Comcast Corp. v. FCC

Background

In 2007, several subscribers of Comcast high-speed Internet discovered that Comcast was interfering with their use of peer-to-peer networking applications. Challenging Comcast's interference, Free Press and Public Knowledge—two non-profit advocacy organizations—filed a complaint with the FCC. The complaint stated that Comcast's actions violated the FCC Internet Policy Statement, particularly violating the statement's principle that “consumers are entitled to access the lawful Internet content of their choice... [and] to run applications and use services of their choice.” Comcast defended its interference with consumers' peer-to-peer programs as necessary to manage scarce network capacity.

Following this complaint, the FCC issued an order censuring Comcast from interfering with subscribers' use of peer-to-peer software—the FCC's second attempt to enforce its network neutrality policy with the first being the Madison River investigation. The order began with the FCC stating it had jurisdiction over Comcast's network management practices under the Communications Act of 1934 (47 U.S.C. § 154). Specifically, the Communications Act of 1934 granted the FCC the power to "perform any and all acts, make such rules and regulations, and issue such orders, not inconsistent with [the Act], as may be necessary in the execution of its functions." Next, the FCC ruled that Comcast impeded consumers' ability to access content and use applications of their choice. Additionally, because other options were available for Comcast to manage their network policy without discriminating against peer-to-peer programs, the FCC found that Comcast's method of bandwidth management breached federal policy.

Comcast complied with the order and appealed.

Opinion of the Court

The D.C. Circuit Court of Appeals held that the FCC failed to justify its exercise of ancillary authority to regulate Internet service providers' network management practices. For an issue to fall within an agency's authority, the agency need only have ancillary authority—a sufficient statutory support requesting the agency at least take action in the first instance of the issue. Here, the Court did not find a sufficient statutory basis under the Communications Act of 1934 for the FCC's mandate to regulate the behavior of Internet service providers.

The Court relied on a two-part test for ancillary authority, laid out in Am. Library Ass'n v. FCC: A commission may exercise ancillary authority only if “(1) the Commission's general jurisdictional granted under Title I [of the Communications Act] covers the regulated subject and (2) the regulations are reasonably ancillary to the Commission's effective performance of its statutorily mandated responsibilities.”

Although Comcast conceded that the FCC satisfied the first prong, the court ruled that the FCC failed to satisfy the second prong. The FCC failed to show that its action of barring Comcast from interfering with its customer's peer-to-peer use was reasonably ancillary to the effective performance of its statutorily-mandated authority. Instead, the FCC relied on a Congressional statement of policy and various provisions of the Communications Act—neither of which the Court found created “statutorily mandated responsibilities.” Additionally, by accepting the FCC's argument, the court believed it would “virtually free the Commission from its congressional tether,” thereby providing the FCC an almost unbounded limit to impose regulations on Internet service providers.

Significance of the decision

The FCC Order was the Commission's first attempt to impose rules requiring network neutrality among ISPs. But in a unanimous decision, the Court found that the FCC lacked the power to enforce these rules. However, the D.C. Circuit hinted that the court would accept separate jurisdictional arguments under other titles of the communications act. Not only does this affect the administrability of the FCC's current network neutrality principles, but it could also affect a wide variety of broadband issues, such as ensuring ISPs do not block websites like Hulu or YouTube or enforcing ISP's advertised broadband speeds.

Further, the court's decision prompted the FCC to establish new rules regarding internet regulations. Because of the ruling in this case, these rules justify themselves in new ways, namely claiming direct authority through section 706 of the Communications Act, as well as ancillary authority through Title II and VI of the Act. While these justifications avoid the direct complaints raised in this case, it is not clear whether they would hold up on appeal.

Comcast's reaction

Comcast issued the following statement:

The FCC's reaction

The FCC released the following statement regarding the Comcast v. FCC decision:

The FCC's new net neutrality rules

In December 2010, FCC approved new net neutrality rules, formalized in an FCC order. While these rules did not reclassify a broadband service as a communications service under the Title II regulation, it would forbid cable and DSL Internet service providers from blocking or slowing online service. It would also prohibit mobile carriers from blocking VoIP applications such as Skype and blocking websites in their entirely, while restrictions are fewer than those on cable and DSL.

In January 2011, Verizon filed an appeal in the United States Court of Appeals for the District of Columbia Circuit, which was the same court that heard Comcast Corp. v. FCC, to overturn this new rule, although the new rules had not yet been in effect. Verizon brought this lawsuit because they were concerned by the FCC's assertion of broad authority for sweeping new regulation of broadband networks and the internet itself, which Verizon believed was well beyond any authority provided by Congress to the FCC.

A few days after the filing by Verizon, MetroPCS, which had already been accused of violating the new rules, also asked the same court to hear the challenge against the new rules. However, in March, 2013, five days after the FCC approved MetroPCS's pending merger with T-Mobile, MetroPCS announced it was dropping its suit, leaving Verizon the sole challenger of the rules.

The court ruled in favor of Verizon by vacating portions of the FCC Open Internet Order of December 2010.