choose  to  offer  some  wireline  broadband  transmission  on  a  common  carrier  basis  even  if  we  eliminate  the  Computer  Inquiry  requirements.  These  associations  also  explain  that 
 their  members  progress  in  deploying  broadband  in  rural  areas  to  date  has  been  attributable  to  an  ability  to  lower  the  costs  of  deployment  through  participation  in  the  National  Exchange  Carrier  Association,  Inc.  (NECA)  pooling 
 arrangements  or  other  tariffed  rate  structures  that  reflect  rate  of  return  regulation.  See,  e.  g.,  NCTA  Mar.  7,  2003  Ex  Parte  Letter  at  2.  To  participate  in  a  NECA  pool,  a  carrier  must  offer  an  interstate  telecommunications  service 
 pursuant  to  a  federally  filed,  NECA  tariff  that  contains  the  same  rates,  terms,  and  conditions  of  service  for  all  participating  carriers.  The  rates  for  these  services  are  based  on  the  pooled  or  averaged  costs  of  each  participating 
 carrier.  Without  the  ability  to  continue  tariffing  broadband  transmission  services,  rural  incumbent  LECs  explain  that  they  would  be  unable  to  afford  the  investment  necessary  to  deploy  facilities  necessary  to  provide  broadband  Internet 
 access  services.  270 
 For  example,  Qwest  has  indicated  it  may  continue  offering  a  common  carrier  DSL  transmission  service  to  end  users  (i.  e.,  its  current  retail  DSL+  transmission  service),  while  entering  into  individually  tailored  arrangements 


 with  ISPs  for  other  types  of  broadband  transmission.  See  Qwest  May  23,  2003  Ex  Parte  Letter,  Attach.  at  3-  5  (describing  Qwests  DSL+  access  offering);  see  also  infra  para.  95  (specifying  that  a  facilities-  based  wireline 
 broadband  Internet  access  provider  may  not  simultaneously  offer  the  same  type  of  broadband  Internet  access  transmission  on  both  a  common  carrier  and  a  non-  common  carrier  basis). 
 271  See  infra  paras.  98-  101  (explaining  the  one-  year  transition  and  granting  blanket  certification  to  discontinue  the 
 provision  of  common  carrier  broadband  Internet  access  transmission  services  to  existing  customers).  272 
 Carriers  electing  to  offer  new  transmission  services  on  a  permissive  detariffing  basis  must  comply  with  section  63.71  if  they  later  decide  to  cease  offering  such  service  on  a  common  carrier  basis.  By  contrast,  carriers  electing 


 permissive  detariffing  for  existing  transmission  services  during  the  transition  period  are  covered  by  our  blanket  certification  to  discontinue  the  provision  of  those  existing  common  carrier  broadband  Internet  access  transmission 
 services.  See  infra  para.  101.  273 
 47  U.  S.  C.    160. 
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 us  that  application  of  the  tariffing  provisions  in  Title  II  is  not  necessary  to  ensure  that  the  charges,  practices,  classifications,  or  regulations  by,  for,  or  in  connection  with  that  telecommunications  carrier  or 
 telecommunications  service  are  just  and  reasonable  and  are  not  unjustly  or  unreasonably  discriminatory  within  the  meaning  of  section  10(  a)(  1).  274  In  particular,  competition  from  other  broadband  Internet  access 
 service  providers,  particularly  cable  modem  service  providers,  will  pressure  wireline  carriers  that  choose  to  provide  broadband  Internet  access  transmission  as  a  common  carrier  service  to  offer  their  customers 
 rates,  terms,  and  conditions  that  are  just,  reasonable,  and  not  unreasonably  discriminatory.  These  carriers,  like  wireline  carriers  that  offer  broadband  Internet  access  transmission  on  a  non-  common  carrier  basis, 
 will  have  business  incentives  to  attract  both  end  user  and  ISP  customers  to  their  networks  in  order  to  spread  network  costs  over  as  much  traffic  and  as  many  customers  as  possible.  275  These  incentives,  in 
 combination  with  the  requirements  that  the  carrier  publish  and  make  generally  available  any  rates,  terms,  and  conditions  for  broadband  Internet  access  transmission  offered  on  a  common  carrier  basis,  276  should 
 provide  protection  against  unjust,  unreasonable,  and  unjustly  or  unreasonably  discriminatory  rates,  terms,  and  conditions  comparable  to  that  available  under  a  tariffing  regime. 


 92.  The  need  to  attract  end  user  and  ISP  customers  also  makes  clear  that  tariffing  is  not  necessary  for  the  protection  of  consumers  within  the  meaning  of  section  10(  a)(  2).  277  On  the  contrary,  permissive 
 detariffing  will  enable  broadband  Internet  access  service  providers  to  respond  to  changing  consumer  demands  more  quickly  than  would  be  possible  under  a  tariffing  regime.  Thus,  in  comparison  to  a 
 mandatory  tariffing  regime,  permissive  detariffing  will  benefit  consumers  by  making  it  more  likely  that  they  will  be  offered  innovative  service  arrangements  responding  to  their  changing  needs. 


 93.  Finally,  the  public  interest  considerations  that  persuade  us  not  to  mandate  a  telecommunications  service  offering  in  the  first  place  also  persuade  us  that  a  permissive  tariffing  regime  for  voluntary 
 broadband  Internet  access  telecommunications  service  offerings  is  consistent  with  the  public  interest  within  the  meaning  of  section  10(  a)(  3).  278  In  particular,  we  find  that  mandatory  tariffing  of  these 
 voluntary  offerings  would  unnecessarily  constrain  how  wireline  carriers  may  offer  broadband  Internet  access  transmission  as  a  telecommunications  service.  We  also  find  that  by  removing  this  unnecessary 
 constraint,  permissively  detariffing  these  telecommunications  service  offerings  will  promote  competitive  market  conditions.  Since  we  find  that  each  of  the  statutory  forbearance  criteria  is  met,  we  forbear  from 
 application  of  these  tariffing  provisions  in  Title  II  to  voluntary  offerings  of  broadband  Internet  access  transmission  as  a  telecommunications  service.  279 


 94.  Consequently,  to  enable  facilities-  based  wireline  Internet  access  providers  to  maximize  their  ability  to  deploy  broadband  Internet  access  services  and  facilities  in  competition  with  other  platform 
 providers,  under  a  regulatory  framework  that  provides  all  market  participants  with  the  flexibility  to  determine  how  best  to  structure  their  business  operations,  facilities-  based  carriers  are  able  to  choose 
 whether  to  offer  wireline  broadband  Internet  access  transmission  as  non-  common  carriage  or  common  carriage.  In  addition,  to  the  extent  they  choose  to  offer  that  transmission  as  common  carriage,  they  may 
 do  so  either  under  tariff  or  on  a  non-  tariffed  basis.  The  Commission,  on  numerous  occasions,  has 
 274  47  U.  S.  C.    160(  a)(  1). 
 275  See  supra  Part  V.  B.  2.d. 
 276  See  supra  para.  90. 
 277  47  U.  S.  C.    160(  a)(  2). 
 278  47  U.  S.  C.    160(  a)(  3). 
 279  47  U.  S.  C.    203-  05. 
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 determined  that  a  particular  service  can  be  offered  on  a  non-  common  carrier  or  common  carrier  basis  at  the  service  providers  option.  280  Similarly,  here,  we  conclude  that  it  is  appropriate  to  provide  facilities-based 
 wireline  broadband  Internet  access  service  providers  with  freedom  to  determine  how  to  provide  the  broadband  transmission  capabilities  of  such  services.  281 


 95.  In  order  to  ensure  that  this  flexible  approach  is  consistent  with  statutory  requirements,  efficient,  and  administrable,  we  specify  that  a  facilities-  based  wireline  broadband  Internet  access  provider  may  not 
 simultaneously  offer  the  same  type  of  broadband  Internet  access  transmission  on  both  a  common  carrier  and  non-  common  carrier  basis.  It  may,  however,  choose  to  make  available  one  type  of  broadband 
 Internet  access  transmission  on  a  common  carrier  basis  and  another  type  of  such  transmission  on  a  non-common  carrier  basis.  Of  course,  any  transmission  offering  that  a  facilities-  based  wireline  broadband 
 Internet  access  provider  makes  available  on  a  tariffed  common  carrier  basis  will  be  subject  to  the  terms  contained  in  its  tariff  and,  consistent  with  Title  II  of  the  Act,  the  provider  may  charge  customers  for  that 
 service  only  at  the  rates  contained  in  the  tariff.  282 


 280  In  several  prior  instances,  the  Commission  has  permitted  carriers  to  decide  how  to  offer  a  service  (i.  e.,  as  non-common 
 or  common  carriage).  See,  e.  g.,  47  C.  F.  R.    27.  10  (designated  wireless  communication  services),  90.  1309  (wireless  broadband  services);  101.  533  (24  GHz  fixed  microwave  services);  101.1017  (local  multipoint  distribution 


 service).  In  an  order  concerning  multichannel  video  and  data  distribution  service,  for  example,  the  Commission  found  that  the  option  of  choosing  either  common  carrier  and/  or  non-  common  carrier  status  will  provide  maximum 
 flexibility  and  restrict  unnecessary  regulatory  burden  for  this  service.  See  Amendment  of  Parts  2  and  25  of  the  Commissions  Rules  to  Permit  Operation  of  NGSO  FSS  Systems  Co-  Frequency  with  GSO  and  Terrestrial  Systems  in 
 the  Ku  Band  Frequency  Range,  ET  Docket  No.  98-  206,  RM-  9147,  RM-  9245,  Memorandum  Opinion  and  Order  and  Second  Report  and  Order,  17  FCC  Rcd  9614,  9676,  para.  157  (2002).  Similarly,  with  respect  to  wireless  carriers, 
 the  Commission  stated  that  it  will  allow  the  service  offering  selected  by  a  [wireless  communications  service]  licensee  to  determine  its  regulatory  status.  See  Wireless  Operations  in  the  3650-  3700  MHZ  Band,  ET  Docket  No. 
 04-  151;  Rules  for  Wireless  Broadband  Services  in  the  3650-  3700  MHZ  Band,  ET  Docket  No.  05-  96;  Additional  Spectrum  for  Unlicensed  Devices  Below  900  MHZ  and  in  the  3  GHZ  Band,  ET  Docket  No.  02-  380;  Amendment  of 
 the  Commissions  Rules  with  Regard  to  the  3650-  3700  MHZ  Government  Transfer  Band,  ET  Docket  No.  98-  237,  Report  and  Order  and  Memorandum  Opinion  and  Order,  20  FCC  Rcd  6502,  paras.  35-  36  (2005)  (allowing  providers 
 to  offer  wireless  broadband  services  on  a  common  carrier  or  non-  common  carrier  basis  because  such  an  approach  will  provide  them  with  the  greatest  flexibility  to  use  the  spectrum  for  service  applications  that  are  best  suited  for 
 their  needs,  and  encourage  multiple  entrants  and  stimulate  expansion  of  wireless  broadband  services);  Amendment  of  the  Commission  Rules  to  Establish  Part  27,  the  Wireless  Communications  Service  (  WCS),  GN  Docket  No.  96-228, 
 Report  and  Order,  12  FCC  Rcd  10785,  10847-  48,  paras,  120  &  122  (1997);  see  also  Amendment  to  the  Commissions  Regulatory  Policies  Governing  Domestic  Fixed  Satellites  and  Separate  International  Systems,  IB 
 Docket  No.  95-  41,  Report  and  Order,  11  FCC  Rcd  2429,  2436,  paras.  45-  50  (1996)  (giving  fixed  satellite  service  operators  the  choice  of  operating  as  common  carriers  or  non-  common  carriers,  and  allowing  the  opportunity  to  elect 
 their  regulatory  classifications  in  their  applications).  In  this  latter  order,  the  Commission  modified  its  policy  set  forth  in  the  Transponder  Sales  Order  by  concluding  that  market  forces  had  eliminated  any  need  to  require  domestic 
 satellite  licensees  to  provide  capacity  on  a  common  carrier  basis.  Id.  at  2436,  paras.  45-  46  &  49  (citing  Transponder  Sales  Order,  90  FCC  2d  at  1252). 
 281  See  infra  paras.  87-  88. 
 282  See  Orloff  v.  FCC,  352  F3d  415,  418  (D.  C.  Cir.  2003)  (citing  MCI  Telecom.  Corp.  v.  AT&  T,  512  U.  S.  218,  220 
 (1994)). 
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 c)  Other  Proposed  Alternative  Regulations  for  Wireline  Broadband  Internet  Access  Services 
 96.  Some  commenters  request  that  we  impose  certain  content-  related  requirements  on  wireline  broadband  Internet  access  service  providers  that  would  prohibit  them  from  blocking  or  otherwise  denying 
 access  to  any  lawful  Internet  content,  applications,  or  services  a  consumer  wishes  to  access.  283  While  we  agree  that  actively  interfering  with  consumer  access  to  any  lawful  Internet  information,  products,  or 
 services  would  be  inconsistent  with  the  statutory  goals  of  encouraging  broadband  deployment  and  preserving  and  promoting  the  open  and  interconnected  nature  of  the  public  Internet,  284  we  do  not  find 
 sufficient  evidence  in  the  record  before  us  that  such  interference  by  facilities-  based  wireline  broadband  Internet  access  service  providers  or  others  is  currently  occurring.  Nonetheless,  we  articulate  principles 
 recognizing  the  importance  of  consumer  choice  and  competition  in  regard  to  accessing  and  using  the  Internet:  the  Internet  Policy  Statement  that  we  adopt  today  adopts  such  principles.  285  We  intend  to 
 incorporate  these  principles  into  our  ongoing  policymaking  activities.  286  Should  we  see  evidence  that  providers  of  telecommunications  for  Internet  access  or  IP-  enabled  services  are  violating  these  principles, 
 we  will  not  hesitate  to  take  action  to  address  that  conduct.  287 
 97.  Finally,  as  noted  above,  some  commenters,  in  acknowledging  that  the  current  Computer  Inquiry  regime  is  outdated,  propose  more  streamlined  regulatory  requirements  for  wireline  broadband  Internet 


 access  service.  288  They  seek  to  retain  the  core  Title  II  principle  underlying  the  Computer  Inquiry  obligations  (i.  e.,  the  requirement  to  separate  out  and  offer  any  broadband  Internet  access  transmission 
 capabilities  and  services  on  a  nondiscriminatory  basis  to  all  ISPs).  289  As  the  record  demonstrates, 


 283  See,  e.  g.,  Letter  from  Gerard  J.  Waldron,  Coalition  of  Broadband  Users  and  Innovators,  to  Marlene  H.  Dortch, 
 Secretary,  FCC,  CC  Docket  No.  02-  33,  at  1-  2  (filed  Aug.  27,  2003);  Letter  from  Amy  L.  Levine,  Counsel  to  Amazon.  com,  Covington  &  Burling,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  1-  2  (filed  May 


 21,  2003).  284 
 See  Appropriate  Framework  for  Broadband  Access  to  the  Internet  over  Wireline  Facilities,  CC  Docket  No.  02-  33,  Policy  Statement,  FCC  05-  151  (rel.  Sept.  23,  2005)  (Internet  Policy  Statement). 


 285  Id.  at  para.  5. 
 286  Id.  at  para.  6. 
 287  Federal  courts  have  long  recognized  the  Commissions  authority  to  promulgate  regulations  to  effectuate  the  goals 
 and  accompanying  provisions  of  the  Act  in  the  absence  of  explicit  regulatory  authority,  if  the  regulations  are  reasonably  ancillary  to  the  effective  performance  of  the  Commissions  various  responsibilities.  See  United  States  v. 


 Southwestern  Cable  Co.,  392  U.  S.  157,  178  (1968)  (Southwestern  Cable);  see  also  FCC  v.  Midwest  Video  Corp.,  440  U.  S.  689  (1979)  (Midwest  Video  II);  United  States  v.  Midwest  Video  Corp.,  406  U.  S.  649  (1972)  (Midwest 
 Video  I);  Promotion  of  Competitive  Networks  in  Local  Telecommunications  Markets,  Wireless  Commun.  Assn  Intl,  Inc.,  Petition  to  Amend  Section  1.4000  of  the  Commissions  Rules,  WT  Docket  No.  99-  217,  First  Report  and  Order 
 and  Further  Notice  of  Proposed  Rulemaking,  15  FCC  Rcd  22983,  23028-  29,  para.  101  &  n.  261  (2000)  (Competitive  Networks).  In  this  regard,  we  note  that  the  Enforcement  Bureau  recently  entered  into  a  consent  decree  to  resolve  an 
 investigation  with  respect  to  the  blocking  of  ports  used  for  VoIP.  See  Madison  River  LLC  and  Affiliated  Companies,  File  No.  EB-  05-  IH-  0110,  Order,  20  FCC  Rcd  4295  (Enf.  Bur.  2005)  (adopting  a  consent  decree  terminating  an 
 investigation  into  Madison  Rivers  compliance  with  section  201(  b)  regarding  the  unlawful  blocking  of  ports  used  for  VoIP  applications). 
 288  See  supra  para.  42. 
 289  Id.  The  Earthlink  et  al.  Streamlining  Proposal  would  eliminate  CEIs  nine  parameters  and  procedural 
 requirements  and  ONAs  unbundling  obligations,  reporting  requirements,  and  BSE  and  BSA  tariffing  requirements.  The  underlying  nondiscriminatory  access  obligations  would  be  retained  such  that  BOCs  would  be  obligated  to 


 (continued  .  .  .) 
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 however,  the  inability  to  customize  broadband  service  offerings  inherent  in  the  nondiscriminatory  access  requirement  impedes  deployment  of  innovative  wireline  broadband  services  taking  into  account 
 technological  advances  and  consumer  demand.  290  Thus,  continuing  to  impose  such  requirements  would  only  perpetuate  wireline  broadband  Internet  access  providers  inability  to  make  better  use  of  the  latest 
 integrated  broadband  equipment  and  would  deprive  consumers  of  more  efficient  and  innovative  enhanced  services.  291  Similarly,  a  continued  obligation  to  provide  any  new  broadband  transmission  capability  to  all 
 ISPs  indiscriminately,  and  provide  advance  notice  thereof,  would  reduce  incentives  to  develop  innovative  wireline  broadband  capabilities  and  places  wireline  broadband  at  a  substantial  competitive  disadvantage 
 vis-  -  vis  cable  modem  and  other  broadband  Internet  access  service  providers.  292  Thus,  we  reject  these  proposals. 


 2.  Current  Title  II  Unbundled  Wireline  Broadband  Internet  Access  Transmission  Services  Must  Remain  Available  During  a  One-  Year  Transition  Period 
 98.  Although  we  determine  above  that  immediate  relief  for  wireline  broadband  Internet  access  transmission  providers  is  warranted,  we  are  nonetheless  sensitive  to  the  fact  that  the  Commissions 
 previous  regulatory  regime  for  these  services  has  created  reasonable  reliance  and  expectation  by  unaffiliated  ISPs  on  the  availability  of  currently  tariffed,  broadband  Internet  access  transmission 
 offerings.  293  In  addition,  we  are  concerned  that  a  flash-  cut  transition  may  unnecessarily  disrupt  customers  service  due  to  a  providers  inability  to  adapt  its  business  practices  so  quickly.  We  therefore 
 adopt  a  one-  year  transition  period,  which  begins  on  the  effective  date  of  this  Order,  in  order  to  give  both  ISPs  and  facilities-  based  wireline  broadband  Internet  access  transmission  providers  sufficient  time  to 
 adjust  to  our  new  framework.  294  During  the  transition,  facilities-  based  wireline  broadband  Internet  access 
 (continued  from  previous  page)  provide  all  of  their  broadband  transmission  services  and  capabilities  to  all  ISPs  on  just,  reasonable  and 
 nondiscriminatory  rates,  terms  and  conditions,  including  any  offerings  made  pursuant  to  individual  contracts  with  ISPs,  as  well  as  other  access-  related  obligations  such  as  access  to  electronic  OSS,  databases  and  other  systems.  In 
 addition,  BOCs  would  be  required  to  develop  new  broadband  transmission  capabilities  upon  reasonable  request  by  an  ISP  within  90  days.  This  proposal  would,  however,  permit  streamlined  tariff  or  web  posting  requirements  for 
 transmission  access  services,  but  would  still  require  advance  notification  of  new  or  changed  aspects  of  their  transmission  capabilities.  Earthlink  et  al.  Streamlining  Proposal,  passim. 
 290  See,  e.  g.,  Verizon  June  26,  2003  Ex  Parte  Letter  at  6-  7  (noting  that  these  proposed  streamlined  changes  do 
 nothing  to  deal  with  the  fundamental  problems  .  .  .  that  Verizon  is  unable  to  provide  customers  specially  designed  arrangements,  specially  designed  terms  and  conditions  or  experimental  offerings). 


 291  See  id.  at  7;  see  also  supra  paras.  65-  70  (discussing  impact  of  unbundling  obligation  on  ability  to  implement 
 integrated  equipment  into  offerings).  292 
 See,  e.  g.,  Verizon  June  26,  2003  Ex  Parte  Letter  at  6-  7;  see  also  supra  para.  71  (discussing  impact  of  nondiscrimination  requirement  on  ability  to  respond  to  individualized  requests.) 


 293  See,  e.  g.,  Big  Planet  Comments  at  15;  Covad  Reply  at  20-  21;  EarthLink  Reply  at  17-  20,  22;  see  also,  e.  g., 
 CompTel  v.  FCC,  117  F.  3d  1068  (8  th  Cir.  1997)  (stating  that  although  temporary  agency  rules  are  subject  to  judicial  review  notwithstanding  their  transitory  nature,  substantial  deference  by  courts  is  accorded  to  an  agency  when  the 


 issue  concerns  interim  relief);  CompTel  v.  FCC,  87  F.  3d  522,  531  (D.  C.  Cir.  1996);  MCI  v.  FCC,  750  F.  2d  135,  140  (D.  C.  Cir.  1984).  We  note,  however,  that  some  ISPs  have  already  engaged  in  contractual  arrangements  with 
 facilities-  based  wireline  broadband  providers  that  enable  them  to  obtain  not  only  broadband  transmission  but  also  other  enhanced  services  associated  therewith.  See  supra  para.  74. 
 294  See,  e.  g.,  SBC  and  USIIA  May  3,  2002  Ex  Parte  Letter,  Attach.  at  2  (SBC  and  USIIA  memorandum  of 
 understanding  providing  that  SBC  is  willing  to  grandfather  existing  agreements  with  ISPs  for  their  remaining  term  or  one  year,  at  the  choice  of  the  ISP);  see  also  HTBC  Reply  at  7  (proposing  a  two-  year  period  of  non-  common 


 (continued  .  .  .) 
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 transmission  providers  must  continue  to  honor  existing  transmission  arrangements  with  their  current  ISP  or  other  customers,  but  they  are  not  required  to  offer  such  arrangements  to  new  customers  or  to  existing 
 customers  at  new  locations.  If  these  arrangements  are  provided  pursuant  to  tariffs  currently  on  file  with  the  Commission,  wireline  broadband  Internet  access  transmission  providers  may  retain  these  tariffs 
 during  the  one-  year  period,  or,  alternatively,  they  may  cancel  the  tariffs  pursuant  to  normal  tariff  cancellation  procedures  provided  they  honor  existing  wireline  broadband  Internet  access  transmission 
 arrangements  in  another  manner.  To  the  extent  facilities-  based  wireline  broadband  Internet  access  transmission  providers  have  entered  into  any  other  common  carrier  transmission  arrangements  with  ISP 
 customers  that  are  not  subject  to  tariffing,  295  these  arrangements  must  also  be  continued  during  the  one-year  transition  unless,  of  course,  they  would  otherwise  expire  during  the  transition  period  pursuant  to  their 
 pre-  existing  terms.  Upon  the  effective  date  of  this  Order,  facilities-  based  wireline  broadband  Internet  access  providers,  including  the  BOCs  and  their  affiliates,  are  no  longer  required  to  continue  taking  the 
 existing  common  carrier  transmission  arrangements  that  they  provide  to  ISPs  as  an  input  to  their  self-provided  wireline  broadband  Internet  access  service.  To  the  extent  facilities-  based  carriers  offer  new 
 wireline  broadband  Internet  access  transmission  arrangements  after  the  effective  date  of  this  Order  or  provide  such  service  to  new  customers,  these  arrangements  may  be  made  available  on  a  common  carrier 
 basis  or  a  non-  common  carrier  basis  as  set  forth  above.  296 
 99.  This  one-  year  period  will  allow  ISPs  to  continue  operating  under  their  current  arrangements  while  they  negotiate  non-  common  carrier  agreements  with  providers  of  wireline  broadband  Internet  access 


 transmission.  Based  on  the  assurances  made  by  facilities-  based  wireline  broadband  Internet  access  providers  and  their  stated  desire  to  ensure  that  their  platform  is  competitive  with  other  broadband 
 platforms,  we  strongly  encourage  the  parties  to  work  together  to  develop  individual  contracts  that  are  mutually  beneficial  to  each  party.  297  In  the  meantime,  the  ability  to  continue  operating  under  existing 


 (continued  from  previous  page)  carriage  coupled  with,  inter  alia,  the  requirement  that  incumbent  LECs  honor  their  existing  transmission 
 arrangements  with  unaffiliated  ISPs).  295 
 See,  e.  g.,  SBC  Advanced  Services  Forbearance  Order,  17  FCC  Rcd  at  27008-  16,  paras.  13-  28  (allowing  SBC  to  provide  advanced  services  on  a  detariffed  basis  to  the  extent  SBC  operates  in  accordance  with  a  specified  separate 


 affiliate  structure  and  other  safeguards  and  commitments).  SBC  may  already  offer  the  transmission  component  of  wireline  broadband  Internet  access  service  on  a  detariffed  basis.  Any  common  carrier  broadband  Internet  access 
 transmission  arrangements  that  an  SBC  affiliate  has  with  an  existing  customer  pursuant  to  the  SBC  Advanced  Services  Forbearance  Order  also  are  subject  to  this  one-  year  transition. 
 296  As  defined  in  section  61.  3(  x)  of  our  rules,  a  new  service  offering  is  one  that  provides  for  a  class  or  sub-  class 
 of  service  not  previously  offered  by  the  carrier  involved  and  that  enlarges  the  range  of  service  options  available  to  ratepayers.  47  C.  F.  R.    61.  3(  x).  Consistent  with  this  rule,  we  determine  that  an  existing  offering,  for  purposes  of 


 the  transition,  is  one  that  was  available,  by  tariff  or  by  other  similar  means,  to  unaffiliated  ISPs  and  other  customers  as  of  the  date  this  Order  is  released.  We  note  that  we  expect  our  actions  in  this  Order  to  increase  wireline  providers 
 incentive  and  ability  to  deploy  new  broadband  Internet  access  services.  See  infra  Part  V.  B.  2.  c.  297 
 See  supra  paras.  74-  75;  Letter  from  L.  Barbee  Ponder  IV,  Senior  Regulatory  Counsel-  D.  C.,  BellSouth,  to  Marlene  H.  Dortch,  Secretary,  FCC,  WC  Docket  No.  02-  33,  at  3  (filed  Apr.  20,  2004);  SBC  July  31,  2003  Ex  Parte 


 Letter  at  7  (  The  reason  SBC  has  made  an  express  commitment  to  continue  offering  independent  ISPs  commercial  access  arrangements  in  a  deregulated  environment  is  that  SBC  benefits  from  having  independent  ISPs  as  additional 
 sales  channels  for  its  broadband  services.);  Verizon  June  26,  2003  Ex  Parte  Letter  at  3  (  Verizon  recognizes  the  substantial  value  of  providing  wholesale  broadband  offerings  to  ISPs  and  intends  to  provide  unaffiliated  ISPs  private 
 carriage  access  to  Verizons  network.);  SBC  and  USIIA  May  3,  2002  Ex  Parte  Letter  at  1  &  Attach.  at  2  (SBC  and  USIIA  memorandum  of  understanding  dated  May  2,  2003);  see  also  Qwest  May  23,  2003  Ex  Parte  Letter  at  1, 
 Attach.  at  2  (indicating  that  consumers  prefer  having  a  choice  of  ISPs). 
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 arrangements  for  an  additional  one-  year  period  during  new  contract  negotiations  will  avoid  unnecessary  customer  disruption.  Such  a  transition  period  is  consistent  with  previous  decisions  in  which  the 
 Commission  modified  the  regulatory  framework  for  certain  services  subject  to  a  transition.  298  Indeed,  several  parties,  including  most  BOCs,  that  urge  elimination  of  the  Computer  Inquiry  rules  support  a 
 transition.  299  Here,  as  in  these  other  proceedings,  a  transition  period  will  allow  sufficient  time  for  all  affected  parties  to  adjust  to  the  new  framework  without  unnecessary  disruption  and  without  unduly 
 extending  the  old  framework. 
 3.  Discontinuation  of  Service 
 100.  Section  214(  a)  of  the  Act  requires  that,  prior  to  discontinuing  any  interstate  or  foreign  telecommunications  service,  a  telecommunications  carrier  obtain  from  the  Commission  a  certification 
 that  neither  the  present  nor  future  public  convenience  or  necessity  will  be  adversely  affected  thereby.  300  The  reasons  that  persuade  us  not  to  require  that  the  transmission  component  of  wireline  broadband 
 Internet  access  service  continue  to  be  offered  as  a  telecommunications  service  under  Title  II  also  persuade  us  that  discontinuance  of  the  provision  of  common  carrier  broadband  Internet  access  transmission 
 services  to  existing  customers  would  not  adversely  affect  the  present  or  future  public  convenience  or  necessity.  Instead,  competition  from  other  broadband  Internet  access  service  providers  and  the  wireline 
 providers  business  incentives  to  attract  ISP  customers  should  ensure  the  continued  availability  of  this  transmission  component,  under  reasonable  rates,  terms,  and  conditions.  301  Accordingly,  we  find  that  the 
 circumstances  here  meet  our  test  for  determining  whether  a  telecommunications  service  may  be  discontinued  under  section  214(  a).  302 


 298  See,  e.  g.,  Computer  II  Final  Decision,  77  FCC  2d  at  488,  para.  266  (establishing  a  two-  year  transition  period  for 
 carriers  to  restructure  manner  in  which  they  were  providing  existing  services  affected  by  the  new  resale  structure);  see  also  Triennial  Review  Order,  18  FCC  Rcd  at  17137-  41,  paras.  264-  69  (finding  that  a  transitional  mechanism  is 


 an  effective  means  to  implement  a  new  regulatory  regime  and  that  section  201(  b)  gives  the  Commission  broad  authority  to  adopt  a  three-  year  transition  for  line  sharing);  id.  at  17312-  13,  para.  525,  528-  32  (adopting  a  transition 
 plan  to  migrate  the  existing  unbundled  local  circuit  switching  customer  base  to  alternative  service  arrangements  when  unbundled  local  circuit  switching  was  no  longer  available);  Implementation  of  the  Local  Competition 
 Provisions  in  the  Telecommunications  Act  of  1996;  Intercarrier  Compensation  for  ISP-  Bound  Traffic,  16  FCC  Rcd  9151,  9186-  87,  paras.  77-  78  (2001)  (establishing  a  three-  year  interim  intercarrier  compensation  regime  for  ISP-bound 
 traffic  to  avoid  a  flash  cut  to  a  new  compensation  regime).  299 
 See,  e.  g.,  HTBC  Reply  at  7-  8;  see  also  Letter  from  Robert  T.  Blau,  Vice  President-  Executive  and  Federal  Regulatory  Affairs,  BellSouth,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  1-  2  (filed  Sept.  29, 


 2003);  Letter  from  W.  Scott  Randolph,  Director-  Regulatory  Affairs,  Verizon,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  Attach.  at  1-  2  (filed  Sept.  29,  2003);  Letter  from  James  C.  Smith,  Senior  Vice  President, 
 SBC,  to  Michael  K.  Powell,  Chairman,  FCC,  CC  Docket  No.  02-  33,  at  1-  2  (filed  Sept.  29,  2003);  Letter  from  Gary  Lytle,  Vice  President-  Federal  Relations,  Qwest,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  1-  3 
 (filed  Sept.  30,  2003)  (all  supporting  the  HTBC  proposed  two-  year  transition  plan).  300 
 47  U.  S.  C.    214(  a).  301 
 See  supra  para.  91  (finding  that  mandatory  tariffing  of  broadband  Internet  access  telecommunications  service  offerings  is  not  necessary  to  ensure  that  the  rates,  terms,  and  conditions  for  those  offerings  are  just,  reasonable,  and 


 not  unjustly  or  unreasonably  discriminatory).  302 
 In  evaluating  discontinuance  requests,  the  Commission  considers  a  number  of  factors  including:  (1)  the  financial  impact  on  the  common  carrier  of  continuing  to  provide  the  service;  (2)  the  need  for  the  service  in  general;  (3)  the 


 need  for  the  particular  facilities  in  question;  (4)  the  existence,  availability,  and  adequacy  of  alternatives;  and  (5)  increased  charges  for  alternative  services,  although  this  factor  may  be  outweighed  by  other  considerations.  See 
 (continued  .  .  .) 
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 101.  Therefore,  pursuant  to  our  rule  for  discontinuing  domestic  telecommunications  services,  303  we  grant  facilities-  based,  wireline  broadband  Internet  access  transmission  providers  blanket  certification  to 
 discontinue  providing  existing  customers  the  common  carrier  broadband  Internet  access  transmission  services  that  are  the  subject  of  this  Order,  304  subject  to  the  following  conditions.  305  First,  to  protect  these 
 customers  against  abrupt  termination  of  service,  we  require  that  a  carrier  discontinuing  common  carrier  broadband  Internet  access  transmission  service  shall  provide  affected  customers  with  advance  notice  of 
 the  discontinuance.  Specifically,  the  carrier  shall  provide  all  affected  customers  with  its  name  and  address,  the  date  of  the  planned  discontinuance,  the  geographic  areas  where  service  will  be  discontinued, 
 and  a  brief  description  of  the  service  to  be  discontinued.  306  In  addition,  on  or  after  the  date  it  provides  the  advance  notice  to  its  customers  and  at  least  30  days  prior  to  the  date  on  which  service  will  be 
 discontinued,  the  carrier  must  file  with  the  Commission  notice  of  its  intent  to  discontinue  service.  307  Carriers  are  not  required  to  make  any  showing  in  this  notice  and  do  not  need  to  obtain  any  additional 
 permission  from  the  Commission  to  cease  service.  308  Upon  notification  of  discontinuance,  the  Commission  reserves  the  right  to  take  actions  where  appropriate  under  the  circumstances  to  protect  the 
 public  interest.  309 


 (continued  from  previous  page)  Verizon  Telephone  Companies,  Section  63.  71  Application  to  Discontinue  Expanded  Interconnection  Service 
 Through  Physical  Collocation,  WC  Docket  No.  02-  237,  Order,  18  FCC  Rcd  22737,  22742,  para.  8  (2003);  Application  for  Authority  Pursuant  to  Section  214  of  the  Communications  Act  of  1934  to  Cease  Providing  Dark 
 Fiber  Service,  File  Nos.  W-  P-  C-  6670  and  W-  P-  D-  364,  8  FCC  Rcd  2589,  2600,  para.  54  (1993)  (Dark  Fiber  Order),  remanded  on  other  grounds,  Southwestern  Bell  v.  FCC,  19  F.  3d  1475  (D.  C.  Cir.  1994).  Here,  requiring  that  wireline 
 carriers  continue  to  provide  existing  customers  with  the  transmission  component  of  wireline  broadband  Internet  access  service  as  a  telecommunications  service  would  harm  the  public  interest  by  impeding  the  deployment  of 
 innovative  broadband  infrastructure  and  services  responsive  to  consumer  demands.  See  supra  paras.  79-  80.  303 
 47  C.  F.  R.    63.71(  c).  304 
 See  supra  para.  9  (describing  the  scope  of  this  Order).  305 
 This  discontinuance  could  occur  at  the  end  of  the  transition  period  or,  provided  that  all  existing  customers  of  the  grandfathered  wireline  broadband  transmission  service  at  issue  have  transitioned  to  some  other  type  of  service 


 arrangement,  sometime  during  the  transition  period.  See  supra  para.  98.  306 
 See  47  C.  F.  R.    63.  71(  a)(  1)-(  a)(  4).  While  we  note  that  the  affected  customers  typically  will  be  ISPs  that  use  the  common  carrier  broadband  Internet  access  transmission  service  as  an  input  for  the  broadband  Internet  access 


 services  they  offer  end  users,  carriers  may  have  other  customers  that  also  use  these  existing  services.  See,  e.  g.,  supra  note  270  (describing  Qwests  DSL+  service). 
 307  See  47  C.  F.  R.    63.  71(  b).  The  carrier  may  provide  this  notice  to  the  Commission  at  any  time  after  the  effective 
 date  of  this  Order.  This  notice  shall  be  filed  in  CC  Docket  No.  02-  33  and  shall  be  captioned,  Notice  of  Discontinuance  of  Common  Carrier  Broadband  Internet  Access  Transmission  Service.  The  notice  shall  include,  in 


 addition  to  the  information  set  forth  in  the  notice  provided  affected  customers,  a  brief  description  of  the  dates  and  methods  of  notice  to  those  customers.  See  47  C.  F.  R.    63.  71(  b).  The  carrier  shall  submit  copies  of  this  notice  to  the 
 state  public  utility  commission  and  the  Governor  of  each  State  in  which  service  is  to  be  discontinued  as  well  as  to  the  Special  Assistant  for  Telecommunications  at  the  Department  of  Defense.  See  47  C.  F.  R.    63.  71(  a). 
 308  This  Order  provides  carriers  all  necessary  authority  to  cease  providing  to  existing  customers  the  common  carrier 
 broadband  Internet  access  transmission  services  that  are  the  subject  of  this  Order.  309 
 In  the  Notice  of  Proposed  Rulemaking  we  adopt  today,  we  seek  comment  on  whether  we  should  exercise  our  Title  I  authority  to  impose  section  214-  type  requirements  on  providers  of  broadband  Internet  access  service  to 


 protect  end  users  from  service  discontinuance  without  notice.  See  infra  Part  VIII.  E. 
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 D.  Classification  of  Wireline  Broadband  Internet  Access  Transmission  Component 
 102.  Above,  we  affirm  that  wireline  broadband  Internet  access  service  is  an  information  service,  and  decline  to  continue  the  reflexive  application  of  the  Computer  Inquiry  regime  to  facilities-  based  providers 


 of  such  service.  This  is  not,  however,  the  end  of  our  inquiry.  The  Wireline  Broadband  NPRM  also  sought  comment  on  the  legal  classification  of  the  transmission  component  underlying  facilities-  based 
 wireline  broadband  Internet  access  service.  310  In  contrast  to  the  classification  of  wireline  broadband  Internet  access  service  as  an  information  service,  311  there  is  considerable  disagreement  in  the  record  as  to 
 the  appropriate  classification  of  the  transmission  component  of  such  Internet  access  service.  312  The  legal  classification  of  this  transmission  component  has  certain  regulatory  implications  for  its  provider. 
 Specifically,  if  the  transmission  component  is  a  telecommunications  service  under  the  Act,  313  providers  of  that  service  are  subject  to  common  carrier  regulation  under  Title  II  of  the  Act  in  their  provision  of  that 
 service.  314  Conversely,  if  the  transmission  component  is  not  a  telecommunications  service  under  the  Act,  providers  of  that  component  are  not  subject  to  Title  II  requirements,  315  except  to  the  extent  the 
 Commission  imposes  similar  or  identical  obligations  pursuant  to  its  Title  I  ancillary  jurisdiction.  316 
 103.  We  address  two  circumstances  under  which  the  statutory  classification  of  the  transmission  component  arises:  the  provision  of  transmission  as  a  wholesale  input  to  ISPs  (including  affiliates)  that 


 provide  wireline  broadband  Internet  access  service  to  end  users,  and  the  use  of  transmission  as  part  and  parcel  of  a  facilities-  based  providers  offering  of  wireline  broadband  Internet  access  service  using  its  own 
 transmission  facilities  to  end  users.  First,  we  address  the  wholesale  input.  Nothing  in  the  Communications  Act  compels  a  facilities-  based  provider  to  offer  the  transmission  component  of  wireline 
 broadband  Internet  access  service  as  a  telecommunications  service  to  anyone.  Furthermore,  consistent  with  the  NARUC  precedent,  317  the  transmission  component  of  wireline  broadband  Internet  access  service 


 310  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3029,  para.  17,  &  3033,  para.  25. 
 311  See  supra  Part  IV. 
 312  Several  parties,  including  all  of  the  BOCs,  argue  that  wireline  broadband  Internet  access  service  has  a 
 telecommunications  component  that  does  not  fall  under  Title  II.  See,  e.  g.,  Qwest  Comments  at  4;  Verizon  Comments  at  9;  NextLevel  Reply  at  7-  10.  Allegiance  disputes  this,  arguing  that  self-  provisioned  wireline 


 broadband  Internet  access  is  a  bundled  offering  of  a  telecommunications  service  and  information  service.  Allegiance  Comments  at  12  (citing  Joint  Explanatory  Statement  of  the  Committee  of  Conference,  S.  Conf.  Rep.  No. 
 230,  104th  Cong.,  2d  Sess.  1  (1996)  (Joint  Explanatory  Statement)  (emphasis  added)).  313 
 47  U.  S.  C.    153(  46).  314 
 We  note  that  the  Commission  has  authority  under  section  10  of  the  Act  to  forbear  from  applying  Title  II  requirements.  See  47  U.  S.  C.    160;  see  also  NCTA  v.  Brand  X,  slip  op.  at  3. 


