FCC Preempts State Laws That Restrict Municipal Broadband Networks

Taking a position favored by the Obama administration, the Federal Communications Commission on Thursday voted to preempt state laws that prevented cities in Tennessee and North Carolina from expanding broadband services.

The three-to-two vote marked a victory for the Electric Power Board, a community broadband provider in Chattanooga, Tennessee; and the City of Wilson, North Carolina.

Wilson, a city 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.

The state laws, the FCC determined, conflicted with its mandate under the Telecommunications Act of 1996 to promote competition, investment and broadband deployment. Preemption will quicken broadband investment, boost competition, and serve the public interest, according to the FCC’s order.

All three Democrats at the agency, including FCC Chairman Tom Wheeler, voted in favor of preemption. The two Republicans, Ajit Pai and Michael O’Rielly, dissented.

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

Concerns had 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. City-run broadband operations have produced a combination of successes and failures.

“The record is replete with examples of failed municipal broadband networks, which is the reason numerous states have enacted provisions to protect their citizens from potential failures,” said Genny Morelli, president of ITTA, an organization that represents midsize communications companies, in a statement. “The FCC should not interfere with state sovereignty to protect local taxpayers from such high-risk undertakings.”

Last month, the Obama administration urged the FCC to remove barriers preventing local communities from offering broadband services.

“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,” National Telecommunications and Information Administration (NTIA) administrator Laurence Strickling wrote.