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DoJ Slaps California With Net Neutrality Suit

Jeff Baumgartner
10/1/2018
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After California Governor Jerry Brown signed a tough network neutrality bill into law Sunday, the US Department of Justice moved ahead swiftly with a lawsuit that aims to snuff out that state-backed effort.

The lawsuit, filed by US Department of Justice with the US District Court, Eastern District of California, claims that the state's bold move "unlawfully imposes burdens on the Federal Government's deregulatory approach to the Internet."

The suit also argues that the California law (SB-822) is invalid under the Supremacy Clause, holding that it is pre-empted by federal law that takes precedence over state law, referring to the Federal Communications Commission (FCC) 's Restoring Internet Freedom order released in January. The DoJ is seeking an order that "preliminarily and permanently" enjoins enforcement of the provisions of SB-822. (See US DoJ Files Net Neutrality Suit Against California and States Challenge FCC 'Internet Freedom' Order.)

The bill just signed by Governor Brown cleared the California State Assembly in late August and was drafted to counter the FCC's order to roll back the network neutrality rules developed under previous FCC Chairman Tom Wheeler. (See FCC Nixes Net Neutrality Rules on June 11.)

California's law takes a hard stance on network neutrality with some so-called "bright line rules" that extended beyond those that were included in the FCC rules before being rolled back. In addition to banning blocking and throttling and paid prioritization, SB-822 also takes aim at paid interconnection agreements and zero-rating policies, which are used by some ISPs, including mobile carriers, to exempt certain traffic (such as music and video) from the service provider's data usage policy.

With respect to paid interconnections, those are commonplace today and include deals such as those signed between Netflix Inc. (Nasdaq: NFLX) and such ISPs as AT&T Inc. (NYSE: T), Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Verizon Communications Inc. (NYSE: VZ). The FCC had earlier declined to target zero-rating policies across the board, opting instead to look at them on a case-by-case basis. (See Netflix, TWC Sign Pay-to-Peer Deal and Netflix Adds AT&T to Pay-to-Peer List.)

The DoJ also fears that SB-822's focus on Specialized Services Provisions are so broad that they could "even apply to a provider prioritizing its co-packaged pay-TV services," an apparent reference to managed IPTV services.


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In a statement, FCC Chairman Ajit Pai, who has led the FCC's effort to roll back its previous net neutrality rules, held that the Internet "is inherently an interstate information service" so "only the federal government can set policy in this area." He also argued that the prohibition on zero-rating policies could be harmful to lower-income Americans.

Last month, AT&T Chairman and CEO Randall Stephenson urged Congress to develop federal laws for network neutrality in part because it would be difficult, if not impossible, for ISPs and other Internet companies to adhere to multiple (and likely different) state laws. (See Congress Must Act on Network Neutrality, AT&T CEO Says .)

"I don't even know how companies like ours or Google or Facebook … operate in an environment like that. The need for legislation is pressing," he said then.

The American Cable Association (ACA) , a group that represents the interests of smaller, independent cable operators, supports the DoJ lawsuit. The ACA also called for Congress to step in and adopt national legislation that would codify the "three bright line rules" of no blocking, no throttling and no unreasonable paid prioritization.

"[I]f the California law were permitted to go into effect, it would harm consumers by stymying small and medium-sized ISPs' investments in broadband networks in the state and the deployment of innovative services," ACA President and CEO Matthew Polka said in a statement.

— Jeff Baumgartner, Senior Editor, Light Reading

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Clifton K Morris
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Clifton K Morris,
User Rank: Lightning
10/1/2018 | 4:30:17 PM
Re: A 'hefty thank you' to California from Jessica Rosenworcel
It seems Rosenworcel understands internet services very well. Still, consumers are entering into (sometimes) a contractual obligation that includes the exchange of money in exchange for a service. Granted, the end service delivered is intangible but relies on very real peering agreements, permitting, access to municipal easements, power, more.

5G in millimeter band is equally interesting, because antennas are non-secure public property. Do local municipalities also have to cover the cost to investigate, repair, replace microcells installed on public land if a car accident occurs. In the past, carriers paid for fencing around the assets they own as well.

5G is an interesting set of technology but it’s very doubtful with all the legal and political positioning occurring that customer will ever see the amount billed for services go down, even in the light of transferring tower asset management to local municipalities under eminent domain, and reversal of classification from being a “utility”.

Next, a customer of anything, including intangible services (such as services like investment advice) are often highly regulated to ensure the product meets customer expectations of the advertisements, and not harm the customer with an obligation to pay for services marketing teams don’t understand. When services fail to meet expectations, customers still need a process for a refund, over-reaching claims to the service capability also needs to be managed.

What Ajit Pai has stood up for, as a government authority, is something strange, yet new. I don’t believe in the history of government that any Government Authority has fought against consumer protections like this.

California should subpoena and sue, appeals are likely to be needed too. But they’ll need someone with experience in “intangible property” and can build a strong case. I’d recommend Irell & Manella for counsel. Morgan Chu is a truly gifted trial lawyer. I met him at a recent law school speaking engagement.
Jeff Baumgartner
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Jeff Baumgartner,
User Rank: Light Sabre
10/1/2018 | 4:00:28 PM
A 'hefty thank you' to California from Jessica Rosenworcel
FCC Commissioner Jessica Rosenworcel is on California's side in this matter, arguing again that the FCC "got it wrong" when it rolled back the rules. Here's here statement:

 "Yesterday, California Governor Jerry Brown signed a net neutrality bill into law.  A hefty thank you to the Golden State for your effort to get right what the FCC got wrong when it wiped out our open internet protections late last year.  The FCC's misguided decision to roll back net neutrality gave broadband providers the green light to block websites, throttle services, and censor online content.  That's why the California law is a welcome development—it's good for consumers, good for businesses, and good for anyone who connects and creates online.     

 The Department of Justice has signaled that it will challenge California's new law in court.  Regrettably, this confirms that Washington is not listening to the American people.   But I remain hopeful because the fight to save net neutrality lives on in the courts, in governors' actions, in state legislatures, in big cities and small towns, and with citizens across the country."

 

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Sr.Embed22197
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Sr.Embed22197,
User Rank: Light Beer
10/1/2018 | 1:40:50 PM
You got what you asked for, not what you wanted
"I don't even know how companies like ours or Google or Facebook ... operate in an environment like that. The need for legislation is pressing," he said then.

 

Hey, it's simple, stop screwing with traffic.  You're a utility, act like one.  When you don't, you'll get legislation, you won't like it.
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