A Light in Digital Darkness: Public Broadband after Tennessee v. FCC.

Date01 January 2018
AuthorGuttentag, Mikhail

Table of Contents Introduction I. The Costs of Limiting Cities to Private Broadband A. The Lack of Competition in the Last Mile 1. The Internet's Brief Competitive Beginning B. The Major Drivers of Digital Divides II. The Public Broadband Alternative A. Envisioning Public Broadband as a Local Utility 1. Arguments against Public Broadband 2. Which Places Could Be Well-Served by Public Broadband B. Public Broadband in Urban Areas C. Will President Trump's FCC Support Public Broadband? III. Overcoming Legal Barriers to Public Broadband A. State-Based Restrictions on Public Broadband B. Congress and the Community Broadband Act C. FCC Regulatory Authority 1. Preemption of State Laws Under Section 253 2. Removing Barriers to Investment, Deployment, and Competition Under Section 706 3. Courts Preempt FCC Preemption IV. Nixon v. Missouri Municipal League: The Loss of Section 253 A. The Eighth Circuit Unanimously Overturns the FCC 1. Section 253(a) is a "Plain Statement"; the FCC Creates Ambiguity Where None Exists 2. The FCC Unduly Narrows the Meaning of the Modifier "Any" 3. Rejecting the D.C. Circuit's Abilene Decision, Creating the Circuit Split B. The Supreme Court Limits Section 253 1. Majority Opinion: FCC Cannot Preempt Under Section 253, Mostly for Prudential Reasons 2. Justices Scalia and Thomas's Surprising Concurrence, on a Textual Basis 3. Justice Stevens' Dissent: Section 253 Means What It Says 4. The Lasting Missouri Municipal League Legacy: Restricting Public Broadband V. Tennessee v. FCC: The Limits of Section 706 A. The New FCC Grants Preemption, but Under Section 706 366 B. The Sixth Circuit Overturns The FCC's Section 706 Attempt VI. Conclusion: Public Broadband's Path Ahead INTRODUCTION: PUBLIC BROADBAND AND PUBLIC POWER

"Failure to provide broadband to rural areas of America is a death sentence for those communities. They cannot compete economically without access to broadband."

--United States Senator Angus King (I-ME) (2)

"We see broadband in the 21st century as electricity was in the 20th." --Danna Bailey (Vice President, Chattanooga EPB) (3)

Internet can be delivered like other publicly funded services, such as water, electricity, sewers, and roads. (4) To date, Internet provision is left almost entirely to the private sector, leaving many places without affordable or high-speed service. However, there are a growing number of municipalities in the United States who have built their own high-speed Internet networks and offer it like a public utility. More cities should join them.

Many communities currently underserved by Internet providers--rural areas especially--were once underserved by private electricity providers that offered electricity to big cities and wealthy customers but left the rest of the country behind. (5) These communities formed locally owned electric utilities to provide electricity at affordable rates and wider availability than service from private providers. (6) Franklin Delano Roosevelt made public power a central part of his successful 1932 Presidential campaign, (7) and once elected, he created the Tennessee Valley Authority to bring affordable electricity to rural areas. (8) Today, more than two thousand communities in the United States provide their own electricity, including cities like Seattle, San Antonio, and Los Angeles. (9) All told, today more than one in four Americans purchase electricity service from a publicly owned power system or a nonprofit cooperative, (10) and the rest purchase electricity from price-regulated suppliers.

Like electricity in the last century, Americans increasingly see universal, affordable access to broadband Internet as urgent and important for local economies, education, democracy, and good health. A recent study found that nine in ten Americans believe at-home broadband is either "essential" (49%) or "important" (41%), and only one in ten respondents said it was neither. (11) Another poll showed that two-thirds of Americans believe that not having at-home broadband "would be a major disadvantage to finding a job, getting health information or accessing other key information," a nearly ten-percent increase over the previous five years. (12)

