High Court: States Can Nix Muni Telecom


States are within their rights to prevent municipal governments from moving into the telecommunications business, according to a decision issued Wednesday by the U.S. Supreme Court.

In an 8-1 decision, the high court overturned a decision by the U.S. Court of Appeals for the Eighth Circuit, which struck down a state ban on municipal overbuilds by the state of Missouri.

The Missouri attorney general asked the high court to interpret Section 253 of the Federal Cable Act. Language in that section prevents legislative blocks to "any entity" that wishes to enter the telecommunications business. The Missouri Municipal League argued that "any entity" included political subdivisions like cities and municipal utilities.

But the Supreme Court said the pre-emption would not work normally if applied to a government unit, since the regulator and the regulated entity would be, essentially, the same thing.

Also, regulation of a public and private entity would be so different that it is unlikely that Congress intended to set off on "such uncertain adventures," Justice David Souter wrote.

The federal regulation should be read in such a way that it preserves states’ chosen disposition of their own powers, the court said.

The decision did not address whether or not it is good public policy for governments to deliver telecommunications services.