Court Sides With Comcast Over FCC Throttling Order

The FCC’s net neutrality push is in jeopardy.

On Tuesday, a federal appeals court said the FCC has no right to tell ISPs in general – and Comcast Corp. (CMCSA) in particular – how to manage their networks. Judges then overturned the FCC’s 2008 order that instructed Comcast to stop blocking bandwidth-hungry peer-to-peer traffic.

“The commission has failed to tie its assertion of ancillary authority over Comcast’s Internet service to any ‘statutorily mandated responsibility’,” the judges wrote in their 3-0 ruling.

In a prepared statement, Comcast said the court reached the right conclusion.

“Our primary goal was always to clear our name and reputation,” said Sena Fitzmaurice, vice president of government communciations for Comcast. “Comcast remains committed to the
FCC’s existing open Internet principles, and we will continue to work constructively with this FCC as it determines how best to increase broadband adoption and preserve an open and vibrant Internet.”

The FCC did not provide an immediate response to a request for comment on Tuesday’s ruling. 

The decision, a giant victory for Comcast, threatens to end the FCC’s quest for net-neutrality regulation. That’s because the judges could not find justification for the agency to control how ISPs manage their networks. Next, FCC Chairman Julius Genachowski either will have to figure out how his six, rather vague, net neutrality principles might be wrangled into law, or pursue some other options. Legal experts say the FCC really has four choices at hand: appeal the finding; stop trying to regulate broadband altogether; come up with new rationale for policing ISPs’ network management and seek court approval of that reasoning; or ask Congress for explicit permission.

Many observers, though, predict the FCC will make a different move. They say Genachowski will try to reclassify Internet access as a telecommunications service, rather than an information service. If he were to succeed, the agency would gain far greater power over ISPs. But achieving that outcome promises to come at a price. If Genachowski indeed gets a commission vote for reclassification, expect months, if not years, of legal disputes as companies including Comcast, AT&T Inc. (T), Verizon Communications Inc. (VZ), and even some CLECs, fight back.

Consumer advocates are among the entities most likely to support a reclassification effort. In fact, Public Knowledge discussed that very possibility with VON and its sister sites last February, dubbing the idea “an elegant way” to make the net neutrality debate “go away.” On Tuesday, the group restated its support for reclassification.

“The FCC should immediately start a proceeding bringing Internet access service back under some common carrier regulation similar to that used for decades,” said Gigi Sohn, Public Knowledge’s president and co-founder, in an April 6 prepared statement. “The commission would not have to impose a heavy regulatory burden on the telephone and cable companies, yet consumers could once again have the benefit of legal protections.”

The Media Access Project agreed.

“The commission must have the authority to protect all Internet users against harmful and anticompetitive conduct by Internet service providers,” Parul Desai, vice president of the Media Access Project, said in a press release. “ISP interference to lawful uses of the Internet must not be tolerated, and the commission must have the power to adopt rules to prohibit such practices.”

Other organizations reiterated that stance, then went so far as to claim the April 6 verdict endangers implementation of the FCC’s national broadband plan. Problem is, said plan contains zero mention of net neutrality or network management requirements. The FCC purposely omitted those topics so Congress would be more inclined to act on the recommended strategies. Thus, assertions that the FCC holds “virtually no power to make policies to bring broadband to rural America, to promote competition, to protect consumer privacy or truth in billing,” as stated by Free Press Director Derek Turner, seem like a stretch.

Meantime, other industry insiders said the appeals court came to the right conclusion on April 6.

“The type of ‘network neutrality’ regulation at issue is not in the best interest of consumers and the court’s decision indicates that the FCC does not have the authority to impose such regulation,” Thomas Lenard, president of the incumbent-affiliated Technology Policy Institute, said in a statement. “I am concerned, however, that the commission may now attempt to reclassify broadband as a telecommunications service, subjecting it to traditional public utility-type regulation. In my opinion, this would be a grave mistake that would undermine the goals of the recently released national broadband plan.”

Barbara Esbin, senior fellow at the free-market The Progress & Freedom Foundation think tank, also said the three-judge panel made the right call.

“As I have said from the outset, the FCC’s action against Comcast’s Internet network management practices was unlawful because Congress has not delegated to the FCC regulatory authority over the provision of Internet services,” she said. “The FCC’s proposed ‘open Internet’ rules are premised on the same jurisdictional theory … that the D.C. Circuit has now invalidated. This strongly suggests that the time has come for our elected representatives to take up the question of whether and how the FCC should regulate the provision of Internet services.”

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