Big cable, telcos try to block Vermont’s net neutrality purchasing rules

23 October 2018 by Steve Blum
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Charter Communications, Comcast, AT&T and other big, monopoly model broadband providers are taking the State of Vermont to federal court, accusing it of flouting the Federal Communications Commission’s keen desire to remove any limits on their behavior. Vermont legislators passed a law earlier this year that prohibits state and local agencies from buying broadband service from companies that don’t abide by the network neutrality principles adopted by a democratic majority FCC in 2015 and overturned last year as republicans took over control of the agency.

They’re making pretty much the same arguments that they’re making in California, where their lobbying front organisations are also trying to kill a newly enacted net neutrality law. The two laws are very different, however. Vermont’s is similar to senate bill 460, which was killed by the California legislature in August. It, too, would have required state and local governments to only buy from net neutrality compliant Internet service providers. The bill that did pass in California – SB 822 – aims to reinstate those rules across the board. It’s on shakier ground than Vermont’s law.

It’s not unusual for state, and even local, governments to try to sway commerce through their purchasing power, and pursue policies that oppose federal government actions. I do business with a lot of cities in California, and it’s not uncommon to be asked to sign pledges not to, say, manufacture nuclear weapons or do business with “morally repugnant regimes”.

As a general rule, states are free to spend their money and govern their own conduct and that of local governments as they fit, although there are limits. The claim that the FCC’s declaration that it was preempting any state net neutrality laws applies to state procurement policy will run into the same problem that killed Obama administration attempt to override state limits on municipal broadband: congress didn’t clearly say it could. An Ohio-based federal appeals court ruled that

This preemption by the FCC of the allocation of power between a state and its subdivisions requires at least a clear statement in the authorizing federal legislation. The FCC relies upon [section] 706 of the Telecommunications Act of 1996 for the authority to preempt in this case, but that statute falls far short of such a clear statement.

At least five federal appeal court circuits are involved in the arm wrestling over the FCC’s authority. Besides California, Vermont and Ohio, the FCC is being directly challenged in the District of Columbia, and a Minneapolis-based federal appeals recently weighed in on what kind of online services a state may and may not regulate. It’s increasingly likely that the federal supreme court will have the final word.