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FCC smackdown

Court backs Comcast on Internet use

A hallmark of FCC chairman Julius Genachowski’s agenda has been to bring the commission into the 21st century, adopting rules for the Internet and laying the groundwork for a vast expansion of broadband — all with big implications for Hollywood.

But it was a decision made in the Bush era, under the chairmanship of Kevin Martin, that led to Tuesday’s federal appellate court ruling casting doubt on the FCC’s authority to police the Web. It delivered at least a momentary setback to Genachowski’s plans, particularly his efforts to pass net neutrality regulations that would prevent Internet providers from favoring one kind of web traffic over another.

The proposed rules, which have won vigorous backing from many in the creative community and more measured support from the studios, are now likely to be delayed as the commission tries to find a more solid legal footing to make its case.

The case stems from complaints the FCC received in 2007 that Comcast was slowing customers’ use of BitTorrent, a peer-to-peer application often used to transmit video, without telling them, and was blocking other kinds of traffic.

The FCC, by a vote of 3-2, issued a rebuke to Comcast, and ordered it to halt the practice and to disclose its methods of managing its network. But its decision was based on a set of FCC “principles,” rather than clear statutory authority, that the appeals court found wanting.

Circuit Judge David S. Tatel wrote that the FCC “failed to tie its assertion of ancillary authority over Comcast’s Internet service to any ‘statutory mandated responsibility.’?”

So where to from here?

Ironically, one reason for Genachowski’s effort to pass net neutrality rules was to give the principles more teeth. Currently in a public review period, approval is now likely to be slowed.

“The Court of Appeals has in effect said to the FCC, ‘You get a do over, but you have got to make a better case next time,'” said Reed Hundt, chairman of the FCC from 1993 to 1997. “They clearly left the door open, but obviously (the FCC has) got to go back and find a jurisdictional hook.” As a solution, consumer groups on Tuesday were pushing the FCC to reclassify Internet providers under the same rules that are applied to phone service. Sen. John Kerry (D-Mass.) issued a statement saying such a move would be “entirely consistent with the history of communications law.” But he also suggested there may be a need for a “new legal and regulatory framework for broadband.”

The drawbacks of a legislative approach are time, and a likely contentious battle between regulators and cable and telecom providers. The court decision not only impacts net neutrality rules but aspects of the FCC’s recently passed National Broadband Plan, a framework for making high-speed Internet ubiquitous across the country.

Moreover, advocates of net neutrality warn that the decision essentially leaves the FCC with little ability to prevent Internet providers from giving preferential treatment to certain websites over others, or creating something akin to the tiered system of cable TV.

Markham Erickson, executive director of the Open Internet Coalition, an org that includes Google, IAC and Netflix, said that the ruling has created a “dangerous situation, one where the health and openness of broadband Internet is being held hostage by the behavior of the major telco and cable providers.”

The Writers Guild of America, in particular, sees net neutrality as a guarantee that the creative community will have access to the Internet, after years in which independent creators have seen their distribution options dwindle in the face of industry consolidation.

“The Court of Appeals decision does not close the door to efforts to ensure net neutrality, whether by the FCC or the U.S. Congress,” said Neal Sacharow, a spokesman for the Writers Guild of America, West. “In light of Comcast’s proposed merger with NBC Universal, the need for strong protection of net neutrality is more clear than ever.”

As it presses its case, Comcast also is seeking approval from the Justice Dept. and the FCC for a proposed transaction in which it would buy 51% of NBC Universal. NBC U was an intervenor in the case before the appellate court.

Comcast has insisted all along that there was nothing nefarious about the way it managed its traffic, and that its slowing of BitTorrent was a necessary step against a service-hogging bandwidth. Telco and cable companies have characterized the rhetoric of some consumer groups as alarmist, and the net neutrality effort as a solution in search of a problem. Even with the freedom to limit and block traffic, an outcry seems inevitable should some provider actually try it.

“Our primary goal was always to clear our name and reputation,” Sena Fitzmaurice, the company’s vice president for government relations, said in a statement. “… Comcast remains committed to the FCC’s existing open Internet principles, and we will continue to work constructively with this FCC as it determines how best to increase broadband adoption and preserve an open and vibrant Internet.”

White House spokesman Robert Gibbs, in the daily briefing to reporters, said that the administration continues to support net neutrality and is “committed to providing businesses with the certainty that they need, as well.”

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