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FCC Finds Way Forward After Comcast Decision

by Glen Shapiro,, New York

12 May 2010

The United States Court of Appeals ruled on April 6 that the US Federal Communications Commission (FCC) did not have the authority to dictate an internet service provider’s network management practices but, in a statement a month later, the FCC has announced that it believes it has found the way to continue its broadband regulatory role.

In 2007, several subscribers to Comcast’s high-speed internet service discovered that the company was interfering with their use of peer-to-peer (P2P) networking applications. P2P programmes allow users to share large files directly with one another without going through a central server. Such programs also consume significant amounts of bandwidth, and Comcast argued that it had an obligation to manage its network capacity for its customers.

The FCC then attempted to enforce “net neutrality” principles and barred Comcast from interfering with its customers’ use of P2P networking applications by exercising an authority within the Communications Act. It said that its action was “reasonably ancillary to the... effective performance of its statutorily mandated responsibilities.” However, the court decided that the FCC had failed to tie its assertion of ancillary authority over Comcast’s internet service to any such responsibility, and found for Comcast.

The Comcast court decision created a serious problem for the FCC to continue its broadband policies, including reforming the Universal Service Fund to provide broadband to all Americans, protecting consumers and promoting competition by ensuring transparency regarding broadband access services, safeguarding the privacy of consumer information and preserving the free and open internet. There was uncertainty about the FCC’s ability to perform the basic oversight functions it felt to be essential and appropriate.

Therefore, since the decision, the FCC has been searching for a way forward. Its chairman, Julius Genachowski, however, announced on May 6 that it believes it has found a way to continue its role.

The court decision had, he said, cast serious doubt on the particular legal theory the FCC had used since 2002 to justify its backstop role with respect to broadband internet communications. The FCC had then decided to classify a broadband internet access service not as a “telecommunications service” for purposes of the Communications Act, but as something different - an “information service.”

That decision had led to broadband becoming the type of service over which the FCC could exercise only the indirect “ancillary” authority judged inadequate in the Comcast case, as opposed to the clearer direct authority exercised over telecommunications services.

While the FCC could, at this stage, fully reclassify internet communications as a “telecommunications service,” thereby restoring the FCC’s direct authority over broadband communications networks, but also imposing on providers of broadband access services dozens of new regulatory requirements, Julius Genachowski said that the FCC’s lawyers had found another option.

Under this option, the FCC will only recognize the transmission component of broadband access service as a telecommunications service, and apply only the handful of provisions under Title II of the Communications Act that, prior to the Comcast decision, were widely believed to be within the FCC’s purview for broadband.

It will also forbear from application of the many sections of the Communications Act that it considers are unnecessary and inappropriate for broadband access service, and put in place up-front forbearance and meaningful boundaries to guard against regulatory overreach.

Genachowski said that this approach will place federal policy regarding broadband communications services on the soundest legal foundation, thereby eliminating as much of the current uncertainty as possible, and would restore the status quo. It will not change the range of obligations that broadband access service providers faced pre-Comcast.

However, it is now being said in some quarters that the treatment of broadband as a “telecommunications service” will, in itself, create uncertainty over the extent of the FCC’s powers in the future. While the current FCC may exercise forbearance, for example, over net neutrality, the FCC might well be able to extend its reach in the future by widening the scope of its regulatory powers under the Act.

TAGS: court | business | commerce | law | internet | e-commerce | United States | regulation

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