US trade groups challenge California’s Internet Bill

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US trade bodies CTIA, USTelecom, NCTA and ACA – representing America’s broadband providers – have filed a joint lawsuit in federal court challenging the State of California’s Internet Bill (SB 822), which was intended to restore the protections put in place by a (now-rescinded) 2015 FCC Order, as well as closing ‘loopholes’ that its backers said could have allowed anti-competitive forms of zero-rating.

In a joint statement, the say: “The nation’s broadband providers are the innovation engine of America’s digital economy and remain committed to an open Internet for consumers. We oppose California’s action to regulate Internet access because it threatens to negatively affect services for millions of consumers and harm new investment and economic growth. Republican and Democratic administrations, time and again, have embraced the notion that actions like this are preempted by federal law. We believe the courts will continue to uphold that fundamental principle. Meanwhile, we will continue our work to ensure Congress adopts bipartisan legislation to create a permanent framework for protecting the open Internet that consumers expect and deserve.”

The move follows that of the US Justice Department (DoJ), who on September 30th filed a lawsuit against the state of California alleging that the bill signed into law earlier that day by Governor Jerry Brown unlawfully imposes burdens on the Federal Government’s deregulatory approach to the Internet.

According to the DoJ, in 1996, a bipartisan Congress decided that the Internet should remain “unfettered by Federal or State regulation”. Since 2002, the FCC has accordingly classified broadband Internet access as an ‘information service’ that is exempt from public-utility regulations. The FCC briefly departed from this classification in a 2015 Order, which imposed restrictions on the freedom of the Internet. In 2018, the FCC returned to its prior light-touch framework, ensuring that Internet access services are free and guided by a uniform set of federal rules, rather than by a patchwork of state and local regulations. The United States concluded that California, through Senate Bill 822, is attempting to subvert the Federal Government’s deregulatory approach by imposing burdensome state regulations on the free Internet, which is unlawful and anti-consumer.

In filing the complaint, Attorney General Jeff Sessions said: “Under the Constitution, states do not regulate interstate commerce—the federal government does. Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy. The Justice Department should not have to spend valuable time and resources to file this suit today, but we have a duty to defend the prerogatives of the federal government and protect our Constitutional order. We will do so with vigor. We are confident that we will prevail in this case—because the facts are on our side.”

“I’m pleased the Department of Justice has filed this suit,” commented FCC Chairman Ajit Pai. “The Internet is inherently an interstate information service. As such, only the federal government can set policy in this area. And the U.S. Court of Appeals for the Eighth Circuit recently reaffirmed that state regulation of information services is preempted by federal law.

“Not only is California’s Internet regulation law illegal, it also hurts consumers. The law prohibits many free-data plans, which allow consumers to stream video, music, and the like exempt from any data limits. They have proven enormously popular in the marketplace, especially among lower-income Americans. But notwithstanding the consumer benefits, this state law bans them.

“The Internet is free and open today, and it will continue to be under the light-touch protections of the FCC’s Restoring Internet Freedom Order. I look forward to working with my colleagues and the Department of Justice to ensure the Internet remains ‘unfettered by Federal or State regulation’, as federal law requires, and the domain of engineers, entrepreneurs, and technologists, not lawyers and bureaucrats.”

Stanford professor Barbara van Schewick said that like the 2015 Order, SB 822 ensures that Californians, not the companies they pay to get online, get to be in control of what sites, apps and services they use. “SB 822 bans ISPs from blocking, throttling, and charging websites fees for access to the ISP’s subscribers or for fast lanes, which will protect California’s economic growth, innovation economy and democratic engagement.”


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