What Comcast’s Win Against FCC Means for Broadband

1Executive Summary

On Tuesday, the U.S. Court of Appeals in the District of Columbia issued a ruling challenging the FCC’s decision to slap Comcast on the wrist in 2008 for the cable giant’s throttling of P2P traffic traveling over its pipes. The ruling decreed that the FCC has overstepped its authority in censuring Comcast and puts into jeopardy — or at least delays — the agency’s efforts to regulate network neutrality. The ruling may also be the final push that forces Congress to take up comprehensive reform of how broadband networks are regulated in the U.S.

The Tuesday ruling essentially said that the FCC didn’t anchor its decision to interfere in Comcast’s network management in the proper statutory authority. Much like you or I can challenge a speeding ticket if the cop that issued it gets the color of the car wrong — even if we were going 20 mph over the limit — Comcast got the FCC’s decision revoked on a technicality.

At this point, the FCC has four choices — and depending on what it chooses, the ruling could spark a legislative reform effort in Congress that could drag on for years or merely set of infighting among policy wonks at the FCC, consumer groups and ISPs as the agency seeks to reclassify high speed internet as a transport service like the telephone rather than an information service like Google or Facebook.

  • Option 1: Appeal The FCC could appeal the decision to the full court of appeals or to the Supreme Court, but it doesn’t look like the agency is interested in taking that option. Most lawyers I spoke with don’t think it would be wise after reading the ruling, either. They think the FCC would just lose again.
  • Option 2: Do Nothing Like appealing, this isn’t a strong option, because the FCC would likely find itself in the same position, arguing before the courts every time it tried to regulate certain aspects of broadband infrastructure, forced to defend the use of its authority each time it wanted to get access to data or implement certain sections of the National Broadband Plan. Susan Crawford, a Yale professor and the former co-lead on the FCC Agency Review team for the Obama-Biden transition team, said it would “be like getting nibbled to death by ducks,” adding that they wouldn’t be nice ducks — they’d be angry ones.

Assuming the agency isn’t cool with pissed-off waterfowl and a useless appeal, it’s left with the two more realistic options: reclassification and going to Congress. Before we get to these options we’re going to have to hop in the time machine and travel back to 2002 (and to the Communications Act of 1934 and the Telecommunications Act of 1996, while we’re at it).

A Brief History Lesson
In 2002, Michael Powell’s FCC was asked to decide if cable providers were information services or transport providers. He went with information providers (which puts them under Title I of the FCC jurisdiction) because they offered services on top of Internet access, such as email. Later in 2005, then-FCC Chairman Kevin Martin classified DSL the same way; later orders did the same for broadband over power line and wireless broadband.

However, by classifying cable and DSL companies as information services, rather than as transport, the FCC backed itself into a corner when it comes to trying to regulate aspects of these information services. The Communications Act of 1934, which created the agency, gives the FCC broad jurisdiction to regulate transport companies under Title II of the act, but it forces the FCC to justify its decisions to regulate information providers that fall under Title I.

Confusingly, despite the FCC’s classification of DSL service, the telecommunications companies that provide it are still technically regulated under Title II because they provide transport services like the telephone. But because high-speed Internet from phone and cable companies is now an information service, it forces the FCC to justify its regulations that touch high-speed Internet access in more creative ways that then can get shot down by the courts if not done properly. That’s what happened in the Comcast case.

Option 3:  Reclassify Broadband Providers as Transport

The FCC can reclassify high-speed Internet service as transport and solve many of its problems.That would place ISPs more squarely under the FCC’s thumb, and indeed, the ISPs aren’t really keen on this idea. Last month, Tom Tauke, Verizon’s head policy wonk gave a speech where he protested this plan before it even became an issue. In the speech he said:

One idea recently floated to solidify the FCC’s jurisdiction was to place broadband under the old rules that applied to telephone networks under Title II. To us, that clearly was outside the scope of the statute. It also highlighted the danger of attempting to apply statutory provisions intended for the telephone industry of the 1900s to the communications and Internet world of the 21st century.

He deftly ignores the relative flexibility of the Telecommunications Act of 1996, which tried to give the FCC a broad brush for implementing regulations over the pipe itself, no matter what type of pipe it was copper, fiber or coax. While that’s intentional, he paints a misleading picture. Those rules did apply to the old phone lines, but it’s because those lines were two-way communications services, much like high speed Internet allows today. Reclassification of cable, DSL and fiber lines under Title II simply acknowledges that high-speed Internet access, behind the bells and whistles of a Comcast email address or 250 MB of free storage, are really a two-way communications pipeline — the dreaded dumb pipe.

Moreover, when the FCC originally decided to classify DSL as an information service it reserved the right to change its mind later — a move that Crawford said was unusual. In the Wireline Broadband Framework issued Sept. 23, 2005, the FCC said:

“The Commission is free to modify its own rules at any time to take into account changed circumstances. … As such, in our discretion, subject to reasoned explanation, we are free to alter the policy judgment reflected in those requirements based on our assessment of their relevant costs and benefits in light of changed technological and market conditions.”

