FCC to vote on overturning two state laws limiting municipal broadband

FCC Chairman Tom Wheeler's municipal broadband proposal, scheduled for a vote Feb. 26, would largely preempt laws in North Carolina and Tennessee that limit the expansion of municipal broadband networks within their borders.

The proposed FCC order, responding to petitions from cities in each state, does not address state laws that limit municipal broadband networks in about 20 other states, but it signals how the agency would proceed should it receive petitions from cities in other states, senior FCC officials said Monday during a press briefing.

The FCC's vote will help bring faster broadband and more competition to parts of both states, a senior FCC official said. City-funded broadband networks can provide services that residents and businesses want when private broadband providers haven't stepped up, agency officials said.

The state law in North Carolina bars the city of Wilson from extending its 1 Gbps broadband service to areas with only 768 kbps service, an FCC official said.

"Communities across the nation know that access to robust broadband is key to their economic future -- and the future of their citizens," Wheeler said in a statement. "Many communities have found that existing private-sector broadband deployment or investment fails to meet their needs. They should be able to make their own decisions about building the networks they need to thrive."

Wheeler has talked for months about preempting state laws limiting municipal broadband projects, so the proposal comes as no surprise. Wheeler's efforts were boosted last month, when President Barack Obama called on the agency to take action against those state laws.

Wheeler's proposal is likely to win support from the majority of the commission. If the FCC approves his proposal, the agency will likely face a lawsuit challenging its authority to preempt state laws. Last week, a coalition of state groups threatened a lawsuit, based on the 10th Amendment to the U.S. Constitution, which gives states all power not delegated to the federal government.

State groups and some congressional Republicans argue that municipal broadband services use taxpayer money to compete with private broadband providers. In a handful of cases, municipal broadband projects have run into financial problems after large initial investments, critics note.

But the FCC has authority from Congress and the Constitution to preempt state broadband laws, FCC officials said. The Constitution gives Congress, and thus the FCC, authority to regulate interstate commerce, and broadband is interstate in nature, an FCC official said. In addition, the Telecommunications Act of 1996 gives the FCC authority to encourage broadband deployment, he said.

The two petitions to overturn state laws came from Wilson, N.C., and Chattanooga, Tennessee. The Tennessee law bars the Electric Power Board of Chattanooga from extending its 1 Gbps service outside the utility's electric service territory.

In North Carolina, the state law requires community broadband services to add additional costs into their budgets, bars them from offering discounts to customers and bars the city service from extending its coverage area.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's email address is grant_gross@idg.com.