 315  See  NCTA  v.  Brand  X,  slip  op.  at  3-  4. 
 316  Indeed,  it  was  precisely  the  Commissions  historic  exercise  of  its  Title  I  ancillary  jurisdiction  that  resulted  in  the 
 imposition  of  the  Computer  Inquiry  obligations  that  we  eliminate  today  for  wireline  broadband  Internet  access  service  providers.  See  supra  Part  V.  B;  see  also  NCTA  v.  Brand  X,  slip  op.  at  24-  25.  We  further  note  that  the 


 Computer  Inquiry  rules  did  not  require  a  Title  II  offering  with  respect  to  the  end  user  of  the  information  service  for  which  the  transmission  is  a  component;  rather,  those  rules  required  the  offering  of  a  Title  II  transmission  component 
 offering  to  competing  information  services  providers.  317 
 Under  the  so-  called  NARUC  I  decision,  and  other  compelling  precedent,  the  Commission  and  courts  perform  a  two-  step  analysis  to  determine  whether  a  communications  service  offering  is  subject  to  Title  II.  First,  the 


 Commission  inquires  whether  there  is  a  legal  compulsion  to  serve  the  public  indifferently.  NARUC  I,  525  F.  2d  at  642  (  we  must  inquire,  first,  whether  there  will  be  any  legal  compulsion  .  .  .  to  serve  [the  public]  indifferently). 
 (continued  .  .  .) 
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 is  a  telecommunications  service  only  if  one  of  two  conditions  is  met:  the  entity  that  provides  the  transmission  voluntarily  undertakes  to  provide  it  as  a  telecommunications  service;  or  the  Commission 
 mandates,  in  the  exercise  of  our  ancillary  jurisdiction  under  Title  I,  that  it  be  offered  as  a  telecommunications  service.  318  As  to  the  first  condition,  we  explain  above  that  carriers  may  choose  to 
 offer  this  type  of  transmission  as  a  common  carrier  service  if  they  wish.  In  that  circumstance,  it  is  of  course  a  telecommunications  service.  Otherwise,  however,  is  it  not,  as  we  would  not  expect  an 
 indifferent  holding  out  but  a  collection  of  individualized  arrangements.  319  As  to  the  second  condition,  based  on  the  record,  we  decline  to  continue  our  reflexive  application  of  the  Computer  Inquiry 
 requirement,  which  compelled  the  offering  of  a  telecommunications  service  to  ISPs.  320  Thus,  we  affirm  that  neither  the  statute  nor  relevant  precedent  mandates  that  broadband  transmission  be  a 
 telecommunications  service  when  provided  to  an  ISP,  but  the  provider  may  choose  to  offer  it  as  such. 
 104.  Second,  we  address  the  use  of  the  transmission  component  as  part  of  a  facilities-  based  providers  offering  of  wireline  broadband  Internet  access  service  to  end  users  using  its  own  transmission  facilities. 


 We  conclude,  consistent  with  Brand  X,  that  such  a  transmission  component  is  mere  telecommunications  and  not  a  telecommunications  service.  321  As  stated  above,  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  directly  to  the  public,  regardless  of  the  facilities  used.  322  Thus,  whether  a 
 telecommunications  service  is  being  provided  turns  on  what  the  entity  is  offering  .  .  .  to  the  public,  and  customers  understanding  of  that  service.  323  End  users  subscribing  to  wireline  broadband  Internet  access 
 service  expect  to  receive  (and  pay  for)  a  finished,  functionally  integrated  service  that  provides  access  to  the  Internet.  End  users  do  not  expect  to  receive  (or  pay  for)  two  distinct  services    both  Internet  access 


 (continued  from  previous  page)  Second,  if  the  Commission  finds  that  neither  the  statute  nor  the  public  interest  compel  a  common  carriage  offering 
 of  the  service,  the  Commission  then  examines  whether  there  are  reasons  implicit  in  the  nature  of  [the  providers]  operations  to  expect  an  indifferent  holding  out  to  the  eligible  user  public.  NARUC  I,  525  F.  2d  at  642;  see  Vitelco  v. 
 FCC,  198  F.  3d  at  924  (asking  whether  the  service  provider  intends  to  make  capacity  available  to  the  public  indifferently).  In  the  communications  context,  implicit  in  this  prong  is  the  notion  that  the  carrier  is  providing  a 
 service  whereby  customers  may  transmit  intelligence  of  their  own  design  and  choosing.  See  CCIA  v.  FCC,  693  F.  2d  at  210  (citing  NARUC  I,  525  F.  2d  at  641  n.  58  (quoting  Industrial  Radiolocation  Service,  5  FCC  2d  197,  202 
 (1966)))  (internal  quotation  marks  omitted).  318 
 See  Southwestern  Bell  Tel.  Co.  v.  FCC,  19  F.  3d  1475,  1481  (D.  C.  Cir.  1994)  (Southwestern  Bell);  AT&  T-  SSI,  13  FCC  Rcd  at  21588-  89,  paras.  8-  9;  NORLIGHT  Request  for  Declaratory  Ruling,  2  FCC  Rcd  132,  133,  para.  14 


 (1987);  NARUC  II,  533  F.  2d  at  608-  09;  NARUC  I,  525  F.  2d  at  640.  In  1998,  the  Commission  found,  and  the  court  agreed,  that  the  enactment  of  the  1996  Act  did  not  disturb  the  NARUC  I  decisions  common  carriage  test.  See 
 Vitelco  v.  FCC,  198  F.  3d  at  927  (holding  that  the  legislative  history  [of  the  1996  Act]  .  .  .  can  be  reasonably  construed  as  manifesting  Congress  intention  to  maintain  the  public-  private  dichotomy  of  NARUC  I). 
 319  NARUC  I,  525  F.  2d  at  642. 
 320  See  supra  Part  V.  A.  2 
 321  See  NCTA  v.  Brand  X,  slip  op.  at  14-  31(  affirming  as  a  reasonable  construction  of  the  statute  the  Commissions 
 conclusion  that  cable  modem  service  does  not  include  a  telecommunications  service).  322 
 47  U.  S.  C.    153(  46)  (emphasis  added).  323 
 See  NCTA  v.  Brand  X,  slip  op.  at  10  (discussing  the  word  offering  in  the  statutory  definition  of  telecommunications  service). 
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 service  and  a  distinct  transmission  service,  for  example.  324  Thus,  the  transmission  capability  is  part  and  parcel  of,  and  integral  to,  the  Internet  access  service  capabilities.  325  Accordingly,  we  conclude  that 
 wireline  broadband  Internet  access  service  does  not  include  the  provision  of  a  telecommunications  service  to  the  end  user  irrespective  of  how  the  service  provider  may  decide  to  offer  the  transmission  component 
 to  other  service  providers. 
 105.  In  so  concluding,  we  reject  arguments  that  companies  using  their  own  facilities  to  provide  wireline  broadband  Internet  access  service  simultaneously  provide  a  telecommunications  service  to  their 


 end  user  wireline  broadband  Internet  access  customers.  326  The  record  demonstrates  that  end  users  of  wireline  broadband  Internet  access  service  receive  and  pay  for  a  single,  functionally  integrated  service, 
 not  two  distinct  services.  327  This  conclusion  also  is  consistent  with  certain  past  Commission  pronouncements  that  the  categories  of  information  service  and  telecommunications  service  are 
 mutually  exclusive.  328  Moreover,  the  fact  that  the  Commission  has,  up  to  now,  required  facilities-  based  providers  of  wireline  broadband  Internet  access  service  to  separate  out  a  telecommunications  transmission 
 service  and  make  that  service  available  to  competitors  on  a  common  carrier  basis  under  the  Computer  Inquiry  regime  has  no  bearing  on  the  nature  of  the  service  wireline  broadband  Internet  access  service 
 providers  offer  their  end  user  customers.  329  We  conclude  now,  based  on  the  record  before  us,  that  wireline  broadband  Internet  access  service  is,  as  discussed  above,  a  functionally  integrated,  finished 
 product,  rather  than  both  an  information  service  and  a  telecommunications  service. 
 106.  Finally,  some  parties  argue  (without  clearly  distinguishing  between  the  transmission  component  as  a  wholesale  input  and  transmission  used  to  provide  the  information  service  to  the  end  user)  that 


 324  NCTA  v.  Brand  X,  slip  op.  at  18  (stating  that  [  i]  t  is  common  usage  to  describe  what  a  company  offers  to  a 
 consumer  as  what  the  consumer  perceives  to  be  the  integrated  finished  product,  even  to  the  exclusion  of  discrete  components  that  compose  the  product). 


 325  NCTA  v.  Brand  X,  slip  op.  at  18-  19  (explaining  the  integrated  nature  of  the  transmission  component  in  cable 
 modem  Internet  access  service);  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4823,  paras.  39-  40;  SBC  Comments  at  17. 


 326  See,  e.  g.,  Allegiance  Comments  at  8-  9  ([  T]  hroughout  the  past  25  years,  the  Commission  has  consistently 
 determined  that  facilities-  based  providers  [of  information  service]  provide  two  separate  services    a  telecommunications  service  and  an  information  service.);  id.  at  10-  11  (arguing  that  Commission  has  already 


 imposed  two-  service  treatment  for  regulatory  purposes  on  incumbent  LEC-  provided  broadband  Internet  access);  McLeodUSA  Comments  at  9  (  The  [1996  Act]  definitions  of  the  terms  information  service,    telecommunications 
 service,    and  telecommunications  were  expressly  intended  to  acknowledge  the  concept  from  the  Computer  Inquiry  cases  that  there  is  always  a  telecommunications  service  underlying  every  information  service.  )  (emphasis 
 added);  id.  at  11-  12  (since  certain  functions  of  wireline  broadband  Internet  access  service,  such  as  e-  mail,  file  transfer,  and  instant  messaging,  provide  raw  transmission,  that  service  is  a  telecommunications  service,  and 
 therefore  the  service  offered  to  customers  as  broadband  access  includes  both  information  services  and  telecommunications  services);  US  LEC  Comments  at  2-  3;  ASCENT  Reply  at  3-  4. 
 327  E.  g.,  SBC  Comments  at  16-  17;  Qwest  Reply  at  4-  8;  Verizon  Reply  at  6-  11. 
 328  As  explained  above,  although  the  Commission  has  not  been  entirely  consistent  on  this  point,  we  agree  for  the 
 wireline  broadband  Internet  access  described  in  this  Order  with  the  past  Commission  pronouncements  that  the  categories  of  information  service  and  telecommunications  service  are  mutually  exclusive.  See  supra  note  32. 


 329  See  infra  Part  V.  A;  see  also  NCTA  v.  Brand  X,  slip  op.  at  24-  25  (observing  that  [  i]  n  the  Computer  II  rules,  the 
 Commission  subjected  facilities-  based  providers  to  common  carrier  duties  not  because  of  the  nature  of  the  offering  made  by  those  carriers,  but  rather  because  of  the  concern  that  local  telephone  companies  would  abuse  the  monopoly 


 power  they  possessed  by  virtue  of  the  bottleneck  local  telephone  facilities  they  owned). 
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 Commission  precedent  mandates  that  we  classify  the  transmission  underlying  wireline  broadband  Internet  access  as  a  telecommunications  service.  330  We  disagree.  As  an  initial  matter,  as  the  Supreme  Court  held 
 in  relation  to  the  transmission  underlying  cable  modem  service,  the  Commission  is  free  within  the  limits  of  reasoned  interpretation  to  change  course  if  it  adequately  justifies  the  change.  331  The  Court 
 acknowledged  the  Commissions  ability  to  respond  to  changed  circumstances  and  market  conditions,  factors  which  serve  as  the  basis  for  the  actions  we  take  in  this  Order.  332  The  previous  orders  upon  which 
 commenters  rely  assumed,  correctly  in  each  instance,  that  the  offering  of  DSL  transmission  on  a  common  carrier  basis  was  a  telecommunications  service.  333  These  decisions,  however,  did  not  address  the 
 important  threshold  public  interest  issue  we  address  in  this  Order    whether  this  broadband  transmission  component  must  continue  to  be  offered  to  competing  providers  of  facilities-  based  wireline  broadband 
 Internet  access  service  on  a  common  carrier  basis.  And  as  we  explain  above,  the  current  record  does  not  support  a  finding  or  compulsion  that  the  transmission  component  of  wireline  broadband  Internet  access 
 service  is  a  telecommunications  service  as  to  the  end  user.  334 
 107.  Now  that  we  have  concluded  that  a  common  carrier  offering  is  no  longer  required,  and  have  made  the  statutory  classification  findings,  we  address  what  impact  these  actions  have  on  other  regulatory 


 obligations.  335 


 330  See,  e.  g.,  AOL  Comments  at  6-  12;  Covad  Comments  at  72-  75;  Time  Warner  Comments  at  9-  16;  Vermont 
 Commission  Comments  at  20-  26;  Letter  from  Ruth  Milkman,  Counsel  to  MCI,  to  Michelle  Carey,  Chief,  Competition  Policy  Division,  Wireline  Competition  Bureau,  FCC,  CC  Docket  Nos.  02-  33  &  01-  337,  at  2  (filed  June 


 23,  2003)  (MCI  June  23,  2003  Ex  Parte  Letter)  (citing  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3040,  para.  42).  331 
 See  NCTA  v.  Brand  X,  slip  op.  at  14.  332 
 See  id.,  slip  op.  at  15.  333 
 For  example,  in  its  AOL  Bulk  Services  Order,  the  Commission  stated  that  although  bulk  DSL  services  sold  to  ISPs  are  not  retail  services  subject  to  section  251(  c)(  4),  these  services  are  telecommunications  services.  .  .  . 


 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).  In  that  order,  the 
 Commission  devoted  its  entire  analysis  to  section  251(  c)(  4)  and  only  in  its  Conclusion  did  it  mention  that  incumbent  LECs  must  continue  to  comply  with  their  common  carrier  obligations.  Id.  Similarly,  in  its  GTE  DSL 
 Order,  the  Commission  found  that  GTEs  asynchronous  DSL  (ADSL)  service  offering  was  interstate  and  appropriately  tariffed  with  the  Commission.  GTE  Telephone  Operating  Cos.  GTOC  Tariff  No.  1,  GTOC  Transmittal 
 No.  1148,  13  FCC  Rcd  22466,  para.  1  (1998)  (GTE  DSL  Order),  recon.,  17  FCC  Rcd  27409  (1999)  (GTE  DSL  Reconsideration  Order).  Again,  its  analysis  concerned  another  issue    the  jurisdiction  of  GTEs  ADSL  transmission 
 for  purposes  of  determining  whether  GTE  should  file  an  interstate,  as  opposed  to  intrastate,  tariff.  Id.  at  22478-  79,  para.  22  (noting  that  this  transmission  does  in  fact  constitute  an  interstate  telecommunication).  Similarly,  in  the 
 CPE/  Enhanced  Services  Bundling  Order,  the  Commission  assumed  without  analysis  that  the  provision  of  DSL  was  a  telecommunications  service.  CPE/  Enhanced  Services  Bundling  Order,  16  FCC  Rcd  at  7445-  46,  para.  46. 
 334  To  the  extent  NARUC  I  is  relevant  to  this  inquiry,  our  analysis  accords  with  this  precedent.  There  is  no  legal 
 compulsion  to  serve  the  public  indifferently.  Nor  is  there  anything  implicit  in  the  nature  of  wireline  broadband  Internet  access  service  that  makes  it  reasonable  to  expect  that  its  telecommunications  component  would  be  offered 


 to  the  public  indifferently.  Consequently,  NARUC  I  provides  no  support  for  claims  that  the  transmission  component  of  facilities-  based  wireline  broadband  Internet  access  service  is,  or  must  be  found  to  be,  a  telecommunications 
 service. 
 335  We  find  moot  Verizons  pending  petition  for  forbearance  with  regard  to  broadband  services  provided  via  FTTP, 
 as  well  as  its  simultaneously  filed  petition  for  declaratory  ruling  or  interim  waiver  with  regard  to  the  same  services.  Conditional  Petition  of  the  Verizon  Telephone  Companies  for  Forbearance  Under  47  U.  S.  C.    160(  c)  with  Regard  to 


 Broadband  Services  Provided  Via  Fiber  to  the  Premises,  WC  Docket  No.  04-  242  (filed  June  28,  2004)  (Verizon  (continued  .  .  .) 
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 VI.  EFFECT  ON  EXISTING  OBLIGATIONS 
 108.  The  Wireline  Broadband  NPRM  sought  comment  on  what  effect  classifying  wireline  broadband  Internet  access  service  as  an  information  service  would  have  on  other  regulatory  obligations.  Title  II 


 obligations  have  never  generally  applied  to  information  services,  including  Internet  access  services.  336  Instead,  when  the  Commission  has  deemed  it  necessary  to  impose  regulatory  requirements  on  information 
 services,  it  has  done  so  pursuant  to  its  Title  I  ancillary  jurisdiction.  Indeed,  as  noted  above,  the  Commission  imposed  the  Computer  Inquiry  obligations  on  facilities-  based  common  carriers  pursuant  to 
 its  Title  I  ancillary  jurisdiction.  337  Similarly,  the  Commission  has  exercised  its  ancillary  jurisdiction  under  Title  I  to  extend  accessibility  obligations  that  mirror  those  under  section  255  to  certain  information 
 services,  i.  e.,  voicemail  and  interactive  menu  service.  338  The  Commissions  ancillary  jurisdiction  under  Title  I  to  impose  regulatory  obligations  on  broadband  Internet  access  service  providers  was  recently 
 recognized  by  the  Supreme  Court.  339 
 109.  The  Commission  may  exercise  its  ancillary  jurisdiction  when  Title  I  of  the  Act  gives  the  Commission  subject  matter  jurisdiction  over  the  service  to  be  regulated  340  and  the  assertion  of  jurisdiction 


 (continued  from  previous  page)  FTTP  Forbearance  Petition);  Petition  of  the  Verizon  Telephone  Companies  for  Declaratory  Ruling  or,  Alternatively, 
 for  Interim  Waiver  with  Regard  to  Broadband  Services  Provided  Via  Fiber  to  the  Premises,  WC  Docket  No.  04-  242  (filed  June  28,  2004)  (Verizon  FTTP  Petition  for  Declaratory  Ruling  or  Interim  Waiver).  In  these  two  petitions, 
 Verizon  sought  to  ensure  that  it  could  offer  those  of  its  broadband  services  that  are  provided  via  [FTTP]  in  the  same  manner  that  cable  companies  offer  broadband  services  via  cable  modem.  Verizon  FTTP  Forbearance  Petition 
 at  1.  Verizon  emphasized  that  the  relief  sought  in  its  petitions  would  be  temporary,  necessary  only  [  u]  ntil  the  Commission  has  determined  an  appropriate  regulatory  framework  for  broadband  generally.  Id.,  Attach.  at  12. 
 Because  this  Order  establishes  a  regulatory  framework  for  wireline  broadband  Internet  access  service  and  eliminates  disparities  between  the  regulatory  treatment  of  that  broadband  and  cable  modem  service,  Verizons  petitions  are 
 moot.  336 
 See  Report  to  Congress,  13  FCC  Rcd  at  11523-  24,  para.  44  (noting  legislative  history  demonstrating  a  Congressional  intent  that  information  service  providers  not  be  deemed  providers  of  telecommunications  service); 


 Computer  II  Final  Decision,  77  FCC  2d  at  428-  35,  paras.  114-  132  (enhanced  services  are  not  subject  to  Title  II  obligations);  see  also  Cable  Modem  Declaratory  Ruling,  17  FCC  Rcd  at  4823,  paras.  39-  40. 
 337  See  supra  para.  24. 
 338  See  infra  para.  121. 
 339  See  NCTA  v.  Brand  X,  slip  op.  at  25  (stating  that  after  designating  cable  modem  service  an  information  service, 
 the  Commission  remains  free  to  impose  special  regulatory  duties  on  facilities-  based  ISPs  under  its  Title  I  ancillary  jurisdiction). 


 340  See  Southwestern  Cable,  392  U.  S.  at  177-  78.  Southwestern  Cable,  the  lead  case  on  the  ancillary  jurisdiction 
 doctrine,  upheld  certain  regulations  applied  to  cable  television  systems  at  a  time  before  the  Commission  had  an  express  congressional  grant  of  regulatory  authority  over  that  medium.  See  id.  at  170-  71.  In  Midwest  Video  I,  the 


 Supreme  Court  expanded  upon  its  holding  in  Southwestern  Cable.  The  plurality  stated  that  the  critical  question  in  this  case  is  whether  the  Commission  has  reasonably  determined  that  its  origination  rule  will  further  the  achievement 
 of  long-  established  regulatory  goals  in  the  field  of  television  broadcasting  by  increasing  the  number  of  outlets  for  community  self-  expression  and  augmenting  the  publics  choice  of  programs  and  types  of  services  .  .  .  .  Midwest 
 Video  I,  406  U.  S.  at  667-  68  (quoting  Amendment  of  Part  74,  Subpart  K,  of  the  Commissions  Rules  and  Regulations  Relative  to  Community  Antenna  Television  Systems;  and  Inquiry  into  the  Development  of  Communications 
 Technology  and  Services  to  Formulate  Regulatory  Policy  and  Rulemaking  and/  or  Legislative  Proposals,  Docket  No.  18397,  First  Report  and  Order,  20  FCC  2d  201,  202  (1969)  (CATV  First  Report  and  Order)).  The  Court  later 
 restricted  the  scope  of  Midwest  Video  I  by  finding  that  if  the  basis  for  jurisdiction  over  cable  is  that  the  authority  is  (continued  .  .  .) 
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 is  reasonably  ancillary  to  the  effective  performance  of  [its]  various  responsibilities.  341  We  recognize  that  both  of  the  predicates  for  ancillary  jurisdiction  are  likely  satisfied  for  any  consumer  protection, 
 network  reliability,  or  national  security  obligation  that  we  may  subsequently  decide  to  impose  on  wireline  broadband  Internet  access  service  providers.  342 


 110.  First,  we  find  that  we  have  subject  matter  jurisdiction  over  providers  of  broadband  Internet  access  services.  These  services  are  unquestionably  wire  communication  as  defined  in  section  3(  52)  343  because 
 they  transmit  signals  by  wire  or  cable,  or  they  are  radio  communication  as  defined  in  section  3(  33)  if  they  transmit  signals  by  radio.  344  The  Act  gives  the  Commission  subject  matter  jurisdiction  over  all 
 interstate  and  foreign  communications  by  wire  or  radio  .  .  .  and  .  .  .  all  persons  engaged  within  the  United  States  in  such  communication  in  section  2(  a).  345  Second,  with  regard  to  consumer  protection  obligations, 
 we  find  that  regulations  would  be  reasonably  ancillary  to  the  Commissions  responsibility  to  implement  sections  222  (customer  privacy),  255  (disability  access),  and  258  (slamming  and  truth-  in-  billing),  among 
 other  provisions,  of  the  Act.  346  Similarly,  network  reliability,  emergency  preparedness,  national  security,  and  law  enforcement  requirements  would  each  be  reasonably  ancillary  to  the  Commissions  obligation  to 
 make  available  a  rapid,  efficient,  Nation-  wide,  and  world-  wide  wire  and  radio  communication  service  .  .  .  for  the  purpose  of  the  national  defense  [and]  for  the  purpose  of  promoting  safety  of  life  and 
 property  through  the  use  of  wire  and  radio  communication.  347 


 (continued  from  previous  page)  ancillary  to  the  regulation  of  broadcasting,  the  cable  regulation  cannot  be  antithetical  to  a  basic  regulatory  parameter 
 established  for  broadcast.  See  Midwest  Video  II,  440  U.  S.  at  700;  see  also  American  Library  Assn  v.  FCC,  406  F.  3d  689  (D.  C.  Cir.  2005)  (holding  that  the  Commission  lacked  authority  to  impose  broadcast  content  redistribution  rules 
 on  equipment  manufacturers  using  ancillary  jurisdiction  because  the  equipment  at  issue  was  not  subject  to  the  Commissions  subject  matter  jurisdiction  over  wire  and  radio  communications). 
 341  Southwestern  Cable,  392  U.  S.  at  178;  see  also  VoIP  E911  Order,  at  paras.  26-  35. 
 342  To  this  end,  we  concurrently  adopt  a  Notice  of  Proposed  Rulemaking  (Notice)  to  determine  what  specific  duties 
 are  necessary  for  broadband  Internet  access  service  providers,  regardless  of  the  technology  they  employ,  to  ensure  the  Commissions  ability  to  fulfill  its  statutory  obligations  in  the  important  area  of  consumer  protection.  See  infra 


 Part  VIII.  343 
 Section  3(  52)  of  the  Act  defines  the  term  wire  communication  or  communication  by  wire  to  mean  the  transmission  of  writing,  signs,  signals,  pictures,  and  sounds  of  all  kinds  by  aid  of  wire,  cable,  or  other  like 


 connection  between  the  points  of  origin  and  reception  of  such  transmission,  including  all  instrumentalities,  facilities,  apparatus,  and  services  (among  other  things,  the  receipt,  forwarding,  and  delivery  of  communications)  incidental  to 
 such  transmission.  47  U.  S.  C.    153(  52).  As  the  Commission  recently  found  with  respect  to  VoIP  services,  irrespective  of  whether  such  services  are  telecommunications  services  or  information  services,  based  on  sections  1 
 and  2(  a)  of  the  Act,  47  U.  S.  C.    151,  152(  a),  they  are  covered  by  the  Commissions  general  jurisdictional  grant.  See  VoIP  E911  Order  at  paras.  26-  35. 
 344  47  U.  S.  C.    153(  33)  (defining  radio  communication  as  the  transmission  by  radio  of  writing,  signs,  signals, 
 pictures,  and  sounds  of  all  kinds,  including  all  instrumentalities,  facilities,  apparatus,  and  services  (among  other  things,  the  receipt,  forwarding,  and  delivery  of  communications)  incidental  to  such  transmission). 


 345  47  U.  S.  C.    152(  a). 
 346  As  we  have  explained,  the  Commissions  truth-  in-  billing  rules  derive  from  section  258  as  well  as  section  201(  b). 
 See  infra  paras.  152-  53.  347 
 47  U.  S.  C.    151  (emphasis  added);  see  also  VoIP  E911  Order  at  para.  29. 
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 111.  In  the  attached  Notice  of  Proposed  Rulemaking  (Notice),  we  specifically  seek  comment  on  what  obligations  we  should  impose  pursuant  to  our  Title  I  authority  to  further  consumer  protection  in  the 
 broadband  age.  We  emphasize  that  we  will  not  hesitate  to  adopt  any  non-  economic  regulatory  obligations  that  are  necessary  to  ensure  consumer  protection  and  network  security  and  reliability  in  this  dynamically 
 changing  broadband  era. 
 A.  Federal  Universal  Service  Contribution  Obligations 
 112.  In  section  254  of  the  Act,  Congress  codified  our  Federal  universal  service  programs  to  ensure  affordable  telecommunications  services  to  all  Americans,  including  consumers  living  in  high-  cost  areas, 


 low  income  consumers,  eligible  schools  and  libraries,  and  rural  health  care  providers.  In  this  section,  we  address  the  universal  service  contribution  obligations  of  providers  of  wireline  broadband  Internet  access 
 service.  Section  254(  d)  of  the  Act  states  that  [  e]  very  telecommunications  carrier  that  provides  interstate  telecommunications  services  shall  contribute  to  universal  service.  348  In  the  Universal  Service  Order,  the 
 Commission  interpreted  the  first  sentence  of  section  254(  d)  as  imposing  a  mandatory  contribution  requirement  on  all  telecommunications  carriers  that  provide  interstate  telecommunications  services.  349  In 
 the  Wireline  Broadband  NPRM,  the  Commission  recognized  that,  under  its  existing  rules  and  policies,  telecommunications  carriers  providing  telecommunications  services,  including  broadband  transmission 
 services,  are  subject  to  universal  service  contribution  requirements.  350  Under  current  law,  the  Commission  has  permissive  authority  to  require  [  a]  ny  other  provider  of  interstate  telecommunications  to 
 contribute  to  universal  service  if  required  by  the  public  interest.  351  The  question  of  whether  and  under  what  circumstances  the  public  interest  would  require  us  to  exercise  our  permissive  authority  over  wireline 
 broadband  Internet  access  providers  is  pending  before  the  Commission  in  this  docket.  352  In  addition,  the  question  of  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  is  also  pending  before  us.  353  We  expect  to  address  these  issues  in  a  comprehensive  fashion  either  in  this  docket  or  in  the  Universal  Service 
 Contribution  Methodology  proceeding  now  pending  in  Docket  No.  96-  45.  354 
 113.  Congress  required  in  section  254  of  the  Act  that  [  t]  here  should  be  specific,  predictable,  and  sufficient  Federal  and  State  mechanisms  to  preserve  and  advance  universal  service.  355  Accordingly,  we 


 conclude  that  facilities-  based  providers  of  wireline  broadband  Internet  access  services  must  continue  to  contribute  to  existing  universal  service  support  mechanisms  based  on  the  current  level  of  reported  revenue 
 for  the  transmission  component  of  their  wireline  broadband  Internet  access  services  for  a  270-  day  period 


 348  47  U.  S.  C.    254(  d). 
 349  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Report  and  Order,  12  FCC  Rcd  8776, 
 9173,  para.  777  (1997)  (Universal  Service  Order)  (subsequent  history  omitted);  see  also  47  C.  F.  R.    54.  706.  350 
 Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3051,  para.  72;  see  also  CPE/  Enhanced  Services  Bundling  Order,  16  FCC  Rcd  at  7446-  47,  para.  48. 


 351  47  U.  S.  C.    254(  d). 
 352  Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3052,  para.  74. 
 353  Id.  at  3054,  para.  79. 
 354  E.  g.,  Federal-  State  Joint  Board  on  Universal  Service,  CC  Docket  No.  96-  45,  Report  and  Order  and  Second 
 Further  Notice  of  Proposed  Rulemaking,  17  FCC  Rcd  24952,  24983-  97,  paras.  66-  100  (2002)  (Universal  Service  Contribution  Methodology  NPRM). 


 355  47  U.  S.  C.    254(  b)(  5). 
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 after  the  effective  date  of  this  Order  or  until  we  adopt  new  contribution  rules  in  the  Universal  Service  Contribution  Methodology  proceeding,  356  whichever  occurs  earlier.  That  is,  wireline  broadband  Internet 
 access  providers  must  maintain  their  current  universal  service  contribution  levels  attributable  to  the  provision  of  wireline  broadband  Internet  access  service  for  this  270-  day  period.  357  We  take  this  action,  as 
 a  matter  of  policy,  to  preserve  existing  levels  of  universal  service  funding,  and  prevent  a  precipitous  drop  in  fund  levels  while  we  consider  reform  of  the  system  of  universal  service  in  the  Universal  Service 
 Contribution  Methodology  proceeding.  358  We  are  committed  to  ensuring  that  there  continue  to  be  specific,  predictable,  and  sufficient  Federal  and  State  mechanisms  to  preserve  and  advance  universal 
 service.  If  we  are  unable  to  complete  new  contribution  rules  within  the  270-  day  period  of  time,  the  Commission  will  take  whatever  action  is  necessary  to  preserve  existing  funding  levels,  including 
 extending  the  270-  day  period  discussed  above  or  expanding  the  contribution  base.  We  have  ample  authority  to  take  interim  actions  to  preserve  the  status  quo.  359 


 B.  Law  Enforcement,  National  Security,  and  Emergency  Preparedness 
 1.  CALEA 
 114.  The  Communications  Assistance  for  Law  Enforcement  Act  (CALEA)  requires  telecommunications  carriers  to  ensure  that  equipment,  facilities  or  services  that  provide  a  customer  or 
 subscriber  with  the  ability  to  originate,  terminate,  or  direct  [communications]  are  capable  of  providing  authorized  surveillance  to  law  enforcement  agencies.  360  In  a  separate  order  adopted  today,  we  conclude 
 that  providers  of  facilities-  based  broadband  Internet  access  service  and  interconnected  VoIP  service  are  subject  to  CALEA.  361  We  therefore  do  not  address  CALEA  issues  in  this  Order. 


 356  E.  g.,  Universal  Service  Contribution  Methodology  NPRM,  17  FCC  Rcd  24952,  24983-  97,  paras.  66-  100. 
 357  Of  course,  as  we  stated  above,  some  providers  of  wireline  broadband  Internet  access  service  may  choose  to  offer 
 a  stand-  alone  broadband  telecommunications  service  on  a  common  carrier  basis.  To  the  extent  that  they  do  so,  they  must  continue  to  contribute  to  universal  service  mechanisms  on  a  permanent  basis  pursuant  to  section  254(  d). 


 358  See  Universal  Service  Contribution  Methodology  NPRM,  17  FCC  Rcd  24952,  24983-  97,  paras.  66-  100. 
 359  As  the  D.  C.  Circuit  has  held,  [  a]  voidance  of  market  disruption  pending  broader  reforms  is,  of  course,  a  standard 
 and  accepted  justification  for  a  temporary  rule.  Competitive  Telecommunications  Assn  v.  FCC,  309  F.  3d  8,  14  (D.  C.  Cir.  2002)  (citing  MCI  Telecommunications  Corp.  v.  FCC,  750  F.  2d  135,  141  (D.  C.  Cir.  1984)  (MCI  v.  FCC) 


 &  ACS  of  Anchorage  v.  FCC,  290  F.  3d  403,  410  (D.  C.  Cir.  2002)).  Indeed,  [  s]  ubstantial  deference  must  be  accorded  an  agency  when  it  acts  to  maintain  the  status  quo  so  that  the  objectives  of  [related  proceedings]  will  not  be 
 frustrated.  MCI  v.  FCC,  750  F.  2d  at  141.  Similarly,  we  require  facilities-  based  wireline  broadband  Internet  access  services  providers  that  are  subject  to  the  actions  we  take  today  to  continue  contributing  to  the  Telecommunications 
 Relay  Services  (TRS)  Fund  and  the  North  American  Numbering  Plan  Administration  (NANPA)  cost  recovery  mechanisms  during  the  transition.  See  supra  para.  68  &  infra  note  390. 
 360  See  47  U.  S.  C.    1002(  a).  As  noted  by  the  Department  of  Justice  and  Federal  Bureau  of  Investigation,  CALEA 
 is  intended  to  preserve  the  governments  technical  capability  to  conduct  electronic  surveillance  that  is  otherwise  allowed  under  the  law.  DOJ/  FBI  Comments  at  4  (emphasis  in  original). 


 361  Communications  Assistance  for  Law  Enforcement  Act  and  Broadband  Access  and  Services,  ET  Docket  No.  04- 
 295,  First  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  FCC  05-  153  (rel.  Sept.  23,  2005)  (determining  that  providers  of  facilities-  based  broadband  Internet  access  service  and  interconnected  VoIP  service  are 


 subject  to  CALEA). 
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 2.  USA  PATRIOT  Act 
 115.  We  find  that  our  actions  in  this  Order  will  not  affect  the  governments  implementation  or  enforcement  of  the  Uniting  and  Strengthening  America  by  Providing  Appropriate  Tools  Required  to 
 Intercept  and  Obstruct  Terrorism  Act  of  2001  (USA  PATRIOT  Act).  362  This  Act  amended  the  federal  criminal  code  to  authorize  the  interception  of  wire  and  electronic  communications  for  the  production  of 
 evidence  of  terrorism  offenses  and  computer  fraud,  and  modified  only  one  section  of  the  Communications  Act,  section  631  of  Title  VI.  363  We  conclude  that  the  scope  of  activities  covered  under  the  definitions  of 
 wire  communications  and  electronic  communications  is  broad  enough  to  encompass  wireline  broadband  Internet  access  service  regardless  of  the  legal  classification  of  this  service,  or  its  transmission  component, 
 under  the  Communications  Act.  Only  one  party  submitted  comments  on  the  subject,  agreeing  that  the  legal  classification  of  wireline  broadband  Internet  access  service  as  an  information  service  will  have  no 
 impact  on  the  applicability  of  the  USA  PATRIOT  Act.  364 
 3.  Emergency  Preparedness  and  Response 
 116.  We  find  that  our  classification  of  wireline  broadband  Internet  access  service  as  an  information  service,  and  the  transmission  input  as  telecommunications  (except  to  the  extent  that  the  provider  chooses 
 to  offer  that  transmission  on  a  common  carrier  basis),  will  not  affect  the  Commissions  existing  rules  implementing  the  National  Security  Emergency  Preparedness  (NSEP)  Telecommunications  Service 
 Priority  (TSP)  System.  365  But,  we  will  nonetheless  exercise  our  Title  I  authority,  as  necessary,  to  give  full  effect  to  the  principles  and  purpose  of  the  NSEP  TSP  System.  The  NSEP  TSP  System  is  set  forth  in 
 appendix  A  to  Part  64  of  the  rules  and  provides  that  the  Commission  has  authority  over  the  assignment  and  approval  of  priorities  for  provisioning  and  restoration  of  common  carrier-  provided 
 telecommunications  services.  366  The  facilities-  based  wireline  broadband  Internet  access  service  providers  that  are  the  subject  of  our  Order  today  are  telecommunications  carriers  with  respect  to  other 
 services  that  they  provide.  Therefore,  we  find  that  these  providers  remain  subject  to  the  NSEP  TSP. 
 117.  The  Secretary  of  Defense  (Secretary),  the  only  party  to  submit  comments  on  this  issue,  expressed  concern  that  the  existing  National  Communications  System  programs  will  no  longer  apply  to  wireline 


 broadband  Internet  access  service  if  it  is  classified  as  an  information  service  unless  the  Commission  exercises  its  ancillary  jurisdiction.  367  As  the  Secretary  recognizes,  NSEP  communications  are  currently 


 362  P.  L.  No.  107-  56,  115  Stat.  272  (2001)  (codified  in  scattered  sections  of  18  U.  S.  C.,  47  U.  S.  C.,  50  U.  S.  C.). 
 363  See    211  of  the  USA  PATRIOT  Act  (amending  47  U.  S.  C.    631(  c)(  2)  to  permit  specified  disclosures  to 
 government  entities,  except  for  records  revealing  cable  subscriber  selection  of  video  programming,  for  a  cable  operator). 


