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Court throws out order that restricted Comcast

Setting the stage for a showdown in Washington over the Internet, a federal appeals court Tuesday threw out an order by the FCC punishing Comcast Corp. for blocking high-volume Internet traffic in 2007.

Setting the stage for a showdown in Washington over the Internet, a federal appeals court Tuesday threw out an order by the FCC punishing Comcast Corp. for blocking high-volume Internet traffic in 2007.

The unanimous three-judge decision by the U.S. Court of Appeals for the District of Columbia severely limits the FCC's regulatory powers over the Internet.

It was viewed as a big victory for Comcast, Verizon Communications Inc., and other network operators that say the Internet should remain largely free of government oversight. It was considered a sharp defeat for the FCC and those who have organized around the "net neutrality" concept.

They believe the Internet, the most innovative new communications technology in a generation, should be more regulated because of its importance to the economy and consumers, and that specific rules should bar companies from meddling with Internet traffic.

The August 2008 enforcement order against Comcast brought unwanted publicity to the Philadelphia cable-TV company and forced it to disclose information about its Internet-management protocols.

The "decision means there are no protections in the law for consumers' broadband services. Companies selling Internet access are free to play favorites with content on their networks, to throttle certain applications or simply to block others," said Gigi B. Sohn, president and cofounder of Public Knowledge, a nonprofit communications advocacy group. "In addition, as of now, the Federal Communications Commission's ambitious National Broadband Plan to help boost the economy is in legal limbo."

FCC Chairman Julius Genachowski, who has staked his tenure at the federal agency on advancing broadband technology, this year released the national plan that seeks to extend the Internet to millions of rural and poor households and boost Internet speeds.

Experts said Tuesday's court decision leaves the FCC few legal options to implement the plan, which took months to formulate and would cost billions of dollars. One option would be new legislation, although that seems a long shot considering the political gridlock and other big items on the congressional agenda.

"The FCC is firmly committed to promoting an open Internet and to policies that will bring the enormous benefits of broadband to all Americans," FCC spokeswoman Jen Howard said in a statement. "It will rest these policies . . . on a solid legal foundation."

She added, "The court in no way disagreed with the importance of preserving a free and open Internet; nor did it close the door to other methods for achieving this important end."

The FCC already is moving inside the agency to gain regulatory traction over parts of the Internet by converting a policy statement on the Internet into formal rules. The FCC would face fierce opposition from telephone and cable companies if it moved for extensive new powers, experts said. The phone and cable companies spend millions of dollars each year lobbying the FCC and Congress.

"There is fear is that [the FCC] will move on this and reclassify the Internet as a common carrier and subject it to price controls and public-utility regulation," said Thomas Lenard, president of the Technology Policy Institute, which receives funding from Comcast and Verizon.

The FCC could view the lack of authority over the Internet as a "threat to doing many of the things it wants to do," he said.

Genachowski's predecessor, Kevin J. Martin, was a Republican who battled Comcast over indecency and cable-TV pricing as head of the FCC. He brought passion to the Internet case by holding public hearings, and Internet advocates cheered his approach.

The issue focused on BitTorrent, a peer-to-peer file-sharing software program that allowed users to share video over the Internet. Critics said BitTorrent was mostly used for piracy and illegally sharing Hollywood movies, while its supporters said it was a competitive threat to Comcast's cable-TV service.

Comcast said BitTorrent users were "Internet hogs" who slowed Internet speeds for average customers, which led the cable giant to interfere with some BitTorrent Internet traffic. The company is the nation's largest residential Internet provider over its cable-TV transmission lines. It initially denied interfering with BitTorrent traffic, then acknowledged it had done so.

Comcast attempted to settle with the FCC by agreeing to change its network-management practices so that it did not target BitTorrent or any specific type of Internet application. Unable to stop the order, Comcast appealed.

The FCC said the government agency had the "ancillary authority" to extend oversight over the Internet. Tuesday's opinion, though, said the Internet was neither a telecommunications service nor a cable-TV service and so was outside traditional regulatory parameters at the FCC.

Comcast said in a statement, "Our primary goal was always to clear our name and reputation. We have always been focused on serving our customers and delivering the quality open-Internet experience consumers want. Comcast remains committed to the FCC's existing open Internet principles, and we will continue to work constructively with this FCC as it determines how best to increase broadband adoption and preserve an open and vibrant Internet."