Federal Communications Commission Loses in Court, States have the Ability to Limit Municipal Broadband

Written by:
Written by: Lauren Sisneros
Sept. 13, 2016

A Federal Appels Court recently blocked efforts to expand public broadband.  The Sixth Circuit Court of Appeals filed a ruling on Aug. 10, 2016, reversing the Federal Communications Commission (FCC) order to overturn anti-municipal broadband laws in North Carolina and Tennessee.  In February 2015, the FCC voted 3-2, along party lines, to allow Chattanooga, Tenn., and Wilson, N.C., to expand municipal broadband services to nearby communities.  The order preempted state laws that were designed to restrict municipal providers from providing broadband services outside their current service area. The FCC asserted authority under Section 706 of the Communications Act to preempt state laws limiting the ability of the state to control the provision of broadband by a state’s own political subdivisions. The FCC’s attempt to ensure local internet choice was stuck down when officials in both states appealed the FCC’s decision and the federal court ruled in their favor disagreeing with the FCC’s legal arguments of authority to pre-empt state laws.

The ruling is a loss for municipal broadband proponents who argue that municipal broadband leads to the advancement of broadband competition in the United States.  Laws in more than 20 states restrict or prohibit local governments from building their own broadband networks resulting in restrictions for cities and towns to compete against private internet service providers and ultimately provide affordable broadband to consumers.  Opponents of municipal broadband argue that it is inappropriate for government broadband networks to compete with private providers because they have inherent advantages, like rights of ways and public financing, which significantly reduce the costs associated with entry into broadband markets.

As Education Commission of the States has highlighted in previous work, access and use of broadband is restricted by the geography of broadband service and the low adoption of service subscriptions. This may be problematic to efforts to expand state attainment, particularly for adults, low-income populations, racial/ethnic minorities and geographically isolated student groups.  The unequal distribution of access to and adoption of adequate broadband should be a cause for concern. According to the Executive Office of the President, municipal broadband networks provide affordable high-speed broadband access to communities that otherwise would not have access.

If the FCC would have won the court battle, other states may have followed and petitioned the FCC to overturn their restrictive municipal broadband laws. The FCC will not seek further review of the federal court decision, according to a statement by an agency’s spokesman and published by the New York Times.  The federal court ruling means that the debate now shifts to the state level and varies across the country based on existing states’ statutes.  Policymakers and other state leaders interested in municipal broadband should be aware of their states’ policy addressing municipal broadband networks.

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