National Cable & Telecommunications Assn. v. Brand X Internet Services

(Slip Opinion)

OCTOBER TERM 2004

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Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U. S. 321, 337.

SUPREME COURT OF THE UNITED STATES
Syllabus

NATIONAL CABLE & TELECOMMUNICATIONS
ASSOCIATION ET AL. v. BRAND X INTERNET
SERVICES ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT
No. 04–277.

Argued March 29, 2005—Decided June 27, 2005*

Consumers traditionally access the Internet through “dial-up” connections provided via local telephone lines. Internet service providers
(ISPs), in turn, link those calls to the Internet network, not only by
providing a physical connection, but also by offering consumers the
ability to translate raw data into information they may both view on
their own computers and transmit to others connected to the Internet. Technological limitations of local telephone wires, however, retard the speed at which Internet data may be transmitted through
such “narrowband” connections. “Broadband” Internet service, by
contrast, transmits data at much higher speeds. There are two principal kinds of broadband service: cable modem service, which transmits data between the Internet and users’ computers via the network
of television cable lines owned by cable companies, and Digital Subscriber Line (DSL) service, which uses high-speed wires owned by local telephone companies. Other ways of transmitting high-speed
Internet data, including terrestrial- and satellite-based wireless networks, are also emerging.
The Communications Act of 1934, as amended by the Telecommunications Act of 1996, defines two categories of entities relevant here.
“Information service” providers—those “offering . . . a capability for
[processing] information via telecommunications,” 47 U. S. C.
——————
* Together with No. 04–281, Federal Communications Commission
et al. v. Brand X Internet Services et al., also on certiorari to the same
court.

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§153(20)—are not subject to mandatory regulation by the Federal
Communications Commission as common carriers under Title II of
the Act. Conversely, telecommunications carriers—i.e., those “offering . . . telecommunications for a fee directly to the public . . . regardless of the facilities used,” §153(46)—are subject to mandatory Title II
regulation. These two classifications originated in the late 1970’s, as
the Commission developed rules to regulate data-processing services
offered over telephone wires. Regulated “telecommunications service” under the 1996 Act is the analog to “basic service” under the
prior regime, the Computer II rules. Those rules defined such service
as a “pure” or “transparent” transmission capability over a communications path enabling the consumer to transmit an ordinary-language
message to another point without computer processing or storage of
the information, such as via a telephone or a facsimile. Under the
1996 Act, “[i]nformation service” is the analog to “enhanced” service,
defined by the Computer II rules as computer-processing applications
that act on the subscriber’s information, such as voice and data storage services, as well as “protocol conversion,” i.e., the ability to communicate between networks that employ different data-transmission
formats.
In the Declaratory Ruling under review, the Commission classified
broadband cable modem service as an “information service” but not a
“telecommunications service” under the 1996 Act, so that it is not
subject to mandatory Title II common-carrier regulation. The Commission relied heavily on its Universal Service Report, which earlier
classified “non-facilities-based” ISPs—those that do not own the
transmission facilities they use to connect the end user to the Internet—solely as information-service providers. Because Internet access
is a capability for manipulating and storing information, the Commission concluded, it was an “information service.” However, the integrated nature of such access and the high-speed wire used to provide it led the Commission to conclude that cable companies
providing it are not “telecommunications service” providers. Adopting the Universal Service Report’s reasoning, the Commission held
that cable companies offering broadband Internet access, like nonfacilities-based ISPs, do not offer the end user telecommunications
service, but merely use telecommunications to provide end users with
cable modem service.
Numerous parties petitioned for review. By judicial lottery, the
Court of Appeals for the Ninth Circuit was selected as the venue for
the challenge. That court granted the petitions in part, vacated the
Declaratory Ruling in part, and remanded for further proceedings. In
particular, the court held that the Commission could not permissibly
construe the Communications Act to exempt cable companies provid-

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ing cable modem service from mandatory Title II regulation. Rather
than analyzing the permissibility of that construction under the deferential framework of Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837, however, the court grounded that
holding in the stare decisis effect of its decision in AT&T Corp. v.
Portland, 216 F. 3d 871, which had held that cable modem service is
a “telecommunications service.”
Held: The Commission’s conclusion that broadband cable modem companies are exempt from mandatory common-carrier regulation is a
lawful construction of the Communications Act under Chevron and
the Administrative Procedure Act. Pp. 8–32.
1. Chevron’s framework applies to the Commission’s interpretation
of “telecommunications service.” Pp. 8–14.
(a) Chevron governs this Court’s review of the Commission’s construction. See, e.g., National Cable & Telecommunications Assn., Inc.
v. Gulf Power Co., 534 U. S. 327, 333–339. Chevron requires a federal court to defer to an agency’s construction, even if it differs from
what the court believes to be the best interpretation, if the particular
statute is within the agency’s jurisdiction to administer, the statute
is ambiguous on the point at issue, and the agency’s construction is
reasonable. 467 U. S., at 843–844, and n. 11, 865–866. The Commission’s statutory authority to “execute and enforce” the Communications Act, §151, and to “prescribe such rules and regulations as may
be necessary . . . to carry out the [Act’s] provisions,” §201(b), give the
Commission power to promulgate binding legal rules; the Commission issued the order under review in the exercise of that authority;
and there is no dispute that the order is within the Commission’s jurisdiction. Pp. 8–10.
(b) The Ninth Circuit should have applied Chevron’s framework,
instead of following the contrary construction it adopted in Portland.
A court’s prior construction of a statute trumps an agency construction otherwise entitled to Chevron deference only if the prior court
decision holds that its construction follows from the unambiguous
terms of the statute and thus leaves no room for agency discretion.
See Smiley, supra, at 740–741. Because Portland held only that the
best reading of §153(46) was that cable modem service was “telecommunications service,” not that this was the only permissible reading
or that the Communications Act unambiguously required it, the
Ninth Circuit erred in refusing to apply Chevron. Pp. 10–14.
2. The Commission’s construction of §153(46)’s “telecommunications service” definition is a permissible reading of the Communications Act at both steps of Chevron’s test. Pp. 14–29.
(a) For the Commission, the question whether cable companies
providing cable modem service “offe[r]” telecommunications within

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Syllabus
§153(46)’s meaning turned on the nature of the functions offered the
end user. Seen from the consumer’s point of view, the Commission
concluded, the cable wire is used to access the World Wide Web,
newsgroups, etc., rather than “transparently” to transmit and receive
ordinary-language messages without computer processing or storage
of the message. The integrated character of this offering led the
Commission to conclude that cable companies do not make a standalone, transparent offering of telecommunications. Pp. 15–17.
(b) The Commission’s construction of §153(46) is permissible at
Chevron’s first step, which asks whether the statute’s plain terms
“directly addres[s] the precise question at issue.” 467 U. S., at 843.
This conclusion follows both from the ordinary meaning of “offering”
and the Communications Act’s regulatory history. Pp. 17–25.
(1) Where a statute’s plain terms admit of two or more reasonable ordinary usages, the Commission’s choice of one of them is entitled to deference. See, e.g., Verizon Communications Inc. v. FCC, 535
U. S. 467, 498. It is common usage to describe what a company “offers” to a consumer as what the consumer perceives to be the integrated finished product, even to the exclusion of discrete components
that compose the product. What cable companies providing cable
modem service “offer” is finished Internet service, though they do so
using the discrete components composing the end product, including
data transmission. Such functionally integrated components need
not be described as distinct “offerings.” Pp. 17–21.
(2) The Commission’s traditional distinction between basic and
enhanced service also supports the conclusion that the Communications Act is ambiguous about whether cable companies “offer” telecommunications with cable modem service. Congress passed the
Act’s definitions against the background of this regulatory history,
and it may be assumed that the parallel terms “telecommunications
service” and “information service” substantially incorporated the
meaning of “basic” and “enhanced” service. That history in at least
two respects confirms that the term “telecommunications service” is
ambiguous. First, in the Computer II order establishing the terms
“basic” and “enhanced” services, the Commission defined those terms
functionally, based on how the consumer interacts with the provided
information, just as the Commission did in the order under review.
Cable modem service is not “transparent” in terms of its interaction
with customer-supplied information; the transmission occurs only in
connection with information processing. It was therefore consistent
with the statute’s terms for the Commission to assume that the parallel term “telecommunications service” in §153(46) likewise describes a “pure” or “transparent” communications path not necessarily separately present in an integrated information-processing service

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Syllabus
from the end-user’s perspective. Second, the Commission’s application of the basic/enhanced service distinction to non-facilities-based
ISPs also supports the Court’s conclusion. The Commission has historically not subjected non-facilities-based information-service providers to common carrier regulation. That history suggests, in turn,
that the Act does not unambiguously classify nonfacilities based ISPs
as “offerors” of telecommunications. If the Act does not unambiguously classify such providers as “offering telecommunications,” it also
does not unambiguously so classify facilities-based informationservice providers such as cable companies; the relevant definitions do
not distinguish the two types of carriers. The Act’s silence suggests,
instead, that the Commission has the discretion to fill the statutory
gap. Pp. 21–25.
(c) The Commission’s interpretation is also permissible at Chevron’s step two because it is “a reasonable policy choice for the agency
to make,” 467 U. S., at 845. Respondents argue unpersuasively that
the Commission’s construction is unreasonable because it allows any
communications provider to evade common-carrier regulation simply
by bundling information service with telecommunications. That result does not follow from the interpretation adopted in the Declaratory Ruling. The Commission classified cable modem service solely
as an information service because the telecommunications input used
to provide cable modem service is not separable from the service’s
data-processing capabilities, but is part and parcel of that service and
integral to its other capabilities, and therefore is not a telecommunications offering. This construction does not leave all informationservice offerings unregulated under Title II. It is plain, for example,
that a local telephone company cannot escape regulation by packaging its telephone service with voice mail because such packaging offers a transparent transmission path—telephone service—that
transmits information independent of the information-storage capabilities voice mail provides. By contrast, the high-speed transmission
used to provide cable modem service is a functionally integrated
component of Internet service because it transmits data only in connection with the further processing of information and is necessary to
provide such service. The Commission’s construction therefore was
more limited than respondents assume.
Respondents’ argument that cable modem service does, in fact, provide “transparent” transmission from the consumer’s perspective is
also mistaken. Their characterization of the “information-service” offering of Internet access as consisting only of access to a cable company’s e-mail service, its Web page, and the ability it provides to create a personal Web page conflicts with the Commission’s reasonable
understanding of the nature of Internet service. When an end user

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accesses a third party’s Web site, the Commission concluded, he is
equally using the information service provided by the cable company
as when he accesses that company’s own Web site, its e-mail service,
or his personal webpage. As the Commission recognized, the service
that Internet access providers offer the public is Internet access, not
a transparent ability (from the end-user’s perspective) to transmit information. Pp. 25–29.
3. The Court rejects respondent MCI, Inc.’s argument that the
Commission’s treatment of cable modem service is inconsistent with
its treatment of DSL service and is therefore an arbitrary and capricious deviation from agency policy under the Administrative Procedure Act, see 5 U. S. C. §706(2)(A). MCI points out that when local
telephone companies began to offer Internet access through DSL
technology, the Commission required them to make the telephone
lines used to provide DSL available to competing ISPs on nondiscriminatory, common-carrier terms. Respondents claim that the
Commission has not adequately explained its decision not to regulate
cable companies similarly.
The Court thinks that the Commission has provided a reasoned
explanation for this decision. The traditional reason for its Computer
II common-carrier treatment of facilities-based carriers was that the
telephone network was the primary, if not the exclusive, means
through which information service providers could gain access to
their customers. The Commission applied the same treatment to
DSL service based on that history, rather than on an analysis of contemporaneous market conditions. The Commission’s Declaratory
Ruling, by contrast, concluded that changed market conditions warrant different treatment of cable modem service. Unlike at the time
of the DSL order, substitute forms of Internet transmission exist today, including wireline, cable, terrestrial wireless, and satellite. The
Commission therefore concluded that broadband services should exist
in a minimal regulatory environment that promotes investment and
innovation in a competitive market. There is nothing arbitrary or
capricious about applying a fresh analysis to the cable industry.
Pp. 29–31.

