Comcast Not On Notice? They Were Told Point Blank!

It is a rather trite cliche that those who do not learn from history are doomed to repeat it. But in law, where concepts such as precedent and law matter a great deal, there’s an even bigger problem: Those who do not learn from history are likely to miss the obvious.

As we all know, Comcast has invested a lot of time in arguing that they lacked notice that the FCC would enforce the principles of the policy statement via a complaint against them. “How could we possibly have known?” Comcast has asked, winning sympathetic nods from a variety of folks. “Policy statements aren’t enforceable! How can you possibly punish us for something we didn’t know we might be held accountable for, all our public statements to the contrary?”

Well, let us suppose that Comcast was told two years ago today that the FCC would entertain complaints if Comcast blocked or degraded traffic. Would that make a difference? If the FCC had said directly to Comcast: “If in the future evidence arises that any company is willfully blocking or degrading Internet content, affected parties may file a complaint with the Commission.” I would think we could all agree that this constituted “notice,” yes? Perhaps not notice of whether or not the behavior at issue constituted blocking or degrading — that is, after all, what the Commission determines in a complaint. But certainly if the FCC had told Comcast directly, to its face, no ifs and or buts, the above quoted line, I would hope we could all agree that Comcast had received reasonable notice that parties could bring complaints to the Commission, asking the Commission to determine whether the parties had behaved in an inappropriate manner.

Because — Surprise! — exactly two years ago today, that is exactly what the FCC told Comcast.

More below . . . .

As long-time readers may dimly recall, a bit more than two years ago today the FCC granted the applications of Time Warner and Comcast to acquire the bankrupt Adelphia and swap systems among themselves. We at MAP had opposed this deal for a year. One of the issues we pressed was, no surprise, network neutrality and enforcement of the policy statement.

The Commission had including the policy statement as a merger condition (and I remind all you folks at home that mergers are “adjudications” under the Act) in both the SBC/AT&T merger and the Verizon/MCI merger. We pressed the Commission to do so in the Adelphia transaction.

The Commission declined to explicitly do so. Instead, it invited us to come back with a specific complaint if we ever had evidence of specific practices.

In other words, the Commission relied on the fact in the Adelphia transaction that parties could and would bring private enforcement complaints against Comcast (and others, but certainly against Comcast and Time Warner) in the event a documentable incident of something that might qualify as “blocking and degrading” would occur. Whoever else might claim they had no inkling parties could bring private complaints, Comcast (and Time Warner) certainly knew it as of July 21, 2006 when the Commission published its Order granting the applications to merge. Indeed, under one reading, this constitutes a merger condition that Comcast cannot evade. But I prefer to think of it as the Commission announcing a policy it would determine the question of what constituted blocking and degrading by the filing of complaints — which is what we have done here.

Because the language on this is fairly important, I quote at length (Numbers refer to Paragraph numbers in the decision):

214. Free Press [MAP’s lead client in the Petition to Deny] urges the Commission to adopt ISP access and interoperability conditions similar to those imposed by the Federal Trade Commission and the Commission in connection with AOL-Time Warner transaction. In the alternative, Free Press proposes that the post-transaction entities be prohibited from discriminating against providers of content, video, or voice services offered via broadband. CWA/IBEW propose that the Commission require “interoperability of network devices” and content neutrality on Comcast’s and Time Warner’s post-transaction broadband platforms. IBC proposes that the Commission require Comcast and Time Warner to program their set-top boxes to be Internet-accessible and to devote one cable channel to Internet access via television.

215. In response to these allegations, the Applicants state that “[t]he record is entirely void of any evidence that Comcast or Time Warner have ever degraded, blocked or otherwise discriminated against any packets delivered by any IP-enabled service application.” They emphasize that their desire to satisfy their subscribers and compete against other Internet providers provides sufficient incentive for them to allow their subscribers “unfettered access to all the content, services and applications that the Internet has to offer.”

216. The Applicants aver that market forces will ensure that consumers’ needs are met because the Applicants face strong competition from other providers of broadband services. Further, they explain that they need flexibility to experiment with business models to respond to the dynamic marketplace and they should not be restricted in their ability to invest in and expand their networks to satisfy their customers. The Applicants also contend that direct enforcement of the Commission’s broadband Policy Statement would be difficult to administer and would hamper the Applicants’ efforts to resolve issues related to copyright protection, peer-to-peer applications, spam, and identity theft.

217. Discussion. We conclude that the transactions are not likely to increase incentives for either Comcast or Time Warner to engage in conduct that is harmful to consumers or competition with respect to the delivery of Internet content, services, or applications given the competitive nature of the broadband market. We agree with Applicants that competition among providers of broadband service is vigorous. Broadband penetration has rapidly increased over the last year with more Americans relying on high speed connections to the Internet for access to news, entertainment and communication. Increased penetration has been accompanied by more vigorous competition. In turn, greater competition limits the ability of providers to engage in anticompetitive conduct, a concern of some commenters, since subscribers would have the option of switching to alternative providers if their access to content were blocked or degraded. In particular, incumbent LECs’ share of the U.S. broadband market has gradually increased over the past few years through increased deployment and increasingly aggressive pricing. Statistics collected by the Commission indicate that the percentage of broadband subscribers served by cable modem service has decreased over time, from 58% in 2003 to 56% in 2005, while the percentage served by DSL has increased from 38% to 41%. Additionally, consumers have gained access to more choice in broadband providers. For example, while the percentage of zip codes served by only one broadband provider has dropped from 16.4% in 2003 to 9.3% in 2005, the percentage of zip codes served by four or more broadband providers has increased from 43.7% in 2003 to 59.7% in 2005.

