[Federal Register Volume 74, Number 228 (Monday, November 30, 2009)]
[Proposed Rules]
[Pages 62638-62662]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E9-28062]
[[Page 62637]]
-----------------------------------------------------------------------
Part II
Federal Communications Commission
-----------------------------------------------------------------------
47 CFR Part 8
Preserving the Open Internet, Broadband Industry Practices; Proposed
Rule
Federal Register / Vol. 74, No. 228 / Monday, November 30, 2009 /
Proposed Rules
[[Page 62638]]
-----------------------------------------------------------------------
FEDERAL COMMUNICATIONS COMMISSION
47 CFR Part 8
[GN Docket No. 09-191; WC Docket No. 07-52; FCC 09-93]
Preserving the Open Internet, Broadband Industry Practices
AGENCY: Federal Communications Commission.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: In this Notice of Proposed Rulemaking (NPRM), the Commission
considers adopting rules to preserve the open Internet. In this NPRM,
the Commission proposes draft language to codify the four principles
the Commission articulated in the Internet Policy Statement; a fifth
principle that would require a broadband Internet access service
provider to treat lawful content, applications, and services in a
nondiscriminatory manner; and a sixth principle that would require a
broadband Internet access service provider to disclose such information
concerning network management and other practices as is reasonably
required for users and content, application, and service providers to
enjoy the protections specified in this rulemaking. The Commission also
proposes draft language to make clear that the principles would be
subject to reasonable network management and would not supersede any
obligation a broadband Internet access service provider may have--or
limit its ability--to deliver emergency communications or to address
the needs of law enforcement, public safety, or national or homeland
security authorities, consistent with applicable law. The draft rules
would not prohibit broadband Internet access service providers from
taking reasonable action to prevent the transfer of unlawful content,
such as the unlawful distribution of copyrighted works. Nor would the
draft rules be intended to prevent a provider of broadband Internet
access service from complying with other laws. The NPRM seeks comment
on a category of ``managed'' or ``specialized'' services, how to define
such services, and what principles or rules, if any, should apply to
them. The NPRM affirms that the six principles the Commission proposes
to codify apply to all platforms for broadband Internet access, and
seeks comment on how, in what time frames or phases, and to what extent
the principles should apply to non-wireline forms of Internet access,
including, but not limited to, terrestrial mobile wireless, unlicensed
wireless, licensed fixed wireless, and satellite. The NPRM also seeks
comment on the enforcement procedures that the Commission should use to
ensure compliance with the proposed principles.
DATES: Comments are due on or before January 14, 2010 and reply
comments are due on or before March 5, 2010. Written comments on the
Paperwork Reduction Act proposed information collection requirements
must be submitted by the public, Office of Management and Budget (OMB),
and other interested parties on or before January 29, 2010.
ADDRESSES: You may submit comments, identified by GN Docket No. 09-191
and WC Docket No. 07-52, by any of the following methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Federal Communications Commission's Web site: http://www.fcc.gov/cgb/ecfs/. Follow the instructions for submitting comments.
E-mail: [email protected]. and include the following words in
the body of the message: ``get form.'' A sample form and directions
will be sent in response. Include the docket number(s) in the subject
line of the message.
Blog Filers: In addition to the usual methods for filing
electronic comments, the Commission is allowing comments, reply
comments, and ex parte comments in this proceeding to be filed by
posting comments on http://blog.openinternet.gov and on http://openinternet.ideascale.com.
Mail: Secretary, Federal Communications Commission, 445
12th Street, SW., Washington, DC 20554.
Hand Delivery/Courier: 236 Massachusetts Avenue, NE.,
Suite 110, Washington, DC 20002.
People with Disabilities: Contact the FCC to request
reasonable accommodations (accessible format documents, sign language
interpreters, CART, etc.) by e-mail: [email protected] or phone: 202-418-
0530 or TTY: 202-418-0432.
For detailed instructions for submitting comments and additional
information on the rulemaking process, see the SUPPLEMENTARY
INFORMATION section of this document. In addition to filing comments
with the Secretary of the Commission, a copy of any comments on the
Paperwork Reduction Act information collection requirements contained
herein should be submitted to the Federal Communications Commission via
e-mail to [email protected] and to Nicholas A. Fraser, Office of Management
and Budget, via e-mail to [email protected] or via fax
at 202-395-5167.
FOR FURTHER INFORMATION CONTACT: Claude Aiken, Competition Policy
Division, Wireline Competition Bureau, at 202-418-1580 or
[email protected], or John Spencer, Broadband Division, Wireless
Telecommunications Bureau, at 202-418-2487 or [email protected]. For
additional information concerning the Paperwork Reduction Act
information collection requirements contained in this document, send an
e-mail to [email protected] or contact Judith B. Herman at 202-418-0214, or
via e-mail at [email protected].
SUPPLEMENTARY INFORMATION: This is a summary of the Commission's Notice
of Proposed Rulemaking (NPRM) in GN Docket No. 09-191, WC Docket No.
07-52, FCC 09-93 adopted on October 22, 2009. The complete text of this
document is available on the Commission's Internet site at www.fcc.gov
and for public inspection Monday through Thursday from 8 a.m. to 4:30
p.m. and Friday from 8 a.m. to 11:30 a.m. in the Commission's Consumer
and Governmental Affairs Bureau Reference Information Center, Room CY-
A257, 445 12th Street, SW., Washington, DC 20554. The full text of the
NPRM may also be purchased from the Commission's duplicating
contractor, Best Copy and Printing, Inc., Portals II, 445 12th Street,
SW., Washington, DC 20554, telephone 202-488-5300, facsimile 202-488-
5563, e-mail at [email protected], or via its Web site at http://www.bcpiweb.com.
Pursuant to Sections 1.415 and 1.419 of the Commission's rules, 47
CFR 1.415, 1.419, interested parties may file comments and reply
comments on or before the dates indicated in the DATES section of this
NPRM. Comments may be filed: (1) By using the Commission's Electronic
Comment Filing System (ECFS), (2) by using the Federal Government's
eRulemaking Portal, (3) by filing paper copies, or (4) by using the
Commission's Ideascale and Openinternet.gov sites. See Electronic
Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).
Electronic Filers: Comments may be filed electronically
using the Internet by accessing the ECFS: http://www.fcc.gov/cgb/ecfs/
or the Federal eRulemaking Portal: http://www.regulations.gov. Filers
should follow the instructions provided on the Web site for submitting
comments.
ECFS filers must transmit one electronic copy of the
comments for each docket referenced in the caption of this proceeding.
In completing the
[[Page 62639]]
transmittal screen, filers should include their full name, U.S. Postal
Service mailing address, and the applicable docket or rulemaking
number.
Parties may also submit an electronic comment by Internet
e-mail. To get filing instructions, filers should send an e-mail to
[email protected], and include the following words in the body of the
message, ``get form.'' A sample form and directions will be sent in
response.
Paper Filers: Parties who choose to file by paper must
file an original and four copies of each filing. If more than one
docket or rulemaking number appears in the caption of this proceeding,
filers must submit two additional copies for each additional docket or
rulemaking number. Filings can be sent by hand or messenger delivery,
by commercial overnight courier, or by first-class or overnight U.S.
Postal Service mail (although we continue to experience delays in
receiving U.S. Postal Service mail). All filings must be addressed to
the Commission's Secretary, Office of the Secretary, Federal
Communications Commission.
The Commission's contractor will receive hand-delivered or
messenger-delivered paper filings for the Commission's Secretary at 236
Massachusetts Avenue, NE., Suite 110, Washington, DC 20002. The filing
hours at this location are 8 a.m. to 7 p.m. All hand deliveries must be
held together with rubber bands or fasteners. Any envelopes must be
disposed of before entering the building.
Commercial overnight mail (other than U.S. Postal Service
Express Mail and Priority Mail) must be sent to 9300 East Hampton
Drive, Capitol Heights, MD 20743.
U.S. Postal Service first-class, Express, and Priority
mail must be addressed to 445 12th Street, SW., Washington, DC 20554.
Blog Filers: In addition to the usual methods for filing
electronic comments, the Commission is allowing comments, reply
comments, and ex parte comments in this proceeding to be filed by
posting comments on http://blog.openinternet.gov and on http://openinternet.ideascale.com. Accordingly, persons wishing to examine the
record in this proceeding should examine the record on ECFS, http://blog.openinternet.gov, and http://openinternet.ideascale.com. Although
those posting comments on the blog may choose to provide identifying
information or may comment anonymously, anonymous comments will not be
part of the record in this proceeding and accordingly will not be
relied on by the Commission in reaching its conclusions in this
rulemaking. The Commission will not rely on anonymous postings in
reaching conclusions in this matter because of the difficulty in
verifying the accuracy of information in anonymous postings. Should
posters provide identifying information, they should be aware that
although such information will not be posted on the blog, it will be
publicly available for inspection upon request.
This document contains proposed information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995, Public Law 104-13. Public and agency comments on
the proposed information collection requirements are due January 29,
2010.
Comments on the proposed information collection requirements should
address: (a) Whether the proposed collection of information is
necessary for the proper performance of the functions of the
Commission, including whether the information shall have practical
utility; (b) the accuracy of the Commission's burden estimates; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on the respondents, including the use of automated
collection techniques or other forms of information technology. In
addition, pursuant to the Small Business Paperwork Relief Act of 2002,
Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment
on how we might further reduce the information collection burden for
small business concerns with fewer than 25 employees.
OMB Control Number: None.
Title: Disclosure of Network Management Practices.
Form Number: N/A.
Type of Review: New Collection.
Respondents: Business or other for-profit; not-for-profit
institutions; and State, Local or Tribal governments.
Number of Respondents and Responses: 1,674 respondents; 1,674
responses.
Estimated Time per Response: 327 hours.
Frequency of Response: Third party disclosure; reporting on
occasion.
Obligation to Respond: Mandatory.
Total Annual Burden: 546,840 hours.
Total Annual Costs: $4,687,000.
Privacy Act Impact Assessment: No impact.
Nature and Extent of Confidentiality: The Commission does not
expect to provide respondents with any assurance of confidentiality.
Needs and Uses: The Federal Communications Commission proposes to
require providers of broadband Internet access service to disclose such
information concerning network management and other practices as is
reasonably required for users and content, application, and service
providers to enjoy the protections specified in its October 22, 2009
Notice of Proposed Rulemaking (FCC 09-93).
To request materials in accessible formats for people with
disabilities (Braille, large print, electronic files, audio format) or
to request reasonable accommodations for filing comments (accessible
format documents, sign language interpreters, CART, etc.), send an e-
mail to [email protected] or call the Consumer & Governmental Affairs
Bureau at 202-418-0530 (voice) or 202-418-0432 (TTY).
Synopsis of Notice of Proposed Rulemaking
1. When the Telecommunications Act of 1996 was enacted, very few
Americans had residential broadband Internet access service. Since the
competition-based policies ushered in by the Telecommunications Act
first took root through Commission implementation in the late 1990s,
broadband Internet access service adoption has increased dramatically,
with broadband in approximately thirty percent of American households
in 2005 and sixty-three percent today. It is important to note that
from 1996 to the adoption of the Commission's Internet Policy Statement
in August of 2005, digital subscriber line (DSL) service offered by
telecommunications carriers was regulated under Title II of the Act and
experienced explosive growth. Since the Commission adopted the Internet
Policy Statement over four years ago, our nation has seen even greater
expansion of broadband Internet access service. In 2005, access to the
Internet was split evenly between dial-up and broadband; now less than
ten percent of Americans access the Internet with dial-up. Online
retail spending increased 65 percent between 2005 and 2007. Today
nearly a fifth of online adults access Internet video on a daily basis,
compared with eight percent in 2006. Broadband Internet access has
become a vital resource for, among other things, commerce, civic
engagement, and communications and telecommuting options for people
with
[[Page 62640]]
disabilities, health care, and education. For purposes of this
proceeding, we propose to define the Internet as the system of
interconnected networks that use the Internet Protocol for
communication with resources or endpoints (including computers,
webservers, hosts, or other devices) that are reachable, directly or
through a proxy, via a globally unique Internet address assigned by the
Internet Assigned Numbers Authority. To be considered part of the
``Internet'' for this proceeding, an Internet end point must be
identified by a unique address assigned through the Internet Assigned
Numbers Authority or its delegate registry, not an address created by a
user for its internal purposes. We do not intend for this definition of
the Internet to encompass private intranets generally inaccessible to
users of the Internet. We seek comment on these proposals.
2. The evolution in Internet usage, and associated developments in
network technology, have respectively motivated and enabled network
operators to differentiate price and service for end users and for
providers of content, applications, and services. A significant debate
has developed over how best to preserve the Internet's openness. We
thus find it appropriate at this time to evaluate the need for
oversight of broadband Internet access service providers' practices.
Given the evolution of the Internet and the broadband marketplace, we
believe that high-level rules specifying impermissible practices will
best promote an Internet environment of widespread innovation and
light-handed regulation.
A. The Need for Commission Action
3. Despite our efforts to date, some conduct is occurring in the
marketplace that warrants closer attention and could call for
additional action by the Commission, including instances in which some
Internet access service providers have been blocking or degrading
Internet traffic, and doing so without disclosing those practices to
users. We also believe it is important to provide greater clarity and
certainty to Internet users; content, application, and service
providers; and broadband Internet access service providers regarding
the Commission's approach to safeguarding the open Internet. As
discussed below, we seek comment on the reasons either for or against
particular types of oversight by the Commission of broadband Internet
access service providers' practices, including possible specific rules.
In undertaking this examination, we seek to preserve the open, safe,
and secure Internet and to promote and protect the legitimate business
needs of broadband Internet access service providers and broader public
interests such as innovation, investment, research and development,
competition, consumer protection, speech, and democratic engagement.
Thus, in the subsequent parts of this NPRM, we seek comment on how to
tailor rules to achieve this balance.
1. Commission Goals
4. The Communications Act, related statutes, and Commission
precedent establish a number of interrelated goals that inform the
Commission's approach to broadband Internet access service. For one,
the Commission seeks to promote investment and innovation with respect
to the Internet, as with other communications technologies. As the
Commission has recognized, ``[t]he Internet has served as a critical
platform for innovation for nearly two decades,'' and ``[h]istorically,
`the innovation and explosive growth of the Internet [have been]
directly linked to its particular architectural design.' ''
5. Promoting competition for Internet access and Internet content,
applications, and services is another key goal. In particular, Section
230 of the Act states that ``[i]t is the policy of the United States *
* * to preserve the vibrant and competitive free market that presently
exists for the Internet and other interactive computer services.'' In
adopting its Internet Policy Statement, the Commission recognized the
importance of such competition not only ``among network providers,''
but also among ``application and service providers, and content
providers.'' As the Commission has observed, ``[s]o far in the
Internet's history,'' the basic standards underlying the operation of
the Internet ``have created `the equivalent of perfect competition * *
* among applications and content * * * with a minimum [of] interference
by the network or platform owner.' ''
6. The Act and Commission precedent likewise demonstrate the
importance of protecting users' interests as a Commission goal. These
interests are wide-ranging, including consumer protection in commercial
contexts; the development of technological tools to empower users; and
speech and democratic participation. As Congress has observed, ``[t]he
rapidly developing array of Internet * * * services available to
individual Americans represent an extraordinary advance in the
availability of educational and informational resources to our
citizens,'' and the Internet ``offer[s] a forum for a true diversity of
political discourse, unique opportunities for cultural development, and
myriad avenues for intellectual activity.''
7. Other statutory objectives are relevant to our evaluation of
broadband Internet access service providers' practices, including
addressing the needs of law enforcement and public safety. Each of the
goals described above informs our policy analyses, and we seek comment
on how these and other relevant policy goals should affect our analysis
of the Internet principles discussed below.
