Derailed by the D.C. Circuit: getting network management regulation back on track.

• Author: Mulligan, Edward B., V

1. INTRODUCTION II. BACKGROUND--NETWORK MANAGEMENT A. Understanding Network Management B. Precursors to the Regulation of Network Management Practices C. The FCC Condemns Comcast's Network Management Practices 1. Comcast's Former Network Management Practices 2. The FCC's Analysis of Comcast's Practices 3. Post-Order Fallout for Comcast and Other ISPs D. Comcast's Response to the FCC Order E. The D.C. Circuit Vacates the FCC Order F. Comcast and the FCC Respond to the D.C. Circuit Decision III. WHAT NEXT? JURISDICTION AND BEYOND A. Securing Jurisdiction over Network Management Practices B. Lingering Hurdles to an Open Internet--How the FCC Order Failed 1. Protocol-Agnostic Network Management 2. Excessive Use Threshold 3. Consumer Disclosure IV. POLICY RECOMMENDATIONS--BEYOND JURISDICTION, REGULATIONS ARE NEEDED V. CONCLUSION I. INTRODUCTION

   Over the last two decades, the Internet has become one of the world's most popular and valuable tools. In fact, over the last nine years alone, the percentage of American adults using the Internet has increased over twenty-five percent--from fifty-three percent in 2000 to seventy-nine percent in 2009. (1) Because Americans have become increasingly reliant on the Internet in the course of their daily lives, the need for Internet regulation has become a topic of public debate. (2) Growing concerns about how Internet service providers (ISPs) manage network traffic have fueled this already-heated debate. (3) While policymakers have remained reluctant to formally regulate the Internet, actions taken in recent years have indicated a shift in this policy--a sign that the days of a largely unregulated Internet may be coming to an end.

   Despite this trend, recent attempts by the FCC to implement Internet regulations--particularly those addressing network management practices--have faltered. The most recent setback is the D.C. Circuit's decision in Comcast v. FCC. (4) In that appeal, Comcast asked the D.C. Circuit to determine whether the FCC had the requisite authority to regulate its network management practices--a claim the FCC made in its August 2008 Memorandum Decision and Order ("FCC Order" or "Order"). (5) The D.C. Circuit first acknowledged that the Communications Act of 1934 did not grant the FCC explicit authority over cable Internet providers. (6) The court then considered whether the FCC had ancillary authority to regulate network management practices. (7) It answered this question in the negative as well. (8)

   So, as of the publication of this Note, the FCC does not have the requisite authority to regulate network management practices. (9) As the discriminatory nature of Comcast's former network management practices illustrates, that regulation is needed in this area. Therefore, conceding jurisdiction should not be an option for the FCC. It is merely the first step in getting its plans for network management regulation back on track. In fact, there are a variety of circumstances under which the FCC could gain authority over cable Internet providers. (10) These include a possible appeal to and reversal by the United States Supreme Court of the D.C. Circuit's decision, congressional action granting the FCC explicit authority, or reclassifying cable Internet service so that it falls within the FCC's authority under either Title II or VI of the Communications Act (which grant the FCC explicit authority to regulate "telecommunications services" and "cable services," respectively). (11) However, as this Note cautions, overcoming the jurisdictional problem is only the first step of many required to solve the FCC's Internet regulation problems. More is needed, as evidenced by Comcast's failed attempt at compliance with the now-vacated FCC Order. The FCC must adopt clear rules that set identifiable boundaries for network management, enforced by monitoring procedures and serious consequences in the case of noncompliance.