 364  See  SBC  Reply  at  52  (citing  18  U.  S.  C.    2510(  12),  2703). 
 365  The  NSEP  TSP  System  enables  telecommunications  users  with  responsibility  for  national  security  and 
 emergency  preparedness  to  receive  priority  in  the  deployment  of  new  telecommunications  services  and  the  restoration  of  existing  telecommunications  services  vital  to  coordinating  and  responding  to  natural  and  man-  made 


 disasters.  See  Welcome  to  the  TSP  Website!,  available  at  http://  tsp.  ncs.  gov/  (visited  July  28,  2005).  366 
 47  C.  F.  R.  Pt.  64,  App.  A,  at    1.b.  367 
 Secretary  of  Defense  Comments  at  4-  5  (citing  Southwestern  Cable,  392  U.  S.  at  178  (holding  that  the  Commission  has  ancillary  jurisdiction  where  it  has  subject  matter  jurisdiction  under  Title  I  of  the  Act  and  the  subject 


 of  the  regulation  is  reasonably  ancillary  to  the  effective  performance  of  the  Commissions  various  responsibilities)).  Among  other  functions,  the  National  Communications  System  helps  coordinate  the  planning  for 
 and  provision  of  national  security  and  emergency  preparedness  communications  for  the  Federal  government  during  (continued  .  .  .) 
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 provided  by  carriers  subject  to  Title  II.  368  Information  service  providers,  therefore,  have  not  been  subject  to  these  rules  unless  those  providers  are  also  offering  services  as  telecommunications  carriers.  369  Since 
 the  actions  we  take  in  this  Order  affect  only  wireline  carriers  that  provide  the  transmission  component  of  wireline  broadband  Internet  access  service,  we  have  no  reason  to  expect  that  those  actions  will  adversely 
 affect  emergency  preparedness  efforts.  These  service  providers,  for  the  most  part,  provide  their  wireline  broadband  Internet  access  services  over  the  same  facilities  used  to  provide  other  telecommunications 
 services  and  thus  these  facilities  remain  subject  to  Part  64  to  the  same  extent  as  they  have  before.  Moreover,  we  do  agree  with  the  Secretarys  conclusion  that,  should  the  need  arise,  we  do  have  the 
 authority  to  regulate  NSEP  under  Title  I.  We  will  closely  monitor  the  development  of  wireline  broadband  Internet  access  service  and  its  effect  on  the  NSEP  TSP  System  and,  if  needed,  will  expeditiously  take  all 
 appropriate  actions  to  promote  the  viability  of  that  system.  370 
 118.  Moreover,  lest  there  be  any  uncertainty,  we  state  that  our  decision  to  classify  wireline  broadband  Internet  access  service  as  an  information  service,  and  the  transmission  input  as  telecommunications 


 (except  when  offered  on  a  common  carrier  basis),  has  no  effect  whatsoever  on  our  recently  adopted  E911  rules  for  interconnected  VoIP  providers.  371  In  that  order,  we  required  providers  of  interconnected  VoIP  372 
 to  offer  E911  service  to  their  subscribers.  Although  interconnected  VoIP  is  necessarily  provided  via  broadband,  nothing  in  the  VoIP  E911  Order  in  any  way  turns  on  the  statutory  classification  of  that 
 broadband  connection.  Thus,  we  reaffirm  that,  after  todays  Order,  interconnected  VoIP  providers  must  comply  with  the  VoIP  E911  Order  regardless  of  how  or  by  whom  the  underlying  broadband  connection  is 
 provided. 
 4.  Network  Reliability  and  Interoperability 
 119.  We  reject  arguments  that  classifying  wireline  broadband  Internet  access  service  as  an  information  service  and  its  transmission  component  as  telecommunications  (except  to  the  extent  that 
 the  provider  chooses  to  offer  that  transmission  on  a  common  carrier  basis)  requires  that  we  obtain  additional  authorization  from  the  Network  Reliability  and  Interoperability  Council  (NRIC)  at  this  time. 
 NRIC,  initially  established  by  the  Commission  in  1992  as  the  Network  Reliability  Council,  advises  the  Commission  on  recommendations  to  ensure  optimal  reliability  and  interoperability  of  the  nations 


 (continued  from  previous  page)  crises  and  emergencies.  National  Communications  System  Mission  Statement,  available  at 
 http://  www.  ncs.  gov/  index.  html  (visited  July  28,  2005).  368 
 Secretary  of  Defense  Comments  at  2.  369 
 A  service  provider  may  be  a  common  carrier  for  some  purposes  and  not  for  others.  NARUC  II,  533  F.  2d  at  608;  see  47  U.  S.  C.  153(  44)  (specifying  that  a  telecommunications  carrier  shall  be  a  common  carrier  under  [the]  Act  only 


 to  the  extent  it  is  engaged  in  providing  telecommunications  services).  370 
 We  further  note  that  the  pending  IP-  Enabled  Services  Proceeding  addresses  issues  relating  to  IP-  enabled  services  (a  category  that  may  overlap  with  wireline  broadband  Internet  access  service)  and  critical  infrastructure  necessary  to 


 provide  for  homeland  security  and  public  safety.  See  IP-  Enabled  Services,  WC  Docket  No.  04-  36,  Notice  of  Proposed  Rulemaking,  19  FCC  Rcd  4863,  4897-  501,  paras.  51-  57  (2004)  (IP-  Enabled  Services  NPRM). 
 371  VoIP  E911  Order,  at  paras.  36-  51. 
 372  We  defined  interconnected  VoIP  as  a  service  bearing  the  following  characteristics:  (1)  the  service  enables  real-time, 
 two-  way  voice  communications;  (2)  the  service  requires  a  broadband  connection  from  the  users  location;  (3)  the  service  requires  IP-  compatible  CPE;  and  (4)  the  service  offering  permits  users  generally  to  receive  calls  that 


 originate  on  the  public  switched  telephone  network  (PSTN)  and  to  terminate  calls  to  the  PSTN.  Id.  at  para.  24. 
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 communications  networks.  373  Section  256  of  the  Act  codifies  the  Commissions  ability  and  obligation  to  oversee  network  planning  and  set  standards  to  enable  the  Commission  to  carry  out  the  objectives  of  this 
 section  as  well  as  the  Commissions  prior  practices  in  the  area  of  network  reliability  and  interoperability  through  the  NRIC.  374  NRIC  VI,  the  latest  chartered  council,  significantly  expanded  its  membership  to 
 include  the  Internet  service  industry  375  and  included  among  its  scope  of  activities  numerous  issues  relating  to  the  Internet  and  broadband  deployment.  376 


 120.  Contrary  to  what  some  commenters  suggest,  we  do  not  agree  that  classifying  wireline  broadband  Internet  access  service  as  an  information  service  would  deny  us  the  ability  to  oversee  broadband 
 interconnectivity.  377  Rather,  we  agree  with  the  view  that  our  actions  in  this  proceeding  will  not  constrain  our  ability  to  address  network  reliability  and  interoperability  issues.  378  A  purpose  of  section  256  is  to 
 ensure  the  ability  of  users  and  information  providers  to  seamlessly  and  transparently  transmit  and  receive  information  between  and  across  telecommunications  networks.  379  This  provision  affords  the 
 Commission  adequate  authority  to  continue  overseeing  broadband  interconnectivity  and  reliability  issues,  regardless  of  the  legal  classification  of  wireline  broadband  Internet  access  service.  Moreover,  NRICs 
 current  charter  directs  it  to  make  recommendations  to  increase  the  deployment  and  improve  the  security,  reliability,  and  interoperability  of  high-  speed  residential  Internet  access  service,  380  and  we  find  that  its 
 activities  in  this  regard  are  consistent  with  section  256. 
 C.  Access  by  Persons  with  Disabilities 
 121.  Section  255(  c)  of  the  Act  requires  that  a  provider  of  telecommunications  service  shall  ensure  that  the  service  is  accessible  to  and  usable  by  individuals  with  disabilities,  if  readily  achievable.  381  Like 


 the  other  Title  II  obligations  discussed  above,  section  255  expressly  applies  to  telecommunications  services,  not  information  services.  Although  the  requirements  contained  in  section  255  do  not  apply  to 
 information  services,  in  the  past  the  Commission  has  exercised  its  ancillary  jurisdiction  under  Title  I  to  extend  accessibility  obligations  that  mirror  those  under  section  255  to  two  critically  important  information 
 services,  voicemail  and  interactive  menu  service.  382  This  Order  does  not  affect  voicemail  or  interactive 


 373  See,  e.  g.,  Charter  of  the  Network  Reliability  and  Interoperability  Council  -  VII,  at    B,  available  at 
 http://  www.  nric.  org/  charter_  vii/  NRICVII_  Charter_  FINAL_  Amended_  2004_  3_  12_  04.  pdf  )  (visited  July  21,  2005)  (NRIC  VII  Charter). 


 374  47  U.  S.  C.    256(  b)(  2),  (c);  see,  e.  g.,  Network  Reliability  Performance  Committee,  Compendium  of  Technical 
 Papers,    2,  available  at  http://  www.  nric.  org/  pubs/  nric2/  fg1/  execsumm.  pdf  (visited  July  21,  2005).  375 
 See  47  U.  S.  C.    256;  see  also  NRIC  Mission  Statement,  available  at  http://  www.  nric.  org/  (visited  July  11,  2005).  376 
 See,  e.  g.,  NRIC  VII  Charter,  at    B.  1.  377 
 See,  e.  g.,  Allegiance  Comments  at  53  (arguing  that  section  256(  b)  limits  to  telecommunications  services  the  Commissions  authority  to  oversee  and  coordinate  network  planning). 


 378  SBC  Comments  at  41. 
 379  47  U.  S.  C.    256(  a)(  2). 
 380  NRIC  VII  Charter,  at    B.  4. 
 381  47  U.  S.  C.    255(  c). 
 382  See  Implementation  of  Sections  255  and  251(  a)(  2)  of  the  Communications  Act  of  1934,  as  Enacted  by  the 
 Telecommunications  Act  of  1996,  Access  to  Telecommunications  Service,  Telecommunications  Equipment  and  Customer  Premises  Equipment  by  Persons  with  Disabilities,  WT  Docket  No.  96-  198,  Report  and  Order  and  Further 


 Notice  of  Inquiry,  16  FCC  Rcd  6417,  6455,  para.  93  (1999)  (Section  255  Order).  The  Commission  declined  at  that  (continued  .  .  .) 
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 menu  service  providers  obligations  or  other  telecommunications  service  providers  obligations  under  section  255(  c).  We  will  continue  to  exercise  our  Title  I  authority,  as  necessary,  to  give  full  effect  to  the 
 accessibility  policy  embodied  in  Section  255. 
 122.  In  addition,  section  225(  b)  directs  the  Commission  to  ensure  telecommunications  relay  services  (TRS),  a  set  of  services  that  includes  both  video  relay  service  (VRS)  and  IP  relay,  are  available  to 


 individuals  with  hearing  or  speech  impairments.  383  The  Commission  has  previously  determined  that  the  statutory  definition  of  TRS  includes  both  information  services  and  telecommunications  services.  384 
 Nothing  in  this  Order  disturbs  that  earlier  conclusion;  consequently,  this  Order  will  not  affect  TRS  requirements  or  the  ability  of  TRS  users  to  access  VRS  or  IP  relay.  385 


 123.  In  addition,  the  Commission  will  remain  vigilant  in  monitoring  the  development  of  wireline  broadband  Internet  access  service  and  its  effects  on  the  important  policy  goals  of  section  255.  386  As  noted 


 (continued  from  previous  page)  time,  however,  to  extend  accessibility  obligations  to  other  information  services,  such  as  e-  mail,  electronic 
 information  services,  and  web  pages,  that  did  not  appear  to  have  the  potential  to  render  telecommunications  services  inaccessible  to  persons  with  disabilities.  Id.  at  6461,  para.  107.  The  Commission  instituted  a  Further  Notice  of 
 Inquiry  at  the  same  time  to  obtain  additional  information  about  Internet  telephony  and  certain  computer-  based  equipment  that  replicates  current  telecommunications  functionality.  The  Commission  stated  that  its  goal  was  to 
 take  full  advantage  of  the  promise  of  new  technology,  not  only  to  ensure  that  advancements  do  not  leave  people  with  disabilities  behind,  but  also  to  harness  the  power  of  innovation  to  break  down  the  accessibility  barriers  we  face  today 
 and  prevent  their  emergence  tomorrow.  See  id.  at  6483,  para.  175.  383 
 47  U.  S.  C.    225(  b);  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  CC  Docket  No.  98-  67  &  CG  Docket  No.  03-  123,  Order  on  Reconsideration,  FCC 


 05-  139,  at  paras.  6-  7  (rel.  July  19,  2005)  (IP  Relay  Reconsideration  Order).  VRS  is  TRS  that  permits  individuals  with  hearing  or  speech  disabilities  to  communicate  with  voice  telephone  users  through  video  equipment.  See  47 
 C.  F.  R.    64.  601(  17).  IP  Relay  is  TRS  provided  over  the  Internet.  After  a  user  establishes  a  local  connection  to  an  ISP  and  selects  an  Internet  address  of  an  IP  Relay  provider,  the  IP  Relay  provider  will  establish  an  Internet 
 connection,  via  a  toll-  free  number,  to  the  relay  center.  This  call  is  then  routed  to  a  communications  assistant  and  the  regular  relay  session  is  initiated.  IP  Relay  Reconsideration  Order,  at  n.  6;  Provision  of  Improved 
 Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  CC  Docket  No.  98-  67,  Declaratory  Ruling  and  Second  Further  Notice  of  Proposed  Rulemaking,  17 
 FCC  Rcd  7779  (2002)  (IP  Relay  Declaratory  Ruling  &  FNPRM).  384 
 47  U.  S.  C.    225(  a)(  3);  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  CC  Docket  No.  98-  67,  Report  and  Order  and  Further  Notice  of  Proposed 


 Rulemaking,  15  FCC  Rcd  5140,  5177-  78,  para.  88  (2000)  (Improved  TRS  Order  &  FNPRM)  (concluding  that  section  225  does  not  limit  relay  services  to  telecommunications  services,  but  .  .  .  reaches  enhanced  or  information 
 services).  385 
 We  note  that,  as  part  of  our  efforts  to  help  ensure  that  individuals  with  hearing  or  speech  disabilities  have  access  to  communications  technologies  that  is  functionally  equivalent  to  that  available  to  people  without  these  disabilities, 


 we  recently  adopted  new  VRS  rules  that  establish  mandatory  speed  of  answer  requirements  for  VRS;  require  VRS  to  be  offered  24  hours  a  day,  seven  days  a  week;  and  permit  VRS  providers  to  receive  compensations  from  the 
 interstate  TRS  fund  for  providing  VRS  mail  and  translation  between  American  Sign  Language  and  Spanish.  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with  Hearing  and  Speech 
 Disabilities,  CC  Docket  No.  98-  67  &  CG  Docket  No.  03-  123,  Order,  FCC  05-  140  (rel.  July  19,  2005);  IP  Relay  Reconsideration  Order,  supra  n.  383. 
 386  The  Commission  is  currently  reviewing  the  issue  of  disability  access  with  respect  to  IP-  enabled  services.  IP-Enabled 
 Services  NPRM,  19  FCC  Rcd  at  4897-  501,  paras.  58-  60.  In  addition,  the  Commission  has  before  it  a  number  of  other  pending  proceedings  related  to  disability  issues.  See,  e.  g.,  California  Coalition  of  Agencies  Serving 


 (continued  .  .  .) 
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 above,  we  will  exercise  our  Title  I  ancillary  jurisdiction  to  ensure  achievement  of  important  policy  goals  of  section  255  and  also  section  225  of  the  Act.  387 
 124.  Consistent  with  our  decision  today  to  require  facilities-  based  wireline  broadband  Internet  access  service  providers  to  continue  to  contribute  to  universal  service  support  mechanisms  for  an  additional  270- 
 day  period,  388  as  a  matter  of  policy,  we  also  require  such  providers  to  report  the  revenue  on  Form  499-  A  389 
 (continued  from  previous  page)  the  Deaf  and  Hard  of  Hearing,  Petition  for  Declaratory  Ruling  on  Interoperability,  CC  Docket  No.  98-  67  &  CG 
 Docket  No.  03-  123  (filed  Feb.  15,  2005)  (seeking  ruling  that  VRS  providers  cannot  limit  access  of  their  equipment  to  one  provider);  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with  Hearing 
 and  Speech  Disabilities,  CC  Docket  Nos.  90-  571  &  98-  67,  CG  Docket  No.  03-  123,  Report  and  Order,  Order  on  Reconsideration,  and  Further  Notice  of  Proposed  Rulemaking,  19  FCC  Rcd  12475  (June  30,  2004)  (2004  TRS 
 Report  &  Order)  (issues  raised  in  the  FNPRM  are  pending);  Closed  Captioning  of  Video  Programming,  Telecommunications  for  the  Deaf,  Inc.  Petition  for  Rulemaking,  CG  Docket  No.  05-  231,  Notice  of  Proposed 
 Rulemaking,  FCC  05-  142  (July  21,  2005);  Implementation  of  Sections  255  and  251(  a)(  2)  of  the  Communications  Act  of  1934,  as  Enacted  by  the  Telecommunications  Act  of  1996,  Access  to  Telecommunications  Service, 
 Telecommunications  Equipment  and  Consumer  Premises  Equipment  by  Persons  with  Disabilities,  WT  Docket  No.  96-  198,  Report  and  Order  and  Further  Notice  of  Inquiry,  16  FCC  Rcd  6417  (1999).  Also  pending  are  petitions  for 
 reconsideration  of  various  aspects  of  the  2004  TRS  Report  &  Order  filed  by  Communication  Services  for  the  Deaf,  Inc.  (CSD),  the  National  Video  Relay  Service  Coalition  (NVRSC),  Hands  On  Video  Relay  Services,  Inc.  (HOVRS), 
 and  Hamilton  Relay,  Inc.  (Hamilton).  Further,  CSD,  NVRSC,  HOVRS,  and  Hamilton  have  filed  applications  for  review  of  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with  Hearing  and 
 Speech  Disabilities,  CC  Docket  No.  98-  67,  Order,  19  FCC  Rcd  12224  (Con.  &  Gov.  Aff.  Bur.  2004)  (2004  Bureau  TRS  Order),  modified  Telecommunications  Relay  Services  and  Speech-  to-  Speech  Services  for  Individuals  with 
 Hearing  and  Speech  Disabilities,  CC  Docket  No.  98-  67,  Order,  19  FCC  Rcd  24981  (Con.  &  Gov.  Aff.  Bur.  2004)  (Modified  2004  Bureau  TRS  Order).  Finally,  on  July  26,  2004,  Telco  Group,  Inc.,  filed  a  Petition  for  Declaratory 
 Ruling,  or  in  the  Alternative,  Petition  for  Waiver  seeking  a  ruling  excluding  international  revenues  from  the  revenue  base  used  to  calculate  contributions  to  the  Interstate  TRS  Fund. 
 387  We  will  take  this  commitment  into  account  in  all  ongoing  proceedings  that  affect  access  to  services  by  people 
 with  disabilities.  See  Implementation  of  Sections  255  and  251(  a)(  2)  of  the  Communications  Act  of  1934,  as  amended  by  the  Telecommunications  Act  of  1996,  Access  to  Telecommunications  Service,  Telecommunications 


 Equipment  and  Consumer  Premises  Equipment  by  Persons  with  Disabilities,  Report  and  Order  and  Further  Notice  of  Inquiry,  WT  Docket  No.  96-  198  (Sept.  29,  1999);  Telecommunications  Relay  Services  and  Speech-  to-  Speech 
 Services  for  Individuals  with  Hearing  and  Speech  Disabilities,  CC  Docket  No.  90-  571,  Report  and  Order,  Order  on  Reconsideration,  and  Further  Notice  of  Proposed  Rulemaking,  19  FCC  Rcd  12475  (2004)  (petitions  for 
 reconsideration  filed  by  CSD,  NVRSC,  HOVRS,  and  Hamilton;  Telco  Group,  Inc.,  Petition  for  Declaratory  Ruling,  or  in  the  Alternative,  Petition  for  Waiver  (filed  July  26,  2004)  (seeking  ruling  excluding  international  revenues  from 
 the  revenue  base  used  to  calculate  contributions  to  the  Interstate  TRS  Fund);  California  Coalition  of  Agencies  Serving  the  Deaf  and  Hard  of  Hearing,  Petition  for  Declaratory  Ruling  on  Interoperability,  CC  Docket  No.  98-  67, 
 CG  Docket  No.  03-  123  (filed  Feb.  15,  2005);  Modified  2004  Bureau  TRS  Order,  supra  (applications  for  review  filed  by  CSD,  NVRSC,  HOVRS,  and  Hamilton. 
 388  See  supra  para.  113.  Section  225(  b)(  1)  of  the  Communications  Act,  which  codifies  Title  IV  of  the  Americans 
 with  Disabilities  Act  of  1990,  directs  the  Commission  to  ensure  that  interstate  and  intrastate  telecommunications  relay  services  are  available,  to  the  extent  possible  and  in  the  most  efficient  manner,  to  hearing-  impaired  and  speech-impaired 


 individuals  in  the  United  States.  47  U.  S.  C.    225(  b)(  1).  To  that  end,  the  Commission  established  the  TRS  Fund  to  reimburse  TRS  providers  for  the  costs  of  providing  interstate  telecommunications  relay  services.  See 
 Telecommunications  Relay  Services  and  the  Americans  with  Disabilities  Act  of  1990,  CC  Docket  No.  90-  571,  Third  Report  and  Order,  8  FCC  Rcd  5300,  5301,  para.  7  (1993)  (  TRS  III  Order).  NECA  currently  is  responsible  for 
 administering  the  TRS  Fund.  Pursuant  to  section  64.  604(  c)(  5)(  iii)(  A)  of  the  Commissions  rules,  every  carrier  that  provides  interstate  telecommunications  services  must  contribute  to  the  TRS  Fund  based  upon  its  interstate  end-  user 
 revenues.  47  C.  F.  R.    64.  604(  c)(  5)(  iii)(  A). 
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 associated  with  the  transmission  component  of  their  wireline  broadband  Internet  access  service  as  of  the  effective  date  of  this  Order  for  an  additional  270-  day  period  for  purposes  of  contributing  to  the  TRS  fund 
 for  that  same  270-  day  period.  390 
 D.  NANPA  Funding 
 125.  Pursuant  to  this  same  interim  authority,  391  we  require  facilities-  based  wireline  broadband  Internet  access  service  providers  to  continue  to  contribute  to  the  cost  of  numbering  administration  through  the 


 NANPA  funding  mechanism  established  by  the  Commission  pursuant  to  section  251(  e)  of  the  Act  for  the  same  270-  day  period.  We  take  this  action  to  ensure  that  the  funding  for  this  critical  function  does  not 
 immediately  decrease  while  the  Commission  examines  what,  if  any  funding  related  obligations  should  apply  to  facilities-  based  broadband  Internet  access  service  providers.  392  Section  251(  e)(  2)  requires  that 
 [  t]  he  cost  of  establishing  telecommunications  numbering  administration  arrangements  .  .  .  be  borne  by  all  telecommunications  carriers  on  a  competitively  neutral  basis  as  determined  by  the  Commission.  393  In 
 carrying  out  this  statutory  directive,  the  Commission  adopted  section  52.17  of  its  rules,  which  requires,  among  other  things,  that  all  telecommunications  carriers  contribute  toward  the  costs  of  numbering 
 administration  on  the  basis  of  their  end-  user  telecommunications  revenues  for  the  prior  calendar  year.  394 
 E.  Obligations  of  Incumbent  LECs  Under  Section  251 
 126.  As  noted,  the  Wireline  Broadband  NPRM  sought  comment  on  the  relationship  between  a  competitive  LECs  rights  under  section  251  and  the  Commissions  tentative  conclusion  that  wireline 


 broadband  Internet  access  service  is  an  information  service  with  a  telecommunications  input.  395  Several  competitive  LECs,  and  one  BOC,  argue  that  regardless  of  how  the  Commission  classifies  wireline 


 (continued  from  previous  page)  389  The  Commission  requires  telecommunications  providers  to  submit  financial  information  on  Telecommunications 
 Reporting  Worksheets  (FCC  Form  499-  A)  to  enable  the  Commission  to  determine  and  collect  certain  statutorily  mandated  assessments.  In  1999,  to  streamline  the  administration  of  multiple  federal  funding  programs  and  to  ease 
 the  burden  on  regulatees,  the  Commission  consolidated  the  information  filing  requirements  for  multiple  telecommunications  regulatory  programs  into  the  annual  Telecommunications  Reporting  Worksheet.  See  1998 
 Biennial  Regulatory  Review    Streamlined  Contributor  Reporting  Requirements  Associated  with  Administration  of  Telecommunications  Relay  Services,  North  American  Numbering  Plan,  Local  Number  Portability,  and  Universal 
 Service  Support  Mechanisms,  CC  Docket  No.  98-  171,  Report  and  Order,  14  FCC  Rcd  16602  (1999)  (Contributor  Reporting  Requirements  Order).  The  next  year  the  Commission  revised  the  Telecommunications  Reporting 
 Worksheet  slightly  to  collect  the  additional  information  necessary  to  achieve  its  goal  of  establishing  a  central  repository  for  interstate  telecommunications  providers  by  the  least  provider-  burdensome  method.  Implementation  of 
 the  Subscriber  Carrier  Selection  Provisions  of  the  Telecommunications  Act  of  1996,  CC  Docket  No.  94-  129,  Third  Report  and  Order  and  Second  Order  on  Reconsideration,  15  FCC  Rcd  15996,  16026,  para.  63  (2000)  (Carrier 
 Selection  Order).  NECA,  as  the  TRS  Administrator,  uses  the  prior  years  revenue  information  provided  on  the  Telecommunications  Reporting  Worksheet  to  determine  amounts  owed  for  the  TRS.  See  47  C.  F.  R.    64.  604(  c). 
 390  Our  authority  to  take  this  interim  action  to  preserve  the  status  quo  mirrors  the  authority  upon  which  we  require 
 continued  contribution  for  USF  funding.  See  supra  note  359.  391 
 See  id.  392 
 47  U.  S.  C.    251(  e).  393 
 47  U.  S.  C.    251(  e)(  2).  394 
 47  C.  F.  R.    52.17(  a).  395 
 Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3047,  para.  61. 
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 broadband  Internet  access  service,  including  its  transmission  component,  competitive  LECs  should  still  be  able  to  purchase  UNEs,  including  UNE  loops  to  provide  stand-  alone  DSL  telecommunications  service, 
 pursuant  to  section  251(  c)(  3)  of  the  Act.  396  We  agree. 
 127.  Section  251(  c)(  3)  and  the  Commissions  rules  look  at  what  use  a  competitive  LEC  will  make  of  a  particular  network  element  when  obtaining  that  element  pursuant  to  section  251(  c)(  3);  the  use  to  which 


 the  incumbent  LEC  puts  the  facility  is  not  dispositive.  397  In  this  manner,  even  if  an  incumbent  LEC  is  only  providing  an  information  service  over  a  facility,  we  look  to  see  whether  the  requesting  carrier 
 intends  to  provide  a  telecommunications  service  over  that  facility.  398  Thus,  competitive  LECs  will  continue  to  have  the  same  access  to  UNEs,  including  DS0s  and  DS1s,  to  which  they  are  otherwise  entitled 
 under  our  rules,  regardless  of  the  statutory  classification  of  service  the  incumbent  LECs  provide  over  those  facilities.  So  long  as  a  competitive  LEC  is  offering  an  eligible  telecommunications  service    i.  e., 
 not  exclusively  long  distance  or  mobile  wireless  services    it  may  obtain  that  element  as  a  UNE.  399  Accordingly,  nothing  in  this  Order  changes  a  requesting  telecommunications  carriers  UNE  rights  under 
 section  251  and  our  implementing  rules.  400 


 396  See  Covad  Comments  at  84;  MCI  Comments  at  73-  76;  Letter  from  Andrew  D.  Lipman,  Richard  M.  Rindler,  & 
 Patrick  J.  Donovan,  Counsel  for  McLeodUSA,  to  Chairman  Kevin  J.  Martin,  FCC,  CC  Docket  No.  02-  33,  at  1-  2  (filed  Aug.  3,  2005)  (McLeodUSA  Aug.  3,  2005  Ex  Parte  Letter);  Letter  from  Jason  Oxman,  Senior  Vice  President, 


 Legal  Affairs,  CompTel/  ALTS,  to  Marlene  H.  Dortch,  Secretary,  FCC,  at  2  (filed  July  12,  2005)  (CompTel/  ALTS  July  12,  2005  Ex  Parte  Letter);  see  also  Qwest  Apr.  10,  2003  Ex  Parte  Letter,  Attach.  at  3  (  CLEC  access  to  UNEs 
 not  at  risk  in  this  proceeding).  397 
 A  network  element  is  an  element  that  is  capable  of  being  used  by  a  requesting  carrier  in  the  provision  of  a  telecommunications  service,  regardless  of  whether  the  element  is  actually  used  by  the  incumbent  LEC  in  the 


 provision  of  a  telecommunications  service.  Triennial  Review  Order,  18  FCC  Rcd  at  17020,  para.  59  (emphasis  omitted). 
 398  In  any  event,  section  251(  h)  of  the  Act  defines  incumbent  LECs  for  purposes  of  section  251  of  the  Act,  and 
 nothing  in  this  Order  has  any  effect  on  such  definition  or  the  obligations  associated  therewith.  47  U.  S.  C.    251(  h);  cf.  WorldCom  v.  FCC,  246  F.  3d.  690,  695  (D.  C.  Cir.  2001)  ([  W]  e  find  no  error  in  the  Commissions  conclusion 


 that  it  can  apply  the    251(  c)  duties  to  a  firm  that  met  the    251(  h)  criteria  on  February  8,  1996  and  is  still  providing  exchange  access  or  telephone  exchange  service.  )  (emphasis  omitted).  An  incumbent  LECs  obligations  under 
 section  251(  c)  will  remain  until  the  incumbent  LEC  is  either  determined  not  to  be  an  incumbent  LEC  under  section  251(  h),  or  the  Commission  forbears  from  section  251  obligations;  we  have  not  done  either  to  date. 
 399  See,  e.  g.,  47  C.  F.  R.    51.  309(  b),  (d)  (allowing  a  requesting  carrier  to  provide  any  telecommunications  services 
 over  a  UNE,  provided  that  the  UNE  is  not  used  exclusively  for  the  provision  of  mobile  wireless  services  or  interexchange  services);  USTA  II,  359  F.  3d  at  592  (affirming  the  need  to  analyze  the  services  that  a  competing 


 carrier  seeks  to  provide  using  UNEs);  Triennial  Review  Remand  Order,  20  FCC  Rcd  at  2551-  58,  paras.  34-  40  (evaluating  the  need  for  competitive  LECs  to  obtain  UNEs  based  on  the  services  the  competitive  LECs  seek  to 
 offer);  see  also  Triennial  Review  Order,  18  FCC  Rcd  at  17350-  66,  paras.  590-  619  (establishing  criteria  to  limit  access  to  enhanced  extended  links  (EELs)  to  eligible  services),  aff'd  USTA  II,  359  F.  3d  at  592-  93;  McLeodUSA 
 Aug.  3,  2005  Ex  Parte  Letter  at  1  (stating  that  competitive  LECs  must  continue  to  have  access  to  UNEs  regardless  of  the  statutory  classification  of  wireline  broadband  Internet  access  service). 
 400  Similarly,  our  classification  determinations  in  this  Order  have  no  effect  whatsoever  on  the  section  251 
 interconnection  obligations  of  incumbent  LECs  or  on  competitive  LECs  rights  to  obtain  such  interconnection.  See  47  U.  S.  C.    251(  c)(  2). 
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 F.  Cost  Allocation 
 128.  In  this  section,  we  address  cost  allocation  issues  raised  by  our  decision  to  allow  incumbent  LECs  to  enter  into  non-  common  carriage  arrangements  with  affiliated  and  unaffiliated  ISPs  for  the  provision  of 


 wireline  broadband  Internet  access  transmission  using  facilities  that  are  also  used  for  provision  of  regulated  telecommunications  services.  Specifically,  we  address  whether  we  should  require  incumbent 
 LECs  subject  to  our  part  64  cost  allocation  rules  to  classify  that  activity  as  a  regulated  activity,  as  opposed  to  a  nonregulated  activity,  under  our  part  64  cost  allocation  rules.  401  We  conclude  that  incumbent  LECs 
 should  classify  this  non-  common  carrier  activity  as  a  regulated  activity  under  those  rules  and  that  this  accounting  treatment  is  consistent  with  section  254(  k)  of  the  Act.  402 


 1.  Relative  Costs  and  Benefits 
 129.  The  part  64  cost  allocation  rules  set  forth  a  detailed  methodology  that  incumbent  LECs  subject  to  those  rules  must  follow  in  allocating  the  amounts  recorded  in  their  part  32  accounts  between  regulated 
 and  nonregulated  activities.  403  Those  rules  also  require  some  of  these  incumbent  LECs  to  maintain  cost  allocation  manuals  setting  forth  how  they  will  implement  those  principles.  404  The  costs  and  revenues 
 allocated  to  nonregulated  activities  are  excluded  from  the  jurisdictional  separations  process.  In  contrast,  the  costs  and  revenues  allocated  to  regulated  activities  are  apportioned  between  the  state  and  interstate 
 jurisdictions  in  accordance  with  the  part  36  jurisdictional  separations  rules.  405  Each  regulatory  jurisdiction  applies  its  own  ratemaking  processes  to  the  amounts  assigned  to  it  by  part  36.  States,  however,  may  add 
 back  costs  that  are  identified  as  nonregulated  under  part  64,  or  remove  additional  costs  that  are  identified  as  regulated  under  part  64.  406 


 130.  In  this  Order,  we  allow  the  non-  common  carrier  provision  of  wireline  broadband  Internet  access  transmission  that  we  previously  have  treated  as  regulated,  interstate  special  access  service,  407  but  we  do 
 not  preemptively  deregulate  any  service  currently  regulated  by  any  state.  408  Therefore,  as  specified  in  section  32.23  of  our  rules,  the  provision  of  this  transmission  is  to  be  classified  as  a  regulated  activity 
 under  part  64  until  such  time  as  the  Commission  decides  otherwise.  409  We  do  not  decide  otherwise  at  this  time  because  we  find  that  the  costs  of  changing  the  federal  accounting  classification  of  the  costs 


 401  47  C.  F.  R.    64.901. 
 402  47  U.  S.  C.    254(  k). 
 403  47  C.  F.  R.    64.901.  Part  32  establishes  a  Uniform  System  of  Accounts  that  certain  incumbent  LECs  must  use  to 
 record  their  historical  costs  and  revenues.  47  C.  F.  R.  Part  32.  404 
 47  C.  F.  R.    64.903.  405 
 47  C.  F.  R.  Part  36.  406 
 Joint  Cost  Order,  2  FCC  Rcd  at  1310,  paras.  88-  90  (states  not  required  to  use  joint  cost  rules  for  intrastate  ratemaking);  see  Detariffing  the  Installation  and  Maintenance  of  Inside  Wiring,  Third  Report  and  Order,  CC  Docket 


 No.  79-  105,  7  FCC  Rcd  1334,  1339,  paras.  41-  42  (1992).  407 
 See  GTE  DSL  Order,  13  FCC  Rcd  at  22474-  83,  paras.  16-  32  (finding  that  GTEs  ADSL  service  is  an  interstate  special  access  service  that  should  be  federally  tariffed). 


 408  See  GTE  DSL  Reconsideration  Order,  17  FCC  Rcd  at  27411-  12,  para.  9  (stating  that,  in  some  circumstances, 
 ADSL  services  may  be  appropriately  tariffed  as  interstate  services).  409 
 47  C.  F.  R.    32.23(  a);  see  Joint  Cost  Order,  2  FCC  Rcd  at  1308-  09,  para.  79  (stating  intent  to  address  on  a  case-by-  case  basis  the  accounting  treatment  to  be  accorded  activities  deregulated  only  in  the  interstate  jurisdiction). 
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 underlying  this  transmission  would  outweigh  any  potential  benefits  and  that  section  254(  k)  of  the  Act  does  not  mandate  such  a  change. 
 131.  Requiring  that  incumbent  LECs  classify  the  provision  of  broadband  Internet  access  transmission  provided  on  a  non-  common  carrier  basis  as  a  nonregulated  activity  under  part  64  would  mean,  among 
 other  matters,  that  incumbent  LECs  would  have  to  develop,  and  we  would  have  to  review,  methods  for  measuring  the  relative  usage  that  this  transmission  and  the  incumbent  LECs  traditional  local  services 
 make  of  incumbent  LECs  transmission  facilities.  410  Incumbent  LECs  argue  that  they  should  not  have  to  undertake  this  task  because  it  would  impose  significant  burdens  on  them  with  little  discernible  benefit.  411 
 We  agree.  The  Commission  adopted  the  part  64  cost  allocation  rules  during  the  late  1980s  as  one  element  of  the  nonstructural  safeguards  that  were  to  replace  the  Computer  II  regime.  412  The  principal  purpose  of 
 those  rules  was  to  ensure  that  telephone  ratepayers  would  continue  to  receive  reasonable  protections  against  improper  cross-  subsidization  in  the  event  the  BOCs  provided  enhanced  services  on  an  integrated 
 basis,  rather  than  through  separate  subsidiaries.  413  The  Commission  also  sought  to  ensure  that  ratepayers  would  share  in  any  savings  achieved  through  the  integrated  provision  of  regulated  and  nonregulated 
 activities  and  to  improve  the  cost  allocation  procedures  used  by  other  LECs,  which  had  been  relieved  of  structural  separation  requirements  in  Computer  II.  414 


 132.  When  the  Commission  developed  the  part  64  cost  allocation  rules,  the  LECs  interstate  rates  and  many  of  their  intrastate  rates  were  set  under  rate  base,  cost-  of-  service  regulation.  The  Commission 
 designed  those  rules  to  make  sure  that  all  of  the  costs  of  nonregulated  activities  are  removed  from  the  rate  base  and  allowable  expenses  for  interstate  regulated  services.  415  The  rules  therefore  are  quite 
 detailed:  they  require  LECs  to  apportion,  on  an  account-  by-  account  basis,  all  of  their  costs  between  regulated  and  nonregulated  activities  using  direct  assignment  wherever  possible  and  a  specific  cost 
 allocation  hierarchy  where  direct  assignment  is  not  possible.  416  This  level  of  detail  paralleled  the  level  of  detail  in  the  cost-  of-  service  calculations  that  LECs  performed  to  develop  their  rates  for  interstate  access 
 services.  Although  not  required  to  do  so,  many  state  commissions  followed  these  rules  for  intrastate  ratemaking  purposes. 


 133.  During  the  period  since  the  adoption  of  the  part  64  cost  allocation  rules,  our  ratemaking  methods  and  those  of  our  state  counterparts  have  evolved  considerably.  417  This  evolution  has  greatly  reduced 
 410  See  47  C.  F.  R.    64.  901(  b)(  4)  (requiring  that  investment  in  central  office  equipment  and  outside  plant  be  allocated 
 between  regulated  and  nonregulated  activities  based  on  peak  relative  regulated  and  nonregulated  usage).  411 
 See,  e.  g.,  Letter  from  Stephen  L.  Ernest,  Regulatory  Counsel,  BellSouth,  to  Marlene.  H.  Dortch,  Secretary,  FCC,  at  8-  9  (filed  June  29,  2004)  (BellSouth  June  29,  2004  Ex  Parte  Letter);  Verizon  Jan.  6,  2004  Ex  Parte  Letter  at  3; 


 Letter  from  Stephen  L.  Ernest,  Regulatory  Counsel,  BellSouth,  to  Marlene.  H.  Dortch,  Secretary,  FCC,  at  3-  6  (filed  Aug.  26,  2003)  (BellSouth  Aug.  26,  2003  Ex  Parte  Letter). 
 412  Computer  III  Phase  I  Order,  104  FCC  Rcd  at  1074-  77,  paras.  234-  40. 
 413  See  Joint  Cost  Order,  2  FCC  Rcd  at  1303,  para.  37;  see  Joint  Cost  Reconsideration  Order,  2  FCC  Rcd  at  6283-84, 
 paras.  1,  6.  414 
 See  Joint  Cost  Order,  2  FCC  Rcd  at  1304,  para.  39;  Joint  Cost  Reconsideration  Order,  2  FCC  Rcd  at  6300,  para.  156. 


 415  Joint  Cost  Order,  2  FCC  Rcd  at  1304,  para.  40. 
 416  See  47  C.  F.  R.    64.  901. 
 417  See,  e.  g.,  MAG  Order,  19  FCC  Rcd  at  4153-  55,  paras.  70-  72;  Verizon  Jan.  6,  2004  Ex  Parte  Letter  at  3  (pointing 
 out  that,  in  most  states,  cost  allocation  results  do  not  affect  rates  for  local  telephone  services). 
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 incumbent  LECs  incentives  to  overstate  the  costs  of  their  tariffed  telecommunications  services.  418  Based  on  the  current  record,  we  find  that  this  reduction  in  incentives  diminishes  the  need  for  incumbent  LECs  to 
 apply  detailed  and  burdensome  procedures  to  exclude  the  costs  of  providing  broadband  Internet  access  transmission  from  their  regulated  costs.  419  A  nonregulated  classification  therefore  would  generate  at  most 
 marginal  benefits.  420 
 134.  Requiring  that  incumbent  LECs  classify  their  non-  common  carrier,  broadband  Internet  access  transmission  activities  as  nonregulated  activities  under  part  64  would  impose  significant  burdens  that 


 outweigh  these  potential  benefits.  421  In  particular,  the  cost  allocation  principles  set  forth  in  our  part  64  rules  assume  that  meaningful  measures  of  cost  causality  and  usage  will  be  available  to  help  allocate  a 
 carriers  investments  and  expenses  between  regulated  and  nonregulated  activities.  422  If  we  were  to  require  that  incumbent  LECs  classify  their  non-  common  carrier,  broadband  Internet  access  transmission  activities 
 as  nonregulated  activities  under  part  64,  the  extent  of  nonregulated  usage  of  incumbent  LECs  networks  could  increase  dramatically.  New  measures  of  cost  causality  and  usage  would  have  to  be  developed  to 
 reflect  this  increased  nonregulated  usage.  423  These  measures,  moreover,  would  have  to  reflect  the  evolution  of  the  incumbent  LECs  networks  from  traditional  circuit-  switched  networks  into  IP-  based 
 networks.  424  The  proceedings  to  set  these  measures  would  be  both  resource-  intensive  and,  given  the  changes  in  network  technology  from  the  time  when  the  part  64  cost  allocation  rules  were  developed, 
 likely  to  lead  to  arbitrary  cost  allocation  results. 
 135.  Because  the  costs  of  requiring  that  incumbent  LECs  classify  their  non-  common  carrier,  broadband  Internet  access  transmission  operations  as  nonregulated  activities  under  part  64  exceed  the 


 potential  benefits,  we  decline  to  require  such  a  classification.  Classifying  those  operations  as  regulated  under  part  32  means  that  any  necessary  ratemaking  adjustments,  including  any  reallocations  of  costs,  will 
 be  addressed  in  the  ratemaking  process  in  the  relevant  regulatory  jurisdiction.  In  our  case,  that  is  the  interstate  jurisdiction.  Currently,  some  price  cap  carriers  treat  broadband  special  access  services  as  price 
 cap  services,  while  others  treat  these  broadband  services  as  services  excluded  from  price  caps.  Price  cap  carriers  that  have  tariffed  these  services  under  price  caps,  and  that  choose  to  replace  these  tariffed  services 
 with  non-  common  carriage  arrangements,  will  make  the  appropriate  adjustments  to  the  actual  price  index  (API)  and  price  cap  index  (PCI)  for  the  special  access  basket.  The  ordinary  application  of  the  price  cap 
 rate  formulas  will  ensure  that  other  special  access  rates  remain  consistent  with  the  price  cap  rules  after  deregulation  of  broadband  transmission  services.  Carriers  that  have  excluded  broadband  transmission 
 services  from  price  caps  will  not  need  to  make  these  adjustments. 


 418  See,  e.  g.,  BellSouth  Aug.  26,  2003  Ex  Parte  Letter  at  3-  6. 
 419  See,  e.  g.,  BellSouth  June  29,  2004  Ex  Parte  Letter  at  3-  7;  BellSouth  Aug.  26,  2003  Ex  Parte  Letter  at  3-  6; 
 Verizon  Jan.  6,  2004  Ex  Parte  Letter  at  3.  420 
 See,  e.  g.,  BellSouth  June  29,  2004  Ex  Parte  Letter  at  3-  7;  BellSouth  Aug.  26,  2003  Ex  Parte  Letter  at  3-  6;  Verizon  Jan.  6,  2004  Ex  Parte  Letter  at  3. 


