FCC gets its chance to overturn state limits on broadband competition

FCC Chairman Tom Wheeler has been saying he’ll use the agency’s authority to overturn state laws that limit municipal broadband networks, and now he has a chance to make good on that promise.

EPB, a community-owned electric utility in Chattanooga, Tennessee, today filed a petition with the FCC asking it to invalidate a state law that prevents it from offering Internet and TV service outside its electric service area. EPB already operates a fiber network that provides broadband, TV, and phone service to people within its territory, and nearby communities have asked for service as well.

Wheeler is already facing opposition from House Republicans and the threat of a lawsuit, but he argues that the FCC can overturn state laws by using its authority to promote competition in local telecommunications markets by removing barriers that prevent investment.

EPB’s petition asks the FCC to do just that, describing how the utility already had to overcome legal challenges from incumbent Internet providers. EPB faced lawsuits from the Tennessee Cable and Telecommunications Association and Comcast, both of which were dismissed in 2008.

EPB served its first fiber customers in 2009 and finished building its network by 2011. Now it’s turning a profit that puts money back into the electric system, EPB Chief Operating Officer David Wade told Ars last November. EPB has 60,000 electric customers who also buy the utility’s voice, video, or Internet services.

While EPB offers gigabit uploads and downloads, there are residents in surrounding areas who can’t even get what the FCC considers minimum “broadband” speeds, which are 4Mbps downstream and 1Mbps upstream.

“Recognizing the quality and value of the Internet and video programming services that EPB provides, neighboring communities, residents, and businesses located outside of EPB’s electric service territory have asked EPB many times to extend Internet and video services to serve them,” the EPB petition says.

EPB is allowed to offer VoIP phone service to other communities, but it can’t also offer Internet access and video programming, making the prospect economically unsound. To expand into other communities without that restriction, EPB needs the FCC to declare that four words of a 1997 state law—“within its service area”—are unenforceable.

“Since 1999, several bills have been introduced to modify territorial or other limitations applicable to municipal electric systems that provide Internet and video services. None of the bills has been enacted,” the petition says.

EPB’s petition to the FCC is limited to just the Tennessee law, though there are laws limiting municipal broadband in 20 states. We’ve asked the FCC when the agency will take action on the Tennessee petition and whether it has plans to act in other states, and we’ll provide an update if we get one.

UPDATE: According to the FCC, “there is no specific timeline for review” of the Tennessee petition and any future ones from other states. These petitions will be handled on a case-by-case basis, so don’t expect the FCC to make a single declaration that preempts all state laws inhibiting municipal broadband. “The FCC has the authority to take broader action through rulemakings—but that is not what is happening here,” an FCC spokesperson said.

UPDATE 2: It turns out the FCC received two simultaneous petitions to overturn state laws limiting municipal broadband today, including one from a city in North Carolina. Wheeler issued the following statement: “We have just received the petitions filed by EPB of Chattanooga and the City of Wilson, North Carolina and are reviewing them. We look forward to a full opportunity for comment by all interested parties, and will carefully review the specific legal, factual, and policy issues before us.”