Appeals court ruling could impact National Broadband Plan, net-neutrality rules

The U.S. Court of Appeals has ruled that the Federal Communications Commission lacks the authority to demand that Internet service providers like Comcast Corp., have to offer equal access to anyone who wants to connect to their network. The ruling is a blow for net-neutrality proponents and could impact the National Broadband Plan recently submitted to Congress.
The case dates back to 2007, when Comcast started blocking some peer-to-peer networking applications that it said consumed too much network bandwidth. Some opponents believed Comcast was degrading traffic from BitTorrent because it competed against Comcast’s on-demand video offering. Two net-neutrality proponents, Public Knowledge and Free Press, complained to the FCC that the Internet Service Provider shouldn’t be able to decide which applications should run on the network.
The FCC concluded that “it had jurisdiction over Comcast’s network management practices, but also that it could resolve the dispute through adjudication rather than through rulemaking,” according to the U.S. Court of Appeals for District of Columbia Circuit, which issued today’s opinion in a dry, 36-page report. “On the merits, the Commission ruled that Comcast had ‘significantly impeded consumers’ ability to access the content and use the applications of their choice … and that because Comcast had several available options it could use to manage network traffic without discriminating” against peer-to-peer communications, … its method of bandwidth management contravened federal policy.”
For its part, Comcast changed its policy and began disclosing how it managed certain applications on the network, but challenged the FCC’s decision that it had to treat all traffic on its network equally.
At question is whether the FCC has “ancillary authority” over Internet management practices because the FCC’s authority largely is solely over telecommunications service providers, not information services. “As in the case of section 230(b) and section 1, the commission is seeking to use its ancillary authority to pursue a stand-alone policy objective, rather than to support its exercise of a specifically delegated power,” the appeals court ruled in siding with Comcast.
The next steps in the ongoing net-neutrality policy debate are unclear. Interestingly, the FCC under new chairman Julius Genachowski has further ruled that wired broadband service providers must not favor one application over another, although the commission has said that wireless broadband providers should be able to manage their traffic.
“Today’s Appeals Court decision means there are no protections in the law for consumers’ broadband services. Companies selling Internet access are free to play favorites with content on their networks, to throttle certain applications or simply to block others. In addition, as of now, the Federal Communications Commission’s (FCC) ambitious National Broadband Plan to help boost the economy is in legal limbo,” said Gigi Sohn, president of Public Knowledge. “The ability of the FCC to support broadband through universal service is in jeopardy, as is the agency’s ability to protect consumer privacy, ensure access to broadband-based emergency communications or promote access to broadband for the disabled. In our view, the FCC needs to move quickly and decisively to make sure that consumers are not left at the mercy of telephone and cable companies.”
Public Knowledge said the FCC should start to bring Internet access service under its jurisdiction over common carrier regulations. “Some parts of the Communications Act, which prohibit unjust and unreasonable discrimination, could be applied here. 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 and the Broadband Plan could go forward. The American public deserves no less.”
Research firm Jefferies & Co. Inc. said the order does not rule on net-neutrality itself. “Importantly, we note that the ruling does not state an opinion on the issue of net neutrality or network management. Rather, the court states that “we begin – and end – with Comcast’s jurisdictional challenge.”
However, the company goes onto say it will impact how the FCC addresses net neutrality going forward. “We believe questions about the commission’s jurisdiction could have implications for its desire to codify net neutrality principles. … We believe that the FCC could seek to extend its jurisdiction to the Internet by reclassifying broadband as a Title 2 “telecommunications” service (over which it has greater purview), rather than the more lightly regulated Title 1 “information” service it is now.
Further, Jefferies researchers said the ruling could open the door for tiered pricing plans. “To the extent that the ruling could allow broadband service providers more flexibility in their network management practices, we believe new revenue streams could emerge, including: (a) metered billing based on usage, and (b) incremental revenue based on service quality. However, we caveat this speculation by noting that today’s development likely represents just the latest salvo in what we expect will be a prolonged debate.”