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Verizon v. FCC, No. 11-1355 (D.C. Cir.)

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Released: January 4, 2013
ORAL ARGUMENT NOT YET SCHEDULED
SURREPLY BRIEF FOR RESPONDENTS
IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT

NO. 11-1355

VERIZON ET AL.,
APPELLANTS/PETITIONERS,
V.
FEDERAL COMMUNICATIONS COMMISSION
AND UNITED STATES OF AMERICA,
APPELLEE/RESPONDENTS.

ON PETITIONS FOR REVIEW AND NOTICES OF
APPEAL OF AN ORDER OF THE FEDERAL
COMMUNICATIONS COMMISSION

CATHERINE G. O’SULLIVAN
SEAN A. LEV
NICKOLAI G. LEVIN
GENERAL COUNSEL
ATTORNEYS
PETER KARANJIA

DEPUTY GENERAL COUNSEL
UNITED STATES
DEPARTMENT OF JUSTICE
JACOB M. LEWIS
WASHINGTON, D.C. 20530
ASSOCIATE GENERAL COUNSEL

JOEL MARCUS
MATTHEW J. DUNNE
COUNSEL
FEDERAL COMMUNICATIONS COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740



TABLE OF CONTENTS

TABLE OF AUTHORITIES ........................................................................... ii
ARGUMENT ....................................................................................................1
1.
Title III ..............................................................................................1
2.
Common Carriage .............................................................................4
3.
Fifth Amendment ..............................................................................7
CONCLUSION .................................................................................................7

i

TABLE OF AUTHORITIES

CASES


*
Cellco Partnership v. FCC, No. 11-1135
(December 4, 2012) .................................................................. 1, 2, 3, 4, 5, 7
Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S.
29 (1983) .......................................................................................................3
SEC v. Chenery Corp., 332 U.S. 194 (1947) ...................................................3

ADMINISTRATIVE DECISIONS


700 MHz Order, 22 FCC Rcd 15365 (2007) ....................................................3
In Re Access Charge Reform, 14 FCC Rcd 14221
(1999) ............................................................................................................6

STATUTES AND REGULATIONS


47 U.S.C. § 201(a).............................................................................................5
47 U.S.C. § 303(b).........................................................................................1, 2
47 U.S.C. § 303(r) .............................................................................................2
47 U.S.C. § 316 .............................................................................................2, 3
*
Authorities upon which we chiefly rely are marked with asterisks.

ii

ARGUMENT

As demonstrated in our principal brief, the Commission acted within its
statutory authority – and consistently with the APA and the Constitution – in
adopting the Open Internet Order. In this surreply, we focus on this Court’s
recent decision in Cellco Partnership v. FCC, No. 11-1135 (December 4,
2012), which reaffirms the Commission’s conclusions concerning: (1) its
authority under Title III of the Communications Act; (2) the absence of any
common carriage mandate under the Order; and (3) the Order’s compliance
with the Fifth Amendment.
1. Title III
Cellco confirms that the FCC has authority under Title III of the
Communications Act to establish Open Internet rules applicable to wireless
mobile broadband providers.
Cellco upheld an FCC rule requiring cellular telephone companies to
enter into agreements for “data roaming” – arrangements that allow a
customer outside the range of his own wireless provider’s network to access
mobile data services using another provider’s network. This Court held that
the rule was within the Commission’s authority under Section 303(b) of the
Act to “[p]rescribe the nature of the service to be rendered” by the holders of
FCC-issued spectrum licenses. Slip op. 13 (“[T]he data roaming rule merely



defines the form mobile-internet service must take for those who seek a
license to offer it.”). The Court found it “clear” that the data roaming rule fell
“well within the Commission’s Title III authority,” particularly when
considered together with the Commission’s authority both under Section
303(r) to promulgate implementing rules and under Section 316 to modify
radio licenses. Id.
So too here. By setting basic “rules of the road” establishing that
wireless broadband Internet access providers may not block lawful data
traffic in using their FCC-licensed spectrum, Order ¶¶42, 99 (JA___), the
Commission’s Open Internet Rules likewise “prescribe the nature of the
1
service to be rendered” by the holders of those licenses. See FCC Br. 43-46.
Petitioners err in their contention that the Commission did not rely on
Section 303(b) in the Order and therefore may not do so here. Verizon Reply
17; MetroPCS Reply 5. The Commission expressly grounded its Open
Internet Rules on its authority under “Title III of the Communications Act,”
Order ¶133 (JA___); see id. at ¶¶127, 128 (JA___), and the “Ordering

1 Nothing in Section 303(b) as construed in Cellco limits that provision to
regulations concerning “spectrum management.” Verizon Reply 18.
Regardless, by ensuring that spectrum is used in a manner that will spur
demand, innovation, and investment, see Order ¶134 (JA___), the Order
ensures spectrum will be “manage[d]…in the public interest.” Cellco, slip op.
11; see Br. 37-39.

