California is regulating a producty sold within it's borders
If we can disregard all the smoke and mirrors for a moment.
ISPs are not selling the Internet, they are selling access to the Internet. The contract is for a service that occurs entirely within the State of California. Once you access the internet you can do as you wish with it, including getting data from anywhere.
California just said that you can provide the service with some constraints. All data must be treated equally. You are not allowed to influence what the consumer does with the tool you sell him or her.
This is entirely legal, especially since the FCC has acknowledged that the ISPs are not selling telecommunication. They are selling access to a public system. Like a car dealership effectively sells access to the roads. The dealership doesn't get to determine which roads you drive on or how fast you drive. ISPs are treated the same as other businesses under this law.
Biting the hand that feeds IT
