FCC decision against Comcast lays blueprint for Internet battle

The decision by the Federal Communications Commission (FCC) to punish Comcast for limiting Web traffic to its consumers is likely to reignite a torrid battle between America’s tech giants and cable providers next Congress.

The agency’s move was the first time it waded into the complex “net neutrality” debate — the push for open, unrestricted access to broadband networks — by directly acting against a cable provider. It could set a precedent for future penalties and provide the legal framework for legislation from Capitol Hill.

{mosads}“The FCC decision, a court ruling in reaction to it and the coming election could put this debate back on the front-burner,” said Blair Levin, an independent analyst of the telecom industry and former chief of staff to past FCC Chairman Reed Hundt. He is now the managing director at the investment research firm Stifel Nicolaus .

Levin and others believe the FCC decision on Comcast’s management of its consumers’ Web traffic could set off a chain reaction of further commission action and court rulings.

Comcast has signaled it will appeal the FCC’s decision. Regardless of its result, industry observers expect lawmakers to propose giving the FCC explicit authority to keep access to the Internet open and unrestricted.

Members’ resolve to do so will only be strengthened if Democrats gain the presidency or larger majorities in Congress. That would give tech companies the upper hand over cable and telecom companies.

“If Democrats make gains in the White House and Congress, this could be the beginning of a net neutrality rule,” said Levin.

Cable providers worry a net neutrality rule would invite government regulation that would hinder investment in America’s broadband network. But concerned about limits placed on Web traffic, tech companies believe only unfettered access to the Internet will allow their businesses to grow.

Most of the major players in the net neutrality debate weighed in with comments to the FCC on the Comcast decision. Google, Amazon and Skype contacted FCC commissioners and staff about the complaint over the past year, according to ex parte records filed with the commission.

Major telecom companies and trade groups, including AT&T, the National Cable and Telecommunications Association (NCTA) and the Recording Industry Association of America , also weighed in.

Rep. Edward Markey (D-Mass.) has introduced net neutrality legislation in this Congress, but it has not received a vote. Markey has said he will continue to press for passage of net neutrality legislation in light of the FCC decision on Comcast.

But a number of Republicans could stand in his path. Sen. Sam Brownback (R-Kan.) described the FCC decision as “a giant step backward,” while House Minority Leader John Boehner (R-Ohio) wrote to FCC Chairman Kevin Martin before the decision, saying the FCC weighing in against Comcast could “stifle innovation and entrepreneurship.”

The FCC’s 3-2 vote last week found Comcast had violated the commission’s open Internet principles. It was the latest action in the years-long net neutrality fight, and a significant defeat for older telecommunications firms.

The decision stemmed from an October 2007 Associated Press report that said Comcast was limiting uploads by users of BitTorrent, a P2P file-sharing software program. P2P programs allow users to share music and video files that can often slow down Web traffic due to their size.

Sensing an opportunity to strike a precedent, open Internet watchdogs Free Press and Public Knowledge filed a formal complaint with the FCC in November 2007 against Comcast.

Martin, a Republican, joined the panel’s two Democrats in voting against Comcast.

A legal appeal by Comcast could slow efforts in Congress to move a net neutrality bill that would lock in aspects of the FCC decision.

“This gives momentum when we push for a new rule or law. But if litigation is going on, some congressmen may want to wait,” said Marvin Ammori, general counsel for Free Press.

In a statement last week, Comcast indicated an appeal would raise due process concerns and other substantive legal questions. “We are considering all our legal options and are disappointed that the commission rejected our attempts to settle this issue without further delays,” Sena Fitzmaurice, a Comcast spokeswoman, said in the statement.

Before the decision, the cable provider had already changed its management practices regarding consumers’ Web traffic and had set up agreements with BitTorrent and other P2P software companies.

Before litigation can begin, however, the FCC must publish its final order laying out its decision. A spokesman for the FCC declined to comment on the timing of the order’s publication.

The FCC has declined to go a step further and offer a formal rulemaking on its Internet principles.

Instead, it intends to act on a case-by-case basis as complaints against cable providers arise.

That has raised the ire of America’s cable providers, who were frustrated by the FCC decision last week.

“I believe rules, regulatory or legislative, are unnecessary because I am not sure what kind of problem we are trying to solve,” said Kyle McSlarrow, NCTA’s president and CEO. “If you are going to have rules, go through an actual rulemaking and provide realistic guidance. The worst-case scenario is you pretend you don’t have rules and then play a game of ‘gotcha.’ ”

Noting Congress has not been so active with legislation this year, McSlarrow said he expects the time will be ripe for lawmakers to act next year.

“It feels like it is a teeing-up of the issue,” said McSlarrow. “The table is being set up for a fresh look at telecommunications policy, and net neutrality is going to be a very important part of that.”