FCC Preemption of State Network Neutrality Initiatives

            In a less emphasized, but important initiative, the FCC set out its preemption of any state attempt to legislate network neutrality rules.  See Restoring Internet Freedom Order at ¶194 onward.  OK, I get this logic: Internet traffic has a fundamental and inseparable interstate characteristic.  Balkanized policies could generate costs and confusion.

            However, there are a number of inconvenient precedents that make the FCC’s preemption appear as results-driven at the behest of powerful stakeholders keen on having the Commission  foreclose progressive states from possibly demonstrating the upside benefits of an open Internet and the absence of all the dire predictions of reduced innovation, investment and “freedom.”

            First let’s marvel at the irony of a Republican majority waxing poetic about the benefits in federal preemption of the states.  So much for the talk about how state Public Utility Commissions operate closer to where the “rubber meets the road.”  So much for relying on states serving as laboratories to identify best practices.

            Next, let us look at some on the reasons the FCC has declined to preempt, or triggered judicial reversal when it attempted to preempt.  Municipal Wi-Fi comes to mind, because that service involves irrefutable, interstate service, e.g., from the global Internet cloud to places like Chattanooga, Tennessee and Wilson, North Carolina where incumbent carriers did not want municipalities to have the option for self-help when these carriers refrained from providing broadband.

            In Tennessee v. FCC, the 6th Circuit Court of Appeals (832 F.3d 597) reversed the FCC’s state preemption attempts based on multiple rationales that might have the same impact on  network neutrality preemption.  The court was able to differentiate the matter of municipal provision of broadband from the broader matter of whether and how the FCC could preempt state law.  Section 253 of the Telecommunications Act of 1996 contains some rock solid language favoring preemption when a state “prohibits” or has the effect of prohibiting “the ability of any entity to provide any interstate or intrastate telecommunications service.”  Notwithstanding that rather clear and explicit language, the 6th Circuit opted to read Section 253 as imposing no bar on the power of a state legislature—no doubt urged on by stakeholders keen on preserving any and all future options—to foreclose municipal governing entities from providing a service increasingly viewed as essential.

            The court also noted how the FCC previously refrained from preempting when it had an opportunity to do so where a state enacted a law prohibiting any sort of municipal provision of telecommunications service.  See Nixon v. Missouri Municipal League, 541 U.S. 125 (2004). Additionally, the court read Section 706 of the Telecommunications Act of 1996 as not including preemption as one of the tools available to promote affordable and ubiquitous broadband access from places like Wilson where broadband access would not be available unless the municipality acted, because no incumbent  had any interest. 

            Does this make sense and pass your smell test?  Would the court of public opinion defer to the wisdom of their elected officials to preclude the formation of any new municipal water authority even in instances where the incumbent goes bankrupt and no commercial venture wants to acquire the assets?

            Just now we have traditional views of federalism conveniently superseded by loftier notions of federal deregulatory consistency.  In the case of network neutrality, the FCC and its beneficiaries want to prevent states from enacting laws, rather than have such laws upheld and considered primary.  Why has state law become something readily swatted away by an all-powerful federal authority?