FCCs Wheeler Aims to Spur Municipal Broadband Investments

Josh LongThe head of the Federal Communications Commission plans to circulate a proposal this week that would preempt state laws in North Carolina and Tennessee, paving the way for the deployment of municipal broadband networks.

FCC Chairman Tom Wheeler has proposed a finding that state laws pose a barrier to broadband investment and competition, justifying their preemption.

The Electric Power Board in Chattanooga, Tennessee, and the City of Wilson, North Carolina, have requested that the FCC preempt state laws, which would enable the power board and city to expand broadband, voice and video services to additional areas.

Wilson, a city in North Carolina that was established in 1849, told the FCC in its petition that it has received requests from government agencies, businesses and others in five counties to deliver services over its fiber-optic network. The city already provides cable television, gigabit Internet access and other services in Wilson County.

A trade association representing AT&T, Verizon and other telecommunications carriers has opposed the petitions, arguing the FCC shouldn’t interfere with state legislatures on the issue.

Some municipal broadband networks have been successful while others have failed.

“With state taxpayers on the financial hook when a municipal broadband network goes under, it is entirely reasonable for state legislatures to be cautious in limiting or even prohibiting that activity,” wrote Anne Veigle, senior vice president of communications with the United States Telecom Association (USTelecom), in an Aug. 29, 2014, blog.

Concerns also have been raised that municipal broadband operations stymie private investment. But Wheeler appears to have rejected that idea, finding municipal operations are deployed only after the private sector has had ample opportunity to invest in an area but failed to meet the needs of a community. Municipal utility groups in Kentucky where state law does not preempt municipal broadband told the FCC last month that they offered broadband to communities before the telephone and cable companies and generally offered services at higher speeds and comparable or lower prices than the private sector.

“When the private sector does not create a competitive market, local governments, on behalf of their residents, should have the option to explore and potentially develop a broadband system that will create a competitive marketplace – either directly or by encouraging a private sector investor,” said Mayor Gary Resnick, chair of the Intergovernmental Advisory Committee, in an FCC filing today.

The committee provides guidance to the FCC on issues of importance to local, tribal and state governments.

Last month, the Obama administration urged the FCC to remove barriers preventing local communities from offering broadband services. The letter from National Telecommunications and Information Administration (NTIA) administrator Laurence Strickling may have resonated with Wheeler and his two Democratic colleagues.

“We know that local government entities, working with community stakeholders such as businesses, community organizations and schools, are very effective catalysts for defining local broadband needs, identifying local financial and other resources, garnering public support for investment, and convening private and public partners to develop solutions,” Strickling wrote.

Wheeler has proposed largely granting the petitions based on the FCC’s authority under Section 706 of the Telecommunications Act of 1996. The provision of federal law grants the FCC authority to take steps to accelerate the deployment of broadband services by removing barriers to investment in infrastructure.

A Tennessee law that bars the Electric Power Board of Chattanooga from offering Internet and video programming services outside its electric service territory “is precisely the type of legal barrier that Congress directed the Commission to sweep away in Section 706 of the Telecommunications Act of 1996,” lawyers for the board wrote in an FCC petition.

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