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CHAIRMAN KEVIN J. MARTIN, DISSENTING
Re: Bright House Networks, LLC et al., Complainant v. Verizon California
Inc., et al., Defendants.
I have consistently maintained that it is important to create a regulatory
environment that promotes competition and investment, setting rules of the
road so that all players can compete on a level playing field. Today, a
majority of the Commission voted to allow complainants--players providing
a bundle of services over one platform (cable VoIP)-to gain an advantage
over their competitors-players providing those same bundled services over
a different platform (traditional telephone service). Specifically, the
majority decided to prohibit some companies from marketing to retain their
customers, even though the marketing practices prohibited today are
similar to the aggressive marketing techniques engaged in by the
complainants themselves (when they provide cable video service). To reach
this result, the majority has created new law, holding that these
complainants are "telecommunications carriers" for purposes of obtaining
this competitive advantage, but that they are not "telecommunications
carriers" for other purposes, such as complying with the obligations of
I am concerned that today's decision promotes regulatory arbitrage and is
outcome driven; it could thwart competition, harm rural America, and
frustrate regulatory parity. Therefore, I must dissent from today's
In its Recommended Decision, the Enforcement Bureau (Bureau) recommended
that the Commission, among other things, deny the cable Complainants'
claims that Verizon's practices violate section 222(b) of the Act. The
Bureau interpreted section 222(b) to apply only where a telecommunications
carrier receives another carrier's proprietary information so that the
receiving carrier can provide a telecommunications service. The Bureau
concluded that Verizon's actions, as the receiving carrier, did not
violate section 222(b) because Verizon's role in the number porting
process does not involve the provision of a "telecommunications service."
Although number portability requires carrier-to-carrier coordination, it
does not involve the provision of a carrier-to-carrier "telecommunications
The Bureau further concluded that even assuming arguendo that section
222(b) could be construed to refer to the submitting carrier's provision
of "telecommunications service," section 222(b)'s marketing ban would not
apply to Verizon's receipt of information from Comcast's and Bright
House's affiliates because the record lacked evidence that those
affiliates are, in fact, "telecommunications carriers." Comcast and Bright
House pointed to their affiliates' state certificates and interconnection
agreements, and to self-certifications during the proceeding that the
affiliates are common carriers. However, the Bureau found that
Complainants failed to show that the affiliates publicly hold themselves
out as offering telecommunications indiscriminately to any and all
As I have said before, all consumers should enjoy the benefits of
competition. Competition is the best protector of the consumer's interest
and the best method of delivering the benefits of choice, innovation, and
affordability to American consumers. Customer retention marketing is a
form of aggressive competition that has the potential to benefit consumers
through lower prices and expanded service offerings. Moreover, the cable
companies engage in such practices to keep their video customers from
switching to other providers. I am therefore disappointed that the
Commission would prohibit these practices, which promote competition and
benefit consumers and particularly disappointed that they would do so and
prohibit practices from only one class of companies.
I also fear that today's decision will have a negative impact on rural
carriers and customers in rural America. Today's action rests in part on a
questionable conclusion that Comcast's and Bright House's affiliates are
"telecommunications carriers." This finding affords the affiliates the
privileges of a "telecommunications carrier," including the right to
interconnection, even though there is scant evidence that the affiliates
have ever offered telecommunications to the public and no evidence that
they have provided telecommunications to any entity other than Bright
House and Comcast. This will bind our hands and have far-reaching
consequences, particularly for small rural local exchange carriers around
the country, such as Vermont Telephone Company, who may be forced to
interconnect with similar entities that have no intention of providing
telecommunications to the public or assuming the obligations of a
"telecommunications carrier." For example, will such entities assume the
obligations of "telecommunications carriers," such as the disabilities
access requirements of section 255, the slamming requirements of section
258, and the CALEA requirements?
Part of the job of being a Commissioner is that you are required to make
hard or difficult decisions and those decisions have implications for the
entire industry. For example, what constitutes a "telecommunications
Here the majority wants to grant the Complaint but not really answer that
question. They have avoided making a difficult decision by embracing the
novel idea that a company can be classified as a carrier for a provision
or even a subprovision of a statute but not another provision or
subprovision of the very same statute. Naturally, they do so without
citing any statutory basis or authority for such an inherently arbitrary
approach. Yet they had no choice but to create such an argument if they
were to find in favor of Comcast and Bright House.
The majority's attempt to dodge the issue and deny the consequences of
today's action by holding that we are determining that the Competitive
Carriers are carriers for purposes of 222(b) based on the specific record
and specific facts of this case but not for other purposes makes no sense
and is not legally sustainable. A provider either is or is not a
"telecommunications carrier." This "pick and choose, rule by rule"
approach is the very height of arbitrary and capricious conduct by the
Commission, and is a thinly veiled attempt by the majority to reach a
desired result without accepting responsibility for the legal consequences
of their action.
Indeed if such an approach were possible it would allow industry players
and the Commission to circumvent the entire statutory scheme applied by
picking and choosing which provisions and subprovisions of the statute
applied by classifying and declassifying carriers without any factual or
statutory distinction or basis.
