Full opinion text
BRISCOE, Chief Judge. In late 2011, the Federal Communications Commission (FCC or Commission) issued a Report and Order and Further Notice of Proposed Rulemaking (Order) comprehensively reforming and modernizing its universal service and intercarrier compensation systems. Petitioners, each of whom were parties to the FCC’s rule-making proceeding below, filed petitions for judicial review of the FCC’s Order. The Judicial Panel on Multidistrict Litigation consolidated the petitions in this court. In the Joint Universal Service Fund Principal Brief, Additional Universal Service Fund Issues Principal Brief, Wireless Carrier Universal Service Fund Principal Brief, and Tribal Carriers Principal Brief, petitioners assert a host of challenges to the portions of the Order revising how universal service funds are to be allocated to and employed by recipients. After carefully considering those claims, we find them either unpersuasive or barred from judicial review. Consequently, we deny the petitions to the extent they are based upon those claims. Table of Contents I. Glossary II. Background A. Introduction B. Distinction between telecommunications service providers and information-service providers C. The FCC’s pre-Order regulatory framework for telephone services D. The deficiencies identified by the FCC regarding its pre-Order regulatory framework E. The FCC’s National Broadband Plan F. The FCC’s Notice of Inquiry and Notice of Proposed Rulemaking G. The FCC’s Report and Order of November 18, 2011 H. This litigation III. Standards of review A. The Chevron standard B. The arbitrary and capricious standard C. The de novo standard IV. Universal Service Fund Issues A. Joint Universal Service Fund Principal Brief 1. Did the FCC’s broadband requirement exceed its authority under 17 U.S.C. § 254.? 2. Did the FCC act arbitrarily in simultaneously imposing the broadband requirement and reducing USF support? 3. Does the FCC’s use of auctions to distribute USF violate § 214(e)? 4. Was the FCC’s decision to reduce USF support in areas with “artificially low” end user rates unlawful or arbitrary? 5. Does the Order unlawfully deprive rural carriers of a reasonable opportunity to recover their prudently-incurred costs? 6. Do the FCC’s regression and SNA rules have unlawful retroactive effects? 7. Did the FCC disregard evidence that allocating USF to rural price cap carriers by competitive bidding would reduce service quality? 8. Does eliminating USF support for the highest-cost areas defeat the very purpose of universal service? 9. Is the FCC’s decision to eliminate high-cost support to RLECs, where an unsubsidized competitor offers voice and broadband to all of the RLECs’ customers in the same study area, unlawful and unsupported by substantial evidence? 10. Did the FCC arbitrarily fail to explain how its new definition of supported telecommunications services took into account the four factors it was required to consider under § 254(c)(1)? 11. Did the FCC arbitrarily disregard comments that the Order’s incremental USF support provisions would duplicate or undermine state-initiated plans for broadband deployment? 12. Did the Order unlawfully make changes not contained in the FCC’s proposed rule that could not reasonably have been anticipated by commenters? B. Additional Universal Service Fund Issues Principal Brief 1. The FCC’s decision to limit USF support for broadband deployment to price-cap ILECs 2. Did the FCC violate the mandatory referral duty imposed by 47 U.S.C. § 410(c)? 3. Did the FCC irrationally refuse to modify service obligations for carriers to whom it denied USF support? 4. Is the Order, as applied to Allband and similarly-situated small rural carriers, unconstitutional under due process principles and as a bill of attainder, and/or does it violate the Act, principles of estoppel and contract law? C. Wireless Carrier Universal Service Fund Principal Brief 1. Does the FCC lack authority to redirect USF support to broadband or to regulate broadband? 2. Must the USF portions of the Order be vacated? 3. Did the FCC act arbitrarily and capriciously in reserving CAFII support for ILECs? 4. Did the FCC act arbitrarily and capriciously in repealing the identical support rule and adopting a single-winner reverse auction? Did the FCC act arbitrarily and capriciously in setting the Mobility II budget at $500 million? 5. 6. Did the FCC fail to respond to comments calling for a separate mobility fund for insular areas? D. Tribal Carriers Principal Brief 1. Did the FCC act arbitrarily and capriciously in prescribing funding cuts for tribal carriers? V. Conclusion I. Glossary 1996 Act Telecommunications Act of 1996 Act (or 1934 Act) Communications Act of 1934 APA Administrative Procedure Act ARC Access Recovery Charge Joint Board Federal-State Joint Board on Universal Service CAF Connect America Fund CETC Competitive Eligible Telecommunications Carrier COLR Carrier of Last Resort ETC Eligible Telecommunications Carrier FCC (or Commission) Federal Communications Commission HCLS High Cost Loop Support IAS Interstate Access Support ICC Intercarrier Compensation ICLS Interstate Common Line Support ILEC Incumbent Local Exchange Carrier IP Internet Protocol JA Joint Appendix LEC Local Exchange Carrier Mobility Fund CAF Mobility Fund NPRM Notice of Proposed Rulemaking PSTN Public Switched Telephone Network RLEC Rate-of-Return ILEC SA Supplemental Joint Appendix SNA Safety Net Additive USF Universal Service Fund VoIP Voice over Internet Protocol WCB FCC’s Wireline Competition Bureau II. Background A. Introduction For nearly eighty years, the FCC has regulated interstate communications. When it was first created by way of the Communications Act of 1934 (the 1934 Act or the Act), the FCC’s regulatory activities were focused on “communication^] by wire and radio.” 47 U.S.C. § 151. The FCC’s regulatory oversight subsequently expanded to include telephone service. Most recently, the FCC was charged by Congress with developing a “[N]ational [BJroadband [P]lan,” American Recovery and Reinvestment Act of 2009, Pub.L. No. 111-5, § 6001(k)(l), 123 Stat. 115, 515, the purpose of which is “to ensure that all people of the [U]nited [SJtates have access to broadband capability and [to] establish benchmarks for meeting that goal,” id. § 6001(k)(2), 123 Stat. at 516. In a statement issued on March 16, 2010, the FCC concluded that Congress’s stated goals for the National Broadband Plan could not be achieved unless the FCC “comprehensively reformed” its existing regulatory system for telephone service. JA at 2. On February 9, 2011, the FCC issued a Notice of Proposed Rulemaking (NPRM) “proposing] to fundamentally modernize the [FCC]’s Universal Service Fund (USF or Fund) and intercarrier compensation (ICC) system.” Id. at 284 (NPRM ¶ 1). After receiving and considering comments in response to the NPRM, the FCC on November 18, 2011 issued a Report and Order and Further Notice of Proposed Rulemaking (Order). The Order, and the reforms it proposes, are the subject of this litigation. B. Distinction between telecommunications service providers and information-service providers The 1934 Act, as amended by the Telecommunications Act of 1996 (the 1996 Act), “subjects all providers of ‘telecommunications servic[e]’ to mandatory common-carrier regulation, [47 U.S.C.] § 153(44).” Nat’l Cable & Telecomm. Ass’n v. Brand X Internet Servs., 545 U.S. 967, 973, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005). “Telecommunications service” is defined as “the offering of telecommunications for a fee directly to the public ... regardless of the facilities used.” 47 U.S.C. § 153(46). In turn, “[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.” 