City-run Internet services still in limbo after FCC vote

Introduction

After the nation’s top Internet regulator moved to allow two cities to offer broadband service to their residents, don’t expect a lot of other cities to follow. Expect lawsuits.

The Federal Communications Commission voted last week to preempt laws in Tennessee and North Carolina that make it all but impossible for municipalities to expand Internet service. Chattanooga, Tennessee, and Wilson, N.C., had asked the FCC to act so that they could extend their networks to nearby towns that wanted it.

About 18 other states have laws that restrict cities from building or expanding government operated local broadband networks. The laws are a result of heavy lobbying and spending over the years by large telecommunications companies such as AT&T, Comcast and Time Warner Cable. The FCC’s favorable ruling may be viewed as opening the door to towns in those states to file similar petitions.

But that’s not likely to happen soon, said city officials overseeing networks and broadband experts. First, cities are waiting for the FCC to release their final ruling, probably later this month, on preempting the Tennessee and North Carolina laws. The details may affect how other towns view their chances of getting a favorable FCC decision.

Second, it is likely the FCC’s ruling will be challenged in court, and cities want to wait for the judges to weigh in before paying lawyers to petition the FCC. Any suit will have a chilling effect on cities.

None of the big five telecoms — Comcast, Time Warner Cable, AT&T, Verizon or CenturyLink — issued a statement about municipal broadband immediately after the vote. Comcast and AT&T didn’t respond to requests for comment. The National Conference of State Legislatures, a group that promotes the interests of states in Congress, threatened last year to sue the FCC when agency Chairman Tom Wheeler signaled the FCC would likely vote to preempt the state broadband laws. NCSL repeated the threat after the vote.

“NCSL takes the pre-emption of states very seriously and will continue to pursue our options to ensure that any action taken by the FCC on municipal broadband networks is overturned by the courts,” according to a statement posted last week on its website.

The National Association of Attorneys General said in an email it had no plans to sue, but Tennessee’s attorney general left the possibility open.

It’s unclear how the law applies to other towns in Tennessee and North Carolina. Before last week’s vote, FCC senior administrators said the agency’s decision to preempt the state laws would apply only to Chattanooga and Wilson. Cities in other states, and even those in Tennessee and North Carolina, would have to petition the agency separately for relief from restrictive laws.

In Tullahoma, Tennessee, about an hour’s drive west from Chattanooga, city officials plan to wait to see if the city needs to file its own petition to expand its super-fast broadband network, which began operating in 2007.

“We will do whatever we can to ensure we have the ability to provide our services to anyone in the area that wants it and will pay for it,” Steve Cope, chairman of the Tullahoma Utility Board, which operates the city’s broadband network, said in an email.

Jim Baller, the attorney who represented Chattanooga and Wilson, said the FCC order does explicitly apply to Chattanooga and Wilson. But he said Chattanooga had asked the FCC to strike four words from the Tennessee law that prevented it from providing broadband service outside of its service area. By doing so, it would allow other Tennessee cities to expand. The same situation would apply for North Carolina cities.

“The FCC surely does not intend to require each such municipal utility to file its own individual petition to get the same ruling from the FCC that Chattanooga got,” Baller wrote in an email. “The same is true of North Carolina municipalities that are similarly-situated to Wilson. After all, the FCC’s intent is to remove barriers to community broadband initiatives, not to create costly, burdensome, and time-consuming new barriers of its own.”