Monday, July 28, 2008

Comcast Order: What to expect Aug 1 and beyond

When several media outlets simultaneously report upcoming FCC decisions, you can be sure of one thing: one of the commissioners leaked it. That's what happened this past Friday, when AP, WSJ, and others all noted that "according to FCC officials," three of the five Commissioners voted to find that Comcast was in violation of FCC policy. Those three Commissioners will undoubtedly be Chairman Martin, Commissioner Copps, and Commissioner Adelstein. Today, Commissioner McDowell published a Washington Post Op-Ed [which Mark Cooper answered] that all but declared that he was going to vote against the measure. The official vote will go down this Friday, August 1.

[Update: Oh snap! The politicking is bleeding into the WSJ Op-Ed page, and the NYT Op-Ed page too. And now we've got the house Republican minority leader trashing the decision on the eve of its announcement.]

The word from inside the beltway was that it was touch-and-go for the last week as to whether or not the order was going to go through. The biggest debate appeared to be complex jurisdictional issues. Comcast has been arguing 1) that the Commission could not enforce the non-binding 2005 "policy statement" without first passing rules and 2) that in any event it lacked statutory authority to intervene based on broadband's "deregulated" Title I status. Martin himself said in 2005 that, "policy statements do not establish rules nor are they enforceable documents." This thrilling administrative law debate went roughly as follows:

Free Press: The FCC has jurisdiction to act, based on 8 different statutory sources. Also, the FCC frequently exercises its power to act via adjudication rather than rulemakings. Oh, and the cherry on top is that Comcast is currently arguing in federal court in California that the FCC does have jurisdiction over these matters.

Comcast: No, those clauses don't give the FCC jurisdiction to act. Plus, Free Press has changed it's story since its original complaint where it asked the Commission to enforce the policy statement. It is now asking the Commission to enforce particular statutes.

Free Press: We haven't changed our story, and it doesn't matter regardless. Oh and by the way, we also have a bunch of legal scholars that say that the Commission has jurisdiction.

Comcast: The part of the statutes you cite are just preambles and statutory statements of "policy", which the D.C. Circuit Court says are "not an operative part of the statute and [do] not enlarge or confer powers on administrative agencies or officers."

Media Access Project: Comcast was warned that the FCC would do this if they discriminated. Oh, and the Sixth Circuit seems to say that there is yet another statutory basis for jurisdiction.

Free Press: Yeah, what they said.

Comcast: We've retained a DC law firm which says that the FCC does not have jurisdiction.

Free Press: I think we've stated our case.

Does this mean that the Net Neutrality crowd "won"?
Getting the FCC to take action on this issue was a battle, but not the war. Many considered it unthinkable that anything would happen on this front until the next administration. This moves the ball in their direction but the game is far from over. Free Press has already posted two things on their blog in celebration.

What did the Net Neutrality crowd win?
It's unclear exactly what is in the order. According to news reports, it doesn't include a fine on Comcast. It probably includes requirements for them to stop doing whatever they've been doing, and to clearly disclose their "network management" practices. This is far from a broad neutrality mandate. The order probably won't lend a great deal of clarity to the question of what constitutes "reasonable network management." There is no broader rule from the commission, which would likely carry more power and clarity than the ad hoc approach of adjudication. There is certainly nothing with the force of statute.

What Happens Next?
Comcast sues the FCC. This will happen immediately. The case will go directly to Appeals court because suits always skip District court when they're appealed from the FCC. Comcast will argue many of the same things they argued in the proceeding. They will discuss how the Brand X case placed broadband clearly within "deregulated" Title I. Title I is essentially the introduction to the Communications Act, and is pretty thin on any details. Comcast will attack whatever statutory ground the FCC claims for its decision. This will come down to questions like whether the Commission can construe general language of Title I to give them authority to take the specific actions in the order, or whether other sections of the Act which appear to apply to other technologies (like common carriers) can actually apply to cable. They might even get down-and-dirty and start talking about the 1979 decision FCC v. Midwest Video Corp. decision that said that the Commission did not have jurisdiction to impose common carriage on cable because cable was a “broadcast” service. Who knows how this will come out, but Declan McCullaugh over at CNet concludes (without much analysis) that the FCC "probably can't police" the order. In the meantime, the stock price of Sandvine (the company that makes Comcast's "traffic shaping" hardware) will probably continue to tank.

But what about nipples?
I'm glad you asked. The recent 3rd Circuit decision invalidating the FCC's finding of indecency in the "wardrobe malfunction" incident actually relates to the current situation. In the decision, the Court found that the FCC's fine was "arbitrary and capricious" and that there was no clear statutory basis nor precedent for the fine. Some of Comcast's arguments are sure to echo this reasoning, and they appear to feel emboldened by the 3rd Circuit decision even though the subject matter is quite different. [Update: Free Press et al. rebut this argument]

Where does this put the Net Neutrality fight?
Neutrality proponents have somewhat more confidence at the FCC when making complaints, and this has whole ordeal has probably put more fear in the hearts of broadband providers that would like to discriminate against traffic. The inevitable appeal provides another stage on which to debate neutrality. However, neutrality proponents don't have as strong of an argument that the FCC isn't doing anything so we need Congress to step in. Still, from all appearances, the next Congress will be far more open to the idea of legislation (although most people don't think it's going to happen in the first session).

Well Steve, what do you think?
Adam Thierer (from think tank Progress and Freedom Foundation) commented that this FCC decision is evidence that the regulatory sky is falling on liberty's head, and I replied. [Update: The PFF crew continues to pile on, with even the ideologically aligned Tim Lee telling everybody to chill out. Hance Haney can't help but get in on the bashing.]

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