by Wendy Davis @wendyndavis, June 13, 2018

Internet service providers are stepping up their fight against a California net neutrality proposal that would explicitly prohibit providers from exempting material from consumers' data caps.

The proposed law, approved last month by the state Senate and currently before the Assembly, restores Obama-era net neutrality rules that ban throttling, blocking, and charging higher fees for prioritized delivery. The measure also would explicitly ban "zero-rating" -- or the practice of exempting certain material from data caps. In addition, the proposed law also limits some forms of paid "interconnection" agreements, which involve companies like Netflix paying broadband carriers to interconnect directly with their network.

Consumer advocates say that "zero-rating" schemes enable broadband providers to favor their own content -- typically video -- at the expense of competitors. But the telecoms argue that zero-rating benefits consumers by allowing them to access TV shows and movies without incurring data overage fees.

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AT&T and Verizon both engage in zero-rating. AT&T's current program allows wireless customers who purchase DirecTV to watch video through a mobile app, without having that data counted against their caps.

Last year, former Federal Communications Commission Chairman Tom Wheeler said AT&T's zero-rating practice violated the then-existing federal net neutrality rules. But current FCC Chairman Ajit Pai reversed course and endorsed AT&T's practice soon after taking charge. The agency subsequently voted to abolish the net neutrality rules.

This week, the industry group CALinnovates argued to lawmakers in California's Assembly that zero-rating practices benefit consumers -- particularly low-income people, according to Ernesto Falcon, legislative counsel with the digital rights group Electronic Frontier Foundation.

"They're focused on narrowing the bill as much as they can," Falcon tells MediaPost, referring to the broadband industry. He adds that providers are also attacking the bill's restrictions on paid interconnection agreements.

This week, CALinnovates gave Assembly members a three-page study (funded by the organization) that says California residents who used zero-rated services save between $130 million and $158 million a year.

"Low-income and minority Californians enjoy disproportionately greater benefits from zero-rated data," the study states. "Californias who rely exclusively on a smartphone to access the internet enjoy benefits as high as $30 a month per person from zero-rated data."

But Falcon argues that the CALinnovates report ignores "the fact that the data cap is an artificial construct that is designed to raise rates on wireless users."

The Assembly is slated to consider amendments to the bill on Wednesday.

Even if the law passes, it's not clear whether it will survive a court challenge. When the FCC repealed net neutrality rules, the agency also prohibited states from passing their own laws. Broadband providers have already said they will sue to enforce that prohibition, but not all legal experts think the prohibition will be upheld by the courts.