THE COMMISSION SHOULD FOLLOW THE D.C. CIRCUIT’S GUIDANCE AND REAFFIRM THE IMPORTANCE OF ITS TRANSPARENCY FRAMEWORK WHILE ADOPTING NEW RULES PURSUANT TO SECTION 706 OF THE TELECOMMUNICATIONS ACT OF 1996.
The Verizon decision established a clear roadmap for the Commission to promulgate sensible and legally sound open Internet rules pursuant to Section 706 of the Telecommunications Act of 1996. Section 706(a), the D.C. Circuit explained, “vest[s] the Commission with actual authority” to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.”33 Moreover, upon a finding that “advanced telecommunications capability” is not being “deployed to all Americans in a reasonable and timely fashion,” Section 706(b) provides the Commission additional authority to “take immediate action to accelerate deployment of [advanced telecommunications] capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”
The D.C. Circuit upheld the Commission’s 2010 conclusion that promoting and protecting the open Internet fell squarely within these grants of authority. The court characterized the Commission’s finding that Internet openness is crucial to edge-provider innovation and drives end-user demand, which in turn stimulates investment in broadband infrastructure—i.e., the “virtuous circle”—as “both rational and supported by substantial evidence.”35 That core justification thus plainly empowers the Commission to adopt new rules under Section 706(a) to protect and provide for such openness as a way to “encourage the deployment” of advanced telecommunications capability.36 Because the Commission also has concluded that “broadband deployment to all Americans is not reasonable and timely,”37 the Commission can similarly justify new rules protecting Internet openness under Section 706(b) as a means of “‘accelerat[ing] [broadband] deployment’” by “removing ‘barriers to infrastructure investment’ and promoting ‘competition.’”38 The Commission should follow the court’s roadmap by reaffirming the importance of the transparency framework and adopting new open Internet rules pursuant to Section 706.
A. The Commission Should Reaffirm the Importance of Its Transparency Framework.
The Verizon court unanimously upheld the 2010 transparency rule,39 and thus assured that consumers will continue to receive robust disclosures describing the terms, conditions, and performance attributes of broadband Internet access services. As the Commission recognizes, well-designed disclosure rules are “the most effective and least intrusive regulatory measures at the Commission’s disposal” for protecting the open Internet.40 Such rules bolster competition in the communications marketplace by enabling end users to make informed decisions about choosing (and deciding whether to keep) their broadband provider. They also provide assurances to regulators, edge providers, and the broader Internet community that broadband providers will remain committed to the open Internet. As reflected in the existing disclosures of all major broadband providers, including Comcast, there is widespread support and a public commitment from broadband providers to maintain open Internet policies and practices.
Section 706 provides abundant authority to reaffirm the Commission’s 2010 transparency rule and to make reasonable adjustments calibrated to support the “virtuous circle” of innovation and increased competition. Some of the Commission’s new proposals could yield such benefits. For example, the Commission may well wish to require greater disclosure than it currently does for how actual broadband speeds compare with advertised speeds, as consumers should know whether they are receiving the full benefit of the services that they purchase.42 Many broadband providers, including Comcast, already disclose far more information on this issue than is required.43 In addition, the Commission may well find that the OIAC’s proposal for a “standardized label” would make broadband providers’ disclosures more accessible and useful for consumers.
The Commission should ensure, however, that any new disclosure obligations are appropriately tailored to its objectives in this proceeding. Certain proposals in the NPRM threaten to impose substantial burdens while providing consumers with minimal or no countervailing benefits. For instance, the Commission should not require broadband providers to make additional disclosures tailored to edge providers or to “providers who seek to exchange traffic with broadband provider networks.”45 The current transparency rule already requires broadband providers to disclose information “sufficient for . . . content, application, service, and device providers to develop, market, and maintain Internet offerings.”46 Beyond this, it is unclear what information these entities would need in order to make their offerings available on an open network like the Internet. Indeed, one of the principal characteristics of the Internet is that any IP-based service can be delivered over it, without special tailoring.47 In addition, the Commission should not require broadband providers that have data caps or usage thresholds to collect and disclose data regarding consumers’ “application-specific usage” or “which user or device contributed to which part of the total data usage.”48 These proposals would require broadband providers to inspect and track their customers’ usage in ways that broadband providers often do not today. Aside from the obvious burdens inherent in such a requirement, this policy could raise legitimate concerns regarding consumer privacy.49
But setting aside these discrete problematic proposals, Comcast agrees with the Commission that it should use transparency as a critical means of promoting Internet openness. With relevant and accessible information about their options, consumers can make more informed choices and spur companies to continue providing services that meet their needs.
