*Pages 1--27 from Microsoft Word - 25906.doc* Federal Communications Commission FCC 02- 342 Before the Federal Communications Commission Washington, D. C. 20554 In the Matter of The 2002 Biennial Regulatory Review ) ) ) ) ) ) ) ) ) GC Docket No. 02- 390 REPORT Adopted: December 31, 2002 Released: March 14, 2003 By the Commission: Chairman Powell and Commissioner Abernathy issuing a joint statement; Commissioners Copps and Adelstein issuing a joint statement; Commissioner Martin approving in part, dissenting in part, and issuing a statement. I. INTRODUCTION 1. Section 11 of the Communications Act of 1934, as amended (Communications Act), requires the Commission: (1) to review biennially its regulations that apply to the operations or activities of telecommunications service providers; and (2) to determine whether those regulations are “no longer necessary in the public interest as the result of meaningful economic competition between providers of such service.” 1 Following such review, the Commission is required to modify or repeal any such regulations that are no longer necessary in the public interest. 2 2. Consistent with our Section 11 regulatory review obligations, we issue this Report and concurrently release the 2002 Biennial Regulatory Review Staff Reports (Staff Reports). The Staff Reports review the rules issued under the Communications Act that apply to the operations or activities of any provider of telecommunications services to determine whether any such regulations are “no longer necessary in the public interest as the result of meaningful economic competition between providers of such service.” 3 As appropriate, based on these Staff Reports, we will issue notices of proposed rule making to repeal or modify regulations that are no longer in the public interest. 3. The process of reviewing our rules subject to Section 11 is, in essence, ever- continuing. As the Staff Reports indicate, the number of rules subject to this review is substantial. Thus, to faithfully fulfill our obligation under the statute, our staff engages in an ongoing review, independently considering whether the relevant regulations are no longer necessary in the public interest as the result of meaningful 1 47 U. S. C. § 161( a). 2 47 U. S. C. § 161( b). 3 47 U. S. C. § 161( a). 1 Federal Communications Commission FCC 02- 342 2 economic competition. 4 To supplement this effort, the Commission issued Public Notices in September 2002 seeking suggestions from the public as to which rules should be modified or repealed as part of the 2002 Biennial Review. 5 Comments were due on October 18, 2002 with reply comments due on November 4, 2002. We received 84 comments and 26 reply comments. In response to these comments, this Report addresses several overarching legal issues regarding the biennial review process. Concurrently, the Staff Reports analyzing the rules subject to the biennial review requirement reflect the input from the comments regarding particular rules. II. LEGAL ISSUES 4. Commenters have raised a number of broad legal concerns about our review under Section 11. As discussed below, some of these matters have been addressed in previous biennial review proceedings and we will not dwell on them. We will, however, take this opportunity to consider the congressional purpose behind Section 11; what it means for a rule to be “necessary in the public interest;” and to what extent the development of “meaningful economic competition” should define the scope of the biennial review. 5. Initially, we note that Congress added Section 11 to the Communications Act as part of the reforms in the Telecommunications Act of 1996 (1996 Act). 6 As the courts have recognized on many occasions, the overarching goal of the reforms in the 1996 Act was to promote competition in the communications industry. 7 Thus, it is not surprising that Congress also included provisions to ensure that the agency would monitor the effect of that competition as it rolled out and make appropriate adjustments to its rules to modify or eliminate those rules that were “no longer necessary in the public interest as the result of meaningful economic competition.” It is against this backdrop that we consider the scope of our Section 11 review, the standard of review applicable to our consideration, and the timing of rule changes relevant to these proceedings. 4 All decisions not expressly required to be made at the Commission level may be made by staff under 47 U. S. C. § 155( c)( 1), subject to the filing of applications for Commission review. See 47 U. S. C. § 155( c)( 4) and 47 C. F. R. § 1.115. 5 See The Commission Seeks Public Comment in the 2002 Biennial Review of Telecommunications Regulations Within the Purview of the Consumer & Governmental Affairs Bureau, Public Notice, CG Docket No. 02- 311 (rel. Sept. 26, 2002); International Bureau Seeks Comment in 2002 Biennial Review of Telecommunications Regulations, Public Notice, IB Docket No. 02- 309 (rel. Sept. 26, 2002); The Commission Seeks Public Comment in the 2002 Biennial Review of Telecommunications Regulations Within the Purview of the Office of Engineering and Technology, Public Notice, ET Docket No. 02- 312 (rel. Sept. 26, 2002); The Commission Seeks Public Comment in the 2002 Biennial Review of Telecommunications Regulations Within the Purview of the Wireless Telecommunications Bureau, Public Notice, WT Docket No. 02- 310 (rel. Sept. 26, 2002); and The Commission Seeks Public Comment in 2002 Biennial Review of Telecommunications Regulations Within the Purview of the Wireline Competition Bureau, Public Notice, WC Docket No. 02- 313 (rel. Sept. 26, 2002) (collectively “2002 Biennial Review Public Notices”). We incorporate the comments filed in response to those notices in this docket. 6 Telecommunications Act of 1996, Pub. L. No. 104- 104, 110 Stat. 56 (1996). 7 See, e. g., AT& T Corp. v. Iowa Utilities Bd., 525 U. S. 366, 371 (1999) (Iowa Utilities Board) (the 1996 Act “fundamentally restructures local telephone markets” to facilitate market entry); Reno v. American Civil Liberties Union, 521 U. S. 844, 857- 58 (1997) (“ The Telecommunications Act was an unusually important legislative enactment . . . designed to promote competition”). See also United States Telecom Association v. FCC, 290 F. 3d 415, 417 (D. C. Cir. 2002); New York & Public Service Comm’n of New York v. FCC, 267 F. 3d 91, 96 (2nd Cir. 2001). 2 Federal Communications Commission FCC 02- 342 4 9. We do not disagree with the underlying goal of continually reassessing and updating all our rules. The Commission has broad discretion to review the continued need for any rule in the absence of a congressional mandate such as Section 11. We can, should, and will exercise that power. Section 11, however, imposes particular requirements on the review of rules within its scope. For this reason, we believe it better to focus the present biennial review reports only on those rules that the statute specifically addresses. This will reduce confusion and allow us to better fulfill our statutory obligation. Other regulatory changes proposed by commenters in this proceeding will be considered outside the biennial review reporting context. 10. In their comments, Covad and Time Warner Telecom contend that many of the issues raised by commenters are already pending in other dockets and thus are inappropriate for inclusion in the biennial review. 12 While we recognize the practical nature of this suggestion, we conclude as a legal matter that the statute does not contemplate any such exemption. As noted above, if a rule applies to the operations or activities of telecommunications service providers and was promulgated under the Communications Act, it is within the scope of our Section 11 review. This is true regardless of whether it is also the subject of a pending rulemaking proceeding. Even in that case, the Commission would still need to make the statutorily required determination about the continued need for the particular rule. This does not mean, however, that the Commission must commence multiple proceedings. As a practical matter, where the Commission concludes that a rule in its current form is no longer necessary in the public interest, the pending rulemaking, depending on its scope, could serve as the appropriate vehicle to consider modification or repeal of that rule under Section 11( b). 