>> you can see that event in its entirety tomorrow at 10:35 eastern on c-span. >> the case, verizon versus the fcc, pits one of the largest internet providers against the federal government. >> thanks very much for being with us. what is this case about? >> thank you. the case is about whether or not the fcc has the authority to set rules over the internet, particularly over internet service providers, the company

that provides a link to your house that you use to access the internet. if the fcc says that whoever provides that link has to provide all content on an equal basis, it cannot discriminate between types of content, give one faster access to one and not another, the companies that have built these networks and didn't leave the bellows doing it, say they should be able to manage their networks as they see fit the companies that have built these networks and spent billions of dollars doing it. >> why, then, does the fcc, based on the comment that verizon and others are paying for this -- why does the fcc believe that the internet should be free for many providers and many of those who use the web?

>> understand that it is not that you as a consumer do not have to pay for service, but it is that the internet is open and kind of unburdened. it is one of the things that has made the internet so successful. anyone can produce any good or service and put it up on the internet for sale or just put it up there to share with the world. if the internet service providers start differentiating between types of content, charging some to reach consumers and others not, it essentially will change that economic model, and companies that can afford to pay will pay. companies that cannot afford to pay could never get off the ground. >> as your piece points out, this really is a new test for the fcc as we move into the 21st

century. how significant is this case? >> it is very significant. the fcc has regulated telephone companies for a long time and has applied these rules to them. the company that string the telephone wire to your house has to allow other companies to use that line to access you, so you can choose your service provider, whether you want to have verizon or sprint or at&t or whatever long-distance service you want. with the internet, things are a little different. most homeowners, most residences only have one or two choices for who they can get their internet from, so that greatly reduces the possibilities and competition. the fcc also decided several years ago that internet service itself was not the same thing as phone service.

it was not a telecommunication service. it was instead an information service, and information services, as such, are not regulated by the fcc the same way as phone companies. the fcc has far less authority to impose rules on how information service providers conduct their business. >> of course, the u.s. not alone in using the internet. are there lessons from other countries that we can take away? >> a few, but, really, the u.s. is much further ahead on this score, and a lot of countries in europe are watching what happens with this case. there have been attempts to introduce to the european union similar rules that would restrict internet service providers from discriminating against one form of content or another. france has made a proposal. last week, the european

commission came out with an initial proposal, which was not as free and open as a lot of the consumer advocates would have liked, so it's very unclear what direction the eu is going to go. >> why is it before the court of appeals and the district of columbia? >> the fcc's regulatory agency is in the district of columbia. for a company to challenge a regulatory order, they immediately go to a court of appeals. they do not go to a trial court essentially because they are saying that the cause it -- primarily a question of whether something is constitutional or not they take immediately to the appeals court. the court is likely to decide maybe by the end of the year or early next year, if not, and it is a three-judge panel that heard this decision. most people who watch this court carefully think that the decision will come down to one

judge who has a swing vote. the fact is that he, in 2010, wrote a very influential decision, which essentially said the fcc has failed to prove that it has authority to regulate the internet in a case that is very similar to this. today, he seems to be asking questions that show that he could find a way that the fcc could say something simple like, "you cannot block any content. you have to provide all content

equal access, but you also may be able to charge some companies to use a faster lane to get to the consumer faster." >> depending on the ruling, either for verizon or the fcc, could this case potentially go to the supreme court? >> oh, yeah. the last decision the fcc did not appeal to the supreme court, but that was because they were working on this rule, which is now in court. they have used the outline they were given in that decision to formulate this rule, hoping that it would pass muster.

if it fails, there's a good chance that it could go to the supreme court. >> we are talking with ed wyatt of the "new york times." you were in the court today. give us a listener's guide. what can they expect? >> there was very aggressive questioning from the judges, particularly of the fcc. the argument was supposed to last one hour. it lasted two hours, and a full hour of that was the judges, when the fcc lawyer -- the judges pummeling the fcc lawyer with questions of when this could or could not apply. you will hear the judges express some skepticism of verizon's arguments. i do not know if on the recording they differentiate -- you can tell who is speaking all the time, but it was a very lively argument. >> good morning. >> good morning. with the court's permission, i would like to reserve five minutes of my time.

the decision whether and how to regulate the operations of broadband providers is a decision for congress to make. whatever the wisdom of such regulation, it is not up to the fcc to decide this important and hotly debated question entirely on its own, but that is what happened here. the agencies claim that delegated authority to use these rules on a purely implicit asis and on a conglomeration of over 20 statutory positions viewed as a whole is simply not credible. for three basic reasons. >> [inaudible] [laughter] >> what the agency did say was that it had no instructions and any one or even two or three provisions, but with all 24 "viewed as a whole" they gave it support, and even then viewed it with some sort of implied authority because it said elsewhere it has nothing

specific and has long been claimed, any express authority. i have three overarching reasons why their statutory theory must fail. first, given the undisputed economic and political significance of the internet, it is highly unlikely that congress would have delegated authority for rules like this is such an opaque and indeed convoluted way in such an opaque and indeed convoluted way. >> let's focus on 706, and in particular, 706d. >> that suffers from the general problems i was about to describe, so if i may, i will talk about those in that context. >> you want to talk about the language? >> yes. it is still not credible that congress would have authorized these kinds of rules and a provision that is about accelerating broadband

deployment. that statute on its face is about the construction of rock band networks. it does not even purport to deal with operation of networks once constructed. access rights for third parties unregulated -- >> this goes to your argument. the commission's rationale for the order is unreasonable. is that your point? >> no, we think they lack statutory authority under cases like brown and williams. >> they have it on 706. >> b or a? 706 b says they have the deployment -- >> it says if the commission

determines -- if the commission's determination has been made, it shall take immediate action to accelerate deployment by removing barriers. >> that on its face does not even purport to deal with the subject at hand. the subject at hand is the regulation of the operation of networks once constructed. >> this theory clearly bars it. is it your position that the language itself prohibited or it is your position that the language cannot be interpreted that way? >> it is our position that the theory is barred. you cannot just look at those three or four words and operation. >> the commission has for a long time has been acknowledged as having been delegated very

thorough authority in this area. now in 1996, congress comes along with this section, but recalling section 706, and it has this very broad language to which the judge has alluded, and in that context, does this court have to look at that language in terms of the plain language of a very broad authorization, given the background of which congress is deemed to be aware in terms of what the supreme court has deemed to be aware? >> you look at that language, which does not even purport to deal with the subject at hand, it is limited -- >> the telecommunications market. >> these are actually telecommunications services.

