Politics and Law

The Federal Communications Commission on Wednesday finally released the text of its 3-2 ruling saying Comcast violated the law when throttling BitTorrent transfers, marking the first time any broadband provider has been found to violate Net neutrality rules.

Comcast will be required to take these steps in the next 30 days: disclose "the precise contours" of its current and future network management practices, and submit a "nondiscriminatory network management" compliance plan so government regulators can decide whether they approve. The company will not be fined.

If Comcast fails to comply, it will be automatically required to "suspend the network management practices" associated with handling BitTorrent transfers.

Comcast is widely expected to appeal the FCC's 67-page order to a federal court, most likely the D.C. Circuit, which has taken a dim view of the commission's expansions of its authority in the absence of a law passed by Congress.

Comcast representatives told CNET News as recently as Tuesday that the company's lawyers needed to review the order before they were able to discuss an appeal; they did not immediately respond to a request for comment on Wednesday.

The majority bloc of FCC commissioners--not one is an engineer--wrote in Wednesday's order (PDF):

It is our expert judgment that Comcast's practices do not constitute reasonable network management...Comcast's practices contravene industry standards and have significantly impeded Internet users' ability to use applications and access content of their choice.

Moreover, the practices employed by Comcast are ill-tailored to the company's professed goal of combating network congestion. In sum, the record evidence overwhelmingly demonstrates that Comcast's conduct poses a substantial threat to both the open character and efficient operation of the Internet, and is not reasonable."

In March, Comcast and BitTorrent declared a truce, with the broadband provider saying it will adopt a "capacity management technique that is protocol-agnostic" by the end of 2008. Before the announcement, Comcast had responded to network congestion caused by BitTorrent users by sending forged TCP reset packets, which disrupted transfers and prevented some users from uploading files.

Not helping Comcast's credibility was its poker-faced denial in August 2007 of initial allegations that it was filtering BitTorrent traffic. A few months later, though, it turned out that Comcast really was throttling BitTorrent, after all, and the company was forced to concede to the FCC that it blocks only "excessive" traffic. (The FCC picked up on this in its order, saying "Comcast's first reaction to allegations of discriminatory treatment was not honesty, but at best misdirection and obfuscation.")

As I wrote in an article a few weeks ago, the FCC may have trouble defending its actions in court.

In 2006, Congress rejected five different bills, backed by groups including Google, Amazon.com, Free Press, and Public Knowledge, that would have explicitly handed the FCC the power to police Net neutrality violations.

Even though the Democrats have enjoyed a majority on Capitol Hill since last year, their leadership has shown zero interest in resuscitating those proposals. While the FCC did adopt FCC broad principles (PDF) in August 2005 saying consumers may use the applications of their choice, the agency admitted on the day of their adoption that the guidelines "are not enforceable."

Robert McDowell, one of the two dissenting commissioners, said at the Progress and Freedom Foundation's conference this week that the FCC had relied on dubious evidence, including unsigned declarations.

"Governments need to make sure they have a very thorough record," he said. "The FCC of late has not been doing that."

Also at the conference, Verizon's chief technologist said delaying some peer-to-peer traffic may be necessary to prevent voice applications from being unusable (the company says it is not currently prioritizing traffic in this manner).

The ruling from the FCC stems from a request submitted in November by Free Press and its political allies, including some Yale, Harvard, and Stanford law school faculty. They claim that the FCC has the authority--under existing law--to "impose additional regulations" declaring Comcast's throttling to be illegal. They also enlisted the help of computer scientists from schools including MIT and Carnegie Mellon who argued that Comcast's throttling did not amount to reasonable network management.

(Ironically, some of the same interest groups that sued the FCC over its claim to possess unfettered authority--even in the absence of congressional authorization--to enforce broadcast flag rules are now backing its theories of unfettered authority to police Net neutrality violations. Public Knowledge, for instance, claimed the FCC's use of so-called ancillary authority was "arbitrary and capricious" and "unlawful." Now it loves the idea.)

Federal regulators voted 3-2 on Friday to declare that Comcast's throttling of BitTorrent traffic last year was unlawful, marking the first time that any U.S. broadband provider has ever been found to violate Net neutrality rules.

The Federal Communications Commission handed Comcast a cease-and-desist order and required the company to disclose to subscribers in the future how it plans to manage traffic. Comcast had said that its measures to slow BitTorrent transfers, which it voluntarily ended in March, were necessary to prevent its network from being overrun.

