Court Questions FCC's Authority in Comcast Net Neutrality Case

Judges raise serious questions about FCC's right to regulate ISPs' network management, sparking uncertainty about its pending Net neutrality rulemaking.

By Kenneth Corbin | Posted Jan 8, 2010
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WASHINGTON -- A panel of federal judges today heard oral arguments in Comcast's challenge against the Federal Communications Commission's ruling to censure the cable giant for secretly blocking certain Internet traffic, raising significant questions about the commission's authority to act in the matter.

Comcast's (NASDAQ: CMCSA) argument that the FCC's action in August 2008 was predicated on an "expansive theory" of the commission's authority, one that found scant support in its statutory authority, seemed to resonate with the judges, who reserved their most pointed questions for the commission's attorney.

"This is the first time that they have tried in any substantial way to exert authority over the Internet," said Comcast attorney Helgi Walker, of the law firm Wiley Rein. "This is a historic case."

FCC General Counsel Austin Schlick flatly disputed that assertion, calling it "profoundly ahistorical," but the judges seemed skeptical when he cited provisions in communications laws and past cases to support the commission's position.

The case stems from a petition consumer groups filed with the FCC in 2008, asking officials to open an investigation into Comcast's practices for managing data traffic on its network. Comcast eventually admitted that it had slowed certain transmissions from BitTorrent and other peer-to-peer protocols.

Ahead of the FCC's ruling in the matter, Comcast voluntarily agreed to move to what it called a "protocol-agnostic" method of traffic management, but the commission still approved the order, rebuking the company both for selectively blocking traffic and failing to provide its subscribers with sufficient notice about its practices.

Comcast quickly challenged the ruling, initiating a legal proceeding that today came before the U.S. Court of Appeals for the D.C. Circuit.

Whether or not Comcast was wrong to block the traffic on its network is no longer an issue. The legal challenge to the ruling turns on the FCC's authority to regulate in the matter.

Overstepping its authority?

Specifically, Comcast is arguing that the FCC overstepped by interpreting its Internet policy statement of 2005 as an enforceable document, and, more broadly, whether it even has the statutory authority to regulate the manner in which ISPs manage their networks.

"There was not a single provision of federal law ... that governed Comcast's network practices. All there was was a policy statement," Walker said

"That document quite simply lacked any legal force or effect," she added, arguing that previous FCC actions were taken "always against the backdrop of some statutory scheme."

The court's decision could have a significant impact on the proceeding currently underway at the FCC that would enshrine the policy statement as binding rules, and create two additional provisions about nondiscrimination and consumer notification -- effectively making network neutrality the law of the land.

Schlick argued that the FCC has what is known as ancillary jurisdiction in the matter, telling the judges that the Supreme Court has affirmed its authority to establish regulations that serve the goals that Congress has expressed in the laws it has passed, even if the authority was not explicitly written into the statute.

But the three judges seemed unconvinced by Schlick's assertion that several provisions in various laws, including the 1996 Telecommunications Act, afforded the FCC the ancillary authority to regulate network management.

"The commission seems to be intent about acting upon implicits in this case," Chief Judge David Sentelle said.

If the judges were to void the Comcast order on the grounds that it lacked ancillary authority in the matter, it could derail the FCC's current push to enact binding Net neutrality rules.

"The FCC's entire work in this area depends on the assumption that we have the power we need to protect consumers against discrimination and maintain an open Internet, without undue regulation," Schlick told InternetNews.com in an e-mail before today's hearing. "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."

Today, he admitted as much to the judges, if in fewer words.

The FCC has not set a date to vote on its current network neutrality rulemaking, but it is expected to consider the matter sometime this spring. Rulings from the appeals court are commonly returned within a few months following the oral arguments.

In addition to throwing a wrench into the FCC's rulemaking proceeding, a court order finding that the FCC acted outside of its statutory mandate would likely set in motion a concerted push in Congress to move on Net neutrality legislation. Previous efforts to pass network neutrality bills have fallen short, Walker was quick to point out, and attempts to renew the push would be met with vocal opposition in what has historically been a highly partisan debate.

One of the judges, A. Raymond Randolph, expressed frustration that Congress had failed to act decisively on the issue, complaining that leaving the matter to the FCC "allows Congress to evade its responsibility."

In the area of Internet law, he said that Congress seemed incapable of passing meaningful legislation, opting instead for toothless bills that duck the hard issues and perpetuate a climate of legal uncertainty.

"The only bills that get passed are the ones that say 'study it,'" he said.

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