ORAL ARGUMENT NOT YET SCHEDULED BRIEF FOR RESPONDENTS IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT NOS. 11-1135 & 11-1136 CELLCO PARTNERSHIP D/B/A VERIZON WIRELESS, APPELLANT/PETITIONER, V. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, APPELLEE/RESPONDENTS. ON PETITION FOR REVIEW OF AN ORDER OF THE FEDERAL COMMUNICATIONS COMMISSION AUSTIN C. SCHLICK GENERAL COUNSEL PETER KARANJIA DEPUTY GENERAL COUNSEL RICHARD K. WELCH DEPUTY ASSOCIATE GENERAL COUNSEL LAURENCE N. BOURNE COUNSEL SHARIS A. POZEN ACTING ASSISTANT ATTORNEY GENERAL CATHERINE G. O’SULLIVAN FINNUALA K. TESSIER ATTORNEYS UNITED STATES DEPARTMENT OF JUSTICE WASHINGTON, D.C. 20530 FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 (202) 418-1740 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 1 of 135 CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASES 1. Parties. All parties, intervenors, and amici appearing in this Court and before the Commission are listed in the petitioner’s brief. 2. Ruling under review. Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other Providers of Mobile Data Services, Second Report and Order, 26 FCC Rcd 5411 (2011) (“Order”) (J.A. 1), 76 Fed. Reg. 26199 (May 6, 2011). 3. Related cases. This case has not previously been before this Court. We are not aware of any related case pending before this Court or any other Court. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 2 of 135 i TABLE OF CONTENTS TABLE OF CONTENTS .................................................................................. i TABLE OF AUTHORITIES .......................................................................... iii GLOSSARY.................................................................................................... ix JURISDICTION................................................................................................1 STATEMENT OF ISSUES...............................................................................2 STATUTES AND REGULATIONS ................................................................3 COUNTERSTATEMENT OF THE CASE......................................................3 COUNTERSTATEMENT OF THE FACTS....................................................5 I. STATUTORY AND REGULATORY BACKGROUND.........................5 II. THE ORDER ON REVIEW ....................................................................10 SUMMARY OF ARGUMENT ......................................................................21 ARGUMENT ..................................................................................................25 I. DEFERENTIAL STANDARDS OF REVIEW APPLY IN THIS CASE..............................................................................................26 II. THE DATA ROAMING RULE IS WITHIN THE FCC’S STATUTORY AUTHORITY..................................................................28 A. The FCC Correctly Determined That The Data Roaming Rule Is Within Its Authority Under The Communications Act. ......................................................................................................28 1. The Data Roaming Requirement Does Not Impose A Common-Carriage Obligation On Host Providers..........................29 2. Specific Grants of Authority In The Communications Act Expressly Authorize The FCC To Manage Spectrum And To Impose Conditions On Licenses To Further The Public Interest, Convenience, And Necessity. ........................................................................................46 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 3 of 135 ii B. Section 706 Of The Telecommunications Act Of 1996 Independently Authorizes The Data Roaming Rule. ..........................53 C. Verizon’s Fifth Amendment Argument Is Meritless, And Provides No Basis For Displacing Chevron Deference In This Case. ............................................................................................56 III. THE DATA ROAMING RULE IS THE PRODUCT OF REASONED AGENCY DECISIONMAKING ......................................60 CONCLUSION ...............................................................................................63 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 4 of 135 iii TABLE OF AUTHORITIES CASES American Library Ass’n v. FCC, 406 F.3d 689 (D.C. Cir. 2005).................................................................................... 27, 52 American Trucking Ass’n v. FCC, 377 F.2d 121 (D.C. Cir. 1966)...........................................................................................43 AT&T v. FCC, 572 F.2d 17 (2d Cir. 1978) .....................................................31 Bell Atl. Tel. Cos. v. FCC, 24 F.3d 1441 (D.C. Cir. 1994)............................................................................................... 24, 56, 59 * Bldg. Owners and Managers Ass’n Int’l v. FCC, 254 F.3d 89 (D.C. Cir. 2001) ............................................. 24, 56, 57, 59, 60 Cablevision Sys. Corp. v. FCC, 570 F.3d 83 (2d Cir. 2009)..................................................................................................... 24, 57 Cablevision Sys. Corp. v. FCC, 649 F.3d 695 (D.C. Cir. 2011).....................................................................................................46 California Citizens Band Ass’n v. U.S., 375 F.2d 43 (9th Cir. 1967) .............................................................................................49 Cellnet Commc’ns v. FCC, 149 F.3d 429 (6th Cir. 1998)............................................................................................................52 Celtronix Telemetry, Inc. v. FCC, 272 F.3d 585 (D.C. Cir. 2001)...................................................................................... 2, 49 Chevron USA, Inc. v. NRDC, 467 U.S. 837 (1984) ........................... 21, 26, 27 Cmty. Television, Inc. v. FCC, 216 F.3d 1133 (D.C. Cir. 2000).....................................................................................................49 Comcast Corp. v. FCC, 600 F.3d 642 (D.C. Cir. 2010)............................................................................................................55 * Competitive Telecomms. Ass’n v. FCC, 998 F.2d 1058 (D.C. Cir. 1993)............................................................................. 7, 41 CompuServe, Inc. v. Cyber Promotions, Inc., 962 F. Supp. 1015 (S.D. Ohio 1997)......................................................................58 Consumer Electronics Ass’n v. FCC, 347 F.3d 291 (D.C. Cir. 2003)...........................................................................................28 FCC v. Midwest Video Corp., 440 U.S. 689 (1979) ........ 29, 30, 33, 34, 35, 36 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 5 of 135 iv FCC v. Pottsville Broad. Co., 309 U.S. 134 (1940)........................................29 FCC v. Sanders Bros. Radio Station, 309 U.S. 470 (1940) ..........................................................................................................50 FCC v. WNCN Listeners Guild, 450 U.S. 582 (1981) ....................................................................................... 27, 28, 29, 62 Iowa Telecomms. Servs. v. Iowa Utils. Bd., 563 F.3d 743 (8th Cir. 2009) ......................................................................... 36, 37, 38 Lichoulas v. FERC, 606 F.3d 769 (D.C. Cir. 2010)........................................45 * Nat’l Ass’n of Regulatory Util. Comm’rs v. FCC, 525 F.2d 630 (D.C. Cir. 1976) ............................................. 7, 30, 31, 32, 33 * Nat’l Ass’n of Regulatory Util. Comm’rs v. FCC, 533 F.2d 601 (D.C. Cir. 1976) ........................................... 29, 30, 32, 34, 38 * Nat’l Broad. Co. v. United States, 319 U.S. 190 (1943) ............................................................................................. 22, 47, 48 Nat’l R.R. Passenger Corp. v. Boston & Maine Corp., 503 U.S. 407 (1992).........................................................................26 Orloff v. FCC, 352 F.3d 415 (D.C. Cir. 2003)................................. 6, 7, 36, 37 Penn Central Transp. v. New York City, 438 U.S. 104 (1978) ...................................................................................................57 Qwest Corp. v. United States, 48 Fed. Cl. 672 (2001) ..........................................................................................................58 Regents of University System of Georgia v. Carroll, 338 U.S. 586 (1950) ....................................................................................50 Schurz Commc’ns, Inc. v. FCC, 982 F.2d 1043 (7th Cir. 1992).............................................................................................. 22, 29 Sprint Corp. v. FCC, 331 F.3d 952 (D.C. Cir. 2003)......................................46 Sw. Bell Tel. Co. v. FCC, 19 F.3d 1475 (D.C. Cir. 1994)................................................................................... 29, 30, 32, 33, 34 Transmission Agency of N. California v. FERC, 495 F.3d 663 (D.C. Cir. 2007) .................................................................... 21, 27 Turner Broad. Sys., Inc. v. FCC, 819 F. Supp. 32 (D.D.C. 1993), vacated on other grounds, 512 U.S. 622 (1994) ...........................................................................................58 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 6 of 135 v U.S. Telecom Ass’n v. FCC, 295 F.3d 1326 (D.C. Cir. 2002).............................................................................................. 26, 31 * United States v. Midwest Video Corp., 406 U.S. 649 (1972) ................................................................................................... 34, 35 United States v. Riverside Bayview Homes, Inc., 474 U.S. 121 (1985) ....................................................................................60 United States v. Sw. Cable Co., 392 U.S. 157 (1968)........................ 34, 50, 52 Vernal Enters., Inc. v. FCC, 355 F.3d 650 (D.C. Cir. 2004).......................................................................................................2 Virgin Islands Tel. Corp. v. FCC, 198 F.3d 921 (D.C. Cir. 1999)...........................................................................................32 WBEN, Inc. v. FCC, 396 F.2d 601 (2d Cir. 1968) ..........................................49 Western Union Int’l v. FCC, 568 F.2d 1012 (2d Cir. 1977)............................................................................................................43 ADMINISTRATIVE DECISIONS Appropriate Regulatory Treatment for Broadband Access to the Internet Over Wireless Networks, 22 FCC Rcd 5901 (2007) ............................................................... 11, 19, 52 Cellular Report & Order, 86 FCC 2d 469 (1981) ..................................... 9, 51 Deployment of Wireline Services Offering Advanced Telecommunications Capability, 13 FCC Rcd 24012 (1998) ...............................................................................................55 Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, Seventh Broadband Progress Report and Order on Reconsideration, 26 FCC Rcd 8008 (2011) ................................................55 Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, Sixth Broadband Deployment Report, 25 FCC Rcd 9556 (2010) .................................................................................................55 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 7 of 135 vi Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, 11 FCC Rcd 18455 (1996), petition for review denied, Cellnet Commc’ns v. FCC, 149 F.3d 429 (6th Cir. 1998)............................................................................................................52 Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, 11 FCC Rcd 9462 (1996)..........................................................................................51 Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, Order on Reconsideration, 14 FCC Rcd 16340 (1999) ..............................................52 Orloff v. Vodafone Airtouch Licenses LLC, D/B/A Verizon Wireless, 17 FCC Rcd 8987 (2002), aff’d Orloff v. FCC, 352 F.3d 415 (D.C. Cir 2003).............................................37 Preserving the Open Internet, 25 FCC Rcd 17905 (2010), pet. for review pending, Verizon v. FCC, D.C. Cir. Nos. 11-1155 & 11-1156 (filed Sept. 30, 2011)......................................................................................................53 Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other Providers of Mobile Data Services, 25 FCC Rcd 4181 (2010) .................................................................... 14, 18, 38 Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers, 22 FCC Rcd 15817 (2007) ........................................ 8, 9, 10, 11, 38, 39, 44, 51 STATUTES AND REGULATIONS 5 U.S.C. § 706(2)...............................................................................................3 15 U.S.C. § 1 ...................................................................................................16 28 U.S.C. § 2342(1) ..........................................................................................2 47 U.S.C. § 152(a)...........................................................................................52 47 U.S.C. § 153(11) ................................................................................. 34, 53 47 U.S.C. § 153(51) ..................................................................... 19, 22, 29, 53 47 U.S.C. § 153(53) ........................................................................................19 47 U.S.C. § 201 ...............................................................................................10 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 8 of 135 vii 47 U.S.C. § 201 et seq.....................................................................................15 47 U.S.C. § 201(b).............................................................................................7 47 U.S.C. § 202 ...............................................................................................10 47 U.S.C. § 202(a)...................................................................................... 7, 37 47 U.S.C. § 208 ...............................................................................................17 47 U.S.C. § 209 ...............................................................................................17 47 U.S.C. § 301 ...............................................................................................20 47 U.S.C. § 301 et seq.......................................................................................5 47 U.S.C. § 303 ...............................................................................................20 * 47 U.S.C. § 303(b).......................................................................... 