While President Obama urged the FCC to push back on laws limiting municipal broadband buildouts, the Department of Justice did not have his back when it came to challenges by Tennessee and North Carolina to the FCC's decision earlier this year to do just that by preempting state laws limiting muni buildouts.
The antitrust division at DOJ weighed in at the Sixth Circuit on the challenge Friday (Nov. 6) and it was hardly a ringing endorsement. "Respondent United States of America takes no position in these cases," said DOJ attorney Robert B. Nicholson in a court filing Friday (Nov. 6).
In a 3-2, party-line vote (supported by its Democratic majority), the FCC on Feb. 26 pre-empted state laws in Tennessee and North Carolina that limited cities’ ability to get into the broadband business. The agency cited its authority under Section 706 of the 1996 Telecommunications Act to ensure that advanced telecom services are deployed in a reasonable and timely manner.
The order pre-empts geographic limitations on the expansion of municipal broadband systems in Chattanooga, Tenn., and Wilson, N.C., though it does not compel any action in either case. The decision does not affect laws in other states, but signals how the FCC might act on similar petitions.
The FCC said it can't pre-empt laws preventing municipalities from building broadband networks, but can preempt ones that limit it where it has already been authorized.
In a speech in Cedar Falls, Iowa, Feb. 26, where a community broadband network, with the help of government funding, delivers 1 gigabit speed service at about the same price as the cable bundle, President Obama told a crowd of sometimes cheering Iowans that there was not enough competition to ISPs that continued to "jack up"
rates, and that the government should try to encourage municipal competitors to fill that breach.
He said in many places big companies are "doing everything they can to keep out new competitors" and "stamp out" competition. "Enough is enough," he said, and called on the FCC to do whatever it could to push back on those laws.
But there had been signs that was not the last word from the Administration. In a letter to FCC Chairman Tom Wheeler after that speech, the head of the National Telecommunications & Information Administration, the President's chief telecom adviser, said that muni broadband is not always, or even "typically," the best way to meet a community's broadband needs, "particularly where existing service providers are willing and able to meet a communities evolving needs."
"The Department of Justice's curt statement advising the court that it takes no position in the appeal of the FCC's preemption of state laws restricting local government broadband networks is very curious," said Randolph May, president of the Free State Foundation, who is no fan of the FCC's preemption action. "As someone who served as FCC associate general counsel, I can tell you this is a very rare occurrence. And it is especially curious in this case because President Obama urged the FCC to do exactly what FCC Chairman Tom Wheeler then did. We don't know for sure, but my best guess is that the DOJ, quite rightly, is concerned about the lawfulness of the FCC's preemption action. If so, the concern is justified."
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