Why Congress is Comcastic

April 6, 2010: 8:31 PM ET

By David A. Kaplan, contributor

A federal appeals court sided with Comcast, saying the FCC overstepped its bounds in enforcing net neutrality. But the real slap is on Congress.

Brian Roberts at a Senate hearing in March

In an important decision already being attacked by supporters of "net neutrality," the court ruled that the FCC lacked the power to force Comcast (CMCSA) to treat all traffic equally on its broadband network.  Thus, Comcast—and other telecom and cable companies—are now free to favor, or to discriminate against, certain types of Internet traffic.

Think of the Internet as potentially made up of fast lanes and slow lanes—and perhaps forbidden lanes.  For example, if Comcast or Time-Warner (TWC) wanted to create a multi-tiered service in which content-providers paid more to deliver their Web pages faster, they theoretically could so.  Or perhaps a broadband provider might prohibit some traffic altogether, say, involving, overly large files or video that might lead a customer to cutting his or her cable TV service.

Until now, you and I assumed that no matter what address we enter in a Web browser, pages will appear at the same rate (assuming no video or complicated graphics).  Comcast—the country's largest cable provider—wanted to change that, by blocking its broadband subscribers from using BitTorrent's online file-sharing technology.  The FCC intervened. BitTorrent involves large video files and many include pirated copies of movies, some of which violate the copyrights of rights-holders of companies like NBC, which Comcast is about to acquire.  Comcast insisted it had a right to prevent BitTorrent from slowing down its network, all the more so given the millions it invested in infrastructure.

The same argument would apply to blocking or limiting consumer access to video sites like hulu.com or Google's  youtube.com.  For their part, Google (GOOG), as well as other content-providers, say that limits or pricing tiers would stifle competition and destroy the promise of the Net as an open resource. The FCC agreed, and attempted to mandate a policy of net neutrality.  Indeed, the commission's new Democratic chairman Julius Genachowski—handpicked by President Obama—has made net neutrality the centerpiece of his regulatory agenda.

In its 36-page ruling today, a unanimous three-member court didn't pass judgment on whether the FCC or Comcast had the better argument.  Instead, it chided the FCC for a legal land grab of authority.  Yes, Congress had given the FCC "wide latitude" to adapt to "rapid technological change," but that wasn't the same as a "statutorily mandated responsibility," wrote Judge David Tatel (who was appointed by President Clinton).  In short, no matter the possible legitimacy of concerns over Internet policy, the court said the FCC was making up its own rules.

Who's in a better position to make national policy: Congress or the alphabet-soup array of regulatory agencies it has created over the decades?

It's an old debate that riles up the participants in the process—the government doers and the companies done unto—as well as the squadrons of lawyers who make a living representing both sides.  The court today was course correct to note that agencies need a wide berth to make rules and regulations: the FAA must adjust to changing circumstances at airports, the CDC has to react to outbreaks of disease, and the FDA needs to stay on top of changing medical and pharmaceutical data.  Even in a perfect world, nobody would expect Congress to involve itself in day-to-day minutiae (unless of course it offered an opportunity to grandstand in a committee hearing).

But for too many years Congress has stayed out of too many policy arenas.

Health-care notwithstanding, Senators and Congressmen like to deflect responsibility.  We have air-base closing commissions, blue-ribbon panels on deficit reduction, and task forces on Social Security—all subjects that one might reasonably expect Congress, itself, to tackle.  In the area of providing a vigorous and open Internet, some legislators have attempted to pass federal legislation mandating net neutrality, though those efforts haven't gained much traction.  They are worthy efforts, but if Congress can't get its act together to make net neutrality the law of the land, why should an unelected and unaccountable agency be a proxy?  We expect far too little of our elected representatives.

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Dan Roth
Dan Roth

Daniel Roth is the editor of FORTUNE.com, overseeing its daily analysis of the biggest topics in business and the most important companies. Previously, Roth was a senior writer at Wired magazine. His 2008 cover story on Shai Agassi was a finalist at the Loeb business journalism awards and his story on Demand Media was included in Yale University Press' Best Technology Writing 2010. Before Wired, Roth was the first writer and founding member of Cond Nast Portfolio. Roth also served as a senior writer and senior editor at FORTUNE for eight years.

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