i asked this question -- suppose, hypothetically, you are deciding market power. isn't that a barrier to broadband development? >> no, it is not. actually, 706 b says that the commission should take action to accelerate deployment, which is again -- >> but if you were exercising market power, it would be difficult for anybody else to get into the market. hypothetically -- >> the justice department and the fcc both in their comments

caution them or caution the fcc to limit their concerns with market power. so let's ask the question, hypothetically, if the fcc had concluded either generally or specifically that one of the broadband providers or to exercise market power does not fit within the language of 706, believing that market power would accelerate broadband development. i think looking only at that language, they might have a reasonable reading there. again, we have to look at the

other vision of congressional intent. >> [inaudible] could you answer the question? >> yes, i think -- >> that would be consistent with 706? >> i think that is possible. >> the axis of the market power and determination is relevant. i think we made an argument that those kinds of decisions are really policy determinations. >> eu argue -- you argue [inaudible]

those are your arguments. >> [inaudible] >> whether you at any point asserted the argument i just articulated. you hear argue that there was not adequate evidence to support that there was a problem and now concede that if there was evidence of market power in any particular locality, that would be evidence that would fall within 706b.

>> the burden is on the commission to show that it has statutory authority. >> you did make it with respect to the first amendment argument anyway. >> yes, we did. >> you referred to 706b as including a geographic requirement. how does that work in the context of the internet? in other words, when you look at the brief that was filed by the internet engineers and technologists, that concept of geographic limitation, while it might make sense in the telephone context, of putting up telephone poles or something like that, it would not in the internet context. not referring specifically to a

geographic limitation, it should not be read that way. >> 706 b says congress should make an inquiry to see if there are any inquiries of the country that do not have any broadband service at all, not even one broadband provider, and if they make a finding of inadequate deployment, they shall take immediate action to accelerate deployment. >> the commission made that finding, didn't it? >> it said that -- for the first time in six reports conveniently prior to this, they decided actual deployment was not inadequate. even the 95% of americans have broadband, we think that unlocking was itself invalid because of her first to the engineer to create -- >> what rule? i did not see any challenge to the commission. the reasoning was that 200 kilobytes were taken for years. the percentage of americans traditionally rapid and fast.

>> that represents most of the country, and for these rules to apply there, even on judge silberman's hypothetical, is for that statute, but we cannot just look or these six words. the court has always looked to the rest of the act, the structure of the act, and so forth. we have other provisions of the communications act passed at the same time that makes the intent of congress perfectly clear.

it says the internet shall remain untethered by regulation. >> i see that. if there were market powers, that would not be the property or fcc regulation. >> it would be easier or possible to reconcile that, but these rules cannot be reconciled with the plain language of 230 v b. >> it talks about maximizing user control -- >> it says it is the policy of the united states that the internet shall remain untethered by regulation. >> that's the last cause -- clause, but the policy before that talks about maximizing use. >> right, but there are other parts that are directly relevant. congress also created a distinct regulatory scheme as to telecom services on the one hand and information services on the other. these are information services that are to be not regulated

pursuant to title to. finally, without the communications act, we have seen that congress knows how to create access regimes. when it wants to do so, it knows how to do that very direct way. consider section 251, which requires interconnection on what? nondiscriminatory terms. consider even other statutes. congress said the pipelines have to provide access to competitors, and it has to be on nondiscriminatory terms, and even on price regulation, there's nothing like that in 706 and 706 b. >> what about 706 k? >> -- 706 letter a? >> the same problems are there. when you take all evidence into

account, this language is just not sufficiently clear to provide the basis. it is not rational that congress would have stashed a mass of authority. it was a step one argument with brown and williamson -- >> i'm just not sure. the argument about this language is that it is either a policy statement or a greater authority, correct? those are the only two options. >> we do not think it contains any stand-alone power, 706a. >> you don't think it does? >> it does not. it shall encourage, and how shall it do that? >> the three different techniques or other regulating methods that remove barriers to

infrastructure investment. that is exactly what the commission says it is doing. the creation of barriers to -- limiting the creation of barriers to infrastructure. >> i do not think that can be read as substantive regulatory power. --at is a very important point one that was debated in comcast. the commission fails to take any account of the reference. if 706a gives the fcc regulatory authority over and above are separate from that which is contained elsewhere in any act, that it has to do the same thing for state commission. >> but you have that problem even if it is a policy statement because it says "shall." >> it says shall encourage, not that they shall regulate. but that is even more unlikely when you step back and consider that by their own

characterization, these rules are at least three steps removed from that actual statutory goal. these rules were not really adopted. they say that the way they get to promoting broadband deployment is through this chain of logic that they have. they have to try to find some way to lead these rules because of statutory language in 706. they said that an open international call for more people to want to use the internet, which will drive demand, which will in turn drive disruption. >> a tremendous amount of evidence. there is a tremendous amount of evidence on record that supports that. >> we disagree on that. the statutory authority part is that just makes it even less credible that they have to start so far removed from the actual purpose of the rules to try to squeeze this into the language of the statute, and on their

reading of 706, even apart from the fact that -- >> i guess i'm not sure i understand why it is so -- in such a remote area. [inaudible] the browser made it possible. they make the same point about streaming. it is a debatable issue. why that is so remote as to make what the commission did unreasonable? >> the notion of these rules were really adopted in order to encourage broadband deployment by removing barriers to infrastructure is derived from the state of the rules themselves.

the purpose is to preserve the open internet, not to encourage broadband deployment, the construction of networks. it is just bootstrapping. secondly, brown and williams said that it requires a clear statement in cases like this. what brown and williams said and also can solace and even in ci-- and even mci said, is that statutory ambiguity is not enough to constitute an implied delegation of authority. courts have required -- the supreme court has required a clear statement. even if you think it is ambiguous. even if you think it is not crazy to sit these rules, there is still no clear statement here. >> we have the basic argument. i'm not sure i understand judge tatel's point.

i do not think there is any dispute on evidence. the only evidence i see is the number of markets that the fcc served or ones in which there was only one broadband provider. that is not a disputed issue or a fact. >> no. >> what i understand is the dispute is a projection as to what might happen in the future. i do not see any evidence disputed between the two of you in terms of real evidence. is there? >> we have mounted an arbitrary and capricious challenge. >> i understand that, but i'm not sure there's enough evidence to pursue this. >> we said in our brief that the rules actually distance and -- disincent broadband buildout.

