FCC loses Comcast's court challenge, a major setback for agency on Internet policies

Tuesday, April 6, 2010; 11:20 AM
By Cecilia Kang Washington Post
Comcast on Tuesday won its federal lawsuit against the Federal Communications Commission, in a ruling that undermines the agency's ability to regulate Internet service providers just as it unrolls a sweeping broadband agenda.
The decision also sparks pressing questions on how the agency will respond, with public interest groups advocating that the FCC attempt to move those services into a regulatory regime clearly under the agency's control.
The U.S. Court of Appeals for the Distrit of Columbia, in a 3-0 decision, ruled that the FCC lacked the authority to require Comcast, the nation's biggest broadband services provider, to treat all Internet traffic equally on its network.
That decision -- based on a 2008 ruling under former FCC Chairman Kevin Martin -- addresses Comcast's argument that the agency didn't follow proper procedures and that it "failed to justify exercising jurisdiction" when it ruled Comcast violated broadband principles by blocking or slowing a peer-sharing Web site, Bit Torrent.
But it also unleashed a broader debate over the agency's ability to regulate broadband service providers such as AT&T, Comcast, and Verizon Communications.
The judges focused on whether the FCC has legal authority over broaband services, which are categorized separately from phone, cable television and wireless services. The agency currently has only "ancillary authority" over broadband services, a decision made by past agency leaders in an attempt to keep the fast moving Internet services market at an arms distance from the agency.
The Commission may exercise this 'ancillary' authority only if it demonstrates that its action . . . is "'reasonally ancillary to the .. effective performance of its stautorily mandated responsibilities." The Commission has failed to make that showing.
The court's decision comes just days before the agency accepts final comments on a separate open Internet regulatory effort this Thursday. And the agency will be faced with a steep legal challenge going forward as it attempts to convert itself from a broadcast- and phone-era agency into one that draws new rules for the Internet era.
Andrew Schwartzman, policy director for Media Access Project said the ruling, "represents a severe restriction on the FCC's powers."
Public interest group have urged the agency to reclassify broadband services so that they are more concretely under the agency's authority. The FCC has been reluctant to say if it would do so and a spokesperson didn't immediately respond to a request for comment.
Analysts said the agency may not be able to proceed on its net neutrality policy -- a rule that Internet service providers have fought against. And there is doubt the agency could reform an $8 billion federal phone subsidy to include money to bring broadband services to rural areas.
Bruce Mehlman, former Assistant Secretary of Commerce.for Technology Policy, however said the decision may help speed the development of faster, and more robust networks.
"It may drive greater investment in broadband networks by removing regulatory uncertainty and perceived disincentives to invest in infrastructure," Mehlman said.