5, 22, 28, 48 * 47 U.S.C. § 303(g).......................................................................... 6, 22, 28, 47 * 47 U.S.C. § 303(r) .......................................................................... 6, 22, 28, 47 47 U.S.C. § 309 .............................................................................. 6, 20, 22, 28 47 U.S.C. § 309(j)(3).......................................................................................48 * 47 U.S.C. § 316 ............................................................................ 20, 22, 28, 49 47 U.S.C. § 316(a).............................................................................................6 47 U.S.C. § 332(c)(1) ....................................................................................6, 7 47 U.S.C. § 332(c)(2) ............................................................... 8, 18, 22, 29, 53 47 U.S.C. § 332(d)(1)........................................................................................8 47 U.S.C. § 332(d)(3)........................................................................................8 47 U.S.C. § 402(a).............................................................................................2 47 U.S.C. § 402(b)(5)........................................................................................2 47 U.S.C. § 541(c).................................................................................... 36, 53 47 U.S.C. § 543 ...............................................................................................36 47 U.S.C. § 1302 ................................................................................ 20, 24, 53 47 U.S.C. § 1302(a).........................................................................................54 47 U.S.C. § 1302(b) ........................................................................................54 47 U.S.C. § 1302(d)(1)....................................................................................54 47 C.F.R. § 20.12(d)..................................................................... 10, 39, 40, 44 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 9 of 135 viii 47 C.F.R. § 20.12(e)........................................................................................44 47 C.F.R. § 20.3 ......................................................................................... 8, 11 * Cases and other authorities principally relied upon are marked with asterisks. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 10 of 135 ix GLOSSARY 3G Third generation mobile broadband service Act The Communications Act of 1934, as amended AT&T AT&T Corp. Br. Brief CMRS Commercial mobile radio service Commission or FCC Federal Communications Commission J.A. Joint Appendix Verizon Cellco Partnership d/b/a Verizon Wireless USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 11 of 135 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT NOS. 11-1135 & 11-1136 CELLCO PARTNERSHIP D/B/A VERIZON WIRELESS, APPELLANT/PETITIONER, V. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, APPELLEE/RESPONDENTS. ON PETITION FOR REVIEW OF AN ORDER OF THE FEDERAL COMMUNICATIONS COMMISSION BRIEF FOR RESPONDENTS JURISDICTION The Order on review was released on April 7, 2011, and a summary thereof was published in the Federal Register on May 6, 2011. Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other Providers of Mobile Data Services, Second Report and Order, 26 FCC Rcd 5411 (2011) (“Order”) (J.A. 1), 76 Fed. Reg. 26199 (May 6, 2011). Cellco Partnership d/b/a/ Verizon Wireless (“Verizon”) filed its appeal (Case No. 11-1135) and its petition for review (Case No. 11-1136) USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 12 of 135 2 of the Order on May 13, 2011. This Court’s jurisdiction rests on 47 U.S.C. § 402(a) and 28 U.S.C. § 2342(1). 1 STATEMENT OF ISSUES “Data roaming” allows consumers to obtain data services over their cellular phones and other mobile devices when they travel outside their own wireless provider’s network coverage area, by relying on another wireless provider’s network. For example, data roaming may be necessary for a customer who lives in West Virginia to access the Internet in Washington, D.C., using her “smartphone.” In the Order on review, the Federal Communications Commission (“FCC” or “Commission”) found that some wireless providers were refusing to negotiate data roaming arrangements with other providers, and that this was preventing seamless nationwide access to 1 Verizon’s notice of appeal in Case No. 11-1135 asserts that the Order modifies its wireless licenses within the meaning of 47 U.S.C. § 402(b)(5). Notice of Appeal, Case No. 11-1135, at 2 (filed May 13, 2011). Section 402(b), however, does not apply to license modifications effectuated by a generally applicable rulemaking order (like the Order challenged here), rather than in a licensee-specific adjudication. See, e.g., Celtronix Telemetry, Inc. v. FCC, 272 F.3d 585, 587, 589 (D.C. Cir. 2001) (dismissing section 402(b) appeal of FCC order that “alter[ed] the term[s] of existing licenses by rulemaking” and instead accepting concurrently filed petition for review under 47 U.S.C. § 402(a)). Because sections 402(a) and 402(b) provide “mutually exclusive” channels for review of FCC orders, the Court should dismiss Case No. 11-1135 for want of jurisdiction and hear the petition for review filed under section 402(a) in Case No. 11-1136. Vernal Enters., Inc. v. FCC, 355 F.3d 650, 655 (D.C. Cir. 2004). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 13 of 135 3 mobile data services. The Commission accordingly required providers of mobile data services to offer to negotiate data roaming arrangements with other such providers, while leaving the providers broad flexibility to agree on individualized terms on a case-by-case basis. The questions presented are as follows: 1. Whether the FCC acted within its statutory authority when it adopted a rule requiring facilities-based providers of commercial mobile data services to offer to negotiate individually tailored data roaming arrangements with other such providers on commercially reasonable terms. 2. Whether the FCC acted within its discretion under the Administrative Procedure Act, 5 U.S.C. § 706(2), in concluding that the rule it adopted is in the public interest. STATUTES AND REGULATIONS Pertinent statutes and regulations are appended to this brief. COUNTERSTATEMENT OF THE CASE Propelled by the increasing popularity of smartphones (like Apple’s iPhone) and tablets (like the iPad), consumer demand for mobile Internet access has exploded in recent years. Today, tens of millions of Americans rely on wireless devices to access mobile broadband service for business or personal use. The utility of mobile broadband service, however, is seriously USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 14 of 135 4 eroded if consumers lose connectivity when they travel (or “roam”) outside their own wireless provider’s network coverage area. Data roaming agreements between service providers address this problem and thereby expand consumer access to nationwide mobile broadband service. In a notice-and-comment rulemaking proceeding, the FCC considered the need for rules addressing data roaming arrangements between providers of mobile broadband service. The administrative record showed that wireless providers had been unable to secure data roaming arrangements – that would enable them to offer the nationwide coverage needed for a competitive product offering – with AT&T and Verizon (by far the two largest wireless providers, whose networks use wide swaths of FCC-licensed spectrum across the country). On that record, the FCC in the Order on review exercised its authority under Title III of the Communications Act of 1934, among other statutory provisions, to adopt a rule that requires facilities-based providers of commercial mobile data services to offer to negotiate data roaming agreements with each other on individualized terms and conditions. In addition to facilitating consumer access to nationwide mobile broadband service, the FCC found that the rule would promote investment in and USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 15 of 135 5 deployment of mobile broadband networks as well as competition among multiple providers of mobile data services. Verizon – alone among all commercial mobile data services providers – now challenges the FCC’s data roaming rule in this Court. COUNTERSTATEMENT OF THE FACTS I. STATUTORY AND REGULATORY BACKGROUND 1. Title III of the Communications Act of 1934, 47 U.S.C. §§ 301 et seq. (“the Act”), grants the Commission broad authority to oversee radio transmission in the United States. Section 301 provides that “[i]t is the purpose of this [Act], among other things, to maintain the control of the United States over all the channels of radio transmission; and to provide for the use of such channels, but not the ownership thereof, by persons for limited periods of time, under licenses granted by Federal authority.” 47 U.S.C. § 301. To further that broad purpose, various provisions of section 303 of the Act authorize the FCC, subject to what the “public convenience, interest, or necessity requires,” to “[p]rescribe the nature of the service to be rendered by each class of licensed stations and each station within any class,” 2 to “encourage the larger and more effective use of radio in the public 2 47 U.S.C. § 303(b). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 16 of 135 6 interest,” 3 and to “prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry out the provisions of this [Act]” in the public interest. 4 In addition, section 316 authorizes the FCC to modify existing licenses to impose new conditions on the licensee’s operations if “such action will promote the public interest, convenience, and necessity, or the provisions of this [Act] . . . will be more fully complied with.” 47 U.S.C. § 316(a). To date, the Commission has exercised its Title III authority to allocate wireless communications spectrum for use on both a “common carrier” and “private carriage” basis. Common carriage historically involved the filing of tariffs, and prior review and approval of rates by the Commission, to ensure that they were cost-based and not discriminatory. See Orloff v. FCC, 352 F.3d 415, 419-20 (D.C. Cir. 2003) (describing traditional common-carrier regulation). In recent decades and with Congressional approval (see 47 U.S.C. § 332(c)(1)), the Commission determined that competitive market conditions allowed it to relax some of the traditional attributes of common- carrier regulation for wireless carriers, and it thus dispensed with tariffing 3 Id. § 303(g). 4 Id. § 303(r); see also id. § 309 (providing for conditions on the grant of spectrum licenses). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 17 of 135 7 requirements and ex ante rate review. Orloff, 352 F.3d at 419. But the Commission has continued to enforce the core common-carrier requirements (set out in sections 201 and 202 of the Act, 47 U.S.C. §§ 201(b) and 202(a)) that rates and terms of common-carriage wireless services must be just, reasonable and not unreasonably discriminatory. Orloff, 352 F.3d at 419. A common carrier that is eligible for regulatory flexibility may negotiate rates and terms with a particular customer, but the resulting rates and terms conform to common-carriage principles because the carrier must make them available to other similarly situated customers as well. Competitive Telecomms. Ass’n v. FCC, 998 F.2d 1058, 1063-64 (D.C. Cir. 1993). Thus, despite recent regulatory flexibility, the essential distinction between common-carrier and non-common-carrier services remains that the former are provided “indifferently” to all comers, while the latter are provided on the basis of “individualized decisions, in particular cases, whether and on what terms to deal.” Nat’l Ass’n of Regulatory Util. Comm’rs v. FCC, 525 F.2d 630, 641 (D.C. Cir. 1976) (“NARUC I”). As required by Congress, the Commission’s rules provide for common- carrier treatment of commercial mobile radio service, or “CMRS.” 47 U.S.C. § 332(c)(1). CMRS is defined as a mobile service that is “provided for profit,” “interconnected” to the public switched telephone network, and USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 18 of 135 8 available on a common-carrier basis – i.e., “[a]vailable to the public, or to such classes of eligible users as to be effectively available to a substantial portion of the public.” 47 C.F.R. § 20.3; see 47 U.S.C. § 332(d)(1) (defining “commercial mobile service”). By contrast, “private mobile radio services” are mobile services that do not qualify as CMRS or “the functional equivalent” of CMRS. 47 C.F.R. § 20.3; see also 47 U.S.C. § 332(d)(3) (parallel definition of “private mobile service”). “A person engaged in the provision of a service that is a private mobile service shall not, insofar as such person is so engaged, be treated as a common carrier.” 47 U.S.C. § 332(c)(2). 2. Roaming allows subscribers of one wireless carrier to use the network facilities of another “host” provider when making calls. Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers, 22 FCC Rcd 15817, 15819 (¶ 5) (2007) (“2007 Order”). Roaming is essential to wireless communications when the subscriber is outside the geographic reach of his or her provider’s wireless towers and other network facilities. Pursuant to the Communications Act, the FCC has adopted policies designed to make roaming available to users of common-carrier CMRS almost since the advent of such services. These policies have contributed substantially to the expansion of wireless services to reach “more than 300 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 19 of 135 9 million mobile voice subscribers,” virtually all of whom have “access to nationwide voice services and roaming.” Order, 26 FCC Rcd at 5479 (Statement of Chairman Genachowski) (J.A. 69). In 1981, the FCC adopted “manual” roaming requirements – under which the CMRS subscriber establishes a relationship directly with the roaming host provider (for example, by giving that provider a credit card number). Order ¶ 3 (J.A. 2) (citing Cellular Report & Order, 86 FCC 2d 469 (1981)). In 2007, the Commission stated that CMRS providers also had a common-carrier duty to provide “automatic” roaming services – which do not require subscribers to establish separate relationships with the host provider 5 – to other carriers upon just, reasonable and nondiscriminatory rates, terms, and conditions. Order ¶ 4 (J.A. 3) (citing 2007 Order, 22 FCC Rcd at 15818 (¶ 1)). The FCC determined at that time that the manual and automatic roaming obligations applied, subject to certain technical specifications, to CMRS carriers’ “real-time, two-way switched voice or data services . . . that are interconnected with the public switched network” (“interconnected roaming”). Order ¶ 4 (J.A. 3) (citing 2007 Order, 22 FCC Rcd at 15837 (¶ 54)). 