8. As a general matter, we believe that our proposals should have
broad application so that the protections that we propose are widely
enjoyed. As such, we propose to define broadband Internet access
service for the purpose of these rules as ``[a]ny communication service
by wire or radio that provides broadband Internet access directly to
the public, or to such classes of users as to be effectively available
directly to the public.'' We do not intend that our proposals would
apply to ``establishments that acquire broadband Internet access
service from a facilities-based provider to enable their patrons or
customers to access the Internet from their respective
establishments.'' For example, we would not intend to include coffee
shops, waiting rooms, or rest areas. Nor would we intend to include
broadband Internet access service that is not intentionally offered for
the benefit of others, such as service from personal Wi-Fi networks
whose signal may be detectable outside the user's premises. We seek
comment on this approach for defining the scope of entities covered by
our proposals, including ways to make clear who is and is not subject
to these rules.
2. Evolution of the Internet Marketplace and Technologies
9. We also note that Internet technologies have changed markedly
along with the evolution of the Internet marketplace. The Internet has
traditionally relied on an end-to-end, open architecture, in which
network operators use their ``best effort'' to deliver packets to their
intended destinations without quality-of-service guarantees. This open
architecture ``allowed all application developers to make their
innovations available to all by placing a software program on a
publicly available server,'' but the best-effort nature of early
networks presented challenges for the deployment of applications
requiring quality-of-service assurances.
10. With the rapid growth of broadband applications and content,
especially video, access providers may
[[Page 62641]]
face capacity constraints. In many cases, either provisioning
additional bandwidth or using sophisticated software techniques has
been sufficient to support applications requiring reliable delivery or
low latency, such as real-time voice and video. For example, Skype has
more than 440 million registered users for its Internet-based real-time
communications application, which runs over the best-effort Internet.
As Internet infrastructure and the content, applications, and services
delivered over the Internet have evolved, network equipment makers have
also responded with new technologies, including more sophisticated
routers that enable network operators to distinguish among different
classes of traffic and offer different qualities of service to
different traffic (service differentiation), which enables charging
different prices for different traffic (price differentiation). For
example, a broadband Internet access service provider can ensure that
one class of traffic enjoys a greater share of capacity than another
when there is contention for resources. A broadband Internet access
service provider can also differentiate among different packet streams
or classes of traffic by scheduling the transmission of certain packets
waiting in a buffer ahead of others, determining by algorithm which
packets in a buffer are dropped (i.e., discarded and not transmitted),
blocking an entire packet stream by means of an admission control
algorithm, transmitting data over more (or less) efficient routing,
redirecting traffic to another site, or blocking traffic entirely. With
``deep packet inspection,'' a broadband Internet access service
provider can determine which packets to favor by examining ``in detail
the content of [an] e-mail, or Web page, or downloaded file. It is
possible to distinguish music files from text from pictures, or to
search for key words within any text.'' A broadband Internet access
service provider can also favor certain parties by providing access to
information cached at the provider's facility, allowing consumers
quicker access to Web sites using the caching services.
11. Any of these techniques may be provided only to an Internet
access service provider's own affiliates and partners. Or they may be
turned into a service that Internet access service providers offer to
content and application providers for a fee. Equipment manufacturers
note that these new technologies allow Internet access service
providers to maximize the revenue opportunities associated with their
networks. For example, Sandvine, a technology vendor, claims to offer a
``range of policy management options such as application-based and
subscriber-based approaches, aggregate and per-subscriber shaping,
prioritization, caching and content acceleration.'' Procera Networks
advertises its PacketLogic technology as giving network providers the
ability to ``monetize your network'' by monitoring user traffic on a
real-time basis and using ``optimization that distinguishes between
interactive and downloading traffic.'' And Cisco offers network
providers the ability to ``identify[] services that might be riding an
operator's network for free'' and ``extend quality of service
guarantees to that third party for a share of the profits.''
12. Four years ago, changes that were already taking place in the
Internet marketplace and among network technologies led the Commission
to adopt the Internet Policy Statement. Since then, the Internet
marketplace and underlying technologies have continued to evolve, and
we seek more detailed comment on the technological capabilities
available today, as offered for sale and as actually deployed in
providers' networks. We further seek comment on the effects of those
technologies on the content, applications, and services being
provided--or capable of being provided--over the Internet.
3. The Debate Regarding Oversight of Traffic Management Pricing and
Practices
13. The increasing capability of broadband Internet access service
providers to offer differentiated services and prices for traffic
flowing over their networks has spurred a debate about the public
policy implications of using that capability. In particular, some
parties have expressed concerns that, absent appropriate oversight,
broadband Internet access service providers could make the Internet
less useful for some users or applications by differentiating traffic
based upon the user, the application provider, or the type of traffic.
Other parties have suggested that ``the problems are all potential
problems, not actual problems'' and that the ``fundamental inability to
demonstrate any evidence of an actual market failure confirms what all
the rhetoric in the world cannot obscure: `Net neutrality' is a
solution in search of a problem.''
14. In determining the Commission's proper role with respect to
safeguarding the open Internet, we believe it is helpful to examine
this debate and the arguments that have been made in favor of and
against open Internet policies. The arguments in this area have largely
revolved around four issues: (1) How best to promote investment and
innovation; (2) the current and future adequacy of competition and
market forces; (3) how best to promote speech and civic participation;
and (4) the practical significance of network congestion to the other
considerations. We summarize and seek evidence supporting or refuting a
number of these key arguments.
a. Investment and Innovation
15. The Commission has recognized that the historically open
architecture of the Internet has facilitated entrepreneurs' entry into
the market with new Internet services and promoted the Act's policies
favoring ``a diversity of media voices'' and ``technological
advancement.'' As discussed above, however, technologies now allow
network operators to distinguish different classes of traffic, to offer
different qualities of service, and to charge different prices to each
class.
16. In light of these developments, some parties have contended
that safeguarding historic Internet traffic pricing and practices is
needed to preserve the end-to-end architecture of the Internet, with
intelligence and control at the edge of the network. These proponents
of open Internet policies maintain that the end-to-end architecture is
essential to give entrepreneurs confidence that they will be free to
innovate on the Internet without first seeking permission from
broadband Internet access service providers and, accordingly, is
necessary to promote innovation and growth. Supporters argue that
differentiation by Internet access service providers can be especially
harmful to innovation by outsiders--individuals and entities
unaffiliated with network owners--who have been responsible for some of
the most important innovations in the history of the Internet. These
outsiders, many of whom may have limited resources but can innovate on
today's Internet with very low marginal costs, could choose not to
innovate if faced with fees from Internet access service providers for
equal access to end users. And the potential for such fees may deter
outsiders from investing in long-term research and development that
could benefit all of society.
17. Some parties characterize the Internet as a ``general purpose
technology,'' which ``does not create value through its existence
alone'' but ``by enabling users to do the things they want or need to
do.'' ``[T]he rate at which a general purpose technology
[[Page 62642]]
affects economic growth depends on the rate of co-invention (i.e., the
rate at which potential uses of the technology are identified and
realized).'' In the case of the Internet, this means ``that identifying
potential uses for the Internet and developing the corresponding
applications is the prerequisite for realizing the enormous growth
potential inherent in the Internet as a general-purpose technology. As
a result, measures that reduce the amount of application-level
innovation have the potential to significantly harm social welfare by
significantly limiting economic growth.''
18. Parties opposing further Commission action in this area raise
several arguments in response. First, they contend that differentiation
in pricing or quality of service may enable different types of
innovation that might not be feasible with a network lacking such
capabilities. Second, they assert that some traffic imposes greater
burdens on the network than other traffic and that ``innovation could
be even better for consumers if it could respond to price signals from
platform providers,'' such as by ``tak[ing] into account potential
congestion costs of bandwidth-intensive applications.'' Third, they
often claim that charging content, application, and service providers
may be necessary to recover the cost of the investment in their
networks and to fund additional investment in research, development,
and infrastructure. According to opponents, charging only end users
instead would increase end-user prices, limit the number of users, and
reduce revenue, discouraging network improvements.
19. Opponents also cite economic theory that holds that benefits
can arise from price and quality discrimination, at least in certain
cases. For example, they argue that the ability of a provider to price
discriminate not only will benefit the provider, but may also benefit
the public as a whole (although not necessarily in all cases). Further,
economists have recognized that the Internet is an example of a ``two-
sided market,'' in that broadband Internet access service providers
offer service to both end-user customers and to content, application,
and service providers simultaneously. Theoretical economic analyses
suggest that price discrimination may be more beneficial in a two-sided
market than in the standard one-sided market.
b. Competition and Market Forces
20. Supporters of open Internet policies contend that market forces
alone are unlikely to ensure that broadband Internet access service
providers will discriminate in socially efficient ways and that, absent
regulation, such discrimination is likely to change fundamentally the
nature of the Internet, reduce competition, and hinder innovation and
growth. Furthermore, some have noted that the justification for
government oversight of key infrastructure has not always relied solely
on lack of competition in the relevant market, and argue that the long-
standing doctrines of common carriage or bailment should inform
policies for broadband Internet access service providers.
21. Even where there is effective competition in the Internet
access market, individual broadband Internet access service providers
may charge inefficiently high prices to content, application, and
service providers, even though it may be in the collective interest of
all providers to charge a lower price or zero price in order to
maximize innovation at the edge of the network and thereby increase the
overall value of broadband Internet access. Investing in innovative
Internet content, applications, and services is risky, and firms will
not invest unless their expected revenues exceed their expected costs.
If allowed to do so, broadband Internet access service providers may
attempt to extract some of the profit earned by content, application,
and service providers by charging them fees for providing access (or
prioritized access) to the broadband Internet access service providers'
subscribers. These fees will reduce the potential profit that a
content, application, or service provider can expect to earn and hence
reduce the provider's incentive to make future investments in the
quantity or quality of its content, application, or service.
22. If enough broadband Internet access service providers impose a
fee, or if the fees are sufficiently high across a small number of
broadband Internet access service providers with sufficient market
share, then not only will content, application, and service providers'
incentive to innovate be reduced, but the fees could drive some
content, application, and service providers from the market. This would
reduce the quantity and quality of Internet content, applications, and
services, reducing the overall value of the Internet to end users and
thereby reducing demand for broadband Internet access services. This
dynamic raises a collective action problem: Although it might be in the
collective interest of competing broadband Internet access service
providers to refrain from charging access or prioritization fees to
content, application, and service providers, it is in the interest of
each individual access provider to charge a fee, and given multiple
providers, it is unlikely that access providers could tacitly agree not
to charge such fees. Furthermore, it is unlikely that competitive
forces are sufficient to eliminate the incentive to charge a fee,
particularly where the imposition of such a fee will not cause the
access provider to lose many customers. Thus, allowing broadband
Internet access service providers to impose access or prioritization
fees may inefficiently reduce innovation and investment in content,
applications, and services, generating a suboptimal economic outcome.
23. Where effective competition is lacking (i.e., where broadband
Internet access service providers have market power), it is more likely
that price and quality discrimination will have socially adverse
effects. Broadband Internet access service providers possessing market
power may have an incentive to raise prices charged to content,
application, and service providers and end users. Not only would that
harm users overall, but it could reduce innovation at the edge of the
network and cause some end users to decide not to subscribe to
broadband Internet access service. Moreover, imposing a fee on content,
application, and service providers could reduce total welfare more than
imposing the same fee on the end users and no fee on the content,
application, and service providers. In particular, such pricing may
disproportionately affect ``socially produced'' content, i.e., content
produced collaboratively by individuals without a direct financial
incentive, such as Wikipedia.
24. In addition, broadband Internet access service providers
generally, and particularly broadband Internet access service providers
with market power, may have the incentive and ability to reduce or fail
to increase the transmission capacity available for standard best-
effort Internet access service, particularly relative to other services
they offer, in order to increase the revenues obtained from content,
application, and service providers or individual users who desire a
higher quality of service. The result may be insufficient transmission
capacity allocated to some content, application, or service providers
and a misallocation of transmission capacity across quality-of-service
classes.
25. Where broadband Internet access service providers have market
power and are vertically integrated or affiliated with content,
application, or service
[[Page 62643]]
providers, additional concerns may arise. By providing a user's
broadband connection to the Internet, a broadband Internet access
service provider serves as a gatekeeper to the content, applications,
and services offered on the Internet. Broadband Internet access service
providers have an incentive to use this gatekeeper role to make it more
difficult or expensive for end users to access services competing with
those offered by the network operator or its affiliates. For example, a
broadband Internet access service provider that is also a pay
television provider could charge providers or end users more to
transmit or receive video programming over the Internet in order to
protect the broadband Internet access service provider's own pay
television service. Alternatively, such a broadband Internet access
service provider could seek to protect its pay television service by
degrading the performance of video programming delivered over the
Internet by third parties. The result may be higher prices or worse
service for some content and applications and inefficiently low
investment in some content and application markets.
26. This analysis is further complicated by control that the
broadband Internet access service provider has over the delivery of
traffic to its subscribers. In particular, there are typically multiple
paths for routing packets over the Internet. For those packets to reach
the end users that subscribe to a particular broadband Internet access
service, however, they ultimately must be transported on that broadband
Internet access service provider's network. Thus, even if there is
competition among broadband Internet access service providers, once an
end-user customer has chosen to subscribe to a particular broadband
Internet access service provider, this may give that broadband Internet
access service provider the ability, at least in theory, to favor or
disfavor any traffic destined for that subscriber. And as discussed
throughout this section, there may be various circumstances when the
broadband Internet access service provider would have the incentive to
do so.
27. Opponents have responded that the markets for broadband
Internet access services are sufficiently competitive to allay these
concerns. They further contend that, even if a broadband Internet
access service provider possessed market power, it generally would have
an incentive to discriminate only in a socially efficient manner.
Finally, opponents argue that, even if broadband Internet access
service providers occasionally discriminate in a socially inefficient
manner, open Internet policies would impose greater costs and
inefficiency than the absence of policies.
c. Speech and Civic Participation
28. Congress has recognized that the Internet ``offer[s] a forum
for a true diversity of political discourse, unique opportunities for
cultural development, and myriad avenues for intellectual activity.''
Numerous judicial opinions have noted the Internet's potential for
facilitating speech. The bipartisan Knight Commission recently reported
that the Internet has brought about ``new forms of collaboration
between full-time journalists and the general citizenry,'' opening the
age of networked journalism. It also observed that ``[p]olitical
leaders and many government agencies are staking out ambitious agendas
for openness,'' and ``[t]he potential for using technology to create a
more transparent and connected democracy has never seemed brighter.''
At the same time, however, broadband Internet access service providers
today could block, slow, or redirect access to Web sites espousing
public policy positions that the broadband Internet access service
provider considers contrary to its interests, or controversial content
to which the service provider wants to avoid any connection. Broadband
Internet access service providers also have the ability to delete or
hinder e-mail based on inspection of its contents. Because broadband
Internet access service providers are not government actors, the First
Amendment does not directly govern their actions.
29. Proponents therefore argue that the Commission should take
steps to preserve the Internet ``as a general purpose technology that
supports wide open speech.'' Others have argued that ``the openness of
networks [is] essential to meeting community information needs,'' and
that the Internet could be conceived of as a ``new marketplace of
ideas''--a ``core common infrastructure'' that ``giv[es] users the
capacity to participate in building our common informational and
cultural environment and the freedom to construct their personal
information environment that is the greatest promise of networked
communications.''
30. Some proponents of oversight have thus argued that the
Commission should apply a standard similar to strict scrutiny to
content-based discrimination, to ensure that any discrimination be
carefully tailored to serve the public interest, not merely a private
interest. (As discussed below, we do not adopt this standard in the
draft rules we propose.) Some parties further argue that broadband
Internet access service providers should not be left to balance among
competing public interests themselves, but rather that the Commission
(or other government entity) must be the one to do so. In support of
such oversight, proponents note that the government has undertaken a
role in promoting communications technologies as a channel for speech
and democratic content in other contexts, such as the cable ``must
carry'' rules.
31. Opponents respond that such policies are unnecessary. In
particular, they claim that a ``firestorm of controversy * * * would
erupt if a major network owner embarked on a systematic campaign of
censorship on its network,'' thus mitigating the need for formal
policies.
d. Congestion
32. The existence of congestion in the network is a major
motivating factor in the open Internet debate, and is central to
arguments that differential pricing or service quality is necessary.
Moreover, because the effects of delays or dropping of packets arising
from congestion are not the same for all applications, broadband
Internet access service providers and content, application, and service
providers may have incentives to seek agreements for the prioritization
of traffic or other quality of service guarantees. Permitting these
activities without appropriate oversight could lead to a number of
harms, undermining the public interest goals of the Act discussed
above.