13 11. Other commenters have urged the Commission to consider generally and specifically whether any rules or regulations should be added or expanded to best address the needs of state and federal regulators, investors, and customers. 14 As noted above, however, in order to reduce confusion and improve administrative efficiency, we wish to confine this biennial Section 11 effort to the areas defined by the statute. Adding rules, as opposed to modifying or eliminating existing rules, is clearly beyond the immediate task. To the extent that commenters seek to add rules and/ or seek review of rules that are beyond the scope of Section 11, we will consider those requests in appropriate context, such as petitions for rulemaking. We note that while proposing new rules is outside the scope of the biennial review, the Commission may, pursuant to its general rulemaking authority, decide to combine a biennial review rulemaking with related rulemaking proposals. In addition, as the Commission concluded in the 2000 Biennial Review, when it reviews its rules and considers competitive developments, it may consider 12 Reply Comments of Covad Communications, WC Docket No. 02- 313 (Covad Reply Comments), at 2 (arguing that it would be a mistake for the Commission to address issues pending in other dockets separately and redundantly in the biennial review); Reply Comments of Time Warner Telecom, WC Docket No. 02- 313, at 1 (claiming that there is no need to address the regulations applicable to broadband service provided by ILECs and prohibitions under Section 272 in the biennial review proceeding, as they are being addressed comprehensively in separate Commission proceedings); see also AT& T Reply Comments at 1. 13 Where appropriate, Further Notices could be issued to expand the scope of such pending rulemakings. 14 For example, the Wyoming PSC argues that if the Commission continues to conduct a broad inquiry, beyond the statutory requirements in Section 11, it should invite comment on whether any rules should be added or expanded to best address regulators’ needs. Wyoming PSC Comments at 2. See also Reply Comments of the Washington Utilities and Transportation Commission, WC Docket No. 02- 313, at 2. Other commenters oppose these suggestions to add new regulations within the biennial review context, as antithetical to the purpose of Section 11. See, e. g., Sprint Reply Comments, WC Docket No. 02- 313 at 1; Reply Comments of the Competitive Universal Service Coalition, WC Docket No. 02- 313, at 2; Reply Comments of the United States Telecom Association, WC Docket No. 02- 313, WT Docket No. 02- 310 (USTA Reply Comments), at 2. 4 Federal Communications Commission FCC 02- 342 5 whether new or different regulations are more appropriate. 15 B. Standard of Review 12. We now turn to address several issues regarding the appropriate standard of review under Section 11. Specifically, commenters in this proceeding proffer differing interpretations of the statutory language that requires the Commission to determine whether its rules are “no longer necessary in the public interest as the result of meaningful economic competition.” 16 The Commission has not previously addressed the proper interpretation of this statutory language; we take this opportunity to do so. 13. As explained below, we find, contrary to the suggestions of some of the commenters, no evidence that Congress intended to impose a new or higher standard for what is “necessary in the public interest” for purposes of Section 11 review. We look to how this term has been used in other portions of the Act and how we have applied it. We conclude that Congress did not intend that we apply a different standard from that required for the Commission to adopt a rule in the first instance. To conclude otherwise, we would have to assume that without directly saying it, Congress intended to give special meaning to the common phrase “necessary in the public interest.” We cannot make that analytical leap. We further conclude that Section 11( a)( 2) creates a causal connection between the existence of “meaningful economic competition between providers of [telecommunications] service” and the finding that a regulation is “no longer necessary in the public interest.” 1. Necessary in the public interest 14. Several parties suggest that Section 11 obligates the Commission to eliminate immediately any rule that it cannot determine is “essential” or “indispensable” to promoting the public interest. 17 Initially, to the extent that these parties seek to rely on the D. C. Circuit’s decision in Fox Television Stations v. FCC, 18 interpreting Section 202( h) of the 1996 Act, we note that reliance is misplaced. On rehearing, the Court deleted language in its initial decision, 19 which had indicated that the Commission applied “too low a standard” in conducting its biennial review of media ownership regulations. 20 Thus, the Court did not foreclose or circumscribe our consideration of this issue. 21 15 2000 Biennial Review, 16 FCC Rcd at 1213 ¶ 19. 16 See 47 U. S. C. § 161( a)( 2). 17 See Verizon Comments at 3, CTIA Comments at 3; BellSouth Reply Comments, at 1; Sprint Reply Comments, WT Docket No. 02- 310, at 2; but see AT& T Reply Comments at 6- 7. AT& T vehemently disagrees with this reading of Section 11. AT& T contends that Section 11 only requires the Commission to review its rules to determine whether they remain “consistent with” or “useful in” the public interest. Id. To the extent Verizon argues that Section 11 contemplates automatic repeal, we address that interpretation in Part II. C infra. 18 280 F. 3d 1027 (D. C. Cir. 2002); reh’g granted in part, 293 F. 3d 537 (D. C. Cir. 2002) (Fox). 19 280 F. 3d at 1050 (holding that under the correct standard set forth in Section 202( h), “a regulation should be retained only insofar as it is necessary in, not merely consonant with, the public interest”). 20 293 F. 3d at 540 (agreeing with the Commission that a discussion of the meaning of “necessary in the public interest" was not essential to its decision to remand the national television station ownership rule and to vacate the cable and broadcast cross- ownership rule). We note that the language of Section 202( h) is not identical to Section 11. Section 202( h) states: The Commission shall review its rules adopted pursuant to this section and all of its ownership rules biennially as part of its regulatory reform review under section 11 of the Communications Act of 1934 and shall determine whether any of such rules are necessary in the public interest as (continued....) 5 Federal Communications Commission FCC 02- 342 12 specific purpose of that provision and the deregulatory thrust of the 1996 Act. 52 Verizon and Sprint argue that Congress could not have intended the Commission to conduct an unlimited review of all its regulations, but then limited the Commission to determining that a rule is unnecessary only due to the existence of meaningful competition. 53 Verizon reasons that the language, “as the result of meaningful economic competition,” is explanatory, not a prerequisite for review or elimination of unnecessary regulations. 54 USTA and NTCA agree and urge the Commission not to limit its review under Section 11 to whether meaningful economic competition alone justifies change, but to repeal or modify regulations when it would serve the public interest and lessen regulatory burdens. 55 By contrast, the Wyoming PSC urges the Commission to refocus its examination of its regulations based on the language of Section 11, rather than on a broader reading of the public interest standard. 