Thursday, February 26, 2015

Federalism Versus Balkanization and Muni Wi-Fi

         While most attention today focused on the FCC’s Open Internet, I was intrigued with the discussion—make that righteous indignation—presented by Commission’s Pai on the FCC’s partial preemption of state laws restricting territorial build outs by municipal Wi-Fi networks.  Commissioner Pai gave an extensive review of Constitutional law with emphasis on state sovereignty.

          Commissioner Pai never addressed the considerable body of case precedent favoring FCC preemption of state regulation, including the attempt by state public utility commissions to regulate—if not prohibit-Voice over the Internet Protocol (“VoIP”).  See Minn. PSC v. FCC, 394 F.3d 568 (8th Cir. 2004).  States’ rights notwithstanding, many courts share the FCC’s view that much in telecommunications and now the Internet involve interstate commerce. 99.9999999+ percent of the time, Internet traffic crosses a state border.  Over the years, such a crossing “contaminated” any pure intrastate link which arguably includes the wireless few feet linking a tablet and the Internet cloud.

          Not so long ago Commissioners of both parties would express concern about “balkanization” of telecommunications policy, i.e., fragmentation and proliferation of many inconsistent state policies.  That environment would generate “regulatory uncertainty” and “disincentives for investment in next generation networks.”  Now Commissioners and others earn brownie points for how well they can express fealty to the Constitution.

          An ignored but obvious issue in the debate lies in the vast increase in scrutiny and involvement in telecommunications policy by groups such as the American Legislative Exchange Council.  The real possibility exists that ALEC offered state legislators in places like North Carolina and Tennessee a template for a law few framed as pro-market/pro-state.  Might state legislators have voted for something without much analysis?

          In any event I saw a huge irony in the universal view that America needs more competition in broadband, but Commission Pai’s insistence that municipalities do not count, even when no one else seems “incentivized” to make the effort.

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