33. Although network operators may seek to alleviate congestion by
increasing capacity, such actions would involve costs--in some cases
large costs--and revenue opportunities might not justify the required
investment. As a result, we must balance the need for incentives for
infrastructure investment with the need to ensure that network
operators do not adopt congestion management measures that could
undermine the usefulness of the Internet to the public as a whole. We
seek further comment on these issues below.
4. Next Steps
34. We summarized above a number of the key arguments in the
ongoing open Internet debate. We recognize, however, that this summary
may be incomplete. Thus, we seek comment on what other considerations
should inform our analysis. We also seek qualitative or quantitative
evidence and analysis that illuminates any of the above arguments,
including specific examples. To what extent are particular
[[Page 62644]]
arguments independent of competitive conclusions regarding particular
markets for broadband Internet access services? Even in effectively
competitive markets for broadband Internet access service, what impact
do switching costs and consumer lock-in effects have on broadband
Internet access service providers' ability to act in ways that limit
innovation in content, applications, and services and/or reduce overall
welfare? To the extent that certain arguments do depend upon the
particular competitive state of a market, how should the Commission
define and evaluate such markets? What specific evidence is there
regarding the competitive state of those markets? We also seek comment
on whether and to what extent application of the generally applicable
antitrust laws is sufficient to address the concerns we identify here.
We further seek comment on the effect of our decision to promulgate or
not promulgate rules on the availability of antitrust law to address
anticompetitive conduct in the broadband Internet access service
market, particularly in light of Verizon Communications Inc. v. Law
Offices of Curtis V. Trinko, LLP and Credit Suisse Securities (USA) LLC
v. Billing. We note that policymakers in a number of other countries
are considering similar issues, and we seek comment on the analyses of
these issues that have been raised in those contexts, as well.
35. We also seek comment on possible implications that the draft
rules we propose here might have on efforts to close the digital divide
and encourage robust broadband adoption and participation in the
Internet community by minorities and other socially and economically
disadvantaged groups. According to a recent study, broadband adoption
varies significantly across demographic groups, and African Americans,
Hispanics, and lower-income Americans, among others, trail the national
average in home broadband adoption. This disparity among broadband
adoption rates is significant and impacts efforts to promote
employment, education, healthcare, and consumer welfare. Minorities and
other socially and economically disadvantaged groups may also face
unique or particularly high barriers to innovation, communication, and
civic participation on the Internet, and may be susceptible to
discrimination. This may make open Internet protections particularly
important for these groups. We invite comment on these and related
issues.
B. Our Authority To Prescribe Rules Implementing Federal Internet
Policy
36. Consistent with the Comcast Network Management Practices Order,
we may exercise jurisdiction under the Act to regulate the network
practices of facilities-based broadband Internet access service
providers. We have ancillary jurisdiction over matters not directly
addressed in the Act when the subject matter falls within the agency's
general statutory grant of jurisdiction and the regulation is
``reasonably ancillary to the effective performance of the Commission's
various responsibilities.'' That test is met with respect to broadband
Internet access service.
37. As explained in the Comcast Network Management Practices Order,
we believe that exercising ancillary authority over facilities-based
Internet access will ``promote the objectives for which the Commission
has been [specifically] assigned jurisdiction'' and ``further the
achievement of * * * [legitimate] regulatory goals.'' The proposed
rules we enunciate here will, we believe, advance the federal Internet
policy set forth by Congress in section 230(b) as well as the broadband
goals that section 706(a) of the Telecommunications Act of 1996 charges
the Commission with achieving. Section 201(b), moreover, gives the
Commission specific authority ``to prescribe such rules and regulations
as may be necessary in the public interest to carry out the provisions
of th[e] Act.''
38. Voice and video services are increasingly delivered over the
Internet, in actual or potential competition with voice and video
offerings of companies that provide broadband Internet access. This
growing interrelationship with voice and video services that the
Commission has traditionally regulated pursuant to express statutory
obligations and its general public interest mandate further supports
the Commission's consideration of regulatory requirements for the
provision of broadband Internet access service, and its ancillary
jurisdiction to establish appropriate rules.
39. With respect to Internet access via spectrum-based facilities,
we have additional authority pursuant to Title III of the
Communications Act. We have recognized previously that the spectrum
allocation and licensing provisions of Title III and the Commission's
rules continue to apply to wireless broadband Internet access services
because these services use radio spectrum. We have relied upon Title
III authority in the past to regulate services provided by wireless
carriers.
40. We invite comment on our view that we have jurisdiction over
broadband Internet access service sufficient to adopt and enforce the
proposed rules, or other rules that commenters propose.
C. Codifying the Existing Four Internet Principles
41. We believe that the four Internet principles have performed
effectively their role of explicating statutory federal Internet
policy. At the time the Commission adopted the principles, it stated
that they were not rules but that it would ``incorporate the above
principles into its ongoing policymaking activities.'' Those ongoing
activities included a broadband practices proceeding, two public field
hearings, and an enforcement action. After four years of evaluating
market developments, we now believe it is appropriate to codify the
four principles. Codification will increase certainty regarding the
Commission's approach to preserving the open Internet.
42. We propose to codify the four principles at their current level
of generality. Doing so will help establish clear requirements while
giving us the flexibility to consider particular circumstances case by
case. In that way, we will be able to generate over time a body of law
that develops as technology and the marketplace evolve. As one
commenter observed, ``given the extraordinarily rapid and wholly
unpredictable evolution of services and applications, we see the need
for policymaking principles centered on supporting innovation and
protecting consumer interests in an agile, rather than prescriptive,
way.''
43. We also propose to codify the principles as obligations of
broadband Internet access service providers, rather than as describing
what ``consumers are entitled'' to do with their service, as the
original Internet principles were phrased. We believe that codifying
them as obligations of particular entities, rather than just as
principles, would make clear precisely who must comply and in what way.
Making these rules apply to particular entities will also provide
certainty to all Internet participants as to what to expect and who
bears responsibility for what types of actions.
44. Finally, we affirm that these principles apply to all providers
of Internet access service (other than via dial-up), regardless of the
technology over which such service is delivered. We recognize that in
other contexts, the term ``broadband'' may be used differently. We
believe, however, that
[[Page 62645]]
defining broadband here to encompass all non-dial-up Internet access
will ensure that our open Internet rules benefit as many users as
possible and have broad application to protect the open Internet,
however accessed. We seek comment on this approach to defining
``broadband.'' We propose that these rules should not apply to dial-up
Internet access service. Title II regulation applies to users'
telephone connections to dial-up Internet access service providers, and
the Commission's interpretation of those obligations appears to have
resulted in a market for dial-up Internet access service providers that
does not present the same concerns as the market for broadband Internet
access. In addition, because of the lower speed of dial-up Internet
access service, many of the Internet applications and services that may
benefit from quality-of-service assurances and that raise the greatest
concerns regarding discrimination are unavailable over dial-up Internet
connections as a practical matter. We seek comment on our proposal. We
note that our use of the term ``broadband Internet access service'' in
the context of this NPRM does not prejudge how the Commission might
define that term in other contexts.
45. Specifically, we propose that all providers of broadband
Internet access service must comply with the following four rules:
1. Subject to reasonable network management, a provider of
broadband Internet access service may not prevent any of its users from
sending or receiving the lawful content of the user's choice over the
Internet.
2. Subject to reasonable network management, a provider of
broadband Internet access service may not prevent any of its users from
running the lawful applications or using the lawful services of the
user's choice.
3. Subject to reasonable network management, a provider of
broadband Internet access service may not prevent any of its users from
connecting to and using on its network the user's choice of lawful
devices that do not harm the network.
4. Subject to reasonable network management, a provider of
broadband Internet access service may not deprive any of its users of
the user's entitlement to competition among network providers,
application providers, service providers, and content providers.
46. We believe that applying these rules to all providers of
broadband Internet access service would support the statutory and
policy goals we articulated above. First, these rules would support our
goals of protecting consumers and encouraging innovation and
investment. Ensuring that users can send and receive content, run
applications, and use services of their choice allows them to take
advantage of the diverse results of past investment and innovation,
which in turn encourages further innovation and investment, and
research and development. Likewise, ensuring that users can connect the
devices of their choice to the network would encourage investment and
innovation in the device market, and permits customers to change
Internet access service providers more easily, which in turn would
encourage more innovation among providers to win their business.
47. Second, these rules would support our goals of promoting
competition. They would promote competition in the upstream markets for
content, applications, and services by ensuring that users can take
advantage of any offerings, not just those that are approved or
selected by their Internet access service provider. These rules would
also support our goals of promoting consumer protection, user
empowerment, speech, and democratic participation.
48. We now address each principle in turn. The first principle in
the Internet Policy Statement, and the first rule we propose to codify
here, ensures that users are in control of the content that they send
and receive. Making sure that users can express themselves freely on
the Internet and receive the content of their choice ensures that users
are unconstrained by broadband Internet access service providers in
their ability to participate in the marketplace of ideas. Indeed, to
further this interest in encouraging freedom of expression, we propose
that the first rule make explicit that users can both send the content
of their choice and receive the content of their choice. While the
Internet Policy Statement principle referred only to users' ``access''
to content, we believe that the ability of a user to produce or
distribute content is just as important as the ability to receive it.
Indeed, anyone who posts a comment on a blog is ``sending'' content.
49. The second principle in the original Internet Policy Statement
protects the ability of consumers to run applications and use services
of their choice, subject to the needs of law enforcement. As explained
below, we propose that all the principles be subject to the needs of
law enforcement, as well as public safety, and national and homeland
security, by proposing separate draft rules on these topics. As
explained in more detail below, we intend to leave sufficient
flexibility in all our rules to allow broadband Internet access service
providers to address law enforcement, public safety, and national and
homeland security needs. Furthermore, we have no intention of
protecting unlawful activities in these rules. Therefore, for
additional precision, we add the word ``lawful'' to the proposed second
rule to make clear that nothing here requires broadband Internet access
service providers to allow users to engage in unlawful activities. The
addition of the word ``lawful'' also harmonizes the second proposed
rule with the first and third.
50. The third principle in the original Internet Policy Statement
allows users to connect their choice of legal devices that do not harm
the network. The proposed rule changes the word ``legal'' to ``lawful''
for harmony with the other proposed rules. We do not intend any
difference in meaning by changing this particular word. In addition,
the proposed rule would protect the ability of users to connect and use
such devices. We add this clarification to avoid any overly narrow
reading of the proposed rule, and as discussed below, seek comment on
the application of this proposed rule to wireless networks.
51. The fourth principle in the original Internet Policy Statement
protects competition among network providers, application and service
providers, and content providers. Here, we change the proposed wording
of the last three types of providers--application, service, and
content--to be consistent with other proposed rules. Again, no
substantive difference is intended by that change.
52. We propose not to adopt a specific definition of ``content,
application, or service provider,'' because any user of the Internet
can be such a provider. For example, anyone who creates a family Web
site for sharing photographs could be reasonably classified as a
``content provider.'' We believe that this broad interpretation of the
phrase would reinforce the other principles and the overall goals of
this rulemaking.
53. As stated, we propose that all four principles would apply to
all forms of broadband Internet access service, regardless over which
technology platform they are provided. We explain below that all four
principles would be subject to reasonable network management and the
needs of law enforcement, public safety, and homeland and national
security authorities. In addition, we seek comment on the implications
of these principles for broadband Internet access over mobile wireless
networks and how, and in what time frames or phases, and to what extent
they can be fairly and appropriately implemented.
[[Page 62646]]
54. At least one commenter in this proceeding has suggested that we
should read the Internet Policy Statement as embodying obligations
binding on content, applications, and service providers in addition to
broadband Internet access service providers. Although the question of
Internet openness at the Commission has traditionally focused on
providers of broadband Internet access service, we seek comment on the
pros and cons of phrasing one or more of the Internet openness
principles as obligations of other entities, in addition to providers
of broadband Internet access service.
55. We also seek comment in general on our formulation of these
proposed rules, including whether the fourth principle is appropriate
for codification as a rule or whether the other rules we propose in
this NPRM adequately achieve the fourth principle's purposes. We seek
comment, including any applicable data and specific examples, on the
likely costs and benefits of each of these proposed rules. We also seek
comment on whether and how codifying these principles will promote free
speech, civic participation, and democratic engagement. Will codifying
these principles help preserve the Internet's status as ``a forum for a
true diversity of political discourse'' and an open platform for
publication of information?
D. Codifying a Principle of Nondiscrimination
56. As discussed above, the ability of network operators to
discriminate in price or service quality among different types of
traffic or different providers or users may impose significant social
costs, particularly if the discrimination is motivated by
anticompetitive purposes. At the same time, we recognize that traffic
on the Internet is increasing rapidly and that broadband Internet
access service providers must be able to manage their networks and
experiment with new technologies and business models in ways that
benefit consumers. The key issue we face is distinguishing socially
beneficial discrimination from socially harmful discrimination in a
workable manner.
57. Based on the record, we propose a general rule prohibiting a
broadband Internet access service provider from discriminating against,
or in favor of, any content, application, or service, subject to
reasonable network management. More specifically we propose the
following new rule:
5. Subject to reasonable network management, a provider of
broadband Internet access service must treat lawful content,
applications, and services in a nondiscriminatory manner.
58. We further propose that, as with the previous four rules, this
rule should be subject to exceptions for the needs of law enforcement,
public safety, national and homeland security authorities, as discussed
at greater length below.
59. We understand the term ``nondiscriminatory'' to mean that a
broadband Internet access service provider may not charge a content,
application, or service provider for enhanced or prioritized access to
the subscribers of the broadband Internet access service provider. We
propose that this rule would not prevent a broadband Internet access
service provider from charging subscribers different prices for
different services. We seek comment on each of these proposals. We also
seek comment on whether the specific language of this draft rule best
serves the public interest.
60. In defining the scope of this proposed fifth rule, we propose
to focus on that portion of the connection between a broadband Internet
access service subscriber and the Internet for which the broadband
Internet access service provider, as discussed above, may have the
ability and the incentive to favor or disfavor traffic destined for its
end-user customers. We seek comment on this proposal, and how best to
define the portion of the network subject to the fifth rule.
61. We believe that the proposed nondiscrimination rule, subject to
reasonable network management and understood in the context of our
proposal for a separate category of ``managed'' or ``specialized''
services (described below), may offer an appropriately light and
flexible policy to preserve the open Internet. Our intent is to provide
industry and consumers with clearer expectations, while accommodating
the changing needs of Internet-related technologies and business
practices. Greater predictability in this area will enable broadband
providers to better plan for the future, relying on clear guidelines
for what practices are consistent with federal Internet policy. First,
as explained in detail below, reasonable network management would
provide broadband Internet access service providers substantial
flexibility to take reasonable measures to manage their networks,
including but not limited to measures to address and mitigate the
effects of congestion on their networks or to address quality-of-
service needs, and to provide a safe and secure Internet experience for
their users. We also recognize that what is reasonable may be different
for different providers depending on what technologies they use to
provide broadband Internet access service (e.g., fiber optic networks
differ in many important respects from 3G and 4G wireless broadband
networks). We intend reasonable network management to be meaningful and
flexible. Second, as explained below, we recognize that some services,
such as some services provided to enterprise customers, IP-enabled
``cable television'' delivery, facilities-based VoIP services, or a
specialized telemedicine application, may be provided to end users over
the same facilities as broadband Internet access service, but may not
themselves be an Internet access service and instead may be classified
as distinct managed or specialized services. These services may require
enhanced quality of service to work well. As these may not be
``broadband Internet access services,'' none of the principles we
propose would necessarily or automatically apply to these services. In
this context, with a flexible approach to reasonable network
management, and understanding that managed or specialized services, to
which the principles do not apply in part or full, may be offered over
the same facilities as those used to provide broadband Internet access
service, we believe that the proposed approach to nondiscrimination
will promote the goals of an open Internet.