 421  E.  g.,  BellSouth  June  29,  2004  Ex  Parte  Letter  at  8. 
 422  See  47  C.  F.  R.    64.  901(  b)(  3),  (4). 
 423  See,  e.  g.,  BellSouth  June  29,  2004  Ex  Parte  Letter  at  8-  9. 
 424  See  Verizon  June  26,  2003,  Ex  Parte  Letter  at  4  (asserting  that  it  likely  is  not  even  possible  to  apply  the  part  64 
 cost  allocation  rules  to  wireline  broadband  Internet  access  services  in  any  reasonable  fashion  because  those  rules  require  allocations  based  on  usage,  a  concept  applicable  to  circuit-  switched  services  but  almost-  meaningless  in  the 


 packet-  switched  world). 
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 136.  Our  ruling  here  with  respect  to  the  accounting  treatment  of  broadband  Internet  access  transmission  provided  on  a  non-  common  carrier  basis  does  not  change  the  accounting  treatment  that 
 applies  to  broadband  Internet  access  service  provided  to  end  users.  That  is,  and  always  has  been,  an  information  service.  An  incumbent  LEC  that  offers  this  service  must  continue  to  account  for  it  as  a 
 nonregulated  activity. 
 137.  We  note  that  our  decision  to  treat  the  non-  common  carrier  provision  of  broadband  Internet  access  transmission  as  a  regulated  activity  under  part  64  will  affect  the  results  of  computations  of  the  rate  of 


 return  earned  on  interstate  Title  II  services.  This  is  not  a  matter  of  practical  concern  with  respect  to  most  incumbent  LECs  regulated  under  the  CALLS  plan  or  price  caps,  because  earnings  determinations  are  not 
 used  in  determining  their  price  cap  rates.  425  In  the  event  that  an  earnings  determination  is  needed  for  some  ratemaking  purpose,  the  affected  carrier  will  have  to  propose  a  way  of  removing  the  costs  of  any 
 non-  Title  II  services  from  the  computation.  Price  cap  carriers  that  have  not  taken  advantage  of  pricing  flexibility,  and  therefore  are  still  able  to  take  advantage  of  low-  end  adjustments  to  their  price  cap  rates, 
 will  have  to  address  this  cost  allocation  issue  if  and  when  they  seek  a  low-  end  adjustment. 
 138.  Finally,  all  rate-  of-  return  carriers  that  have  participated  in  this  proceeding  have  stated  that  they  wish  to  continue  offering  broadband  transmission  as  a  Title  II  common  carrier  service.  426  We  have 


 provided  them  with  this  option.  As  such,  we  do  not,  at  this  time,  address  the  treatment  of  private  carriage  arrangements  by  rate-  of-  return  carriers  because  the  issue  is  entirely  hypothetical. 


 2.  Section  254(  k) 
 139.  Section  254(  k)  of  the  Act  states  that  a  telecommunications  carrier  may  not  use  services  that  are  not  competitive  to  subsidize  services  that  are  subject  to  competition.  427  That  section  also  requires  the 
 Commission  to  establish,  with  respect  to  interstate  services,  accounting  and  cost  allocation  rules  that  ensure  that  services  included  in  the  definition  of  universal  service  bear  no  more  than  a  reasonable  share 
 of  the  joint  and  common  costs  of  facilities  used  to  provide  those  services.  428  By  continuing  to  treat  the  provision  of  wireline  broadband  transmission  as  a  regulated  activity  under  part  64,  we  do  not  change  the 
 regulatory  cost  allocation  treatment  and  thus  do  not  change  their  status  under  section  254(  k).  Our  actions  in  this  Order  therefore  do  not  create  a  violation  of  section  254(  k). 


 425  The  price  cap  plan  no  longer  contains  a  sharing  requirement,  and  most  price  cap  carriers  have  foregone  the 
 possibility  of  obtaining  an  earnings-  based  low-  end  adjustment  in  order  to  take  advantage  of  pricing  flexibility.  See  generally  MAG  Order,  19  FCC  Rcd  at  4154-  55,  paras.  71-  72;  Section  272(  b)(  1)  s  Operate  Independently 


 Requirement  for  Section  272  Affiliates,  WC  Docket  No.  03-  228,  Report  and  Order,  19  FCC  Rcd  5102,  5115  n.  72  (2003)  (Operate  Independently  Order)  (pointing  out  that  because  the  BOCs  have  taken  advantage  of  pricing 
 flexibility,  they  cannot  resort  to  the  low-  end  adjustment).  426 
 Letter  from  Daniel  Mitchell,  Vice  President,  Legal  and  Industry,  NTCA,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  1  (filed  Aug.  2,  2005)  (NTCA  Aug.  2,  2005  Ex  Parte  Letter);  Letter  from  Stuart  Polikoff, 


 Director  of  Government  Relations,  OPASTCO,  to  Marlene  H.  Dortch,  Secretary,  FCC,  CC  Docket  No.  02-  33,  at  2  (filed  July  12,  2005)  (OPASTCO  July  12,  2005  Ex  Parte  Letter)  (stating  that  many  rural  incumbent  LECs  offer  DSL 
 transmission  services  under  the  NECA  tariff  and  participate  in  associated  revenue  pools,  and  that  the  Commission  must  preserve  this  option  for  those  carriers). 
 427  47  U.  S.  C.    254(  k). 
 428  Id. 
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 140.  We  reject  NARUCs  and  the  State  Consumer  Advocates  argument  that  we  must,  under  section  254(  k),  require  incumbent  LECs  to  reallocate  a  portion  of  their  joint  and  common  loop  costs  from 
 universal  services  as  a  group  to  wireline  broadband  Internet  access  transmission.  429  The  State  Consumer  Advocates  submit  a  cost  allocation  proposal  (which  it  characterizes  as  market-  driven)  that 
 differs  from  the  current  part  64  rules.  430  BellSouth  and  SBC  assert  that  cost  allocations  are  not  relevant  under  price  cap  regulation  and  that  the  Commission  should  reject  the  State  Consumer  Advocates 
 proposal.  431 
 141.  We  find  that  section  254(  k)  of  the  Act  does  not  mandate  allocation  of  interstate  loop  costs  to  non-common  carrier  broadband  Internet  access  transmission.  Under  the  CALLS  access  charge  plan,  the 


 interstate  loop  costs  of  price  cap  carriers  are  not  assigned  to  the  different  services  that  subscribers  may  receive  over  the  loop,  but  are  recovered  directly  from  end  users  through  the  subscriber  line  charge.  The 
 Commission  explicitly  found  that  section  254(  k)  did  not  prohibit  this  cost  recovery  mechanism,  432  and  the  Fifth  Circuit  upheld  this  finding.  433 


 142.  The  subscriber  line  charge  is  not  itself  a  service  included  in  the  definition  of  universal  service.  The  interstate  loop  costs  recovered  through  the  subscriber  line  charge  represent  the  costs  of  all 
 jurisdictionally  interstate  uses  of  the  loop.  Since  1998,  those  uses  have  included  both  services  supported  by  universal  service,  such  as  access  to  interexchange  service,  and  broadband  special  access  services, 
 which  are  not  supported  by  universal  service.  Costs  need  not  be  reallocated  at  this  time  from  the  subscriber  line  charge  to  non-  common  carrier,  broadband  Internet  access  transmission  in  order  to  prevent 
 imposition  of  an  unreasonable  level  of  joint  and  common  costs  on  services  included  in  the  definition  of  universal  services.  This  is  not,  as  State  Consumer  Advocates  claim,  unreasonable.  Rather,  it  is  a 
 reasonable  and  rational  cost  allocation  approach.  434  We  can  take  additional  steps  to  address  cost  allocation  issues  in  the  future  if  the  need  arises. 


 143.  We  observe  that  NARUC  and  the  State  Consumer  Advocates  appear  to  assume  that  any  reallocation  of  loop  costs  to  broadband  Internet  access  transmission  would  be  given  effect  in  the 
 ratemaking  process  in  such  a  way  that  consumers  who  do  not  receive  wireline  broadband  Internet  access  service  over  their  loops  would  have  their  tariffed  rates  reduced.  This  ratemaking  approach  would  likely 
 produce  a  relatively  small  per-  line  rate  reduction  for  the  large  number  of  consumers  who  do  not  receive  this  broadband  service,  while  leaving  a  larger  per-  line  amount  to  be  recovered  from  the  smaller  number  of 
 consumers  who  receive  both  narrowband  and  broadband  services  over  their  loops.  This  form  of  cost  reallocation  produces  anomalous  results,  and  we  do  not  adopt  it.  It  would  cause  a  consumer  who  buys  the 


 429  NARUC  Comments  at  12-  13;  State  Consumer  Advocates  Comments  at  24-  25. 
 430  State  Consumer  Advocates  Comments  at  26.  This  proposal  would  require  allocation  to  broadband  Internet  access 
 of  an  amount  of  cost  equal  to  the  difference  between  the  competitors  wholesale  price  and  the  incumbent  LECs  incremental  cost  for  broadband  transmission  service.  Id.  at  27. 


 431  BellSouth  Comments  at  27-  29;  SBC  Reply  at  63-  64. 
 432  See  Access  Charge  Reform,  CC  Docket  Nos.  96-  262  and  94-  1,  Sixth  Report  and  Order,  15  FCC  Rcd  12962, 
 12998-  13001,  paras.  91-  97  (2000)  (subsequent  history  omitted)  (CALLS  Order).  433 
 Texas  Office  of  Public  Utility  Counsel  v.  FCC,  265  F.  3d  313,  323-  324  (5  th  Cir.  2001).  434 
 State  Consumer  Advocates  argue  that  the  need  to  assign  costs  among  all  services  using  the  loop  will  become  even  more  important  as  incumbent  LEC  networks  are  engineered  to  deliver  a  variety  of  integrated  services.  State 


 Consumer  Advocates  Comments  at  33-  34.  We  conclude  instead  that  as  more  services  are  offered  over  a  single  loop,  cost  allocations  are  likely  to  become  more  arbitrary  and  thus  less  reasonable. 
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 two  services  over  the  same  loop  to  pay  much  more  for  that  facility  than  a  consumer  who  buys  only  narrowband  service,  even  though  the  cost  of  that  facility  is  fixed  and  does  not  vary  in  proportion  to  usage. 
 It  would  be  possible  to  devise  a  scheme  in  which  costs  were  reallocated  only  with  respect  to  those  loops  on  which  both  services  are  being  provided,  but  this  would  seem  to  produce  only  a  shifting  of  charges 
 from  one  part  of  the  customers  bill  to  another. 
 144.  We  note  that  the  question  whether  there  should  be  any  changes  to  the  jurisdictional  allocation  of  loop  costs  in  light  of  use  of  the  loop  for  broadband  services  was  referred  to  the  Federal-  State  Joint  Board 


 on  Separations  in  1999.  435  Specifically,  in  the  wake  of  the  Commissions  determination  in  its  1999  tariff  investigation  that  GTEs  ADSL  service  was  an  interstate  special  access  service  subject  to  federal  tariffing, 
 NARUC  filed  a  petition  for  clarification  regarding  the  proper  allocation  under  Part  36  of  the  Commissions  rules  of  loop  costs  associated  with  DSL  services.  436  Noting  that  issues  associated  with  how 
 to  allocate  local  loop  plant  between  voice  and  data  services  for  purposes  of  jurisdictional  separations  were  beyond  the  scope  of  the  limited  investigation  in  the  tariff  proceeding,  the  Commission  stated  that  it  would 
 address  these  important  issues  in  conjunction  with  the  Joint  Board.  437  This  issue  remains  pending.  In  any  event,  separations  is  now  subject  to  a  five-  year  freeze,  and  the  Joint  Board  is  working  on  the  approach 
 that  should  follow  this  freeze;  the  issues  we  describe  in  this  Order  already  fall  within  this  context.  438  After  the  Joint  Board  makes  its  recommendation,  we  can  reexamine  the  question  of  how  any  additional 
 costs  that  might  be  assigned  to  the  interstate  jurisdiction  may  be  recovered  by  local  exchange  carriers. 
 VII.  ENFORCEMENT 
 145.  We  intend  to  swiftly  and  vigorously  enforce  the  terms  of  this  Order.  Significantly,  through  review  of  consumer  complaints  and  other  relevant  information,  we  will  monitor  all  consumer-  related 


 problems  arising  in  this  market  and  take  appropriate  enforcement  action  where  necessary.  Similarly,  we  will  continue  to  monitor  the  interconnection  439  and  interoperability  practices  440  of  all  industry  participants, 
 including  facilities-  based  Internet  access  providers,  and  reserve  the  ability  to  act  under  our  ancillary  authority  in  the  event  of  a  pattern  of  anti-  competitive  conduct.  441 


 VIII.  NOTICE  OF  PROPOSED  RULEMAKING 
 146.  The  broadband  marketplace  before  us  today  is  an  emerging  and  rapidly  changing  one.  Nevertheless,  consumer  protection  remains  a  priority  for  the  Commission.  We  have  a  duty  to  ensure  that 


 consumer  protection  objectives  in  the  Act  are  met  as  the  industry  shifts  from  narrowband  to  broadband  services.  Through  this  Notice,  we  thus  seek  to  develop  a  framework  for  consumer  protection  in  the 
 broadband  age    a  framework  that  ensures  that  consumer  protection  needs  are  met  by  all  providers  of 
 435  GTE  DSL  Reconsideration  Order,  17  FCC  Rcd  at  27412,  para.  9;  see  also  Jurisdictional  Separations  and 
 Referred  to  the  Federal-  State  Joint  Board,  CC  Docket  No.  80-  286,  Report  and  Order,  16  FCC  Rcd  11382,  11397-98,  para.  31  (2001). 


 436  GTE  DSL  Reconsideration  Order,  17  FCC  Rcd  at  27411,  para.  7. 
 437  Id.  at  27412,  para.  9. 
 438  See  Jurisdictional  Separations  and  Referral  to  the  Federal-  State  Joint  Board,  CC  Docket  No.  80-  286,  Report  and 
 Order,  16  FCC  Rcd  11382  (2001).  439 
 47  U.  S.  C.    251(  a).  440 
 47  U.  S.  C.    256.  441 
 See  supra  n.  339  (citing  NCTA  v.  Brand  X,  slip  op.  at  25,  regarding  the  Commissions  Title  I  authority). 
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 broadband  Internet  access  service,  regardless  of  the  underlying  technology.  442  This  framework  necessarily  will  be  built  on  our  ancillary  jurisdiction  under  Title  I;  as  we  explain  in  the  Order,  443  this 
 jurisdiction  is  ample  to  accomplish  the  consumer  protection  goals  we  identify  below,  and  we  will  not  hesitate  to  exercise  it.  444 


 147.  For  each  of  the  specific  areas  of  Commission  regulation  described  below,  we  ask  commenters  to  address  whether  the  imposition  of  regulations  pursuant  to  our  ancillary  jurisdiction,  and  the  corresponding 
 ability  of  consumers  to  take  advantage  of  Commission  avenues  for  resolution  of  consumer  protection  issues,  is  desirable  and  necessary  as  a  matter  of  public  policy,  or  whether  we  should  rely  on  market  forces 
 to  address  some  or  all  of  the  areas  listed.  Are  these  types  of  regulations  more  or  less  relevant  in  the  context  of  broadband  Internet  access  service  than  they  are  for  traditional  telephony  services?  We  ask 
 commenters  to  describe  any  technical,  economic,  or  other  impediments  that  may  affect  the  ability  of  broadband  Internet  access  service  providers  to  comply  with  such  regulations.  Are  there  areas  of 
 consumer  protection  not  listed  above  for  which  the  Commission  should  impose  regulations?  If  so,  commenters  should  describe  the  nature  of  the  concern  and  address  the  questions  posed  in  this  paragraph. 


 A.  CPNI 
 148.  Consumers  privacy  needs  are  no  less  important  when  consumers  communicate  over  and  use  broadband  Internet  access  than  when  they  rely  on  telecommunications  services.  For  example,  a  consumer 


 may  have  questions  about  whether  a  broadband  Internet  access  service  provider  will  treat  his  or  her  account  and  usage  information  as  confidential,  or  whether  the  provider  reserves  the  right  to  use  account 
 information  for  marketing  and  other  purposes.  Section  222  of  the  Act  establishes  the  regulatory  framework  governing  telecommunications  carriers  use  and  disclosure  of  CPNI  and  other  customer 
 information  obtained  by  those  carriers  in  their  provision  of  a  telecommunications  service.  445  That  section  requires,  in  general,  that  telecommunications  carriers  use  or  disclose  CPNI  only  in  the  provision 
 of  the  telecommunications  service  from  which  the  CPNI  is  derived,  or  in  the  provision  of  services  necessary  to,  or  used  in,  the  provision  of  such  telecommunications  services.  446 


 149.  We  seek  comment  on  whether  we  should  extend  privacy  requirements  similar  to  the  Acts  CPNI  requirements  to  providers  of  broadband  Internet  access  services.  For  example,  should  we  adopt  rules 
 under  our  Title  I  authority  that  forbid  broadband  Internet  access  providers  from  disclosing,  without  their 
 442  We  note  that  questions  regarding  necessary  regulatory  obligations  of  cable  modem  providers  have  previously 
 been  raised  in  the  Cable  Modem  Declaratory  Ruling  and  NPRM,  17  FCC  Rcd  at  4848-  54,  paras.  96-  112.  To  the  extent  that  our  inquiry  here  is  duplicative  of  those  questions,  we  ask  commenters  to  refresh  the  record  by  filing 


 comments  in  this  instant  proceeding  in  WC  Docket  No.  05-  271.  443 
 See  supra  paras.  108-  111.  444 
 Indeed,  this  Commission  has  already  shown  its  willingness  to  rely  on  ancillary  jurisdiction  in  the  face  of  a  demonstrated  need.  See  VoIP  E911  Order  at  paras.  26-  32. 


 445  47  U.  S.  C.    222(  c)(  1)  (emphasis  added).  The  Commission  has  adopted  rules  implementing  section  222, 
 including  rules  defining  the  scope  of  the  phrase  telecommunications  service  in  section  222(  c)(  1)(  A)  as  well  as  rules  specifying  which  services  are  included  in  the  phrase  services  necessary  to,  or  used  in  the  provision  of 


 telecommunications  service  in  section  222(  c)(  1)(  B).  See  47  C.  F.  R.    64.  2001-  64.  2008;  see  also  Implementation  of  the  Telecommunications  Act  of  1996:  Telecommunications  Carriers  Use  of  Customer  Proprietary  Network 
 Information  and  Other  Customer  Information,  CC  Docket  No.  96-  115,  Third  Report  and  Order  and  Third  Further  Notice  of  Proposed  Rulemaking,  17  FCC  Rcd  14860  (2002)  (CPNI  Remand  Order). 
 446  47  U.  S.  C.    222(  c)(  1). 
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 customers  approval,  information  about  their  customers  that  they  learn  through  the  provision  of  their  broadband  Internet  access  service?  We  seek  comment  on  what  sort  of  customer  proprietary  information 
 broadband  Internet  access  providers  possess,  e.  g.,  information  about  consumers  service  plans,  installed  equipment,  or  patterns  of  Internet  access  use.  We  note  that  long  before  Congress  enacted  section  222  of 
 the  Act,  the  Commission  had  recognized  the  need  for  privacy  requirements  associated  with  the  provision  of  enhanced  services  and  had  adopted  CPNI-  related  requirements  in  conjunction  with  other  Computer 
 Inquiry  obligations.  447 
 B.  Slamming 
 150.  Section  258  of  the  Act  prohibits  telecommunications  carriers  from  submitting  or  executing  an  unauthorized  change  in  a  subscribers  selection  of  a  provider  of  telephone  exchange  service  or  telephone 


 toll  service,  a  practice  commonly  known  as  slamming.  448  In  a  series  of  orders,  the  Commission  adopted  various  rules  to  implement  section  258,  and  concluded  that  state  authorities  should  have  primary 
 responsibility  for  administering  the  rules.  449  By  providing  for  state  administration  of  slamming  rules,  the 
 447  See  Computer  III  Phase  II  Order,  2  FCC  Rcd  at  3094-  95,  paras.  152-  56  (1987).  Specifically,  in  the  Computer  III 
 proceeding,  the  Commission  adopted  a  framework  governing  CPNI  not  only  to  protect  independent  enhanced  service  providers  from  anticompetitive  use  of  customers  local  and  long  distance  services  information  gained  by  the 


 dominant  telephone  service  providers  to  advance  their  enhanced  services  provisioning,  but  also  to  protect  legitimate  customer  expectations  of  confidentiality.  Under  the  pre-  1996  Act  CPNI  framework,  which  was  eliminated  in  its 
 entirety  when  the  Commission  implemented  section  222,  customer  information  derived  from  the  provision  of  enhanced  services  was  not  subject  to  CPNI  protections.  See  Implementation  of  the  Telecommunications  Act  of  1996: 
 Telecommunications  Carriers  Use  of  Customer  Proprietary  Network  Information  and  Other  Customer  Information,  CC  Docket  No.  96-  115,  Second  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  13  FCC  Rcd  8061, 
 8184-  93,  paras.  176-  89  (1998)  (CPNI  Order),  on  recon.,  14  FCC  Rcd  14409  (1999)  (CPNI  Reconsideration  Order),  vacated  sub  nom.  U.  S.  West  v.  FCC,  182  F.  3d  1224  (10  th  Cir.  1999),  cert.  denied,  530  U.  S.  1213  (2000). 
 448  47  U.  S.  C.    258(  a)  (mandating  that  [  n]  o  telecommunications  carrier  shall  submit  or  execute  a  change  in  a 
 subscribers  selection  of  a  provider  of  telephone  exchange  service  or  telephone  toll  service  except  in  accordance  with  such  verification  procedures  as  the  Commission  shall  prescribe).  Prior  to  the  adoption  of  section  258  of  the 


 Act,  the  Commission  had  recognized  that  slamming  was  a  significant  problem,  and  had  taken  various  steps  to  address  the  issue;  the  adoption  of  section  258  expanded  the  Commissions  authority  in  this  area.  See,  e.  g.,  Policies 
 and  Rules  Concerning  Unauthorized  Changes  of  Consumers  Long  Distance  Carriers,  CC  Docket  No.  94-  129,  Report  and  Order,  10  FCC  Rcd  9560  (1995),  stayed  in  part,  11  FCC  Rcd  856  (1995);  Policies  and  Rules  Concerning 
 Changing  Long  Distance  Carriers,  CC  Docket  No.  91-  64,  Report  and  Order,  7  FCC  Rcd  1038  (1992),  recon.  denied,  8  FCC  Rcd  3215  (1993);  Investigation  of  Access  and  Divestiture  Related  Tariffs,  CC  Docket  No.  83-  1145, 
 Phase  I,  Memorandum  Opinion  and  Order,  101  FCC  2d  935,  recon.,  102  FCC  2d  503  (1985);  see  also,  e.  g.,  Cherry  Communications,  File  No.  ENF-  93-  045,  Order,  9  FCC  Rcd  2086  (1994)  (adopting  consent  decree  enforcing  the 
 Commissions  anti-  slamming  rules).  449 
 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  Rulemaking,  14  FCC  Rcd  1508  (1998)  (Second  Report  and  Order),  stayed  in  part,  MCI  WorldCom  v.  FCC,  No.  99-  1125  (D.  C.  Cir.  May  18,  1999)  (Stay  Order), 
 motion  to  dissolve  stay  granted,  MCI  WorldCom  v.  FCC,  No.  99-  1125  (D.  C.  Cir.  June  27,  2000)  (Order  Lifting  Stay);  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,  First  Order  on  Reconsideration,  15  FCC  Rcd  8158  (2000)  (First  Reconsideration  Order); 
 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,  Third  Report  and  Order  and  Second  Order  on  Reconsideration,  15  FCC  Rcd  15996  (2000)  (Third  Report  and  Order);  Errata,  DA  00-  2163  (rel.  Sept.  25,  2000);  Erratum,  DA  00-  292  (rel.  Oct.  4,  2000);  Implementation  of  the 
 (continued  .  .  .) 
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 Commission  recognized  that  state  authorities  are  particularly  well-  equipped  to  handle  such  complaints  because  states  are  close  to  consumers  and  are  familiar  with  trends  in  their  regions.  450  The  Commission 
 also  recognized,  however,  that  all  states  may  not  have  the  resources  available  to  handle  slamming  complaints.  451  Accordingly,  the  Commissions  rules  allow  consumers  in  states  that  do  not  opt-  in  to 
 administer  the  slamming  rules  to  file  slamming  complaints  with  the  Commission.  452 
 151.  We  seek  comment  on  whether  we  should  exercise  our  Title  I  authority  to  impose  similar  requirements  on  providers  of  broadband  Internet  access  service.  Commenters  should  explain  in  what 


 circumstances  subscribers  to  broadband  Internet  access  could  get  slammed.  453  Is  the  provisioning  process  for  broadband  Internet  access  service  such  that  an  unauthorized  change  in  provider  is  more  likely 
 in  situations  where  the  provider  relies  on  third-  party  broadband  transmission  facilities? 
 C.  Truth-  in-  Billing 
 152.  The  Commission  has  adopted  truth-  in-  billing  rules  to  ensure  that  consumers  receive  accurate,  meaningful  information  on  their  telecommunications  bills  that  will  allow  consumers  to  better  understand 


 their  bills,  compare  service  offerings,  and  thereby  promote  a  more  efficient,  competitive  marketplace.  454  In  general,  the  Commissions  rules  require  that  a  telecommunication  carriers  bill  must:  (1)  be 
 accompanied  by  a  brief,  clear,  non-  misleading,  plain  language  description  of  the  service  or  services  rendered;  (2)  identify  the  service  provider  associated  with  each  charge;  (3)  clearly  and  conspicuously 
 identify  any  change  in  service  provider;  (4)  identify  those  charges  for  which  failure  to  pay  will  not  result  in  disconnection  of  basic  local  service;  and  (5)  provide  a  toll-  free  number  for  consumers  to  inquire  or 
 dispute  any  charges.  455  The  Commissions  rules  on  truth-  in-  billing  are  designed  to  reduce  slamming,  456 


 (continued  from  previous  page)  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,  Order,  16  FCC  Rcd  4999  (2001);  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,  Third  Order  on  Reconsideration  and  Second  Further  Notice  of  Proposed 
 Rule  Making,  18  FCC  Rcd  5099  (2003)  (Third  Reconsideration  Order  and/  or  Second  FNPRM).  The  rules  adopted  by  the  Commission  to  implement  section  258  are  codified  in  part  64.  See  47  C.  F.  R.    64.  1100  et  seq. 
 450  First  Reconsideration  Order,  15  FCC  Rcd  at  8169-  80,  paras.  22-  43. 
 451  Id.  at  8165-  66,  paras.  25-  28. 
 452  Id. 
 453  Typically,  in  order  to  subscribe  to  broadband  Internet  access  service,  a  consumer  must  install,  or  have  installed, 
 equipment  (i.  e.,  a  modem  that  the  ISP  provides  to  the  consumer  and  that  is  specific  to  that  ISP)  that,  along  with  a  proprietary  password,  enables  the  consumer  to  utilize  that  particular  ISPs  Internet  access  service.  We  therefore 


 seek  comment  on  whether,  given  the  manner  in  which  broadband  Internet  access  service  is  provisioned,  slamming  could  actually  occur  from  a  technical  perspective. 
 454  See  47  C.  F.  R.    64.  2400-  2401. 
 455  47  C.  F.  R.    64.2401. 
 456  See  supra  Part  VIII.  B. 
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 cramming,  457  and  other  telecommunications  fraud  by  setting  standards  for  accuracy  on  bills  for  telecommunications  service.  458 
 153.  We  seek  comment  on  whether  we  should  exercise  our  Title  I  authority  to  impose  requirements  on  broadband  Internet  access  service  providers  that  are  similar  to  our  truth-  in-  billing  requirements  or  are 
 otherwise  geared  toward  reducing  slamming,  cramming,  or  other  types  of  telecommunications-  related  fraud.  For  example,  during  2005,  the  Commissions  Consumer  and  Governmental  Affairs  Bureau  has 
 received  complaints  about  the  billing  practices  of  broadband  Internet  access  services  providers,  including  complaints  related  to  double  billing,  billing  for  unexplained  charges,  and  billing  for  cancelled  services.  459 
 Overall,  parties  should  explain  what  problems  customers  of  broadband  Internet  access  service  are  likely  to  have  with  their  bills  and  whether  we  should  address  these  problems  through  truth-  in-  billing-  type 
 requirements. 
 D.  Network  Outage  Reporting 
 154.  The  Commission  requires  certain  communications  providers  to  notify  the  Commission  of  outages  of  thirty  or  more  minutes  that  affect  a  substantial  number  of  customers  or  involve  major  airports,  major 


 military  installations,  key  government  facilities,  nuclear  power  plants,  or  911  facilities.  460  We  seek  comment  on  whether  we  should  exercise  our  Title  I  authority  to  impose  any  similar  requirements  on 
 broadband  Internet  access  service  providers.  Do  the  purposes  of  our  network  outage  reporting  requirements  apply  to  outages  of  broadband  Internet  access  service?  Should  we  adopt  requirements  that 
 differ  depending  on  the  nature  of  the  facility  or  the  type  of  customer  served? 
 E.  Section  214  Discontinuance 
 155.  Section  214  of  the  Act  limits  a  telecommunications  carriers  ability  to  discontinue  unilaterally  its  service  to  customers.  461  The  Commissions  implementing  rules  generally  require  that  domestic  carriers 


 wishing  to  discontinue,  reduce,  or  impair  services  must  first  request  authority  to  do  so  from  the  Commission  462  and  must  notify  affected  customers  and  others  of  their  plans.  463 


 457  Cramming  is  the  practice  of  placing  unauthorized,  misleading,  or  deceptive  charges  on  a  telecommunications 
 bill.  Cramming  is  most  likely  to  occur  when  a  carrier  does  not  clearly  or  accurately  describe  all  of  the  relevant  charges  on  the  consumers  bill. 


 458  See  47  C.  F.  R.    64.  2400(  a). 
 459  Operations  Support  for  Complaint  Analysis  and  Resolution  (OSCAR)  System,  Consumer  &  Governmental 
 Affairs  Bureau  (Aug.  4,  2005).  460 
 47  C.  F.  R.    63.100(  a)-(  e);  see  also  New  Part  4  of  the  Commissions  Rules  Concerning  Disruptions  to  Communications,  ET  Docket  No.  04-  35,  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  19  FCC 


 Rcd  16830,  16867,  para.  65  (2004).  461 
 47  U.  S.  C.    214(  a).  Part  63  of  the  Commissions  rules  implements  this  section  of  the  Act,  establishing  comprehensive  rules  with  which  telecommunications  carriers  must  comply  in  seeking  to  discontinue 


 telecommunications  services.  These  rules  vary  depending  on  whether  the  carrier  in  question  is  a  dominant  or  non-dominant  provider  of  the  telecommunications  services  it  is  seeking  to  discontinue.  See  47  C.  F.  R.    63.  60  et  seq. 
 462  47  U.  S.  C.    63.  71. 
 463  47  U.  S.  C.    63.  71(  a). 
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 156.  We  seek  comment  on  whether  we  should  exercise  our  Title  I  authority  to  impose  discontinuance-type  requirements  on  providers  of  broadband  Internet  access  service.  As  customers  grow  more  dependent 
 on  broadband  Internet  access  services,  does  the  need  for  notice  to  customers  grow  stronger?  464  Or  do  the  multiplicity  and  availability  of  broadband  Internet  access  providers  mitigate  the  need  for  such  notice? 


 F.  Section  254(  g)  Rate  Averaging  Requirements 
 157.  Finally,  we  seek  to  ensure  that  our  actions  today  do  not  jeopardize  the  policies  of  section  254(  g).  That  section  required  the  Commission  to  adopt  rules  to  require  that  the  rates  charged  by  providers  of 


 interexchange  telecommunications  services  to  subscribers  in  rural  and  high  cost  areas  .  .  .  be  no  higher  than  the  rates  charged  by  each  such  provider  to  its  subscribers  in  urban  areas.  465  The  provision  further 
 required  that  the  rules  require  that  a  provider  of  interstate  interexchange  telecommunications  services  .  .  .  provide  such  services  to  its  subscribers  in  each  State  at  rates  no  higher  than  the  rates  charged  to  its 
 subscribers  in  any  other  State.  466  The  Commission  has  forborne  from  the  requirements  of  section  254(  g)  with  regard  to  private  line  services,  of  which  DSL  is  one.  467  Because  the  policies  underlying  section 
 254(  g)  remain  important,  however,  we  ask  whether  we  should  exercise  our  Title  I  authority  to  impose  any  similar  requirements  on  providers  of  broadband  Internet  access  services,  particularly  as  consumers 
 substitute  broadband  services  and  applications  for  narrowband  services  that  were  covered  by  section  254(  g). 


 G.  Federal  and  State  Involvement 
 158.  We  recognize  that  the  states  play  an  important  role  in  ensuring  that  public  safety  and  consumer  protection  goals  are  met.  The  Commission  has  recently  announced  the  creation  of  a  federal-  state  task 


 force  on  VoIP  E911  enforcement,  468  and  we  believe  that  this  Notice  may  give  rise  to  additional  areas  in  which  cooperation  between  this  Commission  and  the  states  can  achieve  the  best  results.  We  note  in  this 
 regard  that  NARUC  has  recently  advocated  for  a  functional  approach  to  questions  of  federal  and  state  jurisdiction,  particularly  with  respect  to  consumer  protection  issues.  469  For  example,  with  respect  to 
 CPNI,  NARUC  recommends  that  the  Commission  be  primarily  responsible  for  establishing  rules,  while  state  or  local  authorities  assume  responsibility  for  enforcing  those  rules.  470  To  the  extent  that  the 


 464  For  example,  in  2001,  a  large  provider  of  broadband  Internet  access  services,  @Home,  sought  bankruptcy  court 
 protection  and  announced  plans  to  sell  its  high-  speed  network.  Within  a  relatively  brief  period  of  time,  the  company  requested  and  received  permission  from  the  United  States  Bankruptcy  Court  to  shut  down  its  network,  causing  its 


 subscribers  to  switch  to  other  providers.  News  reports  described  the  many  problems  the  subscribers  encountered  during  the  transition,  including  service  outages,  inadequate  customer  support,  and  loss  of  high-  speed  access.  See 
 Bill  Bergstrom,  Comcast  Fields  Internet  Complaints,  Tallahassee  Democrat,  Jan.  9,  2002;  Bill  Bergstrom,  Internet  Switch  Problems  Annoy  Comcast  Customers,  Fort  Wayne  Journal-  Gazette,  Jan.  7,  2002. 
 465  47  U.  S.  C.    254(  g). 
 466  Id. 
 467  See  Policy  and  Rules  Concerning  the  Interstate,  Interexchange  Marketplace,  Report  and  Order,  11  FCC  Rcd 
 9564,  9577,  para.  27  (1996)  (forbearing  from  application  of  section  254(  g)  to  the  extent  necessary  to  permit  carriers  to  depart  from  geographic  rate  averaging  to  offer  .  .  .  private  line  services). 


 468  See,  e.  g.,  FCC  Announces  Joint  Federal/  State  VoIP  Enhanced  911  Enforcement  Task  Force,  Press  Release,  2005 
 Westlaw  1750445  (July  25,  2005).  469 
 See  generally  NARUC  Legislative  Task  Force  Report  on  Federalism  and  Telecom  (July  2005).  470 
 See  id.  at  8. 
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 Commission  finds  it  necessary  to  impose  consumer  protection  and  related  regulations  on  broadband  Internet  access  service  providers,  we  seek  comment  on  how  best  to  harmonize  federal  regulations  with  the 
 states  efforts  and  expertise  in  these  areas.  Do  commenters  support  NARUCs  functional  approach?  In  what  other  ways  can  the  federal  and  state  governments  cooperate  in  order  to  ensure  the  best  results  for 


 consumers? 
 H.  Consumer  Options  for  Enforcement 
 159.  We  note  that  consumers  have  various  methods  of  pursuing  complaints  with  the  Commission  against  entities  subject  to  our  jurisdiction.  In  particular,  the  Commissions  informal  complaint  process 


 permits  consumers  to  submit  complaints  to  the  Commission  by  any  reasonable  means,  including  by  telephone,  facsimile,  postal  mail,  email  and  an  Internet  complaint  form.  Consumer  Center 
 representatives,  known  as  Consumer  Advocacy  and  Mediation  Specialists  or  CAMSs,  are  available  to  assist  consumers  in  filing  complaints  if  needed.  CAMSs  staff  review  complaints  for  subject  matter 
 content  and  determine  appropriate  handling  of  the  complaints. 
 IX.  PROCEDURAL  MATTERS 
 A.  Final  Paperwork  Reduction  Act  Analysis 
 160.  This  Report  and  Order  does  not  contain  any  information  collection  subject  to  the  Paperwork  Reduction  Act  of  1995  (PRA),  Public  Law  104-  13.  In  addition,  therefore,  it  does  not  contain  any  new  or 
 modified  information  collection  burden  for  small  business  concerns  with  fewer  than  25  employees,  pursuant  to  the  Small  Business  Paperwork  Relief  Act  of  2002,  Public  Law  107-  198,  see  44  U.  S.  C. 
   3506(  c)(  4). 
 B.  Regulatory  Flexibility 
 161.  As  required  by  the  Regulatory  Flexibility  Act,  see  5  U.  S.  C.    603,  the  Commission  has  prepared  a  Final  Regulatory  Flexibility  Certification  of  the  possible  significant  economic  impact  on  small  entities  of 


 the  policies  and  rules  addressed  in  this  Report  and  Order.  This  certification  is  set  forth  in  Appendix  B. 
 162.  As  required  by  the  Regulatory  Flexibility  Act,  5  U.  S.  C.    603,  the  Commission  has  prepared  an  Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant  economic  impact  on  small 


 entities  of  the  policies  and  rules  addressed  in  this  Notice  of  Proposed  Rulemaking.  The  IRFA  is  set  forth  in  Appendix  B.  Written  public  comments  are  requested  on  the  IRFA.  These  comments  must  be  filed  in 
 accordance  with  the  same  filing  deadlines  as  comments  filed  in  response  to  this  Notice  of  Proposed  Rulemaking  and  must  have  a  separate  and  distinct  heading  designating  them  as  responses  to  the  IRFA. 


 C.  Other  Procedural  Matters 
 1.  Ex  Parte  Presentations 


 163.  The  rulemaking  this  Notice  initiates  shall  be  treated  as  a  permit-  but-  disclose  proceeding  in  accordance  with  the  Commissions  ex  parte  rules.  471  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 


 471  47  C.  F.  R.    1.200  et  seq. 
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 Washington,  D.  C.  20554,  or  by  e-  mail  to  janice.  myles@  fcc.  gov.  Parties  shall  also  serve  one  copy  with  the  Commissions  copy  contractor,  Best  Copy  and  Printing,  Inc.  (BCPI),  Portals  II,  445  12th  Street,  S.  W., 
 Room  CY-  B402,  Washington,  D.  C.  20554,  (202)  488-  5300,  or  via  e-  mail  to  fcc@  bcpiweb.  com. 
 166.  Documents  in  WC  Docket  No.  05-  271  will  be  available  for  public  inspection  and  copying  during  business  hours  at  the  FCC  Reference  Information  Center,  Portals  II,  445  12th  Street  S.  W.,  Room  CY-A257, 


 Washington,  D.  C.  20554.  The  documents  may  also  be  purchased  from  BCPI,  telephone  (202)  488-  5300,  facsimile  (202)  488-  5563,  TTY  (202)  488-  5562,  e-  mail  fcc@  bcpiweb.  com. 


 3.  Accessible  Formats 
 167.  To  request  materials  in  accessible  formats  for  people  with  disabilities  (Braille,  large  print,  electronic  files,  audio  format),  send  an  e-  mail  to  fcc504@  fcc.  gov  or  call  the  Consumer  &  Governmental 
 Affairs  Bureau  at  202-  418-  0530  (voice)  or  202-  418-  0432  (TTY).  Contact  the  FCC  to  request  reasonable  accommodations  for  filing  comments  (accessible  format  documents,  sign  language  interpreters,  CART, 
 etc.)  by  e-  mail:  FCC504@  fcc.  gov;  phone:  202-  418-  0530  or  TTY:  202-  418-  0432. 
 X.  ORDERING  CLAUSES 
 168.  Accordingly,  IT  IS  ORDERED  that,  pursuant  to  Sections  1-  4,  10,  201-  205,  214,  222,  225,  251,  252,  254-  256,  258,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151-  154,  160, 


 201-  205,  214,  222,  225,  251,  252,  254-  256,  258,  303(  r),  and  Section  706  of  the  Telecommunications  Act  of  1996,  47  U.  S.  C.    157  nt,  the  Report  and  Order  and  Notice  of  Proposed  Rulemaking  ARE  ADOPTED. 


