FCC Imposes New Government Constraints on Internet Network Management

On August 1, 2008, the Federal Communications Commission voted 3-2 to issue an order imposing regulatory controls on the Internet. The ruling concerns a network management technique used by Comcast for its high-speed Internet service that had the effect of giving slightly lower priority to some peer-to-peer (P2P) upload sessions so that the latency-sensitive applications of the vast majority of its Internet customers would remain uninterrupted. The Commission ruled that the practice—which Comcast previously announced would be phased out this year—violated the Commission’s “network neutrality” policy guidelines and amounted to discriminatory “blocking” and “monitoring” of Internet content, as well as “interference” with consumers’ “right to access” lawful Internet content. While not fining Comcast, the Commission instead orders Comcast to report on the technique, submit a compliance plan for terminating it by year-end, and describe to the FCC and the public the specifics of what new management techniques will be implemented. Noncompliance, warns the Commission, will be subject to future injunctive relief and additional enforcement actions.

The Order, the text of which is not yet available, reviews the specific technique of using deep packet inspection and packet reset signals to control the bandwidth consumption of P2P applications. It finds the technique to be discriminatory, and therefore subjects Comcast to a newly created obligation to justify the technique as being carefully tailored to be minimally intrusive. Because the technique did not affect all applications that consume large amounts of bandwidth, and was not confined to peak congested periods and locations, it was found to be insufficiently justified. The FCC also insinuates an anticompetitive motive, suggesting that Comcast was discriminating against P2P video downloads. The Order even accuses Comcast of inspecting and censoring consumers’ content. The Order claims that this is all in contravention of a previously announced FCC “policy.”

The Order is controversial, for at least four reasons.

First, the factual premise of the Order is highly suspect. The existing Internet network congestion avoidance algorithms were adopted by the engineering community in 1987, long before P2P. P2P was specifically designed to evade these congestion avoidance algorithms, by opening multiple stream flows to transport one title to one recipient. The result is that without network management, P2P can consume nearly all available bandwidth. At peak times, 5 percent of Internet consumers are using 90 percent of the available bandwidth. One cannot build out of this problem by expanding capacity. Even Japanese networks with far greater bandwidth are facing P2P congestion collapse and employ network management techniques to limit P2P. Otherwise, P2P applications from the rest of the world will swarm to that network and overwhelm its upload capacity. The specific network management technique at issue in this case imposed trivial and imperceptible delays on uploads (rather than downloads) of a small fraction of peer-to-peer files, in order to protect the operation of latency-sensitive applications of the other 95 percent of customers. Although the item was presented with claims of anticompetitive incentive, the technique did not block downloads of competing video and in fact protected the integrity of video streaming over the Internet. The Commission’s “findings” to the contrary are widely perceived to have their origin in FCC Chairman Kevin Martin’s political hostility to the cable industry, to which have been added Commissioners Michael Copps’ and Jonathan Adelstein’s desires for a formal rule of nondiscrimination among bits and bytes.

Second, the operational concerns going forward are significant. Dissenting Commissioner Deborah Taylor Tate specifically noted that by handicapping network administrators, the FCC is making it much harder to limit unlawful content and online child pornography. Dissenting Commissioner Robert McDowell warned that network administrators now have no clear guidance on what management techniques are allowed, because there are no rules, and yet there is a substantial risk of enforcement actions.

Third, the Order is a dramatic departure from the national policy of fueling Internet development by keeping it free of government regulation. By statute, Congress has declared it to be U.S. national policy to keep the Internet “unfettered by Federal or State regulation.” In 2005, the FCC adopted “principles” of Internet openness, which included the right of consumers to access lawful Internet content, and to run applications and to use services of their choice. But the FCC announced that these principles were not rules, and specifically found that they “are subject to reasonable network management.” In today’s announcement, the Commission could not find a solid basis in existing rules or in any express statute to regulate the Internet, and took the highly unusual path of inferring regulatory authority from prefatory provisions of Title I of the Communications Act that have historically been used only to support other, express grants of authority to the Commission.

Fourth, the precedent of this Order should be quite troubling. NTIA, the communications arm of the White House, has expressed its serious concern over the FCC regulating in an area intended to be free of regulation. A Republican House leader wrote to protest “heavy-handed” regulation of the Internet. Commissioner McDowell wrote in an op-ed earlier this week that “engineers, not politicians or bureaucrats, should solve engineering problems.” He pointed to the settlement Comcast had already reached with BitTorrent and the ongoing work to update network management and develop responsible P2P practices through engineering forums such as IETF. In a lengthy and detailed dissent, Commissioner McDowell specifically took the FCC to task for politicizing what should be accomplished through thoughtful and evolving engineering decisions. He noted that despite claims in the Order, the FCC did not actually investigate the factual allegations, and rushed through a supposed enforcement order without underlying rules and without following the quasi-judicial procedures that should govern such decisions. An editorial by The Wall Street Journal perfectly captured the larger risks with government control of the Internet: “the bigger concern is that the chairman is taking a huge step toward putting in place a regulatory regime that would give the FCC, rather than Internet service providers, unprecedented control over how consumers use the Web. … It’s not the private sector they should be worried about. There’s no evidence that Comcast was trying to suppress a political view or favor one of its own services. … Giving the government more say in network management, by contrast, introduces all kinds of potential for political mischief. Net neutrality is a slippery slope toward interventions of all kinds—not merely over access but ultimately over content.

This Order is by no means the beginning or the end of disagreements over the extent of appropriate Internet regulation or network management. Issues such as FCC jurisdiction, proceeding by rule or adjudication, and fact finding without evidentiary protections will remain in the mix in further proceedings.