62. We note that our proposed nondiscrimination and reasonable
network management rule bears more resemblance to unqualified
prohibitions on discrimination added to Title II in the 1996
Telecommunications Act than it does to the general prohibition on
``unjust or unreasonable discrimination'' by common carriers in section
202(a) of the Act. We seek comment on whether an ``unjust or
unreasonable discrimination'' standard would be preferable to the
approach we propose. As explained above, rather than extending that
common carrier standard to broadband Internet access services, we
propose a general nondiscrimination rule subject to reasonable network
management and specifically enumerated exceptions (including separate
treatment of managed or specialized services). We believe that a
bright-line rule against discrimination, subject to reasonable network
management and enumerated exceptions, may better fit the unique
characteristics of the Internet, which differs from other
communications networks in that it was not initially designed to
support just one application (like telephone and cable television
[[Page 62647]]
networks), but rather to allow users at the edge of the network to
decide toward which lawful uses to direct the network.
63. If we were to prohibit ``unjust or unreasonable''
discrimination by broadband providers, we anticipate that the types of
discrimination that would be considered ``just'' and ``reasonable''
would likely be reasonable network management or fall within one of the
exceptions described below. We base that belief on our four years of
experience under the Internet Policy Statement and our familiarity with
the debate over open Internet principles, which began well before 2005.
As we note below, we believe that a case-by-case approach to providing
more detailed rulings in this area is inevitable and valuable. At the
same time, where we can identify and describe ex ante exceptions to the
general nondiscrimination rule, we believe it is helpful to do so. As
explained below, moreover, we propose that the nondiscrimination rule
would be subject to reasonable network management, which we believe
would be sufficient to address concerns that a general prohibition on
discrimination lacks necessary flexibility. To be sure, the contours of
our proposed exceptions would be subject to development in future
adjudications. We would not, however, have to establish the exceptions
themselves through that process.
64. We seek comment on these proposals. We seek comment generally
on the costs and benefits of this proposed nondiscrimination rule, both
in the near-term and long-term. In particular, would a rule prohibiting
broadband Internet access service providers from charging content,
application and service providers fees be likely to result in higher
social welfare than would result in a market in which no constraints on
such fees are imposed? What would the effects be on future innovation?
65. We seek comment on the effects that prohibiting charges to
content, application, and service providers for enhanced or prioritized
service would have on broadband Internet access service users. In
discussing these issues, we encourage parties to be specific in
describing whether, when, and how broadband Internet access service
providers charge content, application, and service providers for
prioritization of traffic today, and any consequences they believe
would arise from prohibiting broadband Internet access service
providers from charging for prioritization.
66. More generally, we seek comment on how the proposed
nondiscrimination rule would affect broadband Internet access service
providers' pricing and practices, including network deployment, and the
current or planned offerings of particular Internet content,
application, and service providers. Are there particular content,
applications, or services whose quality and utility to end users
depends on a broadband Internet access service provider's assuring a
certain quality of service? For example, do services such as VoIP,
video conferencing, IP video, or telemedicine applications depend on
discrimination in how traffic is handled? To the extent that parties
believe enhanced or guaranteed quality of service is required for
certain content, applications, or services, they should identify
specifically the content, applications, and services for which such
practices are required and explain why it is required. What would the
practical differences be between permitting operators to manage their
networks to assure quality of service to particular types of traffic--
e.g., all VoIP traffic--and the offering of such management for a fee
or other consideration? Would the proposed nondiscrimination rule
discourage innovation in or development of certain types of content,
applications, or services? Should these services be more properly
understood as managed or specialized services rather than broadband
Internet access services?
67. Have we correctly identified the costs and benefits of the
alternative approaches? Does subjecting the nondiscrimination rule to
reasonable network management ensure that network operators can
reasonably manage their networks consistent with the intent of
preserving the free and open Internet? Does the separate regulatory
category of managed or specialized services allow beneficial
discrimination to serve the public? Conversely, are there any socially
beneficial forms of discrimination that would not fall within the
category of reasonable network management or the exceptions discussed
below? If so, should we instead adopt a rule prohibiting only
unreasonable discrimination? Would a rule prohibiting unreasonable
discrimination permit socially beneficial discrimination that would be
prohibited under a nondiscrimination rule? Would such a rule be
inconsistent with the Internet's traditional operation or otherwise
undermine the manifold benefits the open Internet has provided? Would a
prohibition on unreasonable discrimination, standing alone, be less
certain, harder to enforce, or both? Would it create greater incentives
for broadband Internet access service providers to engage in socially
harmful discrimination?
68. More generally, we seek comment on the relationship between the
proposed rules and the requirements of Title II of the Act. For
example, should the standards for evaluating discrimination be based on
the Commission's precedent under either section 202 or section 272 of
the Act? Has ex post enforcement of similar prohibitions on
discrimination and unreasonable discrimination proven adequate in other
contexts?
69. We also seek comment on whether our proposed nondiscrimination
rule will promote free speech, civic participation, and democratic
engagement. Would discrimination by access providers interfere with
those goals? Conversely, would our proposed rule impose any burdens on
access providers' speech that would be cognizable for purposes of the
First Amendment, and if so, how? Would any burden on access providers'
speech be outweighed by the speech-enabling benefits of an open
Internet that provides a non-discriminatory platform for the robust
interchange of ideas?
70. Finally, we note that NTIA and RUS, in administering the BTOP
and BIP broadband grant and loan programs, required applicants to
agree, among other things, ``not [to] favor any lawful Internet
applications and content over others.'' We seek comment on how BTOP and
BIP applicants have proposed to comply with these requirements and how
this might inform the Commission's definition of a nondiscrimination
rule.
E. Codifying a Principle of Transparency
71. In this part, we propose to codify a sixth principle of
transparency. In general, we believe that sunlight is the best
disinfectant and that transparency discourages inefficient and socially
harmful market behavior. As we noted in our recent Consumer Information
and Disclosure Notice of Inquiry (NOI), access to accurate information
plays a vital role in maintaining a well-functioning marketplace that
encourages competition, innovation, low prices, and high-quality
services. The Consumer Information and Disclosure NOI, however, focuses
on a broad array of consumer issues that cut across all communications
service offerings, while here we seek comment on the specific issue,
not raised in that NOI, of how broadband Internet access service
providers should disclose relevant network management practices to
[[Page 62648]]
consumers as well as to content, application, and service providers and
to government. As previously noted, recipients of BTOP and BIP grants
are required to disclose network management practices on their Web
sites. We propose a transparency principle to protect and empower
consumers and to maximize the efficient operation of relevant markets
by ensuring that all interested parties have access to necessary
information about the traffic management practices of networks. At the
same time, recognizing the potential burdens of such rules, we seek to
design a transparency rule that is minimally intrusive. We seek comment
below on how to balance these goals and reiterate our desire for
comments that include data and specific examples.
72. We believe that adopting a rule requiring transparency would
benefit several constituencies. First, disclosure rules would enable
broadband subscribers to understand and take advantage of the technical
capabilities and limitations of the services they purchase. Second,
disclosure would benefit content, application, and service providers
and investors by increasing access to information needed to develop and
market new Internet offerings. Third, disclosure would benefit policy
makers and the Internet users who rely on them by providing an
empirical foundation for evaluating the effectiveness and necessity of
ongoing policies. As such, we propose codifying a sixth principle of
transparency as follows:
6. Subject to reasonable network management, a provider of
broadband Internet access service must disclose such information
concerning network management and other practices as is reasonably
required for users and content, application, and service providers to
enjoy the protections specified in this part.
We propose that, as with the previous five rules, this rule should
be subject to reasonable network management and the needs of law
enforcement, public safety, and homeland and national security, as
discussed at greater length below.
73. We seek comment on the specific wording of this proposed rule.
In particular, we seek comment on how we should interpret what
information is ``reasonably required'' and whether there are some
standard practices that should be excluded from such mandatory
disclosure. We also seek comment on alternative proposed formulations
of the rule, including whether the rule should require disclosure of
information directly to the Commission.
74. Disclosure to Users. In the Consumer Information and Disclosure
NOI, we sought comment on a broad range of issues related to disclosure
to consumers. In this NPRM, we seek comment more narrowly on the kind
of required disclosures to users that would effectuate the Internet
principles discussed herein. Specifically, we propose that broadband
Internet access service providers should be required to disclose
information to users concerning network management and other practices
that may reasonably affect the ability of users to use the devices,
send or receive the content, use the services, run the applications,
and enjoy the competitive offerings of their choice.
75. Commenters to the National Broadband Plan NOI have generally
agreed that disclosure of network management practices is important for
users. A large number of commentators on open Internet principles in
our Broadband Industry Practices proceeding--both those in favor of a
nondiscrimination principle and those opposed--likewise believe that
broadband Internet access service providers should be required to
disclose more information about their network management practices than
they currently disclose. Disclosure of this information would correct
information asymmetries and allow users to make informed purchasing and
usage decisions.
76. We have in the past found evidence of service providers
concealing information that consumers would consider relevant in
choosing a service provider or a particular service option. For
example, in Madison River and Comcast, broadband Internet access
service providers blocked specific applications desired by users
without informing them. In a recent academic study, thousands of
incidents were observed in which BitTorrent uploads were blocked in the
United States during early 2008. Specifically, the study found that
``BitTorrent uploads are being blocked for a significant number of
hosts, mostly from ISPs in the USA and in Singapore.'' At that time,
the U.S. Internet service providers whose customers experienced the
most blocking had not publicly disclosed their network and congestion
management practices, nor had most other providers. Of major broadband
providers, only a handful appear to publicly disclose their network and
congestion management practices.
77. After the Commission issued the Comcast Network Management
Practices Order, some providers voluntarily disclosed congestion
management practices on their Web sites. Nevertheless, there may be
other instances of unreported application blocking or other practices
that limit consumers' ability to access content, applications, or
services of their choice on the Internet. In the absence of disclosure
rules, we have no way of knowing the full extent of these practices.
Nor do users.
78. We seek comment on what consumers need to know about network
management practices to make informed purchasing decisions and to make
informed use of the services they purchase. We believe that many
consumers need information concerning actual (as opposed to advertised)
transmission rates, capacity, and any network management practices that
affect their quality of service. Commenters should address what types
of network management practices could interfere with or restrict
service and what types of disclosure would be appropriate. Should
broadband Internet access service providers be required to disclose,
for example, the times of day users are most likely to be affected by
network congestion, or the steps providers might take to control or
alleviate congestion? Disclosure of service information is vital to
consumer choice both before and after a consumer decides to purchase a
service. Thus, we seek comment on the types of information broadband
Internet access service providers should be required to disclose to
consumers before and after purchase.
79. We also seek comment on how this information should be
disclosed to users. Are there standard labeling formats that could be
used to disclose network management practices to users? Are there
technological tools available now, or current tools that could be
easily adapted, to facilitate consumer comparisons of network
management practices? We seek examples of disclosure, both within and
outside the communications market, that are both useful for consumers
and not unnecessarily burdensome. We note that some current disclosure
practices appear too general to be useful to users. On the other hand,
too much detail may be counter-productive if users ignore or find it
difficult to understand those details. We seek comment on the
appropriate balance. Similarly, we seek comment on how disclosure can
be tailored not to unduly burden broadband Internet access service
providers. We propose that providers should be able to publicly
disclose their practices on their Web sites and promotional material.
Are there other
[[Page 62649]]
consumer-friendly outlets for this information that broadband Internet
access service providers can use without undue cost and effort?
80. Disclosure to Content, Application, and Service Providers.
Content, application, and service providers should have adequate
information about network management practices to enable them to
innovate and provide their products and services effectively to users.
By reducing uncertainty, transparency should increase the ability and
incentives of these providers to invest and innovate and engage in
research and development. We seek comment on what information is
currently available, what additional information should be made
available, and how this information should be made available to
content, application, and service providers. Are there current examples
of disclosure to upstream entities by broadband Internet access service
providers that could serve as a useful model for any disclosure
requirements? Would the comparably efficient interconnection (CEI) and
open network architecture (ONA) rules the Commission adopted in
Computer III provide a useful guide in developing disclosure
requirements in this context? Should broadband Internet access service
providers make such disclosures available on their Web sites? Are there
particular formats that would make the disclosures more accessible and
useful for content, application, and service providers? We also seek
comment on how such required disclosures can be tailored not to unduly
burden broadband Internet access service providers.
81. Disclosure to Government. The Commission should have access to
the information it needs to enforce any rules adopted in this
proceeding and to make informed policy decisions going forward. We seek
comment on the frequency and content of any reports from broadband
Internet access service providers that would make open Internet
policies enforceable and/or provide a useful tool for policy making.
Specifically, what should broadband Internet access service providers
be required to disclose to the Commission, if anything? Network
management practices disclosed to consumers both before and after they
purchase broadband Internet access service? A list of the methods of
disclosure? Should providers report the number and content of any
consumer complaints about the adequacy of disclosure both pre- and
post-sale? Should broadband Internet access service providers also
report the same information for complaints filed by content,
application, and service providers? How frequently should the
Commission require such reports? Are there governmental agencies, other
than this Commission, to which disclosures should be made, and if so,
what information should be disclosed?
82. General Issues. We seek comment on what events should trigger
disclosure obligations, how these disclosures should be made and in
what format, how often they should be made, and whether the disclosures
should be uniform or tailored to specific purposes and audiences.
Should broadband Internet access service providers be required to
disclose any changes to their network management practices before or
within a certain period of time after implementing those changes? Would
current or past disclosure practices serve as good models for
disclosure to consumers; content, application, and service providers;
and the Commission?
83. We do not anticipate that any disclosures required by the
proposed transparency rule would implicate personally identifiable
information or individuals' privacy interests or any proprietary
network data. However, we seek comment on whether this assumption is
correct. We further seek comment on any network security, online
safety, and competition concerns that might be raised by the proposed
transparency rule. If such concerns exist, how can we best address them
in our rules? Should certain information be disclosed only to the
Commission and not to the public, upon a showing of good cause that
public disclosure would cause significant harms? We note that parties
in other proceedings have raised public safety and competitive harm
concerns about such reports. We also propose that any routine reports
should not affect our ability or the ability of other government
entities to gather any network management information necessary to
comply with or enforce the law.
84. We also seek comment on general arguments against disclosure
requirements. Specifically, is network management information genuinely
of use to users and/or content, application, and service providers?
Would disclosure slow innovation in the network or slow or deter
research in efficient network design? We also seek comment on whether
transparency will encourage or enable users and/or content,
application, and service providers to circumvent legitimate network
management tools designed, for example, to manage congestion.
85. Finally, we seek comment on legal limitations on the type of
information broadband Internet access service providers may disclose.
For example, we note there are several laws that prohibit disclosure by
a broadband Internet access service provider to the end user of the
provider's compliance with certain requests of law enforcement
authorities. We seek comment on whether the proposed exception to the
rules for the needs of law enforcement, discussed below, adequately
addresses this issue.
F. Reasonable Network Management, Law Enforcement, Public Safety, and
Homeland and National Security
86. As stated above, our goals in this proceeding are to encourage
investment and innovation, promote competition, and protect the rights
of users, including promoting speech and democratic participation.
While the six rules proposed above are derived from and designed to
support these goals, there may be times when strict application of
those rules would be in tension with these goals. For example, the
general usefulness of the Internet could suffer if spam floods the
inboxes of users, if viruses affect their computers, or if network
congestion impairs their access to the Internet. Other critical
governmental interests such as law enforcement, national security, and
public safety may require that Internet access service providers
discriminate with regard to particular traffic. For example, a failure
to prioritize certain types of traffic in the case of an emergency
could impair the efforts of first responders. Consequently, we must
ensure that our framework provides a way to balance potentially
competing interests while helping to ensure an open, safe, and secure
Internet. We propose that all six proposed rules should be subject to
(1) reasonable network management, (2) the needs of law enforcement,
and (3) the needs of public safety and homeland and national security.
The original second Internet principle, rather than all four, was
subject to the needs of law enforcement. We believe it would be
preferable to make clear that all principles are subject to the needs
of law enforcement, as well as those of public safety and homeland and
national security, and seek comment on that proposal.
