D.C. Circuit Rebuffs Federal Communications Commission’s Attempt to Exercise Jurisdiction Over Comcast’s Network Management Practices
April 6, 2010
Yesterday, the United States District Court for the District of Columbia issued its decision in Comcast Corporation v. Federal Communications Commission and United States of America, vacating a 2008 FCC order in which the agency asserted jurisdiction over Internet service providers pursuant to Title I of the Communications Act of 1934, as amended. In its decision, the Court concluded that the FCC had failed to demonstrate that regulating the network management practices of non-common carriers, including Internet service providers like Comcast, was “reasonably ancillary to the . . . effective performance of its statutorily mandated responsibilities.” By explicitly addressing and rejecting each of the statutory provisions cited by the FCC as justifying its assertion of Title I authority over non-common carriers, the Court delivered a significant setback to the FCC’s efforts not only to adopt net neutrality rules but also to implement many of the recommendations of the National Broadband Plan.

In this case, the FCC acknowledged that it has no express authority over the network management practices of non-common carriers. Rather, the FCC contended that it has “ancillary” Title I authority over Comcast’s network management practices in order to carry out statutorily mandated responsibilities set forth in section 230(b) (which is part of a provision addressing protection for private blocking and screening of offensive material), section 1 (which sets forth the purpose for creating the FCC), section 706 (which provides that the FCC shall encourage the deployment of advanced telecommunications capability), section 256 (which directs the FCC to establish procedures for oversight of coordinated network planning), section 257 (which gave the FCC 15 months from the adoption of the 1996 Act to identify and eliminate market barriers), section 201 (which provides that all charges, practices, classifications and regulations for and in connection with common carrier services shall be just and reasonable), Title III (which provides the FCC with authority over broadcasting), and section 623 (which provides the FCC with authority over cable rates).

The Court considered, and rejected, each of the statutory provisions cited by the FCC as a potential basis for Title I jurisdiction over non-common carriers. The Court ruled that sections 230(b), 1, 706, and 256 were all policy statements rather than the type of statutory mandates necessary to justify the exercise of Title I ancillary jurisdiction. With respect to section 257, the Court concluded that the statutory mandate extended only to the imposition of disclosure requirements necessary to generate mandatory FCC reports to Congress regarding remaining market barriers. The Court rejected the FCC’s arguments regarding section 201, Title III and section 623 because the agency first articulated these arguments in its brief to the Court rather than in the Order itself.

The decision arguably leaves open the possibility that the FCC could rely upon section 706, Title III or section 623 to justify future assertions of Title I ancillary jurisdiction. Specifically, the FCC could reverse its own prior decision that section 706 is a policy statement rather than a statutory mandate, or the agency could more fully articulate its position regarding Title III or section 623. However, the Court’s discussion of the limits of Title I jurisdiction suggests that it may be difficult for the Commission to justify broad authority over non-common carriers by pointing to section 706, Title III, or section 623.

The significance of the Comcast decision extends far beyond net neutrality regulations. For example, the FCC likely would have to rely upon Title I ancillary jurisdiction to adopt many of the broadband recommendations set forth in the National Broadband Plan since the agency has already classified most broadband services as non-common carrier services. As such, it is unclear how the FCC will move forward with respect to net neutrality or any of the other recommendations in the National Broadband Plan. One option potentially available to the FCC is to reclassify broadband services as common carrier services, which are subject to the agency’s Title II jurisdiction. The FCC’s press office released a statement reaffirming the agency’s commitment to “foster innovation and investment while protecting and empowering consumers on a solid legal foundation,” which Commissioner Clyburn echoed in her statement. Commissioner Copps called for the FCC to reclassify broadband services as common carrier services, a position that both Commissioners McDowell and Baker opposed in their statements. Time will tell whether the Commissioners will reach consensus regarding the legal basis for regulation of broadband and Internet services (and if so which regulations would be appropriate) or whether Congress will adopt legislation reformulating the limits of the FCC’s jurisdiction. In any event, the Court’s decision is likely to delay and complicate the FCC’s efforts to adopt net neutrality regulations and implement many recommendations set forth in the National Broadband Plan.

For further information on this case and its implications, please contact your Kelley Drye attorney or any member of the Communications Practice Group.