California

A California lawmaker halted an effort to pass a law that would force Internet service providers to offer $15 monthly plans to people with low incomes.

Assemblymember Tasha Boerner proposed the state law a few months ago, modeling the bill on a law enforced by New York. It seemed that other states were free to impose cheap-broadband mandates because the Supreme Court rejected broadband industry challenges to the New York law twice.

Boerner, a Democrat who is chair of the Communications and Conveyance Committee, faced pressure from Internet service providers to change or drop the bill. She made some changes, for example lowering the $15 plan’s required download speeds from 100Mbps to 50Mbps and the required upload speeds from 20Mbps to 10Mbps.

But the bill was still working its way through the legislature when, according to Boerner, Trump administration officials told her office that California could lose access to $1.86 billion in Broadband Equity, Access, and Deployment (BEAD) funds if it forces ISPs to offer low-cost service to people with low incomes.

That amount is California’s share of a $42.45 billion fund created by Congress to expand access to broadband service. The Trump administration has overhauled program rules, delaying the grants. One change is that states can’t tell ISPs what to charge for a low-cost plan.

The US law that created BEAD requires Internet providers receiving federal funds to offer at least one “low-cost broadband service option for eligible subscribers.” But in new guidance from the National Telecommunications and Information Administration (NTIA), the agency said it prohibits states “from explicitly or implicitly setting the LCSO [low-cost service option] rate a subgrantee must offer.”

State lawmaker describes “complete farce”

After losing their case against New York, Internet service providers asked the Trump administration to try to block state affordability laws. Although New York’s court win seemed to solidify states’ regulatory authority, the Trump administration could use its control over BEAD funding to pressure states into abandoning low-income requirements.

“When we introduced the bill, there were looming changes to the BEAD program,” Boerner told Ars. “There were hints at what would happen, but we had a call two weeks ago with NTIA that confirmed that… explicit or implicit rate regulation would disqualify a state for access.”

NTIA officials also made it clear that, even if California obtained the funding, ISPs could exempt themselves from the proposed low-cost broadband bill simply by applying for BEAD funding, Boerner told us. She said the NTIA’s new guidance is a “complete farce,” since ISPs are getting public money to build infrastructure and won’t have to commit to offering low-income plans at specific rates.

“All they would have to do to get exempted from AB 353 [the $15 broadband bill] would be to apply to the BEAD program,” she said. “Doesn’t matter if their application was valid, appropriate, granted, or they got public money at the end of the day and built the projects—the mere application for the BEAD program would exempt them from 353, if it didn’t jeopardize from $1.86 billion to begin with. And that was a tradeoff I was unwilling to make.”

We contacted the NTIA and asked whether Boerner’s description of the agency’s statements is accurate. We also asked the NTIA whether it believes that ISPs applying for BEAD funding are exempt from the New York law. The NTIA declined to comment today.

Boerner’s account of NTIA’s guidance raises the question of whether the NTIA is trying to pressure New York into changing or dropping its low-cost broadband law. New York Attorney General Letitia James defended the state law in court, but her office declined to comment when contacted by Ars. We also contacted Gov. Kathy Hochul’s office yesterday and did not receive a reply.

Boerner said the federal government’s action is “a flat-out giveaway to large corporations and denying Californians and Americans access to what’s essentially a basic service that everybody needs, which is access to broadband.”

Advocates: California shouldn’t back down

An earlier version of Boerner’s bill was approved by the state Assembly on June 4. Boerner said there were negotiations with the Senate on how to proceed, and the bill was amended. But last week, after the call with NTIA, Boerner decided not to move ahead with it this year.

“I held it in committee,” Boerner said.

Boerner’s top donors include Cox, AT&T, and Comcast. Boerner acknowledged that when the bill was still moving ahead, she lowered its required speeds based on discussions with cable companies and other ISPs. The 50/10Mbps threshold is “what I was able to negotiate for the $15. Most companies—especially cable, a lot of the big ISPs in California—already offer $30 for 100/20Mbps,” she said.

Advocacy groups say that California lawmakers shouldn’t bend to big ISPs or the NTIA. The BEAD law’s funding is for subsidizing new broadband deployments, while California’s proposed law would mainly apply to networks that have already been built, they point out.

Moreover, New York beat ISPs in court after nearly four years in litigation. The US Court of Appeals for the 2nd Circuit upheld the law last year. While the Supreme Court never directly ruled on the law, it rejected telecom groups’ petitions to hear their challenge to the appeals court ruling.

“No matter which way you slice it, federal changes to the BEAD program do not override the Supreme Court’s affirmation of a state’s authority to establish a broadband affordability standard. They just don’t,” Arturo Juarez, policy advisor for the California Alliance for Digital Equity, told Ars.

Speed cut negotiated with ISPs “a non-starter for us”

California-based advocates were eager to push for a low-income requirement after the Supreme Court rejected efforts to overturn New York’s law. “When the chair decided to take up the measure, we were really excited,” Juarez said. “She obviously sits on a key committee to getting the bill out.”

