HOUSE BILL REPORT

HB 2282

As Reported by House Committee On:

Technology & Economic Development

Title: An act relating to protecting an open internet in Washington state.

Brief Description: Protecting an open internet in Washington state.

Sponsors: Representatives Hansen, Cody, Goodman, Pettigrew, Tarleton, Fey, DeBolt, Bergquist, Springer, Santos, McBride, Smith, Chapman, Slatter, Peterson, Wylie, Fitzgibbon, Morris, Stonier, Lytton, Sawyer, Robinson, Tharinger, Kagi, Pellicciotti, Dolan, Orwall, Valdez, Haler, Kilduff, Senn, Frame, Sells, Kirby, Stanford, Blake, Reeves, Clibborn, Macri, Kloba, Appleton, Stambaugh, Jinkins, Ormsby, Ryu, Hayes, Pollet, Doglio, Ortiz-Self, Riccelli, McDonald and Gregerson.

Brief History:

Committee Activity:

Technology & Economic Development: 1/18/18, 1/25/18 [DPS].

Majority Report: The substitute bill be substituted therefor and the substitute bill do pass. Signed by 15 members: Representatives Morris, Chair; Kloba, Vice Chair; Tarleton, Vice Chair; Smith, Ranking Minority Member; DeBolt, Assistant Ranking Minority Member; Doglio, Fey, Harmsworth, Hudgins, McDonald, Nealey, Santos, Slatter, Steele and Wylie.

Minority Report: Do not pass. Signed by 1 member: Representative Manweller.

Minority Report: Without recommendation. Signed by 1 member: Representative Young.

Staff: Lily Smith (786-7175).

Background:

Federal Communications Commission.

The Federal Communications Commission (FCC) regulates interstate and international communications in commerce, with particular requirements for common carriers. Providers of telecommunications services are considered common carriers.

Prior to 2015, the FCC classified the provision of broadband Internet access services (Internet service) as an information service, which is not subject to common carrier regulation. In a 2015 order, the FCC reclassified Internet service as a telecommunications service and applied specific service conduct rules, which prohibited blocking, throttling, and the use of paid prioritization. The 2015 order included a noninterference conduct standard and updates to a preexisting disclosure rule. The 2015 regulatory action is often referred to as "net neutrality."

In 2018 the FCC issued an order reclassifying Internet service as an information service and reversing the 2015 conduct rules, conduct standards, and updates to the disclosure rule.

Federal Trade Commission.

The Federal Trade Commission (FTC) is tasked with preventing unfair or deceptive acts or practices in or affecting commerce under the Federal Trade Commission Act (FTCA), along with enforcement of specific consumer protection and antitrust laws.

The FTCA does not apply to common carriers when engaged in business as a common carrier. Prior to the 2015 FCC order reclassifying Internet service as a telecommunications service, the FTC had authority over Internet providers under the FTCA. The 2018 FCC order returns that authority.

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Summary of Substitute Bill:

Internet providers in Washington are prohibited, with some exceptions, from:

• blocking content, applications, services, or nonharmful devices;

• impairing or degrading ("throttling") traffic on the basis of content, application, service, or use of nonharmful devices; or

• favoring some traffic over others in exchange for benefit ("paid prioritization").

Internet providers in Washington are required to disclose information about network management practices, performance, and commercial terms.

A violation of the act is enforceable under the Consumer Protection Act, chapter 19.86 RCW, solely by the Attorney General.

The Internet Consumer Access Account is created in the State Treasury.

The act takes effect upon the later of: (1) 90 days after adjournment of the legislative session in which it is passed; or (2) the effective date of the federal order repealing equivalent federal rules.

Substitute Bill Compared to Original Bill:

The substitute bill modifies the disclosure requirement.

The conduct standard relating to unreasonable interference with end-user services and choices, or edge provider's ability to provide those services is removed.

"Paid prioritization" is specified to not include the provision of tiered Internet services, and the waiver process for the prohibition on paid prioritization is removed.

Exemptions are added for actions related to:

• law enforcement and public safety needs; and

• protecting against copyright infringement or other unlawful activity.

The act is made enforceable solely by the Attorney General.

The effective date is modified to be contingent upon the effective date of the federal order repealing equivalent federal rules.

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Appropriation: None.

Fiscal Note: Available.

Effective Date of Substitute Bill: The bill contains a contingent effective date and takes effect on the later of: (1) 90 days after adjournment of the legislative session in which it is passed; or (2) the effective date of the federal order repealing equivalent federal rules.

Staff Summary of Public Testimony:

(In support) This bill will ensure that Internet providers cannot control the speed at which consumers use a particular application. A new business may not be able to get off the ground if it cannot compete on the Internet. Industry should be able to agree to the rules of the road. Transparency and information on these business practices is critical. Net neutrality did not exist before 2015, and there are many examples of how the Internet was manipulated with companies leveraging their access to charge others for effective access. This specific bill provides higher protections. Addressing the issue entirely within the state should be considered.

(Opposed) The wireless industry supports an open and free Internet. Industry opposition has been about the reclassification of service. The FCC adopted 1930s-style regulations for Internet providers, and then found that they did public harm and investments declined. Strong consumer protections, such as under the FTC and the Attorney General, are still in place. Before 2015 there were virtually no instances where wireless companies were found to be engaging in these practices. Internet providers have made legally enforceable promises to not throttle or discriminate and to make practices transparent. The Internet is interstate, the FCC has reiterated that this issue is about interstate commerce, and it broadly preempted state laws. A patchwork of state laws would be untenable, and this area is best dealt with in federal law.

(Other) The vast majority of companies support net neutrality, which is necessary to ensure that the next big start-up can grow. The FTC should determine transparency standards. Applying a standard of conduct is problematic. The other net neutrality bill is preferred because clear definitions are needed.

Persons Testifying: (In support) Representative Hansen, prime sponsor; and Logan Bowers.

(Opposed) Gerard Keegan, CTIA; and Ron Main, Broadband Communications Association of Washington.

(Other) Michael Schutzler, Washington Technology Industry Association.

Persons Signed In To Testify But Not Testifying: None.