47 U.S.C. § 153(43). “Telecommunications earrierfs]” are defined as “provider[s] of telecommunications services.” 47 U.S.C. § 153(44). Notably, the 1934 Act, as amended by the 1996 Act, does not regulate information-service providers. “[I]nformation service” is defined as “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.... ” 47 U.S.C. § 153(20). In March 2002, the FCC formally “concluded that broadband Internet service provided by cable companies is an ‘information service’ but not a ‘telecommunications service’ under the [1934] Act, and therefore not subject to mandatory Title II common-carrier regulation.” Nat’l Cable, 545 U.S. at 977-78, 125 S.Ct. 2688. In June 2005, the Supreme Court held that this “conclusion [wa]s a lawful construction of the [1934] Act under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984), and the Administrative Procedure Act.” Nat’l Cable, 545 U.S. at 974, 125 S.Ct. 2688. C. The FCC’s pre-Order regulatory framework for telephone services The pre-Order regulatory system for telephone service, which was developed by the FCC over decades, was revised by the FCC in accordance with the 1996 Act. The 1996 Act, which “fundamentally restructure[d] local telephone markets,” AT & T Corp. v. Iowa Util. Bd., 525 U.S. 366, 370, 119 S.Ct. 721, 142 L.Ed.2d 835 (1999), “sought to introduce competition to local telephone markets” while simultaneously “preserving universal service.” Qwest Corp. v. FCC, 258 F.3d 1191, 1196 (10th Cir.2001) (Qwest Corp.). “Universal service” was defined in the 1996 Act “[a]s an evolving level of telecommunications services that the [FCC] shall establish periodically under [§ 254 of the 1996 Act], taking into account advances in telecommunications and information technologies and services.” 47 U.S.C. § 254(c)(1). In other words, the 1996 Act “anticipate^] ... that in the future other types of telecommunications m[ight] become necessary for the nation to remain at the forefront of technological development,” and, consequently, it “outlin[ed] a process for the FCC to adjust [the definition of ‘universal service’] as new technologies ar[o]se.” Wireless World. LLC v. Virgin Islands Pub. Servs. Comm’n, No. Civ. A. 02-0061STT at *7 n. 7, 2008 WL 5635107 (D .Virgin Islands 2008). The FCC implemented “high-cost universal service support ... to help ensure that consumers ha[d] access to telecommunications services in areas where the cost of providing such services would otherwise be prohibitively high.” JA at 2. This “high-cost [universal service] support [wa]s provided through a complicated patchwork of programs ... in which the types of support a carrier reeeive[d] depended] on the size and regulatory classification of the carrier.” Id. at 3. More specifically, “[t]he federal high-cost support mechanism included five major components,” id.: 1) “High-cost loop support [that] provided support for intrastate network costs to rural incumbent local exchange carriers (LECs) in service areas where the cost to provide service exceeded] 115 percent of the national average,” id.; 2) “Local switching support [that] provided intrastate support for switching costs for companies that served 50,000 or fewer access lines,” id.; 3) “High-cost model support [that] provided support for intrastate network costs to non-rural incumbent LECs in states where the cost to provide service in non-rural areas exceeded] two standard deviations above the national average cost per line,” id.; 4) “Interstate access support (IAS) [that] provided support for price cap carriers to offset certain reductions in interstate access charges,” id.; and 5) “Interstate common line support (ICLS) [that] provided support to rate-of-return carriers, to the extent that subscriber line charge (SLC) caps d[id] not permit such carriers to recover their interstate common line revenue requirements,” id. This system, often referred to as the inter-carrier compensation or ICC system, was “designed for an era of separate long-distance companies[,] ... high per-minute charges, and [little] competition ... among telephone companies_” Id. at 396 (Order ¶ 9). D. The deficiencies identified by the FCC regarding its pre-Order regulatory framework In devising its National Broadband Plan, the FCC noted what it perceived as deficiencies in its pre-Order regulatory framework. To begin with, “only voice [wa]s a supported service” under this framework, and “there [wa]s no requirement to provide broadband service to consumers, nor [wa]s there any mechanism to ensure that support [wa]s targeted toward extending broadband service to unserved areas.” Id. at 3. Further, “some of the ... high-cost programs d[id] not provide support in an economically efficient manner.” Id. “In addition, several programs provide[d] support based on an incumbent carrier’s embedded costs, whether or not a competitor provide[d], or could provide, service at a lower cost.” Id. Thus, “only non-rural high-cost support [wa]s based on forward-looking economic cost, as determined by the [FCC]’s voice telephony cost model.” Id. at 4. As a result, “[i]n 2009, the [FCC] disbursed almost $4.3 billion in high-cost support, of which $331 million was calculated on the basis of forward-looking costs.” Id. at 6-7. E. The FCC’s National Broadband Plan “On March 26, 2010, the [FCC] delivered to Congress [its] National Broadband Plan.” Id. at 7. “The National Broadband Plan estimated that 14 million people living in seven million housing units in the United States currently do not have access to .terrestrial broadband infrastructure capable of meeting this target, described as ‘the broadband availability gap.’ ” Id. Consequently, the National Broadband Plan “recommend[ed] the creation of a Connect America Fund [ (CAF) ] to address the broadband availability gap in unserved areas and to provide any ongoing support necessary to sustain service in areas that require public funding, including those areas that already may have broadband.” Id. The National Broadband Plan outlined five principles that the CAF should adhere to, and it recommended that the FCC “create a fast-track program in CAF for providers to receive targeted funding for new broadband construction in unserved areas, and create a Mobility Fund to provide one-time support for deployment of 3G networks, to bring all states to a minimum level of 3G (or better) mobile service availability.” Id. at 7 (internal quotation marks omitted). “The National Broadband Plan [also] recommend[ed] that the [FCC] direct public investment toward meeting an initial national broadband availability target of 4 Mbps of actual download speed and 1 Mbps of actual upload speed.” Id. at 7. In addition, the National Broadband Plan recommended that