Federal Court Rejects FCC Plan To Save Municipal Broadband From Archaic State Regulations

The Federal Communications Commission led by chairman Tom Wheeler suffered a setback today in its plan to encourage and allow cities to build and expand their own broadband networks, as a federal appeals court ruled the agency didn't have the authority to block two states from setting limits on municipal broadband expansion.

Municipalities in Chattanooga, Tennessee and Wilson, North Carolina wanted to expand their broadband networks to neighboring communities and counties, which would increase competition with private Internet Service Providers (ISPs) that have regional monopolies. However, there are laws in place that prevent them from doing so.


A majority vote by the FCC in 2015 to issue an order pre-empting state law as it pertains to its authority to "remove barriers to broadband investment and competition" as part of the Telecommunications Act of 1996 didn't fly with the appellate court. Wheeler voiced his displeasure with the ruling, criticizing the impact it will have on jobs and investments that broadband provides.

"Over 50 communities have taken steps to build their own bridges across the digital divide. 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.

The legal issue the FCC ran into is that it just doesn't have the specific, clearly defined authority to overturn state laws.

"The FCC clearly tried to invoke imaginary authority and finally was called out by a court for doing so," FCC Republican Michael O'Rielly said. "Unless Congress specifically authorizes FCC intervention, States rightly can limit government-operated broadband networks in order to protect their citizens’ pocketbooks and good senses. Contrary to some beliefs, municipal networks are not panaceas to solving any lack of ubiquitous broadband, but instead unfairly distort the marketplace."

Nearly two dozen states have in place municipal broadband restrictions.