"We need to protect consumers' access, said FCC Chairman Kevin Martin, a Republican. "While Comcast has said it would stop the arbitrary blocking, consumers deserve to know that the commitment is backed up by legal enforcement."

The vote was not unexpected. Martin said recently that he planned to side with the commission's two Democrats on the request submitted in November by Free Press and its political allies, including some Yale, Harvard, and Stanford University law school faculty. That led to a backlash against Martin this week from economic conservatives, including the Bush administration and House Republican Leader John Boehner.

It also is likely to be challenged in court. In 2006, Congress rejected five different bills that would have handed the FCC the power to police Net neutrality violations; the FCC has acknowledged that its own Net neutrality principles "are not enforceable"; the Supreme Court has previously ruled that the FCC has no power to regulate "unless and until Congress confers power upon it."

Comcast said in a statement on Friday that it believes "the commission's order raises significant due process concerns and a variety of 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."

Details of the FCC's ruling, which may not be available for a few weeks, remain unclear. While Comcast will face no fine, Martin said the FCC has adopted a new legal "framework" that will let federal bureaucrats deem whether future network management practices are permissible. The dissenting Republicans said they did not receive the final text of the order until late last night--it apparently includes a variant of a "strict scrutiny" test usually reserved to judge whether government policies are legal or not--and it is not yet public.

Commissioner calls ruling unlawful
In an unusually pointed dissent, Commissioner Robert McDowell, a Republican, said the FCC's ruling was unlawful and the lack of legal authority "is sure to doom this order on appeal." McDowell said the order would invite far more extensive FCC regulation of the Internet, with the rules varying by which political party controls the White House: "The ground rules will change based on election results."

The is the FCC's "journey into the realm of the unknowable," McDowell said, saying that the outcome "may result in slower online speeds" for most Americans. Deborah Taylor Tate joined him in a dissent; Democrats Michael Copps and Jonathan Adelstein joined Martin.

A summary of the order released by the FCC on Friday says:

The Commission announced its intention to exercise its authority to oversee federal Internet policy in adjudicating this and other disputes regarding discriminatory network management practices with dispatch, and its commitment in retaining jurisdiction over this matter to ensure compliance with a proscribed plan to bring Comcast's discriminatory conduct to an end.

Under the plan, within 30 days of release of the Order Comcast must:
* Disclose the details of its discriminatory network management practices to the Commission
* Submit a compliance plan describing how it intends to stop these discriminatory management practices by the end of the year
* Disclose to customers and the Commission the network management practices that will replace current practices

To the extent that Comcast fails to comply with the steps set forth in the Order, interim injunctive relief automatically will take effect requiring Comcast to suspend its discriminatory network management practices and the matter will be set for hearing.

Free Press hailed the vote as a "landmark" decision. "Comcast's history of deception and continued blocking show contempt for the online consumer protections established by the FCC," said Josh Silver, executive director of Free Press, in a statement. "We commend Chairman Martin and Commissioners Copps and Adelstein for standing up for Internet users and working across party lines to protect free speech and the free market."

Not helping Comcast's credibility was its denial in August 2007 of early allegations that it was filtering BitTorrent traffic. A few months later, though, it turned out that Comcast really was throttling BitTorrent after all, and the company was forced to concede to the FCC that it blocks only "excessive" traffic. That also handed competitors like AT&T a perfect opening to say that they don't throttle peer-to-peer traffic at all.

Kevin Martin, the Republican chairman of the Federal Communications Commission, is drawing fire from economic conservatives over his plan to declare that Comcast violated the law when throttling BitTorrent last year.

The vote is expected at a FCC meeting (PDF) on Friday morning. It promises to be a landmark one: this would be the first time the commission has ruled on a Net neutrality violation. (An earlier one was settled without a formal ruling.)

Martin's intra-party backlash started on Wednesday with an editorial in the Wall Street Journal that started with this uncomplimentary paragraph: "Bad personnel decisions have haunted the Bush Administration, and one of the bigger disappointments is Federal Communications Commission Chairman Kevin Martin. In his last months as Master of the Media Universe, he seems poised to expand government regulation of the Internet."

