Summary of the CALEA NPRM's Substantial Replacement Analysis
August 9, 2004. The Federal Communications Commission's (FCC) CALEA NPRM [100 pages in PDF], released on August 9, 2004 tentatively concludes that broadband internet access services (BIAS) and certain voice over internet protocol (VOIP) services are subject to the requirements of the CALEA. To reach these conclusions the NPRM had to surmount two substantial obstacles to such conclusions. First, the CALEA provides that it only imposes obligations upon a "telecommunications carrier". Second, it provides that it does not impose obligations upon information services. The CALEA does, however, contain a clause pertaining to substantial replacement that forms the entire basis of the NPRM's tentative conclusions.
The Statute. § 102(8) of the Communications Assistance for Law Enforcement Act (CALEA), which is codified at 47 U.S.C. § 1001(8), provides the following definition of "telecommunications carrier".
(8) The term ``telecommunications carrier''--
(A) means a person or entity engaged in the transmission or switching of wire or electronic communications as a common carrier for hire; and
(i) a person or entity engaged in providing commercial mobile service (as defined in section 332(d) of this title); or
(ii) a person or entity engaged in providing wire or electronic communication switching or transmission service to the extent that the Commission finds that such service is a replacement for a substantial portion of the local telephone exchange service and that it is in the public interest to deem such a person or entity to be a telecommunications carrier for purposes of this chapter; but
(C) does not include--
(i) persons or entities insofar as they are engaged in providing information services; and
(ii) any class or category of telecommunications carriers that the Commission exempts by rule after consultation with the Attorney General."
The NPRM's Substantial Replacement Analysis. The notice of proposed rulemaking (NPRM) focuses on the clause found at § 102(8)(B)(ii) of the CALEA.
This clause pertains to something that is a "replacement for a substantial portion of the local telephone exchange service". The NPRM tentatively concludes that certain services are just such a replacement.
More specifically, the statute, in its definitional section, defines a "telecommunications carrier" as "a person or entity engaged in the transmission or switching of wire or electronic communications as a common carrier for hire".
But then, § 102(8)(B)(ii) provides that a "telecommunications carrier" also "includes ... a person or entity engaged in providing wire or electronic communication switching or transmission service to the extent that the Commission finds that such service is a replacement for a substantial portion of the local telephone exchange service ...".
The plain meaning of this clause presents several impediments to the conclusions in the NPRM. For example, broadband internet access services, which the the NPRM tentatively concludes are subject to the CALEA under § 102(8)(B)(ii), enable users to visit web pages, publish web pages, search the web, make purchases and sales, use interactive computer services, enter chat rooms, and send and receive e-mail, instant messages, video messages, and text messages. Moreover, law enforcement surveillance extends to these activities. If § 102(8)(B)(ii) is understood as it is plainly worded, then the FCC's tentative conclusion that broadband internet access service is a "replacement for a substantial portion of the local telephone exchange service" necessarily implies that activities such as web surfing, online shopping, and the use of interactive computer services replaces a substantial portion of old fashioned phone service. This is untenable.
The NPRM therefore gives § 102(8)(B)(ii) a meaning contrary to its plain meaning. It takes the language, word by word, and phrase by phrase, and applies meanings to words that are inconsistent with the meaning that those words possess for persons who speak the English language.
Step by step, this is the interpretation created for § 102(8)(B)(ii) in the NPRM. (See, NPRM at Paragraphs 42-44.)
First, the NPRM reconstructs the phrase "wire or electronic communication switching". Switching, the FCC writes, does not actually mean using "switches", a term that otherwise possesses a clear meaning. Rather, it also means "routers", notwithstanding the fact that the Congress did not include the term "routers" in the statute. Moreover, the NPRM asserts that switching also includes use of any equipment that provides addressing functions on internet protocol networks.
Second, the NPRM reconstructs the word "substantial". The statute requires that there be a "a replacement for a substantial portion". Substantial is a high standard -- too high to bring broadband internet services within the scope of § 102(8)(B)(ii). So, the NPRM decides that "substantial" does not mean "substantial". Rather, it really means "any". (See, NPRM, at Paragraph 44, sentence 2.)
Third, the NPRM reconstructs the word "replacement". The NPRM decides that "replacement" may not mean "replacement". Rather, it may mean "substitutability". The NPRM is vague on this. Nevertheless, the FCC has used the term substitution, not in its plain sense (as when one quarterback is substituted for another quarterback), but rather in an economic sense. See for example, the FCC's notice of proposed rulemaking (NPRM) [97 pages in PDF] regarding regulation of internet protocol services, including voice over internet protocol (VOIP). This NPRM is FCC 04-28 in WC Docket No. 04-36. It is also sometimes referred to as the IP Enabled Services NPRM.
That is, there exists substitutability between two products or services when, if the price of the one product or service is changed, it affects the demand for the other. Far more products and services are substitutions for each other than are replacements for each other. For example, an increase in the price of airline tickets might increase the demand for phone services, and hence, air travel services could be an economic substitute for phone service. But, it could not be argued that air travel is a replacement for phone service.