56 AT& T and Covad also maintain that only to the extent the Commission determines that meaningful competition has rendered particular regulations “no longer necessary in the public interest,” may it repeal or modify those regulations pursuant to Section 11. 57 26. The LECs who comment in this proceeding seem to fear that without a broad mandate beyond competition considerations, the Commission will have no meaningful obligation under Section 11. We disagree. Section 11 reflects the legislative judgment that the development of meaningful economic competition in the telecommunications marketplace should yield a different regulatory framework from that designed for a non- competitive market characterized by few service providers or a monopoly. In other words, Section 11 obligates the Commission to reassess constantly the state of competition and directs the Commission to act when it determines that competition, and not regulation, can meet some or all of the objectives of a particular rule. As such, we believe that Congress intended the Commission to focus its Section 11 inquiry on whether meaningful competition exists. This qualitative assessment of competition would then undergird our determinations about the continued need for particular rules. 27. We, of course, acknowledge the Commission’s broad authority, apart from Section 11, to consider proposed modifications to or elimination of its rules under the public interest standard. 58 In addition, Section 10 of the Communications Act allows the Commission to consider a broad range of public interest factors and to forbear from applying any regulation to telecommunications carriers when, along with two other factors, forbearance is “consistent with the public interest.” 59 The competition analysis we conduct under Section 11 is a distinct arrow in the Commission’s regulatory quiver and we decline the invitation to conflate these approaches into the Section 11 process. 3. Biennial Review Presumptions 28. Verizon has also argued that Section 11 places the burden on the Commission to support, 52 See Verizon Reply Comments at 4- 5; Sprint Reply Comments, WT Docket No. 02- 310, at 2. 53 Id. 54 Verizon Reply Comments at 4- 5. 55 USTA Reply Comments at 2; Comments of the National Telecommunications Cooperative Association (NTCA), WC Docket No. 02- 313, at 2. 56 Wyoming PSC Comments at 2. 57 AT& T Reply Comments at 3; Covad Reply Comments at 2. 58 See discussion Part II. A supra. 59 47 U. S. C. § 160. 12 Federal Communications Commission FCC 02- 342 13 with substantial record evidence, any conclusion that its rules remain necessary in the public interest. 60 If the Commission is unable to meet this burden, Verizon argues that a regulation must be repealed immediately. 61 We see no such requirement in the statute. It is clear that Section 11 places an affirmative obligation on the Commission to examine critically rules subject to Section 11 review and to analyze the state of competition in the relevant market in order to determine whether competition has rendered those rules no longer necessary in the public interest. 62 We also acknowledge that Section 11 creates a presumption in favor of repealing or modifying covered rules, where the statutory criteria are met, but we do not read the statute to create a special burden of proof apart from our standard obligation to provide a reasoned basis for our decisions. 63 29. Nothing in the language of the statute suggests that in the absence of Commission action, the presumption in favor of repeal or modification operates independently and leads to automatic repeal of any rule. In fact, the language of Section 11( a) does not create an alternative to the Commission conducting a review and making a determination of whether any regulation is no longer necessary in the public interest as the result of meaningful competition. Section 11( a) clearly states that the Commission “shall review all regulations issued under this Act . . . that apply to the operations or activities of any provider of telecommunications service.” To read an automatic repeal into Section 11( a), captioned “Biennial Review of Regulations,” would relieve the Commission of its fundamental responsibility under the section— namely conducting a comprehensive biennial review. Indeed, an automatic repeal approach ignores the congressional directive to the Commission in Section 11( a) to conduct a review as a prerequisite for elimination and modification of a rule. Accordingly, a biennial review is not an administrative luxury. 30. Moreover, the language of Section 11( b) provides not one, but two responses to a review and determination that regulations are no longer necessary in the public interest as the result of meaningful competition. Under Section 11( b), the Commission is not limited to eliminating a rule, automatically or otherwise; modification of the rule is a deregulatory tool as well. 31. Congress could have limited the Commission to only eliminating rules determined to be no longer necessary in the public interest. The legislative history of Section 11 makes it clear, however, that Congress explicitly declined to do so. The Senate Report preceding the Conference Report describes a bill which would have restricted the Commission to only eliminating (rather than eliminating or modifying) rules: This provision adds a new section 259 entitled “Regulatory Reform” to the 1934 Act. New subsection 259( a) requires the FCC, with respect to its regulations under the 1934 Act . . . to review in odd- numbered years beginning with 1997 all regulations issued under the 1934 Act . . . applicable to telecommunications services. It directs further that [the FCC] shall determine whether competition has made those regulations unnecessary 60 Verizon Comments at 7. Cingular also contends that the Commission’s biennial review decisions must be based on relevant factors and must articulate a satisfactory explanation for the agency’s actions. Comments of Cingular Wireless, IB Docket No. 02- 309, at 4. 61 Verizon Comments at 7. 62 In Fox, the court reviewed the Commission’s determination to retain the national television station ownership rule and faulted the Commission for its failure to sufficiently assess the state of competition in relevant markets. Fox, 280 F. 3d at 1043- 44. 63 See id. at 1048 (holding that Section 202( h) carries with it a presumption in favor of repealing or modifying the ownership rules). 13 Federal Communications Commission FCC 02- 342 14 to protect the public interest. Subsection 259( b) requires the FCC to repeal any regulations under the 1934 Act that are found to be no longer in the public interest . . . . 64 While the Senate bill contained the above section, the House version did not. According to the House Conference Report, the conferees created and agreed on the language in Section 11, which provides for both modification and elimination, rather than the elimination- only language of the Senate bill. 65 Both the text of the statute and the history of Section 11 demonstrate that Congress provided for modification as well elimination as means to address regulations that are no longer in the public interest. Therefore, we find no basis for adopting an automatic repeal approach in lieu of the option to modify or eliminate a rule as appropriate. 32. Finally, we note that in the analogous context of Section 202( h), the D. C. Circuit has declined to treat a biennial review as requiring immediate repeal. In reviewing our treatment of the national television ownership cap in Fox, although the Court concluded that the Commission had failed to adequately explain its reasons for retaining the rule, the appropriate remedy was to remand rather than vacate. 66 The Court apparently saw no statutory requirement to immediately eliminate the rule. Similarly, we see none here. C. Timing of Section 11 Review 33. A few commenters urge an interpretation of Section 11 under which the Commission would review all regulations and repeal or modify those no longer indispensable to the public interest by December 31 st of each even- numbered year. 67 The Commission addressed this issue fully in the 2000 Biennial Review and we decline to reconsider our approach. 