Policy Documents

FCC Preemption of State Bans on Municipal Broadband Networks Is Most Likely Unlawful

Seth L. Cooper –
February 26, 2014

Following its second stinging judicial rebuke in as many attempts to impose Internet regulations, the FCC is now gearing up for a third try. A February 19 statement by FCC Chairman Tom Wheeler outlined a new plan to exert FCC power over broadband Internet services. Not surprisingly, the plan calls for re-thinking the FCC’s already overanalyzed legal rationale for imposing network neutrality rules.  

What might surprise is the plan's call to examine state laws that keep local governments out of the Internet business. It hints at federal preemption of state-level restrictions on municipal broadband projects.  

But preemption would undermine local government accountability to state governments and to taxpayers. Any FCC attempt to interfere with the relationship between states and their local governments will run up against basic free market and federalism principles.  

Nearly twenty states restrict local government entry into the business of providing broadband Internet services. Such laws prevent local government conflicts of interest with the private sector marketplace competitors who invest tens of millions of dollars in localities to build out their broadband networks. They also protect local taxpayers from potentially devastating financial losses from poorly-run municipal broadband projects.