Court upholds New York law that says ISPs must offer $15 broadband

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Court upholds New York law that says ISPs must offer $15 broadband

New York obtains significant win for states' ability to regulate broadband.

arstechnica.com

Court upholds New York law that says ISPs must offer $15 broadband​

New York obtains significant win for states' ability to regulate broadband.​

JON BRODKIN - 4/26/2024, 5:10 PM

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A federal appeals court today reversed a ruling that prevented New York from enforcing a law requiring Internet service providers to sell $15 broadband plans to low-income consumers. The ruling is a loss for six trade groups that represent ISPs, although it isn't clear right now whether the law will be enforced.

New York's Affordable Broadband Act (ABA) was blocked in June 2021 by a US District Court judge who ruled that the state law is rate regulation and preempted by federal law. Today, the US Court of Appeals for the 2nd Circuit reversed the ruling and vacated the permanent injunction that barred enforcement of the state law.

For consumers who qualify for means-tested government benefits, the state law requires ISPs to offer "broadband at no more than $15 per month for service of 25Mbps, or $20 per month for high-speed service of 200Mbps," the ruling noted. The law allows for price increases every few years and makes exemptions available to ISPs with fewer than 20,000 customers.

"First, the ABA is not field-preempted by the Communications Act of 1934 (as amended by the Telecommunications Act of 1996), because the Act does not establish a framework of rate regulation that is sufficiently comprehensive to imply that Congress intended to exclude the states from entering the field," a panel of appeals court judges stated in a 2-1 opinion.

Trade groups claimed the state law is preempted by former Federal Communications Commission Chairman Ajit Pai's repeal of net neutrality rules. Pai's repeal placed ISPs under the more forgiving Title I regulatory framework instead of the common-carrier framework in Title II of the Communications Act.

2nd Circuit judges did not find this argument convincing:

Second, the ABA is not conflict-preempted by the Federal Communications Commission's 2018 order classifying broadband as an information service. That 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. Accordingly, we REVERSE the judgment of the district court and VACATE the permanent injunction.

Be careful what you lobby for​

The judges' reasoning is similar to what a different appeals court said in 2019 when it rejected Pai's attempt to preempt all state net neutrality laws. In that case, the US Court of Appeals for the District of Columbia Circuit said that "in any area where the Commission lacks the authority to regulate, it equally lacks the power to preempt state law." In a related case, ISPs were unable to block a California net neutrality law.

Several of the trade groups that sued New York "vociferously lobbied the FCC to classify broadband Internet as a Title I service in order to prevent the FCC from having the authority to regulate them," today's 2nd Circuit ruling said. "At that time, Supreme Court precedent was already clear that when a federal agency lacks the power to regulate, it also lacks the power to preempt. The Plaintiffs now ask us to save them from the foreseeable legal consequences of their own strategic decisions. We cannot."

Judges noted that there are several options for ISPs to try to avoid regulation:

If they believe a requirement to provide Internet to low-income families at a reduced price is unfair or misguided, they have several pathways available to them. They could take it up with the New York State Legislature. They could ask Congress to change the scope of the FCC's Title I authority under the Communications Act. They could ask the FCC to revisit its classification decision, as it has done several times before But they cannot ask this Court to distort well-established principles of administrative law and federalism to strike down a state law they do not like.

Coincidentally, the 2nd Circuit issued its opinion one day after current FCC leadership reclassified broadband again in order to restore net neutrality rules. ISPs might now have a better case for preempting the New York law. The FCC itself won't necessarily try to preempt New York's law, but the agency's net neutrality order does specifically reject rate regulation at the federal level.

Ruling important for state authority, professor says​

Stanford Law Professor Barbara van Schewick said today's ruling provides states with important protections in the event that the FCC ever deregulates broadband again. "Today's decision means that if a future FCC again decided to abdicate its oversight over broadband like it did in 2017, the states have strong legal precedent, across circuits, to institute their own protections or re-activate dormant ones," she said.

Combined with other rulings like the one upholding California's net neutrality law, van Schewick says that "case law is now abundantly clear that if the FCC eliminates its authority over broadband by miscategorizing it as a Title I information service, then the states can step in."

Andrew Jay Schwartzman, senior counselor for the Benton Institute for Broadband & Society, said that "today's decision holds that FCC regulations do not interfere with the states' ability to ensure that their residents have affordable access... This decision provides a roadmap for other states to follow to join New York in doing what the federal government has thus far failed to do."

