Chattanooga wants feds to pre-empt broadband ban

Introduction

Chattanooga, Tenn., officials plan to ask the federal government to allow it to expand the super-fast Internet service it offers city residents, a move that will likely unleash a torrent of lobbying and lawsuits by telecommunications companies that have spent years convincing states to curb city-run networks.

The city’s Electric Power Board, which operates a fiber-optic Internet service that competes with companies such as Comcast Corp. and Charter Communications Inc., will petition the Federal Communications Commission in the next couple of months to pre-empt the Tennessee law that prohibits the city from expanding the network, Danna Bailey, vice president of corporate communications for the EPB, told the Center for Public Integrity.

“We continue to receive requests for broadband service from nearby communities to serve them,” Bailey said. “We believe cities and counties should have the right to choose the infrastructure they need to support their economies.”

The move by Chattanooga will be a first salvo in an effort by municipalities and the FCC to reverse the laws in 20 states that ban or severely restrict local governments from offering Internet service to residents.

FCC Chairman Tom Wheeler has said numerous times since he took over as chairman in November 2013, including in testimony before Congress, that he plans to pre-empt state laws that ban or place barriers on cities that want to build or expand broadband networks.

Wheeler asked to meet with Chattanooga Mayor Andy Berke in June to discuss the city’s plans for expanding its network. Wheeler told the mayor that any pre-emption of state laws would have to come out of the public utilities that operate the networks, Berke said in a phone interview.

“I did not talk to him about the overall plan of what he is going to do,” Berke said.

A day after his meeting with Berke, Wheeler wrote in his blog, “I believe that it is in the best interests of consumers and competition that the FCC exercises its power to pre-empt state laws that ban or restrict competition from community broadband. Given the opportunity, we will do so.”

Chattanooga’s network, which covers 600 square miles and serves 60,000 customers, has received wide acclaim for attracting high-tech businesses to the area and providing residents with speeds they couldn’t purchase from the area’s private Internet and cable providers such as Comcast and Charter.

A state law passed in 1999 prohibits Chattanooga from offering service beyond the area it provides electric power.

The FCC declined to comment specifically on a possible Chattanooga filing. Mark Wigfield, an FCC spokesman, said if a petition is filed “the commission would engage in a very fact-specific, case-specific, and statute-specific inquiry.”

Charter declined to comment, and Comcast didn’t respond to requests for comment.

More than 130 cities operate their own Internet network, according to the Institute for Local Self-Reliance. The Internet speeds are frequently faster than what private service providers offer and are comparable in price or cheaper. Cities view the networks as an economic development tool to create jobs and to offer service in areas that private companies view as unprofitable.

Telecommunications companies argue it is unfair for them to compete with government, which doesn’t have to make a profit or pay taxes.

It’s not certain how the pre-emption process would work. Neither the city nor the FCC have offered up any details.

The state laws restricting municipal broadband have been backed, and sometimes written, by telecommunications companies led by AT&T Inc., Time Warner Cable Inc., Verizon Communications Inc. and Comcast.

The companies are among some of the biggest contributors to state lawmakers’ campaigns and spend millions of dollars more on lobbying state houses. 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 the totals for any other state it has given to.

The companies and Republicans in Congress will likely fight Chattanooga’s petition. Senators including Deb Fischer, R-Nebraska, Ron Johnson, R-Wisconsin, Ted Cruz, R-Texas and Marco Rubio, R-Florida, wrote a letter warning Wheeler not to act on the state laws, saying they were troubled by the agency “forcing taxpayer funded competition against private broadband providers.”

Sixty House Republicans led by House Energy and Commerce Vice Chairwoman Rep. Marsha Blackburn, R-Tennessee and Rep. Bill Johnson of Ohio followed up with their own letter criticizing Wheeler for his intention to pre-empt state broadband laws “despite the states’ determination to protect their taxpayers.”

“I find it deeply ironic that those who claim to protect taxpayers want to limit Chattanooga’s network expansion,” said Christopher Mitchell, director of Community Broadband Networks at the Institute for Local Self-Reliance, which supports municipal networks. “Big companies like AT&T receive numerous tax subsidies and refuse to invest in modern connections whereas allowing Chattanooga to expand would supercharge local economies while almost certainly reducing or entirely removing such subsidies.”