Cities Seek FCC Help to Expand Broadband

This week’s round-up covers the latest news on municipal broadband. In the spirit of disclosure, in 2012, the Benton Foundation and the Institute for Local Self-Reliance (ILSR) released “Broadband at the Speed of Light: How Three Communities Built Next-Generation Networks”, a report that highlights municipal network success stories. In addition, Joanne Hovis, a member of the Benton Board of Directors, founded, with Jim Baller (mentioned below), the Coalition for Local Internet Choice which supports the authority of local communities to make the broadband Internet choices.

Back in February, Federal Communications Commission Chairman Tom Wheeler announced a number of steps the FCC would take to ensure an Open Internet in light of a January 2014 decision by the United States Court of Appeals for the District of Columbia which affirmed the FCC’s authority to regulate the Internet but invalidated rules meant to require Internet service providers to give all traffic equal access through their networks. [See Wheeler’s Got Next] Chairman Wheeler said the FCC will “look for opportunities to enhance Internet access competition” and highlighted a recommendation in the opinion of Judge Laurence Hirsch Silberman in the Open Internet decision to lift legal restrictions on the ability of cities and towns to offer broadband services to consumers in their communities. This week saw a major development on this front. Chattanooga (TN) and Wilson (NC) simultaneously petitioned the FCC to pre-empt laws in their states that ban the cities from expanding their high-speed Internet networks.

Wilson's city leaders want to expand the city’s broadband network, Greenlight. Because of state law, Wilson is restricted to offering Greenlight service in Wilson County but often receives requests for service outside of the county. The city’s petition to the FCC says that North Carolina law restricting municipal broadband is inconsistent with the Telecommunications Act and should be determined to be unenforceable.

"The city’s petition seeks to remove the significant operational barriers imposed by the state law so that Greenlight can continue to thrive and serve our community,” Mayor Bruce Rose said. "I have seen Wilson evolve from the World’s Greatest Tobacco Market to North Carolina’s First Gigabit City. We have continuously invested and re-invested in public facilities. Years ago, our city council saw fiber optics as the public infrastructure of the future and absolutely essential to improve the economy, provide jobs and improve our quality-of-life. Greenlight has been a great example of the benefits that community broadband can provide for a city.”

Electric Power Board of Chattanooga (EPB), an independent board of the City of Chattanooga, offers ultra-high-speed Internet access, video programming, and voice services over a fiber-optic communications network that permits delivery of these services to every one of its 170,000 residential and commercial customers throughout its 600 square mile electric service area. But the EPB petition notes that EPB is “surrounded by a digital desert” where there are hundreds of people -- nearly all in rural areas -- who can't access even basic broadband Internet. And despite potential customers who are practically begging for Internet providers to expand to their areas, the big players so far haven't pulled the trigger on very rural broadband.

EPB seeks the opportunity to respond to requests to provide advanced telecommunication services that EPB regularly receives from citizens and businesses located outside EPB’s electric service territory. Under current Tennessee law, Tennessee municipal electric systems, including EPB, are authorized to provide telecommunications services anywhere in the state. Even though the high-speed fiber optics system that EPB would use to deliver such telecommunications services would also permit it to easily provide advanced telecommunications capabilities and services -- including Internet access and Internet Protocol Television -- the territorial restriction contained in Section 601 prohibits EPB from using the same fiber for delivery of advanced telecommunications services outside its electric service territory. EPB seeks the authority to offer advanced telecommunications services in areas outside its electric service territory where the cost of the services will be covered by service revenue, contributions in aid of construction, or other capital or operating support.

EPB is petitioning the FCC to find that advanced telecommunications capabilities, including high-speed broadband services, are not being deployed on a reasonable and timely basis in communities near EPB’s electric service area because of the territorial restriction in Tennessee law that limits EPB’s deployment of Internet and video programming to its electric service area. The FCC should find that, absent Tennessee law’s electric service area limitation, broadband investment would occur on a reasonable and timely basis in the areas surrounding EPB’s current footprint. The FCC should, EPB argues, take immediate action to remove the barrier created by the territorial restriction contained in Tennessee law and declare it to be unenforceable.

The EPB asks the FCC to act under the authority Congress gave the Commission in Section 706 of the Telecommunications Act of 1996. Andrew Jay Schwartzman, in Did Congress Empower the FCC to Regulate the Internet? Appeals Court Says ‘Yes’, explained Sec. 706 authority here back in February. In short, the law directs the FCC to “take immediate action to accelerate deployment … by removing barriers to infrastructure investment and by promoting competition in the telecommunications market.”

