Sarah Tew/CNET

California seems poised to throw net neutrality a lifeline.

The State Assembly Committee on Communications and Conveyance voted 8-2 Wednesday to move forward with Senate Bill 822, which offers the strongest protections yet guarding net neutrality. A second bill, SB 460, which additionally restricts companies that violate the first bill from working with the state, likewise won approval.

There still needs to be a broader vote, but Wednesday's move is a key step toward making the proposed regulation into law.

California is just one of the states looking to enact its own rules governing an open internet, after the Federal Communications Commission, under Chairman Ajit Pai, rolled back the Obama-era net neutrality rules in June. States like Washington have pushed through a net neutrality law, while others are considering it. The vote comes just a day after the attorneys general of 22 states and the District of Columbia filed their brief to a US Appeals Court to reverse the FCC's move. Companies like Firefox and trade groups also filed their arguments.

Net neutrality, the principle that all internet traffic is treated fairly, has been one of the hottest topics of debate over the last several years. Consumers, tech companies and Democrats have pushed for stricter regulations prohibiting the prioritization of traffic, which resulted in the Obama-era rules put in place by the previous FCC. But the Trump-era FCC has agreed with the internet service providers and Republicans who fear the regulations are too onerous and hurt capital investment.

This bill almost didn't survive in its current form. It was initially hailed as the "gold standard" of net neutrality regulation because it went beyond even the Obama-era rules, but the same California assembly committee in late June gutted the bill, which was introduced by Sen. Scott Wiener from San Francisco. At the time, Wiener said the amendments made it "a fake net neutrality bill."

The initial bill included rules that went beyond restrictions on how traffic is treated, including rules against a practice called zero-rating, which lets a carrier offer a video or site to you without it eating into your data plan. A company like AT&T could theoretically offer you video service that wouldn't count against your data, putting it at an unfair advantage over rival services that would eat your data limit.

Scott Wiener

Wiener's bill is also designed to ensure that broadband providers adhere to net neutrality principles at so-called interconnection points, where traffic from companies like Netflix flow onto broadband networks to be delivered to consumers.

The move to weaken the bill was seen as a major blow to Democrats in Congress and in state houses across the country, which were looking to California to set a high standard as they push to reinstate strong net neutrality protections to replace the rules the Republican-led FCC voted to eliminate.

It also angered supporters of the movement, who have accused Democratic Assemblyman Miguel Santiago, who serves as the chair of the committee, of being a shill for big broadband companies, like AT&T, which has contributed thousands of dollars to his campaigns.

Wiener and Santiago have worked to negotiate a fix to the bill to bring back some of the protections that were weeded out in the committee process.

Zero-rating up for debate

The biggest issue up for debate is the restriction on zero-rating, which ISPs have argued actually saves consumers money because it spares them from losing out on their data allotment.

Bill Devine, vice president of legislative affairs for AT&T, voiced his objection to the bill's inclusion of rules and warned it would ultimately hurt consumers.

"We believe it's anticompetitive and anticonsumer." he said in the committee meeting. "It will drive up your constituencies' bill."

Members of the committee also expressed their concern. "We're prohibiting a practice that takes money out of consumers' pocket," said Jay Obernolte, a Republican assemblyman from Big Bear Lake.

Wiener, however, argued zero-rating actually hurts consumers in the long run because it gives the ISP an unfair advantage and reduces competition, leading to higher prices down the line.

"It's free data that's not really free," Wiener said.

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