The US Department of Justice under President Joe Biden has dropped a department lawsuit filed under former President Donald Trump that challenged California's net neutrality rules. California's law, considered more strict than federal rules adopted during the Obama administration, could set the baseline for future federal rules.
The DOJ formally dismissed the lawsuit Monday. The suit was first filed in 2018 under ex-US Attorney General Jeff Sessions, a Trump appointee. Former California Gov. Jerry Brown, a Democrat, signed the California law in October 2018. California adopted the new rules after a Republican-led FCC in 2017 repealed federal rules that had been established under President Barrack Obama.
Interim Federal Communications Commission chairwoman Jessica Rosenworcel, a Democrat who supported the original Obama-era rules and opposed the Republican repeal, said she was "pleased that the Department of Justice" had withdrawn the lawsuit.
"When the FCC, over my objection, rolled back its net neutrality policies, states like California sought to fill the void with their own laws," she said in a statement. "By taking this step, Washington is listening to the American people, who overwhelmingly support an open internet, and is charting a course to once again make net neutrality the law of the land."
California's gold standard for net neutrality
When the FCC eliminated national protections for net neutrality, California used the Obama-era net neutrality protections as the basis for its state law. Those earlier ruIes prohibited internet service providers from slowing or blocking access to websites or charging companies like Netflix extra to deliver their service faster.
But California went further than the federal government in its protections of an open internet. It also outlawed so-called zero-rating offers, which allow carriers to exempt certain services from counting against a user's data cap. Additionally, the California law applies the net neutrality rules to so-called interconnection deals between network operators, something the FCC's 2015 rules didn't explicitly do.
Interconnection happens when two network operators hand off traffic to each other. For example, when Netflix delivers video streams directly to broadband providers, like Verizon and Comcast, which control the internet connection into people's homes. Companies negotiate private contracts over those handoffs. And California's law ensures the rules of no-blocking, no-throttling and no-paid prioritization also apply when traffic is being handed off.
California is just one of several states looking to enact its own rules governing an open internet. States such as Washington have pushed through a net neutrality law, while others are considering it.
Net neutrality, the principle that all internet traffic should be treated fairly, has been one of the hottest topics of debate over the past several years. Consumers, tech companies and Democrats have pushed for stricter regulations prohibiting the prioritization of traffic, which resulted in the rules put in place by Obama's FCC. But the Trump-era FCC agreed with ISPs and Republicans who complained the regulations were onerous and hurt capital investment.
A new era for net neutrality
With Democrats now in charge, it's expected the FCC will move to reinstate federal rules, which include provisions to prevent broadband providers from blocking or slowing access to the internet or charging for faster access. This aspect of the rules has been relatively uncontroversial. Even broadband providers, such as Comcast, say they agree with the premise of no blocking or throttling.
But the 2015 rules also firmly established the FCC's oversight over broadband, which would give the agency the authority to police broadband abuses, such as weak privacy practices or fraudulent billing. In addition, they'd give the agency more authority to promote competition by doing things such as preempting state laws that prohibit municipalities from offering broadband services.
This is the aspect of the Obama-era rules that's most controversial. It's also likely where the new fight over net neutrality will focus.
"This debate has always been about the FCC's authority," said Gigi Sohn, a fellow at the Georgetown Law Institute for Technology Law & Policy and advisor to former FCC Chairman Tom Wheeler. "The question is really about whether there should be an agency to oversee the broadband market."
Sohn added that since the 2015 fight, the bar's been raised. The standard isn't the 2015 FCC rules. Instead policy makers will be looking at California's stricter 2018 law and beyond. Ultimately the argument is likely to center on how much authority the FCC has to regulate broadband networks.
"I'm not advocating for just reinstating the old rules," Sohh said. "We need to push for FCC authority to adopt policy to handle issues like zero-rating and data caps."
Legal issues remain
Even though the Biden DOJ has dropped the lawsuit against the California law, legal challenges from lobbying groups representing almost every broadband and wireless provider in the US still remain. Also suing California in federal court over the law: the wireless industry's lobby group, CTIA, along with USTelecom, which lobbies for the telecommunications industry. Also: the two lobbying organizations for the cable industry, NCTA and the American Cable Association. The groups assert that California's net neutrality protections are illegal because they're preempted by the FCC, which rolled back federal net neutrality rules. The next hearing is scheduled for Feb. 23.
Meanwhile, even though there's strong Democratic support for reinstating federal net neutrality protections, it's unclear when the FCC will be able to reinstate rules. The FCC is currently evenly divided, with two Democrats and two Republicans. Until Biden nominates and the Senate confirms a third Democrat to the FCC, the agency is unlikely to begin the process to reinstate the rules.