The dissenting judge in today's 2nd Circuit ruling, Richard Sullivan, wrote that the state law "is field-preempted because the Communications Act preempts all rate regulation of interstate communication services. By its text, the Communications Act grants the FCC authority over 'all interstate' communication services—save for a limited set of state-law prohibitions—while leaving to the states the power to regulate intrastate communications."

States have the power to enforce consumer protection laws. But because "rate regulation was not one of those traditional spheres of state authority, only the FCC retains the authority to regulate rates of interstate communications," he wrote.

Lobby groups disappointed​

Sullivan also argued that the appeals court lacks jurisdiction. "After New York was preliminarily enjoined from enforcing the ABA, it stipulated to judgment against it, and then appealed that stipulated judgment. This was a strategic move," Sullivan wrote.

This tactic "is generally not permitted as a shortcut to appellate review," Sullivan wrote. However, the majority decided that the court has "appellate jurisdiction because the district court plainly rejected the legal basis for New York's preemption defenses, all claims have been disposed of with prejudice, the stipulation was designed solely to obtain immediate appellate review and does not circumvent restrictions on our appellate jurisdiction, and New York expressly preserved the right to appeal."

The lobby groups that sued New York issued a joint statement saying they "are disappointed by the court's decision and New York state's move for rate regulation in competitive industries. It not only discourages the needed investment in our nation's infrastructure, but also potentially risks the sustainability of broadband operations in many areas."

The groups that sued New York are the New York State Telecommunications Association; CTIA; America's Communications Association (formerly the American Cable Association); USTelecom; NTCA-The Rural Broadband Association; and the Satellite Broadcasting and Communications Association. The groups could seek a rehearing before all 2nd Circuit judges or appeal to the Supreme Court. They could also seek preemption on the basis of the FCC's more recent decision to classify broadband under Title II.

 

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[Elim Garak]

Good, it should be cheap, affordable, and widely available.

 

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ISP failed to comply with New York’s $15 broadband law—until Ars got involved

Optimum wasn’t ready to comply with law, rejected low-income man’s request twice.

arstechnica.com

ISP failed to comply with New York’s $15 broadband law—until Ars got involved​

Optimum wasn't ready to comply with law, rejected low-income man's request twice.

Jon Brodkin – Jan 24, 2025 11:42 AM |

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Credit: Getty Images | imagedepotpro

When New York's law requiring $15 or $20 broadband plans for people with low incomes took effect last week, Optimum customer William O'Brien tried to sign up for the cheap Internet service. Since O'Brien is in the Supplemental Nutrition Assistance Program (SNAP), he qualifies for one of the affordable plans that Internet service providers must offer New Yorkers who meet income eligibility requirements.

O'Brien has been paying Optimum $111.20 a month for broadband—$89.99 for the broadband service, $14 in equipment rental fees, a $6 "Network Enhancement Fee," and $1.21 in tax. He was due for a big discount under the New York Affordable Broadband Act (ABA), which says that any ISP with over 20,000 customers must offer either a $15 plan with download speeds of at least 25Mbps or a $20 plan with at least 200Mbps speeds, and that the price must include "any recurring taxes and fees such as recurring rental fees for service provider equipment required to obtain broadband service and usage fees."

Despite qualifying for a low-income plan under the law's criteria, O'Brien's request was denied by Optimum. He reached out to Ars, just like many other people who have read our articles about bad telecom customer service. Usually, these problems are fixed quickly after we reach out to an Internet provider's public relations department on the customer's behalf.

That seemed to be the way it was going, as Optimum's PR team admitted the mistake and told us that a customer relations specialist would reach out to O'Brien and get him on the right plan. But O'Brien was rejected again after that.

We followed up with Optimum's PR team, and they had to intervene a second time to make sure the company gave O'Brien what he's entitled to under the law. The company also updated its marketing materials after we pointed out that its Optimum Advantage Internet webpage still said the low-income plan wasn't available to current customers, former users who disconnected less than 60 days ago, and former customers whose accounts were "not in good standing." The New York law doesn't allow for those kinds of exceptions.

O'Brien is now on a $14.99 plan with 50Mbps download and 5Mbps upload speeds. He was previously on a 100Mbps download plan and had faster upload speeds, but from now on he'll be paying nearly $100 less a month.

Obviously, telecom customers shouldn't ever have to contact a news organization just to get a basic problem solved. But the specter of media coverage usually causes an ISP to take quick action, so it was surprising when O'Brien was rejected a second time. Here's what happened.