 169.  IT  IS  FURTHER  ORDERED,  pursuant  to  Sections  1-  4,  10,  201-  205,  214,  222,  225,  251,  252,  254-  256,  258,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151-  154,  160,  201- 
 205,  214,  222,  225,  251,  252,  254-  256,  258,  303(  r),  and  Section  706  of  the  Telecommunications  Act  of  1996,  47  U.  S.  C.    157  nt,  that  wireline  broadband  Internet  access  transmission  providers  ARE 
 GRANTED  blanket  certification  to  discontinue  the  provision  of  common  carrier  broadband  Internet  access  transmission  services  to  existing  customers  as  set  forth  and  subject  to  the  conditions  stated  in  this 
 Order. 
 170.  IT  IS  FURTHER  ORDERED,  pursuant  to  Sections  1-  4,  10,  201-  205,  214,  222,  225,  251,  252,  254-  256,  258,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151-  154,  160,  201- 


 205,  214,  222,  225,  251,  252,  254-  256,  258,  303(  r),  and  Section  706  of  the  Telecommunications  Act  of  1996,  47  U.  S.  C.    157  nt,  that  the  Conditional  Petition  for  Forbearance  Under  47  U.  S.  C.    160(  c)  filed  by 
 the  Verizon  Telephone  Companies  in  WC  Docket  No.  04-  242  on  June  28,  2004,  IS  DENIED  AS  MOOT. 
 171.  IT  IS  FURTHER  ORDERED,  pursuant  to  Sections  1-  4,  10,  201-  205,  214,  222,  225,  251,  252,  254-  256,  258,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C.    151-  154,  160,  201- 


 205,  214,  222,  225,  251,  252,  254-  256,  258,  303(  r),  and  Section  706  of  the  Telecommunications  Act  of  1996,  47  U.  S.  C.    157  nt,  that  the  Petition  for  Declaratory  Ruling  or,  Alternatively,  for  Interim  Waiver 
 filed  in  WC  Docket  No.  04-  242  by  the  Verizon  Telephone  Companies  on  June  28,  2004,  IS  DISMISSED  AS  MOOT. 


 172.  IT  IS  FURTHER  ORDERED,  pursuant  to  sections  1.103(  a)  and  1.427(  b)  of  the  Commissions  rules,  47  C.  F.  R.    1.103(  a),  1.427(  b),  that  this  Report  and  Order  SHALL  BE  EFFECTIVE  30  days  after 
 publication  of  the  Report  and  Order  in  the  FEDERAL  REGISTER. 
 173.  IT  IS  FURTHER  ORDERED  that  the  Commissions  Consumer  and  Governmental  Affairs  Bureau,  Reference  Information  Center,  SHALL  SEND  a  copy  of  this  Order,  including  the  Final 
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 Regulatory  Flexibility  Certification,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration. 
 174.  IT  IS  FURTHER  ORDERED  that  the  Commissions  Consumer  and  Governmental  Affairs  Bureau,  Reference  Information  Center,  SHALL  SEND  a  copy  of  this  Notice  of  Proposed  Rulemaking, 
 including  the  Initial  Regulatory  Flexibility  Analysis,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration.  473 


 FEDERAL  COMMUNICATIONS  COMMISSION 


 Marlene  H.  Dortch  Secretary 


 473  See  5  U.  S.  C.    603(  a). 
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 APPENDIX  A  LIST  OF  COMMENTERS 
 Commenters  WC  Docket  No.  02-  33 
 Comments  Abbreviation  Alcatel  USA,  Inc.  Alcatel 
 Allegiance  Telecom,  Inc.  Allegiance  Alvarion,  Inc.  Alvarion 
 American  Foundation  for  the  Blind  AFB  American  ISP  Association  AISPA 
 American  Public  Power  Association  APPA  AOL  Time  Warner  Inc.  AOL 
 Arizona  Consumer  Council,  Center  for  Digital  Democracy,  Citizen  Action  of  Illinois,  Citizens  Utility  Board  of  Oregon,  Consumer  Action, 
 the  Consumer  Federation  of  America,  Consumers  Union,  Democratic  Process  Center,  Florida  Consumer  Action  Network,  Illinois  Pirg, 
 Massachusetts  Consumer  Coalition,  Media  Access  Project,  New  Jersey  Citizen  Action,  Texas  Consumer  Association,  Texas  Office  of  Public 
 Utility  Counsel,  USAction 


 Arizona  Consumer  Council  et  al. 


 Association  of  Communications  Enterprises  ASCENT  AT&  T  Corporation  AT&  T 
 Beacon  Telecommunications  Advisors,  LLC  Beacon  BellSouth  Corporation  BellSouth 
 Big  Planet,  Inc.  Big  Planet  Business  Telecom,  Inc.,  CTC  Communications  Corp.,  Florida  Digital 
 Network,  Inc.,  Globalcom,  Inc.,  and  RCN  Telecom  Services,  Inc.  Business  Telecom  et  al.  California  Internet  Service  Providers  Association  CISPA 
 Catena  Networks,  Inc.  Catena  Cbeyond  Communications,  LLC,  EL  Paso  Networks,  LLC,  Focal 
 Communications  Corporation,  New  Edge  Network,  Inc.,  and  Pac-  West  Telecomm,  Inc.  Cbeyond  et  al. 
 Charter  Communications,  Inc.  Charter  Cinergy  Communications  Company  Cinergy 
 Covad  Communications  Company  Covad  Cox  Communications,  Inc.  Cox 
 David  R.  Hughes  David  R.  Hughes  DirectTV  Broadband,  Inc.  DirectTV 
 DSLnet  Communications,  LLC  DSLnet  EarthLink,  Inc.  EarthLink 
 Federal  Bureau  of  Investigation  (FBI)  and  Department  of  Justice  DOJ/  FBI  Florida  Public  Service  Commission  Florida  Commission 
 Fred  Williamson  and  Associates,  Inc.  FW&  A  General  Communication  Inc.  GCI 
 GVNW  Consulting,  Inc.  GVNW  Hugh  Carter  Donahue  Donahue 
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 Hughes  Network  Systems,  Inc.,  Hughes  Communications,  Inc.,  and  Hughes  Communications  Galaxy,  Inc.  Hughes 
 Illinois  Commerce  Commission  Illinois  Commission  Independent  Telephone  and  Telecommunications  Alliance  ITTA 
 Information  Technology  Association  of  America  ITAA  Kenneth  Arrow  et  al.  Arrow  et  al. 
 JMC  Telecom  and  NuVox  Communications  JMC/  NuVox  McLeodUSA  Telecommunications  Services,  Inc.  McLeodUSA 
 Mescalero  Apache  Telecom,  Inc.  MATI  Michigan  Public  Service  Commission  Michigan  Commission 
 Minnesota  Department  of  Commerce  Minnesota  Commerce  Dept.  Monet  Mobile  Networks,  Inc.  Monet 
 Mpower  Communications  Corp.  Mpower  Mutual  Data  Services,  Inc.,  Mutual  Data 
 National  Association  of  Regulatory  Utility  Commissioners  NARUC  National  Cable  &  Telecommunications  Association  NCTA 
 National  Exchange  Carrier  Association,  Inc.  NECA  National  Rural  Telecom  Association  NRTA 
 Nebraska  Independent  Companies  Nebraska  Independents  New  Hampshire  ISP  Association  New  Hampshire  ISPs 
 NewSouth  Communications  NewSouth  New  York  State  Department  of  Public  Service  New  York  Commission 
 Office  of  the  Attorney  General  of  Texas,  Consumer  Protection  Division  Texas  Attorney  General  Ohio  Internet  Service  Providers  Association,  Texas  Internet  Services 
 Providers  Association,  and  Washington  Association  of  Internet  Service  Providers  Ohio  ISP  Assoc.  et  al. 
 Oregon  Public  Utility  Commission  Oregon  Commission  Organization  for  the  Promotion  and  Advancement  of  Small 
 Telecommunications  Companies  OPASTCO  Oregon  Public  Utility  Commission  Oregon  Commission 
 Part-  15  Organization,  Inc.  Part-  15.  Org  People  of  the  State  of  California  and  the  California  Public  Utilities 
 Commission  California  Commission  Pennsylvania  Office  of  Consumer  Advocate,  Maine  Public  Advocate, 
 Maryland  Office  of  Peoples  Counsel,  Ohio  Consumers  Counsel,  Utility  Reform  Network,  California  Office  of  Ratepayer  Advocates,  Connecticut 
 Office  of  Consumer  Counsel,  and  New  Hampshire  Office  of  Consumer  Advocate 


 Pennsylvania  Consumer  Advocate  et  al. 


 Public  Service  Commission  of  Wisconsin  Wisconsin  Commission  Public  Utilities  Commission  of  Ohio  Ohio  Commission 
 Public  Utilities  Commission  of  Texas  Texas  Commission  Qwest  Communications  International  Inc.  Qwest 
 Rehabilitation  Engineering  Research  Center  on  Telecommunications  Access  RERC-  TA 
 Ruby  Ranch  Internet  Cooperative  Association  Ruby  SBC  Communications  Inc.  SBC 
 Secretary  of  Defense  Secretary  of  Defense 
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 SES  AMERICOM,  Inc.  SES  AMERICOM  Socket  Holdings  Corporation  Socket 
 Sprint  Corporation  Sprint  State  Members  of  the  Federal-  State  Joint  Board  on  Separations  Federal-  State  Joint  Board 
 Statement  of  43  Economists  Economists  SureWest  Communications  SureWest 
 TDS  Telecommunications  Corporation,  Madison  River  Communications,  and  North  Pittsburgh  Systems  Inc.  TDS  et  al. 
 Telecommunications  for  The  Deaf,  Inc.  Telecom  for  the  Deaf  TeleTruth  TeleTruth 
 Texas  Office  of  Public  Utility  Counsel,  Consumer  Federation  of  America,  Consumers  Union,  Media  Access  Project,  and  the  Center  for 
 Digital  Democracy 
 Texas  Counsel  et  al. 


 Time  Warner  Telecom  Time  Warner  Pennsylvania  Office  of  Consumer  Advocate,  Maine  Public  Advocate, 
 Maryland  Office  of  Peoples  Counsel,  Ohio  Consumers  Counsel,  Utility  Reform  Network,  California  Office  of  Ratepayer  Advocates,  Connecticut 
 Office  of  Consumer  Counsel,  and  New  Hampshire  Office  of  Consumer  Advocate 


 Pennsylvania  Consumer  Advocate  et  al. 


 United  Church  of  Christ,  Office  of  Communication,;  Association  of  Independent  Video  and  Filmmakers;  National  Association  of  Media  Arts 
 and  Culture 
 United  Church  of  Christ  et  al. 


 United  States  Internet  Industry  Association  USIIA  United  States  Telecom  Association  USTA 
 US  LEC  Corp.  US  LEC  Verizon  telephone  companies  Verizon 
 Verizon  Wireless  Verizon  Wireless  Vermont  Public  Service  Board  Vermont  Commission 
 WaveRider  Communications  Inc.  WaveRider  Western  Alliance  Western  Alliance 
 Whizwireless,  LLC  Whizwireless  Wireless  Communications  Association  International,  Inc.  WCA 
 WorldCom,  Inc.,  The  Competitive  Telecommunications  Association,  and  the  Association  for  Local  Telecommunications  Services  MCI  et  al. 
 Z-  Tel  Communications,  Inc.  Z-  Tel 


 Reply  Commenters  WC  Docket  No.  02-  33 
 Comments  Abbreviation  Ad  Hoc  Telecommunications  Users  Committee  Ad  Hoc 
 Alaska  Telephone  Association  Alaska  Allegiance  Telecom,  Inc.  Allegiance 
 American  Library  Association  American  Library  AOL  Time  Warner  Inc.  AOL 
 Association  for  Local  Telecommunication  Services  ALTS 
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 Association  of  Communications  Enterprises,  AT&  T,  Big  Planet,  Inc.,  Business  Telecom,  Inc.,  Cbeyond  Communications,  LLC,  CTC 
 Communications  Corp.,  DSLNet  Communications,  LLC,  El  Paso  Networks,  LLC,  Focal  Communications  Corporation,  Florida  Digital 
 Network,  New  Edge  Network,  Inc.,  Pac-  West  Telecomm,  Inc.,  RCN  Telecom  Services,  Inc.,  and  US  LEC  Corp. 


 ASCENT  et  al. 


 AT&  T  Corporation  AT&  T  Attorney  General  to  Texas,  Consumer  Protection  Division  Texas  Attorney  General 
 Beacon  Telecommunications  Advisors,  LLC  Beacon  BellSouth  Corporation  BellSouth 
 Cablevision  Systems  Corporation  Cablevision  California  Internet  Service  Providers  Association  CISPA 
 Charter  Communications,  Inc.  Charter  City  of  Ketchikan  d/  b/  a  Ketchikan  Public  Utilities    Telephone  Division  KPU 
 Comcast  Corporation  Comcast  Communications  Workers  of  America  CWA 
 Covad  Communications  Company  Covad  DirectTV  Broadband,  Inc.  DirectTV  Broadband 
 DSLnet  Communications,  LLC  DSLnet  EarthLink,  Inc.  EarthLink 
 Fred  Williamson  and  Associates,  Inc.  FW&  A  General  Communication  Inc.  GCI 
 GVNW  Consulting,  Inc.  GVNW  High  Tech  Broadband  Coalition  HTBC 
 Independent  Telephone  and  Telecommunications  Alliance  ITTA  Information  Technology  Association  of  America  ITAA 
 Kenneth  Arrow  et  al.  Arrow  et  al.  KMC  Telecom  and  NuVox  Communications  KMC/  NuVox 
 McLeodUSA  Telecommunications  Services,  Inc.  McLeodUSA  Mescalero  Apache  Telecom,  Inc.  MATI 
 National  Association  of  Broadcasters  NAB  National  Cable  &  Telecommunications  Association  NCTA 
 National  Rural  Telecom  Association  NRTA  National  Telecommunications  Cooperative  Association  NTCA 
 Nebraska  Independent  Companies  Nebraska  Independents  New  York  State  Attorney  General  New  York  Attorney  General 
 New  York  State  Department  of  Public  Service  New  York  Commission  Next  Level  Communications  Next  Level 
 Ohio  Internet  Service  Providers  Association,  Texas  Internet  Services  Providers  Association,  and  Washington  Association  of  Internet  Service 
 Providers 
 Ohio  ISP  Assoc.  et  al. 


 Organization  for  the  Promotion  and  Advancement  of  Small  Telecommunications  Companies  OPASTCO 
 Pennsylvania  Office  of  Consumer  Advocate,  Maine  Public  Advocate,  Maryland  Office  of  Peoples  Counsel,  Ohio  Consumers  Counsel,  Utility 
 Reform  Network,  California  Office  of  Ratepayer  Advocates,  and  New  Hampshire  Office  of  Consumer  Advocate 
 Pennsylvania  Consumer  Advocates  et  al. 


 Qwest  Communications  International  Inc.  Qwest 
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 Regulatory  Commission  of  Alaska  Alaska  Commission  SBC  Communications  Inc.  SBC 
 Satellite  Industry  Association  SIA  SES  AMERICOM,  Inc.  SES  AMERICON 
 Sprint  Corporation  Sprint  Time  Warner  Telecom  Time  Warner 
 United  States  Internet  Industry  Association  USIIA  United  States  Telecom  Association  USTA 
 Verizon  telephone  companies  Verizon  WorldCom,  Inc.,  Competitive  Telecommunications  Association,  and 
 Association  for  Local  Telecommunications  Services  MCI  et  al.  XO  Communications,  Inc.  XO 
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 APPENDIX  B  REGULATORY  FLEXIBILITY  ANALYSES 
 I.  FINAL  REGULATORY  FLEXIBILITY  CERTIFICATION 
 1.  The  Regulatory  Flexibility  Act  of  1980,  as  amended  (RFA),  1  requires  that  a  regulatory  flexibility  analysis  be  prepared  for  notice-  and-  comment  rulemaking  proceedings,  unless  the  agency  certifies  that 
 the  rule  will  not,  if  promulgated,  have  a  significant  economic  impact  on  a  substantial  number  of  small  entities.  2  The  RFA  generally  defines  the  term  small  entity  as  having  the  same  meaning  as  the  terms 
 small  business,  small  organization,  and  small  governmental  jurisdiction.  3  In  addition,  the  term  small  business  has  the  same  meaning  as  the  term  small  business  concern  under  the  Small  Business 
 Act.  4  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).  5 
 2.  In  the  Wireline  Broadband  NPRM,  the  Commission  sought  comment  generally  on  the  appropriate  statutory  classification  for  wireline  broadband  Internet  access  service  provided  over  a  providers  own 


 facilities,  and  on  what  regulatory  requirements,  if  any,  should  be  imposed  on  the  telecommunications  component  of  wireline  broadband  Internet  access  service.  6  Specifically,  the  Commission  sought  comment 
 on  whether  the  Computer  Inquiry  requirements  should  be  modified  or  eliminated  as  applied  to  self-provisioned  wireline  broadband  Internet  access  service,  as  well  as  how  the  Commissions  tentative 
 conclusion  that  wireline  broadband  Internet  access  service  is  an  information  service  would  affect  the  CALEA  assistance  capabilities,  the  USA  PATRIOT  Act,  other  national  security  or  emergency 
 preparedness  obligations,  network  reliability  and  interoperability,  and  existing  consumer  protection  requirements,  such  as  section  214  of  the  Act,  CPNI  requirements  under  section  222  of  the  Act,  and 
 requirements  for  access  to  persons  with  disabilities  under  section  255  of  the  Act.  7  The  Commission  also  sought  comment  on  how  to  continue  to  meet  the  goals  of  universal  service  under  section  254  of  the  Act  in 
 a  marketplace  where  competing  providers  are  deploying  broadband  Internet  access,  including  how  the  regulatory  status  of  wireline  broadband  Internet  access  could  impact  the  system  of  assessments  and 
 contributions  to  universal  service.  8  Finally,  the  Wireline  Broadband  NPRM  also  invited  comment  on  the 


 1  See  5  U.  S.  C.    603.  The  RFA,  see  5  U.  S.  C.    601-  12,  has  been  amended  by  the  Small  Business  Regulatory 
 Enforcement  Fairness  Act  of  1996  (SBREFA),  Pub.  L.  No.  104-  121,  Title  II,  110  Stat.  857  (1996).  2 
 5  U.  S.  C.    605(  b).  3 
 5  U.  S.  C.    601(  6).  4 
 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  term  which  are  appropriate  to  the  activities  of  the 
 agency  and  publishes  such  definition(  s)  in  the  Federal  Register.  5 
 15  U.  S.  C.    632.  6 
 Wireline  Broadband  NPRM,  17  FCC  Rcd  at  3029-  48,  paras.  17-  64.  7 
 Id.  at  3035-  47,  paras.  30-  61.  8 
 Id.  at  3043-  54,  paras.  54-  78. 
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 relationship  between  the  statutory  classification  of  wireline  broadband  Internet  access  service  and  an  incumbent  LECs  obligation  to  provide  access  to  UNEs  under  sections  251  and  252.  9 
 3.  The  Order  eliminates  the  Computer  Inquiry  requirements  on  facilities-  based  carriers  in  their  provision  of  wireline  broadband  Internet  access  service.  Consequently,  BOCs  are  immediately  relieved  of 
 the  separate  subsidiary,  CEI,  and  ONA  obligations  with  respect  to  wireline  broadband  Internet  access  services.  In  addition,  subject  to  a  one-  year  transition  period  for  existing  wireline  broadband  transmission 
 services,  all  wireline  broadband  Internet  access  service  providers  are  no  longer  subject  to  the  Computer  II  requirement  to  separate  out  the  underlying  transmission  from  wireline  broadband  Internet  access  service 
 and  offer  it  on  a  common  carrier  basis.  We  determine  in  this  Order  that  wireline  broadband  Internet  access  service  is  an  information  service,  as  that  term  is  defined  in  the  statute.  To  the  extent  that  the 
 regulatory  obligations  discussed  above  apply  to  the  transmission  component  of  wireline  broadband  Internet  access  service  when  provided  to  ISPs  or  others  on  a  stand-  alone  common  carrier  basis,  these 
 obligations  will  continue  to  apply  when  carriers  offer  broadband  Internet  access  service  transmission  on  a  common  carrier  basis,  both  during  the  transition  and  thereafter. 


 4.  The  rule  changes  adopted  in  this  Order  apply,  for  the  most  part,  only  to  BOCs  (Computer  Inquiry  separate  subsidiary,  CEI,  and  ONA  obligations  with  respect  to  wireline  broadband  Internet  access 
 services).  In  addition,  all  facilities-  based  wireline  broadband  Internet  access  service  providers  are  no  longer  subject  to  the  Computer  II  requirement  to  separate  out  the  underlying  transmission.  Neither  the 
 Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  applicable  to  providers  of  incumbent  local  exchange  service  and  interexchange  services.  The  closest  applicable  size 
 standard  under  the  SBA  rules  is  for  Wired  Telecommunications  Carriers.  10  This  provides  that  such  a  carrier  is  small  entity  if  it  employs  no  more  than  1,500  employees.  11  None  of  the  four  BOCs  that  would 
 be  affected  by  amendment  of  these  rules  meets  this  standard.  To  the  extent  that  any  other  wireline  provider  would  be  classified  as  a  small  entity,  it  would  not  be  negatively  affected  by  the  regulatory  relief 
 we  grant  in  this  Order. 
 5.  Therefore,  we  certify  that  the  requirements  of  the  Order  will  not  have  a  significant  economic  impact  on  a  substantial  number  of  small  entities.  We  note  that  one  party,  Teletruth,  filed  comments  in 


 response  to  the  IFRAs  in  the  Wireline  Broadband  and  Incumbent  LEC  Broadband  proceedings.  Teletruth  argues  that  that  these  IRFAs  are  deficient  because  they  fail  to  assess  the  potential  impact  of  the  actions 
 proposed  in  those  proceedings  on  small  ISPs  and  small  competitive  LECs  and  that  our  implementation  of  the  RFA  is  otherwise  deficient.  12  These  arguments  are  identical  to,  and  indeed  filed  as  part  of  the  same 
 pleading  as,  arguments  the  Commission  previously  has  rejected.  13  We  therefore  again  reject  these  arguments  for  the  reasons  stated  in  our  prior  Orders  responding  to  TeleTruths  comments.  14 


 9  Id.  at  3047,  para.  61. 
 10  13  C.  F.  R.    121.  201,  NAICS  code  517110. 
 11  Id. 
 12  See  TeleTruth  Comments  passim. 
 13  See  TeleTruth  Comments  passim. 
 14  See  TeleTruth  Comments  passim. 
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 6.  The  Commission  will  send  a  copy  of  the  Order,  including  a  copy  of  this  Final  Regulatory  Flexibility  Certification,  in  a  report  to  Congress  pursuant  to  the  Congressional  Review  Act.  15  In  addition, 
 the  Order  and  this  final  certification  will  be  sent  to  the  Chief  Counsel  for  Advocacy  of  the  SBA,  and  a  summary  of  the  Order  and  final  certification  will  be  published  in  the  Federal  Register.  16 


 II.  INITIAL  REGULATORY  FLEXIBILITY  ANALYSIS 
 7.  As  required  by  the  Regulatory  Flexibility  Act  of  1980,  as  amended  (RFA),  17  the  Commission  has  prepared  the  present  Initial  Regulatory  Flexibility  Analysis  (IRFA)  of  the  possible  significant  economic 


 impact  on  small  entities  that  might  result  from  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.  The  Commission  will  send  a  copy  of  the  Notice,  including  this  IRFA,  to  the  Chief  Counsel  for  Advocacy  of  the  Small  Business  Administration.  18  In  addition,  the  Notice 
 and  IRFA  (or  summaries  thereof)  will  be  published  in  the  Federal  Register.  19 
 A.  Need  for,  and  Objectives  of,  the  Proposed  Rules 


 8.  The  broadband  marketplace  before  us  today  is  an  emerging  and  rapidly  changing  one.  Nevertheless,  consumer  protection  remains  a  priority  for  the  Commission.  We  initiate  this  rulemaking  to 
 ensure  that  consumer  protection  objectives  in  the  Act  are  met  as  the  industry  shifts  from  narrowband  to  broadband  services.  Through  this  Notice,  the  Commissions  objective  is  to  develop  a  framework  for 
 consumer  protection  in  the  broadband  age    a  framework  that  ensures  that  consumer  protection  needs  are  met  by  all  providers  of  broadband  Internet  access  service,  regardless  of  the  underlying  technology.  20  The 
 Notice  seeks  comment  on  whether  the  Commission  should  impose,  for  example,  privacy  requirements  similar  to  the  Acts  CPNI  requirements,  slamming,  truth-  in-  billing,  network  outage  reporting,  section  214 
 discontinuance,  or  section  254(  g)  rate  averaging  requirements  on  providers  of  broadband  Internet  access  service.  We  also  seek  comment  on  how  best  to  harmonize  federal  regulations  with  the  states  efforts  and 
 expertise  in  consumer  protection  issues. 
 B.  Legal  Basis 


 9.  The  legal  basis  for  any  action  that  may  be  taken  pursuant  to  the  Notice  is  contained  in  sections  1-  4,  201-  205,  251,  252,  254,  256,  303(  r)  of  the  Communications  Act  of  1934,  as  amended,  47  U.  S.  C. 
   151-  154,  201-  205,  251,  252,  254,  256,  303(  r),  and  Section  706  of  the  Telecommunications  Act  of  1996,  47  U.  S.  C.    157  nt. 


 15  See  5  U.  S.  C.    801(  a)(  1)(  A). 
 16  See  5  U.  S.  C.    605(  b). 
 17  See  5  U.  S.  C.    603.  The  RFA,  see  5  U.  S.  C.    601-  12,  has  been  amended  by  the  Small  Business  Regulatory 
 Enforcement  Fairness  Act  of  1996  (SBREFA),  Pub.  L.  No.  104-  121,  110  Stat.  857  (1996).  18 
 See  5  U.  S.  C.    603(  a).  19 
 See  5  U.  S.  C.    603(  a).  20 
 See  supra  Notice  at  para.  146. 
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 C.  Description  and  Estimate  of  the  Number  of  Small  Entities  to  Which  the  Proposed  Rules  May  Apply 
 10.  The  RFA  directs  agencies  to  provide  a  description  of  and,  where  feasible,  an  estimate  of  the  number  of  small  entities  that  may  be  affected  by  the  proposed  rules.  21  The  RFA  generally  defines  the 
 term  small  entity  as  having  the  same  meaning  as  the  terms  small  business,  small  organization,  and  small  governmental  jurisdiction.  22  In  addition,  the  term  small  business  has  the  same  meaning  as  the 
 term  small  business  concern  under  the  Small  Business  Act.  23  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).  24 
 11.  Small  Businesses.  Nationwide,  there  are  a  total  of  approximately  22.4  million  small  businesses,  according  to  SBA  data.  25 


 12.  Small  Organizations.  Nationwide,  there  are  approximately  1.6  million  small  organizations.  26 
 13.  Small  Governmental  Jurisdictions.  The  term  small  governmental  jurisdiction  is  defined  as  governments  of  cities,  towns,  townships,  villages,  school  districts,  or  special  districts,  with  a  population 


 of  less  than  fifty  thousand.  27  As  of  1997,  there  were  approximately  87,453  governmental  jurisdictions  in  the  United  States.  28  This  number  includes  39,044  county  governments,  municipalities,  and  townships,  of 
 which  37,546  (approximately  96.2%)  have  populations  of  fewer  than  50,000,  and  of  which  1,498  have  populations  of  50,000  or  more.  Thus,  we  estimate  the  number  of  small  governmental  jurisdictions  overall 
 to  be  84,  098  or  fewer. 
 14.  We  note  that  the  list  of  potentially  affected  entities  below  is  perhaps  more  expansive  than  is  necessary.  We  have,  for  instance,  included  services  that  are  apparently  currently  not  a  part  of  the  Internet 


 industry,  as  well  as  manufacturers. 


 21  5  U.  S.  C.    603(  b)(  3),  604(  a)(  3). 
 22  5  U.  S.  C.    601(  6). 
 23  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. 
 24  15  U.  S.  C.    632. 
 25  See  SBA,  Programs  and  Services,  SBA  Pamphlet  No.  CO-  0028,  at  page  40  (July  2002). 
 26  Independent  Sector,  The  New  Nonprofit  Almanac  &  Desk  Reference  (2002). 
 27  5  U.  S.  C.    601(  5). 
 28  U.  S.  Census  Bureau,  Statistical  Abstract  of  the  United  States:  2000,  Section  9,  pages  299-  300,  Tables  490  and 
 492. 
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 1.  Telecommunications  Service  Entities 
 a.  Wireline  Carriers  and  Service  Providers 
 15.  We  have  included  small  incumbent  local  exchange  carriers  in  this  present  RFA  analysis.  As  noted  above,  a  small  business  under  the  RFA  is  one  that,  inter  alia,  meets  the  pertinent  small  business 
 size  standard  (e.  g.,  a  telephone  communications  business  having  1,500  or  fewer  employees),  and  is  not  dominant  in  its  field  of  operation.  29  The  SBAs  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.  30  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. 


 1.  Incumbent  Local  Exchange  Carriers  (LECs).  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  incumbent  local  exchange  services.  The 
 appropriate  size  standard  under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  31  According  to 
 Commission  data,  32  1,303  carriers  have  reported  that  they  are  engaged  in  the  provision  of  incumbent  local  exchange  services.  Of  these  1,303  carriers,  an  estimated  1,020  have  1,500  or  fewer  employees  and  283 
 have  more  than  1,500  employees.  Consequently,  the  Commission  estimates  that  most  providers  of  incumbent  local  exchange  service  are  small  businesses  that  may  be  affected  by  our  action.  In  addition, 
 limited  preliminary  census  data  for  2002  indicate  that  the  total  number  of  wired  communications  carriers  increased  approximately  34  percent  from  1997  to  2002.  33 


 16.  Competitive  Local  Exchange  Carriers,  Competitive  Access  Providers  (CAPs),  Shared-  Tenant  Service  Providers,  and  Other  Local  Service  Providers.  Neither  the  Commission  nor  the  SBA  has 
 developed  a  small  business  size  standard  specifically  for  these  service  providers.  The  appropriate  size  standard  under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size 
 standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  34  According  to  Commission  data,  35 


 29  15  U.  S.  C.    632. 
 30  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.  See  13  C.  F.  R.    121.102(  b). 
 31  13  C.  F.  R.    121.  201,  NAICS  code  517110  (changed  from  513310  in  Oct.  2002). 
 32  FCC,  Wireline  Competition  Bureau,  Industry  Analysis  and  Technology  Division,  Trends  in  Telephone  Service 
 at  Table  5.3,  page  5-  5  (June  2004)  (  Trends  in  Telephone  Service).  This  source  uses  data  that  are  current  as  of  October  1,  2004. 


 33  See  U.  S.  Census  Bureau,  2002  Economic  Census,  Industry  Series:  Information,  Table  2,  Comparative 
 Statistics  for  the  United  States  (1997  NAICS  Basis):  2002  and  1997,  NAICS  code  513310  (issued  Nov.  2004).  The  preliminary  data  indicate  that  the  total  number  of  establishments  increased  from  20,  815  to  27,  891.  In  this 


 context,  the  number  of  establishments  is  a  less  helpful  indicator  of  small  business  prevalence  than  is  the  number  of  firms,  because  the  latter  number  takes  into  account  the  concept  of  common  ownership  or  control.  The  more 
 helpful  2002  census  data  on  firms,  including  employment  and  receipts  numbers,  will  be  issued  in  late  2005.  34 
 13  C.  F.  R.    121.  201,  NAICS  code  517110  (changed  from  513310  in  Oct.  2002). 
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 769  carriers  have  reported  that  they  are  engaged  in  the  provision  of  either  competitive  access  provider  services  or  competitive  local  exchange  carrier  services.  Of  these  769  carriers,  an  estimated  676  have 
 1,500  or  fewer  employees  and  93  have  more  than  1,500  employees.  In  addition,  12  carriers  have  reported  that  they  are  Shared-  Tenant  Service  Providers,  and  all  12  are  estimated  to  have  1,500  or  fewer 
 employees.  In  addition,  39  carriers  have  reported  that  they  are  Other  Local  Service  Providers.  Of  the  39,  an  estimated  38  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees. 
 Consequently,  the  Commission  estimates  that  most  providers  of  competitive  local  exchange  service,  competitive  access  providers,  Shared-  Tenant  Service  Providers,  and  Other  Local  Service  Providers 
 are  small  entities  that  may  be  affected  by  our  action.  In  addition,  limited  preliminary  census  data  for  2002  indicate  that  the  total  number  of  wired  communications  carriers  increased  approximately  34  percent  from 
 1997  to  2002.  36 
 17.  Local  Resellers.  The  SBA  has  developed  a  small  business  size  standard  for  the  category  of  Telecommunications  Resellers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer 


 employees.  37  According  to  Commission  data,  38  143  carriers  have  reported  that  they  are  engaged  in  the  provision  of  local  resale  services.  Of  these,  an  estimated  141  have  1,500  or  fewer  employees  and  two 
 have  more  than  1,500  employees.  Consequently,  the  Commission  estimates  that  the  majority  of  local  resellers  are  small  entities  that  may  be  affected  by  our  action. 


 18.  Toll  Resellers.  The  SBA  has  developed  a  small  business  size  standard  for  the  category  of  Telecommunications  Resellers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer 
 employees.  39  According  to  Commission  data,  40  770  carriers  have  reported  that  they  are  engaged  in  the  provision  of  toll  resale  services.  Of  these,  an  estimated  747  have  1,500  or  fewer  employees  and  23  have 
 more  than  1,500  employees.  Consequently,  the  Commission  estimates  that  the  majority  of  toll  resellers  are  small  entities  that  may  be  affected  by  our  action. 


 19.  Payphone  Service  Providers  (PSPs).  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  payphone  services  providers.  The  appropriate  size  standard  under 
 SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  41  According  to  Commission  data,  42  654  carriers  have 
 reported  that  they  are  engaged  in  the  provision  of  payphone  services.  Of  these,  an  estimated  652  have  1,500  or  fewer  employees  and  two  have  more  than  1,500  employees.  Consequently,  the  Commission 
 estimates  that  the  majority  of  payphone  service  providers  are  small  entities  that  may  be  affected  by  our 


 (continued  from  previous  page)  35  Trends  in  Telephone  Service  at  Table  5.3. 
 36  See  supra  note  33. 
 37  13  C.  F.  R.    121.  201,  NAICS  code  517310  (changed  from  513330  in  Oct.  2002). 
 38  Trends  in  Telephone  Service  at  Table  5.3. 
 39  13  C.  F.  R.    121.  201,  NAICS  code  517310  (changed  from  513330  in  Oct.  2002). 
 40  Trends  in  Telephone  Service  at  Table  5.3. 
 41  13  C.  F.  R.    121.  201,  NAICS  code  517110  (changed  from  513310  in  Oct.  2002). 
 42  Trends  in  Telephone  Service  at  Table  5.3. 
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 action.  In  addition,  limited  preliminary  census  data  for  2002  indicate  that  the  total  number  of  wired  communications  carriers  increased  approximately  34  percent  from  1997  to  2002.  43 
 20.  Interexchange  Carriers  (IXCs).  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  providers  of  interexchange  services.  The  appropriate  size  standard 
 under  SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  44  According  to  Commission  data,  45  316  carriers  have 
 reported  that  they  are  engaged  in  the  provision  of  interexchange  service.  Of  these,  an  estimated  292  have  1,500  or  fewer  employees  and  24  have  more  than  1,500  employees.  Consequently,  the  Commission 
 estimates  that  the  majority  of  IXCs  are  small  entities  that  may  be  affected  by  our  action.  In  addition,  limited  preliminary  census  data  for  2002  indicate  that  the  total  number  of  wired  communications  carriers 
 increased  approximately  34  percent  from  1997  to  2002.  46 
 21.  Operator  Service  Providers  (OSPs).  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  operator  service  providers.  The  appropriate  size  standard  under 


 SBA  rules  is  for  the  category  Wired  Telecommunications  Carriers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  47  According  to  Commission  data,  48  23  carriers  have 
 reported  that  they  are  engaged  in  the  provision  of  operator  services.  Of  these,  an  estimated  20  have  1,500  or  fewer  employees  and  three  have  more  than  1,500  employees.  Consequently,  the  Commission  estimates 
 that  the  majority  of  OSPs  are  small  entities  that  may  be  affected  by  our  action.  In  addition,  limited  preliminary  census  data  for  2002  indicate  that  the  total  number  of  wired  communications  carriers 
 increased  approximately  34  percent  from  1997  to  2002.  49 
 22.  Prepaid  Calling  Card  Providers.  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  prepaid  calling  card  providers.  The  appropriate  size  standard  under 


 SBA  rules  is  for  the  category  Telecommunications  Resellers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  50  According  to  Commission  data,  51  89  carriers  have  reported 
 that  they  are  engaged  in  the  provision  of  prepaid  calling  cards.  Of  these,  88  are  estimated  to  have  1,500  or  fewer  employees  and  one  has  more  than  1,500  employees.  Consequently,  the  Commission  estimates 
 that  all  or  the  majority  of  prepaid  calling  card  providers  are  small  entities  that  may  be  affected  by  our  action. 


 23.  800  and  800-  Like  Service  Subscribers.  52  Neither  the  Commission  nor  the  SBA  has  developed  a  small  business  size  standard  specifically  for  800  and  800-  like  service  (  toll  free)  subscribers.  The 


 43  See  supra  note  33. 
 44  13  C.  F.  R.    121.  201,  NAICS  code  517110  (changed  from  513310  in  Oct.  2002). 
 45  Trends  in  Telephone  Service  at  Table  5.3. 
 46  See  supra  note  33. 
 47  13  C.  F.  R.    121.  201,  NAICS  code  517110  (changed  from  513310  in  Oct.  2002). 
 48  Trends  in  Telephone  Service  at  Table  5.3. 
 49  See  supra  note  33. 
 50  13  C.  F.  R.    121.  201,  NAICS  code  517310  (changed  from  513330  in  Oct.  2002). 
 51  Trends  in  Telephone  Service  at  Table  5.3. 
 52  We  include  all  toll-  free  number  subscribers  in  this  category,  including  those  for  888  numbers. 
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 appropriate  size  standard  under  SBA  rules  is  for  the  category  Telecommunications  Resellers.  Under  that  size  standard,  such  a  business  is  small  if  it  has  1,500  or  fewer  employees.  53  The  most  reliable  source  of 
 information  regarding  the  number  of  these  service  subscribers  appears  to  be  data  the  Commission  collects  on  the  800,  888,  and  877  numbers  in  use.  54  According  to  our  data,  at  the  end  of  January,  1999,  the 
 number  of  800  numbers  assigned  was  7,692,955;  the  number  of  888  numbers  assigned  was  7,706,393;  and  the  number  of  877  numbers  assigned  was  1,946,538.  We  do  not  have  data  specifying  the  number  of 
 these  subscribers  that  are  not  independently  owned  and  operated  or  have  more  than  1,500  employees,  and  thus  are  unable  at  this  time  to  estimate  with  greater  precision  the  number  of  toll  free  subscribers  that 
 would  qualify  as  small  businesses  under  the  SBA  size  standard.  Consequently,  we  estimate  that  there  are  7,692,955  or  fewer  small  entity  800  subscribers;  7,706,393  or  fewer  small  entity  888  subscribers;  and 
 1,946,538  or  fewer  small  entity  877  subscribers. 
 b.  International  Service  Providers 


 24.  The  Commission  has  not  developed  a  small  business  size  standard  specifically  for  providers  of  international  service.  The  appropriate  size  standards  under  SBA  rules  are  for  the  two  broad  categories  of 
 Satellite  Telecommunications  and  Other  Telecommunications.  Under  both  categories,  such  a  business  is  small  if  it  has  $12.5  million  or  less  in  average  annual  receipts.  55  For  the  first  category  of  Satellite 
 Telecommunications,  Census  Bureau  data  for  1997  show  that  there  were  a  total  of  324  firms  that  operated  for  the  entire  year.  56  Of  this  total,  273  firms  had  annual  receipts  of  under  $10  million,  and  an  additional 
 24  firms  had  receipts  of  $10  million  to  $24,999,999.  Thus,  the  majority  of  Satellite  Telecommunications  firms  can  be  considered  small. 


 25.  The  second  category    Other  Telecommunications    includes  establishments  primarily  engaged  in  .  .  .  providing  satellite  terminal  stations  and  associated  facilities  operationally  connected  with  one  or 
 more  terrestrial  communications  systems  and  capable  of  transmitting  telecommunications  to  or  receiving  telecommunications  from  satellite  systems.  57  According  to  Census  Bureau  data  for  1997,  there  were  439 
 firms  in  this  category  that  operated  for  the  entire  year.  58  Of  this  total,  424  firms  had  annual  receipts  of  $5  million  to  $9,999,999  and  an  additional  six  firms  had  annual  receipts  of  $10  million  to  $24,999,990. 
 Thus,  under  this  second  size  standard,  the  majority  of  firms  can  be  considered  small. 
 c.  Wireless  Telecommunications  Service  Providers 


 26.  Below,  for  those  services  subject  to  auctions,  we  note  that,  as  a  general  matter,  the  number  of  winning  bidders  that  qualify  as  small  businesses  at  the  close  of  an  auction  does  not  necessarily  represent 
 the  number  of  small  businesses  currently  in  service.  Also,  the  Commission  does  not  generally  track 
 53  13  C.  F.  R.    121.  201,  NAICS  code  517310  (changed  from  513330  in  Oct.  2002). 
 54  See  FCC,  Common  Carrier  Bureau,  Industry  Analysis  Division,  Study  on  Telephone  Trends,  Tables  21.2,  21.3, 
 and  21.  4  (Feb.  1999).  55 
 13  C.  F.  R.    121.  201,  NAICS  codes  517410  and  517910  (changed  from  513340  and  513390  in  Oct.  2002).  56 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size  (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  513340  (issued  Oct.  2000). 


