January 8, 2010 10:06 PM

Comcast Oral Argument: Is The Net Neutrality NPRM A "Rainout"?

OK, first let me say, that I was NOT at the oral argument in the Comcast v. FCC case in the DC Circuit this morning.  So, everything I'm going to say is based on second hand reports from people that were there or from news stories.  Thus, having established only the thinnest of credentials to opine on the "near and present" dangers of the court's potential decision, I will pontificate . . . but first some background.

In 2008, the FCC (in a 3:2 decision) issued an order finding that Comcast had violated the principles in the Commission's 2005 Policy Statement regarding broadband Internet access by surreptitiously degrading customer use of peer-to-peer ("P2P") applications. ("Comcast Order").  The Policy Statement held that "consumers are entitled to run applications and use services of their choice." (Policy Stmt at ¶ 4)  In its 2008 Comcast Order, the Commission said that Comcast's method of degrading P2P traffic in order to limit upstream congestion in its networks did not constitute "reasonable network management," and, therefore, violated the Commission's policy that consumers be allowed to run the applications of their choice.  This policy violation, the Commission added, was compounded by Comcast's failure to candidly disclose these practices to its subscribers and the Commission.

Comcast appealed this decision to the DC Circuit, and the court held oral arguments today.  Comcast made essentially 2 arguments: 1) being cited for a "policy" violation was improper, because the Commission had not adopted rules specific enough to warn Comcast that its practices might violate the Commission's application of its principles (i.e., the "narrow" argument), and 2) that the Commission, relying on only general policy statements in the Communications Act (in Sections 230 and 706), lacked any specific statutory authority over Internet practices to enforce the policy principles, which were enacted under Title I of the Communications Act--another general statement by Congress authorizing the Commission to regulate communications by wire or radio (i.e., the "broad argument").

Press reports indicate that the judges were skeptical of the Commission's authority to discipline Comcast on either the "narrow" or "broad" arguments.  At least one press report had the FCC's General Counsel stating that he would rather the Commission lose on "narrow" grounds.  As a taxpayer, I'm not so sure I would agree, and here's why. 
The Commission, in the jurisdictional section of its NPRM (see ¶ 84) (released Oct. 22, 2009), pretty much "doubles down" on the arguments it makes in its Comcast brief filed only a month earlier (Sept. 21, 2009).  If the jurisdictional underpinnings of the policy statement are going to be declared a broadly insufficient basis on which to adopt Net Neutrality rules, I'd want to know.  I mean, why waste all your resources adopting rules that are only going to get rejected on a "broad basis?"  If the Commission needs to try another approach, one would hope they would get as much guidance as possible from the court.  

Of course, for the court to ask the litigants how they would like to see the Commission lose--on narrow or broad grounds--boarders on the irresponsible.  The court knows that the Commission is conducting a rulemaking proceeding based on what it believes to be statutorily sound jurisdiction--the same statutory jurisdiction on which it believes it had the authority to adopt and enforce the Policy Statement.  If the court believes the statutes cited cannot be used as a basis for the Commission to regulate the Internet, it is extremely wasteful to allow the Commission to proceed apace, as private parties waste millions of dollars in attorney's fees, and the Commission wastes millions of dollars in staff resources.  

Chairman Genachowski clearly made his intentions known in this statement issued after the oral argument, "This case underscores the importance of the FCC's ongoing rulemaking to preserve the free and open Internet.  I remain confident the Commission possesses the legal authority it needs and look forward to reviewing the court's decision when it issues."  The FCC may well possess the legal authority it needs to adopt some, more reasonable, rules governing behavior by Internet services, applications, and access providers, but it may not be the legal authority the Commission thinks it has.

Given Chairman Genachowski's statement, the court owes it to the agency, the parties, and the public to provide as much guidance as possible.  The FCC did not provide public notice of other potential bases of legal authority.  If the FCC needs to revise its jurisdictional basis for Internet rules, it will almost certainly have to revise its proposed rules.  In all likelihood, we have at least a partial "rainout" of the existing NPRM.  The DC Circuit should do its best to give the Commission the broadest guidance it can.  It's too late for comments, but the real "rainout" shame would be for the Commission to accept replies, ex parte filings and declarations, and write substantive rules only to find out in a year or two, what it could have found out a few months from now.

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