Internet service providers fear that the elimination of FCC net neutrality rules will negatively impact them

Internet service providers have asked the U.S. Supreme Court to invalidate a New York law that requires broadband providers to offer $15-a-month service to low-income people. On Monday, six trade groups representing the cable, telecommunications, mobile and satellite industries filed a petition challenging the state law with the Supreme Court.

Although ISPs have recently been able to block the FCC’s net neutrality rules, this week’s petition shows that the companies are worried that states will step into a regulatory vacuum with different kinds of laws targeting broadband prices and practices. A victory for the broadband industry over federal regulation could strengthen the authority of New York and other states to regulate broadband. To prevent that, ISPs have argued that the Supreme Court should invalidate both the New York law and the FCC’s broadband regulations, although the rulings would have to be made in two separate cases.

The situation in which New York’s law is upheld while federal regulations are repealed “will likely lead to greater rate regulation absent judicial intervention,” ISPs told the Supreme Court. “Other states will likely imitate New York as the Attorney General begins enforcing the Affordable Broadband Act, and New York consumers will be able to purchase broadband Internet access at below-market rates. As petitioners have demonstrated, New York’s price cap will force them to sell broadband Internet access at a loss and discourage them from investing in expanding their broadband networks. As rate regulation spreads, these harms will also spread, stifling critical investments in delivering broadband Internet access to unserved and underserved areas.”

New York’s law was upheld in April by the U.S. Court of Appeals for the 2nd Circuit, which reversed the District Court’s 2021 ruling. New York Attorney General Letitia James agreed last week not to enforce the $15 broadband fee law while the Supreme Court considers whether to take up the case.

“Although New York has agreed not to enforce its rate regulation law until the Court decides this petition, New York continues to assert that it has the authority to do what the FCC cannot,” the ISPs wrote. “This case therefore raises the question of whether broadband services will remain protected from treatment by common carriers and rate regulation by individual states.”

Fate of New York law tied to FCC regulations

The fate of New York’s law is tied in part to the FCC’s April 2024 decision to restore net neutrality rules and regulate ISPs as public carriers under Title II of the Communications Act. When New York passed its affordability law, the FCC did not regulate ISPs under Title II. The lack of federal regulation has given states more freedom to implement their own rules.

When judges on the 2nd Circuit upheld the New York law, they wrote that “a federal agency cannot exclude states from regulating in an area where the agency itself does not have regulatory authority.” If the FCC’s reinstated common carrier rules are upheld, ISPs will have a better chance of overturning the New York law.

But ISPs are trying to overturn net neutrality and common-net rules—and are succeeding. The U.S. Court of Appeals for the 6th Circuit stayed enforcement of the FCC’s rules pending the outcome of the dispute, and a panel of judges said the ISPs are likely to prevail. “The broadband ISPs have shown that they are likely to succeed on the merits,” the 6th Circuit judges wrote.

Internet service providers fear that if they succeed in overturning FCC regulations, they will be subject to a slew of state laws, such as New York’s. “As a result of the Sixth and Second Circuit rulings, any state can now do what the FCC cannot—subject interstate information service to public carrier regulation, including rate regulation,” Internet service provider lobbying groups said in their petition to the Supreme Court. That would be “to the detriment of providers, consumers, and the nation,” they argued.

The ISPs asked the Supreme Court to “affirm that a federal communications statute — not a set of state laws — governs the regulation of interstate communications services such as broadband Internet access.”