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US Appeals Court Protects State Broadband Laws Literally Written By Big Telecom

A court has killed an FCC challenge to anticompetitive telecom laws all over the country.
August 10, 2016, 8:05pm

Wednesday afternoon, a US Appeals Court ruled that the Federal Communications Commission does not have the power to preempt state laws that restrict cities from building community-owned broadband networks, killing two planned network expansions in Tennessee and North Carolina and once again showing how much power big telecommunications companies have over the American political system.

This particular court case has been going on for two years, but its origins date back much further. In the early 2000s, after several cities around the country—including Chattanooga, Tennessee and Wilson, North Carolina—created successful local government-owned gigabit broadband networks that threatened traditional power players such as Comcast and AT&T, telecom lobbyists began pushing laws through state legislatures that restrict such networks. Currently, 23 states have these sorts of laws on the books, and their origins can invariably be traced back to telecom lobbying.


In 2014, FCC chairman Tom Wheeler said the agency would attempt to use federal authority granted to it in the Telecommunications Act of 1996, which states the FCC should take "measures that promote competition in the local telecommunications market," to nullify state laws that prevent such competition. Wilson and Chattanooga each filed petitions with the FCC asking it to give them legal permission to expand their existing networks.

Wheeler's attempt to preempt the North Carolina and Tennessee rules was an exercise in trying to retrofit an old federal law to fix the tyranny of what are quite literally corporate-bought state laws.

The FCC took up their cause and attempted to preempt laws in their states that were written specifically to prevent their networks from expanding. Both North Carolina and Tennessee sued the FCC, claiming that the federal government was taking steps that challenged the states' rights to self rule.


Institute for Local Self Reliance

The US Sixth Circuit of Appeals sided with the states on Wednesday, ruling that the Telecommunications Act of 1996's authority did not specifically provide the commission with the power to "re-allocate decision-making power between the states and their municipalities."

Over a five year period in North Carolina, Time Warner Cable, AT&T, and CenturyLink donated more than $1 million to lawmakers to get the law passed

It's important to remember that Wheeler's attempt to preempt the North Carolina and Tennessee rules was an exercise in trying to retrofit an old federal law to fix the tyranny of what are quite literally corporate-bought state laws. The FCC's failure to prevail in this particular legal case doesn't say anything about whether the two state's laws make any sense, are worth defending, or have the best interest of the people in mind.

It's worth it, then, to look at just how the laws in Tennessee and North Carolina came into being, and who pushed for their passage.


After failing to enact meaningful barriers to community-owned broadband at the federal level, the telecom industry, through a group called the American Legislative Exchange Council, began heavy lobbying efforts on a state-by-state basis. The telecom industry wrote talking points and "model legislation" that was then handed to state legislators who were bought off by the industry.

A 2011 Bloomberg Businessweek article called, amazingly, "Psst … Wanna Buy a Law?" explains how a bill given to a Louisiana state lawmaker named Noble Ellington by telecom lobbyists then became a law in six separate states:

"Ellington's bill started life as a set of bullet points that at least two telecommunications companies recommended to a state legislator in Utah in 2001. Versions of it have become law in six states. Jim Baller, an attorney who tracks the bill and represents cities when it shows up, says it was introduced in 14 states in 2005 alone. On the fourth attempt, it passed in North Carolina this year. Incumbent telcos have shown a pattern of promoting these bills and rewarding the state legislators who sponsor them."

A 2013 report by the Institute for Local Self Reliance notes that over a five year period in North Carolina, Time Warner Cable, AT&T, and CenturyLink donated more than $1 million to lawmakers to get the law passed.

Through lobbyists, those companies introduced "The Local Government Fair Competition Act of 2007," "The Level Playing Field Act of 2009," and "The No Nonvoter Local Debt for Competing System Act of 2010." Each of these measures failed. In 2011, an influx of Republican lawmakers flooded the statehouse in the midterm elections and passed the telecom-supported "Level Playing Field/Local Government Competition Act."


"The more than $1 million they donated during the course of the competition-limiting campaign is far less than they would have lost in monopoly profits had even one additional mid-sized town opted to build its own network like Wilson," the report notes, adding that it's now essentially impossible to get the law reversed at the local level. "While advancing bills with barriers that only applied to local governments, they saturated legislators with talking points about 'fair competition' and a 'level playing field.' They only have to succeed once; because of their lobbying power, they have near limitless power to stop future bills that would restore local authority."

In Tennessee, meanwhile, telecom lobbyists killed 2011 legislation that would have made it easier for community networks to expand around the state. In 2010, AT&T donated $91,000 to favorable lawmakers, Comcast donated $75,000, and cable industry political action committees donated another $32,850. In March of this year, Comcast and AT&T lobbyists killed another bill that would have made it easier for Chattanooga to expand its network.

Though the telecom industry has shored up strong anticompetitive legislation in 23 states, it is of course still trying to tighten its grip on state legislatures around the nation. Earlier this year, a think tank funded by AT&T and Time Warner released a paper aimed to help states "craft economically sound laws that protect taxpayers from undesired consequences of government-run broadband."

Among those "consequences," the FCC found that incumbent telecom companies have been forced to improve their services and lower their prices in markets that have competition from locally owned broadband providers. It's important to remember, then, who the laws are really helping, and who originally wrote them.

Wheeler said that, though the FCC didn't win in the courtroom, he is interested in helping state legislatures fight back against corporate interests, if lawmakers are inclined to repeal laws passed by those who came before them.

"Should states seek to repeal their anti-competitive broadband statutes, I will be happy to testify on behalf of better broadband and consumer choice," Wheeler said in a statement. "Should states seek to limit the right of people to act for better broadband, I will be happy to testify on behalf of consumer choice."