FCC muni preemption decision could limit California broadband oversight

by Steve Blum • , ,

CPUC’s broadband authority depends on federal law.

Tennessee and North Carolina are challenging the FCC’s ruling earlier this year that preempted state restrictions on municipal broadband. The central argument is whether congress gave the FCC sufficient authority to override what is usually reckoned to be the ironclad state responsibility of telling local governments what they can and can’t do. The FCC based its ruling on section 706 of the telecommunications act of 1996, which says…

The Commission and each State commission with regulatory jurisdiction over telecommunications services shall encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans…by utilizing, in a manner consistent with the public interest, convenience, and necessity, price cap regulation, regulatory forbearance, measures that promote competition in the local telecommunications market, or other regulating methods that remove barriers to infrastructure investment.

There are two ways to read that section. Telecoms companies argue that it’s intended to guide how the FCC and state regulators, including the California Public Utilities Commission, implement more specific sections of the law. In other words, it only offers advice and does not grant any additional authority.

In the muni preemption ruling and other decisions, the FCC has – recently, at least – taken the words of the law at face value and declared that it actually grants wide ranging power to do pretty much anything that removes “barriers to infrastructure investment”. That assumption was tested once at the federal appellate level, when Verizon successfully challenged the FCC’s first attempt at imposing net neutrality rules in 2010. Even though the FCC lost (on other grounds), the decision in that case generally supported the commission’s reasoning regarding section 706, but left open the question of the full extent of its authority. The FCC accepted the decision, so it never got to the U.S. supreme court.

The Tennessee case is another opportunity, at either the appeals or supreme court level, to define the limits of section 706. If the ultimate decision takes a narrow view, it will curtail the wide ranging regulatory review that the CPUC is taking of major broadband transactions, like those proposed by Comcast, Frontier and Charter. The CPUC needs section 706 to justify using broadband considerations as criteria for approval: without federal authority, state law bars it from getting involved with Internet services.