2

Clauses” make clear that the Order was adopted “pursuant to,” inter alia,
“section[] 303…of the Communications Act,” Order ¶170 (JA___).
Moreover, the Commission relied on precedent adopting similar rules for
wireless providers pursuant to, inter alia, Section 303(b). See id. ¶134 &
nn.433, 434 (JA___); 700 MHz Order, 22 FCC Rcd 15365 ¶207 n.471
(2007). Accordingly, this is not a case in which the Court must “guess at the
theory underlying the agency’s action.” SEC v. Chenery Corp., 332 U.S.
194, 197 (1947); see Motor Vehicle Mfrs. Ass’n v. State Farm, 463 U.S. 29,
43 (1983) (Chenery satisfied where “agency’s path may reasonably be
discerned”).
Cellco likewise confirms that the Order is within the Commission’s
independent power to modify licenses (including by rulemaking) under
Section 316 of the Act. The Cellco Court rejected Verizon’s claim that a data
roaming obligation was a “fundamental” change to radio license terms that
exceeded the Commission’s license-modification authority. Slip op. 15.
Petitioners now argue that the rule in Cellco imposed only a “limited
obligation,” while this Order works a “fundamental change,” Verizon Reply
20-21; MetroPCS Reply 10. But the Order, “grounded in broadly accepted
Internet norms,” Order ¶1 (JA___), simply preserves the status quo. By
contrast, the rule in Cellco imposed a new duty to negotiate roaming

3

agreements with competing providers on “commercially reasonable terms.”
See Cellco, slip op. 3. Under Cellco, the Open Internet Order – which does
not prevent Verizon from engaging in any anticipated business practices, see,
2
e.g., Verizon Br. 51 – is not a fundamental change.
2. Common Carriage
Consistent with our arguments (Br. 61 & n.12), Cellco holds that “the
Commission’s interpretation and application of the term ‘common carrier’
warrants Chevron deference.” Slip op. 17.
As Cellco made clear, “there is room for permissible regulation of
private carriers that shares some aspects of traditional common carrier
obligations.” Slip op. 23. Thus, a rule does not impose common carriage
obligations simply because, as here, it limits providers’ discretion in some
manner. Id. 22-23. As the Court explained, “common carriage is not all or
nothing – there is a gray area in which although a given regulation might be
applied to common carriers, the obligations imposed are not common carriage
per se.” Id. 21-22. And within that “gray area,” “the Commission’s

2 Because the rules for wireless and fixed providers operate independently,
differ in scope, and rely in part on distinct authority, the rules for wireless
service would be lawful regardless of the Court’s determination regarding the
fixed rules (which are also lawful). Contra Verizon Reply 21-22.

4

determination that a regulation does or does not confer common carrier status
warrants deference.” Id. 22.
Cellco further held that core common carriage exists when a carrier “is
forced to offer service indiscriminately and on general terms.” Slip op. 21.
Here, the Order leaves a broadband provider free to offer (or decline) to serve
any end user – the only “customer” here – on any price and terms it chooses.
Br. 66. Because there is no obligation to “offer service indiscriminately and
on general terms,” there is no common carriage.
Verizon nevertheless argues (Reply 5-7) that the Order creates “per se”
common carriage because an access provider “provi[des]… service” to edge
providers. But under the Communications Act (and consistent with Cellco), a
common carriage relationship is defined in relation to an entity that
“request[s]” “service.” 47 U.S.C. § 201(a); see Br. 61-62. Edge providers do
not request service from an end user’s Internet access provider. Indeed, they
generally have no technological or commercial relationship with that access
provider. Br. 62. Instead, edge providers typically pay their own access
providers to connect to the Internet. See Internet Eng’rs Amicus Br. 11.
Thus, as in Cellco, the FCC acted within its discretion in determining that
there is no common carriage where a rule preserves a provider’s right to serve
(or not serve) the person requesting service – i.e., any end user. Once a

