Federal Court Rules FCC Lacks Authority to Regulate Net Neutrality

The U.S. Court of Appeals in the District of Columbia has ruled against the Federal Communication Commission (FCC), saying it failed to show it had the Title 1 authority under the Communications Act of 1934 to tell Comcast what to do to enforce network neutrality rules over broadband Internet providers. The ruling is a significant victory for Comcast Corporation, which had been involved in a dispute with the F.C.C. over network filtering of P2P filesharing software after its customers complained that the cable giant was interfering with P2P apps.

"The commission has failed to tie its assertion of ancillary authority over Comcast's Internet service to any statutorily mandated responsibility," stated a three-judge panel of the DC U.S. Court of Appeals."

The F.C.C. released the following statement after the ruling:

"The F.C.C. is firmly committed to promoting an open Internet and to policies that will bring the enormous benefits of broadband to all Americans. It will rest these policies -- all of which will be designed to foster innovation and investment while protecting and empowering consumers -- on a solid legal foundation.

"Today's court decision invalidated the prior Commission's approach to preserving an open Internet. 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."

Today's decision followed a January hearing where the federal court judges showed skepticism of F.C.C. authority to require broadband Internet providers to give equal treatment to packets as they moved over telecom networks. As Karl Bode writes at DSLreports, before Comcast's win over the F.C.C.:

Again, no FCC fine was levied, no new rules were imposed, and Comcast barely saw a wrist slap for" lying to consumers and the press multiple times, in both filings and in print, about throttling all customer traffic, 24/7 using user packet forgery.

Comcast ultimately shifted to a clear 250 GB monthly cap and a more intelligent and less blunt force method of targeting network congestion. Still, Comcast never much liked the precedent the FCC's actions set, so Comcast lawyers have spent the last few years trying to argue that the FCC never had the authority to dictate how Comcast manages its network. The FCC found themselves on uncertain legal footing because the rather flimsy network neutrality principles (pdf) created by previous FCC administrations were painfully vague."

The decision creates a roadblock in the F.C.C.'s path towards moving forward with elements of its national broadband plan. The decision might mean, for instance, the F.C.C. lacks the necessary powers it requires to shift spectrum from TV companies to wireless providers.

As a result of the ruling, Comcast and other broadband service providers may reasonably be expected to filter P2P filesharing again. As Cecilia Kang reported at the Washington Post, the F.C.C.'s loss in the court comes only two days ahead of the deadline for final comments on a separate open Internet regulatory effort. As Kang observed, the FCC will be now confronted with a new legal challenge as it moves to evolve from an agency that regulates broadcasts and phone lines into one that governs bits and bytes in the Internet era. Indeed, this ruling makes it clear that the agency did not argue effectively enough that it possesses sufficient authority under existing statutes.

"Either the F.C.C. or Congress is going to have to go back to the drawing board and reconsider the "authority that the agency can exercise over 'last mile' providers of Internet access," said Leslie Harris, president and CEO of the Center for Democracy & Technology (CDT). "Otherwise, the legal landscape will remain murky and ultimately fail to protect open and unfettered Internet access."

Dan Gillmor, director of the Knight Center for Digital Media Entrepreneurship at Arizona State University's Walter Cronkite School of Journalism and Mass Communication, took a similar position, arguiing that net neutrality has always been up to lawmakers:

This isn't just a free-speech issue at its core. It also raises some basic economic questions; America lags further and further behind the rest of the developed world in taking advantage of broadband's potential, and the consequences of our inaction grow more serious every year.

While I'm skeptical of all of the specific network-neutrality fixes I've seen so far -- unintended consequences worry me -- I'm absolutely freaked out at the trend. We are turning over our fundamental rights to communicate and collaborate to companies that have not earned even a semblance of trust.

The CDT took the position that this aspect of the ruling may have healthy long-term consequences for the Internet's future. "CDT has long argued that the best approach here would be for Congress to give the F.C.C. a clean but limited grant of authority to preserve the openness and neutrality of Americans' 'last mile' access to the Internet," said CDT Senior Policy Counsel David Sohn. "Alternatively, the F.C.C. will have to consider using its authority to reclassify broadband services to bring them under agency jurisdiction in a focused and light-touch way."

