Comcast Discriminated against P2P Traffic, FCC Votes 3-2

Comcast wasn’t fined but could face further enforcement action if it violates the order. The action gives the company 30 days after the document’s release to reveal “the details of its discriminatory network management practices,” tell the FCC how it will stop them and describe to its broadband subscribers and the commission its revised practices, a commission news release said. Comcast must stop treating P2P traffic differently from other Web applications by year-end under the order. The company has said it will. “All we are doing is requiring them to follow through on the commitment,” so “hopefully” the FCC won’t have to further act against the company, General Counsel Matthew Berry told reporters. The order has “teeth,” he said.

The FCC will be “vigilant” in checking Comcast’s diligence in obeying the order, due to be released “very soon,” said Wireline Bureau Chief Dana Shaffer. “We call upon the public to monitor Comcast vigilantly,” Berry said. If the operator doesn’t comply, Shaffer said, “the order makes clear that they will be subject to perhaps injunctive relief and/or further enforcement action.”

Comcast violated sections 201, 230, 256, 257, 601 and 706 of the 1996 Telecom Act, Berry said. The cable operator got notice of the threat of FCC action on Web-blocking complaints in a 2006 order approving the $17 billion takeover of Adelphia by Comcast and Time Warner Cable, Shaffer said. Since Comcast didn’t seek reconsideration of the Adelphia order or challenge it otherwise, “it is somewhat disingenuous of Comcast to come back and now dispute the commission’s authority,” Shaffer said.

Friday’s order against Comcast “raises significant due process concerns and a variety of substantive legal questions,” a company spokeswoman said. “We are considering all our legal options and are disappointed that the commission rejected our attempts to settle this issue without further delays.” Comcast’s network management was “reasonable, wholly consistent with industry practices” and didn’t block access to Web sites or online applications, she said. NCTA President Kyle McSlarrow said the agency is “second-guessing reasonable network management techniques” and has “no notice or guidelines in place.”

Comcast didn’t say whether it will appeal. Free Press General Counsel Marvin Ammori said he won’t be surprised if it does. “They tend to appeal most of the decisions at the FCC that don’t go their way,” he told reporters. Gigi Sohn, president of Public Knowledge, which also complained about Comcast’s practices, said the FCC vote was the most significant advancement of the public interest in communications technology in at least 20 years.

The FCC found that Comcast’s behavior departed from standard industry practice and the company was “selectively targeting and interfering with practices of peer to peer applications,” Shaffer said. The company “compounded the harm” by not going public on its actions, she added, citing a Comcast spokesman’s comments to news media that it wasn’t blocking access to any application. “Comcast has a substantial anticompetitive motive” to interfere with P2P because those applications let people watch video on the Internet that they could otherwise view on TV, she said.

No broadband provider defended Comcast’s actions, Martin said. Comcast was “hiding” what it did “by making consumers think the problem is their own” and “lying about it to the public,” he added. Comcast’s deep-packet inspection is akin to the post office’s “opening your mail, deciding they didn’t want to bother delivering it, and hiding that fact by sending it back to you stamped ‘address unknown -- return to sender,'” Martin said. Opponents of Comcast’s practices have said the company sent “false reset messages” that cut off ongoing communication between network users. Martin said Comcast claimed it was managing congestion caused by a few users sapping capacity with bandwidth-intensive uses, but “the evidence told a different story.” It blocked use of BitTorrent and other applications when customers used “very little bandwidth simply because they were using a disfavored application,” Martin said.

Comcast gave an “inaccurate response” to early questions about its behavior, Adelstein said. The FCC order is a “narrow” finding, stands on “firm legal ground” and “sets out an important marker” that other ISPs’ practices will be subject to “heightened review,” he added. It shows that the FCC will take a “case-by-case approach” on network management, Adelstein said. The FCC has authority to act and legislation isn’t needed, Martin said Copps said the “landmark” decision doesn’t prevent ISPs from “reasonably managing their networks” but keeps the Internet “open.” Before the FCC investigation, begun in January by the Enforcement Bureau, decisions about the Internet were “being made in a black box,” Copps said.

The order isn’t a “monumental decision,” Commissioner Deborah Tate said, adding that the complaint dealt with the activities of 5 percent of Internet users. “It seems as if there has been a communication gap between Comcast and its customers” over network management, and all “ISPs must do better.” But Comcast’s posting usage policies on its Web site showed that the company was responsive.

Technical disputes are best settled “through collaboration and negotiation,” and the FCC lacks authority to intervene, McDowell said. The final version of the order changed about half of the earlier draft, he said. In an interview, he said communications among commissioners’ offices leading up to the order departed from FCC precedent because not all aides for FCC members were in the loop. “There were significant, substantive changes and the majority did not air those changes on the traditional e-mail chain among offices the way majorities did” in other instances, he said. But Martin told reporters that the final draft was similar to his July 11 public description of the item, and an FCC spokeswoman said commission procedure was followed.

What Is Congress’ Role?

The commission action shows no law is needed, telecom companies said. “Redoubled industry efforts” on setting practices and explaining them to consumers can avert problems, said Verizon Executive Vice President Tom Tauke. AT&T Senior Executive Vice President Jim Cicconi said the FCC decision not to fine Comcast showed there was no evidence of “anticompetitive intent.”

But the decision could lend momentum to legislation, especially if Comcast goes to court, others said. Lawsuits challenging FCC on its network principles could spur Congress to step in, said a Stifel Nicolaus note. If courts find the FCC had no clear rules, a future FCC might adopt rules that cable and telcos “would find far more troubling,” it said.

The decision got Hill scrutiny, even as Congress shut down for its summer break. “I do believe legislation is still needed to clarify that the FCC has the authority” to enforce its rules, Rep. Chip Pickering, R-Miss., told us. But case-by-case enforcement remains the best tack, said Pickering, co-sponsor of a bill (HR-5353) with Telecom Subcommittee Chairman Ed Markey, D-Mass., to give the FCC enforcement power.

The decision “underscores” the need to ensure consumers are protected from network management interference, Markey said. He vowed a push on his bill and pledged to continue monitoring industry practices. The House Commerce Committee will keep exercising “vigorous oversight to ensure that the FCC fully enforces its Internet principles,” a committee spokesman said.

Some Republicans said the FCC overreacted. “There has been no market failure to justify the heavy-hand of so-called net neutrality, and I do not believe the Commission has the authority to enforce principles as if they were adopted rules,” said Sen. Sam Brownback, R-Kan. He called the Comcast decision a “giant step backward” from Bush administration deregulatory policies.

Internet Players Divided

The vote drew mixed reactions among Internet players. “I think this is a win for the American people and a good first test of the FCC’s net neutrality principles,” Craigslist founder Craig Newmark told us. The order “sends an important signal that consumers must have open and unfettered access to all of the Internet’s resources,” said Richard Whitt, senior policy counsel to Google.

David Sohn, senior policy counsel to the Center for Democracy & Technology, said he fears that the final order “probably” will reflect a “broad conception” of FCC power. “We have doubts whether the FCC’s current statutory authority really gives them a sound legal basis to do formal enforcement in this area,” he said. The FCC order is “an important first step,” said Bennett Kelley, founder of the Internet Law Center. He said he was surprised that the first significant government action on network neutrality came from the FCC.

Child safety advocates and content owners are pleased with the order’s provisions on “unlawful” content. “We are grateful that the commission reiterated its concern for blocking unlawful content such as child pornography,” Carolyn Atwell-Davis, director of legislative affairs for the National Center for Missing and Exploited Children, told us.