The Journal also reported in a news article on Friday that the Bush administration itself is irritated. "We're concerned about the decision," Meredith Attwell Baker, acting head of the Commerce Department's National Telecommunications & Information Administration, told the paper. "It appears to reverse a decade-old bipartisan policy against regulation of the Internet."

There's also House Republican Leader John Boehner, an Ohio Republican, who sent a letter (PDF) to Martin on Thursday warning him of going through with his plan to rule against Comcast, with the help of the five-member FCC's two Democrats. The text of the letter:

Dear Chairman Martin,

I am dismayed by recent press reports that you intend to interfere with the network management decisions of broadband providers, essentially regulating the Internet. As one of your Republican colleagues at the FCC, Commissioner McDowell, so aptly explained in his July 28 Washington Post editorial, "[t]he Internet has flourished because it has operated under the principle that engineers, not politicians or bureaucrats, should solve engineering problems." Congress has intentionally refrained from imposing the heavy hand of government, which is precisely why we have seen such rapid growth in the Internet. As the Wall Street Journal editorial board pointed out July 30, "the FCC's job is not to determine business models in the private sector. The community of Internet service and content providers has proven itself more than able to work out problems on its own as Web use has exploded."

As press reports indicate, the current case is no different. Difficulties in quickly transferring large files led to the development of cutting edge peer-to-peer technology. When a small minority of subscribers--often using these applications to share pirated music and movies--began clogging the networks to the harm of the large majority of users, broadband providers began taking steps to alleviate the congestion. This, in turn, has prompted peer-to-peer developers to collaborate with broadband providers to find better ways to manage traffic. It is this market-based, self-governing nature of the Internet that is the key to its success. Your heavy handed attempts to inject the FCC into the middle of that process threaten to hijack the evolution of the Internet to everyone's detriment. It will also deter the very broadband investment we need for the Internet to continue growing to meet the increasing demands being placed upon it.

Adding insult to injury, it appears you are wading into this debate on very shaky procedural and legal grounds. While the FCC has endorsed certain Internet policy principles, it has never adopted regulations through a proper notice and comment rulemaking. Nor should it, for the reasons I outline above. Nonetheless, your continued pursuit of this matter suggests that you are making not only a poor policy judgment, but a poor legal one, as well. I urge you return to a sound market-oriented approach, rather than continue down the path you have chosen. It will surely stifle one of the greatest technological and economic success stories our Nation has seen.

Adam Thierer, a policy analyst at the free market Progress and Freedom Foundation (which began its days as Newt Gingrich's favorite think tank), wrote this week that liberal activists "will incessantly petition the FCC to review each and every business model decision and encourage the unelected bureaucrats at the agency to manage the Internet to their heart's content."

It's possible that this last-minute criticism will change Martin's mind, or he may be spooked at the prospect of damaging his future political viability (at least inside the Republican Party). We'll know for sure in a few hours.

Federal regulators are planning to meet on Friday and declare that Comcast violated Net neutrality principles when throttling BitTorrent traffic on its network. This would become the U.S. government's first Net neutrality-related ruling.

There's just one problem with the Federal Communications Commission's plans: They may not be quite, well, legal. In other words, the FCC may not actually have the authority to make its ruling stick.

In 2006, Congress rejected five different bills, backed by groups including Google, Amazon.com, Free Press, and Public Knowledge, that would have handed the FCC the power to police Net neutrality violations. Even though the Democrats have enjoyed a majority on Capitol Hill since last year, their leadership has shown zero interest in resuscitating those proposals.

It's true that the FCC adopted a set of principles in August 2005 saying "consumers are entitled to run applications and use services of their choice." But the principles also permit providers' "reasonable network management" and, confusingly, the FCC admitted on the day of their adoption that the guidelines "are not enforceable."

Friday's scheduled vote at the FCC stems from a request submitted in November by Free Press and its political allies, including some Yale, Harvard, and Stanford University law school faculty. They claim the FCC has the authority--under existing law--to "impose additional regulations" declaring Comcast's throttling to be illegal.

"Should Comcast finally be held accountable for its illegal practices, it will be the direct result of historic public involvement in this precedent-setting debate," said Marvin Ammori, general counsel of Free Press, which is funded in part by George Soros' Open Society Institute. "We look forward to seeing the order, and commend the FCC for conducting such a thorough investigation on behalf of Internet users everywhere."