87. As with the six proposed rules, we propose to describe these
concepts at a relatively general level and leave more detailed rulings
to the adjudications of particular cases, as we did in the Comcast
Network Management Practices Order. As in that order, the novelty of
Internet access and traffic management questions, the complex
[[Page 62650]]
nature of the Internet, and a general policy of restraint in setting
policy for Internet access service providers weigh in favor of a case-
by-case approach. We contemplate that individual adjudications will
principally involve resolution of complaints about broadband Internet
access service providers' specific practices. Providers would not be
required to seek a declaratory ruling from the Commission before a
practice is actually deployed, but they or others would be free to do
so. Accordingly, we propose to lay out a few examples of proper and
improper application of the concepts here but to reserve definition of
the precise contours of these concepts for future adjudications. This
course should allow us to proceed cautiously with respect to these
emerging issues and to do so with sensitivity to the fast-changing
nature of the Internet and its continued growth. We discuss each of
these concepts in turn.
1. Reasonable Network Management
88. Here we discuss the proposed definition of reasonable network
management:
Reasonable network management consists of: (a) Reasonable practices
employed by a provider of broadband Internet access service to (i)
reduce or mitigate the effects of congestion on its network or to
address quality-of-service concerns; (ii) address traffic that is
unwanted by users or harmful; (iii) prevent the transfer of unlawful
content; or (iv) prevent the unlawful transfer of content; and (b)
other reasonable network management practices.
89. There appear to be several types of situations that could
justify a broadband Internet access service provider's acting
inconsistently with the six open Internet principles described above.
First, if a broadband Internet access service provider's network is or
appears likely to become congested to such a degree that an individual
user's Internet access is noticeably affected, the broadband Internet
access service provider may be justified in taking reasonable steps to
reduce or mitigate the adverse effects of that congestion or to address
quality-of-service concerns. Second, it may be reasonable for a
provider to take measures to counter traffic that is harmful or
unwanted by users. Third, if particular content or a particular
transfer of content is prohibited by law, the provider may be justified
in not carrying that traffic. Finally, there may be other situations in
which network management practices do not fall into one of these
categories but may nevertheless be reasonable. We address each of these
categories in turn.
90. First, we propose that a broadband Internet access service
provider may take reasonable steps to reduce or mitigate the adverse
effects of congestion on its network or to address quality-of-service
concerns. What constitutes congestion, and what measures are reasonable
to address it, may vary depending on the technology platform for a
particular broadband Internet access service. For example, if cable
Internet subscribers in a particular neighborhood are experiencing
congestion, it may be reasonable for an Internet service provider to
temporarily limit the bandwidth available to individual users in that
neighborhood who are using a substantially disproportionate amount of
bandwidth until the period of congestion has passed. Alternatively, a
broadband Internet service provider might seek to manage congestion by
limiting usage or charging subscribers based on their usage rather than
a flat monthly fee. Some have suggested it would be beneficial for a
broadband provider to protect the quality of service for those
applications for which quality of service is important by implementing
a network management practice of prioritizing classes of latency-
sensitive traffic over classes of latency-insensitive traffic (such as
prioritizing all VoIP, gaming, and streaming media traffic). Others
have suggested that such a practice would be difficult to implement in
a competitively fair manner and could undermine the benefits of a
nondiscrimination rule, including keeping barriers to innovation low.
We seek comment on whether these and other potential approaches to
addressing congestion would be reasonable. On the other hand, we
believe that it would likely not be reasonable network management to
block or degrade VoIP traffic but not other services that similarly
affect bandwidth usage and have similar quality-of-service
requirements. Nor would we consider the singling out of any particular
content (i.e., viewpoint) for blocking or deprioritization to be
reasonable, in the absence of evidence that such traffic or content was
harmful. We recognize that in a past adjudication, the Commission
proposed that for a network management practice to be considered
``reasonable,'' it ``should further a critically important interest and
be narrowly or carefully tailored to serve that interest.'' We believe
that this standard is unnecessarily restrictive in the context of a
rule that generally prohibits discrimination subject to a flexible
category of reasonable network management. We seek comment on our
proposal not to adopt the standard articulated in the Comcast Network
Management Practices Order in this rulemaking.
91. Second, we propose that broadband Internet access service
providers may address harmful traffic or traffic unwanted by users as a
reasonable network management practice. For example, blocking spam
appears to be a reasonable network management practice, as does
blocking malware or malicious traffic originating from malware, as well
as any traffic that a particular user has requested be blocked (e.g.,
blocking pornography for a particular user who has asked the broadband
Internet access service provider to do so).
92. Third, we propose that broadband Internet access service
providers would not violate the principles in taking reasonable steps
to address unlawful conduct on the Internet. Specifically, we propose
that broadband Internet access service providers may reasonably prevent
the transfer of content that is unlawful. For example, as the
possession of child pornography is unlawful, consistent with applicable
law, it appears reasonable for a broadband Internet access service
provider to refuse to transmit child pornography. Moreover, it is
important to emphasize that open Internet principles apply only to
lawful transfers of content. They do not, for example, apply to
activities such as the unlawful distribution of copyrighted works,
which has adverse consequences on the economy and the overall broadband
ecosystem. In order for network openness obligations and appropriate
enforcement of copyright laws to co-exist, it appears reasonable for a
broadband Internet access service provider to refuse to transmit
copyrighted material if the transfer of that material would violate
applicable laws. Such a rule would be consistent with the Comcast
Network Management Practices Order, in which the Commission stated that
``providers, consistent with federal policy, may block * * *
transmissions that violate copyright law.''
93. Finally, we propose that broadband Internet access service
providers may take other reasonable steps to maintain the proper
functioning of their networks. We include this catch-all for two
reasons. First, we do not presume to know now everything that providers
may need to do to provide robust, safe, and secure Internet access to
their subscribers, much less everything they may need to do as
technologies and usage patterns change in the future. Second, we
believe that
[[Page 62651]]
additional flexibility to engage in reasonable network management
provides network operators with an important tool to experiment and
innovate as user needs change.
94. We seek comment on the specific wording of the proposed
definition of reasonable network management. We seek comment on how to
evaluate whether particular network management practices fall into one
or more of these categories and on who should bear the burden of proof
on that issue. We ask parties to identify other laws that would require
or permit broadband Internet access service providers to act in a
manner inconsistent with the six rules. We seek comment on whether
certain network management techniques are considered best practices in
the network engineering community or are consistent with industry
standards and cooperative agreements. We note that in section IV.H we
seek comment on how to consider reasonable network management practices
in the context of broadband Internet access over mobile wireless
networks. We also note that standards bodies such as the Internet
Engineering Task Force (IETF) have played a significant role in
developing network management protocols, and we seek comment on whether
the IETF, other standards bodies, or other third parties could help
define more precisely what practices are reasonable or, specifically in
the context of copyright protection, how it could be determined whether
the transfer of particular content is unlawful. We ask that parties
support their comments with data and specific examples where possible.
2. Law Enforcement
95. Federal law has long recognized the importance of permitting
law enforcement access to communications networks in certain
circumstances. The Communications Assistance for Law Enforcement Act,
for example, requires broadband Internet access service providers to
assist law enforcement in intercepting, tracking, and identifying
communications made over their networks. The Foreign Intelligence
Surveillance Act authorizes law enforcement collecting foreign
intelligence or working to thwart a threat to national security to
wiretap communications over the Internet and prohibits an Internet
access service provider from disclosing the existence of the wiretap to
its subscriber. And the Electronic Communications Privacy Act creates a
framework for law enforcement to work with Internet access service
providers and others for the purpose of investigating and monitoring
information stored on or transiting the Internet while balancing the
privacy interests of affected parties. We believe that a broadband
Internet access service provider may comply with these laws and
otherwise meet the needs of law enforcement without violating the rules
we propose today. For example, we do not believe that nondisclosure of
a wiretap to a surveillance target would violate a carrier's
transparency obligations as proposed here.
96. Accordingly, we propose the following new rule:
Nothing in this part supersedes any obligation a provider of
broadband Internet access service may have--or limits its ability--to
address the needs of law enforcement, consistent with applicable law.
97. We seek comment on our conclusions and on the specific wording
of this proposed rule. We also seek comment on instances in which
broadband Internet access service providers have or may in the future
need to facilitate the needs of law enforcement, including in ways
that, in the absence of the exception proposed in this section, might
conflict with the rules we propose today. In particular, we seek
specific examples and data regarding these issues.
3. Public Safety and Homeland and National Security
98. In connection with a local, regional, or national emergency,
federal, state, tribal, and local public safety entities; homeland
security personnel; and other appropriate governmental agencies may
need guaranteed access to reliable communications over the Internet in
order to coordinate disaster relief and other response efforts, or for
other emergency communications. Guaranteeing quality of service for
these purposes may be critically important to our national security and
safety. For example, during a public health emergency, increased
absenteeism and utilization of teleworking would likely increase the
number of users seeking to access the Internet from numerous discrete
points (e.g., residences). The performance of essential functions could
be impeded by unmanaged network congestion resulting from this change
in usage patterns.
99. Accordingly, we propose the following new rule:
Nothing in this part supersedes any obligation a provider of
broadband Internet access service may have--or limits its ability--to
deliver emergency communications, or to address the needs of public
safety or national or homeland security authorities, consistent with
applicable law.
100. We seek comment on our conclusions and on the specific wording
of this proposed rule. We also seek comment on instances in which
broadband Internet access service providers have or may in the future
need to facilitate the needs of public safety or national or homeland
security, including in ways that, in the absence of the exception
proposed in this section, might conflict with the rules we propose
today. We reiterate our desire for specific examples and data regarding
these issues.
G. Managed or Specialized Services
101. As rapid innovation in Internet-related services continues, we
recognize that there are and will continue to be Internet-Protocol-
based offerings (including voice and subscription video services, and
certain business services provided to enterprise customers), often
provided over the same networks used for broadband Internet access
service, that have not been classified by the Commission. We use the
term ``managed'' or ``specialized'' services to describe these types of
offerings. The existence of these services may provide consumer
benefits, including greater competition among voice and subscription
video providers, and may lead to increased deployment of broadband
networks.
102. We recognize that these managed or specialized services may
differ from broadband Internet access services in ways that recommend a
different policy approach, and it may be inappropriate to apply the
rules proposed here to managed or specialized services. However, we are
sensitive to any risk that the growth of managed or specialized
services might supplant or otherwise negatively affect the open
Internet. In this section, we seek comment on whether and, if so, how
the Commission should address managed or specialized IP-based services
in order to allow providers to develop new and innovative technologies
and business models and to otherwise further the goals of innovation,
investment, competition, and consumer choice, while safeguarding the
open Internet.
103. We begin by seeking comment on what functions such managed or
specialized services might fulfill. For example, AT&T offers its U-
verse multi-channel, Internet-Protocol-based video service through the
same network as its fiber-based broadband Internet access offering, and
the record in our National Broadband Plan proceeding includes
discussion of potential future offerings such as specialized
telemedicine, smart grid, or eLearning applications that may require or
benefit from enhanced quality
[[Page 62652]]
of service rather than traditional best-effort Internet delivery. What
other managed or specialized services are currently being offered or
may be offered in the near future? What specific content, applications,
or services may require enhanced quality-of-service offerings, and why?
What kinds of special or enhanced treatment are required? Are or will
managed or specialized services be provided over the same network and
to the same users who subscribe to broadband Internet access service?
We encourage commenters to be as specific as possible about the current
or likely future identity of such offerings; their technical
characteristics, including whether they traverse more than one service
provider's network; the technical characteristics of any enhanced
quality of service offering that might be required for such content,
application, or service; and sales and marketing arrangements for such
content, application, or service, as well as for any enhanced quality
of service offering (e.g., are or would such offerings be sold or
marketed as part of other services or as a distinct service, whether
bundled or stand-alone?).
104. More generally, how should we define the category of managed
or specialized services? How are managed or specialized services
different from broadband Internet access service as defined in this
NPRM, and what are their essential distinguishing characteristics? Is
allocation of available bandwidth for managed or specialized services
versus broadband Internet access services a critical factor in
analyzing such issues?
105. In addition, we seek comment on what policies should apply to
managed or specialized services, if any, in light of the Commission's
statutory mandate and the goals of this rulemaking process. Should the
Commission classify these services for policymaking purposes, and if
so, how? If rules are appropriate in this area, what should those rules
state? Should any of the rules proposed here for broadband Internet
access service apply to managed or specialized services?
106. Finally, we seek comment on what impact managed or specialized
services might have on the open Internet and the advancement of the
goals of this rulemaking process, and how the Commission should address
any such impacts. Will managed or specialized services increase or
reduce investment in broadband network deployment and upgrades? Will
network providers provide sufficient capacity for robust broadband
Internet access service on shared networks used for managed or
specialized services? Again, we encourage commenters to be as specific
and fact-based as possible in addressing these issues.
H. Applicability of Principles to Different Broadband Technology
Platforms
107. As our choices for accessing the Internet continue to
increase, and as users connect to the Internet through different
technologies, the principles we propose today seek to safeguard its
openness for all users. We affirm that the six principles that we
propose to codify today would apply to all platforms for broadband
Internet access. Nevertheless, we acknowledge that technological,
market structure, consumer usage, and historical regulatory differences
between different Internet access platforms may justify differences in
how we apply the Internet openness principles to advance the goals of
innovation, investment, research and development, competition, and
consumer choice. While there has been considerable discussion and
factual development regarding openness issues in the wireline context,
other Internet access platforms present additional important issues
related to openness that merit focused attention. In this section, we
seek comment on the application of the principles to different access
platforms, including how, in what time frames or phases, and to what
extent the principles should apply to non-wireline forms of Internet
access, including, but not limited to, terrestrial mobile wireless,
unlicensed wireless, licensed fixed wireless, and satellite.
108. Since the adoption of the Internet Policy Statement in 2005,
alternative platforms for accessing the Internet have flourished,
unleashing tremendous innovation and investment. In particular,
wireless broadband Internet access has emerged as a technology that,
from a consumer's perspective, now supports many of the same functions
as DSL and cable modem service. For example, a consumer's laptop can be
connected to the Internet through wireless or landline technologies. As
noted above, the AT&T-BellSouth neutrality commitment extended to fixed
WiMAX service. Wireless Internet access is provided through a variety
of methods and technologies and is faster in most cases than dial up.
109. Because of the rapid growth and increasing use of mobile
wireless as a platform for broadband Internet access, we will examine
in greater detail in the following parts the application of the
principles to mobile broadband Internet access. We note as a threshold
matter that wireless providers may offer a range of services--including
traditional voice, short message service (SMS), and media messaging
service (MMS)--that are not broadband Internet access services and thus
are not included in the scope of the draft rules discussed above.
110. The manner in which the principles apply to mobile Internet
access raises challenging questions, particularly with respect to the
attachment of devices to the network and discrimination with regard to
access to content, applications, and services, subject to reasonable
network management. The difficulty of the questions is in part due to
the way in which devices, applications, and content are provided today
in the mobile wireless context. Moreover, we note that mobile wireless
networks are not as far along in the process of transitioning to IP-
based traffic as wireline networks. We seek to analyze fully the
implications of these principles for mobile network architectures and
practices as well as how, in what time frames or phases, and to what
extent they can be fairly and appropriately implemented. We undertake
this analysis with a focus on promoting innovation, investment,
research and development, competition, and consumer choice, in order to
support a thriving Internet and robust mobile wireless broadband
networks.
1. Emergence of Mobile Internet Access
111. Mobile wireless is now a key platform enabling consumers to
access communications services. Since 2004, the number of mobile
telephone subscribers has exceeded the number of landlines. More
recently, mobile wireless has emerged as an important method of
Internet access. The first 3G networks went into service in 2003, and
today tens of millions of Americans access the Internet through mobile
handheld devices or through personal computers or other devices
equipped with wireless Internet capability. In the past four years, the
number of mobile devices capable of high-speed Internet access grew
from approximately 400,000 to more than 59 million by the end of June
2008. 3G networks have enabled speeds comparable to some fixed access
networks, offering a robust Internet experience. And in the future,
with new 3.5G and 4G networks, some consumers may use mobile wireless
devices for all of their Internet access services. Simultaneously, new
devices have emerged to take advantage of faster 3G network speeds.
