Earthlink, Inc. v. Federal Communications Commission

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 9, 2006 Decided August 15, 2006

No. 05-1087

EARTH LINK, INC.,
PETITIONER

v.

FEDERAL COMMUNICATIONS COMMISSION AND
UNITED STATES OF AMERICA ,
RESPONDENTS

BELLSOUTH CORPORATION , ET AL.,
INTERVENORS

On Petition for Review of an Order of the
Federal Communications Commission

Mark J. O'Connor argued the cause for petitioner. With him
on the briefs were Donna N. Lampert and Jennifer L.
Phurrough.

Nandan M. Joshi, Counsel, Federal Communications
Commission, argued the cause for respondent. On the brief were
Thomas O. Barnett, Assistant Attorney General, U.S.
Department of Justice, Catherine G. O'Sullivan and Nancy C.
Garrison, Attorneys, Samuel L. Feder, General Counsel, Federal
Communications Commission, Jacob M. Lewis, Associate
 2

General Counsel, John E. Ingle, Deputy Associate General
Counsel, and Laurence N. Bourne, Counsel.

Scott H. Angstreich argued the cause for intervenors
BellSouth Corporation, et al. in support of the respondent. With
him on the briefs were Michael K. Kellogg, Mark L. Evans,
Geoffrey M. Klineberg, Sean A. Lev, Michael E. Glover, Edward
Shakin, James D. Ellis, Gary L. Phillips, and Bennett L. Ross.

Before: SENTELLE and BROWN , Circuit Judges, and
EDWARDS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge BROWN .

BROWN , Circuit Judge: Traditionally (if that can be said of
anything in the information age), many internet users lumbered
along via dial-up connections over standard copper phone lines.
Increasingly, however, broadband internet service is becoming
available, providing significantly higher access speeds. Two of
the most widespread methods of delivering broadband service
are digital subscriber line (DSL), which utilizes the high-
frequency portion of copper lines, and cable modem service.
Other technologies, such as fiber optics, are steadily gaining
ground.

In the case before us, the Federal Communications Com-
mission (FCC) agreed not to require the Bell Operating Compa-
nies (BOCs) to provide their competitors with “unbundled”
access to certain fiber-based network facilities. See 47 U.S.C.
§ 271(c)(2)(B). EarthLink, Inc., an internet service provider that
benefits from such unbundling, challenges the FCC’s order.
Persuaded that the agency’s interpretation and application of the
statutory scheme are permissible, we deny the petition for
review.
 3

I

Until the 1990s, local telephone companies operated as
monopolies. See AT&T Corp. v. Iowa Utils. Bd., 525 U.S. 366,
371 (1999); AT&T Corp. v. FCC, 220 F.3d 607, 610 (D.C. Cir.
2000). The local exchange carriers in a given area owned “the
local loops (wires connecting telephones to switches), the
switches (equipment directing calls to their destinations), and
the transport trunks (wires carrying calls between switches) that
constitute a local exchange network.” Iowa Utils. Bd., 525 U.S.
at 371. Congress passed the Telecommunications Act of 1996,
Pub. L. No. 104-104, 110 Stat. 56 (“the Act”) (amending the
Communications Act of 1934, 47 U.S.C. § 151 et seq.), to
“promote competition and reduce regulation in order to secure
lower prices and higher quality services for American telecom-
munications consumers and encourage the rapid deployment of
new telecommunications technologies.” U.S. Telecom Ass’n v.
FCC, 290 F.3d 415, 417 (D.C. Cir. 2002) (USTA I) (quoting Act
pmbl.) (internal quotation marks omitted).

Under 47 U.S.C. § 251, the FCC has authority to require
incumbent local exchange carriers (ILECs) to provide access to
their network facilities and capabilities on an “unbundled” basis
to competitive local exchange carriers (CLECs). Id. § 251(c)(3),
(d)(2). In determining what unbundled network elements must
be made available, the FCC considers “at a minimum, whether
. . . the failure to provide access . . . would impair the ability of
the [CLEC] to provide the services that it seeks to offer.”
Id. § 251(d)(2)(B); see id. § 153(29) (defining “network ele-
ment” as “a facility or equipment used in the provision of a
telecommunications service”).