218. This growth in the number of providers is reflected in an increasing number of subscribers to new broadband technologies. For example, cable modem service and DSL service are facing emerging competition from deployment of cellular, WiFi, and WiMAX-based competitors, and broadband over power line (BPL) providers. Commission statistics indicate that satellite and wireless broadband lines more than doubled between June 2004 and June 2005, from 422,000 to 970,000, with BPL lines surveyed for the first time in June 2005. Some analysts project that some of these technologies have the potential to reduce further cable’s share of the broadband market beyond the projected continued losses to DSL, particularly in rural areas. Press reports indicate that both DBS providers have signed distribution agreements with WildBlue Communications, Inc., a provider of satellite-broadband Internet service.

219. The only specific factual allegation in the record concerns an instance of e-mails being inadvertently blocked by a Comcast firewall provider. In this regard, Free Press alleges that Comcast blocked e-mails generated by an organization called “After Downing Street” (“ADS”), resulting in e-mails containing a reference to ADS being blocked for one week, without notice to ADS or subscribers. Free Press asserts that, although the problem was blamed on an anti-spam measure deployed by Symantec under contract with Comcast, when ADS contacted Symantec directly, the block was immediately removed. There is no evidence that the block was motivated by subjective judgments regarding the content being transmitted or that it was anything other than the result of a legitimate spam filtering effort by Symantec. Comcast states that it uses Symantec Corporation’s Brightmail software solution to filter out spam e-mails. To avoid giving “ unscrupulous spam senders a roadmap for avoiding filters,” Symantec does not explain how it determines which e-mails are spam. However, Symantec did explain to Comcast that it had received thousands of complaints from end users, saying that ADS e-mails were spam. Comcast stated that the e-mails were blocked “ because they exhibited many signature characteristics of unwanted bulk e-mail.” ISPs’ blocking of spam is a common and generally approved practice, and there is nothing in the record here to suggest that the blockage was other than the automatic functioning of the anti-spam software.

220. There is, other than this, no record evidence indicating that Comcast or Time Warner has willfully blocked a web page or other Internet content, service, or application via its high speed Internet platforms. Commenters and petitioners do not offer evidence that Time Warner and Comcast are likely to discriminate against Internet content, services, or applications after the proposed transactions are complete; nor do they explain how the changes in ownership resulting from the transactions could increase Time Warner’s or Comcast’s incentive to do so. If in the future evidence arises that any company is willfully blocking or degrading Internet content, affected parties may file a complaint with the Commission.

(emphasis added).

And, in case anyone missed the point, the Commission included this another few paragraphs later.

223. The Commission also has recently adopted a Policy Statement on broadband access to the Internet. This statement reflects the Commission’s view that it has the jurisdiction necessary to ensure that providers of telecommunications for Internet access or Internet Protocol-enabled (IP-enabled) services are operated in a neutral manner. [emphasis added] To ensure that broadband networks are widely deployed, open, affordable, and accessible, the Commission adopted four principles embodied in that Policy Statement:

(1) consumers are entitled to access the lawful Internet content of their choice; (2) consumers are entitled to run applications and use services of their choice, subject to the needs of law enforcement; (3) consumers are entitled to connect their choice of legal devices that do not harm the network; and (4) consumers are entitled to competition among network providers, application and service providers, and content providers. The Commission held out the possibility of codifying the Policy Statement’s principles where circumstances warrant in order to foster the creation, adoption, and use of Internet broadband content, applications, services, and attachments, and to ensure consumers benefit from the innovation that comes from competition. Accordingly, the Commission chose not to adopt rules in the Policy Statement. This statement contains principles against which the conduct of Comcast, Time Warner, and other broadband service providers can be measured. [empahsis added] Nothing in the record of this proceeding, however, demonstrates that these principles are being violated by Comcast or Time Warner or that the transactions before us create economic incentives that are likely to lead to violations. Additionally, the vigorous growth of competition in the high-speed Internet access market further reduces the chances that the transactions are likely to lead to violations of the principles.

So, to summarize, on July 21, 2006, Comcast and Time Warner were explicitly told —

1) The Policy statement reflected the view of the Commission that it had jurisdiction to either make rules or enforce complaints to ensure that the internet operates “in a neutral manner;”

2) That the Commission considered doing rules, but decided to proceed by adjudication instead;

3) That in 2006, the Commission had no reason to believe it needed formal rules, because it figured competition would keep ISPs from doing anything naughty and might make it difficult for ISPs to act with flexibility when handling issues like spam or p-2-p;

4) Therefore, the FCC elected to proceed via adjudications rather than rules;

5) The FCC explicitly invited anyone with credible evidence that Comcast or Time Warner blocked or degraded access to content to file a complaint in the future.

How could Comcast have been on any MORE notice? Two years ago today, the FCC sent them a personally engraved invitation telling them that if Free Press ever found evidence that Comcast was blocking or degrading content, Free Press should file a complaint and the FCC would consider whether or not the behavior constituted operation in a “non-neutral” manner or if it was “reasonable network management.” The FCC even explicitly recounted Comcast’s concern that it needed flexibility to deal with P2P management, and would address whether it’s P2P management scheme was reasonable via the complaint process. And it told this to Free Press. Which, when it discovered such evidence in October 2007, filed a complaint, just like the FCC told them too and just like it told Comcast it would entertain.

Nothing like a little touch of history when dealing with cases of precedent and notice.

Stay tuned . . . .