68 First, the language of Section 11 does not require such a compressed schedule. Sections 11( a)( 1) and 11( a)( 2) require the Commission to review certain of its rules in every even- numbered year and determine whether those rules are no longer necessary in the public interest as a result of meaningful economic competition. Subsequent to making those determinations, the Commission is directed to “repeal or modify any regulation it determines to be no longer necessary in the public interest.” 69 Congress thus distinguished between making determinations (that certain rules are no longer in the public interest), which must occur within a specified time period, i. e., every even- numbered year, and taking action (to repeal or modify rules that are no longer in the public interest) which is not required to be completed within that specific time period. 70 Second, we 64 S. Rep. No. 104- 23, at 49 (1995) (emphasis added). 65 H. R. Conf. Rep. No. 104- 458, at 185 (1996). 66 Fox, 280 F. 3d at 1049. 67 See, e. g., Verizon Comments at 7- 8; Verizon Reply Comments at 4; USTA Reply Comments at 2. 68 See 2000 Biennial Review, 16 FCC Rcd at 1213 ¶ 12. 69 47 U. S. C. § 161( b). 70 Congress could have created a deadline for completing the regulatory actions contemplated by Section 11( b), as it did in Section 251( d) and Section 10 of the 1996 Act. Instead, Section 11 merely directs the Commission to commence a review within even- numbered years. We also note, in this regard, that the Commission must comply fully with the requirements of the Administrative Procedure Act, which would prove a very difficult task within the timeframe proposed by commenters. Moreover, even were a statutory deadline missed, where Congress does not specify otherwise, agencies do not lose their power to act after the statutory deadline. See Brock v. Pierce County, 476 U. S. 253, 260 (1986); Gottlieb v. Pena, 41 F. 3d 730, 737- 738 (D. C. Cir. 1994). We note further that where Congress intends the failure to meet a deadline to have a regulatory consequence, it is quite able to indicate its intent. See, e. g., 47 U. S. C. § 160( c) (failure to act on forbearance petition within statutory period causes it to be granted by operation of law). 14 Federal Communications Commission FCC 02- 342 15 believe that completing rule revisions within the even- numbered year would make it difficult to develop a sufficient record with respect to all the rules within the scope of Section 11. Accordingly, we decline to adopt a compressed schedule that Congress did not mandate. 71 III. ADMINISTRATIVE MATTERS 34. Applications for Review. The Staff Reports that are being released concurrently with this order recommend which rules are no longer necessary in the public interest and should be modified or repealed. Persons disagreeing with any of these recommendations may file an application for review under Section 1.115 of the Commission’s rules. 72 Otherwise, based on these Staff Reports, we will issue notices of proposed rulemaking, over the next year, to repeal or modify regulations as appropriate. IV. CONCLUSION 35. We commend the Bureaus and Offices for working together to prepare the many recommendations that comprise the Staff Reports. Their enterprise, imagination, and coordinated effort made this review and these reports possible. A constant in each biennial review are the bedrock principles of promoting the public interest and alleviating regulatory burdens. We expect these principles will be reflected in forthcoming notices of proposed rule making. FEDERAL COMMUNICATIONS COMMISSION Marlene H. Dortch Secretary 71 We also decline to adopt two proposals proffered by USTA to create formal deadlines for Commission action under Section 11. USTA suggests that rules identified for elimination in a biennial review would automatically sunset within 90 days, unless a petition to retain the rule is filed, and that biennial review rulemaking proceedings be initiated and completed within 90 days of the Commission’s determination under Section 11( a). USTA Comments at 3. Neither the sunset procedure nor the one- size- fits- all, 90- day rulemaking timeframe is required by Section 11. While the Commission is committed to timely biennial reviews under Section 11, from a practical standpoint, these approaches could inadvertently prolong the biennial review and would place unnecessary administrative burdens on Commission staff. 72 47 C. F. R. § 1.115. 15 Federal Communications Commission FCC 02- 342 3 Regardless of one’s view of the correct interpretation of the substantive standard in section 11, there should be no doubt that the requirement to determine whether competition has rendered certain rules obsolete establishes a very meaningful process. The Commission must assess the state of competition in the relevant market for a given rule and then determine whether the rule in its current form is no longer necessary in the public interest as a result of meaningful economic competition. Before Congress enacted section 11, the FCC was under no requirement to ascertain regularly the continued relevance of its rules or to justify their retention in the face of meaningful competition. Now, the Commission conducts a thorough analysis of all covered rules every two years, and where we find that a particular regulation no longer serves the public interest as a result of competition, we are required to repeal or modify it. Section 11 thus provides an important tool in carrying out Congress’s general preference for reducing regulation where competition has emerged, and that fact should not be obscured by the narrow debate over whether the Commission must repeal a rule that continues to serve the public interest solely because the rule cannot be proven to be indispensable. Ultimately, we hope that the Commission moves beyond this academic debate and translates words into deeds by actually reducing regulation where competition exists. 18 Federal Communications Commission FCC 02- 342 JOINT STATEMENT OF COMMISSIONER MICHAEL J. COPPS AND COMMISSIONER JONATHAN S. ADELSTEIN, APPROVING Re: The 2002 Biennial Regulatory Review We approve the Order because it recognizes that Section 11 requires a two- step process. First, as the statute states, the Commission must determine if there is meaningful competition in the relevant market. The Order correctly notes, however, that “the mere presence of meaningful competition will not always lead us to conclude that repeal or modification of a rule is in the public interest. Rather, our task is to determine whether the competitive environment has changed such that the rule is no longer meaningful, i. e., is not needed to further the public interest.” In addition, the Order concludes that the public interest standard must be interpreted to mean the traditional Commission public interest standard, and does not require a heightened justification. Furthermore, we view the attached Bureau reports as recommendations from that Bureau as to whether we should retain, modify, or repeal specific rules. Our approval of this item does not suggest a certain position as to the recommendations of the staffs of the respective Bureaus. We reserve our right to address these issues as they are presented to us in the proceedings that will manifest themselves as a result of this Biennial Review proceeding. 19 Federal Communications Commission FCC 02- 342 SEPARATE STATEMENT OF COMMISSIONER KEVIN J . MARTIN Re: The 2002 Biennial Regulatory Review, Report I respectfully dissent in part from this item because I believe the majority has misinterpreted section 11’s standard of review. Section 11 was added to the Communications Act by the Telecommunications Act of 1996 (“ 1996 Act”) as part of the 1996 Act’s effort “to promote competition and reduce regulation.” 