The Chattanooga and Wilson (NC) petitions are a move to lift all statewide bans on municipal broadband networks. More than 130 cities operate their own Internet networks, according to the Institute for Local Self-Reliance while some 21 states restrict such networks. The state laws restricting municipal broadband have been backed, and sometimes written, by telecommunications companies led by AT&T, Time Warner Cable, Verizon Communications and Comcast. They argue it is unfair for them to compete with government, which doesn’t have to make a profit or pay taxes.

The companies are among some of the biggest contributors to state lawmakers’ campaigns and spend millions of dollars more on lobbying statehouses. AT&T has given nearly $140,000 to Tennessee lawmakers’ campaigns in the 2014 election cycle, the most for any state, according to the National Institute on Money in State Politics. Comcast gave $76,800 during the same cycle, also surpassing totals given in any other state.

According to the FCC, "there is no specific timeline for review" of the Chattanooga and Wilson (NC) petitions and any future ones from other states. These petitions will be handled on a case-by-case basis, so the FCC might not make a single declaration that preempts all state laws inhibiting municipal broadband. "The FCC has the authority to take broader action through rulemakings -- but that is not what is happening here," an FCC spokesperson said.

If the FCC acts to lift municipal broadband bans, it is likely to face a court challenge. The National Conference of State Legislatures (NCSL) wrote in a letter to Chairman Wheeler this week saying such a move would infringe on states' rights protected by the Constitution. NCSL said it "will challenge the constitutionality of any action on the part of the [FCC] seeking to diminish the duly adopted laws of the impacted states or prevent additional states from exercising their well-established rights to govern in the best interests of the voters. Aside from the constitutional challenges, such an attempt disregards the countless hours of deliberation and votes cast by locally elected lawmakers across the country and supplants it with the impulses of a five-member appointed body in Washington, D.C. As you have conceded previously, 'I understand that the experience with community broadband is mixed, that there have been both successes and failures.' Your words in mind, is it that unreasonable policymakers in 21 states have responded by enacting safeguards on municipal networks to mitigate the pitfalls associated with entry?"

A challenge to FCC action might be based on a 2001 Supreme Court decision known as Nixon v. Missouri Municipal League. We’ll leave it to sharper legal minds to go into more detail but, in sum, the Supreme Court found in that case that the FCC’s preemptive power -- under a part of the Communications Act called Section 253 -- couldn't be used in the city context. The Court argued that states should be allowed to prevent cities from building and providing their own telecommunications services, and that Congress, in writing the Communications Act, probably never intended to let the federal government free municipalities from state regulations. But the FCC is likely to rely on a Sec. 706 if it acts this time, not Sec. 253.

The Chattanooga petition argues that Nixon v. Missouri Municipal League does not affect the FCC’s authority in the current matter mainly because of the reliance on Sec. 706.

It's not clear whether the FCC can successfully argue the point. But House Republicans don't seem open to letting Chairman Wheeler try. Last week, in an amendment to a must-pass funding bill, House lawmakers, in a narrow 223-200 vote, approved a provision that would prohibit the FCC from ensuring cities' ability to sell their own high-speed broadband directly to consumers. The provision reads:

Sec. 920. None of the funds made available in this Act to the Federal Communications Commission may be used, with respect to the States of Alabama, Arkansas, California, Colorado, Florida, Louisiana, Michigan, Minnesota, Missouri, Nebraska, Nevada, North Carolina, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia, Washington, and Wisconsin, to prevent such States from implementing their own State laws with respect to the provision of broadband Internet access service (as defined in section 8.11 of title 47, Code of Federal Regulations) by the State or a municipality or other political subdivision of the State.

"Confused that supposedly local government-oriented Republicans are squashing local initiatives aimed at bringing choice and competition to the monopolistic telecom market?" asks Caroline Craig in InfoWorld. "The Internet may bring people closer together, but Internet lobbying dollars make for some interesting political bedfellows, and big telecom companies spend millions pushing their agendas in state and federal legislatures."

The Financial Services and General Government Appropriations Act awaits consideration from the Senate.

This debate is at its early stages. You can follow our coverage and we'll see you in the Headlines.