5 With automatic roaming, the subscriber’s own provider establishes a pre- existing contractual arrangement for roaming services with the host provider. Order ¶ 3 n.2 (J.A. 2). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 20 of 135 10 Thus, before the Order on review, roaming obligations (1) applied only to interconnected services (principally roaming for wireless “voice” calls), and (2) consistent with the statutory classification of CMRS as common carriage, required that roaming be provided on the same terms to similarly situated customers. To implement this common-carriage obligation, the FCC further established a presumption (codified at 47 C.F.R. § 20.12(d)) that one wireless carrier’s request for automatic interconnected roaming from another wireless carrier must be accommodated under sections 201 and 202 of the Act, 47 U.S.C. §§ 201 & 202, as long as the requesting carrier’s network is technologically compatible with the host’s network. Order ¶ 4 (J.A. 3) (citing 2007 Order, 22 FCC Rcd at 15831 (¶ 33)). II. THE ORDER ON REVIEW 1. Data Roaming Requests for Comment. At the same time it established automatic roaming obligations for interconnected services in 2007, the FCC also sought comment on whether it should adopt roaming requirements for non-interconnected data services – “including information services or other non-CMRS services offered by CMRS carriers.” Order ¶ 6 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 21 of 135 11 (J.A. 4) (citing 2007 Order, 22 FCC Rcd at 15845 (¶ 77)). 6 In 2010, the FCC sought further comment and a refreshed record on this issue. Of the approximately two dozen interested parties that filed formal comments with the agency – including most major providers of mobile data services – only AT&T and Verizon opposed data roaming requirements. Order ¶ 12 (J.A. 7). 2. Data Roaming Rule. Based on the record compiled in response to the 2007 and 2010 requests for public comment, the FCC adopted a data roaming rule requiring facilities-based providers of commercial mobile data services to offer to negotiate individualized data roaming agreements with other such providers on commercially reasonable terms. Order ¶ 1 (J.A. 1). 7 6 In 2007, the Commission concluded that mobile wireless broadband Internet access service (one of the core consumer services facilitated under carriers’ data roaming arrangements) is not CMRS because “such broadband service is not an ‘interconnected service.’” Appropriate Regulatory Treatment for Broadband Access to the Internet Over Wireless Networks, 22 FCC Rcd 5901, 5917-18 (¶ 45) (2007) (“2007 Wireless Broadband Order”) (“Mobile wireless broadband Internet access services do not ‘give subscribers the capability to communicate to or receive communications from all other users on the public switched network.’”) (quoting 47 C.F.R. § 20.3). 7 A “commercial mobile data service” is “any mobile data service that is not interconnected with the public switched network but is (1) provided for profit; and (2) available to the public or to such classes of eligible users as to be effectively available to the public.” Order ¶ 1 n.1 (J.A. 2) (emphasis added). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 22 of 135 12 a. The FCC determined that a data roaming rule would “promote consumer access to seamless mobile data coverage nationwide;” “appropriately balance the incentives for new entrants and incumbent providers to invest in and deploy advanced networks across the country;” and “foster competition among multiple providers in the industry.” Order ¶ 13 (J.A. 8). These anticipated benefits were especially important because, with the rapid growth of smartphone usage, mobile data services were becoming “an increasingly significant part of the lives of American consumers,” who “expect to be able to have access to the full range of services . . . wherever they go.” Order ¶¶ 14, 15 (J.A. 8-9). Yet, the record indicated that the availability of data roaming arrangements would be critical to enabling consumers to have a competitive choice of facilities-based providers offering nationwide access to mobile data services. Id. ¶ 15 (J.A. 9-10). The FCC found, for instance, that without roaming service from the major carriers, consumers in rural areas – “where mobile data services may be solely available from small rural providers” – would lose mobile broadband access whenever they traveled outside their providers’ small geographic license areas. Id. ¶ 15 & n.51 (J.A. 9). And even in areas served by large national networks, the FCC determined, the unavailability of data roaming USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 23 of 135 13 arrangements could hamper the competitive viability of smaller providers that might offer high-quality or low-cost service where they have a network, but would be unable to offer service of sufficient geographic scope to serve the needs of some customers. Id. ¶ 15 & n.52 (J.A. 9). Rejecting claims by AT&T and Verizon that a data roaming rule was unnecessary because voluntary agreements will be reached without regulation, the FCC credited comments by numerous industry participants that they had “encountered significant difficulties obtaining data roaming arrangements on advanced ‘3G’ data networks, particularly from the major nationwide providers.” Order ¶ 24 (J.A. 14). The FCC found that, although AT&T had been offering retail 3G data services since 2005 and was providing coverage to 275 major metropolitan areas by May 2008, it did not enter into any data roaming agreements for that service until the FCC was days away from adopting a mandatory data roaming requirement. Order ¶ 25 (J.A. 14-15). Similarly, Verizon “had only nine [3G data] roaming agreements as of April 2010, even though its [3G] network ha[d] been in operation since October of 2003.” Id. ¶ 26 (J.A. 15-16). The FCC noted that the major carriers’ negotiation of a handful of roaming arrangements for data services after the FCC’s 2010 request for comment on a data roaming rule “may have been the result of large providers seeking to defuse an issue under USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 24 of 135 14 active Commission consideration and may not accurately reflect the ability of the requesting providers to obtain roaming arrangements in the future” if the agency declined to adopt a data roaming rule. Order ¶ 27 (J.A. 16). 8 The FCC further found that the benefits of a data roaming requirement would not be limited to meeting consumers’ expectations. “[B]y ensuring that providers wanting to invest in their networks can offer subscribers a competitive level of mobile network coverage,” a data roaming requirement also would “encourage investment in and deployment of broadband networks by multiple service providers, including large nationwide providers, regional providers and small providers.” Order ¶ 16 (J.A. 10). The record showed that data roaming could be particularly critical during a provider’s “early period of investment and buildout” in a market, because it enables the 8 The FCC’s prior experience gave it additional reason to doubt that data roaming agreements would be forthcoming in the absence of a rule. The FCC noted that, in 2007, it had declined to require carriers to provide interconnected roaming to requesting carriers in the requester’s licensed service areas on the assumption that carriers would voluntarily negotiate such agreements while they built out their facilities within their areas of license. In 2010, however, the agency recognized that the exclusion “reduc[ed] the availability of home roaming arrangements” – and accordingly eliminated it. Order ¶ 27 (J.A. 16) (quoting Reexamination of Roaming Obligations of Commercial Mobile Radio Service Providers and Other Providers of Mobile Data Services, 25 FCC Rcd 4181, 4195 (¶¶ 26, 28) (2010) (“2010 Reconsideration”)). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 25 of 135 15 company to enter the market with “a competitive level of local coverage.” Id. ¶ 18 (J.A. 11); see also id. ¶ 19 (J.A. 11-12) (citing record evidence). Balanced against the substantial benefits of the data roaming rule – in the form of increased investment in broadband networks, increased competitive choice for consumers, and related benefits, such as lower prices, increased data usage, and incentives for providers to develop innovative data services, Order ¶¶ 28-31 (J.A. 17-18) – the FCC determined that any costs associated with the rule were relatively small, id. ¶ 32 (J.A. 19). The Commission stressed that “neither AT&T nor Verizon state that they would invest less under a roaming obligation,” id. ¶ 33 (J.A. 19), and the rule allows roaming hosts to insist on terms that protect their networks against congestion or technically incompatible uses, id. ¶ 35 (J.A. 20). b. In adopting the new rule, the FCC expressly declined the request of several industry participants to impose a data roaming obligation as a common-carriage duty under Title II of the Communications Act, 47 U.S.C. §§ 201 et seq. See Order ¶ 70 (J.A. 37). Instead, the FCC required commercial mobile data service providers to offer to negotiate data roaming arrangements with other such providers. Order ¶ 1 (J.A. 1). The host provider is free to insist on any “commercially reasonable” term or condition for roaming that it thinks appropriate given the “individualized USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 26 of 135 16 circumstances,” and is not required “to serve all comers indiscriminately on the same or standardized terms.” Order ¶ 45 (J.A. 23). While providers may not engage in conduct that “unreasonably restrains trade,” id., 9 the Commission emphasized that it expected the flexible “standard of commercial reasonableness” to “accommodate a variety of terms and conditions in data roaming,” Order ¶ 81 (J.A. 41). See also id. ¶¶ 68 (J.A. 35) (“providers will have flexibility with regard to roaming charges, subject to a general requirement of commercial reasonableness”), 78 (J.A. 40) (“duty to offer data roaming arrangements on commercially reasonable terms and conditions will allow for greater flexibility and variation in terms and conditions”). The agency emphasized that the Order does not subject covered providers to a common-carriage requirement of “just, reasonable and nondiscriminatory” rates, terms, and conditions. Order ¶ 68 & n.198 (J.A. 35). 9 The Commission’s analysis under the Communications Act and its implementing regulations is distinct from the analysis the Department of Justice would perform under the antitrust laws, and the rules at issue here should not be viewed as setting forth standards for determining whether particular conduct would violate the antitrust laws. For example, whether conduct “unreasonably restrains trade” in violation of the Order (see ¶¶ 45, 85 (J.A. 23, 42)) is not determined by whether it would violate section 1 of the Sherman Act, 15 U.S.C. § 1. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 27 of 135 17 The FCC specified other express freedoms allowed under the rule. The rule permits hosts to deny roaming to requesting providers either when those providers are not technologically compatible, or when it is not technically or economically feasible to provide roaming in connection with the particular data service for which roaming is requested. Id. ¶¶ 43, 46-47 (J.A. 22-23, 23- 24). Responding to AT&T’s concerns and rejecting requests by many commenters for a broader rule, id. ¶ 48 & nn. 135-137 (J.A. 24-25), the agency also specified that a host reasonably is allowed to condition the availability of a data roaming arrangement on the requesting provider’s provision of mobile data service to its own subscribers using a generation of wireless technology comparable to that on which the requesting provider seeks to roam, id. ¶¶ 43, 48 (J.A. 22-23, 24-25). Finally, the FCC explained that host providers are free to negotiate “commercially reasonable measures to safeguard quality of service against network congestion that may result from roaming traffic or to prevent harm to their networks.” Id. ¶ 52 (J.A. 26). Under the new data roaming rule, enforcement is subject to case-by- case adjudication – either through complaint procedures that the FCC established, or through declaratory ruling proceedings. Order ¶ 75 (J.A. 39). The FCC determined, however, that because these enforcement procedures do not arise under sections 208 and 209 of the Act, 47 U.S.C. §§ 208 & 209 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 28 of 135 18 (which specifically provide for a damages remedy against common carriers), damages – which are available for violations of the interconnected roaming rules – are not available for violations of the data roaming rule. Order ¶ 76 (J.A. 39). The FCC also declined to impose time limits for data roaming negotiations, finding that some negotiations may be more complex than others, and “[a] single time limit for all negotiations” therefore “would not be appropriate.” Id. ¶ 84 (J.A. 42). The FCC rejected the contentions of AT&T and Verizon that its data roaming requirements would violate the limitation in section 332(c)(2) of the Communications Act that “[a] person engaged in the provision of a service that is a private mobile service shall not, insofar as such person is so engaged, be treated as a common carrier for any purpose under this [Act].” 47 U.S.C. § 332(c)(2). The FCC found it unnecessary to decide whether some or all forms of data roaming are private mobile services subject to the common- carriage limitation. 10 This issue had no practical significance because, for reasons the agency explained in detail, the Order does not impose a common- 10 See Order ¶ 59 (J.A. 29) (noting MetroPCS’s argument that data roaming is a pure common-carriage transmission service); 2010 Reconsideration, 25 FCC Rcd at 4216-17 (¶ 68) (noting that the provision of roaming access to information services can involve either transmission of the packets to the roaming subscriber’s native network or direct support of the information service by the host provider). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 29 of 135 19 carriage obligation. See Order ¶ 68 (J.A. 34) (the “data roaming rule[] we adopt do[es] not amount to treating mobile data service providers as ‘common carriers’ under the Act”). The FCC likewise rejected Verizon’s contention that the rule violates the prohibition (now codified in 47 U.S.C. § 153(51)) against imposing common-carrier regulation on non- telecommunications services. See Order ¶¶ 60, 68 (J.A. 29, 34-36). 11 In that regard, AT&T and Verizon had argued to the FCC that their few existing data roaming agreements did not involve common carriage because they were not “‘undertaking to carry for all people indifferently.’” Order ¶ 68 & n.197 (J.A. 35) (citing Verizon filing). Verizon, for instance, stressed in the agency’s proceeding that it made “‘individualized decisions, in particular cases, whether and on what terms to deal’ with potential roaming partners.” 