79 Entitled “regulatory reform,” section 11 was meant to reduce regulation and to constrain the Commission’s authority. The provision requires the Commission to review its regulations for providers of telecommunications service every two years and to “determine whether any such regulation is no longer necessary in the public interest as the result of meaningful economic competition between providers of such service.” 80 Section 11 then mandates that “The Commission shall repeal or modify any regulation it determines to be no longer necessary in the public interest.” 81 As I have explained repeatedly in previous decisions before the Commission, I believe the majority has failed to adhere to this language. 82 I also disagree with the majority’s reading of the legislative history and the case law. However, what troubles me the most about the majority’s decision is its view of the role of competition in the 1996 Act’s statutory scheme. A fundamental premise of the 1996 Act and section 11 is that where competition is present, competition – and not regulation – will best maximize consumer welfare. Congress thus made the presence or absence of meaningful competition a crucial factor in determining the nature and extent of regulation: competition first, then deregulation. Where there is competition to protect consumers, deregulation is appropriate and regulations should be retained only if they are necessary – i. e., still needed to protect consumers. Where there is not competition, regulations may be appropriate to protect consumers. The majority’s reading of section 11 is most problematic in ignoring this principle. In this item, the majority concludes that the term “necessary” should be read to mean “useful,” “convenient,” or “appropriate” and asserts that the phrase “necessary in the public interest” means nothing more than “in the public interest.” 83 As the majority reads section 11 then, the Commission is required to conduct a thorough analysis of all covered rules, conducting a market analysis to determine the state of competition relevant to each rule and then make an affirmative finding on whether each rule is 79 Preamble to the Telecommunications Act of 1996, Pub. Law. No. 104- 104, § 202, 110 Stat. 56 (1996). 80 47 U. S. C. § 161( a). 81 Id. § 161( b). 82 See Separate Statement of Commissioner Kevin J. Martin, Year 2000 Biennial Regulatory Review – Amendment of Part 22 of the Commission’s Rules To Modify or Eliminate Outdated Rules Affecting the Cellular Radiotelephone Service and other Commercial Mobile Radio Services, Report and Order, WT Docket No. 01- 108 (adopted Aug. 8, 2002); Separate Statement of Commissioner Kevin J. Martin, Verizon Wireless’s Petition for Partial Forbearance from the Commercial Mobile Radio Services Number Portability Obligation, Memorandum Opinion and Order, WT Docket No. 01- 184, CC Docket No. 95- 116 (adopted July 16, 2002); Separate statement of Commissioner Kevin J. Martin, Implementation of the Cable Television Consumer Protection and Competition Act of 1992; Development of Competition and Diversity in Video Programming Distribution: Section 628( c)( 5) of the Communications Act; Sunset of Exclusive Contract Prohibition, Report and Order, CS Docket No. 01- 290 (adopted June 13, 2002). 83 See Report ¶¶ 15, 17- 18. 20 Federal Communications Commission FCC 02- 342 2 “in the public interest.” The problem with this reading is that, even without section 11, the Commission already has a statutory obligation to maintain only those rules that are in the public interest. Why would the Commission be required to conduct a market analysis if, regardless of the result of the analysis, the Commission has an obligation to eliminate rules no longer in the public interest? Either the presence of competition is irrelevant and section 11’s standard is essentially meaningless, or section 11 allows the Commission to maintain regulations acknowledged to be no longer in the public interest if their lack of support was not due to the presence of competition. Either answer renders the statute “absurd[].” 84 Nevertheless, the majority attempts both of them. On the one hand, the majority insists that the presence of competition matters under its interpretation, because, it argues, in conducting section 11’s “thorough analysis of all covered rules,” the Commission need repeal or modify only those rules that are no longer in the public interest as a result of the presence of competition. 85 Thus, it would seem to be entirely proper for the Commission, in a section 11 proceeding, to acknowledge that numerous regulations are no longer in the public interest but maintain them because their lack of support was caused by something other than the presence of competition, such as, for example, technological obsolescence. But on the other hand, the majority insists that the Commission must repeal or modify any rule found to be not in the public interest during a section 11 review, even if the reason for the rule’s flaw is not the presence of competition: “If the Biennial Review process identifies rules that have become obsolete based on factors other than competition . . . the broad and clear deregulatory goals of the Act and our general public interest obligations require that we modify or eliminate such rules.” 86 If this is true, however, it is unclear why the presence or absence of competition has any relevance. The majority offers no explanation. There is little reason, moreover, for the majority to read the statute in this manner. Both the Supreme Court and the D. C. Circuit have held that the term “necessary” in the 1996 Act should be read in accordance with its ordinary meaning and does not mean merely “useful,” “convenient,” or “appropriate.” The majority does not point to a single case construing the 1996 Act or, indeed, any statute intended to limit regulatory authority that supports its interpretation. Moreover, the majority not only interprets “necessary” in a manner that conflicts with the term’s plain meaning; it goes on to read the word entirely out of the statute. In the majority’s view, when “necessary” means “useful,” “convenient,” or “appropriate,” the phrase “necessary in the public interest” means exactly the same thing as “in the public interest.” The majority’s only real argument is that reading section 11’s standard to require anything more than a showing that a regulation is in the public interest would require a greater showing when deciding whether to retain a rule than in deciding whether to adopt the rule in the first place. There are good reasons, however, to have a more permissive standard for deciding whether to adopt a rule. For example, unlike a decision whether to retain a rule, which is made after the rule has been in operation at least two years, a decision whether to adopt a rule is necessarily a predictive judgment that cannot be based on actual evidence of the rule’s impact. The statute’s text specifically recognizes this distinction. The decision whether to adopt a rule is governed by section 201( b) of the Communications Act, which, unlike section 11, requires only a determination that a rule is likely to – or “may” – be necessary in the public interest: “The Commission may prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.” 87 The majority offers no basis whatsoever for 84 Id. ¶ 18 n. 35. 85 Separate Statement of Chairman Powell and Commissioner Abernathy; see Report ¶¶ 23- 27. 86 Separate Statement of Chairman Powell and Commissioner Abernathy. 87 47 U. S. C. § 201( b) (emphasis added). 