In an interesting development, the U.S. Supreme Court refused to take the appeal case where ISPs wanted to overturn a New York law that requires ISPs to offer low rates to low-income households.

This case began when the New York legislature approved the Affordable Broadband Act in 2018, which requires ISPs to offer broadband rates to low-income households of no more than $15 for 15 Mbps or $20 for 200 Mbps. ISPs immediately appealed the law and won an injunction against the lower rates until courts heard the issue. Earlier this year, the 2nd U.S. Circuit Court of Appeals in Manhattan ruled that federal telecommunications law does not stop states from regulating broadband rates. When the Supreme Court refused the case, the New York Attorney General said the State would start enforcing the law in thirty days.

To be clear, the refusal of the Supreme Court to take the case does not mean it endorses the original law, but merely that the justices decided against adding this case to an already busy docket.

The intent of the original law is clear – the NY legislature thinks that larger ISPs in the state should be forced to offer affordable rates to low-income households. That’s an interesting concept because it elevates broadband to the level of a necessity akin to low rates that are mandated for rents and electricity for some low-income households. It’s a very different concept than funding low rates through an external subsidy.

There is not likely to be a huge impact from the implementation of the law since the biggest ISPs in the state already offer plans that meet the law. Charter reached a settlement agreement with the State in August to offer low rates for the next four years for participants in the National Free School Lunch Program or those receiving Supplementary Security Income. The State says Charter should have been offering this plans as a result of agreement with the state for the merger with Tim Warner Cable in 2016. Since Charter reached that agreement, both Altice and Verizon have agreed to offer similar plans. The concessions from the largest ISPs in the state might be part of the reason why the Supreme Court didn’t take the case.

However, now that the law is in effect, the temporary agreement with Charter will become permanent, as will the plans of other large ISPs. The original law exempted ISPs with fewer than 20,000 customers.

The real issue of the case is a jurisdictional issue which asks if states have the right to regulate broadband prices. The regulatory world has always operated under the general presumption that States are allowed to regulate things that the federal government elects not to regulate.

The FCC has never attempted to regulate broadband rates and has been focused on a yoyo of policy flip-flops as subsequent FCC’s either kill or reinstate Title II regulation of broadband. It’s now clear that the FCC is out of the broadband regulation business since a federal court recently ruled that FCC has no authority to regulate broadband.

Title II regulation would have given the FCC the authority to regulate broadband rates. Even if the FCC never exercised the right, an FCC right to regulate could theoretically hinder states from implementing rate regulation.

The New York law is an interesting precedent because it solidifies the ability of states to regulate broadband in general and rates specifically in the absence of federal broadband regulation. Now that the law has gone into effect, it seems inevitable that other states will explore similar laws. The big ISPs that operate in multiple states are likely to find themselves supporting different plans across the country – exactly the kind of patchwork regulation that makes ISPs prefer federal regulation over state regulation. I’ve always been mystified why ISPs work so hard to kill weak regulations at the FCC when the alternative is different rules in the states. My conclusion on that question is that fighting regulation is a reflex for large companies, even when leaving things alone might be better for them.