$15-A-Month Internet Law on Hold in New York, Judge Rules

New York cannot require internet providers to offer broadband service for low-income customers for as little as $15-a-month starting next week, a federal judge ruled on Friday.

The low-income broadband consumers law passed in the state budget in April, which was supposed to come into effect on Tuesday. It allowed the state’s attorney general to issue penalties up to $1,000 per violation from providers.

USTelecom, CTIA, the New York State Telecommunications Association and other industry groups representing internet providers had sued in April arguing that the law meant they could either face penalties for not complying or be forced to provide the services “at a loss.”

U.S. District Court Senior District Judge Denis R. Hurley, of the Eastern District of New York, said in a preliminary injunction "the internet's promise of access" hinges on whether people can afford it.

But the judge said the internet providers have shown that they could suffer “imminent irreparable injury” because of the law's potential impact on their wallets. Three of the internet companies told the court that the law would reduce annual net income by at least $1 million each.

“While a telecommunications giant like Verizon may be able to absorb such a loss, others may not,” the judge wrote. “The Champlain Telephone Company, for example, ‘estimates that nearly half of its existing broadband customers will quality for discounted rates,’ with each customer ‘causing a monetary loss.’”

The law also requires providers to advertise the broadband plan for low-income consumers. Verizon estimated the ad campaign would cost between $250,000 and $1 million.

New York state argued those estimates aren't backed by any financial records.

But Judge Hurley said that state didn't cite any reason that the courts shouldn't rely on the internet companies' financial estimates, which they submitted under penalty of perjury.

The judge questioned whether a state can tell an internet provider how much they can charge consumers. Internet providers have argued they are primarily subject to federal law, which regulates interstate commerce.

In February, a federal judge's ruling cleared the way for the state of California to ban internet providers from slowing down or blocking access to websites and applications that don’t pay for premium service.

But Judge Hurley pointed out that California's attorney general had argued that the state's law did “'not regulate how much providers can charge their customers.'”

The judge also noted that low-income individuals can now ask for $50 off their monthly bill under a new temporary federal benefit.

Gov. Andrew Cuomo spokesperson Rich Azzopardi said that New York will keep defending the law.

“We always knew big telecom would pull out all the stops to protect their profits at the expense of the New Yorkers who need access to this vital utility the most," Azzopardi said in a Friday statement. "We are going to continue to fight for them.”