345 F. 3d 1120, reversed and remanded.
THOMAS, J., delivered the opinion of the Court, in which REHNQUIST,
C. J., and STEVENS, O’CONNOR, KENNEDY, and BREYER, JJ., joined. STEVENS, J., and BREYER, J., filed concurring opinions. SCALIA, J., filed a
dissenting opinion, in which SOUTER and GINSBURG JJ., joined as to
Part I.

Cite as: 545 U. S. ____ (2005)

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Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Washington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.

SUPREME COURT OF THE UNITED STATES
_________________

Nos. 04–277 and 04–281
_________________

NATIONAL CABLE & TELECOMMUNICATIONS
ASSOCIATION, ET AL., PETITIONERS
04–277
v.
BRAND X INTERNET SERVICES ET AL.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES, PETITIONERS
04–281
v.
BRAND X INTERNET SERVICES ET AL.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[June 27, 2005]

JUSTICE THOMAS delivered the opinion of the Court.
Title II of the Communications Act of 1934, 48 Stat.
1064, as amended, 47 U. S. C. §151 et seq., subjects all
providers of “telecommunications servic[e]” to mandatory
common-carrier regulation, §153(44). In the order under
review, the Federal Communications Commission concluded that cable companies that sell broadband Internet
service do not provide “telecommunications servic[e]” as
the Communications Act defines that term, and hence are
exempt from mandatory common-carrier regulation under
Title II. We must decide whether that conclusion is a
lawful construction of the Communications Act under
Chevron U. S. A. Inc. v. Natural Resources Defense Council,
Inc., 467 U. S. 837 (1984), and the Administrative Procedure

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Act, 5 U. S. C. §555 et seq. We hold that it is.
I
The traditional means by which consumers in the
United States access the network of interconnected computers that make up the Internet is through “dial-up”
connections provided over local telephone facilities. See
345 F. 3d 1120, 1123–1124 (CA9 2003) (cases below); In re
Inquiry Concerning High-Speed Access to the Internet Over
Cable and Other Facilities, 17 FCC Rcd. 4798, 4802–4803,
¶9 (2002) (hereinafter Declaratory Ruling). Using these
connections, consumers access the Internet by making
calls with computer modems through the telephone wires
owned by local phone companies. See Verizon Communications Inc. v. FCC, 535 U. S. 467, 489–490 (2002) (describing the physical structure of a local telephone exchange). Internet service providers (ISPs), in turn, link
those calls to the Internet network, not only by providing a
physical connection, but also by offering consumers the
ability to translate raw Internet data into information
they may both view on their personal computers and
transmit to other computers connected to the Internet.
See In re Federal-State Joint Board on Universal Service,
13 FCC Rcd. 11501, 11531, ¶63 (1998) (hereinafter Universal Service Report); P. Huber, M. Kellogg, & J. Thorne,
Federal Telecommunications Law 988 (2d ed. 1999) (hereinafter Huber); 345 F. 3d, at 1123–1124. Technological
limitations of local telephone wires, however, retard the
speed at which data from the Internet may be transmitted
through end users’ dial-up connections. Dial-up connections are therefore known as “narrowband,” or slower
speed, connections.
“Broadband” Internet service, by contrast, transmits
data at much higher speeds. There are two principal
kinds of broadband Internet service: cable modem service
and Digital Subscriber Line (DSL) service. Cable modem

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Opinion of the Court

service transmits data between the Internet and users’
computers via the network of television cable lines owned
by cable companies. See id., at 1124. DSL service provides high-speed access using the local telephone wires
owned by local telephone companies. See WorldCom, Inc.
v. FCC, 246 F. 3d 690, 692 (CADC 2001) (describing DSL
technology). Cable companies and telephone companies
can either provide Internet access directly to consumers,
thus acting as ISPs themselves, or can lease their transmission facilities to independent ISPs that then use the
facilities to provide consumers with Internet access.
Other ways of transmitting high-speed Internet data into
homes, including terrestrial- and satellite-based wireless
networks, are also emerging. Declaratory Ruling 4802, ¶6.
II
At issue in these cases is the proper regulatory classification under the Communications Act of broadband cable
Internet service. The Act, as amended by the Telecommunications Act of 1996, 110 Stat. 56, defines two categories
of regulated entities relevant to these cases: telecommunications carriers and information-service providers. The
Act regulates telecommunications carriers, but not information-service providers, as common carriers. Telecommunications carriers, for example, must charge just and
reasonable, nondiscriminatory rates to their customers, 47
U. S. C. §§201–209, design their systems so that other
carriers can interconnect with their communications
networks, §251(a)(1), and contribute to the federal “universal service” fund, §254(d). These provisions are mandatory, but the Commission must forbear from applying
them if it determines that the public interest requires it.
§§160(a), (b). Information-service providers, by contrast,
are not subject to mandatory common-carrier regulation
under Title II, though the Commission has jurisdiction to
impose additional regulatory obligations under its Title I

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ancillary jurisdiction to regulate interstate and foreign
communications, see §§151–161.
These two statutory classifications originated in the late
1970’s, as the Commission developed rules to regulate
data-processing services offered over telephone wires.
That regime, the “Computer II” rules, distinguished between “basic” service (like telephone service) and “enhanced” service (computer-processing service offered over
telephone lines). In re Amendment of Section 64.702 of the
Commission’s Rules and Regulations (Second Computer
Inquiry), 77 F. C. C. 2d 384, 417–423, ¶¶86–101 (1980)
(hereinafter Computer II Order). The Computer II rules
defined both basic and enhanced services by reference to
how the consumer perceives the service being offered.
In particular, the Commission defined “basic service” as
“a pure transmission capability over a communications
path that is virtually transparent in terms of its interaction with customer supplied information.” Id., at 420, ¶96.
By “pure” or “transparent” transmission, the Commission
meant a communications path that enabled the consumer
to transmit an ordinary-language message to another
point, with no computer processing or storage of the information, other than the processing or storage needed to
convert the message into electronic form and then back
into ordinary language for purposes of transmitting it
over the network—such as via a telephone or a facsimile.
Id., at 419–420, ¶¶94–95. Basic service was subject to
common-carrier regulation. Id., at 428, ¶114.
“[E]nhanced service,” however, was service in which
“computer processing applications [were] used to act on
the content, code, protocol, and other aspects of the subscriber’s information,” such as voice and data storage
services, id., at 420–421, ¶97, as well as “protocol conversion” (i.e., ability to communicate between networks that
employ different data-transmission formats), id., at 421–
422, ¶99. By contrast to basic service, the Commission

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decided not to subject providers of enhanced service, even
enhanced service offered via transmission wires, to Title II
common-carrier regulation. Id., at 428–432, ¶¶115–123.
The Commission explained that it was unwise to subject
enhanced service to common-carrier regulation given the
“fast-moving, competitive market” in which they were
offered. Id., at 434, ¶129.
The definitions of the terms “telecommunications service” and “information service” established by the 1996 Act
are similar to the Computer II basic- and enhanced-service
classifications. “Telecommunications service”—the analog
to basic service—is “the offering of telecommunications for
a fee directly to the public . . . regardless of the facilities
used.” 47 U. S. C. §153(46). “Telecommunications” is “the
transmission, between or among points specified by the
user, of information of the user’s choosing, without change
in the form or content of the information as sent and
received.” §153(43). “Telecommunications carrier[s]”—
those subjected to mandatory Title II common-carrier
regulation—are defined as “provider[s] of telecommunications services.” §153(44). And “information service”—the
analog to enhanced service—is “the offering of a capability
for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information
via telecommunications . . . .” §153(20).
In September 2000, the Commission initiated a rulemaking proceeding to, among other things, apply these
classifications to cable companies that offer broadband
Internet service directly to consumers. In March 2002,
that rulemaking culminated in the Declaratory Ruling
under review in these cases. In the Declaratory Ruling,
the Commission concluded that broadband Internet service provided by cable companies is an “information service” but not a “telecommunications service” under the
Act, and therefore not subject to mandatory Title II common-carrier regulation. In support of this conclusion, the

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Commission relied heavily on its Universal Service Report.
See Declaratory Ruling 4821–4822, ¶¶36–37 (citing Universal Service Report or Report). The Universal Service
Report classified “non-facilities-based” ISPs—those that do
not own the transmission facilities they use to connect the
end user to the Internet—solely as information-service
providers. See Universal Service Report 11533, ¶67.
Unlike those ISPs, cable companies own the cable lines
they use to provide Internet access. Nevertheless, in the
Declaratory Ruling, the Commission found no basis in the
statutory definitions for treating cable companies differently from non-facilities-based ISPs: Both offer “a single,
integrated service that enables the subscriber to utilize
Internet access service . . . and to realize the benefits of a
comprehensive service offering.” Declaratory Ruling 4823,
¶38. Because Internet access provides a capability for
manipulating and storing information, the Commission
concluded that it was an information service. Ibid.
The integrated nature of Internet access and the highspeed wire used to provide Internet access led the Commission to conclude that cable companies providing Internet access are not telecommunications providers. This
conclusion, the Commission reasoned, followed from the
logic of the Universal Service Report. The Report had
concluded that, though Internet service “involves data
transport elements” because “an Internet access provider
must enable the movement of information between customers’ own computers and distant computers with which
those customers seek to interact,” it also “offers end users
information-service capabilities inextricably intertwined
with data transport.” Universal Service Report 11539–
11540, ¶80. ISPs, therefore, were not “offering . . . telecommunications . . . directly to the public,” §153(46), and
so were not properly classified as telecommunications
carriers, see id., at 11540, ¶81. In other words, the Commission reasoned that consumers use their cable modems

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not to transmit information “transparently,” such as by
using a telephone, but instead to obtain Internet access.
The Commission applied this same reasoning to cable
companies offering broadband Internet access. Its logic
was that, like non-facilities-based ISPs, cable companies
do not “offe[r] telecommunications service to the end user,
but rather . . . merely us[e] telecommunications to provide
end users with cable modem service.” Declaratory Ruling
4824, ¶41. Though the Commission declined to apply
mandatory Title II common-carrier regulation to cable
companies, it invited comment on whether under its Title
I jurisdiction it should require cable companies to offer
other ISPs access to their facilities on common-carrier
terms. Id., at 4839, ¶72. Numerous parties petitioned for
judicial review, challenging the Commission’s conclusion
that cable modem service was not telecommunications
service. By judicial lottery, the Court of Appeals for the
Ninth Circuit was selected as the venue for the challenge.
The Court of Appeals granted the petitions in part,
vacated the Declaratory Ruling in part, and remanded to
the Commission for further proceedings. In particular, the
Court of Appeals vacated the ruling to the extent it concluded that cable modem service was not “telecommunications service” under the Communications Act. It held that
the Commission could not permissibly construe the Communications Act to exempt cable companies providing
Internet service from Title II regulation. See 345 F. 3d, at
1132. Rather than analyzing the permissibility of that
construction under the deferential framework of Chevron,
467 U. S. 837, however, the Court of Appeals grounded its
holding in the stare decisis effect of AT&T Corp. v. Portland, 216 F. 3d 871 (CA9 2000). See 345 F. 3d, at 1128–
1132. Portland held that cable modem service was a
“telecommunications service,” though the court in that
case was not reviewing an administrative proceeding and
the Commission was not a party to the case. See 216

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F. 3d, at 877–880. Nevertheless, Portland’s holding, the
Court of Appeals reasoned, overrode the contrary interpretation reached by the Commission in the Declaratory
Ruling. See 345 F. 3d, at 1130–1131.
We granted certiorari to settle the important questions
of federal law that these cases present. 543 U. S. __
(2004).
III
We first consider whether we should apply Chevron’s
framework to the Commission’s interpretation of the term
“telecommunications service.”
We conclude that we
should. We also conclude that the Court of Appeals should
have done the same, instead of following the contrary
construction it adopted in Portland.
A
In Chevron, this Court held that ambiguities in statutes
within an agency’s jurisdiction to administer are delegations of authority to the agency to fill the statutory gap in
reasonable fashion. Filling these gaps, the Court explained, involves difficult policy choices that agencies are
better equipped to make than courts. 467 U. S., at 865–
866. If a statute is ambiguous, and if the implementing
agency’s construction is reasonable, Chevron requires a
federal court to accept the agency’s construction of the
statute, even if the agency’s reading differs from what the
court believes is the best statutory interpretation. Id., at
843–844, and n. 11.
The Chevron framework governs our review of the Commission’s construction. Congress has delegated to the
Commission the authority to “execute and enforce” the
Communications Act, §151, and to “prescribe such rules
and regulations as may be necessary in the public interest
to carry out the provisions” of the Act, §201(b); AT&T
Corp. v. Iowa Utilities Bd., 525 U. S. 366, 377–378 (1999).

