An earlier version of this report mischaracterized the fate of planned cybersecurity, privacy and consumer-protection policies at the FCC. They are at risk but have not been thrown out. An earlier version also incorrectly said Comcast can manage congestion by type of content. This version has been corrected.
Comcast ruling raises questions on FCC regulation
Thursday, April 8, 2010; 10:58 AM
At first glance, Tuesday's federal court ruling on Comcast looked like a clean win for the cable giant and for competitors including Time Warner and AT&T. The court, after all, ruled that Comcast could regulate high-speed Internet traffic over its own system and that a company that wanted to push its content through Comcast's pipelines could not.
But the ruling might be only the beginning of a long campaign between Internet service providers and companies such as Skype, Google and Microsoft. The outcome is far from certain.
At issue is the wonky-sounding phrase "net neutrality." In 2008, the Federal Communications Commission told Comcast and other big high-speed Internet companies that they must treat content that flows through their pipelines equally, whether it's digitally lightweight e-mail or hefty movie files, by pushing it all through at the same speed.
Comcast complained that certain kinds of Internet traffic are so heavy that they slow down the entire system. Essentially, Comcast wanted to be able to enforce speed limits on its information highway, moving the big, traffic-clogging Internet traffic into a slower lane. Comcast sued the FCC, and Tuesday, the U.S. Court of Appeals for the D.C. Circuit sided with Comcast.
The immediate impact is on the FCC. The agency said Wednesday that the cybersecurity, privacy and consumer-protection policies it had wanted to pursue under its net-neutrality authority could now be in jeopardy. Now the FCC must decide whether it wants to appeal or try to work around the ruling.
Experts wonder what the court's ruling might mean for the pending $30 billion merger of Comcast and NBC-Universal. Net-neutrality advocates fear that NBC's online content, such as episodes of "30 Rock," would be waved into the fast lane on Comcast's pipes, while content from rival companies -- say, videos on the Google-owned YouTube -- would get slowed down. Comcast says that it manages congestion on its Internet network only by volume, not by the type of content. In other words, Comcast sees only a line of slow-moving trucks. It does not manage traffic based on what's inside the trucks.
The head of the big cable companies' trade group called Tuesday's ruling a victory, at least for now.
"While in the short run it's clearly a reaffirmation of status quo, which is good news, it raises uncertainty in terms of a regulatory or legislative response," said Kyle McSlarrow, chief executive of the National Cable & Telecommunications Association.
The ruling frees the big cable companies from the threat of net-neutrality rules, which they say would significantly hamper their ability to manage traffic on their own networks and prioritize certain applications, such as those that block spam.
"Some public interest groups and nonprofits have pointed to some kerfuffles over network owners interfering with traffic that was sent by a reproductive rights group and a charity; in both cases the broadband providers cleared things up quickly, but those are other examples of areas of concern," said Rebecca Arbogast, head of research at Stifel Nicholaus. "The broadband providers make the argument that on the other side, if net-neutrality rules are adopted, it may interfere with their ability to prioritize traffic in order to provide Kindle- and Garmin-type services," she said, referring to the Amazon e-book and the Global Positioning System navigation system.
But the FCC could work around the Tuesday ruling with a vote of the five FCC commissioners. Currently, Internet service providers fall under a lightly regulated area of the FCC. It would take only a 3-to-2 vote to move high-speed Internet into one of the FCC's more heavily regulated areas, where the agency could set tough rules on companies such as Comcast.
The FCC said Wednesday that the ruling would hamper key portions of its national broadband plan, such as its goal to bring high-speed connections to rural and low-income areas.
On the other side of this Goliath vs. Goliath tale is Google and companies that want a freer information superhighway.
The search giant has pushed for the FCC to impose conditions on an auction for airwaves that would require that a wireless network built from that spectrum be open to any device and any Internet application. The company hasn't weighed in on how the FCC should proceed after the court decision.
Comcast took on the FCC after the agency said the cable giant violated open-Internet guidelines in 2007 by throttling BitTorrent, a popular online peer-to-peer file-sharing service that not coincidently allows users to download pirated movies and television shows.
Wednesday, Christopher Libertelli, director of government and regulatory affairs for Skype, worried that the decision leaves such P2P services with no advocate.
"What I can say is that there is no place to go after this decision if a peer-to-peer application is degraded on a network," he said.