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April 09, 2010

We're not there yet: Tuesday's DC Circuit ruling on FCC jurisdiction over ISPs.

Earlier this week, on April 6, the D.C. Circuit ruled that the FCC lacked the authority to regulate the Internet traffic management practices of Comcast and other ISPs. Fine with us. But we agree also with yesterday's piece in The Economist that the Net needs something in the way of a regulatory framework--a 'least intrusive' version with clear rules--and that only Congress should construct it:

In the past decade, many European telecoms regulators forced unwilling incumbents to accept open-access policies: telecoms operators had to sell access to their network infrastructure to market entrants, to ensure healthy competition on speed and price.

As America’s cable companies rolled out broadband access, they argued, curiously, that a connection to the internet was not a telecommunications service, but an information service, and thus (under America’s arcane telecoms rules) not subject to open-access regulation.

In 2002 the FCC agreed, and in 2005 the Supreme Court upheld its authority to agree. Comcast, on that occasion, did not dispute the FCC’s authority.

The distinction between information and telecommunications is important. Comcast offers its

customers a variety of bundled services: connection to the internet, cable television, telephony and video on demand. There’s no reason why it shouldn’t, but the FCC’s [earlier] 2002 decision has left America with a patchwork of local cable monopolies and thus no market recourse for any customer who wants the pure telecommunications service of a simple connection.

In its case against the FCC, Comcast argued that peer-to-peer file-sharing was hogging bandwidth. It was. But the most efficient way to allocate bandwidth among customers is to charge heavy users higher prices, which Comcast chose not to do.

The real sin, then, was that the file-sharers wanted a service that Comcast did not care to provide. This is not a moral issue, but a market failure. [read more in "Raze the Mystery House"]

Posted by JD Hull at April 9, 2010 11:59 PM

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