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These provisions give the Commission the authority to
promulgate binding legal rules; the Commission issued the
order under review in the exercise of that authority; and
no one questions that the order is within the Commission’s
jurisdiction. See Household Credit Services, Inc. v. Pfennig, 541 U. S. 232, 238–239 (2004); United States v. Mead
Corp., 533 U. S. 218, 231–234 (2001); Christensen v. Harris County, 529 U. S. 576, 586–588 (2000). Hence, as we
have in the past, we apply the Chevron framework to the
Commission’s interpretation of the Communications Act.
See National Cable & Telecommunications Assn., Inc. v.
Gulf Power Co., 534 U. S. 327, 333–339 (2002); Verizon,
535 U. S., at 501–502.
Some of the respondents dispute this conclusion, on the
ground that the Commission’s interpretation is inconsistent with its past practice. We reject this argument.
Agency inconsistency is not a basis for declining to analyze
the agency’s interpretation under the Chevron framework.
Unexplained inconsistency is, at most, a reason for holding
an interpretation to be an arbitrary and capricious change
from agency practice under the Administrative Procedure
Act. See Motor Vehicle Mfrs. Assn. of United States, Inc. v.
State Farm Mut. Automobile Ins. Co., 463 U. S. 29, 46–57
(1983). For if the agency adequately explains the reasons
for a reversal of policy, “change is not invalidating, since
the whole point of Chevron is to leave the discretion provided by the ambiguities of a statute with the implementing agency.” Smiley v. Citibank (South Dakota), N. A., 517
U. S. 735, 742 (1996); see also Rust v. Sullivan, 500 U. S.
173, 186–187 (1991); Barnhart v. Walton, 535 U. S. 212,
226 (2002) (SCALIA, J., concurring in part and concurring
in judgment). “An initial agency interpretation is not
instantly carved in stone. On the contrary, the agency . . .
must consider varying interpretations and the wisdom of
its policy on a continuing basis,” Chevron, supra, at 863–
864, for example, in response to changed factual circum-

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Opinion of the Court

stances, or a change in administrations, see State Farm,
supra, at 59 (REHNQUIST, J., concurring in part and dissenting in part). That is no doubt why in Chevron itself,
this Court deferred to an agency interpretation that was a
recent reversal of agency policy. See 467 U. S., at 857–
858. We therefore have no difficulty concluding that
Chevron applies.
B
The Court of Appeals declined to apply Chevron because
it thought the Commission’s interpretation of the Communications Act foreclosed by the conflicting construction of
the Act it had adopted in Portland, supra. See 345 F. 3d,
at 1127–1132. It based that holding on the assumption
that Portland’s construction overrode the Commission’s,
regardless of whether Portland had held the statute to be
unambiguous. 345 F. 3d, at 1131. That reasoning was
incorrect.
A court’s prior judicial construction of a statute trumps
an agency construction otherwise entitled to Chevron
deference only if the prior court decision holds that its
construction follows from the unambiguous terms of the
statute and thus leaves no room for agency discretion.
This principle follows from Chevron itself. Chevron established a “presumption that Congress, when it left ambiguity in a statute meant for implementation by an agency,
understood that the ambiguity would be resolved, first and
foremost, by the agency, and desired the agency (rather
than the courts) to possess whatever degree of discretion
the ambiguity allows.” Smiley, supra, at 740–741. Yet
allowing a judicial precedent to foreclose an agency from
interpreting an ambiguous statute, as the Court of Appeals assumed it could, would allow a court’s interpretation to override an agency’s. Chevron’s premise is that it
is for agencies, not courts, to fill statutory gaps. See 467
U. S., at 843–844, and n. 11. The better rule is to hold

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judicial interpretations contained in precedents to the
same demanding Chevron step one standard that applies
if the court is reviewing the agency’s construction on a
blank slate: Only a judicial precedent holding that the
statute unambiguously forecloses the agency’s interpretation, and therefore contains no gap for the agency to fill,
displaces a conflicting agency construction.
A contrary rule would produce anomalous results. It
would mean that whether an agency’s interpretation of an
ambiguous statute is entitled to Chevron deference would
turn on the order in which the interpretations issue: If the
court’s construction came first, its construction would
prevail, whereas if the agency’s came first, the agency’s
construction would command Chevron deference. Yet
whether Congress has delegated to an agency the authority to interpret a statute does not depend on the order in
which the judicial and administrative constructions occur.
The Court of Appeals’ rule, moreover, would “lead to the
ossification of large portions of our statutory law,” Mead,
supra, at 247 (SCALIA, J., dissenting), by precluding agencies from revising unwise judicial constructions of ambiguous statutes. Neither Chevron nor the doctrine of
stare decisis requires these haphazard results.
The dissent answers that allowing an agency to override
what a court believes to be the best interpretation of a
statute makes “judicial decisions subject to reversal by
Executive officers.” Post, at 13 (opinion of SCALIA, J.). It
does not. Since Chevron teaches that a court’s opinion as
to the best reading of an ambiguous statute an agency is
charged with administering is not authoritative, the agency’s decision to construe that statute differently from a
court does not say that the court’s holding was legally
wrong. Instead, the agency may, consistent with the
court’s holding, choose a different construction, since the
agency remains the authoritative interpreter (within the
limits of reason) of such statutes. In all other respects, the

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court’s prior ruling remains binding law (for example, as
to agency interpretations to which Chevron is inapplicable). The precedent has not been “reversed” by the agency,
any more than a federal court’s interpretation of a State’s
law can be said to have been “reversed” by a state court
that adopts a conflicting (yet authoritative) interpretation
of state law.
The Court of Appeals derived a contrary rule from a
mistaken reading of this Court’s decisions. It read Neal v.
United States, 516 U. S. 284 (1996), to establish that a
prior judicial construction of a statute categorically controls an agency’s contrary construction. 345 F. 3d, at
1131–1132; see also post, at 12, n. 11 (SCALIA, J., dissenting). Neal established no such proposition. Neal declined
to defer to a construction adopted by the United States
Sentencing Commission that conflicted with one the Court
previously had adopted in Chapman v. United States, 500
U. S. 453 (1991). Neal, supra, at 290–295. Chapman,
however, had held the relevant statute to be unambiguous. See 500 U. S., at 463 (declining to apply the rule of
lenity given the statute’s clear language). Thus, Neal
established only that a precedent holding a statute to be
unambiguous forecloses a contrary agency construction.
That limited holding accorded with this Court’s prior
decisions, which had held that a court’s interpretation of a
statute trumps an agency’s under the doctrine of stare
decisis only if the prior court holding “determined a statute’s clear meaning.” Maislin Industries, U. S., Inc. v.
Primary Steel, Inc., 497 U. S. 116, 131 (1990) (emphasis
added); see also Lechmere, Inc. v. NLRB, 502 U. S. 527,
536–537 (1992). Those decisions allow a court’s prior
interpretation of a statute to override an agency’s interpretation only if the relevant court decision held the statute unambiguous.
Against this background, the Court of Appeals erred in
refusing to apply Chevron to the Commission’s interpreta-

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tion of the definition of “telecommunications service,” 47
U. S. C. §153(46). Its prior decision in Portland held only
that the best reading of §153(46) was that cable modem
service was a “telecommunications service,” not that it was
the only permissible reading of the statute. See 216 F. 3d,
at 877–880. Nothing in Portland held that the Communications Act unambiguously required treating cable Internet providers as telecommunications carriers. Instead, the
court noted that it was “not presented with a case involving potential deference to an administrative agency’s
statutory construction pursuant to the Chevron doctrine,”
id., at 876; and the court invoked no other rule of construction (such as the rule of lenity) requiring it to conclude that the statute was unambiguous to reach its
judgment. Before a judicial construction of a statute,
whether contained in a precedent or not, may trump an
agency’s, the court must hold that the statute unambiguously requires the court’s construction. Portland did not
do so.
As the dissent points out, it is not logically necessary for
us to reach the question whether the Court of Appeals
misapplied Chevron for us to decide whether the Commission acted lawfully. See post, at 16–17 (opinion of SCALIA,
J.). Nevertheless, it is no “great mystery” why we are
reaching the point here. Ibid. There is genuine confusion
in the lower courts over the interaction between the Chevron doctrine and stare decisis principles, as the petitioners
informed us at the certiorari stage of this litigation. See
Pet. for Cert. of Federal Communications Commission
et al. in No. 04–281, pp. 19–23; Pet. for Cert. of National
Cable & Telecomm. Assn. et al. in No. 04–277, pp. 22–29.
The point has been briefed. See Brief for Federal Petitioners 38–44; Brief for Cable-Industry Petitioners 30–36.
And not reaching the point could undermine the purpose
of our grant of certiorari: to settle authoritatively whether
the Commission’s Declaratory Ruling is lawful. Were we

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to uphold the Declaratory Ruling without reaching the
Chevron point, the Court of Appeals could once again
strike down the Commission’s rule based on its Portland
decision. Portland (at least arguably) could compel the
Court of Appeals once again to reverse the Commission
despite our decision, since our conclusion that it is reasonable to read the Communications Act to classify cable
modem service solely as an “information service” leaves
untouched Portland’s holding that the Commission’s
interpretation is not the best reading of the statute. We
have before decided similar questions that were not,
strictly speaking, necessary to our disposition. See, e.g.,
Agostini v. Felton, 521 U. S. 203, 237 (1997) (requiring the
Courts of Appeals to adhere to our directly controlling
precedents, even those that rest on reasons rejected in other
decisions); Roper v. Simmons, 543 U. S. ___ , ___ (2005) (slip
op., at 23–24) (SCALIA, J., dissenting) (criticizing this Court
for not reaching the question whether the Missouri Supreme Court erred by failing to follow directly controlling
Supreme Court precedent, though that conclusion was not
necessary to the Court’s decision). It is prudent for us to do
so once again today.
IV
We next address whether the Commission’s construction
of the definition of “telecommunications service,” 47
U. S. C. §153(46), is a permissible reading of the Communications Act under the Chevron framework. Chevron
established a familiar two-step procedure for evaluating
whether an agency’s interpretation of a statute is lawful.
At the first step, we ask whether the statute’s plain terms
“directly addres[s] the precise question at issue.” 467
U. S., at 843. If the statute is ambiguous on the point, we
defer at step two to the agency’s interpretation so long as
the construction is “a reasonable policy choice for the
agency to make.” Id., at 845. The Commission’s interpre-

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tation is permissible at both steps.
A
We first set forth our understanding of the interpretation of the Communications Act that the Commission
embraced. The issue before the Commission was whether
cable companies providing cable modem service are providing a “telecommunications service” in addition to an
“information service.”
The Commission first concluded that cable modem
service is an “information service,” a conclusion unchallenged here. The Act defines “information service” as “the
offering of a capability for generating, acquiring, storing,
transforming, processing, retrieving, utilizing, or making
available information via telecommunications . . . .”
§153(20). Cable modem service is an information service,
the Commission reasoned, because it provides consumers
with a comprehensive capability for manipulating information using the Internet via high-speed telecommunications. That service enables users, for example, to browse
the World Wide Web, to transfer files from file archives
available on the Internet via the “File Transfer Protocol,”
and to access e-mail and Usenet newsgroups. Declaratory
Ruling 4821, ¶37; Universal Service Report 11537, ¶76.
Like other forms of Internet service, cable modem service
also gives users access to the Domain Name System
(DNS). DNS, among other things, matches the Web page
addresses that end users type into their browsers (or
“click” on) with the Internet Protocol (IP) addresses1 of the
servers containing the Web pages the users wish to access.
Declaratory Ruling 4821–4822, ¶37. All of these features,
the Commission concluded, were part of the information
service that cable companies provide consumers. Id., at
——————
1 IP addresses identify computers on the Internet, enabling data packets
transmitted from other computers to reach them. See Universal Service
Report 11531, ¶62; Huber 985.