>> that is sort of a projection all methodology very.-- on economic theory. i do not see any real dispute. >> our amicus pointed out evidence that we think shows that these rules will deter broadband deployment. >> but these are not historical facts. those are projections, right? i'm not sure there is really a dispute between the two of you at all. >> when the agency regulates by its own admission in order to shut down an entire side of a potentially two-sided market and differentially -- essentially freeze the development of commercial arrangement, yes, i think we are necessarily -- >> is it not -- it's about [inaudible]

one side said if these rules are in fact or were in fact -- these rules would limit investment, right? by broadband providers. on the other side, you have experts and witnesses who say perhaps it will, but the overall internet will be benefited overall by the positive changes that will flow, that the investment that will come from that will turn around and produce a better system than limitations on the other side, then the two-sided market. in the commission said that they decided that restricting discrimination is more official, even if it results in some

restriction. >> i think that would have been fine had the agency had a warrant from congress to actually adopt rules like this. that is what you posited with a perhaps pre-existing condition. granted, authority is a case, but the problem here is they do not even have the necessary existing prior valid grant of authority from congress. >> [inaudible] with respect to your commentary and argument. >> yes. >> which is wrong from a recent opinion by one of the more scholarly panelists on our court. [laughter] in his most articulate description.

let's assume we agree on that. >> yes. >> which would mean that the requirement to carry free all or none rules would go. >> everything would go. the entire law. >> is there anything that would remain? what about transparency? [inaudible] based on common carriage? >> transparency rules based on 218, which is the will based on common carriers. if you find we are being regulated with common carriers, then we could not apply. >> that is an interesting point. >> i just want to make that clarification. the order does not contain a severability clause. the fcc has not contested severability. all they could bring themselves to say was that if they reapply here, the mobile rules should still be lawful.

they did not say the rules were severable. >> by the way, it would apply with respect to the local, too. >> the common carrier band, i would like to talk about that. it applies to mobile, instructing the point that the order is not severable, but now we believe that it is the common carrier ground. it's a very important distinction. the commission here -- >> [inaudible] that's a very good point. >> i want to ask you about the difference between -- with respect to your commentary on the antidiscrimination part.

let's assuming we felt that the at the discrimination rules give on its own. does the anti-blocking rule by itself? >> it is not all there is, your honor. in paragraph 64 of the order, the agency also sets forth the catching of edge providers will as a corollary. that is a large part of what is causing us problems. >> i thought that was an antidiscrimination suit. >> no, it was the no blocking rule. they say it would be tantamount to blocking if you charge industries to reach end-users. >> furthermore, if you are allowed to charge, which i assume you are only allowed to charge because of the anti- common carrier law. and just like in the dispute the between cbs and warner, time warner, you could refuse to carry.

>> right. in the framework, we could. absolutely. >> if that is true, the employee would have to go, too, because if you charge and somebody refuses to pay, you should be able to block them. >> and they have no right to terminate service under these rules. exactly. no right to terminate service not provided for anywhere in these orders. >> i read this as saying that a charge that he cannot touch to block, but you can charge for different kinds of services. you cannot degrade or charge in such a way that it makes it unlivable, but you can still charge. i read this as saying that you can charge for different kinds of services.

>> in the section regarding the no-blocking rule for providers, says to the extent that a content application or service provider can avoid being blocked, only by paying a fee, charging such a fee would not be permissible under these rules. >> if that is true, why antidiscrimination law? >> i think what this says is it basically prohibits rice discrimination.-- price discrimination. the charge will be zero, and you may not deviate from that. then they wanted to say explicitly, just to put a cherry on top, that with respect to transmission of traffic, you cannot prefer some traffic over another. they are shouting out favoritism, which is, of course, a fundamental element of common carrier regulation, the prohibition against any favoritism. >> i just wanted to ask you a question. the interveners raised a question about your standing.

one of the questions i had -- what showing have you made that this is a market that verizon is in? because providers have requested carriage by verizon. >> under sierra club, we have self evidence standing -- >> just to this point. >> of the orders on review. we had a case about third parties who are not even regulated by the government. >> i think that is a factual question. >> yes. as i was saying to judge silberman, what the agency has done it shut down and prevent the development of a two-sided market with respect to internet services. there is evidence on the record that providers are contracting with broadband providers where, actually, they demand payment.

espn has a website that is so popular that espn demands and receives payments from broadband providers in order to allow those subscribers access to espn content. the markets are certainly in that regard. we would be exploring those commercial arrangements, but this order prohibits those. -- which think the types of shrink the types of services that will be available on the internet. >> [inaudible] but this is a rule. >> we did not reach that question, remember. [laughter] >> to judge rogers' standing point, to answer her factual question, there would be a

market were it not for these rules, and my client wants the freedom to explore that. i was going to say that it is not actually a very difficult case on the common carrier issue. if a carrier is forced to offer service indiscriminately and on general terms, then that carrier is being relegated to common carrier status. >> ok, can i go back to 706 for just a second? the question i wanted to ask you, which is, let's assume we thought that 706 was ambiguous. did i hear you saying under those circumstances you concede

that the commission-- the commision's balancing was ok? >> no. even at 706 or ambiguous, that is not sufficient.-- even if 706 were ambiguous, that is not sufficient. they explicitly, ambiguity is not for a court to conclude that congress meant to delegate authority. >> 706 could be read legitimately to authorize the sec to take action to deal with market, because that would discourage broadband. >> it is directing their actions towards the removal of barriers to infrastructure investment. according to the encouraging, it is after-the-fact that these rules are meant to regulate the internet as a means of communication in it of itself. it is bootstrapping.

>> av of market power, let's say verizon has market power, if it was the only broadband provider, it would be a legitimate thing for the fcc to conclude that remedying that would encourage other broadband providers to get in the market. >> if i conceded that, then that was an era. -- in error. the general points i said a --ight all these per diem. apply to all of these provisions. >> no. 706 would apply. >> 706 suffers from the overarching problems. >> that is no problem.

