Will the FCC Vacate State Broadband Restrictions?

Petitions from Wilson, N.C., and Chattanooga, Tenn., ask the Federal Communications Commission to pre-empt state barriers to government-owned broadband networks and could lead to legal challenges.

by / September 24, 2014
Will the FCC vacate state laws to permit local governments to build and expand broadband networks? Shutterstock

As the Internet of Things expands and demand for connectivity rises, high-speed broadband will likely become a necessity rather than a luxury for most homes and businesses. But access to reliable and affordable gigabit connections continues to be a challenge in many communities.

For almost 20 years, the insatiable hunger for faster Internet speeds has raged, even as existing Internet providers and new initiatives such as Google Fiber have made some progress building out networks. Yet, depending on one's location, service availability can vary greatly, frustrating residents and businesses.

Local governments believed they had found a solution to spreading high-speed Internet to underserved areas by creating their own broadband networks. A competition with the private sector ensued, with both sides attacking the credibility of the services the other provided.

The cable industry has been lobbying state legislatures to enact barriers to municipal networks under the premise that local governments have a competitive advantage under established state regulations. As of today, 19 states have barriers in place that discourage or prevent municipal broadband networks, according to the Institute for Local Self-Reliance, an organization that advocates for equitable community development.

But two municipalities facing those state restrictions are now challenging their legality. Wilson, N.C., and the Electric Power Board of Chattanooga, Tenn., filed petitions with the Federal Communications Commission (FCC) earlier this year asking it to vacate state laws that are preventing cities from providing and expanding communications services.

Experts are at odds, however, on whether the move will be successful, and if it is, what kind of impact overturning state laws might have on the expansion of municipal broadband in the U.S.

Michael Botein, professor of law at New York Law School, believes the Wilson and Chattanooga petitions to the FCC don’t mean anything at this point; they're there as a way to pressure private-sector Internet providers to react. He noted that the FCC doesn’t have to make a ruling -- and it may not, considering the controversy that would ensue from the Commission vacating state law and the legal challenges such a move would bring.

“If the Commission refuses to act … there are some really rare cases where you can go into court and ask for and maybe even get an order, ordering the FCC to decide the case,” Botein said. “But that’s incredibly rare.”

Christopher Mitchell, director of the Telecommunications as Commons Initiative at the Institute for Local Self-Reliance, said he and other municipal broadband advocates have “high hopes” that the FCC will take a stand. 

Although Mitchell wants to see the FCC address state restrictions municipal networks, he said cities and counties shouldn’t be waiting on the commission to do something. Instead, they should be working diligently at the state level to solve the issues.

“I understand, though, that it’s very hard to change the vote in state legislatures,” Mitchell said. “And that’s why to some extent, the FCC taking action allows us to point to that and say, ‘Look states, you’re actually discouraging investment when you want to be encouraging it.’”

Legal Arguments

Local governments believe Section 706 of the Telecommunications Act of 1996 gives the commission broad authority to regulate in the public interest – in this case, overturning state laws that run counter to Internet expansion. Section 706 came into the spotlight earlier this year, when the U.S. Court of Appeals for the District of Columbia Circuit shot down the FCC’s net neutrality rule in Verizon v. FCC

Circuit Judge Laurence Silberman, dissenting from part of the court's overall decision, outlined the language the FCC would need to base its regulatory authority argument on in regard to Section 706.

That was bolstered by FCC Chairman Tom Wheeler’s blog on June 10, where he shared his opinion that it is in the best interest of consumers and competition for the FCC to use its power to pre-empt those state laws that ban or restrict community broadband networks.

"If the people, acting through their elected local governments, want to pursue competitive community broadband, they shouldn’t be stopped by state laws promoted by cable and telephone companies that don’t want that competition," Wheeler wrote.

The United States Telecom Association (USTelecom) has expressed that the FCC has no authority under the Telecommunications Act of 1996 and shouldn’t be meddling with state broadband laws.

Blogging on the issue, Anne Veigle, senior vice president of communications for USTelecom, wrote that public broadband networks have a “mixed record” of success. As a result, because state taxpayer funds are often used to finance the networks, the industry feels it is reasonable for “state legislatures to be cautious” in restricting or prohibiting them.

“The Commission has the power to pre-empt state laws under appropriate circumstances,” Veigle wrote. “However, Supreme Court precedent requires a clear and unambiguous statement of congressional intent in order to interfere with the relationship between states and their political subdivisions. Because the Commission lacks this clear intent under Section 706 of the Communications Act, the FCC does not have the power to pre-empt the North Carolina and Tennessee statutes.”

Government Technology reached out to USTelecom for further discussion of the topic, but an industry representative was not made available.

The National Conference of State Legislatures (NCSL), National Governors Association (NGA) and the Council of State Governments (CSG), agree with industry. In a joint letter sent to the FCC on Aug. 29, the executive directors of all three organizations noted the need for ubiquitous broadband, but felt the commission needed to respect the policy decision of state leaders.

“Any outcome in this proceeding attempting to modify or outright pre-empt the duly-enacted laws of 21 states regulating taxpayer funded broadband networks represents and unnecessary encroachment on states’ rights by an agency of the federal government in the absence of express statutory authority,” the letter stated.

Reading the Tea Leaves

If the FCC does hear the Wilson and Chattanooga petitions and ultimately rules for the cities, Mitchell expects a lengthy legal process. He envisioned a scenario that could drag on for years and possibly reach the U.S. Supreme Court.

If the matter goes that far, Botein expressed reservation in the high court’s ability to understand the technical issues that are in play when it comes to municipal broadband networks. He called the U.S. Supreme Court “one of the worst informed” judicial bodies when the issue deals with technology, and said he wouldn’t “put any trust in their ability to puzzle this one out.”

Mitchell didn’t share Botein’s concern, however. He felt any worries about the Supreme Court “not getting it” when it comes to technology were lessened in the wake of United States v. Jones in 2012. The court ruled in Jones that installing a GPS tracking device on a vehicle and using it to monitor the vehicle’s movements was considered a search under the Fourth Amendment.

“I don’t think the Supreme Court is going to question at all the logic of removing bans to municipal networks in order to encouragement investment … the only legal question will be one of pre-emption,” Mitchell said.

If the FCC decides to not to hear the petitions, Mitchell said he doesn’t think the inaction would change much for cities with regard to their interest in expanding broadband connectivity. In addition, he felt that the cable industry wouldn’t make a big public splash if the FCC declines, because it would shine a greater spotlight on the topic.

“If the FCC fails to act on Chattanooga or Wilson, then I’d welcome industry trying to give more controversy – it’ll give us more opportunities to educate the public on this issue,” Mitchell said.

Initial comments to the FCC regarding the Wilson and Chattanooga petitions were due on Aug. 29. The deadline for the public to reply to those comments is Sept. 29.

Brian Heaton

Brian Heaton was a writer for Government Technology magazine from 2011 to mid-2015.