Intellectual Property Law

FCC Upholds Net Neutrality by Ordering Removal of Transfer Barriers

By IBLS Editor

Net neutrality is the notion that Internet providers must transmit all content at equal speed. In August 2008, the FCC issued a ruling, stating that Internet service providers cannot intentionally degrade any applications, that such activities amount to discrimination and do not constitute proper network management. The FCC, upholding the principle of net neutrality, also issued an injunction against Comcast activities in this regard.

In November, 2007, two public advocacy groups, Free Press and Public Knowledge, filed a formal complaint with the Federal Communications Commission regarding Comcast?s installation of equipment that slowed file transfers for users of BitTorrent software. BitTorrent is used for downloading movies, television shows, music, and software.

Comcast, the largest cable company in the U.S., claimed that it installed the equipment because the small percentage of customers using BitTorrent consumed a large share of Comcast?s network capacity, thereby interfering with the efficient Internet usage of other customers.

The issue is central to the concept of net neutrality, the notion that Internet providers are to provide equal access to the Internet to all consumers, with equal content and at equal speed. Enacting policies that violate with or diminish net neutrality can provide an unfair advantage to certain customers and can provide undue control to large content providers at the expense of start-ups, small businesses, and non-profit organizations that might not be able to afford a fast-track information stream.

In August, 2008, the FCC upheld the complaint against Comcast, which marked the first time that an Internet provider was found to have violated the FCC?s open-access rules. The FCC held that Comcast had illegally inhibited users of high-speed Internet services from utilizing popular file-sharing software. While no fine was imposed, Comcast was ordered to cease blocking file transfers by this year. The FCC noted that the decision is meant to serve as a key precedent barring service providers from favoring certain services over others by slowing down file transfers. In its defense, Comcast stated that its network management choices were reasonable and wholly consistent with industry practices as they did not block Internet traffic, but only delayed it. Comcast has appealed the FCC?s decision. The final judgment was a close one, having been decided by a 3-2 margin. It was noted in the dissenting opinion that the FCC did not have the legal authority to order Comcast to end blocking file transfers because it had never issued formal regulations on the issues in question. The dissent also opined that Comcast?s tactics were a legitimate managing method and did not disadvantage or interfere with its rivals? activities in any way. However, with respect to the above arguments, the majority stated that it was common practice for agencies to address new policy issues when dealing with complaints.

Representatives from other telecommunications companies supported the FCC?s decision, citing, in particular, the FCC?s authority to adjudicate net neutrality issues. It should be noted, however, that although most telecommunications companies prefer that the FCC refrain from meddling in the management of their networks, there is a clear preference for FCC oversight versus direct legislative interference.

All Internet providers use some form of software tools to manage their network traffic. Comcast appears to have been more aggressive than some of its rivals, but it is certainly not alone in this regard.   In fact, some commentators have cautioned that the FCC ruling could, ironically, stymie net neutrality as Internet providers are toying with the idea of charging customers based on the amount of data they use, instead of offering essentially unlimited data for a flat fee.

The Chairman of the House Subcommittee on Telecommunications and the Internet, Edward Markey, from Massachusetts, has introduced legislation mandating network neutrality. This proposal is especially important in light of the fact that the FCC may not have the authority to enforce its ruling, thereby creating the need for legislative measures in this regard.

Full post as published by IBLS Internet Law Blog on September 22, 2008 (boomark / email).