The Act also contains provisions applicable specifically to
the BOCs (a subset of ILECs), allowing them to enter long
distance markets forbidden to them under the antitrust consent
 4

decree that broke up AT&T in the early 1980s. See AT&T, 220
F.3d at 610-12. Under 47 U.S.C. § 271, BOCs seeking to
provide certain long-distance services—namely, in-region
“interLATA services”1—must obtain permission from the FCC,
id. § 271(d)(1), premised upon, among other things, the BOC’s
compliance with a “[c]ompetitive checklist,” id. § 271(c)(2)(B).
Checklist items four through six and ten require BOCs to
provide unbundled access to local loops, local transport, local
switching, and call-related databases. Id. § 271(c)(2)(B)(iv)-(vi),
(x). These particular obligations are independent of any
unbundling required by § 251. U.S. Telecom Ass’n v. FCC, 359
F.3d 554, 588 (D.C. Cir. 2004) (USTA II); cf. 47 U.S.C.
§ 271(c)(2)(B)(ii) (incorporating by reference the unbundling
requirements of § 251(c)(3)).

Notwithstanding the foregoing, under 47 U.S.C. § 160, the
FCC must forbear from applying a given provision of the
Communications Act to a telecommunications carrier “in any or
some of its . . . geographic markets,” if three conditions are met:
(1) enforcement is not necessary to ensure that charges and
practices are just, reasonable and non-discriminatory; (2)
enforcement “is not necessary for the protection of consumers”;
and (3) forbearance “is consistent with the public interest.” Id.
§ 160(a).2 As to the third prong, the FCC “shall consider

1
See 47 U.S.C. § 153(21) (defining “interLATA service” as
“telecommunications between a point located in a local access and
transport area and a point located outside such area”); id. § 271(b)(1)
(“in-region” refers to services that originate within the BOC’s
geographic region).

2
47 U.S.C. § 160(a) and (b):

(a) Regulatory flexibility[.] . . . [T]he [FCC] shall forbear from
applying any regulation or any provision of this chapter to a
telecommunications carrier or telecommunications service, or
 5

whether forbearance . . . will promote competitive market
conditions, including the extent to which such forbearance will
enhance competition among providers of telecommunications
services.” Id. § 160(b). Telecommunication carriers may petition
for forbearance and, if the FCC declines to act within a year
(subject to a 90-day extension), the petition is deemed granted
as a matter of law. Id. § 160(c).

Furthermore, section 706 of the Act sets forth the following

class of telecommunications carriers or telecommunications
services, in any or some of its or their geographic markets, if the
[FCC] determines that--

(1) enforcement of such regulation or provision is not
necessary to ensure that the charges, practices,
classifications, or regulations by, for, or in connection with
that telecommunications carrier or telecommunications
service are just and reasonable and are not unjustly or
unreasonably discriminatory;

(2) enforcement of such regulation or provision is not
necessary for the protection of consumers; and

(3) forbearance from applying such provision or regulation
is consistent with the public interest.

(b) Competitive effect to be weighed[.] In making the
determination under subsection (a)(3) of this section, the [FCC]
shall consider whether forbearance from enforcing the provision
or regulation will promote competitive market conditions,
including the extent to which such forbearance will enhance
competition among providers of telecommunications services. If
the [FCC] determines that such forbearance will promote
competition among providers of telecommunications services,
that determination may be the basis for a[n] [FCC] finding that
forbearance is in the public interest.
 6

overarching direction:

The [FCC] . . . shall encourage the deployment on a
reasonable and timely basis of advanced telecommunica-
tions capability to all Americans . . . by utilizing . . .
regulatory forbearance, measures that promote competition
in the local telecommunications market, or other regulating
methods that remove barriers to infrastructure investment.

Act § 706(a) (emphasis added) (reproduced at 47 U.S.C. § 157
note); see Act § 706(c)(1) (defining “advanced telecommunica-
tions capability” as “high-speed, switched, broadband telecom-
munications capability that enables users to originate and
receive high-quality voice, data, graphics, and video telecommu-
nications using any technology”).

A

In 2003, in its Triennial Review Order, the FCC attempted
to implement the unbundling requirements of § 251(c)(3).
Review of the Section 251 Unbundling Obligations of Incumbent
Local Exchange Carriers, 18 F.C.C.R. 16,978 (2003) (Triennial
Review Order).3 In pertinent part, the agency relieved those
obligations on a nationwide basis with respect to certain new
fiber broadband network elements. Specifically, the FCC did not
require ILECs unbundle fiber-to-the-home (FTTH) loops (i.e.,
loops extending from the ILEC’s central office all the way to the
customers’ premises) in places where fiber loop plant had not
previously existed: “greenfield” situations (i.e., new residential
areas where no lines had existed) and “overbuild” situations
(i.e., locations where only copper loop plant was in place). Id. at
17,142. In the latter, however, if the ILEC decides to retire the

3
The FCC’s prior attempts were unsuccessful. See Iowa Utils.
Bd., 525 U.S. 366; USTA I, 290 F.3d 415.
 7

incumbent copper loops, it must then make its fiber loops
available—albeit only for narrowband, not broadband uses. Id.
The FCC also declined to require unbundling as to the “next
generation network, packetized capabilities” of hybrid loops
(i.e., loops comprised only partially of fiber) and “packet-
switching.” Id. at 17,149, 17,321.