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4821–4823, ¶¶36–38; see also Universal Service Report
11536–11539, ¶¶75–79.
At the same time, the Commission concluded that cable
modem service was not “telecommunications service.”
“Telecommunications service” is “the offering of telecommunications for a fee directly to the public.” 47 U. S. C.
§153(46). “Telecommunications,” in turn, is defined as
“the transmission, between or among points specified by
the user, of information of the user’s choosing, without
change in the form or content of the information as sent
and received.” §153(43). The Commission conceded that,
like all information-service providers, cable companies use
“telecommunications” to provide consumers with Internet
service; cable companies provide such service via the highspeed wire that transmits signals to and from an end
user’s computer. Declaratory Ruling 4823, ¶40. For the
Commission, however, the question whether cable broadband Internet providers “offer” telecommunications involved more than whether telecommunications was one
necessary component of cable modem service. Instead,
whether that service also includes a telecommunications
“offering” “tur[ned] on the nature of the functions the end
user is offered,” id., at 4822, ¶38 (emphasis added), for the
statutory definition of “telecommunications service” does
not “res[t] on the particular types of facilities used,” id., at
4821, ¶35; see §153(46) (definition of “telecommunications
service” applies “regardless of the facilities used”).
Seen from the consumer’s point of view, the Commission
concluded, cable modem service is not a telecommunications offering because the consumer uses the high-speed
wire always in connection with the information-processing
capabilities provided by Internet access, and because the
transmission is a necessary component of Internet access:
“As provided to the end user the telecommunications is
part and parcel of cable modem service and is integral to
its other capabilities.” Declaratory Ruling 4823, ¶39. The

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Opinion of the Court

wire is used, in other words, to access the World Wide
Web, newsgroups, and so forth, rather than “transparently” to transmit and receive ordinary-language messages without computer processing or storage of the message. See supra, at 4 (noting the Computer II notion of
“transparent” transmission). The integrated character of
this offering led the Commission to conclude that cable
modem service is not a “stand-alone,” transparent offering
of telecommunications. Declaratory Ruling 4823–4825,
¶¶41–43.
B
This construction passes Chevron’s first step. Respondents argue that it does not, on the ground that cable
companies providing Internet service necessarily “offe[r]”
the underlying telecommunications used to transmit that
service. The word “offering” as used in §153(46), however,
does not unambiguously require that result. Instead,
“offering” can reasonably be read to mean a “stand-alone”
offering of telecommunications, i.e., an offered service
that, from the user’s perspective, transmits messages
unadulterated by computer processing. That conclusion
follows not only from the ordinary meaning of the word
“offering,” but also from the regulatory history of the
Communications Act.
1
Cable companies in the broadband Internet service
business “offe[r]” consumers an information service in the
form of Internet access and they do so “via telecommunications,” §153(20), but it does not inexorably follow as a
matter of ordinary language that they also “offe[r]” consumers the high-speed data transmission (telecommunications) that is an input used to provide this service,
§153(46). We have held that where a statute’s plain terms
admit of two or more reasonable ordinary usages, the

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Opinion of the Court

Commission’s choice of one of them is entitled to deference. See Verizon, 535 U. S., at 498 (deferring to the
Commission’s interpretation of the term “cost” by reference to an alternative linguistic usage defined by what “[a]
merchant who is asked about ‘the cost of providing the
goods’ ” might “reasonably” say); National Railroad Passenger Corporation v. Boston & Maine Corp., 503 U. S.
407, 418 (1992) (agency construction entitled to deference
where there were “alternative dictionary definitions of the
word” at issue). The term “offe[r]” as used in the definition of telecommunications service, 47 U. S. C. §153(46), is
ambiguous in this way.
It is common usage to describe what a company “offers”
to a consumer as what the consumer perceives to be the
integrated finished product, even to the exclusion of discrete components that compose the product, as the dissent
concedes. See post, at 3 (opinion of SCALIA, J.). One might
well say that a car dealership “offers” cars, but does not
“offer” the integrated major inputs that make purchasing
the car valuable, such as the engine or the chassis. It
would, in fact, be odd to describe a car dealership as “offering” consumers the car’s components in addition to the car
itself. Even if it is linguistically permissible to say that
the car dealership “offers” engines when it offers cars, that
shows, at most, that the term “offer,” when applied to a
commercial transaction, is ambiguous about whether it
describes only the offered finished product, or the product’s discrete components as well. It does not show that no
other usage is permitted.
The question, then, is whether the transmission component of cable modem service is sufficiently integrated with
the finished service to make it reasonable to describe the
two as a single, integrated offering. See ibid. We think
that they are sufficiently integrated, because “[a] consumer uses the high-speed wire always in connection with
the information-processing capabilities provided by Inter-

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Opinion of the Court

net access, and because the transmission is a necessary
component of Internet access.” Supra, at 16. In the telecommunications context, it is at least reasonable to describe companies as not “offering” to consumers each
discrete input that is necessary to providing, and is always
used in connection with, a finished service. We think it no
misuse of language, for example, to say that cable companies providing Internet service do not “offer” consumers
DNS, even though DNS is essential to providing Internet
access. Declaratory Ruling 4810, n. 74, 4822–4823, ¶38.
Likewise, a telephone company “offers” consumers a transparent transmission path that conveys an ordinarylanguage message, not necessarily the data transmission
facilities that also “transmi[t] . . . information of the user’s
choosing,” §153(43), or other physical elements of the
facilities used to provide telephone service, like the trunks
and switches, or the copper in the wires. What cable
companies providing cable modem service and telephone
companies providing telephone service “offer” is Internet
service and telephone service respectively—the finished
services, though they do so using (or “via”) the discrete
components composing the end product, including data
transmission. Such functionally integrated components
need not be described as distinct “offerings.”
In response, the dissent argues that the high-speed
transmission component necessary to providing cable
modem service is necessarily “offered” with Internet service because cable modem service is like the offering of
pizza delivery service together with pizza, and the offering
of puppies together with dog leashes. Post, at 3–4 (opinion
of SCALIA, J.). The dissent’s appeal to these analogies only
underscores that the term “offer” is ambiguous in the way
that we have described. The entire question is whether
the products here are functionally integrated (like the
components of a car) or functionally separate (like pets
and leashes). That question turns not on the language of

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Opinion of the Court

the Act, but on the factual particulars of how Internet
technology works and how it is provided, questions Chevron leaves to the Commission to resolve in the first instance. As the Commission has candidly recognized, “the
question may not always be straightforward whether, on
the one hand, an entity is providing a single information
service with communications and computing components,
or, on the other hand, is providing two distinct services,
one of which is a telecommunications service.” Universal
Service Report 11530, ¶60. Because the term “offer” can
sometimes refer to a single, finished product and sometimes to the “individual components in a package being
offered” (depending on whether the components “still
possess sufficient identity to be described as separate
objects,” post, at 3), the statute fails unambiguously to
classify the telecommunications component of cable
modem service as a distinct offering. This leaves federal
telecommunications policy in this technical and complex
area to be set by the Commission, not by warring
analogies.
We also do not share the dissent’s certainty that cable
modem service is so obviously like pizza delivery service
and the combination of dog leashes and dogs that the
Commission could not reasonably have thought otherwise.
Post, at 3–4. For example, unlike the transmission component of Internet service, delivery service and dog
leashes are not integral components of the finished products (pizzas and pet dogs). One can pick up a pizza rather
than having it delivered, and one can own a dog without
buying a leash. By contrast, the Commission reasonably
concluded, a consumer cannot purchase Internet service
without also purchasing a connection to the Internet and
the transmission always occurs in connection with information processing. In any event, we doubt that a statute
that, for example, subjected offerors of “delivery” service
(such as Federal Express and United Parcel Service) to

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Opinion of the Court

common-carrier regulation would unambiguously require
pizza-delivery companies to offer their delivery services on
a common carrier basis.
2
The Commission’s traditional distinction between basic
and enhanced service, see supra, at 4–5, also supports the
conclusion that the Communications Act is ambiguous
about whether cable companies “offer” telecommunications
with cable modem service. Congress passed the definitions in the Communications Act against the background
of this regulatory history, and we may assume that the
parallel terms “telecommunications service” and “information service” substantially incorporated their meaning, as
the Commission has held. See, e.g., In re Federal-State
Joint Board on Universal Service, 12 FCC Rcd. 8776,
9179–9180, ¶788 (1997) (noting that the “definition of
enhanced services is substantially similar to the definition
of information services” and that “all services previously
considered ‘enhanced services’ are ‘information services’ ”);
Commissioner v. Keystone Consol. Industries, Inc., 508
U. S. 152, 159 (1993) (noting presumption that Congress is
aware of “settled judicial and administrative interpretation[s]” of terms when it enacts a statute). The regulatory
history in at least two respects confirms that the term
“telecommunications service” is ambiguous.
First, in the Computer II Order that established the
terms “basic” and “enhanced” services, the Commission
defined those terms functionally, based on how the consumer interacts with the provided information, just as the
Commission did in the order below. See supra, at 4–5. As
we have explained, Internet service is not “ ‘transparent in
terms of its interaction with customer-supplied information,’ ” Computer II Order 420, ¶96; the transmission occurs
in connection with information processing. It was therefore consistent with the statute’s terms for the Commis-

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Opinion of the Court

sion to assume that the parallel term “telecommunications
service” in 47 U. S. C. §153(46) likewise describes a “pure”
or “transparent” communications path not necessarily
separately present, from the end user’s perspective, in an
integrated information-service offering.
The Commission’s application of the basic/enhanced
service distinction to non-facilities-based ISPs also supports this conclusion. The Commission has long held that
“all those who provide some form of transmission services
are not necessarily common carriers.” Computer II Order
431, ¶122; see also id., at 435, ¶132 (“acknowledg[ing] the
existence of a communications component” in enhancedservice offerings). For example, the Commission did not
subject to common-carrier regulation those service providers that offered enhanced services over telecommunications facilities, but that did not themselves own the underlying facilities—so-called “non-facilities-based” providers.
See Universal Service Report 11530, ¶60. Examples of
these services included database services in which a customer used telecommunications to access information,
such as Dow Jones News and Lexis, as well as “value
added networks,” which lease wires from common carriers
and provide transmission as well as protocol-processing
service over those wires. See In re Amendment to Sections
64.702 of the Commission’s Rules and Regulations (Third
Computer Inquiry), 3 FCC Rcd. 1150, 1153, n. 23 (1988);
supra, at 4 (explaining protocol conversion). These services “combin[ed] communications and computing components,” yet the Commission held that they should “always
be deemed enhanced” and therefore not subject to common-carrier regulation. Universal Service Report 11530,
¶60. Following this traditional distinction, the Commission in the Universal Service Report classified ISPs that
leased rather than owned their transmission facilities as
pure information-service providers. Id., at 11540, ¶81.
Respondents’ statutory arguments conflict with this

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regulatory history. They claim that the Communications
Act unambiguously classifies as telecommunications carriers all entities that use telecommunications inputs to
provide information service. As respondent MCI concedes,
this argument would subject to mandatory commoncarrier regulation all information-service providers that
use telecommunications as an input to provide information service to the public. Brief for Respondent MCI, Inc.
30. For example, it would subject to common-carrier
regulation non-facilities-based ISPs that own no transmission facilities. See Universal Service Report 11532–11533,
¶66. Those ISPs provide consumers with transmission
facilities used to connect to the Internet, see supra, at 2,
and so, under respondents’ argument, necessarily “offer”
telecommunications to consumers. Respondents’ position
that all such entities are necessarily “offering telecommunications” therefore entails mandatory common-carrier
regulation of entities that the Commission never classified
as “offerors” of basic transmission service, and therefore
common carriers, under the Computer II regime.2 See
Universal Service Report 11540, ¶81 (noting past Commission policy); Computer and Communications Industry
Assn. v. FCC, 693 F. 2d 198, 209 (CADC 1982) (noting and
upholding Commission’s Computer II “finding that enhanced services . . . are not common carrier services
within the scope of Title II”). We doubt that the parallel
term “telecommunications service” unambiguously worked
——————
2 The dissent attempts to escape this consequence of respondents’
position by way of an elaborate analogy between ISPs and pizzerias.
Post, at 7–8 (opinion of SCALIA, J.). This analogy is flawed. A pizzeria
“delivers” nothing, but ISPs plainly provide transmission service
directly to the public in connection with Internet service. For example,
with dial-up service, ISPs process the electronic signal that travels over
local telephone wires, and transmit it to the Internet. See supra, at 2;
Huber 988. The dissent therefore cannot deny that its position logically
would require applying presumptively mandatory Title II regulation to
all ISPs.

