Update: On June 21, 2018, the Court affirmed the decision of the lower court, finding that “[t]he Transparency Rule does not preempt state laws ‘that prevent fraud, deception and false advertising.'”
Earlier this week CDT sought permission to file an amicus brief in People v. Charter Communications and Spectrum Management Holding Company (together “Charter”), a lawsuit initiated last year by the New York Attorney General alleging that Charter’s misrepresentations about its broadband Internet service offerings in New York violated state consumer protection and anti-fraud laws. The AG’s complaint pointed to Charter’s advertisements which claimed subscribers would receive broadband internet access “up to” a maximum speed. The AG alleges these advertisements were false in part because Charter provided customers with networking equipment incapable of attaining those maximum speeds, and because Charter failed to provide sufficient network capacity to support the advertised speeds. New York State’s Supreme Court (which despite the name is a trial-level court) denied Charter’s motion to dismiss; Charter appealed this decision. CDT filed a brief supporting the AG’s position in the pending appeal in which we focused on two issues: that the Federal Communications Commission’s Transparency Rule (the only rule slated to survive the net neutrality repeal) should not preempt New York’s consumer protection laws and that consumers are right to expect their broadband speeds to match advertised claims.
The FCC Transparency Rule and state consumer protection laws should complement each other
In making its case for preemption, Charter alleges that compliance with both the Federal Communication Commission’s (FCC) disclosure requirements and state law is impossible, or, if not impossible, that doing so would frustrate the FCC’s policy objectives. In our brief we highlight the important role states play in regulating broadband service and protecting consumers. The Federal Communications Act expressly maintained state authority to “protect the public safety and welfare” and to “safeguard the rights of consumers.” 47 U.S.C. § 253(b). And nothing in the New York state laws prohibits any disclosure under the Transparency Rules. So, from a consumer’s perspective, Charter’s compliance with the federal and state laws is not only possible, it may be desirable.
Furthermore, the FCC has invested significant time and effort to increase the accuracy and transparency of the information consumers receive, reflected in the Transparency Rules adopted the FCC’s 2010 and 2015 Open Internet Orders. The Transparency Rule requires providers to disclose sufficient, relevant, and accurate information in such a way that allows consumers to make informed choices regarding their broadband service. New York’s consumer protection laws prohibit false advertising and other deceptive business practices. These protections build on and complement the Transparency Rule so that the state and FCC together protect consumers from false advertising.
Consumers expect their actual internet speeds to be similar to the marketed speed
Charter alleges that reasonable consumers would not be deceived by their “up to” advertisements, but we think that it is reasonable for consumers to expect that their actual internet speeds will be similar to the marketed speeds. While consumers certainly cannot expect that their broadband speed will be at the maximum level all of the time, they should be able to expect that these speeds will be attained regularly. Moreover, when a consumer purchases an internet access package marketed as providing certain speeds and including equipment such as a modem or a router, it is reasonable for the customer to expect those devices to be capable of transmitting data at the rate advertised. In this case, Charter supplied and installed hardware inside customers’ homes that was incapable of delivering data at the advertised rates. Where ISPs supply customer premises equipment, advertised speed tiers should reflect actual internet speeds at consumers’ devices.
This lawsuit raises important questions about the role of states in regulating broadband service and what consumers should reasonably expect from their providers given their representations. States are vital to protecting consumer interests, and their work complements that of the FCC. Transparent, truthful advertising, readily understood by a reasonable consumer, is fundamentally necessary for consumers to make informed choices about their service provider. We hope the appellate court will agree and dismiss Charter’s motion.