In the agency’s view, balancing the costs and benefits of
unbundling, with particular attention to incentivizing new fiber
investment by both ILECs and CLECs, the scales tipped against
mandating unbundling. See, e.g., id. at 17,121-22, 17,141-53.
The FCC emphasized that its “obligation to ensure the deploy-
ment of advanced telecommunications capability under section
706 warrants different approaches with regard to existing
[copper] loop plant and new [fiber] loop plant.” Id. at 17,126.

In USTA II, while vacating much of the Triennial Review
Order, we upheld the FCC’s nationwide decision to refrain from
requiring § 251 unbundling as to the fiber broadband elements
described above. USTA II, 359 F.3d at 578-87. The FCC had
reasonably determined, for example, that “any damage to
broadband competition from denying unbundled access to the
broadband capacities of hybrid loops is likely to be mitigated by
the availability of loop alternatives or intermodal competition.”
Id. at 582. As to the latter, we noted that cable companies,
having roughly a 60% share of the nationwide broadband
market, provided “robust intermodal competition” to ILECs,
which occupied a secondary market position. Id.

Furthermore, we held that the FCC “reasonably interpreted
§ 251(c)(3) to allow it to withhold unbundling orders, even in
the face of some impairment, where such unbundling would
pose excessive impediments to infrastructure investment,” id. at
580, because “[s]ection 706(a) identifies one of the Act’s goals
beyond fostering competition piggy-backed on ILEC facilities,
 8

namely, removing barriers to infrastructure investment,” id. at
579. Even if the FCC’s judgment “entails increasing consumer
costs today in order to stimulate technological innovations,” we
opined, “there is nothing in the Act barring such trade-offs.” Id.
at 581. That is, FCC may weigh the “costs of unbundling” (e.g.,
investment disincentives) against the “benefits of removing this
barrier to competition.” Id. at 579 (discussing hybrid loops); see
id. at 583 (“[T]he [section] 706 considerations . . . are enough to
justify the [FCC’s] decision not to unbundle FTTH.”).

In turn, we found reasonable the FCC’s conclusion that
requiring unbundling of the elements at issue would, indeed,
produce undesirable incentives as it is “likely to delay infra-
structure investment, with CLECs tempted to wait for ILECs to
deploy FTTH and ILECs fearful that CLEC access would
undermine the investments’ potential return.” Id. at 584.
Accordingly, we upheld the FCC’s refusal to unbundle the
broadband fiber elements, “even in the face of some CLEC
impairment, in light of evidence that unbundling would skew
investment incentives in undesirable ways and that intermodal
competition from cable ensures the persistence of substantial
competition in broadband.” Id. at 585.

After we decided USTA II, the FCC extended the same
§ 251 unbundling relief to fiber-to-the-curb (FTTC) loops (i.e.,
hybrid loops in which fiber runs nearly, but not all the way, to
the customers’ premises) and loops to multi-dwelling units.
Triennial Review Order, Order on Reconsideration, 19 F.C.C.R.
20,293 (2004); Triennial Review Order, Order on Reconsidera-
tion, 19 F.C.C.R. 15,856 (2004).
 9

B

The BOCs filed four petitions—one each for Verizon;4
AT&T Inc. (formerly SBC Communications, Inc.);5 Qwest
Communications International, Inc.; and BellSouth Telecommu-
nications, Inc.—seeking forbearance under § 160 from the
additional unbundling requirements of § 271.6 After consolidat-
ing the petitions, the FCC, in the Order under review here,
agreed to forbear from applying § 271’s independent unbundling
obligations to the broadband elements that the FCC had previ-
ously “relieved from unbundling [on a national basis] under
[§] 251: FTTH loops, FTTC loops, the packetized functionality
of hybrid loops, and packet switching.” Petition for Forbear-
ance of the Verizon Telephone Companies Pursuant to 47 U.S.C.
§ 160(c), 19 F.C.C.R. 21,496, ¶ 12 (2004) (Order).

