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FCC Orders Comcast to Change Its Broadband Network Management Practices

August 25 , 2008
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            The Federal Communications Commission has released the full text of its order (adopted August 1, 2008) finding unreasonable Comcast’s practice of selectively targeting and interfering with its customers’ “peer-to-peer” applications over its cable broadband network.  As previously noted in our Memorandum to Clients following the adoption of the order, the FCC did not impose a monetary forfeiture on Comcast, but instead gave Comcast until September 19, 2008 to provide the agency with details concerning its network management practices, and required the company to have new procedures in place by the end of 2008.

The FCC’s action against Comcast arose out of complaints filed by certain groups alleging that Comcast was “blocking” certain users’ access to the Internet.  Comcast had defended its actions on the grounds that its actions did not constitute “blocking” of traffic, but rather was designed to manage Internet usage by those customers who were using software to transfer large files – such as movies and other software – thus potentially slowing other customers’ traffic.  Comcast argued that its actions were reasonable and necessary to ease network congestion, and that the Commission had no legal authority to regulate its network management practices.

The Commission, in a 3-2 vote, rejected Comcast’s arguments and found that they had violated the Communications Act and the Commission’s rules.  The FCC first concluded that the Supreme Court’s Brand X decision provided the necessary authority for the Commission to regulate Comcast’s network management practices.  The Commission then determined that, although Comcast has the right to deploy means designed to ease network congestion, Comcast’s practices were arbitrary and capricious because they were both over- and under-inclusive. 

Specifically, the Commission found that, under Comcast’s policies, (1) customers using even a small amount of bandwidth would have their files blocked if they used an application disfavored by Comcast; (2) customer file transfers would be blocked regardless of the level of network congestion or time of day, as opposed to during times of day when congestion is prevalent; (3) it failed to distinguish between neighborhoods that have heavily congested traffic and those that do not; and (4) a customer could use a significant amount of bandwidth during periods of network congestion, yet would be unaffected as long as he/she was not using a peer-to-peer application.  The Commission also cited Comcast for its failure to notify its customers regarding these practices, and found that there were less invasive means of managing network traffic, such as by charging additional fees for heavy usage.

In dissent, Commissioners McDowell and Tate reiterated that, although the Commission generally has jurisdiction to review Internet matters, it was unfair to require Comcast to change its policies because the Commission had previously released only broad guidelines regarding Internet policy and not a specific set of rules to enforce.  The Republican dissenters also predicted that the decision would create regulatory uncertainty for engineers, who may be hampered in their ability to effectively manage their broadband networks.

We would be pleased to respond to any questions you may have concerning this matter.