B. The Commission Should Reinstate a No-Blocking Rule Designed to Guarantee End Users Access to the Entire Internet.
The Verizon decision also supplies a sound basis for the proposed reinstatement of the Commission’s no-blocking rule.50 Although the court struck down the 2010 no-blocking rule, it did so because the Commission had not provided a valid legal rationale to support it under Section 706—not because such a rationale did not exist.51 In fact, the court indicated that the 2010 no-blocking rule would have been valid if it were understood to simply establish a minimum level of service on a broadband provider’s network, while leaving room for providers to “negotiate separate agreements with . . . individual edge provider[s]” regarding a greater level of service and to charge similarly situated edge providers “different prices for the same service.”52 The Commission should utilize the court’s reasoning and reinstate a no-blocking rule that guarantees that end users can access the entire Internet.
1. Any “Minimum Level of Service” Should Be Defined as a Requirement To Deliver Traffic on a “Best Efforts” Basis.
The NPRM tentatively concludes that “the revived no-blocking rule should be interpreted as requiring broadband providers to furnish edge providers with a minimum level of access to their end-user subscribers.”54 The Commission asks whether it should interpret this standard as a requirement to deliver traffic on a “best efforts” basis; as a requirement to deliver traffic in a manner that satisfies certain quantitative performance parameters; or as a requirement to deliver traffic in a manner that would meet the expectations of a “reasonable person.”55
Any “minimum level of service” that the Commission adopts should be interpreted only as a requirement that broadband providers deliver traffic to end users on a “best efforts” basis. “Best efforts” traffic delivery is a well-understood engineering concept.56 Among other things, it ensures that no resources are pre-allocated, pre-reserved, or prioritized in the delivery of “best effort[s]” traffic. This standard would ensure that the goal of the no-blocking rule—to guarantee end users access to the entire Internet—is fulfilled.
In contrast, any attempt to establish minimum quantitative performance parameters would be ineffective, as this approach would fail to account for the variability inherent in providing broadband Internet access service. Broadband providers engineer their networks to optimize performance across metrics such as throughput, latency, and jitter. However, performance inevitably still varies based on factors such as contention in the last mile and the distance between the endpoints of a transmission, as well as several factors that are wholly within customers’ control, such as the modems, Wi-Fi routers, or devices they use to access the network. Indeed, the Commission’s data show that even the performance of broadband providers that over-deliver on their advertised speeds is subject to significant variation.
The Commission should not micro-manage these issues. As the NPRM acknowledges, any technical performance standards—even if they could account for the factors out of the broadband provider’s control—would become quickly outdated as technologies evolve and performance capabilities change.58 It would be impossible for the Commission to continuously modify its parameters to account for these developments, and the entire Internet ecosystem would thus remain subject to ill-fitting standards. In other proceedings, the Commission has properly declined to adopt technical thresholds in favor of standards based on functional performance.59 It should do so again here by requiring “best efforts” traffic delivery rather than mandating technical standards.
2. The No-Blocking Rule Should Not Interfere with Free and Low-Cost Service Offerings.
The Commission should make certain that the no-blocking rule does not limit or foreclose the offering of low-cost broadband Internet access services. For example, through the Internet Essentials program, Comcast provides low-income families with broadband Internet access for $9.95 per month. This service offers speeds of up to 5 Mbps downstream and up to 1 Mbps upstream. Internet Essentials has connected over 300,000 low-income families (over 1.2 million individuals) to the Internet, and no other program of any kind has done as much to advance the Commission’s goal of expanding broadband adoption. If the Commission were to define its “minimum level of service” in terms of a quantitative performance standard (which, as explained above, it should not do), it should make absolutely clear that this standard would not interfere with the offering of Internet Essentials or other low-cost services in any way.
C. The Commission Should Establish a Legal Standard To Govern Direct Commercial Relationships Between Broadband Providers and Edge Providers Relating to the Transmission of Internet Traffic Over Broadband Internet Access Service.
In Verizon, the court struck down the “no unreasonable discrimination” rule but left room for the Commission to adopt a new rule pursuant to Section 706 to govern any direct commercial relationships between broadband providers and edge providers that address transmission of Internet traffic over broadband Internet access service, such as “paid prioritization” arrangements. As an initial matter, it is important to recognize that, for all the talk about “fast lanes” and “slow lanes,” broadband providers and edge providers have not entered into “paid prioritization” arrangements throughout the many years when there has been no legal prohibition of such arrangements. Indeed, broadband providers’ response to consumer demand for higher speeds has not been to create “fast lanes” but rather to make the entire Internet faster for everyone. For its part, Comcast has not entered into a single “paid prioritization” arrangement, has no plans to do so in the future, and does not even know what such an arrangement would entail as a practical matter. Nonetheless, Comcast supports the Commission in its effort to apply an enforceable legal standard for determining which limited arrangements should be permitted.