the FCC’s “long range goal should be to replace all of the legacy High-Cost programs with a new program that preserves the connectivity that Americans have today and advances universal broadband in the 21st century.” Id. (internal quotation marks omitted). In other words, the National Broadband Plan proposed “cap[ping] and cut[ting] the legacy high-cost programs and” shifting the “realize[d] savings ... to targeted investment in broadband infrastructure.” Id. at 9. F. The FCC’s Notice of Inquiry and Notice of Proposed Rulemaking On April 21, 2010, the FCC issued a Notice of Inquiry and Notice of Proposed Rulemaking (Notice of Inquiry). The Notice of Inquiry sought “comment on three discrete groups of issues.” Id. at 8. First, the Notice of Inquiry sought “comment on use of a model as a competitively neutral and efficient tool for helping [the FCC] to quantify the minimum amount of universal service support necessary to support networks that provide broadband and voice service, such that the contribution burden that ultimately falls on American consumers is limited.” Id. Second, the Notice sought “comment on potential approaches to providing such targeted funding on an accelerated basis in order to extend broadband networks in unserved areas, such as a competitive procurement auction.” Id. Third, the Notice sought “comment on specific proposals to cap and cut the legacy high-cost programs [for voice services] and realize savings that c[ould] be shifted to targeted investment in broadband infrastructure.” Id. at 8-9. The FCC subsequently “received over 2,700 comments, reply comments, and ex parte filings totaling over 26,000 pages, including hundreds of financial filings from telephone companies of all sizes, including numerous small carriers that operate in the most rural parts of the nation.” Id. at 398 (Order ¶ 12). The FCC “held over 400 meetings with a broad cross-section of industry and consumer advocates.” Id. The FCC also “held three open, public workshops, and engaged with other federal, state, Tribal, and local officials throughout the process.” Id. G. The FCC’s Report and Order of November 18, 2011 On November 18, 2011, the FCC released its 752-page Order. Id at 390. The Order stated that “[t]he universal service challenge of our time is to ensure that all Americans are served by networks that support high-speed Internet access — in addition to basic voice service — where they live, work, and travel.” Id. at 395 (Order ¶ 5). In turn, the Order stated that the “existing universal service and intercarrier compensation systems [we]re based on decades-old assumptions that fail[ed] to reflect today’s networks, the evolving nature of communications services, or the current competitive landscape.” Id. at 396 (Order ¶ 6). In light of these factors, the Order purported to “comprehensively reform[] and modernize[ ] the universal service and intercarrier compensation systems to ensure that robust, affordable voice and broadband service, both fixed and mobile, [we]re available to Americans throughout the nation.” Id. at 394 (Order ¶ 1). The Order summarized the key components of the universal service reform the FCC would be implementing. Because the vast majority of Americans “that lack access to residential fixed broadband at or above the [FCC]’s broadband speed benchmark live in areas served by price cap carriers,” i.e., “Bell Operating Companies and other large and mid-sized carriers,” the FCC stated that it “w[ould] introduce targeted, efficient support for broadband in two phases” for these areas. Id. at 400 (Order ¶ 21). Phase I of this plan, intended “[t]o spur immediate broadband build-out,” would freeze “all existing high-cost support to price cap carriers” and make “an additional $300 million in CAF funding ... available.” Id. (Order ¶ 22). “Frozen support w[ould] be immediately subject to the goal of achieving universal availability of voice and broadband, and subject to obligations to build and operate broadband-capable networks in areas unserved by an unsubsidized competitor over time.” Id. Phase II of the plan “w[ould] use a combination of a forward-looking broadband cost model and competitive bidding to efficiently support deployment of networks providing both voice and broadband service for five years.” Id. (Order ¶ 23). With respect to rate-of-return carriers, which “serve[d] less than five percent of access lines in the U.S.,” but received “total support from the high-cost fund ... approaching $2 billion annually,” the Order imposed substantial reforms. Id. at 401 (Order ¶ 26). In particular, any such carriers “receiving legacy universal service support, or CAF support to offset lost ICC revenues,” were required to “offer broadband service meeting initial CAF requirements ... upon their customers’ reasonable requests.” Id. The Order noted that, because of “the economic challenges of extending service in the high-cost areas of the country served by rate-of-return carriers, this flexible approach [would] not require rate-of-return companies to extend service to customers absent such a request.” Id. The Order indicated that a CAF Mobility Fund would be created to “promot[e] the universal availability” of “mobile voice and broadband services.” Id. at 402 (Order ¶ 28). Phase I of the CAF Mobility Fund would “provide up to $300 million in one-time support to immediately accelerate deployment of networks for mobile voice and broadband services in unserved areas.” Id. at 402. This support, the Order indicated, would “be awarded through a nationwide reverse auction.” Id. Phase II of the Mobility Fund would “provide up to $500 million per year in ongoing support” in order to “expand and sustain mobile voice and broadband services in communities in which service would be unavailable absent federal support.” Id. Included in this $500 million annual budget was “ongoing support for Tribal areas of up to $100 million per year.” Id. Phase II also anticipated “eliminating] the identical support rule that determines the amount of support for mobile, as well as wireline, competitive ETCs [ (eligible telecommunications carriers) ],” id. (Order ¶ 29), and the creation of a “Remote Areas Fund” designed “to ensure that Americans living in the most remote areas in the nation, where the cost of deploying traditional terrestrial broadband networks is extremely high, can obtain affordable access through alternative technology platforms, including satellite and unlicensed wireless services,” id. (Order ¶ 30). The Order also indicated that the FCC was reforming its intercarrier compensation rules, including “adoptflng] a uniform national bill-and-keep framework as the ultimate end state for all telecommunications traffic exchanged with a LEC.” Id. at 403 (Order ¶ 34). “Under bill-and-keep,” the Order noted, “carriers look first to their subscribers to cover the costs of the network, then to explicit universal service support where necessary.” Id. Relatedly, the Order noted that the FCC was “abandoning] the calling-party-network-pays model that dominated ICC regimes of the last century.” Id. However, the Order noted, “states will have a key role in determining the scope of each carrier’s financial responsibility for purposes of