Broadband

Muni Broadband, Take II

After ISPs win in U.S. appeals court, states are likely next battleground 8/22/2016 8:00 AM Eastern
Chattanooga, Tenn., was one of two communities that asked the FCC to pre-empt state laws preventing them from expanding their muni broadband networks.
TakeAway

The 6th U.S. Circuit Court of Appeals’s smackdown of the FCC’s pre-emption of state laws limiting municipal broadband buildouts was a win for cable ISPs, but the battle isn’t likely over.

WASHINGTON — Amidst a round of regulatory defeats and a big court loss on net neutrality, cable ISPs scored a win with the 6th U.S. Circuit Court of Appeals’s smackdown of the Federal Communications Commission’s pre-emption of state laws limiting municipal broadband buildouts.

 

That court concluded that the FCC’s authority to promote advanced telecommunications deployment in a reasonable and timely manner did not extend to deciding whether a state or its municipal subdivision gets to control broadband buildouts, unless Congress has explicitly granted the FCC that power.

 

The states of North Carolina and Tennessee had asked the court to review the FCC order, which allowed muni broadband buildouts in the communities of Wilson, N.C., and Chattanooga, Tenn.

 

The fight is likely not over. The Democrat-controlled Wheeler FCC has pushed muni broadband, as has the Obama Administration and as likely will a Hillary Clinton administration if she wins the White House in November. Like President Obama, Democratic candidate Clinton has made affordable, ubiquitous broadband a campaign pledge and platform plank.

 

The court decision came just after two cable industry defeats in D.C. that stung: the appeals court backing of FCC net-neutrality rules and the FCC’s decision not to ban retrans blackouts or mandate arbitration.

 

FCC AMBITIONS

Asked if the FCC would seek a rehearing of the muni broadband case by the full court of appeals or, alternately, the Supreme Court, a spokesperson said the commission was still reviewing its options. It has 45 days from the decision date to seek en banc re-hearing and 90 days to appeal it to the Supreme Court.

 

“The FCC has sweeping ambitions for what muni broadband can be,” Scott Cleland, chairman of the ISP-backed NetCompetition, said.

 

The FCC spokesperson would not discount appealing the 6th Circuit panel decision. But even backers of the FCC’s pre-emption see challenging it in court as a long shot. Harold Feld, legal director for Public Knowledge, said that while either the FCC or the two cities that petitioned the FCC to pre-empt broadband-limiting laws can appeal in either venue, “this isn’t really a good case for either sort of appeal.”

 

The FCC asserted the state statutes at issue were barriers to broadband investment and competition that Section 706 of the Communications Act empowered the FCC to remove.

 

The court said not so. It ruled that Section 706 would have to explicitly say that Congress was giving the FCC the right to trump states’ sovereignty when it comes to laws affecting their subdivisions, and the section does not explicitly do that.

 

“Even as someone who actively supported the FCC on this, I can’t say that’s an obviously wrong interpretation,” Feld said.

 

ISPs have long argued the FCC was using Section 706 too broadly as an excuse to regulate broadband, particularly when many interpret the provision as a deregulatory one meant to clear away regs impeding broadband expansion.

 

SEC. 706 AUTHORITY UNRESOLVED

“The clear statutory context of what Congress’ intent was is the deregulatory 1996 Act,” said Cleland, who called Section 706 “transitional deregulatory authority.”

 

The 6th Circuit clearly signaled that pre-empting states’ rights was not within that broad authority, though that leaves other Sec. 706 authority questions unresolved.

 

The push for muni broadband will likely move to the states, and getting laws limiting broadband buildouts repealed. Feld said roughly 20 states have such laws on the books. “If folks want the option for their town or county to provide some kind of broadband service, it means either changing local law or changing federal law,” Feld blogged last week.

 

The latter is a tough slog, so the most likely venue for pro-muni activism is getting states to reverse their prohibitions. Of course, ISPs will be pushing back, since they argue that those buildouts can be both unfair government-subsidized competition that discourages private investment or can leave taxpayers holding the bag when those government buildouts don’t pan out as advertised.

 

Wheeler, in opining on the court loss, said he would be happy to help an effort to repeal state laws. “Should states seek to repeal their anti-competitive broadband statutes, I will be happy to testify on behalf of better broadband and consumer choice,” he said.

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