Comcast vs. FCC: Implications in throttling BitTorrent

Comcast is appealing a ruling before a three-judge appeals court panel concerning the FCC’s sanctions in 2008 of the operator, and whether it has jurisdiction under current Net Neutrality rules to do so, for what has become known throughout the media as past throttling of BitTorrent. (See FCC formally rules Comcast’s throttling of BitTorrent was illegal). This could be an important decision for ISP industry operators, who have many (irons-in-the-fire) when it comes to a business model that depends on both residential Internet and business customers, in helping it pay for a broadband pipeline created with private investment.

It also has implications for consumers who are increasingly using more file sharing applications to watch video content from their Internet Service Provider connections, and Internet giants like Google (Nasdaq: GOOG)who depend on free access to its information sharing business model. While Comcast (Nasdaq: CMCSA,CMCSK) has indicated their Internet management practices have since been changed, as a result of the issue, and it no longer throttles customers, what remains is a court challenge this past week in which the court grilled the FCC on its authority to regulate ISP’s under current Net Neutrality rules without a legislative mandate. (See Comcast Scores Against FCC in Court Battle over Net Neutrality).

The wider ramifications is whether the ruling will apply to business applications, which require special and unique service agreements for much larger file sharing and speeds in offering these programs. In essence, ISP’s need the flexibility to charge differing rates depending on the requirements of certain applications, which in-turn allow for infrastructure investments to accommodate these needs. This is their (Bread and Butter) of profitability.

One the one hand the FCC is under a mandate by the current administration to have a free flowing Internet with consumers and file sharing applications having unfettered access, and on the other, private investors which have created the pipeline are mandated by economics to make a profit depending on differing needs, from both consumer and business. If the FCC loses this current battle in court, then future challenges will likely occur concerning any new Net Neutrality rules that are adopted.

It seems from opening arguments before the courts that the FCC may have overstepped its boundaries in taking Comcast to task over BitTorrent, and may have to back up and ask Congress for a legislative mandate in regulating broadband as an information service.