Battle lines drawn in fight for state, local telecoms policy role

by Steve Blum • , , , ,

Update: the state senate approved SB 460 by a 21 to 12 vote and sent it on to the assembly.

The Federal Communications Commission can regulate some aspects of broadband deployment, but not all. That’s the picture painted by two complementary analyses of federal law and telecoms policy, one by the California senate’s judiciary committee staff and the other by attorneys working for the City of McAllen, Texas and endorsed by the cities of San Jose and New York.

A bill that would reinstate network neutrality is working its way through the California senate. It’s been endorsed on a political level, but its legal foundation is shaky. The staff analysis essentially says that it’ll survive court challenges if the FCC decision to scrap federal net neutrality rules, which also specifically preempted state level regulations, is overturned. The likeliest grounds for that, according to the staff analysis, would be that it was “arbitrary, capricious and an abuse of discretion”.

On the other hand, whacking state and local governments with a sledgehammer that takes away control of public right of ways or municipally owned property, such as light poles, is unconstitutional, according to a white paper submitted to the FCC by McAllen: even if the federal congress authorised it (it hasn’t) the constitution protects property rights, both private and public…

By definition, charging fair market value for use of property is “fair and reasonable” compensation under the Fifth Amendment. The Supreme Court has construed the Fifth Amendment’s Takings Clause to protect the property of state and local governments from uncompensated taking under federal law, and held that it “requires that the United States pay ‘just compensation’ normally measured by fair market value"…

The Commission has no authority to require state or federal taxpayers to subsidize the business plans of private companies…

Proposals to compel local governments to surrender use of their property for below-market rates are fundamentally inconsistent with the functioning of a free market and will encourage inefficient, inequitable deployment.

So far, the FCC hasn’t made any decisions about further preemption of local or state authority, the dictates of industry lobbyists and supine accommodation of at least one commissioner not withstanding. But it has binned net neutrality and blocked states from reviving it. Its ultimate success at either endeavour will be decided by federal judges – likely, by the federal supreme court.