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.
OK. Except I don't remember AT&T being granted any exclusivity at a state or federal level at any particular point in time. And it's deregulation that brought it back in its latest incarnation. Even at ATT's most pervasive, companies like GTE held some local markets.What time period is under discussion?
BTW - The DOE was formed by the Carter administration seven years after the EPA was conceived during the Nixon administration. If you wonder why I suspect your statements, inaccuracies like (paraphrasing) 'the EPA mismanaging energy policy since Carter' would be one.
Thank you, Kurt. I agree with you and don't believe my article said otherwise. What I focused on here was the court's decision and what it meant for the FCC as well as the industry at large. The experts I spoke with seemed to think that there is a need for governmental oversight. I don't necessarily agree with that, but it appears that we are not in the majority here.
In regards to your reply, I find it typcial of parties who don't remember their history correctly before putting foot in mouth. Your reference to telcos was completely off the mark, since it was the AT&T anti-trust settlement that re-invented independent telco service.
Please enlighten me about what I ignored and not about why you think I ignored it.
Since you ignored most of what I posted, @hrcohen, I won't bother responding as you'll just ignore this as well and keep soapboxing your opinion. Your view of monopolies and markets is so skewed towards statism, you can't see the forest for the trees.
Historically, monopolies come about from patent protection or coercive acts. It is generally accepted that monopolies slow or defeat progress and keep prices above levels that would be seen in a competitive environment. If you don't believe so, visit your local stadium, ball park, or arena and compare the prices to those in a mall food court.
You are completely mistaken about telco history which had many competitors until AT&T took a predominant position. Ditto the automobile industry, the aircraft industry, the computer hardware industry.
A perfect free market requires perfect information. Since no actual market provides that, the government intervenes with regulation as a substitute.
The elimination of monopolies by entrepeneurs generally requires the expiration of patents by the monopoly or the creation of patents that the entrepeneur acquires or for which the entrepeneur receives a license.
Even a cursory review of the Comcast opinion reveals that the only remarkable thing about this ruling is that the Court makes clear what (I should hope) we all kind of already knew in our hearts: that the FCC can't just do whatever the hell it wants (i.e., in the name of "ancillary authority").
I'm not so sure of that, and it has to do with something you cite later:
This is not the same thing as the FCC not being able to prevent Comcast restricting access to a particular website because it does not like what it has to say.
It's not? The old acronym, IANAL, that most certainly applies to me, but I i've scanned over the opinion, and I worry that if the court this stridently cuts off the ancillary authority to this extent, how is the FCC left with the authority to halt the latter? The REAL abuses of the tools ISP's have to throttle our freedoms on the Internet?
In the end, however, I'm more in agreement than not. As I said, P2P seems to me more like a service than organized content like the "Comcast Sucks" example I gave in my previous post. So I tend to side with the court on the particulars at hand in this case. But I worry that the decision went so far as to render ineffective some authority that I'd much rather entrust to the FCC than to Comcast, et al.
No system can survive being pushed to the limit continuously. Systems were made to handle the regular, average situation. So, if there is one element of a system that is pushing the limit over and over, how can the system survive? So, at first it does seem as if Comcast is evil, but in a wierd sense, don't kill me for suggesting this, is it so horrible that we put the small group of usersonto their own subnet. Aren't they probably just copy illegal movies and songs and games anyway?
I would humbly recommend that anyone genuinely concerned about what this means for the future of the Internet and consumer choice should read the Court opinion. This is not a case about monopolies. This is not a case about censorship. There is no boogeyman, and those "monsters" that you see at night are just shadows.
Generally, an executive agency needs authority to act. This authority can come from Congress or, when Constitutional, the President. Even a cursory review of the Comcast opinion reveals that the only remarkable thing about this ruling is that the Court makes clear what (I should hope) we all kind of already knew in our hearts: that the FCC can't just do whatever the hell it wants (i.e., in the name of "ancillary authority").
The following language from the Court opinion is particularly noteworthy in that respect:
[T]he Commission maintains that congressional policy by itself creates "statutorily mandated responsibilities" sufficient to support the exercise of section 4(i) ancillary authority. Not only is this argument flatly inconsistent with [case law], but if accepted it would virtually free the Commission from its congressional tether. As the Court explained in Midwest Video II, "without reference to the provisions of the Act" expressly granting regulatory authority, "the Commission's [ancillary] jurisdiction...would be unbounded."
Other than this, the Court more or less reaffirms long-standing precedent that ancillary jauthority cases shall be decided upon case-by-case bases.
That's pretty much it.
Almost all of what the FCC does it has express authority to do (and that's quite a bit). In this one case, the FCC was unable to demonstrate how preventing a cable company from enforcing a restriction on P2P services to conserve limited bandwidth satisfied the requirements of ancillary authority.
This is not the same thing as the FCC not being able to prevent Comcast restricting access to a particular website because it does not like what it has to say.
I think this court decision only barely qualifies as news.
On a separate subject, from a business perspective, I should think that a better policy for Comcast and other broadband providers is simply to charge a premium to users who want to use P2P services (allowing non P2P-users to pay a lower rate).
QoS has been a sane consideration of net-admins for years. If you cutomers begin chirping because they can't get to their emails and a quick check of use statistics shows that P2P is the road hog. It only makes sense to throttle the P2P.
- It certainly has... not only net admins but VoIP admins too; from the larger CLEC's, to resellers, down to the end-user with his own open source PBX. The fact is that QoS feature on routers seems relatively useless unless of course you're utilizing it for a LAN scenario where you need voice SIP traffic on port 5060/UDP to be a priority over anything else. Companies tend to want the voice calls they answer not to sound like a garbled mess just to appease the bandwidth hogs at work streaming their audio and video clips when they should be productive, so they set up QoS on the intranet to help.
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