SB 822: Net neutrality bill

On Sept. 30, 2018, Gov. Jerry Brown signed Senate Bill 822, which enacted the California Internet Consumer Protection and Net Neutrality Act of 2018.

SB 822 aims to restore and expand the "net neutrality" protections previously granted under the FCC's 2015 Open Internet Order (2015 Order) issued under the Obama administration. The 2015 Order was repealed under the Trump administration on June 11, 2018 as part of the Restoring Internet Freedom Order (2018 Order), which reclassified ISPs as providers of "information services" under Title 1 of the Communications Act instead of "telecommunications services" under Title II. The reclassification effectively placed ISPs outside the jurisdiction of the Federal Communications Commission and back within the domain of the Federal Trade Commission.

Under SB 822, it is unlawful for ISPs to block or "throttle" (i.e., adjust the speed of) lawful content or impair or degrade lawful internet traffic based on content (with an exception for reasonable network maintenance). The law also prohibits "paid prioritization," which is the practice charging a fee in exchange for giving preferential access to paying data traffic. Additionally, SB 822 prohibits ISPs from charging "edge providers" (i.e., app and content providers) "access fees" in order to reach end users.

SB 822 also takes a step further than the FCC's prior 2015 Order by addressing "zero-rating" practices. Zero-rating refers generally to ISPs making offers to their users not to count data against a plan's data limit when the user is using an ISP's own apps and services rather than those of competitors. Under SB 822, ISPs may not engage in zero-rating except in limited circumstances.

Within hours of signing SB 822 into law, the U.S. Department of Justice filed a lawsuit challenging the constitutionality of the bill. In United States v. California, No. 2:18-at-01539 (E.D. Cal. Sept. 30, 2018), the DOJ argued that the bill is preempted by the FCC's 2018 Order and that Congress granted the FCC the sole authority to create rules related to ISPs. A coalition of four associations representing ISPs also filed a lawsuit (American Cable Association v. Becerra, 2:18-cv-02684 (E.D. Cal. Oct. 3, 2018)) making similar arguments.

SB 822 was scheduled to go into effect on Jan. 1, however, in exchange for a stay of the proceedings in both lawsuits, the state of California has agreed not to enforce the new law pending resolution of Mozilla Corp. v. FCC, No. 18-1051 (D.C. Cir. Aug. 20, 2018), a prior lawsuit challenging the FCC's 2018 Order that is pending before the Court of Appeals for the D.C. Circuit. Oral arguments in Mozilla are scheduled for Feb. 1. The ruling should have a significant impact on the future of ISP regulation by the states.