Mozilla Corporation v. FCC

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued February 1, 2019 Decided October 1, 2019

No. 18-1051

MOZILLA CORPORATION,

PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION AND UNITED

STATES OF AMERICA,

RESPONDENTS

CITY AND COUNTY OF SAN FRANCISCO, ET AL.,

INTERVENORS

Consolidated with 18-1052, 18-1053, 18-1054, 18-1055,

18-1056, 18-1061, 18-1062, 18-1064, 18-1065, 18-1066,

18-1067, 18-1068, 18-1088, 18-1089, 18-1105

On Petitions for Review of an Order of

the Federal Communications Commission

Pantelis Michalopoulos and Kevin Kendrick Russell

argued the causes for non-government petitioners. With them

on the joint briefs were Cynthia L. Taub, Markham C.

Erickson, Michael A. Cheah, Brian M. Willen, Donald J.

Evans, Sarah J. Morris, Matthew F. Wood, Colleen Boothby,

James N. Horwood, Tillman L. Lay, Jeffrey M. Bayne,

2

Katherine J. O= Konski, Andrew Jay Schwartzman, Harold

J. Feld, and Lisa A. Hayes. Keenan P. Adamchak and Kevin

S. Bankston, entered appearances.

Stephanie Weiner argued the cause for intervenors Internet

Association et al. et al. in support of petitioners. With her on

the briefs were Christopher J. Wright, Scott Blake Harris, E.

Austin Bonner, Matt Schruers, John A. Howes, Jr., and

Anthony R. Segall. Maria K. Myers entered an appearance.

Danielle L. Goldstein and Steven C. Wu, Deputy Solicitor

General, Office of the Attorney General for the State of New

York, argued the causes for government petitioners. With them

on the briefs were Barbara D. Underwood, Attorney General

at the time the brief was filed, Office of the Attorney General

for the State of New York, Arocles Aguilar, Helen M.

Mickiewicz, Lisa-Marie G. Clark, Kimberly Lippi, Ester

Murdukhayeva, Assistant Solicitor General, Office of the

Attorney General for the State of New York, James R.

Williams, Greta Hansen, Xavier Becerra, Attorney General,

Office of the Attorney General for the State of California,

Sarah E. Kurtz, Deputy Attorney General, Nicklas A. Akers,

Senior Assistant Attorney General, George Jepsen, Attorney

General, Office of the Attorney General for the State of

Connecticut, Jonathan J. Blake, Assistant Attorney General,

Jeffrey T. Pearlman, Phillip R. Malone, Matthew P. Denn,

Attorney General, Office of the Attorney General for the

State of Delaware, Christian D. Wright, Director,

Consumer Protection, Thomas J. Miller, Attorney General,

Office of the Attorney General for the State of Iowa, Benjamin

E. Bellus, Assistant Attorney General, Russell A. Suzuki,

Attorney General at the time the brief was filed, Office of

the Attorney General for the State of Hawai=i, Clyde J.

Wadsworth, Solicitor General, Lisa Madigan, Attorney

General, Office of the Attorney General for the State of

Illinois, David Franklin, Solicitor General, Andrew G.

3

Beshear, Attorney General, Office of the Attorney General for

the Commonwealth of Kentucky, Maura Healey, Attorney

General, Office of the Attorney General for the

Commonwealth of Massachusetts, Jared Rinehimer, Assistant

Attorney General, Janet T. Mills, Attorney General at the time

the brief was filed, Office of the Attorney General for the State

of Maine, Brendan O=Neil, Assistant Attorney General, Brian

E. Frosh, Attorney General, Office of the Attorney General for

the State of Maryland, Richard L. Trumka, Jr., Assistant

Attorney General, Lori Swanson, Attorney General, Office of

the Attorney General for the State of Minnesota, Joseph C.

Meyer, Assistant Attorney General, Hector Balderas, Attorney

General, Office of the Attorney General for the State of New

Mexico, Tania Maestas, Deputy Attorney General, James M.

Hood, Attorney General, Office of the Attorney General for the

State of Mississippi, Crystal Utley Secoy, Special Assistant

Attorney, Gurbir S. Grewal, Attorney General, Office of the

Attorney General for the State of New Jersey, Jeremy M.

Feigenbaum, Assistant Attorney General, Joshua H. Stein,

Attorney General, Office of the Attorney General for the State

of North Carolina, Kevin Anderson, Senior Deputy Attorney

General, Peter Kilmartin, Attorney General, Office of the

Attorney General for the State of Rhode Island, Michael W.

Field, Assistant Attorney General, Ellen F. Rosenblum,

Attorney General, Office of the Attorney General for the State

of Oregon, Andrew Shull, Senior Assistant Attorney General,

Josh Shapiro, Attorney General, Office of the Attorney

General for the Commonwealth of Pennsylvania, Michael J.

Fischer, Chief Deputy Attorney General, Thomas J. Donovan,

Jr., Attorney General, Office of the Attorney General for the

State of Vermont, Christopher J. Curtis, Chief, Public

Protection Division, Karl A. Racine, Attorney General, Office

of the Attorney General for the District of Columbia, Loren L.

AliKhan, Solicitor General, Mark R. Herring, Attorney

General, Office of the Attorney General for the

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Commonwealth of Virginia, Samuel T. Towell, Deputy

Attorney General, Robert W. Ferguson, Attorney General,

Office of the Attorney General for the State of Washington,

Tiffany Lee, Assistant Attorney General, Dennis J. Herrera,

and William K. Sanders. Bryan C. Yee, Deputy Attorney

General, Office of the Attorney General for the State of

Hawai=i, Sarah E. Kurtz, Deputy Attorney General, Office of

the Attorney General for the State of California, Michael C.

Wertheimer, Assistant Attorney General, and John S. Story,

Attorney, Office of the Attorney General for the State of

Connecticut, Theresa C. Mueller, Jennifer M. Murphy, and

James B. Ramsey, entered appearances.

Christopher Jon Sprigman was on the brief for amici

curiae Members of Congress in support of petitioners.

Mitchell Stoltz and Corynne McSherry were on the brief

for amicus curiae Electronic Frontier Foundation in support of

petitioners.

Christopher T. Bavitz was on the brief for amicus curiae

Engine Advocacy in support of petitioners.

MacKenzie Fillow, Edward N. Siskel, Michael P. May, and

Karen L. Moynahan were on the brief for amici curiae The City

of New York and 27 other local governments, mayors and

municipal organizations in support of petitioners.

Allen S. Hammond, IV was on the brief for amici curiae

Professors of Administrative, Communications, Energy,

Antitrust, and Contract Law and Policy in support of

petitioners.

Jessica L. Ellsworth and Matthew Higgins were on the

brief for amici curaie The American Council on Education and

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19 other education and library associations in support of

petitioners.

Henry Goldberg and Devendra T. Kumar were on the brief

for amicus curiae eBay Inc. in support of petitioners.

Adrienne E. Fowler was on the brief for amicus curiae

Twilio Inc. in support of petitioner.

Andrew Jay Schwartzman and James T. Graves were on

the brief for amicus curiae Consumer Reports in support of

petitioners.

Thomas H. Vidal was on the brief for amici curiae

Professors Scott Jordan and Jon Peha in support of petitioners.

Michael J. Burstein was on the brief for amici curiae

Professors of Communications Law in support of petitioners.

Paul Goodman and Yosef Getachew were on the brief for

amici curiae Common Cause, et al. in support of petitioners

and vacation of the order.

William Michael Cunningham, pro se, was on the brief for

amicus curiae William Michael Cunningham in support of the

public interest.

Thomas M. Johnson Jr, General Counsel, Federal

Communications Commission, argued the cause for

respondents. With him on the brief were Kristen C. Limarzi

and Nickolai G. Levin, Attorneys, U.S. Department of Justice,

David M. Gossett, Deputy General Counsel, Federal

Communications Commission, Jacob M. Lewis, Associate

General Counsel, and James M. Carr and Scott M. Noveck,

Counsel. Robert J. Wiggers, Attorney, U.S. Department of

6

Justice, and Richard K. Welch, Deputy Associate Counsel,

Federal Communications Commission, entered appearances.

Jonathan E. Nuechterlein argued the cause for ISP

intervenors. On the brief were Michael K. Kellogg, Scott H.

Angstreich, Helgi C. Walker, Andrew G.I. Kilberg, Miguel A.

Estrada, Matthew A. Brill, Matthew T. Murchison, Jeffrey A.

Lamken, and Stephen E. Coran. C. Frederick Beckner, III,

Rick Chessen, Kellam M. Conover, Neal M. Goldberg,

Theodore B. Olson, and Michael S. Schooler entered

appearances.

Ken Paxton, Attorney General, Office of the Attorney

General for the State of Texas, Kyle D. Hawkins, Solicitor

General, and John C. Sullivan, Assistant Solicitor General,

were on the brief for amici curiae The States of Texas, et al. in

support of respondents.

Lawrence J. Spiwak was on the brief for amicus curiae

Phoenix Center for Advanced Legal and Economic Public

Policy Studies in support of respondents.

Tara M. Corvo and Jonathan Markman were on the brief

for amici curiae Richard Bennett, et al. in support of

respondents.

Thomas R. McCarthy was on the brief for amici curiae

Washington Legal Foundation, et al. in support of respondents.

John D. Seiver, Daniel P. Reing, and Sarah Oh were on

the brief for amicus curiae The Technology Policy Institute in

support of respondents.

Charles Kennedy and James Dunstan were on the brief for

amicus curiae TechFreedom in support of respondents.

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Arthur J. Burke was on the brief for amicus curiae

Information Technology and Innovation Foundation in support

of respondents.

Robert N. Weiner was on the brief for amici curiae The

Georgetown Center for Business and Public Policy and Nine

Prominent Economists and Scholars in support of respondents.

Leonid Goldstein, pro se, was on the brief as an intervenor

in support of respondents.

John P. Elwood, Matthew X. Etchemendy, Peter C.

Tolsdorf, Kevin W. Brooks, Dileep S. Srihari, and Daryl

Joseffer were on the brief for amici curiae The National

Association of Manufacturers, et al. in support of respondents.

David P. Murray was on the brief for amici curiae The

International Center for Law and Economics and Participating

Scholars in support of respondents.

Robert G. Kirk was on the brief for amicus curiae Roslyn

Layton in support of respondents.

J. Wade Lindsay was on the brief for amicus curiae Tech

Knowledge in support of respondents.

Christopher S. Yoo was on the brief for amicus curiae

Christopher S. Yoo in support of respondents.

Andrew Grimm was on the briefs for intervenor Digital

Justice Foundation, Inc. in support of neither party.

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Before: MILLETT and WILKINS, Circuit Judges, and

WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed PER CURIAM.

Concurring opinion filed by Circuit Judge MILLETT.

Concurring opinion filed by Circuit Judge WILKINS.

Opinion concurring in part and dissenting in part filed by

Senior Circuit Judge WILLIAMS.

TABLE OF CONTENTS

I. Broadband Internet Classification .................................. 13

A. The Supreme Court’s Decision in Brand X ................. 16

B. DNS and Caching in the 2018 Order ........................... 19

C. Objections to the Classification.................................... 21

1. “Walled Garden” Reading of Brand X ................. 21

2. “Telecommunications Management” Exception ... 22

3. Adjunct-to-Basic Precedent .................................. 32

4. Functional Integration ........................................... 40

II. Mobile Broadband Classification................................... 46

A. The 2018 Order’s Provisions ....................................... 46

B. Objections to the Classification.................................... 49

1. Meaning of “Public Switched Network” .............. 50

2. Whether Mobile Broadband Is an

“Interconnected Service” ...................................... 54

3. Whether Mobile Broadband Is the “Functional

Equivalent” of a Commercial Mobile Service...... 62

III. Section 706 Authority .................................................... 66

9

IV. Section 257 and the 2018 Order’s

Transparency Requirements ........................................... 68

V. Arbitrary and Capricious Challenges ............................. 73

A. Effects on Investment and Innovation ......................... 74

B. Harms to Edge Providers and Consumers ................... 85

1. Reliance on the Transparency Rule ...................... 87

2. Reliance on Competition ....................................... 88

3. Reliance on Antitrust and Consumer

Protection Laws ..................................................... 91

C. Public Safety ................................................................. 93

D. Reliance Interests ........................................................ 100

E. Pole Attachments ........................................................ 104

F. Lifeline Program ......................................................... 109

G. Cost-Benefit Analysis................................................. 113

H. Data Roaming Rates ................................................... 119

I. Procedural Challenges ................................................ 120

VI. Preemption ................................................................... 121

A. Express and Ancillary Authority................................ 122

B. The Commission’s Asserted Sources of Authority ... 126

1. Impossibility Exception....................................... 126

2. Federal Policy of Nonregulation ......................... 130

3. Case Precedent..................................................... 133

C. Conflict Preemption.................................................... 135

VII. Conclusion ................................................................... 145

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PER CURIAM: In 2018, the Federal Communications

Commission adopted an order classifying broadband Internet

access service as an information service under Title I of the

Communications Act of 1934, as amended by the

Telecommunications Act of 1996, Pub. L. 104–104, 110 Stat

56 (“the Act”). See In re Restoring Internet Freedom, 33 FCC

Rcd. 311 (2018) (“2018 Order”). In so doing, the agency

pursued a market-based, “light-touch” policy for governing the

Internet and departed from its 2015 order that had imposed

utility-style regulation under Title II of the Act.

Petitioners––an array of Internet companies, non-profits,

state and local governments, and other entities––bring a host of

challenges to the 2018 Order. We find their objections

unconvincing for the most part, though we vacate one portion

of the 2018 Order and remand for further proceedings on three

discrete points.

The 2018 Order and today’s litigation represent yet

another iteration of a long-running debate regarding the

regulation of the Internet. We rehearsed much of this complex

history in United States Telecom Association v. FCC, 825 F.3d

674, 689–697 (D.C. Cir. 2016) (“USTA”), and see no need to

recapitulate here what was so well and thoroughly said there.

In the interest of reader-friendliness, though, we briefly review

certain highlights necessary to understand this opinion.

As relevant here, the 1996 Telecommunications Act

creates two potential classifications for broadband Internet:

“telecommunications services” under Title II of the Act and

“information services” under Title I. These similar-sounding

terms carry considerable significance: Title II entails common

carrier status, see 47 U.S.C. § 153(51) (defining

“telecommunications carrier”), and triggers an array of

statutory restrictions and requirements (subject to forbearance

11

at the Commission’s election). For example, Title II

“declar[es] * * * unlawful” “any * * * charge, practice,

classification or regulation that is unjust or unreasonable.” Id.

§ 201(b). By contrast, “information services” are exempted

from common carriage status and, hence, Title II regulation.

An analogous set of classifications applies to mobile

broadband: A “commercial mobile service” is subject to

common carrier status, see 47 U.S.C. § 332(c)(1), whereas a

“private mobile service” is not, see id. § 332(c)(2).

The Commission’s authority under the Act includes

classifying various services into the appropriate statutory

categories. See National Cable & Telecomms. Ass’n v. Brand

X Internet Servs., 545 U.S. 967, 980–981 (2005). In the years

since the Act’s passage, the Commission has exercised its

classification authority with some frequency.

Initially, in 1998, the Commission classified broadband

over phone lines as a “telecommunications service.” See In re

Deployment of Wireline Services Offering Advanced

Telecommunications Capability, 13 FCC Rcd. 24012 (1998).

Just four years later, though, the Commission determined

that cable broadband was an “information service,” see In re

Inquiry Concerning High-Speed Access to the Internet over

Cable and Other Facilities (“Cable Modem Order”), 17 FCC

Rcd. 4798 (2002), a choice that the Supreme Court upheld in

Brand X, 545 U.S. 967. The agency then applied a similar

classification to wireline and wireless broadband. See In re

Appropriate Framework for Broadband Access to the Internet

over Wireline Facilities, 20 FCC Rcd. 14853 (2005) (“2005

Wireline Broadband Order”); In re Appropriate Regulatory

Treatment for Broadband Access to the Internet over Wireless

Networks, 22 FCC Rcd. 5901 (2007) (“Wireless Broadband

Order”).

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But in 2015 the Commission took the view that broadband

Internet access is, in fact, a “telecommunications service” and

that mobile broadband is a “commercial mobile service.” See

In re Protecting and Promoting the Open Internet, 30 FCC

Rcd. 5601 (2015) (“Title II Order”). In USTA, this court

upheld that classification as reflecting a reasonable

interpretation of the statute under Chevron’s second step. See

825 F.3d at 701–706, 713–724; see also Chevron, U.S.A., Inc.

v. Natural Res. Def. Council, 467 U.S. 837 (1984).

Once again, the Commission has switched its tack. In

2017, the Commission issued a notice of proposed rulemaking

seeking to revert to its pre-2015 position, In re Restoring

Internet Freedom, 32 FCC Rcd. 4434 (2017), and released the

final order at issue in this case in January 2018.

The 2018 Order accomplishes a number of objectives.

