A Legal Look at the Comcast Case

This week brings the latest round of filings in the court case involving the FCC's 2008 order punishing cable giant Comcast for interfering with legal peer-to-peer traffic. In its order, the agency found that Comcast's blocking violated federal law and did not constitute reasonable network management practices.

Comcast has appealed the decision, but public interest groups have continued to hold the company’s feet to the fire. On Monday, Free Press filed an Intervenor’s brief in support of the FCC's order. We were joined by Public Knowledge, the Open Internet Coalition, and Media Access Project representing Consumers Union, the Consumer Federation of America and Vuze, Inc.

Why are we all rallying behind the FCC’s decision? Upholding the agency's order is an essential step in the larger fight to protect the open Internet, our greatest "town square" and most powerful media infrastructure for free speech and innovation. The FCC's order guards against gatekeeper control of the Internet, and if it is overturned, companies like Comcast might turn the Internet into a pay-for-play media system like cable TV.

Let's recap the Comcast case, shall we? The company secretly blocked legal uploads of content for years, and then lied about it – repeatedly – to the FCC until they were caught red-handed. Free Press and Public Knowledge filed a complaint, and a bipartisan majority of FCC commissioners agreed with us that Comcast’s actions were illegal. The FCC didn't issue a fine, but told Comcast to stop the practices and to disclose what it had done and how it planned to manage its networks in the future. Comcast complied, but also appealed the order, arguing that the FCC didn’t have the legal authority to impose any rules on Internet access services, and also that the FCC didn't use the proper procedures in decrying its order.

Our filing shows that Comcast’s arguments are baseless. Here’s a quick summary from our legal department at Free Press:

Jurisdiction: Does the FCC have the legal authority to order Comcast to stop blocking Internet traffic? Yes. The FCC issued its order under “ancillary jurisdiction.” In a nutshell, this means that the FCC determined it must issue the order to fulfill other related duties and policies as established by Congress. The doctrine of ancillary jurisdiction started with the FCC's first rules for cable television. Before Congress passed any laws dealing with cable TV, the FCC established rules to guide the nascent industry. The courts upheld these rules – all the way up to the Supreme Court – on the grounds that they were “reasonably ancillary” to the FCC's other statutory duties.

Since then, the D.C. Circuit, the Supreme Court and other courts have upheld a long history of ancillary jurisdiction cases. In its appeal, Comcast has largely ignored this history and seems to suggest that the doctrine shouldn't exist. Certainly, some people believe as a matter of policy that the FCC should not have ancillary jurisdiction. A lot of these people also believe that there shouldn't be an FCC, or at least not an FCC that has any authority to make policy. But like it or not, ancillary jurisdiction is the law. Until Congress says otherwise, the FCC should interpret its authority to the best of its abilities, and courts should review those interpretations with deference to the agency.

Finally, as a policy matter, if the FCC is not authorized to prevent bad behavior by Internet service providers, the resulting damage to competition, service price and quality, and consumer interests is frightening to imagine.

Procedure: Did the FCC use proper procedures in issuing its order? Yes. The FCC in its order acted (primarily) on a complaint filed by Free Press and Public Knowledge. This makes the order an “adjudication,” as opposed to a rulemaking, wherein the FCC issues a formal Notice of Proposed Rulemaking followed by a Memorandum Opinion and Order. As a legal matter, federal agencies have discretion to choose whether to conduct an adjudication or a rulemaking. Although rulemakings are the FCC’s preferred tool in making policy, the agency has a long history of using adjudications to enforce rules and policies alike. The FCC has even based decades of adjudication on nothing more than a policy statement. The 1974 Children's Advertising policy statement led to decades of adjudications levying admonishments and fines on multiple companies, and the D.C. Circuit has upheld these adjudications without a formal rulemaking process. So what's the problem in this case?

Comcast’s argument: first, that there's no "legal norm" here, so the company couldn't have known what actions would and would not have been legal; second, that the FCC’s Internet Policy Statement was applied directly as a rule, which required a formal rulemaking process.

Once again, Comcast comes up empty. The FCC’s proceeding provided ample notice and substantial opportunity to comment. And, for good measure, the FCC held two public hearings specifically on Comcast's behavior. During the first hearing, Comcast showed up and paid people to fill seats to keep the public out; at the second, Comcast chose not to show up at all. Comcast also filed numerous “ex partes” throughout 2008 to make additional claims on its own behalf in the record.

Getting lost in all the legal talk? No worries. For us, this is a pretty straightforward case. The FCC's action fell well within the scope of precedent, and the agency properly used an adjudication to fix an immediate problem – the blocking of legal uses of the Internet by a gatekeeper cable company.

And, if the D.C. Circuit doesn't agree, then we're going to need to get Congress to pass the Internet Freedom Preservation Act, which will make Net Neutrality the law and stop companies like Comcast from cutting off the open Internet.