[Below is the Introduction to this latest FSF
Perspectives. A PDF version of the complete
Perspectives is
here.]
Following its second stinging judicial rebuke in as many attempts to impose Internet regulations, the FCC is now gearing up for a third try. A February 19 statement by FCC Chairman Tom Wheeler outlined a new plan to exert FCC power over broadband Internet services. Not surprisingly, the plan calls for re-thinking the FCC's already overanalyzed legal rationale for imposing network neutrality rules.
What might surprise is the plan's call to examine state laws that keep local governments out of the Internet business. It hints at federal preemption of state-level restrictions on municipal broadband projects.
But preemption would undermine local government accountability to state governments and to taxpayers. Any FCC attempt to interfere with the relationship between states and their local governments will run up against basic free market and federalism principles.
Nearly twenty states restrict local government entry into the business of providing broadband Internet services. Such laws prevent local government conflicts of interest with the private sector marketplace competitors who invest tens of millions of dollars in localities to build out their broadband networks. They also protect local taxpayers from potentially devastating financial losses from poorly-run municipal broadband projects.
Federal law contains no clear statement authorizing preemption of state restrictions on their cities and counties going into the telecommunications or broadband Internet business. No matter how broad its regulatory power under Verizon v. FCC - and it is not likely to be as broad as the Commission surmises - the FCC cannot interfere with state control over cities and counties absent a clear statement of intent by Congress.
FCC preemption of state restrictions on government-owned broadband projects would violate constitutional federalism principles. Local governments are creations of the states. It would be constitutionally improper for a federal agency to turn counties or cities into separatist enclaves by granting them powers that their respective states never delegated to them in the first place.
The U.S. Supreme Court previously rejected federal law preemption of state prohibitions on telecommunications services. In Nixon v. Missouri Municipal League (2004), the Supreme Court expressly rejected claims that Section 253(a) of the Communications Act preempted a statute prohibiting its cities and counties from offering telecommunications services. The Court based its decision on the "clear statement" rule and constitutional federalism problems posed by preemption of fundamental state sovereign functions.
Also, a 1997 order by the FCC rejecting preemption of a Texas restriction on local governments providing telecommunications services is an agency precedent that weighs against preemption. Should the FCC attempt preemption in the future, it would have to offer a reasonable explanation for disregarding the reasoning behind its 1997 order.
In short, states that safeguard taxpayers from financially risky government-owned broadband ventures, most of which lose money, are safeguarded by constitutional principles and precedents. Rather than restrict states' ability to ensure the financial soundness of their cities and counties, the FCC should look to promote successful private sector-led investment in faster and better broadband networks. When it comes to local barriers to broadband investment, the FCC should seek ways to end rights-of-way discrimination, streamline tower siting rules, reform franchising processes and fees, and clear away other red tape.
* Seth L. Cooper is an Adjunct Senior Fellow of the Free State Foundation, an independent, nonpartisan free market-oriented think tank located in Rockville, Maryland. This Perspectives from FSF Scholars essay is a revised version of a blog post that originally appeared at The American Legislator.