First, and most importantly, it classifies broadband Internet as

an “information service,” see 2018 Order ¶¶ 26–64, and

mobile broadband as a “private mobile service,” see id. ¶¶ 65–

85. Second, relying on Section 257 of the Act (located in Title

II but written so as to apply to Titles I through VI), the

Commission adopts transparency rules intended to ensure that

consumers have adequate data about Internet Service

Providers’ network practices. See id. ¶¶ 209–38. Third, the

Commission undertakes a cost-benefit analysis, concluding

that the benefits of a market-based, “light-touch” regime for

Internet governance outweigh those of common carrier

regulation under Title II, see id. ¶¶ 304–323, resting heavily on

the combination of the transparency requirements imposed by

the Commission under Section 257 with enforcement of

existing antitrust and consumer protection laws, see id. ¶¶ 140–

154. The Commission likewise finds that the burdens of the

Title II Order’s conduct rules exceed their benefits. See id.

¶¶ 246–266.

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We uphold the 2018 Order, with two exceptions. First, the

Court concludes that the Commission has not shown legal

authority to issue its Preemption Directive, which would have

barred states from imposing any rule or requirement that the

Commission “repealed or decided to refrain from imposing” in

the Order or that is “more stringent” than the Order. 2018

Order ¶ 195. The Court accordingly vacates that portion of the

Order. Second, we remand the Order to the agency on three

discrete issues: (1) The Order failed to examine the

implications of its decisions for public safety; (2) the Order

does not sufficiently explain what reclassification will mean

for regulation of pole attachments; and (3) the agency did not

adequately address Petitioners’ concerns about the effects of

broadband reclassification on the Lifeline Program.

I. Broadband Internet Classification

The central issue before us is whether the Commission

lawfully applied the statute in classifying broadband Internet

access service as an “information service.” We approach the

issue through the lens of the Supreme Court’s decision in

Brand X, which upheld the Commission’s 2002 refusal to

classify cable broadband as a “telecommunications service.”

545 U.S. at 974. The Commission’s classification of cable

modem as an “information service” was not challenged in

Brand X, see id. at 987, but, given that “telecommunications

service” and “information service” have been treated as

mutually exclusive by the Commission since the late 1990s,

see, e.g., 2018 Order ¶¶ 53, 62 & n.239; Title II Order ¶ 385,

a premise Petitioners do not challenge, see Mozilla Br. 24, we

view Brand X as binding precedent in this case.

We start, of course, with the statutory definition. Section

47 U.S.C. § 153(24) reads:

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The term “information service” means the offering of

a capability for generating, acquiring, storing,

transforming, processing, retrieving, utilizing, or

making available information via telecommunications

* * * but does not include any use of any such

capability for the management, control, or operation

of a telecommunications system or the management

of a telecommunications service.

The final clause is known as the “telecommunications

management” exception. The Act defines

“telecommunications service” (as distinct from

“telecommunications,” see id. § 153(50)), as follows:

The term “telecommunications service” means the

offering of telecommunications for a fee directly to

the public, or to such classes of users as to be

effectively available directly to the public, regardless

of the facilities used.

Id. § 153(53).

The Commission appears to make two arguments for its

classification. It states first that “broadband Internet access

service necessarily has the capacity or potential ability to be

used to engage in the activities within the information service

definition—‘generating, acquiring, storing, transforming,

processing, retrieving, utilizing, or making available

information via telecommunications,’” 2018 Order ¶ 30

(quoting 47 U.S.C. § 153(24)), and on that basis alone merits

an “information service” classification.

The Commission then goes on to say: “But even if

‘capability’ were understood as requiring more of the

information processing to be performed by the classified

service itself, we find that broadband Internet access service

15

meets that standard.” 2018 Order ¶ 33. As we will see, the

Commission regards this requirement as being met by specific

information-processing features that are, in its view,

functionally integrated with broadband service, particularly

Domain Name Service (“DNS”) and caching, about which

more later. (Petitioners themselves treat the Commission’s

DNS/caching argument as “an alternative ground” for the

Commission’s classification. Mozilla Reply Br. 21.)

Our review is governed by the familiar Chevron

framework in which we defer to an agency’s construction of an

ambiguous provision in a statute that it administers if that

construction is reasonable. See, e.g., American Elec. Power

Serv. Corp. v. FCC, 708 F.3d 183, 186 (D.C. Cir. 2013) (The

Chevron framework “means (within its domain) that a

‘reasonable agency interpretation prevails.’”) (quoting

Northern Nat. Gas Co. v. FERC, 700 F.3d 11, 14 (D.C. Cir.

2012)). By the same token, if “Congress has directly spoken

to an issue then any agency interpretation contradicting what

Congress has said would be unreasonable.” Entergy Corp. v.

Riverkeeper, Inc., 556 U.S. 208, 218 n.4 (2009).

At Chevron Step One, we ask “whether Congress has

directly spoken to the precise question at issue.” 467 U.S. at

842. Where “the intent of Congress is clear, that is the end of

the matter; for [we], as well as the agency, must give effect to

the unambiguously expressed intent of Congress.” Id. at 842–

843. But if “the statute is silent or ambiguous with respect to

the specific issue,” we proceed to Chevron Step Two, where

“the question for the court is whether the agency’s answer is

based on a permissible construction of the statute.” Id. at 843.

However, we do not apply Chevron reflexively, and we find

ambiguity only after exhausting ordinary tools of the judicial

craft. Cf. Kisor v. Wilkie, 139 S. Ct. 2400, 2414–2415 (2019).

16

All this of course proceeds in the shadow of Brand X, which

itself applied Chevron to a similar issue.

Applying these principles here, we hold that classifying

broadband Internet access as an “information service” based on

the functionalities of DNS and caching is “‘a reasonable policy

choice for the [Commission] to make’ at Chevron’s second

step.” Brand X, 545 U.S. at 997 (alteration in original) (quoting

Chevron, 467 U.S. at 845). As we said in USTA, “Our job is to

ensure that an agency has acted ‘within the limits of

[Congress’s] delegation’ of authority,” 825 F.3d at 697

(quoting Chevron, 467 U.S. at 865), and “we do not ‘inquire as

to whether the agency’s decision is wise as a policy matter;

indeed, we are forbidden from substituting our judgment for

that of the agency,’” id. (quoting Association of Am. Railroads

v. ICC, 978 F.2d 737, 740 (D.C. Cir. 1992)); see also United

States Telecom Ass’n v. FCC, 855 F.3d 381, 384 (D.C. Cir.

2017) (“[T]he [Brand X] Court made clear in its decision—

over and over—that the Act left the [classification] to the

agency’s discretion.” (Srinivasan, J., joined by Tatel, J.,

concurring in denial of rehearing en banc)).

A. The Supreme Court’s Decision in Brand X

Brand X held that, by virtue of the ambiguity of the word

“offering,” the FCC could permissibly choose not to classify

cable modem service as a “telecommunications service.”

Brand X, 545 U.S. at 973–974, 989–992. As to DNS and

caching, the Brand X Court endorsed the Commission’s

argument that those functionalities can be relied on to classify

cable modem service as an “information service.” Challengers

opposing the FCC had argued that when consumers “go[]

beyond” certain Internet services offered by cable modem

companies themselves—for example, beyond access to

proprietary e-mail and Web pages (commonly referred to as the

17

cable modem companies’ “walled gardens”)—the companies

were “offering” a “telecommunications service” rather than an

“information service.” Id. at 998. The Court rejected this

claim. It found that such a view “conflicts with the

Commission’s understanding of the nature of cable modem

service,” which the Court deemed “reasonable.” Id.; cf. 2018

Order ¶ 51. The Court explained that—when a user accesses

purely third-party content online—“he is equally using the

information service provided by the cable company that offers

him Internet access as when he accesses the company’s own

Web site, its e-mail service, or his personal Web page,” Brand

X, 545 U.S. at 999 (emphasis added), i.e., “walled garden”

services. Why so?

Brand X’s answer, as relevant here, lay in DNS and

caching. The argument proceeded in two steps—first, showing

that DNS and caching themselves can properly fall under the

“information service” rubric; second, showing that these

“information services” are sufficiently integrated with the

transmission element of broadband that it is reasonable to

classify cable modem service as an “information service.” See

Brand X, 545 U.S. at 999–1000.

As to the first step, the Court observed that “[a] user cannot

reach a third party’s Web site without DNS,” Brand X, 545

U.S. at 999, which “among other things, matches the Web page

addresses that end users type into their browsers (or ‘click’ on)

with the Internet Protocol (IP) addresses of the servers

containing the Web pages the users wish to access,” id. at 987.

It therefore saw it as “at least reasonable” to treat DNS itself

“as a ‘capability for acquiring * * * retrieving, utilizing, or

making available’ Web site addresses and therefore part of the

information service cable companies provide.” Id. at 999

(quoting 47 U.S.C. § 153(24)); see also id. at n.3 (rebutting

dissent’s claim that “DNS does not count as use of the

18

information-processing capabilities of Internet service”). The

Court applied a cognate analysis to caching, which “facilitates

access to third-party Web pages by offering consumers the

ability to store, or ‘cache’ popular content on local computer

servers,” id. at 999, “obviat[ing] the need for the end user to

download anew information from third-party Web sites each

time the consumer attempts to access them,” id. at 999–1000.

Thus the Court found “reasonable” the FCC’s position that

“subscribers can reach third-party Web sites via ‘the World

Wide Web, and browse their contents, [only] because their

service provider offers the capability for * * * acquiring,

[storing] * * * retrieving [and] utilizing * * * information.’”

Id. at 1000 (alterations in original) (some internal quotation

marks omitted) (quoting In re Federal-State Joint Bd. on

Universal Serv., 13 FCC Rcd. 11501, 11537–11538 ¶ 76

(1998) (“Stevens Report”)).

As to the second step, the Brand X Court endorsed the

FCC’s position that—because DNS and caching are

“inextricably intertwined” with high-speed transmission—it

was reasonable for the Commission not to treat the resulting

package as an “offering” of a standalone “telecommunications

service.” 545 U.S. at 978–979, 989–991; see Cable Modem

Order at 4823 ¶ 38 (“As currently provisioned, cable modem

service is a single, integrated service that enables the subscriber

to utilize Internet access service * * * .”). “[H]igh-speed

transmission used to provide cable modem service is a

functionally integrated component of [cable modem] service

because it transmits data only in connection with the further

processing of information and is necessary to provide Internet

service.” Brand X, 545 U.S. at 998 (emphasis added). DNS

and caching, in turn, are two examples of such “further

processing” integrated with the data transmission aspect of

cable modem service. “[A] consumer cannot purchase Internet

service without also purchasing a connection to the Internet and

19

the transmission always occurs in connection with information

processing,” id. at 992, in the form of (for example) DNS or

caching. Thus, according to the Supreme Court, the

Commission reasonably concluded that cable modem service

is not an offering of a standalone “telecommunications

service,” but, rather, an “information service”—which by

definition is offered “via telecommunications.” See id. at 989–

992; see also 2018 Order ¶ 52.

B. DNS and Caching in the 2018 Order

The reasoning in the 2018 Order tallies with the line of

argument in Brand X described above. See, e.g., 2018 Order

¶¶ 26, 34, 41, 51, 53, 54, 55 n.207, 57. The Commission’s

principal claim is that “ISPs offer end users the capability to

interact with information online * * * through a variety of

functionally integrated information processing components

that are part and parcel of the broadband Internet access service

offering itself”—including DNS and caching. Id. ¶ 33. The

Commission describes DNS and caching as “integrated

information processing capabilities offered as part of

broadband Internet access service to consumers today.”

Id. We hold that under Brand X this conclusion is reasonable.

We note that the 2018 Order alluded to several

“information processing functionalities inextricably

intertwined with the underlying service” besides DNS and

caching, such as “email, speed test servers, backup and support

services, geolocation-based advertising, data storage, parental

controls, unique programming content, spam protection, pop-

up blockers, instant messaging services, on-the-go access to

Wi-Fi hotspots, and various widgets, toolbars, and

applications.” 2018 Order ¶ 33 n.99. Although the 2018 Order

states that these “further support the ‘information service’

classification,” it did not find them “determinative,” id., and

20

mentioned them only briefly in a footnote. Thus we address

DNS and caching only.

In passages echoing Brand X, the Commission

characterized the essential roles of DNS and caching. As to

DNS, it observed that DNS is “indispensable to ordinary users

as they navigate the Internet.” 2018 Order ¶ 34 (quoting

AT&T Comments at 73, J.A. 189). “[T]he absence of ISP-

provided DNS would fundamentally change the online

experience for the consumer.” Id. This formulation is actually

a good deal more cautious than that of the Court in Brand X,

which declared that without DNS a “user cannot reach a third

party’s Web site.” 545 U.S. at 999. In fact users who know

the necessary IP addresses could enter them for each relevant

server. But the Commission and the Court (the latter more

emphatically) are making an undeniable pragmatic point—that

use of the Web would be nightmarishly cumbersome without

DNS.

As to caching, the Commission explained that it “provides

the capability to perform functions that fall within the

information service definition,” 2018 Order ¶ 41, including,

but not limited to, “enabl[ing] the user to obtain more rapid

retrieval of information through the network,” id. (quoting

Information Technology and Innovation Foundation (“ITIF”)

Comments at 13, WC Dkt. No. 17-108 (July 17, 2017)

(quoting, in turn, Title II Order ¶ 372)). Operating a caching

service entails running “complex algorithms to determine what

information to store where and in what format,” id. (quoting

ITIF Comments at 13), so that “caching involves storing and

retrieving capabilities required by the ‘information service’

definition,” id. Thus the Commission added technical detail

reinforcing the Brand X Court’s statements as to caching. See

545 U.S. at 999–1000.

21

The Commission then summarized these points, again in

terms resonating with those in which Brand X had endorsed the

2002 Cable Modem Order. It argued that “ISPs offer a single,

inextricably intertwined information service,” 2018 Order

¶ 49, based in part on the functionalities of DNS and caching.

It said that “all broadband Internet access services rely on DNS

and commonly also rely on caching by ISPs,” id. ¶ 48, and

contended that DNS and caching should be “understood as part

of a single, integrated information service offered by ISPs,” id.

¶ 50; see also id. ¶ 42. It then maintained, drawing on Brand

X, that “[w]here * * * a service involving transmission

inextricably intertwines that transmission with information

service capabilities—in the form of an integrated information

service—there cannot be ‘a “stand-alone” offering of

telecommunications * * * ,’” id. ¶ 53 (quoting Brand X, 545

U.S. at 989), in line with the Commission’s stance in Brand X.

“[A]n offering like broadband Internet access service that

‘always and necessarily’ includes integrated transmission and

information service capabilities * * * [is] an information

service.” Id. ¶ 55 (quoting Brand X, 545 U.S. at 992).

C. Objections to the Classification

Petitioners raise numerous objections aimed to show that

the Commission’s reliance on DNS and caching for classifying

broadband as an “information service” is unreasonable at

Chevron’s second step. We find them unconvincing.

1. “Walled Garden” Reading of Brand X

First, to short-circuit the Commission’s reliance on Brand

X, Petitioners try to characterize the Court’s reasoning in that

case as dependent on a vision of Internet providers as offering

mainly access to their “walled gardens.” They assert that in

Brand X “the Court was focused on the [Broadband Internet

22

Access Service (“BIAS”)] providers’ add-on information

services, such as ISP-provided e-mail,” and that “the Court had

no occasion to consider the proper classification of a service

combining telecommunications with nothing more than DNS

and caching.” Mozilla Br. 42. This reading is unpersuasive

because it airbrushes out the lengthy discussion summarized

above in which the Court finds “reasonable” the Commission’s

“information-service” classification even where “a consumer

goes beyond [walled garden] offerings and accesses content

provided by parties other than the cable company,” Brand X,

545 U.S. at 998—by virtue of the functionalities of DNS and

caching, see id. at 998–1000. We thus reject Petitioners’

attempt to discredit the Commission’s sensible reliance on

Brand X’s treatment of DNS and caching. See, e.g., 2018

Order ¶¶ 10, 34, 41, 51; see also Part I.C.4 infra (addressing

Petitioners’ related claims in functional integration context).

2. “Telecommunications Management” Exception

Petitioners assert that DNS and caching fall under the

“telecommunications management” exception (“TME”) and so

cannot be relied on to justify an “information service”

classification. See Mozilla Br. 43–46. We find that

Petitioners’ arguments do not hold up, either because they rest

on a misreading of Brand X and USTA or do not adequately

grapple with the Commission’s reasonable explanation as to

why DNS and caching fall outside that exception. See 2018

Order ¶¶ 36–38, 42–44. Our discussion here will be quite

involved in part because Brand X did not directly confront

whether DNS and caching may fall within the TME. See Brand

X, 545 U.S. at 999 n.3.