At the outset, the FCC made clear that its forbearance
analysis is “informed” by section 706’s mandate to encourage
deployment of broadband services. Id. ¶ 20 (citing Act pmbl.,
§ 706; Deployment of Wireline Servs. Offering Advanced
Telecomms. Capability, 13 F.C.C.R. 24,012, 24,047 (1998)

4
For simplicity, “Verizon” refers to the Verizon telephone
companies—the local exchange carriers affiliated with Verizon
Communications, Inc.

5
In 2005, SBC Communications acquired AT&T Corp. (forming
AT&T Inc.).

6
Upon being divested by AT&T as required by the 1982 consent
decree, the BOCs were consolidated into seven regional holding
companies and, due to mergers, that number has since dropped to four.
See Ass’n of Commc’ns Enters. v. FCC, 235 F.3d 662, 663-64 (D.C.
Cir. 2001); AT&T, 220 F.3d at 610-11. There might soon be only
three. See Dionne Searcey et al., A Reborn AT&T to Buy BellSouth,
W ALL S T . J., Mar. 6, 2006, at A1.
 10

(discussing the relationship between § 160 and section 706)).
Through that prism, the FCC then applied § 160(a)’s tripartite
inquiry, determining that unbundling the broadband fiber
elements is not necessary either to ensure just and reasonable
rates or to protect consumers, and that forbearance is in the
public interest. Id. ¶¶ 19-36. The FCC’s analysis was similar for
all three prongs, balancing short-term competitive effects and
future developments. See, e.g., id. ¶ 31 (“[T]he [FCC] lawfully
may focus on future consumer benefits anticipated by its current
policy decisions.” (citing USTA II, 359 F.3d at 581)).

The FCC acknowledged the important role that competition
plays in ensuring reasonable rates, protecting consumers, and
furthering the public interest. Id. ¶¶ 24, 30, 33; see also 47
U.S.C. § 160(b). The agency determined, however, that the
BOCs have only “limited competitive advantages” in the
market. Id. ¶ 30. Considering the “wholesale market in conjunc-
tion with competitive conditions in the downstream retail
broadband market,” the FCC looked to several factors, including
the emerging nature of the broadband market, in which “the
preconditions for monopoly are not present”; the fact that cable
modem providers, not ILECs, “control a majority of all residen-
tial and small-business lines”; the expected rise of other
intermodal broadband competition, such as fixed wireless,
satellite, and broadband over powerline; and the CLECs’
continued ability to compete in the broadband market by
deploying their own fiber loops or accessing ILECs’ legacy
copper elements. Order ¶¶ 21-23. Ultimately, the FCC con-
cluded that any short-term effects on competition are offset by
the prospect of additional intermodal competition and the
benefits that forbearance will provide: incentives for both ILECs
and CLECs to invest in and deploy broadband facilities, which
will increase competition going forward and thereby keep rates
reasonable, benefit consumers, and serve the public interest.
 11

EarthLink, an internet service provider that relies on CLECs
and ILECs (including the BOCs) for last-mile access to consum-
ers, petitions for review of the Order. Verizon, AT&T and
BellSouth intervene in support of the FCC.

II

EarthLink raises a number of challenges to the FCC’s
interpretation and application of the statutory forbearance
provision. We conclude the FCC’s decision (1) survives
Chevron analysis, (2) is neither arbitrary nor inconsistent with
FCC precedent, and (3) is supported by the record.

A

First, EarthLink argues the Order runs afoul of § 160(a).
We examine the FCC’s interpretation under the familiar
Chevron framework. Chevron U.S.A., Inc. v. Natural Res. Def.
Council, Inc., 467 U.S. 837 (1984); Cellular Telecomms. &
Internet Ass’n v. FCC, 330 F.3d 502, 507 (D.C. Cir. 2003). First,
if the statute unambiguously controls the “precise question at
issue,” then we need go no further. Chevron, 467 U.S. at 842-43.
Second, where the agency exercises delegated authority to
resolve statutory ambiguity, we will uphold the FCC’s interpre-
tation as long as it is reasonable, see id. at 843-44, even if “there
may be other reasonable, or even more reasonable, views,”
AT&T, 220 F.3d at 621 (internal quotation marks and citation
omitted). See also AT&T Corp. v. FCC, 349 F.3d 692, 698-99
(D.C. Cir. 2003) (“Chevron deference is due . . . only if the
agency has acted pursuant to ‘delegated authority’ and the
agency action has the ‘force of law.’” (citations omitted)).