bill-and-keep, and in evaluating interconnection agreements negotiated or arbitrated under the framework in sections 251 and 252 of the Communications Act.” Id. H. This litigation Petitioners, who were parties to the FCC’s rulemaking proceeding below, each filed petitions for judicial review of the Order. After the Judicial Panel on Multi-district Litigation consolidated the petitions in this court, we held oral argument on the petitions on November 19, 2013. III. Standards of review The issues raised by petitioners in their respective briefs implicate three different standards of review: the Chevron standard, which applies to all of the issues in which petitioners assert that the FCC acted contrary to its statutory authority; the arbitrary and capricious standard, which applies to petitioners’ challenges to rules implemented by the FCC in its Order; and the de novo standard of review that applies to the constitutional issues raised by petitioners. A. The Chevron standard In “reviewing] an agency’s construction of [a] statute which it administers,” the first question for the court is “whether Congress has directly spoken to the precise question at issue.” Chevron, 467 U.S. at 842, 104 S.Ct. 2778. “If the intent of Congress is clear, that is the end of the matter,” id, and both the agency and the court “must give effect to the unambiguously expressed intent of Congress,” id. at 843, 104 S.Ct. 2778. “If, however, ... the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency’s answer is based on a permissible construction of the statute.” Id. This court gives deference to the agency’s interpretation so long as that interpretation is not arbitrary, capricious, or manifestly contrary to the statute. Id. at 844, 104 S.Ct. 2778. B. The arbitrary and capricious standard The Administrative Procedure Act (APA) directs us to “hold unlawful and set aside agency action, findings and conclusions found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). Under the arbitrary and capricious standard, “a reviewing court may not set aside an agency rule that is rational, based on consideration of the relevant factors and within the scope of the authority delegated to the agency by the statute.” Motor Vehicle Mfrs. Ass’n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). “The scope of review under the ‘arbitrary and capricious’ standard is narrow and a court is not to substitute its judgment for that of the agency.” Id. “Nevertheless, the agency must examine the relevant data and articulate a satisfactory explanation for its action including a rational connection between the facts found and the choice made.” Id. (internal quotation marks omitted). A reviewing court must “uphold a decision of less than ideal clarity if the agency’s path may reasonably be discerned.” Id. (internal quotation marks omitted). C. The de novo standard The APA also compels us to “set aside agency action, findings and conclusions found to be ... contrary to constitutional right.” 5 U.S.C. § 706(2)(B). “Because constitutional questions arising in a challenge to agency action under the APA fall expressly within the domain of the courts, we review de novo whether agency action violated a claimant’s constitutional rights.” Copar Pumice Co. v. Tidwell, 603 F.3d 780, 802 (10th Cir.2010) (internal quotation marks omitted). IV. Universal Service Fund Issues In the Joint Universal Service Fund Principal Brief, Additional Universal Service Fund Issues Principal Brief, Wireless Carrier Universal Service Fund Principal Brief, and Tribal Carriers Principal Brief, petitioners assert various challenges to the portions of the Order revising how universal service funds are to be allocated to and employed by recipients. We proceed to address each of those briefs and the issues raised therein. A. Joint Universal Service Fund Principal Brief 1. Did the FCC’s broadband requirement exceed its authority under 17 U.S.C. § 254.? Petitioners argue that the FCC’s “continued classification of broadband Internet access service as an ‘information service’ is fatal to” the FCC’s condition that “USF support recipients ... provide broadband Internet access to consumers on reasonable request.” Pet’r Br. 3 at 11. More specifically, petitioners argue that the FCC, in requiring USF support recipients to provide broadband Internet access to consumers upon reasonable request, exceeded its authority under 47 U.S.C. § 254 in two ways. First, petitioners argue that the Act “expressly dictates that supported services are limited to an ‘evolving level of telecommunications services.’ ” Id. (italics in brief). “But the Order,” petitioners argue, “unlawfully mandates that carriers provide non-supported information services to receive USF support.” Id. at 11-12. Second, petitioners argue that, although the Act expressly provides that USF support is to go exclusively to telecommunications carriers for the purpose of providing “telecommunications services,” the Order “unlawfully gives USF support to entities that are not telecommunications carriers to provide non-telecommunications services.” Id. at 11. a) Relevant statutory language In addressing petitioners’ arguments, we begin by quoting at length the statutory language at issue. The primary statute upon which petitioners rely, 47 U.S.C. § 254, provides, in pertinent part, as follows: (b) Universal service principles. The [Federal-State] Joint Board[, which was created in subsection (a) by the 1996 Act,] and the Commission shall base policies for the preservation and advancement of universal service on the following principles: (1) Quality and rates. Quality services should be available at just, reasonable, and affordable rates. (2) Access to advanced services. Access to advanced telecommunications and information services should be provided in all regions of the Nation. (3) Access in rural and high-cost areas. Consumers in all regions of the Nation, including low-income consumers and those in rural, insular, and high cost areas, should have access to telecommunications and information services, including interexchange services and advanced telecommunications and information services, that are reasonably comparable to those services provided in urban areas and that are available at rates that are reasonably comparable to rates charged for similar services in urban areas. (4) Equitable and nondiscriminatory contributions. All providers of telecommunications services should make an equitable and nondiscriminatory contribution to the preservation and advancement of universal service. (5) Specific and predictable support mechanisms. There should be specific, predictable and sufficient Federal and State mechanisms to preserve and advance universal service. (6) Access to advanced telecommunications services for schools, health care, and libraries. Elementary and secondary schools and classrooms, health care providers, and libraries should have access to advanced telecommunications services as described in subsection (h). (7) Additional principles. Such other principles as the Joint Board and the Commission determine are necessary and appropriate for the protection of the public interest, convenience, and necessity and are consistent with this