In deciding whether to slot DNS and caching under the

TME the Commission confronted “archetypal Chevron

questions[] about how best to construe an ambiguous term in

23

light of competing policy interests.” City of Arlington v. FCC,

569 U.S. 290, 304 (2013). “[I]f the implementing agency’s

construction is reasonable, Chevron requires a federal court to

accept the agency’s construction of the statute, even if the

agency’s reading differs from what the court believes is the

best statutory interpretation.” Brand X, 545 U.S. at 980. And

when an agency changes course, as it did here, it “must show

that there are good reasons for the new policy,” but “it need not

demonstrate to a court’s satisfaction that the reasons for the

new policy are better than the reasons for the old one.” USTA,

825 F.3d at 707 (quoting FCC v. Fox Television Stations, Inc.,

556 U.S. 502, 515 (2009)). The Commission clears this bar.

a. The Commission’s Interpretation

To begin with, Petitioners misconstrue USTA. As they do

persistently, they gloss passages that find parts of the Title II

Order to be permissible readings of the statute as mandating

those readings—when the passages plainly do not do so. A

case in point is the treatment of the TME. Petitioners say that

“[t]his Court has already agreed that DNS and caching fall

within the terms of the telecommunications management

exception.” Mozilla Br. 43 (emphasis added) (citing USTA,

825 F.3d at 705). Yet all we said in USTA was that we were

“unpersuaded” that the FCC’s “use of the telecommunications

management exception was * * * unreasonable.” USTA, 825

F.3d at 705. The Title II Order, in other words, adopted a

permissible reading, though not a required one. This holding

in no way bars the Commission from adopting a contrary view

now—so long as it adequately justifies that view, as we find it

has.

Despite Petitioners’ objections, we find that the 2018

Order engages in reasonable line-drawing for purposes of

administering this amorphous exception. Relying on judicial

24

precedent, Department of Justice policy (developed pursuant to

its duty to see that the settlement of its antitrust suit against

AT&T was lawfully implemented), and prior Commission

statements, the 2018 Order seems to envision a continuum with

two poles: a user-centered pole and network management-

centered pole. It locates a given service on the continuum and

classifies it as falling within or outside the TME according to

which pole it appears closest to. If a service is “directed at

* * * customers or end users,” 2018 Order ¶ 36 (quoting

United States v. Western Elec. Co., No. 82-0192, 1989 WL

119060, at *1 (D.D.C. Sept. 11, 1989)), or benefits users “in

significant part,” id. ¶ 38, or “predominantly,” id. ¶ 42, it does

not call for TME classification. We view this construction as

an adequately justified departure from the Title II Order’s

understanding of the TME in the face of a dauntingly

ambiguous provision with inevitably fuzzy borderline cases

and complex and possibly inconsistent (or at least orthogonal)

policy implications.

Given the Commission’s approach, it need not—and does

not—deny that even those services properly classed under the

TME benefit end users in some respect. It would be folly to

deny as much given that the raison d’être of ISPs is to serve

their customers. As one commenter notes, “To maintain * * *

that something that is ‘useful’ to an end user cannot fall under

the management exception is absurd, as the entire purpose of

broadband is to be useful to end users * * * .” Public

Knowledge Reply at 37, J.A. 2857; see 2018 Order ¶ 38 n.135;

see also Mozilla Reply Br. 19–20.

But a rule involving a spectrum or continuum commonly

requires a decider to select a point where both ends are in play.

Night and day are distinguishable, however difficult

classification may be at dawn and dusk. The Commission’s

way of construing the TME and applying its continuum-based

25

approach is not inconsistent with Public Knowledge’s point

that “the entire purpose of broadband is to be useful to end

users.” The Commission notes that its “focus remains on the

purpose or use of the specific function in question and not

merely whether the resulting service, as a whole, is useful to

end-users.” 2018 Order ¶ 38 n.135. While DNS might play a

role in managing a network, the Commission reasonably

concluded that DNS “is a function that is useful and essential

to providing Internet access for the ordinary consumer,” id.

¶ 36, and that these benefits to the end user predominate over

any management function DNS might serve. The Commission

says that caching “benefits” users through “rapid retrieval of

information from a local cache,” id. ¶ 42, and can also be used

“as part of a service, such as DNS, which is predominantly to

the benefit of the user (DNS caching),” id. (emphasis added).

And it gives examples of services that in its view are genuine

TME services: Simple Network Management Protocol

(“SNMP”), Network Control Protocol (“NETCONF”), or Data

Over Cable Service Interface Specification (“DOCSIS”)

bootfiles for controlling the configuration of cable modems.

Id. ¶ 36 (quoting Sandvine Comments at 5, WC Dkt. No. 17-

108 (July 14, 2017)). It observes that the Title II Order had

essentially proceeded in a contrary manner, finding that the

management-centered functionality of DNS predominated, so

as to render it TME-worthy. “Although confronted with claims

that DNS is, in significant part, designed to be useful to end-

users rather than providers, the Title II Order nonetheless

decided that it fell within the [TME].” Id. ¶ 38 (emphasis

added). The Commission reasonably declined to follow this

route (partly, as we shall see below, because it believed that it

would cause the exception to swallow the rule in ways

antithetical to its reading of Commission precedent and the

Act’s goals). It chose a different, and reasonable, alternative.

26

b. Modification of Final Judgment Precedent

In adopting its approach to the TME, the Commission

rested on precedent from a line of judicial decisions

interpreting the Modification of Final Judgment (“MFJ”), a

consent decree entered into between the Department of Justice

and AT&T in 1982 as part of the breakup of the AT&T

monopoly to create a set of independent regional Bell

Operating Companies (“BOCs”). See United States v.

American Tel. & Tel. Co., 552 F. Supp. 131, 225–232 (D.D.C.

1982) (subsequent history omitted). This decree, which

modified a 1956 consent decree and final judgment, spawned

a long line of cases in which District Court Judge Harold

Greene resolved conflicts over the decree’s limits on the

BOCs’ permissible business ventures. The cases interpreted a

broad array of terms of the consent decree, entered many

modifications, and granted waivers, balancing a need to “avoid

anticompetitive effects” (which might flow from BOC

exploitation of their monopolies in telecommunications to

dominate related services) with a hope of “bring[ing] th[e]

nation closer to enjoyment of the full benefits of the

information age” by facilitating “the efficient, rapid, and

inexpensive dissemination of * * * information.” United

States v. Western Elec. Co., 714 F. Supp. 1, 3, 5 (D.D.C. 1988),

aff’d in part, rev’d in part, 900 F.2d 283 (D.C. Cir. 1990).

The Commission makes a good case for the

persuasiveness of this precedent. First, the definition of

“information service” in the 1996 Act––including the TME––

is lifted nearly verbatim from the 1982 consent decree.

Compare American Tel. & Tel. Co., 552 F. Supp. at 229, with

47 U.S.C. § 153(24). Second, in the case on which the

Commission principally relies, the court was interpreting the

MFJ’s TME equivalent and adopted a reading in keeping with

its understanding of Department of Justice policy at the time.

27

In Western Electric, Judge Greene addressed the question

whether the consent decree permitted the BOCs to offer relay

services for customers who use “telecommunications devices

for the deaf” (“TDDs”). 1989 WL 119060, at *1. The court

held that, because TDD services involve “transformation of

information”––“the very crux and purpose of the TDD relay

services”––they “f[e]ll squarely” within the definition of

“information services,” which covers the capability to

“transform[] * * * information.” Id. Accordingly offering the

service ran afoul of Section II(D)(1) of the decree, see

American Tel. & Tel. Co., 552 F. Supp. 131 at 227, banning the

BOCs from providing information services, see Western

Electric, 1989 WL 119060, at *1. The BOCs argued as a

fallback position that TDD services fell within the TME. Id.

Judge Greene made quick work of this, finding it “patently

obvious that what is being sought * * * does not involve the

internal management of Bell Atlantic” and hence was not

TME-eligible. Id. In support of this conclusion the court

explained, relying on the Department of Justice Competitive

Impact Statement, that the TME “was directed at internal

operations, not at services for customers or end users.”

Western Elec. Co., 1989 WL 119060, at *1 (emphasis added)

(citing Department of Justice, Competitive Impact Statement in

Connection with Proposed Modification of Final Judgment,

Notice, 47 Fed. Reg. 7170, 7176 (Feb. 17, 1982)).

It is this language that the Commission expressly invokes

to ground its interpretation of the TME, stating that it (the

Commission) “interpret[s] the concepts of ‘management,

control, or operation’ in the [TME] consistent with” Judge

Greene’s analysis. See 2018 Order ¶ 36. And as we have noted

above, the Commission rightly acknowledges that being

“directed at” one end of a spectrum does not rule out

embodying certain aspects from the other end. The agency was

within its rights to treat Judge Greene’s analysis––which in

28

essence interpreted the statutory provision at issue and squared

with the government’s position supporting enforcement of the

antitrust decree—as support for its construction of the TME.

(As no party objected to the BOCs’ offering of TDD services,

and BOC entry into this activity posed no anticompetitive risk,

the court granted a waiver for their provision. See Western

Elec. Co., 1989 WL 119060, at *2.)

The Commission offers an added reason to put stock in the

MFJ precedent: It believed that Petitioners’ approach risked

causing the TME exception to swallow the “information

services” category. It said, plausibly, that such an “expansive

view” of the TME assigns it an outsized role, thereby

“narrowing * * * the scope of information services” in a way

that clashes with the Commission’s pre-1996 Act approach to

cabining the “basic services” category, see 2018 Order ¶ 38 &

n.135, and the 1996 Act’s imperative to “preserve the vibrant

and competitive free market * * * for the Internet * * *

unfettered by Federal or State regulation,” id. ¶ 39 (quoting 47

U.S.C. § 230(b)(2)), which the Commission permissibly uses

as a rationale to interpret a vague provision in a way that limits

regulatory burdens. In sum, the Commission lawfully

construed an ambiguous statutory phrase in a way that tallies

with its policy judgment, as is its prerogative.

Petitioners’ objections to the Commission’s classification

of DNS and reliance on the MFJ do not convince us.

Many of Petitioners’ objections pillory a straw man. They

state that “[t]he statute asks whether a function is used ‘for the

management, control, or operation of a telecommunications

system,’ not whether the function also benefits consumers.”

Mozilla Br. 45 (quoting 47 U.S.C. § 153(24)). But, as noted

before, the Commission need not deny, for example, that

“configuration management”––a function it slots under the

29

TME, see 2018 Order ¶ 36 & n.126—benefits end users in

some respect. See Mozilla Reply Br. 19–20. It can simply say

that DNS/caching and (for example) configuration

management, respectively, adjoin opposite ends of the

spectrum, one meriting inclusion in the TME and the other not.

Petitioners observe that DNS renders broadband Internet

access “more efficient in ways that are generally invisible to

users,” a point that misses its mark entirely, or at best

equivocates on the key point at issue. Mozilla Br. 45. While

DNS is “invisible” in the sense that it is “under the hood,” so

to speak, it remains “essential to providing Internet access for

the ordinary consumer.” 2018 Order ¶ 36. Using a certain

“configuration” tool or protocol might, say, make Internet

traffic a bit faster or slower in the way that a metro’s use of

varying rail technologies might influence train speeds. But an

absence of DNS would be something different altogether,

hobbling ordinary users in navigating the Web, akin to a total

absence of signage in a metro. Signage, unlike DNS, is of

course quite apparent, but their user-centered purposes are

alike for all practical purposes. (We address in Part I.C.4

Petitioners’ separate argument that users’ ability to obtain DNS

from providers other than their ISPs precludes a finding of

functional integration.) So the sense in which DNS is

“invisible” to many end users is fully consistent with the

agency’s rationale for locating it nearer to the user-centric

pole—and hence beyond the TME.

Finally, an argument made by amici on behalf of

Petitioners as to DNS arguably aligns with claims made by the

Commission’s amici and so may work in the agency’s favor.

Petitioners’ amici assert in the context of functional integration

(an issue to which we turn in Part I.C.4) that broadband Internet

access is not functionally integrated with DNS because

broadband access works perfectly well without DNS. “Internet

30

architects deliberately created DNS to be entirely independent

from the IP packet transfer function,” Jordan/Peha Amicus Br.

17, and “a BIAS provider’s DNS is an extraneous capability

* * * not required for the core service,” id. at 17–18 (emphasis

added). But if DNS is “extraneous” to operating the network,

it is at least debatable whether DNS is used in “the

management, control, or operation of a telecommunications

system or the management of a telecommunications service.”

Amici for the Commission make related points, observing that

“[a]n app’s DNS translation transaction ends before the BIAS

transmission begins,” “DNS transactions do not provide the

BIAS provider with information about the best path to the

destination,” and they “do not have the power to either

optimize or impair the BIAS provider network.” Bennett et al.,

Amicus Br. 13. Thus it is at least reasonable not to view DNS

as a network management tool. Id. at 13–14. Granted, Jordan

and Peha remark that running DNS helps an ISP “reduce[] the

volume of DNS queries passing through its network.”

Jordan/Peha Amicus Br. 18. But in the deferential posture of

Chevron the points quoted above by Jordan/Peha seem in part

to support the Commission’s reading of the record (consistent

with Bennett et al.) as showing that, whereas “little or nothing

in the DNS look-up process is designed to help an ISP

‘manage’ its network,” 2018 Order ¶ 36, DNS is “essential to

providing Internet access for the ordinary consumer,” id., for

whom “DNS is a must,” id. ¶ 34 (quoting Brand X, 545 U.S. at

999).

The Commission extends the same logic to caching,

though matters here are less obvious. It explains that caching

“does not merely ‘manage’ an ISP’s broadband Internet access

service and underlying network,” but “enables and enhances

consumers’ access to and use of information online.” 2018

Order ¶ 42. It makes clear that ISP caching service is not just

“instrumental to pure transmission” but, rather, “enhances

31

access to information” by consumers by facilitating “rapid

retrieval of information from a local cache or repository.” Id.

As the Title II Order had put it (albeit drawing a different

lesson), “caching * * * provide[s] a benefit to subscribers in

the form of faster, more efficient service,” id. ¶ 368 n.1037, by

“enabling the user to obtain ‘more rapid retrieval of

information’ through the network,” id. ¶ 372 (quoting Cable

Modem Order, 17 FCC Rcd. at 4810 ¶ 17 & n.76); cf. Brand X,

545 U.S. at 999–1000 (stating that “[c]acheing [sic] obviates

the need for the end user to download anew information from

third-party Web sites * * * , thereby increasing the speed of

information retrieval”).

Granted, some ISPs describe caching in terms indicating

that it is a network management practice, and caching can help

reduce ISPs’ costs. See Jordan/Peha Amicus Br. 20–21. But

these facts are not determinative. The Commission is entitled

to draw its own conclusions based on its (permissible)

interpretation of the TME, so long as consistent with the

record. Here it has done that. The Commission found (without

contradiction in the record) that caching “enables and enhances

consumers’ access to and use of information online.” 2018

Order ¶ 42. In particular, “[t]he record reflects that without

caching, broadband Internet access service would be a

significantly inferior experience for the consumer, particularly

for customers in remote areas, requiring additional time and

network capacity for retrieval of information from the

Internet.” Id. That is so, the Commission maintains, even

though encrypted traffic does not use caching, because “truly

pervasive encryption on the Internet is still a long way off[] and

* * * many sites still do not encrypt.” Id. at n.147 (citation

omitted).

32

3. Adjunct-to-Basic Precedent

Finally, Petitioners raise a host of objections arising from

the Commission’s “adjunct-to-basic” precedent, developed in

the Computer Inquiries orders issued by the Commission. See

In re Amendment of Section 64.702 of the Commission’s Rules

and Regulations (Second Computer Inquiry), 77 F.C.C.2d 384

(1980) (“Second Computer Inquiry”).

Because in our view the precedents in this area are murky,

raising convoluted questions of grafting older Commission

interpretations onto the “information services” definition as

applied to broadband Internet service, we find neither side’s

recounting of adjunct-to-basic precedent fully compelling.

Even though Congress’s creation of the TME may fairly be

said to have “[t]rack[ed]” adjunct-to-basic in certain respects,

USTA, 825 F.3d at 691, the Commission reasonably refused to

be bound by facets of the analogy filtered through the lens of

the Title II Order. The Commission’s chief task was to

interpret the TME’s statutory text in a coherent, workable

fashion and offer a reasonable rationale for altering its course,

not to demonstrate that its reading is a tight fit with every

aspect of adjunct-to-basic precedent. In fact, as we will see,

that precedent is not the seamless web of Petitioners’ vision.

Petitioners try to catch the Commission in a contradiction

in a two-step approach. The agency, as we have seen, locates

DNS and caching outside the TME. First, Petitioners invoke

Commission precedent seeming to suggest that all or most

adjunct-to-basic services would fall under the TME. Second,

they observe that––whereas paradigmatic examples of adjunct-

to-basic services such as speed dialing and call forwarding are

undeniably useful to consumers and, per step one, belong under

the TME––the Commission can give no satisfactory

explanation for excluding DNS and caching from the TME. In

33

particular, Petitioners and commenters analogize DNS to

ordinary directory assistance, which the Commission has

dubbed adjunct-to-basic, since both services help direct users

to their chosen endpoints. See, e.g., Mozilla Br. 46; Open

Technology Institute (“OTI”) New America Comments at 33–

34, J.A. 1631–1632. Whence the difference?

To make sense of these claims and the Commission’s

response, we need to review the basic terms. To preview, even

if there are incongruities in the Commission’s treatment of the

TME vis-à-vis the adjunct-to-basic idea, we see them as

byproducts of drawing imperfect analogies.

