Wednesday, October 07, 2009

The Comcast Case and Network Neutrality

Guest Blogger

John Blevins and Marvin Ammori

This past Monday, a group of law professors and public interest organizations (listed below) filed briefs in Comcast v. FCC in the DC Circuit court—a case with potentially enormous implications for the future of the open Internet. The briefs are available here and here.

For those unfamiliar with the case, here’s a very brief summary: In 2007, Comcast got caught interfering with applications on the Internet (specifically, it blocked its users’ uploads using peer-to-peer applications like BitTorrent). After initially denying any blocking—and then after several months of consumer complaints, terrible press coverage, and an FCC investigation with several public hearings—Comcast finally came clean and promised to stop.

In 2008, the FCC concluded that Comcast’s actions were illegal, violating federal policy set out in the Communications Act, and ordered the company to demonstrate that it had (as promised) discontinued these practices. Comcast then sued in the DC Circuit, arguing that the FCC’s Order was both procedurally defective and beyond the FCC’s jurisdictional authority.

The stakes of this litigation are high. If the DC Circuit vacates the FCC’s Order, the court will give every network provider in the nation the green light to adopt and expand Comcast’s discriminatory practices—a development that would undermine the basic level playing field that we expect on the Internet.

The decision could also undermine the FCC’s recent proposal to adopt rules governing and ensuring network neutrality. Indeed, if Comcast is right that the FCC wrongly claimed jurisdiction over network discrimination, then the FCC would have to return to Congress—where a Senate filibuster would loom large over any attempt to pass new legislation.

The two briefs filed yesterday, then, address different aspects of the overall argument supporting the FCC’s position.

The first—the Amici Brief submitted by Professors Jack Balkin, Jim Chen, Larry Lessig, Barbara van Schewick, and Tim Wu—illustrated the harmful policy consequences of reversing the FCC’s Order. In short, Amici explained why you should care about what Comcast did.

One of Amici’s primary arguments was that Comcast’s actions would cause real economic harm by raising the costs of innovating on the Internet.* In doing so, Comcast’s actions would transform the open Internet into a more “closed” network, closer in spirit to today’s cable network where uses are completely controlled and pre-approved by the network provider.

For background, the reason that innovation is easy and inexpensive on the Internet is because everyone on the Internet has traditionally followed shared, non-secret practices and protocols. The creators of Twitter, for instance, didn’t have to call network providers like Comcast for permission to introduce their application. They simply conformed their application to transparent, standard protocols—and then trusted that their new application would work on the network. This ease of innovation allows an extremely diverse set of people (from college students to Fortune 500 companies) to experiment, which paves the way for new markets and economic growth.

Actions like secret blocking would undermine these basic foundations for innovation by raising costs in numerous ways—and we list only a few examples here. In the brave new world of blocking, application innovators would be forced to waste time and resources tailoring their application to multiple networks, and to multiple providers’ idiosyncratic blocking practices. Blocking would also make it harder for new developers to obtain start-up funding, as testimony in the FCC’s record demonstrated. And it would likely trigger a wasteful arms race, as users and application developers focus their efforts on evading network filters.

Comcast’s discriminatory practices—if more widely adopted—would also distort competition among new applications and content. Traditionally, user-driven market forces have determined the success of failure of new applications. Comcast’s practices, however, foreshadow a troubling trend in which network providers start picking the “winners and losers” on the Internet based on their own individual motives.

Unfortunately, market competition is insufficient to address these problems because network providers have incentives to discriminate against certain applications, and because the Internet access market is extremely uncompetitive.

In short, the stakes of reversing the Order are high—indeed, a reversal could undermine, at a fundamental level, the features of the Internet that have made it so valuable.

The second brief was filed by public interest groups Free Press, Consumers Union, Consumer Federation of America, Public Knowledge, and was joined by technology start-up Vuze, Inc. and a group of for-profits and non-profits in favor of network neutrality called the Open Internet Coalition (which includes companies such as Google and Skype, among others). Media Access Project acted as counsel to some of the groups.

This brief focused on the (admittedly less sexy) issues at the core of the appeal—whether the FCC had the jurisdiction to act against Comcast and whether the FCC followed appropriate procedures.

For jurisdiction, the brief emphasized that, under Chevron, the FCC receives deference for interpreting the Communications Act, including interpreting the scope of its jurisdiction under that Act. This deference provides some certainty to industry and consumers. The FCC, for instance, has spent the last several years claiming to have jurisdiction over network neutrality issues. If those conclusions are entitled to no judicial deference when challenged, industry and consumers will be subject to increased uncertainty over the legal regime and who will enforce it.

Regarding procedure, Comcast essentially argues that that the FCC improperly enforced an administrative policy statement as though it were a rule. Agencies, however, have the discretion to choose to make policy through either rules or adjudications—here, it chose adjudication.

In acting through adjudication, agencies usually try to give notice to parties through a policy statement. That is exactly what the FCC did here and it’s pretty basic administrative law. The FCC, in fact, gave Comcast far more than enough process. In these respects, the brief complemented the FCC brief (pdf), filed two weeks earlier, which soundly refuted many of Comcast’s arguments.

For those interested in the fuller versions of these arguments, we’d encourage you to check out the briefs, which provide a lot more detail.

*The innovation arguments relied extensively on Professor van Schewick’s work and forthcoming book. The other scholars have also written on innovation and the Internet, notably in Lessig’s book The Future of Ideas.

John Blevins is an Assistant Professor of Law at South Texas College of Law in Houston, and also writes at Obsidian Wings, where this is cross-posted. He was Counsel to Amici. Marvin Ammori is the an Assistant Professor of Law at the University of Nebraska-Lincoln where he teaches cyberlaw and telecommunications law. He was Free Press’s first lawyer and the architect of the consumer case brought against Comcast at the FCC, now on appeal.

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