FCC says private providers are not delivering acceptable service
AT&T, Verizon Communications and other broadband service providers have won a court victory in a case that has been closely watched by consumer broadband advocates, local governments and the telecom industry. The 6th U.S. Circuit Court of Appeals has decided that the Federal Communications Commission cannot override state laws governing municipal broadband.
Municipal utilities in North Carolina and Tennessee wanted to offer gigabit broadband outside the service areas prescribed by their respective state laws. Some states limit municipal broadband footprints in order to encourage private providers to build networks in the state, since private companies are less likely to invest if they have to compete with government-funded networks.
The FCC argued that the Telecommunications Act of 1996 gives it the authority to override those state laws. Section 706 of the Telecommunications Act directs the federal government and state governments to “encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans.”
The appeals court said that Section 706 does not give the FCC authority to override state laws. The decision won immediate praise from the telecom industry and from utility regulators.
“Municipal governments are creations of state law, and their powers exist only because a state has given them a right to exercise them,” said Travis Kavulla, president of the National Association of Regulatory Utility Commissioners. “For the FCC to attempt to remove the restrictions states have imposed on the operation of city governments was an offense to the Constitution.”
FCC Chairman Tom Wheeler said community broadband has been creating jobs and opportunity in North Carolina and Tennessee, and that private providers are “protecting their monopoly” and “have failed to deliver acceptable service at an acceptable price.”
AT&T agreed to deliver broadband over fiber to more than 12 million Americans as a condition of the FCC’s approval of AT&T’s DirecTV acquisition. As part of a separate agreement with the government, AT&T also has promised to extend internet service (but not high-speed broadband) to more than 1 million rural homes and businesses, with help from the Connect America Fund.
Verizon Communications agreed to expand internet access in California and Texas as a condition of FCC approval of Verizon’s sale of fiber assets in those states to Frontier Communications. Verizon also has agreements with a number of U.S. cities under which the carrier has committed to deliver broadband to homes.
Consumer advocates at Common Cause said the 6th Circuit’s decision was a “setback for the public interest,” and vowed to continue the fight state by state. The group wants to overturn state laws that limit municipal broadband expansion.
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