So the FCC can change its mind and reclassify high-speed Internet access as a transport, rather than information service. Doing so would allow the FCC to continue its Net Neutrality push and implement critical aspects of the National Broadband Plan. If it does this, it would likely issue a Notice of Inquiry or a Notice of Proposed Rulemaking telling the world that it wants to classify high-speed Internet access as a transport service under Title II. It would then accept comments and the entire process could take at least six months of back and forth — and would likely end with a court battle. Alternatively it could issue a Declaratory Order, skip the comment period and go straight to the court fight, but insiders in Washington don’t think that will happen.

If the FCC takes this route, the current Net Neutrality proceeding would be paused, but could then resume once the FCC has its authority in order — the agency wouldn’t have to redo the months of work that have already gone into the proceeding. Additionally, if the FCC reclassifies various information services as transport, it will likely have to issue other notices saying that it intends to avoid forcing certain rules on those high-speed Internet providers such as forced interconnections and tariff agreements.

Option 4: Hope for Congress to Step in

Reclassification is the option that most believe will make the most sense, but there is what Derek Turner of the Free Press calls the nuclear option: Congress.

This is a great option for ISPs like Comcast or Verizon, because Congressional legislation takes forever, and allows them to continue running their businesses without too much worry over the current FCC’s interference. For instance, it can allow them to sue, and possibly win if the FCC gets too uppity while trying to enforce network neutrality. Plus, there are plenty of members of Congress who are against net neutrality, making any effort to enact it on the Hill uncertain, time-consuming and difficult.

Getting Congress to act quickly isn’t going to happen, especially in an election year, when it’s up against the ISPs, which employ powerful lobbyists and can also rally their thousands of workers in a variety of states to vote in their favor. The broad base of potential “grassroots” hatred toward any attempt to “regulate the Internet” that the ISPs can muster is fearsome for any politician trying to court voters in his or her district.

There are also members of Congress who don’t want to legislate on this topic again, believing that the 1996 Telecommunication Act does give the FCC the authority and it merely needs to take it. As Senator John Kerry (D-Mass.) said Tuesday in response to the Comcast ruling:

“I was a member of the Senate Commerce Committee during consideration of the Telecommunications Act of 1996. I know the Congress did not intend for cable and telephone broadband Internet service providers to fall outside the authority of the FCC to protect consumers, protect against discrimination, provide public safety officials with priority access to service, ensure that people with disabilities are given consideration, or ensure that modern communications are available to everyone in America.”

So, to many, the FCC’s choice seems obvious: It should reclassify high speed Internet service as transport. But no matter what happens, the need to take action now is an unfortunate bump in the road to rapidly implementing network neutrality, universal service fund reform and even forcing ISPs to turn over data about broadband speeds.

Relevant analyst in broadband
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3 Comments Subscribers to comment
  1. I have often wondered what if we had a more competitive marketplace — more than just incumbent duopoly which currently exists only to thwart any real change.

    Now I know it is wishful thinking, but I really wonder if our lawmakers spend as much energies on trying to create more competitors.

  2. Bob Harrington Tuesday, April 13, 2010

    Doesn’t it occur to anyone that, at the federal and state levels, the incumbent ‘fix is in’?

    The telephone industry has spent over a century very effectively building relationships and lobbying to insert a law here, a couple of paragraphs there. Everywhere you look you will find a spiderweb of rules and regulations that the big boys helped put in place and know how to defend. The PR machines and legal strategies in their combined play books are formidable.

    The cable industry has been at this just three or four decades, adding more layers to the protective web.

    Plus, they all have bought and paid for friends going up every rung of the ladder to very high places. There is nothing stopping them from going back to the well over and over. You know they will; they claim it is in the best interests of their investors. Time works for them. And they love their powerful positions.

    The unfortunate result, America is screwed.

    Our ‘communications policy’ forces us to pay the piper every day. We are now paying in life blood. The signs are everywhere. Yet American leadership may realize too late we are bleeding to death.

    So does anyone really believe Congress, or even the FCC, is the go-to place for breakthrough leadership on our national communications policy?

    Guess who’s pulling those strings.

  3. Richard Bennett Monday, April 12, 2010

    There are still two options for the FCC: base the ancillary jurisdiction argument on a stronger argument and leave the Internet under Title I, or reclassification. The problem that NN advocates have with Title I is that it extends to search and advertising services, so a general rule that a service provider can’t use its service to privilege its own products would be bad for Google, for example, because it clearly uses its control of search to privilege its products in mapping and finance, for example. So the challenge for such firms is how to regulate the virtual network – the Internet – without regulating platforms like Google and Facebook. The regulation needs to base itself on an arbitrary distinction between one type of platform and another.

    The FCC’s placement of Internet service isn’t completely unbound either; it can’t be arbitrary, so the real challenge is how to pass an arbitrariness test without regulating the promoters of net neutrality. The only way out of this is to twist the law into a pretzel.

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