5

service provider has opted to serve a customer, service is not turned into
common carriage by a rule that protects the customer’s ability to receive
Internet content of his choice.
To be sure, common carriage may be provided on a wholesale basis,
Verizon Reply 6-7, but still the relevant entity is the customer who
“request[s]” service. Thus, Verizon’s analogy to access charges (Reply 7) is
inapt. In the telephone context, the long-distance carrier requests service
(usually defined by tariff) from the local carrier. See Access Charge Reform,
14 FCC Rcd 14221, 14318 ¶188 (1999). The long-distance carrier and the
local provider also have a direct technical relationship, as the long-distance
provider delivers traffic to (or accepts traffic from) the local provider. In the
case of the Internet, by contrast, edge providers do not request service from
the end user’s access provider, and that access provider is not required to
deliver content based on the demand of edge providers. Instead, it is only the
request of an end user – the access provider’s customer – that triggers service.
In this context, the FCC had discretion to conclude that a no-blocking rule
does not create a common carriage relationship between edge providers and
an end user’s access provider. Indeed, any other result would have sharply
expanded traditional notions of common carriage.

6

3. Fifth Amendment
As the Cellco Court held, “a justly compensated taking is not
unconstitutional.” Slip op. 26. Because broadband providers are
compensated by their customers, there is no colorable takings claim here. Br.
76-77.

CONCLUSION

The notices of appeal should be dismissed and the petitions for review
denied.
Respectfully
submitted,
CATHERINE G. O’SULLIVAN
SEAN A. LEV
NICKOLAI G. LEVIN
GENERAL COUNSEL
ATTORNEYS
PETER KARANJIA

DEPUTY GENERAL COUNSEL
UNITED STATES
DEPARTMENT OF JUSTICE
JACOB M. LEWIS
WASHINGTON, D.C. 20530
ASSOCIATE GENERAL COUNSEL

/s/ Joel Marcus
JOEL MARCUS
MATTHEW J. DUNNE
COUNSEL

FEDERAL COMMUNICATIONS
COMMISSION
WASHINGTON, D.C. 20554
(202) 418-1740
January 4, 2013

7

IN THE UNITED STATES COURT OF APPEALS
FOR THE DISTRICT OF COLUMBIA CIRCUIT


VERIZON ET AL.,
APPELLANTS/PETITIONERS,
v.
NO. 11-1355
F

EDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA,
APPELLEE/RESPONDENTS.



CERTIFICATE OF COMPLIANCE

Pursuant to the requirements of Fed. R. App. P. 32(a)(7), I hereby
certify that the accompanying Surreply Brief for Respondents in the
captioned case contains 1,342 words.

/s/ Joel Marcus
Joel Marcus

Counsel
Federal Communications Commission
Washington, D.C. 20554
(202) 418-1745 (Telephone)
(202) 418-2819 (Fax)
January 4, 2013



CERTIFICATE OF SERVICE



I, Joel Marcus hereby certify that on January 4, 2013, I electronically filed
the foregoing Surreply 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. Others, marked with an asterisk, will
receive service by mail unless another attorney for the same party is
receiving service through CM/ECF.


Helgi C. Walker
Michael E. Glover
Eve K. Reed
Edward Shakin
William S. Consovoy
William H. Johnson
Brett A. Shumate
Verizon
Wiley Rein LLP
1320 North Courthouse Road
1776 K Street, N.W.
9th Floor
Washington, D.C. 20006
Arlington, VA 22201
Counsel for: Verizon
Counsel for: Verizon

John T. Scott, III
Walter E. Dellinger
William D. Wallace
O’Melveny & Myers LLP
Verizon Wireless
1625 Eye Street, N.W.
1300 I Street, N.W.
Washington, D.C. 20006
Suite 400 West
Counsel for: Verizon
Washington, D.C. 20005

Counsel for: Verizon

Carl W. Northrop
Mark A. Stachiw
Michael L. Lazarus
General Counsel, Secretary & Vice
Andrew M. Morentz
Chairman
Telecommunications Law
MetroPCS Communications, Inc.
Professionals PLLC
2250 Lakeside Blvd.
875 15th Street, N.W., Suite 750
Richardson, TX 75082
Washington, D.C. 20005
Counsel for: MetroPCS
Counsel for: MetroPCS
Communications, Inc., et al.
Communications, Inc., et al.

