A federal court told the Federal Communications Commission on Wednesday that it couldn’t stop states from limiting the expansion of internet service provided by cities rather than the private sector.
It’s a defeat for FCC Chairman Tom Wheeler, who went to bat for two cities in the South providing municipal broadband last year — Wilson, N.C., and Chattanooga, Tenn.
Both cities have offered internet service for years but faced laws restricting their ability to expand geographically. The FCC preempted those state laws in a party-line vote in 2015, arguing that it has a mandate to promote competition in the broadband market, and the states subsequently sued over the order.
A three-judge panel on the 6th Circuit U.S. Court of Appeals rejected the FCC’s justification of its authority and struck down the agency's action.
“This preemption by the FCC of the allocation of power between a state and its subdivisions requires at least a clear statement in the authorizing federal legislation,” the judges said. “The FCC relies upon [section] 706 of the Telecommunications Act of 1996 for the authority to preempt in this case, but that statute falls far short of such a clear statement.”
The Open Technology Institute, which supports the FCC’s action, said that at least 19 states have laws to restrict municipal broadband like the ones in Tennessee and North Carolina.
The decision is a repudiation of Wheeler, who in a statement said that the court's decision “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,” he said. “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.”
The agency could request that the full court hear its claims or ask the Supreme Court to take the case.
Wheeler’s Republican colleagues and the broadband industry cheered the ruling.
“In my statement last year dissenting from the commission’s decision, I warned that the FCC lacked the power to preempt these Tennessee and North Carolina laws and that doing so would usurp fundamental aspects of state sovereignty,” said Ajit Pai, the commission’s senior Republican member. “I am pleased that the 6th Circuit vindicated these concerns.”
Walter McCormick, the president of trade group USTelecom, called the ruling “a victory for the rule of law” in a statement.