Comcast has pledged to change its filtering behavior, as Nate Anderson points out at Ars Technica, and has since transitioned to a protocol agnostic approach to network congestion.

Today's decision could have broader implications for network neutrality than the return of filtering for P2P file sharing, however, as Edward Wyatt observed in at the New York Times:

The ruling would allow Comcast and other Internet service providers to restrict consumers' ability to access certain kinds of Internet content, such as video sites like or Google's YouTube service, or charge certain heavy users of their networks more money for access."

As Wyatt points out, the decision could also affect the pending Comcast-NBC Universal merger. While Comcast has said that it would not favor the content of its own websites, broadcast or cable channels, this decision would weaken the ability of the F.C.C. to regulate such behavior.

Given the direct impact on consumer experience that would result from such traffic shaping, however, it's more likely that the Federal Trade Commission would be involved in enforcement. Mike Masnick argues at TechDirt, in fact, that the court ruling the F.C.C. has no mandate to enforce network neutrality is a good thing:

"Lots of people seem upset by this, but they should not be. This is the right decision. The FCC was clearly going beyond its mandate, as it has no mandate to regulate the internet in this manner. In fact, what amazed us throughout this whole discussion was that it was the same groups that insisted the FCC had no mandate over the broadcast flag, that suddenly insisted it did have a mandate over net neutrality. You can't have it both ways (nor should you want to). Even if you believe net neutrality is important, allowing the F.C.C. to overstep its defined boundaries is not the best way to deal with it."

Jim Harper, director of information policy studies at the Cato Institute, took an even stronger position on the issue, arguing that the F.C.C. doesn't have the authority to regulate the Internet - "and shouldn't."

The court's decision marks another turning point in the debate over whether the federal government should regulate Internet access services. What's entertaining about it is that the problem was solved two years ago by market processes--sophisticated Internet users, a watchdog press, advocacy groups, and interested consumers communicating with one another over the Internet.

The next step will be for advocates to run to Congress, asking it to give the FCC authority to fix the problems of two years ago. But slow-moving, technologically unsophisticated bureaucrats do not know better than consumers and technologists how to run the Internet. The FCC's "net neutrality" hopes are nothing more than public utility regulation for broadband. If they get that authority, your online experience will be a little more like dealing with the water company or the electric company and a little less like using the Internet.

As I've noted before, Tim Lee's is the definitive paper. The Internet is far more durable than regulators and advocates imagine. And regulators are far less capable of neutrally arbitrating what's in the public interest than most people realize.

Reclassification at hand?

What's next for net neutrality? Just as the nation had to bone up on reconciliation rules in the legislative endgame surrounding healthcare, now tech policy wonks will be explainin how "reclassification" might work. Currently, broadband services fall under the "Title I" category, under which that federal appeals court ruled the agency failed to make showing that it had "ancillary" jurisdiction over broadband ISPs. As result, the commission may try to re-classify broadband as a "Title II" service, over which it would have jurisdiction, as some observers believe that the F.C.C. has hinted.

As Tony Romm writes at Hilicon Valley, however, reclassification would not be any easy route:

"However, if the FCC does seek to re-classify broadband, it is likely to face another set of tough legal battles. Top ISPs, including Comcast as well as AT&T and Verizon, have signaled they would aggressively fight any such rule change. Verizon executives have even explicitly warned the agency recently not to travel the re-classification route.

"Saying it is unwise to classify broadband as a Title II service is an understatement," Tom Tauke, Verizon's executive vice president for public affairs, policy and communications, said last week.

Senator Jon Kerry (D-MA) released a statement that the F.C.C.has the 'rationale' to consider reclassification. As Tony Romm reported for the Hill, Kerry suggested "a new legal and regulatory framework for broadband, especially if reclassifying broadband as a telecommunications service proves too difficult to administer."

Expect to hear more from Senators, Representatives and lobbyists in the weeks ahead. Declan McCullagh has been covering the court ruling on net neutrality closely at CNET, including reactions from influentional legislators, industry groups and history around the issue. Comments on the politics and prospects for reconciliation by Sam Feder, a former FCC general counsel, are particularly instructive.

The full text of the Comcast vs F.C.C. ruling is embedded below.