Marketplace: Comcast 1, FCC 0

Politicians and regulatory officials alike are pondering how next to approach network neutrality following the recent U.S. Court of Appeals for the District of Columbia Circuit decision that ruled in favor of Comcast by reversing a 2008 Federal Communications Commission order that barred the operator from interfering with its customers’ use of peer-to-peer (P2P) networking applications, including video downloads. This order could have far-reaching ramifications when it comes to competition, not only for bandwidth but for customers.

In a written statement attributed to Sena Fitzmaurice, vice president /Government Communications, Comcast said, “We are gratified by the Court’s decision today to vacate the previous FCC’s order. Our primary goal was always to clear our name and reputation. We have always been focused on serving our customers and delivering the quality open-Internet experience consumers want. Comcast remains committed to the FCC’s existing open Internet principles, and we will continue to work constructively with this FCC as it determines how best to increase broadband adoption and preserve an open and vibrant Internet.”

There is some question regarding the words “open” and “vibrant” when it comes to who really will prosper from broadband services in the long and short term.

In its original order, the FCC said it was promoting video competition by determining Comcast had violated its Internet open-access principles by blocking BitTorrent traffic as part of network management, adding “video distribution poses a particular competitive threat to Comcast’s video-on-demand (VOD) service.” In fact, the FCC included this statement in its Comcast P2P order: “…If cable companies such as Comcast are barred from inhibiting consumer access to high-definition on-line video content, then…consumers with cable modem service will have available a source of video programming (much of it free) that could rapidly become an alternative to cable television. The competition provided by this alternative should result in downward pressure on cable television prices, which have increased rapidly in recent years.” The three-judge panel disagreed.

Winners and losers

However, even with what looks like a ruling that errs on the side of “let the marketplace decide,” to some, the 36-page opinion crafted by Circuit Judge David S. Tatel bolsters the biggest broadband players – i.e., Comcast, AT&T and Verizon – perhaps at the expense of smaller players or new entrants that may be entering the field as a result of broadband stimulus cash.

Katherine Waldron, CEO of Waldron and Associates, an IT and telecom consulting company focused on broadband projects, said, "With the ability of the major providers to freely discriminate, now more than ever we need to ensure that true competition exists and that there are multiple viable multiple players if we are to remain globally competitive in our communications abilities.”

Waldron and her partner Christopher Campbell directed the submission of a second-round BTOP application for the Florida community colleges, independent colleges and universities, and Florida Public Broadcasting stations. Their clients requested $103 million to interconnect these institutions onto a high-speed backbone network to enhance education statewide as well as to stimulate job growth and economic development.

What to do?

According to Jeffrey S. Silva, senior policy director/ Telecommunications, Media and Technology at Washington, D.C.-based Medley Global Advisors LLC, there are two options the FCC and “pro-net neutrality Democratic lawmakers” could entertain.

One involves the FCC reclassifying broadband from a lightly regulated information service to a regulation-heavy common-carrier regime; this battle has played out in the wireless and wireline telecom industries. Such a prospect has prompted Verizon and AT&T to counter that Congress should step in to update the 1996 Telecom Act, Silva said. Another alternative is standalone net-neutrality legislation, though the chances of moving a bill this year appear slim.

“While the Appeals Court decision is a blow to the FCC, it should be noted that neither legal clarity nor regulatory uncertainty implicated by the Comcast ruling are necessarily absolute,” Silva said. “Legal decisions are based on fact-specific issues presented to the court. A different set of circumstances can yield a different legal outcome. Moreover, laws can change and regulatory formulations can be altered to achieve a desired result if there is political will for change. Few things are ever final in official Washington.”

– Debra Baker