Many of today's smartphones (e.g., Blackberry, iPhone, Palm Pre, and
phones based on the Android or Windows Mobile platforms) are
essentially handheld computers
[[Page 62653]]
with fully featured Web browsers and the ability to run thousands of
applications, many of which utilize the Internet, and more and more
Americans are using these devices. Similarly, wireless modems are
increasingly allowing laptops, netbooks, and desktop computers to
connect to the Internet.
112. In evaluating the highly dynamic landscape for mobile wireless
broadband Internet access, we recognize that there are technological,
structural, consumer usage, and historical differences between mobile
wireless and wireline/cable networks. In order to facilitate connection
and quality of communications over these radio links, wireless networks
employ technical controls over factors such as the frequency, time, and
power of the phones' signals. The customer device communicates with the
network using a specified technical interface. Moreover, cellular
wireless networks are shared networks (as are some types of wireline
networks), with limited resources typically shared among multiple
users. Wireless networks must deal with particularly dynamic changes in
the communications path due to radio interference and propagation
effects such as signal loss with increasing distance of the wireless
phone from the base stations, fading, multipath, and shadowing.
113. The mobile wireless industry structure has evolved differently
as well. As part of the effort to promote widespread use of mobile
wireless, service providers package devices with services, often
subsidizing these devices, and in the process, they may work directly
with handset manufacturers to develop the design of their end-user
devices. Mobile broadband customers generally purchase their devices
directly from the wireless provider, often at a significant discount
pursuant to a long-term service contract. Moreover, as mobile broadband
service has developed, it has been integrated with end-user devices
that are used to deliver traditional voice service.
2. Background of Wireless Open Platforms
114. In 2007, the Commission adopted a rule that required certain
licensees to provide an open platform on their networks for devices and
applications. Specifically, the open platform rule requires that Upper
700 MHz C-Block licensees must allow customers, device manufacturers,
third-party application developers, and others to use or develop the
devices and applications of their choice, so long as they meet all
applicable regulatory requirements and do not cause harm to the
network. The Commission also prohibited all handset locking for Upper
700 MHz C-Block licensees.
115. In addition, some service and equipment providers have opened
their networks to certain third-party devices and/or applications. For
example, in 2008, T-Mobile with Google unveiled the G1, the first
Android device using Android's free, open-source mobile operating
system platform, and since that time, T-Mobile has offered additional
Android devices. Verizon Wireless established its Open Development
Program, to allow its customers to use the devices and applications of
their choice on its network. Clearwire launched its CLEAR 4G WiMAX
Innovation Network in Silicon Valley, a 4G WiMAX ``sandbox'' for
application developers to use to develop wireless Internet
applications. With the development of more advanced smartphone devices
(such as the iPhone and the Palm Pre) over more robust wireless
networks, many new and innovative applications have also been
developed, which are typically offered to consumers through
applications stores. These stores are often operated by wireless
handset manufacturers and operating system developers, including Apple,
Palm, and Research in Motion (for BlackBerry), and others are in
development.
3. Application of the Internet Principles to Wireless
a. Connection to the Network and Device Attachment
116. In the wireless Internet context, different devices may
interconnect to the network in different ways. Smartphones have built-
in radio capability, and typically may connect to the network following
a registration procedure (e.g., entering an authorization code) or by
inserting a preregistered chip (e.g., a subscriber identity module
(SIM) card). Some laptop and netbook computers now have pre-installed
radios and attach to the network in a manner similar to smartphones.
Many laptops and other devices do not have built-in radios, but have a
slot or port whereby a modem can be easily connected. Wireless
interconnection is complicated by the fact that different operators
utilize different network standards, which require devices to have a
compatible ``air interface'' in order to operate. Further, as explained
above, consumers typically purchase their wireless devices directly
from their wireless providers (or their agents), and providers often
restrict consumers from attaching certain third-party devices to their
networks.
117. In the residential landline context, broadband providers
typically provide a modem that attaches to the network, but allow users
freely to interconnect devices locally to the modem through an Ethernet
or WiFi connection. An analogous practice in the wireless context is
known as ``tethering,'' whereby a wireless handset or device can be
used as a modem to connect with other devices such as a laptop computer
by wire or radio (e.g., WiFi or Bluetooth). Similarly, some providers
have begun to introduce ``personal hotspot'' devices (e.g., the MiFi)
that combine a 3G modem with a WiFi hub that can serve multiple
devices. Tethering is not universally permitted by providers.
118. Unlicensed wireless devices can generally attach to a local-
area or personal-area network without requiring the network owner
(typically a consumer) to test for whether the device is non-harmful,
since this would be impractical. Typically this is accomplished by
using industry standard interfaces such as a WiFi connection. We note
that private sector certification programs have been established to
ensure compatibility with the standards. For example, in order to
advertise a product as WiFi compliant the device must undergo third-
party testing in accordance with a program established by the WiFi
Alliance.
119. In this context, we ask how, in what time frames or phases,
and to what extent the ``any device'' rule should apply to mobile
wireless broadband Internet access. In particular, we seek concrete
data and specific examples that will inform our consideration of the
issue. Should we require a mobile broadband Internet access service
provider to allow users to attach any device with a compatible air
interface directly to its network? If so, what procedures may providers
use to prevent harm to the network? Who should ensure that devices are
non-harmful: the providers themselves, third-party organizations,
industry associations/laboratories, or the Commission? Should we allow
providers to satisfy the device-attachment principle by providing
wireless modems or SIM cards that could be easily inserted into end-
user devices?
120. Should we require providers to allow ``tethering'' as a form
of device interconnection? If we required wireless providers to permit
tethering, what impact would that have on wireless network congestion,
and what reasonable network management
[[Page 62654]]
measures should providers be allowed to take to ensure that their
networks can support tethering? Alternatively, should a tethering
requirement be sufficient to satisfy the ``any device'' requirement in
the wireless context?
121. In the interest of ensuring that the application of the ``any
device'' rule is fair and appropriate, we also seek comment on
realistic and reasonable time frames or phases for applying this rule
to mobile wireless broadband Internet access services.
122. We note that the ``any device'' rule proposed in this NPRM
would differ from the rules that the Commission adopted for Upper 700
MHz C Block licensees in several respects. For example, the rule
proposed in this NPRM would not necessarily prohibit the practice of
``handset locking'' (i.e., preventing a subscriber from transferring a
handset to another provider's network during the time the contract with
the subscriber is in place), which was explicitly prohibited in the
rules applicable to the Upper 700 MHz C Block licensees. Further, the
``any device'' rule proposed in this NPRM, as well as the ``any
application'' rule proposed herein, would require a provider of
broadband Internet access service to allow users to connect to the
provider's network their choice of lawful devices that do not harm the
network and to run the lawful applications of the users' choice. In
contrast, the rules the Commission adopted for Upper 700 MHz C Block
licensees, which have been in effect since 2007, require licensees
offering any service on Upper 700 MHz C Block spectrum, without
limitation to broadband internet access service, to allow use of the
devices and applications of the user's choice on the licensee's C Block
network.
123. In addition, we note that rural wireless carriers have raised
an additional issue that relates to devices, asking the Commission to
address exclusive handset arrangements between wireless service
providers and device manufacturers. We do not view the open Internet
rules proposed here as directly related to handset exclusivity, and we
do not intend to address that issue in this proceeding, but rather will
consider it separately.
b. Application of Nondiscrimination With Respect to Access to Content,
Applications, and Services, Subject to Reasonable Network Management
124. Application of a nondiscrimination principle raises important
questions in wireless, given the provision of voice, SMS/MMS, and
Internet service through a single device, typically sold by the same
network operator. We seek comment on how, in what time frames or
phases, and to what extent the prohibition on discrimination, subject
to reasonable network management, should be administered for wireless
services, including specific examples and data regarding practices.
Would it be desirable to treat different devices and networks
differently? Should the principle apply in the same way to an iPhone
connected to a 3G network and to a laptop connected to a modem that is
connected to a wireless mesh network? How should this principle apply
in the context of 4G networks capable of supporting voice, video, and
data services on a converged platform architecture? We also seek
comment on time frames or phases that would facilitate fair and
appropriate application of the nondiscrimination principle to mobile
wireless broadband Internet access services.
125. With respect to the identification of reasonable network
management practices for mobile broadband, we note that each provider
has a finite amount of spectrum available to it. The users in a cell
share the spectrum at any given time and the demands on capacity can
vary widely depending on such factors as the number of users within
that cell at any given time and the applications they are using.
Moreover, while all networks must be designed to deal with various
factors that can affect performance, wireless networks must be designed
to deal with wide variations in signal levels across the service area
as well as interference from other devices. In order to maximize
utility to all users in a given cell sector, certain basic technical
``rules of the road'' are critical. What implications do these
technical characteristics have for practices that might be considered
reasonable network management in the wireless context? Further, for a
given application, wireless networks are more sensitive to user
behavior than wireline networks, so capacity management is a constant
concern of wireless engineers. Bandwidth-intensive Internet services
already create challenges for wireless networks, and these challenges
are likely to increase, although the effects may be ameliorated by new
technology, investment, innovation in business models, and/or
additional spectrum. On the other hand, for the most bandwidth-
intensive service today--streaming video--many wireless users view
video content on smaller screens, which requires less bandwidth than
typical video services consumed over a wireline Internet connection.
126. In what way do these wireless characteristics affect what
kinds of network management practices are or are not reasonable? Are
there particular wireless network management practices that should be
identified by the Commission as reasonable? For example, are there any
circumstances in which it could be reasonable for a wireless network to
block video applications because they consume too much capacity? What
about third-party VoIP applications or peer-to-peer applications?
127. We further seek comment on what access to applications means
in the mobile wireless context. Does the quality of a user's experience
with an application vary depending on whether the application is
downloaded onto the user's device or whether it is accessed in the
cloud using the device's Web browser?
I. Enforcement
128. In this NPRM, we propose to codify six principles that will
govern the conduct of broadband Internet access service providers, and
to enforce those rules on a case-by-case basis through adjudication.
The Commission has authority to enforce its rules. Section 503(b) of
the Act authorizes the Commission to issue citations and impose
forfeiture penalties for violations of the Commission's rules. The
Commission may initiate an enforcement action on its own motion or in
response to a complaint filed by an outside party. We note that in the
Adelphia/Time Warner/Comcast Order, the Commission invited parties to
file complaints if evidence arose that Comcast was willfully blocking
or degrading access to Internet content. And in the Comcast Network
Management Practices Order, we addressed a complaint concerning alleged
blocking or degrading of Internet content.
129. We seek comment on whether the Commission should adopt
procedural rules specifically governing complaints involving alleged
violations of any Internet principles we codify in our regulations.
Should the Commission adopt formal complaint procedures for alleged
violations of its open Internet rules? If so, what process should
govern such complaints? Would any of the Commission's existing rules,
such as the rules governing formal complaints under section 208 of the
Act or the rules governing complaints related to cable service, provide
a suitable model in developing new procedural rules for open Internet
complaints? Should the procedural rules differ depending on
characteristics of the defendant (e.g.,
[[Page 62655]]
common carrier, cable provider)? Are there statutory limits on the
scope of relief that the Commission may award in a formal complaint
proceeding involving a violation of any open Internet rules? For
example, may the Commission award damages to a complainant? If so,
under what circumstances? What other issues concerning enforcement
should the Commission consider? We invite comment.
J. Technical Advisory Process
130. We recognize that our decisions in this rulemaking must
reflect a thorough understanding of current technology and future
technological trends. To ensure that we have this understanding, the
Chief of the Commission's Office of Engineering & Technology will
create an inclusive, open, and transparent process for obtaining the
best technical advice and information from a broad range of engineers.
Initial Regulatory Flexibility Analysis
1. As required by the Regulatory Flexibility Act of 1980, as
amended (RFA), the Commission has prepared this Initial Regulatory
Flexibility Analysis (IRFA) of the possible significant economic impact
on a substantial number of small entities from the policies and rules
proposed in this Notice of Proposed Rulemaking (NPRM). The Commission
requests written public comment on this IRFA. Comments must be
identified as responses to the IRFA and must be filed by the deadlines
for comments on the NPRM provided on the first page of the NPRM. The
Commission will send a copy of the NPRM, including this IRFA, to the
Chief Counsel for Advocacy of the Small Business Administration (SBA).
In addition, the NPRM and IRFA (or summaries thereof) will be published
in the Federal Register.
A. Need for, and Objectives of, the Proposed Rules
2. Today's Internet is shaped by a legacy of openness and
transparency that has been critical to its success as an engine for
creativity, innovation, and economic growth. The NPRM seeks comment on
a number of issues relating to preserving this openness and
transparency. In the NPRM the Commission proposes draft language to
codify the four principles the Commission articulated in the Internet
Policy Statement that providers must allow consumers to:
access the lawful Internet content of their choice[;] * * * run
applications and use services of their choice, subject to the needs of
law enforcement[;] * * * connect their choice of legal devices that do
not harm the network[; and] * * * [benefit from] competition among
network providers, application and service providers, and content
providers.
3. The Commission also proposes draft language to codify a fifth
principle that would require a broadband Internet access service
provider to treat lawful content, applications, and services in a
nondiscriminatory manner and draft language to codify a sixth principle
that would require a broadband Internet access service provider to
disclose such information concerning network management and other
practices as is reasonably required for users and content, application,
and service providers to enjoy the protections specified in this
rulemaking.
4. The NPRM proposes draft language to make clear that the
principles would be subject to reasonable network management and would
not supersede any obligation a broadband Internet access service
provider may have--or limit its ability--to deliver emergency
communications or to address the needs of law enforcement, public
safety, or national or homeland security authorities, consistent with
applicable law. The draft rules do not prohibit broadband Internet
access service providers from taking reasonable action to prevent the
transfer of unlawful content, such as the unlawful distribution of
copyrighted works. Nor are the draft rules intended to prevent a
provider of broadband Internet access service from complying with other
laws.
5. The NPRM seeks comment on defining a category of managed or
specialized services, how to define such services, and what principles
or rules, if any, should apply to them. The NPRM also seeks comment on
how, to what extent, and when the principles should apply to wireless
broadband Internet access service, whether such access is obtained via
terrestrial mobile wireless, unlicensed wireless, licensed fixed
wireless, or satellite. Finally, the NPRM seeks comment on the
enforcement procedures that the Commission should use to ensure
compliance with the proposed principles.
B. Legal Basis
6. The legal basis for any action that may be taken pursuant to the
NPRM is contained in sections 1, 2, 4(i)-(j), 201(b), 230, 257, 303(r),
and 503 of the Communications Act of 1934, as amended, and section 706
of the Telecommunications Act of 1996, as amended, 47 U.S.C. 151, 152,
154(i)-(j), 201(b), 230, 257, 303(r), 503, 1302.
C. Description and Estimate of the Number of Small Entities to Which
the Rules Would Apply
7. 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 rules adopted herein. The RFA generally defines the
term ``small entity'' as having the same meaning as the terms ``small
business,'' ``small organization,'' and ``small governmental
jurisdiction.'' In addition, the term ``small business'' has the same
meaning as the term ``small business concern'' under the Small Business
Act. 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).
1. Total Small Entities
8. Our proposed action, if implemented, may, over time, affect
small entities that are not easily categorized at present. We therefore
describe here, at the outset, three comprehensive, statutory small
entity size standards. First, nationwide, there are a total of
approximately 27.2 million small businesses, according to the SBA. In
addition, a ``small organization'' is generally ``any not-for-profit
enterprise which is independently owned and operated and is not
dominant in its field.'' Nationwide, as of 2002, there were
approximately 1.6 million small organizations. Finally, the term
``small governmental jurisdiction'' is defined generally as
``governments of cities, towns, townships, villages, school districts,
or special districts, with a population of less than fifty thousand.''
Census Bureau data for 2002 indicate that there were 87,525 local
governmental jurisdictions in the United States. We estimate that, of
this total, 84,377 entities were ``small governmental jurisdictions.''
Thus, we estimate that most governmental jurisdictions are small.
2. Internet Access Service Providers
9. The actions proposed in the NPRM would apply to broadband
Internet access service providers. In 2007, the SBA recognized two new
small businesses, economic census categories. They are (1) Internet
Publishing and Broadcasting and Web Search Portals and (2) All Other
Information Services. However, census data do not yet exist that may be
used to calculate the number of small entities that fit these
definitions. Therefore, we will use the prior definition of Internet
Service
[[Page 62656]]
Providers (ISPs) in order to estimate numbers of potentially-affected
small business entities.
