Broadband Cable Association of Pennsylvania

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September 10, 2013

In a momentous battle over whether the Web should remain free and open, members of a federal appeals court expressed doubt over a government requirement that Internet service providers treat all traffic equally.On Monday, the Federal Communications Commission and Verizon, one of the largest Internet service providers, squared off in a two-hour session of oral arguments - three times as long as was scheduled. As Verizon pushed for the authority to manage its own pipes, the government argued that creators of legal content should have equal access to Internet users, lest big players gain an unfair advantage.

But two judges appeared deeply skeptical that the F.C.C. had the authority to regulate the Internet in that manner. The two jurists, Judge Laurence H. Silberman and Judge David S. Tatel, said that the agency's anti-discrimination rule - which requires an Internet service provider to give all traffic that travels through its pipes the same priority - illegally imposed rules meant for telephones on the infrastructure of the Web. The F.C.C. itself disallowed the telephone-type regulation a decade ago. The third judge, Judith W. Rogers, did not ask as many questions but appeared to accept much of the F.C.C.'s position.

Consumers could experience a significant change in the Internet if the United States Court of Appeals for the District of Columbia Circuit strikes down the F.C.C.'s requirement, called the Open Internet Order. Currently, companies that offer goods or services online do not have to pay anything to get their content to consumers. If Internet service providers started charging fees to reach customers more quickly, large, wealthy companies like Google and Facebook would have an edge, the F.C.C. says. The government argued that such a tiered service could cause small, start-up companies with little money to pay for their access - the next Google or Facebook, perhaps - to wither on the vine. In any case, the added costs would be likely to be passed on to consumers.

The case, which is expected to be decided late this year or early next year, has attracted enormous interest. On Monday, telecommunications lawyers began lining up to get into the courtroom two and a half hours before the session was scheduled to start. The session was standing room only, with many others left to listen in an adjacent overflow room. The judges were not entirely hostile to the F.C.C.'s arguments. Judge Tatel, who many telecommunications analysts expect to be the swing vote on the case, pushed lawyers on both sides to concede that the part of the F.C.C. rule that prohibits outright blocking of online content or applications could be allowed.

Judge Tatel also queried each side on whether the two main provisions of the Open Internet Order - no blocking and no discrimination - had to be taken as a whole or could be separated, with the no-blocking rule being upheld. An opinion that voided one provision yet upheld the other would be more likely to be appealed to the Supreme Court, telecommunications lawyers said, because neither side would be completely happy with the decision. Helgi C. Walker of the law firm Wiley Rein, who argued the case on behalf of Verizon, said the rules had to be struck down as a whole. Congress never intended the F.C.C. to have authority to regulate the Internet, she said. Sean A. Lev, who argued the case for the agency, told the judges that the F.C.C. did have the authority to govern the Internet under numerous parts of the Telecommunications Act, including one that gives the commission the duty to work to expand broadband access. Companies that have equal access to consumers are encouraged to innovate, Mr. Lev said, adding that it would result in more vibrant start-ups and a growth in demand for Internet service.

The judges themselves seemed intent on viewing the case from as many sides as possible. Each side was scheduled 20 minutes to present its case and answer questions from the justices. But after spending 30 minutes on Verizon's presentation, the judges proceeded to grill the F.C.C.'s lawyer for a full hour. The remainder of the two-hour session was spent hearing from a lawyer representing public-interest groups, who joined the lawsuit on the F.C.C.'s side, and a rebuttal from Verizon. The F.C.C.'s uphill battle, in part, reflects politics and past decisions by the agency. In 2002, its chairman at the time, Michael K. Powell, a Republican, got the majority of the commission to agree that the Internet was not a telecommunications service like the telephone system. Instead, it classified the Web as an information service, making it subject to much lighter regulation. New York Times

Comcast's NBCUniversal put a television executive in charge of its film studio on Monday, leading to the promotion of one longtime movie manager and the ouster of another. NBCUniversal said that the executive, Jeff Shell, a Comcast insider who has recently been focused on the media conglomerate's international businesses, will take over day-to-day operations at Universal Studios, which includes the Universal and Focus Features labels. For the last 18 years, those duties have fallen to Ron Meyer, who will step into a kind of senior statesman role across the company.

By naming one of its own to succeed Mr. Meyer - rather than promoting a Universal executive - Comcast signaled that the movie studio is now firmly nested inside a corporate structure that cares as much about funneling content to cable video-on-demand services as it does about theatrical hits. Comcast has made multiple changes on the television side of NBCUniversal, but it has largely left the film and theme park unit alone, leading to speculation about its future. "I have worked with him for over a decade and have been consistently impressed by his strategic vision, operational focus and energy," Steve Burke, NBCUniversal's chief executive, said of Mr. Shell in a statement.

Adam Fogelson, the chairman of Universal Pictures, will leave the company after 15 years. A former movie marketer, Mr. Fogelson found hits in films like "Fast & Furious 6," "Despicable Me 2" and "Ted" - notably leaving behind a long fallow period for the studio. But Mr. Fogelson was also behind flops like "R.I.P.D." and "Battleship." Coming up is "47 Ronin," a samurai film that has suffered cost overruns. Mr. Fogelson's deputy, Donna Langley, will take over his job. "She has been a driving force behind Universal's current successes," Mr. Burke said.

Mr. Meyer, 68, the longest-serving chief of a major studio, will become the vice chairman of NBCUniversal, which Comcast bought in 2011. A consummate Hollywood player - he co-founded Creative Artists Agency - Mr. Meyer is known for leading Universal through disruptive ownership changes; the studio has been bought and sold at least four times in recent decades. Regime change has recently been sweeping Hollywood. Universal joins 20th Century Fox, Walt Disney Studios and Warner Brothers, all of which have undergone executive shuffling over the last year and a half, for various reasons.

The continued presence of Mr. Meyer, who was signed to a contract that extends into 2017, is intended in part to ensure stability while Mr. Shell, 48, who is not known in film circles, gets up to speed. Mr. Shell helped manage overseas film distribution and marketing as chairman of NBCUniversal International, but he has largely spent his career in television. He previously ran Comcast's cable networks, which include E! and Style. Before joining Comcast, Mr. Shell was chief executive of TV Guide International. Earlier in his career, he logged time at News Corporation, where he helped oversee Fox Sports, FX and the National Geographic Channel. New York Times

Mark Critz, a former Democratic congressman from Johnstown, officially filed the paperwork today to run for the nomination for Pennsylvania's lieutenant governor next year. In a press release, Mr. Critz said he felt compelled to run because policies pushed by Republican Gov. Tom Corbett have failed to create jobs and reduced funding for public education. "We need leaders in Harrisburg who are committed to creating good paying jobs that grow the middle class and will fight to fully fund our schools so that every child has the skills they need to succeed," Mr. Critz said in the release.

Mr. Critz was an aide to the late U.S. Rep. John Murtha and won a special election to complete his term, serving another two-year term after that. But redistricting after the 2010 census left his district combined with that of another Democrat, Jason Altmire. Mr. Critz defeated Mr. Altmire in the primary last year then lost to Republican Keith Rothfus in the general election. Brad Koplinske, a Harrisburg city councilman, previously announced he would run for lieutenant governor. Pittsburgh Post-Gazette

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