21 Federal Communications Commission FCC 02- 342 3 equating the determination that a rule “may be necessary in the public interest” with the determination that a rule is “necessary in the public interest,” which the majority has already argued means exactly the same thing as “in the public interest.” The only way to make sense of the majority’s argument is once again to read words completely out of the statute. In my view, Congress intended section 11 to be a significant and coherent deregulatory provision that turns on the presence of competition to protect consumers. Competition is the best method of providing consumers choice, innovation, and affordability. Where meaningful competition is not present, Congress understood the importance of regulation, and the Commission has some latitude to adopt and maintain regulations. But where meaningful competition is present, regulation may be unnecessary or even harmful. Where there is such competition, section 11 requires repeal or modification of regulations that are no longer “necessary in the public interest” – a burden that, as the provision’s terms make plain, is more substantial than the “in- the- public- interest” standard. This interpretation is faithful to the statute’s language and best effectuates Congress’s intent. I. The Majority’s Interpretation Conflicts With The Statute’s Text My reading of section 11 begins, as it must, with the statute’s language. The Communications Act contains no statutory definition of the term “necessary,” and, thus, the term should be construed “in accordance with its ordinary or natural meaning.” FDIC v. Meyer, 510 U. S. 471, 476 (1994). The term “necessary” is ordinarily defined as “absolutely required,” “indispensable,” or “essential.” Merriam Webster’s Collegiate Dictionary 774 (10th ed. 2000). Indeed, the majority acknowledges that “the word ‘necessary’ has an everyday meaning that implies indispensable.” Report ¶ 15. Both the Supreme Court and the D. C. Circuit have held, in interpreting other sections of the 1996 Act, that the term “necessary” must be read in accordance with its ordinary meaning and thus cannot mean merely “useful,” “convenient,” or “appropriate.” In AT& T vs. Iowa Utilities Board, for example, the Supreme Court addressed section 251( d)( 2) of the Act, which requires the Commission to consider whether access to a proprietary network element is “necessary” before ordering incumbent local exchange carriers (“ LECs”) to provide the element to competitors. See AT& T Corp. v. Iowa Utils. Bd., 525 U. S. 366 (1999). The Commission had found that access to an element is necessary if its denial would cause a competitor any increase in cost or decrease in quality. The Court rejected this interpretation: “the Commission’s assumption that any increase in cost (or decrease in quality) imposed by denial of a network element renders access to that element ‘necessary’ . . . is simply not in accord with the ordinary and fair meaning of [the statute’s] terms.” Id. at 389- 90. The D. C. Circuit came to a similar conclusion in interpreting section 251( c)( 6), which requires incumbent LECs to provide for physical collocation of equipment “necessary” for interconnection or access to unbundled network elements. See GTE Serv. Corp. v. FCC, 205 F. 3d 416 (2000). The Commission had interpreted this language to require collocation of any equipment “used or useful” for either interconnection or access to unbundled network elements. Rejecting the Commission’s interpretation, the D. C. Circuit held that the statute must be interpreted in accordance with its plain meaning: “As is clear from the Court’s judgment in Iowa Utilities Board, a statutory reference to ‘necessary’ must be construed in a fashion that is consistent with the ordinary and fair meaning of the word, i. e., so as to limit ‘necessary’ to that which is required to achieve a desired goal.” Id. at 423. The Court concluded that the word “necessary” is “fairly straightforward. Something is necessary if it is required or indispensable to achieve a certain result.” Id. at 422. To challenge this precedent, the majority makes much of Sinclair Broadcasting Group, Inc. v. FCC, 284 F. 3d 148 (D. C. Cir. 2002), a case addressing the Commission’s local television ownership rule, which limits ownership of multiple television stations in the same market. The D. C. Circuit in that case 22 Federal Communications Commission FCC 02- 342 4 applied the “necessary in the public interest” standard of section 202( h) of the 1996 Act. Similar to section 11, section 202( h) requires the Commission to review its broadcast ownership rules biennially to “determine whether any of such rules are necessary in the public interest as the result of competition.” 1996 Act § 202( h). The majority argues that Sinclair supports its interpretation of “necessary in the public interest” because the Court “ultimately upheld the bulk of the Commission’s local ownership rule” and rejected other aspects of the rule for “lack of a reasonable explanation, rather than a higher public interest standard.” Report ¶ 20. But this argument makes no sense. To begin with, the meaning of the “necessary in the public interest” standard was not even at issue in Sinclair. Indeed, the majority concedes that the case “did not expressly address the meaning of the phrase.” Report ¶ 20. That alone makes reliance on the case misplaced, as it is a long standing principle that judicial decisions do not serve as precedent for points that were not raised and analyzed. See, e. g., United States v. Verdugo- Urquidez, 494 U. S. 259, 272 (1990). 88 Even leaving aside that problem, however, the majority’s argument does not hold together. The mere fact that Sinclair upheld parts of the local television ownership rule under the “necessary in the public interest” standard could have no bearing whatsoever on the interpretive question at issue here unless those parts were merely “useful” or “appropriate” in the public interest but could not meet a higher standard – a point that is not readily apparent and that the majority in no way asserts. The majority’s refusal even to make such an assertion, which is an essential premise of its argument, is a telling acknowledgment of the argument’s weakness. Additionally, the fact that the court rejected other aspects of the local television ownership rule for lack of a reasonable explanation tells us nothing about whether there were additional flaws in the Commission’s reasoning, as courts almost never address every ground upon which their decisions might rest. See, e. g., COMSAT Corp. v. FCC, 283 F. 3d 344, 349 (D. C. Cir. 2002). Moreover, if we are going to look to the reasoning of cases that lack precedential value, the case most on point is Fox Television Stations, Inc. v. FCC, 280 F. 3d 1027 (D. C. Cir.), reh’g granted in part, 293 F. 3d 537 (D. C. Cir. 2002). In that case, the D. C. Circuit vacated the Commission’s Cable/ Broadcasting Cross Ownership rule (“ CBCO”), which restricted the ability of television licensees to hold cable franchises. The Court applied the “necessary in the public interest” standard of section 202( h) and, in its initial opinion, rejected the precise argument the majority makes here. Specifically, the Court found that that “the Commission applied too lenient a standard when it concluded only that the CBCO Rule ‘continues to serve the public interest, ’ and not that it was ‘necessary’ in the public interest.” Fox, 280 F. 3d at 1050. According to the Court, “The statute is clear that a regulation should be retained only insofar as it is necessary in, not merely consonant with, the public interest.” Id. (emphasis added). On the Commission’s petition for rehearing, the Court removed this reasoning from its opinion, because the issue had not been briefed by the parties and was unnecessary to the Court’s decision. See Fox, 293 F. 3d at 540- 41. But the Court left open the proper interpretation of “necessary in the public interest,” and its initial reasoning remains persuasive. At the very least, this explicit discussion of the issue by the D. C. Circuit is far more compelling than anything the majority gleans from Sinclair. 89 II. Legislative History Does Not Support The Majority’s Interpretation 88 See also, e. g., Hagans v. Lavine, 415 U. S. 528, 533, n. 5 (1974); United States v. L. A. Tucker Truck Lines, Inc., 344 U. S. 33, 37- 38 (1952). 