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The Supreme Court has already indicated it would be unconstitutional.
It would be anti-competitive, the opposite of the FCC’s statutory purpose and legal mandate.
I. Why FCC Preemption of States Rights would be Unconstitutional
First, the Supreme Court already has decided this issue effectively in favor of state rights. InNixon v. Missouri Municipal League (2004) the Supreme Court rejected federal preemption of state prohibitions on telecom services. It specifically rejected the use of the FCC’s Title IIsection 253(a) authority to preempt state prohibitions of localities offering telecom services on constitutional federalism grounds.
If clear FCC Title II statutory language was insufficient to overcome states constitutional rights, it is hard to see how the FCC’s new-found, balsa Section 706 authority would be sufficient to trump the Supreme Court’s defense of state’s rights in the Constitution.
This Supreme Court precedent presents a high bar for the FCC to overcome because the core constitutional issue is largely-settled and because Chevron Deference does not apply to the Supreme Court’s decisions.
Second, municipalities are legal creations of the state, not the Federal government. States have clear sovereign economic and fiscal responsibilities to the citizens and taxpayers of their state. The construction and operation of broadband networks in a local community clearly is an in-state activity not an inter-state activity that generally can afford the FCC jurisdiction.
In sum, if the FCC preempts state prohibitions of community broadband capital projects, the FCC essentially would be asserting that it, not the states, is the ultimate approving authority for community broadband capital projects, by effectively pre-approving all potential community broadband projects in advance, by denying the state its right to prohibit them.
II. Why FCC Preemption would be the Opposite of Promoting Competition
Governments do not “compete” with companies; Governments tax, limit, police and judge companies.
So when governments try and offer a similar service that private companies have long provided consumers, these governments effectively are opposing and undermining private companies in the marketplace — not “competing” with them.
Why is muni-broadband anti-competitive?
First, Congress in the 1996 Telecom Act made promoting communications competition the law of the land. To forward that goal the FCC ruled broadband was an interstate service under Federal regulatory jurisdiction.
Nowhere in that law did Congress define or conceive a government to be a potential “competitor.”
Second, everyone knows the old adage, “you can’t fight city hall.” Well a private company certainly cannot compete with their regulator who controls their business’ livelihood — access to public rights of way underground, on poles, or on wireless towers.
Moreover a company can’t compete with their tax assessor, permit-grantor, police force, etc. — no more than a citizen can “compete” with the powers of a policeman, prosecutor, and judge.
Third, a private company cannot compete with a municipality that can compel taxpayers to subsidize the municipality’s overbuild broadband network even if they don’t vote for it or sign up for it; or if they want to use a private company service. That’s not competition; that’s a rigged game.
Fourth, who thinks Government can deliver complex technology better than private companies?
Building and operating a broadband network is much more than digging trenches and laying fiber. It is a very complex and difficult systems integration and management endeavor to do competently, economically, and responsibly.
Moreover, Governments are well known to vastly underestimate the complexity and degree of difficulty in delivering successful systems integration.
Americans learned this lesson only too well last year when the HealthCare.gov website managers failed to anticipate that one needs to not only test individual systems, but also how all the different subsystems work or don’t work together – under most all circumstances.
Provisioning and operating advanced technology networks is a job for professional technologists and experienced systems integrators who have successfully done it before, not municipalities which have neither the core competency, nor the experience to do it.
Sadly, this is why so many municipalities have run up large broadband infrastructure debts that can’t be repaid. It is why they have failed in creating economically sustainable and operationally proficient broadband networks.
Fifth, municipalities building opposing networks create a predatory and hostile market environment that unnecessarily and unfairly chills much needed private capital investment to best serve consumers.
Lastly, what about all the obvious privacy and surveillance conflicts? Who thinks it is a good idea for the mayor or the police to have access to local voters’ emails and web surfing histories?
In short, municipalities building broadband networks are not “competition,” they effectively are Governmental opposition to the existence of private broadband networks.
In conclusion, the FCC should not attempt to preempt state muni-broadband laws because it would be both unconstitutional and anti-competitive.