FCC decision on network neutrality overturned by U.S. appeals court

WASHINGTON — A federal appeals court on Tuesday overturned a Federal Communications Commission ruling that forced cable giant Comcast Corp. to give equal treatment to all Internet traffic flowing through its network.

The decision strikes at the FCC’s ability to force so-called network neutrality on telecommunications companies.

The U.S. Court of Appeals for the District of
Columbia ruled the FCC overstepped its bounds and lacked direct
statutory authority from Congress to regulate Internet traffic.
Enacting network neutrality rules is a major priority of FCC Chairman Julius Genachowski, who took over in early 2009.

The court’s ruling also could pose legal problems
for the FCC as it seeks to enact the expansive National Broadband
Policy it unveiled last month.

A spokesman for Genachowski would not say what the
next steps would be for the FCC as advisers reviewed the court’s
36-page decision. Among the options would be to appeal the ruling, seek
direct authority from Congress to regulate broadband or have the
commission attempt to classify high-speed Internet service under
existing law so it would be subject to the same type of regulation as
telephone service.

“The FCC is firmly committed to promoting an open
Internet and to policies that will bring the enormous benefits of
broadband to all Americans,” said FCC spokeswoman Jen Howard.
“It will rest these policies — all of which will be designed to foster
innovation and investment while protecting and empowering consumers —
on a solid legal foundation.”

Comcast cheered the decision and said it was committed to allowing its customers open access to the Internet.

“Our primary goal was always to clear our name and reputation,” said Sena Fitzmaurice, vice president of government communications. “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 case stems from a 3-2 ruling by the FCC in 2008 finding that Comcast,
the nation’s largest provider of high-speed Internet, had improperly
blocked some of its customers from using file-sharing technology. The
FCC ruled that Comcast
failed to tell subscribers it was blocking access to the BitTorrent
technology, which allows users to more easily share online video, lied
about the practice when confronted about it by the FCC, and had
intended to cripple online video sites that compete with Comcast’s on-demand service.

Comcast said it
was simply managing traffic on its network and that some customers
using the file-sharing technology were slowing the network. Comcast challenged the FCC’s authority to regulate how the company managed its network.

The FCC said that regulating Internet traffic was
related to its authority to regulate phone and other telecommunications
services. But the appellate court ruled that Congress never gave the
FCC the direct authority.

“The commission may exercise this ‘ancillary’ authority only if it demonstrates that its action — here barring Comcast
from interfering with its customers’ use of peer-to-peer networking
applications — is reasonably ancillary to the … effective performance
of its statutorily mandated responsibilities,” the court said. “The
commission has failed to make that showing. It relies principally on
several congressional statements of policy, but under Supreme Court and
D.C. Circuit case law statements of policy, by themselves, do not
create “statutorily mandated responsibilities.”

Gigi Sohn, president of Public Knowledge, a digital
rights group, said the court decision “calls into question anything the
FCC wants to do in regulating broadband and Internet access.”

“Companies selling Internet access are free to play
favorites with content on their networks, to throttle certain
applications or simply to block others,” she said, calling for the FCC
to reclassify Internet services to fall under traditional rules
governing phone service.

But Randall S. Milch, general counsel for Verizon Communications Inc.,
another leading broadband service provider, said Internet users had
nothing to worry about and that the FCC still had the ability to
enforce consumer protection statutes.

“Consumers are in the driver’s seat in today’s
market-driven Internet ecosystem, and their interests remain fully
protected,” he said.

Rep. Rick Boucher, D-Va.,
chairman of the House subcommittee that deals with telecommunications,
said he would try to get telecommunications companies, major content
providers such as Google and Yahoo,
and others to agree on legislation that would grant the FCC the direct
legal authority over Internet services that the court said it lacked.

“The commission must have the authority to enforce the principals of network openness,” Boucher said.

Boucher and other Democrats have been pushing for several years to enact such legislation, which President Obama has backed. But telecommunications companies and most Republicans have
opposed it, saying additional regulation would stifle investment in
expanding Internet access.

Tuesday’s court decision adds new impetus for such legislation, said Paul Glenchur, a senior analyst at Potomac Research Group in Washington. But Congress moves slowly, he said.

“It’s up to the FCC to decide how they want to proceed here,” he said.

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