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this abrupt shift in Commission policy.
Respondents’ analogy between cable companies that
provide cable modem service and facilities-based enhanced-service providers—that is, enhanced-service providers who own the transmission facilities used to provide
those services—fares no better. Respondents stress that
under the Computer II rules the Commission regulated
such providers more heavily than non-facilities-based
providers. The Commission required, for example, local
telephone companies that provided enhanced services to
offer their wires on a common-carrier basis to competing
enhanced-service providers. See, e.g., In re Amendment of
Sections 64.702 of the Commission’s Rules and Regulations
(Third Computer Inquiry), 104 F. C. C. 2d 958, 964, ¶4
(1986) (hereinafter Computer III Order). Respondents
argue that the Communications Act unambiguously requires the same treatment for cable companies because
cable companies also own the facilities they use to provide
cable modem service (and therefore information service).
We disagree. We think it improbable that the Communications Act unambiguously freezes in time the Computer
II treatment of facilities-based information-service providers. The Act’s definition of “telecommunications service”
says nothing about imposing more stringent regulatory
duties on facilities-based information-service providers.
The definition hinges solely on whether the entity “offer[s]
telecommunications for a fee directly to the public,”
47 U. S. C. §153(46), though the Act elsewhere subjects
facilities-based carriers to stricter regulation, see §251(c)
(imposing various duties on facilities-based local telephone
companies). In the Computer II rules, the Commission
subjected facilities-based providers to common-carrier
duties not because of the nature of the “offering” made by
those carriers, but rather because of the concern that local
telephone companies would abuse the monopoly power
they possessed by virtue of the “bottleneck” local telephone

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Opinion of the Court

facilities they owned. See Computer II Order 474–475,
¶¶229, 231; Computer III Order 968–969, ¶12; Verizon,
535 U. S., at 489–490 (describing the naturally monopolistic physical structure of a local telephone exchange). The
differential treatment of facilities-based carriers was
therefore a function not of the definitions of “enhancedservice” and “basic service,” but instead of a choice by the
Commission to regulate more stringently, in its discretion,
certain entities that provided enhanced service. The Act’s
definitions, however, parallel the definitions of enhanced
and basic service, not the facilities-based grounds on
which that policy choice was based, and the Commission
remains free to impose special regulatory duties on facilities-based ISPs under its Title I ancillary jurisdiction. In
fact, it has invited comment on whether it can and should
do so. See supra, at 7.
In sum, if the Act fails unambiguously to classify nonfacilities-based information-service providers that use
telecommunications inputs to provide an information
service as “offer[ors]” of “telecommunications,” then it also
fails unambiguously to classify facilities-based information-service providers as telecommunications-service
offerors; the relevant definitions do not distinguish facilities-based and non-facilities-based carriers. That silence
suggests, instead, that the Commission has the discretion
to fill the consequent statutory gap.
C
We also conclude that the Commission’s construction
was “a reasonable policy choice for the [Commission] to
make” at Chevron’s second step. 467 U. S., at 845.
Respondents argue that the Commission’s construction
is unreasonable because it allows any communications
provider to “evade” common-carrier regulation by the
expedient of bundling information service with telecommunications. Respondents argue that under the Commis-

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Opinion of the Court

sion’s construction a telephone company could, for example, offer an information service like voice mail together
with telephone service, thereby avoiding common-carrier
regulation of its telephone service.
We need not decide whether a construction that resulted
in these consequences would be unreasonable because we
do not believe that these results follow from the construction the Commission adopted. As we understand the
Declaratory Ruling, the Commission did not say that any
telecommunications service that is priced or bundled with
an information service is automatically unregulated under
Title II. The Commission said that a telecommunications
input used to provide an information service that is not
“separable from the data-processing capabilities of the
service” and is instead “part and parcel of [the information
service] and is integral to [the information service’s] other
capabilities” is not a telecommunications offering. Declaratory Ruling 4823, ¶39; see supra, at 16–17.
This construction does not leave all information service
offerings exempt from mandatory Title II regulation. “It is
plain,” for example, that a local telephone company “cannot escape Title II regulation of its residential local exchange service simply by packaging that service with voice
mail.” Universal Service Report 11530, ¶60. That is because a telephone company that packages voice mail with
telephone service offers a transparent transmission path—
telephone service—that transmits information independent of the information-storage capabilities provided by
voice mail. For instance, when a person makes a telephone call, his ability to convey and receive information
using the call is only trivially affected by the additional
voice-mail capability. Equally, were a telephone company
to add a time-of-day announcement that played every time
the user picked up his telephone, the “transparent” information transmitted in the ensuing call would be only
trivially dependent on the information service the an-

Cite as: 545 U. S. ____ (2005)

27

Opinion of the Court

nouncement provides. By contrast, the high-speed transmission used to provide cable modem service is a functionally integrated component of that service because it
transmits data only in connection with the further processing of information and is necessary to provide Internet
service. The Commission’s construction therefore was
more limited than respondents assume.
Respondents answer that cable modem service does, in
fact, provide “transparent” transmission from the consumer’s perspective, but this argument, too, is mistaken.
Respondents characterize the “information-service” offering of Internet access as consisting only of access to a cable
company’s e-mail service, its Web page, and the ability it
provides consumers to create a personal Web page. When
a consumer goes beyond those offerings and accesses
content provided by parties other than the cable company,
respondents argue, the consumer uses “pure transmission”
no less than a consumer who purchases phone service
together with voice mail.
This argument, we believe, conflicts with the Commission’s understanding of the nature of cable modem service,
an understanding we find to be reasonable. When an end
user accesses a third-party’s Web site, the Commission
concluded, he is equally using the information service
provided by the cable company that offers him Internet
access as when he accesses the company’s own Web site,
its e-mail service, or his personal Web page. For example,
as the Commission found below, part of the information
service cable companies provide is access to DNS service.
See supra, at 15–16. A user cannot reach a third-party’s
Web site without DNS, which (among other things)
matches the Web site address the end user types into his
browser (or “clicks” on with his mouse) with the IP address
of the Web page’s host server. See P. Albitz & C. Liu, DNS
and BIND 10 (4th ed. 2001) (For an Internet user, “DNS is
a must. . . . [N]early all of the Internet’s network services

28

NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.
BRAND X INTERNET SERVICES
Opinion of the Court

use DNS. That includes the World Wide Web, electronic
mail, remote terminal access, and file transfer”). It is at
least reasonable to think of DNS as a “capability for . . .
acquiring . . . retrieving, utilizing, or making available”
Web site addresses and therefore part of the information
service cable companies provide. 47 U. S. C. §153(20).3
Similarly, the Internet service provided by cable companies facilitates access to third-party Web pages by offering
consumers the ability to store, or “cache,” popular content
on local computer servers. See Declaratory Ruling 4810,
¶17, and n. 76. Cacheing obviates the need for the end
user to download anew information from third-party Web
sites each time the consumer attempts to access them,
thereby increasing the speed of information retrieval. In
other words, subscribers can reach third-party Web sites
via “the World Wide Web, and browse their contents,
[only] because their service provider offers the ‘capability
for . . . acquiring, [storing] . . . retrieving [and] utilizing . . .
information.’ ” Universal Service Report 11538, ¶76 (quoting 47 U. S. C. §153(20)). “The service that Internet access
providers offer to members of the public is Internet access,” Universal Service Report 11539, ¶79, not a transparent ability (from the end user’s perspective) to transmit
information. We therefore conclude that the Commission’s
——————
3 The dissent claims that access to DNS does not count as use of the
information-processing capabilities of Internet service because DNS is
“scarcely more than routing information, which is expressly excluded
from the definition of ‘information service.’ ” Post, at 9, and n. 6 (opinion of SCALIA, J.). But the definition of information service does not
exclude “routing information.” Instead, it excludes “any use of any such
capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.”
47 U. S. C. §153(20). The dissent’s argument therefore begs the question because it assumes that Internet service is a “telecommunications
system” or “service” that DNS manages (a point on which, contrary to
the dissent’s assertion, post, at 9, n. 6, we need take no view for purposes of this response).

Cite as: 545 U. S. ____ (2005)

29

Opinion of the Court

construction was reasonable.
V
Respondent MCI, Inc., urges that the Commission’s
treatment of cable modem service is inconsistent with its
treatment of DSL service, see supra, at 3 (describing DSL
service), and therefore is an arbitrary and capricious
deviation from agency policy. See 5 U. S. C. §706(2)(A).
MCI points out that when local telephone companies
began to offer Internet access through DSL technology in
addition to telephone service, the Commission applied its
Computer II facilities-based classification to them and
required them to make the telephone lines used to transmit DSL service available to competing ISPs on nondiscriminatory, common-carrier terms. See supra, at 24
(describing Computer II facilities-based classification of
enhanced-service providers); In re Deployment of Wireline
Services Offering Advanced Telecommunications Capability, 13 FCC Rcd. 24011, 24030–24031, ¶¶36–37 (1998)
(hereinafter Wireline Order) (classifying DSL service as a
telecommunications service). MCI claims that the Commission’s decision not to regulate cable companies similarly under Title II is inconsistent with its DSL policy.
We conclude, however, that the Commission provided a
reasoned explanation for treating cable modem service
differently from DSL service. As we have already noted,
see supra, at 9–10, the Commission is free within the
limits of reasoned interpretation to change course if it
adequately justifies the change.4 It has done so here. The
——————
4 Respondents vigorously argue that the Commission’s purported
inconsistent treatment is a reason for holding the Commission’s construction impermissible under Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). Any inconsistency
bears on whether the Commission has given a reasoned explanation for
its current position, not on whether its interpretation is consistent with
the statute.

