ISPs Protest FCC Plans to Preempt State Laws Limiting Muni Broadband

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By Bryce Baschuk

Aug. 29 — Conservative, consumer and telecommunications groups are sparring over the Federal Communications Commission's plan to preempt state laws that restrict communities from funding their own municipal broadband networks, according to filings submitted Aug. 29.

The partisan feud over taxpayer funded networks has boiled over in the months since FCC Chairman Tom Wheeler said he would target anti-municipal network laws as a part of the agency's net neutrality effort.

The commission is currently seeking comment on whether it should intervene in at least two states where such laws are preventing citizens from gaining access to sufficient connectivity.

The initial comment cycle on the matter ended Aug. 29 and stakeholders have until Sept. 29 to file reply comments.

Tennessee, North Carolina 

In July the Electric Power Board of Chattanooga, Tenn., and the City of Wilson, N.C., asked the FCC to preempt state laws that restricted their ability to deploy taxpayer funded broadband networks.

North Carolina and Tennessee are among the nearly 20 states that have established rules to discourage or prevent local governments from building broadband networks that may compete with incumbent commercial Internet service providers, according to data compiled by the Institute for Local Self-Reliance. Such laws are often the product of intense lobbying by cable companies and other ISPs seeking to preserve their market power.

Their petitions came after Wheeler said the commission will use its authority under section 706 of the 1996 Telecommunications Act to preempt state laws that prevent municipal networks. Section 706 requires the FCC to encourage “the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.”

The FCC will seek to “knock down public and private barriers to competition and avoid erecting new ones,” Wheeler said April 30 during a speech at the cable show. “I believe the FCC has the power––and I intend to exercise that power—to preempt state laws that ban competition from community broadband,” he said.

Telcos Deny FCC's Preemption Power

USTelecom, which represents wireline broadband companies said the FCC lacks the statuary authority to preempt such laws and urged the commission to leave municipal broadband issues to the states.

“Section 706 simply does not give the Commission the power to insert itself between the respective states and their subdivisions in deciding how to conduct their internal affairs,” USTelecom said in its filing.

“While the FCC possesses preemptive authority to remove barriers to entry, this power is not without limits,” US Telecom said. “In this context, where the agency is asked to confront the essential power of states to order and control their local subdivisions, there must be clear congressional language authorizing preemption. Such language is utterly lacking in Section 706.”

AT&T Inc. also urged the FCC to avoid regulatory overreach when it comes to preempting state municipal broadband prohibitions in its filing at the commission.

AT&T generally said such networks “provide less benefit, poses greater risk of stranded investment of taxpayer funds, and potentially harm consumers by discouraging private sector investment.”

Conservatives Champion Federalism

The conservative-leaning Americans for Prosperity group said its members are strongly opposed to any FCC actions that preempt state municipal broadband curbs, according to its filing.

Americans for Prosperity said FCC preemption would drive away private sector broadband investment and give an unfair advantage to government-owned networks.

“Any action by the FCC to block North Carolina law would not only undermine the power of the state government but the principles of constitutional federalism,” the group said.

“Unelected FCC officials in Washington, D.C., shouldn't attempt to override initiatives passed by representatives who the people directly elected.”

Consumers Champion Local Government

A coalition of consumer advocacy groups said they support the FCC's effort to remove barriers to broadband deployment in Chattanooga and Wilson, according to a separate filing.

The groups said state restrictions on municipal broadband “do not serve the public interest” and were created by “powerful firms [that] want to limit the competition.”

“Restoring authority to local governments, so they may decide for themselves if a municipal investment or partnership is an appropriate way to expand high speed Internet access, will result in a more rapid deployment of high speed Internet access,” the groups said.

The filing was authored by the Institute for Local Self-Reliance, Common Cause, the Center for Media Justice, the Media Mobilizing Project, the National Hispanic Media Coalition, Public Knowledge, the Writers Guild of America West, the Benton Foundation, and the Utility Reform Network among others.

States Versus Towns

The North Carolina League of Municipalities commended the FCC for helping to reduce barriers to broadband deployment in areas that lack adequate access, according to its filing.

“State laws restricting or prohibiting municipal efforts to provide broadband services––like that passed by North Carolina in 2011––stifle economic growth by preventing competition and inhibiting job creation,” the group said.

Conversely the National Governors Association urged the FCC to reject the petitions and said the FCC has no authority to preempt state laws, according to its filing.

The petitioners “fail to identify the necessary language in Section 706 that would authorize the commission to preempt state law because it just does not exist,” the group said.

To contact the reporter on this story: Bryce Baschuk in Washington at bbaschuk@bna.com

To contact the editor responsible for this story: Heather Rothman at hrothman@bna.com