The telecommunications industry suffered a defeat as judge refuses to block California’s replacement of rules scrapped by the Trump administration in 2018.
SACRAMENTO, Calif. (CN) –– AT&T and Verizon’s attempt to disconnect California’s net neutrality act stalled Tuesday, with a federal judge finding the law which prevents the “throttling” of internet speeds is not preempted by the U.S. Constitution.
U.S. District Judge John Mendez declined the telecommunication industry’s motion for preliminary injunction, granting California a win against the nation’s largest service providers in the fight over internet regulations.
Mendez, a George W. Bush appointee, said controversial changes made by the Federal Communications Commission in 2018 and the longstanding federal Communications Act do not clearly prohibit states from adopting their own net neutrality laws. He said the providers should look to Congress for more clarity on the ever-evolving issue of internet access and speeds, not the judiciary.
“I don’t find the plaintiffs have demonstrated a likelihood of success on the merits at this stage of the litigation,” Mendez said, ruling from the bench. “This is not the type of pervasive regulatory system that left no room for state law.”
California may have gained an ally in the Biden administration when it comes to open internet access, but the Golden State remains locked in battle with the powerful industry over the future of the internet.
While the federal government earlier this month halted the Trump administration’s bid to overturn the state’s landmark consumer protection law, a coalition of internet service providers led by Verizon and AT&T are still looking to take down California’s net neutrality framework.
In arguing against California Senate Bill 822, the providers tried to paint the law as an attempt to regulate interstate commerce. Besides, argued plaintiffs’ lawyer Matthew Brill, the law is unnecessary as the industry has been on its best behavior since the FCC loosened regulations.
“The fact is, the internet is open and will remain open,” the providers’ attorney Matthew Brill claimed. “The internet is performing beautifully.”
The bold assertion kicked off over two hours of discussion on whether California overstepped its bounds when it enacted its own net neutrality framework to replace Obama-era rules that were scrapped in 2018.
The state law, which is not yet being enforced due to litigation, bars providers from offering “fast lanes” or better access in exchange for payment, and limits “free-data plans” where consumers can access certain content without having the data counted toward their monthly limit.
Over the last two years, Brill contended there have been no documented cases of providers intentionally “throttling” internet speeds and that companies have performed exceptionally even with the increased demand during the pandemic. Furthermore, Brill said most providers have already voluntarily implemented bans against throttling and fast lines, and that attorneys general can sue companies that break their promise.
After taking in Brill’s opening argument, Mendez asked California’s lawyers if SB 822 was really necessary and whether they agreed the providers’ promises were legally binding.
“There are several problems with that argument,” shot back Patty Li of the California Department of Justice.
Li countered the promises fall way short of California’s law and because they are voluntary, providers can revoke them instantly and without notice. She also highlighted claims of a local firefighting agency that says its data was throttled by Verizon while fighting a major wildfire in 2018.
“The particular harm that SB 822 is meant to address, those harms continue to be possible every day it’s not in effect,” Li said.
The FCC put the finishing touches on the repeal of an Obama-era policy that required providers to treat all internet traffic equally in 2018. Its chairman, appointed by former President Donald Trump, said net neutrality regulations stymied innovation and that the government needed to let the market run its course.
“It’s basic economics: The more heavily you regulate something, the less of it you’re likely to get,” wrote then-Chairman Ajit Pai in 2017.
But critics countered the move played into the hands of providers and would encourage them to cater to companies and websites willing to pay for premium access and internet speeds. They warned for example AT&T could theoretically charge extra for access to preferred sites like Facebook or Google, leaving smaller competitors in the dust.
The move prompted lawsuits and sparked California and dozens of other states to pursue their own net neutrality laws.
For now, California’s law appears to be on firm ground due to Tuesday’s order and the fact the Biden administration dropped out of the case, signaling the Obama-era rules could make a comeback during the president’s first term.
Reading the political tea leaves, Judge Mendez asked the providers why they are fighting SB 822 when it’s increasingly likely they will soon have to revert to the old rules anyway. He also scoffed at their irreparable harm claim, saying many of the providers involved in the current lawsuit told shareholders back in 2015 the Obama rule change wouldn’t change their business models.
“Where’s the harm?,” Mendez asked. “Your clients are going to deal not only with SB 822…but the FCC reclassifying your clients again.”
California Attorney General Xavier Becerra applauded the ruling, calling it an “important win for California and for our democracy.”
“The ability of an internet service provider to block, slow down or speed up content based on a user’s ability to pay for service degrades the very idea of a competitive marketplace and the open transfer of information at the core of our increasingly digital and connected world,” Becerra said in a statement.
In explaining his oral ruling, Mendez indicated he was swayed by amicus briefs submitted by legal scholars, the fire department and other states in favor of California’s argument. He added that the bench ruling was necessitated by a continued lack of resources in the Eastern District of California and apologized to the parties for not being able to issue a written document.
Though he acknowledged the complexity of the case and the strong possibility his order would be appealed, Mendez couldn’t resist throwing a jab at Congress.
“This case raises issues that quite frankly might be better resolved by Congress rather than the federal courts,” Mendez said. “They’ve got to keep up with what’s going on in the real world.”