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The U.S. Court of Appeals has ruled (pdf) that the FCC lacks the authority to demand that Internet service providers like Comcast have to offer equal access to anyone who wants to connect to their network. A three-judge panel in Washington, D.C., unanimously tossed out the FCC’s August 2008 cease and desist order against Comcast.

The ruling is a blow for net-neutrality proponents, reports the NY Times, and could impact the National Broadband Plan, say observers. The court’s decision comes just days before the FCC accepts final comments on a separate open Internet regulatory effort this Thursday.

The case dates back to 2007, when Comcast started blocking some peer-to-peer networking applications that it said consumed too much network bandwidth. Some opponents believed Comcast was degrading traffic from BitTorrent because it competed against Comcast’s on-demand video offering.

Two net-neutrality proponents, Public Knowledge and Free Press, complained to the FCC that the Internet Service Provider shouldn’t be able to decide which applications should run on the network.

“As a result of this decision, the FCC has virtually no power to stop Comcast from blocking Web sites,” added Derek Turner, research director for Free Press.

The FCC on Tuesday described the ruling as an invalidation of the agency’s “approach,” but not its ultimate goal, reports The Hill.

In a statement (pdf) the agency’s top spokeswoman stressed the FCC would not back down from the net neutrality fight.

“The FCC is firmly committed to promoting an open Internet and to policies that will bring the enormous benefits of broadband to all Americans,” spokeswoman Jen Howard (right) said. “It will rest these policies — all of which will be designed to foster innovation and investment while protecting and empowering consumers — on a solid legal foundation.”

The ruling would allow Comcast and other ISPs to restrict consumers’ ability to access certain kinds of Internet content, such as video sites like Hulu.com or Google’s YouTube service, or charge certain heavy users of their networks more money for access.

Google, Microsoft and other big producers of Web content have argued that such controls or pricing policies would thwart innovation and customer choice.

The decision could reinvigorate dormant efforts in Congress to pass a federal law specifically governing net neutrality, a principle generally supported by the Obama administration, reports the NY Times.

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