1. The Commission Should Apply a “Commercial Reasonableness” Standard To Govern These Relationships.
Under Verizon, it is highly unlikely that the Commission could impose a categorical ban on “paid prioritization” arrangements pursuant to Section 706.62  In striking down the FCC’s “no unreasonable discrimination” rule, the court found the Commission’s statement that “it is unlikely that pay for priority would satisfy the ‘no unreasonable discrimination’ standard” to be evidence that “the Commission will likely bar broadband providers from charging edge providers for using their service, thus forcing them to sell this service to all who ask at a price of $0.”63 Because this left “no room at all for ‘individualized bargaining,’” the “‘no unreasonable discrimination’” rule amounted to an impermissible common carrier mandate.64 A categorical ban on paid prioritization, which would be even more restrictive than the language in the 2010 Open Internet Order, almost certainly would not pass muster.
The court did suggest, however, that the Commission could lawfully apply a “commercial reasonableness” standard to govern these relationships.65 A requirement for all direct commercial relationships between broadband providers and edge providers relating to the transmission of Internet traffic over broadband Internet access services to be “commercially reasonable,” determined case-by-case based on “the totality of the circumstances,”66 would closely mirror the rule suggested in Verizon.67 It would leave sufficient room for “individualized negotiation” between broadband providers and edge providers, and would build in “considerable flexibility for providers to respond to the competitive forces at play in the [broadband Internet access] market.”68 Under Verizon and Cellco, this formulation of the “commercially reasonable” standard would be legally sound.
Comcast supports the application of such a standard. Comcast also would not be opposed to a rebuttable presumption that “paid prioritization” arrangements are commercially unreasonable. This presumption could be interpreted to preclude, among other things, exclusive arrangements and arrangements that prioritize a broadband provider’s own affiliated Internet content vis-à-vis unaffiliated content. A broadband provider seeking to justify any “paid prioritization” arrangement could be required to bear the burden of showing that the arrangement is commercially reasonable and fair to consumers and edge providers. Comcast believes that few arrangements would be deemed to overcome the presumption.
However, the Commission should not establish a policy that would preclude all experimentation in this area. Arrangements could emerge between broadband providers and edge providers that could have widely varying implications for competition and consumer welfare based on the terms of an individual arrangement, the parties involved, and the markets affected. As FCC General Counsel Jon Sallet recently explained, “[c]ase-by-case enforcement offers a potentially more dynamic approach, permitting the Commission to respond to and learn from the rapid pace of change in the communications market.”
2. The Commission Should Not Apply a Roving “Commercial Reasonableness” Standard to All Broadband Provider Practices.
The Commission’s proposed rule could be interpreted to reach far beyond direct commercial relationships between broadband providers and edge providers that address the transmission of Internet traffic over broadband Internet access service.70 This would be overly broad and would seriously expand the scope of this proceeding. The 2010 nondiscrimination rule applied only to unreasonable discrimination by a broadband provider with respect to the transmission of broadband Internet access service exclusively—not to any and all unreasonable practices in any context.
But the rule proposed in the NPRM is different. Because on its face, it seems to prohibit all “commercially unreasonable practices,” the rule could be construed to create a roving standard of conduct governing everything a broadband provider does. It thus threatens to subject broadband providers to new and uncertain obligations and invite abuse from other parties. For example, an over-the-top video provider might claim that it is a commercially unreasonable practice to provide customers with discounts for purchasing a bundle consisting of both broadband and video services. Or perhaps the developer of a file-sharing application would claim that it is a commercially unreasonable practice to decline to allocate a larger amount of bandwidth to upstream traffic. These issues were clearly beyond the scope of the 2010 nondiscrimination rule and are distinct from the issues that this proceeding was designed to address.
The Commission should make clear that the “commercial reasonableness” rule is not intended to reach these issues. It can do so by limiting the application of this standard to direct commercial relationships between broadband providers and edge providers relating to the delivery of Internet traffic over broadband Internet access service. This approach would permit the Commission to address the practices that it is chiefly concerned about, such as “paid prioritization” arrangements, while minimizing the potential for misapplication of the standard.