FCC Chairman Kevin Martin, a Republican and occasionally the swing vote at the commission, is reported to be in favor of ruling against Comcast. It's no stretch to say the FCC's two Democrats, Michael Copps and Jonathan Adelstein, will join him. That leaves the remaining two Republican commissioners dissenting; commissioner Robert McDowell wrote an op-ed article published in the Washington Post on Monday that the Internet would "die of clogged arteries if network owners had to seek government permission before serving their customers by managing surges of information flow."

Lacking authority
Lack of legal authority hasn't stopped the FCC before. In 2005, a federal appeals court in Washington, D.C., ruled the agency did not have the authority to draft its so-called broadcast flag rule. Last week, a federal appeals court in Pennsylvania ruled the FCC's sanctions against CBS, which publishes CNET News, in the Janet Jackson Wardrobe Malfunction Incident amounted to an "arbitrary and capricious change of policy."

(Ironically, some of the same interest groups that sued the FCC over its claim to possess unfettered authority--even in the absence of congressional authorization--to enforce broadcast flag rules are now backing its theories of unfettered authority to police Net neutrality violations. Public Knowledge, for instance, claimed the FCC's use of so-called ancillary authority was "arbitrary and capricious" and "unlawful." Now it loves the idea.)

For its part, Comcast has been adamant that it would be unlawful for the FCC to hand down a cease-and-desist order related to BitTorrent. Its filings with the agency read like legal briefs, and amount to an unsubtle promise to file a lawsuit if the FCC proceeds. One, for instance, warns the FCC that any ruling "clearly would be subject to close and skeptical judicial review."

Comcast spokeswoman Sena Fitzmaurice on Monday declined to say whether her employer would sue, saying the text of any order has not been released and it's not clear what authority the FCC would invoke.

But she offered what amounts to a strong hint that a lawsuit is in the works: "Does that legal standard set precedent for the future about other legal decisions? If you let a statement saying they have ancillary authority potentially go unchallenged, does that have further implications?" (Comcast has hired Helgi Walker, a partner at the law firm of Wiley Rein and a former associate counsel to President Bush on FCC matters, to represent it before the commission.)

For Comcast, there are some risks to a court challenge. For now, at least, the vagueness of the FCC's Net neutrality principles can be useful to both sides: broadband providers and Free Press can point to them as supporting their respective positions. If a court declares them to be unlawful, the ruling could invite more specific regulations or explicit legislation from Congress.

Coming clean
In March, Comcast announced a kind of detente with BitTorrent, saying it would move toward a "capacity management technique that is protocol agnostic." Before the announcement, Comcast had responded to network congestion caused by BitTorrent users by sending forged TCP reset packets, which disrupted transfers and prevented some users from uploading files.

Not helping Comcast's credibility was its poker-faced denial in August 2007 of initial allegations that it was filtering BitTorrent traffic. A few months later, though, it turned out that Comcast really was throttling BitTorrent after all, and the company was forced to concede to the FCC that it blocks only "excessive" traffic. That also handed competitors like AT&T a perfect opening to say that they don't throttle peer-to-peer traffic at all.

But even if Comcast was being less than forthcoming, it doesn't mean the FCC has the power to fine it or issue a cease-and-desist order. The U.S. Supreme Court ruled in another FCC case that "an agency literally has no power to act... unless and until Congress confers power upon it." And that doesn't seem to have happened here.

If FCC enforcement against Comcast is illegal, why would Chairman Martin call Friday's meeting? Only he knows for certain, but one explanation is that if the FCC is embarrassed when slapped down by a federal appeals court two years hence, Martin will have long since departed to a lucrative partnership at a law firm or private equity firm. (This is a customary exit path for FCC chairmen: Newton Minow went to Sidley Austin; William Kennard went to the Carlyle Group; James Quello went to Wiley Rein, named for ex-chairman Richard Wiley, where equity partners made an average of $4.4 million in 2006.)

Friday's ruling may also end up as a cautionary tale for AT&T and Verizon, which as recently as last month seemed to be egging on the FCC to take action against their cable industry rival. But the same activists that have targeted Comcast before the FCC no doubt realize that AT&T's terms of service limit "peer-to-peer applications"; Verizon Wireless flatly prohibits them; Verizon's Fios service blocks incoming port 80. Another term for those network management practices is "Net neutrality violations."