Tuesday's opinion from the DC Circuit Court of Appeals in the FCC v. Comcast case has been the subject of analysis, emotional ranting, and more throughout the blogosphere.
It appears that most views fall into either the “screw the FCC” camp or the “Comcast is evil” camp. The separation appears mainly political in nature. I would argue that a smarter view would be based on economics.
The original fight started a couple of years back, when Comcast Corp. (Nasdaq: CMCSA, CMCSK) began limiting bandwidth for some peer-to-peer traffic, notably BitTorrent, on its network. The Federal Communications Commission (FCC) jumped on this as a violation of policy on what is commonly referred to as “Net Neutrality.” Comcast agreed to make its traffic management more subtle and transparent, so the FCC gave them a small slap on the wrist.
Had it ended there, this would have been a big win for the FCC in its bid for nationalized net neutrality rules that would apply to all Internet service providers, giving them a legal precedent.
Comcast, however, pursued an appeal and won. The interesting part of this win is not, as most commentators seem to think, whether the “Evil Corporation” won out over the “Steadfast Regulatory Agency” (or reverse the adjectives). That comic book consideration misses a larger point: Does the Internet really need regulation at all?
According to Internet Evolution ThinkerNetter Tom Nolle, president of the CIMI Corp. consultancy, it does:
"Any market is a balance of opportunism between buyers and sellers," says Nolle. "Government has always accepted that sellers could game the market through collusion, etc. The purpose of regulation is to insure that the market stays fair. Because the Internet, broadband Internet in particular, is a market, we should assume that regulations will be needed to keep a natural balance between the interest of sellers and buyers. I don't think there's any question that need exists. I don't think there's any question that the DC Court of Appeals thinks that need exists. But the court doesn't think the FCC has the authority under law to take the specific steps in traffic management regulation that they took."
The court's decision is 36 pages of opinion that dismantles the FCC's arguments that it has even basic jurisdiction in this matter.
Most of the FCC's argument briefs were regarding its authority, under statutory provision, to impose neutrality principles on ISPs and network providers. The FCC, under these provisions, claimed that Comcast had failed to follow the rules and was thus subject to fines.
Interestingly, the court's opinion did not even mention Comcast's rebuttals and focuses entirely on the FCC briefs. The court tears down the FCC's efforts to tie in their “ancillary jurisdiction” (or “implied jurisdiction”) as part of the Commission's authority under the Communications Act.
In effect, the DC Court managed to completely destroy the very foundation upon which the FCC has based its net neutrality rules. Last year's Notice of Proposed Rulemaking on the issue of net neutrality has now become a house of cards for the FCC. This can only be remedied through another court decision in the commission's favor or intervention by Congress with a new law.
In the meantime, the fundamental question goes mostly unanswered: Does the Internet really need governmental regulation to keep it neutral?
“There is definitely a role for government to ensure that ISPs do not engage in anti-consumer or anti-competitive practices and to promote innovation both at the edge of the network and in the network. Whether that requires more regulation or legal authority for the FCC is an open question,” says Daniel Castro of the Information Technology & Innovation Foundation think tank in Washington, D.C. “But I think we haven't seen any bad actions that have not been addressed through a combination of Congressional oversight, FCC regulation (or threat of regulation), and public reaction (through the media and the marketplace).”
Up to this point, the 'Net has moved forward quite rapidly and, most would agree, neutrally, without much (if any) regulation by governments. It could be argued that all that is required for net neutrality is an industry standard of openness about services themselves rather than a set of complex regulations.
— Craig Agranoff is an entrepreneur and national social media consultant as well as a published specialist in online reputation management and monitoring.