States Said Unlikely to Change Regulation Soon Over Net Neutrality Order
Release of the FCC net neutrality order brought limited clarity to how the rules and the commission’s accompanying reclassification of broadband as a Communications Act Title II service will affect state telecom regulation, state telecom lawyers and observers said in interviews last week. That lack of clarity largely stems from continued uncertainty about whether the net neutrality rules -- and particularly Title II reclassification -- will survive legal scrutiny, lawyers said. Alamo Broadband and USTelecom filed lawsuits Monday seeking reviews of the net neutrality order at the 5th U.S. Circuit Court of Appeals and the U.S. Court of Appeals for the D.C. Circuit, respectively (see 1503230066). The order faces continued scrutiny on Capitol Hill (see 1503200048).
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The order won’t change state-level regulation in the near term, with most state regulators appearing likely to wait until after the first round of litigation against the order concludes to think about reinterpreting their current regulatory authority, said NARUC General Counsel Brad Ramsay. “Most states are litigation averse, so they’re going to wait until that first round is over,” he said. “That’s at least a year and a half away. Are the states chomping at the bit to get into the broadband regulatory sphere? Absolutely not.” A few states are probably interested, “but I don’t see any great upswell yet of states that want to deal with service quality obligations” or other broadband regulatory issues, Ramsay said. “The first round of litigation is going to be interesting, and we’re not going to know for a while how the outcome of those cases will pan out” for state interests, said National Regulatory Research Institute Principal Researcher Sherry Lichtenberg.
The California Public Utilities Commission is examining how the net neutrality order could affect its regulatory authority, but the state constitution mandates that the CPUC can’t change its interpretation of its authority until an appellate court rules on the order, said CPUC Office of Ratepayer Advocates Senior Attorney Lindsay Brown. “There are going to be lawsuits on all sides and who knows how that will end up being resolved at the end of the day.” The CPUC derived its current interpretation of its authority under Telecom Act Section 706 from the D.C. Circuit’s Verizon v. FCC decision, Brown said.
The net neutrality order and Title II reclassification could have a longer-term effect on state commissions’ authority on broadband issues because it “gives us much better arguments” to justify state oversight, though that’s unlikely to extend to rate regulation or new fees, Ramsay said. Those are items that in most cases would likely require legislation to authorize state commissions to institute, he said. The order is more likely to improve the argument for state commissions to build up a record on service quality issues or consumers complaints, Ramsay said.
Many states have specifically prohibited state commissions from regulating IP services, and the net neutrality order “doesn’t necessarily override that,” Lichtenberg said. The order itself places some limits on how far any state commission can go in increasing its regulatory authority over broadband, as the FCC specifically said that states are bound by FCC forbearance, said an industry lawyer who has state-level experience. The order also “makes clear” that the FCC will pre-empt states when necessary to prevent them for imposing regulations that “don’t jibe” with the net neutrality order, the lawyer said. The order also specifically prohibits states from assessing state USF fees on broadband services pending a decision by the Federal-State Joint Board on Universal Service, which is supposed to make recommendations on federal and state contribution reforms (see 1503020054). How the joint board will rule remains an open question, Lichtenberg said.