Internet service providers celebrated four months ago when the Federal Communications Commission voted to eliminate nationwide net neutrality rules that prohibit blocking, throttling, and paid prioritization. But now Internet service providers in California are terrified that they could end up facing even stricter rules being considered by the California legislature.
AT&T and the lobby group that represents Comcast, Charter, Cox, and other cable companies have been making their displeasure known to lawmakers in advance of hearings on a bill that could impose the toughest net neutrality law in the nation.
AT&T and the California Cable & Telecommunications Association (CCTA) have privately distributed documents to lawmakers describing the ways in which the proposed bill is allegedly too strict compared to the FCC rules that are slated to be taken off the books.
ISPs preferred FCC rules (which they helped kill)
The industry-authored bill analyses were provided to Ars by supporters of the California net neutrality bill, which was submitted by state Sen. Scott Wiener (D-San Francisco). You can read the AT&T document here and the CCTA document here.
The AT&T and CCTA bill analyses demonstrate that AT&T and the CCTA seem to prefer the federal rules over the potential California rules. The documents repeatedly criticize Wiener’s bill for going beyond the FCC rules and argue that the FCC’s 2015 net neutrality order did a better job defining all the relevant terms to prevent confusion about what the rules actually meant. (Wiener disputes the ISPs’ claims.)
The documents themselves do not identify who wrote them, but a representative from Wiener’s office confirmed to Ars that the bill analyses were distributed to lawmakers last week by AT&T and CCTA lobbyists. The documents were sent to lawmakers via email and “dropped off in physical copies to certain offices of members of the [Senate Energy, Utilities, and Communications] Committee,” Wiener’s office told us.
It’s not clear if every member of the committee received the AT&T and CCTA documents.
The industry lobbying may already be having an impact on lawmakers. A new Senate committee analysis of the bill recommends amendments that would make it weaker by cutting some of the more controversial parts.
The broadband industry’s lobbying against this bill has been “intense and comprehensive,” Wiener told Ars in a phone interview. ISP lobbyists are “trying to create the inaccurate impression among legislators that the bill deviates significantly from the 2015 FCC order,” he said.
Wiener said that his bill doesn’t exactly match the FCC rules, because the state has to regulate differently than the federal government. But in general, he says his bill imposes the same basic rules the FCC did.
ISPs have been telling lawmakers that they shouldn’t have to face a “patchwork” of different state laws throughout the country, but Wiener isn’t buying it.
“You can’t go and get federal net neutrality protections repealed and then be surprised and indignant and complain that states are stepping in to protect consumers and the economy,” he said.
The Energy, Utilities, and Communications Committee is scheduled to discuss the bill in a hearing tomorrow and will likely vote on it. The vote is a key milestone that could kill the bill if telecom lobbyists are able to rally senators against it.
“I think we’ll get it out of committee tomorrow,” Wiener said. There will be some negotiation on how the bill will be amended, with Wiener attempting to avoid amendments that weaken the potential net neutrality law.
There are multiple net neutrality proposals in the California legislature. If Wiener’s bill is shelved entirely, it’s possible that the California legislature could still impose a less-strict net neutrality law.
Be careful what you lobby for
AT&T’s analysis compares the text of Wiener’s bill to the FCC rules and provides “commentary” on the differences. The analysis complains that Wiener’s bill is too strict in restricting paid prioritization and zero-rating.
“Recognizing that there may be instances in which paid prioritization is beneficial, the FCC [rules allowed the FCC to] waive the ban if the petitioner demonstrated the practice would provide some significant public interest benefit and would not harm the open nature of the Internet,” AT&T wrote. By contrast, Wiener’s bill “does not provide for any waiver of the ban.”
The FCC did not ban zero-rating, instead opting to review zero-rating implementations on a case-by-case basis. (The FCC in January 2017 said that AT&T’s version of zero-rating violated net neutrality, but that finding was rescinded after Republican Ajit Pai took over the chairmanship.)
AT&T said that Wiener’s bill is more strict because it “would effectively ban any zero-rating. Consumers in California have been enjoying the benefits of zero-rating since before the 2015 Order without evidence of any threat to an open Internet or to competition.”
