In a blow to the Federal Communications Commission (FCC) and supporters of net neutrality, the Federal Appeals Court in DC ruled unanimously on Tuesday that the FCC cannot interfere in the management of networks run by telecommunications companies.

The case, Comcast v. FCC, was brought to court when a number of Comcast broadband customers who were using peer-to-peer file sharing services found that their Internet service was being restricted. Comcast has complained that peer-to-peer networking sites, like BitTorrent, use up large amounts of bandwidth and that the company has a right to restrict access to them.
Supporters of net neutrality, who believe that no web sites or applications should be given preference over others, argue that telecommunications companies could use the ruling as a precedent to broadly restrict access to certain sites or services, or restrict certain users.

"As a result of this decision, the FCC has virtually no power to stop Comcast from blocking Web sites," said S. Derek Turner, research director for Free Press, one of the nonprofit advocacy groups that filed the original complaint with the FCC.

"The decision has forced the FCC into an existential crisis, leaving the agency unable to protect consumers in the broadband marketplace," he said.

Comcast applauded the ruling. "Our primary goal was always to clear our name and reputation," said Vice President of Government Communications Sena Fitzmaurice in a statement. "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."

The ruling comes only weeks after the release of the National Broadband Plan, a major initiative by the FCC to focus government resources on expanding access to broadband services, especially in rural areas, open up broadcast spectrum for wireless devices and give consumers the option of purchasing a set-top box through which Internet and cable services would be run.

According to The New York Times, about a third of Americans do not own or do not have access to high-speed Internet services.

As the use of broadband Internet has expanded, telecommunications companies like Comcast and AT&T have been aggressive in trying to clearly demarcate just how much regulatory control the FCC has over Internet service.

In the ruling, the FCC acknowledged that there is not specific law or statute that grants them the power to intervene in the network management practices of Internet service providers. Instead, the FCC argument rested on the "ancillary" authority provision of the Communications Act, which says, "the Commission may perform any and all acts, make such rules and regulations, and issue such orders ... as may be necessary in the execution of its function."

Consumer advocacy groups worry that the ruling could pave the way for Comcast and other telecommunications companies to promote their own content and services at the expense of content and services that are not associated with the company. For example, access to video sharing sites like YouTube or Hulu might be restricted to encourage users to visit a company-associated video sharing service like Comcast On Demand.

Another fear is that the ruling could set a precedent for unrelated regulations, like requiring telecommunications companies to provide broadband access to remote areas, and could provide companies with ammunition to fight competition from set-top boxes that are not tied to one service provider. Without the ability to prevent companies from restricting access to certain sites or applications, the FCC will, "be unable to implement the National Broadband Plan," Turner said.

In response, the FCC could push Congress to give the Commission explicit regulatory power over the use of high-speed Internet, as Congress has granted in the past to the regulation of the radio and television industries. 

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