“We don’t have that plan”​

O'Brien contacted Optimum (which used to be called Cablevision and is now owned by Altice USA) after learning about the New York law from an Ars article. "I immediately got on Optimum's website to chat with live support but they refused to comply with the act," O'Brien told us on January 15, the day the law took effect.

A transcript of O'Brien's January 15 chat with Optimum shows that the customer service agent told him, "I did check on that and according to the policy we don't have that credit offer in Optimum right now." O'Brien provided the agent a link to the Ars article, which described the New York law and mentioned that Optimum offers a low-income plan for $15.

"After careful review, I did check on that, it is not officially from Optimum and in Optimum we don't have that plan," the agent replied.

O'Brien provided Ars with documents showing that he is in SNAP and thus qualifies for the low-income plan. We provided this information to the Optimum PR department on the morning of January 17.

"We have escalated this exchange with our teams internally to ensure this issue is rectified and will be reaching out to the customer directly today to assist in getting him on the right plan," an Optimum spokesperson told us that afternoon.

A specialist from Optimum's executive customer relations squad reached out to O'Brien later on Friday. He missed the call, but they connected on Tuesday, January 21. She told O'Brien that Optimum doesn't offer the low-income plan to existing customers.

"She said their position is that they offer the required service but only for new customers and since I already have service I'm disqualified," O'Brien told us. "I told her that I'm currently on food stamps and that I used to receive the $30 a month COVID credit but this did not matter. She claimed that since Optimum offers a $15, 50Mbps service... that they are in compliance with the law."

Shortly after the call, the specialist sent O'Brien an email reiterating that he wasn't eligible, which he shared with Ars. "As discussed prior to this notification, Optimum offers a low-income service for $15.00. However, we were unable to change the account to that service because it is an active account with the service," she wrote.

Second try​

We contacted Optimum's PR team again after getting this update from O'Brien. On Tuesday evening, the specialist from executive customer relations emailed O'Brien to say, "The matter was reviewed, and I was advised that I could upgrade the account."

After another conversation with the specialist on Wednesday, O'Brien had the $15 plan. O'Brien told us that he "asked why I had to fight tooth and nail for this" and why he had to contact a news organization to get it resolved. "I claimed that it's almost like no one there has read the legislation, and it was complete silence," he told us.

On Wednesday this week, the Optimum spokesperson told us that "it seems that there has been some confusion among our care teams on the implementation of the ABA over the last week and how it should be correctly applied to our existing low-cost offers."

Optimum has offered its low-cost plan for several years, with the previously mentioned restrictions that limit it to new customers. The plan website wasn't updated in time for the New York law, but now says that "new and existing residential Internet customers in New York" qualify. The new-customer restriction still applies elsewhere.

"Our materials have been updated, including all internal documents and trainings, in addition to our external website," Optimum told us on Wednesday this week.

Law was in the works for years​

Broadband lobby groups convinced a federal judge to block the New York affordability law in 2021, but a US appeals court reversed the ruling in April 2024. The Supreme Court decided not to hear the case in mid-December, allowing the law to take effect.

New York had agreed to delay enforcement until 30 days after the case's final resolution, which meant that it took effect on January 15. The state issued an order on January 9 reminding ISPs that they had to comply.

"We have been working as fast as we can to update all of our internal and external materials since the ABA was implemented only last week—there was quite a fast turnaround between state officials notifying us of the intended implementation date and pushing this live," Optimum told Ars.

AT&T decided to completely stop offering its 5G home Internet service in New York instead of complying with the state law. The law doesn't affect smartphone service, and AT&T doesn't offer wired home Internet in New York.

Optimum told us it plans to market its low-income plan "more broadly and conduct additional outreach in low-income areas to educate customers and prospects of this offer. We want to make sure that those eligible for this plan know about it and sign up."

O'Brien was disappointed that he couldn't get a faster service plan. As noted earlier, the New York law lets ISPs comply with either a $15 plan with download speeds of at least 25Mbps or a $20 plan with at least 200Mbps speeds. ISPs don't have to offer both.

"I did ask about 200Mbps service, but they said they are not offering that," he said. Optimum offers a $25 plan with 100Mbps speeds for low-income users. But even in New York, that one still isn't available to customers who were already subscribed to any other plan.

Failure to comply with the New York law can be punished with civil penalties of up to $1,000 per violation. The state attorney general can sue Internet providers to enforce the law. O'Brien said he intended to file a complaint against Optimum with the AG and is still hoping to get a 200Mbps plan.

We contacted Attorney General Letitia James' office on Wednesday to ask about plans for enforcing the law and whether the office has received any complaints so far, but we haven't gotten a response.