• The Wall Street Journal et al., Wednesday, April 7, 2010 12:49 PM

Representing a serious setback for net neutrality advocates, a federal appeals court on Tuesday rejected the Federal Communications Commission's claim that Comcast couldn't manage Internet traffic on its network and block BitTorrent data.

"At stake is how far the FCC can go to dictate the way Internet providers like AT&T Inc. and Verizon Communications Inc. manage traffic on their multibillion-dollar networks," The Journal writes.

Far from ending the battle, however, "This ruling may have just stirred the pot of uncertainty more," writes ZDNet's Between The Lines blog.

Under the sensational headline, "Your Cable Company Can Now Tax Your Favorite Websites," Valleywag says: "This is bad news for YouTube and Hulu fans, but not all is lost." For one, the ruling will likely embolden net neutrality supporters, including President Obama, to introduce legislation explicitly broadening the powers of the FCC and thus reinstating the rules just thrown out by the court, according to The Wall Street Journal.

Indeed, Comcast's actions had already "led to petitions from advocates and regulatory action from the Federal Communications Commission, which wants to prohibit Internet providers from selectively blocking Web content and applications," notes CNNMoney.com.

Investment bank Stifel Nicolaus suggests that the FCC will likely move to reclassify broadband providers as a so-called Title II service providers, which would mean more regulation and FCC authority.

"Title II is the worst fear of cable/telco broadband providers, which have warned of disastrous consequences," the bank writes in a research note. "We expect they would try several strategies to avoid this outcome, including arguing for an overhaul of the communications statute (which would likely take years and could implicate Google, Apple and other edge/tech companies), threatening that reclassification would chill broadband investment, and working to develop industry principles to address government's concerns on net neutrality and consumer protection."

GigaOm warns: "While this decision does throw the FCC's current network neutrality rule-making into disarray, it also could affect the agency's attempts to regulate a wide variety of broadband issues, including how broadband providers tell consumers what their true Internet speeds are, as well as how the agency can enact universal service fund reform and set privacy rules on the Internet."

Read the whole story at The Wall Street Journal et al. »