California’s landmark net neutrality bill faces obstacles

An attempt in California to replace the FCC's repealed Obama-era net neutrality rules faces its first legislative test Tuesday.

Senate Bill 822, written by state Sen. Scott Wiener, a Democrat from San Francisco, will get its first hearing before the Energy, Utilities and Communications Committee, which could gut key provisions of the legislation.

In its original form, the California bill offers consumers the most comprehensive net neutrality protections at a state level to date. The bill would transform the Federal Communications Commission's 2015 net neutrality rules into California law. But it goes further, barring internet service providers from offering deals, such as sponsored content or zero-rated data plans, that "economically discriminate" against certain sites or services. Such offerings allow a company to pay data charges so that certain apps don't count against a wireless subscriber's data plan.

Net neutrality supporters are worried that the state's Democrat-led legislature will concede too much to the broadband industry, which says it supports the spirit of net neutrality but believes Wiener's legislation goes too far. On Monday, the committee issued a report that many net neutrality supporters said eliminates key protections and opens loopholes that would allow internet service providers to skirt net neutrality protections.

"It's outrageous that California Democrats would produce a document that looks like it was literally written by lobbyists for AT&T and Comcast," said Evan Greer, deputy director for advocacy group Fight for the Future. "They're calling for giant loopholes that would gut SB 822 and leave California residents vulnerable to ISP scams and abuses."  

States take up net neutrality cause

California is one of more than two dozen states considering legislation to reinstate net neutrality rules, which were repealed by the Trump administration's FCC in December. Other states, including New York, Connecticut and Maryland, are also preparing legislation to protect net neutrality. Earlier this year, Washington became the first state to sign such legislation into law. Governors in several states, including New Jersey and Montana, have signed executive orders requiring ISPs that do business with the state adhere to net neutrality principles.

Meanwhile, Democrats in the US Senate are trying to reinstate the FCC's rules through the Congressional Review Act.

But Wiener's bill in California's is viewed as the "gold standard" in terms of net neutrality, according to advocacy groups like the Electronic Frontier Foundation. The progression of the bill through the state legislature is being watched closely because advocates and the industry alike believe the fate of the legislation could affect the movement nationally. The bill won support from heavy hitters like former FCC chairman Tom Wheeler, an Obama appointee, whose FCC adopted the 2015 rules. He's called the effort in California the "most sweeping" bill of its kind in the country. If it passes in its current form, Wheeler said he believes it could send a strong signal to other states and to Capitol Hill.

"What is important right now is that California is going to lead the way," Wheeler told the San Francisco Chronicle. "If California starts down the path, then the other 49 states can say, 'Look how it's done in California and this is the right way to do it.' Someone has got to set the standard. It's incredibly important that California leads the way."

Net neutrality in a nutshell

The federal rules, which are set to officially expire April 23, were meant to prevent major companies like AT&T, Verizon and Comcast from abusing their power as gatekeepers to the internet by unfairly blocking, throttling or charging companies or groups to access to the internet.

The broadband industry has repeatedly stated it supports the basic idea of net neutrality. And large companies like AT&T, Comcast, and Verizon say they don't currently block or slow down internet traffic. But they argue that certain provisions of the bill are too limiting such as ones that would ban new business models like zero-rating data or paid priority, which could allow companies to pay broadband companies to get their services delivered faster than competitors. The big broadband providers also say that without the ability to experiment with new business models, innovation will suffer and they'll have to charge consumers more for their services.

"We have been clear about our support for an open internet," an AT&T spokesman said. "This bill introduces an entirely new regulatory scheme...that will harm the state's internet economy by reducing competition and investment leading to less innovative products and services."

Net neutrality advocates, such as Ernesto Falcon of EFF, say they don't buy this argument.

"While it is a fair assumption that ISPs would love to jack up the prices even more, it is not true that ISPs are drowning in debt and need the money from the new revenue streams opened up by the repeal of the FCC's net neutrality and privacy provisions," he said Monday in a blog post.

The bottom line he said is that "ISPs are not hurting for profit."

In fact, Falcon argues that large ISPs like Comcast, AT&T and Verizon have made billions of dollars in profits for the last 10 years. They've "been so resilient that only hurricanes and the Great Recession put a dent in their margins," he said.

But the committee's report, which mirrors arguments made by the industry, states that the bill "could increase cost pressures on consumers," especially for lower-income Californians who may be disproportionately affected by these increases.

"To the extent that sponsored data plans provide consumers with more access to data at a lower cost, prohibiting beneficial forms of zero-rating could increase consumers' data costs in the long-term," the report states. "Low-income Californians who more heavily rely on mobile devices in lieu of fixed services could be disproportionately impacted."

Still, public support for net neutrality has become a national hot-button issue for liberals and conservatives alike, which makes killing the bill unlikely from a political perspective. Instead, consumer advocates fear the bill will become so watered down it will weaken its effectiveness.

Wiener isn't giving up hope. Even if the committee cuts key components of the bill, he plans to continue to move the legislation forward.

"My goal is to pass the strongest net neutrality bill possible," he said Monday. "So we will continue to work with the committee and others to make sure we get there. There are always ups and downs in the legislative process."

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