from the you-broke-it,-you-buy-it dept

During peak COVID in 2021, when everybody was freaking out about how shitty and expensive U.S. broadband was for telecommuting and home education, NY state officials had an idea: what if we pass a law demanding that ISPs try to provide cheap broadband (a piddly 25 Mbps for $15) to low income families.

Some particulars of NY’s Affordable Broadband Act: ISPs with less than 20,000 subscribers are exempt. Only Americans on existing low-income programs could qualify. And the price increases had to be capped at two percent per year, though this was to be renegotiated on an ongoing basis. This was a limited form of rate regulation, and not particularly radical.

But NY State’s Affordable Broadband Act didn’t last long. In 2021 a US District Court judge blocked the law, claiming that the first Trump administration’s 2017 net neutrality repeal banned states from trying to regulate broadband. But courts repeatedly have shot down that claim, stating that the feds can’t abdicate their authority over broadband consumer protection and pre-empt state authority.

So in April of 2024, that judge’s ruling was reversed by the US Court of Appeals for the 2nd Circuit. Last week the Supreme Court refused to hear the case, leaving the 2nd Circuit’s ruling, and the law, intact. It’s not clear when or if New York State will actually start enforcing it.

As Ars Technica notes, this case has particular importance given all the planned looming dismantling of the federal regulatory state during Trump 2.0:

“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.”

As Trump 2.0 regulators like the FCC and FTC give up on consumer protection, it’s going to punt many of these fights to the state level. Given corporations spent so much money gutting Chevron deference in a bid to turn federal regulators into decorative gourds, they’re not going to like it much if consumer protection remains healthy and strong on the state level.

The idea of “rate regulation” is just about the most terrible phrase imaginable if you’re a telecom executive or “free market” Libertarian think tanker type. Limiting price gouging in this fashion is repeatedly brought up as a terrifying bogeyman in telecom policy conversations, though it very rarely manifests. NY’s effort to help people during COVID was a pretty far outlier in terms of policy proposals.

But Big Telecom is clearly worried that if NY’s law is allowed to stand, the years of rate regulation being off the table to address telecom monopolization will come to an end:

“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.”

Telecoms want to have their cake (no federal regulation) and eat it too (no state laws filling the obvious void they created). To be clear, there are several cases currently ongoing where telecoms, freshly emboldened by a corrupt Supreme Court, are arguing that the FCC has no federal authority to do much of anything that helps real people (net neutrality, wireless privacy issues, and low-income affordability programs).

So we’re kind of looking at a dog caught the car situation. Telecom giants spent thirty years arguing for the complete dismantling of coherent federal consumer protections. Falsely claiming that gutting federal corporate oversight would bring vast untold benefits to markets and consumers (spoiler: that didn’t happen and will never happen).

They created this “problem” of states passing a discordant number of fractured state-level laws, the resulting complications on pre-emption, and all the legal headaches that will now result. And they’re crying about the problem they created.

Corporate power (telecom or otherwise) is at the ledge of a generational quest to kill coherent federal governance. And they’re not much going to like the new world they built, where states like Washington, California, Oregon, and Maine all craft different and inconsistent laws filling the new federal void on consumer protection, labor rights, environmental law, public safety restrictions, and everything else.

There will be chaos. And in many markets where we’re not talking about net neutrality, but life and death situations. Especially in states where leaders don’t believe in consumer protection, environmental protections, or corporate accountability either.

Again, U.S. broadband is a failed market thanks to regulatory capture. Regional telecom monopolies dominate a region, then lobby to ensure market competition can’t take root, resulting in high prices, slow speeds, spotty access, and terrible customer protection. Absolutely any time anyone proposed ANY FIX WHATSOEVER in the last 30 years, telecoms and their allies had embolisms.

Ideally, you’d want to fix this problem via antitrust reform, stricter merger review, and policies that encourage free market competition. But the “free market!” telecom policy type guys don’t actually want that. They’ve advocated for the total dismantling of federal oversight. Now that they’ve got it, state rights, once such a precious thing in center-right ideology, will be the next target.

Because the goal here for corporate power has never been “free markets.” It’s market domination. They want to be able to behave anti-competitively and price gouge captive customers free from any sort of state or federal intervention. After decades of lobbying Trump 2.0 is poised to deliver that goal on the federal level. State autonomy will be next. People will die. But the legal billable hours will be epic.

Filed Under: 2nd circuit, affordable, chevron, free market, high speed internet, new york, rate regulation, supreme court, telecom