A law recently took effect in New York requiring broadband providers to offer a low pricing tier, which could spur copycat laws in other states. Any requirement to mandate low-cost pricing could do more harm than good and ultimately mean fewer dollars for broadband investment.
New York’s Affordable Broadband Act requires a 25 megabits-per-second download speed service tier of $15 monthly, with an option of $20 monthly for 200 Mbps. Price increases are capped at 2 percent annually, with state officials periodically reviewing whether minimum speed thresholds should be increased.
The ABA ping-ponged through courts for the past few years. The U.S. District Court for the Eastern District of New York barred the New York attorney general from enforcing the 2021 law, concluding that the Communications Act of 1934 and the Federal Communication Commission’s Restoring Internet Freedom order in 2018 that classified broadband as an information service took precedence over the state act.
The Court of Appeals for the 2nd Circuit reversed the ruling in April 2024. That court said the Communications Act doesn’t establish a framework of rate regulation “sufficiently comprehensive to imply that Congress intended to exclude the states from entering this field.” The appeals court also noted the FCC’s 2018 decision stripped that agency of the authority to regulate broadband rates, “and a federal agency cannot exclude states from regulating in an area where the agency itself lacks regulatory authority.”
Industry trade groups petitioned the Supreme Court to intervene, arguing that as an interstate communications service, broadband is subject to regulation under the Communications Act.
Dascher Pasco, an attorney at Troutman Pepper Locke, wrote at Regulatory Oversight that “petitioners also argued that rate regulation imposed by the ABA would burden the economy by allowing consumers to buy broadband at below-market rates, deterring the investment and expansion of broadband networks.”
The Supreme Court declined to review the petition, and the New York law went into effect on January 15.
Trade groups NCTA — The Rural Broadband Association, ACA Connects, CTIA, New York State Telecommunications Association, Satellite Broadcasting & Communications Association and USTelecom issued a statement that the decision “leaves in place harmful rate regulations that will undermine the effective delivery of broadband services and discourage investment in broadband networks, particularly in unserved and underserved areas.”
Other states are likely to follow New York’s lead on the ABA. A recent Fierce Telecom article pointed out that a patchwork of state broadband rate laws will create unnecessary confusion in the marketplace.
Rate regulation has become a topic of heated debate in the $42.5 billion Broadband Equity, Access, and Deployment Program. The National Telecommunications and Information Administration, which administers that program, was allowing states to set rates as they developed their BEAD proposals. This prompted the 16 Republicans on the House Energy and Commerce Committee to send a letter to then-NTIA Director Alan Davidson arguing that the stance went against congressional intent.
It is hoped other states do not create their own broadband rate regulations. This will only dissuade competition in the broadband marketplace and complicate efforts to connect every American with high-speed internet service.
