The implications of California's newly signed net neutrality law are not well understood, according to internet service providers in the state, creating uncertainty around what services the legislation will prohibit.

The law — which is slated to take effect Jan. 1, 2019, but which is already facing a legal challenge from the U.S. Department of Justice — aims to bar fixed and mobile broadband providers from blocking or throttling legal internet traffic or prioritizing certain traffic in exchange for payment. The law will also ban certain "zero-rating" practices that exempt particular internet traffic from counting toward a customer's data cap.

The California Cable and Telecommunications Association, or CCTA — a group representing Comcast Corp., Charter Communications Inc. and Cox Communications Inc. — called the legislation "unlawful," warning it will lead to increased "regulatory uncertainty that will hurt innovation and investment, while raising costs for customers in California for years to come."

Charter, Comcast and Cox are among the top five residential broadband service providers in California, according to MediaCensus data from Kagan, a media research group within S&P Global Market Intelligence. AT&T Inc. and Frontier Communications Corp. round out the list. Charter leads the pack with more than 33% market share in the state, followed by Comcast at nearly 26% and AT&T at more than 21%.

Like the CCTA, AT&T expressed its opposition to the law, with AT&T Executive Vice President of Regulatory and State External Affairs Joan Marsh saying that state laws around net neutrality are "insufficient and unworkable."

Marsh added that AT&T remains unequivocally committed to providing consumers with "an internet that is free from censorship, blocking and discriminatory throttling."

One provision in the law that could impact AT&T directly is its ban on certain types of zero rating. AT&T currently zero rates DIRECTV NOW for AT&T wireless customers in the state, meaning that customers watch the streaming service without it counting against their data cap. The California law prohibits "zero-rating some internet content, applications, services, or devices in a category of Internet content, applications, services, or devices, but not the entire category."

AT&T declined to comment on the specific implications for DIRECTV NOW. A spokesman for California State Sen. Scott Wiener, who helped author SB 822, said, "The bill would prohibit AT&T's DIRECTV NOW if it zero-rates DIRECTV only, and not all other video streaming apps as well."

In addition to AT&T, there is some question as to whether the law would prohibit T-Mobile US Inc.'s Binge On service in the state. Binge On allows customers with qualifying data plans to watch video streams from a large number of partner sites at no cost to their data plan. Moreover, T-Mobile optimizes all detectable video content so that it streams as 480p, described as DVD quality. This is notably lower than high definition video, which streams at 720p or even 1080p.

Berin Szóka, president of TechFreedom, said, "I don't think SB 822 [California's net neutrality law] — assuming it survives constitutional challenge, which I think is unlikely — would bar Binge On," given that the service optimizes all video content equally.

But David Choffnes, assistant professor in the College of Computer and Information Science at Northeastern University, disagreed.

"Binge On throttles only some video — what they often refer to as 'detectable video' — but not all video," Choffnes said, noting that internet protocols do not require a content provider to signal what type of content they are delivering.

"As a result, [T-Mobile] must 'guess' what type of content is in network traffic, and we found that they do so using text-based clues that are by definition incomplete and error-prone when it comes to video content," he said.

T-Mobile declined to comment on the Binge On concerns. After looking into the matter, Sen. Wiener's spokesman Victor Ruiz-Cornejo said "the bill does not prohibit Binge On outright" so long as the service does not zero rate specific content.

T-Mobile counts more than 100 participating video streaming services for Binge On, including Alphabet Inc.'s YouTube, Netflix Inc., Hulu LLC, HBO NOW, DISH Network Corp.'s Sling TV, ESPN, Amazon.com Inc.'s Prime Video, DIRECTV and PBS Kids.

According to T-Mobile's site, "Only video streaming from participating video content providers doesn't count against your high-speed data bucket. Video streaming from non-participating video content providers, and data used to load and browse content on streaming provider apps and websites are still deducted from your high-speed data bucket."

MediaCensus' second-quarter 2018 residential broadband and multichannel video subscriber data at the ZIP code, county, DMA® and state level and by operator is available. Click here to see broadband subscribers by state, and click here to visit the MediaCensus homepage.