Charter cites FCC preemption of state net
neutrality rules in case filed by NY.
The impending repeal of net neutrality rules is being used by Charter Communications to fight a lawsuit that alleges the company made false promises of fast Internet service.
New York Attorney General Eric Schneiderman in February filed the lawsuit against Charter and its Time Warner Cable (TWC) subsidiary. Meanwhile, Federal Communications Commission Chairman Ajit Pai this month submitted a proposal to roll back the FCC’s net neutrality rules and to preempt state governments from regulating net neutrality on their own.
Schneiderman’s lawsuit in New York State Supreme Court doesn’t allege violations of the core net neutrality rules (i.e., blocking or throttling specific websites). Instead, the lawsuit says that TWC promised Internet speeds that it knew it could not deliver and that the slow speeds affected all kinds of websites and online services. The suit also alleges that TWC deceived the FCC in order to get a better score on the commission’s evaluations of Internet speeds.
But Charter told the court on Monday that the impending preemption of states on net neutrality will help its case. Charter submitted Pai’s net neutrality repeal proposal into the record and directed the judge to the order’s attempt to preempt state regulations.
“Charter submits that the FCC’s proposed holdings regarding federal preemption nevertheless are instructive” and said it supports the company’s motion to dismiss the case.
Preemption argument fails, AG says
Charter is wrong, the attorney general’s office said in a response filed in court yesterday.
In addition to bans on blocking, throttling, and paid prioritization, the net neutrality rules require ISPs to be transparent about their network management practices. Charter’s court filing says that the FCC’s transparency rule “preempts the Attorney General’s allegations that Time Warner Cable made deceptive claims about its broadband speeds.”
But the net neutrality repeal doesn’t add new preemption powers related to transparency, Schneiderman argues. The FCC is maintaining some of the transparency requirements even after the planned repeal. The attorney general’s brief says:
The Draft Rule—which seeks to establish a new deregulatory policy effectively undoing network neutrality—includes no language purporting to create, extend, or modify the preemptive reach of the Transparency Rule on which much of Defendants’ preemption argument is based. Thus, even if the FCC promulgates the Draft Rule in its current form, the Draft Rule would not add any new legal authority pertinent to Defendants’ preemption argument.
The AG’s office made three additional arguments. The FCC draft order “repeatedly and emphatically stresses the continued availability of traditional state remedies and consumer protections,” the filing said.
The FCC is also proposing to end its use of broadband “nutrition labels” that inform customers about possible limitations in their service. These nutrition labels provide a “safe harbor” that protects against punishment by the FCC.
“This is the same safe harbor that Defendants claim is the basis for their conflict preemption,” the AG’s office wrote. But after the repeal, that safe harbor will be gone.
Finally, the AG’s office said that Charter’s filing “omitted” language from the FCC’s draft order that undercuts its argument. The FCC order notes that “states retain their traditional role in policing and remedying violations of a wide variety of general state laws.”
“In sum,” the AG’s office wrote, “the Draft Rule does not preempt [the attorney general’s] consumer fraud action, but rather makes clear that the states have a longstanding and traditional role in protecting their citizens against frauds, including those committed by Internet service providers.”
Charter had noted that the net neutrality repeal proposal says that “regulation of broadband Internet access service should be governed principally by a uniform set of federal regulations, rather than by a patchwork of separate state and local requirements.”
But the FCC’s attempted preemption of state regulations is no slam dunk and could be challenged. The FCC’s previous attempt to preempt state laws regarding municipal broadband was overturned by a federal appeals court.
Deceptive speed promises
Going back to the lawsuit’s allegations, the AG’s office said that “[Charter] subscribers’ wired Internet speeds for the premium plan (100, 200, and 300Mbps) were up to 70 percent slower than promised; Wi-Fi speeds were even slower, with some subscribers getting speeds that were more than 80 percent slower than what they had paid for.”
Deficient cable modems and routers leased to customers accounted for some of the alleged problems. The lawsuit also points to business disputes between Charter and other network operators, which slowed down Internet speeds when the companies didn’t upgrade infrastructure quickly enough.
Charter argues that the alleged conduct occurred entirely before it purchased TWC in May 2016. But Schneiderman’s lawsuit alleged that the company “continues to underserve [its] subscribers by failing to make the capital investments necessary to live up to [its] promised speeds.”