Sixth Circuit Strikes Down FCC's Municipal Broadband Ruling

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By Jonathan R. Tung, Esq. on August 12, 2016 6:59 AM

The FCC met with defeat in the Sixth Circuit recently when that court ruled that states could limit municipal broadband networks in towns in rural Tennessee and North Carolina.

The effect of the appellate ruling means that some parts of the two states must continue on with internet access that does not qualify as broadband. Slower internet speeds are the norm for many rural residents in that area -- a reality that some had hoped to change.

The Result

In February of 2015, the FCC voted to block laws in North Carolina and Tennessee that would have prevented municipal board band providers from expanding into nearby areas, bringing broadband where no broadband was before. The FCC had no specific authority to overturn the laws, but argued that it could do so under its authority to promote competition. The Sixth Circuit didn't agree.

The reversal by the Sixth Circuit means that broadband providers like Chattanooga's EPB will not be able to expand its broadband internet service into several rural communities beyond their recognized municipal service lines. Up until the FCC had got involved, Tennessee law strictly prohibited broadband carriers from overstepping the clearly marked boundary lines.

A Weak Ruling?

In its opinion, the circuit described its ruling as "limited" in scope. In fact, we estimate that some legal commentators will eventually characterize the court's decision as somewhat arbitrary. Take this section of the opinion, for example:

We do not question the public benefits that the FCC identifies in permitting municipalities to expand Gigabit Internet coverage. Furthermore, we need not, and do not, address a number of legal issues debated by the parties, including (1) whether § 706 provides the FCC any preemptive power at all, (2) whether Congress, if it is clear enough, could give the FCC the power to preempt as it did in this case, (3) whether, if the FCC had such power, its exercise of it was arbitrary or capricious in this case, and (4) whether and to what extent the clear statement rule would apply to FCC preemption if a State required its municipality to act contrary to otherwise valid FCC regulations.

In justifying its ruling, the Fifth Circuit has said that "state's right to determine the boundaries of its political subdivisions" and that the FCC had simply gone too far.

The FCC has expressed disappointment with the decision and has also predicted that the decision will directly lead to the halting of telecom development and the loss of jobs.

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