A federal appeals court ruled on Tuesday that regulators had limited
power over Web traffic under current law. The decision will allow
Internet service companies to block or slow specific sites and charge
video sites like YouTube to
deliver their content faster to users.
decision was a setback to efforts by the Federal Communications Commission to require
companies to give Web users equal access to all content, even if some of
that content is clogging the network.
The court ruling, which came after Comcast
asserted that it had the right to slow its cable customers' access to a
file-sharing service called BitTorrent, could prompt efforts in
Congress to change the law in order to give the F.C.C. explicit
authority to regulate Internet service.
That could prove difficult politically, however, since some conservative
Republicans philosophically oppose giving the agency more power, on the
grounds that Internet providers should be able to decide what services
they offer and at what price.
More broadly, the ruling by the United States Court of Appeals for the
District of Columbia Circuit could raise obstacles to the Obama
administration's effort to increase Americans' access to high-speed
For example, the national broadband plan released by the
administration last month proposed to shift billions of dollars in money
from a fund to provide phone service in rural areas to one that helps
pay for Internet access in those areas. Legal observers said the court
decision suggested that the F.C.C. did not have the authority to make
The F.C.C. will now have to reconsider its strategy for mandating "net
neutrality," the principle that all Internet content should be
treated equally by network providers. One option would be to reclassify
broadband service as a sort of basic utility subject to strict
regulation, like telephone service. Telephone companies and broadband
providers have already indicated that they would vigorously oppose such a
The appeals court's 3-0 decision, which was written by one of the
court's more liberal members, Judge David S. Tatel, focused on the
narrow issue of whether the F.C.C. had authority to regulate Comcast's
network management practices.
But it was a clear victory for those who favor limiting the F.C.C.'s
regulation of the Internet, said Phil Kerpen, a vice president at
Americans for Prosperity, a group that advocates limited government.
"The F.C.C. has no legal basis for imposing its dystopian regulatory
vision under the net neutrality banner," he said.
As a practical matter, the court ruling will not have any immediate
impact on Internet users, since Comcast and other large Internet
providers are not currently restricting specific types of Web content
and have no plans to do so.
Comcast, the nation's largest cable provider, had a muted reaction to
its victory. The company said it was gratified by the court's decision
but added that it had changed the management policies that led it to
restrict access to BitTorrent, a service used to exchange a range of
large data files, from pirated movies to complex software programs.
"Comcast remains committed to the F.C.C.'s existing open Internet
principles, and we will continue to work constructively with this F.C.C.
as it determines how best to increase broadband adoption and preserve
an open and vibrant Internet," Comcast said in a statement.
The company is currently seeking federal approval for its proposed
acquisition of a majority stake in NBC
Universal, the parent of the NBC
broadcast network and a cadre of popular cable channels. Some members of
Congress and consumer groups have opposed the merger, saying that it
would enable Comcast to favor its own cable channels and discriminate
against those owned by competitors - something the company has said it
does not intend to do.
After the ruling on Tuesday, consumer advocates voiced similar concerns
about Comcast's potential power over the Internet, saying that the
company could, for example, give priority to transmission of video
services of NBC channels and restrict those owned by a competitor like CBS.
"Internet users now have no cop on the beat," said Ben Scott, policy
director for Free Press, a nonprofit organization that supported the
F.C.C. in the case.
Genachowski, the chairman of the F.C.C., had said previously that
if the agency lost the Comcast case, he would seek to find other legal
authority to implement consumer protections over Internet service. In a
statement, the F.C.C. said it remained "firmly committed to promoting an
While the court decision invalidated its current approach to that goal,
the agency said, "the court in no way disagreed with the importance of
providing a free and open Internet, nor did it close the door to other
methods for achieving this important end."
The concept of equal access for all Internet content is one that people
who favor some degree of F.C.C. regulation say is necessary not only to
protect consumers but also to foster innovation and investment in
"You can't have innovation if all the big companies get the fast lane,"
said Gigi B. Sohn, president of Public Knowledge, which advocates for
consumer rights on digital issues. "Look at Google, eBay, Yahoo -
none of those companies would have survived if 15 years ago we had a
fast lane and a slow lane on the Internet."
The court's ruling could potentially affect content providers like
Google, which owns YouTube, a popular video-sharing service. Content
providers fear that Internet service companies will ask them to pay a
fee to ensure delivery of material like high-definition video that takes
up a lot of network capacity.
Google declined to comment directly on the ruling but pointed to the
Open Internet Coalition, of which it is a member. The coalition's
executive director, Markham Erickson, said the decision "creates a
dangerous situation, one where the health and openness of the Internet
is being held hostage by the behavior of the major telco and cable
Sam Feder, a lawyer who formerly served as general counsel for the
F.C.C., said that the court's decision "is the worst of all worlds for
the F.C.C." He said the opinion was written narrowly enough that it was
unlikely to be successfully appealed, while also raising enough
possibilities of other ways that the F.C.C. could accomplish the same
goals that it was unlikely to inspire Congressional action to give the
agency specific regulatory authority over the Internet.
Under the Bush administration, the F.C.C. largely deregulated Internet
service. But in 2008, the final year of the administration, the agency
decided to impose the net neutrality order on Comcast. Under President
Obama, the F.C.C. has broadened that initiative, seeking to craft
rules governing the entire industry.
Tuesday's ruling was the latest in a string of court decisions that
rebuffed efforts by the F.C.C. to expand its regulatory authority, noted
Eli M. Noam, a professor of finance and economics at the Columbia
University graduate business school and the director of the
Columbia Institute for Tele-Information.
"The F.C.C. is going to have to be more careful in how it proceeds," he
said, suggesting that the agency would have to structure policy
decisions that were more broadly acceptable to the major
telecommunications industry players in order to give them some
Andrew M. Odlyzko, a professor at the University
of Minnesota who has served as director of the university's Digital
Technology Center, said that while some service providers might jump
at the opportunity to establish toll roads for broadband, the biggest
companies, including Comcast and Verizon,
have said they do not intend to do so.