The Golden State’s Gold Standard on Net Neutrality


When the California State Legislature voted last week to defy the US federal government and preserve net neutrality – the rules that prevent internet service providers (ISPs) from charging website operators for faster transmission to subscribers – it highlighted a memorable session for regulatory activity in the US technology sector that many of the major players would no doubt rather forget.

The federal net neutrality ruling will have a direct and lasting impact on tech giants, many headquartered in the Golden State. Coupled with June’s adoption of new rules on data protection, California’s push pledges to reconfigure the business models of companies like Facebook and Google that generate vast revenues from customer data.

As telecommunications carriers trek into the domain of net neutrality (abolished by the Federal Communications Commission just weeks before passage of the California Consumer Privacy Act (CCPA)), they will also be required to fundamentally reform how they service the country’s most populous state, should Governor Jerry Brown sign the legislation.

Building a Prototype

With more than two dozen states challenging net neutrality – and nearly a dozen taking legislative steps to create data protection systems – California’s efforts offer a blueprint response to the raft of scandals that have compromised companies and national institutions, scarring customers in the process.

It also sets up a framework for a Supreme Court challenge on net neutrality decisions and defines the rights of states in charting the future of service delivery in the era of 5G telecommunications, which is set to arrive in the US in 2020 when the CCPA goes into effect.

With companies across the spectrum of industry routinely bombarded by hackers and routinely found failing to protect customer dataOpens a new window , the California law is part of a global move to afford consumers greater control of their personal information.

Personal Limits

In the US, foreign social media interference in the 2016 presidential election has provided further motivation to rein in tech giants that comb user data in order to offer targeted markets to advertisers.

Akin to the European Union’s General Data Privacy Regulation, which went into effect in May and binds companies servicing the EU’s 28 member countries regardless of domicile, the CCPA’s core tenets include giving consumers the right to know what data has been collected, how it has been used, and timely notification of breaches by hackers. It permits them to opt out of the selling of their data and the right to delete, on request, personal information from company registers.

It also affords them similarly priced product and service offers, regardless of whether they choose to share their data with sellers and providers.

Most states have established individual data breach and brokerage regulationsOpens a new window . However none – as yet – have gone as far as California, which makes companies to receive an opt-in from users under the age of 16 (or their guardians) before their data can be sold.

Backing Business Interests

Big tech won a slight reprieve in seeing the CCPA adopted ahead of formal referendum in the state’s upcoming November election, which would have precluded future amendments had it passed. While some, like cloud service providers Microsoft and Salesforce, backed the new lawOpens a new window , companies that monetize consumer data, including Facebook and (Google parent) Alphabet, lobbied against its passage.

Telecoms carriers AT&T, Comcast and Verizon stood against the CCPA, and also attempted to curtail the net neutrality legislation. That law would require ISPs to abide by precepts of the 2015 Open Internet legislation reversed by the FCC.

Like Facebook’s sale of data on 87 million US accounts to UK consultancy Cambridge Analytica, which then collected support on social media for Presidential candidates Ted Cruz and eventual winner Donald Trump, carriers have done themselves few favors with the two-tiered approach that they claim is necessary to offset their investments in 5GOpens a new window .

Verizon’s purposely slowing service for firefighters in Santa Clara due to excessive usage during California’s recent record wildfires inspired voters to demand that legislators restore the initial bill that originated in the upper house, but had been gutted by a lower-house committee.

The state’s net neutrality one-ups the old Federal rules, denying carriers the ability to exempt sites and content produced by their subsidiaries from customer data plans.

Further, it places California mong those violating an FCC prohibition on creating net neutrality legislation in the absence of Federal rules. Some 20 states have sued the government over net neutrality, while New Jersey, Oregon and Washington also have moved to limit the ability of ISPs to create so-called “fast lanes” for preferred sites.

As those suits progress – potentially, to the Supreme Court – carriers and other tech giants are using their lobbying muscle to push for nationwide rules around data protection. According to some in Silicon Valley, creating a unified code is the lesser to two evilsOpens a new window when it comes to compliance with 50 separate regimes.