Court ruling rolls back FCC's net-neutrality guidelines

A federal appeals court today overturned a Federal Communications Commission order against Comcast, ruling that the commission does not have the authority to regulate network management practices of Internet service providers.

The ruling by the D.C. Circuit Appeals Court has little practical impact on Comcast, which already had stopped the practice of choking off peer-to-peer traffic of subscribers, but is widely seen as a blow against the FCC policy of network neutrality. Without the authority to regulate network management, the commission is left, for the time being at least, without a tool for requiring that carriers treat all traffic equally.

Supporters of net neutrality say the policy ensures that carriers, who increasingly also are content providers, do not discriminate against competitors by blocking access to their content.

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Industry groups, which opposed the policy as a threat to technological innovation, are pleased with the decision.

“The D.C. Circuit's ruling reaffirms the primacy of the rule of law and the legislative authority of Congress to determine whether and how our nation's communications networks are to be regulated,” said Barbara Esbin, senior fellow at The Progress & Freedom Foundation.

The court ruled on the issue of the FCC’s jurisdiction, not on the policy of net neutrality. The commission acknowledged that it had no express statutory authority, but relied on a catch-all provision of the Communications Act giving it authority to make rules and regulations necessary to carry out its duties.

“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 wrote in its decision. “The Commission has failed to make that showing.”

Courts have recognized the commission’s authority to impose some regulation on Internet service providers, but that does not confer blanket authority.

The case stemmed from a 2007 complaint filed against Comcast with the FCC by Free Press and Public Knowledge after it became known that Comcast was throttling back subscribers’ traffic from some peer-to-peer applications. Comcast asserted that it was a reasonable way to manage traffic on its networks, but opponents of the practice saw it as a way to restrict consumers’ access to competing content and services.

The FCC ruled that Comcast had violated an FCC policy adopted in 2005 declaring that consumers are entitled to:

• Access the lawful Internet content of their choice.
• Run applications and services of their choice, subject to the needs of law enforcement.
• Connect their choice of legal devices to the network.
• Benefit from competition among network, application, service and content providers.

“All of these principles are subject to reasonable network management,” the policy statement said.

But the policy has not been adopted as a formal rule, and that was one of the grounds on which Comcast challenged the decision.

“It is true that 'Congress gave the [Commission] broad and adaptable jurisdiction so that it can keep pace with rapidly evolving communications technologies’,” the court’s decision concluded, citing language from arguments. “It is also true that 'the Internet is such a technology,’ indeed, ‘arguably the most important innovation in communications in a generation.’” But that does not give the commission “untrammeled freedom to regulate activities over which the statute fails to confer . . . Commission authority.”

The FCC voted unanimously in October, with some dissent from Republican commissioners, to authorize a notice of proposed rulemaking on net neutrality that would formalize the 2005 policy statement.

“Today’s court decision invalidated the prior commission’s approach to preserving an open Internet," FCC spokesperson Jen Howard said Tuesday in response to the decision. "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."

She said the FCC would not abandon the principles of net neutrality. "The FCC is firmly committed to promoting an open Internet and to policies that will bring the enormous benefits of broadband to all Americans. 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."