89 Of the other cases relied upon by the majority, none of them address the meaning of “necessary” in the 1996 Act, one of them does not address the term “necessary” at all (see National R. R. Passenger Corp. v. Boston & Maine Corp., 503 U. S. 407, 418- 19 (1992)), and most were decided prior to 1947. See Report ¶ 15 n. 25. Most importantly, none of the majority’s cases involve a deregulatory provision like section 11, which, as discussed below, is a significant factor in interpreting the meaning of the provision’s terms. 23 Federal Communications Commission FCC 02- 342 5 Despite the case law interpreting “necessary” in the 1996 Act and the majority’s acknowledgment that “the word ‘necessary’ has an everyday meaning that implies indispensable,” the majority concludes that the term should instead be read to mean “useful,” “convenient,” or “appropriate.” See Report ¶ 15. The majority rests this conclusion in large part on a brief paragraph in the 1996 Act Conference Report, which appears to equate the phrase “necessary in the public interest” with the phrase “in the public interest.” See id. ¶ 17. Apparently, under the majority’s theory, if “necessary” means nothing more than “useful,” “convenient,” or “appropriate,” the term has no meaning at all when attached to the phase “in the public interest.” Indeed, there does seem to be no meaningful difference between saying something is “in the public interest” and saying that the same thing is “useful in the public interest” or “appropriate in the public interest.” But whatever the merits of using legislative history to read the word “necessary” out of the statute, as the majority does – a problem I address in a moment – the majority’s analysis does not take into account all of the relevant legislative history. In fact, there is ample evidence in the legislative history that “necessary” in section 11 was meant to have independent force and meaning. For example, the Senate Report on the bill that became the 1996 Act attaches independent meaning to the term “necessary,” stating that the statute would require the Commission to “determine whether competition has made those regulations unnecessary to protect the public interest.” S. Rep. No. 23, 104th Cong., 1st Sess. (Mar. 30, 1995) (emphasis added). Similarly, the bill’s sponsor stated that the statute’s biennial review provision would “ensure[] that regulations applicable to the telecommunications industry remain current and necessary in light of changes in the industry.” 141 Cong. Rec. S7881- 02, at S7887 (daily ed. Jun. 7, 1995) (statement of Sen. Pressler) (emphasis added) (“ Pressler Statement”). In any case, regardless how one interprets the 1996 Act’s legislative history, it is hornbook law that “Legislative history is irrelevant to the interpretation of an unambiguous statute.” Davis v. Michigan Dept. of Treasury, 489 U. S. 803, 808 n. 3 (1989). 90 As both the Supreme Court and D. C. Circuit have found, the meaning of “necessary” in the 1996 Act is clear. Accordingly, “we do not resort to legislative history.” Ratzlaf v. United States, 510 U. S. 135, 147- 48 (1994). Moreover, the majority does not seek to use legislative history merely to add an interpretive gloss to section 11. Instead, the majority wishes to read the word “necessary” completely out of the statute. The majority’s argument thus runs up against another basic principle: “It is a time- honored tenet that [a] ll words and provisions of statutes are intended to have meaning and are to be given effect, and no construction should be adopted which would render statutory words or phrases meaningless, redundant, or superfluous.” Lopez- Soto v. Hawayek, 175 F. 3d 170, 173 (1st Cir. 1999) (citation and quotation marks omitted). 91 Accordingly, the majority’s interpretation is simply untenable. III. The Statute’s Context (As Well As Its Text) Undermines The Majority’s Interpretation Finally, the majority argues that “context” supports its interpretation. The majority points to section 201( b) of the Communications Act, which grants the Commission authority “to prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.” 47 U. S. C. § 201( b). The majority argues that this provision has not been interpreted to require anything more than a showing that a regulation is in the public interest. See Report ¶ 18 & n. 33. According to the majority, reading section 11 to require a greater showing when deciding whether to retain a rule would “unreasonably hold the Commission to a different and higher standard in deciding 90 Accord Circuit City Stores, Inc. v. Adams, 532 U. S. 105, 119 (2001); PanAmSat Corp. v. FCC, 198 F. 3d 890, 895 (D. C. Cir. 1999). 91 See also Department of Revenue of Oregon v. ACF Indus., Inc., 510 U. S. 332, 340 (1994) (It is an “elementary canon of construction that a statute should be interpreted so as not to render one part inoperative.”) (citation and quotation marks omitted). 24 Federal Communications Commission FCC 02- 342 6 whether to retain an existing rule in a biennial review proceeding than in deciding whether to adopt a rule in the first place.” Id. ¶ 18. Such a result, the majority argues, would render section 11 an “absurdity.” Id. ¶ 18 n. 35. This argument suffers from multiple flaws. To begin with, there is nothing “absurd” in having a more permissive standard for deciding whether to adopt a rule in the first instance than for deciding whether to retain a rule where competition has developed. A decision whether to adopt a rule is necessarily a predictive judgment that cannot be based on actual evidence of the rule’s impact. It would make little sense, in that context, to hold the Commission to a more significant burden to justify the rule. Rather, what reasonably can be expected of the Commission before a rule is adopted is a determination whether the rule is likely to be necessary in the public interest. Indeed, as discussed below, the text of section 201( b) acknowledges that fact, granting the Commission authority to adopt rules that “may be necessary in the public interest.” 47 U. S. C. § 201( b) (emphasis added). Once a rule has been in place at least two years, however, we can assess the rule in light of actual experience. We will then have evidence of the rule’s impact and are capable of meeting a greater burden to justify the rule. Under section 11, moreover, this greater burden is triggered only where competition has developed, which, as I discuss below, recognizes the importance Congress placed on the need for regulatory restraint in the presence of competition. The majority’s suggestion that the Commission might continually readopt rules under section 201( b) that were required to be repealed pursuant to section 11 (see Report ¶ 18) is a straw man: Where competition has developed, the Commission’s judgment about whether to adopt a rule will necessarily be informed by section 11’s – and, for that matter, the entire 1996 Act’s – admonition to exercise regulatory restraint in the presence of competition. Unlike the majority’s interpretation, moreover, my view that the standards of section 11 and section 201( b) differ is supported by the text of the provisions. In contrast to section 11, section 201( b) is phrased in lenient, permissive terms: “The Commission may prescribe such rules and regulations as may be necessary in the public interest to carry out the provisions of this chapter.” 47 U. S. C. § 201( b) (emphasis added). Section 201( b) thus makes clear that a decision whether to adopt a rule is held to a different standard than the decision whether to retain a rule. Unlike a decision to retain a rule, the decision to adopt a rule is, as discussed above, necessarily predictive and cannot be based on actual evidence of the rule’s operation. Under section 201( b), such a decision can be justified if it is likely to – or “may” – be necessary in the public interest. This stands in marked contrast to section 11’s mandate to retain a rule only if it is necessary in the public interest, without any qualifications. The majority offers no basis whatsoever for equating these determinations. The majority simply reads the determination that a rule “may be necessary in the public interest” to be identical to the determination that a rule is “necessary in the public interest,” which the majority has already argued means exactly the same thing as “in the public interest.” Again, the only way to make sense of the majority’s argument is to read words completely out of the statute. As the majority itself argues, it is better to presume that “Congress meant what it said.” Report ¶ 17 n. 32. 