The FCC Loses Another One

The Federal Communications Commission keeps grabbing and the judges keep slapping its hands.

The big news today is that a federal appeals court has ruled the FCC has no legal authority to regulate the Internet. This throws the entire FCC broadband policy agenda into turmoil.

The decision, by the United States Court of Appeals for the District of Columbia Circuit, concerns sanctions the FCC imposed on Comcast after the cable company slowed down the rate of transfer for certain peer-to-peer files using the BitTorrent protocol. Although Comcast and BitTorrent settled the dispute, the FCC nonetheless sought to fine Comcast for violating the FCC’s network neutrality guidelines against content discrimination. Comcast sued, claiming it had the right to manage its own network to serve the interest of the 95 percent its customers who don’t use BitTorrent.

The industry was watching the case because it was the first major test of the FCC’s interpretation of its “ancillary authority” to regulate Internet service providers. In what amounts to the latest blow against FCC overreach, the court ruled that under current law, the FCC’s regulatory purview does not extend to the Internet. Any change to that effect would have to come from congressional legislation.

Starting with the FCC’s Notice of Proposed Rulemaking on network neutrality, and extending to much of the FCC’s Broadband Plan issued last month, the decision blows a hole in a year’s worth of policy planning at the commission. FCC Chairman Julius Genachowski took office last year with a progressive agenda to set what is arguably a government-driven industrial policy for the country’s telecom and information technology sector, using the “ancillary authority” argument to justify increased oversight of not simply telecom and wireless spectrum issues, but of influential applications and content companies such as Google, Apple and Disney.

Outside of a new law, the FCC could attempt to reclassify ISPs, now lightly regulated as Title I (information services providers) to heavily regulated Title II (telecom services providers). This stands to be even more of a stretch as the ancillary authority rationale, as it would essentially treat any competitive ISP as the equivalent of a wireline narrowband phone company.

This would create a regulatory nightmare, simply because the ISP category is so broad–i.e., Google can be considered an ISP.

If there is any good news is that the courts keep pushing back against FCC overreach. The closest thing it’s had to a win in recent years has been in FCC v. Pacifica Foundation, better known as the “seven dirty words” case that erupted from a radio airing of a famous George Carlin monologue. Even then, the court limited the FCC’s authority to regulate broadcast content to times when its is reasonable to believe children might be listening.

In fact the courts consistently have ruled against FCC attempts to abrogate both speech and property rights, no matter who holds the chair. When the commission tried to force cable companies to share  infrastructure with competitors (FCC v. Brand X), the courts struck it down. Three times the FCC tried to require phone companies to unbundle their network elements. Three times the courts halted it. Its $550,000 fine against CBS over Janet Jackson’s wardrobe malfunction? Dropped by court order. Its attempt to regulate Internet content under the Children’s Online Protection Act (COPA)? Unconstitutional. Indecency rulings and fines against Fox and NBC? “Arbitrary and capricious,” said an appeals court.

You’d think by now the FCC would be getting the message–stick to the job Congress gave you. From reading Adam’s comment and excerpt below, it seems that the D.C. court is making an extra effort to drive that point home. Either way, it’s gratifying to see one branch of the government willing to fight “mission creep.”

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