12 And it described its voluntary, non-common carriage practice as a “commercially reasonable, market-based approach” that was “in no way 11 Like the dichotomy between CMRS (subject to common-carrier treatment) and “private mobile service” (not subject to such treatment), the Communications Act distinguishes between a “telecommunications service” (subject to common-carrier treatment) and an “information service” (not subject to such treatment). See 47 U.S.C. § 153(51), (53). The 2007 Wireless Broadband Order classified mobile broadband Internet access as an “information service.” 22 FCC Rcd at 5909-14 (¶¶ 19-34). 12 Reply Comments of Verizon Wireless at 32 (July 12, 2010) (J.A. 397) (quoting Verizon Wireless Comments at 31-32 (June 14, 2010) (J.A. 248- 49)). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 30 of 135 20 intended to freeze out potential roaming partners.” Verizon Reply Comments at 32 n.102 (J.A. 397) (emphasis added). Similarly, AT&T stated that it did not offer data roaming on a common-carrier basis, because it “does not have a standing roaming offer to all similarly situated providers, but rather negotiates specific contracts on an individualized, case-by-case basis.” 13 Pointing to the providers’ own recognition that their “commercially reasonable” data roaming arrangements did not involve common carriage, the FCC explained why the Order similarly does not impose a common-carriage obligation: The rule we adopt will allow individualized service agreements and will not require providers to serve all comers indifferently on the same terms and conditions. Providers can negotiate different terms and conditions on an individualized basis, including prices, with different parties. The commercial reasonableness of terms offered to a particular provider may depend on numerous individualized factors . . . [and are not subject to] common carrier obligation[s] under Sections 201 and 202 of the Act. . . . Order ¶ 68 (J.A. 35-36) (emphasis added). The FCC identified express statutory authority for its data roaming requirement under Title III of the Communications Act. Order ¶¶ 62-64 (J.A. 30-33) (citing, e.g., 47 U.S.C. §§ 301, 303, 309, 316, 1302). The underlying “public interest” standard, which applies to virtually all 13 AT&T Inc. Comments at 19 (June 14, 2010) (J.A. 100). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 31 of 135 21 Commission actions under Title III, was also satisfied by, for example, facilitating consumer access to ubiquitous wireless broadband service and encouraging investment in and buildout of advanced data services. Order ¶¶ 63-64 (J.A. 32-33). Finally, the FCC rejected Verizon’s contention that the data roaming rule unlawfully imposed either a physical or regulatory taking of the host provider’s property. Order ¶ 69 (J.A. 36-37). The agency explained that “the issuance of an FCC license does not provide the licensee with any rights that can override the Commission’s proper exercise of its regulatory power over the spectrum.” Id. In any event, there could be no takings violation because an opportunity to obtain “just” compensation is guaranteed under the “commercially reasonable” standard embedded in the data roaming rule. Id. SUMMARY OF ARGUMENT 1. The FCC’s interpretation of the Communications Act is subject to review under the deferential standards of Chevron USA, Inc. v. NRDC, 467 U.S. 837 (1984), which apply to an administrative agency’s construction of its governing statute, including interpretive questions that implicate the agency’s jurisdiction, Transmission Agency of N. California v. FERC, 495 F.3d 663, 673 (D.C. Cir. 2007). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 32 of 135 22 2.a. The FCC properly adopted the Order pursuant to Title III of the Communications Act, which directs the Commission to condition and modify radio licenses in order to manage spectrum in the public interest. Order ¶¶ 61-64 (J.A. 29-33) (citing, e.g., 47 U.S.C. §§ 303(b), 303(g), 303(r), 309, 316). Those sections, which also supplied the statutory basis for voice roaming rules dating back to the 1980s, give the Commission “expansive” powers and a “comprehensive” mandate, Nat’l Broad. Co. v. United States, 319 U.S. 190, 219 (1943), which “limits the practical scope of responsible judicial review,” Schurz Commc’ns, Inc. v. FCC, 982 F.2d 1043, 1048 (7th Cir. 1992). Verizon contends (Br. 19, 24-41) that the data roaming requirement nevertheless violates specific statutory prohibitions – contained in 47 U.S.C. §§ 153(51) and 332(c)(2) – against common-carrier regulation of non-CMRS services and information services. That argument is misdirected because the Commission declined to impose common-carrier obligations on host providers of data roaming services. Order ¶ 68 (J.A. 34-36). The data roaming rule does “not require [host] providers to serve all comers indifferently on the same terms and conditions,” a requirement that Verizon itself described as the “sine qua non” of common-carrier treatment. Id. ¶ 68 & n.197 (J.A. 35). Indeed, the Commission’s rule contemplating individually USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 33 of 135 23 negotiated data roaming agreements on commercially reasonable terms “tailored to individualized circumstances,” id. ¶ 45 (J.A. 23), sounds very much like Verizon’s description of its voluntary data roaming practices before the Order – which Verizon cited as proof that data roaming need not be common carriage. See Verizon Reply Comments at 32 & n.102 (J.A. 397). Nor is there any merit to Verizon’s argument that the data roaming rule for non-interconnected wireless services imposes a requirement that is substantially identical to the common-carrier obligation of just, reasonable and nondiscriminatory rates and terms that has long been applicable to providers of interconnected CMRS (including voice services). The Order makes clear that providers may negotiate for any individualized terms for data roaming that are within the broad bounds of commercial reasonableness – a standard that permits the Commission to consider numerous factors, including whether the potential host’s position is “tantamount to a refusal to offer data roaming” or “unreasonably restrains trade,” but does not require the host to treat similarly situated providers the same. Order ¶¶ 85, 86 (J.A. 42- 43); accord id. ¶ 45 (J.A. 23). By contrast, a common-carriage requirement obligates the provider to make like services available to all similarly situated customers on equivalent terms. Competitive Telecomms. Ass’n v. FCC, 998 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 34 of 135 24 F.2d at 1063-64. Verizon’s suggestion (Br. 37-41) that the Commission, in adjudicating data roaming disputes, will impose common-carriage requirements notwithstanding the agency’s express statement to the contrary (Order ¶ 68 (J.A. 34-36)) is unripe and, in any event, meritless. b. Even if the data roaming requirement did impose a common- carriage requirement, which it does not, the rule would be authorized by section 706 of the Telecommunications Act of 1996, 47 U.S.C. § 1302. See Order ¶ 64 (J.A. 32-33). The common-carriage limitations in sections 153(51) and 332(c)(2) only apply to common-carrier treatment under the Communications Act of 1934, as amended. Section 706 is not part of the Communications Act and thus is not subject to those limitations. c. The data roaming rule does not “raise a substantial takings issue” that would warrant a narrowing construction of the FCC’s statutory authority under Bell Atl. Tel. Cos. v. FCC, 24 F.3d 1441 (D.C. Cir. 1994). The Bell Atlantic rule only applies to per se takings, such as permanent physical occupations of a provider’s property, and is premised on the assumption that a taking would expose the public fisc to a claim for compensation. Bldg. Owners and Managers Ass’n Int’l v. FCC, 254 F.3d 89, 99 (D.C. Cir. 2001). Data roaming involves delivery of electronic signals, which is not a physical taking. Cablevision Sys. Corp. v. FCC, 570 F.3d 83, 98 (2d Cir. 2009). And USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 35 of 135 25 the availability of commercially reasonable compensation under negotiated data roaming agreements eliminates any possibility of government liability even if a taking were to occur. 3. Finally, Verizon’s perfunctory attack (Br. 56-59) under the deferential arbitrary-and-capricious standard of the Administrative Procedure Act (“APA”) similarly fails. The treatment of data roaming as non-common carriage poses no unexplained departure from the Commission’s prior decisions to treat roaming for interconnected CMRS as common carriage. In determining the need for a data roaming rule, the Order cited record evidence that many wireless providers were encountering “significant difficulties [in] obtaining data roaming arrangements,” particularly from AT&T and Verizon. Order ¶¶ 24-27 (J.A. 14-17). Verizon provides no basis for concluding that the Commission abused its broad discretion in predicting that the new rule will benefit the public. Order ¶¶ 28-36 (J.A. 17-20). ARGUMENT The Commission’s data roaming rule differs fundamentally from the common-carriage rule many wireless providers supported, and AT&T and Verizon opposed, in the agency’s proceeding. 14 For its part, Verizon now finds it necessary to take the litigation position that the Commission will give 14 AT&T has not joined Verizon’s judicial challenge to the rule. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 36 of 135 26 wireless providers less operational freedom than the Commission has clearly said it will allow. Indeed, Verizon challenges a rule the Commission did not adopt. Because Verizon’s challenges are inconsistent with both the relevant facts and the relevant law, they should be rejected. I. DEFERENTIAL STANDARDS OF REVIEW APPLY IN THIS CASE 1. Review of the FCC’s interpretation of provisions of the communications laws – including the applicability of common-carriage principles under those laws – is governed by Chevron USA, Inc. v. NRDC, 467 U.S. 837. See, e.g., U.S. Telecom Ass’n v. FCC, 295 F.3d 1326, 1332 (D.C. Cir. 2002). If the intent of Congress is clear from the statutory language, “that is the end of the matter.” Chevron, 467 U.S. at 842-843. But if the statutory language does not reveal the “unambiguously expressed intent of Congress” on the “precise question” at issue, id., the Court must accept the agency’s interpretation as long as it is reasonable and “is not in conflict with the plain language of the statute,” Nat’l R.R. Passenger Corp. v. Boston & Maine Corp., 503 U.S. 407, 417 (1992). Judicial deference is particularly appropriate where, as here, the interpretive questions implicate the FCC’s judgment under the statutory “public interest, convenience, and necessity” standard, because “Congress has delegated” that judgment “to the USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 37 of 135 27 Commission in the first instance.” FCC v. WNCN Listeners Guild, 450 U.S. 582, 596 (1981) (internal quotation marks omitted). “In determining whether [an agency] has acted beyond its jurisdiction, [this Court] grant[s] [the agency] Chevron deference.” Transmission Agency of N. California, 495 F.3d at 673 (citation omitted). Verizon claims otherwise (Br. 22-23, 27-28 n.7), relying on American Library Ass’n v. FCC, 406 F.3d 689 (D.C. Cir. 2005), but that case says no such thing. In American Library Association, the Court explicitly “appl[ied] the familiar standards of review enunciated . . . in Chevron.” Id. at 698. Although the Court ultimately determined that the FCC had not “acted pursuant to delegated authority” and, accordingly, was due no interpretive deference in that instance, id. at 699, it did so not because jurisdictional statutes are subject to a heightened standard of review, but because, in the circumstances of that case, the agency’s reading of the Communications Act was foreclosed by the plain meaning of the statutory text, id. at 700. See also Transmission Agency of N. California, 495 F.3d at 673 (describing American Library Association as a case decided under Chevron Step 1). 2. Verizon’s contentions (Br. 56-59) that the FCC acted arbitrarily and capriciously in violation of the APA are likewise reviewed under a highly deferential standard. Under that standard, the Court “presume[s] the validity USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 38 of 135 28 of the Commission’s action and will not intervene unless the Commission failed to consider relevant factors or made a manifest error in judgment.” Consumer Electronics Ass’n v. FCC, 347 F.3d 291, 300 (D.C. Cir. 2003). Moreover, where the FCC’s decision “rest[s] on judgment and prediction rather than pure factual determinations,” “complete factual support for the [FCC’s] ultimate conclusions is not required, since a forecast of the direction in which [the] future public interest lies necessarily involves deductions based on the expert knowledge of the agency.” WNCN Listeners Guild, 450 U.S. at 594-95 (internal quotation marks omitted). II. THE DATA ROAMING RULE IS WITHIN THE FCC’S STATUTORY AUTHORITY A. The FCC Correctly Determined That The Data Roaming Rule Is Within Its Authority Under The Communications Act. The FCC determined that multiple provisions in Title III of the Communications Act empowered it to adopt its data roaming rule in service of an array of evident public interest benefits, including the promotion of competition and investment in mobile broadband services and ubiquitous consumer access to such networks and services. Order ¶¶ 62-67 (J.A. 30-34) (citing, e.g., 47 U.S.C. §§ 303(b), 303(g), 303(r), 309, 316). The “public interest” standard – a component of all of the Title III provisions on which the FCC relied – “invests the Commission with an enormous discretion and USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 39 of 135 29 correspondingly limits the practical scope of responsible judicial review.” Schurz Commc’ns, 982 F.2d at 1048. Accord WNCN Listeners Guild, 450 U.S. at 593. Not surprisingly, therefore, Verizon’s primary challenge to the data roaming rule is that the Order conflicts with an express, but narrow, statutory prohibition – the prohibition on common-carriage treatment contained in 47 U.S.C. §§ 332(c)(2) and 153(51). Verizon Br. 27-41. As we explain below, Verizon’s claim fails because the Order does not impose a common-carriage obligation. 