Muni Broadband Debate Focuses on Section 706 Authority

Comments from a number of parties had yet to be posted Friday afternoon, before a 11:59 p.m. Friday deadline. As many commentators had predicted (WID Aug 22 p3), arguments posted Friday around petitions from Wilson, North Carolina, and the Electric Power Board (EPB) of Chattanooga, Tennessee, to pre-empt their state’s laws centered on Section 706 authority. Supporters including several towns argued the section’s mandate to encourage broadband development and remove any barriers to it gives the FCC pre-emption authority, while others said the state laws violate the section.

The comments also rehashed what had been central to the debates held at the state level. Municipal broadband supporters, including associations representing cities, mayors and counties, commented that the state laws prevent citizens from having access to high-speed broadband. Free-market think tanks pointed to a number of failed projects and argued the state laws are needed to protect taxpayers.

Pre-emption is appropriate, said the Colorado Communications and Utility Alliance (http://bit.ly/1qnNFCK), because the state laws “conflict with clearly stated Federal law and policy by creating barriers to broadband infrastructure investment, deployment, competition and innovation.” CCUA’s filing identified it as the state chapter of the National Association of Telecommunications Officers and Advisors and the communications section of the Colorado Municipal League.

Congress, through Section 706, gave the commission “broad authority and discretion” to make sure broadband is made available “on a reasonable and timely basis,” commented Mooresville, North Carolina (http://bit.ly/1osOiGU). It said Congress “undoubtedly understood” municipalities were essential to broadband deployment. Mooresville and Davidson, North Carolina, jointly developed a broadband network, for which Mooresville borrowed $100 million for the system, said Mooresville. The North Carolina law “established fixed boundaries of the service area thereby eliminating the expansion and growth opportunities to enable the system to be able to pay for its debt service,” the town said.

Nothing About Pre-Emption

Nowhere in Section 706 “is any form of the word ‘preempt’ used nor can it be implied from the plain text of section,” said NCSL (http://bit.ly/1vupBSX). The section mentions only such actions as “'price cap regulation, and regulatory forbearance,'” it said. Wilson and the EPB may argue forbearance means the same as pre-emption, NCLS said, but that “proposition is weak at best and completely erroneous at worst.” There’s no clear expression of congressional intent required by the U.S. Supreme Court in Nixon v. Missouri Municipal League to justify pre-emption, NCLS argued. USTelecom also referred to the case (http://bit.ly/1B1zHLg), saying the FCC lacks authority “to take the extraordinary step of interposing itself between the state legislature and the political subdivisions that the legislature controls."

The agency has pre-emption authority in other situations, USTelecom argued, but the commission “should look first at the removal of barriers ... erected by municipalities” on private operators. Quoting the FCC National Broadband Plan, USTelecom said obtaining permits and leasing pole attachments and rights-of-way can add 20 percent to the cost of fiber optic deployment. “Municipal control of local rights-of-way often translates into onerous rules at the local level that add additional expense and delay to broadband infrastructure projects -- rules that are ripe for Commission preemption,” USTelecom said.

The Fiber to the Home Council Americas, in supporting the petitions for pre-emption, said states “may not act contrary to the explicit directives of Section 706 and impose de jure or de facto prohibitions on municipal utility broadband investments” in areas without reasonable and timely deployment (http://bit.ly/1lAbSqB). The Telecommunications Industry Association echoed the point (http://bit.ly/1vusjb8), saying that “no statewide statutory barriers to municipal participation in the broadband market, whether explicit or de facto, should be erected."

Despite the back and forth, the U.S. Court of Appeals for the D.C. Circuit and the 10th Circuit have construed Section 706 “as giving the commission very broad authority to advance broadband deployment,” said Andrew Schwartzman, senior counselor at Georgetown Law’s Institute for Public Representation, in an interview. The focus of the comments was expected, he said, but comments from those in favor of pre-emption “help round out the factual issues by demonstrating shortcomings in current deployment and showing how various municipal broadband projects have succeeded in deploying broadband to more users.”

While states argued against having the FCC usurp their authority, local governments argued that the state laws do the same. The state laws affect “a local government’s ability to provide vital broadband services that would stimulate local businesses development, foster work force retraining, and boost employment in economically underachieving areas,” said a joint filing (http://bit.ly/1qnOviT) by the National Association of Counties, National League of Cities (NLC), NATOA and the U.S. Conference of Mayors. The state laws are “counterproductive” when “local governments across America are ready, willing, and able to do their share” to deploy broadband, the groups said. The filing did not deal with the legal debate over authority because there hasn’t yet been a formal vote by members about the legal questions, said Julia Pulidindi, NLC principal federal advocate-technology and communications. Pointing to the benefits of municipal broadband, the groups said Danville, Virginia, which once had the state’s highest unemployment, has attracted new business to the city after building its own network.

Highlands, North Carolina, said (http://bit.ly/1CarXYX) that local Internet providers are not interested in building broadband in the area. As a result, the town has trouble attracting residents, it said.

Citing a number of municipal projects that have run into problems, as in Provo, Utah (WID June 5/13 p9), he American Consumer Institute, which advocates for less regulation, said (http://bit.ly/1zSluhn) that municipal projects can exhibit “gross inefficiencies, poor quality of service and slow speeds” because they can push losses on to taxpayers.