The Supreme Court yesterday rejected the broadband industry's challenge to a New York law that requires Internet providers to offer $15- or $20-per-month service to people with low incomes.
In August, six trade groups representing the cable, telecom, mobile, and satellite industries filed a petition asking the Supreme Court to overturn an appeals court ruling that upheld the state law. But the Supreme Court won't take up the case. The high court denied the telecom groups' petition without comment in a list of orders released yesterday.
Although a US District Court judge blocked the law in 2021, that judge's ruling was reversed by the US Court of Appeals for the 2nd Circuit in April 2024. The Supreme Court's denial of the industry petition leaves the 2nd Circuit ruling in place.
The appeals court ruling is an important one for the broader question of how states can regulate broadband providers when the Federal Communications Commission isn't doing so. Trade groups claimed the state law is preempted by former FCC Chairman Ajit Pai's repeal of net neutrality rules, which ended Title II common-carrier regulation of ISPs.
In a 2-1 opinion, a panel of 2nd Circuit appeals court judges said the Pai-era FCC "order stripped the agency of its authority to regulate the rates charged for broadband Internet, and a federal agency cannot exclude states from regulating in an area where the agency itself lacks regulatory authority."
The FCC's current chair, Democrat Jessica Rosenworcel, led a vote to reinstate net neutrality rules and common-carrier regulations. But the 6th Circuit appeals court blocked the net neutrality order from taking effect and is considering whether to block the rules permanently.
ISPs can’t stop states from regulating
ISPs are worried that their success in blocking federal rules will allow New York and other states to regulate. Telco groups told the Supreme Court that the New York law being upheld while federal rules are struck down "will likely lead to more rate regulation absent the Court's intervention. Other States are likely to copy New York once the Attorney General begins enforcing the ABA [Affordable Broadband Act] and New York consumers can buy broadband at below-market rates."
The Supreme Court's denial of the ISPs' petition suggests that the telco groups can't have it both ways—if the FCC doesn't regulate, states can step in. ISPs ran into the same problem when they tried to block California's net neutrality law, which the state enacted after the Pai FCC revoked federal rules.
The Supreme Court petition was filed by the New York State Telecommunications Association, CTIA-The Wireless Association, NTCA-The Rural Broadband Association, USTelecom, ACA Connects-America’s Communications Association, and the Satellite Broadcasting and Communications Association. Cable lobby group NCTA filed a brief supporting the petition.
New York Attorney General Letitia James defended the state law in a Supreme Court brief filed in October. The brief said that when New York enacted its law, the Pai-era FCC "had classified broadband as an information service subject to Title I of the Communications Act. Under Title I, Congress gave the FCC only limited regulatory authority—leaving ample room for States to regulate information services."
Multiple appeals courts have found "that federal law does not broadly preempt state regulations of Title I information services," and "Congress has expressed no intent—much less the requisite clear and manifest intent—to preempt state regulation of Title I information services," the New York brief said. "Applicants’ field preemption claim fails because, far from imposing a pervasive federal regulatory regime on Title I information services, Congress instead gave the FCC only limited authority over information services. Congress thus left the States’ traditional police powers over information services largely untouched."
Law requires $15 price, or $20 for higher speeds
It's unclear when New York might start enforcing its law. The state law was approved in 2021 and required ISPs to offer $15 broadband plans with download speeds of at least 25Mbps, with the $15 being "inclusive of any recurring taxes and fees such as recurring rental fees for service provider equipment required to obtain broadband service and usage fees."
The law also said ISPs could instead choose to comply by offering $20-per-month service with 200Mbps speeds. Price increases would be capped at 2 percent per year, and state officials would periodically review whether minimum required speeds should be raised.
Residents who meet income eligibility requirements would qualify for the plans. ISPs with 20,000 or fewer subscribers would be allowed to apply for exemptions from the law.
The New York attorney general's Supreme Court brief argued that public-interest factors "weigh heavily in favor of allowing" the law, and that it won't create the economic problems that telco groups warned of. "The three largest broadband providers in New York are already offering an affordable broadband product to low-income consumers irrespective of the ABA, and smaller broadband providers can seek an exemption from the ABA’s requirements," the brief said.
