INTERNET FEDERALISM.

Date22 March 2021
AuthorNarechania, Tejas N.

TABLE OF CONTENTS I. INTRODUCTION 548 II. PLACE AND THE INTERNET'S INFRASTRUCTURE 558 A. Access Networks 559 1. Cable and Cable Modem Service 560 2. Telephone and DSL Service 562 3. Wireless Broadband Access 564 4. Other Access Networks 565 B. Backbone Networks 566 1. Transit 567 2. Peering 568 C. Content Delivery Networks 570 III. FEDERALISM AND THE INTERNET'S INFRASTRUCTURE 572 A. State and Local Power, State and Local Competence 575 1. Local Competence and State Powers 575 2. Local Competence and Pragmatic Subsidiarity 582 B. Federal Power and Local Competence 587 1. The Federal Plan and Constitutional Concerns 588 2. Cooperative and Interjurisdictional Schemes 591 IV. FEDERALISM AND THE INTERNET 598 A. Network Neutrality 599 B. Universal Service 609 C. Municipal Broadband 614 V. CONCLUSION: INSIDE WIRING AND THE INTERNET 618 I. INTRODUCTION

It is common to see diagrams of the internet featuring a computer tethered to a cloud, floating off into cyberspace. (1) It's a nice image, but the colloquial notion embodied in such pictures--that the internet is one singular, ethereal, and interjurisdictional thing--has led policymakers and scholars to overlook some important details. In truth, the internet is a series of discrete components--wires, antennae, towers, and conduits--all of which together constitute a foundational communications network. (2) Seeing the internet as such a combination of separate and preexisting infrastructural components--many of which our legal system has already encountered--helps us to more clearly understand the possibilities for regulation aimed at the internet's infrastructure. States routinely exercise regulatory authority over local aspects of interstate systems in view of local conditions such as geography, safety, regional interests, and market competition. (3) So long as these rules do not discriminate against out-of-state actors, unreasonably burden interstate commerce, or conflict with federal rules, they are routinely affirmed. (4)

Yet a chorus of voices contends that the internet is, somehow, different. In the wake of the Federal Communications Commission's 2017 decision to both rescind its network neutrality protections and simultaneously preempt any state actions seeking to promulgate analogous local rules, (5) policymakers and scholars have suggested that some essential interstate character of the internet renders it immune to local regulatory authority. (6) The breadth of such claims extends far beyond the example of network neutrality. Several scholars, relying on several cases, suggest an expansive view of federal preemption online--even as the Commission's interest in internet-related regulation reached its lowest ebb. (7) According to such commentators, state authorities have little power to regulate local broadband carriers because internet communications cross state lines, and because the Commission has disavowed its own powers to regulate broadband carriage (e.g., retail consumer access to the internet via, say, Comcast or Verizon). (8)

By contrast, both Justice Thomas and the U.S. Court of Appeals for the D.C. Circuit (as well as some scholars and practitioners) have hinted some doubts about this view. (9) Justice Thomas has suggested that the Commission's disavowal of regulatory power preserves rather than preempts state authority. (10) And the D.C. Circuit vacated (over dissent) the agency's sweeping preemption order--though it conceded that some state rules may conflict with federal standards. (11) And so policymakers and broadband carriers renewed preemption arguments in cases across the country, challenging various state regulatory measures addressing matters such as network neutrality, data privacy, and universal service. (12) Such debates show little sign of abating. (13)

In short, there is little agreement over the scope of federal, state, and local regulatory power over broadband carriage. We intercede in this debate with two primary contributions. First, we offer a brief but detailed examination of the internet's internal structure, lifting the fog of the internet's cloud facade and exposing the internet's constitutive components. As we have already suggested, this infrastructure is frequently shaped by local conditions. Second, we offer a close study of prior federal, state, and local communications-network-related regulations--regulations regarding the same infrastructure as that which helps to form today's internet. Here, we find that state and local authorities have often regulated this local infrastructure in view of local concerns, notwithstanding its connections to an interstate communications system. And so, even given the distinctions between broadband carriage and cable or telephone service, we conclude that it is appropriate for state regulators to intervene on related or analogous matters of broadband carriage, too.

