Cable-FCC Fight Brews Over Pre-emption

WHEELER SEEKS TO CHALLENGE STATE LAWS LIMITING MUNI BROADBAND
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WASHINGTON — Cable operators and the Federal Communications Commission appear to be on a collision course over regulating municipal broadband operations.

FCC chairman Tom Wheeler staked out that territory as part of his overall plan to promote broadband price and service competition, and emphasized it in a policy speech last week. He branded state rules that limit municipal broadband operators as a tool of lobbyists trying to prevent such competition.

Having signaled that he was ready to take on those laws, the cities of Chattanooga, Tenn., and Wilson, N.C., gave Wheeler an opportunity by asking the FCC to step in to pre-empt state laws limiting municipal broadband operations. Cities have argued such laws are “artificial barriers” to broadband “investment, deployment, competition and innovation,” as Madison, Wisc., said in its filing supporting pre-emption.

Now that the initial comments have been filed, the battle lines are drawn.

But the National Cable & Telecommunications Association, cable’s main trade group, is not taking direct aim. In fact, it did not even file comments. “We don’t file in every proceeding, and this was one we choose not to [file in],” an NCTA spokesman said.

The NCTA’s two largest cable-operator members, Comcast and Time Warner Cable, are currently trying to steer their proposed merger through Wheeler’s FCC, so they are perhaps unsurprisingly not interested in a public battle over municipal broadband regulations.

Comcast executive vice president David Cohen has said that as a former municipal official (he was the chief of staff to former Philadelphia Mayor Ed Rendell), he is not a fan of state legislatures limiting cities’ ability to act. But he also does not think pre-empting those limits was the right way to advance broadband, he said.

“We’ve been supportive of public-private partnerships where tax dollars aren’t competing against private investment capital,” a Comcast spokesperson said, confirming the MSO had not filed comments in the proceeding. “In general, cities have extensive infrastructure needs like roads, bridges and schools, and we think, especially in times of fiscal tradeoffs, that taxpayer money should be focused on those needs rather than competing with the private sector.”

Another reason cable operators don’t have to take point on the fight is that they have some firepower already in their corner. The industry’s allies include governors and state legislatures who think they should have the power to run their own states and make state laws.

The National Conference of State Legislatures, for example, said that FCC pre-emption, if it goes beyond Chattanooga and Wilson to become a general policy, could affect at least 21 states where it said regulators have enacted “safeguards on municipal networks to mitigate the pitfalls associated with entry.”

The FCC must reject the petition, the National Governors Association said flatly.

Wheeler is looking to use the FCC’s authority under Section 706 of the Telecommunications Act — the same authority buttressing his Internet-neutrality proposal (see cover story) — to justify stepping into the municipal broadband debate. With pre-emption, his goal is to remove impediments to more ubiquitous and affordable broadband services, roadblocks he ascribes to ISP lobbyists who have successfully prevented would-be competitors from entering the business.

The NGA countered by stating that Congress made clear in the 1996 Telecommunications Act that the FCC is prohibited from preemption “absent express authority.”

The governors also dismissed cities’ arguments that the FCC can step in. “Petitioners’ statutory interpretation and legal legerdemain fail to identify the necessary language in Section 706 that would authorize the commission to preempt state law because it just does not exist,” the NGA said in its filing.

Cable’s biggest guns may be holstered, but that doesn’t mean MSO interests aren’t represented in the docket.

NetCompetition, a consortium whose members include the NCTA, Comcast and Time Warner Cable, was not shy about its problems with pre-empting state laws limiting municipal broadband. In its filing, the group said the principal problems are that the U.S. Supreme Court has signaled that such pre-emption would be unconstitutional and that the move would be anti-competitive in contravention of the FCC’s “statutory purpose and legal mandate.”

And again, with echoes of the net neutrality debate, NetCompetition chairman Scott Cleland said the Supreme Court has already rejected federal pre-emption of state prohibitions of telecommunications service, regulated under the Telecom Act’s stricter Title II commoncarrier standard.

“If clear FCC Title II statutory language was insufficient to overcome states’ constitutional rights, it is hard to see how the FCC’s new-found Section 706 authority would be sufficient to trump the Supreme Court’s defense of states’ rights in the Constitution,” he said.

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