But advocates were disturbed by changes made to the bill, including the speed cut.

“We learned that there had been some backdoor, closed negotiations with industry to lower the speed threshold… that, of course, was just a non-starter for us,” Juarez said. “I don’t think it makes any sense to say that we’re going to lock low-income folks into second-class connectivity or essentially offer them a broadband service that doesn’t even qualify as broadband because it’s not fast enough, it doesn’t even meet the federal definition of what broadband is.”

Natalie Gonzalez, director of Digital Equity Los Angeles, told Ars that the NTIA guidance shouldn’t apply to existing broadband networks. Having BEAD rules apply to “existing infrastructure and existing subscription packages is a pretty far reach,” she said. Gonzalez also said that no legal analysis or evidence has been made public to show how the BEAD guidance on affordable broadband would make the state legislation unviable.

“From our standpoint as advocates and being on the calls with the CPUC [California Public Utilities Commission], our interpretation is that the rules simply just eliminate any new builds” from having an affordable option as a requirement, she said.

ISP-based verification another sticking point

Juarez and Gonzalez said they were also concerned that Boerner’s proposal would let ISPs do the verification of people’s eligibility for low-income plans, instead of having the CPUC perform that task. “We didn’t want ISP-based verification… because we saw that just doesn’t work, and it really represents a major barrier to access,” Juarez said.

Gonzalez said that “parents aren’t going to work with fears of immigration raids,” and people are concerned that ISPs would share sensitive data with the federal government. She said, “there was real hesitation from community and advocates within our coalition of who is going to be housing this data, what are the transparency and accountability and reporting requirements within the ISPs to secure this type of information.”

The CPUC handles California’s Lifeline program, “and that existing state verification process has been vetted, has been around for a long time,” Juarez said. The Boerner bill stated that the CPUC would have no authority to implement or enforce the $15 mandate and would have given oversight authority to the state Department of Technology.

Juarez said that advocates also wanted the bill to have broader exemptions for small Internet service providers that serve rural areas and aren’t as profitable. Big ISPs can easily afford to offer low-cost plans, he said. He pointed to a California Public Advocates Office analysis that said, “a $15 low-income broadband requirement would potentially reduce the combined revenues of the four largest broadband providers—AT&T, Comcast, Cox, Charter/Spectrum—by less than one percent.”

“We know that these massive multi-billion dollar corporations, they really have enough subscribers and they have enough service area to accommodate this sort of plan,” Juarez said.

Lawmaker “looking for new and creative ideas”

Boerner defended her approach to the bill. While she initially proposed higher speeds, she said that the 50/10Mbps threshold is robust enough for a family doing tasks like telehealth, Zooms, online learning, and file syncing. “The use case I always have in my head is a single mom with three kids working two jobs. That mom needs to get online, apply for jobs, she needs her kids to all get online and do their homework at the same time. I’m a mom of two kids. Nobody needs their kids fighting over bandwidth,” she said.

Boerner said her goal with the bill “was always a basic broadband service” that would be affordable. “There are lots of packages out there in the world that people choose to get because they’re being price-conscious and they choose the service level that they need,” she said.

We asked Boerner about pressure from broadband industry lobbyists. She replied, “Most industries are against rate regulation. We were trying to find a balance between meeting a need, which I think all of the companies see that need, right? They see the need for low-income Californians to get online. They want to be part of the solution, and also almost every industry in California hates rate regulation. So how do you balance those interests?”

While Boerner’s bill won’t be moving forward this year, a different bill in the state Senate would encourage ISPs to offer cheap broadband by making them eligible for Lifeline subsidies if they sell 100/20Mbps service for $30 or less. Unlike Boerner’s bill, it wouldn’t force ISPs to offer low-cost plans.

Boerner criticized Congress for discontinuing a national program that made $30 discounts available to people with low incomes. Her attempt to impose a low-cost mandate in California began after the nationwide Affordable Connectivity Program (ACP) was eliminated.

“We all saw the photos of kids outside of Taco Bell or McDonald’s using their Wi-Fi to turn in homework during the pandemic, and none of us wanted to go back to that,” she said.

The ACP’s $30 discounts temporarily alleviated that problem. The ACP “was one of our most successful public benefit programs, and it wasn’t partisan,” Boerner said. “It was rural, it was urban, it was Democrat, it was Republican… every American who was low-income benefited from the ACP. And I’d really like to appeal to Congress to act in the interests of Americans and find a way to have federal subsidies for low-income access to broadband again. I wouldn’t need to do state regulations if Congress had done their job.”

It isn’t clear whether Boerner will revive her attempt to impose a low-cost mandate. When asked about her future plans for broadband affordability legislation, she did not provide any specifics. “We’re always looking for new and creative ideas,” Boerner said.