Net Neutrality, Revisited: No Statutory Authority for FCC to Regulate ISP Network Management

Recent efforts by the Federal Communications Commission (FCC) to establish rules governing net neutrality were, for the timing being, in vain as the D.C. Circuit held that the FCC lacks a Congressional mandate to establish such regulations.  The case arrived via an appeal from an FCC order prohibiting Comcast from selectively interfering with the connections of peer-to-peer applications such as BitTorrent.

The net neutrality rules laid out a number of limitations on the capacity of ISPs to control internet traffic, dampened by a “reasonable network management” exception. Presumably, the FCC rules left open the determination of whether a network management decision was reasonable and planned to resolve such issues by exercising the same authority they sought to exercise in Comcast. According to the court, the FCC does not have this authority under its “ancillary jurisdiction” derived from 47 U.S.C. §154(i). Under the Communications Act of 1934, the FCC is authorized to “perform any and all acts, make such rules and regulations, and issue such orders…as may be necessary in the execution of its functions.” Unfortunately for the FCC, Congress several times refused to amend title 47 to grant express authority to the FCC to regulate network management.

Free market ideologues will praise the decision, because now the market is free, once again, to dictate what constitutes “reasonable” network management. The more restrictions placed on access, the less likely an ISP will be able to attract new customers. To the greatest degree possible, an ISP will avoid impeding the average user’s daily use, boding well for the Facebooks, Flickrs, and YouTubes of the world. Theoretically, it is in an ISP’s best interest to maintain “reasonable” net neutrality.

While great in theory, this decision surely sounds alarms for fringe users, such as those of BitTorrent, the popular file sharing software most notable for the ease at which it enables copyright infringement. Bandwidth allocation effectively becomes a function of use over users. A peer-to-peer (P2P) program like BitTorrent that eats large chunks of bandwidth but only from a few users will get the short end of the stick. From a copyright protection standpoint, this is a good thing. The most egregious sources of infringed material will no longer have the bandwidth to function on such a broad scale. With minimal bandwidth, a patient user may still be able to acquire the desired audio or video; however, the wait may not be worth the effort. The natural result of the absence of FCC regulation could be a decrease in internet piracy.

Although a major source of copyrighted material, P2P file-sharing has also been a valuable and efficient means for the lawful sharing of data. Scientists across the world exchange research data via the same channels, professors share important educational documents, audio and video files with their students, and online gaming has provided a social arena where previously isolated individuals can interact with like-minded individuals. As the internet continues to expand and more and more data is transmitted, bandwidth becomes scarce and each of these lawful uses may, and probably will, feel the squeeze.

Ultimately, this decision is good news for copyright advocates, the RIAA, MPAA, and artists everywhere that value their product more than their art. The many channels that could convey the large chunks of data at rapid rates will shrink as valuable and limited resources are diverted to more mainstream internet uses. After copyright advocates petitioned strongly for the “reasonable network management” exception, the D.C. Circuit did them one better by ensuring that “reasonable” means whatever the ISPs want it to mean. Most internet users will probably never experience the effects of this decision; in attempting to reach the broadest number of people, ISPs will cater to their preferences. Those on the fringe of internet usage will feel the sting, but because their numbers are small, their cries will not be heard.

The D.C. Circuit’s decision struck a blow to net neutrality with this decision, but it may not be fatal. Congress may elect to expand the FCC’s regulatory authority. On the other hand, Congress may feel that regulation in this area is not necessary, considering the naturally efficient allocation of bandwidth created by a working, competitive market. Whatever the outcome, the debate rages on.