Telecom Groups Sue NY Over $15 Low-Income Broadband Law

On Friday, numerous telecommunications associations filed a complaint in the Eastern District of New York against New York Attorney General Letitia A. James over a state law that purportedly seeks to regulate the rates and speeds of interstate communications, from which the plaintiffs argued New York is precluded under federal law.

According to the complaint, internet access is generally provided through broadband, which “ ‘transmits data at much higher speeds’ than preexisting technologies, such as dial-up connections provided over local telephone facilities.” Additionally, the plaintiffs noted that broadband is considered “an interstate information service that is subject to a federal regulatory framework, under which a combination of mandatory disclosures, competition, and federal and state enforcement of preexisting laws benefit consumers.” The plaintiffs asserted that the Federal Communications Commission (FCC) has twice rejected ex ante rate broadband regulation. The associations contended that “the broadband service that New York seeks to regulate has never been subject to rate regulation at the federal or state level.”

The plaintiffs claimed that broadband providers understand the need to close the digital divide and ensure broadband is available to all Americans, including low-income Americans and underserved communities. Pursuant to that need, broadband providers are allegedly building out their networks to reach underserved communities and offering lower-priced services to reach low-income households and participating in federal programs to subsidize broadband, such as the Lifeline program and the Emergency Broadband Benefit program. Moreover, the associations stated that New York “recognizes that, as a result of providers’ offerings and these federal programs, there are already ‘multiple options’ for New Yorkers to purchase ‘affordable internet plans.’ ”

However, the plaintiffs averred that New York seeks to regulate broadband rates. Specifically, according to the complaint, a provision of the newly enacted New York State Fiscal Year 2022 Budget “requires wireline, fixed wireless, and satellite broadband providers – no later than June 15, 2021 – to begin offering to qualifying low-income consumers high-speed broadband service at a cost to consumers of $15 per month or higher-speed broadband service at a cost to consumers of $20 per month (the ‘Rate Regulation’).” The associations alleged that the Communications Act and a 2018 FCC order that reestablished the current, non-common-carrier federal framework was upheld by the D.C. Circuit Court, confirming that “broadband is an interstate information service that should not be subject to common-carrier regulation” precluding the state from regulating broadband rates. In particular, the plaintiffs claimed that the rate regulation clashes with the circuit decision and the Communications Act “by compelling providers to offer broadband on a common-carrier basis: at state-set rates and terms to all eligible members of the public.”

Additionally, the plaintiffs proffered that the rate regulation “intrudes into an exclusively federal field,” noting that federal legislation precludes states from regulating these services. As a result, the plaintiffs alleged that New York has exceeded its regulatory authority and that the rate regulation is also preempted by federal law, conflict, and field.

The associations in the instant action include New York State Telecommunications Association Inc. (NYSTA), the Wireless Association, America’s Communications Association (ACA Connects), the Broadband Association, the Rural Broadband Association, and Satellite Broadcasting & Communications Association (SBCA).

The claims for relief are declaratory judgment that federal law preempts the rate regulation and that enforcement of the rate regulation would violate 42 U.S.C. §1983.

The plaintiffs seek declaratory judgment in their favor, a preliminary and permanent injunction, an award for costs and fees, and other relief.

ACA Connects is represented by MoloLamken LLP and SBCA by Harris, Wiltshire & Grannis LLP. The remaining plaintiffs are represented by Kellogg, Hansen, Todd, Figel & Frederick P.L.L.C.