Court Strikes Down FCC Ruling on Comcast

Major blow for Federal Communications Commission's authority to regulate broadband services, raising major doubts about its current net neutrality proceedings.

By Kenneth Corbin | Posted Apr 6, 2010
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A federal appeals court has struck down the Federal Communications Commission's order censuring Comcast for secretly blocking traffic on its network, dealing a major blow to the commission's regulatory authority over the Internet just as it sets out on implementing its ambitious 10-year broadband plan.

In a unanimous ruling, the three-judge panel held that the commission exceeded its so-called "ancillary authority," a term referring to a regulatory mandate implied -- but not expressly stated -- in statute.

"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,'" Judge David Tatel wrote in the court's ruling, citing an earlier Circuit Court decision in a 2005 case. "The commission has failed to make that showing."

When Comcast (NASDAQ: CMCSA) and the FCC presented their oral arguments to the court in January, the judges seemed skeptical about the commission's assertion that it had the authority to enforce an Internet policy statement it had ratified in 2005. In the meantime, the FCC has initiated a proceeding to enshrine that policy statement as a set of binding rules and add specific provisions barring Internet service providers from discriminating against certain traffic and providing meaningful disclosures about how they manage their networks.

But with the ruling the D.C. Circuit Court of Appeals issued on Tuesday, the FCC's authority to press forward with that proceeding or any other broadband-related issue is in serious doubt.

FCC spokeswoman Jen Howard declined to comment beyond a statement saying the commission is "firmly committed to promoting an open Internet," and that the ruling would not derail its work on the issue.

"Today's court decision invalidated the prior commission's approach to preserving an open Internet," Howard said. "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."

But what the court did say is that with broadband classified as a so-called Title I service under the Communications Act, the FCC does not have the authority to regulate ISPs in the same manner as telecommunications, or Title II, services, which are subjected to common carrier requirements and other regulations.

At the time of the oral-argument hearing in January, FCC General Counsel Austin Schlick made it clear how much was riding on the court's decision.

"If Comcast's most extreme argument were adopted by the D.C. Circuit, then we would have to either change fundamentally our regulatory approach, or look to the Supreme Court or Congress to restore that power," Schlick told InternetNews.com on the eve of the hearing.

For Comcast, the court's ruling was obviously welcome news, though the company said it won't affect the way it manages its network.

"We are gratified by the court's decision today to vacate the previous FCC's order. Our primary goal was always to clear our name and reputation," Sena Fitzmaurice, Comcast's vice president of government communications, said in an e-mail to InternetNews.com. "We have always been focused on serving our customers and delivering the quality open-Internet experience consumers want."

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