Victory for ISPs —
$15 requirement is rate regulation and preempted by federal law, ruling says.
Jon Brodkin
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On Friday, the broadband industry won a court order that prohibits New York from enforcing a state law that would require ISPs to sell $15-per-month broadband plans to low-income households.
Lobby groups for ISPs sued New York to block the law that was scheduled to take effect on June 15 and received a preliminary injunction today from US District Court for the Eastern District of New York. The state law is preempted by federal law, US District Judge Denis Hurley wrote in the order. While the case will continue, Hurley found that the industry is likely to succeed in its lawsuit.
The Affordable Broadband Act (ABA) would require ISPs to offer “all qualifying low-income households at least two Internet access plans: (i) download speeds of at least 25 megabits-per-second at no more than $15-per-month, or (ii) download speeds of at least 200 megabits-per-second at no more than $20-per-month,” the ruling noted. The low-income qualifications specified by the law cover about 7 million New Yorkers in 2.7 million households, over one-third of all households in the state. The law allows exceptions to the minimum-speed requirement “where such download speed is not reasonably practicable.”
$15 requirement “is rate regulation”
The New York law “is rate regulation, and rate regulation is a form of common carrier treatment,” Hurley wrote, rejecting arguments made by New York Attorney General Letitia James. he continued:
In Defendant’s words, the ABA concerns “Plaintiffs’ pricing practices” by creating a “price regime” that “set[s] a price ceiling,” which flatly contradicts her simultaneous assertion that “the ABA does not ‘rate regulate’ broadband services.” “Price ceilings” regulate rates.
The judge rejected New York’s argument that the Federal Communications Commission abandoned “its authority to regulate broadband at all” when Chairman Ajit Pai led a vote to undo the common-carrier classification that was imposed on ISPs during the Obama era.
“In reclassifying broadband Internet as a Title I information service, the FCC made the affirmative decision not to treat it as a common carrier,” the judge wrote. “The FCC’s affirmative decision is different from an abdication of jurisdiction writ large, even though Title I may not confer as expansive of powers as, say, Title II and its grant to impose common-carrier obligations.”
Hurley quoted from the Supreme Court’s Brand X ruling from 2005, which said that information-service providers “are not subject to mandatory common-carrier regulation under Title II, though the Commission has jurisdiction to impose additional regulatory obligations under its Title I ancillary jurisdiction to regulate interstate and foreign communications.”
Ultimately, the New York law “conflicts with the implied preemptive effect of both the FCC’s 2018 Order and the Communications Act,” Hurley wrote.
The FCC’s preemption power is limited. Pai tried to preempt all state net neutrality laws, even ones that didn’t exist at the time of his order, and was rebuffed in court. But Hurley decided that the ruling in that separate case “does not preclude or revoke the 2018 Order’s implicit preemptive effect.”
Interstate service
The judge also found that the state law is preempted because it covers an “interstate communication service.” The fact that the law only covers Internet users based in New York does not offset the fact that broadband access itself is an interstate service with transmissions that routinely cross state lines, the judge wrote:
The sole basis on which Defendant relies to call the ABA “intrastate” is its applicability only to “[c]ompanies that have chosen to provide service in New York.” But any state law can be construed as applicable only to those subject to that state’s jurisdiction, which, accordingly, does not make it “intrastate.” “The key to [the FCC’s] jurisdiction,” the line between inter- vs. intrastate, “is the nature of the communication itself rather than the physical location of the technology” or the consumers served.
Because the ABA regulates within the field of interstate communications, it triggers field preemption. Binding Second Circuit decisions are clear: the Communications Act’s “broad scheme for the regulation of interstate service by communications carriers indicates an intent on the part of Congress to occupy the field to the exclusion of state law.”
Hurley found that a preliminary injunction is needed to prevent ISPs from suffering “unrecoverable losses.”
“Beginning June 15, 2021, Plaintiffs will suffer unrecoverable losses increasing with time, and the enormity of the matter—six plaintiffs with multiple member organizations attacking a statute affecting one-third of all New York households—portends a lengthy litigation,” Hurley wrote. The lawsuit against New York was filed by the New York State Telecommunications Association, USTelecom, CTIA–The Wireless Association, NTCA–The Rural Broadband Association, the Satellite Broadcasting & Communications Association, and America’s Communications Association.
Hurley also cited statements from ISPs that suggest the law may “reduce Internet access statewide” by discouraging expansion. “Empire Telephone Corporation’s declarant avers that Empire will have to cancel expansion projects which, if completed, would result in Empire ‘serv[ing] more than 20,000 households,’ thereby disqualifying Empire from an exemption,” Hurley wrote. Providers with fewer than 20,000 residential customers are eligible for exemptions from the law. Hurley quoted two other small ISPs making similar claims.