U.S. Federal Communications Commission (FCC) Chairman Julius Genachowski’s efforts to modernize national broadcast and broadband policy have been met with strong resistance from U.S. telecom giants and an unfriendly U.S. Court of Appeals in Washington, D.C., after legal efforts from Verizon and Comcast resulted in an appeals court challenge to the FCC’s policy enforcement power, issued April 6.
    In its ruling, the U.S. Court of Appeals for the District of Columbia stated that the FCC lacks the authority to require broadband providers to give equal treatment to all Internet traffic flowing over their networks. The appeals case stems from a 2008 legal challenge filed by Comcast against the FCC, after the commission banned the company from blocking its broadband subscribers from using file-sharing torrent Web sites. The court of appeal’s decision set off a wave of panic in the satellite industry due to its implications over the FCC’s National Broadband Plan, which aims to re-allocate ATC spectrum to maximize efficiency.
    Attorney Owen Kurtin, founder and principal of The Vinland Group, said the court’s ruling is a major blow to the FCC’s broadband policy. The decision “is a major affirmation of Internet backbone providers’ rights to manage their networks as they see fit when not operating on a common carrier or cable operator-regulated basis. The FCC and the intervening parties may choose to appeal the decision to the U.S. Supreme Court, where, in the last decade of local competition wars, the FCC at times fared better than it did before the D.C. Circuit. Absent that, the FCC’s broadband policy and plans go back to the drawing board for a far less regulated treatment.”
    Kurtin said that Genachowski’s pro-net neutrality stance, underscored by the National Broadband Plan, has caused political friction with the appeals court, which has favored a more hands-off regulatory approach. As an example, Kurtin points to the court’s decision to overturn the FCC’s authority banning Comcast’s broadband management practices in 2008. “The D.C. circuit appeals court cited the U.S. Supreme Court’s 2005 Brand X decision, which ruled that cable modem Internet service was an information service under the 1996 Telecommunications Act … The Court further found that other provisions of the Communications Act constituted ‘statements of policy’ that did not confer regulatory authority on the FCC or offer the necessary ‘independent justification’ for an assertion of ancillary authority under established case law, and rejected the FCC’s assertion of an expansive interpretation of the ancillary authority power in favor of a restrictive one,” said Kurtin.
    Despite fears over the court’s power to push back the National Broadband Plan, FCC International Bureau Chief Mindel De La Torre said that the decision “should not affect the National Broadband Plan,” and that the FCC is sticking with its current timetable for its allocation of spectrum. "The major work on the ATC spectrum plans will start moving forward in roughly six months," she said.
    The FCC even moved forward and published its National Broadband Action Agenda April 8, which lays out its strategy to connect the entire United States with broadband services within a reasonable economic budget.
    In a statement published with the agenda, Genachowski aimed to alleviate fears and reaffirm the commission’s confidence that the plan will come to fruition. “The court decision earlier this week does not change our broadband policy goals or the ultimate authority of the FCC to act to achieve those goals. The court did not question the FCC’s goals; it merely invalidated one technical, legal mechanism for broadband policy chosen by prior commissions. … It is essential that the Commission act on this roadmap to protect America’s global competitiveness and help deliver the extraordinary benefits of broadband to all Americans.”
    De La Torre emphasized the FCC’s policy goals for 2010. “The FCC is working to both create and promote business competition in the U.S. satellite and telecoms market while maintaining America’s leadership in the international community. We’re also working to streamline spectrum allocation processes and to come up with more innovative ways to use that spectrum. Our broadband policy has been beneficial for companies like Hughes and WildBlue, which have grown their subscriber base tremendously. As evidence, we can look at the remarkable rate at which the U.S. satellite industry itself has grown since 2004,” she said.
    The Broadband Plan extends beyond connectivity to the home to civil service uses such as healthcare and education. De La Torre said the commission has congressional support because of its emphasis on improving the economy, but despite the optimism, some telecom executives have made it clear that they would prefer to maintain their market position and have the FCC stay out of their business practices.
    During a speech given to the Council on Foreign Relations, Verizon Chairman and CEO Ivan Seidenberg shared his thoughts on the FCC’s proposed ATC spectrum allocation. “My reaction is going to surprise you. I don’t think the FCC should tinker with this. I think the market’s going to settle this. So in the long term, if we can’t show that we have applications and services to utilize that spectrum better than the broadcasters, then the broadcasters will keep the spectrum. … Cable companies have bought spectrum over the last 10 or 15 years that’s been lying fallow. They haven’t been using it, so here, the FCC is out running around looking for new sources of spectrum, and we’ve got probably 150 megahertz of spectrum sitting out there that people own that aren’t being built on. I don’t get that. This annoys me.”