Wiener disputed the notion that he’s trying to impose a total ban on zero-rating, saying that his bill would allow data cap exemptions that are not anti-competitive. For example, an ISP could zero-rate all data generated by online gaming if it allowed any gaming company to benefit from the data cap exemption, he said.
Wiener said his bill does differ significantly from the FCC rules in one aspect. The FCC implemented a “general conduct rule” that covers anti-competitive or anti-consumer behavior in general, with the FCC determining on a case-by-case basis whether any particular practice violates the rule.
Implementing that in California “would require making the California Public Utilities Commission [CPUC] a utility-style regulator of the broadband companies” and require a bigger budget, Wiener said. But ISPs are vehemently opposed to utility-style regulations, he said.
“If they don’t want the CPUC to be a case-by-case regulator under a general conduct rule, the alternative is to create clear rules,” Wiener said. “That’s what we’ve done in the bill.”
The proposed rules in Wiener’s bill “were all in the 2015 FCC order” in some form, Wiener argued. “We are just approaching them in a different way because of the position we’re in as a state as opposed to the FCC.”
Wiener said this different approach is true of several aspects of his bill, including its restrictions on zero-rating and peering, the network interconnection agreements in which online services can pay ISPs for direct connections to their networks.
While the FCC subjected peering agreements to case-by-case reviews, Wiener’s bill says that interconnection payment demands would be illegal if they have “the purpose or effect of circumventing or undermining the effectiveness” of the net neutrality rules. In other words, ISPs could be held liable if consumers suffer because of business disputes, as happened when Netflix battled Comcast and other ISPs over interconnection payments a few years ago.
AT&T argued that Wiener’s proposal for interconnection agreements is “vague and overbroad” and “would bring Internet traffic-exchange agreements under the microscope and certain practices that benefit all parties could be prohibited.”
Wiener may have trouble getting the zero-rating and interconnection parts of his bill through the committee vote. A bill analysis issued by the committee said lawmakers “may wish to consider removing provisions prohibiting zero-rating and peering agreements” if they intend to “conform this bill’s scope to that of the FCC’s 2015 Open Internet order.”
When contacted by Ars, an AT&T spokesperson provided this statement: “We have been clear about our support for an open Internet. This bill introduces an entirely new regulatory scheme of CPUC regulation of the Internet that will harm the state’s Internet economy by reducing competition and investment leading to less innovative products and services.”
Cable companies make their case
The CCTA bill analysis was similar to AT&T’s. The cable lobby complained that Wiener’s paid prioritization and zero-rating restrictions are too strict. For example, the CCTA said that the paid prioritization ban does not include “a waiver of this ban if the practice would provide some significant public interest benefit.”
We contacted CCTA and will update this story if we get a response.
The proposed restriction on paid interconnection agreements is also too broad, the CCTA argued in its bill analysis. “Some of the biggest edge providers, like Google, Amazon and Netﬂix, have negotiated special arrangements,” the cable lobby document says. “This provision, read literally, seems to completely upend the market for interconnection and seems to mandate ‘free’ interconnection or prohibit negotiated arrangements.”
The CCTA analysis also argues that the FCC’s repeal of federal net neutrality rules preempts states from taking any action to protect net neutrality.
Separately from the documents shared privately with lawmakers, CCTA and the USTelecom lobby group have written public letters to lawmakers opposing Wiener’s bill. The Electronic Frontier Foundation published an analysis of those letters last week.
The CCTA’s public letter said that “cable ISPs unequivocally support an open Internet” but claimed that Wiener’s bill “is unlawful, discriminatory, and unnecessary.”
Besides lobbying directly for or against specific bills, ISPs are frequent donors to lawmakers. But Wiener said he thinks the net neutrality legislation will get a fair hearing.
“I’ve taken donations from AT&T and Verizon; I have great relationships with them,” Wiener said. Wiener said he agrees with the ISPs on some issues, even though he is “at war with them” on net neutrality and said that broadband lobbyists are trying to confuse lawmakers about the effects of his bill.
“I don’t put too much stock into the issue of political donations,” Wiener said. “In the end, members vote [for the interests of] their district.”