California’s net neutrality law could put an end to ‘zero-rating’ services

California's new net neutrality laws could affect wireless providers' ability to offer "zero-rating" services. (Pixabay)

California is once again directly challenging the Trump administration with legislation that tests the limits of the Golden State’s legal authority. California on Sunday adopted its own set of net neutrality rules in an effort to revive consumer protections that the Federal Communications Commission jettisoned last year.

The Justice Department immediately moved to squash California’s action, filing a lawsuit on grounds that the federal government has superseding and exclusive power to regulate the internet. “Once again the California legislature has enacted an extreme and illegal state law attempting to frustrate federal policy,” Attorney General Jeff Sessions said in a statement.

California’s net neutrality law, which if enforced and upheld by courts could be the strongest of its kind to date, could also send ripple effects throughout the wireless industry. According to FCC Chairman Ajit Pai, California’s net neutrality law could dramatically affect the business model of wireless carriers. Pai contends that this legislation would prevent wireless carriers from “zero rating” video or music data.

Perhaps the best example of “zero rating” data is T-Mobile’s Binge On service, which allows customers to use select streaming music and video services with no impact on their allotted data plan. Binge On and other features like it basically remove all data charges for select services.

In a speech last month before the Maine Heritage Policy Center, Pai called California’s action a “radical, anti-consumer Internet regulation bill that would impose restrictions even more burdensome than those adopted by the FCC in 2015.”

“It would prevent Californian consumers from buying many free-data plans” that “allow consumers to stream video, music, and the like exempt from any data limits,” he added.

While the outcome of California’s battle with the federal government is unknown, wireless carriers and industry groups widely criticized the law .

“Trying to regulate the Internet through a patchwork of state and local legislation is incredibly shortsighted, and will result in regulatory uncertainty that will hurt innovation and investment, while raising costs for customers in California for years to come,” the California Cable & Telecommunications Association said in a statement.

CTIA said it is committed to protecting the open internet, but it opposes California’s effort as it stands today.

“We are disappointed in the Governor’s decision to sign this legislation which threatens the innovation and investment that drive California’s economy,” the trade association said in a prepared statement.

AT&T also reiterated its commitment to an open internet, but the company said it supports the Justice Department’s lawsuit to preempt the California statute. Verizon referred to its broad statements about the issue of net neutrality, but declined to respond to the latest development directly.

T-Mobile declined to comment.