FCC Releases Municipal Broadband Order

Section 706 is an “affirmative grant of authority” as delineated in the U.S. Court of Appeals for the D.C. Circuit’s decision in Verizon v. FCC, the commission said in the order. Section 706 “shows a unique level of Congressional concern with broadband deployment,” with its twin requirements that the FCC “shall” take action to promote broadband deployments and requiring the commission to take action if deployment isn’t occurring in a reasonable and timely fashion, reflecting “Congress’s concern with unserved and underserved areas,” the FCC said. “The law is clear that Congress need not ‘explicitly delegate’ the authority to preempt. In fact, Congress’s decision not to specifically identify preemption is to be expected where, as here, the Commission had previously preempted state law even where the relevant statutes contained no express discussion of preemption.”

The FCC noted that its Section 706 authority to pre-empt municipal broadband laws is limited to dealing with laws that place restrictions on deployment of municipal broadband services without instituting a flat ban on those services. That limitation means the FCC’s authority to pre-empt the North Carolina and Tennessee laws isn’t bound by the Supreme Court’s Nixon precedent, the commission said. The Nixon case centered on “a state’s flat ban on political subdivisions entering the market at all,” the FCC said. “That is different from a situation in which a state has permitted a political subdivision to enter the market as a broadband provider, but also seeks to impose regulations on the municipal provider in order to effect separate communications policy goals. In the latter case, the state has crossed from a ‘decision of the most fundamental sort for a sovereign entity’ into a matter in which conflicting federal law is presumed to preempt under the Commerce Clause.”

The FCC’s distinction that there’s a legal difference between pre-empting state laws that outright ban municipal broadband and pre-empting state laws that only restrict those services is “flat-out wrong,” said Squire Patton communications lawyer Jack Nadler, who isn't involved in the pre-emption dispute but has followed the issue. Nadler has represented public sector clients and international governments on telecom issues. The FCC is saying “that once a municipality is allowed to provide service anywhere in the state, it’s allowed to provide broadband service anywhere in the state,” he said. “That’s a clever argument, but at the very least it’s a bit counterintuitive.” The FCC’s decision to delineate that it doesn’t have authority to pre-empt flat bans will force states to clarify their existing municipal broadband laws, since some states use restrictions to create a de facto ban on those services, Next Century Cities Policy Director Christopher Mitchell said. “They’re essentially telling states that if you want to ban municipal broadband, you have to be clear” that that’s the intent of a law, he said.

FCC Commissioners Mike O’Rielly and Ajit Pai filed lengthy opinions opposing FCC pre-emption, as had been expected. Those opinions highlight both commissioners’ publicly stated concerns with FCC pre-emption and contain all of the points that are likely to form the basis of any legal challenge to the order, Nadler said. In their dissents, O’Rielly and Pai have essentially “written the brief for the opponents,” Nadler said. Strong dissenting opinions often form the basis for legal challenges to FCC orders “and I’m quite certain that will be the case here,” he said.

Baller Herbst lawyer Jim Baller, who represented EPB and Wilson in their pre-emption petitions, said in a statement that the order “will encourage States not to adopt new protectionist measures, and to remove existing ones, that impair the ability of their communities to survive and thrive in the emerging knowledge-based global economy. Such laws are bad for the communities involved, bad for the private sector, particularly high tech companies, and bad for America’s global competitiveness.”