A call made by President Barack Obama to the FCC asking the FCC to overturn a series of existing 20 existing state laws that either prohibit or outright ban cities and towns from building and operating their own broadband network businesses will face a number of legal challenges.
Legislators from three states and three state groups, which would likely file lawsuits if the regulator tries to move on this issue, said that the FCC lacks the authority to preempt the existing laws on the books.
Brad Ramsay, general counsel of the National Association of Regulatory Utility Commissioners (NARUC), said during a press conference on Monday that if any state were to go to the U.S. Supreme Court, "the FCC will lose."
Besides Obama's plea to the FCC, Chattanooga, Tenn., and Wilson, N.C., filed separate petitions last year asking the FCC to overturn laws that place limits on how far they can scale their municipal broadband networks. The FCC said that they will vote during their monthly meeting on Feb. 26. on the requests to rework laws that inhibit local municipalities from building broadband networks to compete with established telcos and cable operators like Verizon (NYSE: VZ) and Comcast (NASDAQ: CMCSA).
Within the FCC, municipal broadband has become a dividing issue amongst the Democrat and Republican commissioners. While FCC Chairman Tom Wheeler supports the municipal broadband concept, Republican commissioners Michael O'Rielly and Ajit Pai said the regulator has no authority to preempt state laws governing such projects.
In addition to the FCC, a group of Democratic lawmakers has developed a new bill called the Community Broadband Act. Jointly developed by Sens. Cory Booker (D-NJ), Edward Markey (D-MA) and Claire McCaskill (D-MO), the proposal is designed to give cities and towns the right to decide to build a network.
But a number of states and telcos have cited concerns about a number of municipal broadband projects like Vermont Telecom that did not live up to their promise.
"My question for the FCC, if they follow this course, is the FCC going to foot the bill if there are failures?" said state Representative Joe Atkins, a Minnesota Democrat, according to a Computerworld report.
TDS Telecom, a telco serving Tier 2 and Tier 3 markets that is also deploying 1 Gbps fiber-to-the-home (FTTH) services, is also critical of the Obama administration's call to overturn the existing laws.
Drew Petersen, vice president of External Affairs and Corporate Communications at TDS Telecom, said in a prepared statement that the president should focus on driving partnerships with traditional service providers and provide incentives "to complete the job of constructing reliable, high-speed networks in the remaining pockets of this country where no competition or providers exist."
"Instead, the Obama administration has introduced a government-owned solution to drive innovation," Petersen said. "The President's municipal broadband initiative recommends repealing laws in 20 states that prohibit municipal governments from using taxpayer dollars to build government-owned communications networks. There are dozens of examples where government operated networks have failed, often at a catastrophic cost to the impacted community."
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