Does Comcast Fear To Win Too Much?

I grant I wasn’t there, but pretty much everyone who was seems to think the D.C. Circuit oral argument in the Comcast/BitTorrent case was an utter disaster for the FCC/pro-NN forces and a total triumph for Comcast. Given my previously voiced opinion about the judicial activists on the D.C. Circuit, I can’t say this surprises me even in light of the previous precedent. Indeed, from what I have heard, the D.C. Circuit appeared breathtakingly eager to rush past the procedural issues and declare that the FCC has absolutely no jurisdiction to regulate anything an ISP ever does, ever.

So why has Comcast, which (along with its trade association) has argued that it would violate its First Amendment rights for the FCC to regulate its conduct as an ISP, posted this blog entry to explain that of course they totally support FCC regulation of broadband ISPs, under the right circumstances, etc.?

Answer: Comcast fears to win too much. For Comcast (and other broadband providers), the ideal world consists of an FCC with jurisdiction but no authority. That is to say, they want an FCC that appears to have authority to do something, but when push comes to shove is prevented from actually doing anything Comcast doesn’t like. Which is why Comcast wanted to win on procedure and, perhaps, get the court to threaten the FCC that it had no authority. In that universe (which could still come to pass), Comcast could keep Congress from giving the FCC explicit authority by saying it has jurisdiction but keep the FCC from doing anything by claiming that it lacked authority for any specific action.

But there is every indication that the D.C. Circuit will go much further, and find that the FCC has no jurisdiction to even consider regulation of ISP behavior no matter what the circumstances, because it doesn’t believe that ancillary authority exists. While that sounds like exactly what Comcast would want, it scares them silly. Because even the fear of this sort of huge loss creates a panic that could lead Congress explicitly delegating the FCC extremely clear and unambiguous authority.

More, including a shout out to all my fellow Buffy the Vampire Slayer fans, below . . . .

UPDATE: According to this blog post by Washpo Reporter Cecilia Kang, I’m not the only one thinking this way. A few more choice remarks from NCTA’s Kyle McSlarrow about how the FCC’s role is to be a big ATM for his members may get even this Congress off it’s rear end.

This is, of course, the Nirvana to all those Libertarian think tank groups who filed amicus briefs, and what Ken Ferree and Michael Powell actually hoped to achieve when they classified cable modem service as a Title I ancillary service. But for Comcast, which is a company trying to make money and not terribly interested in Libertarian theory except insofar as it makes fleecing the consumer flock easier, this is a disaster. It is rather like the Spike’s little speech to Buffy and her Mom at the end of the second season of Buffy the Vampire Slayer .

We like to talk big, vampires do. ‘I’m going to destroy the world.’ It’s just tough guy talk. Strut round with your friends over a pint of blood… the truth is I like this world. You’ve got dog racing. Manchester United. And you’ve got people. Billions of people walking around like Happy Meals with legs. It’s all right here.

Substitute “megacorps” for “vampires,” “totally deregulate” for “destroy the world,” and “customers” for “people,” and that pretty much sums up Comcast’s attitude.

Now Comcast faces the likelihood that the FCC will be plainly stripped of all authority, in a clear and unambiguous manner for everyone to see. Not only would this trigger an appeal to the Supreme Court (which might or might not succeed), it would also present a rather stark set of choices for Congress and the FCC. For the FCC, it could reclassify broadband from Title I to Title II. For Congress, it could grant the FCC explicit and unambiguous authority to regulate broadband access. Alternatively, Congress and the FCC can sit by and pray nothing every happens that would require regulatory oversight — such as AT&T and Verizon deciding they are tired of losing customers to Comcast and its cable brethren and they start degrading Cable VOIP traffic (a Title I service). Truth to tell, it won’t be Verizon that blocks first. It’ll be small fry like Madison River. But it will work its way up the chain, gradually drifting apart as short-term opportunity and response to threats overwhelms long-term concern.

Mind you, I confess to a certain wicked Cassandrafreude to wanting to see this happy Libertarian world where Comcast and Verizon and AT&T and Time Warner Cable and everyone else have to negotiate with each other for access to each other’s networks, secure in the knowledge that they are utterly free to make whatever deals they want. For a look at such a world, consider the recent cable retrans fights, but with much higher stakes. The internet utterly depends on reliable interconnection. But it is enormously tempting to any individual broadband access provider to try to diddle traffic to its own advantage while expecting everyone else to treat its traffic in a predictable fashion. Right now, this arrangement works in part because nobody wants to risk a regulatory response such as what happened with Comcast when it went after BitTorrent or when Madison River refused to complete VOIP calls. But once it becomes clear there is no possibility of any regulatory response, I predict things will begin to drift apart. Because the incentive to maximize short-term advantage will always outweigh longer-term concerns about fragmentation of the Internet.

Of course, most Libertarians bet the other way. And maybe they are right. But I don’t think Comcast is particularly interested in betting its bottom line on it. More importantly, neither Congress or the FCC is likely to want to bet that way either. A big loss at the hands of the D.C. Circuit, or even the fear of such a loss, dramatically increases the likelihood of all kinds of things everyone thought were “off the table” — such as reclassifying broadband as a telecommunications service or Congress actually getting off its fundament and passing a law. Hence Comcast’s rush to calm everyone down and persuade everyone that of course the FCC would still have jurisdiction if it continues a rulemaking with a “proper record” and comes up with regulations Comcast likes that “support an open internet.” After all, we wouldn’t want anything to disrupt the flow of Happy Meals settled expectations of customers.

Stay tuned . . . .

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3 Comments

  1. JohnMc says:

    Interesting perspective Harold. A possibility as well. But I doubt as it stands right now you would see such action, as least not with this Congress. Everybody in the House is already a lame duck till November. So they are not going to rock the boat too much — they have NTIA PAC money they want to siphon first. That route is likely delayed until at least 2011 via Congress.

    The FCC? Its even worse. They will probably not act at all. They have to assume at the margins that they may have no controlling authority till Congress acts. By 2011 however its too late. The current chairs see the lay of the land — good chance Obama is a one termer and better than even odds it won’t be a Democrat in the WH 2013.

    As to your second observation of a war of wits that is most likely a given. Part of the DC 1’s memo was to vacate the 30% rule. That translates to open season till new rules come out. So Comcast’s biggest worry is that over the next 3 years AT&T/Verizon might try and eat much of their lunch. I suspect at a minimum there will be a mini land grab attempt by all parties involved.

    However I don’t think exurban fights are going to be repeated. Verizon specifically hates exurban territories. The faster they can pawn them off the better they feel.

  2. Rich Brown says:

    If the big cable companies are freed from the FCC will local jurisdictions be free to once again add service requirements into their cable franchise?

    If so, some cities will require the cable company to provide actual service to the population. Sadly, others will give the Comcasts/Verizons the usual sweetheart deals.

    Oh, and by the way, I watched that episode of Buffy last night 🙂

  3. JohnMc says:

    Rich,

    I don’t see why the cities could not in the interim period. Though its probably not their focus if they expect the FCC to step in again.

    But a more salient question — do you think it matters? I don’t personally. I used to have cable, TV and internet. But I have ditched the TV and get my internet thru a WISP. Never was much of a pay per view person and with a RedBox machine on nearly every corner around here I can get a fresh movie and pop it in the media center for a $1.

    Bottom line — for me cable has become irrelevant.

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