>> it is a legal argument. >> it became a legal argument? >> based upon congressional intent, which is the whole point of every statutory construction case. your opinions have been clear on this. we will not just look at the structure of the act. we even look at legislative history and subsequent legislation. we look at the consistent position of the agency, which it has no direct authority. it discovers implied authority that has been hiding in plain sight. that undermines the credibility of their argument in a real- world way. >> why do we hear from the commission -- why don't we hear from the commission?

[no audio] >> thank you judge. the commission's decision is grounded in the relative statutes, 706a and 706 b. and with the legislative history and the context of the session, all the things ms. walker has suggested we look at. 4706 a, ms. walker finds it a limitation to authority granted elsewhere in the statue.

it says the commission shall use measures that promote competition in the market for those that remove barriers to infrastructure investment. the reference is interesting. in 1996, when the statute was passed, it was meant to be telecommunications. they did have authority. it was not unusual that congress would refer to that. in particular, it is important to realize that in the same statute, where congress passed this provision, it passed 257, where congress was clear that it was not granting additional authority.

it says this is 47 years. these commission shallcomplete a proceeding -- [indiscernible] other than this section. then it goes on. congress knew how the court and provisions that were explicit in granting additional authority. >> if i may ask you to go through what the court perceives as the biggest issue. the prohibition against regulative -- >> i think it is important to understand that verizon talks about the relationships where we are caring something, using espn.com. the only request here is from the end-user. in this the sanity, the equivalent of verizon, the cable

company, has 100 channels. it has to decide through contracts. how are we going to divide up the channels? you can't say you have to do first come first serve. >> those are the same positions of the edge providers. >> they have their own internet access provider. >> that means there are intermediates. >> it means there are millions of edge providers out there. let's say i want to call my father and call it viral.-- my father in colorado. imagine a voice call where i was a verizon customer. verizon can choose to serve may or not to serve me. verizon, if i want to come my

father, rising can't charge my father or his provider.-- verizon can't charge my father oror his provider. >> i'm inclined to think you are run afoul of the recent opinion. >> i disagree. can i continue? just this one thing. the judge was asking, talking about your point that the edge providers are not a commentary problem because broadband providers are not serving the edge providers. they have their own broadband providers. there is no way that they can communicate with me, except by going through my broadband internet. my broadband internet is serving.

they're serving bits to me. >> i do not think that is true. let me explain why. imagine the voice call. >> let's talk about the internet. >> they are in the same position of a long-distance call. the engineer space that you talk to, they do not interconnect with the edge provider. what happens is verizon has a traffic to one or many backbone providers. that is handed to a different broadband access provider that they have separately paid for

the services of being connected. >> distinguish that for me. the local broadcasters, who are consumers of cable. >> the local broadcasters are customers of the cable. >> yes. why is that different from internet providers? >> there is one important difference. verizon has no relationship with those. >> what is the purpose of the regulation, to prevent broadband internet providers from imposing charges? the commission acknowledges that the capability is there to do it. that is the purpose of this.

>> right now, the services three -- the service is free. the fcc is concerned they will start to charge for service. it is hard to say they are not being served. >> absolutely not. they are paying their own providers. >> they're getting the service free from verizon. access to the verizon customers for free. >> no, they are not. >> [inaudible] then they sell to the deliberate i don't understand why you are having to divide up the market way you are doing. >> the economic relationship in this market --

>> they have a relationship with the end-user, but with the back -- but the back-end user. broadband providers to the edge provider can charge that. everybody can charge everybody except for the broadband provider to the user. >> that is wrong. >> who else charges? >> everyone can charge their own customers. >> the broadband provider to the and provider can charge. yes? ok.

everybody in this market can charge except for the broadband provider to the end-user. >> the broadband provider charges the end-user. >> that is the limitation. >> that one segment. i want to focus on antitrust for a moment. you said in your brief, the commission found it would be excessively -- that is omitted. they went out of its way to say we're not deciding [inaudible] are you being deceptive? >> i don't think there is any intention, it makes the point. >> you omitted that. --

>> let me explain. >> the questions trouble me. the end-users may have limited choice among broadband providers. may. my plan -- what does may mean? >> 20% of americans only have one choice. >> you do not think there is a limitation of choice pray they may have a choice.

those that can switch partners may not benefit from switching as providers with similar access. they may not know whether charges are service-level. the final sentence, information may cause this way. >> i think this is an exercise, i was -- >> that wasn't even saying i will. you said i think it may. >> we find three specific economic intentions for providers to act in ways that harm. >> the consumer can switch easily. >> it puts and simmers and

difficulties. >> that they may have difficulty switching. >> i think may is used in that not every consumer would face the same hurdles. >> you develop evidence on that question. you did. the conclusion is only may. >> the commission did not say every, all 200 million americans would have the same concern. the commission is saying these are reasonable findings. >> possibilities. >> it is more the possibilities. when you're talking with the future, given what we know and hard it is to switch, when you only have one other choice, when you may have taken day off work

losing e-mail addresses and other attachments. >> you call the broadband provider a gateway. a gatekeeper. a retail score -- a retail store is a gatekeeper. >> not the same way. -- the fcc does not display in does not explain. all this suggestion of market power, which is a consistent with this statement.-- inconsistent with the statement. >> it is -- it's role here went -- its role went beyond market power. the commission rejected the idea that has to define market power.

the footnotes talk about the department of justice and sbc. the commission said its goal is not to find an antitrust violation. it is to encourage the department of communications capability. >> the department of justice consistent -- the department of justice is inconsistent. they should focus and whether there is a market problem here. >> i do not think that is a fair position. what the commission said -- >> with respect to this

regulation. >> the justice department has offered caution. the commission did not engage in price rendition. the commission specifically rejected it. no one is being told to carry free. they can charge whatever they want to their end-users. >> they can charge the hedge providers -- the edge providers. >> it is reasonable to understand, this goes back to early concession.-- the early discussion. >> that is what i wanted to explore with you. the commission focused on the request obligation that the statute comes late.-- the statue te contemplates. you said in responding to another question that the

commission in regulating is entitled to find the market as it finds it. not using it in an antitrust sense, but the relationship between the party as it defines -- as it finds it. i want to understand that clearly. the location of that is that if -- implication of that is if we were presented with an actual situation where verizon entered into a caring obligation with an edge provider, we would be in a different situation than we are today. the so-called blocking and cutting off the two-sided market simply is not part of this case because the statute refers to entities that request, and there is no request that is evident from the record here for some of the reasons that the engineers