According to EarthLink, the statute permits the FCC to
grant forbearance only after a “painstaking analysis of market
conditions” in “particular geographic markets and for specific
 12

telecommunications services.” We disagree. On its face, the
statute imposes no particular mode of market analysis or level
of geographic rigor. See 47 U.S.C. § 160(a) (requiring forbear-
ance in “any or some of [a carrier’s] geographic markets” if
three conditions are met). Seizing on the phrase “geographic
markets” in § 160(a), EarthLink contends the decision to forbear
on a nationwide basis—without considering more localized
regions individually—is per se improper. This argument is
tenuous, at best. In context, the language simply contemplates
that the FCC might sometimes forbear in a subset of a carrier’s
markets; it is silent about how to determine when such partial
relief is appropriate. Similarly, the statute does not require
consideration of specific services. See id. (permitting forbear-
ance as to a “class of telecommunications carriers or telecom-
munications services” (emphasis added)). Instead, we are
persuaded the agency reasonably interpreted the statute to allow
the forbearance analysis to vary depending on the circum-
stances.

Insofar as EarthLink suggests the statute does not permit the
FCC to make the forbearance decision with an eye to the
future—by accounting for section 706’s goals and assessing
likely market developments—the argument also fails.7 Nothing
in § 160 prohibits weighing such considerations in assessing the
impact of forbearance on rates, consumers, and the public
interest. See 47 U.S.C. § 160(a)(1), (2), (3); id. § 160(b).

7
See, e.g., Petitioner’s Br. 34-35 (FCC cannot rely on
“‘investment disincentives’ to justify forbearance” because § 160(a)(1)
“does not permit the FCC either to ignore or counterbalance” the
short-term effect on “‘rates and charges’ in order to accommodate
other goals, even worthy goals such as broadband deployment”); id.
at 36 (FCC cannot conclude “‘the protection of consumers’ is
adequately addressed in the here and now by the promise of future
alternatives broadband networks yet to be built”).
 13

Further, section 706 explicitly directs the FCC to “utiliz[e]”
forbearance to “encourage the deployment on a reasonable and
timely basis of advanced telecommunications capability to all
Americans.” As the precise interplay between section 706 and
the three-part forbearance inquiry is not self-evident from the
text, it is precisely the type of ambiguity entrusted to reasonable
agency construction. The language of section 706 suggests a
forward-looking approach and, reading the two statutory
provisions together, we cannot fault the FCC for interpreting it
to inform the § 160 analysis.

This conclusion finds support in USTA II where we held
that the FCC properly considered section 706’s goals in deciding
not to require § 251 unbundling. See 359 F.3d at 579-80
(interpreting § 251(d)(2)’s “at a minimum” clause). We rejected
the argument that the Act prohibits “‘ad hoc’ balancing of the
statute’s pro-competition goals with an allegedly conflicting
goal derived from [section] 706,” holding instead that “[s]ection
706(a) identifies one of the Act’s goals beyond fostering
competition piggy-backed on ILEC facilities, namely, removing
barriers to infrastructure investment.” Id. at 579. Similar trade-
offs are also reasonably incorporated into a decision to forbear
from § 271 unbundling. While the FCC’s prior decision to
relieve § 251 unbundling does not automatically make it proper
to forbear from the separate § 271 unbundling requirements, the
FCC permissibly construed the statutory scheme to permit
weighing similar considerations in each case.

B

Next, EarthLink argues the Order “arbitrarily assessed
broadband competition in an irrational and ad hoc manner.” We
review the FCC’s application of the Act pursuant to the deferen-
tial “arbitrary and capricious” standard. See Cellular
Telecomms. & Internet Ass’n, 330 F.3d at 507-08; 5 U.S.C.
 14

§ 706(2)(A). Our role in this regard is a limited one and we will
not substitute our judgment for that of the agency. Cellular
Telecomms. & Internet Ass’n, 330 F.3d at 507. We must ensure
the FCC has “considered the relevant factors and ‘articulate[d]
a rational connection between the facts found and the choice
made.’” AT&T, 220 F.3d at 616 (quoting Motor Vehicle Mfrs.
Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983)). We will reverse “only if the agency’s decision is not
supported by substantial evidence, or the agency has made a
clear error in judgment”; indeed, an extra measure of deference
is warranted where the decision involves a “high level of
technical expertise” in an area of “rapid technological and
competitive change.” Id. (internal quotation marks and citations
omitted).

Similar to its statutory interpretation argument, EarthLink
contends “competition” can only rationally be assessed by
focusing on more specific product and geographic markets and
by conducting a “traditional market analysis (including market
share, demand and supply elasticity, and other factors).” While
such an analysis is no doubt appropriate in some circumstances,
we cannot say the FCC was unreasonable in taking another tack
here, tailoring the forbearance inquiry to the situation at hand.