The FCC created a distinction between “basic services”

and “enhanced services” in its Second Computer Inquiry, with

the latter concept defined as follows:

[T]he term “enhanced service” shall refer to services[]

offered over common carrier transmission facilities

used in interstate communications, which employ

computer processing applications that act on the

format, content, code, protocol or similar aspects of

the subscriber’s transmitted information; provide the

subscriber additional, different, or restructured

information; or involve subscriber interaction with

stored information. Enhanced services are not

regulated under Title II of the Act.

Second Computer Inquiry, 77 F.C.C.2d at 498; see also 47

C.F.R. § 64.702(a).1 In contrast,

1

Note that the definition of “enhanced services” is restricted to

services “offered over common carrier transmission.” Second

Computer Inquiry, 77 F.C.C.2d at 498. For this reason, among

others, at least one scholar has argued that caution is warranted in

34

In offering a basic transmission service * * * a carrier

essentially offers a pure transmission capability over

a communications path that is virtually transparent in

terms of its interaction with customer supplied

information.

Second Computer Inquiry, 77 F.C.C.2d at 420 ¶ 96; see also id.

at 419–420 ¶ 95 (“[A] basic transmission service should be

limited to the offering of transmission capacity between two or

more points suitable for a user’s transmission needs and subject

only to the technical parameters of fidelity or distortion criteria,

or other conditioning.”).

The most contested category is a third: adjunct-to-basic. It

arose to accommodate the reality that providers of ordinary

telephone services wished to offer new technologies

facilitating that service—technologies that would quite plainly

fall under the “enhanced services” definition, though ordinary

phone service was indisputably a “basic service.” To square

the circle and avoid complexities of hybrid treatment, the

Commission created an adjunct-to-basic bucket:

In the [1985] NATA Centrex proceeding, the

Commission defined adjunct services as services that

‘facilitate the provision of basic services without

altering their fundamental character,’ and determined

that such services should be treated as basic services

drawing overly-neat analogies between “enhanced services” and

“information services” on the one hand, and “basic services” and

“telecommunications services,” on the other. See Robert Cannon,

The Legacy of the Federal Communications Commission’s

Computer Inquiries, 55 Fed. Comm. L.J. 167, 191–192 (2003)

(explaining why all “enhanced services” are “information services”

whereas not all “information services” are necessarily “enhanced

services”).

35

for purposes of the Computer II rules, even though

they might fall within possible literal readings of the

definition of enhanced services.

In re Bell Operating Companies, Petitions for Forbearance

from the Application of Section 272 of the Commc’ns Act of

1934, as Amended, to Certain Activities, 13 FCC Rcd. 2627,

2639 ¶ 18 (CCB 1998) (“272 Forbearance Order”) (citation

omitted).

The Commission has set out two necessary criteria for a

service to qualify as adjunct-to-basic:

[C]arriers may use some of the processing and storage

capabilities within their networks to offer optional

tariffed features as ‘adjunct to basic’ services, if the

features: (1) are intended to facilitate the use of

traditional telephone service; and (2) do not alter the

fundamental character of telephone service.

In re Establishment of a Funding Mechanism for Interstate

Operator Servs. for the Deaf, 11 FCC Rcd. 6808, 6816–6817

¶ 16 (1996) (“Operator Services Order”).

Which services qualify as adjunct-to-basic? The answer

covers a remarkably wide gamut, including “inter alia, speed

dialing, call forwarding, computer-provided directory

assistance, call monitoring, caller i.d., call tracing, call

blocking, call return, repeat dialing, and call tracking, as well

as certain Centrex features.” In re Implementation of the Non-

Accounting Safeguards of Sections 271 and 272 of the

Commc’ns Act of 1934, as Amended, 11 FCC Rcd. 21905,

21958 ¶ 107 n.245 (1996) (“Non-Accounting Safeguards

Order”). The same goes for “communications between a

subscriber and the network itself for call setup, call routing, call

cessation, calling or called party identification, billing, and

36

accounting,” In re N. Am. Telecommunications Ass’n Petition

for Declaratory Ruling Under Section 64.702 of the

Commission’s Rules Regarding the Integration of Centrex,

Enhanced Servs., and Customer Premises Equip., 3 FCC Rcd.

4385, 4386 ¶ 11 (1988) (“Centrex Order”) (citation omitted),

and prepaid calling cards with built-in advertisements, see

American Tel. & Tel. Co. v. FCC, 454 F.3d 329, 331 (D.C. Cir.

2006)—though not “talking yellow pages” with

advertisements, see id. at 333; see also Northwest Bell Tel. Co.

Petition for Declaratory Ruling, 2 FCC Rcd. 5986, 5988 ¶ 20

(1987).

Having laid out the key terms, we return to the parties’

claims. We are satisfied with the Commission’s prioritization

of the MFJ precedent and its way of squaring the adjunct-to-

basic precedent with its treatment of DNS and caching.

First, as explained above, the Commission had adequate

grounds to focus on the 1982 MFJ’s definition of “information

service,” which the 1996 Act took over virtually word for

word.

Second, devising a coherent and workable test for

applying the statutory TME permissibly takes precedence in

the Commission’s analysis over attempts to reach synthetic

conformity between adjunct-to-basic precedent and the 1996

Act’s terms. As the Court said in Brand X, we should “leav[e]

federal telecommunications policy in this technical and

complex area to be set by the Commission, not by warring

analogies,” 545 U.S. at 992, whether crafted by courts,

litigants, or Commissions past.

Third, the Commission’s historical approach to adjunct-to-

basic has hardly been clear-cut in its own right. As we have

previously said, “it is difficult to discern any clear policy” in

the Commission’s application of its “various formulations” of

37

what counts as adjunct-to-basic, so that “[t]he Commission’s

rulings reflect a highly fact-specific, case-by-case style of

adjudication.” American Tel. & Tel. Co., 454 F.3d at 333.

Given this lack of cohesion, we can hardly fault the current

Commission for discounting the persuasive force of adjunct-

to-basic analogies in interpreting and applying the 1996 Act’s

TME in light of its policy views.

Furthermore, the Commission’s definition of adjunct-to-

basic services does not, as a linguistic matter, force the

Commission’s hand in interpreting the TME. Just because an

adjunct-to-basic service like speed dialing or directory

assistance “facilitate[s]” telephone service, USTA, 825 F.3d at

691, it hardly follows automatically that it also qualifies under

the text of the TME, since it requires no contortion of English

to say that (for example) directory assistance is, by and large,

not used to “manage[]” or “control” or “operat[e]” a

telecommunications system or service, 47 U.S.C. § 153(24).

So the Commission had ample basis to dub the adjunct-to-

basic line of analysis “potentially ambiguous precedent,” 2018

Order ¶ 39, and depart from what it regarded as “loose

analogies” devised in the Title II Order. “Because broadband

Internet access service was not directly addressed in pre-1996

Act Computer Inquiries and MFJ precedent, analogies to

functions that were classified under that precedent must

account for potentially distinguishing characteristics” as they

relate to “technical details” and “regulatory backdrop.” Id.

These claims are not unreasonable. Whatever the

Commission’s prior views on the relationship between basic

services and their adjuncts, it is reasonable for the Commission

to say that that rubric need not transfer over neatly to what it

claims is not a basic service—broadband Internet access. See

id. ¶ 40 n.139. Hence there is little basis for the claim that

adjunct-to-basic lore requires the Commission to jettison the

38

lesson of Judge Greene’s TDD ruling. See Western Elec. Co.,

1989 WL 119060, at *1; see also Mozilla Br. 44.

Fourth, the Commission identifies precedent from the

Computer Inquiries themselves to support a reading of the

TME as requiring location of particular services on a spectrum

running between utility to carriers and utility to end users. A

ruling invoked by the 2018 Order allowed BOCs to enable the

tracing of Emergency 911 (“E911”) calls to the right location.

The FCC’s Common Carrier Bureau said:

Although the “telecommunications management

exception” encompasses adjunct services, the storage

and retrieval functions associated with the BOCs’

automatic location identification databases provide

information that is useful to end users, rather than

carriers. As a consequence, those functions are not

adjunct services and cannot be classified as

telecommunications services on that basis.

272 Forbearance Order, 13 FCC Rcd. at 2639 ¶ 18; see 2018

Order ¶ 38 n.131. While the Title II Order had sought to

distinguish this precedent on the ground that the benefit of

E911 service was “unrelated to telecommunications,” Title II

Order ¶ 368, it does not seem unreasonable for the current

2018 Order to assume a broader view of telecommunications

in its invocation of this precedent.

Fifth, in any case, we are satisfied with the agency’s

refusal to treat DNS like speed dialing, call forwarding, and

directory assistance.

As already noted, the Commission has adequate grounds

not to hold its interpretation of the TME hostage to a chimerical

hope for a perfect match-up with adjunct-to-basic precedent, in

part because the regulatory history is so convoluted as to render

39

the likelihood of a “perfect” matchup remote. So even if the

Commission’s interpretation of the TME comes at the cost of

certain incongruities with the concept of adjunct-to-basic

services, it reasonably regards alignment with the text and

purposes of the 1996 Act, and the unifying policy vision

animating the 2018 Order, as more weighty factors. See 2018

Order ¶ 39.

Moreover, implicit in the Commission’s analysis is a

recognition of a key difference between the above services and,

at the least, DNS. Those other services are plausibly described

as adjunct-to-basic, i.e., “ancillary” and “optional” in relation

to telephone service. Centrex Order, 3 FCC Rcd. at 4389 ¶ 30

(quoting Second Computer Inquiry, 77 F.C.C.2d at 421 ¶ 98);

cf. 2018 Order ¶ 40 n.138. Not so, the Commission says, for

DNS, which “[f]or an Internet user * * * is a must.” 2018

Order ¶ 34 (quoting Brand X, 545 U.S. at 999) (emphasis

added) (internal quotation mark omitted). So DNS might well

be seen to “alter the fundamental character of [the] service,”

and would thus fail to satisfy one of the two criteria specified

by the Commission (and quoted above) for a service to qualify

as adjunct-to-basic. Operator Services Order, 11 FCC Rcd. at

6816–6817 ¶ 16. This seems to distinguish DNS from such

functions as speed dialing, call forwarding, and directory

assistance, and thus square the Commission’s current treatment

of DNS with the Commission’s prior treatment of those

services as adjunct-to-basic, consistent with Judge Greene’s

treatment of a certain type of directory assistance as falling

within the TME. See Western Elec. Co., 1989 WL 119060, *1

n.7; Mozilla Br. 44–45. (While some adjunct-to-basic services

seem non-optional in certain respects, like “communications

between a subscriber and the network itself for call setup * * *

[and] call cessation,” Centrex Order, 3 FCC Rcd. at 4386 ¶ 11,

this point simply reinforces the miscellaneous nature of the

40

adjunct-to-basic category, where “it is difficult to discern any

clear policy,” American Tel. & Tel. Co., 454 F.3d at 333.)

We find the above considerations sufficient to uphold the

agency’s position and hence do not address analogies to other

MFJ precedents on technologies and services. See 2018 Order

¶¶ 35, 43–44. Even if Petitioners offer plausible interpretations

of rulings on address translation and third-party storage

services provided by the BOCs, we believe the Commission

has given a sufficiently sturdy justification for treating DNS

and caching as non-TME services apart from other MFJ-linked

analogies. It has set forth a plausible reading of the highly

ambiguous TME, adequately explained its basis for giving

more credence to judicial MFJ precedent than to the Computer

Inquiries in this context, and made a reasonable case as to why

DNS and caching need not be classed under the TME.

4. Functional Integration

Petitioners then open a new—and final—line of attack:

Even if DNS and caching are “information services,” the

Commission’s reliance on them to classify broadband as an

“information service” was still unreasonable. Mozilla Br. 46.

They make three arguments in support of this thesis, but none

holds water. As a threshold matter, we note that Brand X

already held it reasonable for the Commission to conclude that

DNS and caching are information services functionally

integrated with the offering of “Internet access [service]” “to

members of the public.” Brand X, 545 U.S. at 1000 (quoting

Stevens Report ¶ 79).

Petitioners first play up the facts that users may obtain

DNS from providers other than their ISPs and that caching is

not utterly indispensable. According to them, because “a user

can easily configure her computer to use a third-party DNS

server and content can be delivered even without caching,”

41

Mozilla Br. 46, especially in the context of encrypted

communications that occur without caching, id. at 46–47, it

follows that DNS and caching are not “inextricably intertwined

with the transmission component” of broadband, id. at 46.

These facts ostensibly yield a “contradict[ion]” in the agency’s

position, since one’s ISP-provided DNS and caching are not

“indispensable” after all. Id.

We find the objection misguided. As the Commission

explained, “[T]he fact that some consumers obtain [DNS and

caching] from third-party alternatives is not a basis for ignoring

the capabilities that a broadband provider actually ‘offers.’”

2018 Order ¶ 50. Given the ambiguity in the term “offe[r],”

see Brand X, 545 U.S. at 989–990, the Commission’s preferred

reading of that term rather than the Title II Order’s “narrower

interpretation,” 2018 Order ¶ 50—which would foreclose the

Commission’s view quoted above—is permissible. In

elucidating the ambiguity, Brand X said that “[t]he entire

question is whether the products here are functionally

integrated (like the components of a car) or functionally

separate (like pets and leashes). That question turns not on the

language of the Act, but on the factual particulars of how

Internet technology works and how it is provided, questions

Chevron leaves to the Commission to resolve in the first

instance.” 545 U.S. at 991. The agency reasonably concluded

that, notwithstanding the availability of alternative sources of

DNS, a market where “the vast majority of ordinary

consumers”—“[a]pproximately 97 percent”—“rely upon the

DNS functionality provided by their ISP,” 2018 Order ¶ 34 &

n.109 (citation omitted in second quotation), as “part and parcel

of the broadband Internet access service,” id. ¶ 42, meets

Brand X’s requirements for functional integration. Chevron

licenses these interpretive steps.

42

Second, Petitioners focus on what they dub the “relative

importance” of the “inextricably intertwined” components at

play—DNS/caching and high-speed transmission. Mozilla Br.

47. The transmission aspect, they say, overshadows DNS and

caching in “importance,” where that concept is understood in

terms of what “consumers focus on,” id. (quoting USTA, 825

F.3d at 698), and what aspect has “dominance in the broadband

experience,” id.; see also Mozilla Reply Br. 24. The

supposedly miniscule “importance” of DNS and caching in

consumers’ minds when using the Web means that those

functionalities cannot be “inextricably intertwined” with high-

speed transmission—and hence broadband cannot be an

“information service” based on DNS and caching services.

These claims are unavailing. To begin with, Petitioners’

invocation of USTA is yet again misplaced. There we said

simply that the Commission reasonably determined what

“consumers focus on,” USTA, 825 F.3d at 698, without holding

that that is the only permissible view. Moreover, nowhere does

Brand X say that a finding of “functional integration” requires

a finding as to “dominance” or “relative importance” in the

sense Petitioners imply. Average consumers, presumably, are

no less in the dark now about the inner workings of DNS and

caching than they were in 2005 when the Court decided Brand

X. Yet that did not keep the Court from finding reasonable the

FCC’s position that DNS and caching were functionally

integrated with high-speed transmission. However “consumer

perception” might be understood, it is not unreasonable to

interpret it as reflected in a consumer’s use of the offered

service as a whole and the functionalities that make that

possible, even if the consumer has no inkling of what is “under

the hood.” As Brand X said, “Seen from the consumer’s point

of view, the Commission concluded, cable modem service is

not a telecommunications offering because the consumer uses

the high-speed wire always in connection with the information-

43

processing capabilities provided by Internet access * * * .” 545

U.S. at 988 (emphasis added). So it is perfectly sensible for the

agency to retort that “[w]hile the typical broadband subscriber

may know little or nothing about DNS or caching, that

subscriber would keenly feel the absence of those functions” in

everyday Web use. Commission Br. 43.

Petitioners reply that the argument proves too much, as

Web browsers and search engines are also essential to the

consumer’s Internet experience. See Mozilla Reply Br. 24.

But quite apart from the fact that the role of ISP-provided

browsers and search engines appears very modest compared to

that of DNS and caching in ISPs’ overall provision of Internet

access, Petitioners are in a weak posture to deny that inclusion

of “search engines and web browsers” could support an

“information service” designation, id., since those appear to be

examples of the “walled garden” services that Petitioners hold

up as models of “information service”-eligible offerings in

their gloss of Brand X.

Finally, Petitioners contend that even if DNS and caching

were functionally integrated with transmission, that “does not

automatically lead to an information service classification.”

Mozilla Br. 47. “The FCC could not have reasonably

concluded that a drop of DNS and caching in a sea of

transmission transformed the service into something that could

properly be called an information service.” Id. The idea seems

to be that ISPs now offer fewer “walled garden” services of the

kind consumers mostly care about than they did in the era of

the 2002 Cable Modem Order and Brand X, so that basing an

“information service” designation on DNS and caching alone

is currently as dubious as saying that a few golden threads

interwoven in an ordinary sweater turn the sweater into a

golden garment. “Congress could not have intended inclusion

of two minor auxiliary information services to transform the

44

classification of what is otherwise overwhelmingly

telecommunications.” Mozilla Reply Br. 25.

