On August 1, 2008, the Federal Communications Commission (FCC) found that Comcast Corporation had unduly interfered with Internet users’ right to access lawful content and use applications of their choosing when it monitored the content of its Internet subscribers’ communications and selectively blocked certain applications, including peer-to-peer transmissions.

The FCC released a Memorandum Opinion and Order on August 20, 2008, detailing its decision. In a 3-2 vote, the commission found that Comcast’s practices, including discriminating against certain applications, were inconsistent with the concept of an “open and accessible Internet.” The FCC found that Comcast had employed “deep packet inspection” to monitor its customers’ Internet connections and was using the contents of the packets – not their destination – to determine their routing. Calling the practice “invasive,” the commission found that Comcast’s activities may have interfered with up to 75 percent of all peer-to-peer connections in certain communities. Comcast’s activities effectively blocked Internet traffic, the FCC concluded, with evidence in the record that certain customers were unable to share music, videos, and software because of Comcast’s activities.

Under the FCC decision, Comcast has 30 days to disclose the details of its discriminatory network management practices to the commission. It also must submit a compliance plan detailing how it intends to stop such practices by the end of the year. In addition, Comcast must disclose to its customers and the FCC the network management practices it will use to replace the old discriminatory practices.

Although Comcast asserted that its activities constituted “reasonable network management,” the FCC disagreed. Comcast argued that it was attempting to alleviate and prevent network congestion, but it appeared that Comcast employed its packet inspection and routing activities in locations where the network was not congested and during times of non-congestion. Its activities also affected customers using the “disfavored applications” even when such customers only used a little bandwidth, while other customers were allowed to use much greater bandwidth as long as they did not use such applications. Of note, the commission stated that Comcast had an anticompetitive motive to block certain peer-to-peer applications because such applications compete with Comcast’s own video-on-demand service and allow users to view high quality video files.

The FCC also criticized Comcast for failing to disclose its discriminatory network management practices to its customers. As a result, customers experiencing problems with certain applications were unable to tell whether the problem was caused by the Internet connection or the application. The FCC noted that to the extent Comcast’s Internet customers erroneously blamed the peer-topeer applications for the failures, such applications (which compete with Comcast) were being disadvantaged in the competitive marketplace.

Two Republican Commissioners dissented from the Comcast decision, while the two Democratic Commissioners sided with the Republican Chairman in adopting the item. The dissenting Commissioners raised procedural concerns with the decision and argued that it was an unnecessary regulatory intrusion into the marketplace. FCC Chairman Kevin Martin disagreed, asserting that the decision was an “important step” in ensuring that all consumers “have unfettered access to the Internet.” Noting that the decision was not about “regulating the Internet,” Martin stated, “[i]f we aren’t going to stop a company that is looking inside its subscribers’ communications (reading the ‘packets’ they send), blocking that communication when it uses a particular application regardless of whether there is congestion on the network, hiding what it is doing by making consumers think the problem is their own, and lying about it to the public, what would we stop?”

This decision is an important precedent with regard to FCC enforcement actions relating to Internet service provision. Companies that provide Internet services to consumers should take note and monitor their own activities accordingly.

The FCC decision can be foundhere.