Given the FCC’s view of the broadband market as still
emerging and developing, it reasonably eschewed a more
elaborate snapshot of the current market in deciding whether to
forbear with respect to the fiber network elements at issue here.
Cf. Inquiry Concerning High-Speed Access to the Internet over
Cable and Other Facilities, 17 F.C.C.R. 4798, 4847-48 (2002)
(suggesting forbearance from common carrier regulations would
be proper on a nationwide basis with respect to cable-modem
service). Guided by section 706, the agency decided to balance
the future benefits against short term impact. Cf. Petition of U.S.
West Commc’ns, Inc. for a Declaratory Ruling Regarding the
 15

Provision of Nat’l Directory Assistance, 14 F.C.C.R. 16,252,
16,277 (1999) (basing forbearance decision in part on whether
“pro-consumer benefits . . . outweigh any potential competitive
advantage that may accrue” to the carrier requesting forbear-
ance). The FCC then appropriately stepped through the three-
part forbearance inquiry, at each step explaining its view that
forbearance would only have a “modest” impact that was
outweighed by forward-looking benefits (increased competition
and fiber deployment).

Nor is the Order inconsistent with FCC precedent. The
decisions proffered by EarthLink are not directly applicable to
the present circumstances; for example, many of them address
dominant carrier regulation rather than unbundling require-
ments, see, e.g., WorldCom, Inc. v. FCC, 238 F.3d 449, 459
(D.C. Cir. 2001) (noting, in dicta, that the FCC requires a
“painstaking analysis of market conditions” when “an LEC
seeks classification as a non-dominant carrier or the forbearance
of dominant carrier regulation”); AT&T Corp. v. FCC, 236 F.3d
729, 735-36 (D.C. Cir. 2001) (explaining that, in making
dominance classifications, FCC’s traditional market power
inquiry looks to factors such as carrier’s market share, supply
and demand elasticity, and carrier’s cost structure, size and
resources), or are otherwise distinguishable, see, e.g., Applica-
tions for Consent to the Transfer of Control of Licensees and
Section 214 Authorizations by Time Warner Inc. and America
Online, Inc., Transferors, to AOL Time Warner Inc., Transferee,
16 F.C.C.R. 6547, 6578 (2001) (finding, in merger analysis, the
“relevant geographic markets for residential high-speed Internet
access services are local”).

EarthLink’s reliance on Qwest Omaha, a post-Order
decision, is particularly inapt as that case highlights the FCC’s
capacity and propensity to adapt forbearance decisions to the
circumstances. Petition of Qwest Corp. for Forbearance
 16

Pursuant to 47 U.S.C. § 160(c) in the Omaha Metro. Statistical
Area, 20 F.C.C.R. 19,415 (2005) (Qwest Omaha). First, while
the FCC acknowledged that a decision to forbear from dominant
carrier regulation is “informed by the [FCC’s] traditional market
power analysis,” id. at 19,425, the agency was quick to note that
such analysis “does not bind [the FCC’s § 160] forbearance
analysis,” id. at 19,425 n.52 (emphasis added) (citing AT&T
Corp., 236 F.3d at 736-37). Second, when addressing forbear-
ance from §§ 251 and 271, the FCC did not invoke its “tradi-
tional market power” analysis, see, e.g., id. at 19,443-19,470,
instead noting at one point that the FCC’s “unbundling analysis”
is “instructive for purposes of rendering [its § 160(a)] determina-
tion,” id. at 19,446 (emphasis added). Third, in denying forbear-
ance from § 271, Qwest Omaha specifically distinguished the
Order:

The reasoning that formed the basis of the [FCC’s] decision
[in the Order] to forbear from applying the [§] 271 network
access requirements to certain of the BOCs’ broadband
facilities does not extend to . . . legacy elements. The supply
market for legacy services is quite different from the supply
market for broadband services. As explicitly recognized in
section 706, it is important for [the FCC] to remove invest-
ment disincentives that apply to broadband services in order
to encourage the construction of next generation facilities
to customers nationwide. In contrast, the policies of section
706 do not apply to already-constructed legacy elements.

Id. at 19,469. Thus, insofar as the later Qwest Omaha decision
is relevant at all, cf. AT&T Inc. v. FCC, 452 F.3d 830, 839 (D.C.
Cir. 2006) (examining subsequent agency action to show pattern
of arguably inconsistent decisionmaking), it lends credence to
the FCC’s action in the present matter.

