II-3.1: Decision of the Federal Appeals Court in Washington, D.C. handed down on 6 April 2010: Comcast Corporation vs. Federal Communication Commission (FCC). This Regulator is incompetent to impose the theory of Network and Internet Neutrality.

www.pacer.psc.uscourts.gov

Context and Summary

This affair started with a battle between Comcast, one of America’s largest telecommunications providers, and two associations for the protection of Internet users, Free Press and People Knowledge, which accused Comcast of limiting peer-to-peer file-sharing services through the BitTorrent service, on the grounds that use of such services was overloading its network. Following a complaint filed by these associations with the FCC, the FCC ordered Comcast to stop imposing bandwidth limitations on subscribers, and to inform it of any practices it planned to implement in this domain, in order to allow the FCC to uphold the “principle that consumers are entitled to access the lawful Internet content of their choice.” After having obeyed the order, Comcast filed a suit against the FCC, and asked the Appeals Court to define the regulatory authority’s purview over bandwidth management.

The Federal Appeals Court in Washington DC handed down its decision on April 6 2010, stating that the FCC was not legally mandated to regulate the question of bandwidth on the Internet, and could not impose upon internet service providers the obligation to provide unrestricted and equal access to the Internet. The Court bases its argument on the 1934 law that set up the FCC, and assigned it the power to regulate specific domains. This law provides the FCC with an ‘ancillary’ power to “perform any and all acts, make such rules and regulations, and issue such orders…as may be necessary in the execution of its functions.” The law is, however, silent on whether or not the FCC has regulatory authority over cable internet services, and the Appeals Court has decided that the FCC’s ancillary power cannot be so broadly interpreted as to serve as a basis for regulating this area.

Brief commentary

This decision is important and is part of a worldwide debate, full of ardent, and often opposing, opinions. The Court condemned the FCC for attributing itself the power to regulate Internet bandwidth provision. However, its decision does not discuss the fundamental question at hand, which is whether the principle of network neutrality is justified or not. Its decision is based on the absence of a specific legal mandate granting the FCC competency in this domain.

The divergent solutions adopted by the regulator and the judge can be explained b y the following: the former adopted a justification by analogy, whereas the latter adopted a restrictive form of reasoning. Truly, the regulator decided that it was necessary for it to intervene in order to allow free access for all to bandwidth, which should not be limited by the internet service provider’s will alone. This necessity, derived from the priniple of network neutrality, justifies the power of the regulator. To some extent, one might say necessity knows no law. This is a justification based on an analogy based on the goals of regulation, which provides the regulator with powers that are not explicitly conferred by law, but rather, justified by its mission, which is taken to be the effective access by all to Internet. Indeed, the FCC based its decision mainly on the Congressional statement of policy at the beginning of the 1934 Law creating the FCC. The regulator believed that it was even more justified to adopt such a position, since there was case law precedent in this domain—as we well know, precedent provides legitimising, or even legal, power in Anglo-American legal systems. Truly, in a number of cases, such as Southwestern Cable and Midwest Video I, the Supreme Court allowed the FCC to regulate cable television before such power was explicitly granted to the FCC, based on the aforementioned Congressional statement of policy.

In the decision at hand, the judge chose to adopt a more restrictive reasoning—one might even say that his decision is “à la française”—via the notion of delegation of powers. This logic, simpler than the FCC’s, says that a power not expressly delegated by Congress to the regulator, who is nothing more than an arm of the government, does not exist: therefore, the regulator is incompetent to act in this area. The FCC adopted an ‘upstream’ reasoning, according to which it has the powers necessary to fulfil its goals; the judge, a ‘downstream’ reasoning, where powers are only specifically granted by the source of that power. One might wonder how the Supreme Court would decide on the Appeals Court’s decision. In any case, since the question at hand is the lack of the regulator’s mandate to regulate in this domain, the remedy would be passing a law to expressly confer the FCC with such a mandate.

This is why Congress would have to modify the 1934 Law that sets out the rights and duties of this regulatory authority in order to allow it to guarantee network neutrality, if this is its political will. It seems that the current American administration is in favour of the principle of network neutrality, as attested by President Obama’s campaign declarations. However, this question is the subject of hot debate in Congress, opposing Democrats and Republicans. Internet service providers want to be able to control the content subscribers can access on their networks, and especially to be able to limit bandwidth available for certain sites in order to allow subscribers to more rapidly access others. However, overly restrictive regulation of such corporations might serve as a disincentive to pursue future investment in costly technological development. The same questions are currently being debated in European countries, especially since they are crucial to determine the economic and technological choices that will determine the future architecture of this sector.

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http://www.regulatorylawreview.com/spip.php?article183