Court rules for Comcast over FCC in 'net neutrality' case

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By Cecilia Kang
Washington Post Staff Writer
Wednesday, April 7, 2010

A federal appeals court ruled Tuesday that the Federal Communications Commission lacks the authority to force Internet service providers to keep their networks open to all forms of content, throwing into doubt the agency's status as watchdog of the Web.

The FCC has long sought to impose rules requiring Internet providers to offer equal treatment to all Web traffic, a concept known as network neutrality. But in a unanimous decision, the U.S. Court of Appeals for the D.C. Circuit found that the agency lacked the power to stop cable giant Comcast from slowing traffic to a popular file-sharing site.

Although the Comcast case centered on the issue of network neutrality, the court's ruling could hamper other initiatives, including the Obama administration's ambitious plans to expand high-speed Internet service nationwide and the agency's enforcement of new truth-in-advertising rules on broadband speeds promised by carriers.

Analysts said the decision in effect removes a government enforcer that otherwise would prevent a company such as Comcast from blocking the Hulu or YouTube video sites from its network, analysts said.

"Today's ruling is destabilizing, as it could effectively free broadband service providers from FCC regulation over broadband," said Rebecca Arbogast, head of research at Stifel Nicolaus.

The court's decision could prompt the FCC or Congress to write new rules or laws to more concretely establish the agency as a regulator of Internet services. The FCC has intentionally kept its authority over broadband vague, in hopes that looser regulation might spur growth in the market for Internet services. Tighter oversight -- which consumer groups have urged -- would be strongly opposed by companies that operate Internet networks.

The FCC's predicament stems from a 2008 sanction against Comcast for violating the agency's open Internet guidelines, which were meant to force broadband providers to treat all network traffic equally, so as not to put any Web site at a disadvantage. In a 3 to 2 vote, the FCC found that Comcast had improperly slowed traffic to the BitTorrent file-sharing site and urged the company to halt the practice. It did not impose a fine.

Comcast appealed the FCC sanction, saying that the agency's order was outside the scope of its authority. The court agreed on Tuesday, saying the agency relied on laws that give it some jurisdiction over broadband services but not enough to make the action against Comcast permissible.

"For a variety of substantive and procedural reasons those provisions cannot support its exercise of ancillary authority over Comcast's network management practices," the court wrote in its 3-0 decision. "We therefore grant Comcast's petition for review and vacate the challenged order."

Sena Fitzmaurice, a Comcast spokeswoman, said the company was "gratified" by the ruling.

"Our primary goal was always to clear our name and reputation," she said.

The decision comes as Comcast is pursuing agency approval of its proposed $30 billion merger with NBC Universal, which would put a vast library of television and movie programming under the control of the nation's largest cable provider.


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