Judges seem to have hard time with FCC's ancillary authority argument If the cross-examination an FCC lawyer got from a three-judge panel of the U.S. Court of Appeals for the District of Columbia Friday is any indication, the FCC's BitTorrent decision against Comcast could well be overturned.
"Clearly they had problems," said one courtroom observer of the FCC's argument.
If the court does find against the FCC, that could also create problems for its proposed codification of network neutrality proposals.
In oral argument before a packed courthouse--observers lined the back wall and others were forced to observe from the vestibule--Chief Judge David Sentelle flanked by Judges David Tatel and Raymond Randolph peppered FCC attorney Austin Schlick with questions about what authority the FCC had to adjudicate the network management complaint against Comcast.
Comcast attorney Helgi Walker argued that the commission's ancillary authority, which has been upheld in past decisions, did not extend in instances where there was no statute or rule to pin it to, as she said was the case here.
The FCC was enforcing its four Internet openness principles when it found Comcast's network management of peer-to-peer traffic to be unacceptable.
Schlick countered that the FCC's authority stemmed from its charter to enforce the Communications Act and 1996 update of that act. But Judge Randolph said that that ancillary authority had to be pegged to some operative statute, and that the FCC itself had said that the principles were only a policy statement.
The Judges seemed to get a little testy when Schlick failed to cite another case in which the FCC had adjudicated a complaint without authority expressly tied to a statute. The one case he did site, a 1980 case involving CBS, turned out to have been pegged to campaign finance reform law, a point Sentelle made pointedly.
"The FCC seems intent on acting on implicits," said Sentelle when Schlick The judges pressed Schlick to address their questions rather than attempt to cite what he considered precedential cases.
While the FCC said its BitTorrent decision, which involved no fine, had essentially no negative long-term impact on the company, Walker said that was hardly the case. She talked of the harm to the company's reputation and the expense of changing its network management system to comply with the FCC's decision, as well as the threat of further FCC action based on the finding.
Schlick countered that Comcast's decision to update that system was of its own volition. So, asked Sentelle, it would have done so even without the decision?
And on the issue of no future harms, Schlick conceded that the fact that the FCC did not fine Comcast did not mean the BitTorrent finding couldn't be used to take stronger enforcement action against it.
Doesn't that work against the FCC's argument that the decision didn't punish Comcast in any legal, recognizable way, asked one judge.
An attorney for the cable industry, intervening for NCTA and NBCU in support of Comcast, added that it was not just Comcast that was harmed, but the whole industry, which now subject to a vague network management order that was unclear about what was proscribed and what was permitted. He said the fact that the FCC followed up the BitTorrent decision with a network neutrality rulemaking reinforced the argument that the FCC was on shaky ground.
But referencing Shakespeare, Sentelle said he was not sure he agreed, saying the FCC may have been trying to make "surety surer." He said the FCC's effort to make its authority clearer does not concede there was not authority to begin with.
Tatel seemed the most receptive to the FCC's position, though in the end he seemed not to find the way the FCC argued that position convincing. In particular he suggested that maybe the FCC's regulatory authority over cable rates could be the peg, since it said that controlling peer-to-peer files implicated competition with cable service. But he said the FCC had only mentioned that in its brief, and provided no supporting evidence.
Judge Randolph appeared the most receptive to Comcast's arguments, with he and Tatel doing most of the questioning and Sentelle weighing in less frequently.
The FCC based some of its argument on the Brand X case, in which the Supreme Court said that even though the commission was reclassifying cable modem service as an information service exempt from mandatory access, it still had authority over the service. It also pointed to conditions in the Adelphia deal.
Asked whether a finding in Comcast's favor would potentially jeopardize its network neutrality rulemaking, Schlick indicated he thought it could if the FCC lost on the ancillary authority issue. Walker agreed it could be problematic for that rulemaking, a rulemaking she suggested would find her back in the same court.
Schlick said that he did not think the BitTorrent authority extended to regulating e-mail or social networks. He also said he did not think the FCC ancillary authority was unlimited, pointing to the court's decision that it could not adopt a broadcast flag regime for TV sets.
IBut it was the sense that the FCC was trying to assert a broad adjudicatory authority untethered to statute that seemed the highest hurdle for the Judges, though Schlick said the FCC was simply using the authority Congress gave it in the Communications Act.
A decision is expected sometime in late June or early summer.