In sum, EarthLink pointed to no case speaking directly to
 17

the present circumstances, and we find no “abrupt departure”
from FCC precedent. Wis. Valley Improvement v. FERC, 236
F.3d 738, 748 (D.C. Cir. 2001); see also Motor Vehicle Mfrs.
Ass’n, 463 U.S. at 42; Greater Boston Television Corp. v. FCC,
444 F.2d 841, 852 (D.C. Cir. 1970) (“[A]n agency changing its
course must supply a reasoned analysis indicating that prior
policies and standards are being deliberately changed . . . .”).
Rather, the agency reasonably tailored its analysis to the
situation at hand.8

C

Finally, the record supports the FCC’s forbearance determi-
nation. Given the FCC’s forward-looking interpretation and
application of the statute, the agency only needed to show that
the positive short-term impact of unbundling would be out-
weighed by the longer-term positive impact that not unbundling

8
Various related arguments warrant little discussion. EarthLink
contends that “the FCC proffered [§] 271 unbundling as an effective
backstop for competitors in light of the [Triennial Review Order’s]
elimination of [§] 251 unbundling.” However, in the passage
EarthLink cites in support, the FCC merely concluded that § 271
obligations are independent from those in § 251, not that the former
must remain in place wherever the latter have been lifted. See
Triennial Review Order, 18 F.C.C.R. at 17,385-86.

Also, according to EarthLink, the FCC failed to properly consider
the wholesale market. Not so. The FCC explained its lack of concern
in the wholesale market; in its view, the CLECs have alternate ways
to compete and the BOCs will be inclined to offer reasonable
wholesale rates because they face “intense intermodal competition”
inducing them, “even in the absence of [§] 271 unbundling,” to “find
ways to keep traffic ‘on-net.’” Order ¶ 26; see also id. ¶ 28 (rejecting
argument that “a fully competitive wholesale market is a mandatory
precursor” to forbearance).
 18

would have on rates, consumers, and the public interest. The
record here is up to the task.

The FCC reasonably concluded the benefits of unbundling
were “modest,” pointing to, among other things, evidence of
intermodal competition indicating that cable modem ser-
vice—not ILECs—is the nationwide broadband market leader
with a solid majority. See, e.g., Order ¶ 22 (citing Industry
Analysis and Technology Division, FCC, High-Speed Services
for Internet Access: Status as of June 30, 2003, tbls. 3, 4 (Dec.
2003)). Indeed, the FCC relied on a report that is a later iteration
of the study relied upon in the Triennial Review Order to find a
sufficiently “competitive environment,” 18 F.C.C.R. at 17,151-
52—a finding we upheld in resounding terms:

[W]e agree with the [FCC] that robust intermodal competi-
tion from cable providers—the existence of which is
supported by very strong record evidence, including cable’s
maintenance of a broadband market share on the order of
60%—means that even if all CLECs were driven from the
broadband market, mass market consumers will still have
the benefits of competition between cable providers and
ILECs.

USTA II, 359 F.3d at 582 (citation omitted). It can hardly be
irrational, then, to similarly find sufficient competition in the
present case. That is, it is reasonable to conclude that the BOCs’
secondary market position relative to cable internet providers
tends to mitigate the impact of forbearance on the state of
competition in the broadband market, especially where cable
internet providers themselves are not required to unbundle.

EarthLink’s proffered evidence and statistical analysis are
not to the contrary and its frantic claim that the Order is
premised on a “momentous new economic theory”—one that
 19

“reverse[s] decades of communications precedent” by finding
that “duopoly now equates to rigorous competition”—misses the
mark. The FCC nowhere asserts that cable’s majority market
share alone is dispositive, only that, in light of the various other
circumstances, it lends support to the forbearance decision in the
present case.

In the agency’s view, “[t]he broadband market is still an
emerging and changing market, where, as the [FCC] previously
has concluded, the preconditions for monopoly are not present.
In particular, actual and potential intermodal competition
informs rational competitors’ decisions concerning next-
generation broadband technologies.” Order ¶ 22 (footnote
omitted). The FCC cited its prior decision in which it elaborated
on that thought:

The facts that different companies are using different
technologies to bring broadband to residential consumers
and that each existing broadband technology has advantages
and disadvantages as a means of delivery to millions of
customers opens the possibility of intermodal competition,
like that between trucks, trains, and planes in transportation.
. . . Anti-competitive coordination among competitors is
difficult in such markets.