 57  Office  of  Management  and  Budget,  North  American  Industry  Classification  System  513  (1997)  (NAICS  code 
 513390,  changed  to  517910  in  Oct.  2002).  58 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size  (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  513390  (issued  Oct.  2000). 
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 subsequent  business  size  unless,  in  the  context  of  assignments  or  transfers,  unjust  enrichment  issues  are  implicated. 
 27.  Wireless  Service  Providers.  The  SBA  has  developed  a  small  business  size  standard  for  wireless  firms  within  the  two  broad  economic  census  categories  of  Paging  59  and  Cellular  and  Other  Wireless 
 Telecommunications.  60  Under  both  SBA  categories,  a  wireless  business  is  small  if  it  has  1,500  or  fewer  employees.  For  the  census  category  of  Paging,  Census  Bureau  data  for  1997  show  that  there  were  1,320 
 firms  in  this  category,  total,  that  operated  for  the  entire  year.  61  Of  this  total,  1,303  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  17  firms  had  employment  of  1,000  employees  or  more.  62 
 Thus,  under  this  category  and  associated  small  business  size  standard,  the  majority  of  firms  can  be  considered  small.  For  the  census  category  Cellular  and  Other  Wireless  Telecommunications,  Census 
 Bureau  data  for  1997  show  that  there  were  977  firms  in  this  category,  total,  that  operated  for  the  entire  year.  63  Of  this  total,  965  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  12  firms 
 had  employment  of  1,000  employees  or  more.  64  Thus,  under  this  second  category  and  size  standard,  the  majority  of  firms  can,  again,  be  considered  small.  In  addition,  limited  preliminary  census  data  for  2002 
 indicate  that  the  total  number  of  paging  providers  decreased  approximately  51  percent  from  1997  to  2002.  65  In  addition,  limited  preliminary  census  data  for  2002  indicate  that  the  total  number  of  cellular  and 
 other  wireless  telecommunications  carriers  increased  approximately  321  percent  from  1997  to  2002.  66 
 28.  Cellular  Licensees.  The  SBA  has  developed  a  small  business  size  standard  for  wireless  firms  within  the  broad  economic  census  category  Cellular  and  Other  Wireless  Telecommunications.  67  Under 


 this  SBA  category,  a  wireless  business  is  small  if  it  has  1,500  or  fewer  employees.  For  the  census  category  Cellular  and  Other  Wireless  Telecommunications  firms,  Census  Bureau  data  for  1997  show  that 


 59  13  C.  F.  R.    121.  201,  NAICS  code  513321  (changed  to  517211  in  October  2002). 
 60  13  C.  F.  R.    121.  201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 61  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000).  62 
 Id.  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1000  employees  or  more. 


 63  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513322  (issued  October  2000).  64 
 Id.  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1000  employees  or  more. 


 65  See  U.  S.  Census  Bureau,  2002  Economic  Census,  Industry  Series:  Information,  Table  2,  Comparative  Statistics 
 for  the  United  States  (1997  NAICS  Basis):  2002  and  1997,  NAICS  code  513321  (issued  Nov.  2004).  The  preliminary  data  indicate  that  the  total  number  of  establishments  decreased  from  3,427  to  1,664.  In  this  context, 


 the  number  of  establishments  is  a  less  helpful  indicator  of  small  business  prevalence  than  is  the  number  of  firms,  because  the  latter  number  takes  into  account  the  concept  of  common  ownership  or  control.  The  more  helpful  2002 
 census  data  on  firms,  including  employment  and  receipts  numbers,  will  be  issued  in  late  2005.  66 
 See  U.  S.  Census  Bureau,  2002  Economic  Census,  Industry  Series:  Information,  Table  2,  Comparative  Statistics  for  the  United  States  (1997  NAICS  Basis):  2002  and  1997,  NAICS  code  513322  (issued  Nov.  2004).  The 


 preliminary  data  indicate  that  the  total  number  of  establishments  increased  from  2,959  to  9,511.  In  this  context,  the  number  of  establishments  is  a  less  helpful  indicator  of  small  business  prevalence  than  is  the  number  of  firms, 
 because  the  latter  number  takes  into  account  the  concept  of  common  ownership  or  control.  The  more  helpful  2002  census  data  on  firms,  including  employment  and  receipts  numbers,  will  be  issued  in  late  2005. 
 67  13  C.  F.  R.    121.  201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
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 there  were  977  firms  in  this  category,  total,  that  operated  for  the  entire  year.  68  Of  this  total,  965  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  12  firms  had  employment  of  1,000  employees 
 or  more.  69  Thus,  under  this  category  and  size  standard,  the  great  majority  of  firms  can  be  considered  small.  Also,  according  to  Commission  data,  437  carriers  reported  that  they  were  engaged  in  the  provision 
 of  cellular  service,  Personal  Communications  Service  (PCS),  or  Specialized  Mobile  Radio  (SMR)  Telephony  services,  which  are  placed  together  in  the  data.  70  We  have  estimated  that  260  of  these  are 
 small,  under  the  SBA  small  business  size  standard.  71 
 29.  Common  Carrier  Paging.  The  SBA  has  developed  a  small  business  size  standard  for  wireless  firms  within  the  broad  economic  census  category,  Cellular  and  Other  Wireless  Telecommunications.  72 


 Under  this  SBA  category,  a  wireless  business  is  small  if  it  has  1,500  or  fewer  employees.  For  the  census  category  of  Paging,  Census  Bureau  data  for  1997  show  that  there  were  1,320  firms  in  this  category,  total, 
 that  operated  for  the  entire  year.  73  Of  this  total,  1,303  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  17  firms  had  employment  of  1,000  employees  or  more.  74  Thus,  under  this  category  and 
 associated  small  business  size  standard,  the  majority  of  firms  can  be  considered  small.  In  the  Paging  Third  Report  and  Order,  we  developed  a  small  business  size  standard  for  small  businesses  and  very 
 small  businesses  for  purposes  of  determining  their  eligibility  for  special  provisions  such  as  bidding  credits  and  installment  payments.  75  A  small  business  is  an  entity  that,  together  with  its  affiliates  and 
 controlling  principals,  has  average  gross  revenues  not  exceeding  $15  million  for  the  preceding  three  years.  Additionally,  a  very  small  business  is  an  entity  that,  together  with  its  affiliates  and  controlling 
 principals,  has  average  gross  revenues  that  are  not  more  than  $3  million  for  the  preceding  three  years.  76  The  SBA  has  approved  these  small  business  size  standards.  77  An  auction  of  Metropolitan  Economic  Area 
 licenses  commenced  on  February  24,  2000,  and  closed  on  March  2,  2000.  78  Of  the  985  licenses  auctioned,  440  were  sold.  Fifty-  seven  companies  claiming  small  business  status  won.  Also,  according  to 


 68  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513322  (issued  October  2000).  69 
 Id.  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1000  employees  or  more. 


 70  Trends  in  Telephone  Service  at  Table  5.3. 
 71  Id. 
 72  13  C.  F.  R.    121.  201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 73  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513321  (issued  October  2000).  74 
 Id.  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1000  employees  or  more. 


 75  Amendment  of  Part  90  of  the  Commissions  Rules  to  Provide  for  the  Use  of  the  220-  222  MHz  Band  by  the  Private 
 Land  Mobile  Radio  Service,  PR  Docket  No.  89-  552,  Third  Report  and  Order  and  Fifth  Notice  of  Proposed  Rulemaking,  12  FCC  Rcd  10943,  11068-  70,  paras.  291-  295,  62  FR  16004  (Apr.  3,  1997). 


 76  See  Letter  to  Amy  Zoslov,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications 
 Bureau,  FCC,  from  A.  Alvarez,  Administrator,  SBA  (Dec.  2,  1998)  (SBA  Dec.  2,  1998  Letter).  77 
 Revision  of  Part  22  and  Part  90  of  the  Commissions  Rules  to  Facilitate  Future  Development  of  Paging  Systems,  Memorandum  Opinion  and  Order  on  Reconsideration  and  Third  Report  and  Order,  14  FCC  Rcd  10030,  paras.  98-107 


 (1999).  78 
 Id.  at  10085,  para.  98. 
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 Commission  data,  375  carriers  reported  that  they  were  engaged  in  the  provision  of  paging  and  messaging  services.  79  Of  those,  we  estimate  that  370  are  small,  under  the  SBA-  approved  small  business  size 
 standard.  80 
 30.  Wireless  Communications  Services.  This  service  can  be  used  for  fixed,  mobile,  radiolocation,  and  digital  audio  broadcasting  satellite  uses.  The  Commission  established  small  business  size  standards 


 for  the  wireless  communications  services  (WCS)  auction.  81  A  small  business  is  an  entity  with  average  gross  revenues  of  $40  million  for  each  of  the  three  preceding  years,  and  a  very  small  business  is  an 
 entity  with  average  gross  revenues  of  $15  million  for  each  of  the  three  preceding  years.  The  SBA  has  approved  these  small  business  size  standards.  82  The  Commission  auctioned  geographic  area  licenses  in 
 the  WCS  service.  In  the  auction,  there  were  seven  winning  bidders  that  qualified  as  very  small  business  entities,  and  one  that  qualified  as  a  small  business  entity. 


 31.  Wireless  Telephony.  Wireless  telephony  includes  cellular,  personal  communications  services  (PCS),  and  specialized  mobile  radio  (SMR)  telephony  carriers.  As  noted  earlier,  the  SBA  has  developed 
 a  small  business  size  standard  for  Cellular  and  Other  Wireless  Telecommunications  services.  83  Under  that  SBA  small  business  size  standard,  a  business  is  small  if  it  has  1,500  or  fewer  employees.  84 
 According  to  Commission  data,  445  carriers  reported  that  they  were  engaged  in  the  provision  of  wireless  telephony.  85  We  have  estimated  that  245  of  these  are  small  under  the  SBA  small  business  size  standard. 


 32.  Broadband  Personal  Communications  Service.  The  broadband  Personal  Communications  Service  (PCS)  spectrum  is  divided  into  six  frequency  blocks  designated  A  through  F,  and  the  Commission 
 has  held  auctions  for  each  block.  The  Commission  defined  small  entity  for  Blocks  C  and  F  as  an  entity  that  has  average  gross  revenues  of  $40  million  or  less  in  the  three  previous  calendar  years.  86  For  Block  F, 
 an  additional  classification  for  very  small  business  was  added  and  is  defined  as  an  entity  that,  together  with  its  affiliates,  has  average  gross  revenues  of  not  more  than  $15  million  for  the  preceding  three 
 calendar  years.  87  These  standards  defining  small  entity  in  the  context  of  broadband  PCS  auctions  have  been  approved  by  the  SBA.  88  No  small  businesses,  within  the  SBA-  approved  small  business  size 
 standards  bid  successfully  for  licenses  in  Blocks  A  and  B.  There  were  90  winning  bidders  that  qualified  as  small  entities  in  the  Block  C  auctions.  A  total  of  93  small  and  very  small  business  bidders  won 


 79  Trends  in  Telephone  Service  at  Table  5.3. 
 80  Id. 
 81  Public  Notice,  Auction  of  Wireless  Communications  Services,  Auction  Notes  and  Filing  Requirements  for  128 
 WCS  Licenses  Scheduled  for  April  15,  1997,  DA  97-  386,  Feb.  21,  1997.  82 
 SBA  Dec.  2,  1998  Letter.  83 
 13  C.  F.  R.    121.  201,  NAICS  code  513322  (changed  to  517212  in  October  2002).  84 
 Id.  85 
 Trends  in  Telephone  Service  at  Table  5.3.  86 
 See  Amendment  of  Parts  20  and  24  of  the  Commissions  Rules    Broadband  PCS  Competitive  Bidding  and  the  Commercial  Mobile  Radio  Service  Spectrum  Cap,  WT  Docket  No.  96-  59,  Report  and  Order,  11  FCC  Rcd  7824,  61 


 FR  33859  (July  1,  1996)  (PCS  Order);  see  also  47  C.  F.  R.    24.  720(  b).  87 
 See  PCS  Order,  11  FCC  Rcd  7824.  88 
 See,  e.  g.,  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  PP  Docket  No.  93-  253,  Fifth  Report  and  Order,  9  FCC  Rcd  5332,  59  FR  37566  (July  22,  1994). 
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 approximately  40  percent  of  the  1,479  licenses  for  Blocks  D,  E,  and  F.  89  On  March  23,  1999,  the  Commission  re-  auctioned  347  C,  D,  E,  and  F  Block  licenses.  There  were  48  small  business  winning 
 bidders.  On  January  26,  2001,  the  Commission  completed  the  auction  of  422  C  and  F  Broadband  PCS  licenses  in  Auction  No.  35.  Of  the  35  winning  bidders  in  this  auction,  29  qualified  as  small  or  very 
 small  businesses.  Subsequent  events,  concerning  Auction  35,  including  judicial  and  agency  determinations,  resulted  in  a  total  of  163  C  and  F  Block  licenses  being  available  for  grant. 


 33.  Narrowband  Personal  Communications  Services.  To  date,  two  auctions  of  narrowband  personal  communications  services  (PCS)  licenses  have  been  conducted.  For  purposes  of  the  two  auctions  that  have 
 already  been  held,  small  businesses  were  entities  with  average  gross  revenues  for  the  prior  three  calendar  years  of  $40  million  or  less.  Through  these  auctions,  the  Commission  has  awarded  a  total  of  41 
 licenses,  out  of  which  11  were  obtained  by  small  businesses.  To  ensure  meaningful  participation  of  small  business  entities  in  future  auctions,  the  Commission  has  adopted  a  two-  tiered  small  business  size  standard 
 in  the  Narrowband  PCS  Second  Report  and  Order.  90  A  small  business  is  an  entity  that,  together  with  affiliates  and  controlling  interests,  has  average  gross  revenues  for  the  three  preceding  years  of  not  more 
 than  $40  million.  A  very  small  business  is  an  entity  that,  together  with  affiliates  and  controlling  interests,  has  average  gross  revenues  for  the  three  preceding  years  of  not  more  than  $15  million.  The 
 SBA  has  approved  these  small  business  size  standards.  91  In  the  future,  the  Commission  will  auction  459  licenses  to  serve  Metropolitan  Trading  Areas  (MTAs)  and  408  response  channel  licenses.  There  is  also 
 one  megahertz  of  narrowband  PCS  spectrum  that  has  been  held  in  reserve  and  that  the  Commission  has  not  yet  decided  to  release  for  licensing.  The  Commission  cannot  predict  accurately  the  number  of 
 licenses  that  will  be  awarded  to  small  entities  in  future  auctions.  However,  four  of  the  16  winning  bidders  in  the  two  previous  narrowband  PCS  auctions  were  small  businesses,  as  that  term  was  defined.  The 
 Commission  assumes,  for  purposes  of  this  analysis  that  a  large  portion  of  the  remaining  narrowband  PCS  licenses  will  be  awarded  to  small  entities.  The  Commission  also  assumes  that  at  least  some  small 
 businesses  will  acquire  narrowband  PCS  licenses  by  means  of  the  Commissions  partitioning  and  disaggregation  rules. 


 34.  220  MHz  Radio  Service    Phase  I  Licensees.  The  220  MHz  service  has  both  Phase  I  and  Phase  II  licenses.  Phase  I  licensing  was  conducted  by  lotteries  in  1992  and  1993.  There  are  approximately  1,515 
 such  non-  nationwide  licensees  and  four  nationwide  licensees  currently  authorized  to  operate  in  the  220  MHz  band.  The  Commission  has  not  developed  a  small  business  size  standard  for  small  entities 
 specifically  applicable  to  such  incumbent  220  MHz  Phase  I  licensees.  To  estimate  the  number  of  such  licensees  that  are  small  businesses,  we  apply  the  small  business  size  standard  under  the  SBA  rules 
 applicable  to  Cellular  and  Other  Wireless  Telecommunications  companies.  This  category  provides  that  a  small  business  is  a  wireless  company  employing  no  more  than  1,500  persons.  92  For  the  census  category 
 Cellular  and  Other  Wireless  Telecommunications,  Census  Bureau  data  for  1997  show  that  there  were  977 


 89  FCC  News,  Broadband  PCS,  D,  E  and  F  Block  Auction  Closes,  No.  71744  (rel.  Jan.  14,  1997);  see  also 
 Amendment  of  the  Commissions  Rules  Regarding  Installment  Payment  Financing  for  Personal  Communications  Services  (PCS)  Licenses,  WT  Docket  No.  97-  82,  Second  Report  and  Order,  12  FCC  Rcd  16436,  62  FR  55348  (Oct. 


 24,  1997).  90 
 Amendment  of  the  Commissions  Rules  to  Establish  New  Personal  Communications  Services,  Narrowband  PCS,  Docket  No.  ET  92-  100,  Docket  No.  PP  93-  253,  Second  Report  and  Order  and  Second  Further  Notice  of  Proposed 


 Rulemaking,  15  FCC  Rcd  10456,  65  FR  35875  (June  6,  2000).  91 
 See  SBA  Dec.  2,  1998  Letter.  92 
 13  C.  F.  R.    121.  201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
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 firms  in  this  category,  total,  that  operated  for  the  entire  year.  93  Of  this  total,  965  firms  had  employment  of  999  or  fewer  employees,  and  an  additional  12  firms  had  employment  of  1,000  employees  or  more.  94 
 Thus,  under  this  second  category  and  size  standard,  the  majority  of  firms  can,  again,  be  considered  small.  Assuming  this  general  ratio  continues  in  the  context  of  Phase  I  220  MHz  licensees,  the  Commission 
 estimates  that  nearly  all  such  licensees  are  small  businesses  under  the  SBAs  small  business  size  standard.  In  addition,  limited  preliminary  census  data  for  2002  indicate  that  the  total  number  of  cellular  and  other 
 wireless  telecommunications  carriers  increased  approximately  321  percent  from  1997  to  2002.  95 
 35.  220  MHz  Radio  Service    Phase  II  Licensees.  The  220  MHz  service  has  both  Phase  I  and  Phase  II  licenses.  The  Phase  II  220  MHz  service  is  a  new  service,  and  is  subject  to  spectrum  auctions.  In  the 


 220  MHz  Third  Report  and  Order,  we  adopted  a  small  business  size  standard  for  small  and  very  small  businesses  for  purposes  of  determining  their  eligibility  for  special  provisions  such  as  bidding  credits  and 
 installment  payments.  96  This  small  business  size  standard  indicates  that  a  small  business  is  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  not  exceeding  $15 
 million  for  the  preceding  three  years.  97  A  very  small  business  is  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  that  do  not  exceed  $3  million  for  the 
 preceding  three  years.  The  SBA  has  approved  these  small  business  size  standards.  98  Auctions  of  Phase  II  licenses  commenced  on  September  15,  1998,  and  closed  on  October  22,  1998.  99  In  the  first  auction,  908 
 licenses  were  auctioned  in  three  different-  sized  geographic  areas:  three  nationwide  licenses,  30  Regional  Economic  Area  Group  (EAG)  Licenses,  and  875  Economic  Area  (EA)  Licenses.  Of  the  908  licenses 
 auctioned,  693  were  sold.  100  Thirty-  nine  small  businesses  won  licenses  in  the  first  220  MHz  auction.  The  second  auction  included  225  licenses:  216  EA  licenses  and  9  EAG  licenses.  Fourteen  companies 
 claiming  small  business  status  won  158  licenses.  101 
 36.  800  MHz  and  900  MHz  Specialized  Mobile  Radio  Licenses.  The  Commission  awards  small  entity  and  very  small  entity  bidding  credits  in  auctions  for  Specialized  Mobile  Radio  (SMR) 


 geographic  area  licenses  in  the  800  MHz  and  900  MHz  bands  to  firms  that  had  revenues  of  no  more  than 


 93  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Table  5,  Employment  Size  of  Firms 
 Subject  to  Federal  Income  Tax:  1997,  NAICS  code  513322  (issued  October  2000).  94 
 Id.  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of  1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1000  employees  or  more. 


 95  See  U.  S.  Census  Bureau,  2002  Economic  Census,  Industry  Series:  Information,  Table  2,  Comparative  Statistics 
 for  the  United  States  (1997  NAICS  Basis):  2002  and  1997,  NAICS  code  513322  (issued  Nov.  2004).  The  preliminary  data  indicate  that  the  total  number  of  establishments  increased  from  2,959  to  9,511.  In  this  context, 


 the  number  of  establishments  is  a  less  helpful  indicator  of  small  business  prevalence  than  is  the  number  of  firms,  because  the  latter  number  takes  into  account  the  concept  of  common  ownership  or  control.  The  more  helpful  2002 
 census  data  on  firms,  including  employment  and  receipts  numbers,  will  be  issued  in  late  2005.  96 
 220  MHz  Third  Report  and  Order,  12  FCC  Rcd  10943,  11068-  70,  paras.  291-  295  (1997).  97 
 Id.  at  11068,  para.  291.  98 
 See  Letter  to  D.  Phythyon,  Chief,  Wireless  Telecommunications  Bureau,  Federal  Communications  Commission,  from  A.  Alvarez,  Administrator,  Small  Business  Administration  (Jan.  6,  1998). 


 99  See  generally  Public  Notice,  220  MHz  Service  Auction  Closes,  14  FCC  Rcd  605  (1998). 
 100  See,  e.  g.,  Public  Notice,  FCC  Announces  It  is  Prepared  to  Grant  654  Phase  II  220  MHz  Licenses  After  Final 
 Payment  is  Made,  14  FCC  Rcd  1085  (1999).  101 
 Public  Notice,  Phase  II  220  MHz  Service  Spectrum  Auction  Closes,  14  FCC  Rcd  11218  (1999). 
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 $15  million  in  each  of  the  three  previous  calendar  years,  or  that  had  revenues  of  no  more  than  $3  million  in  each  of  the  previous  calendar  years,  respectively.  102  These  bidding  credits  apply  to  SMR  providers  in 
 the  800  MHz  and  900  MHz  bands  that  either  hold  geographic  area  licenses  or  have  obtained  extended  implementation  authorizations.  The  Commission  does  not  know  how  many  firms  provide  800  MHz  or 
 900  MHz  geographic  area  SMR  service  pursuant  to  extended  implementation  authorizations,  nor  how  many  of  these  providers  have  annual  revenues  of  no  more  than  $15  million.  One  firm  has  over  $15 
 million  in  revenues.  The  Commission  assumes,  for  purposes  here,  that  all  of  the  remaining  existing  extended  implementation  authorizations  are  held  by  small  entities,  as  that  term  is  defined  by  the  SBA. 
 The  Commission  has  held  auctions  for  geographic  area  licenses  in  the  800  MHz  and  900  MHz  SMR  bands.  There  were  60  winning  bidders  that  qualified  as  small  or  very  small  entities  in  the  900  MHz  SMR 
 auctions.  Of  the  1,020  licenses  won  in  the  900  MHz  auction,  bidders  qualifying  as  small  or  very  small  entities  won  263  licenses.  In  the  800  MHz  auction,  38  of  the  524  licenses  won  were  won  by  small  and 
 very  small  entities. 
 37.  700  MHz  Guard  Band  Licensees.  In  the  700  MHz  Guard  Band  Order,  we  adopted  a  small  business  size  standard  for  small  businesses  and  very  small  businesses  for  purposes  of  determining 


 their  eligibility  for  special  provisions  such  as  bidding  credits  and  installment  payments.  103  A  small  business  as  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross 
 revenues  not  exceeding  $15  million  for  the  preceding  three  years.  Additionally,  a  very  small  business  is  an  entity  that,  together  with  its  affiliates  and  controlling  principals,  has  average  gross  revenues  that  are 
 not  more  than  $3  million  for  the  preceding  three  years.  An  auction  of  52  Major  Economic  Area  (MEA)  licenses  commenced  on  September  6,  2000,  and  closed  on  September  21,  2000.  104  Of  the  104  licenses 
 auctioned,  96  licenses  were  sold  to  nine  bidders.  Five  of  these  bidders  were  small  businesses  that  won  a  total  of  26  licenses.  A  second  auction  of  700  MHz  Guard  Band  licenses  commenced  on  February  13, 
 2001  and  closed  on  February  21,  2001.  All  eight  of  the  licenses  auctioned  were  sold  to  three  bidders.  One  of  these  bidders  was  a  small  business  that  won  a  total  of  two  licenses.  105 


 38.  Rural  Radiotelephone  Service.  The  Commission  has  not  adopted  a  size  standard  for  small  businesses  specific  to  the  Rural  Radiotelephone  Service.  106  A  significant  subset  of  the  Rural 
 Radiotelephone  Service  is  the  Basic  Exchange  Telephone  Radio  System  (BETRS).  107  The  Commission  uses  the  SBAs  small  business  size  standard  applicable  to  Cellular  and  Other  Wireless 
 Telecommunications,  i.  e.,  an  entity  employing  no  more  than  1,500  persons.  108  There  are  approximately  1,000  licensees  in  the  Rural  Radiotelephone  Service,  and  the  Commission  estimates  that  there  are  1,000 
 or  fewer  small  entity  licensees  in  the  Rural  Radiotelephone  Service  that  may  be  affected  by  the  rules  and  policies  adopted  herein. 


 102  47  C.  F.  R.    90.814(  b)(  1). 
 103  See  Service  Rules  for  the  746-  764  MHz  Bands,  and  Revisions  to  part  27  of  the  Commissions  Rules,  WT  Docket 
 No.  99-  168,  Second  Report  and  Order,  65  FR  17599  (Apr.  4,  2000).  104 
 See  generally  Public  Notice,  220  MHz  Service  Auction  Closes,  Report  No.  WT  98-  36  (Oct.  23,  1998).  105 
 Public  Notice,  700  MHz  Guard  Band  Auction  Closes,  DA  01-  478  (rel.  Feb.  22,  2001).  106 
 The  service  is  defined  in  section  22.  99  of  the  Commissions  Rules,  47  C.  F.  R.    22.  99.  107 
 BETRS  is  defined  in  sections  22.  757  and  22.  759  of  the  Commissions  Rules,  47  C.  F.  R.    22.  757  and  22.  759.  108 
 13  C.  F.  R.    121.  201,  NAICS  code  517212. 
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 39.  Air-  Ground  Radiotelephone  Service.  The  Commission  has  not  adopted  a  small  business  size  standard  specific  to  the  Air-  Ground  Radiotelephone  Service.  109  We  will  use  SBAs  small  business  size 
 standard  applicable  to  Cellular  and  Other  Wireless  Telecommunications,  i.  e.,  an  entity  employing  no  more  than  1,500  persons.  110  There  are  approximately  100  licensees  in  the  Air-  Ground  Radiotelephone 
 Service,  and  we  estimate  that  almost  all  of  them  qualify  as  small  under  the  SBA  small  business  size  standard. 


 40.  Aviation  and  Marine  Radio  Services.  Small  businesses  in  the  aviation  and  marine  radio  services  use  a  very  high  frequency  (VHF)  marine  or  aircraft  radio  and,  as  appropriate,  an  emergency  position-indicating 
 radio  beacon  (and/  or  radar)  or  an  emergency  locator  transmitter.  The  Commission  has  not  developed  a  small  business  size  standard  specifically  applicable  to  these  small  businesses.  For  purposes 
 of  this  analysis,  the  Commission  uses  the  SBA  small  business  size  standard  for  the  category  Cellular  and  Other  Telecommunications,  which  is  1,500  or  fewer  employees.  111  Most  applicants  for  recreational 
 licenses  are  individuals.  Approximately  581,000  ship  station  licensees  and  131,000  aircraft  station  licensees  operate  domestically  and  are  not  subject  to  the  radio  carriage  requirements  of  any  statute  or 
 treaty.  For  purposes  of  our  evaluations  in  this  analysis,  we  estimate  that  there  are  up  to  approximately  712,000  licensees  that  are  small  businesses  (or  individuals)  under  the  SBA  standard.  In  addition,  between 
 December  3,  1998  and  December  14,  1998,  the  Commission  held  an  auction  of  42  VHF  Public  Coast  licenses  in  the  157.1875-  157.4500  MHz  (ship  transmit)  and  161.775-  162.0125  MHz  (coast  transmit) 
 bands.  For  purposes  of  the  auction,  the  Commission  defined  a  small  business  as  an  entity  that,  together  with  controlling  interests  and  affiliates,  has  average  gross  revenues  for  the  preceding  three  years  not  to 
 exceed  $15  million  dollars.  In  addition,  a  very  small  business  is  one  that,  together  with  controlling  interests  and  affiliates,  has  average  gross  revenues  for  the  preceding  three  years  not  to  exceed  $3  million 
 dollars.  112  There  are  approximately  10,672  licensees  in  the  Marine  Coast  Service,  and  the  Commission  estimates  that  almost  all  of  them  qualify  as  small  businesses  under  the  above  special  small  business  size 
 standards. 
 41.  Fixed  Microwave  Services.  Fixed  microwave  services  include  common  carrier,  113  private  operational-  fixed,  114  and  broadcast  auxiliary  radio  services.  115  At  present,  there  are  approximately  22,015 


 common  carrier  fixed  licensees  and  61,670  private  operational-  fixed  licensees  and  broadcast  auxiliary 
 109  The  service  is  defined  in  section  22.  99  of  the  Commissions  Rules,  47  C.  F.  R.    22.  99. 
 110  13  C.  F.  R.    121.  201,  NAICS  codes  517212. 
 111  13  C.  F.  R.    121.  201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 112  Amendment  of  the  Commissions  Rules  Concerning  Maritime  Communications,  PR  Docket  No.  92-  257,  Third 
 Report  and  Order  and  Memorandum  Opinion  and  Order,  13  FCC  Rcd  19853  (1998).  113 
 See  47  C.  F.  R.    101  et  seq.  (formerly,  Part  21  of  the  Commissions  Rules)  for  common  carrier  fixed  microwave  services  (except  Multipoint  Distribution  Service). 


 114  Persons  eligible  under  parts  80  and  90  of  the  Commissions  Rules  can  use  Private  Operational-  Fixed  Microwave 
 services.  See  47  C.  F.  R.  Parts  80  and  90.  Stations  in  this  service  are  called  operational-  fixed  to  distinguish  them  from  common  carrier  and  public  fixed  stations.  Only  the  licensee  may  use  the  operational-  fixed  station,  and  only  for 


 communications  related  to  the  licensees  commercial,  industrial,  or  safety  operations.  115 
 Auxiliary  Microwave  Service  is  governed  by  Part  74  of  Title  47  of  the  Commissions  rules.  See  47  C.  F.  R.  Part  74.  This  service  is  available  to  licensees  of  broadcast  stations  and  to  broadcast  and  cable  network  entities. 


 Broadcast  auxiliary  microwave  stations  are  used  for  relaying  broadcast  television  signals  from  the  studio  to  the  transmitter,  or  between  two  points  such  as  a  main  studio  and  an  auxiliary  studio.  The  service  also  includes  mobile 
 television  pickups,  which  relay  signals  from  a  remote  location  back  to  the  studio. 
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 radio  licensees  in  the  microwave  services.  The  Commission  has  not  created  a  size  standard  for  a  small  business  specifically  with  respect  to  fixed  microwave  services.  For  purposes  of  this  analysis,  the 
 Commission  uses  the  SBA  small  business  size  standard  for  the  category  Cellular  and  Other  Telecommunications,  which  is  1,500  or  fewer  employees.  116  The  Commission  does  not  have  data 
 specifying  the  number  of  these  licensees  that  have  more  than  1,500  employees,  and  thus  is  unable  at  this  time  to  estimate  with  greater  precision  the  number  of  fixed  microwave  service  licensees  that  would 
 qualify  as  small  business  concerns  under  the  SBAs  small  business  size  standard.  Consequently,  the  Commission  estimates  that  there  are  up  to  22,015  common  carrier  fixed  licensees  and  up  to  61,670  private 
 operational-  fixed  licensees  and  broadcast  auxiliary  radio  licensees  in  the  microwave  services  that  may  be  small  and  may  be  affected  by  the  rules  and  policies  adopted  herein.  We  noted,  however,  that  the  common 
 carrier  microwave  fixed  licensee  category  includes  some  large  entities. 
 42.  Offshore  Radiotelephone  Service.  This  service  operates  on  several  UHF  television  broadcast  channels  that  are  not  used  for  television  broadcasting  in  the  coastal  areas  of  states  bordering  the  Gulf  of 


 Mexico.  117  There  are  presently  approximately  55  licensees  in  this  service.  We  are  unable  to  estimate  at  this  time  the  number  of  licensees  that  would  qualify  as  small  under  the  SBAs  small  business  size 
 standard  for  Cellular  and  Other  Wireless  Telecommunications  services.  118  Under  that  SBA  small  business  size  standard,  a  business  is  small  if  it  has  1,500  or  fewer  employees.  119 


 43.  39  GHz  Service.  The  Commission  created  a  special  small  business  size  standard  for  39  GHz  licenses    an  entity  that  has  average  gross  revenues  of  $40  million  or  less  in  the  three  previous  calendar 
 years.  120  An  additional  size  standard  for  very  small  business  is:  an  entity  that,  together  with  affiliates,  has  average  gross  revenues  of  not  more  than  $15  million  for  the  preceding  three  calendar  years.  121  The 
 SBA  has  approved  these  small  business  size  standards.  122  The  auction  of  the  2,173  39  GHz  licenses  began  on  April  12,  2000  and  closed  on  May  8,  2000.  The  18  bidders  who  claimed  small  business  status 
 won  849  licenses.  Consequently,  the  Commission  estimates  that  18  or  fewer  39  GHz  licensees  are  small  entities  that  may  be  affected  by  the  rules  and  polices  adopted  herein. 


 44.  Broadband  Radio  Service  and  Educational  Broadband  Service.  Broadband  Radio  Service  comprises  Multichannel  Multipoint  Distribution  Service  (MMDS)  systems  and  Multipoint  Distribution 
 Service  (MDS).  123  MMDS  systems,  often  referred  to  as  wireless  cable,  transmit  video  programming  to  subscribers  using  the  microwave  frequencies  of  MDS  and  Educational  Broadband  Service  (formerly 


 116  13  C.  F.  R.    121.  201,  NAICS  code  517212. 
 117  This  service  is  governed  by  Subpart  I  of  Part  22  of  the  Commissions  rules.  See  47  C.  F.  R.    22.  1001-  22.  1037. 
 118  13  C.  F.  R.    121.  201,  NAICS  code  513322  (changed  to  517212  in  October  2002). 
 119  Id. 
 120  See  Amendment  of  the  Commissions  Rules  Regarding  the  37.  0-  38.6  GHz  and  38.  6-  40.  0  GHz  Bands,  ET  Docket 
 No.  95-  183,  Report  and  Order,  63  Fed.  Reg.  6079  (Feb.  6,  1998).  121 
 Id.  122 
 See  Letter  to  Kathleen  OBrien  Ham,  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless  Telecommunications  Bureau,  FCC,  from  Aida  Alvarez,  Administrator,  SBA  (Feb.  4,  1998). 


 123  Amendment  of  Parts  1,  21  73,  74,  and  101  of  the  Commissions  Rules  to  Facilitate  the  Provision  of  Fixed  and 
 Mobile  Broadband  Access,  Educational  and  Other  Advanced  Services  in  the  2150-  2162  and  2500-  2690  MHz  Bands,  WT  Docket  No.  03-  66,  RM-  10586,  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking,  19  FCC  Rcd 


 14165  (2004). 
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 known  as  Instructional  Television  Fixed  Service).  124  In  connection  with  the  1996  MDS  auction,  the  Commission  established  a  small  business  size  standard  as  an  entity  that  had  annual  average  gross 
 revenues  of  less  than  $40  million  in  the  previous  three  calendar  years.  125  The  MDS  auctions  resulted  in  67  successful  bidders  obtaining  licensing  opportunities  for  493  Basic  Trading  Areas  (BTAs).  Of  the  67 
 auction  winners,  61  met  the  definition  of  a  small  business.  MDS  also  includes  licensees  of  stations  authorized  prior  to  the  auction.  In  addition,  the  SBA  has  developed  a  small  business  size  standard  for 
 Cable  and  Other  Program  Distribution,  which  includes  all  such  companies  generating  $12.5  million  or  less  in  annual  receipts.  126  According  to  Census  Bureau  data  for  1997,  there  were  a  total  of  1,311  firms  in 
 this  category,  total,  that  had  operated  for  the  entire  year.  127  Of  this  total,  1,180  firms  had  annual  receipts  of  under  $10  million  and  an  additional  52  firms  had  receipts  of  $10  million  or  more  but  less  than  $25 
 million.  Consequently,  we  estimate  that  the  majority  of  providers  in  the  Broadband  Radio  Service  category  are  small  businesses  that  may  be  affected  by  the  rules  and  policies  adopted  herein.  This  SBA 
 small  business  size  standard  also  appears  applicable  to  Educational  Broadband  Service.  There  are  presently  2,032  Educational  Broadband  Service  licensees.  All  but  100  of  these  licenses  are  held  by 
 educational  institutions.  Educational  institutions  are  included  in  this  analysis  as  small  entities.  128  Thus,  we  tentatively  conclude  that  at  least  1,932  licensees  are  small  businesses. 


 45.  Local  Multipoint  Distribution  Service.  Local  Multipoint  Distribution  Service  (LMDS)  is  a  fixed  broadband  point-  to-  multipoint  microwave  service  that  provides  for  two-  way  video  telecommunications.  129 
 The  auction  of  the  1,030  Local  Multipoint  Distribution  Service  (LMDS)  licenses  began  on  February  18,  1998  and  closed  on  March  25,  1998.  The  Commission  established  a  small  business  size  standard  for 
 LMDS  licenses  as  an  entity  that  has  average  gross  revenues  of  less  than  $40  million  in  the  three  previous  calendar  years.  130  An  additional  small  business  size  standard  for  very  small  business  was  added  as  an 
 entity  that,  together  with  its  affiliates,  has  average  gross  revenues  of  not  more  than  $15  million  for  the  preceding  three  calendar  years.  131  The  SBA  has  approved  these  small  business  size  standards  in  the 
 context  of  LMDS  auctions.  132  There  were  93  winning  bidders  that  qualified  as  small  entities  in  the  LMDS  auctions.  A  total  of  93  small  and  very  small  business  bidders  won  approximately  277  A  Block 
 licenses  and  387  B  Block  licenses.  On  March  27,  1999,  the  Commission  re-  auctioned  161  licenses;  there  were  40  winning  bidders.  Based  on  this  information,  we  conclude  that  the  number  of  small  LMDS 
 licenses  consists  of  the  93  winning  bidders  in  the  first  auction  and  the  40  winning  bidders  in  the  re-auction,  for  a  total  of  133  small  entity  LMDS  providers. 


 124  See  id. 
 125  47  C.  F.  R.    21.961(  b)(  1). 
 126  13  C.  F.  R.    121.  201,  NAICS  code  513220  (changed  to  517510  in  October  2002). 
 127  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size 
 (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  513220  (issued  October  2000).  128 
 In  addition,  the  term  small  entity  within  SBREFA  applies  to  small  organizations  (nonprofits)  and  to  small  governmental  jurisdictions  (cities,  counties,  towns,  townships,  villages,  school  districts,  and  special  districts  with 


 populations  of  less  than  50,  000).  5  U.  S.  C.    601(  4)-(  6).  We  do  not  collect  annual  revenue  data  on  ITFS  licensees.  129 
 See  Local  Multipoint  Distribution  Service,  Second  Report  and  Order,  12  FCC  Rcd  12545  (1997).  130 
 Id.  131 
 See  id.  132 
 See  Letter  to  Dan  Phythyon,  Chief,  Wireless  Telecommunications  Bureau,  FCC,  from  Aida  Alvarez,  Administrator,  SBA  (Jan.  6,  1998). 
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 46.  218-  219  MHz  Service.  The  first  auction  of  218-  219  MHz  spectrum  resulted  in  170  entities  winning  licenses  for  594  Metropolitan  Statistical  Area  (MSA)  licenses.  Of  the  594  licenses,  557  were 
 won  by  entities  qualifying  as  a  small  business.  For  that  auction,  the  small  business  size  standard  was  an  entity  that,  together  with  its  affiliates,  has  no  more  than  a  $6  million  net  worth  and,  after  federal  income 
 taxes  (excluding  any  carry  over  losses),  has  no  more  than  $2  million  in  annual  profits  each  year  for  the  previous  two  years.  133  In  the  218-  219  MHz  Report  and  Order  and  Memorandum  Opinion  and  Order,  we 
 established  a  small  business  size  standard  for  a  small  business  as  an  entity  that,  together  with  its  affiliates  and  persons  or  entities  that  hold  interests  in  such  an  entity  and  their  affiliates,  has  average  annual 
 gross  revenues  not  to  exceed  $15  million  for  the  preceding  three  years.  134  A  very  small  business  is  defined  as  an  entity  that,  together  with  its  affiliates  and  persons  or  entities  that  hold  interests  in  such  an 
 entity  and  its  affiliates,  has  average  annual  gross  revenues  not  to  exceed  $3  million  for  the  preceding  three  years.  135  We  cannot  estimate,  however,  the  number  of  licenses  that  will  be  won  by  entities  qualifying  as 
 small  or  very  small  businesses  under  our  rules  in  future  auctions  of  218-  219  MHz  spectrum. 
 47.  24  GHz    Incumbent  Licensees.  This  analysis  may  affect  incumbent  licensees  who  were  relocated  to  the  24  GHz  band  from  the  18  GHz  band,  and  applicants  who  wish  to  provide  services  in  the 


 24  GHz  band.  The  applicable  SBA  small  business  size  standard  is  that  of  Cellular  and  Other  Wireless  Telecommunications  companies.  This  category  provides  that  such  a  company  is  small  if  it  employs  no 
 more  than  1,500  persons.  136  According  to  Census  Bureau  data  for  1997,  there  were  977  firms  in  this  category,  total,  that  operated  for  the  entire  year.  137  Of  this  total,  965  firms  had  employment  of  999  or 
 fewer  employees,  and  an  additional  12  firms  had  employment  of  1,000  employees  or  more.  138  Thus,  under  this  size  standard,  the  great  majority  of  firms  can  be  considered  small.  These  broader  census  data 
 notwithstanding,  we  believe  that  there  are  only  two  licensees  in  the  24  GHz  band  that  were  relocated  from  the  18  GHz  band,  Teligent  139  and  TRW,  Inc.  It  is  our  understanding  that  Teligent  and  its  related 
 companies  have  less  than  1,500  employees,  though  this  may  change  in  the  future.  TRW  is  not  a  small  entity.  Thus,  only  one  incumbent  licensee  in  the  24  GHz  band  is  a  small  business  entity. 


