THE BLOG
06/08/2010 05:12 am ET | Updated May 25, 2011

Comcast Finds Winning Is a B*tch

Congratulations, Comcast. You restored your good name and reputation by beating back the Federal Communications Commission (FCC) in court. That little wrist slap the Commission gave you for slowing down traffic in your Internet network a couple of years ago has been avenged. Your record is clean, legally speaking.

Of course, the story isn't all that simple, is it? Because the hidden story of Comcast's glorious victory is that if Comcast were smart, it wouldn't in the first place have brought the case, which challenged the FCC's authority over the company's high-speed Internet service. Some in the telecommunications industry, perhaps even huge companies with three letters in its name, urged (begged?) Comcast not to take the FCC's ruling to court, because of the possibility that Comcast could actually win and, potentially, win big -- which is what happened.

Under normal circumstances, a company like Comcast would feel great, winning a slam-dunk case against a Federal agency. The opinion issued April 6 by the U.S. Appeals Court for the D.C. Circuit, written by Judge David Tatel, was so strong that it even refuted arguments that the FCC didn't make in its defense, but could have. The chances of the FCC asking the U.S. Supreme Court for review are slim and none.

As Comcast has no doubt realized, but won't admit -- winning is a bitch. (They will likely find this out again when they take over NBC, but that's another story.) It's like those stories of the lottery winners who come into millions of dollars, think they are in heaven, but their life becomes a living hell. Comcast has brought down the wrath of its telecommunications brethren, because it has opened the door to something that, in the industry's view, could be much worse than the convoluted, jerry-rigged, barely legal system that allowed the FCC to let Comcast get off so easy.

By winning as big as it did, the result of Comcast's case was that the FCC has, practically speaking, been stripped of its ability to regulate high-speed Internet access (broadband) services. That means if Comcast decided once again to throttle back the Internet traffic of its subscribers, consumers would have little to no recourse. There is no agency, no authority, which could look into a complaint and risk doing anything about it. Practically speaking (even if there is a very slim legal opening), broadband is free from regulation -- a nirvana that the telecoms industry might once upon a time have gratefully accepted as its due, but now looks upon it with some trepidation because now the door has swung wide open to a full-scale discussion of bringing Internet broadband access services back under reasonable regulation.

Digital services offered by telephone companies were offered under regulations until 2005, continuing a line of consumer protections reaching back to 1934. Then it reclassified those digital services into the virtually deregulated bucket of "information services." It was the FCC's decision not to put the then-new cable modem service into that same regulatory bucket in 2002 that started the whole mess we find ourselves in today.

Of course, the industry is big enough to see past the Comcast error and is pressing ahead with its own talking points which will be echoed by assorted industry-friendly spokesmodels.

First, Depend on the Kindness of Strangers. This Blanche Dubois-inspired strategy is based on the simple theme, "trust us." We don't need regulation because we will do the right thing. We will follow the FCC's (now-discredited and incomplete) Internet principles even though we aren't obliged to. We're the telephone (and cable) company, and we wouldn't do anything to hurt our customers. After all, we support an open Internet; we just don't think it's necessary to have any rules that would require us to do so. After all, most Americans have broadband (even if it's only one choice and substandard at that), so why impose harsh, restrictive rules on poor, little old us?

Why, indeed? Perhaps because the concept of noblesse oblige has been replaced, at least in theory, by the rule of law. The companies want to define their own obligations and then enforce them at their whim. Suppose someone wanted to add another principle to the ones that the FCC, thanks to the legal actions of Comcast, can't enforce? Let's say someone wanted to prohibit Internet access companies from discriminating against Web sites on the basis of financial relationships. Or let's say telephone or cable companies moved all their popular services into a more expensive "managed" category, just like a cable network? What could consumers do under the KOS theory? Nothing. And if you have no choice of provider, you're out of luck. But the free market has provided you at least with something, so be grateful, even if the companies with virtually no regulation have led the U.S. consistently downward in the Internet rankings since the deregulation of the past few years, with service more expensive and slower, with fewer choices for consumers than in comparable countries.

Don't buy the argument that new regulation will screw up investment. Companies invest more or less depending on their business plans. With little to no regulation, Verizon will limit its FIOS fiber service to about half of its customers. AT&T hasn't deployed any fiber to the home.

The second option is to Wait for Godot. If one cannot depend on the kindness of strangers, then, the industry contends, it should be up to Congress to change the rules. We can't depend on unelected bureaucrats to deal with topics as essential as broadband, because the result could be "excessive and burdensome regulation" on those humble, hard-working telephone and cable companies who unfairly change the rules without any reason at all.

Of course, no one complained about the "unelected bureaucrats" at the FCC over the past eight years (from the telephone side -- the cable guys had some beefs) when the industry pretty much got everything it wanted. No one complained when the FCC reclassified Internet access broadband service from traditional regulation into the regulatory nether world.

But asking Congress to intervene? In case anyone hasn't been paying attention, Congress is at near paralysis. It would take years, if ever, for Congress to pass something. Even then, if Congress did pass a bill the phone and cable companies would likely come out the winners because of the power of the telecommunications lobby. Despite the support of many, but not all, Congressional leaders, there aren't the votes for a strong bill to protect broadband consumers and to promote competition. If there were, it would have been done long ago. The members of Congress who worry about the burdens on the poor companies aren't as worried that their constituents could get screwed, or that their constituents might deserve better. In the meantime, consumers would be out of luck. The reliance on Congress is a classic misdirection for a solution that will never come.

What's the answer? Do the Right Thing. The FCC can in a number of ways, reverse it's disastrous decisions and put broadband services back under the regulatory umbrella where they belong. There's nothing that says there has to be a heavy regulatory burden, but then the weight of the burden is in the eye of the beholder. No one said that every portion of the law has to apply to services now as they did years ago. The FCC has the discretion to pick and choose to make the "burden" as light or as heavy as it thinks is appropriate.

We need not have, as some commentators call it, the same rules that applied to the monopoly telephone network. On the other hand, some of the same principles, like non-discrimination, should exist regardless of the technology. The regulation of telephone companies existed as the technology evolved from the 1930s through the 2000s. It's flexible and dynamic enough to protect Internet access. The regulatory system that could be put in place would be similar to that in place in the 1990s when, under the Clinton Administration, there were thousands of Internet Service Providers which leased access to telephone company lines and provided new services and choices to millions of consumers. Sadly, that competition was wiped out through the deregulation which followed.

Any regulation is too much for the cable and telephone companies. If the FCC acts in the simple, elegant way that will protect consumers, promote competition and clarify the legal environment for the National Broadband Plan, they will catch holy Hell from every Republican in Congress, at least half the Democrats and will face some years of court suits from the companies. Believe it or not, that's the easy way out. It's the right thing to do and with enough political backing, it just might happen.

And we will have Comcast to thank. Thanks, Comcast. Great win.