Inquiry Concerning the Deployment of Advanced Telecomms.
Capability, 14 F.C.C.R. 2398, 2423-24 (1999) (footnotes
omitted) (citing Brooke Group Ltd. v. Brown & Williamson
Tobacco Corp., 509 U.S. 209, 238 (1993) (“Tacit coordination
is facilitated by a stable market environment, fungible products,
and a small number of variables upon which the firms seeking
to coordinate their pricing may focus.”)); see also Rulemaking
to Amend Part 1, 2, 21, and 25 of the Commission’s Rules, 15
F.C.C.R. 11,857, 11,864-65 (2000). This represents the agency’s
expert assessment, and we examine “not whether the FCC’s
 20

economic conclusions are correct or are the ones that we would
reach on our own, but only whether they are reasonable.” In re
Core Commc’ns, Inc., --- F.3d ----, 2006 WL 1789003, at *10
(D.C. Cir. June 30, 2006). We find the FCC’s explanation
reasonable.9

Nor are we given sufficient cause to second-guess the
FCC’s predictions. “[A]n agency’s predictive judgments about
areas that are within the agency’s field of discretion and
expertise are entitled to particularly deferential review, as long
as they are reasonable,” id. at *12 (emphasis added) (internal
quotation marks and citation omitted), and need not rest on
“pure factual determinations,” FCC v. WNCN Listeners Guild,
450 U.S. 582, 594 (1981). See Time Warner Entm’t Co. v. FCC,
240 F.3d 1126, 1133 (D.C. Cir. 2001) (“Substantial evidence
does not require a complete factual record—we must give
appropriate deference to predictive judgments that necessarily
involve the expertise and experience of the agency.”).

Here, the FCC’s predictions about the development of new
broadband technologies and about the incentives for increased
deployment (and, in turn, increased competition) flowing from

9
Cf. W. Coal Traffic League v. Surface Transp. Bd., 169 F.3d
775, 778-79 (D.C. Cir. 1999) (upholding agency’s conclusion that
merger would result in “rivalry, not collusion”; agency had explained
that “‘the outcome where just two companies offer the only significant
competitive alternatives in a market may range all the way from
intense rivalry to collusion, depending on the circumstances of the
industry’” (citation omitted)); FTC v. H.J. Heinz Co., 246 F.3d 708,
717 (D.C. Cir. 2001) (stating that where district court found “there had
been no significant entries in the baby food market in decades and that
new entry was ‘difficult and improbable,’” this finding “largely
eliminates the possibility that the reduced competition caused by the
[three-to-two] merger will be ameliorated by new competition from
outsiders” (citation omitted)).
 21

an absence of unbundling are well within the agency’s area of
expertise. Indeed, they echo predictions made in the Triennial
Review Order and upheld in USTA II. See, e.g., USTA II, 359
F.3d at 584 (“Absence of unbundling . . . will give all parties an
incentive to take a shot at this potentially lucrative market.”); id.
at 581 (rejecting CLEC’s argument that decision rested on “pure
speculation”); Triennial Review Order, 18 F.C.C.R. at 17,144
(anticipating new technologies); cf. Cincinnati Bell Tel. Co. v.
FCC, 69 F.3d 752, 763 n.4 (6th Cir. 1995) (declining to defer to
FCC’s predictive judgment about increased competition in
cellular market). Moreover, FCC is fully capable of reassessing
the situation if its predictions are not borne out. See Order ¶ 26
n.84.

EarthLink contends that invocation of the disincentives
associated with § 251 unbundling is improper because they are
more acute than those associated with § 271 unbundling. Section
251, EarthLink points out, requires ILECs to provide the
network elements at cost-based (so-called “TELRIC”) pricing,
while § 271 operates under the more relaxed “just and reason-
able” standard of 47 U.S.C. §§ 201 and 202. See USTA II, 359
F.3d at 589-90; 47 U.S.C. § 252(d)(1). Nonetheless, even if
unbundling under § 271 would produce marginally less disin-
centive, the FCC reasonably concluded there would still be a
significant deterrent due to costs inherent in complying with any
unbundling mandate. See, e.g., Order ¶¶ 25, 34.10

In sum, the FCC, reasonably weighed present conditions
and future developments in determining what is necessary for
just and reasonable rates, “necessary for the protection of

10
EarthLink’s suggestion that forbearance from § 271
contravenes FCC precedent by denying CLECs the protections of
§§ 201 and 202 is meritless. The Order granted forbearance as to
§ 271, not §§ 201 and 202.
 22

consumers,” and “consistent with the public interest,” 47 U.S.C.
§ 160(a), and made a “rational connection between the facts
found and the choice made.” AT&T Corp., 220 F.3d at 616
(internal quotation marks and citation omitted).

III

For the foregoing reasons, EarthLink’s petition for review
is

Denied.