But the Supreme Court has never imposed or even hinted

at such a quantitative standard to determine whether

inextricably intertwined functionalities can justify an

“information service” classification. We see no basis for

launching such a notion on our own. Had the Court thought

along Petitioners’ lines, it could have sided with challengers in

Brand X by saying that—when users wander beyond ISPs’

proprietary services—the quantum of ISP-offered

“information services” shrinks so greatly in proportion to the

transmission aspect that in that realm they are accepting an

“offering” of standalone telecommunications service. The

Court took the opposite tack, marshaling DNS and caching as

examples of “information services” operative when users

“access[] content provided by parties other than the cable

company,” Brand X, 545 U.S. at 998, thereby rendering the

Commission’s classification “reasonable,” id. at 1000.

Petitioners try to get mileage from a hypothetical in Brand

X involving the bundling of telephone service with voicemail,

see Mozilla Br. 47, but the attempt falls far short. Challengers

in Brand X had argued that, on the FCC’s theory in that case, a

telephone-plus-voicemail bundle would have to be classified as

an “information service,” making it far too easy to evade the

reach of Title II. The Court declined to “decide whether a

construction that resulted in these consequences would be

unreasonable”—because the hypothetical misfired. Brand X,

545 U.S. at 997. Its result “d[id] not follow from the

construction the Commission adopted,” id., which was “more

limited than respondents [had] assume[d],” id. at 998. That is,

the FCC’s position “d[id] not leave all information-service

offerings exempt from mandatory Title II regulation.” Id. at

997 (emphasis added). A landline telephone service provider

45

could not—on the FCC’s theory as interpreted by the Court—

get away with “packag[ing] voice mail [or a time-of-day

announcement] with telephone service” and on that basis take

landline service out of Title II. Id. at 998. That gimmick must

fail because add-ons like voicemail and time-of-day

announcements are separable from “pure transmission” in a

way that is not true for DNS and caching in relation to

broadband. Whereas landline service “transmits information

independent of the information-storage capabilities provided

by voice mail,” and is “only trivially dependent on the

information service the [time-of-day] announcement

provides,” id., broadband involves “functional[] integrat[ion]”

between “high-speed transmission,” which is “necessary to

provide Internet service,” with “further processing of

information,” id., e.g., in the form of DNS and caching, see id.

at 998–1000. The Brand X Court, in short, made plain that the

challengers’ hypothetical was simply irrelevant. Since

Petitioners develop no credible explanation as to why the

current Commission’s theory is any more vulnerable to the

hypothetical discredited by Brand X, we can see no merit in

their criticism.

To summarize, just as the USTA petitioners “fail[ed] to

provide an unambiguous answer to” whether “broadband

providers make a standalone offering of telecommunications,”

USTA, 825 F.3d at 702, Petitioners have not done so here. Nor

have they shown the Commission’s stance to be unreasonable.

We conclude, under the guidance of Brand X, that the

Commission permissibly classified broadband Internet access

as an “information service” by virtue of the functionalities

afforded by DNS and caching.

46

II. Mobile Broadband Classification

In keeping with its classification of broadband Internet as

an “information service” not subject to Title II, the

Commission classified mobile broadband as a “private mobile

service”—a classification that under the statute automatically

exempted it from common carriage treatment—just as the sole

alternative classification available under the statute would have

automatically required common carriage treatment. See 47

U.S.C. § 332(c)(1) & (2). We uphold this classification as

reasonable under Chevron. As we said in USTA (and as the

Title II Order and Petitioners recognize), the Commission has

compelling policy grounds to ensure consistent treatment of the

two varieties of broadband Internet access, fixed and mobile,

subjecting both, or neither, to Title II.

A. The 2018 Order’s Provisions

Title III of the Act, as amended by Congress in 1993, Pub.

L. No. 103-66, 107 Stat. 312, establishes two mutually

exclusive categories of mobile services—“commercial” and

“private.” Because the latter is defined negatively, as “any

mobile service * * * that is not a commercial service or [its]

functional equivalent,” 47 U.S.C. § 332(d)(3) (emphases

added), the key definition is that of “commercial mobile

service.” And the statute defines it as “any mobile service * * *

that is provided for profit and makes interconnected service

available” to the public. Id. § 332(d)(1). “[I]nterconnected

service,” in turn, is a “service that is interconnected with the

public switched network (as such terms are defined by

regulation by the Commission) * * * .” Id. § 332(d)(2).

The 2018 Order readopted definitions of “public switched

network” and “interconnected service” that the Commission

had set out in the Second CMRS Report and Order of 1994,

47

2018 Order ¶ 74; see In re Implementation of Sections 3(n) and

332 of the Commc’ns Act; Regulatory Treatment of Mobile

Servs., 9 FCC Rcd. 1411, 1516–1517 § 20.3 (1994) (“Second

CMRS Report and Order”), and maintained until the Title II

Order of 2015.

First, the Commission now defines “the public switched

network” as:

[A]ny common carrier switched network, whether by

wire or radio, including local exchange carriers,

interexchange carriers, and mobile service providers,

that use[s] the [ten-digit] North American Numbering

Plan [NANP] in connection with the provision of

switched services.

2018 Order ¶ 66 (second alteration in original); see 47 C.F.R.

§ 20.3; see also CMRS Report and Order, 9 FCC Rcd. at 1517

§ 20.3. The Title II Order, by contrast, modified that definition

by inserting the phrase “or public IP addresses”:

[T]he network that includes any common carrier

switched network, whether by wire or radio, including

local exchange carriers, interexchange carriers, and

mobile service providers, that use[s] the North

American Numbering Plan, or public IP addresses, in

connection with the provision of switched services.

Title II Order ¶ 391 (second alteration in original) (emphasis

added). This insertion assisted the Title II Order in making a

case that mobile broadband was “interconnected” with the

newly redefined public switched network.

As for “interconnected service,” the Commission now

defines it as “a service ‘that gives subscribers the capability to

communicate to or receive communication from all other users

48

on the public switched network.’” 2018 Order ¶ 77 (quoting

47 C.F.R. § 20.3); see Second CMRS Report and Order, 9 FCC

Rcd. at 1516 § 20.3. Restoring “all” was again a reversion to

the agency view since the 1994 Second CMRS Report and

Order. See 2018 Order ¶ 77. The Title II Order had deleted

that word, explaining the change at least in part as a recognition

of the already accepted view that services reaching North

American Numbering Plan (“NANP”) numbers generally

could meet Section 332(d)(1)’s requirement of

interconnectedness despite the existence of some blocked

NANP numbers (such as 900 numbers). See Title II Order

¶ 402 & n.1172.

Finally, the Commission readopted the Second CMRS

Report and Order’s “functional equivalence” test, which

considers “a variety of factors” in making that determination.

2018 Order ¶ 83. The “principal inquiry will involve

evaluating consumer demand for the service in order to

determine whether the service is a close substitute for [a

commercial mobile radio service],” which entails “evaluat[ing]

whether changes in price for the service under examination, or

for the comparable commercial service, would prompt

customers to change from one service to the other.” Second

CMRS Report and Order, 9 FCC Rcd. at 1447–1448 ¶ 80.

Viewing these definitions in the policy-driven mode

endorsed by Brand X (see, e.g., 545 U.S. at 992), the

Commission observed: “No one disputes that, consistent with

the Commission’s previous findings, if mobile broadband

Internet access service were a commercial mobile service for

purposes of § 332 and were also classified as an information

service, such a regulatory framework could lead to

contradictory and absurd results.” 2018 Order ¶ 82. As we

said in USTA, clashing classifications between mobile and

fixed broadband services would yield a “counterintuitive

49

outcome” in which a “mobile device could be subject to

entirely different regulatory rules depending on how it happens

to be connected to the internet at any particular moment.” 825

F.3d at 724. Just as the Title II Order strove to avoid a

“statutory contradiction” that would arise if mobile broadband

were classified differently from broadband Internet, see Title II

Order ¶ 403, the Commission now opted to treat mobile

broadband as a “private mobile service.” Parallel

classifications, it explained, would “further[] the Act’s overall

intent to allow information services to develop free from

common carrier regulations” and tally with the Commission’s

policy rationales for classifying broadband as an “information

service.” 2018 Order ¶ 82; see also id. ¶ 83 n.308; cf. Wireless

Broadband Order 5919–5921 ¶¶ 48–56 (2007) (explaining

importance of avoiding a contradictory outcome in classifying

broadband Internet access and mobile broadband). Petitioners

accept the general proposition, though with an inverse spin:

They say that if we were to reject the Commission’s

“information service” classification, that refusal in itself

“would be a powerful factor in favor of concluding that mobile

BIAS is a commercial mobile service,” because it “would be

unreasonable to construe the statute to create * * * a

contradiction.” Mozilla Br. 79.

Of course the Commission’s legitimate policy purposes

could not justify its indulging in unreasonable interpretations

of the controlling provisions. But it is obliged to interpret the

statute as a whole, and interpretations needed to avert

“statutory contradiction” (really, self-contradiction) ipso facto

have a leg up on reasonableness.

B. Objections to the Classification

We now analyze Petitioners’ three specific objections.

50

1. Meaning of “Public Switched Network”

First, Petitioners protest the Commission’s reversion to the

pre-Title II Order definition of “the public switched network.”

Their initial argument in support of that claim is an entirely

misplaced reliance on passages in USTA where we rejected

challengers’ argument “that the statutory phrase ‘public

switched network’ must be understood as if Congress had used

the phrase ‘public switched telephone network.’” 825 F.3d at

718 (first emphasis added). Rejection of that claim meant,

under Chevron, that we were required to affirm the Title II

Order so long as it had “permissibly considered a network

using [both] telephone numbers and IP addresses to be a

‘public switched network.’” Id. (emphasis added). Thus we

said that the phrase “public switched network” “by its plain

language can reach beyond telephone networks alone.” Id. at

717–718 (emphasis added). In light of Chevron and Brand X,

there is no basis for doubting that we meant just what we said,

leaving the door open to a different, adequately supported,

reading, which the Commission has provided here.

We likewise see no basis for a view that the statutory

language compels the Commission to retain the phrase “or

public IP address,” which the Title II Order had inserted into

the definition of “public switched network.” We note, as we

did in USTA, that the agency acts under express statutory

authority to modify its definition: The term “the public

switched network” is to be “defined by regulation by the

Commission.” 47 U.S.C. § 332(d)(2); see USTA, 825 F.3d at

717–718; Title II Order ¶ 396. Further, the Commission offers

multiple textual grounds in favor of its reading, emphasizing

Congress’s use of the definite article (“the public switched

network”) and “network” in the singular, suggesting that

“Congress intended ‘public switched network’ to mean a

51

single, integrated network.” 2018 Order ¶ 76; cf. United States

v. Manafort, 897 F.3d 340, 347 (D.C. Cir. 2018) (“The use of

the definite article ‘the’ * * * suggests a narrow reading.”).

The Commission also points to contemporaneous

understandings of “public switched network” by the

Commission and courts suggesting that it was commonly

understood to refer to the “public switched telephone

network.” See 2018 Order ¶ 75. It singles out Commission

precedent going back to 1981, see id. at n.276, as well as cases

from this circuit, referring to “public switched network” and

“public switched telephone network” seemingly

interchangeably, see id. at n.279. It was against this

background that Congress added the phrase “the public

switched network” to Title III in 1993. Although mobile

broadband was not yet in widespread use, these textual points

and identification of contemporaneous usage and meaning lend

support to the Commission’s gloss of that term to mean a

“singular network that ‘must still be interconnected with the

local exchange or interexchange switched network as it

evolves.’” Id. ¶ 76 (quoting Wireless Broadband Order, 22

FCC Rcd. at 5918 ¶ 45).

In parrying the USTA petitioners’ claims, we addressed

two other uses of “public switched network” in the United

States Code. Pointing to 18 U.S.C. § 1039(h)(4)’s express use

of “public switched telephone network,” USTA, 825 F.3d at

717, we found that use of this phrase contradicted petitioners’

idea that Congress had intended to assign a more “restrictive

meaning” to “public switched network” in Section 332. But

the language occurs in Title 18 of the United States Code

(devoted to the rather different subject of criminal law), and

was enacted in 2007, two features rendering it insufficient as a

basis to compel either the narrow reading of Congress’s 1993

addition to Title 47 advanced by the USTA petitioners, or the

broad one advanced by the current Petitioners. Further, despite

52

some language in the 2018 Order to the effect that “Congress

intended ‘public switched network’ to mean a single,

integrated network” that was not “meant to encompass multiple

networks whose users cannot necessarily communicate or

receive communications across networks,” 2018 Order ¶ 76,

the Commission here did not suppose that its reading was

required. Rather it said simply that that reading was “the best

reading of the Act,” id. ¶ 74, “more consistent with the text of

section 332(d)(2),” id. ¶ 76, and “better reflects Congressional

intent,” id. Section 1039(h)(4) at most helped the USTA court

find that the petitioners in that case failed to carry their burden

of showing that the Title II Order violated the unambiguous

meaning of “public switched network.” The Commission’s

burden here was only to show the reasonableness of its

interpretation. It did so, and without running afoul of the

doctrine that we must remand a decision when the agency rests

its result on a mistaken notion that it is compelled by statute.

See, e.g., Prill v. NLRB, 755 F.2d 941, 947–948 (D.C. Cir.

1985).

Similarly in USTA we rejected a claim that 47 U.S.C.

§ 1422(b)(1)(ii)’s use of the term “public switched network”—

in a context pretty clearly meaning only the telephone

network—meant that the Commission was required to so limit

its definition for purposes of Section 332. We responded by

pointing out that Congress was merely using the term in the

sense established by the Commission’s then longstanding

definition (including “telephone”); accordingly the section

could not have reasonably been thought “to divest the

Commission of the definitional authority” expressly granted in

Section 332. USTA, 825 F.3d at 718. In short, we simply

refused to regard the provision as inflicting an implied

constraint on the Commission’s definitional authority. Id. Just

so here, as well.

53

Next, Petitioners stress the need for Commission policy to

keep pace with technological innovation. They in essence

reiterate USTA’s “agree[ment] with the Commission that, in

granting the Commission general definitional authority,

Congress ‘expected the notion [of the public switched network]

to evolve and therefore charged the Commission with the

continuing obligation to define it.’” USTA, 825 F.3d at 718

(second alteration in original) (quoting Title II Order ¶ 396).

But, given the ambiguity in the statutory text, the manner in

which the Commission chooses to carry out that “continuing

obligation” is naturally and permissibly driven by its

underlying policy judgments (subject of course to the

possibility of technological changes so substantial and material

that they render the policy judgment irrational, which the

Commission reasonably concluded were not shown here).

Noting that the Title II Order expressly invoked its policy

reasons for broadening the concept of public switched network,

2018 Order ¶ 78 (citing Title II Order ¶ 399), the Commission

similarly invoked its policy choices to restore the agency’s

previous view, id.; see also id. ¶ 82.

The Commission also reasoned that it wished to

harmonize its definition of “public switched network” with that

of an “interconnected service.” See 2018 Order ¶ 77. Because

it restored the word “all” to the definition of “interconnected

service” (as discussed shortly), it had good grounds to omit

“public IP address” from “public switched network.” The

proliferation of “smart” devices with IP addresses, such as

“servers, thermostats, washing machines, and scores of other

devices in the Internet of Things,” Verizon Comments at 48,

J.A. 1968; see also ISPs’ Br. 18, 21–22, threatened such a

definition with a new complication. If those devices were part

of the public switched network, it might yield the dubious

upshot that mobile voice would no longer be a commercial

mobile service because its subscribers could not interconnect

54

with “all” endpoints on the network, “such as IP-enabled

televisions, washing machines, and thermostats, and other

smart devices” incapable of voice communications. 2018

Order ¶ 76 n.284. Hence a restoration of “all” in the definition

of “interconnected service,” coupled with an important

technological development, gave added reason to restore the

agency’s prior view of the “public switched network.”

In sum the Commission amply justified its return to the

CMRS definition of “public switched network.”

2. Whether Mobile Broadband Is an

“Interconnected Service”

Second, Petitioners argue that—even on the

Commission’s definition of “public switched network”—it is

unreasonable to conclude that mobile broadband is not an

“interconnected service.” See Mozilla Br. 75–79. We

disagree.

As noted previously, an “interconnected service,” in the

Commission’s view, “gives subscribers the capability to

communicate to or receive communication from all other users

on the public switched network.” 47 C.F.R. § 20.3 (emphasis

added). The Commission’s core contention is that Voice-over-

IP (“VoIP”)—the generic name for voice calls transmitted over

the Internet—is “a separate application or service” from mobile

broadband. 2018 Order ¶ 80. Hence the capabilities it affords

cannot turn mobile broadband, a separate service, into an

“interconnected service” as defined above. “[M]obile

broadband Internet access as a core service is distinct from the

service capabilities offered by applications (whether installed

by a user or hardware manufacturer) that may ride on top of it.”

Id. ¶ 81. The Commission instead centers its inquiry on the

capabilities mobile broadband service itself affords, rather than

55

“whether [it] allows consumers to acquire other services that

bridge the gap to the telephone network.” Id. ¶ 80 (quoting

Verizon Comments at 47, J.A. 1967). As the Commission

explained in its 2007 Wireless Broadband Order, its finding

that mobile broadband was not an “interconnected service” did

not prejudge how other services—such as “interconnected

VoIP”—should be classified. Wireless Broadband Order, 22

FCC Rcd. at 5918 ¶ 46; cf. American Council on Educ. v. FCC,

451 F.3d 226, 227–229, 228 n.1 (D.C. Cir. 2006) (taking for

granted that broadband and VoIP are distinct services in

upholding a Commission decision).