10. The 2007 Economic Census places these providers, which includes
voice over Internet protocol (VoIP) providers, in the category of All
Other Telecommunications. The SBA small business size standard for such
firms is: those having annual average receipts of $25 million or less.
The most current Census Bureau data on such entities, however, are the
2002 data for the previous census category called Internet Service
Providers. The 2002 data show that there were 2,529 such firms that
operated for the entire year. Of those, 2,437 firms had annual receipts
of under $10 million and an additional 47 firms had receipts of between
$10 million and $24,999,999. Consequently, we estimate that the
majority of ISP firms are small entities that may be affected by our
action.
11. The ISP industry has changed dramatically since 2002. The 2002
data cited above therefore may include entities that no longer provide
Internet access service and may exclude entities that now provide
broadband Internet access service. To ensure that this IRFA describes
the universe of small entities that the proposals in the NPRM may
affect, we discuss in turn several different types of entities that may
be providing broadband Internet access service. We note that, although
we have no specific information on the number of small entities that
provide broadband Internet access service over unlicensed spectrum, we
include these entities in our Initial Regulatory Flexibility Analysis.
3. Wireline Providers
12. Incumbent Local Exchange Carriers (Incumbent 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. According to Commission
data, 1,311 carriers have reported that they are engaged in the
provision of incumbent local exchange services. Of these 1,311
carriers, an estimated 1,024 have 1,500 or fewer employees and 287 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 proposed action.
13. Competitive Local Exchange Carriers (Competitive LECs),
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.
According to Commission data, 1005 carriers have reported that they are
engaged in the provision of either competitive access provider services
or competitive local exchange carrier services. Of these 1005 carriers,
an estimated 918 have 1,500 or fewer employees and 87 have more than
1,500 employees. In addition, 16 carriers have reported that they are
``Shared-Tenant Service Providers,'' and all 16 are estimated to have
1,500 or fewer employees. In addition, 89 carriers have reported that
they are ``Other Local Service Providers.'' Of the 89, all have 1,500
or fewer 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 proposed
action.
14. We have included small incumbent LECs 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.'' The
SBA's Office of Advocacy contends that, for RFA purposes, small
incumbent LECs are not dominant in their field of operation because any
such dominance is not ``national'' in scope. We have therefore included
small incumbent LECs in this RFA analysis, although we emphasize that
this RFA action has no effect on Commission analyses and determinations
in other, non-RFA contexts.
15. Interexchange Carriers. 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.
According to Commission data, 300 carriers have reported that they are
engaged in the provision of interexchange service. Of these, an
estimated 268 have 1,500 or fewer employees and 32 have more than 1,500
employees. Consequently, the Commission estimates that the majority of
IXCs are small entities that may be affected by our proposed action.
16. 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. According to Commission data, 28 carriers have reported that
they are engaged in the provision of operator services. Of these, an
estimated 27 have 1,500 or fewer employees and one has more than 1,500
employees. Consequently, the Commission estimates that the majority of
OSPs are small entities that may be affected by our proposed action.
4. Wireless Providers
17. The broadband Internet access service provider category covered
by this NPRM may cover multiple wireless firms and categories of
regulated wireless services. Thus, to the extent the wireless services
listed below are used by wireless firms for broadband Internet access
services, the proposed actions may have an impact on those small
businesses as set forth above and further below. In addition, for those
services subject to auctions, we note that, as a general matter, the
number of winning bidders that claim to 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 subsequent business size unless, in the context of
assignments and transfers or reportable eligibility events, unjust
enrichment issues are implicated.
18. Wireless Telecommunications Carriers (except Satellite). Since
2007, the Census Bureau has placed wireless firms within this new,
broad, economic census category. Prior to that time, such firms were
within the now-superseded categories of ``Paging'' and ``Cellular and
Other Wireless Telecommunications.'' Under the present and prior
categories, the SBA has deemed a wireless business to be small if it
has 1,500 or fewer employees. For the category of Wireless
Telecommunications Carriers (except Satellite), preliminary data for
2007 show that there were 11,927 firms operating that year. While the
Census Bureau has not released data on the establishments broken down
by number of employees, we note that the Census Bureau lists total
employment for all
[[Page 62657]]
firms in that sector at 281,262. Since all firms with fewer than 1,500
employees are considered small, given the total employment in the
sector, we estimate that the vast majority of wireless firms are small.
19. Wireless Communications Services. This service can be used for
fixed, mobile, radiolocation, and digital audio broadcasting satellite
uses. The Commission defined ``small business'' for the wireless
communications services (WCS) auction as an entity with average gross
revenues of $40 million for each of the three preceding years, and a
``very small business'' as an entity with average gross revenues of $15
million for each of the three preceding years. The SBA has approved
these definitions. The Commission auctioned geographic area licenses in
the WCS service. In the auction, which commenced on April 15, 1997 and
closed on April 25, 1997, seven bidders won 31 licenses that qualified
as very small business entities, and one bidder won one license that
qualified as a small business entity.
20. 1670-1675 MHz Services. This service can be used for fixed and
mobile uses, except aeronautical mobile. An auction for one license in
the 1670-1675 MHz band commenced on April 30, 2003 and closed the same
day. One license was awarded. The winning bidder was not a small
entity.
21. Wireless Telephony. Wireless telephony includes cellular,
personal communications services, and specialized mobile radio
telephony carriers. As noted, the SBA has developed a small business
size standard for Wireless Telecommunications Carriers (except
Satellite). Under the SBA small business size standard, a business is
small if it has 1,500 or fewer employees. According to Trends in
Telephone Service data, 434 carriers reported that they were engaged in
wireless telephony. Of these, an estimated 222 have 1,500 or fewer
employees and 212 have more than 1,500 employees. Therefore,
approximately half of these entities can be considered small.
22. Broadband Personal Communications Service. The broadband
personal communications services (PCS) spectrum is divided into six
frequency blocks designated A through F, and the Commission has held
auctions for each block. The Commission initially defined a ``small
business'' for C- and F-Block licenses as an entity that has average
gross revenues of $40 million or less in the three previous calendar
years. For F-Block licenses, an additional small business size standard
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. These small
business size standards, in the context of broadband PCS auctions, have
been approved by the SBA. 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 claimed small business status
in the first two C-Block auctions. A total of 93 bidders that claimed
small business status won approximately 40 percent of the 1,479
licenses in the first auction for the D, E, and F Blocks. On April 15,
1999, the Commission completed the reauction of 347 C-, D-, E-, and F-
Block licenses in Auction No. 22. Of the 57 winning bidders in that
auction, 48 claimed small business status and won 277 licenses.
23. On January 26, 2001, the Commission completed the auction of
422 C- and F-Block Broadband PCS licenses in Auction No. 35. Of the 35
winning bidders in that auction, 29 claimed small business status.
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. On February 15, 2005, the Commission
completed an auction of 242 C-, D-, E-, and F-Block licenses in Auction
No. 58. Of the 24 winning bidders in that auction, 16 claimed small
business status and won 156 licenses. On May 21, 2007, the Commission
completed an auction of 33 licenses in the A, C, and F Blocks in
Auction No. 71. Of the 12 winning bidders in that auction, five claimed
small business status and won 18 licenses. On August 20, 2008, the
Commission completed the auction of 20 C-, D-, E-, and F-Block
Broadband PCS licenses in Auction No. 78. Of the eight winning bidders
for Broadband PCS licenses in that auction, six claimed small business
status and won 14 licenses.
24. Specialized Mobile Radio Licenses. The Commission awards
``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 $15 million in each of the
three previous calendar years. The Commission awards ``very small
entity'' bidding credits to firms that had revenues of no more than $3
million in each of the three previous calendar years. The SBA has
approved these small business size standards for the 900 MHz Service.
The Commission has held auctions for geographic area licenses in the
800 MHz and 900 MHz bands. The 900 MHz SMR auction began on December 5,
1995, and closed on April 15, 1996. Sixty bidders claiming that they
qualified as small businesses under the $15 million size standard won
263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR
auction for the upper 200 channels began on October 28, 1997, and was
completed on December 8, 1997. Ten bidders claiming that they qualified
as small businesses under the $15 million size standard won 38
geographic area licenses for the upper 200 channels in the 800 MHz SMR
band. A second auction for the 800 MHz band was held on January 10,
2002 and closed on January 17, 2002 and included 23 BEA licenses. One
bidder claiming small business status won five licenses.
25. The auction of the 1,053 800 MHz SMR geographic area licenses
for the General Category channels began on August 16, 2000, and was
completed on September 1, 2000. Eleven bidders won 108 geographic area
licenses for the General Category channels in the 800 MHz SMR band and
qualified as small businesses under the $15 million size standard. In
an auction completed on December 5, 2000, a total of 2,800 Economic
Area licenses in the lower 80 channels of the 800 MHz SMR service were
awarded. Of the 22 winning bidders, 19 claimed small business status
and won 129 licenses. Thus, combining all four auctions, 41 winning
bidders for geographic licenses in the 800 MHz SMR band claimed status
as small businesses.
26. In addition, there are numerous incumbent site-by-site SMR
licenses and licensees with extended implementation authorizations in
the 800 and 900 MHz bands. We do 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. In addition, we do not know how many of these
firms have 1,500 or fewer employees, which is the SBA-determined size
standard. We assume, for purposes of this analysis, that all of the
remaining extended implementation authorizations are held by small
entities, as defined by the SBA.
27. Lower 700 MHz Band Licenses. The Commission previously adopted
criteria for defining three groups of small businesses for purposes of
determining their eligibility for special provisions such as bidding
credits. The Commission defined a ``small business''
[[Page 62658]]
as an entity that, together with its affiliates and controlling
principals, has average gross revenues not exceeding $40 million for
the preceding three years. A ``very small business'' is defined as an
entity that, together with its affiliates and controlling principals,
has average gross revenues that are not more than $15 million for the
preceding three years. Additionally, the lower 700 MHz Service had a
third category of small business status for Metropolitan/Rural Service
Area (MSA/RSA) licenses--``entrepreneur''--which is defined as 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. The SBA approved these small size standards. An
auction of 740 licenses (one license in each of the 734 MSAs/RSAs and
one license in each of the six Economic Area Groupings (EAGs))
commenced on August 27, 2002, and closed on September 18, 2002. Of the
740 licenses available for auction, 484 licenses were won by 102
winning bidders. Seventy-two of the winning bidders claimed small
business, very small business or entrepreneur status and won a total of
329 licenses. A second auction commenced on May 28, 2003, closed on
June 13, 2003, and included 256 licenses: 5 EAG licenses and 476
Cellular Market Area licenses. Seventeen winning bidders claimed small
or very small business status and won 60 licenses, and nine winning
bidders claimed entrepreneur status and won 154 licenses. On July 26,
2005, the Commission completed an auction of 5 licenses in the Lower
700 MHz band (Auction No. 60). There were three winning bidders for
five licenses. All three winning bidders claimed small business status.
28. In 2007, the Commission reexamined its rules governing the 700
MHz band in the 700 MHz Second Report and Order. An auction of 700 MHz
licenses commenced January 24, 2008 and closed on March 18, 2008, which
included 176 Economic Area licenses in the A Block, 734 Cellular Market
Area licenses in the B Block, and 176 EA licenses in the E Block.
Twenty winning bidders, claiming small business status (those with
attributable average annual gross revenues that exceed $15 million and
do not exceed $40 million for the preceding three years) won 49
licenses. Thirty-three winning bidders claiming very small business
status (those with attributable average annual gross revenues that do
not exceed $15 million for the preceding three years) won 325 licenses.
29. Upper 700 MHz Band Licenses. In the 700 MHz Second Report and
Order, the Commission revised its rules regarding Upper 700 MHz
licenses. On January 24, 2008, the Commission commenced Auction 73 in
which several licenses in the Upper 700 MHz band were available for
licensing: 12 Regional Economic Area Grouping licenses in the C Block,
and one nationwide license in the D Block. The auction concluded on
March 18, 2008, with 3 winning bidders claiming very small business
status (those with attributable average annual gross revenues that do
not exceed $15 million for the preceding three years) and winning five
licenses.
30. 700 MHz Guard Band Licensees. In 2000, in the 700 MHz Guard
Band Order, the Commission adopted size standards for ``small
businesses'' and ``very small businesses'' for purposes of determining
their eligibility for special provisions such as bidding credits and
installment payments. A small business in this service is an entity
that, together with its affiliates and controlling principals, has
average gross revenues not exceeding $40 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 $15 million for the preceding
three years. SBA approval of these definitions is not required. An
auction of 52 Major Economic Area licenses commenced on September 6,
2000, and closed on September 21, 2000. 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.
31. Air-Ground Radiotelephone Service. The Commission has
previously used the SBA's small business size standard applicable to
Wireless Telecommunications Carriers (except Satellite), i.e., an
entity employing no more than 1,500 persons. There are approximately
100 licensees in the Air-Ground Radiotelephone Service, and under that
definition, we estimate that almost all of them qualify as small
entities under the SBA definition. For purposes of assigning Air-Ground
Radiotelephone Service licenses through competitive bidding, the
Commission has defined ``small business'' as an entity that, together
with controlling interests and affiliates, has average annual gross
revenues for the preceding three years not exceeding $40 million. A
``very small business'' is defined as an entity that, together with
controlling interests and affiliates, has average annual gross revenues
for the preceding three years not exceeding $15 million. These
definitions were approved by the SBA. In May 2006, the Commission
completed an auction of nationwide commercial Air-Ground Radiotelephone
Service licenses in the 800 MHz band (Auction No. 65). On June 2, 2006,
the auction closed with two winning bidders winning two Air-Ground
Radiotelephone Services licenses. Neither of the winning bidders
claimed small business status.
32. AWS Services (1710-1755 MHz and 2110-2155 MHz bands (AWS-1);
1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz and 2175-2180 MHz bands
(AWS-2); 2155-2175 MHz band (AWS-3)). For the AWS-1 bands, the
Commission has defined a ``small business'' as an entity with average
annual gross revenues for the preceding three years not exceeding $40
million, and a ``very small business'' as an entity with average annual
gross revenues for the preceding three years not exceeding $15 million.
For AWS-2 and AWS-3, although we do not know for certain which entities
are likely to apply for these frequencies, we note that the AWS-1 bands
are comparable to those used for cellular service and personal
communications service. The Commission has not yet adopted size
standards for the AWS-2 or AWS-3 bands but proposes to treat both AWS-2
and AWS-3 similarly to broadband PCS service and AWS-1 service due to
the comparable capital requirements and other factors, such as issues
involved in relocating incumbents and developing markets, technologies,
and services.
33. 3650-3700 MHz band. In March 2005, the Commission released a
Report and Order and Memorandum Opinion and Order that provides for
nationwide, non-exclusive licensing of terrestrial operations,
utilizing contention-based technologies, in the 3650 MHz band (i.e.,
3650-3700 MHz). As of September 2009, more than 1,080 licenses have
been granted and more than 4,870 sites have been registered. The
Commission has not developed a definition of small entities applicable
to 3650-3700 MHz band nationwide, non-exclusive licensees. However, we
estimate that the majority of these licensees are Internet Access
Service Providers (ISPs) and that most of those licensees are small
businesses.
