States May See Green Light to Tackle Broadband Affordability

The FCC’s final order on net neutrality included a discussion of state authority to adopt broadband affordability programs that wasn't in the original draft (see 2405070077). The agency released the final order May 7, about a week after the 2nd U.S. Circuit Court of Appeals ruled that federal law doesn’t preempt a 2021 New York law requiring $15 monthly plans with 25 Mbps download and 3 Mbps upload speeds for qualifying low-income households (see 2404260051). While not addressing individual state programs, the FCC found “that states have a critical role to play in promoting broadband affordability and ensuring connectivity for low-income consumers.” The federal agency added “that the mere existence of a state affordability program is not rate regulation."

One state worth watching is Connecticut, which this year had a wide-ranging bill that included a restriction on state procurement contracts with broadband internet access service (BIAS) providers that lacked an affordable plan for eligible households (see 2402290053). Legislators later removed the equity section from the bill (see 2405070054). The FCC's and 2nd Circuit's recent moves are "encouraging signs for passing similar legislation next year as opponents of high-speed internet regulation often point fingers at other states and federal ambiguity,” said Duff, one of the 2024 bill’s sponsors. “Strong internet service is a necessity in the modern day and state government needs to step up and provide equal access to broadband internet service. That remains as true today as it was earlier this year.”

The National Association of State Utility Consumer Advocates underlined the FCC’s message on state authority. “The FCC majority made clear in the Open Internet Order that states play a critical role in promoting broadband affordability and ensuring connectivity for low income consumers,” NASUCA Telecom Committee Chair Regina Costa said in a statement Thursday. “It also clarified that the state affordability programs do not constitute rate regulation.”

“Combined with the 2nd Circuit’s ruling that New York’s law is not preempted under Title I of the Communications Act,” the FCC’s finding about state affordability laws “could encourage lawmakers in other states to mirror New York’s law or try a similar approach,” said Barbara van Schewick, director of Stanford University’s Center for Internet and Society. “With the ACP ending, states might be looking to do whatever they can to ensure their most vulnerable populations have affordable internet access, even if the legal issues are not yet fully resolved.” If ISPs successfully get a court to stay the FCC’s order reclassifying broadband as Title II, there will be “no question that state broadband affordability laws are not preempted, given the 2nd Circuit’s decision,” van Schewick added.

ACP’s end plus the 2nd Circuit opinion “make it more likely that other states will follow New York's lead,” New Street analyst Blair Levin agreed. ISPs have a problem, he said: An FCC controlled by Democrats is “unlikely to block state efforts, at least until there is something like a sustainable ACP," he said. But if Republicans regain control, they will adopt a legal theory -- Title I or the major question doctrine -- “that makes FCC preemption of states difficult, also opening the door to efforts like New York's.”

“Now that it’s clear that the FCC is not going to block any states that want to do this, it’s easier for states to at least talk about it,” said CCG Consulting President Doug Dawson, who raised concerns about possible negative consequences of forcing low rates on ISPs in a May 6 blog post. However, the politics around such a move will vary by state, he said. Also, Dawson asked “how many states think they can afford the creation of a new permanent subsidy plan, especially considering that a lot of state budgets are suddenly tight after they’ve run out of federal [COVID-19] money.” Congress could still restore ACP, “which would end all state efforts,” the broadband consultant noted: “That chance seems slight now but would likely improve if” Democrats take the House and keep the Senate and White House this November.

Free State Foundation Director-Policy Studies Seth Cooper disagreed that states should read recent developments as a green light to make broadband pricing policies. In an email, Cooper wrote, “While it’s likely some states will be tempted to forge ahead with ‘affordability programs’ that restrict retail broadband service rates, states would be wise to not pursue rate regulation because it has harmful effects on future network investment and the legality of state-level rate controls on broadband remains uncertain.” He added, “The new Title II order’s minimalist non-preemption statement on state broadband affordability programs offers little guidance. Serious questions exist about the extent to which the new Title II order’s forbearance from federal rate regulation of broadband services has preemptive effect on states.” The 2nd Circuit didn’t clarify the state authority question since its decision applied only to Title I regulation, he said.

Public Knowledge Legal Director John Bergmayer hopes states act. “Especially with the lapse of ACP, affordability is a challenge for many people,” he said. Even with an FCC green light, however, Bergmayer predicted “objections and lawsuits from ISPs.”

The cable industry opposes states setting broadband prices. "While there are many ways that states can play a constructive role in helping consumers affected by the expiration of the ACP program, rate regulation is not one of them," an NCTA spokesperson said Friday. "Government cannot efficiently set prices, and any attempt to do so would destroy investment incentives critical to state success in building broadband to all."

“At a time when inflation has become the norm, broadband is the exception," with prices falling as speeds rise, a USTelecom spokesperson said. "We support efforts to promote broadband affordability for those who need it without rate regulation mandates." Congress should fund ACP and require Big Tech to contribute to USF, the spokesperson added.