Petitioners by contrast contend, reprising the Title II

Order, that mobile broadband service meets the above

definition of “interconnected service” by virtue of

functionalities afforded by VoIP. VoIP applications––like

Apple FaceTime, Google Voice, and Skype––are now

ubiquitous and easy to use. “For most users, the only

operational difference between communicating with all other

users, including all NANP endpoints, through a mobile voice

call versus VoIP is which icon they press.” Mozilla Br. 77.

This holds true, Petitioners say, whether applications are

preinstalled on mobile devices or downloaded by users. Some

carriers themselves offer preinstalled Wi-Fi calling and Voice-

over-LTE capabilities that permit users to make voice calls to

NANP numbers via broadband without needing any additional

applications. See OTI New America Reply at 56–59, J.A.

2791–2794; see also Mozilla Br. 76–77. As Petitioners see it,

VoIP functionalities have become part and parcel of mobile

broadband service itself and give subscribers “capabilit[ies]”

that make mobile broadband an “interconnected service.”

Some commenters frame the issue as a claim that

technological change demands persistence in the choice of the

Title II Order. Whereas “[t]he Commission’s findings in the

56

2007 Wireless Broadband Ruling were reasonable,” they are so

no longer, given “the increasing convergence of mobile service

offerings (mobile carriers market ‘data’ packages, not separate

voice calling and broadband products) and of mobile networks

* * * .” OTI New America Reply at 55, J.A. 2790; see Title II

Order ¶ 401. In part for that reason Petitioners say, quoting

USTA, that the distinction between “(i) mobile broadband

alone enabling a connection, and (ii) mobile broadband

enabling a connection through use of an adjunct application

such as VoIP” is “elusive,” USTA, 825 F.3d at 721, and,

therefore, they claim, no longer permissible, Mozilla Br. 77.

We do not see it Petitioners’ way. In our view the

Commission adequately defended its approach and responded

to relevant objections, in keeping with its inclusion of the word

“all” in the definition of “interconnected service.”

First, Petitioners yet again overread USTA. There we

spoke of an “elusive” line in making the simple point that

“[n]othing in the statute * * * compels the Commission to

draw” that line. USTA, 825 F.3d at 721. That proposition is

quite consistent with the proposition that nothing in the statutes

bars the Commission from adopting the distinction—many

legal distinctions are, after all, rather elusive. We fail to see

our language in USTA as foreclosing the Commission’s current

view of what is part of mobile broadband service.

Second, as alluded to earlier, the agency previously drew

this “elusive” distinction at least since 2007, interrupted of

course by the Title II Order, even while it fully and expressly

recognized the availability and significance of VoIP, as it said

in the Wireless Broadband Order:

Mobile wireless broadband Internet access service in

and of itself does not provide this capability to

communicate with all users of the public switched

57

network. For example, mobile wireless broadband

Internet access services do not use the North

American Numbering Plan to access the Internet,

which limits subscribers’ ability to communicate to or

receive communications from all users in the public

switched network. Instead, users of a mobile wireless

broadband Internet access service need to rely on

another service or application, such as certain voice

over Internet Protocol (VoIP) services that rely in part

on the underlying Internet access service, to make

calls to, and receive calls from, “all other users on the

public switched network.” Therefore, mobile

wireless broadband Internet access service itself is not

an “interconnected service” as the Commission has

defined the term in the context of section 332.

Wireless Broadband Order, 22 FCC Rcd. at 5917–5918 ¶ 45;

see also 2018 Order ¶ 81 n.300; Title II Order ¶ 400 & n.1167

(quoting language from the above and acknowledging the

Commission’s previous conclusion).

Third, technological advances since the 2007 Wireless

Broadband Order do not invalidate the Commission’s way of

drawing the line between services. Of course technological

change may sometimes require regulatory reclassification. But

it is not clear why the changes identified by commenters are an

example of such a requirement, as we have noted above. The

proliferation of VoIP and prevalence of its use are orthogonal

to the Commission’s point about the relationship between

mobile broadband and VoIP. Whether VoIP applications are

used by many users or few, and whether they are preinstalled

or acquired on an ad hoc basis, the question is whether VoIP

functionalities are part of the service at issue here—mobile

broadband service—or constitute other services that mobile

broadband allows users to access. Similarly, ease of

58

interoperability is irrelevant to the Commission’s way of

framing whether there are one or two services involved in

facilitating a call, no matter how seamless the toggling may be

from a user’s standpoint. Although a user’s ability to move

easily between making mobile voice calls and VoIP calls (or to

toggle automatically between mobile voice and VoIP on a

single call) may, as the Title II Order had put it, have “blurred

the distinction between services using NANP numbers and

services using public IP addresses,” Title II Order ¶ 401

(emphasis added), blurring is not erasing. The Commission

observes that “even if providers are increasingly offering voice

service and mobile broadband Internet access service together,

this does not support classifying and regulating the latter in the

same way as the former.” 2018 Order ¶ 81 n.302. Similarly,

the Commission comments that there is nothing odd about

subjecting carriers offering “multiple services of mixed

classification” to regulation on a service-by-service basis, and

thus, for example, being “regulated as common carriers to the

extent they offer services that are subject to Title II regulation.”

Id. (citing 47 U.S.C. § 153(51)). (The Commission declined to

determine whether Wi-Fi calling and Voice-over-LTE could

qualify as “interconnected services” because, on the same logic

as above, it treats them as distinct services “subject to separate

classification determinations.” Id.)

Indeed, the 2018 Order recognized “the evolution of

mobile network technologies that have blurred the [physical]

lines between circuit switched and packet switched networks,”

and agreed with commenters arguing that the “public switched

network should not be defined in a static way” (emphasis

added) and should account for “continuous[] grow[th] and

chang[e].” 2018 Order ¶ 78 n.290. But it believed that this

flexibility must be constrained by fidelity to what it viewed as

the best reading of the statute, so that “the public switched

network remains a single integrated network incorporating the

59

traditional local and interexchange telephone networks and

enabling users to send or receive messages to or from all other

users.” Id.

Fourth, no precise conceptual framework dictated to either

the current Commission or the one that issued the Title II Order

how it should parse the relationship between mobile broadband

and VoIP. None of the parties identifies (and we have not

found) either a set of regulatory definitions purporting to draw

lines between “applications” and “services,” or a set of

generally accepted linguistic practices drawing such a line or

generally governing when the capability of apps that are usable

with a service should be taken to belong to the “capabilities”

of the service. As a matter of ordinary language there surely is

no problem with the Commission’s take. If someone tells a

friend, “I just got a great new tablet with mobile broadband,” it

would hardly be a solecism for the friend to reply, “Great—

does your service let me reach you from my landline?” Of

course the new tablet owner might reply, “Not now—but it

could if I set up a Google Voice number,” but that only shows

the linguistic ambiguity. Given the absence of any norms

pressing in Petitioners’ favor, we cannot condemn as

impermissible the Commission’s choice to draw the line in a

way that averted what it reasonably viewed as statutory self-

contradiction, echoing the Title II Order’s reasoning in

Paragraph 403, which was accepted by USTA, see 825 F.3d at

724.

Fifth, attempts to catch the Commission in self-

contradiction are unavailing. Commenters and Petitioners say

that if the Commission’s theory were properly applied, mobile

voice would turn out not to be an “interconnected service,” an

untenable outcome. Commenters invoke the truth that the

Commission recognizes a service as having a “capability” even

though exercise of that capability requires customer premises

60

equipment (“CPE”) even for ordinary landline use. See OTI

New America Comments at 56–57, J.A. 2791–2792; Mozilla

Reply Br. 36–37. And just as customers need mobile devices

packaged with software to make use of a mobile voice service,

they need VoIP to place voice calls over broadband. Since the

former does not disqualify mobile voice from being a

commercial mobile service (as everyone agrees), the latter,

commenters and Petitioners say, should not disqualify mobile

broadband from the same classification. See Mozilla Br. 75–

76; see also OTI New America Comments at 56, J.A. 2791

(“[A] mobile voice subscriber cannot ‘speak’ to a fax machine,

or to a pager, because each of these common carrier services,

despite being ‘interconnected’ through the ‘public switched

network,’ obviously requires certain CPE (or applications) to

meaningfully interconnect and communicate. VoIP and Wi-Fi

calling to NANP endpoints over the internet is no different,

whether the application is pre-loaded by the mobile BIAS

provider (e.g., T-Mobile Wi-Fi Calling, Google Voice) or

downloaded via a pre-loaded app store gateway.”).

But the Commission found the analogy “inapt.” 2018

Order ¶ 80 n.298. (Hence Mozilla is mistaken in saying that

the Commission did not address the matter. See Mozilla Br.

76). The difference, the Commission says, is that—even

though users need to acquire equipment and software

separately for mobile voice—“the function of interconnection

is provided by the purchased mobile service itself.” 2018

Order ¶ 80 n.298. With VoIP, by contrast, the add-on

application—and not the broadband service—supplies the

interconnection functionality. Id. And precisely because (as

noted above) no regulatory, conceptual, or linguistic strictures

force the Commission’s hand, its analysis here is reasonable.

Finally, even if we were to accept Petitioners’ argument

that the capability of mobile broadband service should be

61

conceived as embracing the capabilities both of that service and

of VoIP, the choice of mobile broadband subscribers not to

obtain VoIP capability would stand in the way of mobile

broadband’s satisfying the Commission’s restored definition of

“interconnected service”: To repeat, such service must give

subscribers “the capability to communicate to or receive

communication from all other users on the public switched

network.” 47 C.F.R. § 20.3 (emphasis added). Petitioners and

commenters in support of their position never dispute the

existence of many such non-VoIP-using mobile broadband

subscribers, though their number is unknown.

The gap in Petitioners’ theory is shown most clearly in the

obvious inability of a would-be caller from a NANP number

who seeks to reach a person with mobile broadband but no

form of VoIP (or mobile voice service). Suppose we agreed

with Petitioners that mobile broadband gives the call’s

intended recipient the “capability” of receiving NANP-

originated calls by, for example, obtaining a NANP number

through Google Voice or Skype or like services. By this they

really mean that it gives him the capability of acquiring that

capability (“capability2”?). But the availability of that option

for the intended recipient does not give the would-be caller

even the capability of obtaining the capability of reaching his

intended call recipient.

And a party with mobile broadband but without some form

of VoIP capability cannot either “communicate to or receive

communication from all other users on the public switched

network,” 47 C.F.R. § 20.3 (emphasis added), even though she

has the capability of acquiring that capability. But “[u]sers

who cannot communicate with each other are simply not

‘interconnected’ in any plausible sense.” ISPs’ Br. 19.

62

In sum, we find that the Commission’s way of

distinguishing among services and analyzing their regulatory

implications meets Fox Television’s reasonableness

requirement, 556 U.S. at 514–516, and falls within the bounds

of agency discretion under Chevron.

3. Whether Mobile Broadband Is the “Functional

Equivalent” of a Commercial Mobile Service

Third, Petitioners dispute the Commission’s conclusion

that mobile broadband is not a “functional equivalent” of

mobile voice, which all agree is a commercial mobile service.

47 U.S.C. § 332(d)(3). We are unconvinced. We find that the

Commission reasonably readopted its test for functionally

equivalent services that it had used from 1994 until 2015 and

permissibly found that mobile broadband does not qualify as a

service functionally equivalent to mobile voice.

To begin with, Petitioners do not directly challenge the

Commission’s return to its pre-Title II Order test for functional

equivalence laid out in the Second CMRS Report and Order.

See 2018 Order ¶¶ 83–84; see also Second CMRS Report and

Order, 9 FCC Rcd. at 1447–1448 ¶ 80; cf. ISPs’ Br. 22 n.9.

That approach entails looking to “a variety of factors” to

determine whether “demand for” the allegedly functionally

equivalent service is “a close substitute” for a given

commercial mobile service, including:

[C]onsumer demand for the service to determine

whether the service is closely substitutable * * *;

whether changes in price for the service under

examination, or for the comparable * * * service[,]

would prompt customers to change from one service

to the other; and market research information

63

identifying the targeted market for the service under

review.

Second CMRS Report and Order, 9 FCC Rcd. at 1519

§ 20.9(a)(13)(ii)(B); see also id. at 1447–1448 ¶ 80. This focus

on cross-elasticity of demand differs significantly from the new

test adopted in the Title II Order, which focused entirely on

whether a service is “widely available” and “offers mobile

subscribers the capability to send and receive communications

on their mobile device to and from the public.” Title II Order

¶ 404.

In justifying its return to the CMRS test, the Commission

properly underscores its statutory “discretion” to define

functional equivalence, 2018 Order ¶ 84, whose meaning is to

be “specified by regulation by the Commission,” 47 U.S.C.

§ 332(d)(3); cf. Title II Order ¶ 404. The Commission argues

that the CMRS test “reflects the best interpretation of section

332,” 2018 Order ¶ 83, and “hews much more faithfully to the

intent of Congress” than the Title II Order “or the analyses in

the record focusing on the extent of service availability,” id.

¶ 84.

It was reasonable for the Commission to home in on

substitutability: If the same regulatory regime is to govern two

services, the Commission could sensibly conclude that

economic rationality suggests that the risk of regulation-

engendered economic distortions will be less if the two are

close substitutes. As the Commission rightly observed in the

Second CMRS Report and Order, the “statute’s overriding

purpose [is] to ensure that similar services are subject to the

same regulatory classification and requirements.” 9 FCC Rcd.

at 1447 ¶ 78 (emphasis added). The 2018 Order quite properly

rested on this section of the Second CMRS Report and Order.

2018 Order ¶ 84 & n.312.

64

Applying the restored CMRS test, the Commission

appropriately looked to substitutability of the services on offer.

It reasoned that mobile voice and mobile broadband “have

different service characteristics and intended uses and are not

closely substitutable for each other * * *.” 2018 Order ¶ 85.

Consumers purchase mobile broadband to “access the Internet,

on-line video, games, search engines, websites, and various

other applications.” Id. By contrast, consumers “purchase

mobile voice service solely to make calls to other users using

NANP numbers [presumably referring primarily to users

reachable via the public switched telephone network].” Id.

Thus the Commission plausibly places its emphasis on the

distinct purposes and capabilities of the services taken as a

whole. In virtue of these differences, the two are not “closely

substitutable in the eyes of consumers.” Id. ¶ 84; cf. Second

CMRS Report and Order, 9 FCC Rcd. at 1447–1448 ¶ 80

(asking whether a service is a “close substitute”).

In support of its finding of non-substitutability, the

Commission points to divergent price points between the two

services. It offers examples showing a substantial price gap—

with up to a six-fold jump from $15 to $90 per line—between

unlimited voice/text plans and unlimited mobile broadband

plans. 2018 Order ¶ 85; see id. at nn.317 & 318. It ties this

down to the CMRS test by making the seemingly indisputable

point that “[n]othing in the record suggests that changing the

price for one service by a small but significant percentage

would prompt a significant percentage of customers to move to

the other service.” Id. ¶ 85. Petitioners do not contest that

finding, which is hardly surprising, given the distinct purposes

and range of options in mobile voice and mobile broadband,

notwithstanding their interoperability.

Instead Petitioners respond with an interesting but

seemingly unhelpful point: “Today each of the four national

65

[mobile] carriers exclusively sell smartphone plans that bundle

voice, texting and internet access as applications * * * .” OTI

New America Comments at 97–98, J.A. 1695–1696 (quoted at

Mozilla Br. 81). The Commission concedes that the voice-and-

text-only plans it describes are offered by “small mobile

carriers.” Commission Br. 56 n.12. But Petitioners’ approach

suffers a worse defect: To contest the Commission’s finding

that the two services are not close substitutes (and therefore not

very direct competitors) it offers evidence that they are very

good complements. That seems a rather deft way of changing

the subject. Though national plans may bundle voice and data,

the Commission aptly says that this “does not undermine [its]

conclusion that consumers do not regard [the services] as

fungible.” Id.; cf. ISPs’ Br. 22 (“[C]onsumers generally

subscribe to both services * * * because they employ them for

different purposes.”).

Petitioners appear to rely on a competing test for

functional equivalence resembling the Title II Order’s

approach. As Petitioners see it, the fact that mobile voice and

mobile broadband both allow users to carry out some of the

same tasks—most importantly, placing voice calls to NANP

numbers (to the extent allowed by mobile broadband users’

adoption of VoIP)—suffices to compel their treatment as

functionally equivalent services. Mozilla contends that mobile

broadband “provides all the functionality of mobile voice,

allowing subscribers to call anyone a mobile voice subscriber

could,” and is therefore a functionally equivalent service.

Mozilla Br. 80.

This argument fails on two counts. It completely

disregards the Commission’s solid grounds for returning to the

pre-Title II Order focus on substitutability and cross-

elasticity—a return that, as we noted above, Petitioners do not

explicitly challenge. That focus made the statute’s “functional

66

equivalent” provision serve the sound policy objective of

bringing services in close competition with each other under

the same regulatory umbrella. Second, Petitioners’ alternative

test suffers the same flaw (from the Commission’s perspective)

as their effort to treat mobile broadband and VoIP as a single

service, an effort the Commission was under no obligation to

countenance.