1. The Data Roaming Requirement Does Not Impose A Common-Carriage Obligation On Host Providers. a. The FCC emphasized that its data roaming requirement does “not require [host] providers to serve all comers indifferently on the same terms and conditions.” Order ¶ 68 & n.198 (J.A. 35). As Verizon itself argued before the FCC, this is the “‘sine qua non’” of common-carrier treatment. Letter from John T. Scott, Verizon, to FCC Secretary, at 3 (Mar. 30, 2011) (J.A. 546) (quoting Nat’l Ass’n of Regulatory Util. Comm’rs v. FCC, 533 F.2d 601, 608-09 (D.C. Cir. 1976) (“NARUC II”)); see also Verizon Br. 29 (“the hallmark of common carriage is ‘a duty to hold out facilities indifferently for public use’”) (quoting FCC v. Midwest Video Corp., 440 U.S. 689, 707 n.16 (1979) (“Midwest Video II”)); Sw. Bell Tel. Co. v. FCC, 19 F.3d 1475, 1481 (D.C. Cir. 1994) (“[T]he indiscriminate offering of USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 40 of 135 30 service on generally applicable terms . . . is the traditional mark of common carrier service.”). “A common carrier does not ‘make individualized decisions, in particular cases, whether and on what terms to deal.’” Midwest Video II, 440 U.S. at 701 (quoting NARUC I, 525 F.2d at 641). Thus, as this Court has put the matter, “[i]f the carrier chooses its clients on an individual basis and determines in each particular case ‘whether and on what terms to serve’ and there is no specific regulatory compulsion to serve all indifferently, the entity is a private carrier for that particular service.” Sw. Bell Tel. Co., 19 F.3d at 1481 (quoting NARUC II, 533 F.2d at 608-09). The Order only requires host providers to offer to enter into “individually negotiated data roaming arrangements with commercially reasonable terms and conditions.” Order ¶ 68 (J.A. 35). The terms and conditions for which the potential host bargains may be “tailored to individualized circumstances without [hosts] having to hold themselves out to serve all comers indiscriminately on the same or standardized terms.” Id. ¶ 45 (J.A. 23). Verizon acknowledged before the agency that the type of arrangement ultimately required in the Order “decidedly [is] no[t]” common carriage. Verizon Reply Comments at 32 (J.A. 397) (emphasis added). See id. & n.102 (J.A. 397) (asserting that it employed a “commercially USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 41 of 135 31 reasonable, market based approach” to data roaming, which “is in no way intended to freeze out potential roaming partners” but involves “individualized decisions, in particular cases, whether and on what terms to deal”). Consistent with Verizon’s former position, the Commission concluded that the data roaming rule – which relies on a “commercially reasonable” approach that allows for “individualized decisions” – “do[es] not . . . treat[] mobile data service providers as ‘common carriers’ under the Act.” Order ¶ 68 (J.A. 34-36). That reasonable Commission determination is entitled to deference. See U.S. Telecom Ass’n v. FCC, 295 F.3d at 1332 (according the FCC deference in interpreting and applying common-carriage status under the Communications Act); AT&T v. FCC, 572 F.2d 17, 24 (2d Cir. 1978) (same). 15 Indeed, even apart from the deference due to the agency’s 15 Verizon asserts, contrary to this precedent, that the Commission is entitled to no deference in its determination that the data roaming requirement does not impose common carriage, because “‘[t]he common law definition of common carrier is sufficiently definite as not to admit of agency discretion.’” Br. 37-38 n.7 (quoting NARUC I, 525 F.2d at 644). The Court in NARUC I, however, was merely “reject[ing] those parts of the [FCC] Orders [that] impl[ied] unfettered discretion in the Commission to confer or not confer common carrier status on a given entity.” NARUC I, 525 F.2d at 644 (emphasis added). Here the Commission claims no such “unfettered discretion,” and nothing in NARUC I undermines the routine application of Chevron deference to the agency’s interpretations of its governing statute. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 42 of 135 32 reasonable determination, the same conclusion would follow if this Court were to address the question de novo. Because it allows hosts to insist upon commercially reasonable terms “tailored to individualized circumstances, without having to hold themselves out to serve all comers indiscriminately on the same or standardized terms,” Order ¶ 45 (J.A. 23), the Order does not compel “whether and on what terms to serve” customers, NARUC II, 533 F.2d at 608-09, and contains “no specific regulatory compulsion to serve all indifferently,” Sw. Bell Tel. Co., 19 F.3d at 1481. Accordingly, the individualized arrangements contemplated by the Order are the antithesis of common carriage. See, e.g., Virgin Islands Tel. Corp. v. FCC, 198 F.3d 921, 925 (D.C. Cir. 1999) (upholding FCC decision to treat provider of submarine fiber optic cable systems as a non- common carrier where it “would have to engage in negotiations with each of its customers on the price and other terms which would vary depending on the customers’ capacity needs, duration of the contract and technical specifications”); Sw. Bell Tel. Co., 19 F.3d at 1481 (concluding that provider’s dark fiber offerings, which were “individually tailored arrangements negotiated to last for periods of five to ten years,” were not common-carrier services); NARUC I, 525 F.2d at 643 (upholding FCC classification of certain special mobile service systems as private carriage USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 43 of 135 33 where providers would “negotiate with and select future clients on a highly individualized basis”). b. Verizon contends (Br. 30-32) that the Order deprives host providers of “discretion over whether and with whom to deal,” and that that supposed feature of the Order – “standing alone” – compels the conclusion that the FCC imposed an impermissible common-carrier requirement. Verizon is wrong. Verizon reads out of the concept of common carriage its defining attribute – the duty to hold out facilities “indifferently,” Midwest Video II, 440 U.S. at 707 n.16, or “indiscriminate[ly],” Sw. Bell Tel. Co., 19 F.3d at 1481, i.e., on nondiscriminatory terms. If Verizon were correct that any restriction on a provider’s discretion over “whether and with whom to deal” is, “standing alone” (Br. 32), enough to create a common-carriage obligation, it would make no sense for courts to focus on the terms ultimately offered by the provider – i.e., whether the same offering is made available “indifferently” or “indiscriminate[ly]” to all potential customers who want it. See Midwest Video II, 440 U.S. at 701 (focusing on whether “individualized decisions” are made in “particular cases,” including “whether and on what terms to deal”) (quoting NARUC I, 525 F.2d at 641) (emphasis added); Sw. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 44 of 135 34 Bell Tel. Co., 19 F.3d at 1481 (“whether and on what terms to serve”) (quoting NARUC II, 533 F.2d at 608-09) (emphasis added). Supreme Court precedent further makes clear that not every regulatory limitation on the terms and conditions of providing a communications service involves a common-carriage mandate. If non-common carriers were entitled to absolute discretion over who may use their communications networks and for what purposes, then the cable television rules that the Supreme Court upheld in United States v. Sw. Cable Co., 392 U.S. 157 (1968), and United States v. Midwest Video Corp., 406 U.S. 649 (1972) (“Midwest Video I”), as valid exercises of the FCC’s statutory authority over broadcasting, would have been invalidated on the basis that they imposed impermissible common- carrier obligations. 16 The rules challenged in Southwestern Cable, among other things, required cable systems to carry, upon request, “the signals of broadcast stations into whose service area they brought competing signals,” and to avoid same-day duplication of local broadcast station programming on 16 The Communications Act prohibits broadcast licensees from being treated as common carriers. 47 U.S.C. § 153(11). At the time of the Midwest Video cases, cable regulations rested on the FCC’s authority to regulate broadcasting. See Midwest Video II, 440 U.S. at 703-09; see also Order ¶ 65 (J.A. 33). Accordingly, the statutory prohibition on common-carrier treatment of broadcasters applied to cable regulation and was the basis for the Court’s invalidation of certain cable access rules in Midwest Video II. 440 U.S. at 700. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 45 of 135 35 another channel. Midwest Video I, 406 U.S. at 659 (plurality opinion). The rules challenged in Midwest Video I required cable operators, in addition to carrying broadcast signals, to devote a portion of their facilities to providing original “cablecast” programming. 406 U.S. at 652-54. Both sets of rules limited cable operators’ discretion regarding who could use their systems and what could be carried over them, and both were upheld, notwithstanding the statutory prohibition on treating broadcasting as common carriage. To the same effect, in Midwest Video II, the Supreme Court held that the fairness doctrine, which required broadcasters to provide fair coverage of each side of a public issue, did not mandate common carriage because – just like the data roaming requirement – it preserved “a wide range of licensee discretion.” 440 U.S. at 705 n.14. The portion of Midwest Video II on which Verizon relies (Br. 27-30) involved very different circumstances. Because the public-access rules struck down there required cable systems “to hold out dedicated channels on a first- come, nondiscriminatory basis,” the Government reasonably conceded that they could be viewed as a form of “common carriage-type” regulation. 440 U.S. at 701-02 (emphasis added); see also Order ¶¶ 65, 68 n.203 (J.A. 33, 35- 36). By contrast, the Order’s data roaming requirement calls for individually negotiated arrangements and does “not require [host] providers to serve all USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 46 of 135 36 comers indifferently on the same terms and conditions.” Order ¶ 68 (J.A. 35). Verizon notes that the public access rules struck down in Midwest Video II “restricted what operators could ‘charge for the privileges of access and use of facilities and equipment.’” Br. 28 (quoting Midwest Video II, 440 U.S. at 694). But regulatory review of pricing cannot be the dividing line between common and private carriage. The Communications Act, for instance, contemplates FCC regulation of cable rates, 47 U.S.C. § 543, notwithstanding an express statutory prohibition on regulation of cable systems as common carriers “by reason of providing any cable service,” id. § 541(c). 17 c. Verizon also points to Orloff v. FCC, 352 F.3d at 418-20, and Iowa Telecomms. Servs. v. Iowa Utils. Bd., 563 F.3d 743, 750 (8th Cir. 2009), in which this Court and the Eighth Circuit found that individually negotiated contracts can in some instances co-exist with common-carrier status. In Orloff, section 332(c) required that CMRS carriers be treated as common carriers subject to the prohibition in section 202(a) against unreasonable 17 Of course, the imposition of federal price controls at various times during the 20th Century – including World War II, the Korean War, and the early 1970s – did not convert all covered service providers into common carriers during those periods. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 47 of 135 37 discrimination, and the Court agreed with the FCC and Verizon (as intervenor) that the Commission could lawfully rely on market forces to ensure compliance with that statutory requirement. See 352 F.3d at 419-21. 18 By contrast, in the data roaming Order, the FCC expressly “reject[ed] – rather than determine[d] how to enforce – [the] common carriage requirement” of just, reasonable and nondiscriminatory rates, terms, and conditions. Order ¶ 68 n.198 (J.A. 35). Similarly, in determining that a telecommunications provider was a common carrier notwithstanding individually negotiated contracts with customers, the Eighth Circuit in Iowa Telecommunications Services relied on the fact that, unlike data roaming host providers here (Order ¶ 68 n.198 (J.A. 35)), the provider at issue “self-certified that it is a common carrier” and “ma[de] public its intent to act as a common carrier” for the services at issue. 563 F.3d at 749. 19 As a result, and unlike data roaming hosts, the provider in 18 Dicta in Orloff describe Verizon’s challenged practice as the “offer[ing of] concessions to some customers and not others, even though there is no discernable difference between the two groups.” 352 F.3d at 420-21. But Verizon explained that it “made concessions in a nondiscriminatory manner” because “[a]ll customers … would be equally likely to be offered or not offered a concession” in the competitive Cleveland voice services market at issue. Orloff v. Vodafone Airtouch Licenses LLC, D/B/A Verizon Wireless, 17 FCC Rcd 8987, 8995 (¶ 16) (2002), aff’d Orloff v. FCC, 352 F.3d 415. 19 NARUC II, which Verizon cites (Br. 38) for the proposition that “‘preferential rate structures’ amounting to ‘price discrimination’ did not USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 48 of 135 38 Iowa Telecommunications Services had an obligation to make its individually negotiated offerings available to similarly situated customers. 563 F.3d at 750 & n.6. Verizon identifies no case, and we are aware of no case, in which a carrier such as Verizon that seeks to enter into individualized arrangements and does not wish to provide a common-carriage service on generally available terms, and is supported in that desire by its regulator, has been deemed by a court to be a common carrier. The holding Verizon seeks here is, in short, unprecedented. d. Verizon next contends that roaming for commercial mobile data services must involve a common-carrier obligation because the FCC has stated that “automatic roaming” for voice and other interconnected services is “a common carrier obligation pursuant to Sections 201 and 202 of the Communications Act.” Br. 35 (quoting 2007 Order, 22 FCC Rcd at 15824 (¶ 18)); see also 2010 Reconsideration, 25 FCC Rcd at 4213 (¶ 64) (noting that “the Commission found that automatic roaming is a common carrier obligation”). Verizon has mischaracterized the agency’s orders. defeat common-carrier status,” involved rules that generally required cable systems to offer “first-come, nondiscriminatory access” to their leased access channels. 533 F.2d at 609. By contrast, the Order imposes no such “first- come, nondiscriminatory access” requirement on host providers. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 49 of 135 39 The FCC has never said in any decision that all forms of roaming – including the data roaming rule just recently adopted – is inherently common carriage. Rather, the older decisions cited by Verizon were describing Rule 20.12(d) – a rule that requires roaming for interconnected services to be provided “to any technologically compatible, facilities-based CMRS carrier on reasonable and not unreasonably discriminatory terms and conditions, pursuant to Sections 201 and 202 of the Communications Act,” 47 C.F.R. § 20.12(d) – and stressed that roaming, “as a common carrier obligation” under its rules, “d[id] not extend to” non-interconnected services. 