Net Neutrality Ruling: FCC Loses, Comcast Wins

A federal appeal court handed Comcast Corp. (Nasdaq: CMCSA, CMCSK) a big victory Tuesday, ruling that the Federal Communications Commission (FCC) lacks the authority to impose network neutrality rules and sanctions on the nation's largest cable MSO.

The Commission "has failed to tie its assertion of ancillary authority over Comcast's Internet service to any 'statutorily mandated responsibility,'" the U.S. Court of Appeals for the District Columbia said in a 36-page ruling issued Tuesday.

The ruling essentially vacates a FCC order that called on Comcast to halt what the Commission called "discriminatory" bandwidth management policies by the end of 2008. (See FCC Throttles Comcast.)

And beyond the effect on Comcast, the ruling is viewed as a setback to the FCC and its aim to create enforceable network neutrality rules.

The FCC's Comcast ruling (made via a close 3-2 vote when Kevin Martin served as Commission chairman) was based on claims that Comcast illegally fiddled with some upstream peer-to-peer traffic and, thus, violated the FCC's Internet Policy Statement.

Before the order was handed down, Comcast, which denied "blocking" any Internet applications, had already announced plans to migrate to a "protocol agnostic" platform by the end of 2008. Comcast confirmed it had completed the migration in early 2009. The new system doesn't single out P2P apps, but instead slows down the traffic of some customers temporarily if they are found to be gobbling up more than their fair share of the bandwidth. (See Comcast Getting 'Protocol Agnostic', Comcast Ready to Test New Traffic Cop, and Comcast Goes 'Protocol Agnostic' Everywhere .)

Despite moving to the new system, Comcast appealed the FCC order last summer, arguing that the Commission did not follow "any federal statue, regulation, or precedent." In other words, there was no "'law' to violate," the MSO claimed. (See Comcast Fights FCC Net Neutrality Order .)

Other broadband ISPs have been keeping a close watch on the appeal proceeding, with some fearing privately that the original FCC order could hold jurisdiction over them, too.

Under new chairman Julius Genachowski, the FCC has been moving to turn its Internet policies into enforceable rules. It approved a draft Notice of Proposed Rulemaking (NPRM) on the matter last October, seeking to codify the original Policy Statement issued in 2005 and adding a component that allows consumers to attach "not-harmful" devices to an ISP network. (See FCC Sets Sail on Internet Rulemaking and FCC's Net Neutrality Plan Faces New Attack.)

Officials for Comcast and the FCC were not immediately available for comment Tuesday morning.

UPDATE: Both parties commented in statements issued this afternoon, with the FCC indicating that it may continue to pursue the codification of network neutrality rules.

FCC spokeswoman Jen Howard said, "Today's court decision invalidates the prior Commission's approach to preserving an open Internet. But the Court in no way disagreed with the importance of preserving a free and open Internet; nor did it close the door to other methods for achieving this important end." (See FCC Comment on Comcast v. FCC.)

Comcast, meanwhile, was "gratified" with the decision. "Our primary goal was always to clear our name and reputation," said Comcast VP of government communications Sena Fitzmaurice, noting that the MSO "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." (See Comcast: 'Committed' to FCC's Principles.)

Free Press , an advocate of FCC-mandated Internet rules that has long held that Comcast's earlier Internet traffic policies were tantamount to "blocking," said the court's decision leaves the Commission "unable to protect consumers in the broadband marketplace, and unable to implement the National Broadband Plan."

— Jeff Baumgartner, Site Editor, Light Reading Cable

COMMENTS Add Comment
Cooper10 12/5/2012 | 4:40:05 PM
re: Net Neutrality Ruling: FCC Loses, Comcast Wins From a practical perspective, this changes very little of what Comcast or any other ISP does to manage network traffic to prevent behavior that degrades the experience for other users.

Regardless of individual opinions of large ISPs, it is refreshing to see the courts side on limiting the power of government absent specific authority to regulate.
Greenbone 12/5/2012 | 4:40:05 PM
re: Net Neutrality Ruling: FCC Loses, Comcast Wins

...so this ruling leaves the consumer to think twice about their ISP.

I support (in spirit) the court ruling and feel that ISP's should be able to do whatever they'd like.

As a consumer, however, I want to know up front if an ISP is filtering any specific traffic (peer to peer sharing, on-demand video sites, etc.) - I'd also want to know of any changes mid-stream - and comcast (or other isp's that filter) should be ready to adjust pricing if they are going to reduce the utility of their service.

I'm sure for new clients they will try to bring people under a terms of use that gives them the latitude to dumb-down their service at will, so then it will be up to consumers to simply use and demand alternatives.

A "non-partisan", fully independant ISP would be nice.  Comcast clearly has a vested interest in freezing out Hulu or peer-to-peer sharing. Seems like a messy game for them to play.

We'll have ISP's and we'll have "Custom (limited / filtered / dumbed down) Service Providers". 




bollocks187 12/5/2012 | 4:40:04 PM
re: Net Neutrality Ruling: FCC Loses, Comcast Wins

A court ruling we can stand by.


The FCC has NO clue and no business trying to force an open internet.


The FCC should be focus on creating alternatives for competitive access for end consumers, not trying to control the incumbents.


fgoldstein 12/5/2012 | 4:40:01 PM
re: Net Neutrality Ruling: FCC Loses, Comcast Wins

The Court upheld "rule of law" in an age where "rule of man" has become more prominent.  They held, pretty simply, that the FCC couldn't issue an Order to Comcast if it was not based on specific Rules that were promulgated under a specific Law.  "Policy statements" are not law.

The FCC under Martin had tried very hard to relieve the Bells of hteir common carrier obligations (Title II).  So he attacked Comcast (with whom he had a personal feud) under Title I, as "ancillary jurisdiction".  In the appeal, the FCC gave a long list of ancillary jurisdiction cases.  The Court knocked them down one by one, noting that in each case where ancillary jurisdiction had been upheld, it was more closely tied to one of the major Titles (II, III, VI) than this one.  You can't be ancillary to nothing.

The Court did give a couple of interesting clues, though, as to what would be approved.  They cited the appeal of Computer II in 1980 (the CCIA case), in which they upheld Computer II as a valid check on a monopoly.  Hint, hint!  The whole kerfuffle began when the FCC overturned Computer II in 2005, closing DSL to third-party ISPs and creating the ISP duopoly.  So if the FCC were to return to something like that again (I call it Computer IV), where carriage and content were again separate, the Court's words could be justification.

As to cable, the Court cited the Supreme Court's Brand X decision in a way totally different from the FCC's.  Brand X held that the FCC could require cable to "allow independent ISPs to access their facilities" as a wholesale product.  That's not what the FCC did after Brand X, of course, but it means that the FCC does have to power to regulate cable modems, though not necessarily the Internet services that ride atop them.

The FCC had been reluctant to (re)apply Title II common carrier regulation to Internet access services,  But there is no room left in Title I, it seems, so a light-handed Title II approach (open your networks, guys!) now has a real chance of moving ahead.  Ironically, while this is the only way to have the open, neutral Internet that most people want, it is certainly not the outcome that Comcast wanted.

OldPOTS 12/5/2012 | 4:40:01 PM
re: Net Neutrality Ruling: FCC Loses, Comcast Wins

Thanks fgoldstein!


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