Stephen B. Kinnaird
Samir C. Jain
Paul & Hastings LLP
Wilmer Cutler Pickering, et al.
875 15th Street, NW
1875 Pennsylvania Avenue, N.W.
Washington D.C. 20005
Washington, D.C. 20006
Counsel for: MetroPCS
Counsel for: Verizon
Communications, Inc.



Henry Goldberg
Harold J. Feld
Goldberg, Godles, Wiener & Wright
Public knowledge
1229 Nineteenth Street, N.W.
1818 N Street, N.W.
Washington, D.C. 20036
Suite 410
Counsel for: Open Internet
Washington, D.C. 20036
Coalition
Counsel for: Intervenor Public
Knowledge

David Bergman
Jeffrey J. Binder
Law Office of David C. Bergmann
Law Office of Jeffrey Binder
3293 Noreen Drive
2510 Virginia Avenue, NW
Columbus, OH 43221
Suite 1107
Counsel for: NASUCA
Washington, DC 20037
Counsel for: Vonage Holdings
Corporation

*Kurt M. Rogers
Earle D. Getchell, Jr. Esq.
Brendan D. Kasper
*Wesley G. Russell, Jr.
Vonage Holdings Corp.
Office of the Attorney General,
23 Main Street
Commonwealth of Virginia
Homdel, NJ 07333
900 East Main Street
Counsel for: Vonage Holdings
Richmond, VA 23219
Corporation
Counsel for: Commonwealth of
Virginia

James B. Ramsay
Genevieve Morelli
General Counsel
ITTA
National Association of Regulatory
1101 Vermont Avenue, N.W.
Utility Commissioners
Suite 501
1101 Vermont Avenue, NW
Washington, D.C. 20005
Suite 200
Counsel for: ITTA
Washington, D.C. 20005
Counsel for: NARUC

Ilya Shapiro, Esq.

The Cato Institute
1000 Massachusetts Avenue, NW
Washington, D.C. 20001
Counsel for: Cato Institute


John P. Elwood
Quentin Riegel
Vinson & Elkins LLP
Deputy General Counsel
2200 Pennsylvania Avenue, NW
National Association of
Suite 500 West
Manufacturers
Washington, D.C. 20037
1331 Pennsylvania Avenue, NW
Counsel for: Cato Institute,
North Tower – Suite 1500
Competitive Enterprise Institute,
Washington, D.C. 20004
Free State Foundation,
Counsel for: NAM
TechFreedom


Russell P. Hanser
*Randolph J. May
*Bryan N. Tramont
The Progress & Freedom Foundation
Wilkinson Barker Knauer, LLP
1444 Eye Street, NW
2300 N Street, NW
Suite 500
Suite 700
Washington, DC 20005
Washington, D.C. 20037
Counsel for: Free State Foundation
Counsel for: NAM
*Sam Kazman
Andrew J. Schwartzman
Competitive Enterprise Institute
Media Access Project
1899 L Street, NW
1625 K Street, NW
12th Floor
Suite 1000
Washington, D.C. 20036
Washington, D.C. 20006
Counsel for: Competitive Enterprise Counsel for: Tim Wu
Institute

Kevin S. Bankston
John F. Blevins
Emma J. Llanso
Loyola University New Orleans
Center for Democracy and
College of Law
Technology
7214 St. Charles Avenue
1634 I Street, NW
Box 901
Suite 1100
New Orleans, LA 70118
Washington, D.C. 20006
Counsel for: Paul Vixie, Leonard
Counsel for: Center for Democracy
Kleinrock, Scott Bradner, et al.
and Technology, Marvin Ammori,

Jack M. Balkin, Michael J. Burstein
et al.



E.J. Rosenkranz
Sean H. Donahue
Orrick, Herrington & Sutcliffe LLP
Law Office of Sean H. Donahue
51 West 52nd Street
2000 L Street, NW
New York, NY 10019
Suite 808
Counsel for: Stewart Alsop, Brian
Washington, D.C. 20036
Ascher, Brad Burnham, et al.
Counsel for: National Association of
Telecommunications Officers and
Advisors, et al.

R.C. Lawrence
Nickolai G. Levin
U.S. Attorney’s Office
Catherine G. O’Sullivan
Civil Division
Robert J. Wiggers
555 4th Street , NW
U.S. Department of Justice
Washington, D.C. 20530
Appellate Section
Counsel for: U.S.A.
950 Pennsylvania Avenue, NW
Washington, D.C. 20530
Counsel for: U.S.A.




/s/ Joel Marcus

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