Act. (c)Definition. (1) In general. Universal service is an evolving level of telecommunications services that the Commission shall establish periodically under this section, taking into account advances in telecommunications and information technologies and services. The Joint Board in recommending, and the Commission in establishing, the definition of the services that are supported by Federal universal service support mechanisms shall consider the extent to which such telecommunications services— (A) are essential to education, public health, or public safety; (B) have, through the operation of market choices by customers, been subscribed to by a substantial majority of residential customers; (C) are being deployed in public telecommunications networks by telecommunications carriers; and (D) are consistent with the public interest, convenience, and necessity. (2) Alterations and modifications. The Joint Board may, from time to time, recommend to the Commission modifications in the definition of the services that are supported by Federal universal service support mechanisms. (3) Special services. In addition to the services included in the definition of universal service under paragraph (1), the Commission may designate additional services for such support mechanisms for schools, libraries, and health care providers for the purposes of subsection (h). (d) Telecommunications carrier contribution. Every telecommunications carrier that provides interstate telecommunications services shall contribute, on an equitable and nondiscriminatory basis, to the specific, predictable, and sufficient mechanisms established by the Commission to preserve and advance universal service. The Commission may exempt a carrier or class of carriers from this requirement if the carrier’s telecommunications activities are limited to such an extent that the level of such carrier’s contribution to the preservation and advancement of universal service would be de minimis. Any other provider of interstate telecommunications may be required to contribute to the preservation and advancement of universal service if the public interest so requires. (e) Universal service support. After the date on which Commission regulations implementing this section take effect, only an eligible telecommunications carrier designated under section 214(e) [47 U.S.C. § 214(e) ] shall be eligible to receive specific Federal universal service support. A carrier that receives such support shall use that support only for the provision, maintenance, and upgrading of facilities and services for which the support is intended. Any such support should be explicit and sufficient to achieve the purposes of this section. 47 U.S.C. § 254(b), (c), (d), (e). The terms “telecommunications,” “telecommunications carrier,” and “telecommunications service,” which are used in § 254 and throughout the Act, are defined in the following manner: (50) Telecommunications. The term “telecommunications” means 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. (51) Telecommunications carrier. The term “telecommunications carrier” means any provider of telecommunications services, except that such term does not include aggregators of telecommunications services (as defined in section 226 [47 USCS § 226]). A telecommunications carrier shall be treated as a common carrier under this Act only to the extent that it is engaged in providing telecommunications services, except that the Commission shall determine whether the provision of fixed and mobile satellite service shall be treated as common carriage. He * * (53) Telecommunications service. The term “telecommunications service” means the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used. 47 U.S.C. § 153(50), (51), (53). Notably, “telecommunications service” is treated distinctly under the Act from “information service,” which is defined under the Act as “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications....” 47 U.S.C. § 153(24). b) Is the FCC prohibited from imposing the broadband requirement? Petitioners argue that § 254 unambiguously bars the FCC from conditioning USF funding on recipients’ agreement to provide broadband internet access services. Pet’r Br. 3 at 12. In support, petitioners begin by noting that § 254(c)(1) “explicitly defines ‘universal service’ as ‘an evolving level of telecommunications services’ the [FCC] is to establish, ‘taking into account advances in telecommunications and information technologies and services.’ ” Id. at 12 (quoting 47 U.S.C. § 254(c)(1); emphasis added in brief). In turn, petitioners note that ‘ “telecommunications services’ are common carrier services under Title II of the Act, distinct from ‘information services’ defined in 47 U.S.C. § 153(24), and the [FCC] has declined to classify [broadband] services such as Voice over Internet Protocol (“VoIP’), as telecommunications services.” Id. In particular, petitioners note that the FCC previously determined “that bundled broadband internet access is an ‘information service,’ not a ‘telecommunications service,’ ” and that this determination “was upheld [by the Supreme Court] as a permissible choice under Chevron.” Id. at 14 n. 7 (citing Nat’l Cable & Telecomm. Ass’n v. Brand X Internet Servs., Inc., 545 U.S. 967, 125 S.Ct. 2688, 162 L.Ed.2d 820 (2005)). Notwithstanding these facts, petitioners argue, the FCC concluded that, because “consumers are increasingly obtaining voice services” not from traditional methods “but through services like VoIP,” “its ‘authority to promote universal service ... does not depend on whether VoIP services are telecommunications services or information services.’ ” Id. at 13 (quoting JA at 412 (Order ¶ 63)). “And,” petitioners assert, “based on this conclusion, [the FCC] lumps supported telecommunications services with VoIP to create a new ‘voice telephony service’ classification and orders USF recipients to provide bundled Internet access, an information service, ‘on reasonable request’ as a condition of continued USF support.” Id. at 13-14 (internal citations omitted). Petitioners argue “that Section 254(c)(i )’s limits are unambiguous and deny the FCC the authority it claims.” Id. at 14. More specifically, petitioners argue that the FCC, “[h]aving declined [previously] to define broadband Internet access or VoIP as telecommunications services, ... is not then empowered to include them on the list of supported services simply because advancing the availability of broadband is a desirable goal.” Id. Petitioners further argue that “[a]ny doubt on this score is dispelled by subsection (3) of Subsection 254(c).” Id. at 15. Section 245(c)(3), petitioners note, authorizes the FCC to “designate additional services for support mechanisms for schools, libraries and health care providers.” 47 U.S.C. § 254(c)(3). Petitioners argue that, “[i]n-terpreting the term ‘additional services,’ as the FCC has, to mean services in addition to telecommunications services, leads, inescapably, to the conclusion that Section 254(c)(3) creates a limited ‘schools, libraries and hospitals’ exception to the requirement that USF be used only to support ‘telecommunications services.’ ” Pet’r Br. 3 at 15. “Under the doctrine of expressio unius est exelusio alterius (‘the express mention of one thing excludes all others’),” petitioners argue, “the inclusion of this authorization in Section 254(c)(3) to support non-telecommunications services in specified circumstances precludes an interpretation authorizing the FCC to compel use of USF support to provide broadband Internet access, a non-telecommunication service, in others.” Id. at 15-16 (italics in original). The FCC, in its response, does not dispute that it has previously declined to classify broadband services, including VoIP, as “telecommunications services.” But it does not view this, or anything else in § 254(e)(i)’s definition of “universal service,” as a limitation on its authority to require recipients of USF funds to expend some of those funds to deploy networks capable of providing voice and broadband services. As it noted in the Order, it believes its “authority to promote universal service in this context does not depend on whether interconnected VoIP services are telecommunications services or information services under the ... Act.” JA at 412 (Order ¶ 63). Rather, the FCC contends “that section 254(e) of the Act allow[s] it to ... ‘require carriers receiving federal universal service support to invest in modern broadband-capable networks.’ ” FCC Br. 3 at 13 (quoting JA at 413-414 (Order ¶ 65)). The FCC explains that Congress, by referring in § 254(e) “to ‘facilities’ and ‘services’ as distinct items for which federal universal service funds may be used, ... granted [the FCC] the flexibility not only to designate the types of telecommunications services for which support would be provided, but also to encourage the deployment of the types of facilities that will best achieve the principles set forth in section 254(b) and any other universal service principle that the [FCC] may adopt under section 254(b)(7).” JA at 413 (Order ¶ 65). The FCC further asserts that, under section 254(b), it possesses authority to create inducements, such as linking the receipt of USF funds to the requirement of deploying voice and broadband networks, to ensure that the universal service policies outlined in section 254(b) are achieved. Id. Thus, the resolution of this issue hinges, in substantial part, on the interpretation of two subsections of § 254: subsection (c)(1) and subsection (e). Addressing these subsections in order, it is beyond dispute that subsection (c)(1) expressly authorizes the FCC to define “periodically” the types of telecommunications services that are encompassed by “universal service” and thus “supported by Federal universal service support mechanisms.” Further, there is no question that the FCC, to date, has interpreted the term “telecommunications services” to include only telephone services and not VoIP or other broadband internet services. All that said, however, nothing in the language of subsection (c)(1) serves as an express or implicit limitation on the FCC’s authority to determine what a USF recipient may or must do with those funds. More specifically, nothing in subsection (c)(1) expressly or implicitly deprives the FCC of authority to direct that a USF recipient, which necessarily provides some form of “universal service” and has been deemed by a state commission or the FCC to be an eligible telecommunications carrier under 47 U.S.C. § 214(e), use some of its USF funds to provide services or build facilities related to services that fall outside of the FCC’s current definition of “universal service.” In other words, nothing in the statute limits the FCC’s authority to place conditions, such as the broadband requirement, on the use of USF funds. That leaves § 254(e), the second sentence of which the FCC asserts authorizes it to direct that USF recipients provide broadband Internet access to customers upon reasonable request. The threshold question we must address, under Chevron, is whether Congress in § 254(e) “has directly spoken to the precise question at issue,” 467 U.S. at 842, 104 S.Ct. 2778, i.e., did Congress in the second sentence of § 254(e) delegate authority to the FCC to identify precisely what a recipient of USF funds must do with those funds, id. at 844, 104 S.Ct. 2778. As noted above, the second sentence of subsection (e) provides that “[an eligible telecommunications] carrier [designated under 47 U.S.C. § 214(e) ] that receives [Federal universal service] support shall use that support only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.” 47 U.S.C. § 254(e). Quite clearly, this language does not explicitly delegate any authority to the FCC. But the question remains whether this language can reasonably be construed, as the FCC suggests, as an implicit grant of authority to specify what a USF recipient may or must do with the funds? Upon careful examination, we conclude that the FCC’s interpretation of § 254(e) is not “arbitrary, capricious, or manifestly contrary to the statute.” Chevron, 467 U.S. at 844, 104 S.Ct. 2778. Congress clearly intended, by way of the second sentence of § 254(e), to mandate that USF funds be used by recipients “only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.” And it seems highly unlikely that Congress would leave it to USF recipients to determine what “the support is intended” for. Instead, as the FCC suggests, it is reasonable to conclude that Congress left a gap to be filled by the FCC, i.e., for the FCC to determine and specify precisely how USF funds may or must be used. And, as the FCC explained in the Order, carriers “that benefit from public investment in their networks must be subject to clearly defined obligations associated with the use of such funding.” JA at 418 (Order Id. 74). The FCC also, in our view, reasonably concluded that Congress’s use of the terms “facilities” and “service” in the second sentence of § 254(e) afforded the FCC “the flexibility not only to designate the types of telecommunications services for which support would be provided, but also to encourage the deployment of the types of facilities that will best achieve the principles set forth in section 254(b).” Id. at 412-13 (Order ¶ 64). Indeed, the FCC’s interpretation “ensures that the term[s] [‘facilities’ and services’] carr[y] meaning, as each word in a statute should.” Ransom v. FIA Card Servs., N.A., 562 U.S. 61, 131 S.Ct. 716, 724, 178 L.Ed.2d 603 (2011). To be sure, petitioners argue that the concluding phrase of the second sentence of § 254(e), which reads “for which the support is intended,” must be interpreted as a limit on the FCC’s authority and effectively requires USF funds to be used, whether for “facilities” or “services,” only in relation to “universal service,” which, petitioners again note, the FCC has never expressly defined to include broadband or VoIP services. Pet’r Br. 3 at 22-23. But that is not the only, or even the most sensible, interpretation of the phrase “for which the support is intended.” Indeed, petitioners’ proposed interpretation relies on the implicit assumption that USF funds were intended solely to support the provision of universal service. Had Congress intended such a result, however, it clearly could have said so in a more precise manner. For example, the concluding phrase could have read “for