An appeals court's ruling this week that the Federal Communications Commission overstepped when it punished Comcast for throttling service to bandwidth-hogging customers could undermine the Obama administration's push for network neutrality on the Internet.

The ruling may free up Internet service providers to charge more for broadband speed, or slow or block access to certain sites. Network neutrality proponents, a group that includes the FCC, believe ISPs should treat all end users and Web site publishers equally, regardless of how much bandwidth they consume.

The U.S. Appeals Court for the District of Columbia on Tuesday ruled the FCC was not within its jurisdiction to tell Comcast whether or not it can limit access to the Internet to certain heavy broadband users.

The case stems from an action the FCC took in August 2008, when the agency tried to stop Comcast from slowing traffic for people who were using the BitTorrent P2P service.

The ruling would appear to set a precedent that allows Internet providers to control broadband service as they see fit. Operators of broadband-heavy sites may now have to pay more if they want to deliver content at high speeds. That could impact a range of Web sites, including Google's YouTube and Microsoft's MSN.com.

It also means companies like Comcast, Time Warner Cable and other ISPs can slow traffic coming in and out of certain sites or services, or even block access to them if they wish.

In a statement, the FCC said the decision "invalidated the prior Commission's approach to preserving an open Internet." However, the court did not completely shoot down the FCC's notion of "preserving a free and open Internet," the FCC said, so it seems likely it will appeal the decision.

In a statement, Comcast said it was "gratified" by the decision and will continue to work "constructively" with the FCC "to preserve an open and vibrant Internet."

The ruling came down to whether the FCC had what it calls "ancillary" authority to regulate Internet service provider's control of the networks that power the Internet. Ancillary authority is a term that refers to power not given by a specific statute " in this case, the Telecommunications Act of 1996 -- but is assumed over time through court decisions.

While it acknowledged the FCC over the years has gained more regulatory authority as the Internet evolved, the court said the Commission "failed to tie its assertion of ancillary authority over Comcast's Internet service to any 'statutorily mandated responsibility.'"

InformationWeek has published a report on robust next-generation LANs. Download the report here (registration required).