The FCC explained the history of its universal service rules...

subsidize local phone service for decades “no longer serve[s] the evolving communications needs of 21st century America,” the commission wrote in its response to the joint preliminary brief of the petitioners, who are challenging many of the USF and intercarrier compensation rules in the commission’s landmark 2011 order. The FCC explained its rulemaking process, its solicitation of comment, and its review of the “voluminous” administrative record, before ultimately reforming and modernizing its “antiquated” rules. Universal service and ICC were “two dysfunctional regulatory regimes in need of reform,” the commission wrote. “The 20th century framework for intercarrier compensation no longer made sense in the modern communications market.” The commission also discussed the waste associated with the old systems, and how the USF/ICC order was designed to address those problems. Finally, the FCC reminded the court that the agency is entitled to Chevron deference, and where Congress has not spoken directly to the question at issue, the agency is entitled to adopt a “permissible construction” of the statute. “Judicial review of FCC action under the [Administrative Procedure Act] ‘is no more searching’ where (as here) the agency’s decision ‘represents a change in policy,'” the FCC wrote, quoting circuit precedent. The commission argued for a “deferential standard of review,” in which a court “may not displace the agency’s choice between two fairly conflicting views, even though the court would justifiably have made a different choice."