Summary of the FCC's Comcast Network Management Order

By a 3-2 vote, the FCC concluded that Comcast violated the Commission’s 2005 Policy Statement on the Internet and broadband service [1] in using software applications to block or delay subscriber peer-to-peer (“P2P”) file transfers. [2] Using quite strong, disapporinvg language, the Commission determined that Comcast unduly interfered with Internet users’ right to access the lawful Internet content and to use the applications of their choice:
Although Comcast asserts that its conduct is necessary to ease network congestion, we conclude that the company’s discriminatory and arbitrary practice unduly squelches the dynamic benefits of an open and accessible Internet and does not constitute reasonable network management. Moreover, Comcast’s failure to disclose the company’s practice to its customers has compounded the harm. [3]

Specifically, the Commission found that Comcast had deployed deep packet inspection equipment throughout its network to monitor the content of its customers’ Internet connections and to block specific types of P2P connections such as that facilitated by the use of BitTorrent software. [4]
Comcast used software to enable the company to masquerade as the recipient of a P2P file transfer sessions and to issue a command to reset, i.e., to stop sending traffic and start again. Comcast forged so-called TCP reset packets [5]even though it appears that the company could have handled the actually occurring traffic volume without having to degrade anyone’s traffic. [6] The Commission noted that while Comcast initially disclaimed any responsibility for its customers’ problems, tests conducted by the Associated Press and Electronic Frontier Foundation suggested that the company selectively interfered with attempts by customers to share files online using P2P applications, a practice that did not violate FCC rules, or Comcast’s service terms and conditions. Comcast later acknowledged that it did target its subscribers’ P2P traffic for interference and that such interference was not limited to times of network congestion.
The FCC concluded that Comcast’s practices did not constitute legitimate network management, because the practices discriminated against specific applications without regard to whether they actually caused congestion by depleting the Comcast network of sufficient bandwidth:
On its face, Comcast’s interference with peer-to-peer protocols appears to contravene the federal policy of “promot[ing] the continued development of the Internet” because that interference impedes consumers from “run[ning] applications . . . of their choice,” rather than those favored by Comcast, and that interference limits consumers’ ability “to access the lawful Internet content of their choice,” including the video programming made available by vendors like Vuze. Comcast’s selective interference also appears to discourage the “development of technologies” — such as peer-to-peer technologies — that “maximize user control over what information is received by individuals . . . who use the Internet” because that interference (again) impedes consumers from “run[ning] applications . . . of their choice,” rather than those favored by Comcast. [7]

The Commission noted that Comcast had an anticompetitive motive to interfere with customers’ use of peer-to-peer applications, because such software provides Internet users with a high-quality video access alternative to cable television services. Such video distribution poses a potential competitive threat to Comcast’s video-on-demand (“VOD”) service. The Commission also concluded that Comcast’s practices were not minimally intrusive, as the company claimed, but rather were invasive in that the company substantially impeded subscribers’ ability to access the content and to use the applications of their choice.
The Commission also concluded that Comcast exacerbated the situation by failing 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 P2P applications, customers had no way of knowing when Comcast would interfere 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.
Perhaps mindful of the likelihood that Comcast will appeal the FCC’s Order the Commission extensively outlined its statutory authority for having substantive jurisdiction over Comcast’s Internet-based practices and for reaching an administrative decision without a formal rulemaking before adjudication. The Commission claims to have jurisdiction to resolve disputes regarding discriminatory network management practices based primarily on two statutory mandates: 1) Section 230(b) of the Communications Act of 1934, as amended, where Congress stated that it is the policy of the United States “to preserve the vibrant and competitive free market that presently exists for the Internet” as well as “to promote the continued development of the Internet;” and 2) Section 706(a) of the Act, where Congress directs the Commission to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.” [8] Comcast and other parties considered these broad statutory mandates an insufficiently specific in light of the requirements the FCC decided to impose on Comcast.
The FCC also stated that in establishing its 2005 Internet Policy Statement the Commission intended to incorporate the Policy Statement’s principles “into its ongoing policymaking activities.” [9] The FCC noted that contemporaneous with the issuance of its Internet Policy Statement, the Commission released its Wireline Broadband Order that largely eschewed regulation, but specifically warned that “[s]hould we see evidence that providers of telecommunications for Internet access or IP-enabled services are violating these principles, we will not hesitate to take action to address that conduct.” [10]
The FCC opted to exercise jurisdiction over peer-to-peer Internet connections based on the fact that such connections use “communication by wire.” [11] With that direct link to the general jurisdictional grant conferred under Title I of the Communications Act, the Commission exercised its ancillary jurisdiction on the premise that Comcast’s practices adversely impacted national Internet policy.
The Commission rejected Comcast’s argument that any regulation of network access and management violates the Commission 27 year old policy of leaving information services unregulated:
the Commission previously indicated that it would not hesitate to take action in the event that providers violated the principles set forth in the Internet Policy Statement. Moreover, the Commission repeatedly has stated its willingness to exercise the full range of its statutory authority to ensure that providers of cable modem service meet the public interest in a vibrant, competitive market for Internet-related services. For instance, in the Wireline Broadband Order, the Commission found that it had jurisdiction over providers of broadband Internet access services and stated that “we will not hesitate to adopt any non-economic regulatory obligations that are necessary to ensure consumer protection and network security and reliability in this dynamically changing broadband era.” Specifically with regard to cable modem service, in the 2002 Cable Modem Declaratory Ruling sustained by the Supreme Court in Brand X, the Commission sought comment on a wide range of statutory bases for exercising ancillary jurisdiction over cable modem service, including section 230(b) of the Act. The Commission also explicitly mentioned the blocking or impairing of subscriber access by a cable modem service provider as possible triggers for Commission “intervention.” [12]