30

NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.
BRAND X INTERNET SERVICES
Opinion of the Court

traditional reason for its Computer II common-carrier
treatment of facilities-based carriers (including DSL carriers), as the Commission explained, was “that the telephone
network [was] the primary, if not exclusive, means
through which information service providers can gain
access to their customers.” Declaratory Ruling 4825, ¶44
(emphasis in original; internal quotation marks omitted).
The Commission applied the same treatment to DSL
service based on that history, rather than on an analysis
of contemporaneous market conditions. See Wireline
Order 24031, ¶37 (noting DSL carriers’ “continuing obligation” to offer their transmission facilities to competing
ISPs on nondiscriminatory terms).
The Commission in the order under review, by contrast,
concluded that changed market conditions warrant different treatment of facilities-based cable companies providing
Internet access. Unlike at the time of Computer II, substitute forms of Internet transmission exist today:
“[R]esidential high-speed access to the Internet is evolving
over multiple electronic platforms, including wireline,
cable, terrestrial wireless and satellite.”
Declaratory
Ruling 4802, ¶6; see also U. S. Telecom Assn. v. FCC, 290
F. 3d 415, 428 (CADC 2002) (noting Commission findings
of “robust competition . . . in the broadband market”). The
Commission concluded that “ ‘broadband services should
exist in a minimal regulatory environment that promotes
investment and innovation in a competitive market.’ ”
Declaratory Ruling 4802, ¶5. This, the Commission reasoned, warranted treating cable companies unlike the
facilities-based enhanced-service providers of the past.
Id., at 4825, ¶44. We find nothing arbitrary about the
Commission’s providing a fresh analysis of the problem as
applied to the cable industry, which it has never subjected
to these rules. This is adequate rational justification for
the Commission’s conclusions.
Respondents argue, in effect, that the Commission’s

Cite as: 545 U. S. ____ (2005)

31

Opinion of the Court

justification for exempting cable modem service providers
from common-carrier regulation applies with similar force
to DSL providers. We need not address that argument.
The Commission’s decision appears to be a first step in an
effort to reshape the way the Commission regulates information-service providers; that may be why it has tentatively concluded that DSL service provided by facilitiesbased telephone companies should also be classified solely
as an information service. See In re Appropriate Framework for Broadband Access to the Internet over Wireline
Facilities, 17 FCC Rcd. 3019, 3030, ¶20 (2002). The Commission need not immediately apply the policy reasoning
in the Declaratory Ruling to all types of informationservice providers. It apparently has decided to revisit its
longstanding Computer II classification of facilities-based
information-service providers incrementally. Any inconsistency between the order under review and the Commission’s treatment of DSL service can be adequately addressed when the Commission fully reconsiders its
treatment of DSL service and when it decides whether,
pursuant to its ancillary Title I jurisdiction, to require
cable companies to allow independent ISPs access to their
facilities. See supra, at 7, this page. We express no view
on those matters. In particular, we express no view on
how the Commission should, or lawfully may, classify DSL
service.
*
*
*
The questions the Commission resolved in the order
under review involve a “subject matter [that] is technical,
complex, and dynamic.” Gulf Power, 534 U. S., at 339.
The Commission is in a far better position to address these
questions than we are. Nothing in the Communications
Act or the Administrative Procedure Act makes unlawful
the Commission’s use of its expert policy judgment to
resolve these difficult questions. The judgment of the

32

NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.
BRAND X INTERNET SERVICES
Opinion of the Court

Court of Appeals is reversed, and the cases are remanded
for further proceedings consistent with this opinion.
It is so ordered.

Cite as: 545 U. S. ____ (2005)

1

STEVENS, J., concurring

SUPREME COURT OF THE UNITED STATES
_________________

Nos. 04–277 and 04–281
_________________

NATIONAL CABLE & TELECOMMUNICATIONS
ASSOCIATION, ET AL., PETITIONERS
04–277
v.
BRAND X INTERNET SERVICES ET AL.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES, PETITIONERS
04–281
v.
BRAND X INTERNET SERVICES ET AL.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[June 27, 2005]

JUSTICE STEVENS, concurring.
While I join the Court’s opinion in full, I add this caveat
concerning Part III–B, which correctly explains why a
court of appeals’ interpretation of an ambiguous provision
in a regulatory statute does not foreclose a contrary reading by the agency. That explanation would not necessarily
be applicable to a decision by this Court that would presumably remove any pre-existing ambiguity.

Cite as: 545 U. S. ____ (2005)

1

BREYER, J., concurring

SUPREME COURT OF THE UNITED STATES
_________________

Nos. 04–277 and 04–281
_________________

NATIONAL CABLE & TELECOMMUNICATIONS
ASSOCIATION, ET AL., PETITIONERS
04–277
v.
BRAND X INTERNET SERVICES ET AL.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES, PETITIONERS
04–281
v.
BRAND X INTERNET SERVICES ET AL.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[June 27, 2005]

JUSTICE BREYER, concurring.
I join the Court’s opinion because I believe that the
Federal Communications Commission’s decision falls
within the scope of its statutorily delegated authority—
though perhaps just barely. I write separately because I
believe it important to point out that JUSTICE SCALIA, in
my view, has wrongly characterized the Court’s opinion in
United States v. Mead Corp., 533 U. S. 218 (2001). He
states that the Court held in Mead that “some unspecified
degree of formal process” before the agency “was required”
for courts to accord the agency’s decision deference under
Chevron U. S. A. Inc. v. Natural Resources Defense Council,
Inc., 467 U. S. 837 (1984). Post, at 12 (dissenting opinion);
see also ibid. (formal process is “at least the only safe
harbor”).
JUSTICE SCALIA has correctly characterized the way in
which he, in dissent, characterized the Court’s Mead opin-

2

NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.

BRAND X INTERNET SERVICES

BREYER, J., concurring

ion. 533 U. S., at 245–246. But the Court said the opposite. An agency action qualifies for Chevron deference
when Congress has explicitly or implicitly delegated to the
agency the authority to “fill” a statutory “gap,” including
an interpretive gap created through an ambiguity in the
language of a statute’s provisions. Chevron, supra, at
843–844; Mead, supra, at 226–227. The Court said in
Mead that such delegation “may be shown in a variety of
ways, as by an agency’s power to engage in adjudication or
notice-and-comment rulemaking, or by some other indication of a comparable congressional intent.” 533 U. S., at
227 (emphasis added). The Court explicitly stated that
the absence of notice-and-comment rulemaking did “not
decide the case,” for the Court has “sometimes found
reasons for Chevron deference even when no such administrative formality was required and none was afforded.”
Id., at 231. And the Court repeated that it “has recognized
a variety of indicators that Congress would expect Chevron
deference.” Id., at 237 (emphasis added).
It is not surprising that the Court would hold that the
existence of a formal rulemaking proceeding is neither a
necessary nor a sufficient condition for according Chevron
deference to an agency’s interpretation of a statute. It is
not a necessary condition because an agency might arrive
at an authoritative interpretation of a congressional enactment in other ways, including ways that JUSTICE
SCALIA mentions. See, e.g., Mead, supra, at 231. It is not
a sufficient condition because Congress may have intended
not to leave the matter of a particular interpretation up to
the agency, irrespective of the procedure the agency uses
to arrive at that interpretation, say, where an unusually
basic legal question is at issue. Cf. General Dynamics
Land Systems, Inc. v. Cline, 540 U. S. 581, 600 (2004) (rejecting agency’s answer to question whether age discrimination law forbids discrimination against the relatively
young).

Cite as: 545 U. S. ____ (2005)

3

BREYER, J., concurring

Thus, while I believe JUSTICE SCALIA is right in emphasizing that Chevron deference may be appropriate in the
absence of formal agency proceedings, Mead should not
give him cause for concern.

Cite as: 545 U. S. ____ (2005)

1

SCALIA, J., dissenting

SUPREME COURT OF THE UNITED STATES
_________________

Nos. 04–277 and 04–281
_________________

NATIONAL CABLE & TELECOMMUNICATIONS
ASSOCIATION, ET AL., PETITIONERS
04–277
v.
BRAND X INTERNET SERVICES ET AL.
FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES, PETITIONERS
04–281
v.
BRAND X INTERNET SERVICES ET AL.
ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[June 27, 2005]

JUSTICE SCALIA, with whom JUSTICE SOUTER and
JUSTICE GINSBURG join as to Part I, dissenting.
The Federal Communications Commission (FCC or
Commission) has once again attempted to concoct “a whole
new regime of regulation (or of free-market competition)”
under the guise of statutory construction. MCI Telecommunications Corp. v. American Telephone & Telegraph
Co., 512 U. S. 218, 234 (1994). Actually, in these cases, it
might be more accurate to say the Commission has attempted to establish a whole new regime of nonregulation, which will make for more or less free-market
competition, depending upon whose experts are believed.
The important fact, however, is that the Commission has
chosen to achieve this through an implausible reading of
the statute, and has thus exceeded the authority given it
by Congress.

2

NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.

BRAND X INTERNET SERVICES

SCALIA, J., dissenting

I
The first sentence of the FCC ruling under review reads
as follows: “Cable modem service provides high-speed
access to the Internet, as well as many applications or
functions that can be used with that access, over cable
system facilities.” In re Inquiry Concerning High-Speed
Access to the Internet Over Cable and Other Facilities, 17
FCC Rcd. 4798, 4799, ¶1 (2002) (hereinafter Declaratory
Ruling) (emphasis added, footnote omitted). Does this
mean that cable companies “offer” high-speed access to the
Internet? Surprisingly not, if the Commission and the
Court are to be believed.
It happens that cable-modem service is popular precisely because of the high-speed access it provides, and
that, once connected with the Internet, cable-modem
subscribers often use Internet applications and functions
from providers other than the cable company. Nevertheless, for purposes of classifying what the cable company
does, the Commission (with the Court’s approval) puts all
the emphasis on the rest of the package (the additional
“applications or functions”). It does so by claiming that
the cable company does not “offe[r]” its customers highspeed Internet access because it offers that access only in
conjunction with particular applications and functions,
rather than “separate[ly],” as a “stand-alone offering.” Id.,
at 4802, ¶7, 4823, ¶40.
The focus on the term “offer” appropriately derives from
the statutory definitions at issue in these cases. Under
the Telecommunications Act of 1996, 110 Stat. 56, “ ‘information service’ ” involves the capacity to generate,
store, interact with, or otherwise manipulate “information
via telecommunications.” 47 U. S. C. §153(20). In turn,
“ ‘telecommunications’ ” is defined as “the transmission,
between or among points specified by the user, of information of the user’s choosing, without change in the form or
content of the information as sent and received.” §153(43).

Cite as: 545 U. S. ____ (2005)

3

SCALIA, J., dissenting

Finally, “ ‘telecommunications service’ ” is defined as “the
offering of telecommunications for a fee directly to the
public . . . regardless of the facilities used.” §153(46). The
question here is whether cable-modem-service providers
“offe[r] . . . telecommunications for a fee directly to the
public.” If so, they are subject to Title II regulation as
common carriers, like their chief competitors who provide
Internet access through other technologies.
The Court concludes that the word “offer” is ambiguous
in the sense that it has “ ‘alternative dictionary definitions’ ” that might be relevant. Ante, at 18 (quoting National Railroad Passenger Corporation v. Boston & Maine
Corp., 503 U. S. 407, 418 (1992)). It seems to me, however,
that the analytic problem pertains not really to the meaning of “offer,” but to the identity of what is offered. The
relevant question is whether the individual components in
a package being offered still possess sufficient identity to
be described as separate objects of the offer, or whether
they have been so changed by their combination with the
other components that it is no longer reasonable to describe them in that way.
Thus, I agree (to adapt the Court’s example, ante, at 18)
that it would be odd to say that a car dealer is in the
business of selling steel or carpets because the cars he
sells include both steel frames and carpeting. Nor does
the water company sell hydrogen, nor the pet store water
(though dogs and cats are largely water at the molecular
level). But what is sometimes true is not, as the Court
seems to assume, always true. There are instances in
which it is ridiculous to deny that one part of a joint offering is being offered merely because it is not offered on a
“ ‘stand-alone’ ” basis, ante, at 17.
If, for example, I call up a pizzeria and ask whether they
offer delivery, both common sense and common “usage,”
ante, at 18, would prevent them from answering: “No, we
do not offer delivery—but if you order a pizza from us,

4

NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.
BRAND X INTERNET SERVICES
SCALIA, J., dissenting

we’ll bake it for you and then bring it to your house.” The
logical response to this would be something on the order
of, “so, you do offer delivery.” But our pizza-man may
continue to deny the obvious and explain, paraphrasing
the FCC and the Court: “No, even though we bring the
pizza to your house, we are not actually ‘offering’ you
delivery, because the delivery that we provide to our end
users is ‘part and parcel’ of our pizzeria-pizza-at-home
service and is ‘integral to its other capabilities.’ ” Cf. Declaratory Ruling 4823, ¶39; ante, at 16, 26.1 Any reasonable customer would conclude at that point that his interlocutor was either crazy or following some too-clever-byhalf legal advice.
In short, for the inputs of a finished service to qualify as
the objects of an “offer” (as that term is reasonably understood), it is perhaps a sufficient, but surely not a necessary,
condition that the seller offer separately “each discrete
input that is necessary to providing . . . a finished service,”
ante, at 19. The pet store may have a policy of selling
puppies only with leashes, but any customer will say that
it does offer puppies—because a leashed puppy is still a
puppy, even though it is not offered on a “stand-alone”
basis.
Despite the Court’s mighty labors to prove otherwise,
ante, at 17–29, the telecommunications component of
cable-modem service retains such ample independent
identity that it must be regarded as being on offer—
especially when seen from the perspective of the consumer
or the end user, which the Court purports to find determinative, ante, at 18, 22, 27, 28. The Commission’s ruling
began by noting that cable-modem service provides both
——————
1 The

myth that the pizzeria does not offer delivery becomes even
more difficult to maintain when the pizzeria advertises quick delivery
as one of its advantages over competitors. That, of course, is the case
with cable broadband.