 48.  24  GHz    Future  Licensees.  With  respect  to  new  applicants  in  the  24  GHz  band,  the  small  business  size  standard  for  small  business  is  an  entity  that,  together  with  controlling  interests  and 


 133  Implementation  of  Section  309(  j)  of  the  Communications  Act    Competitive  Bidding,  PP  Docket  No.  93-  253, 
 Fourth  Report  and  Order,  59  Fed.  Reg.  24947  (May  13,  1994).  134 
 Amendment  of  Part  95  of  the  Commissions  Rules  to  Provide  Regulatory  Flexibility  in  the  218-  219  MHz  Service,  WT  Docket  No.  98-  169,  Report  and  Order  and  Memorandum  Opinion  and  Order,  64  Fed.  Reg.  59656  (Nov.  3, 


 1999).  135 
 Amendment  of  Part  95  of  the  Commissions  Rules  to  Provide  Regulatory  Flexibility  in  the  218-  219  MHz  Service,  WT  Docket  No.  98-  169,  Report  and  Order  and  Memorandum  Opinion  and  Order,  64  Fed.  Reg.  59656  (Nov.  3, 


 1999).  136 
 13  C.  F.  R.    121.  201,  NAICS  code  513322  (changed  to  517212  in  October  2002).  137 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Employment  Size  of  Firms  Subject  to  Federal  Income  Tax:  1997,  Table  5,  NAICS  code  513322  (issued  Oct.  2000). 


 138  Id.  The  census  data  do  not  provide  a  more  precise  estimate  of  the  number  of  firms  that  have  employment  of 
 1,500  or  fewer  employees;  the  largest  category  provided  is  Firms  with  1,000  employees  or  more.  139 
 Teligent  acquired  the  DEMS  licenses  of  FirstMark,  the  only  licensee  other  than  TRW  in  the  24  GHz  band  whose  license  has  been  modified  to  require  relocation  to  the  24  GHz  band. 
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 affiliates,  has  average  annual  gross  revenues  for  the  three  preceding  years  not  in  excess  of  $15  million.  140  Very  small  business  in  the  24  GHz  band  is  an  entity  that,  together  with  controlling  interests  and 
 affiliates,  has  average  gross  revenues  not  exceeding  $3  million  for  the  preceding  three  years.  141  The  SBA  has  approved  these  small  business  size  standards.  142  These  size  standards  will  apply  to  the  future  auction, 
 if  held. 
 2.  Cable  and  OVS  Operators 


 49.  Cable  and  Other  Program  Distribution.  This  category  includes  cable  systems  operators,  closed  circuit  television  services,  direct  broadcast  satellite  services,  multipoint  distribution  systems,  satellite 
 master  antenna  systems,  and  subscription  television  services.  The  SBA  has  developed  small  business  size  standard  for  this  census  category,  which  includes  all  such  companies  generating  $12.5  million  or  less  in 
 revenue  annually.  143  According  to  Census  Bureau  data  for  1997,  there  were  a  total  of  1,311  firms  in  this  category,  total,  that  had  operated  for  the  entire  year.  144  Of  this  total,  1,180  firms  had  annual  receipts  of 
 under  $10  million  and  an  additional  52  firms  had  receipts  of  $10  million  or  more  but  less  than  $25  million.  Consequently,  the  Commission  estimates  that  the  majority  of  providers  in  this  service  category 
 are  small  businesses  that  may  be  affected  by  the  rules  and  policies  adopted  herein. 
 50.  Cable  System  Operators  (Rate  Regulation  Standard).  The  Commission  has  developed  its  own  small  business  size  standard  for  cable  system  operators,  for  purposes  of  rate  regulation.  Under  the 


 Commissions  rules,  a  small  cable  company  is  one  serving  fewer  than  400,000  subscribers  nationwide.  145  The  most  recent  estimates  indicate  that  there  were  1,439  cable  operators  who  qualified  as 
 small  cable  system  operators  at  the  end  of  1995.  146  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,  the  Commission  estimates  that  there  are  now  fewer  than  1,439  small  entity  cable  system  operators  that  may  be  affected  by  the  rules  and  policies 
 adopted  herein. 
 51.  Cable  System  Operators  (Telecom  Act  Standard).  The  Communications  Act  of  1934,  as  amended,  also  contains  a  size  standard  for  small  cable  system  operators,  which  is  a  cable  operator  that, 


 directly  or  through  an  affiliate,  serves  in  the  aggregate  fewer  than  1  percent  of  all  subscribers  in  the 
 140  Amendments  to  Parts  1,  2,  87  and  101  of  the  Commissions  Rules  to  License  Fixed  Services  at  24  GHz,  Report 
 and  Order,  15  FCC  Rcd  16934,  16967  (2000);  see  also  47  C.  F.  R.    101.538(  a)(  2).  141 
 Amendments  to  Parts  1,  2,  87  and  101  of  the  Commissions  Rules  to  License  Fixed  Services  at  24  GHz,  Report  and  Order,  15  FCC  Rcd  16934,  16967  (2000);  see  also  47  C.  F.  R.    101.538(  a)(  1). 


 142  See  Letter  to  Margaret  W.  Wiener,  Deputy  Chief,  Auctions  and  Industry  Analysis  Division,  Wireless 
 Telecommunications  Bureau,  FCC,  from  Gary  M.  Jackson,  Assistant  Administrator,  SBA  (July  28,  2000).  143 
 13  C.  F.  R.    121.  201,  North  American  Industry  Classification  System  (NAICS)  code  513220  (changed  to  517510  in  October  2002). 


 144  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size 
 (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  513220  (issued  October  2000).  145 
 47  C.  F.  R.    76.  901(  e).  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  7393  (1995),  60  FR  10534  (Feb.  27,  1995). 
 146  Paul  Kagan  Associates,  Inc.,  Cable  TV  Investor,  February  29,  1996  (based  on  figures  for  December  30,  1995). 
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 United  States  and  is  not  affiliated  with  any  entity  or  entities  whose  gross  annual  revenues  in  the  aggregate  exceed  $250,000,000.  147  The  Commission  has  determined  that  there  are  67,700,000  subscribers  in  the 
 United  States.  148  Therefore,  an  operator  serving  fewer  than  677,000  subscribers  shall  be  deemed  a  small  operator,  if  its  annual  revenues,  when  combined  with  the  total  annual  revenues  of  all  its  affiliates,  do  not 
 exceed  $250  million  in  the  aggregate.  149  Based  on  available  data,  the  Commission  estimates  that  the  number  of  cable  operators  serving  677,  000  subscribers  or  fewer,  totals  1,450.  150  The  Commission  neither 
 requests  nor  collects  information  on  whether  cable  system  operators  are  affiliated  with  entities  whose  gross  annual  revenues  exceed  $250  million,  151  and  therefore  are  unable,  at  this  time,  to  estimate  more 
 accurately  the  number  of  cable  system  operators  that  would  qualify  as  small  cable  operators  under  the  size  standard  contained  in  the  Communications  Act  of  1934. 


 52.  Open  Video  Services.  Open  Video  Service  (OVS)  systems  provide  subscription  services.  152  The  SBA  has  created  a  small  business  size  standard  for  Cable  and  Other  Program  Distribution.  153  This 
 standard  provides  that  a  small  entity  is  one  with  $12.  5  million  or  less  in  annual  receipts.  The  Commission  has  certified  approximately  25  OVS  operators  to  serve  75  areas,  and  some  of  these  are  currently  providing 
 service.  154  Affiliates  of  Residential  Communications  Network,  Inc.  (RCN)  received  approval  to  operate  OVS  systems  in  New  York  City,  Boston,  Washington,  D.  C.,  and  other  areas.  RCN  has  sufficient 
 revenues  to  assure  that  they  do  not  qualify  as  a  small  business  entity.  Little  financial  information  is  available  for  the  other  entities  that  are  authorized  to  provide  OVS  and  are  not  yet  operational.  Given  that 
 some  entities  authorized  to  provide  OVS  service  have  not  yet  begun  to  generate  revenues,  the  Commission  concludes  that  up  to  24  OVS  operators  (those  remaining)  might  qualify  as  small  businesses 
 that  may  be  affected  by  the  rules  and  policies  adopted  herein. 
 3.  Internet  Service  Providers 


 53.  Internet  Service  Providers.  The  SBA  has  developed  a  small  business  size  standard  for  Internet  Service  Providers  (ISPs).  ISPs  provide  clients  access  to  the  Internet  and  generally  provide  related 
 services  such  as  web  hosting,  web  page  designing,  and  hardware  or  software  consulting  related  to  Internet  connectivity.  155  Under  the  SBA  size  standard,  such  a  business  is  small  if  it  has  average  annual  receipts 


 147  47  U.  S.  C.    543(  m)(  2). 
 148  See  FCC  Announces  New  Subscriber  Count  for  the  Definition  of  Small  Cable  Operator,  Public  Notice  DA 
 01-  158  (Jan.  24,  2001).  149 
 47  C.  F.  R.    76.901(  f).  150 
 See  FCC  Announces  New  Subscriber  Count  for  the  Definition  of  Small  Cable  Operators,  Public  Notice,  DA  01-  0158  (rel.  Jan.  24,  2001). 


 151  The  Commission  does  receive  such  information  on  a  case-  by-  case  basis  if  a  cable  operator  appeals  a  local 
 franchise  authoritys  finding  that  the  operator  does  not  qualify  as  a  small  cable  operator  pursuant  to    76.901(  f)  of  the  Commissions  rules.  See  47  C.  F.  R.    76.  909(  b). 


 152  See  47  U.  S.  C.    573. 
 153  13  C.  F.  R.    121.  201,  NAICS  code  513220  (changed  to  517510  in  October  2002). 
 154  See  <http://  www.  fcc.  gov/  csb/  ovs/  csovscer.  html>  (current  as  of  March  2002). 
 155  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  518111  Internet  Service  Providers  (Feb.  2004) 
 <www.  census.  gov>. 
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 of  $21  million  or  less.  156  According  to  Census  Bureau  data  for  1997,  there  were  2,751  firms  in  this  category  that  operated  for  the  entire  year.  157  Of  these,  2,659  firms  had  annual  receipts  of  under  $10 
 million,  and  an  additional  67  firms  had  receipts  of  between  $10  million  and  $24,  999,999.  Consequently,  we  estimate  that  the  majority  of  these  firms  are  small  entities  that  may  be  affected  by  our  action.  In 
 addition,  limited  preliminary  census  data  for  2002  indicate  that  the  total  number  of  Internet  service  providers  increased  approximately  five  percent  from  1997  to  2002.  158 


 4.  Other  Internet-  Related  Entities 
 54.  Web  Search  Portals.  Our  action  pertains  to  VoIP  services,  which  could  be  provided  by  entities  that  provide  other  services  such  as  email,  online  gaming,  web  browsing,  video  conferencing,  instant 
 messaging,  and  other,  similar  IP-  enabled  services.  The  Commission  has  not  adopted  a  size  standard  for  entities  that  create  or  provide  these  types  of  services  or  applications.  However,  the  census  bureau  has 
 identified  firms  that  operate  web  sites  that  use  a  search  engine  to  generate  and  maintain  extensive  databases  of  Internet  addresses  and  content  in  an  easily  searchable  format.  Web  search  portals  often 
 provide  additional  Internet  services,  such  as  e-  mail,  connections  to  other  web  sites,  auctions,  news,  and  other  limited  content,  and  serve  as  a  home  base  for  Internet  users.  159  The  SBA  has  developed  a  small 
 business  size  standard  for  this  category;  that  size  standard  is  $6  million  or  less  in  average  annual  receipts.  160  According  to  Census  Bureau  data  for  1997,  there  were  195  firms  in  this  category  that  operated 
 for  the  entire  year.  161  Of  these,  172  had  annual  receipts  of  under  $5  million,  and  an  additional  nine  firms  had  receipts  of  between  $5  million  and  $9,999,999.  Consequently,  we  estimate  that  the  majority  of  these 
 firms  are  small  entities  that  may  be  affected  by  our  action. 
 55.  Data  Processing,  Hosting,  and  Related  Services.  Entities  in  this  category  primarily  .  .  .  provid[  e]  infrastructure  for  hosting  or  data  processing  services.  162  The  SBA  has  developed  a  small 


 business  size  standard  for  this  category;  that  size  standard  is  $21  million  or  less  in  average  annual  receipts.  163  According  to  Census  Bureau  data  for  1997,  there  were  3,700  firms  in  this  category  that 


 156  13  C.  F.  R.    121.  201,  NAICS  code  518111  (changed  from  previous  code  514191,  On-  Line  Information 
 Services,  in  Oct.  2002).  157 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size  (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  514191  (issued  Oct.  2000). 


 158  See  U.  S.  Census  Bureau,  2002  Economic  Census,  Industry  Series:  Information,  Table  2,  Comparative 
 Statistics  for  the  United  States  (1997  NAICS  Basis):  2002  and  1997,  NAICS  code  514191  (issued  Nov.  2004).  The  preliminary  data  indicate  that  the  total  number  of  establishments  increased  from  4,165  to  4,394.  In  this  context, 


 the  number  of  establishments  is  a  less  helpful  indicator  of  small  business  prevalence  than  is  the  number  of  firms,  because  the  latter  number  takes  into  account  the  concept  of  common  ownership  or  control.  The  more  helpful  2002 
 census  data  on  firms,  including  employment  and  receipts  numbers,  will  be  issued  in  late  2005.  159 
 U.  S.  Census  Bureau,  2002  NAICS  Definitions:  518112  Web  Search  Portals  (Feb.  2004)  <www.  census.  gov>.  160 
 13  C.  F.  R.    121.  201,  NAICS  code  518112  (changed  from  514199  in  Oct.  2002).  161 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size  (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  514199  (issued  Oct.  2000).  This  category  was 


 created  for  the  2002  Economic  Census  by  taking  a  portion  of  the  superseded  1997  category,  All  Other  Information  Services,  NAICS  code  514199.  The  data  cited  in  the  text  above  are  derived  from  the  superseded  category. 
 162  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  518210  Data  Processing,  Hosting,  and  Related  Services  (Feb. 
 2004)  <www.  census.  gov>.  163 
 13  C.  F.  R.    121.  201,  NAICS  code  518210  (changed  from  514210  in  Oct.  2002). 
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 operated  for  the  entire  year.  164  Of  these,  3,477  had  annual  receipts  of  under  $10  million,  and  an  additional  108  firms  had  receipts  of  between  $10  million  and  $24,999,999.  Consequently,  we  estimate  that  the 
 majority  of  these  firms  are  small  entities  that  may  be  affected  by  our  action. 
 56.  All  Other  Information  Services.  This  industry  comprises  establishments  primarily  engaged  in  providing  other  information  services  (except  new  syndicates  and  libraries  and  archives).  165  Our  action 


 pertains  to  VoIP  services,  which  could  be  provided  by  entities  that  provide  other  services  such  as  email,  online  gaming,  web  browsing,  video  conferencing,  instant  messaging,  and  other,  similar  IP-  enabled 
 services.  The  SBA  has  developed  a  small  business  size  standard  for  this  category;  that  size  standard  is  $6  million  or  less  in  average  annual  receipts.  166  According  to  Census  Bureau  data  for  1997,  there  were  195 
 firms  in  this  category  that  operated  for  the  entire  year.  167  Of  these,  172  had  annual  receipts  of  under  $5  million,  and  an  additional  nine  firms  had  receipts  of  between  $5  million  and  $9,999,999.  Consequently, 
 we  estimate  that  the  majority  of  these  firms  are  small  entities  that  may  be  affected  by  our  action. 
 57.  Internet  Publishing  and  Broadcasting.  This  industry  comprises  establishments  engaged  in  publishing  and/  or  broadcasting  content  on  the  Internet  exclusively.  These  establishments  do  not  provide 


 traditional  (non-  Internet)  versions  of  the  content  that  they  publish  or  broadcast.  168  The  SBA  has  developed  a  small  business  size  standard  for  this  new  (2002)  census  category;  that  size  standard  is  500  or 
 fewer  employees.  169  To  assess  the  prevalence  of  small  entities  in  this  category,  we  will  use  1997  Census  Bureau  data  for  a  relevant,  now-  superseded  census  category,  All  Other  Information  Services.  The  SBA 
 small  business  size  standard  for  that  prior  category  was  $6  million  or  less  in  average  annual  receipts.  According  to  Census  Bureau  data  for  1997,  there  were  195  firms  in  the  prior  category  that  operated  for 
 the  entire  year.  170  Of  these,  172  had  annual  receipts  of  under  $5  million,  and  an  additional  nine  firms  had  receipts  of  between  $5  million  and  $9,999,999.  Consequently,  we  estimate  that  the  majority  of  the  firms 
 in  this  current  category  are  small  entities  that  may  be  affected  by  our  action. 
 58.  Software  Publishers.  These  companies  may  design,  develop  or  publish  software  and  may  provide  other  support  services  to  software  purchasers,  such  as  providing  documentation  or  assisting  in  installation. 


 The  companies  may  also  design  software  to  meet  the  needs  of  specific  users.  The  SBA  has  developed  a  small  business  size  standard  of  $21  million  or  less  in  average  annual  receipts  for  all  of  the  following 
 pertinent  categories:  Software  Publishers,  Custom  Computer  Programming  Services,  and  Other 
 164  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size 
 (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  514210  (issued  Oct.  2000).  165 
 U.  S.  Census  Bureau,  2002  NAICS  Definitions:  519190  All  Other  Information  Services  (Feb.  2004)  <www.  census.  gov>. 


 166  13  C.  F.  R.    121.  201,  NAICS  code  519190  (changed  from  514199  in  Oct.  2002). 
 167  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size 
 (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  514199  (issued  Oct.  2000).  This  category  was  created  for  the  2002  Economic  Census  by  taking  a  portion  of  the  superseded  1997  category,  All  Other  Information 


 Services,  NAICS  code  514199.  The  data  cited  in  the  text  above  are  derived  from  the  superseded  category.  168 
 U.  S.  Census  Bureau,  2002  NAICS  Definitions:  516110  Internet  Publishing  and  Broadcasting  (Feb.  2004)  <www.  census.  gov>. 


 169  13  C.  F.  R.    121.  201,  NAICS  code  516110  (derived  from  514199  and  other  1997  codes). 
 170  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size 
 (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  514199  (issued  Oct.  2000).  This  category  was  created  for  the  2002  Economic  Census  by  taking  portions  of  numerous  1997  categories. 
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 Computer  Related  Services.  171  For  Software  Publishers,  Census  Bureau  data  for  1997  indicate  that  there  were  8,188  firms  in  the  category  that  operated  for  the  entire  year.  172  Of  these,  7,633  had  annual  receipts 
 under  $10  million,  and  an  additional  289  firms  had  receipts  of  between  $10  million  and  $24,  999,999.  For  providers  of  Custom  Computer  Programming  Services,  the  Census  Bureau  data  indicate  that  there 
 were  19,334  firms  that  operated  for  the  entire  year.  173  Of  these,  18,786  had  annual  receipts  of  under  $10  million,  and  an  additional  352  firms  had  receipts  of  between  $10  million  and  $24,999,999.  For  providers 
 of  Other  Computer  Related  Services,  the  Census  Bureau  data  indicate  that  there  were  5,524  firms  that  operated  for  the  entire  year.  174  Of  these,  5,484  had  annual  receipts  of  under  $10  million,  and  an  additional 
 28  firms  had  receipts  of  between  $10  million  and  $24,999,999.  Consequently,  we  estimate  that  the  majority  of  the  firms  in  each  of  these  three  categories  are  small  entities  that  may  be  affected  by  our  action. 


 5.  Equipment  Manufacturers 
 59.  The  equipment  manufacturers  described  in  this  section  are  apparently  merely  indirectly  affected  by  our  current  action,  and  therefore  would  not  formally  be  a  part  of  this  RFA  analysis.  We  have  included 
 them,  however,  to  broaden  the  record  in  this  proceeding  and  to  alert  them  to  our  decisions. 
 60.  Wireless  Communications  Equipment  Manufacturers.  The  SBA  has  established  a  small  business  size  standard  for  Radio  and  Television  Broadcasting  and  Wireless  Communications  Equipment 


 Manufacturing.  Examples  of  products  in  this  category  include  transmitting  and  receiving  antennas,  cable  television  equipment,  GPS  equipment,  pagers,  cellular  phones,  mobile  communications  equipment, 
 and  radio  and  television  studio  and  broadcasting  equipment  175  and  may  include  other  devices  that  transmit  and  receive  IP-  enabled  services,  such  as  personal  digital  assistants  (PDAs).  Under  the  SBA  size 
 standard,  firms  are  considered  small  if  they  have  750  or  fewer  employees.  176  According  to  Census  Bureau  data  for  1997,  there  were  1,215  establishments  177  in  this  category  that  operated  for  the  entire  year.  178  Of 
 those,  there  were  1,150  that  had  employment  of  under  500,  and  an  additional  37  that  had  employment  of 
 171  13  C.  F.  R.    121.  201,  NAICS  codes  511210,  541511,  and  541519. 
 172  U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Information,  Establishment  and  Firm  Size 
 (Including  Legal  Form  of  Organization),  Table  4,  NAICS  code  511210  (issued  Oct.  2000).  173 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Professional,  Scientific,  and  Technical  Services,  Establishment  and  Firm  Size  (Including  Legal  Form  of  Organization),  Table  4a,  NAICS  code  541511  (issued  Oct. 


 2000).  174 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Subject  Series:  Professional,  Scientific,  and  Technical  Services,  Establishment  and  Firm  Size  (Including  Legal  Form  of  Organization),  Table  4a,  NAICS  code  541519  (issued  Oct. 


 2000).  175 
 Office  of  Management  and  Budget,  North  American  Industry  Classification  System  308-  09  (1997)  (NAICS  code  334220). 


 176  13  C.  F.  R.    121.  201,  NAICS  code  334220. 
 177  The  number  of  establishments  is  a  less  helpful  indicator  of  small  business  prevalence  in  this  context  than  would 
 be  the  number  of  firms  or  companies,  because  the  latter  take  into  account  the  concept  of  common  ownership  or  control.  Any  single  physical  location  for  an  entity  is  an  establishment,  even  though  that  location  may  be  owned  by  a 


 different  establishment.  Thus,  the  numbers  given  may  reflect  inflated  numbers  of  businesses  in  this  category,  including  the  numbers  of  small  businesses.  In  this  category,  the  Census  breaks-  out  data  for  firms  or  companies  only 
 to  give  the  total  number  of  such  entities  for  1997,  which  were  1,  089.  178 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Industry  Statistics  by  Employment  Size,  Table  4,  NAICS  code  334220  (issued  Aug.  1999). 
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 500  to  999.  The  percentage  of  wireless  equipment  manufacturers  in  this  category  was  approximately  61.35%,  179  so  we  estimate  that  the  number  of  wireless  equipment  manufacturers  with  employment  of 
 under  500  was  actually  closer  to  706,  with  an  additional  23  establishments  having  employment  of  between  500  and  999.  Consequently,  we  estimate  that  the  majority  of  wireless  communications 
 equipment  manufacturers  are  small  entities  that  may  be  affected  by  our  action. 
 61.  Telephone  Apparatus  Manufacturing.  This  category  comprises  establishments  primarily  engaged  primarily  in  manufacturing  wire  telephone  and  data  communications  equipment.  180  Examples 


 of  pertinent  products  are  central  office  switching  equipment,  cordless  telephones  (except  cellular),  PBX  equipment,  telephones,  telephone  answering  machines,  and  data  communications  equipment,  such  as 
 bridges,  routers,  and  gateways.  181  The  SBA  has  developed  a  small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  1,000  or  fewer  employees.  182  According  to  Census 
 Bureau  data  for  1997,  there  were  598  establishments  in  this  category  that  operated  for  the  entire  year.  183  Of  these,  574  had  employment  of  under  1,000,  and  an  additional  17  establishments  had  employment  of 
 1,000  to  2,499.  Consequently,  we  estimate  that  the  majority  of  these  establishments  are  small  entities  that  may  be  affected  by  our  action. 


 62.  Electronic  Computer  Manufacturing.  This  category  comprises  establishments  primarily  engaged  in  manufacturing  and/  or  assembling  electronic  computers,  such  as  mainframes,  personal 
 computers,  workstations,  laptops,  and  computer  servers.  184  The  SBA  has  developed  a  small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  1,000  or  fewer  employees.  185  According 
 to  Census  Bureau  data  for  1997,  there  were  563  establishments  in  this  category  that  operated  for  the  entire  year.  186  Of  these,  544  had  employment  of  under  1,000,  and  an  additional  11  establishments  had 
 employment  of  1,000  to  2,499.  Consequently,  we  estimate  that  the  majority  of  these  establishments  are  small  entities  that  may  be  affected  by  our  action. 


 63.  Computer  Terminal  Manufacturing.  Computer  terminals  are  input/  output  devices  that  connect  with  a  central  computer  for  processing.  187  The  SBA  has  developed  a  small  business  size  standard  for  this 
 category  of  manufacturing;  that  size  standard  is  1,000  or  fewer  employees.  188  According  to  Census 


 179  Id.  at  Table  5. 
 180  Office  of  Management  and  Budget,  North  American  Industry  Classification  System  308  (1997)  (NAICS  code 
 334210).  181 
 Id.  182 
 13  C.  F.  R.    121.  201,  NAICS  code  334210.  183 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Telephone  Apparatus  Manufacturing,  Table  4,  NAICS  code  334210  (issued  Sept.  1999). 


 184  Office  of  Management  and  Budget,  North  American  Industry  Classification  System  306  (1997)  (NAICS  code 
 334111).  185 
 13  C.  F.  R.    121.  201,  NAICS  code  334111.  186 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Electronic  Computer  Manufacturing,  Table  4,  NAICS  code  334111  (issued  Aug.  1999). 


 187  Office  of  Management  and  Budget,  North  American  Industry  Classification  System  307  (1997)  (NAICS  code 
 334113).  188 
 13  C.  F.  R.    121.  201,  NAICS  code  334113. 
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 Bureau  data  for  1997,  there  were  142  establishments  in  this  category  that  operated  for  the  entire  year,  and  all  of  the  establishments  had  employment  of  under  1,000.  189  Consequently,  we  estimate  that  the  majority 
 or  all  of  these  establishments  are  small  entities  that  may  be  affected  by  our  action. 
 64.  Other  Computer  Peripheral  Equipment  Manufacturing.  Examples  of  peripheral  equipment  in  this  category  include  keyboards,  mouse  devices,  monitors,  and  scanners.  190  The  SBA  has  developed  a  small 


 business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  1,000  or  fewer  employees.  191  According  to  Census  Bureau  data  for  1997,  there  were  1061  establishments  in  this  category 
 that  operated  for  the  entire  year.  192  Of  these,  1,046  had  employment  of  under  1,000,  and  an  additional  six  establishments  had  employment  of  1,000  to  2,499.  Consequently,  we  estimate  that  the  majority  of  these 
 establishments  are  small  entities  that  may  be  affected  by  our  action. 
 65.  Fiber  Optic  Cable  Manufacturing.  These  establishments  manufacture  insulated  fiber-  optic  cable  from  purchased  fiber-  optic  strand.  193  The  SBA  has  developed  a  small  business  size  standard  for  this 


 category  of  manufacturing;  that  size  standard  is  1,000  or  fewer  employees.  194  According  to  Census  Bureau  data  for  1997,  there  were  38  establishments  in  this  category  that  operated  for  the  entire  year.  195  Of 
 these,  37  had  employment  of  under  1,000,  and  one  establishment  had  employment  of  1,000  to  2,499.  Consequently,  we  estimate  that  the  majority  of  these  establishments  are  small  entities  that  may  be  affected 
 by  our  action. 
 66.  Other  Communication  and  Energy  Wire  Manufacturing.  These  establishments  manufacture  insulated  wire  and  cable  of  nonferrous  metals  from  purchased  wire.  196  The  SBA  has  developed  a  small 


 business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  1,000  or  fewer  employees.  197  According  to  Census  Bureau  data  for  1997,  there  were  275  establishments  in  this  category 
 that  operated  for  the  entire  year.  198  Of  these,  271  had  employment  of  under  1,000,  and  four  establishments  had  employment  of  1,000  to  2,499.  Consequently,  we  estimate  that  the  majority  or  all  of 
 these  establishments  are  small  entities  that  may  be  affected  by  our  action. 


 189  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Computer  Terminal 
 Manufacturing,  Table  4,  NAICS  code  334113  (issued  Aug.  1999).  190 
 Office  of  Management  and  Budget,  North  American  Industry  Classification  System  307-  08  (1997)  (NAICS  code  334119). 


 191  13  C.  F.  R.    121.  201,  NAICS  code  334119. 
 192  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Other  Computer  Peripheral 
 Equipment  Manufacturing,  Table  4,  NAICS  code  334119  (issued  Aug.  1999).  193 
 Office  of  Management  and  Budget,  North  American  Industry  Classification  System  330  (1997)  (NAICS  code  335921). 


 194  13  C.  F.  R.    121.  201,  NAICS  code  335921. 
 195  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Fiber  Optic  Cable 
 Manufacturing,  Table  4,  NAICS  code  335921  (issued  Nov.  1999).  196 
 Office  of  Management  and  Budget,  North  American  Industry  Classification  System  331  (1997)  (NAICS  code  335929). 


 197  13  C.  F.  R.    121.  201,  NAICS  code  335929. 
 198  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Other  Communication  and 
 Energy  Wire  Manufacturing,  Table  4,  NAICS  code  335929  (issued  Nov.  1999). 
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 67.  Audio  and  Video  Equipment  Manufacturing.  These  establishments  manufacture  electronic  audio  and  video  equipment  for  home  entertainment,  motor  vehicle,  public  address  and  musical  instrument 
 amplifications.  199  The  SBA  has  developed  a  small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  750  or  fewer  employees.  200  According  to  Census  Bureau  data  for 
 1997,  there  were  554  establishments  in  this  category  that  operated  for  the  entire  year.  201  Of  these,  542  had  employment  of  under  500,  and  nine  establishments  had  employment  of  500  to  999.  Consequently,  we 
 estimate  that  the  majority  of  these  establishments  are  small  entities  that  may  be  affected  by  our  action. 
 68.  Electron  Tube  Manufacturing.  These  establishments  are  primarily  engaged  in  manufacturing  electron  tubes  and  parts  (except  glass  blanks).  202  The  SBA  has  developed  a  small  business  size  standard 


 for  this  category  of  manufacturing;  that  size  standard  is  750  or  fewer  employees.  203  According  to  Census  Bureau  data  for  1997,  there  were  158  establishments  in  this  category  that  operated  for  the  entire  year.  204 
 Of  these,  148  had  employment  of  under  500,  and  three  establishments  had  employment  of  500  to  999.  Consequently,  we  estimate  that  the  majority  of  these  establishments  are  small  entities  that  may  be  affected 
 by  our  action. 
 69.  Bare  Printed  Circuit  Board  Manufacturing.  These  establishments  are  primarily  engaged  in  manufacturing  bare  (i.  e.,  rigid  or  flexible)  printed  circuit  boards  without  mounted  electronic 


 components.  205  The  SBA  has  developed  a  small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  500  or  fewer  employees.  206  According  to  Census  Bureau  data  for 
 1997,  there  were  1,389  establishments  in  this  category  that  operated  for  the  entire  year.  207  Of  these,  1,369  had  employment  of  under  500,  and  16  establishments  had  employment  of  500  to  999.  Consequently,  we 
 estimate  that  the  majority  of  these  establishments  are  small  entities  that  may  be  affected  by  our  action. 
 70.  Semiconductor  and  Related  Device  Manufacturing.  These  establishments  manufacture  computer  storage  devices  that  allow  the  storage  and  retrieval  of  data  from  a  phase  change,  magnetic, 


 optical,  or  magnetic/  optical  media.  208  The  SBA  has  developed  a  small  business  size  standard  for  this 


 199  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334310  Audio  and  Video  Equipment  Manufacturing  (Feb. 
 2004)  <www.  census.  gov>.  200 
 13  C.  F.  R.    121.  201,  NAICS  code  334310.  201 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Audio  and  Video  Equipment  Manufacturing,  Table  4,  NAICS  code  334310  (issued  Aug.  1999). 


 202  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334411  Electron  Tube  Manufacturing  (Feb.  2004) 
 <www.  census.  gov>.  203 
 13  C.  F.  R.    121.  201,  NAICS  code  334411.  204 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Electron  Tube  Manufacturing,  Table  4,  NAICS  code  334411  (issued  July  1999). 


 205  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334412  Bare  Printed  Circuit  Board  Manufacturing  (Feb.  2004) 
 <www.  census.  gov>.  206 
 13  C.  F.  R.    121.  201,  NAICS  code  334412.  207 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Bare  Printed  Circuit  Board  Manufacturing,  Table  4,  NAICS  code  334412  (issued  Aug.  1999). 


 208  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334413  Semiconductor  and  Related  Device  Manufacturing 
 (Feb.  2004)  <www.  census.  gov>. 
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 category  of  manufacturing;  that  size  standard  is  500  or  fewer  employees.  209  According  to  Census  Bureau  data  for  1997,  there  were  1,082  establishments  in  this  category  that  operated  for  the  entire  year.  210  Of 
 these,  987  had  employment  of  under  500,  and  52  establishments  had  employment  of  500  to  999. 
 71.  Electronic  Capacitor  Manufacturing.  These  establishments  manufacture  electronic  fixed  and  variable  capacitors  and  condensers.  211  The  SBA  has  developed  a  small  business  size  standard  for  this 


 category  of  manufacturing;  that  size  standard  is  500  or  fewer  employees.  212  According  to  Census  Bureau  data  for  1997,  there  were  128  establishments  in  this  category  that  operated  for  the  entire  year.  213  Of  these, 
 121  had  employment  of  under  500,  and  four  establishments  had  employment  of  500  to  999. 
 72.  Electronic  Resistor  Manufacturing.  These  establishments  manufacture  electronic  resistors,  such  as  fixed  and  variable  resistors,  resistor  networks,  thermistors,  and  varistors.  214  The  SBA  has  developed  a 


 small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  500  or  fewer  employees.  215  According  to  Census  Bureau  data  for  1997,  there  were  118  establishments  in  this  category 
 that  operated  for  the  entire  year.  216  Of  these,  113  had  employment  of  under  500,  and  5  establishments  had  employment  of  500  to  999. 


 73.  Electronic  Coil,  Transformer,  and  Other  Inductor  Manufacturing.  These  establishments  manufacture  electronic  inductors,  such  as  coils  and  transformers.  217  The  SBA  has  developed  a  small 
 business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  500  or  fewer  employees.  218  According  to  Census  Bureau  data  for  1997,  there  were  448  establishments  in  this  category  that  operated 
 for  the  entire  year.  219  Of  these,  446  had  employment  of  under  500,  and  two  establishments  had  employment  of  500  to  999. 


 209  13  C.  F.  R.    121.  201,  NAICS  code  334413. 
 210  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Semiconductor  and  Related 
 Device  Manufacturing,  Table  4,  NAICS  code  334413  (issued  July  1999).  211 
 U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334414  Electronic  Capacitor  Manufacturing  (Feb.  2004)  <www.  census.  gov>. 


 212  13  C.  F.  R.    121.  201,  NAICS  code  334414. 
 213  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Electronic  Capacitor 
 Manufacturing,  Table  4,  NAICS  code  334414  (issued  July  1999).  214 
 U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334415  Electronic  Resistor  Manufacturing  (Feb.  2004)  <www.  census.  gov>. 


 215  13  C.  F.  R.    121.  201,  NAICS  code  334415. 
 216  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Electronic  Resistor 
 Manufacturing,  Table  4,  NAICS  code  334415  (issued  Aug.  1999).  217 
 U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334416  Electronic  Coil,  Transformer,  and  Other  Inductor  Manufacturing  (Feb.  2004)  <www.  census.  gov>. 


 218  13  C.  F.  R.    121.  201,  NAICS  code  334416. 
 219  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Electronic  Coil,  Transformer, 
 and  Other  Inductor  Manufacturing,  Table  4,  NAICS  code  334416  (issued  Aug.  1999). 
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 74.  Electronic  Connector  Manufacturing.  These  establishments  manufacture  electronic  connectors,  such  as  coaxial,  cylindrical,  rack  and  panel,  pin  and  sleeve,  printed  circuit  and  fiber  optic.  220  The  SBA 
 has  developed  a  small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  500  or  fewer  employees.  221  According  to  Census  Bureau  data  for  1997,  there  were  347  establishments  in  this 
 category  that  operated  for  the  entire  year.  222  Of  these,  332  had  employment  of  under  500,  and  12  establishments  had  employment  of  500  to  999. 


 75.  Printed  Circuit  Assembly  (Electronic  Assembly)  Manufacturing.  These  are  establishments  primarily  engaged  in  loading  components  onto  printed  circuit  boards  or  who  manufacture  and  ship 
 loaded  printed  circuit  boards.  223  The  SBA  has  developed  a  small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  500  or  fewer  employees.  224  According  to  Census  Bureau  data  for 
 1997,  there  were  714  establishments  in  this  category  that  operated  for  the  entire  year.  225  Of  these,  673  had  employment  of  under  500,  and  24  establishments  had  employment  of  500  to  999. 


 76.  Other  Electronic  Component  Manufacturing.  These  are  establishments  primarily  engaged  in  loading  components  onto  printed  circuit  boards  or  who  manufacture  and  ship  loaded  printed  circuit 
 boards.  226  The  SBA  has  developed  a  small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  500  or  fewer  employees.  227  According  to  Census  Bureau  data  for  1997,  there  were 
 1,835  establishments  in  this  category  that  operated  for  the  entire  year.  228  Of  these,  1,814  had  employment  of  under  500,  and  18  establishments  had  employment  of  500  to  999. 


 77.  Computer  Storage  Device  Manufacturing.  These  establishments  manufacture  computer  storage  devices  that  allow  the  storage  and  retrieval  of  data  from  a  phase  change,  magnetic,  optical,  or 
 magnetic/  optical  media.  229  The  SBA  has  developed  a  small  business  size  standard  for  this  category  of  manufacturing;  that  size  standard  is  1,000  or  fewer  employees.  230  According  to  Census  Bureau  data  for 


 220  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334417  Electronic  Connector  Manufacturing  (Feb.  2004) 
 <www.  census.  gov>.  221 
 13  C.  F.  R.    121.  201,  NAICS  code  334417.  222 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Electronic  Connector  Manufacturing,  Table  4,  NAICS  code  334417  (issued  July  1999). 


 223  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334418  Printed  Circuit  Assembly  (Electronic  Assembly) 
 Manufacturing  (Feb.  2004)  <www.  census.  gov>.  224 
 13  C.  F.  R.    121.  201,  NAICS  code  334418.  225 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Printed  Circuit  Assembly  (Electronic  Assembly)  Manufacturing,  Table  4,  NAICS  code  334418  (issued  Sept.  1999). 


 226  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334419  Other  Electronic  Component  Manufacturing  (Feb. 
 2004)  <www.  census.  gov>.  227 
 13  C.  F.  R.    121.  201,  NAICS  code  334419.  228 
 U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Other  Electronic  Component  Manufacturing,  Table  4,  NAICS  code  334419  (issued  Aug.  1999). 


 229  U.  S.  Census  Bureau,  2002  NAICS  Definitions:  334112  Computer  Storage  Device  Manufacturing  (Feb.  2004) 
 <www.  census.  gov>.  230 
 13  C.  F.  R.    121.  201,  NAICS  code  334112. 
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 1997,  there  were  209  establishments  in  this  category  that  operated  for  the  entire  year.  231  Of  these,  197  had  employment  of  under  500,  and  eight  establishments  had  employment  of  500  to  999 
 D.  Description  of  Projected  Reporting,  Recordkeeping  and  Other  Compliance  Requirements 


 78.  Should  the  Commission  decide  to  adopt  any  regulations  to  ensure  that  consumer  protection  needs  are  met  by  all  providers  of  broadband  Internet  access  service,  the  associated  rules  potentially  could 
 modify  the  reporting  and  recordkeeping  requirements  of  certain  broadband  Internet  access  services  providers.  We  could,  for  instance,  require  that  broadband  Internet  access  service  providers  must  comply 
 with  slamming,  truth-  in-  billing-  type  protections,  or  network  outage  reporting  requirements.  These  proposals  may  impose  additional  reporting  or  recordkeeping  requirements  on  entities.  We  seek  comment 
 on  the  possible  burden  these  requirements  would  place  on  small  entities.  Also,  we  seek  comment  on  whether  a  special  approach  toward  any  possible  compliance  burdens  on  small  entities  might  be 
 appropriate.  Entities,  especially  small  businesses,  are  encouraged  to  quantify  the  costs  and  benefits  of  any  reporting  requirement  that  may  be  established  in  this  proceeding. 


