California legislature looks at extending moratorium on Internet services regulation

by Steve Blum • , , , ,

Internet services, such as telephone service via voice over Internet protocol (VoIP) technology, are unregulated in California. For now. Federal preemptions, or attempted preemptions, aside, the California legislature approved a seven year moratorium on regulating Internet protocol (IP) enabled services in 2012. Senate bill 1161 said the California Public Utilities Commission and all state and local agencies could not…

Enact, adopt, or enforce any law, rule, regulation, ordinance, standard, order, or other provision having the force or effect of law, that regulates VoIP or other IP enabled service, unless required or expressly delegated by federal law or expressly authorized by statute.

That ban will expire at the end of the year, unless the legislature renews it. In a gut-and-amend move on Monday, assemblywoman Lorena Gonzalez (D – San Diego) turned an obscure bill regarding the San Diego airport into a perpetual extension of SB 1661. Assembly bill 1366 takes out the sunset clause and makes a few meaningless tweaks to the language.

It leaves in place a distinction that wasn’t so obvious in 2012, but has taken on greater significance as the debate over network neutrality and whether broadband is an information or telecommunications service has intensified. The CPUC can’t regulate VoIP or other services that are built on Internet protocol technology, but SB 1161 drew a clear line between those kinds of services and the “broadband connection from the user’s location” that they ride on.

Pausing regulatory action for seven years while technology and service models matured was a good idea at the time. Trying to regulate new online services that evolved rapidly in an open market could have been disastrous for California’s high tech economy. With the benefit of that experience, though, it’s time to consider whether a blanket ban on IP services regulation is still needed. Some of that work began last year, when the California legislature passed a ground breaking data privacy law and its own version of network neutrality rules.

In particular, the carve-out for VoIP needs to closely examined. Seven years ago, VoIP service providers were fringe players. But with AT&T’s embrace of VoIP technology, not least because it’s a path to decommissioning rural copper networks and escaping regulatory oversight, that exception needs another look. Traditional, plain old telephone service – POTS – and VoIP provide virtually identical telecommunications functionality. Keeping one under the CPUC’s umbrella and not the other makes little sense.

AB 1366 will now head to the assembly’s communications and conveyances committee, which does not a have a good track record when it comes to thoughtful consideration of telecoms policy. This one needs watching.