Net Neutrality and the FCC
To the surprise of no one, a federal appeals court ruled yesterday that the Federal Communications Commission lacks the authority to regulate how Internet service providers manage their networks. This validation of the rule of law over bureaucratic diktat is worth cheering. The question now is whether the Obama Administration will accept the decision or evade it by finding other ways to impose “net neutrality” rules on Comcast, AT&T and others.
In 2008 the FCC sanctioned Comcast for managing its network in a way that prevented a small percentage of bandwidth hogs from degrading Internet service for the vast majority of users. This was one of the last political brainstorms of Kevin Martin, President Bush’s second-term FCC chairman and one of his least principled appointees. The vote was 3-2, with Mr. Martin joining two Democratic commissioners in a vote intended to punish companies that had fought him on other issues.
The FCC was warned it had no legal authority to impose such a rule, and Comcast immediately went to court. In its unanimous decision yesterday, three judges on the D.C. Circuit Court of Appeals sided with Comcast. Citing several Supreme Court rulings, the judges noted that in the past the FCC had “strain[ed] the outer limits of even the open-ended and pervasive jurisdiction that has evolved by decisions of the Commission and the courts.” Elsewhere it “exceeded those limits” and “here it seeks to shatter them entirely.”
The ruling is a setback for such net neutrality cheerleaders as the White House, FCC Chairman Julius Genachowski and advocacy groups Free Press and Public Knowledge. The FCC acknowledged that it has no express permission from Congress to impose such rules, arguing instead that it has ancillary jurisdiction under the 1934 Communications Act. But the court rejected that claim, citing a 2005 ruling that the FCC could only exercise ancillary authority to carry out “statutorily mandated responsibilities.”
What part of “statute” doesn’t the FCC understand? Congress has repeatedly refused to give the FCC explicit authority to police the Web. In 2006 alone, lawmakers rejected five separate bills that would have allowed the agency to regulate Internet service providers, and another was introduced last year.
If Congress wants to expand the FCC’s regulatory reach, it can always do so in legislation. Instead, some in Congress want the FCC to continue enforcing net neutrality mandates without the Members having to vote on them. John Kerry (D., Mass.), who chairs a Senate subcommittee on the Internet, said yesterday that he’d support an FCC effort simply to “reclassify” broadband as a telephone service, which the agency does have the power to regulate. Don’t like the law? Reclassify it.
Mr. Genachowski is already moving. Last year the FCC began drafting a formal set of net neutrality rules to justify enforcement actions against Internet providers. And the national broadband plan he released last month calls for using the federal Universal Service Fund, which subsidizes phone service in rural areas, to subsidize broadband deployment. Mr. Genachowski knows he can’t do this under current law unless broadband is reclassified as a phone service. So he’s using this new “plan” as a bureaucratic ruse to expand his agency’s regulatory powers.
At stake here is more than whether some telecom giant (Verizon) or content company (Google) has more pricing power on the Web. The main issue is whether the rules that have allowed an explosion of Internet investment are going to continue, or whether the FCC will unilaterally rewrite the rules to favor some investments over others. As the iPad’s unveiling shows, we’re living in an era of rapid Internet innovation and ferocious competition that is creating new choices for consumers, and the FCC shouldn’t get in the way.
