National Cable & Telecommunications Ass'n v. Brand X Internet Services

OPINION OF THE COURT NATIONAL CABLE & TELECOMMUNICATIONS ASSN. V.BRAND X INTERNET
SERVICES 545 U. S. ____ (2005) 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 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 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 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 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
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 high-speed 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 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 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). 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 circumstances, 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 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 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
interpretation 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 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 interpretation 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) addresses[ Footnote 1 ] 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 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
high-speed 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 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 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 Internet
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 ordinary-language 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
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 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
Commission 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 enhanced-service 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 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 common-carrier 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.[ Footnote 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 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 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 “enhanced-service” 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 non-facilities-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 Commission’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 announcement 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 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).[ Footnote 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
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.[ Footnote 4 ] It has done so here. The 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 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 facilities-based 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
information-service 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 Court of
Appeals is reversed, and the cases are remanded for further
proceedings consistent with this opinion. It is so ordered. Footnote
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. Footnote
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. Footnote
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). Footnote
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. 545 U. S. ____ (2005) 545 U. S. ____ (2005) 545 U. S. ____ (2005) 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. BREYER, J., CONCURRING NATIONAL CABLE & TELECOMMUNICATIONS ASSN. V.BRAND X INTERNET
SERVICES 545 U. S. ____ (2005) 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 opinion. 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).

															   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. SCALIA, J., DISSENTING NATIONAL CABLE & TELECOMMUNICATIONS ASSN. V.BRAND X INTERNET
SERVICES 545 U. S. ____ (2005) 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 non -regulation, 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.

															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
high-speed 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).
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, 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.[ Footnote 1 ] Any reasonable customer would
conclude at that point that his interlocutor was either crazy or
following some too-clever-by-half 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 “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).[ Footnote 2 ]

															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.[ Footnote 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.[ Footnote
4 ]

															   Since the delivery service provided by cable
(the broad-band 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 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 cable-company-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 “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”—non-facilities-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.[ Footnote 5 ] That same
result can be achieved today under the Commission’s statutory
authority to forbear from imposing 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).[ Footnote
6 ] 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
companies to “unbundle” the telecommunications component of
cable-modem service.[ Footnote
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,[ Footnote 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. 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).[ Footnote 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 .[ Footnote 10 ] As I
pointed out in dissent, this in turn meant (under the law as it was
understood until today)[ Footnote
11 ] that many statutory 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.
According 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.[ Footnote
12 ]

															   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.”[ Footnote 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 agency-reversible 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 Chevron ? (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.[ Footnote 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
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. Footnote 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. Footnote 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 information services provided by their Internet service
provider and [Web site operators] in order to access [the
Web]”). Footnote 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. Footnote 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. Footnote 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). Footnote 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 rather the Court that
begs the question, saying that the exception cannot apply because
cable is not a telecommunications service. Footnote 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 common-carrier-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. Footnote 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”). Footnote 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
(still-unspecified) “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 still-underdeveloped 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.” Footnote 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. Footnote 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
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. Footnote 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” that is “consistent
with the court’s holding,” ante, at 11, and available for
adoption by the agency. Footnote 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. Footnote 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.