In August 2008, the FCC found that Comcast’s restrictions on peer-to-peer upload transmissions were unreasonably discriminatory, arbitrarily targeted a particular application, and deprived consumers of their rights to run Internet applications and use services of their choice.
The Comcast ruling represents a significant change in the FCC’s direction: given the FCC’s past decisions that broadband Internet access services do not fall within the "common carrier" category, it is notable that the agency has now imposed nondiscrimination requirements on these services. The rationales articulated in the FCC’s Comcast order, which stress both (i) concerns about protecting competition and (ii) concerns about protecting consumers from disruption of their ability to communicate freely and privately, are rooted in centuries of Anglo-American law defining the obligations of "common carriers." The FCC appears to be moving away from its traditional emphasis on the competition policy concerns, which justify asymmetrical regulation of dominant providers for the sake of enabling competition, and toward an emphasis on the consumer protection issues, which justify symmetrical regulation of all service providers regardless whether they have market power.
The facts in the Comcast case are well known. Comcast is a cable television operator that offers its subscribers facilities-based broadband Internet access service. The FCC found that Comcast, purportedly in order to control congestion on its lastmile access network, was blocking or delaying consumers’ upload transmissions for peer-to-peer applications such as BitTorrent, by inserting false "reset packets" into the TCP transmission stream. According to the FCC’s ruling, Comcast did not disclose this practice to consumers or applications providers, and initially denied that it was doing so. Moreover, the FCC concluded that Comcast was interfering with peer-to-peer uploads not only during periods of peak network traffic or in locations where congestion was occurring, but regardless of the location, level of congestion, or time of day. The FCC condemned this practice in a controversial order adopted by a narrow 3-2 vote, with Republican Chairman Kevin J. Martin joining the two Democratic commissioners in the majority, and the other two Republican commissioners dissenting. In particular, the FCC majority concluded that Comcast’s practice violated the principles set forth in the FCC’s 2005 Internet Policy Statement, and that the FCC had authority to enforce these principles under the Communications Act of 1934.
According to the order, Comcast’s practice of using "deep packet inspection" to determine whether transmissions are peer-to-peer uploads and use of "reset" packets to disrupt such connections was "invasive and outright discriminatory" because it arbitrarily and selectively targeted a particular application. The FCC determined that this conduct deprived consumers of their rights to access the lawful Internet content of their choice and to run applications and use services of their choice. The Commission stated that, in order to show that such a practice constitutes "reasonable network management," an Internet service provider has the burden of proving that "its practice should further a critically important interest and be narrowly tailored to serve that interest."
While the FCC did not dispute that easing network congestion is a critically important interest, it found that Comcast’s practice was not minimally intrusive, and therefore declared it unlawful.
The Comcast decision represents an extraordinary change of direction in FCC policy. The FCC had previously determined that broadband Internet access service, whether provided by cable operators or telephone companies, falls into the category of "information service" that is not subject to the "common carrier" requirements of the Communications Act that apply to "telecommunications service." The core obligation of common carriers is the obligation not to engage in unreasonable discrimination. Over the past decade, the FCC has determined that cable operators are not subject to such common carrier obligations when they provide broadband Internet access service, and removed or relaxed most of the anti-discrimination requirements, such as unbundling and "open network architecture," that formerly applied to incumbent local exchange carriers’ (ILECs’) provision of broadband transmission. The four principles in the FCC’s 2005 Internet Policy Statement pointedly did not specify a nondiscrimination obligation for Internet service providers - and was criticized on that basis.
These developments in the U.S. echo the discussion now going on in Europe in the context of the package of proposals on a new common regulatory framework for telecommunications, released by the European Commission on Nov. 13, 2007, and new amendments adopted in first reading by the European Parliament. On both sides of the Atlantic, a trend is emerging to permit network discrimination only if the discrimination is narrowly tailored to achieve legitimate objectives.
For further details, see the article from David Sieradzki and Winston Maxwell published in Communications & Strategies, no.72, 4th quarter 2008, p. 73