While deciding that it should act on a case-by-case basis, the Commission held that it did not have to conduct a rulemaking or hearing to investigate and remedy Comcast’s practices:
And to the extent that Comcast implies that our ancillary authority does not extend to adjudications but rather must first be exercised in a rulemaking proceeding, it is simply wrong. The question of whether the Commission has jurisdiction to decide an issue is entirely separate from the question of how the Commission chooses to address that issue. Perhaps more to the point, the D.C. Circuit has affirmed the Commission’s exercise of ancillary authority in an adjudicatory proceeding and in the absence of regulations before. [13]
The FCC concluded that “Comcast has several available options it could use to manage network traffic without discriminating as it does” [14] including imposing caps on average users’ capacity and then charging overage fees, throttle back the connection speeds of high-capacity users (rather than any user who relies on peer-to-peer technology, no matter how infrequently) and working with the application vendors themselves. Notwithstanding the fact that Comcast and other Internet Service Providers have pursued each of these options, the Commission determined that Comcast had to change its network management practices on a timely basis and to act with greater transparency. [15] Within 30 days of release of the Commission’s 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; and
· Disclose to customers and the Commission the network management practices that will replace current practices. [16]
The FCC warned Comcast that if it fails to comply with the steps set forth in the Order, the Commission will impose immediate interim injunctive relief requiring the company to suspend its discriminatory network management practices pending a hearing. [17]
[1] Appropriate Framework for Broadband Access to the Internet over Wireline Facilities, CC Docket No. 02-33, Policy Statement, 20 FCC Rcd. 14986 (2005).

[2] Formal Complaint of Free Press and Public Knowledge Against Comcast Corporation for Secretly Degrading Peer-to-Peer Applications, File No. EB-08-IH-1518, Memorandum Opinion and Order, FCC 08-183 (rel. Aug. 20, 2008); available at: http://hraunfoss.fcc.gov/edocs_public/attachmatch/FCC-08-183A1.doc [hereinafter cited as Comcast Internet Order].

[3] Id. at ¶1.

[4] “When Comcast judges that there are too many peer-to-peer uploads in a given area, Comcast’s equipment terminates some of those connections by sending RST packets. In other words, Comcast determines how it will route some connections based not on their destinations but on their contents; in laymen’s terms, Comcast opens its customers’ mail because it wants to deliver mail not based on the address or type of stamp on the envelope but on the type of letter contained therein. Furthermore, Comcast’s interruption of customers’ uploads by definition interferes with Internet users’ downloads since ‘any end-point that is uploading has a corresponding end-point that is downloading.’ Also, because Comcast’s method, sending RST packets to both sides of a TCP connection, is the same method computers connected via TCP use to communicate with each other, a customer has no way of knowing when Comcast (rather than its peer) terminates a connection.
This practice is not ‘minimally intrusive’ but invasive and outright discriminatory.” Id. at ¶¶41-42(citations omitted).

[5] “When an Internet user opens a webpage, sends an email, or shares a document with a colleague, the user’s computer usually establishes a connection with another computer (such as a server or another end user’s computer) using, for example, the Transmission Control Protocol (TCP). For certain applications to work properly, that connection must be continuous and reliable. Computers linked via a TCP connection monitor that connection to ensure that packets of data sent from one user to the other over the connection ‘arrive in sequence and without error,’ at least from the perspective of the receiving computer. If either computer detects that “something seriously wrong has happened within the network,” it sends a ‘reset packet’ or ‘RST packet’ to the other, signaling that the current connection should be terminated and a new connection established “if reliable communication is to continue.” Id. at ¶39 (citations omitted).