92 92 The language of section 201( b) also answers the majority’s argument based on section 11’s use of the phrase “no longer necessary in the public interest”: it argues that the phrase “‘ no longer necessary’ clearly implies that such regulations were once ‘necessary in the public interest. ’” Separate Statement of Chairman Powell and Commissioner Abernathy; see also Report ¶ 17 n. 32. Under section 201( b), however, the Commission must determine that a rule “may be necessary in the public interest” in order to adopt it in the first instance. Section 11’s mandate to repeal or modify rules “no longer necessary in the first instance” simply acknowledges that the rule “may” have been necessary in the public interest previously. 25 Federal Communications Commission FCC 02- 342 7 The contexts in which section 11 and section 201( b) were enacted were also quite different. Section 201( b) was enacted in 1938, a time when there was no competition in telecommunications. The entire purpose of this provision, as well as the 1934 Communications Act, was to grant the Commission regulatory authority. Section 11 and the 1996 Act, in contrast, were part of a fundamental “paradigm shift” to limit regulatory authority. Pressler Statement, 141 Cong. Rec. S7881- 02 at S7888. While previous legislative efforts assumed “the concept of regulated monopoly as a given” – “that monopoly, like the poor, would always be with us” – the 1996 Act is based on the recognition that competition – not regulation – will maximize consumer welfare. Id. The 1996 Act was intended “to promote competition and reduce regulation.” Preamble to the Telecommunications Act of 1996, Pub. Law. No. 104- 104, § 202, 110 Stat. 56 (1996) (emphasis added). It “was an unusually important legislative enactment. . . . [I] ts primary purpose was to reduce regulation . . . .” Reno v. ACLU, 521 U. S. 844, 857 (1997) (emphasis added) (quotation marks omitted). Section 11 was intended to be a significant part of the 1996 Act’s deregulatory program. Entitled “regulatory reform,” the provision was meant to reduce regulation and to constrain the Commission’s authority. Congress wanted to ensure that, “[ e] very 2 years . . . all the rules and regulations will be on the table.” Pressler Statement, 141 Cong. Rec. S7881- 02 at S7888. The biggest problem with the majority’s argument, however, is it that it would, to use the majority’s terms, “render section 11 an absurdity.” Report ¶ 18 n. 35. That is because – irrespective of section 11 – the Commission already has an obligation to maintain only those rules that are in the public interest. See Washington Ass’n for Television and Children v. FCC, 665 F. 2d 1264, 1268 (D. C. Cir. 1981) (The Commission’s “statutory mandate. . . [prohibits] employ[ ing] a policy that, by its own determination, did not serve the public interest.”). 93 On the majority’s interpretation, section 11 would merely restate this obligation – and, even then – only in limited circumstances. As the majority rightly emphasizes, section 11 requires a finding of meaningful competition before its obligation to repeal or modify a rule comes into play. There must be a “causal connection” between the existence of competition and a finding that a regulation is longer “necessary in the public interest.” Report ¶ 23. Thus, under the majority’s theory, the Commission properly could, in a section 11 proceeding, acknowledge that numerous regulations are no longer in the public interest but maintain them because their lack of support was not due to the presence of competition. See id. ¶¶ 23- 27. The majority insists that it does not read the statute in this manner. At least according to the Chairman and Commissioner Abernathy, “If the Biennial Review process identifies rules that have become obsolete based on factors other than competition . . . the broad and clear deregulatory goals of the Act and our general public interest obligations require that we modify or eliminate such rules.” Separate Statement of Chairman Powell and Commissioner Abernathy. The problem with this assertion, however, is that it renders the presence or absence of competition completely irrelevant. Whether or not there is meaningful competition, a rule that is no longer in the public interest must be repealed or modified. The only thing that turns on a finding of competition is apparently the legal citation attached to a rule’s repeal or modification. If that is the case, why would Congress require a finding of meaningful competition at all? This reading of section 11 is, in the majority’s words, “dysfunctional[]” at best. Id. ¶ 15 n. 22. In my view, a critical aspect of section 11 and the 1996 Act’s deregulatory scheme – and one lost in the majority’s interpretation – is the notion that, where competition is present, competition – and not regulation – is the best method of delivering choice, innovation, and affordability to our nation. Congress thus made the presence or absence of meaningful competition a crucial factor in determining the nature and extent of regulation. Where there is such competition, Congress intended there to be deregulation. 93 See also National Broadcasting Co. v. United States, 319 U. S. 190, 225 (1943) (“ If time and changing circumstances reveal that the ‘public interest’ is not served by application of the Regulations, it must be assumed that the Commission will act in accordance with its statutory obligations.”). 26 Federal Communications Commission FCC 02- 342 8 For example, in section 271, Congress conditioned Bell Operating Company entry into the long- distance market on the extent of competition in local markets. See 47 U. S. C. § 271. And, in section 10, Congress directed the Commission to examine “competitive market conditions” in deciding whether to grant a petition for forbearance. 47 U. S. C. § 160( b). Similarly, section 11 requires a finding of meaningful competition before its obligation to repeal or modify a rule comes into play. Unlike the majority’s interpretation, my reading of section 11 gives meaning to Congress’s admonition that the Commission condition deregulation on the presence of competition. Where meaningful competition is not present, Congress understood the importance of regulation, and the Commission has some latitude to maintain regulations. But where meaningful competition is present, Congress believed that competition will maximize consumer welfare and that regulation may be unnecessary and potentially harmful. As the majority acknowledges, where competition is present, “Section 11 creates a presumption in favor of repealing or modifying covered rules.” Report ¶ 28. In such circumstances, the burden shifts to the Commission to justify why continued regulation is “necessary in the public interest.” In making that judgment, the Commission should not be able simply to rest on the ground that the regulation at issue served some public interest purpose and that no one has proved that is no longer the case. The issue is whether the regulation is superior to competition and still needed to serve that purpose. We should have to undertake a substantive and factual examination of the regulation and its effects to determine if its purpose can only be achieved through regulation instead of market forces. The ultimate question must be whether, in light of competition, the rule is “necessary.” In my view, this approach is most faithful to the language of the statute and the intent of Congress. * * * Accordingly, for the reasons stated above, I respectfully dissent from this item’s discussion of section 11’s standard as well as from its application of that standard. 27