Municipal broadband networksThe Federal Communications Commission (FCC) lost a key ruling this week when the US Court of Appeals for the Sixth Circuit ruled in favor of North Carolina and Tennessee, states that brought suit in response to an FCC order which overturned state laws regarding municipal broadband networks. 

The Court’s opinion read, “This preemption by the FCC of the allocation of power between a state and its subdivisions requires at least a clear statement in the authorizing federal legislation.”

The FCC’s February 2015 order was aimed at state laws limiting municipal networks from competing with private internet service providers.  The FCC had voted to block North Carolina and Tennessee laws that prevented municipal networks from expanding services outside of their territory.   At the time of the order, however, 19 states had similar laws.  Had the order been upheld other states could have been impacted, and the FCC may have voted to overrule additional state laws once their authority to do so had been confirmed by the courts.

Utah Code 10-18-101 et seq. limits head-to-head competition between the public and private sectors by requiring municipal broadband networks to offer services on a wholesale basis. Unlike their private networks, governmental agencies are prohibited from selling telecommunications services directly to consumers.

The FCC will review the decision and determine if they will pursue the issue further.  They could appeal to the Supreme Court or request an en banc review by the Sixth Circuit, which would invite a larger number of judges to review the case.