[6] “Comcast’s practice is overinclusive for at least three independent reasons. First, it can affect customers who are using little bandwidth simply because they are using a disfavored application. Second, it is not employed only during times of the day when congestion is prevalent . . .. And third, its equipment does not appear to target only those neighborhoods that have congested nodes — evidence suggests that Comcast has deployed some of its network management equipment several routers (or hops) upstream from its customers, encompassing a broader geographic and system area. With some equipment deployed over a wider geographic or system area, Comcast’s technique may impact numerous nodes within its network simultaneously, regardless of whether any particular node is experiencing congestion.” Id. at ¶48 (citations omitted).

[7] Id. at ¶43 (citations omitted).
[8] The Commission also invoked the following statutory provisions as further justification for its decision to assume jurisdiction and to order a remedy: Section 1 of the Communications Act, 47 U.S.C. §151, Section 201, 47 U.S.C. §201, Section 256, 47 U.S.C. §256, Section 257, 47 U.S.C. §257 and Section 601(4), 47 U.S.C. §601(4).
[9] Id. at ¶13 quoting 2005 Internet Policy Statement, 20 FCC Rcd. 14988, ¶5.

[10] Appropriate Framework for Broadband Access to the Internet Over Wireline Facilities; Universal Service Obligations of Broadband Providers; Review of Regulatory Requirements for Incumbent LEC Broadband Telecommunications Services; Computer III Further Remand Proceedings: Bell Operating Company Provision of Enhanced Services; 1998 Biennial Regulatory Review — Review of Computer III and ONA Safeguards and Requirements; Conditional Petition of the Verizon Telephone Companies for Forbearance Under 47 U.S.C. § 160(c) with regard to Broadband Services Provided via Fiber to the Premises; Petition of the Verizon Telephone Companies for Declaratory Ruling or, Alternatively, for Interim Waiver with Regard to Broadband Services Provided via Fiber to the Premises; Consumer Protection in the Broadband Era, WC Docket No. 04-242, 05-271, CC Docket Nos. 95-20, 98-10, 01-337, 02-33, Report and Order and Notice of Proposed Rulemaking, 20 FCC Rcd 14853, 14853, ¶96 (2005), petitions for review denied, Time Warner Telecom, Inc. v. FCC, 507 F.3d 205 (3d Cir. 2007).

[11] 47 U.S.C. § 152(a).
[12] Comcast Internet Order at ¶39 (citations omitted).

[13] Comcast Internet Order at ¶38, citing CBS, Inc. v. FCC, 629 F.2d 1, 26–27 (1980) (reasoning that the Commission had, in the context of an adjudication, reasonably construed its ancillary authority to encompass television networks), aff’d, 453 U.S. 367 (1981); Complaint of Carter-Mondale Presidential Committee, Inc. against The ABC, CBS and NBC Television Networks, Memorandum Opinion and Order, 74 FCC 2d 631, para. 25 n.9 (1979) (“Our power to adjudicate complaints involving requests for access to the networks is surely ‘reasonably ancillary to the effective performance of the Commission’s various responsibilities.’” (quoting Southwestern Cable Co., 392 U.S. at 178)); see also New York State Comm’n on Cable Television v. FCC, 749 F.2d 804, 815 (D.C. Cir. 1984) (upholding adjudicatory decision that preempted certain state and local satellite television regulations under Commission’s ancillary authority); Negrete-Rodriguez v. Mukasey, 518 F.3d 497, 504 (7th Cir. 2008) (“An agency is not precluded from announcing new principles in an adjudicative proceeding rather than through notice-and-comment rule-making.”).

[14] Comcast Internet Order at ¶49.

[15] “Comcast’s claim that it has always disclosed its network management practices to its customers is simply untrue. Although Comcast’s Terms of Use statement may have specified that its broadband Internet access service was subject to ‘speed and upstream and downstream rate limitations,’ such vague terms are of no practical utility to the average customer.” Id. at ¶53. “Our overriding aim here is to end Comcast’s use of unreasonable network management practices, and our remedy sends the unmistakable message that Comcast’s conduct must stop.” Id. at ¶54.
[16] Id. at ¶54.

[17] Id. at ¶55.