Wednesday, May 05, 2021

New York's Rate Regulation of Broadband Services Is Bad Law

On April 30, broadband Internet service providers in New York filed a lawsuit challenging that state's new law imposing price controls on broadband services. The lawsuit in New York State Telecommunications Association v. James, is straightforward and should result in a court declaring New York's law to be federally preempted. 

The FCC's 2018 Restoring Internet Freedom Order eliminated Title II common carrier regulation of broadband Internet access services and declared them to be Title I information services. Importantly, the Commission's repeal of the old rules and its Title I reclassification decision was upheld by the D.C. Circuit in Mozilla v. FCC (2019). By virtue of Title I reclassification well as precedent such as the D.C. Circuit's decision in Verizon v. FCC (2014), common carrier treatment of broadband Internet access services by a state – including rate regulation – conflicts with federal law. 

A persuasive case also can be made that any rate regulation of broadband Internet access services by a state is subject to field preemption. Broadband network operations transcend state borders and broadband services constitute interstate commerce. 

Included in its 2022 budget law, the State of New York requires broadband Internet service providers to offer ostensibly low-income persons high-speed broadband services for $15 per month. But according to the legal complaint, this requirement could apply to perhaps 35% of households in New York. Moreover, New York's rate regulation requirement appears totally oblivious to other affordability measures already in place, including the temporary $50 Emergency Broadband Benefit subsidy recently established by Congress, as well as Lifeline discounts of $9.25 per month for subscribers of broadband Internet services. Additionally, private market providers such as Comcast and AT&T offer steep discount programs to low-income Americans. 

As already indicated, New York's law is also oblivious to federal law. The case is now pending in the U.S. District Court for the Eastern District of New York. Expect the state's rate regulation law to be preempted.