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FCC Has No Standing in State Broadband Laws


The success of public broadband is a mixed record, with numerous examples of failures — from St. Cloud, Fla. and Groton City, Conn., to Philadelphia and the Utah Telecommunications Open Infrastructure Agency (“UTOPIA”). 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.

For this and other reasons, USTelecom opposes the petitions filed by the city of Wilson, N.C., and the Electric Power Board of Chattanooga, Tenn., asking the Federal Communications Commission (FCC) to preempt state laws restricting public entities from offering broadband service. The FCC should not interfere with state decisions on how best to extend broadband service.

States have adopted a wide range of legislative approaches on how much authority they give local governments to build, own and operate broadband networks. Some states require an election or public hearings before a public project can move forward. Others ask for competitive bids, and still others put restrictions on the terms of service so the public entities bear the same regulatory burdens as private service providers.  

States are well within their rights to impose these restrictions, given the potential impact on taxpayers if public projects are not carefully planned and weighed against existing private investment.

Municipal broadband is often hailed as the solution to providing service in difficult to build areas where it’s been hard to attract private investment. But municipal broadband is not the only or the most efficient way to do this. The FCC’s Connect America Fund (CAF), which is just getting off the ground, is dedicated to serving rural America. The CAF program is focused on stimulating investment by providing public funds for broadband in areas where there is no business case. In contrast to municipal broadband networks, which can undermine competition and saddle local communities with significant debt if such networks fail, the CAF offers an efficient, rational means of helping to expand broadband access to all Americans.

The commission has the power to preempt state laws under appropriate circumstances. However, Supreme Court precedent requires a clear and unambiguous statement of congressional intent in order to interfere with the relationship between states and their political subdivisions. Because the commission lacks this clear intent under Section 706 of the Communications Act, the FCC does not have the power to preempt the North Carolina and Tennessee statutes.

The FCC could make positive use of its preemption authority to facilitate broadband deployment at the local level by removing barriers to entry, specifically around local rights of way. These barriers, which can include the expense of obtaining permits and leasing pole attachments, can amount to 20 percent of the cost of fiber optic deployment, according to the National Broadband Plan.

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