explained. can you explain that a little more? >> it is important that the providers are not -- >> suppose they seek business from edge providers. they say this rule prevents them from entering into contractual relationships and charging the edge providers for carriage. >> the extent they want to interconnect with an edge provider, to act as a backbone for verizon, it is explicit those relationships are not barred. it does not bar interconnection agreements. second, to say that the edge

provider will be requesting to pay verizon takes the word request in an unusual way. verizon would say we're going to block you unless you pay us. we are to do greater savers -- or service -- we are going to do greater service unless you pay us. those are not repressed. that is exceeding to a fabric the only request your comes from the end-user customer. go back to cell phones. what the courts say is important. the regulatory scheme is inconsistent with common carrier

status. it is so fundamentally common carriage. with these relationships, he the market is one in which there are many intermediaries. the core market, to say you can't stop rocking -- stop walking traffic -- -- you can't start blocking traffic. that is not from the court common carrier obligation. there is no record that these way to cut services.-- these parties request service. any request would be unusual, that the company pays someone else for already. >> suppose we buy your argument that broadbrand providers are not carriers for edge providers. i want you to -- i didn't see much in your statement given that you would distinguish the antidiscrimination provision

from section 202. can you just explain to me or give me an answer to this, the anti-blocking provisions that are prohibiting charging. >> i think the only way to enforce a charge is to save you don't pay it, we're going to block you. that is what verizon can threaten to do to anybody. that is why this is so dangerous. >> suppose it was an anti- blocking provision? could verizon charge somebody for faster service for its customers. >> in that instance, they could. >> what happens when the person doesn't pay? >> everyone will get a certain level of service. some people get better service if they pay. the commission -- >> i am talking about the insight blocking -- the anti- blocking. >> what paragraph 37 says is that if the only way you can

avoid blocking is to pay, that is a violation. in terms of not paying, it is not a your blog.-- not that you are blocked. you get lesser service, that is not an anti-blocking. >> so then, that is why there is the antidiscrimination provision. that will save you can charge at says youat's what cannot charge at all. >> the commission did not say -- 76 --as in paragraph why it make be concerned, different pay grades, it did not find here that those would always be significant cause for concern. >> it prevents something beyond walking, which is less adequate service. -- it prevents something beyond blocking, which is less adequate service.

>> which is exactly what sections 202 say. >> yes, your honor. >> what is the difference between the antidiscrimination provisions here in section 20? >> they are not common carrier positions. we pointed out the antidiscrimination provisions. section 616 of the statute. there are -- it is not the only common carriers are subject to discrimination provisions. broadcast channels are subject to them. it means something less than most. >> unreasonable discrimination. >> in a non-discrimination row, -- non-discrimination rule,

it is not inconsistent with a private carrier. there are providers were not common carriers. >> operators are prohibited from determining or influencing the content of programming, and what they can charge for access. use of the equipment, is not -- is in the exec with this is in this case? >> they were a set quantum of channels. they negotiated. as to 20% of those channels, you no longer have the right to negotiate. yesterday on the first come first service -- you have to, on the first come, first serve basis. it is not just that, your honor.

it is being divided. >> the internet is a different thing than cable channels. it has limitless number of destinations. [inaudible] >> verizon is a control. >> as to the end-user -- >> verizon can choose not to serve the end-user. verizon can say, i'm not serving you. i'm not what he serve you the pay $100 a month. >> we should look at the language. if a carrier is forced to offer

service indiscriminately, that carrier is being relegated to common carrier status. tell me how. this is based on the assumption -- on therket. assumption we don't buy that argument. >> the edge provider is a customer. verizon can't -- [indiscernible] i just want -- i just don't want to be conceding. >> you should apologize. -- you shouldn't apologize.

>> as the edge provider, verizon is free to make decisions as to the speed it wants to serve, and reasonable determinations as long as it is not discriminating. >> i don't understand what that means. for example, could it say to users you have to pay for faster service, to honor thousand $200,000?month.-- >> it suggest the commission has concerns. >> what can they do? other than transmit to their end-users or not transmit. to connect their end-users to all edge providers and nondiscriminatory basis.-- on an non-discriminatory basis?

>> there can be reason to -- one thing that is important is that the commission did decide this point. it did not say that it would never be allowed. it did point to a significant reason why given 706 you would want to dissuade verizon from being able to do this. if they could do this, verizon would have an incentive to create congestion and traffic jams so people would pay to get out of it and that -- >> if there is any possibility that verizon is free to negotiate different terms with edge providers, is this any basis? i don't understand why the commission went with these rules.

i thought the purpose of the role was to ensure that all edge providers have unfettered access to the internet. >> that is one of the reasons why the commission is -- >> explain to me where there are --les that allowed the digital roamingle]-- digital survive.nts to >> my point is that they have to look at this in the context of this is not actually in relationship and a digital level. >> the analogy -- >> what i haven't heard from you, i haven't seen in your brief, and i haven't heard today, if that is in fact what we think, that edge providers are served by verizon, i haven't heard a basis for distinguishing

this case from classic common carrier described in so go -- d in selco, aibec allowed thethat roaming to survive. >> may i get in? i don't want to challenge judge tatel. i agree with him on this point. i'm concerned about the first amendment issue. suppose an edge provider is offering anybody with access lessons on how to build or construct chemical weaponsto use

against the united states or any enemy. or against the enemy. verizon says we are not going to allow that edge provider to have access to our customers. is it your view that there is no first amendment issue? the fcc says, you have to have free access. >> i believe in that instance, the security limitations on free access would apply. >> put aside the question. assuming there is no governmental security intervention, for a first amendment right, saying we will not caring. -- we will not carry. >> no more than the law schools in the case to believe that they were not carrying the message. verizon is not speaking in that instance. verizon has made clear that it

is a conduit for other people speech. >> given the law school case, law schools were able to prevent a speaker coming advocating violence against the nine states.-- the united states. >> the difference between that is the loss -- the loss behind the speaker is different. -- the law school is different. >> same thing. >> verizon is not speaking. >> verizon has no first amendment right to reject. >> right. i think that is correct. if i went to the "washington post" today. there was a story about the redskins. i disagree with the story. i would not say what a crazy thing verizon said. >> oppose verizon has phone content -- suppose verizon has phone content.-- has its own