[[Page 62659]]
34. Fixed Microwave Services. Microwave services include common
carrier, private-operational fixed, and broadcast auxiliary radio
services. They also include the Local Multipoint Distribution Service
(LMDS), the Digital Electronic Message Service (DEMS), and the 24 GHz
Service, where licensees can choose between common carrier and non-
common carrier status. At present, there are approximately 36,708
common carrier fixed licensees and 59,291 private operational-fixed
licensees and broadcast auxiliary radio licensees in the microwave
services. There are approximately 135 LMDS licensees, three DEMS
licensees, and three 24 GHz licensees. The Commission has not yet
defined a small business with respect to microwave services. For
purposes of the IRFA, we will use the SBA's definition applicable to
Wireless Telecommunications Carriers (except satellite)--i.e., an
entity with no more than 1,500 persons. Under the present and prior
categories, the SBA has deemed a wireless business to be small if it
has 1,500 or fewer employees. For the category of Wireless
Telecommunications Carriers (except Satellite), preliminary data for
2007 show that there were 11,927 firms operating that year. While the
Census Bureau has not released data on the establishments broken down
by number of employees, we note that the Census Bureau lists total
employment for all firms in that sector at 281,262. Since all firms
with fewer than 1,500 employees are considered small, given the total
employment in the sector, we estimate that the vast majority of firms
using microwave services are small. We note that the number of firms
does not necessarily track the number of licensees. We estimate that
virtually all of the Fixed Microwave licensees (excluding broadcast
auxiliary licensees) would qualify as small entities under the SBA
definition.
35. Broadband Radio Service and Educational Broadband Service.
Broadband Radio Service systems, previously referred to as Multipoint
Distribution Service (MDS) and Multichannel Multipoint Distribution
Service (MMDS) systems, and ``wireless cable,'' transmit video
programming to subscribers and provide two-way high speed data
operations using the microwave frequencies of the Broadband Radio
Service (BRS) and Educational Broadband Service (EBS) (previously
referred to as the Instructional Television Fixed Service (ITFS)). In
connection with the 1996 BRS auction, the Commission established a
small business size standard as an entity that had annual average gross
revenues of no more than $40 million in the previous three calendar
years. The BRS 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. BRS also
includes licensees of stations authorized prior to the auction. At this
time, we estimate that of the 61 small business BRS auction winners, 48
remain small business licensees. In addition to the 48 small businesses
that hold BTA authorizations, there are approximately 392 incumbent BRS
licensees that are considered small entities. After adding the number
of small business auction licensees to the number of incumbent
licensees not already counted, we find that there are currently
approximately 440 BRS licensees that are defined as small businesses
under either the SBA or the Commission's rules.
36. In addition, the SBA's Cable Television Distribution Services
small business size standard is applicable to EBS. There are presently
2,436 EBS licensees. All but 100 of these licenses are held by
educational institutions. Educational institutions are included in this
analysis as small entities. Thus, we estimate that at least 2,336
licensees are small businesses. Since 2007, Cable Television
Distribution Services have been defined within the broad economic
census category of Wired Telecommunications Carriers; that category is
defined as follows: ``This industry comprises establishments primarily
engaged in operating and/or providing access to transmission facilities
and infrastructure that they own and/or lease for the transmission of
voice, data, text, sound, and video using wired telecommunications
networks. Transmission facilities may be based on a single technology
or a combination of technologies.'' The SBA has developed a small
business size standard for this category, which is: All such firms
having 1,500 or fewer employees. To gauge small business prevalence for
these cable services we must, however, use the most current census data
that are based on the previous category of Cable and Other Program
Distribution and its associated size standard; that size standard was:
All such firms having $13.5 million or less in annual receipts.
According to Census Bureau data for 2002, there were a total of 1,191
firms in this previous category that operated for the entire year. Of
this total, 1,087 firms had annual receipts of under $10 million, and
43 firms had receipts of $10 million or more but less than $25 million.
Thus, the majority of these firms can be considered small.
5. Satellite Service Providers
37. Satellite Telecommunications Providers. Two economic census
categories address the satellite industry. The first category has a
small business size standard of $15 million or less in average annual
receipts, under SBA rules. The second has a size standard of $25
million or less in annual receipts. The most current Census Bureau data
in this context, however, are from the (last) economic census of 2002,
and we will use those figures to gauge the prevalence of small
businesses in these categories.
38. The category of Satellite Telecommunications ``comprises
establishments primarily engaged in providing telecommunications
services to other establishments in the telecommunications and
broadcasting industries by forwarding and receiving communications
signals via a system of satellites or reselling satellite
telecommunications.'' For this category, Census Bureau data for 2002
show that there were a total of 371 firms that operated for the entire
year. Of this total, 307 firms had annual receipts of under $10
million, and 26 firms had receipts of $10 million to $24,999,999.
Consequently, we estimate that the majority of Satellite
Telecommunications firms are small entities that might be affected by
our action.
39. The second category of All Other Telecommunications comprises,
inter alia, ``establishments primarily engaged in providing specialized
telecommunications services, such as satellite tracking, communications
telemetry, and radar station operation. This industry also includes
establishments primarily engaged in providing satellite terminal
stations and associated facilities connected with one or more
terrestrial systems and capable of transmitting telecommunications to,
and receiving telecommunications from, satellite systems.'' For this
category, Census Bureau data for 2002 show that there were a total of
332 firms that operated for the entire year. Of this total, 303 firms
had annual receipts of under $10 million and 15 firms had annual
receipts of $10 million to $24,999,999. Consequently, we estimate that
the majority of All Other Telecommunications firms are small entities
that might be affected by our action.
6. Cable Service Providers
40. Because section 706 requires us to monitor the deployment of
broadband
[[Page 62660]]
regardless of technology or transmission media employed, we anticipate
that some broadband service providers may not provide telephone
service. Accordingly, we describe below other types of firms that may
provide broadband services, including cable companies, MDS providers,
and utilities, among others.
41. Cable and Other Program Distributors. Since 2007, these
services have been defined within the broad economic census category of
Wired Telecommunications Carriers; that category is defined as follows:
``This industry comprises establishments primarily engaged in operating
and/or providing access to transmission facilities and infrastructure
that they own and/or lease for the transmission of voice, data, text,
sound, and video using wired telecommunications networks. Transmission
facilities may be based on a single technology or a combination of
technologies.'' The SBA has developed a small business size standard
for this category, which is: All such firms having 1,500 or fewer
employees. To gauge small business prevalence for these cable services
we must, however, use current census data that are based on the
previous category of Cable and Other Program Distribution and its
associated size standard; that size standard was: All such firms having
$13.5 million or less in annual receipts. According to Census Bureau
data for 2002, there were a total of 1,191 firms in this previous
category that operated for the entire year. Of this total, 1,087 firms
had annual receipts of under $10 million, and 43 firms had receipts of
$10 million or more but less than $25 million. Thus, the majority of
these firms can be considered small.
42. Cable Companies and Systems. The Commission has also developed
its own small business size standards, for the purpose of cable rate
regulation. Under the Commission's rules, a ``small cable company'' is
one serving 400,000 or fewer subscribers, nationwide. Industry data
indicate that, of 1,076 cable operators nationwide, all but eleven are
small under this size standard. In addition, under the Commission's
rules, a ``small system'' is a cable system serving 15,000 or fewer
subscribers. Industry data indicate that, of 7,208 systems nationwide,
6,139 systems have under 10,000 subscribers, and an additional 379
systems have 10,000-19,999 subscribers. Thus, under this second size
standard, most cable systems are small.
43. Cable System Operators. 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 United States and is not affiliated with any entity
or entities whose gross annual revenues in the aggregate exceed
$250,000,000.'' The Commission has determined that an operator serving
fewer than 677,000 subscribers shall be deemed a small operator, if its
annual revenues, when combined with the total annual revenues of all
its affiliates, do not exceed $250 million in the aggregate. Industry
data indicate that, of 1,076 cable operators nationwide, all but ten
are small under this size standard. We note that the Commission neither
requests nor collects information on whether cable system operators are
affiliated with entities whose gross annual revenues exceed $250
million, and therefore we are unable to estimate more accurately the
number of cable system operators that would qualify as small under this
size standard.
7. Electric Power Generators, Transmitters, and Distributors
44. Electric Power Generators, Transmitters, and Distributors. The
Census Bureau defines an industry group comprised of ``establishments,
primarily engaged in generating, transmitting, and/or distributing
electric power. Establishments in this industry group may perform one
or more of the following activities: (1) Operate generation facilities
that produce electric energy; (2) operate transmission systems that
convey the electricity from the generation facility to the distribution
system; and (3) operate distribution systems that convey electric power
received from the generation facility or the transmission system to the
final consumer.'' The SBA has developed a small business size standard
for firms in this category: ``A firm is small if, including its
affiliates, it is primarily engaged in the generation, transmission,
and/or distribution of electric energy for sale and its total electric
output for the preceding fiscal year did not exceed 4 million megawatt
hours.'' According to Census Bureau data for 2002, there were 1,644
firms in this category that operated for the entire year. Census data
do not track electric output and we have not determined how many of
these firms fit the SBA size standard for small, with no more than 4
million megawatt hours of electric output. Consequently, we estimate
that 1,644 or fewer firms may be considered small under the SBA small
business size standard.
D. Description of Projected Reporting, Recordkeeping, and Other
Compliance Requirements for Small Entities
45. As indicated above, the Internet's legacy of openness and
transparency has been critical to its success as an engine for
creativity, innovation, and economic development. To help preserve this
fundamental character of the Internet, the NPRM proposes a transparency
principle that may impose a reporting, recordkeeping, or other
compliance burden on some small entities. We do not attempt here to
provide an estimate in terms of potential burden hours. Rather, we
anticipate that commenters will provide the Commission with reliable
information on any costs and burdens on small entities.
E. Steps Taken To Minimize the Significant Economic Impact on Small
Entities, and Significant Alternatives Considered
46. 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. While we have yet to describe any significant alternatives,
we expect to consider all of these factors when we have received
substantive comment from the public and potentially affected entities.
47. The open and transparent Internet has been a launching pad for
innumerable creative and entrepreneurial ventures and enabled
businesses small and large, wherever located, to reach customers around
the globe. As discussed above, the NPRM seeks comment on a variety of
issues relating to preserving this openness and transparency, including
the codification of the four existing Internet principles, the
codification of additional nondiscrimination and transparency
principles, and how, to what extent, and when the principles should
apply to wireless Internet access service providers. In issuing this
NPRM, the Commission is attempting to preserve the historically open
architecture that has enabled the Internet to become a platform for
commerce and innovation that it equally accessible to the new
[[Page 62661]]
entrant and the more established enterprise, without imposing
unnecessary burdens on ISPs, including those that are small entities.
We anticipate that the record will suggest alternative ways in which
the Commission could increase the overall benefits for, and lessen the
overall burdens on, small entities.
F. Federal Rules That May Duplicate, Overlap, or Conflict With the
Proposed Rules
48. None.
Procedural Matters
Ex Parte Presentations. The rulemaking this NPRM initiates shall be
treated as a ``permit-but-disclose'' proceeding in accordance with the
Commission's ex parte rules. Persons making oral ex parte presentations
are reminded that memoranda summarizing the presentations must contain
summaries of the substance of the presentations and not merely a
listing of the subjects discussed. More than a one- or two-sentence
description of the views and arguments presented generally is required.
Other requirements pertaining to oral and written presentations are set
forth in section 1.1206(b) of the Commission's rules.
Parties should send a copy of their filings to the Competition
Policy Division, Wireline Competition Bureau, Federal Communications
Commission, Room 5-C140, 445 12th Street, SW., Washington, DC 20554, or
by e-mail to [email protected]. Parties shall also serve one copy with
the Commission's copy contractor, Best Copy and Printing, Inc. (BCPI),
Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554,
202-488-5300, or via e-mail to [email protected].
Paperwork Reduction Act
This document contains proposed new information collection
requirements. The Commission, as part of its continuing effort to
reduce paperwork burdens, invites the general public and the Office of
Management and Budget (OMB) to comment on the information collection
requirements contained in this document, as required by the Paperwork
Reduction Act of 1995. In addition, pursuant to the Small Business
Paperwork Relief Act of 2002, we seek specific comment on how we might
``further reduce the information collection burden for small business
concerns with fewer than 25 employees.''
Ordering Clauses
Accordingly, it is ordered that, pursuant to sections 1, 2, 4(i)-
(j), 201(b), 230, 257, 303(r), and 503 of the Communications Act of
1934, as amended, and section 706 of the Telecommunications Act of
1996, as amended, 47 U.S.C. 151, 152, 154(i)-(j), 201(b), 230, 257,
303(r), 503, 1302, this NPRM of Proposed Rulemaking is adopted it is
further ordered that the Commission's Consumer and Governmental Affairs
Bureau, Reference Information Center, SHALL SEND a copy of this NPRM,
including the Initial Regulatory Flexibility Analysis, to the Chief
Counsel for Advocacy of the Small Business Administration.
List of Subjects in 47 CFR Part 8
Cable television, Communications, Common carriers, Communications
common carriers, Radio, Satellites, Telecommunications, Telephone.
Federal Communications Commission.
Marlene H. Dortch,
Secretary.
For the reasons stated in the preamble, the Federal Communications
Commission proposes to add Part 8 of Title 47 of the Code of Federal
Regulations as set forth below:
PART 8--PRESERVING THE OPEN INTERNET
Sec.
8.1 Purpose and scope.
8.3 Definitions.
8.5 Content.
8.7 Applications and services.
8.9 Devices.
8.11 Competitive options.
8.13 Nondiscrimination.
8.15 Transparency.
8.17 Reasonable network management
8.19 Law enforcement.
8.21 Public safety and homeland and national security.
8.23 Other laws.
Authority: 47 U.S.C. 151, 152, 154(i)-(j), 201(b), 230, 257,
303(r), 503, 1302.
Sec. 8.1 Purpose and scope.
The purpose of these rules is to preserve the open Internet. These
rules apply to broadband Internet access service providers only to the
extent they are providing broadband Internet access services.
Sec. 8.3 Definitions.
Internet. The system of interconnected networks that use the
Internet Protocol for communication with resources or endpoints
reachable, directly or through a proxy, via a globally unique Internet
address assigned by the Internet Assigned Numbers Authority.
Broadband Internet access. Internet Protocol data transmission
between an end user and the Internet. For purposes of this definition,
dial-up access requiring an end user to initiate a call across the
public switched telephone network to establish a connection shall not
constitute broadband Internet access.
Broadband Internet access service. Any communication service by
wire or radio that provides broadband Internet access directly to the
public, or to such classes of users as to be effectively available
directly to the public.
Reasonable network management. Reasonable network management
consists of:
(1) Reasonable practices employed by a provider of broadband
Internet access service to:
(i) Reduce or mitigate the effects of congestion on its network or
to address quality-of-service concerns;
(ii) Address traffic that is unwanted by users or harmful;
(iii) Prevent the transfer of unlawful content; or
(iv) Prevent the unlawful transfer of content; and
(2) Other reasonable network management practices.
Sec. 8.5 Content.
Subject to reasonable network management, a provider of broadband
Internet access service may not prevent any of its users from sending
or receiving the lawful content of the user's choice over the Internet.
Sec. 8.7 Applications and services.
Subject to reasonable network management, a provider of broadband
Internet access service may not prevent any of its users from running
the lawful applications or using the lawful services of the user's
choice.
Sec. 8.9 Devices.
Subject to reasonable network management, a provider of broadband
Internet access service may not prevent any of its users from
connecting to and using on its network the user's choice of lawful
devices that do not harm the network.
Sec. 8.11 Competitive options.
Subject to reasonable network management, a provider of broadband
Internet access service may not deprive any of its users of the user's
entitlement to competition among network providers, application
providers, service providers, and content providers.
Sec. 8.13 Nondiscrimination.
Subject to reasonable network management, a provider of broadband
Internet access service must treat lawful content, applications, and
services in a nondiscriminatory manner.
[[Page 62662]]
Sec. 8.15 Transparency.
Subject to reasonable network management, a provider of broadband
Internet access service must disclose such information concerning
network management and other practices as is reasonably required for
users and content, application, and service providers to enjoy the
protections specified in this part.
Sec. 8.19 Law enforcement.
Nothing in this part supersedes any obligation a provider of
broadband Internet access service may have--or limits its ability--to
address the needs of law enforcement, consistent with applicable law.
Sec. 8.21 Public safety and homeland and national security.
Nothing in this part supersedes any obligation a provider of
broadband Internet access service may have--or limits its ability--to
deliver emergency communications or to address the needs of public
safety or national or homeland security authorities, consistent with
applicable law.
Sec. 8.23 Other laws.
Nothing in this part is intended to prevent a provider of broadband
Internet access service from complying with other laws.
[FR Doc. E9-28062 Filed 11-27-09; 8:45 am]
BILLING CODE 6712-01-P