2007 Order, 22 FCC Rcd at 15819 (¶ 2) (emphasis added). Indeed, while Verizon generally miscasts roaming as an undifferentiated obligation that invariably entails common-carrier treatment, see, e.g., Br. 16, 35, it ultimately admits that “the FCC classified roaming as a common-carrier obligation in the particular context of voice services,” id. at 35 (emphasis added) – i.e., those services for which the FCC imposed a classic common-carriage obligation not to impose unreasonably discriminatory rates, terms, and conditions pursuant to Title II of the Communications Act. Accordingly, the FCC did not act inconsistently with its prior precedent by creating a non-common carrier roaming obligation applicable to non- USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 50 of 135 40 interconnected data services that are not subject to the agency’s preexisting rules for voice and other interconnected services. e. Nor is there any merit to Verizon’s claim that the “commercially reasonable terms” standard adopted in the Order is, in substance, identical to the common-carriage requirement of just, reasonable and non-discriminatory rates, terms, and conditions. Br. 33-37. The roaming rule that the FCC previously adopted for voice and other interconnected services expressly applies the common-carriage standards of sections 201(b) and 202(a) – just, reasonable and nondiscriminatory rates, terms, and conditions, see 47 C.F.R. § 20.12(d) – while the data roaming rule does “not require providers to serve all comers indifferently on the same terms and conditions,” Order ¶ 68 (J.A. 35). See also id. ¶ 68 n.198 (“we here reject—rather than determine how to enforce—a common carriage requirement of ‘just and reasonable’ rates, terms, and conditions”). Unlike the common-carriage context, where providers are obligated to offer the same terms to a similarly situated requesting party, the Commission emphasized that the “commercially reasonable” standard applicable to data roaming agreements will allow for considerable flexibility in negotiating terms with wide room for variation. See, e.g., Order ¶¶ 68 (J.A. 35) (“providers will have flexibility with regard to roaming charges, subject to a general USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 51 of 135 41 requirement of commercial reasonableness”), 78 (J.A. 40) (“duty to offer data roaming arrangements on commercially reasonable terms and conditions will allow [for] greater flexibility and variation in terms and conditions”), 81 (J.A. 41) (“the standard of commercial reasonableness is one that we expect to accommodate a variety of terms and conditions in data roaming”). Reflecting the considerable leeway that hosts have to agree upon individualized terms for data roaming, the Order lists factors the Commission may consider in determining the commercial reasonableness of the particular negotiating position at issue. In contrast to the “similarly situated” framework that applies to common carriage, these factors include broader and more flexible considerations – such as the impact of the roaming terms and conditions on investment incentives, whether the parties already have roaming arrangements (including for interconnected services) with each other, whether other potential roaming partners are available, and whether the potential host’s position “[is] tantamount to a refusal to offer . . . data roaming” or “unreasonably restrains trade.” Order ¶¶ 85, 86 (J.A. 42-43); compare Competitive Telecomms. Ass’n v. FCC, 998 F.2d at 1063-64 (a common-carriage requirement obligates the provider to make like services available to all similarly situated customers on equivalent terms). Because the rule for commercial data roaming allows service to be provided USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 52 of 135 42 exclusively pursuant to individually negotiated agreements on “commercially reasonable terms and conditions tailored to individualized circumstances,” and does not require that such agreements be made available to similarly situated customers, it does not compel common carriage. See Order ¶ 45 (J.A. 23) (noting that hosts will not “hav[e] to hold themselves out to serve all comers indiscriminately on the same or standardized terms”). Verizon contends that the Commission in effect imposed a requirement of indiscriminate service by stating, when discussing enforcement of the new rule, that “[a]s discussed above, providers can negotiate different terms and conditions, including prices, with different parties, where differences in terms and conditions reasonably reflect actual differences in particular cases.” Br. 32-33 (quoting Order ¶ 85 (J.A. 42)). Not so. The quoted statement expressly does not define the “commercial reasonableness” standard and merely indicates that, in an administrative proceeding where the Commission is asked to enforce the substantive standard of “commercially reasonable terms,” the FCC will consider, among many factors (see Order ¶ 86 (J.A. 42- 43)), the host’s reason for declining a request for treatment similar to that accorded to another requesting provider and whether that proffered reason has a basis in fact. Order ¶ 85 (J.A. 42). Unlike enforcement of common-carrier requirements, in which the Commission evaluates potentially discriminatory USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 53 of 135 43 conduct under common law and statutory precedent, the focus in a data roaming enforcement proceeding would be whether the provider’s conduct in negotiations was within the bounds of legitimate commercial considerations, and the impact of that conduct on competition and consumers. Order ¶¶ 68, 86 (J.A. 34-36, 42-43). Indeed, it is not difficult to conceive of terms that would be commercially reasonable, but nonetheless would violate the classic common- carrier requirement of just, reasonable and nondiscriminatory rates, terms, and conditions. Consider, for example, a situation where a host offers a 20% discount to the first roaming partner that successfully negotiates an agreement, but declines the discount to all later requesters. Such a position would involve discriminatory rates in violation of common-carriage rules 20 – but likely would be justified under the commercial reasonableness standard, so long as the host is not “freez[ing] out [other] potential roaming partners.” See Verizon Reply Comments at 32 n.102 (J.A. 397) (denying the existence of such a company policy). 20 See, e.g., American Trucking Ass’n v. FCC, 377 F.2d 121, 130-34 (D.C. Cir. 1966) (affirming FCC order prohibiting unreasonably discriminatory discounted service); Western Union Int’l v. FCC, 568 F.2d 1012, 1017-19 (2d Cir. 1977) (same). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 54 of 135 44 The data roaming rule also differs substantially from the roaming rules applicable to CMRS (i.e., voice and other interconnected services) in that the CMRS rules “presume that a request by a technologically compatible CMRS carrier for automatic roaming is reasonable [and thus must be honored] pursuant to Sections 201 and 202 of the Communications Act.” 47 C.F.R. § 20.12(d); see also 2007 Order, 22 FCC Rcd 15817 (¶ 33) (discussing presumptions under CMRS automatic roaming rule). Verizon’s unsupported assertion notwithstanding, see Br. 19, the data roaming rule imposes no comparable presumption. It creates an obligation to “offer” a commercially reasonable arrangement to an eligible requesting provider, but adopts no presumption one way or the other regarding the reasonableness of any request or resulting offer. See 47 C.F.R. § 20.12(e). Indeed, even the duty to “offer” a data roaming arrangement is subject to “specified limitations, such that a host provider may not have an obligation to offer data roaming arrangements to a requesting provider.” Order ¶ 80 n.237 (J.A. 40); see id. ¶¶ 43, 46, 47 (J.A. 22-24). Verizon finally relies on the similarity between some factors that inform the FCC’s analysis of whether hosts have complied with voice and data roaming obligations to argue that those obligations are “essentially the same.” Br. 36. But an “overlap[]” (Verizon Br. 36) in the issues the USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 55 of 135 45 Commission may consider in determining compliance with two different substantive standards (e.g., whether alternative roaming partners are available) does not make the standards one and the same. Nor is Verizon’s position advanced by its observation that some limitations on the data roaming obligation (for instance, that roaming need not be negotiated where the providers’ networks are technologically incompatible or roaming is technically infeasible) “mirror” similar limitations on the voice roaming requirement. Br. 37. These limitations are protections for the host provider, not obligations it incurs. Thus, the overlap ensures wireless data providers every measure of flexibility accorded wireless voice providers – plus the additional flexibility of being able to negotiate customized arrangements as non-common carriers. Verizon ultimately falls back to a purely rhetorical assertion (Br. 39) that the FCC will not apply the Order as written, and differences between commercial reasonableness under the data roaming rule and the common- carrier standards of sections 201 and 202 will prove to be a “linguistic shell game.” In this facial challenge to the data roaming rule, Verizon provides no basis to question the agency’s clear statement that it will not apply the common-carrier standard in ruling on data roaming disputes. See Lichoulas v. FERC, 606 F.3d 769, 779 n.8 (D.C. Cir. 2010) (noting the “well-settled USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 56 of 135 46 presumption of administrative regularity”) (citations omitted). Because such disputes will be decided “on a case-by-case basis,” Order ¶ 85 (J.A. 42), Verizon could bring an as-applied challenge to any future application of the data roaming rule that departed from the Order and actually did mandate common carriage in a particular situation. Its current claim that, contrary to the Order’s express terms, the Commission will impose common-carriage requirements on host providers is therefore unripe. See Sprint Corp. v. FCC, 331 F.3d 952, 956 (D.C. Cir. 2003) (“where the agency retains substantial discretion to implement its decision, the decision is not ripe until it has been implemented in particular circumstances”); compare Cablevision Sys. Corp. v. FCC, 649 F.3d 695, 715 (D.C. Cir. 2011) (finding claim to be ripe because “petitioners’ claims rest[] not on the assumption that the [Commission] will exercise its discretion unlawfully in applying the regulation but on whether its faithful application would violate the law”) (internal quotation markets omitted). 2. Specific Grants of Authority In The Communications Act Expressly Authorize The FCC To Manage Spectrum And To Impose Conditions On Licenses To Further The Public Interest, Convenience, And Necessity. Stripped of its mistaken claim that the Order imposes an impermissible common-carriage requirement, Verizon is left to argue that the FCC’s USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 57 of 135 47 mandate under Title III of the Communications Act is limited to “technical issues” concerning the classification of stations by service type, the assignment of stations to particular frequency bands, power limits, and the avoidance of interference. Br. 46. Verizon’s cramped reading of the Commission’s authority finds no support in the statute or governing precedent. First, the Supreme Court long ago made clear that “[t]he [Communications] Act itself establishes that the Commission’s [Title III] powers are not limited to the engineering and technical aspects of radio communication.” NBC, 319 U.S. at 215 (upholding FCC regulations limiting competitively restrictive chain broadcasting practices). Among the provisions establishing this principle are section 303(g), which directs the FCC to “‘encourage the larger and more effective use of radio in the public interest’” and section 303(r), which empowers the FCC “to adopt ‘such rules and regulations and prescribe such restrictions and conditions, not inconsistent with law, as may be necessary to carry out the provisions of this Act.’” Id. at 217 (quoting 47 U.S.C. §§ 303(g) & (r)). Those provisions provide “expansive” powers and a “comprehensive” mandate, 319 U.S. at 219, and refute Verizon’s long-rejected premise that the FCC is simply “a USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 58 of 135 48 kind of traffic officer, policing the wave lengths to prevent stations from interfering with each other,” id. at 215. Verizon is also wrong in claiming that the data roaming rule is unrelated to Congress’s grants of regulatory authority under Title III. In adopting the rule, the FCC relied upon the same “expansive” and “comprehensive” section 303(g) & (r) grants of authority discussed in NBC, finding that data roaming obligations would help “ensure that spectrum is being put to its best and most efficient use.” Order ¶¶ 62 n.172, 64 n.178 (J.A. 31, 32). The FCC also found authority for its data roaming rule in section 303(b), which directs the FCC, consistent with the public interest, to “‘[p]rescribe the nature of the service to be rendered by each class of licensed stations and each station within any class.’” Order ¶ 62 & n.173 (J.A. 31) (quoting 47 U.S.C. § 303(b)). And the agency reasonably predicted (see Order ¶ 63 (J.A. 32)) that the data roaming requirement will advance the objectives of section 309, which, among other things, directs the Commission to encourage “(A) the development and rapid deployment of new technologies, products, and service for the benefit of the public . . . without administrative or judicial delays . . . [and] (D) efficient and intensive use of the electromagnetic spectrum.” 47 U.S.C. § 309(j)(3). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 59 of 135 49 Finally, the FCC stressed that its authority to advance these public interest goals does not evaporate at the time a license is granted, but extends to the modification of existing licenses. Order ¶ 62 (J.A. 30-31) (citing 47 U.S.C. § 316). Section 316(a)(1) provides that “[a]ny station license or construction permit may be modified by the Commission either for a limited time or for the duration of the term thereof, if in the judgment of the Commission such action will promote the public interest, convenience, and necessity.” Precedent confirms that this authority to effect modifications may be exercised through general rulemaking proceedings “based upon the general characteristics of an industry,” and not in licensee-specific adjudications. 