content, which is true of comcast. >> verizon is allowed to have its own content. >> but its content is different >> but it's content is different from the edge provider. they are forced to carry the edge provider. >> verizon has immunity. >> verizon has its own content. the content of the edge provider is hostile. >> verizon is not speaking in connecting you to an edge provider. >> one part is acting as a common carrier, and one part is acting as a speaker. >> it is a conduit. >> parties can be conduits. >> to go back to what we were saying, the commission is being

credited with not making an informed determination this point on how to pay for priority on the issue of whether there are instances where these agreements could happen. i do think that it is to suggest that any time verizon wants to enter an agreement with anybody, whether it has any current economic technical relationship with that party, to say that you can't do that because that would block someone else's call, that is not core common carriage, i want to come back to the instance of blocking.

>> let's say -- [inaudible] the commission has used the language to define discrimination. i do not see where verizon would have any flexibility other than reasonable doubt management practices. >> the commissioner has only had unreasonable discrimination. it did not say anything was on was not. it talked about using -- it is not the case that the commission says that there was a factor we would look at.

>> it is possible under this rule that verizon could enter into exactly the kind of negotiations ms. walker said these rules could include. >> they may raise cause for concern. the commission did not rule on that particular hypothetical. >> why did the commission issue? >> the threat of blocking. the practices that are likely and unlikely to be permissible. the venture capitalist another seven in a fight that the threat of what verizon could do was a

barrier to infrastructure. >> the theory of the rules as i understand it is that any chance of a broadband provider will charge providers, who will threaten and restrict, which will limit the internet. >> the commission has been concerned about that. >> if that is not the theory -- now i'm hearing you say to me that is a theory, but don't pay any attention to that because verizon may be able to raise concerns about edge providers.

don't go beyond what you are -- you are hearing your case as well as you can. you are defending the role that you have got. >> absolute. >> you haven't shown me where the flexibility is. other than you say you might be will to do it. is that where comes from? >> i think so. >> one of the commenters in response to a comment that said the commission says in the order, take a look at 75 years, that has provided all of the reliability and consistency we need.

it sends us right back to the word "unreasonable." >> i have no intention to go beyond the order of paragraph 76. i do not want us to suggest the commission, i'm undermining the rationale of what the commission said. these relationships -- i'm not suggesting that they say that this was not part of its concern. second, as to unreasonable discrimination, this court said that the fact that someone, that there is a commonality of common carriage, does not mean that the relation itself -- >> it is only started when the end user makes the request.

there is no separate relationship. let me just ask you the same question. the consequences of different kinds of rulings. you are telling me that this rule which says to the extent that the service provider could avoid being blocked by paying the fee, that is what you're telling me. that justifies the blocking. it does not prevent verizon for charging for different levels of service. if the court were to knock out the antidiscrimination provision, the anti-blocking provision would be limited to

preventing verizon from actually blocking access to the internet and charging for particular services. >> if you look at the charge, if someone refuses to pay, how can it be legal to block them? >> he was so that service, but not the faster rate. the other would be -- [indiscernible] >> are you saying that hypothetically, if it is illegal to prevent broadband providers from charging, it is illegal for the broadband provider to enforce the charge by refusing to carry unless the edge provider pays?

yes or no? >> [indiscernible] >> let's assume i am legally able to charge you. because of common carrier. are you saying that under this rule, i will block? >> i believe the answer is no. >> even though you are refusing to pay. >> you are not allowed -- can i get speed for free. >> that is a different speed question. >> as well as trying to answer.

>> you would get the faster service. serviceould get regular and not faster service. your answer is let's not block it. >> if the edge provider refuses to pay, under the rule, the broadband provider may not block. >> that is what paragraph 67 says. >> is it illegal to prevent the edge provider from charging, how can it be legal to prevent the edge provider from blocking? >> it depends on the background rule. do you pay for any service, or better service? >> right now they are not paying. edge providers do not pay. verizon says to google, if you want faster service, you pay us x dollars a month.

if google says no, they still of access to the verizon customers, but not the faster service. >> that is correct. >> verizon can say to google, if you want to reach our customers, you do pay a certain dollars month. >> correct? >> correct. >> they go back to clients and tell them that even though the blocking rule, they can charge for different services. she didn't seem to understand that. >> that is how i understand it. >> my question is this -- but there was statutory authority for disclosure and blocking.

what will we do? does it go back to the commission? >> i don't think super there a separate rules. >> you told us affirmatively that it is separate. you didn't say anything about the -- >> it is not distinguishing her argument between the nonblocking and the nondiscrimination. we respond to the argument the way it was made. she attacks just as much -- which only implodes no blocking. it is separate than no blocking. it is a separate principle.

it functions separately. >> i do not understand that. i do not understand that. if at once you say you can't charge him, broadband providers cannot charge up. >> it is subject to 76. >> the broadband provider cannot say look, the reasons why i'm going to charge you, you can't do that. >> because of the intent to discriminate. >> that is correct. >> if the edge provider says that is ridiculous and they refuse to pay, are you saying under these rules, they would be legitimate, assuming discrimination is illegal, it

would be illegal for the fcc to refuse to allow broadband providers to block. >> yes. >> how can they enforce their payment? >> the background rule is they would have some level of access. >> this requires access. assuming the common carrier applies. >> how can you tell a businessman that he must serve a customer who refuses to pay? >> a couple of points.

