Win for States Hampering Broadband Expansion

(CN) — Promoting market competition does not justify overriding state laws that restrict expansion by municipal telecommunications providers, the Sixth Circuit ruled.

The dispute stems from petitions that the Electric Power Board of Chattanooga, Tennessee, and the city of Wilson, North Carolina, filed in July 2014 to expand their broadband networks to underserved communities neighboring their service areas.

Tennessee and North Carolina each have laws, however, that either overtly forbid or restrict such expansions.

The states petitioned for appellate court review when the Federal Communications Commission issued an order pre-empting their laws, calling them anticompetitive "barriers to broadband infrastructure investment."

North Carolina's petition to the Fourth Circuit was consolidated with a petition Tennessee Attorney General Herbert Slatery filed with the Sixth Circuit.

A three-judge panel with that Cincinnati-based court sided with the states Wednesday.

"Nowhere in the [Telecommunications Act's] general charge to 'promote competition in the telecommunications market' is a directive to do so by preempting a state's allocation of powers between itself and its subdivisions," Judge John Rogers wrote for the court. "Although preemption authority does not have to be explicit, the authority to preempt such allocations must be delegated by way of a clear statement."

The Telecommunications Act of 1996 authorizes the FCC to "remove barriers to infrastructure investment," but it is unclear whether this authority applies to both public and private investment or to private investment only.

In the absence of a clear statement on the issue of pre-emption, Rogers said the law cannot be read to authorize overruling state law — despite the apparent public benefit of the FCC's order.

Tennessee's Slatery applauded the outcome. "As we have stated from the outset, this case was not about access to broadband," Slatery said in a statement. "Instead, it was about preventing the federal government from exercising power over the state of Tennessee that it does not have."

FCC Chairman Tom Wheeler meanwhile slammed the ruling, saying that it "appears to halt the promise of jobs, investment and opportunity that community broadband has provided in Tennessee and North Carolina."

"The efforts of communities wanting better broadband should not be thwarted by the political power of those who, by protecting their monopoly, have failed to deliver acceptable service at an acceptable price," Wheeler said in a statement. "The FCC's mandate is to make sure that Americans have access to the best possible broadband. We will consider all our legal and policy options to remove barriers to broadband deployment wherever they exist so that all Americans can have access to 21st Century communications."

In granting Chattanooga's petition last year, the FCC had found that the local power board was financially and technically capable of serving surrounding areas.

"Broadband deployment - especially in rural areas - is not occurring broadly or quickly enough to meet the increasing bandwidth demands of consumers," Wheeler had said at the time.

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