The strongest state net neutrality bill in the nation passed a key test yesterday when a California Senate committee approved it over the objections of AT&T and the cable lobby. AT&T claimed that the rules aren't needed because it already follows its own net neutrality guidelines, while a cable lobbyist told senators that large corporate users shouldn't get "free access" to consumer broadband networks.

The California legislation would replicate the US-wide bans on blocking, throttling, and paid prioritization that were implemented by the FCC in 2015, and it would go beyond the FCC rules with a ban on paid data-cap exemptions. The FCC passed its rules under Democratic leadership but voted to eliminate them after Republican Ajit Pai took over the chairmanship.

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AT&T and a cable lobby group spoke out against the California bill at a hearing of the state Senate Energy, Utilities, and Communications Committee yesterday. But lawmakers were unswayed by the industry lobbyists and voted 8-3 to move the bill forward. The eight ayes came from Democrats and the three noes came from Republicans.

Yesterday's vote was "a great first step in our effort to protect net neutrality in California so that everyone has equal access on the Internet," bill author Sen. Scott Wiener (D-San Francisco) said after the hearing. "Under President Obama, our country was moving in the right direction on guaranteeing an open Internet, but the Trump-led FCC pulled the rug out from under the American people by repealing net neutrality protections. In California, we can lead the effort to clean up this mess and implement comprehensive, thorough Internet protections that put California Internet users and consumers first."

The bill has to go through the Senate Judiciary Committee before reaching a vote from the full Senate. It would also need approval of the Democratic-majority State Assembly and Governor Jerry Brown, also a Democrat.

AT&T: There’s no net neutrality problem

Before the vote, AT&T VP Bill Devine argued that net neutrality rules aren't necessary and complained that the bill "goes well beyond the FCC order of 2015."

"This bill is built on speculation that somebody, somewhere, sometime in the future might violate net neutrality rules," Devine said.


AT&T's blocking of Apple's FaceTime video chat application on iPhones in 2012 and 2013 is one of the main examples put forward by advocates who say net neutrality rules are necessary; Devine didn't mention it in his opening statement. He said that net neutrality advocates "did not raise a single unchecked violation of law to justify the need for this legislation."

Devine claimed that net neutrality is already protected by law because AT&T's commitments not to block, censor, or degrade Internet traffic are "enforceable by the federal government and the California attorney general." However, those are voluntary commitments. Without specific net neutrality rules, companies are only bound by their public promises, which they could change or eliminate.

Devine argued that data-cap exemptions (or "zero-rating") provide "a particularly strong consumer benefit" and should be allowed. AT&T exempts its own video services from mobile-data caps while charging other companies for the same privileged treatment. The Obama-era FCC ruled that this was a violation of net neutrality; Pai's FCC rescinded that finding.


While the FCC subjected data cap exemptions to a case-by-case review, the California bill would prohibit ISPs from charging for data-cap exemptions.

Cable lobby argues against “free access”

Comcast, Charter, Cox, and other cable companies were represented at yesterday's hearing by the California Cable & Telecommunications Association (CCTA).

CCTA President Carolyn McIntyre argued that the bill offers no benefits to average broadband users "but would instead guarantee unfettered and free access to huge corporate bandwidth users that typically negotiate business-to-business Internet traffic agreements."


McIntyre was referring to payments for network interconnection, which allows companies to transmit traffic directly to ISPs at the edge of their networks. This is different from paid prioritization, which would involve payments for priority access over the cables that lead directly into consumers' homes.

McIntyre claimed that the California bill "prohibits ISPs from requiring any consideration from large bandwidth users, monetary or otherwise, for an interconnection agreement." The bill "seems to mandate free interconnection or prohibit negotiated arrangements," she said.

That isn't true, although the bill would give companies seeking interconnection greater leverage in negotiations. ISPs would be prohibited from "engaging in practices with respect to, related to, or in connection with ISP traffic exchange that have the purpose or effect of circumventing" the effectiveness of net neutrality rules.


In other words, ISPs would be able to require payments from companies seeking interconnection as long as any business disputes don't make it difficult for consumers to access Internet services. If an ISP refuses to upgrade a network connection because it wants more money from a content provider or network operator, the content provider or network operator could argue that the ISP is violating net neutrality.

No ban on paid peering

The Senate committee caused confusion on this point by publishing a bill analysis that says, "This bill would prohibit peering agreements." But there's nothing in the actual bill text to support the idea that it's a complete ban, though the bill could make it more difficult for ISPs to charge high rates because they wouldn't be able to "negotiate" by allowing Internet quality to degrade.

A spokesperson for Wiener explained what the bill requires in a statement to Ars:

SB 822 does not prohibit peering agreements. The bill does two things: first, it prohibits ISPs from charging fees to edge providers for access to end users, like [what] has been prohibited in the 2010 and 2015 FCC Orders. Second, SB 822 prohibits an ISP from circumventing net neutrality rules at the point of interconnection to their network. This would be subject to the Attorney General's review. So, SB 822 does not specifically prohibit or permit paid agreements, but it says ISPs cannot use interconnection practices to circumvent net neutrality protections.

Cogent could gain leg up in battle with Comcast

Cogent, a network company that has a free-interconnection agreement with Comcast despite Comcast's repeated requests for payment, could take advantage of this provision. Businesses pay Cogent to carry their traffic into broadband providers' networks, and delayed upgrades in the Comcast/Cogent connections have harmed broadband users who access online services offered by Cogent customers.

Historically, large network operators like Cogent and AT&T have exchanged traffic without payment, to the benefit of their mutual customers.


Cogent CEO Dave Schaeffer appeared at yesterday's hearing to support the net neutrality bill. He said that Cogent has "experienced congestion that was intentionally caused by ISPs violating net neutrality."

Even though the California bill wouldn't ban interconnection payments, it could make it easier for Cogent to maintain its free network interconnection agreements with Comcast and other ISPs. The bill could also help companies that do pay ISPs for interconnection to negotiate better rates or at least avoid big price increases.

Bill survived attempt to water it down

The bill was almost watered down before making it through the committee vote. The committee analysis of the bill suggested cutting the provisions on zero-rating and paid interconnection in order to more closely align with the FCC's 2015 rules. The committee analysis "might as well have been written by AT&T," the Electronic Frontier Foundation said.

Despite that, Wiener said he negotiated amendments with the committee that kept "all key provisions of the bill intact."


Wiener's legislation is "the only state-level bill that fully restores all of the 2015 net neutrality protections," Stanford law professor Barbara van Schewick told the committee. "That's why it's widely viewed as a net neutrality model bill, and that's why [former] FCC Chairman Tom Wheeler, who literally wrote the 2015 order, supports this bill."

The FCC's net neutrality rules are technically still on the books but are slated to be repealed.

"Today, the Internet is a space where every Californian, no matter the color of their skin or the size of their wallets, has equal chance of reaching people online," van Schewick told the committee shortly before the vote. "It's a space where we the people—not AT&T and Comcast—determine what succeeds in our economy, our culture, and our democracy. I hope you will vote to keep it that way."


Washington and Oregon were the first states to pass net neutrality laws after the FCC repeal vote. Additionally, the governors of five states (Vermont, Hawaii, Montana, New Jersey, and New York) issued executive orders to impose net neutrality requirements on ISPs that provide Internet service to state government agencies.

A lobby group that represents AT&T, Verizon, and other telcos has already said it plans to sue states and cities that try to enforce net neutrality rules. The FCC claims that state net neutrality rules would be preempted by the federal repeal, but courts would likely have the final say on that question.