Consider, for example, the ancient cases regarding the regulation of "inside wiring"--the communications circuitry that lives inside the walls of houses, apartment buildings, and office complexes. For a significant part of its history, the Commission required that telephone companies (like AT&T) own, install, and maintain such wiring (in part to help subsidize the costs of deploying communications networks to remote and rural locales). (14) In short, wire installation and maintenance were closely regulated services--i.e., "common carrier" services. But in 1986, the Commission sought to deregulate these services and thereby open them up to competition. (15) Some states objected to this proposal: Alabama and Michigan, among others, expressed concern that if dominant providers like AT&T were not required to maintain these systems in certain rural areas, then no one would. (16) The Commission, however, was undeterred. It proceeded with its deregulatory plan--and, moreover, "[to] avoid a fragmented approach in relation to [its policy] objectives, [the Commission] gave preemptive effect to [its] decisions deregulating the installation and maintenance of inside wiring." (17)

Several states sued, winning (in part) their challenge to the Commission's preemption order. (18) Inside wiring, the D.C. Circuit explained in National Association of Regulatory Utility Commissioners v. FCC (NARUC), was a shared infrastructural component, used in connection with intrastate communications as much as interstate ones. Hence, in view of the overlapping technical and regulatory infrastructures, the states were free to regulate inside wiring--one small, local piece of the telephone network--under their powers to regulate intrastate infrastructure and service (such as local telephone calls). In short, inside wiring-related services were free from federal regulation but could still be subject to the states' relevant local rules--rules that, say, required a dominant provider to continue to service inside wiring where no one else was available to do so. (19)

The Commission tried to save the order's preemptive effect by arguing that the states' regulatory authority was limited to "intrastate common carrier communications services." (20) Since the Commission had now decided to deregulate inside wiring-related services--meaning that they were no longer "common carrier" services--the Commission contended that they were beyond the states' regulatory reach. Under this view, services deregulated by the federal government automatically would fall outside the states' regulatory ambit, simply because the Commission had stopped treating them as common carrier offerings. The D.C. Circuit was unpersuaded. It explained that such a holding would grant the Commission "unchecked authority to force state deregulation of any activity it chose to deregulate at the interstate level." (21) Instead, the Commission's regulation preempted only directly conflicting state regulations, otherwise leaving space for state and local authorities to regulate local services in view of local conditions. (22)

Why bother with a case, over 30 years old, dealing in the minutiae of telephone network technology? Because, in part, these telephone networks help to compose the internet. Though the communications service has been updated, the communications infrastructure remains much the same: Internet data now runs through the wires that were once dedicated to telephone calls. Indeed, as suggested above, NARUC bears a remarkable resemblance to modern debates over federalism on the internet in two important respects.

One, the Commission's inside wiring proceeding highlights the intensely local nature of some aspects of our communications infrastructure. In that proceeding, various states and territories explained that it would be prohibitively expensive or technically infeasible to require that some rural telephone customers bear the costs of installing and maintaining inside wiring. Michigan, for example, explained that there were few qualified service providers in rural regions of the state, and deregulation might adversely affect service quality or lead to wiring that fell short of technical standards. (23) Such comments make clear that local conditions--often the purview of local regulators, who are typically more attuned to local needs and concerns--have real effects on communications technologies and communications markets.

The same can be said for the modern internet. Just as inside wiring is one discrete (and very local) component of a larger communications infrastructure, so too are access networks--cable networks, telephone networks--one local part of the internet's greater schema. States and municipalities thus play an important role in deciding how their residents access the internet. For cable service, state or local authorities issue franchises--essentially, licenses--to carriers seeking to deploy a local communications network. (24) Such authorities also control what entities are eligible to receive federal funds to develop broadband infrastructure in underserved...

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