And yet, Internet access in much of America is dismal. Fifty percent of American households have access to only one Internet provider, with no competition to drive faster or more affordable service, and an additional ten percent of households (including nearly forty percent of households in rural areas) have no access to a broadband Internet provider (13) at all. (14) America's dominant Internet Service Providers (ISPs)--such as Comcast, AT&T and Time Warner Cable--all rank among the country's least popular companies, (15) and with good reason: on average, united States residents pay more money for slower Internet than do people in most countries in the developed world. (16)

Although federal law requires every American be given access to phone service, along with other services like water and electricity, there is no such law ensuring universal access to broadband. (17) Fully one-third of Americans do not subscribe to at-home broadband access, and, of non-subscribers, the overwhelming plurality cite cost as the limiting factor. (18) Because most Americans cannot count on their local government to provide broadband service or regulate prices, they are left with "the worst of both worlds in the broadband industry: no competition and no regulation." (19)

In response to America's lagging Internet infrastructure, some communities and lawmakers have begun to form public and public-private partnerships to provide Internet service as a utility service, delivering Internet access to residents at faster speeds and lower costs than before. (20)

Recent polling suggests that these efforts, or at least the right to undertake them, enjoy overwhelming bipartisan support. Seven in ten Americans believe local governments should have the right to build their own broadband networks, including approximately two-thirds of Republicans and three-quarters of Democrats. (21) In 2015, the White House issued a report trumpeting these publicly owned broadband networks, describing affordable, high-speed Internet access as "critical to U.S. economic growth and competitiveness." (22) There are a growing number of successful publicly owned high-speed Internet networks in communities nationwide. (23)

One example of a successful publicly owned Internet network lies in a small city in southeastern Tennessee. The city of Chattanooga quietly launched its publicly owned high-speed Internet network in 2010, and today its city-run Internet is faster and more affordable at its speed than almost any other network in the world. (24) Upgrading Chattanooga's grid and network cost $330 million, (25) an investment that appears to be paying off handsomely: in its first five years it brought the city an estimated $865 million in economic and social benefits, including thousands of new jobs. (26)

Given Chattanooga's success, one might expect Tennessee and other states to seek to replicate these networks in other cities. Depending on the community's goals, it need not even operate or manage the network it builds. A single municipal network could host a large number of competing ISPs, if it finances the initial construction of the network (connecting high-speed fiber-optic cables to homes, via its electric grid or a similar network), and then leases those connections to competing ISPs. (27) This model is like an airport: the community finances the network (the airport), then leases the airport's connections (gates) to private ISPs, who compete with each other over providing service to customers.

Instead, Tennessee and nineteen other states have made it harder, not easier, to build local networks like the one in Chattanooga. Those state legislatures passed laws that ban or restrict their cities' abilities to provide community-financed Internet service, commonly referred to as "public broadband" or "municipal broadband." (28) The two phrases are used interchangeably here, since "public broadband" need not be administered by a municipality. (29)

Some cities hoped that the FCC would help them overcome these restrictions, since Congress in 1996 gave the FCC authority to preempt state laws that restrict "any entity" from providing broadband. However, the Supreme Court ruled in 2004 that Congress had not made it sufficiently clear that a municipality could be an "entity" providing service, (30) effectively barring municipalities in those states from providing broadband. Over a decade later, the FCC tried a different way to help cities preempt state-level restrictions on municipal broadband, but in the August 2016 decision Tennessee v. FCC, a federal court held that the FCC lacked the authority to do that as well. (31)

These two decisions have left a number of cities that might benefit most from municipal broadband without the means to provide it, unless they can convince state legislatures or Congress to overturn these restrictive state laws. Overturning the laws would require state legislatures to buck the deep-pocketed ISP lobbyists who pushed states to enact the restrictions in the first place, which complicates these efforts.

In this Article, I examine the state of broadband in America, including the lack of competition and drivers of digital divides. I argue that broadband could be offered as a public utility service akin to water or electricity, and make the case that more communities should follow the lead of Chattanooga, and others, and build their own high-speed broadband networks. I look at how the Supreme Court's 2004 Missouri Municipal League decision emboldened ISPs to lobby states to restrict the growth of public broadband, and revisit Justice Stevens' lone dissent, a position which today looks increasingly prescient. The specter of Missouri Municipal League haunts efforts to build publicly owned broadband, and in light of...

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