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


 79.  The  RFA  requires  an  agency  to  describe  any  significant  alternatives  that  it  has  considered  in  reaching  its  proposed  approach,  which  may  include  (among  others)  the  following  four  alternatives: 
 (1)  the  establishment  of  differing  compliance  or  reporting  requirements  or  timetables  that  take  into  account  the  resources  available  to  small  entities;  (2)  the  clarification,  consolidation,  or  simplification  of 
 compliance  or  reporting  requirements  under  the  rule  for  small  entities;  (3)  the  use  of  performance,  rather  than  design,  standards;  and  (4)  an  exemption  from  coverage  of  the  rule,  or  any  part  thereof,  for  small 
 entities.  232 
 80.  The  Commissions  primary  objective  is  to  develop  a  framework  for  consumer  protection  in  the  broadband  era    a  framework  that  ensures  that  consumer  protection  needs  are  met  by  all  providers  of 


 broadband  Internet  access  service,  regardless  of  the  underlying  technology.  We  seek  comment  here  on  the  effect  the  various  proposals  described  in  the  Notice,  and  summarized  below,  will  have  on  small 
 entities,  and  on  what  effect  alternative  rules  would  have  on  those  entities.  We  invite  comment  on  ways  in  which  the  Commission  can  achieve  its  goal  of  protecting  consumers  while  at  the  same  time  impose 
 minimal  burdens  on  small  broadband  Internet  access  service  providers.  With  respect  to  any  of  our  consumer  protection  regulations  already  in  place,  has  the  Commission  adopted  any  provisions  for  small 
 entities  that  we  should  similarly  consider  here? 
 81.  CPNI.  In  this  Notice,  the  Commission  asks  whether  it  should  extend  privacy  requirements  similar  to  the  Acts  CPNI  requirements  to  providers  of  broadband  Internet  access  services.  233  We  ask,  for 


 example,  whether  we  should  forbid  broadband  Internet  access  providers  from  disclosing,  without  their  customers  approval,  information  about  their  customers  that  they  learn  through  the  provision  of  their 


 231  U.  S.  Census  Bureau,  1997  Economic  Census,  Industry  Series:  Manufacturing,  Computer  Storage  Device 
 Manufacturing,  Table  4,  NAICS  code  334112  (issued  July  1999).  232 
 5  U.  S.  C.    603(  c).  233 
 See  supra  Notice  at  para.  149. 
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 broadband  Internet  access  service.  234  By  developing  the  record  with  respect  to  privacy  concerns,  the  Commission  can  appropriately  determine  whether  providers  of  broadband  Internet  access  services, 
 including  small  entities,  should  be  subject  to  similar  privacy  regulations.  235 
 82.  Slamming.  We  seek  comment  on  whether  we  should  impose  slamming  requirements  on  providers  of  broadband  Internet  access  service  and  to  explain  in  what  circumstances  subscribers  to  broadband 


 Internet  access  could  get  slammed.  236  We  also  ask  whether  the  provisioning  process  for  broadband  Internet  access  service  is  such  that  an  unauthorized  change  in  provider  is  more  likely  in  situations  where 
 the  provider  relies  on  third-  party  broadband  transmission  facilities.  237  We  recognize  that  small  broadband  Internet  access  service  providers  may  rely  more  on  third-  party  broadband  transmission  facilities  and  could 
 potentially  inform  the  Commission  as  to  whether  slamming  is  likely  to  occur  in  those  situations. 
 83.  Truth-  in-  Billing.  We  invite  comment  on  whether  we  should  impose  requirements  on  broadband  Internet  access  service  providers  that  are  similar  to  our  truth-  in-  billing  requirements  or  are  otherwise 


 geared  toward  reducing  slamming,  cramming,  or  other  types  of  telecommunications-  related  fraud.  238  We  ask  parties  to  explain  what  problems  customers  of  broadband  Internet  access  service  are  likely  to  have 
 with  their  bills  and  whether  we  should  address  these  problems  through  truth-  in-  billing-  type  requirements.  239  What  effect  will  this  proposal  have  on  small  entities,  and  are  there  alternatives  to 
 imposing  truth-  in-  billing  type  regulations? 
 84.  Network  Outage  Reporting.  We  seek  comment  as  to  whether  broadband  Internet  access  service  providers  should  notify  the  Commission  of  outages  of  thirty  or  more  minutes  that  affect  a  substantial 


 number  of  customers  or  involve  major  airports,  major  military  installations,  key  government  facilities,  nuclear  power  plants,  or  911  facilities.  240  We  encourage  small  entities  to  identify  any  alternatives  that 
 would  protect  consumers  while  at  the  same  time  minimizing  any  burden  on  small  broadband  Internet  access  providers. 


 85.  Section  214  Discontinuance.  In  the  Notice,  the  Commission  stated  that  section  214  of  the  Act  limits  a  telecommunications  carriers  ability  to  discontinue  unilaterally  its  service  to  customers.  241  The 
 Commissions  implementing  rules  generally  require  that  domestic  carriers  wishing  to  discontinue,  reduce,  or  impair  services  must  first  request  authority  to  do  so  from  the  Commission  and  must  notify 
 affected  customers  and  others  of  their  plans.  We  ask  whether  the  Commission  should  impose  discontinuance-  type  requirements  on  providers  of  broadband  Internet  access  service.  242 


 86.  Section  254(  g)  Rate  Averaging  Requirements.  In  the  Notice,  the  Commission  explains  that  section  254(  g)  required  the  Commission  to  adopt  rules  to  require  that  the  rates  charged  by  providers  of 
 234  See  id.  at  para.  149. 
 235  See  id.  at  para.  149. 
 236  See  id.  at  para.  151. 
 237  See  id.  at  para.  151. 
 238  See  id.  at  para.  153. 
 239  See  id.  at  para.  153. 
 240  See  id.  at  para.  154. 
 241  See  id.  at  para.  155. 
 242  See  id.  at  para.  156. 
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 interexchange  telecommunications  services  to  subscribers  in  rural  and  high  cost  areas  .  .  .  be  no  higher  than  the  rates  charged  by  each  such  provider  to  its  subscribers  in  urban  areas.  243  We  ask,  for  example, 
 whether  we  should  adopt  similar  rate  averaging  requirements  on  providers  of  broadband  Internet  access  services,  particularly  as  consumers  substitute  broadband  services  and  applications  for  narrowband 
 services  that  were  covered  by  section  254(  g).  244 
 87.  In  the  Notice,  we  ask  commenters  to  address  whether  the  imposition  of  regulations  pursuant  to  our  ancillary  jurisdiction,  and  the  corresponding  ability  of  consumers  to  take  advantage  of  Commission 


 avenues  for  resolution  of  consumer  protection  issues,  is  desirable  and  necessary  as  a  matter  of  public  policy,  or  whether  we  should  rely  on  market  forces  to  address  some  or  all  of  the  areas  listed.  245  The 
 option  of  relying  on  market  forces  may  benefit  entities,  especially  small  entities,  who  may  find  it  costly  or  burdensome  to  comply  with  Commission  regulations.  We  also  ask  whether  these  types  of  regulations  are 
 more  or  less  relevant  in  the  context  of  broadband  Internet  access  service  than  they  are  for  traditional  telephony  services.  246  In  addition,  we  ask  commenters  to  describe  any  technical,  economic,  or  other 
 impediments  that  may  affect  the  ability  of  broadband  Internet  access  service  providers  to  comply  with  such  regulations.  We  also  ask  whether  there  are  areas  of  consumer  protection  not  listed  above  for  which 
 the  Commission  should  impose  regulations.  247 
 88.  Federal  and  State  Involvement.  To  the  extent  that  the  Commission  finds  it  necessary  to  impose  consumer  protection  and  related  regulations  on  broadband  Internet  access  service  providers,  we  also  seek 


 comment  on  how  best  to  harmonize  federal  regulations  with  the  states  efforts  and  expertise  in  these  areas.  248 


 F.  Federal  Rules  that  May  Duplicate,  Overlap,  or  Conflict  with  the  Proposed  Rules 
 89.  None. 


 243  See  id.  at  para.  157. 
 244  See  id.  at  para.  157. 
 245  See  id.  at  para.  147. 
 246  See  id.  at  para.  147. 
 247  See  id.  at  para.  147. 
 248  See  id.  at  para.  158. 
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 STATEMENT  OF  CHAIRMAN  KEVIN  J.  MARTIN 
 Re:  Appropriate  Framework  for  Broadband  Access  to  the  Internet  over  Wireline  Facilities,  Universal  Service  Obligations  of  Broadband  Providers  (CC  Docket  No.  02-  33),  Review  of  Regulatory  Requirements 
 for  Incumbent  LEC  Broadband  Telecommunications  Services  (CC  Docket  No.  01-  337),  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  Docket  Nos.  95-  20,  98-  10),  Conditional  Petition  of  the  Verizon  Telephone  Companies  for  Forbearance  Under  47 
 U.  S.  C.    160(  c)  with  Regard  to  Broadband  Services  Provided  Via  Fiber  to  the  Premises;  Petition  of  the  Verizon  Telephone  Companies  for  Declaratory  Ruling  or,  Alternatively,  for  Interim  Waiver  with  Regard 
 to  Broadband  Services  Provided  Via  Fiber  to  the  Premises  (WC  Docket  No.  04-  242),  Consumer  Protection  in  the  Broadband  Era  (WC  Docket  No.  05-  271) 


 The  Order  that  we  adopt  today  is  a  momentous  one.  It  ends  the  regulatory  inequities  that  currently  exist  between  cable  and  telephone  companies  in  their  provision  of  broadband  Internet  services. 
 As  I  have  said  on  numerous  occasions,  leveling  the  playing  field  between  these  providers  has  been  one  of  my  highest  priorities.  With  this  Order,  wireline  broadband  Internet  access  providers,  like  cable  modem 
 service  providers,  will  be  considered  information  service  providers  and  will  no  longer  be  compelled  by  regulation  to  unbundle  and  separately  tariff  the  underlying  transmission  component  of  their  Internet 
 access  service. 
 Most  importantly,  however,  the  actions  we  take  in  this  Order  are  an  explicit  recognition  that  the  telecommunications  marketplace  that  exists  today  is  vastly  different  from  the  one  governed  by  regulators 
 over  30  years  ago.  The  Computer  Inquiry  requirements  that  were  adopted  several  decades  ago  were  based  on  the  assumption  that,  without  the  imposition  of  strict  regulation,  telephone  companies  would  be 
 able  to  exert  considerable  market  power  over  unaffiliated  entities  in  the  provision  of  information  services.  To  the  extent  that  this  assumption  was  true  at  the  time,  it  is  no  longer  true  in  todays  broadband  market. 


 As  the  item  recognizes,  the  broadband  Internet  access  market  today  is  characterized  by  multiple  platforms  that  are  vigorously  competing  for  customers.  Such  changed  market  conditions  require,  as  the 
 Supreme  Court  in  the  Brand  X  decision  phrased  it,  a  fresh  analysis.  I  am  pleased  that  the  Commission  so  quickly  undertook  this  analysis,  and,  in  so  doing,  removed  legacy  regulation  that  applied  to  only  one  of 
 the  platform  providers    the  telephone  companies. 
 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. 
 Perpetuating  the  application  of  outdated  regulations  on  only  one  set  of  Internet  access  providers  inhibits  infrastructure  investment,  innovation,  and  competition  generally. 


 In  taking  these  actions,  we  recognize  that  change  is  never  easy.  Nor  can  it  be  effectuated  overnight.  ISPs  currently  rely  on  the  transmission  offerings  that  the  telephone  companies  have  been 
 compelled  by  regulation  to  make  available.  Such  a  transition  is  vital  to  the  continuity  of  service  for  thousands  of  customers.  To  this  end,  we  require  the  telephone  companies  to  make  their  current 
 transmission  offerings  available  for  one  year  from  the  effective  date  of  this  Order. 
 Similarly,  we  cannot  permit  the  telephone  companies  to  immediately  cease  contributing  to  the  universal  service  fund  on  the  portion  of  revenues  derived  from  these  tariffed  Internet  access  offerings. 
 We  must  ensure  the  stability  of  the  fund.  Accordingly,  we  require  telephone  companies  to  continue 
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 contributing  to  the  universal  service  fund  on  their  Internet  access  services  based  on  their  current  contribution  levels  for  270  days  following  the  effective  date  of  the  Order  or  until  we  adopt  new 
 contribution  rules,  whichever  comes  first.  Either  way,  the  Commission  will  act  diligently  to  ensure  that  there  will  be  no  adverse  impact  to  the  fund  as  a  result  of  the  holdings  today. 


 Although  we  are  confronting  a  changed  marketplace,  government  will  continue  to  have  a  role  in  this  dynamic,  new  broadband  marketplace.  Together  with  our  state  colleagues,  the  Commission  must 
 vigilantly  ensure  that  law  enforcement  and  consumer  protection  needs  continue  to  be  met.  To  accomplish  this,  we  adopt  a  Notice  of  Proposed  Rulemaking  seeking  comment  on  the  extent  to  which  we  need  to 
 develop  a  consumer  protection  framework  that  applies  to  all  broadband  Internet  access  platform  providers,  regardless  of  the  underlying  technology. 


 We  also  adopt  today  a  vitally  important  companion  item  that  confirms  that  facilities-  based  Internet  access  providers  (as  well  as  interconnection  VoIP  providers)  are  subject  to  the  requirements  of 
 CALEA.  Law  enforcement  agencies  must  have  the  ability  to  conduct  electronic  surveillance  over  broadband  technologies. 


 The  Commission  also  adopts  today  a  Policy  Statement  that  reflects  each  Commissioners  core  beliefs  about  certain  rights  all  consumers  of  broadband  Internet  access  should  have.  Competition  has 
 ensured  consumers  have  had  these  rights  to  date,  and  I  remain  confident  that  it  will  continue  to  do  so. 
 I  believe  that,  with  the  actions  we  take  today,  consumers  will  reap  the  benefits  of  increased  Internet  access  competition  and  enjoy  innovative  high-  speed  services  at  lower  prices.  There  is,  however, 
 more  to  do  to  stimulate  infrastructure  investment,  broadband  deployment,  and  competition  in  the  broadband  market.  We  intend  to  tackle  these  challenges  in  the  upcoming  months. 


 Finally,  I  want  to  thank  my  colleagues  for  their  perseverance  and  commitment  to  work  together  to  adopt  this  item  today.  It  is  an  honor  and  a  privilege  to  serve  with  such  dedicated  and  capable  public 
 servants. 
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 STATEMENT  OF  COMMISSIONER  KATHLEEN  Q.  ABERNATHY 
 Re:  Appropriate  Framework  for  Broadband  Access  to  the  Internet  over  Wireline  Facilities,  Universal  Service  Obligations  of  Broadband  Providers  (CC  Docket  No.  02-  33),  Review  of  Regulatory  Requirements 
 for  Incumbent  LEC  Broadband  Telecommunications  Services  (CC  Docket  No.  01-  337),  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  Docket  Nos.  95-  20,  98-  10),  Conditional  Petition  of  the  Verizon  Telephone  Companies  for  Forbearance  Under  47 
 U.  S.  C.    160(  c)  with  Regard  to  Broadband  Services  Provided  Via  Fiber  to  the  Premises;  Petition  of  the  Verizon  Telephone  Companies  for  Declaratory  Ruling  or,  Alternatively,  for  Interim  Waiver  with  Regard 
 to  Broadband  Services  Provided  Via  Fiber  to  the  Premises  (WC  Docket  No.  04-  242),  Consumer  Protection  in  the  Broadband  Era  (WC  Docket  No.  05-  271) 


 Three  and  a  half  years  ago,  my  colleagues  and  I  made  a  promise  to  the  American  people:  we  promised  that  efforts  to  deploy  twenty-  first  century  broadband  technologies  for  public  use  would  not  be 
 crushed  by  the  weight  of  1930s-  era  regulations.  To  that  end,  we  initiated  a  series  of  proceedings  designed  to  reevaluate  the  role  of  traditional  common  carrier  regulations  in  the  blossoming  market  for  broadband 
 Internet  access  services. 
 We  quickly  determined  that  cable  modem  services  should  be  free  from  the  heavy  burdens  of  Title  II  regulation.  That  determination  was  soon  subject  to  legal  challenge,  and  the  resulting  litigation 
 effectively  prevented  action  with  regard  to  similar  services  provided  over  wireline  facilities.  In  Junes  NCTA  v.  Brand  X  decision,  the  Supreme  Court  brought  that  period  of  uncertainty  to  a  close,  validating  the 
 Commissions  authority  to  classify  a  broadband  Internet  access  service  as  a  Title  I  information  service. 
 Today,  with  the  benefit  of  the  Courts  guidance,  we  extend  similar  relief  to  providers  of  wireline  broadband  Internet  access.  Specifically,  we  clarify  that  wireline  broadband  Internet  access  services    like 
 the  cable  modem  services  at  issue  in  Brand  X    are  information  services,  and  thus  not  automatically  subject  to  the  full  range  of  Title  II  requirements  designed  for  a  narrowband,  analog,  one-  wire  world.  We 
 also  lift  the  so-  called  Computer  Inquiry  requirements,  which  were  crafted  to  prevent  companies  that  exercised  substantial  market  power  in  the  provision  of  telecommunications  from  leveraging  that 
 dominance  into  the  provision  of  enhanced  services.  Requirements  such  as  these  were  never  meant  to  apply  in  a  competitive,  multi-  platform  communications  market  such  as  the  market  for  high-  speed  Internet 
 access  services. 
 And  let  there  be  no  doubt:  competition  among  broadband  providers  is  flourishing.  The  Commissions  most  recent  statistics  show  that  over  80  percent  of  zip  codes  in  America  are  served  by  two 
 or  more  high-  speed  providers,  about  two-  thirds  are  served  by  three  or  more,  and  over  half  are  served  by  four  or  more.  Moreover,  I  fully  expect  that  providers  taking  advantage  of  new  platforms  will  soon  offer 
 consumers  even  more  choices  in  even  more  areas.  Over  1.2  million  high-  speed  lines  in  service  today  use  wireless,  satellite,  fiber-  optic,  and  powerline  technologies;  that  number  is  poised  to  rise  dramatically  in 
 the  very  near  future.  The  result  of  such  competition  will  be  better  and  better  services  at  lower  and  lower  prices,  with  offerings  designed  to  match  customers  needs  rather  than  regulators  preferences. 


 Todays  decision  is  not,  however,  the  end  of  the  story.  Wireline  broadband  providers  are  not  subject  to  Title  II  or  to  the  Computer  Inquiry  requirements,  but  that  does  not  mean  that  they  are  immune 
 from  all  regulatory  requirements.  When  the  Commission  first  issued  its  tentative  conclusion  that  these  services  were  outside  the  scope  of  Title  II,  I  emphasized  my  commitment  to  preserving  any  specific 
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 regulatory  requirements  that  are  necessary  for  the  furtherance  of  critical  policy  objectives.  In  June,  the  Brand  X  majority  made  clear  that  the  Commission  retains  the  prerogative  to  exercise  its  Title  I  ancillary 
 jurisdiction  to  do  just  that.  The  Commission  has  already  made  clear  its  intention  to  ensure  access  to  emergency  services  as  Americans  transition  to  packet-  switched  communications  technologies, 
 irrespective  of  how  those  services  are  classified  under  the  Communications  Act.  As  we  make  clear  in  todays  Notice,  we  will  now  turn  our  attention  to  other  social  policy  requirements,  such  as  those 
 involving  disability  access,  slamming,  and  consumer  privacy.  Where  action  is  warranted,  we  will  act. 
 There  is  still  work  to  be  done  as  we  endeavor  to  establish  a  new,  minimally  regulated  framework  for  the  digital  era.  But  however  we  address  the  issues  that  remain  before  us,  I  expect  that  our  decision 
 today  will  spur  future  investment  in  broadband  infrastructure  and  provide  the  flexibility  to  which  companies  in  a  competitive  market  and  their  customers  are  entitled. 


 In  short,  I  am  confident  that  todays  Order  does  much  to  fulfill  our  promise  to  the  American  people,  and  I  am  happy  to  support  this  item. 
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 STATEMENT  OF  COMMISSIONER  MICHAEL  J.  COPPS, 
 CONCURRING 
 Re:  In  the  Matter  of  Appropriate  Framework  for  Broadband  Access  to  the  Internet  over  Wireline  Facilities;  Universal  Service  Obligations  of  Broadband  Providers; 
 Review  of  Regulatory  Requirements  for  Incumbent  LEC  Broadband  Telecommunications  Services;  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; 
 Conditional  Petition  of  the  Verizon  Telephone  Companies  for  Forbearance  Under  47  U.  S.  C.    160(  c)  with  Regard  to  Broadband  Services  Provided  via  Fiber  to  the 
 Premises;  Petition  of  the  Verizon  Telephone  Companies  for  Declaratory  Ruling  or,  Alternatively,  for  Interim  Waiver  with  Regard  to  Broadband  Services  Provided 
 via  Fiber  to  the  Premises;  Consumer  Protection  in  the  Broadband  Era,  Report  and  Order  and  Notice  of  Proposed  Rulemaking  (CC  Docket  Nos.  02-  33,  01-  337, 
 95-  20,  98-  10,  WC  Docket  No.  04-  242) 
 My  goal  as  a  Commissioner  has  always  been  to  advance  the  public  interest  as  far  as  I  can  with  the  tools  at  my  disposal  at  the  time.  I  objected  strenuously  to  our  original  reclassification  of  cable  modem 
 and  our  tentative  reclassification  of  wireline  broadband.  But  the  Supreme  Court  has  fundamentally  changed  the  legal  landscape.  I  personally  find  the  jurisprudence  of  Justice  Scalia  far  more  persuasive 
 than  that  of  the  Court  majority,  and  I  agree  wholeheartedly  with  Justice  Scalias  observation  that  the  previous  Commission  chose  to  achieve  its  objectives  through  an  implausible  reading  of  the  statute,  and 
 has  thus  exceeded  the  authority  given  it  by  Congress. 
 But  neither  Justice  Scalias  opinion  nor  my  personal  reading  will  guide  the  Commissions  approach  going  forward.  The  handwriting  is  on  the  wall.  DSL  will  be  reclassified,  either  now  or  soon 
 from  now,  whether  I  agree  or  not.  This  is  not  a  situation  of  my  making  or  my  preference,  and  I  believe  that  it  does  not  inure  to  the  benefit  of  this  institution  or  to  consumers  across  the  land.  But  when 
 fundamental  responsibilities  like  homeland  security,  universal  service,  disabilities  access,  enterprise  competition,  and  Internet  discrimination  protections  are  on  the  chopping  block,  I  feel  compelled  to  work 
 hard  and  be  creative  to  advance  the  public  interest  rather  than  throwing  up  my  hands.  I  therefore  will  concur  in  this  proceeding  to  protect  our  ability  to  meet  these  core  responsibilities. 


 As  we  enter  the  world  of  Title  I  today,  we  all  know  what  the  FCCs  goals  must  be.  Among  other  things,  we  must  continue  to  protect  homeland  security.  We  must  meet  our  universal  service 
 responsibilities.  We  must  maintain  disabilities  access.  We  must  protect  fledgling  competition.  And  we  must  state  clearly  that  innovators,  technology  companies,  and  consumers  will  not  face  unfair 
 discrimination  on  the  Internet  by  network  providers. 
 Our  ability  to  advance  these  critical  goals  should  progress  as  we  advance  to  broadband.  They  should  not  shrink  as  we  fiddle  with  legalisms  and  parse  definitions.  This  item  is  not  an  exercise  in  hair-splitting 
 about  telecommunications  services  and  information  services.  It  is  about  how  we  promote  the  deployment  of  advanced  communications  while  still  staying  true  to  our  core  values.  Nonetheless,  in 
 recent  years  this  Commission  has  irresponsibly  reclassified  services  without  addressing  the  larger  implications  of  its  decisions. 


 Today  we  begin  to  face  up  to  this  shortfall.  The  Order  is  far  from  ideal.  But  our  actions  today 
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 Chairmans  support  of  this  item. 
 I  also  want  to  note  that  the  Supreme  Courts  Brand  X  decision  makes  it  clear  that  the  Commissions  ancillary  authority  can  accommodate  our  work  on  homeland  security,  universal  service, 
 disabilities  access,  competition,  and  Internet  discrimination  protections  and  more.  But  we  have  a  ways  to  go.  Today,  in  addition  to  our  Order,  we  release  a  Notice  of  Proposed  Rulemaking  on  consumer 
 protection  in  the  broadband  era.  I  would  have  much  preferred  positive  action  on  this  now,  but  we  at  least  put  these  issues  squarely  on  the  table  and  now  we  have  a  proceeding  to  deal  with  them.  I  believe  that  a 
 combination  of  a  strong  record,  good  wide  stakeholder  input  and  Commission  sensitivity  to  the  priority  Congress  places  on  consumer  issues  can  preserve  such  protections  as  privacy,  truth-  in-  billing,  and  other 
 safeguards  for  the  communications  tools  our  citizens  rely  upon  no  matter  how  they  may  be  classified.  Hard-  won  consumer  protections  must  never  be  allowed  to  erode  simply  because  we  change  the 
 classification  of  the  tools  people  rely  upon  to  communicate  with  one  another.  So  I  think  we  come  out  here  with  a  framework  for  consumer  protection  in  a  digital  world  a  framework  accommodating  and 
 encouraging  the  expertise  and  authority  that  reside  in  our  state  public  service  commission  counterparts.  I  look  forward  to  the  record  that  develops  and  to  working  with  my  colleagues  and  all  stakeholders  so  that 
 we  can  move  ahead  without  further  delay. 
 Let  me  sum  up  by  reminding  the  Commission  that  we  are  saying  today  that  we  take  the  dramatic  step  of  reclassifying  DSL  in  order  to  spur  broadband  deployment  and  to  help  consumers.  I  want  us  to  test 
 that  proposition  a  year  from  now.  If  by  next  year  consumers  have  more  broadband  options,  lower  prices,  higher  speeds  and  better  services,  maybe  this  proposition  holds  true.  If  our  broadband  take-  rate  reverses 
 course  and  the  United  States  begins  to  climb  up  the  ladder  of  broadband  penetration  rather  than  falling  further  behind  so  many  other  nations,  then  well  have  something  to  crow  about.  If  we  get  no  complaints 
 about  higher  bills,  loss  of  privacy  and  diminished  access  for  the  disability  communities,  we  can  take  a  bow.  And  critically,  if  we  make  progress  on  public  safety  and  homeland  security,  we  can  be  proud  of  our 
 actions.  So  I  hope  next  year  the  Commission  will  put  its  money  where  its  mouth  is  and  check  to  see  if  its  theory  yields  real  world  results  for  American  consumers.  And  if  it  doesnt  achieve  these  results,  I  hope 
 well  admit  it.  I  plan  to  keep  tabs. 
 In  closing,  I  want  to  thank  Chairman  Martin  for  not  only  permitting,  but  encouraging,  open  and  genuine  Commission  dialogue  on  these  difficult  issues.  I  want  to  thank  him,  and  Commissioners 
 Adelstein  and  Abernathy,  for  their  contributions  to  making  this  a  better  item.  The  Bureau  toiled  mightily  with  this  proceeding  and  we  are  indebted  to  their  diligence,  hard  work  and  creative  thought  all  along  the 
 way.  Our  personal  staffs  performed  with  distinction.  And  I  would  be  both  ungrateful  and  remiss  if  I  did  not  recognize  the  extraordinary  indeed,  often  heroic  exertions  of  my  Legal  Advisor  Jessica 
 Rosenworcel  for  helping  all  of  us  navigate  these  perilous  waters  and  arrive  at  somewhat  more  tranquil  shores. 
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 STATEMENT  OF  COMMISSIONER  JONATHAN  S.  ADELSTEIN 
 CONCURRING  IN  FCC  05-  150,  APPROVING  IN  FCC  05-  153 
 Re:  Appropriate  Framework  for  Broadband  Access  to  the  Internet  over  Wireline  Facilities,  Universal  Service  Obligations  of  Broadband  Providers  (CC  Docket  No.  02-  33),  Review  of  Regulatory  Requirements 
 for  Incumbent  LEC  Broadband  Telecommunications  Services  (CC  Docket  No.  01-  337),  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  Docket  Nos.  95-  20,  98-  10),  Conditional  Petition  of  the  Verizon  Telephone  Companies  for  Forbearance  Under  47 
 U.  S.  C.    160(  c)  with  Regard  to  Broadband  Services  Provided  Via  Fiber  to  the  Premises;  Petition  of  the  Verizon  Telephone  Companies  for  Declaratory  Ruling  or,  Alternatively,  for  Interim  Waiver  with  Regard 
 to  Broadband  Services  Provided  Via  Fiber  to  the  Premises  (WC  Docket  No.  04-  242),  Consumer  Protection  in  the  Broadband  Era  (WC  Docket  No.  05-  271)  (Concurring) 


 Re:  Communications  Assistance  for  Law  Enforcement  Act  and  Broadband  Access  and  Services  First  Report  and  Order  and  Further  Notice  of  Proposed  Rulemaking  (ET  Docket  No.  04-  295,  RM-  10865) 
 (Approving) 
 The  items  before  us  are  a  real  tribute  to  the  consensus  building  dedication  of  Chairman  Kevin  Martin  and  all  of  my  colleagues.  It  took  extraordinary  efforts  by  all  of  us  because  the  stakes  are  so  high, 
 the  consequences  so  far  reaching,  and  the  concerns  so  acute.  And  we  did  all  of  this  work  in  an  incredibly  compressed  time-  frame. 


 Today,  we  implement  the  Supreme  Courts  guidance  in  the  Brand  X  decision  and  embark  on  a  new  but  uncharted  path  in  its  treatment  of  wireline  broadband  Internet  access  services,  the  high-  speed 
 DSL  and  fiber-  to-  the-  home  connections.  These  technologies  are  revolutionizing  the  way  that  consumers  connect,  learn,  work,  and  socialize  through  the  Internet.  With  the  Broadband  Reclassification  Order  and 
 NPRM,  we  move  toward  a  measured  and  technology-  neutral  approach  to  broadband  regulation.  Critical  aspects  of  the  reclassification  approach,  however,  give  me  considerable  pause. 


 Indeed,  were  the  pen  solely  in  my  hand,  these  are  not  the  precise  items  I  would  have  drafted  or  the  procedural  framework  I  would  have  chosen.  In  the  wake  of  the  Supreme  Court  decision,  however, 
 this  reclassification  was  inevitable.  Moreover,  the  Broadband  Reclassification  Order  reflects  meaningful  compromise  by  each  of  my  colleagues,  and  I  appreciate  the  efforts  to  address  many  of  my  concerns  about 
 issues  including  the  stability  of  the  universal  service  fund,  access  for  persons  with  disabilities,  and  the  ability  of  competitive  carriers  to  access  essential  input  facilities.  What  weve  done  here  is  ensure  it  was 
 done  in  a  fashion  that  protects,  or  holds  the  promise  of  addressing,  many  critical  policy  goals  that  Congress  and  the  Commission  have  long  held  as  fundamental  to  a  rapid,  efficient,  Nation-  wide,  and 
 world-  wide  wire  and  radio  communication  service. 
 As  we  move  to  this  less-  regulated  framework,  Im  pleased  that  we  take  up  the  Supreme  Courts  invitation  to  use  our  Title  I  ancillary  jurisdiction  to  address  critical  policy  issues.  Commissioner  Copps 
 and  I  have  worked  hard  to  address  or  lay  the  groundwork  for  addressing  many  important  consumer  and  public  policy  concerns,  and  I  appreciate  Chairman  Martin  and  Commissioner  Abernathys  willingness  to 
 engage  in  a  constructive  discussion  about  a  technology-  neutral  framework  for  policy  in  the  broadband  age.  Im  particularly  pleased  that  recent  changes  to  the  Broadband  Reclassification  Order  reiterate  our 
 commitment  to  access  for  persons  with  disabilities  and  consumer  protection,  and  provide  for  meaningful  provisions  to  address  the  needs  of  carriers  serving  Rural  America.  Im  also  pleased  that  we  adopt  a 
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 companion  Order  applying  the  Communications  Assistance  for  Law  Enforcement  Act  (CALEA)  to  facilities-  based  broadband  Internet  access  providers  and  providers  of  interconnected  VoIP  services. 
 Finally,  we  adopt  concurrently  a  companion  Policy  Statement  that  articulates  a  core  set  of  principles  for  consumers  access  to  broadband  and  the  Internet.  Collectively,  these  provisions  are  essential  for  my 
 support  of  this  item. 
 We  undertake  these  proceedings  against  the  backdrop  of  the  Brand  X  decision,  in  which  the  Supreme  Court  upheld  the  FCCs  earlier  determination  that  cable  modem  broadband  services  may  be 
 classified  as  information  services,  rather  than  as  traditional  telecommunications  services.  By  doing  so,  the  FCC  defined  these  cable  broadband  services  out  of  Title  II  of  the  Act,  which  applies  to  common 
 carrier  offerings.  I  was  not  at  the  Commission  when  this  reclassification  approach  was  first  proposed,  but  the  approach  has  always  given  me  some  grounds  for  real  concern.  By  reclassifying  broadband 
 services  outside  of  the  existing  Title  II  framework,  the  Commission  steps  away  from  some  of  the  core  legal  protections  and  grounding  afforded  by  Congress.  This  approach  also  gave  a  significant  and 
 articulate  minority  of  the  Supreme  Court  grounds  for  questioning  whether  the  Commission  had  fundamentally  misinterpreted  the  Communications  Act.  But,  my  reservations  notwithstanding,  the 
 Supreme  Court  majority  upheld  the  reclassification  and  we  must  respond  to  this  changed  landscape. 
 In  fact,  there  is  much  to  be  said  for  a  measured  regulatory  approach  for  broadband  services.  The  applications  that  can  ride  over  broadband  services  are  bringing  increased  educational,  economic,  health, 
 and  social  opportunities  for  consumers.  Im  increasingly  convinced  that  our  global  economic  success  will  also  be  shaped  by  our  commitment  to  ubiquitous  advanced  communications  networks.  Our  challenge  is 
 to  create  an  environment  in  which  providers  can  invest  in  their  networks  and  compete,  application  and  content  providers  can  innovate  and  reach  consumers,  and  we  can  all  maintain  the  core  policy  goals  that 
 weve  worked  hard  to  achieve. 
 The  Broadband  Reclassification  Order  acknowledges  that  the  marketplace  and  technology  of  todays  broadband  Internet  access  services  are  markedly  different  from  those  that  existed  three  decades 
 ago,  when  most  of  the  Computer  Inquiries  requirements  were  first  adopted.  Although  we  adopt  this  new  regulatory  approach  with  the  blessing  of  the  Supreme  Court,  many  of  the  implications  for  consumers  are 
 largely  yet  undefined.  To  some  degree,  we  ask  consumers  to  take  a  leap  of  faith  based  on  our  predictive  judgment  about  the  development  of  competition  in  an  emerging  and  very  fluid  broadband  marketplace. 


 It  remains  unclear  whether  the  approach  we  have  taken  thus  far  has  been  a  success.  Not  all  consumers  have  a  choice  between  affordable  broadband  providers,  and  Americans  continue  to  pay 
 relatively  high  prices  for  relatively  limited  bandwidth.  As  we  move  forward,  I  am  pleased  that  the  Commission  adopts  a  one-  year  transition  for  independent  ISPs  and  encourages  parties  to  engage  in 
 prompt  negotiations  to  facilitate  the  transition  process.  While  this  is  helpful,  we  have  a  lot  more  work  to  do  to  establish  a  coherent  national  broadband  policy  that  signifies  the  level  of  commitment  we  need  as  a 
 nation  to  speed  the  deployment  of  affordable  broadband  services  to  all  Americans.  So  we  will  have  to  monitor  closely  the  development  of  the  broadband  market  and  the  effectiveness  of  this  approach.  If 
 results  dont  improve,  I  hope  we  will  reconsider  what  measures  are  needed  to  spur  the  level  of  competition  necessary  to  lower  prices  and  improve  services  for  consumers. 


 A  critical  aspect  of  our  decision  to  eliminate  existing  access  requirement  for  ISPs  is  the  Commissions  adoption  of  a  companion  Policy  Statement  that  articulates  a  core  set  of  principles  for 
 consumers  access  to  broadband  and  the  Internet.  These  principles  are  designed  to  ensure  that  consumers  will  always  enjoy  the  full  benefits  of  the  Internet.  I  am  also  pleased  that  these  principles,  which  will 
 inform  the  Commissions  future  broadband  and  Internet-  related  policymaking,  will  apply  across  the  range 
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 of  broadband  technologies.  I  commend  in  particular  my  colleague,  Commissioner  Copps,  for  his  attention  to  this  issue. 
 I  am  also  pleased  that  changes  were  made  to  the  Broadband  Reclassification  Order  that  affirm  our  authority  under  Title  I  to  ensure  access  for  those  with  disabilities.  Through  sections  225  and  255  of  the 
 Act,  Congress  codified  important  principles  that  have  ensured  access  to  functionally-  equivalent  services  for  persons  with  disabilities.  Millions  of  Americans  with  disabilities  can  benefit  from  widely-  available 
 and  accessible  broadband  services.  Indeed,  at  last  months  open  meeting,  the  Commission  recognized  the  importance  of  broadband  services  to  persons  with  disabilities,  and  celebrated  the  15  th  anniversary  of  the 
 Americans  with  Disabilities  Act  (ADA),  by  adopting  a  series  of  orders  that  improved  the  quality  of  and  access  to  important  communications  services  for  the  deaf  and  hard  of  hearing  community.  I  strongly 
 believe  that  we  must  not  relegate  the  ADAs  important  protections  to  the  world  of  narrowband  telephone  service,  and  I  appreciate  my  colleagues  willingness  to  address  this  concern. 


 Im  also  particularly  pleased  that  the  Broadband  Reclassification  Order  includes  meaningful  provisions  to  address  the  needs  of  carriers  serving  Rural  America.  By  allowing  rural  providers  to 
 continue  to  offer  their  broadband  services  on  a  common  carrier  basis,  and  by  allowing  them  to  participate  in  the  NECA  pooling  process,  we  maintain  their  ability  to  reduce  administrative  costs,  minimize  risk,  and 
 create  incentives  for  investment  in  broadband  facilities  that  are  so  crucial  to  the  future  of  Rural  America. 
 We  also  take  important  interim  action  in  the  Broadband  Reclassification  Order  to  preserve  the  stability  of  our  universal  service  funding.  Reclassifying  broadband  services  as  information  services 
 removes  revenues  from  wireline  broadband  Internet  access  services  from  the  mandatory  contribution  requirements  of  section  254,  taking  out  a  rapidly-  growing  segment  of  the  telecommunications  sector  from 
 the  required  contribution  base.  I  would  have  preferred  to  exercise  our  permissive  contribution  authority  now  to  address  this  potential  decline  in  the  contribution  base  permanently,  but  I  am  glad  that  we  were 
 able  to  agree  to  adopt  an  interim  measure  to  preserve  existing  levels  of  universal  service  funding  on  a  transitional  basis.  I  also  appreciate  the  Commissions  commitment  to  take  whatever  action  is  necessary  to 
 preserve  existing  funding  levels,  including  extending  the  transition  or  expanding  the  contribution  base.  These  modifications  to  the  Broadband  Reclassification  Order  are  critical  to  my  support  of  the  item. 


 The  Commission  will  also  need  to  assess  how  the  reclassification  of  wireline  broadband  services  might  affect  our  ability  to  support  broadband  services  through  the  universal  service  fund,  should  we 
 decide  to  do  so  in  the  future.  Given  the  growing  importance  of  broadband  services  for  our  economy,  public  safety,  and  society,  I  hope  that  we  can  preserve  our  ability  to  support  the  deployment  of  these 
 services  for  consumers  that  the  market  may  leave  behind. 
 Im  also  glad  that  weve  added  an  important  Notice  of  Proposed  Rulemaking  that  seeks  comment  on  how  we  can  ensure  that  we  continue  to  meet  our  consumer  protection  obligations  in  the  Act.  On  some 
 issues,  like  consumer  privacy,  it  would  have  been  far  wiser  to  act  now.  Im  troubled  by  the  prospect  that  we  might  even  temporarily  roll  back  consumer  privacy  obligations  in  the  Broadband  Reclassification 
 Order,  particularly  during  this  age  in  which  consumers  personal  data  is  under  greater  attack  than  ever.  The  Commission  must  move  immediately  to  address  these  privacy  obligations.  We  should  also  act 
 quickly  to  assess  the  effect  on  our  Truth-  in-  Billing  rules  and  the  rate  averaging  requirements  of  the  Act,  which  ensure  that  charges  for  consumers  in  rural  areas  are  not  higher  than  those  for  consumers  in  urban 
 areas.  This  Notice  sets  the  foundation  for  our  consumer  protection  efforts  across  all  broadband  technology  platforms  and  I  look  forward  to  working  with  my  colleagues  as  we  move  forward  promptly  to 
 address  these  issues. 
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 For  all  these  reasons,  I  concur  in  todays  Broadband  Reclassification  item  and  support  the  CALEA  item. 
 I  would  like  to  thank  my  colleagues  for  their  willingness  to  engage  in  constructive  dialogue  and  to  take  meaningful  steps  to  acknowledge  many  of  my  concerns.  I  also  want  to  thank  Tom  Navin  and  the 
 dedicated  and  professional  staff  of  our  Wireline  Competition  Bureau,  who  have  worked  many  long  hours  to  produce  these  companion  items  so  quickly.  All  of  our  personal  staffs  have  worked  incredibly  long 
 hours  with  great  dedication  to  speed  this  process  along.  I  would  like  to  acknowledge  my  personal  gratitude  to  Scott  Bergmann  for  his  incredible  stamina  and  persistence.  I  would  be  remiss  if  I  didnt  also 
 thank  his  entire  family  for  sacrificing  their  sacred  time  with  him  over  these  past  few  weeks.  I  look  forward  to  working  with  you  all  as  we  moved  forward  together. 
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