Almost by definition this approach is arbitrary and capricious as it
acknowledges that it does not want to be bound by the logic and legal
rationale of the decision for any other purpose and preserves the
flexibility to not apply the same statutory definition to any other aspect
of the statute.
It is indefensible to say that these entities are telecommunications
carriers under one part of the Act and not others; the Act makes no such
distinction. The majority attempts to find precedent to support its
approach. However, that precedent should not apply because
"telecommunications carrier" is a specific statutory definition. The
majority's refusal to say that these entities are "telecommunications
carriers" for all purposes shows that, clearly, their holding is outcome
driven, advances regulatory arbitrage, and reflects a cavalier refusal to
live with the legal consequences of their decision.
In addition, this approach will bind our hands going forward, with broad
implications for other rural carriers and consumers around the country,
and will raise a host of questions. If these entities are
"telecommunications carriers," as the majority holds today, I presume they
are subject to the obligations of a "telecommunications carrier", such as
the disabilities access requirements of section 255, the slamming
requirements of section 258, and the CALEA requirements.
Here, however, the majority is not providing regulatory consistency, nor
are they providing certainty, except for the certainty of providing a
competitive advantage to one type of service provider platform over other
platforms. Thus, consumers will be treated differently based on the
platform over which they receive service.
In the past, some Commissioners have warned the Commission of the dangers
of "inconsistent and arbitrary application" of the Commission's rules.
Specifically, in concurring in the Commission's decision to uphold a Media
Bureau denial of a set-top box waiver request, they stated that "[t]he
result of these inconsistent decisions is that consumers will be treated
differently, based on where they live and which MVPD they choose." I agree
that "[a]ll market players deserve the certainty and regulatory
even-handedness necessary to spark investment, speed competition, empower
consumers, and make America a stronger player in the global economy." It
is unfortunate that the majority did not follow that advice here.
Indeed, the majority does not respond to Verizon's claims.
Section 222(b) protects proprietary information of telecommunications
carriers. But the supposedly proprietary information at issue here, if it
did belong to the service provider, would belong to the complainants
(cable VoIP providers), not the CLEC submitting the information to Verizon
- indeed, the CLECs are not even complainants. And complainants here do
not claim to be telecommunications carriers under the Act. The Commission
cannot designate a cable VoIP provider a telecommunications carrier for
purposes of extending privileges granted under section 222(b) without
subjecting those carriers to the obligations set forth in Title II. There
is a single definition of "telecommunications carrier" in the Act. The
Commission never has and could not classify the same service as a
"telecommunications service" - and thus the entity that provides the
service as a "telecommunications carrier" - for the purposes of one
provision but not another within the same statute. See Clark v. Martinez,
543 U.S. 371, 378 (2005) (meaning of words in a statute cannot change with
statute's application); cf. American Council on Educ. v. FCC, 451 F.3d
226, 234 (D.C. Cir. 2006) (noting that CALEA's text is "more inclusive"
than definition of "telecommunications carrier" in the Act).
I am also troubled about the impact of today's decision on our ability to
promote regulatory parity. Last month, I proposed to my fellow
Commissioners a Notice of Proposed Rulemaking (NPRM) that would initiate
an inquiry into customer retention marketing practices, including how to
ensure that such practices are treated consistently across all platforms
used to provide voice, video, and broadband Internet service.
I am concerned, however, that today's decision will preclude our ability
to apply a consistent regulatory framework across platforms. Indeed, I
anticipate that when the time comes, some of the same members of the
majority will preserve today's competitive advantage for one industry over
another by claiming that we lack statutory authority to establish such a
consistent approach or regulatory level playing field. Despite the fact
that the inconsistencies are a result of a novel interpretation of what
can constitute a telecommunications carrier that they themselves
Indeed, the action we take today to afford the affiliates the full
benefits of a telecommunications carrier without the corresponding
obligations, coupled with a potential lack of statutory authority to later
impose those obligations, is in direct conflict with any stated intent to
provide regulatory parity through the NPRM.
In the Matter of Bright House Networks, LLC, et al. v. Verizon California,
Inc., et al., File No. EB-08-MD-002, Recommended Decision, DA 08-860 (EB
rel. Apr. 11, 2008) (Recommended Decision).
Joint Statement of Commissioners Robert M. McDowell and Jonathan S.
Adelstein Concurring, Comcast Corporation Request for Waiver of Section
76.1204(a)(1) of the Commission's Rules, CSR-7012-Z, Implementation of
Section 304 of the Telecommunications Act of 1996: Commercial Availability
of Navigation Devices: Application for Review, CS Docket No. 97-80,
Memorandum Opinion and Order, 22 FCC Rcd 17113 (2007).
Statement of Commissioner Robert M. McDowell, Appropriate Regulatory
Treatment for Broadband Access to the Internet Over Wireless Networks, WT
Docket No. 07-53, Declaratory Ruling, 22 FCC Rcd 5901 (2007).
Letter from Aaron M. Panner, Counsel to Verizon, to Marlene H. Dortch,
Secretary, FCC, File No. EB-08-MD-002, at 1 (filed June 20, 2008).