Internet service providers in California will have to hew to new net neutrality rules, a federal appeals court signaled Wednesday (April 20).

In a one-paragraph dismissal, the 9th U.S. Circuit Court of Appeals denied cable and telco broadband operators‘ appeal of California's net neutrality law.

“The full court has been advised of the petition for rehearing en banc and no judge has requested a vote on whether to rehear the matter en banc,” the court said in a one-paragraph ruling. “The petition for rehearing is DENIED [that all-caps emphasis was the court’s].‘

FCC Chairwoman Jessica Rosenworcel signaled it was time for nationwide net neutrality rules to return. The 9th Circuit just denied the effort to rehear its decision upholding California’s #netneutrality law," she tweeted. "This is big. Because when the FCC rolled back its open internet policies, states stepped in. I support net neutrality and we need once again to make it the law of the land."

It will almost certainly take the Senate confirming a fifth commissioner, and third Democrat, for that to happen. Currently the FCC is at a 2-2 political tie and the Republicans are no fans for the FCC's former rules.

“This is hardly a surprise,” said Andrew Schwartzman of the court decision. Schwartzman is senior counselor to the Benton Institute for Broadband and Society, and an attorney schooled in appeals court decisions and net neutrality cases. “The 9th Circuit’s unanimous panel opinion affirming the lower court’s decision allowing the new law to go into effect followed established principles. Its finding that federal law does not preclude California from adopting its own network-neutrality rules is rock solid," Schwartzman said.

California enacted the California Internet Consumer Protection and Net Neutrality Act after the Federal Communications Commission under Republican chairman Ajit Pai eliminated the federal rules against blocking, throttling and anti-competitive paid prioritization of internet access.

Also: California Net Neutrality Victory Draws Crowd

ACA Connects, NCTA–The Internet & Television Association, US Telecom and CTIA, representing cable, telco and wireless ISPs, had asked the 9th Circuit to overturn a U.S. District Court‘s decision not to grant a preliminary injunction against the law. But the three-judge 9th Circuit panel (Judges Mary M. Schroeder, J. Clifford Wallace and Danielle J. Forrest) — one of the most liberal circuits in the federal appeals court system — instead upheld the lower court.

The panel agreed with the district court that the FCC lacked the authority to pre-empt the state law because in reclassifying internet access as an information service under Title I of the Communications Act, the FCC no longer had the authority to regulate the way it did when it was considered a Title II telecommunications service.

It also pointed to the U.S. Court of Appeals for the D.C. Circuit upholding the FCC reclassification but striking down the accompanying order asserting preemption of state net neutrality rules.

The Trump Administration had challenged the California law, but the Biden DOJ withdrew that challenge last year.

The California law was passed in 2018, but its implementation was stayed pending the ultimate legal determination on the FCC's Restoring Internet Freedom Order eliminating the rules — the federal appeals court upheld the majority of the decision (Oct. 1, 2019) — as well as of various motions in the California district court. ■

In a big victory for cable operators large and small, a federal court has said the FCC was within its authority to make it easier for cable video service to shed basic rate regulations.

The U.S. Court of Appeals has upheld the FCC's decision, made under former chair Tom Wheeler, reversing the rebuttable presumption that cable operators are not subject to local competition, thereby making regulators prove there is a lack of competition or rate regs go away.

The onus had been on cable ops to prove there was competition, but the FCC concluded that the near-nationwide availability of direct broadcast satelllite service essentially represented that competition.

The commission, with the strong backing of cable operators -- the National Cable & Telecommunications Association and American Cable Association both intervened in the court challenge on the FCC's side -- last year voted to reverse the rebuttable presumption and assume cable systems face local market competition (primarily given the ubiquity of satellite TV) unless telecom regulators or other challengers could prove they did not.

A finding of effective competition lifts basic cable price regulations.

Writing for the three-judge panel that rejected the challenge to that decision by the National Association of Broadcasters, The National Association of Telecommunications Officers and Advisors and the Northern Dakota County Cable Communications Commission, Judge Donald Ginsburg said the FCC decision was within its authority.

"Because the Congress has not spoken directly to the question whether the Commission may use a rebuttable presumption in lieu of case-by-case findings of fact, we analyze the Commission’s decision under Chevron step two," said Ginsburg, referring to the multi-part test for courts deferring to the subject matter expertise of a regulatory agency.

"Based upon the strength of its nationwide data and the opportunity it gave each franchising authority to support the opposite conclusion [virtually none did], we hold the Commission’s use of a rebuttable presumption to comply with the statutory requirement that it make a finding on the state of competition in each franchise area is a permissible construction of the statutory requirement that the Commission 'find effective competition' before terminating rate regulation," he added.

Not surprisingly, the National Association of Telecommunications Officers and Advisors (NATOA) opposed the move and sued the FCC.

The NCTA and ACA, in a brief filed in support of the FCC, said the commission's decision to make franchise authorities petition to retain that regulation was a reasonable implementation of the Communications Act, was consistent with the relevant statute and squared with current market realities, and added that to retain the previous presumption would likely have been arbitrary and capricious.

The National Association of Broadcasters backed NATOA in the suit. It argued that reversing the presumption would lead to higher prices and cable operators pulling local TV station signals off the basic tier.

“We are gratified by the Court’s unanimous decision upholding the FCC’s effective competition order," said NCTA in a statement. "This decision further affirms that consumers are enjoying the benefits of a hyper-competitive video marketplace and that consumer interests are best served by relying on competition rather than outdated regulations built for a world that no longer exists.”

"ACA is pleased with the Court's decision affirming the FCC's 2015 Order that established a presumption that cable operators now face 'effective competition' nationally,' said American Cable Association President Matt Polka. "In today's market, consumers have at least three choices for traditional pay-television service and can elect to subscribe to many online video services, like Netflix and Hulu. There is no longer any good reason that cable operators should remain subject to burdensome rate regulation. ACA is also pleased to see that broadcasters' attempts to maintain unnecessary and unwarranted regulatory handcuffs on cable operators have been thwarted."

“While I disagreed with many of the FCC’s decisions during the Tom Wheeler-era, one of the most constructive, market-oriented actions the agency took was establishing a presumption that, on a national basis, the cable market is presumptively competitive," said free-market think tank Free State Foundation president Randolph May following the decision. "Of course, with competition from satellite and telephone company video providers, and increasingly mobile video services, it would have been blinking marketplace reality to have determined otherwise. Aside from the immediate impact of the court’s affirmance, the ruling ought to have a broader impact in pointing the way for the Commission to employ deregulatory evidentiary presumptions in other instances where there is effective, even if not ubiquitous, competition.”