universal service” (rather than “for which the support is intended”). Because Congress instead chose to utilize broader language, it was certainly reasonable for the FCC to have concluded that the language was intended as an implicit grant of authority to the FCC to flesh out precisely what “facilities” and “services” USF funds should be used for. And the FCC’s interpretation, we note, is consistent both with § 254(c)(l)’s express grant of authority to the FCC to periodically redefine “universal service” and § 254(b)’s express charge to the FCC to “base policies for the preservation and advancement of universal services on” a specific set of controlling principles outlined by Congress. That leads to one final point regarding the FCC’s interpretation of the second sentence of § 254(e). The FCC concluded, in pertinent part, that Congress, “[b]y referring [in the second sentence of § 254(e) ] to ‘facilities’ and ‘services’ as distinct items for which [USF] funds may be used, ... granted the [FCC] the flexibility not only to designate the types of telecommunications services for which support would be provided, but also to encourage the deployment of types of facilities that will best achieve the principles set forth in section 254(b) and any other universal service principle that the [FCC] may adopt under section 254(b)(7).” JA at 412 (Order ¶ 64). This interpretation, in our view, is reasonable because it “consider[s] the operation of the statute as a whole.” Adoptive Couple v. Baby Girl, — U.S. -, 133 S.Ct. 2552, 2573, 186 L.Ed.2d 729 (2013). Section 254(b) clearly states that the FCC “shall base policies for the preservation and advancement of universal service” on six specific principles outlined by Congress (in subsections (b)(1) through (7)), as well as on “[s]uch other principles as ... the [FCC] determined are necessary and appropriate for the protection of the public interest, convenience, and necessity and are consistent with th[e] Act.” By interpreting the second sentence of § 254(e) as an implicit grant of authority that allows it to decide how USF funds shall be used by recipients, the FCC also acts in a manner consistent with the directive in § 254(b) and allows itself to make funding directives that are consistent with the principles outlined in § 254(b)(1) through (7). Thus, in sum, we conclude that petitioners are wrong in arguing that § 254 unambiguously bars the FCC from conditioning USF funding on recipients’ agreement to provide broadband internet access services. c) Is the FCC 'prohibited from providing USF support to entities that do not provide telecommunications services? Petitioners also assert that the FCC exceeded the authority granted to it under § 254 by “extending USF support to non-ETCs for provision of broadband Internet access, a non-telecommunications service.” Pet’r Br. 8 at 1. In support, petitioners note that § 254(e) “provides that only ‘eligible telecommunications carriers,’ i.e., those telecommunications carriers designated [by the FCC or a state commission] under Section 214, ‘shall be eligible to receive specific Federal universal service support.’ ” Id. at 17 (quoting 47 U.S.C. § 254(e)). “To ensure that USF support is limited to telecommunications carriers providing telecommunications service,” petitioners assert, Section 254(e) also provides that “ ‘[a] carrier that receives such support shall use that support only for the provision, maintenance, and upgrading of facilities and services for which the support is intended.’ ” Id. (quoting § 254(e)). In turn, petitioners argue, “[t]he [FCC’s] broadband condition is unlawful because it does not limit support to telecommunications carriers or require that USF be used for telecommunications services.” Id. “Instead,” they argue, “it provides USF support for ‘voice telephony service,’ which it called ‘a technically neutral approach, allowing companies to provision voice service over any platform, including the PSTN and IP networks.’” Id. at 17-18 (internal citation omitted). Thus, petitioners argue, “[w]hile [USF] recipients must provide ‘voice telephony service,’ they are not required to provide telecommunications service subject to common carrier regulations under Title II of the Communications Act.” Id. at 18 (emphasis in original; internal citation omitted). “Instead,” petitioners argue, “a [USF] recipient may provide voice telephony service as VoIP, which the FCC has declined to classify as a telecommunications service.” Id. The FCC, acting under the express authority granted to it under § 254(c)(1), chose in the Order “to simplify how [it] describe[d],” JA at 411 (Order ¶ 62), the types of telecommunications services that are encompassed by “universal service” and thus “supported by Federal universal service support mechanisms,” 47 U.S.C. § 254(c)(1). Prior to the Order, the FCC had defined those services “in functional terms (e.g., voice grade access to the PSTN, access to emergency services).” JA at 411 (Order at ¶ 62). In the Order, the FCC chose instead to employ “a single supported service designated as ‘voice telephony service.’ ” Id. The FCC indicated that its primary justification for adopting this designation was the fact that “consumers are [increasingly] obtaining voice services not through traditional means but instead through interconnected VoIP providers offering service over broadband networks.” Id. at 412 (Order ¶ 63). Although petitioners do not expressly challenge the FCC’s decision in this regard, they contend that the FCC has used this new, simpler classification to provide funding to what they claim are entities that do not provide telecommunications services. The fact remains, however, that in order to obtain USF funds, a provider must be designated by the FCC or a state commission as an “eligible telecommunications carrier” under 47 U.S.C. § 214(e). See 47 U.S.C. § 254(e) (“only an eligible telecommunications carrier designated under section 214(e) ... shall be eligible to receive specific Federal universal service support.”). And, under the existing statutory framework, only “common carriers,” defined as “any person engaged as a common carrier for hire ... in interstate or foreign communication by wire or radio or in interstate or foreign radio transmission of energy,” 47 U.S.C. § 153(10), are eligible to be designated as “eligible telecommunications carriers,” 47 U.S.C. § 214(e). Thus, under the current statutory regime, only ETCs can receive USF funds that could be used for VoIP support. Consequently, there is no imminent possibility that broadband-only providers will receive USF support under the FCC’s Order, since they cannot be designated as “eligible telecommunications carriers.” As a result, we agree with the FCC that the petitioners’ argument “will not be ripe for judicial review unless and until a state commission (or the FCC) designates ... an entity” that is not a telecommunications carrier as “an ‘eligible telecommunications carrier’ ” under § 214(e). FCC Br. 3 at 5. (d) Does Section 706 of the Act, 1*7 U.S.C. § 1302, serve as an independent grant of authority to the FCC to impose the broadband requirement? In a related attack on the FCC’s broadband requirement, petitioners argue that Section 