The Commerce Clause has been ruled to apply to something you grow in your own backyard and consume yourself because of a theoretical impact on the national market: https://en.wikipedia.org/wiki/Wickard_v._Filburn So it's very easy to see how regulating state internet regulations also falls into the purview of the federal government from there.
I never paid much attention to what they got up to before the feds stepped in but I kind of doubt it was a last mile problem, once the packet got that far why mess with it?
But, knowing California, they'll do one of those "...and any packet destined for a customer in California."
Ignoring the around the world latency and assuming CA has a trans-pacific pipe to asia they could route all CA traffic out of country first. Would this disregard the "interstate" premise?
(talking hypothetical here)