Tag Archives: General Electric

Comcast Wins Web Traffic Authority Over FCC

Julius Genachowski, head of the FCC, at a hearing last month

On Tuesday, a federal appeals court ruled to limit the power of the FCC (Federal Communications Commission) over internet traffic. What makes this extraordinary is that the decision will allow ISPs (Internet Service Providers) to block or slow specific sites and charge video sites to deliver their content faster to users.

Under the banner of “net neutrality,” the FCC was poised to require ISPs to provide equal speed coverage to all users. However, the service provider giant Comcast Corporation (NASDAQ: CMCSA) contested that the FCC had no jurisdiction in the matter and that ISPs should be granted the ability to increase control over the content of the internet they provide.

Comcast’s concerns for their content speeds came after increasing network congestion from users of a file sharing program called BitTorrent, which is infamous as a major source of pirated media and software.

Conservative supporters have weighed in on the ruling saying they are philosophically opposed to granting further power to the FCC who are already famous for their control of other media including radio and television. Moreover, they argued against the government’s interjection saying that ISPs should be free to set their own policies and the prices for their services.

After the decision, however, Comcast released that they have since changed the management policies that lead to restricting access to BitTorrent and originally brought this case to court. Yet, despite Comcast’s claims that they will remain “committed to the FCC’s existing and open internet principles,” this court decision leaves the possibility for abuse open with only the guarantee of an oligopolist for protection.

This is especially unsatisfying for consumers with the impending Comcast majority stake acquisition of NBC Universal, which currently owned by General Electric (NYSE: GE) and Vivendi (EuroNext: VIV). With NBC Universal, the temptation to favor NBC cable channels and discriminate against other broadcast groups would be greater and make Comcast more likely to take advantage of their position as an ISP. In practice, for example, Comcast could prioritize NBC video streaming services over competitors.

Some consumers fear that without FCC oversight, such abuses could occur indiscriminately. However, until the FCC is granted control over internet traffic, it is the opinion of this publication that the only protection the general public would have would be in the competition of the free market.

In February, Google (NASDAQ: GOOG) announced that it would begin testing its own fiber optic system, connecting homes, schools and business, in an attempt to one day become an ISP itself. Boasting speeds of 1Gbps (Giga bites per second), Google would be poised to compete with Comcast if it could find ways to make its system affordable. Google’s entrance into the ISP market without ulterior motives would represent better assurances that ISP providers will remain honest suppliers of the world wide web.

Ironically, Google has earlier “net neutrality” to thank for its success, foremost, as the most widely used web-based internet search engine. Google stock went public in August of 2004 and closed Wednesday at $563.54.