ALEC Comments on FCC Municipal Broadband Vote

Overtly political acts are often breathtaking, usually for the arrogance, ignorance and desperation they bring to light. They are made even more so when appointed officials of a so-called independent agency who should be concerned with public policy and technical standards act politically. Today, one’s breath is taken away by the actions of the FCC and its chairman Tom Wheeler.

In addition to seizing control of the Internet, in a purely partisan vote and flying in the face of a Supreme Court ruling (In 2004, the Supreme Court in Nixon v. Missouri Municipal League rejected federal pre-emption of a state ban on municipal telecom services), the FCC has made a move to shred the authority of the states and has decided to force states to allow municipalities to do as they want.

At issue is whether municipalities – cities, towns, counties, etc. – must follow state law when contemplating building, maintaining or continuously upgrading a broadband system with municipal funds. In several instances states have enacted legislation to protect their citizens from runaway spending often done in secret. But the larger issue is not whether government owned networks are a good idea, or under what circumstances they might be deployed, rather it is about the appropriate and lawful balance of state, municipal and federal government power.

The goal of increased access to broadband is a good one, but how we reach that goal is equally important. State legislative safeguards and limits on local government owned networks being vitiated by the federal government is an unacceptable “solution,” given the relationship of a municipality to the state.

Models of municipality creation vary widely around the world, but in the United States, how they are created is fairly clear. The U.S. Constitution empowers states as the primary political entity. The federal government itself is a creation of the states, and of the people, with the Constitution placing restraints on government broadly, at the agreement of the states. States are also empowered to arbitrarily create subdivisions, generically referred to as municipalities. Responsibility for the municipalities ultimately falls to the states.

Inserting the FCC into this relationship will have profound negative effects. The complete usurpation of state’s rights is unacceptable, especially when existing law in 19 states either prohibit government owned broadband networks or place some limitation (such as transparency) on municipalities if they seek or do provide broadband. Municipalities, untethered from responsibility to the state, could partake in risky schemes of tax funded adventurism placing the entire state and all its citizens at risk.

As the ALEC Communications and Technology public sector chairman and vice-chairman, North Dakota Representative Blair Thoreson and California Senator Joel Andersen wrote to the FCC last year,

“Federal preemption of state laws in this area poses at least four serious problems:

First, preempting state-level safeguards, would undermine state government authority and destroy local government accountability. Local governments are the product of state constitutions and state laws, not the federal government. FCC involvement in municipal broadband wrongly interferes with a state’s legal authority. States and local governments have a principal-agent relationship. But preemption would turn that relationship on its head. In this instance, preemption would effectively grant local governments a federal right against their states when it comes to owning and operating broadband networks. This type of regulation violates basic concepts of federalism.

Second, preempting state-level safeguards on local government-owned networks would strip taxpayer protections and creates the possibility of new public debt burdens. The broadband Internet services industry is capital-intensive and its financiers take serious financial risks. Taxpayers should not be left on the hook for poorly run local broadband networks, which will unfairly result in higher taxes for citizens.

Third, the proposed federal preemption of state-level safeguards on local government-owned networks would distort the relationship between government and private business in ways that many states seek to avoid. Government’s impartiality in exercising its regulatory power is eroded when it competes against the private sector. Conflicts of interest arise when broadband network-owning local governments are able to exert power over the private businesses against whom they compete.

Finally, preemption could lead to the highly illiberal result of voiding local voter approval requirements in states that seek to carefully limit government-owned broadband networks. As a matter of policy, we believe that those states that permit their local governments to own broadband networks should do so only if approved by a local vote of the people.

Rather than issue such a problematic proposal, we respectfully encourage the FCC to pursue ways to foster a pro-investment atmosphere for private sector broadband service providers. The federal government should not direct local governments into the Internet business. And it should not preempt the rightful authority of the states.”

Having ignored this sage advice, the FCC has managed to create yet more uncertainty in the Internet ecosystem. What will follow will likely be years of litigation that will result in yet one more loss for the FCC, and a greater loss to all Internet users.