New York’s broadband battle with telecoms could signal the future of state broadband regulation

Trade organizations representing AT&T, Verizon, T-Mobile, and other telecoms filed a lawsuit attempting to kill New York state’s low-income broadband law. Though targeting New York, the lawsuit's outcome could determine whether individual states possess the authority to regulate broadband prices. The suit argues broadband services fall under the purview of the federal government and that New York lacks the power to determine pricing. The groups—which are asking courts to invalidate New York’s law—claim regulating broadband rates would undermine telecoms’ ability to invest and upgrade networks.

New York’s law attacks the problem of broadband affordability from another angle than subsidizing cost, hoping instead to set rates for low-income users.

• The state’s law requires ISPs to offer low-income households a $15/month service option with speeds of at least 25 Mbps, or a $20 high-speed option. For context, NY State Assemblymember Amy Paulin claims the average monthly price of broadband in the state hovers around $50.
• New York’s new law would apply to all ISPs in the state with more than 20,000 customers.
• The New York Governor’s Office claims the reduced prices could impact 7 million people in 2.7 million households.

Affordable broadband initiatives have gained urgency during the pandemic. Just 56% of US households earning less than $30,000 per year had access to home broadband in 2019, according to Pew data. The pandemic laid bare and exacerbated that stark inequality as millions were suddenly forced to work and learn from home. The FCC recently took a first step toward addressing the connectivity gap by approving emergency subsidies to reduce high-speed internet costs. Meanwhile, President Joe Biden included a $100 billion spending initiative to increase broadband access as part of his $2 trillion infrastructure plan. These initiatives expand access and provide subsidies, but they stop short of regulating how much ISPs can charge subscribers.

By opposing New York’s law, the telecom industry hopes to prevent other states from following New York’s example. The industry’s core argument revolves around its claim that state regulation conflicts with FCC rules categorizing broadband as an interstate information service subject to a federal regulatory framework. If New York’s law succeeds, other states eager to secure more desirable rates for their residents will likely follow its lead. On the other hand, if the telecoms win, the court ruling would hamstring the ability of states to regulate broadband rates. Ultimately, if the court decides the federal government has sole authority to regulate broadband, telecom groups may double down on their efforts to influence federal broadband legislation in their favor.