Chattanooga, Tenn., and Wilson, N.C., are among a number of cities and towns that provide their own municipal broadband networks. About 20 states, depending on whom you ask, have laws that restrict them in some fashion.

This summer, in what could eventually be a landmark action, Chattanooga’s Electric Power Board, which runs its network, and the government of Wilson petitioned the Federal Communications Commission to preempt state laws they say prevent them from geographically expanding their broadband offerings. The legal debate has focused on whether the FCC has authority to preempt these state laws.

The laws range from “mildly impactful to outright de facto bans,” says Patrick Lucey, a policy program associate at the Open Technology Institute of the New America Foundation, a centrist nonpartisan think tank in Washington that supports municipal broadband.

Communities build their own networks because they think the private sector isn’t investing in them, said Christopher Mitchell, director of community broadband networks at the Institute for Local Self-Reliance, a nonprofit that promotes local economies.

According to Mitchell, in the case of city-wide municipal fiber networks, reasons for deployment are often a mix of getting fast, reliable service at an affordable price.

States are looking to protect their fiscal well being, said James Ward, committee director of state-federal relations at the National Conference of State Legislatures. If municipal networks fail, states are ultimately on the line, he said.

FCC Chairman Tom Wheeler has been critical of these state laws, though, and has contended the FCC has authority to preempt them.

“If the people, acting through their elected local governments, want to pursue competitive community broadband, they shouldn’t be stopped by state laws promoted by cable and telephone companies that don’t want that competition,” Wheeler wrote in a blog post in July. “I believe that it is in the best interests of consumers and competition that the FCC exercises its power to preempt state laws that ban or restrict competition from community broadband. Given the opportunity, we will do so.”

In July, Chattanooga’s Electric Power Board asked the FCC to preempt the words “within its service area” from state law that it says limits the EPB to providing Internet service only in its electric service jurisdiction.

While the EPB can provide residents and businesses in its electric service area with super-fast Internet access, video programming and phone services over its fiber network, there’s a “digital desert” surrounding the EPB where “businesses and residents are unable to access broadband Internet service or must make do with very limited speeds,” the petition states.

Removing Barriers

In making its argument, Chattanooga cites Section 706 of the 1996 Telecommunications Act which charged the FCC , as the petition describes it, with encouraging the “deployment of advanced telecommunications capabilities by removing barriers to infrastructure investment and by promoting competition in local markets.”

Tennessee’s “territorial restriction,” the city contends “ is precisely the type of legal barrier that Congress directed the Commission to sweep away.”

Similarly, the City of Wilson calls on the FCC to preempt a North Carolina state law that it argues places “numerous onerous restrictions” that “thwart, delay, and make municipal broadband initiatives prohibitively burdensome and expensive.”

The law allows Wilson to continue to provide broadband service to Wilson County, the petition notes, but prevents it from “providing communications services in the five other counties in which Wilson was already providing electric service.”

Opponents disagree about whether the FCC has authority to preempt these laws, pointing to Supreme Court precedent. In general, argues Jon Banks, senior vice president for law and policy at the broadband industry trade association USTelecom, the federal government can’t preempt internal decisions by states unless there’s a crystal clear grant of authority to do so.

USTelecom wrote in its comments on the petitions that, “While the Commission possesses the power to preempt state laws under appropriate circumstances, established Supreme Court precedent requires a clear and unambiguous statement of Congressional intent in order for a federal agency to interfere with the relationship between states and their political subdivisions.”

“Because Section 706 lacks the plain language required by Supreme Court precedent to interfere with state legislative judgments about how best to manage their subdivisions, the Commission lacks the authority to preempt the North Carolina and Tennessee statutes in question,” the trade group wrote.

“In the absence of express congressional intent they’re kind of trying to bushwhack their way into territory where they really don’t belong,” says Susan Frederick, senior federal affairs counsel at the National Conference of State Legislatures.

If the FCC rules in favor of the petitions, it would “fundamentally alter our notions of federalism,” NCSL contends in its comments.

“Municipalities and other types of political subdivisions are creatures of the state — they are created by the state and they are bound by the state and federal law.”

And the NCSL also says in its comments that Congress intended for the FCC and states to share jurisdiction over the matter of expansion of municipal broadband.

Wilson and Chattanooga in their petitions counter that Congress did intend for such preemption and that two previous Supreme Court cases on the issue of preemption don’t apply in their cases

For example, the petitions contend that the Supreme Court decision in Nixon v. Missouri Municipal League, which dealt with preemption of state law restricting municipal telephone service, addressed a different portion of telecommunications law, which has a number of implications including that it applies to telecommunications services, not broadband, which the FCC and the Supreme Court treat differently.

And even if another Supreme Court precedent requiring congressional intent for preemption to be clear applied in this case, Section 706 meets that “plain statement” standard by referring to “all Americans,” the petitions argue.