706 of the Act, 47 U.S.C. § 1302, does not, contrary to the conclusion reached by the FCC in the Order, serve as an independent grant of authority to the FCC. Section 706 of the 1996 Act, entitled “Advanced telecommunications incentives,” provides, in pertinent part, as follows: (a) In general. The Commission and each State commission with regulatory jurisdiction over telecommunications services shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment. (b) Inquiry. The Commission shall, within 30 months after the date of enactment of this Act [enacted Oct. 10, 2008], and annually thereafter, initiate a notice of inquiry concerning the availability of advanced telecommunications capability to all Americans (including, in particular, elementary and secondary schools and classrooms) and shall complete the inquiry within 180 days after its initiation. In the inquiry, the Commission shall determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion. If the Commission’s determination is negative, it shall take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market. (d) Definitions. For purposes of this subsection: (1) Advanced telecommunications capability. The term “advanced telecommunications capability” is defined, without regard to any transmission media or technology, as high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology. 47 U.S.C. § 1302. In the Order, the FCC interpreted Section 706 as providing it with “independent authority ... to fund the deployment of broadband networks.” JA at 414 (Order ¶ 66). The FCC explained the basis for its decision as follows: 66. ... In section 706, Congress recognized the importance of ubiquitous broadband deployment to Americans’ civic, cultural, and economic lives and, thus, instructed the Commission to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.” Of particular importance, Congress adopted a definition of “advanced telecommunications capability” that is not confined to a particular technology or regulatory classification. Rather, “ ‘advanced telecommunications capability’ is defined, without regard to any transmission media or technology, as high-speed, switched, broadband telecommunications capability that enables users to originate and receive high-quality voice, data, graphics, and video communications using any technology.” Section 706 further requires the Commission to “determine whether advanced telecommunications capability is being deployed to all Americans in a reasonable and timely fashion” and, if the Commission concludes that it is not, to “take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.” The Commission has found that broadband deployment to all Americans has not been reasonable and timely and observed in its most recent broadband deployment report that “too many Americans remain unable to fully participate in our economy and society because they lack broadband.” This finding triggers our duty under section 706(b) to “remov[e] barriers to infrastructure investment” and “promot[e] competition in the telecommunications market” in order to accelerate broadband deployment throughout the Nation. 67. Providing support for broadband networks helps achieve section 706(b)’s objectives. First, the Commission has recognized that one of the most significant barriers to investment in broadband infrastructure is the lack of a “business case for operating a broadband network” in high-cost areas “[i]n the absence of programs that provide additional support.” Extending federal support to carriers deploying broadband networks in high-cost areas will thus eliminate a significant barrier to infi’a-structure investment and accelerate broadband deployment to unserved and underserved areas of the Nation. The deployment of broadband infrastructure to all Americans will in turn make services such as interconnected VoIP service accessible to more Americans. 68. Second, supporting broadband networks helps “promot[e] competition in the telecommunications market,” particularly with respect to voice services. As we have long recognized, “interconnected VoIP service ‘is increasingly used to replace analog voice service.’ ” Thus, we previously explained that requiring interconnected VoIP providers to contribute to federal universal service support mechanisms promoted competitive neutrality because it “reduces the possibility that carriers with universal service obligations will compete directly with providers without such obligations.” Just as “we do not want contribution obligations to shape decisions regarding the technology that interconnected VoIP providers use to offer voice services to customers or to create opportunities for regulatory arbitrage,” we do not want to create regulatory distinctions that serve no universal service purpose or that unduly influence the decisions providers will make with respect to how best to offer voice services to consumers. The “telecommunications market” — which includes interconnected VoIP and by statutory definition is broader than just telecommunications services — will be more competitive, and thus will provide greater benefits to consumers, as a result of our decision to support broadband networks, regardless of regulatory classification. 69. By exercising our authority under section 706 in this manner, we further Congress’s objective of “accelerating] deployment” of advanced telecommunications capability “to all Americans.” Under our approach, federal support will not turn on whether interconnected VoIP services or the underlying broadband service falls within traditional regulatory classifications under the Communications Act. Rather, our approach focuses on accelerating broadband deployment to < un-served and underserved areas, and allows providers to make their own judgments as to how best to structure their service offerings in order to make such deployment a reality. 70. We disagree with eommenters who assert that we lack authority under section 706(b) to support broadband networks. While 706(a) imposes a general duty on the Commission to encourage broadband deployment through the use of “price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment,” section 706(b) is triggered by a specific finding that broadband capability is not being “deployed to all Americans in a reasonable and timely fashion.” Upon making that finding (which the Commission has done), section 706(b) requires the Commission to “take immediate action to accelerate” broadband deployment. Given the statutory structure, we read section 706(b) as conferring on the Commission the additional authority, beyond what the Commission possesses under section 706(a) or elsewhere in the Act, to take steps necessary to fulfill Congress’s broadband deployment objectives. Indeed, it is hard to see what additional work section 706(b) does if it is not an independent source of authority. 71.We also reject the view that providing support for broadband networks under section 706(b) conflicts with section 254, which defines universal service in terms of telecommunications services. Information services are not excluded from section 254 because of any policy judgment made by Congress. To the contrary, Congress contemplated that the federal universal servic