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FCC Hammers Comcast

A sharply divided Federal Communications Commission voted Friday that Comcast violated agency policy by blocking and degrading file-sharing applications used by Internet customers.

FCC chairman Kevin Martin, a Republican who branded Comcast an Internet outlaw months ago, reached out to FCC Democrats Michael Copps and Jonathan Adelstein for support, which he got. FCC Republicans Robert McDowell and Deborah Taylor Tate issued strong dissents, refusing once again to support Martin’s persistent attempts to saddle cable operators with more regulation.

Leading up to the 3-2 vote at the FCC’s open meeting here, Martin and the head of the agency’s Wireline Competition Bureau issued a strong indictment against Comcast, accusing the company of lying to the public about how it went about managing data traffic over its high-speed Internet network.

“Today, the [FCC] tells Comcast to stop, and to disclose to its subscribers and customers how it is going to manage traffic on a going-forward basis. We therefore take another important step to ensure that all consumers have unfettered access to the Internet,” Martin said.

Martin’s willingness to partner with FCC Democrats to enact Internet regulations prompted a Bush administration official to criticize the result against Comcast.

“I’m concerned about the decision, about government regulation of the Internet,” said Commerce Department Assistant Secretary Meredith Attwell Baker, a telecommunications policy adviser to the White House. “I’m very concerned about the FCC’s actions today. I associate myself with McDowell and Tate’s comments.”

McDowell found the Comcast order defective in a number of ways, including that a proper complaint had not been filed against the company. He also complained that the FCC was acting without independently confirming the charges against Comcast.

“The truth is, the FCC does not know what Comcast did or did not do. The evidence in the record is thin and conflicting,” McDowell said.

Comcast has until the end of the year to stop specifically targeting peer-to-peer applications, such as BitTorrent, and keep the FCC informed so the agency can monitor compliance. The FCC promised to slap Comcast with an injunction if it failed to adhere to the FCC’s directives.

Comcast has already announced it is switching to an applications-agnostic management system by the end of the year.

Martin has said that the rapid-fire exchange of bandwidth-hogging movies and TV shows potentially pose a competitive threat to Comcast’s video-on-demand services. The cable giant hinted in a statement that it’s going to take the FCC to court, reflecting concerns raised by McDowell that the FCC didn’t have authority to take action against Comcast prior to adopting enforceable rules.

“We are considering all our legal options and are disappointed that the commission rejected our attempts to settle this issue without further delays,” said Sena Fitzmaurice, Comcast’s senior director of corporate communications and government affairs.

The FCC moved against Comcast after receiving complaints that the company had interrupted P2P traffic in violation of the agency’s August 2005 Internet policy statement, which lists various consumer rights on the Internet.

Martin himself said at the time the policy statement was adopted that it was not a rule that could be enforced. The statement also contained an exception from reasonable network management practices.

In its ruling, the FCC insisted it has the authority to enforce the policy statement and stated a number of reasons for concluding that Comcast’s laser-like focus on P2P applications was not a reasonable network-management practice.

The FCC’s action was cheered by groups that initiated some of the complaints against Comcast.

“The FCC’s bipartisan decision to punish Comcast is a major victory,” Free Press executive director Josh Silver said in a statement. “Defying every ounce of conventional wisdom in Washington, everyday people have taken on a major corporation and won an historic precedent for an open Internet.”

Comcast and BitTorrent reached an agreement in March on network-management issues, a sign of progress that should have kept the FCC on the sidelines, said Barbara Esbin, senior fellow and director of the Center for Communications and Competition Policy at The Progress & Freedom Foundation.

“Whether specific management techniques are appropriate should be decided by technical experts and marketplace interactions, not political appointees responding to interest group pressure,” Esbin said.

Comcast’s setback at the FCC was called a landmark decision by Copps and Adelstein.

But the true impact won’t be known because of the uncertainty surrounding potential court rulings, possible Congressional action and the outcome of the presidential election.

Presumptive Democratic Party nominee Sen. Barack Obama (D-Ill.) backs prescriptive net neutrality regulations by the FCC. The likely Republican Party nominee. Sen. John McCain (R-Ariz.), supports a case-by-case examination that relies on anti-trust law to punish anti-competitive conduct.

In his statement, Martin said the action against Comcast proved that the FCC had legal authority to police the Internet, reaffirming his long-held view that new federal legislation is not necessary. AT&T and Verizon issued statements saying the Comcast ruling showed that Congress did not need to pass a net neutrality bill.

Blair Levin, a media analyst with Stifel, Nicolaus & Co., noted that a Comcast court victory over the FCC could prove short-lived.

“If the agency were found to lack authority to act in this area, it could spur network-neutrality legislation in Congress. If the FCC were found to have erred in not establishing clear rules, it could spur a future FCC to adopt rules that cable (and the telcos) would find far more troubling than today’s order,” Levin said.

Rep. Edward Markey (D-Mass.), chairman of the House Subcommittee on Telecommunications and the Internet, reacted to the Comcast ruling by declaring he would try to pass net neutrality legislation regardless of what happens in the market or in the courts.

Markey’s bill (HR 5353) would require high-speed access providers to adhere to nondiscriminatory principles, while still managing their networks to combat spam, child pornography, illegally distributed movies, software and TV shows.

“I understand that Comcast has already begun efforts to modify its network management approach and I believe its efforts to treat content providers in a more non-discriminatory way from a network management standpoint are laudable and welcome. I intend to continue monitoring practices in the industry and pressing for passage of my legislative framework for addressing these issues in the months ahead,” he said.