California May Weaken Net Neutrality Proposal

California lawmakers on Monday floated revisions to a proposed net neutrality bill that could weaken the measure.

The bill, SB 822, introduced in February by state Senator Scott Wiener (D-San Francisco), would largely recreate the Obama-era net neutrality rules. The measure would prohibit broadband providers from blocking or throttling traffic, and from charging higher fees for prioritized delivery. Those prohibitions were all imposed by the Obama-era Federal Communications Commission in 2015, but repealed last year by the Republican-controlled agency.

Weiner's proposal also would restrict Internet service providers' ability to exempt some material from consumers' data caps, and limit some forms of paid "interconnection" agreements -- which can involve video providers paying broadband carriers to interconnect directly with their network. (The best-known dispute over interconnection probably occurred in 2014, when Netflix resolved a problem with choppy streams by entering into agreements with the major carriers.) The Obama-era net neutrality rules took a case-by-case approach to interconnection agreements and to data-cap exemptions.

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On Monday, lawmakers on the California Senate's Energy, Utilities and Communications committee proposed removing the proposed ban on data-cap exemptions -- also called "zero-rating" -- as well as restrictions on paid interconnection agreements.

"To the extent that sponsored data plans provide consumers with more access to data at a lower cost, prohibiting beneficial forms of zero-rating could increase consumers’ data costs in the long-term," the committee writes in its 14-page analysis of the proposal. "Low-income Californians who more heavily rely on mobile devices in lieu of fixed services could be disproportionately impacted."

Current FCC Chairman Ajit Pai made similar arguments last year, when he closed an investigation into decisions by AT&T and Verizon to exempt certain video streams from customers' data caps. AT&T's zero-rating program allows wireless customers who purchase DirecTV to watch video through the provider's mobile app, without burning through their monthly data caps; Verizon also zero-rates some material.

Pai said at the time that the carriers' zero-ratings plans "have proven to be popular among consumers, particularly low-income Americans, and have enhanced competition in the wireless marketplace."

His move came only three weeks after the prior FCC Chairman, Tom Wheeler, said that zero-rating by AT&T and Verizon potentially harmed consumers and competition.

California lawmakers evaluating the new proposal also say its provisions regarding paid interconnection agreements could result in higher costs for consumers.

"In the absence of peering agreements, costs for network upgrades could either be absorbed by ISPs or passed to consumers," the committee writes. "In the short-term, consumers may not experience significant cost impacts. However, a long-term absence of other mechanisms to pay for infrastructure upgrades could increase cost pressures for consumers."

But net neutrality advocates say the amendments proposed on Monday would create a loophole that would effectively allow carriers to charge companies like Netflix higher fees to reach consumers.

"Banning blocking, discrimination, access fees and third-party paid prioritization inside the access network, but not at the point of interconnection, would allow ISPs to easily evade the rules by engaging in these practices at the point of interconnection instead," Stanford's Barbara van Schewick writes.

Net neutrality proponents argue that rules are necessary to prevent broadband providers from engaging in censorship, and from harming competitors. But the current FCC Chairman says the former regulations were too "heavy handed," and depressed investment.

Weiner's original proposal has garnered support from numerous net neutrality proponents, including former FCC Chairman Tom Wheeler. Broadband carriers have been lobbying against the bill.

Lawmakers on the state Energy, Utilities and Communications committee are expected to take up the measure on Tuesday.

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