Comcast v. FCC

Broadband networks represent the most critical communications infrastructure of our time: if these underlying transmission systems don't function effectively, the Internet cannot serve as a vibrant forum for speech, commerce, and culture.

Yesterday's ruling from the D.C. Circuit in Comcast v. FCC called into question the Federal Communications Commission's ability to protect consumers from harmful activity by the owners of these networks. Without oversight, dominant broadband providers - principally large cable and telephone companies - will be free to do as they wish even if their actions hinder the free flow of information, treat consumers unfairly, or discriminate against speech that they find undesirable. The decision also suggests that the Commission has limited authority to implement its recently devised National Broadband Plan - a plan that will be critical in closing the digital divide at home and abroad.

To understand these issues more fully, we need to step back in time a bit. Historically, communications law and FCC policy have recognized several unique characteristics of communications networks (like the telephone, telegraph, and now IP-based networks): (1) The networks require significant investment to build them, and as a result, the market to provide access to such networks will likely be heavily concentrated, (2) customers can likely use the services of only one network provider at a time; and (3) the costs associated with switching providers are significant. Thus, the owners of the networks have sufficient gatekeeping power. Because the network providers possess this gatekeeping power, the law required them to comply with certain basic rules, including the duty to open their networks to everyone without discrimination, and the duty to interconnect with other network providers that offered the same services.

On the other hand, the law historically imposed very few requirements on companies whose services made use of these networks, including such services as e-mail, Web browsing, and other content and applications made available over the Internet. The market for those types of services is more competitive, the barriers to entry are lower, and the chance that those service providers can extract monopoly rents or hamstring their competitors is significantly reduced as a result.

In 1996, Congress passed the Telecommunications Act, which essentially adopted these distinctions. Access to a communications network was deemed a "telecommunications service," and content and applications that used that IP-based networks to transmit data were termed "information services." And for the first few years after the 1996 Act was passed, the FCC treated broadband providers as "telecommunications service" providers.