FCC won't have much luck regulating ISPs as telecom providers, expert says

Yesterday’s appeals court ruling that the Federal Communications Commission lacks jurisdiction over how Internet Service Providers manage network traffic is narrow, but probably makes it difficult for the FCC to try to regulate broadband providers as telecommunications services providers, said Howard Waltzman, an attorney at communications law firm Mayer Brown L.L.P. Waltzman was former chief counsel for Telecommunications and the Internet of the House Energy and Commerce Committee under Reps. Joe Barton and Billy Tauzin.
Yesterday’s ruling was largely regarded as a blow for net-neutrality proponents, and consumer advocacy group Public Knowledge said the ruling could hurt the FCC’s National Broadband Plan recently submitted to Congress. Waltzman begged to differ, saying the narrow ruling should actually help the plan because ISPs have assurance they will be able to manage their network traffic as they build out more broadband service. “It shouldn’t have any impact on the National Broadband Plan. … It helps encourage investment” in broadband deployments across the nation, Waltzman said.
The court case dates back to 2007, when Comcast started blocking some peer-to-peer networking applications that it said consumed too much network bandwidth. Some opponents believed Comcast was degrading traffic from BitTorrent because it competed against Comcast’s on-demand video offering. Two net-neutrality proponents, Public Knowledge and Free Press, complained to the FCC that the Internet Service Provider shouldn’t be able to decide which applications should run on the network.
The FCC concluded that “it had jurisdiction over Comcast’s network management practices, but also that it could resolve the dispute through adjudication rather than through rulemaking,” according to the U.S. Court of Appeals for District of Columbia Circuit, which issued yesterday’s opinion in a dry, 36-page report. “On the merits, the commission ruled that Comcast had ‘significantly impeded consumers’ ability to access the content and use the applications of their choice … and that because Comcast had several available options it could use to manage network traffic without discriminating” against peer-to-peer communications … its method of bandwidth management contravened federal policy.”
For its part,the FCC said it is committed to promoting an open Internet and to policies “that will bring the enormous benefits of broadband to all Americans. It will rest these policies — all of which will be designed to foster innovation and investment while protecting and empowering consumers — on a solid legal foundation. Today’s court decision invalidated the prior commission’s approach to preserving an open Internet. But the court in no way disagreed with the importance of preserving a free and open Internet; nor did it close the door to other methods for achieving this important end.”
Waltzman agreed that the ruling is very narrow and doesn’t say the FCC has no authority over ISPs, but only how ISPs manage their traffic.
In light of the ruling, Public Knowledge and some analysts have suggested the FCC could still try to have authority over ISPs’ network management practices by saying they are entitled to do so under Title 2 of the Communications Act, which gives the FCC authority over telecommunications providers, which is stronger than the light regulation spelled out in Title 1, which covers information services. Waltzman said the FCC would have a difficult time arguing for Title 2 authority in court because the FCC and the courts have continually said that broadband services are information services, not telecommunications services. The FCC would have to argue that the previous 12 years of legal precedent that has concluded broadband services are information services is incorrect. Waltzman also said it would be difficult to have Congress adopt a law that gives the FCC express authority over ISP traffic management.
“There are initially a couple options the FCC and pro-net neutrality Democratic lawmakers could entertain,” said consultancy firm Medley Global Advisors. “One involves the FCC reclassifying broadband from a lightly-regulated information service to a regulation-heavy common carrier regime, a highly controversial approach that could ignite a political firestorm lasting months without any guarantee of resolution. Such a prospect has prompted Verizon and AT&T to counter that Congress should step in to update the 1996 telecom act.
“Another alternative is stand-alone net neutrality legislation, though the chances of moving a bill this year appear slim. Overall, regulatory reclassification and net neutrality legislation represent daunting challenges that may be hard to overcome as Democrats seek to limit further political exposure.”
As such, everyone will be watching the FCC’s next steps, said Bryan Tramont, a managing partner at the law firm of Wilkinson, Barker, Knauer L.L.P. during a joint webcast with PCIA yesterday.