So Much for Net Neutrality
A federal appeals court today ruled that the FCC overreached two years ago, when it issued a cease and desist order against Comcast for deliberately slowing the Internet file transfers of BitTorrent users. Comcast ended the practice soon after, but the situation made clear that the FCC believed it had the legal right to mandate "Net neutrality." Today's ruling seemingly moves the debate over to Congress, which would have to grant the FCC the authority to regulate ISPs. A second possibility -- the “nuclear option,” as some are calling it-- would be for the FCC to reclassify broadband as a regulated service, reversing a decision made under the Bush Administration to classify broadband providers as an “information service” that are beyond the scope of the FCC’s power. Given that it already looks to be a grueling election year, the first scenario seems unlikely at this point -- unless something forces the hand of Congress. Understandably, VCs fear that such a “something” could be an ISP's favorable treatment of a strategic partner or other self-interested maneuver. “Imagine if Comcast decided once day that they didn’t want anyone else to allow voice over their network,” says Allan Leinwand, a venture partner at Panorama Capital. “Maybe they claim that Vonage somehow damages its bandwidth, despite that a packet is a packet.”