In sum, even though Petitioners’ reading of a “functional

equivalen[ce]” in Section 332(d)(3) is not foreclosed by the

statute, the agency’s interpretation of that term, and its

application to mobile broadband, are reasonable and merit

Chevron deference.

III. Section 706 Authority

Petitioners additionally argue that the Commission could

have addressed the harms of blocking and throttling and issued

open Internet rules under Section 706 of the

Telecommunications Act. Pursuant to Section 706(a), the FCC

“shall encourage the deployment on a reasonable and timely

basis of advanced telecommunications capability to all

Americans * * * by utilizing * * * price cap regulation,

regulatory forbearance, measures that promote competition in

the local telecommunications market, or other regulating

methods that remove barriers to infrastructure investment.” 47

U.S.C. § 1302(a). Furthermore, Section 706(b) states that the

agency “shall take immediate action” if this goal is not being

met “in a timely fashion.” Id. § 1302(b). The Commission

interpreted these provisions as “exhorting the Commission to

exercise market-based or deregulatory authority granted under

other statutory provisions, particularly the Communications

Act” not as “an independent grant of regulatory authority to

give those provisions meaning.” 2018 Order ¶ 270. Despite

67

Petitioners’ contentions, we find that this interpretation of

Sections 706(a) and (b) is lawful.

As with our prior analysis of the Commission’s

classification determinations, we evaluate its statutory

interpretation decisions concerning Section 706 authority by

applying the two-step analysis of Chevron. See 467 U.S. at

842–843.

In Verizon v. FCC, we noted that the language of Section

706 is ambiguous. See 740 F.3d 623, 635-636 (D.C. Cir. 2014)

(citing Chevron, 467 U.S. at 842–843); see also id. at 641

(“[A]s with section 706(a), it is unclear whether section 706(b)

* * * vested the Commission with authority to remove []

barriers to infrastructure investment and promote

competition.”). Thus, we proceed to Step Two of the analysis

and ask whether the Commission’s understanding of Section

706 as hortatory represents a reasonable interpretation of the

statute. We find that it does. Indeed, we have previously held

that the language of Section 706(a) could “certainly be read as

simply setting forth a statement of congressional policy” and

“just as easily be read to vest the Commission with actual

authority. Id. at 637. We have also understood Section 706(b)

to be similarly permissive. Id. at 641. Furthermore, in support

of its interpretation, the Commission notes that Section 706

lacks details “identify[ing] the providers or entities whose

conduct could be regulated,” whereas other provisions of the

Act that unambiguously grant regulatory authority do specify

such details. 2018 Order ¶ 271. We find the Commission’s

rationales in favor of its reading of Section 706 to be

reasonable.

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IV. Section 257 and the 2018 Order’s Transparency

Requirements

In its 2018 Order, the Commission retained a

“transparency rule,” which provided that “[a]ny person

providing broadband Internet access service shall publicly

disclose accurate information regarding the network

management practices, performance, and commercial terms of

its broadband Internet access services sufficient to enable

consumers to make informed choices * * * .” 2018 Order

¶ 215. Petitioners challenge the Commission’s legal authority

to issue a transparency rule under 47 U.S.C. § 257. Instead,

Petitioners argue that the Commission should have adopted the

rule under Section 706 of the Telecommunications Act. We

disagree.

We first dispense with the Commission’s contention that

Petitioners Mozilla and Internet Association (“IA”) do not have

standing to assert this challenge because they do not suffer

injury. The Commission notes that Petitioners fail to identify

any injuries that flow from the transparency rule itself but

rather observe that the rule derivatively supports other rules

that they find injurious. Without alleging harm specific to the

transparency rule, the Commission contends, Petitioners lack

standing. This understanding of injury is flawed. Petitioners

allege concrete injury from the Commission’s Order repealing

Internet conduct rules. When a party alleges concrete injury

from promulgation of an agency rule, it has standing to

challenge essential components of that rule, invoked by the

agency to justify the ultimate action, even if they are not

directly linked to Petitioners’ injuries; if Petitioners’ objections

carry the day, the rule will be struck down and their injury

redressed. See Sierra Club v. FERC, 867 F.3d 1357, 1366–

1367 (D.C. Cir. 2017); see also WildEarth Guardians v. Jewell,

738 F.3d 298, 304–308 (D.C. Cir. 2013). Because it is

69

undisputed that the transparency rule is an essential component

of the 2018 Order, Petitioners have standing to object to any

deficiency with the transparency rule. See Sierra Club, 867

F.3d at 1366–1367. The deficiency need not be tied to the

Petitioners’ specific injuries. Accordingly, we find that

Petitioners suffer injury for the purpose of establishing

standing.

Nonetheless, the Commission’s reliance on 47 U.S.C.

§ 257 to issue the transparency rule was proper. Section 257(a)

of the Communications Act required the FCC, within 15

months after enactment of the 1996 Act, to “complete a

proceeding for the purpose of identifying and eliminating, by

regulations pursuant to its authority under this chapter (other

than this section), market entry barriers for entrepreneurs and

other small businesses in the provision and ownership of

telecommunications services and information services.” 47

U.S.C. § 257(a). Section 257(c) directed the Commission,

“triennially thereafter, to report to Congress on such

marketplace barriers and how they have been addressed by

regulation or could be addressed by recommended statutory

changes.” 2018 Order ¶ 232 (citing 47 U.S.C. § 257(c)). The

Commission observed that “section 257 does not specify

precisely how [they] should obtain and analyze information for

purposes of its reports to Congress,” and thus “construe[d] the

statutory mandate to ‘identify’ the presence of market barriers

as including within it direct authority to collect evidence to

prove that such barriers exist.” 2018 Order ¶ 232 n.847. We

find that this interpretation of Section 257(a) is permissible.

“The Commission, however, interpreted the statute to require

a rulemaking based on authority other than section 257 itself

only for rules intended to eliminate market barriers rather than

rules meant to identify such barriers.” Commission Br. 100.

The relevant language in Section 257 is sufficiently

ambiguous—Congress does not proscribe the means of

70

“identifying” market barriers. The Commission permissibly

read the clause to apply only to the elimination of market

barriers. In turn, we find that the Commission’s reading easily

satisfies review at Chevron Step Two, under which we defer to

the agency’s interpretation unless it is “arbitrary or capricious

in substance, or manifestly contrary to the statute.” United

States v. Mead Corp., 533 U.S. 218, 227 (2001).

While Petitioners correctly note that Section 257(c) was

removed from the Communications Act before the 2018 Order

became effective, see RAY BAUM’S Act of 2018, Pub. L. 115-

141, § 402(f), 132 Stat. 1089 (2018), it was not altered in any

material respect for purposes of the Commission’s authority in

this regard. The 2018 legislation that amended the Act

introduced a biennial reporting requirement quite similar to the

triennial reporting requirement contained in the former Section

257(c). See Pub. L. No. 115-141, Div. P, §§ 401, 402(f), 132

Stat. at 1087-1089 (codifying a reporting requirement at

47 U.S.C. § 163). Indeed, Congress emphasized that

“[n]othing in this title or the amendments made by this title

shall be construed to expand or contract the authority of the

Commission.” Pub. L. No. 115-141, Div. P, § 403, 132 Stat. at

1090.

We also reject Petitioners’ contention that they did not

have adequate notice of the statutory authority upon which the

Commission relied in imposing the transparency rule. This

Court has previously recognized Section 257 as a possible

source of authority for such rules. See, e.g., Comcast Corp. v.

FCC, 600 F.3d 642, 659 (D.C. Cir. 2010) (“We readily accept

that certain assertions of Commission authority could be

reasonably ancillary to the Commission’s statutory

responsibility to issue a report to Congress. For example, the

Commission might impose disclosure requirements on

regulated entities in order to gather data needed for such a

71

report.” (quotations omitted)); see also Verizon, 740 F.3d at

668 n.9 (Silberman, J., concurring in part and dissenting in

part). In fact, in response to the Notice of Proposed

Rulemaking’s (“NPRM’s”) explicit solicitation of comment on

its legal authority to adopt rules if the Commission reclassified

broadband as an information service, several commenters

identified Section 257 as a possible source of authority for a

transparency rule. See 2018 Order ¶ 232 n.843; see also

NPRM ¶ 103 (“[W]e seek comment on any other sources of

independent legal authority.” (emphasis added)). Thus, we

find Petitioners’ notice argument to be without merit.

Intervenor Digital Justice Foundation argues that while the

Commission has authority to maintain a transparency rule, it

should have retained aspects of the rule contained in a 2010

Order issued by the Commission. See Preserving the Open

Internet, 25 FCC Rcd. 17905 (2010) (“2010 Order”). At the

outset, we reject the Commission’s assertion that this argument

is not properly before us. Digital Justice has simply raised a

new argument in support of claims the Petitioners have

presented. The argument is thus a far cry from the sort of

intervenor’s claim with “absolutely no substantive connection

with the issues raised by the petition for review,” which we

have rejected in the past. See Synovus Fin. Corp. v. Board of

Governors of Fed. Reserve Sys., 952 F.2d 426, 434 (D.C. Cir.

1991). We also find no merit in the Commission’s argument

that Digital Justice was required to seek reconsideration before

raising this garden-variety arbitrary-and-capricious challenge.

A petition for reconsideration is required for “only those issues

upon which the Commission has been afforded no opportunity

to pass.” AT&T Corp. v. FCC, 394 F.3d 933, 938 n.1 (D.C.

Cir. 2005) (internal quotation marks omitted). That rule

always allows courts to consider whether the Commission

“relied on faulty logic,” id., because “[t]he Commission

necessarily had an opportunity to pass upon the validity of the

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rationale that it actually put forth,” MCI Telecomm. Corp. v.

FCC, 10 F.3d 842, 845 (D.C. Cir. 1993).

Turning to the merits, Digital Justice charges that it was

arbitrary and capricious for the Commission to eliminate

aspects of the former transparency rule without considering the

impact on entrepreneurs and small businesses — as identified

in Section 257(a)—or providing a reasoned explanation for

modifying the rule. We disagree. The Commission explained

that the “additional obligations [of the former transparency

rule] [did] not benefit consumers, entrepreneurs, or the

Commission sufficiently to outweigh the burdens imposed on

[broadband providers].” See 2018 Order ¶ 210. We are also

unpersuaded by Digital Justice’s claim that the Commission

needed to analyze the interest of entrepreneurs and other small

businesses in the specific context of repealing portions of the

transparency rule. Section 257(a) simply requires the FCC to

consider “market entry barriers for entrepreneurs and other

small businesses.” 47 U.S.C. § 257(a). The disclosure

requirements in the transparency rule are in service of this

obligation. The Commission found that the elements of the

transparency rule in the 2018 Order will “keep entrepreneurs

and other small businesses effectively informed of [broadband

provider] practices so that they can develop, market, and

maintain Internet offerings.” See 2018 Order ¶ 218. In fact,

the Order takes care to describe the specific requirements of

the rule to “ensure that consumers, entrepreneurs, and other

small businesses receive sufficient information to make [the]

rule effective.” Id.; see also id. ¶¶ 218–223. Digital Justice’s

challenges cannot prevail under our particularly deferential

arbitrary-and-capricious review.

In sum, we uphold the transparency rule as authorized by

47 U.S.C. § 257.

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V. Arbitrary and Capricious Challenges

The Commission claims that we can uphold its entire

rulemaking on the weight of its statutory interpretation alone.

See Commission Br. 58 (expressing its view that its legal

interpretation “alone suffices to justify the repeal”). In the

Commission’s view, the reasonableness of its interpretation

necessarily insulates the 2018 Order from arbitrary and

capricious challenge. See id.

That argument misunderstands the law. To be sure, the

analysis of an agency’s statutory interpretation at Chevron Step

Two has some overlap with arbitrary and capricious review.

The former asks whether the agency’s interpretation “is based

on a permissible construction of the statute.” Chevron, 467

U.S. at 843. And the latter asks whether the agency

“examine[d] the relevant data and articulate[d] a satisfactory

explanation for its action including a rational connection

between the facts found and the choice made,” and “whether

the decision was based on a consideration of the relevant

factors and whether there has been a clear error of judgment.”

Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co.,

463 U.S. 29, 43 (1983) (internal quotations marks omitted).

Nevertheless, “the Venn diagram of the two inquiries is not a

circle.” Humane Soc’y of United States v. Zinke, 865 F.3d 585,

605 (D.C. Cir. 2017). Each test must be independently

satisfied.

This is a case in point. The Commission has advanced

what is, under controlling precedent, a reasonable

interpretation of the statute for purposes of Chevron. But

aspects of the Commission’s decision are still arbitrary and

capricious under the Administrative Procedure Act because of

the Commission’s failure to address an important and

statutorily mandated consideration—the impact of the 2018

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Order on public safety—and the Commission’s inadequate

consideration of the 2018 Order’s impact on pole-attachment

regulation and the Lifeline Program. We consider each of

Petitioners’ challenges in turn.

A. Effects on Investment and Innovation

Petitioners challenge the Commission’s conclusion that

reclassification of broadband as an information service is

“likely to increase ISP investment and output,” 2018 Order

¶ 98, focusing almost entirely on the Commission’s suggestion

that the Title II Order may well have led to reduced investment

in broadband. They object to particular studies on which the

agency relies, the explanations it offers for its conclusions, and

its failure to credit certain data. We find that the agency’s

position as to the economic benefits of reclassification away

from “public-utility style regulation,” id. ¶ 90, which the

Commission sees as “particularly inapt for a dynamic industry

built on technological development and disruption,” id. ¶ 100,

is supported by substantial evidence, see National Lifeline

Ass’n v. FCC, 921 F.3d 1102, 1111 (D.C. Cir. 2019), and so

reject Petitioners’ objections.

As part of its justification for “light-touch” regulation of

the Internet ecosystem, the Commission made a variety of

arguments about optimal, and suboptimal, conditions for

broadband investment and innovation. It relied on, among

other things, (1) prior agency positions, which have “long

recognized that regulatory burdens and uncertainty * * * can

deter investment by regulated entities,” 2018 Order ¶ 88,

backed up by economic theory in general, id. ¶¶ 89, 93; (2) a

finding that “the balance of the evidence indicates that Title II

discourages investment by ISPs,” id. ¶ 93, supported by studies

evaluating ISP investment before and after the Title II Order,

id. ¶¶ 89–98; (3) the disincentive to investment arising from

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regulatory uncertainty about the substance and potential reach

of Title II regulation, id. ¶¶ 99–102; (4) effects on small ISPs

and rural communities where firms are more likely to take the

risks of offering much-needed services in a more predictable

and less onerous regulatory climate, id. ¶¶ 103–106; and (5) the

absence of evidence of negative effects on edge investment, id.

¶¶ 107–108. This diverse array of theses led the Commission

to conclude that “Title II classification likely has resulted, and

will result, in considerable social cost, in terms of forgone

investment and innovation,” without “discernable incremental

benefit relative to Title I classification.” Id. ¶ 87.

We reiterate that our posture in arbitrary and capricious

review is deferential. To withstand scrutiny, “the agency must

examine the relevant data and articulate a satisfactory

explanation for its action including a rational connection

between the facts found and the choice made.” State Farm,

463 U.S. at 43 (internal quotation marks omitted). Where, as

here, the agency shifts course, “it suffices that the new policy

is permissible under the statute, that there are good reasons for

it, and that the agency believes it to be better, which the

conscious change of course adequately indicates.” Fox

Television, 556 U.S. at 515. Especially apt here is an

admonition we have long made: “Predictions regarding the

actions of regulated entities are precisely the type of policy

judgments that courts routinely and quite correctly leave to

administrative agencies.” Public Citizen, Inc. v. National

Highway Traffic Safety Admin., 374 F.3d 1251, 1260–1261

(D.C. Cir. 2004) (quoting Public Utils. Comm’n v. FERC, 24

F.3d 275, 281 (D.C. Cir. 1994)).

Mozilla and Intervenors IA especially attack a study by

Hal J. Singer, which had “concluded that ISP investment by

major ISPs fell by 5.6 percent between 2014 and 2016.” 2018

Order ¶ 91. They allege “serious methodological defects” with

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the study, Mozilla Br. 69, and say that the Commission should

have placed greater stock in “aggregate investment totals as

actually reported by companies to investors,” id.—specifically,

capital expenditure figures of publicly traded broadband

providers in 2013–2016 as summarized by Free Press in its

comments to the Commission, see J.A. 860. And they

unfavorably contrast the reliability of Singer’s numbers with

those cited by Free Press. They note the Commission’s

acknowledgement that “Singer’s calculations do not control for

some factors that influence investment, such as the ‘lumpiness’

of capital investment and technological change,” 2018 Order

¶ 91 n.339; see Mozilla Br. 69; IA Intervenors’ Br. (“IA Br.”)

22–23, an acknowledgement that might well be taken to reflect

quite proper Commission caution about the empirical issues.