>> i'm just asking, if a businessman is entitled to charge, which you to assume hypothetically, how can you tell the businessman he must serve the customer even if the customer -- >> i do not think we have said the businessman is required to charge. >> this is needlessly confusing. our understanding of the role, which we think is tedious, it requires the broadband provider to carry to his customers the content of the and provider. and, hypothetically, that is a problem under common carriage.

how can you separately say, even if that is true, it is still appropriate for the commission to say to the businessman, the broadband provider, it must provide service even if a customer refuses to pay. >> here is the example i would give. it is not common carriage, -- it is not common carriage to have a simple basic carriage if you can negotiate different levels with different people. that is what i am trying to say. >> that is the reason the anti-blocking provision

prohibits that. >> i think that is correct. to the extent it is prohibited, in paragraph 76, it wouldit is a challenge. -- it would note it is a challenge. i do believe, i'm over my time. i'm happy to answer any further questions. >> thank you. we will hear from counsel. [gavel] [no audio] >> most americans who watch a movie on netflix must rely for their internet access on a

company that would like to sell them a show or phone service instead. most americans watch this programming remotely, must rely on their internet access on a company that would supply them its own programming package. internet access providers have the incentive and the ability to discriminate against many members. while the fcc didn't make an exquisite finding, it did find that 70% of households had only two broadband access providers. they concluded that this fear of discrimination is a barrier to infrastructure investment in the court and that the edge of the internet. those are two kinds of investment that mutually reinforce one another.

verizon has considered in its letter. if it were to be in conflict with an online video provider, it would have to show its viewers blank screens for long periods of time for lack of bandwidth. there is nothing attenuated about this. investments that drive demand, and competing networks. verizon relies on the fda case. the facts of that case were averse from those here. the fda has effectively ratified the agency, the prior view that it didn't have jurisdiction to regulate tobacco.

here, the telecoms act was computer to computer three decisions. verizon has been subject to much more severe roles then those in the network. nor does verizon hold to any verdict in the roles. it points nothing that it has done before the rules were made. it has stalled for change after the rules. verizon wants to double charge end-users and providers, and safety not pay i will degrade your conduct. >> these rules prohibit verizon from doing that? >> verizon may not go to a provider and say if you do not pay me, i will block your content altogether. verizon does have leeway to negotiate certain arrangements in terms of degrading priority.

>> anti-discrimination provisions? >> an example would be an associational cost. they really need high priority access to content because of sensitive operations we want to perform. under the fcc reasoning, that would not be discrimination. there is much more. the fcc [indiscernible] >> under the antidiscrimination >> that would probably be no with other circumstances.

with its specialized services, it could. >> do you agree with mr. leven on anti-discrimination in anti- blocking. the antiblocking provision would barber ricin from blocking -- would bar verizon from providing edge providers to users, and would not require faster service. >> in certain circumstances. under the antiblocking provision, they could not charge for not blocking.

>> they could be charge -- the service is not free. >> if it were a service. >> that is assumed is a service. does that mean the antidiscrimination provision were easier, that verizon could charge google or anyone else for slower faster service. google pays nothing now. the antiblocking provision would be ok for verizon say to google, to pay x dollars a month for faster service. that would be ok. correct.

if the anti-discrimination rule is added, that prohibits verizon from that charge. >> in many circumstances, not an all. >> ok. is that the answer to the next question, which is is that how you would distinguish this from, argue that common carriage doesn't apply to this? >> two distinctions. yes, plus another two. >> what is the flex ability. >> specialized services is a quantification. google could contract with verizon over specialized services.

that is a qualification to discrimination. >> do they say we will offer this service to no other search engine? >> the answer is probably yes. >> maybe you can answer that. you started your argument by telling us that you are worried about -- correct? now you are telling me that under the rules -- >> it does provide -- [indiscernible] within the five specialized services, google could enter into a an agreement with verizon. >> under these rules that could? >> yes. >> a preferential arrangement with google?

>> that is not what the fcc said. >> we will exempt specialized services. on specialized service platforms they would monitor those. [indiscernible] >> how would that work? >> if a platform goes to google or fios and says yes to one provider and no to another one. >> cable-television? >> it is cable-television. >> we're are not talking about cable-television. >> fios does use verizon's ip network. >> it comes across their fios cable network. >> do not go there, please. it is about internet service. >> how would that work?

they would say, i want you to care me. fios says yes and says no to another. >> cable-television? i it is cable-television.>> thought we were talking about the internet. were not talking about cable- television. >> fios does use verizon's ip network. >> it comes across their fios cable network.

>> do not go there, please. it is about internet service. >> yes. >> someone is sitting in their living room and they are getting their tv signal from fios and they are getting their internet through their wireless connection. >> they could get their fios service through the computer as well. >> we are talking about straight-forward internet service. >> setting aside fios, could verizon say to google, for x amount of money, we will give you special access to our users

that we will not give to anybody else? >> with their specialized service offering, that might be possible, yes. >> i am sorry? unless there were reasonable circumstances. if i may go into a question into whether there is a relationship this is different. the programming lineup of the cable operators was transferred from their control. nothing like that has happened

here. internet is not subject to verizon's control. verizon just gives access to slivers of content. there was a hotel that has a privileged view of the speaker. it goes to potential end-users and says, i have a balcony. you cannot go to the speaker and say, pay me because i am bringing viewers. that is one difference between this case. let me say one more thing.

every rule says you must not do something or you may do something else. worded.e you cannot charge for doing something else required of you in the first place. that does fly in the face of every single court decision. comcast recognizes this as an authority. >> thank you. >> thank you very much.

>> counsel for verizon. >> i would like to clarify the confusion about the rules, what they do. [laughter] the no blocking role includes the prohibition against charging. that is paragraph 67. that is very clear. >> i am willing to accept the concession. >> i accept your concession. >> they can charge for faster service. >> that is why i would like to explain. paragraph 67 is about the no blocking rule. nobody doubts that that is rate regulation.

the nondiscrimination rule. here is what paragraph 76 says. in light of these concerns, it is unlikely that pay for priority would satisfy the standard. that is why we are here in this court. instead of running the risk. pay for priority was the whole reason the public interest advocates. thought these rules needed to

be adopted. if he wants to say, it is perfectly ok -- >> the anti-blocking rule would not prohibit, correct? >> we still could not charge for access. >> you could say to a provider-- if you want faster service to our customers -- >> some people in this area have interpreted that as effectively no blocking. there are those who think -- >> you still have access. you would not pay for the faster service. >> if this was just a no blocking rule, it would be different.

