BloostonLaw Telecom Update Published by the Law Offices of Blooston, Mordkofsky, Dickens, Duffy & Prendergast, LLP www.bloostonlaw.com | Vol. 11, No. 31 | August 6, 2008 |
SPECIAL ISSUE FCC Orders Comcast To End Discriminatory Network Management Practices At its August 1 open meeting, the FCC determined that Comcast’s management of its broadband Internet networks contravenes federal policies that protect the vibrant and open nature of the Internet. Ruling on a complaint by Free Press and Public Knowledge as well as a petition for declaratory ruling, the Commission concluded that Comcast has unduly interfered with Internet users’ right to access the lawful Internet content and to use the applications of their choice. Specifically, the Commission found that Comcast had deployed equipment throughout its network to monitor the content of its customers’ Internet connections and selectively block specific types of connections known as peer-to-peer connections. The FCC vote was 3-2, with Commissioners Deborah Tate and Robert McDowell dissenting. There was no fine. The Commission’s action is the result of an examination of conduct that was first brought to light by Comcast subscribers who noticed that they had problems using peer-to-peer applications, such as BitTorrent, over their Comcast broadband connections. When first confronted with press reports about these difficulties, the FCC said, Comcast disclaimed any responsibility for its customers’ problems. However, the Commission said, after tests conducted by The Associated Press and Electronic Frontier Foundation suggested that Comcast was selectively interfering with attempts by customers to share files online using peer-to-peer applications, Comcast changed its story and admitted that it did target its subscribers’ peer-to-peer traffic for interference. The FCC said that Comcast initially claimed that it did so only during periods of peak network congestion and of heavy network traffic. Later, the FCC added, confronted with yet more evidence suggesting that interference was not limited in this manner, Comcast recast its position yet again and admitted that it interferes with peer-to-peer traffic regardless of the level of overall network congestion at the time and regardless of the time of day. The Commission’s extensive investigation into this matter – which included two public hearings, substantial input from experts, and thousands of comments from companies, organizations, and the public at large – confirms that Comcast’s interference is far more invasive and widespread than the company first conceded, the FCC said. The Commission concluded that Comcast’s network management practices discriminate among applications rather than treating all equally and are inconsistent with the concept of an open and accessible Internet. The Commission noted that Comcast has an anticompetitive motive to interfere with customers’ use of peer-to-peer applications. Such applications, including those relying on BitTorrent, provide Internet users with the opportunity to view high-quality video that they might otherwise watch (and pay for) on cable television. Such video distribution poses a potential competitive threat to Comcast’s video-on-demand (VOD) service. The Commission also concluded that Comcast’s practices are not minimally intrusive, as the company claims, but rather are invasive and have significant effects. The Commission found that Comcast monitors its customers’ connections using deep packet inspection and then determines how it will route some connections based not on their destinations but on their contents. In essence, Comcast opens its customers’ mail because it wants to deliver mail not based on the address on the envelope but on the type of letter contained therein, the FCC said. The Commission also found that Comcast’s conduct affected Internet users on a widespread basis. Indeed, Comcast may have interfered with up to three-quarters of all peer-to-peer connections in certain communities, the FCC said. The Commission concluded that the end result of Comcast’s conduct was the blocking of Internet traffic, which had the effect of substantially impeding consumers’ ability to access the content and to use the applications of their choice. The Commission noted that the record contained substantial evidence that customers, among other things, were unable to share music, watch video, or download software due to Comcast’s misconduct. The Commission rejected Comcast’s defense that its practice constitutes reasonable network management. While Comcast claimed that it was motivated by a desire to combat network congestion, the Commission concluded that the company’s practices are ill-tailored to serve that goal for many reasons: they affect customers who are using little bandwidth simply because they are using a disfavored application; they are not employed only during times of the day when congestion is prevalent; the company’s equipment does not target only those neighborhoods suffering from congestion; and a customer may use an extraordinary amount of bandwidth during periods of network congestion and will be totally unaffected so long as he does not utilize an application disfavored by Comcast. The Commission said its determination that Comcast was not engaging in reasonable network management is supported by the overwhelming weight of expert testimony in the record. For example, Professor David Reed of the Massachusetts Institute of Technology, widely respected as one of the architects of the Internet, said that “[n]either Deep Packet Inspection nor RST Injection” — Comcast uses both to manage its network — “are acceptable behavior.” The Commission also concluded that the anticompetitive harms caused by Comcast’s conduct have been compounded by the company’s unacceptable failure to disclose its practices to consumers. Because Comcast did not provide its customers with notice of the fact that it interfered with customers’ use of peer-to-peer applications, customers had no way of knowing when Comcast was interfering with their connections. As a result, the Commission found that many consumers experiencing difficulty using only certain applications would not place blame on Comcast, where it belonged, but rather on the applications themselves, thus further disadvantaging those applications in the competitive marketplace. The Commission also reiterated that its interest is in protecting consumers’ access to lawful content. Blocking unlawful content such as child pornography or pirated music or video would be consistent with federal Internet policy. The Commission announced its intention to exercise its authority to oversee federal Internet policy in adjudicating this and other disputes regarding discriminatory network management practices with dispatch, and its commitment in retaining jurisdiction over this matter to ensure compliance with a proscribed plan to bring Comcast’s discriminatory conduct to an end. Under the plan, within 30 days of release of the Order Comcast must: - Disclose the details of its discriminatory network management practices to the Commission
