Headlines in the vast majority of the country will trumpet the Federal Communications Commission’s vote to implement net neutrality. But in Chattanooga, Tenn., it’s the other vote the FCC took on Thursday that will earn a front-page banner.

A few hours before its vote on net neutrality, the FCC voted along party lines to adopt an order that will allow a small electric utility company in southeastern Tennessee to offer broadband access to rural communities surrounding Chattanooga. The Electric Power Board of Chattanooga (EPB), which serves some 170,000 residents and businesses, created a fiber-optic network that allowed the company to deliver energy more reliably, an effort to reduce power outages. Along with power, the network can also deliver cable, phone and Internet service to residents throughout its service area — Internet that, by the way, achieves some of the fastest speeds in the country.

But a Tennessee state law passed in 1999 prohibits EPB from offering television and Internet service to residents who live in more rural areas outside Chattanooga’s actual city limits. EPB filed a petition with the FCC last summer, seeking permission to expand beyond the city limits.

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On Thursday, the FCC agreed to preempt state laws in Tennessee and North Carolina, where the city of Wilson also sought permission to extend broadband coverage to neighboring communities. The FCC said federal law allows it to preempt state laws that conflict with federal regulations or policies.

“The bottom line of these matters is that some states have created thickets of red tape designed to limit competition,” FCC Chairman Tom Wheeler said Thursday. “When local leaders have their hands tied by bureaucratic state red tape, local businesses and residents are the ones who suffer the consequences.”

The fast Internet speed has helped attract new technology businesses to both Chattanooga and Wilson, including Amazon, which opened a facility in Tennessee, and Regency Interactive, which has a new office in North Carolina. Wilson’s network also provides free wireless Internet downtown.

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“It makes no sense to keep up these artificial barriers that prevent development,” Chattanooga Mayor Andy Berke told The Washington Post. “What we’re really trying to do is grow our city through expanding out broadband to areas that need it. Those are the people who shop in our city, buy homes in our city. We live in a regional world.”

The state laws in both Tennessee and North Carolina passed at the behest of cable and Internet providers like Comcast and AT&T, for whom the expansion of broadband access represents a threat to their business. Telecommunications companies are some of the biggest players in state governments across the country. AT&T and Comcast have contributed more than $215,000 to state lawmakers in Tennessee this election cycle alone, according to the National Institute on Money in State Politics.

Last year, the House of Representatives passed an amendment to an appropriations measure authored by Rep. Marsha Blackburn (R-Tenn.) that would prohibit the FCC from preempting Tennessee state law. The amendment earned support from 221 Republicans and two Democrats; among the four Republicans voting against was Rep. Chuck Fleischmann (R-Tenn.), who represents Chattanooga.

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The National Conference of State Legislatures has objected to the FCC’s move, which it views as trampling on states’ rights. The National League of Cities took the opposite position, backing the petition filed by Chattanooga and Wilson.

“NCSL takes the preemption of states very seriously and will continue to pursue our options to ensure that any action taken by the FCC on municipal broadband networks are overturned by the courts,” said William Pound, the conference’s executive director.

The FCC’s ruling is almost certain to wind up in court. It applies only to the two petitioners, though it would set a precedent for other cities in states that restrict municipal broadband networks.

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Berke said a court challenge is inevitable: “If our past experience is any indication, this isn’t over,” he said.

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Nineteen states have laws on the books that limit such networks. They range from strict prohibitions on any or most municipal broadband service (Texas and Nevada), to requirements that a municipality hold public hearings or a referendum before offering service, as in Alabama, Colorado, Minnesota and Virginia. At least 89 communities around the country have publicly owned fiber-optic networks.

More than half of Americans have only one choice of Internet provider at speeds of 25 megabits per second, the basic threshold for high-speed internet under a new definition approved by the FCC last month.

— Brian Fung contributed.

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