>> i do not understand why -- forget the faster service. >> right. >> verizon could not go to the edge providers and say, we will not give you access to our customers. >> right. >> if the edge provider refused, you could not refuse the carrier? you could not block? >> correct. >> that is what you needed, a no blocking will to deal with that problem. >> it prevents providing service to one. >> these rules do both things. you can not engage in any favoritism. >> i am trying to unpack the two of them and make sure i

understand the function. the anti-blocking rule and the antidiscrimination rules -- you have to serve everyone without discrimination. >> the no blocking rule, which also applies to wireless, it also imposes a form of nondiscrimination. and that is a form of price discrimination. it is a nondiscrimination requirement. there is a separate question of how we should --

>> you cannot say to google you have to pay x dollars a month or we will block you from our users. you can say, we have a deal for you, google. give us some more money and we will give you faster service. >> we cannot do it under paragraph 76. i am trying to clarify.

he is suggesting inaccurately describing the rule. all common carriers engage in reasonable discrimination in the first place. it was not the viewers and their relationship with cable companies being regulated, it it was the third parties who wanted access to reach the viewers and that is exactly what we have here. the issues of the third parties and midwest video. there was room for individualized negotiation. here, there is nothing to negotiate. aey must carry them and at price of zero.

>> the anti-discrimination [indiscernible] >> correct. it leaves us to a brief conversation about culpability. >> just asked the question. [laughter] >> that was an important concern for you in the delaware broadcasters case. the agency has not sought that relief in this court. no agency -- under the broadcasting case, whether the rules can function sensibly if they were severed from each other. they cannot. whether you want to separate blocking from discrimination had to work together.

it would be absurd to think they would regulate wireless. if you go back to your point, all of the reasons why the commission adopted these rules, they were concerned about alternate access to end-users and concerned about creating a third class service that might overtake the other services and not be available to everybody. even if you accept the commission's theory about why it was necessary, a service that is equally available. for this court to blue pencil the order would be an extraordinary act and upset the typical practice. what they said was that -- it

begs the question of whether [indiscernible] >> [inaudible] -- of whether they could rules. from the fixed >> [inaudible] >> fully applied. the argument works on both scores. >> the anti-blocking applies to mobile. >> the blocking rule applies to wireless and if we cannot charge for access and that is a zero price and setting a price of zero -- the price is zero and we may not deviate from that. >> i assume verizon cannot block

on wireless. >> we cannot. >> it could charge for faster service. >> we think it is unclear. we may do that on the wireless side. i think we would welcome that. >> i have seen this statement. >> as to why that would be a crucial point, there is still the question as to whether the

broadband provider can charge for any service. i will not allow you to make my customers unless you pay this amount. in means you have to carry the edge providers free. >> that is exactly what happened in midwest video. we are here and we want to use these channels to reach viewers and we get this for free. >> i do not understand. i cannot understand if common character prohibits the fcc from charging from access to the end- user. >> that was the theory of our brief. the nondiscrimination factor was

the icing on the cake. our biggest concern is the price of zero on both sides and the non-discrimination mandate. my clients have no interest in blocking. >> on the anti-blocking rule, you can charge more for faster service. you cannot do that with a nondiscrimination provision. if the anti-blocking provision blocks both blocking and

charging for more, you would not need the antidiscrimination provision. that is the hardest problem with the commission. i have seen clients -- >> you can not offer preferential forms of service. >> if that is true, would not -- wouldn't that provide the flexibility and digital roaming? >> you would have to scrub the reference under the no blocking rule that says you may not charge anybody for access. i do believe -- i do not think we would be here. >> i do not understand that. >> what if someone refuses to pay?

>> i am positive the commission would not say it is no blocking if we charge somebody. >> i still do not understand. >> i keep coming back. if i am legally entitled to charge and someone refuses to pay, why can't i block? >> i think we should be able to. >> the purpose of blocking is to enforce charge. >> yes. why are you confusing everybody?

let's go back to the two hypotheticals. [laughter] verizon says to google, that is blocking, right? >> if you have to pay for access. >> yes. a month. >> the commission would say, it violates the no blocking rule. >> let's assume there is no discrimination provision. verizon says to google, you have free access to our users, but if you want to get there faster, we will charge you $200 a month. that is ok under the no blocking rule, right? if google decides not to pay, i still have free access, they just do not get it fast. correct? if we make that clear, can you protect them?

>> i think so. i have to reiterate, or if there were a no blocking rule and the commission did not consider the existence or the charges or did not tie it to charging and it was just a pure conduct restriction, no blocking, we are not telling the businessman that you cannot charge -- >> the provider does not have to pay anything. >> under these rules, they pay nothing for access. >> if someone refuses to pay, you think you are entitled to block? >> yes. you are smarter than i am. >> you charge google extra for faster service. if google does not want to pay, you would not block google, they

just would not get the faster service. >> they work differently, but they work together. >> we were making a lot of progress not eight minutes ago. [laughter] >> i am not trying to trap you. i want to asking about the so- called findings in paragraph 27. if those were switched around to users do not have limited choice and they do not have -- does that change the case?

>> no. [laughter] >> allow the fcc to include that regulation was appropriate. >> those statutory terms which are directly to or eight about the removal of barriers -- deregulatory about the removal

of barriers to investment, those are the weights of these particular rules. even if there is a finding. these were provisions. it does not address it. thank you for the opportunity to clarify. [laughter] >> having clarified that -- >> you seem to understand the commission focused on end-users rather than edge providers. >> i do not think you should assume that. >> the own precedent they sided, paragraph 188, you need not affirm the quest for order of service, that paragraph even

notes this court recognized there is no need for an affirmative request for service. >> i will look at the case. >> we say this is why this is common carrier star regulation. -- style regulation. you can have that kind of a relationship with third parties who want to use your service. there is a long precedent against that. we provide no authority. the commission did not cite. that is not enough.

that is what is required. >> thank you. we will take the case under advisement and take a brief recess. [captions copyright national cable satellite corp. 2013] [captioning performed by national captioning institute] the american constitution society for law and policy. that is live monday at 12:30 p.m. eastern here on c-span. >> monday night, our series on "first ladies" continues.

that.s symbolizes all of the inaugural gown. it marks the location -- occasion. when she became the first first lady to donate her down to the smithsonian institution, she established the tradition that first ladies would donate their inaugural gowns to their collection. she donated it to the smithsonian institution. helen taft, the wife of william howard taft. p.m.y night on c-span at 9 . also on c-span radio and c- span.org. >> members of congress paid tribute to the atoms of the 1963 birmingham church bombing.

the congressional gold medal being awarded to the four girls who lost their lives to that event it years ago. -- 50 years ago. >> ladies and gentlemen, please welcome members of the united states house of representatives and the members of the united states senate and the speaker of the united states house of representatives. [applause]