By: Andrew Regitsky
With the Ninth Circuit Court of Appeals rejecting ISPs appeals for a rehearing by the entire Court, the California Net Neutrality Law is in effect for the foreseeable future. That Law is even more stringent than the FCC’s short-lived Net Neutrality Order which restored Title II broadband regulation but did not forbid zero-rated services. The California Law does. It is just a matter of time until other states follow California’s lead, leading to a state-by-state patchwork of Internet rules for what almost everyone agrees is a primarily interstate service.
While ISPs could appeal the Ninth Circuit’s opinion to the Supreme Court, it is debatable whether the High Court would even accept the case since only one state and one court is involved.
Moreover, as soon a fifth FCC and third Democratic Commissioner is confirmed ISPs will soon face a federal Net Neutrality Order which will restore Title II broadband regulation. ISPs have been lucky until now in that President Biden chose a candidate so far out of the mainstream in Gigi Sohn that even some Democrats are hesitant to approve her. Sooner-or-later, however, Sohn will either withdraw her nomination and a person with a more conciliatory voice, but with the same views will be approved, or she’ll squeak in. Either way, the day of reckoning for ISPs is coming.
FCC Commissioners will state publicly that they don’t support broadband price controls but implementing Title II regulation belies these claims. Title II invites complaints about ISP pricing on its face. As the Free State Foundation notes in an April 12, 2022, paper:
Title II is a rate regulation regime because the key provisions in Sections 201(b) and 202(a) provide that “all charges” must be “just and reasonable” and that it is “unlawful for any common carrier to make any unjust or unreasonable discrimination in charges.” The Restoring Internet Freedom Order expressly recognized the likely harm to investment posed by the prospective use of those provisions when it repealed the Title II regulation. As the RIF [Restoring Internet Freedom] Order observed, “the Title II Order did not forbear from ex post enforcement actions related to subscriber charges, raising concerns that ex post price regulation was very much a possibility.” Concerns about ex post rate regulation would loom large under a revived Title II Order. In such a scenario, the Commission would have a duty to consider complaints that rates charged by broadband ISPs violate Sections 201(b) or 202(a).
Second, the Title II Order’s ban on paid prioritization involves rate regulation because it effectively sets a rate of $0 for delivering data with quality-guaranteed service over last-mile broadband networks.
Third, the Title II Order’s subjection of network interconnection to regulatory intervention is rate regulation because the Commission necessarily would become involved in reviewing rates that broadband ISPs charge for peering or transit service.
Finally, any curtailment or modification of “free data” mobile broadband plans – sometimes also called “sponsored data” or “zero-rating” plans – necessarily constitutes rate regulation because it involves the Commission restricting usage categories that are subject to a rate charge of $0 when a subscriber’s usage exceeds his or her monthly data allotments. (“The FCC Should Keep Broadband Free from Rate Regulation,” by Randolph J. May and Seth L. Cooper, Perspectives from FSF Scholars, published on the freestatefoundation.org. Website on April 12, 2022.)
But what can ISPs do? They can continue to appeal to Congress to act but there is no sign that they will. Even though there is agreement on most broadband issues, the political parties will never agree on Title II.
ISPs can boost their public advertising. But that’s a long shot. Public support is stacked against ISPs no matter how successful their broadband services are. That means that once the FCC reinstates Title II ISPs must take to the courts. Their best hope is the Supreme Court which leans conservative. In our opinion, forget appealing California. It will almost certainly be superseded by a federal court on the upcoming FCC Order. However, that decision is likely years away, leaving the industry to muddle along. It won’t be pretty!