Cite as: 545 U. S. ____ (2005)

5

SCALIA, J., dissenting

“high-speed access to the Internet” and other “applications
and functions,” Declaratory Ruling 4799, ¶1, because that
is exactly how any reasonable consumer would perceive it:
as consisting of two separate things.
The consumer’s view of the matter is best assessed by
asking what other products cable-modem service substitutes for in the marketplace. Broadband Internet service
provided by cable companies is one of the three most
common forms of Internet service, the other two being
dial-up access and broadband Digital Subscriber Line
(DSL) service. Ante, at 2–3. In each of the other two, the
physical transmission pathway to the Internet is sold—
indeed, is legally required to be sold—separately from the
Internet functionality. With dial-up access, the physical
pathway comes from the telephone company and the
Internet service provider (ISP) provides the functionality.
“In the case of Internet access, the end user utilizes
two different and distinct services. One is the transmission pathway, a telecommunications service that
the end user purchases from the telephone company.
The second is the Internet access service, which is an
enhanced service provided by an ISP. . . . Th[e] functions [provided by the ISP] are separate from the
transmission pathway over which that data travels.
The pathway is a regulated telecommunications service; the enhanced service offered over it is not.” Oxman, The FCC and the Unregulation of the Internet,
p. 13 (FCC, Office of Plans and Policy, Working Paper
No. 31, July 1999), available at http://www.fcc.gov/
Bureaus/OPP/working_papers/oppwp31.pdf (as visited
June 24, 2005, and available in the Clerk of Court’s
case file).2
——————
2 See also In re Federal-State Joint Board on Universal Service, 13
FCC Rcd. 11501, 11571–11572, ¶145 (1998) (end users “obtain telecommunications service from local exchange carriers, and then use

6

NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.

BRAND X INTERNET SERVICES

SCALIA, J., dissenting

As the Court acknowledges, ante, at 29, DSL service has
been similar to dial-up service in the respect that the
physical connection to the Internet must be offered separately from Internet functionality.3
Thus, customers
shopping for dial-up or DSL service will not be able to use
the Internet unless they get both someone to provide them
with a physical connection and someone to provide them
with applications and functions such as e-mail and Web
access. It is therefore inevitable that customers will regard the competing cable-modem service as giving them
both computing functionality and the physical pipe by
which that functionality comes to their computer—both
the pizza and the delivery service that nondelivery pizzerias require to be purchased from the cab company.4
Since the delivery service provided by cable (the broadband connection between the customer’s computer and the
cable company’s computer-processing facilities) is downstream from the computer-processing facilities, there is no
question that it merely serves as a conduit for the information services that have already been “assembled” by the
——————
information services provided by their Internet service provider and
[Web site operators] in order to access [the Web]”).
3 In the DSL context, the physical connection is generally resold to
the consumer by an ISP that has taken advantage of the telephone
company’s offer. The consumer knows very well, however, that the
physical connection is a necessary component for Internet access which,
just as in the dial-up context, is not provided by the ISP.
4 The Court contends that this analogy is inapposite because one need
not have a pizza delivered, ante, at 20, whereas one must purchase the
cable connection in order to use cable’s ISP functions. But the ISP
functions provided by the cable company can be used without cable
delivery—by accessing them from an Internet connection other than
cable. The merger of the physical connection and Internet functions in
cable’s offerings has nothing to do with the “ ‘inextricably intertwined,’ ”
ante, at 6, nature of the two (like a car and its carpet), but is an artificial product of the cable company’s marketing decision not to offer the
two separately, so that the Commission could (by the Declaratory
Ruling under review here) exempt it from common-carrier status.

Cite as: 545 U. S. ____ (2005)

7

SCALIA, J., dissenting

cable company in its capacity as ISP. This is relevant
because of the statutory distinction between an “information service” and “telecommunications.” The former involves the capability of getting, processing, and manipulating information. §153(20). The latter, by contrast,
involves no “change in the form or content of the information as sent and received.” §153(43). When cablecompany-assembled information enters the cable for delivery to the subscriber, the information service is already
complete. The information has been (as the statute requires) generated, acquired, stored, transformed, processed, retrieved, utilized, or made available. All that
remains is for the information in its final, unaltered form,
to be delivered (via telecommunications) to the subscriber.
This reveals the insubstantiality of the fear invoked by
both the Commission and the Court: the fear of what will
happen to ISPs that do not provide the physical pathway
to Internet access, yet still use telecommunications to
acquire the pieces necessary to assemble the information
that they pass back to their customers. According to this
reductio, ante, at 22–24, if cable-modem-service providers
are deemed to provide “telecommunications service,” then
so must all ISPs because they all “use” telecommunications in providing Internet functionality (by connecting to
other parts of the Internet, including Internet backbone
providers, for example). In terms of the pizzeria analogy,
this is equivalent to saying that, if the pizzeria “offers”
delivery, all restaurants “offer” delivery, because the
ingredients of the food they serve their customers have
come from other places; no matter how their customers get
the food (whether by eating it at the restaurant, or by
coming to pick it up themselves), they still consume a
product for which delivery was a necessary “input.” This
is nonsense. Concluding that delivery of the finished pizza
constitutes an “offer” of delivery does not require the
conclusion that the serving of prepared food includes an

8

NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.

BRAND X INTERNET SERVICES

SCALIA, J., dissenting

“offer” of delivery. And that analogy does not even do the
point justice, since “ ‘telecommunications service’ ” is defined as “the offering of telecommunications for a fee
directly to the public.” 47 U. S. C. §153(46) (emphasis
added). The ISPs’ use of telecommunications in their
processing of information is not offered directly to the
public.
The “regulatory history” on which the Court depends so
much, ante, at 21–25, provides another reason why common-carrier regulation of all ISPs is not a worry. Under
its Computer Inquiry rules, which foreshadowed the definitions of “information” and “telecommunications” services, ante, at 4–5, the Commission forbore from regulating as common carriers “value-added networks”—nonfacilities-based providers who leased basic services from
common carriers and bundled them with enhanced services; it said that they, unlike facilities-based providers,
would be deemed to provide only enhanced services, ante,
at 22.5 That same result can be achieved today under the
Commission’s statutory authority to forbear from imposing
——————
5 The

Commission says forbearance cannot explain why value-added
networks were not regulated as basic-service providers because it was
not given the power to forbear until 1996. Reply Brief for Federal
Petitioners 3–4, n. 1. It is true that when the Commission ruled on
value-added networks, the statute did not explicitly provide for forbearance—any more than it provided for the categories of basic and
enhanced services that the Computer Inquiry rules established, and
through which the forbearance was applied. The D. C. Circuit, however, had long since recognized the Commission’s discretionary power
to “forbear from Title II regulation.” Computer & Communications
Industry Assn. v. FCC, 693 F. 2d 198, 212 (1982).
The Commission also says its Computer Inquiry rules should not
apply to cable because they were developed in the context of telephone
lines. Brief for Federal Petitioners 35–36; see also ante, at 24–25. But
to the extent that the statute imported the Computer Inquiry approach,
there is no basis for applying it differently to cable than to telephone
lines, since the definition of “telecommunications service” applies
“regardless of the facilities used.” 47 U. S. C. §153(46).

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most Title II regulations. 47 U. S. C. §160. In fact, the
statutory criteria for forbearance—which include what is
“just and reasonable,” “necessary for the protection of
consumers,” and “consistent with the public interest,”
§§160(a)(1), (2), (3)—correspond well with the kinds of
policy reasons the Commission has invoked to justify its
peculiar construction of “telecommunications service” to
exclude cable-modem service.
The Court also puts great stock in its conclusion that
cable-modem subscribers cannot avoid using information
services provided by the cable company in its ISP capacity,
even when they only click-through to other ISPs. Ante, at
27–29. For, even if a cable-modem subscriber uses e-mail
from another ISP, designates some page not provided by
the cable company as his home page, and takes advantage
of none of the other standard applications and functions
provided by the cable company, he will still be using the
cable company’s Domain Name System (DNS) server and,
when he goes to popular Web pages, perhaps versions of
them that are stored in the cable company’s cache. This
argument suffers from at least two problems. First, in the
context of telephone services, the Court recognizes a de
minimis exception to contamination of a telecommunications service by an information service. Ante, at 26–27. A
similar exception would seem to apply to the functions in
question here. DNS, in particular, is scarcely more than
routing information, which is expressly excluded from the
definition of “information service.” 47 U. S. C. §153(20).6
——————
6 The

Court says that invoking this explicit exception from the definition of information services, which applies only to the “management,
control, or operation of a telecommunications system or the management of a telecommunications service,” 47 U. S. C. §153(20), begs the
question whether cable-modem service includes a telecommunications
service, ante, at 28, n. 3. I think not, and cite the exception only to
demonstrate that the incidental functions do not prevent cable from
including a telecommunications service if it otherwise qualifies. It is

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NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.
BRAND X INTERNET SERVICES
SCALIA, J., dissenting

Second, it is apparently possible to sell a telecommunications service separately from, although in conjunction
with, ISP-like services; that is precisely what happens in
the DSL context, and the Commission does not contest
that it could be done in the context of cable. The only
impediment appears to be the Commission’s failure to
require from cable companies the unbundling that it required of facilities-based providers under its Computer
Inquiry.
Finally, I must note that, notwithstanding the Commission’s self-congratulatory paean to its deregulatory largesse, e.g., Brief for Federal Petitioners 29–32, it concluded the Declaratory Ruling by asking, as the Court
paraphrases, “whether under its Title I jurisdiction [the
Commission] should require cable companies to offer other
ISPs access to their facilities on common-carrier terms.”
Ante, at 7; see also Reply Brief for Federal Petitioners 9;
Tr. of Oral Arg. 17. In other words, what the Commission
hath given, the Commission may well take away—unless
it doesn’t. This is a wonderful illustration of how an experienced agency can (with some assistance from credulous courts) turn statutory constraints into bureaucratic
discretions. The main source of the Commission’s regulatory authority over common carriers is Title II, but the
Commission has rendered that inapplicable in this instance by concluding that the definition of “telecommunications service” is ambiguous and does not (in its current
view) apply to cable-modem service. It contemplates,
however, altering that (unnecessary) outcome, not by
changing the law (i.e., its construction of the Title II definitions), but by reserving the right to change the facts.
Under its undefined and sparingly used “ancillary” powers, the Commission might conclude that it can order cable
——————

rather the Court that begs the question, saying that the exception

cannot apply because cable is not a telecommunications service.