- Submit a compliance plan describing how it intends to stop these discriminatory management practices by the end of the year
- Disclose to customers and the Commission the network management practices that will replace current practices
To the extent that Comcast fails to comply with the steps set forth in the Order, interim injunctive relief automatically will take effect requiring Comcast to suspend its discriminatory network management practices and the matter will be set for hearing. In a separate statement, FCC Chairman Kevin Martin said: “The specific practice Comcast was engaging in has been roundly criticized and not defended by a single other broadband provider. If 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? Failure to act here would have reasonably led to the conclusion that new legislation and rules are necessary.” Commissioner Michael Copps said: “While today’s Order represents important movement forward, it is not a full substitute for the fifth principle that I believe we must adopt. A clearly-stated commitment of non-discrimination would make clear that the Commission is not having a one-night stand with net neutrality, but an affair of the heart and a commitment for life. That’s what something so precious as this technology deserves. A fifth principle will provide the needed reminder to all—long after the details of this case become blurry history—that the Commission’s policy of network openness is ongoing and its remedies are always available. It’s a pretty safe bet there will be other complaints about nondiscrimination coming to the Commission. A fifth principle would reassure those bringing such complaints that they will receive the same kind of Commission attention that the Comcast complainants received. A fifth principle should also, in my opinion, apply to wireless as well as to wireline networks. In sum, formal Commission adoption of a fifth principle of Internet openness would proclaim and sustain Internet users’ right to all the freedom that network openness provides.” Commissioner Jonathan Adelstein said: “In many ways, today’s approach should ameliorate the concerns of critics who have argued that protecting Internet freedom will lead to overbroad mandates that cannot anticipate changes in technology. First, it makes clear that the protections of the Internet Policy Statement extend only to lawful content; hence, this Order does nothing to prevent providers from, for example, restricting access to child pornography or content that violates copyright law. Second, here we limit our findings to the narrow issues before us. Third, we choose a path that preserves the Commission’s flexibility to consider alterative approaches and technologies. Even many opponents of legislation and rules in this area have supported a case-by-case approach like the one adopted today. Finally, through this adjudication, we have followed a thorough and open process: seeking comment from all parties, conducting open hearings, gathering information and analysis from all sides. Although I support taking this action, I do appreciate my colleagues’ willingness to craft this item in a way that preserves the Commission’s ability to adopt rules at a later date, which was critical to my support of the item.” Commissioner Deborah Tate, in her dissent, said: “I ` applaud the Chairman for focusing the Commission’s and the public’s attention on this issue, and for using it as a vehicle for hearings around the country over the past year. In addition to educating ourselves, I believe these forums have served an important role in outreach and education of the public as they navigate this ever-changing technological revolution. Through these efforts, the Commission has been able to shine a light on particular practices and consumer concerns, and the private sector has responded. Had we continued down our generally deregulatory path regarding information services, we would have not taken the more interventionist approach adopted in this item, which is unnecessary given the industry-wide actions already underway, as well as the specific, ameliorating steps taken by the company to address the allegations in the complaint at hand. Therefore, I respectfully dissent.” Also dissenting, Commissioner Robert McDowell said: “Even if the complaint was not procedurally deficient and we had rules to enforce, the next step would be to look at the strength of the evidence. The truth is, the FCC does not know what Comcast did or did not do. The evidence in the record is thin and conflicting. All we have to rely on are the apparently unsigned declarations of three individuals representing the complainant’s view, some press reports, and the conflicting declaration of a Comcast employee. The rest of the record consists purely of differing opinions and conjecture. As the majority embarks on a regulatory journey into the realm of the unknowable, the evidentiary basis of its starting point is tremendously weak, to the point of being almost nonexistent. In a proceeding of this magnitude, I do not understand why, in the absence of strong evidence, the Commission did not conduct its own factual investigation under its enforcement powers. The Commission regularly takes such steps in other contexts that, while important, do not have the sweeping effect of today’s decision.” BloostonLaw contacts: Ben Dickens, Gerry Duffy, and Mary Sisak. FCC OKs Verizon-RCC Merger, With Conditions The FCC has approved with conditions, the transfer of control of licenses held by Rural Cellular Corporation (RCC) and its subsidiaries to Cellco Partnership d/b/a Verizon Wireless (Verizon Wireless). In analyzing Verizon Wireless’s proposed acquisition of RCC and its subsidiaries, the FCC said it examined the market for mobile telephony services and concluded that the companies had demonstrated that the merger, with certain conditions, will be in the public interest. However, based on a case-by-case analysis which determined that there was a potential for competitive harm in the six markets listed below, the FCC is requiring that one of the two companies divest the licenses and related operational and network assets in those markets.
The markets identified are: Burlington, VT; New York 2-Franklin; Vermont 1-Franklin; Vermont 2-Addison; Washington 2-Okanogan; and Washington 3-Ferry. Overall, the licenses and authorizations transferred in the merger include Cellular licenses, Broadband Personal Communications Service (PCS) licenses, Local Multipoint Distribution Service licenses, Local Television Transmission Service licenses, Common Carrier Fixed Point-to-Point Microwave licenses, and two international authorizations. BloostonLaw contacts: Hal Mordkofsky, Ben Dickens, Gerry Duffy, and John Prendergast. |
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