Court rejects restrictions on Internet
Decision may reignite "Net Neutrality" debate
by Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) -- A U.S. appeals court on Tuesday struck down rules that restrict Comcast Corp. from dictating how customers can use the Internet.
In a 3-0 vote, the U.S. Appeals Court for the District of Columbia ruled that the Federal Communications Commission lacked the statutory authority to determine how Comcast manages its network. See court ruling against FCC.
The decision could reignite a simmering debate in Congress over whether new laws are needed to guarantee "Net Neutrality" -- the right of Internet customers to use the Web for almost any lawful purpose they want.
The FCC said it will consider alternative means to promote an open Internet.
The "court in no way disagreed with the importance of preserving a free and open Internet," spokeswoman Jen Howard said in a statement, "nor did it close the door to other methods for achieving this important end."
The lawsuit stems from several incidents in 2007 in which Comcast blocked some subscribers from sharing large video and audio files over the Internet in what are known as peer-to-peer transactions.
Comcast /quotes/comstock/15*!cmcsk (CMCS.K 17.92, -0.02, -0.11%) complained that such "bandwidth" hogs used up too much capacity and slowed down the network for other customers. The company did not have an immediate comment.
The FCC later issued rules designed to prevent cable or phone companies that operate Internet networks from constraining what their customers do.
Yet the appeals court has vacated other agency decisions on similar statutory grounds and many experts thought Comcast had a good chance to prevail.
The court ruling would apply to any operator of an Internet network. Some of the largest U.S. operators include AT&T Inc. /quotes/comstock/13*!t/quotes/nls/t (T 26.25, -0.06, -0.22%) , Verizon Communications /quotes/comstock/13*!vz/quotes/nls/vz (VZ 31.19, -0.27, -0.86%) , Sprint Nextel Corp. /quotes/comstock/13*!s/quotes/nls/s (S 3.86, -0.05, -1.28%) and Time Warner Cable /quotes/comstock/13*!twc/quotes/nls/twc (TWC 52.29, -1.24, -2.32%) .
Shares of phone and cable companies were little changed in Tuesday trades. Comcast stock was up 5 cents to $17.99.
Back to the drawing board
Under the prior rules, the FCC did give operators some latitude in managing their networks to prevent Internet congestion, block spam and viruses or deny access to illegal content like child pornography.
The court ruling sends the agency back to the drawing board. One possibility is that the FCC for the first time could classify broadband as a "telecommunications service," which would give the agency the power to regulate Internet access just like a public utility.
Broadband has historically fallen into a gap between long-standing phone and cable regulations, so a move to reclassify the service could trigger a fierce political battle in Washington.
What's more, the FCC last month released an ambitious national plan designed to put the Internet in every home and vastly increase connection speeds over the next 10 years. Stricter oversight could dampen industry cooperation and run counter to the stated goal of FCC Chairman Julius Genachowski to tread softly on the Internet.
In an interview with The Wall Street Journal, a sister publication of MarketWatch, Genachowski said in February: "I've been clear repeatedly that we're not going to regulate the Internet."
Network operators have long resisted stricter rules. They say examples of misbehavior are rare and warn tougher regulation could reduce network investment that would increase broadband speeds.
"The Internet has thrived in an environment of minimal regulation," Verizon CEO Ivan Seidenberg wrote in a Journal opinion article last week.
Supporters of Net Neutrality counter that clear rules are needed to ensure that the Internet isn't divided into haves and have-nots. They worry operators will favor some customers or applications over others, with fast lanes for those willing to pay more and slower lanes for those who pay less.
"This cannot be an acceptable outcome for the American public and requires immediately FCC action to reestablish legal authority," said S. Derek Turner of Free Press, a liberal-leaning group that promotes media reform.
Decision may reignite "Net Neutrality" debate
by Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) -- A U.S. appeals court on Tuesday struck down rules that restrict Comcast Corp. from dictating how customers can use the Internet.
In a 3-0 vote, the U.S. Appeals Court for the District of Columbia ruled that the Federal Communications Commission lacked the statutory authority to determine how Comcast manages its network. See court ruling against FCC.
The decision could reignite a simmering debate in Congress over whether new laws are needed to guarantee "Net Neutrality" -- the right of Internet customers to use the Web for almost any lawful purpose they want.
The FCC said it will consider alternative means to promote an open Internet.
The "court in no way disagreed with the importance of preserving a free and open Internet," spokeswoman Jen Howard said in a statement, "nor did it close the door to other methods for achieving this important end."
The lawsuit stems from several incidents in 2007 in which Comcast blocked some subscribers from sharing large video and audio files over the Internet in what are known as peer-to-peer transactions.
Comcast /quotes/comstock/15*!cmcsk (CMCS.K 17.92, -0.02, -0.11%) complained that such "bandwidth" hogs used up too much capacity and slowed down the network for other customers. The company did not have an immediate comment.
The FCC later issued rules designed to prevent cable or phone companies that operate Internet networks from constraining what their customers do.
Yet the appeals court has vacated other agency decisions on similar statutory grounds and many experts thought Comcast had a good chance to prevail.
The court ruling would apply to any operator of an Internet network. Some of the largest U.S. operators include AT&T Inc. /quotes/comstock/13*!t/quotes/nls/t (T 26.25, -0.06, -0.22%) , Verizon Communications /quotes/comstock/13*!vz/quotes/nls/vz (VZ 31.19, -0.27, -0.86%) , Sprint Nextel Corp. /quotes/comstock/13*!s/quotes/nls/s (S 3.86, -0.05, -1.28%) and Time Warner Cable /quotes/comstock/13*!twc/quotes/nls/twc (TWC 52.29, -1.24, -2.32%) .
Shares of phone and cable companies were little changed in Tuesday trades. Comcast stock was up 5 cents to $17.99.
Back to the drawing board
Under the prior rules, the FCC did give operators some latitude in managing their networks to prevent Internet congestion, block spam and viruses or deny access to illegal content like child pornography.
The court ruling sends the agency back to the drawing board. One possibility is that the FCC for the first time could classify broadband as a "telecommunications service," which would give the agency the power to regulate Internet access just like a public utility.
Broadband has historically fallen into a gap between long-standing phone and cable regulations, so a move to reclassify the service could trigger a fierce political battle in Washington.
What's more, the FCC last month released an ambitious national plan designed to put the Internet in every home and vastly increase connection speeds over the next 10 years. Stricter oversight could dampen industry cooperation and run counter to the stated goal of FCC Chairman Julius Genachowski to tread softly on the Internet.
In an interview with The Wall Street Journal, a sister publication of MarketWatch, Genachowski said in February: "I've been clear repeatedly that we're not going to regulate the Internet."
Network operators have long resisted stricter rules. They say examples of misbehavior are rare and warn tougher regulation could reduce network investment that would increase broadband speeds.
"The Internet has thrived in an environment of minimal regulation," Verizon CEO Ivan Seidenberg wrote in a Journal opinion article last week.
Supporters of Net Neutrality counter that clear rules are needed to ensure that the Internet isn't divided into haves and have-nots. They worry operators will favor some customers or applications over others, with fast lanes for those willing to pay more and slower lanes for those who pay less.
"This cannot be an acceptable outcome for the American public and requires immediately FCC action to reestablish legal authority," said S. Derek Turner of Free Press, a liberal-leaning group that promotes media reform.
