California Bill Makes Push to Regulate Broadband as Public Utility

A California lawmaker is pushing a measure that that would classify broadband as a public utility under state law, reviving a longstanding dispute on whether internet service providers should come under more oversight at the state level.

Assemblymember Jim Wood (D) is sponsoring the measure (AB 1714) that would put broadband service under the jurisdiction of the California Public Utilities Commission. It’s potentially the first such bill since a prohibition in state law on regulating Voice over Internet Protocol—technology allowing phone calls over broadband—expired in 2020, observers said.

Industry groups unsuccessfully fought to extend the VoIP prohibition, which consumer advocates said companies constantly pointed to whenever an attempt at regulating broadband occurred.

“The fight for so long was just allow us to regulate it like we normally could. To me, the fight was allow us to even ask broadband companies for data,” said Vinhcent Le, technology equity counsel at The Greenlining Institute. “Now to go like, ‘Hey, actually give the CPUC, the state of California, the people, the ability to ensure rates are reasonable.'—It’s a pretty big step in my opinion.”

Broadband companies see the Wood bill as a step in the wrong direction that could distract from all the ongoing work by federal and state governments to expand broadband.

“I don’t believe that AB 1714 is necessary or appropriate,” said Dane Jasper, CEO of Sonic, an independent internet service provider based in Santa Rosa, Calif. “I have real concerns that it could derail infrastructure investment like our own by limiting our ability to finance modern broadband deployment.”

Stronger Authority

The CPUC currently has tangential authority over the broadband space. Many broadband providers provide internet-based telephone—which is a public utility—and the CPUC has the power to make sure that phone services are widely available and have emergency backups. Utility poles used by broadband are subject to some CPUC rules. Cable companies also deliver broadband alongside TV. The CPUC is responsible for oversight of video franchising—allowing companies to provide cable TV in local and regional areas—while making sure their services are accessible and competitive.

The commission also oversees the allocation of multiple broadband grant programs to incentivize companies to expand broadband service to underserved areas. But those programs are voluntary and Wood fears districts like his will still miss out.

“Providers really go to where they get the biggest bang for their buck. And that means that communities in our area often don’t get an opportunity,” said Wood, whose district stretches from Santa Rosa in the North Bay to more rural coastal and mountainous areas up to the Oregon border.

Wood said he’s been repeatedly told by companies that it’s too expensive to build up service in his district, which has been plagued by massive wildfires in recent years, despite the pandemic showing how important broadband is. If the CPUC had stronger authority over broadband, there would be more of a guarantee his area receives better service, he said.

CPUC oversight would set fairer rates and force companies to provide more transparency in their business models, said Le. Past attempts to get pricing or mapping data by the CPUC has faced resistance from and legal battles with broadband companies. With transparency, anticompetitive behavior could be discouraged as well, Le said.

Wood said his intent isn’t necessarily to fix rates or direct companies to invest in certain places, but rather force the providers to be more open about their operations given how broadband is crucial for economic development.

“I believe that with transparency and the ability to look at these things, that alone potentially has the opportunity to change behavior because nobody’s going to like to be called out for what they’re doing,” he said. “At this point, it’s more about transparency, and are consumers getting what they paid for?”

Business Pushback

The broadband industry has dismissed claims by consumer advocates that it ignores low-income communities and charges unfair rates, noting that it has made efforts despite the higher costs to provide service in remote areas.

“The notion of providing different levels of service within our network is just not true,” said Janus Norman, president of the California Broadband and Video Association, which represents cable broadband providers. “We want to expand our network to those places that traditionally have been less densely populated.” Norman pointed to participation in the grant programs as evidence of that.

Internet providers say the California market already has a lot of competition and low prices. They argue utility-style regulation would destroy that marketplace.

“Broadband internet access is a widely competitive field, with consumers having more and more choices these days,” said Jasper. “In the locations that Sonic serves, consumers have at least three and sometimes four wireline broadband options, plus wireless and mobile solutions.”

There’s also the legal question of whether the Wood bill conflicts with federal policy that classifies broadband not as a carrier, but as an information service. Court rulings have given mixed messages on when federal preemption applies to state regulation of the service.

Regardless, Wood said the prospect of lawsuits or opposition from the broadband industry isn’t going to deter his work. He’s happy to negotiate, but further regulation is a must from his perspective.

Wood said he believes his bill will get support from his colleagues just as he’s gotten their backing on his past broadband legislation around mapping.

“I don’t know that all my colleagues are totally satisfied with the level of service that their constituents are getting,” he said of broadband providers.