Court Finds FCC Lacks Authority to Regulate Internet

In a decision with far-reaching implications for the future of the Internet and the role of the Federal Communications Commission, the U.S. Court of Appeals for the D.C. Circuit ruled today that the agency lacks the authority to regulate the policies of Internet service providers.

In Comcast Corp. v. FCC, the court considered whether the FCC could bar Comcast from interfering with its customers' use of peer-to-peer networking applications. The FCC acknowledged it had no explicit regulatory authority to do so, but the agency claimed it had "ancillary" jurisdiction over such network management practices.

The court didn’t buy it. “Were we to accept that theory of ancillary authority, we see no reason why the Commission would have to stop there, for we can think of few examples of regulations... [it] would be unable to impose upon Internet service providers,” wrote Judge David Tatel for the panel, which also included Chief Judge David Sentelle and Senior Circuit Judge A. Raymond Randolph.

The court concluded, “Because the Commission has failed to tie its assertion of ancillary authority over Comcast’s Internet service to any ‘statutorily mandated responsibility...we grant the petition for review and vacate the Order.”

The case began in 2007, when some subscribers to Comcast’s high-speed Internet service discovered the cable company was interfering with their use of peer-to-peer applications, which allow users to share files, but also use up large amounts of bandwidth.

Non-profits Free Press and Public Knowledge complained to the FCC. In 2008, the FCC concluded it had jurisdiction over Comcast’s network management practices, and also determined that it could resolve the dispute through adjudication rather than a rulemaking. Since Comcast had already changed its policy on peer-to-peer applications, the FCC instead ordered the company to make a set of disclosures about its network management practices.

The company complied with the order, but sued the agency, asserting that the FCC lacked jurisdiction, that the rulemaking was procedurally flawed, and that it was arbitrary and capricious. Comcast was represented by James Lund Casserly and David Paul Murray of Willkie Farr & Gallagher, Elbert Lin, Eve Klindera Reed, and Helgi Walker of Wiley Rein, and David Solomon of Wilkinson Barker Knauer.

“We begin – and end – with Comcast’s jurisdiction challenge,” wrote Tatel. The FCC rested its assertion of authority over Comcast’s network management practices on the broad language of section 4(i) of the Communications Act. This allows the FCC to make rules and regulations and issue orders “as may be necessary in the execution of its functions.”

The “central issue in the case,” wrote Tatel, was whether “the regulations are reasonably ancillary to the Commission’s effective performance of its statutorily mandated responsibilities.”

The FCC was represented by General Counsel Austin Schlick, as well as Daniel McMullen Armstrong III, Joel Marcus and Richard Kiser Welch from the general counsel’s office. Also, Department of Justice Antitrust Division appellate attorneys Nancy Caroline Garrison and Catherine O’Sullivan worked on the case as did Joseph Palmore from the Office of the Solicitor General.

The FCC pointed to section 230(b) of 47 U.S.C. (which lays out the role and function of the agency). The section states that it’s government’s policy to “promote the continued development of the Internet” and to “encourage the development of technologies which maximize user control.” The FCC said Comcast’s practices violated both objectives.

The FCC also cited section 1 of the law, which calls for the FCC to make available “rapid, efficient” communication.

Comcast argued that these were merely statements of congressional policy, and conferred no authority.

The court agreed.

“The Commission maintains that congressional policy by itself creates ‘statutorily mandated responsibilities’ sufficient to support [ancillary authority]... if accepted, it would virtually free the Commission from its congressional tether,” wrote Tatel. “The Commission is seeking to use its ancillary authority to pursue a stand-alone policy objective, rather than to support its exercise of a specifically delegated power.”

Comments

[Gayle]

@Dale - Some of us do think it's a big deal. Gasp.

[Dale]

@baalthazaar: I'm not claiming ot know what the cable market composition is and whether or not Comcast actually has a monopoly. I'm saying that if Congress is concerned, they have shown that they can break monopolies in the past and can do it again.

[baalthazaar]

Actually Comcast (or TimeWarner) has a monopoly as far as cable internet access goes in a lot of areas . The alternatives are DSL which is not on par with cable. I'm ok with them charging charging different rates for different customers as long as there is proper competition and they divest all their content. If they don't, how is it not an anti-trust violation?

[Dale]

@Renee: If you are trying to talk to the judge, I don't think he can hear you. If you're trying to talk to Jenna, I'm pretty sure she never stated an opinion on the matter, but did a nice job summarizing the opinion.
As to your complaint: So? I can't use my Verizon phone on Sprint's network *gasp* big deal.
If Comcast's business practices are truly bad, people will go elsewhere. If congress gets concerned about a monopoly, well they've gotten good at breaking things over the last 100 years, I'm sure they can break Comcast too.

[Renee Marie Jones]

You don't understand. This is not just about peer-to-peer file sharing. It is described that way to get you to go along. It is really about a network providers ability to deliberately interfere with customers access to web sites of competitors, or to web sites that won't pay the provider money.