Court overturns ruling allowing municipal broadband to grow

A federal appeals court ruled that the FCC can not preempt state laws that place restrictions on cities and other public entities from offering broadband service.

“This preemption by the FCC of the allocation of power between a state and its subdivisions requires at least a clear statement in the authorizing federal legislation”, the judges said. In North Carolina, state lawmakers imposed curbs on muni-broadband in 2011 – several years after the city of Wilson spent $28 million to create Greenlight, a muni network that allowed consumers to obtain triple-play Web-TV-phone service that was faster and cheaper than what was available from Time Warner, the local incumbent.

“In my statement past year dissenting from the Commission’s decision, I warned that the FCC lacked the power to preempt these Tennessee and North Carolina laws and that doing so would usurp fundamental aspects of state sovereignty”, said Ajit Pai, the commission’s senior Republican member.

The FCC moved to exempt city-owned networks from territory restrictions in 2015.

When the mood strikes you and you’re looking to light up, you shouldn’t have to hunt around for all the things you need: your pipe, your grinder, your favorite munchies, and so on. State laws, however, prevented them from doing so; that’s the case in 19 states in total, all of which could have been affected by future FCC orders had the court ruled in its favor. Pai added that the FCC should instead focus on eliminating regulatory barriers to private-sector investment in new broadband infrastructure.

The decision was essentially unanimous, with judges John Rogers, Joseph Hood, and Helene White all voting to reverse the FCC’s order.

Wheeler’s opponents, including from within his own agency, said the outcome was an obvious one.

The FCC voted 3-2 in 2015 to issue an order seeking to pre-empt those state laws, saying a 1996 law required it to remove barriers to broadband investment and that the municipalities wanted to expand service into areas with little or no internet service.

The ruling does not bode well for the FCC’s municipal broadband plans. And while government agencies are generally given deference to interpret their own powers where a law has left them unclear, the court determined that isn’t the case in this situation.

About 20 states have laws restricting the rights of cities and towns to compete against private Internet service providers. If the FCC had won, cities and towns in other states could have followed suit and asked the FCC to overturn restrictive laws throughout the nation.

The court case has been a costly distraction from efforts to make broadband deployment easier, Szóka said.

FCC Chairman Tom Wheeler criticized the decision in a statement. “The efforts of communities wanting better broadband should not be thwarted by the political power of those who, by protecting their monopoly, have failed to deliver acceptable service at an acceptable price”.