Appellate judges question FCC’s authority on Net neutrality

Monday, January 11, 2010

WASHINGTON — The Federal Communications Commission ran into a potential setback Jan. 8 in its push to draft rules that would require Internet providers to give equal treatment to all data flowing over their networks.

In hearing a legal dispute between the agency and Comcast Corp., a three-judge federal appeals court panel questioned the commission's authority to impose so-called “Net neutrality” obligations on the nation's largest cable TV and Internet operator. Those rules are intended to prevent broadband providers from abusing their control over the market for high-speed Internet access.

The Legal Times blog reported that the D.C. Circuit panel consisted of Chief Judge David Sentelle, Judge David Tatel and Senior Judge A. Raymond Randolph. The blog quoted Randolph as calling the FCC’s position “antiquated,” and that the agency was acting on its own with no congressional statutory authority. “What independent authority did the commission have to regulate the Internet?” Randolph asked, according to Legal Times.

Legal Times also reported that Tatel questioned whether FCC policy could go so far as to regulate how much e-mail any given subscriber could send and receive.

A decision that goes against the FCC could undermine its ability to impose such rules on all broadband companies, not just Comcast.

The Jan. 8 oral arguments centered on Comcast's challenge of a 2008 FCC order banning the company from blocking its broadband subscribers from using an online file-sharing technology known as BitTorrent. The commission, at the time headed by Republican Kevin Martin, based its order on a set of net-neutrality principles it adopted in 2005 to prevent broadband providers from favoring or discriminating against certain types of Internet traffic. Those principles have guided the FCC's enforcement of communications laws on a case-by-case basis.

Formally adopting those guidelines as binding regulations is a top priority for the FCC's new Democratic chairman, Julius Genachowski. The agency voted in October to launch a proceeding to write the rules.

But with Comcast appealing the FCC order, a key question for the U.S. Court of Appeals for the District of Columbia Circuit is whether the commission has legal authority to impose such obligations. The three-judge panel, which is expected to issue a ruling this spring, appeared skeptical of that on Jan. 8.

Still, in a statement after the arguments, Genachowski he was confident the commission possessed the legal authority it needs “to preserve the free and open Internet.”

Comcast had no official comment.

The dispute over network neutrality has pitted some of the country's leading Internet companies, including Google Inc. and the calling service Skype, against the big phone and cable operators. The Internet companies say that without such rules, broadband providers could become online gatekeepers and prioritize traffic for those who can pay extra, while degrading or blocking cheaper Internet calling services or online video sites that compete with their core businesses.

For instance, BitTorrent, the online file-sharing technology blocked by Comcast, can be used to transfer large files such as online video, something that threatens Comcast's cable TV business. But broadband providers such as Comcast, AT&T Inc. and Verizon Communications Inc. argue that after pouring billions of dollars into their networks, they should be able to offer premium services to differentiate themselves from competitors and earn a healthy return on their investments. They also insist they need flexibility to manage their systems so high-bandwidth applications such as BitTorrent don't hog too much capacity and slow the network for everyone else.

While these issues are being hashed out in the Net-neutrality proceeding at the FCC, the current court case is focused on legal questions.

For its part, Comcast argues that the FCC order is illegal because the agency was seeking to enforce mere policy principles, which don't have the force of regulations or law. But the commission argues that the U.S. Supreme Court ruling National Cable & Telecommunications Association v. Brand X Internet Services (2005) upholding its move to deregulate Internet service gives it the jurisdiction it needs. And a 1996 federal telecommunications law gives the agency authority to set rules for information services — including, the FCC argues, Net-neutrality rules.

An appeals court ruling that rejects this argument could draw Congress into the matter to give the FCC the power to regulate broadband as an information service.

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