21 Verizon suggests in passing that section 303(b) of the Communications Act authorizes the FCC only to place limitations on services offered over radio facilities and does not empower the agency affirmatively to require the provision of any service. Br. 49. The cases upon which Verizon relies do not support that proposition. Those cases acknowledge the FCC’s power to 21 Order ¶ 62 & n.171 (J.A. 31) (citing, e.g., Cmty. Television, Inc. v. FCC, 216 F.3d 1133, 1140 (D.C. Cir. 2000); WBEN, Inc. v. FCC, 396 F.2d 601, 617-18 (2d Cir. 1968); California Citizens Band Ass’n v. U.S., 375 F.2d 43, 50-52 (9th Cir. 1967)). See also Celtronix Telemetry, Inc. v. FCC, 272 F.3d at 589 (“[I]t is undisputed that the [FCC] always retained the power to alter the term of existing licenses by rulemaking.”). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 60 of 135 50 impose limitations on services pursuant to section 303(b), but none states or even suggests that the Commission’s authority under that section is confined to defining service limitations. In any event, the data roaming rule simultaneously defines the affirmative obligation of covered host providers and limits their authorized uses of their FCC-licensed spectrum by requiring them to comply with the rule adopted in the Order. Nor does the data roaming rule “regulate the business” of wireless broadband providers or “determine the validity of [their] contracts” with third parties in a manner inconsistent with FCC v. Sanders Bros. Radio Station, 309 U.S. 470, 475 (1940), and Regents of University System of Georgia v. Carroll, 338 U.S. 586, 602 (1950). Verizon Br. 49. Carroll simply held that the Commission’s Title III authority was limited to regulating the licensee’s use of spectrum and did not empower the agency to nullify third parties’ state-law contract remedies with regulated entities. See Sw. Cable, 392 U.S. at 173 n.37 (distinguishing Carroll). And Sanders Bros. merely states the unexceptional proposition that the Commission does not regulate aspects of a licensee’s business that fall outside the agency’s Title III powers. 309 U.S. at 475-76. Here, the FCC has regulated the licensed radio operations of wireless data providers without abrogating any state-law remedies. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 61 of 135 51 Verizon also makes no effort to square its argument with the undisputed fact that the more rigorous common-carrier roaming requirements applicable to CMRS (i.e., interconnected services) have, from the beginning, been justified in part as an exercise of the FCC’s Title III powers. 22 Because Title III provides a statutory basis for those roaming rules, as Verizon does not dispute, it also supports the data roaming requirement created by the Order. Indeed, Verizon has never challenged the FCC’s reliance on its Title III authority to adopt roaming requirements for interconnected services. This analysis does not change simply because data roaming has not been established as a common-carrier service subject to the FCC’s Title II (as well as Title III) authority. Nothing on the face of the relevant Title III provisions suggests such a distinction, and the Commission correctly concluded that the application of Title III “is not affected by whether the service using the spectrum is a telecommunications service or information service under the Act.” Order ¶ 62 n.166 (J.A. 30) (citing, e.g., 2007 22 See Cellular Report & Order, 86 FCC 2d at 503-04, 513 (¶¶ 80, 113) (relying on Title III in adopting initial manual roaming rule for cellular systems); Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, 11 FCC Rcd 9462, 9469, 9471 (¶¶ 10, 13) (1996) (extending manual roaming requirements to broadband Personal Communications Services and certain Specialized Mobile Radio carriers pursuant to Title III authority); 2007 Order, 22 FCC Rcd at 15849 (¶ 92) (relying in part on Title III authority to adopt automatic roaming rules for CMRS carriers). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 62 of 135 52 Wireless Broadband Order, 22 FCC Rcd at 5915 (¶ 36)). Indeed, the Commission has often used its Title III powers to require licensees to offer non-common carrier services to prospective customers. See, e.g., Interconnection and Resale Obligations Pertaining to Commercial Mobile Radio Services, 11 FCC Rcd 18455, 18471-72 (¶ 31) (1996) (requiring CMRS carriers to make bundled packages that include non-Title II components available for resale pursuant to Title III), petition for review denied, Cellnet Commc’ns v. FCC, 149 F.3d 429 (6th Cir. 1998); id., Order on Reconsideration, 14 FCC Rcd 16340, 16352-53 (¶ 27) (1999) (reaffirming that Title III provides a basis for the bundled offering resale requirement). 23 23 The Commission also correctly concluded that the data roaming requirement is supported by the agency’s ancillary authority under Title I of the Communications Act. See Am. Library Ass’n, 406 F.3d at 691-92 (FCC may exercise ancillary jurisdiction where “(1) the Commission’s general jurisdictional grant under Title I covers the regulated subject and (2) the regulations are reasonably ancillary to the Commission’s effective performance of its statutorily mandated responsibilities”). The data roaming requirement is clearly within the agency’s jurisdiction under Title I. See, e.g., 47 U.S.C. § 152(a) (granting FCC jurisdiction over “all interstate and foreign communication by wire or radio”). It is also reasonably ancillary to the agency’s effective performance of its Title III duties to manage, allocate, and assign spectrum, and to establish spectrum usage conditions. Order ¶ 63 n.176 (J.A. 32). Among other things, the Commission found that, absent data roaming rules, there was a significant risk that “even voice roaming will ultimately be rolled back as voice becomes a data application.” Order ¶ 28 (J.A. 17). Cf. Sw. Cable Co., 392 U.S. at 173-74 (upholding ancillary authority to regulate cable where necessary “to perform with appropriate effectiveness” its Title III authority over broadcasting). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 63 of 135 53 B. Section 706 Of The Telecommunications Act Of 1996 Independently Authorizes The Data Roaming Rule. Even if the Order did impose a common-carriage obligation within the meaning of sections 153(51) and 332(c)(2) of the Communications Act (which, as shown above, it does not), the FCC properly asserted its independent authority to adopt the rule pursuant to section 706 of the Telecommunications Act of 1996, 47 U.S.C. § 1302. That is so because sections 153(51) and 332(c)(2) only prohibit common-carriage treatment “under this [Act]” – i.e., the Communications Act of 1934, as amended. 47 U.S.C. §§ 153(51) & 332(c)(2). Section 706 of the 1996 Act is not part of the Communications Act of 1934, and thus is not subject to those limitations on common-carrier treatment. 24 Section 706(a) directs that the FCC 24 Congress enacted section 706 as an uncodified part of the 1996 Act. Congress recently codified section 706 in Chapter 12 of Title 47, at 47 U.S.C. § 1302. By contrast, the seven titles that comprise the Communications Act appear in Chapter 5 of Title 47. See Preserving the Open Internet, 25 FCC Rcd 17905, 17950 (¶ 79 n.248) (2010) (“Open Internet Order”), pet. for review pending, Verizon v. FCC, D.C. Cir. Nos. 11-1155 & 11-1156 (filed Sept. 30, 2011). Notably, not all Communications Act provisions barring common-carriage treatment are limited to treatment under “this Act.” The prohibition in section 153(11) – that “a person engaged in radio broadcasting shall not, insofar as such person is so engaged, be deemed a common carrier” – contains no such limitation. 47 U.S.C. § 153(11). Nor does the statutory requirement that “[a]ny cable system shall not be subject to regulation as a common carrier or utility by reason of providing any cable service.” 47 U.S.C. § 541(c). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 64 of 135 54 shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans . . . by utilizing, in a manner consistent with the public interest, convenience, and necessity . . . measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure development. 47 U.S.C. § 1302(a). 25 Section 706(b) requires the FCC to inquire whether such reasonable and timely deployment of advanced telecommunications capability is taking place and, “[i]f the Commission’s determination is negative,” that provision mandates that the agency “shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.” 47 U.S.C. § 1302(b). The FCC concluded in the Order that both of these provisions support the data roaming rule because the rule “encourag[es] new deployment of advanced services to all Americans by promoting competition and by removing barriers to infrastructure investment.” Order ¶ 64 (J.A. 32). Noting estimates that “more than 10 million Americans live in rural census blocks with two or fewer mobile service providers,” the FCC determined that 25 “[A]dvanced telecommunications capability” includes broadband Internet access. 47 U.S.C. § 1302(d)(1) (defining “advanced telecommunications capability” as “high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology”); see also Open Internet Order, 25 FCC Rcd at 17968 (¶ 117). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 65 of 135 55 its rule would encourage network upgrades and ubiquitous advanced mobile service deployment, “including in rural areas.” Order ¶ 64 (J.A. 32-33). 26 Verizon responds by citing language in a 13-year-old Commission order that could be construed as suggesting that the FCC – at that time – did not view section 706 as an independent grant of regulatory authority. Br. 51 (citing Deployment of Wireline Services Offering Advanced Telecommunications Capability, 13 FCC Rcd 24012, 24047 (¶ 77) (1998) (“Advanced Services Order”)). But this Court has acknowledged that section 706 “at least arguably . . . delegate[s] regulatory authority to the Commission,” noting that it “contain[s] a direct mandate.” Comcast Corp. v. FCC, 600 F.3d 642, 658 (D.C. Cir. 2010). In the recent Open Internet Order, which the FCC cited in connection with its section 706 discussion in the Order on review (¶ 64 n.179 (J.A. 32)), the Commission rejected the position 26 In July 2010, the FCC found that “broadband deployment to all Americans is not reasonable and timely” and observed, “[a]s a consequence of that conclusion,” that section 706(b)’s directive to “take immediate action” had been triggered. Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, Sixth Broadband Deployment Report, 25 FCC Rcd 9556, 9558 (¶¶ 2-3) (2010). In May 2011, the Commission maintained its conclusion that “broadband is not being deployed in a reasonable and timely fashion to all Americans,” and cited the adoption of the data roaming Order as one of the actions it had taken pursuant to section 706 in response to the previous year’s negative finding. Id., Seventh Broadband Progress Report and Order on Reconsideration, 26 FCC Rcd 8008, 8009, 8015 (¶¶ 1, 11) (2011). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 66 of 135 56 that section 706 does not contain an independent grant of regulatory authority. See Open Internet Order, 25 FCC Rcd at 17968-72 (¶¶ 117-123). Verizon does not even acknowledge this governing articulation of the agency’s section 706 powers, which expressly overrules the Advanced Services Order to the extent it is construed to deny that section 706 is an independent grant of authority to the FCC. Id. at 17969 (¶ 119 n.370). C. Verizon’s Fifth Amendment Argument Is Meritless, And Provides No Basis For Displacing Chevron Deference In This Case. In an effort to bolster its statutory authority argument, Verizon enlists the canon of constitutional avoidance. Specifically, relying on Bell Atl. Tel. Cos. v. FCC, 24 F.3d 1441, Verizon contends that the data roaming rule is beyond the FCC’s statutory authority because it “raise[s] a substantial takings issue in an ‘identifiable class of cases.’” Br. 52 (quoting Bell Atlantic, 24 F.3d at 1445). In such circumstances, Verizon claims, the FCC may impose a regulatory requirement only where “Congress has expressly and specifically directed the Commission” to do so. Br. 52. This argument is meritless. As this Court has held, the plain statement analysis of Bell Atlantic applies only to per se takings, such as the permanent physical occupation of space in telephone companies’ buildings under the rules at issue in Bell Atlantic. Bldg. Owners and Managers Ass’n Int’l v. FCC, 254 F.3d at 99. By USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 67 of 135 57 contrast, because “regulatory taking” claims are “context-specific” and require “‘ad hoc, factual inquiries,’” they “cannot be said to create” the identifiable class of applications that necessarily constitutes a taking to which the Bell Atlantic rule applies. Building Owners, 254 F.3d at 99 (quoting Penn Central Transp. v. New York City, 438 U.S. 104, 124 (1978)). Accordingly, “the Bell Atlantic approach to statutory interpretation” – requiring express Congressional authorization – “does not apply” to agency rules alleged to raise regulatory takings concerns. Building Owners, 254 F.3d at 99. Rather, normal “Chevron analysis . . . does.” Id. Verizon attempts to equate the data roaming rule to the physical occupation of real estate in Bell Atlantic by claiming that the data roaming rule requires host providers to carry “data . . . represented in electrons that tangibly occupy limited physical space on the host carrier’s network and physical infrastructure.” Br. 53. But the courts have squarely rejected the view that electronic signal transport requirements – divorced from any obligation to allow third-party personnel or equipment on a host’s property – are physical occupations that raise per se takings concerns. See Cablevision Sys., 570 F.3d at 98 (affirming FCC finding that mandatory electronic signal carriage was not a permanent physical occupation of cable operator’s network and that the takings claim “fits more comfortably within the Supreme Court’s USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 68 of 135 58 ‘regulatory taking’ analytical framework”); Qwest Corp. v. United States, 48 Fed. Cl. 672, 694 (2001) (rejecting telephone company’s claim that “the telecommunications traffic (i.e., electrical impulses) of a competing carrier on the host carrier’s equipment pursuant to a mandatory lease can be considered a ‘physical taking’ of that equipment”). The opinions Verizon cites (Br. 53) to support its contrary “electronic occupation” theory are neither binding nor pertinent. Judge Williams’ dissenting opinion as a district judge in Turner Broadcasting merely argued that a takings claim is “not . . . frivolous.” Turner Broad. Sys., Inc. v. FCC, 819 F. Supp. 32, 67 (D.D.C. 1993) (Williams, J., dissenting), vacated on other grounds, 512 U.S. 622 (1994). CompuServe, Inc. v. Cyber Promotions, Inc., 962 F. Supp. 1015 (S.D. Ohio 1997), did not involve takings law at all. The Court, accordingly, should reject Verizon’s contention that the data roaming rule imposes a per se taking subject to Bell Atlantic’s plain- statement requirement. Verizon suggests that even if the data roaming rule does not constitute a per se taking, it nevertheless effects a regulatory taking under Penn Central, because it allegedly interferes with investment-backed expectations. Br. 55. Verizon provides no persuasive support for that claim, which second guesses the expert agency’s predictive judgment that its rule will “appropriately USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 69 of 135 59 balance the incentives for new entrants and incumbent providers to invest in and deploy advanced networks across the country.” Order ¶ 13 (J.A. 8). In any event, even if that regulatory takings claim were supported, it would provide no basis to displace the Chevron deference owed the FCC’s reasonable construction of its statutory authority to adopt the Order. Building Owners, 254 F.3d at 99. Finally, the Bell Atlantic rule is inapplicable because it was premised on the concern that construing ambiguous statutes to “create[] a broad class of takings claims, compensable in the Court of Claims, would . . . expose the Treasury to liability both massive and unforeseen.” 