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SCALIA, J., dissenting

companies to “unbundle” the telecommunications component of cable-modem service.7 And presto, Title II will
then apply to them, because they will finally be “offering”
telecommunications service! Of course, the Commission
will still have the statutory power to forbear from regulating them under §160 (which it has already tentatively
concluded it would do, Declaratory Ruling 4847–4848,
¶¶94–95). Such Möbius-strip reasoning mocks the principle that the statute constrains the agency in any meaningful way.
After all is said and done, after all the regulatory cant
has been translated, and the smoke of agency expertise
blown away, it remains perfectly clear that someone who
sells cable-modem service is “offering” telecommunications. For that simple reason set forth in the statute, I
would affirm the Court of Appeals.
II
In Part III–B of its opinion, the Court continues the
administrative-law improvisation project it began four
years ago in United States v. Mead Corp., 533 U. S. 218
(2001). To the extent it set forth a comprehensible rule,8
Mead drastically limited the categories of agency action
that would qualify for deference under Chevron U. S. A.
Inc. v. Natural Resources Defense Council, Inc., 467 U. S.
——————
7 Under the Commission’s assumption that cable-modem-service providers are not providing “telecommunications services,” there is reason
to doubt whether it can use its Title I powers to impose commoncarrier-like requirements, since 47 U. S. C. §153(44) specifically provides that a “telecommunications carrier shall be treated as a common
carrier under this chapter only to the extent that it is engaged in providing telecommunications services” (emphasis added), and “this chapter”
includes Titles I and II.
8 For a description of the confusion Mead has produced in the D. C.
Circuit alone, see Vermeule, Mead in the Trenches, 71 Geo. Wash.
L. Rev. 347, 361 (2003) (concluding that “the Court has inadvertently
sent the lower courts stumbling into a no-man’s land”).

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SCALIA, J., dissenting

837 (1984). For example, the position taken by an agency
before the Supreme Court, with full approval of the agency
head, would not qualify. Rather, some unspecified degree
of formal process was required—or was at least the only
safe harbor. See Mead, supra, at 245–246 (SCALIA, J.,
dissenting).9
This meant that many more issues appropriate for
agency determination would reach the courts without
benefit of an agency position entitled to Chevron deference, requiring the courts to rule on these issues de novo.10
As I pointed out in dissent, this in turn meant (under the
law as it was understood until today)11 that many statu——————
9 JUSTICE

BREYER attempts to clarify Mead by repeating its formulations that the Court has “sometimes found reasons” to give Chevron
deference in a (still-unspecified) “variety of ways” or because of a (stillunspecified) “variety of indicators,” ante, at 2 (concurring opinion)
(internal quotation marks and emphasis omitted). He also notes that
deference is sometimes inappropriate for reasons unrelated to the
agency’s process. Surprising those who thought the Court’s decision
not to defer to the agency in General Dynamics Land Systems, Inc. v.
Cline, 540 U. S. 581 (2004), depended on its conclusion that there was “no
serious question . . . about purely textual ambiguity” in the statute, id.,
at 600, JUSTICE BREYER seemingly attributes that decision to a stillunderdeveloped exception to Chevron deference—one for “unusually
basic legal question[s],” ante, at 2. The Court today (thankfully) does
not follow this approach: It bases its decision on what it sees as statutory ambiguity, ante, at 25, without asking whether the classification of
cable-modem service is an “unusually basic legal question.”
10 It is true that, even under the broad basis for deference that I propose (viz., any agency position that plainly has the approval of the
agency head, see United States v. Mead Corp., 533 U. S. 218, 256–257
(2001) (SCALIA, J., dissenting)), some interpretive matters will be decided
de novo, without deference to agency views. This would be a rare
occurrence, however, at the Supreme Court level—at least with respect
to matters of any significance to the agency. Seeking to achieve 100%
agency control of ambiguous provisions through the complicated
method the Court proposes is not worth the incremental benefit.
11 The Court’s unanimous holding in Neal v. United States, 516 U. S.
284 (1996), plainly rejected the notion that any form of deference could
cause the Court to revisit a prior statutory-construction holding: “Once

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SCALIA, J., dissenting

tory ambiguities that might be resolved in varying fashions by successive agency administrations, would be resolved finally, conclusively, and forever, by federal
judges—producing an “ossification of large portions of our
statutory law,” 533 U. S., at 247. The Court today moves
to solve this problem of its own creation by inventing yet
another breathtaking novelty: judicial decisions subject to
reversal by Executive officers.
Imagine the following sequence of events: FCC action is
challenged as ultra vires under the governing statute; the
litigation reaches all the way to the Supreme Court of the
United States. The Solicitor General sets forth the FCC’s
official position (approved by the Commission) regarding
interpretation of the statute. Applying Mead, however,
the Court denies the agency position Chevron deference,
finds that the best interpretation of the statute contradicts
the agency’s position, and holds the challenged agency
action unlawful. The agency promptly conducts a rulemaking, and adopts a rule that comports with its earlier
position—in effect disagreeing with the Supreme Court
concerning the best interpretation of the statute. Accord——————
we have determined a statute’s meaning, we adhere to our ruling under
the doctrine of stare decisis, and we assess an agency’s later interpretation of the statute against that settled law.” Id., at 295. The Court
attempts to reinterpret this plain language by dissecting the cases Neal
cited, noting that they referred to previous determinations of “ ‘a
statute’s clear meaning.’ ” Lechmere, Inc. v. NLRB, 502 U. S. 527, 537
(1992) (quoting Maislin Industries, U. S., Inc. v. Primary Steel, Inc., 497
U. S. 116, 131 (1990)). But those cases reveal that today’s focus on the
term “clear” is revisionist. The oldest case in the chain using that
word, Maislin Industries, did not rely on a prior decision that held the
statute to be clear, but on a run-of-the-mill statutory interpretation
contained in a 1908 decision. Id., at 130–131. When Maislin Industries
referred to the Court’s prior determination of “a statute’s clear meaning,” it was referring to the fact that the prior decision had made the
statute clear, and was not conducting a retrospective inquiry into
whether the prior decision had declared the statute itself to be clear on
its own terms.

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NATIONAL CABLE & TELECOMMUNICATIONS ASSN. v.
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SCALIA, J., dissenting

ing to today’s opinion, the agency is thereupon free to take
the action that the Supreme Court found unlawful.
This is not only bizarre. It is probably unconstitutional.
As we held in Chicago & Southern Air Lines, Inc. v. Waterman S. S. Corp., 333 U. S. 103 (1948), Article III courts do
not sit to render decisions that can be reversed or ignored
by Executive officers. In that case, the Court of Appeals
had determined it had jurisdiction to review an order of
the Civil Aeronautics Board awarding an overseas air
route. By statute such orders were subject to Presidential
approval and the order in question had in fact been approved by the President. Id., at 110–111. In order to
avoid any conflict with the President’s foreign-affairs
powers, the Court of Appeals concluded that it would
review the board’s action “as a regulatory agent of Congress,” and the results of that review would remain subject
to approval or disapproval by the President. Id., at 112–
113. As I noted in my Mead dissent, 533 U. S., at 248, the
Court bristled at the suggestion: “Judgments within the
powers vested in courts by the Judiciary Article of the
Constitution may not lawfully be revised, overturned or
refused faith and credit by another Department of Government.” Waterman, supra, at 113. That is what today’s
decision effectively allows. Even when the agency itself is
party to the case in which the Court construes a statute,
the agency will be able to disregard that construction and
seek Chevron deference for its contrary construction the
next time around.12
——————
12 The

Court contends that no reversal of judicial holdings is involved,
because “a court’s opinion as to the best reading of an ambiguous
statute . . . is not authoritative,” ante, at 11. That fails to appreciate
the difference between a de novo construction of a statute and a decision whether to defer to an agency’s position, which does not even
“purport to give the statute a judicial interpretation.” Mead, supra, at
248 (SCALIA, J., dissenting). Once a court has decided upon its de novo
construction of the statute, there no longer is a “different construction”

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SCALIA, J., dissenting

Of course, like Mead itself, today’s novelty in belated
remediation of Mead creates many uncertainties to bedevil
the lower courts. A court’s interpretation is conclusive,
the Court says, only if it holds that interpretation to be
“the only permissible reading of the statute,” and not if it
merely holds it to be “the best reading.” Ante, at 13. Does
this mean that in future statutory-construction cases
involving agency-administered statutes courts must specify (presumably in dictum) which of the two they are
holding? And what of the many cases decided in the past,
before this dictum’s requirement was established? Apparently, silence on the point means that the court’s decision
is subject to agency reversal: “Before a judicial construction of a statute, whether contained in a precedent or not,
may trump an agency’s, the court must hold that the
statute unambiguously requires the court’s construction.”13 Ibid. (I have not made, and as far as I know the
Court has not made, any calculation of how many hundreds of past statutory decisions are now agencyreversible because of failure to include an “unambiguous”
finding. I suspect the number is very large.) How much
extra work will it entail for each court confronted with an
agency-administered statute to determine whether it has
reached, not only the right (“best”) result, but “the only
permissible” result? Is the standard for “unambiguous”
under the Court’s new agency-reversal rule the same as
the standard for “unambiguous” under step one of Chev——————
that is “consistent with the court’s holding,” ante, at 11, and available
for adoption by the agency.
13 Suggestive of the same chaotic undermining of all prior judicial
decisions that do not explicitly renounce ambiguity is the Court’s
explanation of why agency departure from a prior judicial decision does
not amount to overruling: “[T]he agency may, consistent with the
court’s holding, choose a different construction, since the agency remains the authoritative interpreter (within the limits of reason) of
[ambiguous] statutes [it is charged with administering].” Ante, at 11.

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SCALIA, J., dissenting

ron? (If so, of course, every case that reaches step two of
Chevron will be agency-reversible.) Does the “unambiguous” dictum produce stare decisis effect even when a court
is affirming, rather than reversing, agency action—so that
in the future the agency must adhere to that affirmed
interpretation? If so, does the victorious agency have the
right to appeal a Court of Appeals judgment in its favor,
on the ground that the text in question is in fact not (as
the Court of Appeals held) unambiguous, so the agency
should be able to change its view in the future?
It is indeed a wonderful new world that the Court creates, one full of promise for administrative-law professors
in need of tenure articles and, of course, for litigators.14 I
would adhere to what has been the rule in the past: When
a court interprets a statute without Chevron deference to
agency views, its interpretation (whether or not asserted
to rest upon an unambiguous text) is the law. I might add
that it is a great mystery why any of this is relevant here.
Whatever the stare decisis effect of AT&T Corp. v. Portland, 216 F. 3d 871 (CA9 2000), in the Ninth Circuit, it
surely does not govern this Court’s decision. And—despite
the Court’s peculiar, self-abnegating suggestion to the
——————
14 Further de-ossification may already be on the way, as the Court
has hinted that an agency construction unworthy of Chevron deference
may be able to trump one of our statutory-construction holdings. In
Edelman v. Lynchburg College, 535 U. S. 106, 114 (2002), the Court found
“no need to resolve any question of deference” because the Equal Employment Opportunity Commission’s rule was “the position we would
adopt even if . . . we were interpreting the statute from scratch.” It
nevertheless refused to say whether the agency’s position was “the only
one permissible.” Id., at 114, n. 8 (quotation marks omitted). JUSTICE
O’CONNOR appropriately “doubt[ed] that it is possible to reserve” the
question whether a regulation is entitled to Chevron deference “while
simultaneously maintaining . . . that the agency is free to change its
interpretation” in the future. Id., at 122 (opinion concurring in judgment). In response, the Court cryptically said only that “not all deference is deference under Chevron.” Id., at 114, n. 8.

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contrary, ante, at 14—the Ninth Circuit would already be
obliged to abandon Portland’s holding in the face of this
Court’s decision that the Commission’s construction of
“telecommunications service” is entitled to deference and
is reasonable. It is a sadness that the Court should go so
far out of its way to make bad law.
I respectfully dissent.