D.C. Circuit Strikes Down Net Neutrality Measure

The D.C Circuit U.S. Court of Appeals ruled on April 6, 2010, that the Federal Communications Commission (FCC) has no authority to regulate an Internet service provider's (ISP) network management practices. Some commentators speculated that the decision could represent a serious setback for advocates of "net neutrality," the doctrine that requires Internet service providers to treat all content equally.

In Comcast Corp. v. F.C.C., 49 Comm. Reg. 1226 (D.C. Cir. 2010), Judge David Tatel ruled that the FCC had no express statutory authority over ISP data management, and the FCC's reliance on a portion of the Communications Act, 47 U.S.C. § 154(i), which authorizes the FCC to "perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with this chapter, as may be necessary in the execution of its functions," was not valid.

The case arose after several subscribers to Comcast's high-speed Internet service discovered that the company was interfering with their use of peer-to-peer networking applications in 2007. According to the court's opinion, peer-to-peer programs allow users to share large files directly with one another without going through a central server, and consume significant amounts of bandwidth.

Two non-profit advocacy organizations and a coalition of public interest groups and law professors filed a complaint and a petition for a declaratory ruling with the FCC, arguing that Comcast "violated the FCC's Internet Policy Statement." The Internet Policy Statement was issued by the FCC in 2005 and asserts that "consumers are entitled to access the lawful Internet content of their choice . . . [and] to run applications and use services of their choice." Comcast argued in opposition that its interference with peer-to-peer programs was necessary "to manage scarce network capacity."

In response to the complaint, the FCC ruled that Comcast had "significantly impeded consumers' ability to access the content and use the applications of their choice," and its method of bandwidth management "contravene[d] . . . federal policy." Comcast then petitioned for a review of the FCC's order in the D.C. Circuit U.S. Court of Appeals.

The FCC defended its ruling by stating that congressional policy had created "statutorily mandated responsibilities" sufficient to support the exercise of § 154(i) "ancillary authority," but Tatel wrote that the argument was contradicted by previous federal decisions, and said that such reasoning would "virtually free the Commission from its congressional tether."

"Were we to accept that theory of ancillary authority . . . we can think of few examples of regulations that apply to Title II common carrier services, Title III broadcast services, or Title VI cable services that the Commission, relying on the broad policies . . . would be unable to impose upon Internet service providers," Tatel wrote.

The FCC also argued that portions of other federal statues, such as 47 U.S.C. § 1302(a), which provides that "[t]he Commission . . . shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans . . . by utilizing . . . price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment," grant the FCC the authority to regulate bandwidth.

Tatel also rejected these arguments, stating that, where the FCC "has no express regulatory authority," he was unwilling to accept the commission's "expansive theory of ancillary authority."

"It is true that Congress gave the Commission broad and adaptable jurisdiction so that it can keep pace with rapidly evolving communications technologies," Tatel concluded. "Yet notwithstanding the difficult regulatory problem of rapid technological change posed by the communications industry, the allowance of wide latitude in the exercise of delegated powers is not the equivalent of untrammeled freedom to regulate activities over which the statute fails to confer Commission authority."

According to an April 6, 2010 story in The New York Times, Comcast had a "muted reaction" to its victory. "Comcast remains committed to the F.C.C.'s existing open Internet principles, and we will continue to work constructively with this F.C.C. as it determines how best to increase broadband adoption and preserve an open and vibrant Internet," Comcast said in a statement.

In an April 6 post on the CommLawBlog, Mitchell Lazarus, an attorney for the law firm of Fletcher, Heald & Hildreth, wrote that the FCC "still has a few options."

"For example, it can ask the same court for a hearing en banc . . . or appeal to the Supreme Court. Or it can ask Congress for a law that gives it the authority it needs. There may be other alternatives as well, involving adjustments to the existing regulations for a better fit with the existing statutes, but their likelihood of success in court remains to be seen," Lazarus wrote. "For the time being, at least, Internet providers are free to favor or block content as they choose."

In an April 6 post on the Electronic Frontier Foundation's website, senior staff attorney Fred von Lohmann wrote the ruling "is not likely to make much difference to Comcast subscribers," since Comcast had agreed to stop regulating bandwidth before the FCC's ruling was issued. "Instead, the court's ruling is important because it represents a blow to FCC Chairman [Julius] Genachowski's proposed net neutrality regulations, which are premised on the same theory of 'ancillary jurisdiction' that the FCC used against Comcast and that the court rejected today," von Lohmann wrote.

In an April 6 post on the TechDirt blog, Mike Masnick praised the decision for limiting the power of the FCC. "The FCC was clearly going beyond its mandate, as it has no mandate to regulate the internet in this manner," Masnick wrote. "Even if you believe net neutrality is important, allowing the FCC to overstep its defined boundaries is not the best way to deal with it. So for those of you upset by this ruling, look at it a little more closely, and be happy that the FCC has been held back from expanding its own mandate."

- JACOB PARSLEY

SILHA FELLOW AND BULLETIN EDITOR

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This page contains a single entry by cla published on June 7, 2010 11:12 AM.

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