Nevertheless, the NPRM is vague on this point. It also suggests that by "replacement" it means "functional substitutability" rather than "economic substitutability". This raises the question of what the NPRM means by the term "functional substitutability". It is not explained or defined in the NPRM, or in the earlier NPRM on IP enabled services. Indeed, the following Google search produces only one web page: site:www.fcc.gov "functional substitutability". That web page is this NPRM.
Fourth, the NPRM reconstructs the relevant unit of analysis. The language of the statute is "a replacement for a substantial portion of the local telephone exchange service" (emphasis added). That is, under the plain meaning of the statute, one must consider whether the service is a replacement. Notwithstanding this language in the CALEA, the NPRM decides that there is a "replacement of any portion of an individual subscriber's functionality" (emphasis added). That is, the FCC decides that the unit of analysis is any individual.
Fifth, the NPRM reconstructs the phrase "local exchange service". The FCC decides that "local exchange service" does not mean "local exchange service". Rather, it means "Internet access" by phone modem.
Sixth, the NPRM reconstructs the structure of the definition of "telecommunications carrier". The NPRM treats the substantial replacement clause as though it were structured as an exception to the information services exclusion. That is, the NPRM treats the substantial replacement clause as though the statute provided that "CALEA requirements apply to services providers who are telecommunications carriers, and not information services providers, except when the services are a substantial replacement ...".
This is not the structure of § 102(8). First, it provides a definition of "telecommunications carrier" (§ 102(8)(A)). It then provides four separate clauses, all of which equally qualify § 102(8)(A). For the purposes of this analysis, only two are relevant. § 102(8)(B)(ii) qualifies the definition of "telecommunications carrier" by including substantial replacements. § 102(8)(C)(i) qualifies the definition of "telecommunications carrier" by excluding information services. The substantial replacement clause does not override or trump the information services clause any more than the information services clause overrides or trumps the substantial replacement clause. The way the statute is structured, substantial replacements and information services are both treated as qualifiers of the underlying definition, and hence, should be understood as mutually exclusive categories.
The result of each of these contorted constructions of clauses in the CALEA is to broader the reach the CALEA's requirements. Taken together, all of these reconstitutions give the FCC a concept of "telecommunications carrier" that is inconsistent with the plain meaning the words drafted by the Congress, that bears little resemblance to the meaning of this term under the Communications Act, and that enables the DOJ and FCC to broadly claim that many things that are telecommunications services, information services, or neither, are subject to CALEA requirements.
Statements by FCC Commissioners. The separate statements of Commissioners reflect varying degrees of unease with the NPRM's substantial replacement analysis.
Kathleen Abernathy, who supported the NPRM, warned in a separate statement [PDF] that "at the end of the day, the federal courts -- rather than this Commission -- will be the arbiter of whether we are authorized to take the actions proposed in this rulemaking, and we must remain mindful of that fact as we consider final rules."
FCC Commissioner Michael Copps was bluntly critical of the substantial replacement analysis. He wrote in a separate statement [PDF] that the NPRM "is flush with tentative conclusions that stretch the statutory fabric to the point of tear. If these proposals become the rules and reasons we have to defend in court, we may find ourselves making a stand on very shaky ground. It would be a shame if our reliance on thin legal arguments results in the CALEA rules being thrown out."
He wrote that "it strains credibility to suggest that Congress intended ``a replacement for a substantial portion of the local telephone exchange´´ to mean the replacement of any portion of any individual subscriber's functionality. Capturing VoIP under the rubric of substantial replacement, ignoring the Ninth Circuit's decision in Brand X, and trying to slice and dice managed and non-managed services is not the way to proceed here."
FCC Commissioner Jonathan Adelstein wrote in a separate statement [PDF] that this NPRM "seizes upon notable but thin distinctions between definitions in CALEA and the Communications Act. Moreover, the item does not acknowledge fully and seek comment on existing precedent that is in tension with the tentative conclusions here. For example, whether or not the Commission ultimately appeals the decision in the Ninth Circuit’s Brand X case, which concluded that broadband access via cable modem includes a ``telecommunications service,´´ this Notice’s failure to seek comment on a legal analysis that would comport with the Circuit’s holding is an unnecessary failing."
Finally, while the NPRM bases its tentative conclusions upon the substantial
replacement clause in the CALEA, the NPRM does not close the door to other
possible bases. For example, it suggests briefly that the authority to impose
CALEA like requirement might be imposed, not by construing the CALEA, but by
invoking 47 U.S.C. §
151. The NPRM states that "Section 151 of the Communications Act charges the
Commission with carrying out its obligations for a number of stated purposes,
including ``for the purpose of the national defense´´ and ``for the purpose of
promoting safety of life and property.´´" (See, NPRM at Paragraph 59.)