24 F.3d at 1445. The data roaming rule permits hosts to charge other providers commercially reasonable rates that surely would satisfy the Constitution’s “reasonable compensation” standard and avoid any claim on the public fisc. See Order ¶ 69 (J.A. 36) (“It does not appear to be possible that compensation could be ‘unjust’ if it is commercially reasonable.”). 27 27 To the extent that Verizon asserts a constitutional claim that the data roaming rule effects a taking without “just compensation” (U.S. Const. amend. V), rather than simply arguing that it is beyond the FCC’s authority under the Communications Act (see Br. 55-56 & n.13), that claim is premature. As this Court observed in Building Owners, “‘in general, [e]quitable relief is not available to enjoin an alleged taking of private property for a public use, duly authorized by law, when a suit for compensation can be brought against the sovereign subsequent to that USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 70 of 135 60 III. THE DATA ROAMING RULE IS THE PRODUCT OF REASONED AGENCY DECISIONMAKING Verizon concludes with a hodgepodge of makeweight contentions that the FCC’s data roaming Order is arbitrary and capricious. Br. 56-59. Recycling a claim it made in challenging the FCC’s statutory authority (see Br. 35), Verizon argues that the Order departs without explanation from prior statements that roaming is a common-carrier obligation. Br. 56-57. As previously explained, the FCC has never stated that all roaming inherently is common carriage. Rather, the FCC stated in the 2007 Order and the 2010 Reconsideration that interconnected CMRS roaming under Rule 20.12(d) – which expressly invoked the common-carriage standards of sections 201 and 202 – constitutes common carriage. By contrast, the Order (which governs non-interconnected commercial data services) only requires host providers to negotiate on a commercially reasonable basis and expressly does not require common carriage. Thus, the Order did not depart from agency precedent on this question. Nor is there merit to Verizon’s assertion that there was no record evidence of a data roaming problem requiring regulatory intervention. Br. 57. The FCC expressly rejected Verizon’s evidentiary claims, see Order ¶ 12 taking.’” 254 F.3d at 99 (quoting United States v. Riverside Bayview Homes, Inc., 474 U.S. 121, 127-28 (1985)). USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 71 of 135 61 n.40 (J.A. 7-8), finding abundant record evidence that requesting providers were encountering “significant difficulties obtaining data roaming arrangements,” particularly with respect to competitively crucial 3G services, id. ¶ 24 (J.A. 14). Indeed, the FCC noted that AT&T and Verizon had widely deployed advanced 3G networks for years before they began to offer limited roaming arrangements over those networks – and their eventual change of position occurred only when the Commission neared adoption of a mandatory data roaming obligation. Order ¶¶ 25-26 (J.A. 14-16). That record fully justified the FCC’s concern that the limited progress achieved with respect to fully voluntary 3G roaming could well reflect a tactical effort to stave off regulation, and was not necessarily indicative of future conduct in the absence of a data roaming requirement. Order ¶ 27 (J.A. 16-17); see also pp. 13-14, above. Indeed, the prior pattern of steadfast opposition by AT&T and Verizon to offering other providers data roaming on their 3G networks gave the FCC ample reason for concern that, absent regulation, those providers would “not be willing to offer roaming arrangements . . . any time in the near future” over the fourth generation networks they are now deploying. Order ¶ 27 (J.A. 17). In sum, the FCC had a concrete basis in the record to conclude that the data roaming rule was needed to promote the development of competitive USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 72 of 135 62 facilities-based broadband data service offerings for the benefit of the public. That predictive judgment is entitled to deference. WNCN Listeners Guild, 450 U.S. at 594-95. Finally, Verizon invents a non-existent contradiction in the FCC’s cost- benefit analysis (Br. 58-59) when it points to the agency’s prediction that “providers are unlikely to rely on roaming arrangements in place of network deployment as the primary source of their service provision” due to the relatively high cost of purchasing roaming compared with providing service over their own facilities. Order ¶ 21 (J.A. 13). Contrary to Verizon’s misstatement of the FCC’s analysis, the Commission did not assert that the data roaming rule would impose no costs on host providers because the rule would never be invoked. Rather, the FCC credited evidence that roaming would be used initially to develop a large enough customer base to justify subsequent network build-out in new geographic areas, Order ¶ 19 (J.A. 11- 12), and the agency acknowledged that there may be some sparsely populated areas where the presence of more than one facilities-based network “is simply uneconomic,” id. ¶ 15 n.51 (J.A. 9). The FCC appropriately balanced the limited costs of data roaming on host providers against the benefits of the rule, and concluded that the rule was justified because the benefits outweighed the costs. Order ¶¶ 28-36 (J.A. 17-20). Verizon neither disputes USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 73 of 135 63 the deference that the expert agency is owed in undertaking such an analysis (see Verizon Br. 23) nor shows that the agency abused its discretion in undertaking that analysis. CONCLUSION For the foregoing reasons, the Court should dismiss Verizon’s appeal in Case No. 11-1135 for want of jurisdiction, and deny its petition for review in Case No. 11-1136. Respectfully submitted, SHARIS A. POZEN ACTING ASSISTANT ATTORNEY GENERAL CATHERINE G. O’SULLIVAN FINNUALA K. TESSIER ATTORNEYS UNITED STATES DEPARTMENT OF JUSTICE WASHINGTON, D.C. 20530 AUSTIN C. SCHLICK GENERAL COUNSEL PETER KARANJIA DEPUTY GENERAL COUNSEL RICHARD K. WELCH DEPUTY ASSOCIATE GENERAL COUNSEL /s/ Laurence N. Bourne LAURENCE N. BOURNE COUNSEL FEDERAL COMMUNICATIONS COMMISSION WASHINGTON, D.C. 20554 (202) 418-1740 January 9, 2012 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 74 of 135 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT CELLCO PARTNERSHIP D/B/A VERIZON WIRELESS, APPELLANT/PETITIONER, v. FEDERAL COMMUNICATIONS COMMISSION AND UNITED STATES OF AMERICA, APPELLEE/RESPONDENTS. NOS. 11-1135 & 11- 1136 CERTIFICATE OF COMPLIANCE Pursuant to the requirements of Fed. R. App. P. 32(a)(7), I hereby certify that the accompanying “Brief for Respondents” in the captioned case contains 13,877 words. /s/ Laurence N. Bourne Laurence N. Bourne Counsel Federal Communications Commission Washington, D.C. 20554 (202) 418-1740 (Telephone) (202) 418-2819 (Fax) March 8, 2012 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 75 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 76 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 77 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 78 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 79 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 80 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 81 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 82 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 83 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 84 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 85 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 86 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 87 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 88 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 89 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 90 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 91 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 92 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 93 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 94 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 95 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 96 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 97 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 98 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 99 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 100 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 101 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 102 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 103 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 104 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 105 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 106 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 107 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 108 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 109 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 110 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 111 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 112 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 113 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 114 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 115 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 116 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 117 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 118 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 119 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 120 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 121 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 122 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 123 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 124 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 125 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 126 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 127 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 128 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 129 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 130 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 131 of 135 USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 132 of 135 11-1135 11-1136 IN THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT Cellco Partnership d/b/a Verizon Wireless, Appellant, Petitioner v. Federal Communications Commission and United States of America Appellee/Respondent CERTIFICATE OF SERVICE I, Laurence N. Bourne, hereby certify that on March 8, 2012, I electronically filed the foregoing Brief for Respondents with the Clerk of the Court for the United States Court of Appeals for the D.C. Circuit by using the CM/ECF system. Participants in the case who are registered CM/ECF users will be served by the CM/ECF system. Some of the participants in the case, denoted with asterisks below, are not CM/ECF users. I certify further that I have directed that copies of the foregoing document be mailed by First-Class Mail to those persons, unless another attorney at the same mailing address is receiving electronic service. *Andrew G. McBride Thomas R. McCarthy Brett A. Shumate Helgi C. Walker Wiley Rein LLP 1776 K Street, NW. Washington, D.C. 20006-2359 Counsel for: Cellco Partnership John T. Scott Verizon Wireless 1300 Eye Street, N.W. Suite 400 West Washington, D.C. 20005 Counsel for: Cellco Partnership USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 133 of 135 11-1135 11-1136 Henry Weissmann Munger, Tolles & Olson 355 South Grand Avenue 35 th Floor Los Angeles, CA 90071-1560 Counsel for: Cellco Partnership Catherine G. O’Sullivan Finnuala K. Tessier U.S. Department of Justice Antitrust Division 950 Pennsylvania Avenue, N.W. Washington, D.C. 20530 Counsel for: USA Mark A. Stachiw General Counsel, Secretary and Vice Chairman MetroPCS Communications, Inc. 2250 Lakeside Boulevard Richardson, TX 75082 Counsel for: MetroPCS Communications, Inc. Douglas E. Hart 441 Vine Street Suite 4192 Cincinnati, OH 45202 Counsel for: Cincinnati Bell Wireless, LLC Jill Canfield 4121 Wilson Boulevard Arlington, VA 22203 Counsel for: National Telecommunications Cooperative Association Richard P. Bress *James H. Barker Alexander Maltas Matthew A. Brill Latham & Watkins LLP 555 11 th Street, N.W. Suite 1000 Washington, D.C. 20004 Counsel for: Leap, Cricket and RCA *Thomas J. Sugrue *Luisa Lancetti T-Mobile USA, Inc. 401 9 th Street, N.W. Suite 550 Washington, D.C. 20004 Counsel for: T-Mobile USA, Inc. Howard J. Symons Mintz Levin Cohn Ferris, et al. 701 Pennsylvania Avenue, N.W. Suite 900 Washington, D.C. 20004 Counsel for: T-Mobile USA, Inc. USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 134 of 135 11-1135 11-1136 Caressa D. Bennet *Michael R. Bennet Bennet & Bennet, PLLC 4350 East West Highway Suite 201 Bethesda, MD 20814 Counsel for: Rural Telecommunications Group, Inc. Daniel L. Brenner Jessica L. Ellsworth Hogan Lovells US LLP Columbia Square 555 13 th Street, N.W. Washington, D.C. 20004-1109 Counsel for: Bright House Networks, LLC Peter M. Connolly Holland & Knight LLP 2099 Pennsylvania Avenue, N.W. Suite 100 Washington, D.C. 20006 Counsel for: United States Cellular Corporation Harold J. Feld Public Knowledge 1818 N Street, N.W. Suite 410 Washington, D.C. 20036 Counsel for: Public Knowledge, et al. Carl W. Northrop Michael L. Lazarus Telecommunications Law Professionals, PLLC 875 15 th Street, N.W. Washington, D.C. 20005-2400 Counsel for: MetroPCS Communications, Inc. Michael Glover Verizon 1320 N. Courthouse Road, 9 th Floor Arlington, VA 22201 Counsel for: Verizon /s/ Laurence N. Bourne USCA Case #11-1135 Document #1362584 Filed: 03/08/2012 Page 135 of 135