If approved, the FCC would find that the states have erected barriers to the timely and reasonable deployment of high-speed Internet access in Chattanooga, Tenn. and Wilson, N.C. It would effectively knock down the state laws that the cities say inhibit them from building viable competitors to the likes of Comcast and Verizon.
The draft decision targets legal hurdles that make it more difficult for city- or community-run Internet services to get off the ground. Tennessee, for example, has passed rules forbidding cities from building high-capacity networks beyond a certain geographic area. Publicly run broadband in North Carolina may not offer service at prices below what a private carrier offers. And in their petitions to the FCC filed last year, the cities point to other regulatory challenges that, they argue, tilt the playing field in favor of incumbent Internet providers such as Comcast and Verizon.
Roughly 20 states have such limits on the books. Overturning the ones in Tennessee and North Carolina would mark the opening of a wider battle over municipal broadband by the federal government. Although any FCC decision in February would be narrowly tailored to the two cities, the legal theory underpinning the proposed action would likely be used to answer similar petitions in the future involving other states.
Under Section 706 of the Communications Act, the FCC is authorized to promote the deployment of broadband in the United States. By ruling that the anti-municipal state laws constitute barriers to that mission, the FCC's draft order invokes Section 706 in preempting the laws.
But that theory has already been questioned by Republicans who believe private investment is a more effective tool for rolling out high-speed broadband. GOP officials, including right-leaning commissioners at the FCC, say Section 706 does not give the agency authority to come between the sovereign relationship between a state and the cities under its jurisdiction, setting up a major legal battle between liberals and conservatives.
Last month, President Obama called on the FCC to address state barriers to broadband deployment, writing a letter to the agency arguing the importance of access to next-generation information networks. The letter also highlighted what Obama described as a lack of competition in the broadband market. The FCC has found that, under a new standard for broadband approved last week, roughly 55 million Americans — or 17 percent of the country — lack a connection to adequate speeds, defined as 25 megabits per second or more. Other FCC studies have found that most Americans have access to only one or two Internet providers at most.
Republicans in Congress, meanwhile, have moved to block the FCC's ability to rule on the Chattanooga and Wilson petitions. A bill sponsored by Senate Commerce Committee Chairman John Thune (R-S.D.) and House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) would restrict the FCC's authority under Section 706, preventing the agency from using that portion of the law as a regulatory tool for broadband. FCC critics fear that, left unchecked, Section 706 could be used to regulate the Internet more broadly, extending even to end-user services such as Google or Netflix.