By Josh Long

A city in North Carolina and power board in Tennessee have asked the Federal Communications Commission to preempt state laws that restrict public entities from offering broadband service in certain areas.  

But the FCC shouldn’t interfere with the state legislatures on this issue, according to a Washington, D.C.-based trade association representing service providers in the telecommunications industry. 

“With state taxpayers on the financial hook when a municipal broadband network goes under, it is entirely reasonable for state legislatures to be cautious in limiting or even prohibiting that activity,” wrote Anne Veigle, senior vice president of communications with the United States Telecom Association (USTelecom), in a blog.

In a filing today with the FCC, USTelecom expressed its opposition to petitions filed by the City of Wilson, North Carolina, and the Electric Power Board of Chattanooga, Tennessee. As USTelecom notes, municipal broadband operations have achieved mixed results, some successes — others, major failures.

Municipal broadband services compete with such USTelecom members as AT&T and Verizon, so it’s little surprise that the trade group opposes the petitions.

“North Carolina and Tennessee – as well as many other states throughout the country – have sensibly determined that competition spurs broadband deployment and reasonably concluded that the unrestricted ability of public entities to offer broadband services may impede competition,” USTelecom stated. “In doing so, these states have exercised their fundamental and traditional power to order and control the activities of the states’ own political subdivisions.”

Wilson, a city in North Carolina that was established in 1849, told the FCC in its petition that it has received requests from government agencies, businesses and others in five counties to deliver services over its fiber-optic network. The city already provides cable television, gigabit Internet access and other services in Wilson County.

The FCC must condemn a state law prohibiting the city from expanding into neighboring counties “because it seeks to thwart Wilson and other municipalities in North Carolina from providing exactly the kind of high-capacity network and services that America needs to remain competitive in the emerging knowledge-based global economy,” according to the petition.

Under the Telecommunications Act of 1996, the FCC has the authority to preempt state law through a finding that advanced telecom capabilities aren’t being implemented in a timely manner, according to the petitions.

A Tennessee law that bars the Electric Power Board of Chattanooga from offering Internet and video programming services outside its electric service territory “is precisely the type of legal barrier that Congress directed the Commission to sweep away in Section 706 of the Telecommunications Act of 1996,” lawyers for the board wrote in an FCC petition.

But the National Governors Association contends the power board and City of Wilson are interpreting the FCC’s authority too broadly under the 1996 Telecom Act and that FCC’s acceptance of the petitions would violate a five-year-old preemption memorandum to executive branch department and agency heads from President Obama.

“Here, neither the North Carolina nor Tennessee legislature and executive branches enacted laws that prohibited either petitioner municipality from establishing broadband capacity to serve their residents within the city limits,” wrote Dan Crippen, executive director of the National Governors Association, in a filing today with the FCC. “There is a legal distinction between laws that are constitutional from those that some faction do not support. The tools to address the latter is the ballot box.”