Last year’s FCC decision to repeal net neutrality was arguably the most unpopular tech policy decision in the history of the modern internet. The repeal not only resulted in an unprecedented public backlash, but prompted numerous states to immediately begin exploring new state-level alternatives in the wake of the FCC’s retreat. Now, instead of one fight on the federal level, telecom giants like AT&T, Verizon and Comcast face countless state-level efforts to keep their monopoly power in check.
On the federal level, the FCC’s “Restoring Internet Freedom” order not only obliterated popular net neutrality rules, but crippled the agency’s ability to protect consumers from a seemingly endless parade of bad ISP behavior, from historically terrible customer service and obnoxious fees to skyrocketing broadband prices. For most Americans the message was crystal clear: the financial interests of AT&T, Verizon and Comcast supercede that of the American consumer and the health of the internet.
But the broadband industry’s victory on net neutrality quickly soured, as more than half the states in the union began exploring their own state-level protections. From executive orders in Montana banning states from doing business with anti-competitive ISPs to a new net neutrality law in Washington, state lawmakers have quickly picked up the slack in the face of federal apathy.
“I have yet to find an example of a federal agency surrendering its authority... but simultaneously having the power to block states”
The most publicized state-level battle has been in California, where Senator Scott Wiener has spent months pushing SB822, a state-level replacement to the FCC’s discarded federal rules, and a law many see as the gold standard for other states to follow.
The bill had a rocky start, with an early incarnation scuttled in committee thanks to ISP lobbyist gamesmanship. The broadband industry was tied to subsequent efforts to mislead the public as to what the bill does, including a recent robocall effort falsely informing senior citizens the measure would dramatically raise their phone bills.
Despite these efforts, the bill passed in the state assembly with a vote of 61-18 Thursday afternoon, and secured the necessary votes in the Senate on Friday. It now heads to the desk of Governor Jerry Brown for signing. Its success reiterates the activist belief that if net neutrality can’t be saved on the federal level, the fight will have to be fought tooth and nail, state by state.
Predicting such state challenges, both Comcast and Verizon successfully lobbied the FCC to include language in its repeal attempting to “pre-empt” or block states from protecting broadband consumers. The FCC obliged, arguing that the Telecommunications Act of 1996 gave it the authority to pre-empt state law because broadband was an interstate service.
But the courts have limited the FCC’s pre-emption authority in thee past. The previous, Tom Wheeler-run FCC attempted in 2015 to use pre-emption to stop states from passing ISP-backed bills prohibiting towns and cities from building their own broadband networks, in a bid to prevent community-driven broadband competition. The U.S. Court of Appeals for the Sixth Circuit ruled in favor of the states, arguing that Section 706 of the Telecom Act grants no such authority to the FCC. While some of these state laws teeter well into the realm of protectionism, the court made it clear the FCC couldn’t tell states what to do, at least as it pertained to community broadband.
ISPs will still try to use the FCC’s pre-emption language to block state net neutrality efforts, but lawyers like Stanford Law Professor Barbara Van Schewick argue that when the FCC rolled back net neutrality and its Title II authority over ISPs under the Telecom Act, it gave up any authority to dictate state behavior.
This orchestra of dysfunction is entirely the fault of the giant ISPs
In another recent case, Charter Spectrum tried to use this pre-emption language to dismiss a New York state lawsuit over slow speeds and terrible service. But the nation’s second-largest cable operator had its efforts rebuffed by the courts, which ruled the FCC lacks the authority to prevent states from policing “fraud, deception and false advertising.” Charter is now on the cusp of being kicked out of New York State for misleading regulators, an historically-unprecedented response highlighting the growing role of state oversight.
Internet policy experts doubt other ISPs are likely to have any better luck in the wake of recent court rulings. “I have yet to find an example of a federal agency surrendering its authority over an industry but simultaneously having the power to block states,” Ernesto Falcon, Legislative Counsel at the Electronic Frontier Foundation told The Verge. “That is just not how pre-emption works.”
Comcast lobbyists have been trying to make a similar, but “even more flimsy” legal argument in recent meetings at the FTC, Falcon said. It’s part of a broader lobbying effort by ISPs to shift telecom oversight from the FCC to the FTC, an agency with far-less latitude and authority to police anti-competitive behavior by your broadband provider.
While ISPs lobbyists have largely succeeded on the federal level, fighting each individual state will be much harder. The entire west coast is now protected by state-level net neutrality rules, which is far from the victorious end game Comcast, Verizon and AT&T lobbyists envisioned.
That said, ISP lobbying organizations like US Telecom have threatened to “aggressively challenge” any state that tries to protect American consumers. “Every time the FCC moved to promote net neutrality, whether it was a Republican FCC sanctioning Comcast or a Democratic FCC enacting the Open Internet Order, the major ISPs sued to block,” notes Falcon. “I see little reason they won’t sue the states.”
But this orchestra of dysfunction is entirely the fault of the giant ISPs. By lobbying to eliminate modest consumer protections on the federal level, they’ve opened the door to a litany of discordant state-level solutions and endless, costly local legal battles, an ignominious fate for arguably the least-liked industry in America.