In our view the Commission’s reliance on, and analysis of,

the Singer study are reasonable. First, it is but one of numerous

studies and trends invoked by the Commission that reached

similar conclusions—about which Petitioners say relatively

little or nothing specific. These include (1) a study finding that

“ISP capital investment increased each year from the end of the

recession in 2009 until 2014, when it peaked,” 2018 Order ¶ 90

& n.335; see IA Br. 20–21 (questioning trends in these data);

(2) another reporting that wireless capital investment had

slowed, with a “precipitous decline in 2016,” id. ¶ 90 n.337;

and (3) an article, Thomas W. Hazlett & Joshua D. Wright, The

Effect of Regulation on Broadband Markets: Evaluating the

Empirical Evidence in the FCC’s 2015 ‘Open Internet’ Order,

50 Rev. Indus. Org. 487 (2017), uncontroverted by Petitioners,

on which the Commission drew extensively, see 2018 Order

¶¶ 94 & n.349, 96 & n.358, 98 & n.362, 107, 148 & nn.535–

536. This study relied in part on a “natural experiment”

derived from Commission policy changes, showing a

“statistically significant upward shift in DSL [Digital

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Subscriber Line]” investment after the FCC reclassified DSL

service as an “information service” in 2005. Id. ¶ 94.

Mozilla’s effort to paint a contrasting picture of the Singer

and Free Press studies (“Singer—bad; Free Press—good”)

encounters multiple obstacles (undiscussed by Petitioners).

Mozilla does not address shortcomings of the Free Press

figures, pinpointed by the agency, including for example its

failure to exclude investment abroad, which the Singer study

had accounted for. 2018 Order ¶ 91; cf. IA Br. 22

(acknowledging this point). Most important, Mozilla and IA

entirely ignore an analysis that puts the two studies on an

apples-to-apples basis and finds agreement between them.

That analysis “adjusted the Free Press and Singer numbers so

that they [1] covered the same ISPs, [2] spanned the same time

period, and [3] subtracted investments unaffected by the

regulatory change.” 2018 Order ¶ 92 (numbering added).

After controlling for these three factors, the assessment “found

that both sets of numbers demonstrate that ISP investment fell

by about 3 percent in 2015 and by 2 percent in 2016.” Id.

(emphasis added). The comparison thus indicates a

convergence between the two sets of figures—a convergence

close to the original Singer findings. While that assessment

may itself be flawed, Petitioners and Intervenors ignore it

altogether. We thus conclude that the Commission’s reliance

on the Singer study—given its apparent match-up with the Free

Press data, and as but a part of the agency’s analysis—is not

unreasonable.

Mozilla also reframes its championing of the Free Press

data by asserting the superiority of investment “results”

attained by “[i]ndividual BIAS providers[]” (citing only the

Free Press data), over “aggregate numbers,” which may be

“easily[] skewed.” Mozilla Br. 70; see IA Br. 21. Whatever

the force of the general theory, it seems immaterial as a basis

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to prefer Free Press’s calculations in light of the apparent (and

uncontested by Petitioners) harmony of the Free Press and

Singer data.

The broader point here is that the Commission was clear-

eyed in assigning quite modest probative value to studies

attempting to draw links between the Title II Order and

broadband investment, so that there is less daylight between

the Commission and Petitioners than the latter seem to think.

It states that “reclassification * * * is likely to increase ISP

investment and output.” 2018 Order ¶ 98 (emphasis added). It

also notes a separate calculation by the Free State Foundation

that yielded findings similar to Singer’s based on “capital

expenditure data for 16 of the largest ISPs.” Id. ¶ 92. But the

Commission observes that, while “suggestive,” they are at

most confirmatory of “other evidence in the record that

indicates that Title II affected broadband investment.” Id. So

here too we find IA’s criticism of Free State’s calculation, see

IA Br. 23–24, to a large extent blunted by the Commission’s

having already discounted it. To be sure, the IA asserts a more

intense level of skepticism, indeed an Olympian level, calling

“attempts to identify and quantify direct causal impacts of the

[Title II Order]” an “essentially * * * pointless exercise.” IA

Br. 18 (citation omitted). The takeaway here is both that

Petitioners’ skepticism is echoed in the 2018 Order and that

some commenters seem to set the bar so high that no empirical

grounds relating to the Title II Order’s effects on ISP

investment could support (or refute) the Commission’s policy.

The parties spar at length over a paper by George Ford at

the Phoenix Center, which had shown that then-FCC Chairman

Julius Genachowski’s “surprise[]” announcement in 2010 of a

“framework for reclassifying broadband under Title II * * *

was associated with a $30 billion-$40 billion annual decline in

investment in” the United States Bureau of Economic

79

Analysis[’s] ‘broadcasting and telecommunications’ category

between 2011 and 2015.” 2018 Order ¶ 95 & n.353. Again

we note that the Commission was fairly modest in its reliance

on the study, observing that because it had used data

“cover[ing] the entire broadcasting and telecommunications

industries,” it could only be reliably adduced as evidence of the

directionality of broadband investment, not “the absolute size

of the change” attributable to the Title II Order. 2018 Order

¶ 95.

IA (perhaps applying the lofty standard by which it

discounted any effort to estimate the effect of the Title II Order

on investment as “essentially a pointless exercise”) still regards

the Commission as having placed undue weight on this result

while underweighting a competing study by Christopher

Hooton that it had proffered. See J.A. 1178–1222. The Hooton

study had criticized Dr. Ford’s work, see J.A. 1184, and elicited

a reply, see 2018 Order ¶ 97 n.360; see also IA Br. 24–25;

Phoenix Ctr. Amicus Br. 18–25.

The Ford-Hooton dispute seems far too sophisticated for

us to credibly take sides. When intricacies of econometric

modeling are in dispute, “we do not sit as a panel of referees

on a professional economics journal, but as a panel of

generalist judges obliged to defer to a reasonable judgment by

an agency acting pursuant to congressionally delegated

authority.” USTA, 825 F.3d at 697 (quoting City of Los

Angeles v. United States Dep’t of Transp., 165 F.3d 972, 978

(D.C. Cir. 1999)). One issue suggests the impenetrability of

the matter from our perspective. The IA brief is very insistent

that the Commission unfairly criticizes the Hooton study for

relying “partially on forecast [data] rather than actual data,”

Commission Br. 83 (quoting 2018 Order ¶ 97), while failing to

complain of comparable methodologies in its own favored

studies, see IA Br. 19; IA Reply Br. 9–11.

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Maybe so, maybe not. Perhaps the methodological dispute

will ultimately attract scholarly attention and be sorted out

persuasively on one side or the other. It seems likely that many

variables would be relevant in assessing when reliance on

forecasts would be justifiable, and—in cases where it was

not—assessing whether the reliance was of any real

consequence. But we are not the needed scholars, and will not

pretend we understand more than we do. Perhaps Hooton wins

on points. That is an insufficient ground for us to call the

Commission’s finding unreasonable.

Next Mozilla quotes remarks by two chief executive

officers of ISPs that it believes “offer[] much more probative

evidence on the effect of the [Title II] Order on investment

decisions.” Mozilla Br. 70; see IA Br. 21–22. But those

statements seem to match exactly one of the grounds on which

the Commission found such statements generally irrelevant to

the investment-effect issue, namely that the executives were

saying only that their firms’ practices would not be affected

because they were not engaged in the conduct prohibited by the

new rules. See 2018 Order ¶ 102 & nn.384–385; R Street

Institute Reply at 8, WC Dkt. No. 17-108 (Aug. 30, 2017); see

also Commission Br. 83. Petitioners do not address these

points. See Mozilla Br. 69–70; IA Br. 22; see also Mozilla

Reply Br. (failing to address reduced investment).

Indeed, one of the CEOs whose December 2015 remarks

Mozilla highlights, Randall Stephenson of AT&T, Mozilla Br.

70 (quoting J.A. 881), said in January 2017 that, while his

company is an “advocate[] of net neutrality,” “[t]here is no way

anybody can argue” that “placing utility[-]style regulation on

our mobility and internet businesses * * * is not suppressive to

investment,” Georgetown Ctr. for Bus. and Pub. Policy Amicus

Br. 6; see also AT&T Comments at 54 n.91, J.A. 170, a

distinction that echoes the FCC’s contrast between a

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commitment to “net neutrality per se” and “the threat of Title

II regulation,” 2018 Order ¶ 95.

We now turn to IA’s claims that the Commission gave

short shrift to benefits for edge investment arising from the

Title II Order. IA Br. 25–27. We are unconvinced. While

agreeing that it is critical not to overlook effects on edge

providers, the Commission found no evidence of either (1) “a

correlation between edge provider investment and Title II

regulation” or (2) a “causal relationship” between the Title II

Order and upswings in edge investment, which would need to

be demonstrated using a counterfactual analysis of the sort

employed on other matters in Hazlett and Wright’s paper. 2018

Order ¶ 107. Without claiming that edge investment would

have been higher absent the Title II Order, the Commission

pointed to data suggesting that “the strongest growth” for

certain edge providers and segments of the industry “predate[d]

the Title II Order.” Id. ¶ 108.

First, IA alleges a double standard as to the above: The

Commission sets a high bar to show causal links between edge

investment and the Title II Order while settling for less

exacting standards in finding that the Title II Order likely hurt

ISP investment. IA Br. 26. But we have already said that the

agency drew reasonable, and appropriately qualified,

conclusions on the latter issue. Second, IA says it is ironic that

the Commission asks for counterfactual analysis while putting

stock in the (allegedly) flawed Ford study. Id. Without

touching on the Ford-Hooton debate, we simply note that IA is

silent as to Hazlett and Wright’s methodology for running

counterfactual analyses, which the Commission treated as

reliable—and without any equivalent as to edge providers in

these proceedings. 2018 Order ¶ 107. Third, IA says the

Commission flouts Fox Television by ignoring the Title II

Order’s claim that edge innovation “depends upon low barriers

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to innovation and entry,” IA Br. 26–27 (quoting Verizon, 740

F.3d at 645 (quoting, in turn, Title II Order ¶ 14)). Here IA

begs the question. The thrust of the 2018 Order is that edge

investment will benefit on net from unburdening ISPs of

“onerous utility regulation.” 2018 Order ¶ 110. The

Commission argues, inter alia, that (1) the Title II Order failed

to take a properly “holistic view of the market(s) supplied by

ISPs,” and that “net gains to subscribers and edge providers,”

id. ¶ 119 (emphasis added), are best achieved without “heavy-

handed” Title II rules, id. ¶ 117; see also id. ¶¶ 120–121; (2)

“smaller edge providers may benefit from tiered pricing, such

as paid prioritization, as a means [both] of gaining [market]

entry,” id. ¶ 133, and “compet[ing] on a more even playing

field against large edge providers,” id. ¶ 255; (3) “ending the

flat ban on paid prioritization will encourage the entry of new

edge providers into the market, particularly those offering

innovative forms of service differentiation and

experimentation,” id.; see also id. at n.921 (reasoning that

“encourag[ing] differentiated services is important because

some online activities require only a minimal amount of

bandwidth but extremely low latency; other uses may require

greater bandwidth” (quoting Ericsson Comments at 5, WC Dkt.

No. 17-108 (July 17, 2017)); and (4) transparency rules,

coupled with ISPs’ economic incentives, can protect “Internet

openness,” ¶ 117; see also id. ¶ 142. Putting aside the merits

of these claims, which we address elsewhere, we do not find

that the Commission’s take on edge investment at Paragraphs

107–108 of the 2018 Order is either arbitrary or in conflict with

Fox Television.

IA also alleges that the Commission failed to grapple

properly with the Title II Order’s prediction of a possible short-

term downturn in investment, only touching cursorily on it at

Paragraph 247. See Title II Order ¶ 410; see also IA Br. 28 &

n.11. But the Commission, noting “that the vague Internet

83

Conduct Standard [of the Title II Order] subjects providers to

substantial regulatory uncertainty,” 2018 Order ¶ 247,

expressed doubt that this uncertainty was “likely to be short

term and [would] dissipate over time as the marketplace

internalizes [the] Title II approach,” id. (second alteration in

original) (quoting Title II Order ¶ 410).

Finally, Petitioners appear to believe that the Commission

arbitrarily downweighted a study, Robert W. Crandall, The

FCC’s Net Neutrality Decision and Stock Prices, 50 Rev.

Indus. Org. 555 (2017), finding that, despite release of the Title

II Order in March 2015, there had been no decline in the stock

prices of BIAS providers in the first half of 2015 relative to the

stock market generally. Mozilla Br. 70–71; see 2018 Order

¶ 93 n.346. (We note that the study relates only indirectly to

the issue of investment, although both derive from market

anticipations of future profit.) The agency had commented that

the study “may reflect the forward-looking, predictive

capabilities of market players.” 2018 Order ¶ 93 n.346. In its

brief before us the Commission confirms what an ordinary

reader would likely have made of that remark, namely, that the

market would have factored into the stock price investors’

expectations of the ultimate Commission action before it

occurred. Commission Br. 84 n.23. Anticipating this reading,

Petitioners see it as unreasonable, because it is tantamount to

using a “crystal ball, since reclassification was not the

preferred course announced by the Commission in the 2014

NPRM [¶ 148].” Mozilla Br. 71; see In re Protecting and

Promoting the Open Internet, 29 FCC Rcd. 5561, 5612–5613

¶ 148 (“2014 NPRM”).

Curiously, we have already opined on Paragraph 148 of

the 2014 NPRM for the Title II Order. In USTA we addressed

United States Telecom’s claim that because the NPRM

proposed to rely on Section 706 there was inadequate notice of

84

its ultimate use of Title II. We batted that out of the park in

one sentence, citing Paragraph 148’s call for comment on

possible use of Title II, USTA, 825 F.3d at 700, a call that the

Commission in fact proliferated in seven additional paragraphs

bursting with minutiae about the use of Title II, see 2014

NPRM ¶¶ 149–155. Moreover the May 2014 NPRM made

clear the Commission’s plan to impose new rules on industry.

See, e.g., id. ¶ 24. (“Today, we respond directly to that remand

[Verizon, 740 F.3d at 659] and propose to adopt enforceable

rules of the road * * * to protect and promote the open

Internet.”). Strikingly, United States Telecom’s claim of

inadequate notice did not suggest that the NPRM left it in the

dark on a single rule adopted in the Title II Order. USTA, 825

F.3d at 700.

We should add that the disputed Crandall article takes no

explicit note of the 2014 NPRM (though its charts suggest an

absence of any stock movement associated with it). See

Crandall, The FCC’s Net Neutrality Decision and Stock Prices,

50 Rev. Indus. Org. at 661 Figs. 1 & 2. Reading the article as

finding no stock price impact from the whole course of events,

however, does not ipso facto undermine the Commission’s

inference of a probable reduction in investment, as that

reduction might reflect firms’ strategies for minimizing the

Title II Order’s anticipated economic impact by reallocating

capital to other, similarly productive, uses, thereby keeping

stock prices mostly unaffected.

In sum, we stress again the Commission’s recognition that

the Title II Order’s effect on investment was subject to honest

dispute, focusing in Paragraphs 87–98 on what is “likely” to

happen, repeatedly flagging shortcomings in studies it cites,

and qualifying their probative force. It found modestly that

“[t]he balance of the evidence in the record suggests that Title

II classification has reduced ISP investment in broadband

85

networks.” 2018 Order ¶ 88. Further, claims about the Title

II Order’s effects on investment are only one element of the

Commission’s basis for believing that reclassification will

yield positive economic effects. We are, in short, unpersuaded

by Petitioners’ and Intervenors’ objections to the

Commission’s finding and their implicit claim that

uncertainties associated with that finding render arbitrary the

Commission’s overall judgment—that there are net public

policy benefits from reclassification, based not only on a

likelihood of increased investment and innovation but also on

the absence of any “discernable incremental benefit relative to

Title I classification.” Id. ¶ 87. This court “properly defers to

policy determinations invoking the [agency’s] expertise in

evaluating complex market conditions.” Gas Transmission

Nw. Corp. v. FERC, 504 F.3d 1318, 1322 (D.C. Cir. 2007).

B. Harms to Edge Providers and Consumers

Petitioners emphasize that, historically, the “FCC has

repeatedly found that [broadband providers] have the ability

and incentive to harm edge providers and consumers.” See

Mozilla Br. at 62 (citing 2010 Order ¶ 21 and Title II Order

¶ 20). According to Petitioners, the Commission ignored these

prior findings when it issued the 2018 Order. Under Fox

Television, when an agency changes its policy “a reasoned

explanation is needed for disregarding facts and circumstances

that underlay or were engendered by the prior policy.” 556

U.S. at 515–516. While “[a]n agency cannot simply disregard

contrary or inconvenient factual determinations that it made in

the past, any more than it can ignore inconvenient facts when it

writes on a blank slate,” Id. at 537 (Kennedy, J., concurring),

such is not the case here.

The Commission reasonably concluded that the harms the

Title II Order was designed to prevent did not require the prior

86

Order’s regulatory measures but could instead be mitigated—

at a lower cost—with transparency requirements, consumer

protection, and antitrust enforcement measures. Even if the

conduct rules lead to marginal deterrence, the Commission

determined that the “substantial costs” are “not worth the

possible benefits.” 2018 Order ¶ 245; see also id. ¶¶ 240–266.

In arriving at this conclusion, the Commissio

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