   Part II of this Note sets forth the historical context that gave rise to the current state of affairs, including a discussion of the FCC Order and the D.C. Circuit's recent decision. Part III anticipates how the FCC might "reestablish" jurisdiction over cable Internet providers in the future, while cautioning that, because other problems persist, jurisdiction is only the first step. In support of the latter assertion, Part III.B demonstrates how Comcast's new practices failed to comply with the framework set forth in the FCC Order. Part IV sets forth policy recommendations--suggesting that the FCC should not concede jurisdiction, but rather aggressively pursue it. It also suggests that, if need be, Congress should step in and grant the FCC explicit authority to regulate the network management practices of cable Internet providers. Part IV also argues that the FCC, once it secures jurisdiction, should take the next step forward by codifying the framework that it set forth in its FCC Order but backed by monitoring procedures and real consequences, such as a form of probationary period. Finally, Part V concludes that while jurisdiction may be the issue of the day, the D.C. Circuit's decision does not foreclose the possibility that the FCC will reenter the picture in the near future. As Comcast's actions--its prior employment of discriminatory management practices and failure to comply with the FCC Order (when it was assumed valid)--illustrate, future regulation of network management practices must be accomplished by more than just adjudicative proceedings based on vague principles. Clear rules backed by monitoring procedures and serious consequences must be adopted and enforced.

2. BACKGROUND--NETWORK MANAGEMENT

   The following Sections discuss network management as a concept, why regulations are needed, and the initial steps taken by Congress and the FCC to regulate such practices. The Sections that follow then focus on the network management practices of one of the world's largest ISPs, Comcast Corporation, that led the FCC to pursue aggressive regulatory tactics. Part II.C outlines exactly how Comcast's former management practices worked. Part II.D discusses the FCC Order and the framework it employed in determining that Comcast's practices had violated federal Internet policies. Part II.E mentions Comcast's response to the FCC Order--the adoption of new network management practices and, in the alternative, an appeal to the D.C. Circuit challenging the FCC's authority to regulate its practices in the first place. Part II.F discusses the D.C. Circuit's long-anticipated decision, which focused on the FCC's authority to regulate in this area. Finally, Part II.G outlines the reactions by the FCC and Comcast to the D.C. Circuit's decision in an effort to anticipate the future direction of this dispute.

   1. Understanding Network Management

      Most users access the Internet by paying monthly access fees to an ISP. ISPs then grant customers access to their high-speed Internet service. Most high-speed Internet services consist of a shared network, meaning that customers "share upstream and downstream bandwidth with their neighbors." (12) Comcast's Internet service is structured in this way. The shared nature of these networks makes them vulnerable to congestion during periods of peak demand; the network's capacity is limited. (13) Because different Internet activities require varying amounts of bandwidth, congestion can also occur during off-peak times if customers place "disproportionate demands on network resources" by engaging in activities that require large amounts of bandwidth. (14) When congestion occurs, the Internet experience for all subscribers connected to the same "Optical Node" is degraded. (15)

      In an age when demand for high-speed Internet service is growing at an exponential rate, (16) ISPs are constantly exploring cost-effective ways to minimize congestion and accommodate increasing demand on existing networks. One of the primary ways that ISPs address these issues is by "managing" Internet traffic. (17) As a result, most ISPs employ some form of network management practice. These practices are designed to avoid effects of network congestion by scaling back the bandwidth of certain users when overall network demand is high. This highly technical practice is most easily explained by analogy to highway traffic. Network congestion occurs when four or more cars attempt to drive side by side on a three-lane highway. Instead of slowing down all four cars, ISPs seek to design network management practices that slow down only one car--usually the largest car--so that the three other cars can continue uninterrupted, ensuring that no more than three cars are driving side by side at any given time. This practice is commonly referred to as "throttling traffic." (18) Sticking with the analogy, Comcast designed its former network management practices to target and throttle specific larger cars--makes and models that Comcast determined were particularly culpable in causing network traffic problems. It turns out that Comcast went so far as to slow targeted cars even when there were no other cars on the road. (19) As this discussion illustrates, such practices can implicate important social policies that have encouraged both Congress and the FCC to take measures to prevent the open and competitive nature of the Internet.

   2. Precursors to the Regulation of Network Management Practices

      Section 230(b) of the Communications Act of 1934 sets forth Congress's national Internet policy. (20) That section states that it is the policy of the United States "to preserve the vibrant and competitive free market that presently exists for the Internet" and "to promote the continued development of the Internet." (21) Congress enacted these policies in recognition of the fact that the Internet "represent[s] an extraordinary advance in the availability of educational and informational resources" and is "a forum for a true diversity of political discourse, unique opportunities for cultural...