FCC Pre-Empts Muni Broadband Laws

The FCC’s order sets the commission up “for wasteful and unnecessary litigation,” said NARUC Telecom Committee Chairman Chris Nelson, chairman of the South Dakota Public Utilities Commission, in a statement. “Instead of spurring municipal interest in broadband investment, this will instead have the opposite effect as today’s order will surely end up in court.” Lawsuits challenging the FCC’s order remain likely to originate out of the offices of North Carolina Attorney General Roy Cooper and Tennessee Attorney General Herbert Slatery, industry lawyers told us. Offices for the attorneys general didn’t comment Thursday about the likelihood or timing of lawsuits.

“The order isn’t out yet and I would assume everyone is looking forward to seeing what’s in the fine print,” said Baller Herbst lawyer Jim Baller, who represented the Electric Power Board of Chattanooga and the city of Wilson, North Carolina, in their pre-emption petitions. Baller said “we would certainly have a considerable interest” in any lawsuit challenging the EPB and Wilson petitions, but the FCC would be the primary respondent. Baller said neither Cooper’s office nor Slatery’s office has contacted him directly about the FCC’s decision.

Thursday’s order directly applies only to the EPB and Wilson petitions, but Commissioner Mignon Clyburn in supporting the petitions said the agency could judge similar state laws on a case-by-case basis if petitioned. FCC Chairman Tom Wheeler said he hopes the order will shine a light on incumbents deterring competition by pushing for the anti-broadband laws in states.

Cities in two different states “are curious” about filing petitions but “aren’t yet committed to it,” said Next Century Cities Policy Director Christopher Mitchell. “No one has gone ahead and done the due diligence of legal work to prepare a petition. I think cities will wait to see what happens with the early appeals process. If a circuit court stays the FCC’s decision pending appeal, there might not be a reason to petition.” Baller said other municipal broadband providers have contacted him about “following up” the FCC’s vote on the EPB and Wilson petitions by filing their own petitions, but declined to identify any of the municipalities or whether he would represent them.

Lafayette, Louisiana, has been identified as a possible candidate for filing a pre-emption petition. City-Parish President Joey Durel, a Republican, told us he would be “willing” to file a petition with the FCC if the city encounters resistance from telcos in the state to its early-stage plans to expand its Lafayette Utilities System (LUS) Fiber network into surrounding towns, but “we don’t foresee having to do that.” Louisiana law “should not prevent us from doing that, but that law has also been used against us, and like always there were some unintended consequences,” he said. “We’ll have to see if anyone does anything.” Durel said Feb. 11 that he wants LUS to begin expanding its fiber system beyond city limits into neighboring towns within Lafayette Parish. “We haven’t ventured out of our city limits yet,” he told us Thursday. “We have the license to do it, we have the legal ability and the technological ability to it. But we aren’t sure yet what the financial model for this will be and technologically we have to figure out the details.”

FCC Chairman Tom Wheeler said the order is based on the agency’s Telecom Act Section 706 mandate to eliminate barriers to broadband deployment. The order said the FCC won't deal with state laws barring municipal broadband projects, but asserted jurisdiction over laws that pose obstacles to projects in states that allow them as a whole. The Tennessee and North Carolina laws essentially bar EPB and Wilson from serving areas outside their service areas, even when asked by surrounding communities to serve them, creating “an island of competition surrounded by a sea of few or no choices,” said Gregory Kwan, Wireline Bureau attorney-advisor-Competition Policy Division.

Proponents said the order fits with the agency’s push to provide more broadband competition, and gives power to municipalities to determine their own broadband future. An "irrefutable truth about broadband" is that “you can’t say you're for broadband and turn around and say you support imposing limits” on deployment, Wheeler said. “You can’t say you’re for competition and deny local elected officials the right to offer competitive choices.”

The order deals with situations in which communities have world-class broadband service, “while others a few yards outside of town are stuck in a digital darkness,” Clyburn said in supporting the order. The issue is important because without high-quality broadband, “no community has a fair shot in the digital age,” she said.

Commissioner Ajit Pai said the Tennessee law was passed unanimously by a Democratic legislature, but in approving the order, ”three unelected officials in Washington, D.C., have decided to rewrite the Tennessee law in a party-line vote.” The agency “simply does not have the legal power to do this,” he said, arguing the distinction about not dealing with outright bans is “semantics.”

The net neutrality order expanded authority over broadband and with the municipal broadband vote, the commission “has the arrogance to try to rewrite state law as well,” O’Rielly said. Government has no role in competing with private entities, O’Rielly said.

GOP lawmakers introduced legislation, as expected, to counter the FCC pre-emption. The States’ Rights Municipal Broadband Act runs three pages. Sen. Thom Tillis, R-N.C., and House Commerce Committee Vice Chairwoman Marsha Blackburn, R-Tenn., led the charge in recent weeks (see 1502120058). Industry officials and municipal broadband advocates suspect the White House would veto this bill but see a likely path forward in Congress if it is attached to FCC appropriations (see 1502200047). House co-sponsors include Reps. Renee Ellmers, R-N.C.; Robert Pittenger, R-N.C.; Mike Pompeo, R-Kan.; and David Rouzer, R-N.C. Blackburn slammed the FCC's "power grab" and said it is "time for Congress to assert itself and protect States once again from unelected Washington bureaucrats.”

One section would say that the sense of Congress is that the FCC “does not have the authority under section 706” of the Telecom Act “to prevent any State from implementing any law of such State with respect to the provision of broadband Internet access service… by such State or a municipality or other political subdivision of such State.” The bill text, as expected, said the FCC isn’t authorized to affect the state laws in several named states with such legal barriers “or any other state” regarding municipal broadband networks. ITTA President Genny Morelli praised the bill. Agency pre-emption "would improperly disrupt the constitutionally-mandated roles of the states and the federal government," she said in a statement.

House Commerce Committee Chairman Fred Upton, R-Mich., and Communications Subcommittee Chairman Greg Walden, R-Ore., slammed the FCC vote. Such pre-emption "is a limited power reserved to the U.S. Congress," they said in a joint written statement. Several Capitol Hill Democrats praised the FCC’s vote to grant petitions, including all five Senate backers of the Community Broadband Act. That legislation would let Congress trump state barriers.

Local leaders “should be empowered to make decisions about their communities’ critical infrastructure,” said the Coalition for Local Internet Choice in a statement. The vote was “a milestone for community leaders, advocates and business owners who have worked together for years to get better broadband access for their communities.” The order “is an important moment for communities in North Carolina, Tennessee, and other states that have barriers to local investments in advanced communications networks,” EPB and Wilson lawyer Baller said in a statement.

USTelecom supports accelerating deployment, but the order “is a distraction from the hard work of improving the regulatory climate for all broadband providers to invest in new and improved infrastructure, and serves little purpose given the likelihood that it will be overturned by the courts,” President Walter McCormick said in a statement. “The FCC could best facilitate further investment and competition in broadband services by focusing its efforts on removing the regulatory hurdles,” he said.